AIG profits sink & cat losses dent P&C performance
Insurer American International Group’s (AIG) profits plummeted in the second quarter of 2015 on the back of lower capital gains and poor performance in its property and casualty business line.
Its profits fell to $1.8 billion in the second quarter of 2015, compared with $3.1 billion in the second quarter of 2014.
According to AIG, this was driven by higher losses on extinguishment of debt from ongoing liability management activities, lower capital gains from sales of investments, and a net gain on the sale of divested businesses related to the sale of International Lease Finance Corporation in the second quarter of 2014.
AIG’s property and casualty segment posted a fall in pre-tax operating income to $5.6 billion in the second quarter of 2015, compared with $5.8 billion in the same period of the prior year, driven by lower underwriting income.
In the segment, the combined ratio deteriorated 2.3 points to 98.8 in the second quarter of 2015 from the prior-year quarter. This was driven by higher catastrophe losses of $209 million in the quarter, compared with $121 million in the prior year quarter.
Peter Hancock, AIG president and chief executive officer, said: “Our second quarter results demonstrate our steadfast commitment to value-based management – we’re taking action today to create long-term value for tomorrow.
“We continued to proactively manage our capital resources through both common stock and debt repurchases. We significantly reduced our non-core investments in both AerCap and Springleaf. These actions simplify our balance sheet and improve our risk profile. Our board’s approval of an additional $5 billion share repurchase authorisation, and a 124 percent increase in the quarterly dividend to $0.28 per share, highlights our commitment to shareholder return and our positive outlook for long-term profitability.”
