AIG’s Duperreault says ‘strong’ Q2 2019 results supported by ‘foundational changes’ at insurer

Insurer AIG reported “strong” income growth in its Q2 2019 results with its CEO pointing to the company’s 2017 decision to restructure its business into three units - operating under a General Insurance business unit, a Life and Retirement unit, and a standalone technology unit.

In the second quarter of 2019 overall group net income rose to $1.1 billion from $937 million in the same period a year earlier.

For the General Insurance part of the business gross written premiums were flat year on year at $8.654 billion in Q2 2019 compared with $8.653 billion a year earlier.

Net premiums written were down 6 percent in the quarter to $6.5 billion from $6.9 billion a year before. Although the combined ratio improved to 97.8 percent from 101.3 in the same three month period in 2018.

The company said its General Insurance business “delivered a second consecutive quarter of underwriting profitability, achieving a combined ratio of 97.8 and an accident year combined ratio, as adjusted, of 96.1, driven by continued underwriting, reinsurance and expense discipline”.

AIG’s life and retirement business reported a 9 percent increase in premiums and fees to $1.3 billion from $1.2 billion in the same quarter in 2018.

Its Q2 results report highlighted that the segment “posted a 17.3 percent adjusted return on common equity (ROCE), reflecting strong private equity returns, investment gains resulting from lower interest rates and solid in force profitability”.

The results showed total consolidated net investment income of $3.7 billion in the second quarter of 2019, compared to $3.1 billion in the prior-year quarter “reflecting favorable market performance and noteworthy income within the private equity portfolio.”

Brian Duperreault, AIG’s president and chief executive, said: “Our strong second quarter performance demonstrated continued positive momentum throughout the first half of 2019. The additional progress on our path to long-term sustainable and profitable growth reflected in this quarter’s results was driven by the foundational changes we implemented across AIG last year.

“General Insurance achieved its second consecutive quarter of underwriting profitability resulting from underwriting and expense discipline, and reinsurance actions, and remains on track to deliver an underwriting profit for the full year. Life and Retirement delivered another quarter of solid in force profitability and double-digit adjusted ROCE, and Life and Retirement expects to deliver full year adjusted ROCE in the low- to mid-teens range, as we stated previously.

“Looking ahead, we remain diligently focused on executing against our strategy to reposition AIG as the leading insurance company in the world, and we continue to expect to achieve double-digit ROCE for consolidated AIG by year-end 2021.”

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