Global insurer AIG saw its first-quarter 2019 net income decline to $654 million year-on-year, despite an improved performance in its general insurance unit driven by enhanced underwriting fundamentals, expense discipline, and reinsurance actions.
Net income fell to $654 million from $938 million a year earlier, while AIG’s return on common equity reached 4.5%, compared with 5.9% a year earlier.
For AIG, its general insurance segment performed well in the period, recording an underwriting profit of $179 million, compared with an underwriting loss of $251 million in Q1 2018.
Gross premiums increased to $10.1 billion and net premiums declined slightly to $6.03 billion. The segment reported a lower expense ratio of 34.3% and an improved combined ratio of 97.4%, compared with 36.6% and 103.8% in Q1 2018, respectively.
The North America region of the general insurance unit experienced catastrophe losses of $158 million, net of reinsurance, which contributed to an underwriting loss of $11 million, pre-tax.
The international segment of the general insurance unit reported adjusted pre-tax income of $334 million, compared with $190 million in Q1 2018. Catastrophe losses in the region totalled $17 million, net of reinsurance, contributing to underwriting income of $190 million, pre-tax.
“Our first quarter results represented strong performance, particularly in General Insurance, reflecting significant foundational work throughout 2018 to position AIG for sustainable, profitable growth. General Insurance achieved an underwriting profit driven by underwriting and expense discipline, improved business mix and reinsurance actions.
“We achieved an underwriting profit on a calendar year and accident year basis in the first quarter and we expect that to continue for the full year. Life and Retirement delivered solid performance, benefiting from diversification of product and distribution channels. We expect Life and Retirement to continue to deliver a low- to-mid teens adjusted ROCE, and we expect to reach a double-digit adjusted ROCE for consolidated AIG within three years,” said AIG’s President and Chief Executive Officer (CEO), Brian Duperreault.
Total consolidated net investment income increased year-on-year to $3.9 billion, which AIG said reflects favourable market performance.
Discussing its life and retirement earnings in the first-quarter of 2019, AIG said that pre-tax income of $924 million reflected the favorable impact of equity market performance and tightening credit spreads.
