Insurance giant AIG has posted a Q3 net income of $648 million, up significantly from the $1.3 billion loss reported in the prior year quarter.
This improvement is partly driven by a $929 million pre-tax net realised gain compared to a $511 million loss in the prior-year quarter, as well as a $1.1 billion reduction in pre-tax net catastrophe losses.
Adjusted after-tax income for the quarter was $505 million, compared to $301 million in the prior-year quarter.
Meanwhile, AIG’s net favourable prior year loss reserve development, net of reinsurance, stands at $4 million, compared to net unfavourable prior year loss reserve development of $170 million in the prior-year quarter.
General insurance posted a combined ratio of 103.7% and an adjusted accident year combined ratio of 95.9% (compared to 124.4% and 99.4% respectively in the previous year quarter), driven by lower catastrophe losses, continued underwriting actions, as well as reinsurance and expense discipline.
General insurance’s adjusted pre-tax income was $507 million and comprised of net investment income of $756 million and an underwriting loss of $249 million.
This underwriting loss was driven by net pre-tax cat losses of $497 million, including $254 million for Typhoon Faxai and $135 million for Hurricane Dorian, resulting in the CR of 103.7% inclusive of 7.5% of cat losses net of reinstatement premiums.
For general insurance North America, net premiums written increased by 8% to $3.4 billion, largely due to the acquisition of Glatfelter and growth within the Validus business, partially offset by the continued impact of pricing and underwriting actions, and higher ceded premiums due to changes in 2019 reinsurance programs.
The North America combined ratio of 105.7% included 7.1% of catastrophe losses net of reinstatement premiums and (0.5) points of net favourable prior year loss reserve development.
Internationally, general insurance posted a combined ratio of 101.8% for the quarter, down from 119.6% in the prior-year quarter due to lower catastrophe losses.
Net premiums written decreased 12% on a reported basis due to the continued impact of pricing and underwriting actions, change in reinsurance and the impact of foreign exchange.
For life and retirement, third quarter adjusted pre-tax income stands at $646 million and includes the impact of the annual actuarial assumption update.
Within AIG’s other operations, third quarter adjusted pre-tax loss hit $500 million, an increase from $388 million in the prior-year quarter.
Legacy results third quarter adjusted pre-tax income hit $93 million, an increase of 11% primarily driven by lower cat losses in legacy general insurance of $14 million compared to $57 million in the prior-year quarter.
“Our results this quarter reflect the significant, ongoing work across the company to lay a foundation for long-term, sustainable and profitable growth,” said Brian Duperreault, AIG’s president and Chief Executive Officer.
“Results are in line with our expectations, particularly in General Insurance, which demonstrated a significant improvement over the prior-year quarter driven by our focus on underwriting excellence, expense discipline and enhanced reinsurance strategy.
“Life and Retirement continued to produce solid results despite ongoing headwinds from the sustained low interest rate environment. This business remains on track to deliver double-digit returns for the full year.”
“As we approach 2020, we remain confident we will deliver underwriting profitability for the full year 2019 and deliver double-digit ROCE by the end of 2021. We still have much work ahead of us, but we are well on our way to positioning AIG as a leading global insurance company,” Duperreault added.
