AIG overcomes catastrophe-heavy quarter with strong underwriting

[NEW YORK] American International Group powered through a catastrophe-heavy quarter on the strength of underwriting and reinsurance practices, delivering its sixth-consecutive earnings beat as chief executive officer Peter Zaffino overhauls the sprawling insurer.

Third-quarter adjusted profit was US$0.97 a share, the New York-based insurer said Thursday. That exceeded both the average estimate of US$0.89 from 14 analysts in a Bloomberg survey and the US$0.81 reported for the same period last year.

"We continue to build momentum and execute on our strategic priorities as evidenced by another quarter of outstanding financial results," Zaffino said in a statement.

AIG improved a key metric: underwriting in North America and internationally. Its combined ratio improved by 7.5 points from a year earlier to 99.7 per cent. That means the firm spent US$0.997 cents on claims and expenses for every premium dollar received.

Net premiums written increased 11 per cent from a year earlier to US$6.6 billion.

The life and retirement business reported a 13 per cent decrease in adjusted pretax income, driven in part by mortality and higher operating expenses.

Natural disasters including Hurricane Ida and flooding throughout Europe contributed to US$628 million in catastrophe losses.

The insurer said the planned initial public offering for its life and retirement business was on track for the beginning of next year, with market conditions and regulatory approvals set to determine whether it will take place in the first or second quarter.

Zaffino told analysts on an earnings call that the company would hold a greater than 50 per cent ownership stake in the business immediately after its trading debut.

BLOOMBERG