AIG hits the red as income plunges
Multinational insurance firm American International Group (AIG) has reported a net loss of $183 million for the first quarter of 2016, compared to net income of $2.5 billion over the same period of 2015.
According to the company the losses reflect the impact of market volatility, as well as net realised capital losses, restructuring costs, and other items.
The firm also posted an after-tax operating income of $773 million for the first quarter of the year, compared with $1.7 billion in the first three months of 2015.
AIG suffered a 44 percent fall in net investment income during the quarter, down to $577 million, compared with $1 billion in the first quarter of 2015. The firm also recorded pre-tax non-operating restructuring costs of $188 million in the first quarter of 2016.
AIG’s property casualty segment suffered a big fall in performance also, recording a 38 percent loss in income in the quarter, down to $720 million, compared with $1.2 billion in the first quarter of last year.
Despite the losses, Peter Hancock, AIG president and chief executive officer, said AIG remained committed to carrying out ambitious plans in its near-future.
He said: “Although our first quarter results were impacted by market volatility on investments, the underlying operating results demonstrate progress on our strategic objectives. We’ve made some ambitious commitments through 2017, and our first quarter operating results show that we’re executing on our plan.
“We returned $4 billion of capital to shareholders during the quarter, and repurchased an additional $870 million of our common stock through May 2, 2016. Expenses declined 5 percent year-over-year, excluding the impact of foreign exchange, as we continued to drive for efficiency and narrow our focus on the products, geographies and demographics that provide the greatest opportunities for profitability.”
Hancock also said that while part of AIG’s current strategy is to streamline its business, the firm is still making targeted investments in its future, including its recently announced plans to form a joint venture with Hamilton Insurance Group and Two Sigma to develop insurance solutions informed by data and technology for the small to medium-sized enterprise market.
“By transforming AIG into a leaner, more profitable and focused insurer, we can leverage our risk expertise, scale and scope to provide value for our clients, and generate returns for our shareholders,” he added. “Our strategy for today will position us to achieve our vision for tomorrow."
