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AIG falls to $60mn Q4 loss

17th February 2021 - Author: Luke Gallin

Global insurer and reinsurer AIG has reported a net loss of $60 million for the fourth-quarter of 2020 despite a 4% rise in General Insurance (GI) adjusted pre-tax income to $809 million for the period.

AIG LogoThe Q4 net loss compares with net income of $922 million for the same period in 2019. Within the firm’s GI unit, higher net investment income ($980mn) was offset by elevated catastrophe losses of $545 million, which included $178 million of losses related to the COVID-19 pandemic.

Non-COVID catastrophes in the quarter totalled $367 million and primarily related to Hurricanes Sally, Zeta, Laura and Delta.

As a result of the catastrophe experience during the period, AIG’s GI segment has reported an underwriting loss of $171 million compared with a gain of $12 million in the prior year quarter.

Alongside the cats and COVID-19, the underwriting loss also included unfavourable prior year development of $45 million, and included $52 million of favourable amortization from the ADC compared to favourable prior year development of $153 million in the prior year quarter.

All in all, the GI segment has reported a combined ratio of 102.8% for the fourth-quarter of 2020, compared with 99.8% for the same period in 2019.

Within GI, net premiums written fell by 5% to $5.6 billion in Q4 2020, driven mostly by a 55% decrease in North America Personal Insurance as a result of cessions pursuant to a series of quota share reinsurance agreements placed in the second quarter of 2020 related to AIG’s Private Client Group as well as the adverse impact of COVID-19 on the Travel business.

AIG’s Life & Retirement operations reported a 20% rise in adjusted pre-tax income to more than $1 billion for the fourth-quarter, driven by strong net investment income and improvements in most segments of the business.

Brian Duperreault, AIG’s Chief Executive Officer (CEO), commented: “AIG’s fourth quarter and full year 2020 operating results demonstrate the continued progress we are making to position AIG for long-term, sustainable and profitable growth. We are effectively managing the impacts of COVID-19 and natural catastrophes and remain well capitalized in this environment of unprecedented uncertainty.

“The General Insurance business continues to improve, with a 1.9 point improvement in the accident year combined ratio, as adjusted, compared to 2019 and 5.6 point improvement in the accident year combined ratio, as adjusted, compared to 2018. Life and Retirement delivered strong returns and remains well positioned to meet the ever-growing needs for protection, retirement savings and lifetime income solutions.”

For the full-year 2020, AIG has reported a net loss of $6 billion, compared with net income of $3.3 billion in 2019. The loss was mostly driven by a $6.7 billion after-tax loss from the sale and deconsolidation of Fortitude Group Holdings in the second-quarter.

Within GI, adjusted pre-tax income also fell for the full-year 2020 as a result of higher catastrophe losses, including $1.1 billion of COVID-19 related losses.

“As I transition into my role as Executive Chairman, I want to thank our global colleagues who have shown unyielding resilience, dedication and perseverance in their efforts to serve our clients, distribution partners, communities and other stakeholders – even as their own lives and work situations have been severely disrupted by the COVID-19 crisis. This strength of human spirit is at the core of AIG and visible in all that we do. I look forward to supporting Peter Zaffino as he becomes the next Chief Executive Officer of AIG and, along with our world-class team, continues AIG’s journey to become a top performing company and leading insurance franchise,” said Duperreault.

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