AIG exceeds expectations with premium growth and investment returns

Reuters, November 3 - Insurance giant American International Group (AIG) AIG.N reported third-quarter earnings on Tuesday that far exceeded analysts’ expectations, as increased investment income and premium growth helped offset a surge in catastrophe losses.

Insurance demand remained steady as households and businesses continued to prioritize protection against financial losses caused by accidents, natural disasters, and other unforeseen events.

Chief Executive Officer Eric Andersen stated that, although the market environment had become more challenging, underwriting remained strong, adding that the company was still on track to meet the financial targets proposed at Investor Day, which are based on overall premium growth.

This New York-based insurer saw net general insurance underwriting premium income grow by 7% in the third quarter to $6.65 billion, mainly thanks to broad-based gains in its commercial and personal insurance lines.

https://www.reuters.com/graphics/AIG-RESULTS/gkvleyrwbpb/chart.png

However, general insurance underwriting income dropped 29% to $564 million.

Total catastrophe-related costs for the quarter were $283 million, compared with $100 million in the same period a year earlier, mainly due to severe convective storms in North America that brought heavy rain, hail, and strong winds.

Catastrophe losses pushed up claims payouts and hurt the profits of property and casualty insurers, including AIG, as claims triggered by natural disasters can significantly impact underwriting performance, making unpredictable weather-related losses an ongoing risk for the sector.

The quarterly general insurance combined ratio—a metric for underwriting performance—stood at 91.3%, compared with 86.8% in the prior year, reflecting increased catastrophe losses and a reduction in favorable claims development from last year.

A combined ratio below 100% means an insurance company’s premium income exceeds its claims expenditures.

According to estimates compiled by London Stock Exchange Group (LSEG), AIG’s adjusted after-tax diluted earnings per share for the three months ending September 30 were $2.06, exceeding Wall Street’s forecast of $1.89.

Boosted by changes in the value of AIG’s investments and higher returns on fixed-maturity securities, net investment income surged 42.5% to $1.1 billion.

(To assist non-English speakers, Reuters provides automated translations of its reports into several other languages. As automated translations may be inaccurate or lack necessary context, Reuters does not guarantee the accuracy of the automated translation and provides it for reader convenience only. Reuters accepts no responsibility for any damage or loss caused by use of the automated translation.)