AIG bounces back to profit on improvements in general insurance in 2019

American International Group (AIG) returned to profit in the fourth quarter of 2019, helped by improvements in general insurance business, reduction in cat losses and favourable net prior year loss reserve development.

For the fourth quarter of 2019, AIG posted a net income of $922 million, a big improvement on the net loss of $622 million it reported in the prior-year quarter.

For the full year, net income attributable to AIG common shareholders was $3.3 billion, compared with a net loss of $6 million in the prior year.

The insurer said the improvement was primarily due to the favourable impact of general insurance underwriting and reinsurance actions, and a reduction in net catastrophe losses. An increase in net investment income and a favourable net prior year loss reserve development also contributed to the positive results.

The company reported gross written premiums (GWP) for its general insurance business in Q4 2019 of $7.3 billion, a 5 percent decrease on the $7.6 billion it wrote in the same period in 2018. The combined ratio for the quarter was 99.8 percent.

Brian Duperreault, AIG’s chief executive officer, said: “Our financial results for the fourth quarter and for full year 2019 reflect the significant progress we made over the course of 2019 to position AIG for long-term, sustainable and profitable growth.

"The improvement in our financial performance over the course of last year was broad-based, with contributions from all of our segments, but most notable was the return to underwriting profitability in General Insurance. The full year combined ratio was 99.6% and the accident year combined ratio, as adjusted, was 96.0%. Life & Retirement also delivered solid results in the face of continued headwinds from low interest rates and tightening credit spreads. Finally, we were pleased to announce that we reached an agreement to sell a majority stake in Fortitude Re, our legacy insurance business, which is scheduled to close mid-year, subject to regulatory approvals.

Duperreault added: “As we look to 2020, we will continue to be laser focused on executing on our strategy to position AIG as both a leading insurance franchise and a top-performing company and we remain committed to achieving a 10% Adjusted ROCE by the end of 2021.

"In addition to continued work as part of the turnaround of General Insurance, AIG 200 will be a top priority. AIG 200 is our multi-year, enterprise-wide transformation program focused on the long-term strategic positioning of AIG and designed to achieve operational excellence. I remain confident we are on the right path at AIG and am very proud of what our colleagues accomplished since I joined the company in 2017. We entered 2020 with great momentum and excitement about what the future holds for AIG.”

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