AIG Cites Strategy Success as It Posts First-Quarter Profit
May 4, 2017 by David Pilla
NEW YORK – American International Group Inc. posted first-quarter net income of $1.19 billion, compared with a net loss of $183 million a year ago on what the group’s chief executive officer said is continued success in its strategic turnaround effort.
“Our first-quarter results highlight the success of the actions we have taken to execute on our strategy, strengthen our balance sheet, and improve earnings quality,” said Peter D. Hancock, AIG’s president and CEO, in a statement. “Operating results across our core commercial and consumer businesses improved and we continued to return excess capital to shareholders.”
The commercial insurance combined ratio rose to 102.2 from 97.7. The personal insurance combined ratio rose to 96.6 from 94.6.
Commercial insurance highlights, pretax operating income included $35 million of favorable prior-year reserve development, net of reinsurance and premium adjustments, in property and special risks and $81 million of adverse prior-year reserve development, net of reinsurance and premium adjustments in liability and financial lines. The liability and financial lines adverse development primarily reflected a $102 million addition related to the Ogden U.K. discount rate adjustment, which was partially offset by $41 million of benefit attributable to the partial quarterly amortization of the deferred gain from the adverse development reinsurance agreement with National Indemnity Co.
AIG had recently announced two items it said will impact first-quarter results — a $100 million estimated negative impact related to the U.K. Ogden rate change for bodily injury and a $40 million pretax amortization gain related to AIG’s $9.8 billion adverse development cover agreement with a Berkshire Hathaway Inc. reinsurer (Best’s News Service, April 20, 2017).
Underwriting entities of American International Group Inc. have current Best’s Financial Strength Ratings of A (Excellent).
Shares of American International Group Inc. (NYSE: AIG) closed at $61.54 on May 3, up 0.02% from the previous close.
(By David Pilla, news editor, BestWeek: David.Pilla@ambest.com)
