AIG CEO promises ‘sense of urgency’ after big Q3 loss

American International Group’s (AIG) chief executive Brian Duperreault said the company is working with a “sense of urgency” and “taking decisive actions across the company” as the business posted another big loss in its third quarter results.

The insurer made a net loss of $1.3 billion in the period, compared to a net loss of $1.7 billion in the prior-year quarter. It mainly blamed pre-tax catastrophe losses of $1.6 billion especially those generated by one of Japan’s worst catastrophe seasons in 25 years.

The company’s general insurance unit made an underwriting loss of $1.7 billion in the quarter, although this was a big improvement on the third quarter of 2017 when it made an underwriting loss of $3.89 billion. Its combined ratio for the third quarter of 2018 was 124.4 percent; it was 157.1 percent in the same period a year earlier.

The company stressed that catastrophe losses in Japan represented over half of the overall catastrophe losses in the quarter. “Our losses reflect the unique severity and frequency of one of Japan’s worst catastrophe seasons in 25 years and AIG’s footprint as the largest foreign-based insurer in the country,” it stated.

“Japan catastrophe losses are net of $264 million of reinsurance recoveries under our Japanese reinsurance programme. Catastrophe losses in North America accounted for just under half of the overall catastrophe losses in the quarter and were largely due to Hurricane Florence and revisions to the loss estimates on the California mudslides.”

It also said that Validus’ net catastrophe losses totaled approximately $200 million, which were mostly Japan-related. AIG estimates that it has exhausted approximately $700 million of the $750 million retention under its North America aggregate catastrophe reinsurance program following the California mudslides, Hurricane Florence and assuming the high end of the previously disclosed loss estimate range for Hurricane Michael.

There were some encouraging signs for the company. Its gross premiums written in general insurance increased by 3 percent to reach $8.6 billion. It also stressed that its life and retirement unit delivered another quarter of solid double-digit adjusted ROEs and sales growth in individual and group retirement and life insurance.

“In the third quarter we continued to execute against our strategic priorities for delivering long-term, profitable growth,” said Duperreault. “While managing a significant number of global catastrophic events, general insurance continued to make progress against key initiatives, including improving underwriting capabilities, repositioning reinsurance structures, adding world class talent and driving efficiencies.

“We remain on track to produce an underwriting profit. Life and Retirement achieved increased sales and solid double digit returns, reflecting the strength of our product expertise and distribution networks.”

Duperreault added: “Looking ahead, we continue to work with a sense of urgency and are taking decisive actions across the company to position AIG for the future.”

Get all the latest re/insurance industry news with our daily newsletter -  sign up here.

More of today's news

Ardonagh sells UK commercial MGA business to Arch for £31m

Swiss Re posts $1.1bn 9M profit after $1.6bn claims loss

Lancashire hit by another busy period for cat losses

Canopius taps new head of claims from Markel

Arch dodges cat bullet to post solid Q3 results

AXA XL partners with insurtech Slice on new cyber offering

LIIBA outlines key Brexit challenge

No ‘big bang’ disruption in insurance: Munich Re

Japan typhoons expose lack of BI cover

Lloyd’s Asia seeks innovation in mature markets

Asia needs to tackle new risks: Swiss Re

Don't miss our insurtech email newsletter - sign up today