AIG profit beats estimates on strong underwriting gains

INSURER American International Group reported a nearly 17 per cent rise in quarterly profit on Tuesday (May 3) that topped market estimates, as strong underwriting gains and lower catastrophe losses cushioned a drop in investment income.

The company - one of the world's biggest commercial insurers - said gross premiums written in its general insurance business rose 7 per cent in the first 3 months of the year to US$11.51 billion.

The strong results come at a time when the insurance industry is facing hefty claims from the months-long war in Ukraine that has sparked wide-ranging sanctions.

AIG, whose adjusted after-tax income attributable to the company's common shareholder jumped to US$1.07 billion, said its performance was also underpinned by "focused risk selection".

Reuters had reported last month that the company was considering cutting cover for Russia and Ukraine to shield itself from the risk of steep claims.

AIG earned an adjusted profit of US$1.30 per share, compared with average analyst expectation of US$1.18 per share, according to Refinitiv IBES data.

The company also benefited from a sharp narrowing of catastrophe losses in its general insurance unit, mirroring a trend seen at sector bellwether Travellers Companies.

The insurance industry was over the past 2 years inundated with claims from businesses losing revenue due to the Covid-19 crisis, but that has eased with the reopening of the economy.

The general insurance accident year combined ratio came in at 89.5 per cent, compared with 92.4 per cent a year earlier. The metric excludes catastrophe losses and a ratio below 100 signifies that the insurer earns more from premiums than it pays out in claims.

But after several months of big investment gains, AIG reported an 11 per cent fall in consolidated net investment income as the market rout caused by the Ukraine crisis and the Federal Reserve's aggressive policy tightening hit its portfolio. REUTERS