Insurer AIG profit beats estimates on gains in life and retirement unit
AMERICAN International Group (AIG) exceeded second-quarter profit expectations on Tuesday (Aug 1), driven by growth at its life and retirement unit and lower-than-expected catastrophe losses in what was a very expensive quarter for the industry.
AIG, one of the world’s biggest commercial insurers, said net premiums written in its general insurance arm for the quarter ended June grew 10 per cent to US$7.5 billion.
Adjusted after-tax income attributable to common shareholders climbed to US$1.75 per share from US$1.39 a year ago. Analysts on average had expected US$1.59, according to Refinitiv data.
AIG’s life and retirement unit saw a 42 per cent jump in premiums and deposits, partly helped by record sales in fixed index annuities.
Total consolidated net investment income rose 37 per cent to US$3.6 billion, helped by higher income from fixed maturity securities and loan portfolios due to the higher reinvestment rates.
The New York-based company’s general insurance underwriting income fell 26 per cent, hurt by US$250 million in total catastrophe-related charges mainly related to US storms and Typhoon Mawar, which hit the Western Pacific Island of Guam in May.
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Reinsurance broker Gallagher Re preliminarily pegged global insured losses from natural hazards in the first six months of 2023 at US$52 billion, while weather and climate events alone were expected to have driven an insurance bill of US$46 billion.
Last month, peer insurer Travelers Companies reported a 98 per cent slump in quarterly profit, as severe storms in parts of the United States caused the insurer’s catastrophe losses net of reinsurance to jump to US$1.48 billion.
AIG’s general insurance accident year combined ratio was 88 per cent, compared with 88.5 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.
AIG also said it increased its share repurchase authorisation to US$7.5 billion. REUTERS
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