Global insurer AIG has posted a Q2 net income of $1.1 billion, up from $937 million in the prior year quarter, driven by “expense discipline, and reinsurance actions” within its general insurance segment, according to President and Chief Executive Officer, Brian Duperreault.
With a combined ratio (CR) of 97.8%, general insurance delivered a second consecutive quarter of underwriting profitability and “remains on track to deliver an underwriting profit for the full year,” Duperreault said.
“Our strong second quarter performance demonstrated continued positive momentum throughout the first half of 2019,” he added.
“The additional progress on our path to long-term sustainable and profitable growth reflected in this quarter’s results was driven by the foundational changes we implemented across AIG last year.”
The accident year CR, as adjusted, was 96.1%, comprised of a 61.3% accident year loss ratio, as adjusted, down 410 basis points from the prior-year quarter, and an expense ratio of 34.8%, down 80 basis points from the prior-year quarter.
AIG said the decrease in accident year loss ratio reflected the change in business mix including the acquisitions of Validus and Glatfelter, improved new business and renewal terms and reduced volatility due to the increased use of reinsurance.
Net premiums written by the North America region of the general insurance unit increased by 2.2% to $3.3 billion, largely due to the inclusion of the Validus and Glatfelter acquisitions, partially offset by underwriting actions to strengthen the portfolio while maintaining pricing discipline, and higher ceded premiums due to changes in 2019 reinsurance programs.
A pre-tax underwriting loss of $5 million includes $170 million of catastrophe losses, net of reinsurance, of which $137 million.
The international segment of the general insurance unit reported an adjusted pre-tax income of $262 million, compared to $161 million in the prior-year quarter.
Pre-tax underwriting income of $152 million included $4 million of catastrophe losses, net of reinsurance, and net favourable prior year loss reserve development of $5 million.
In Life and Retirement, a Q2 adjusted pre-tax income of $1 billion reflected strong private equity returns including income of $138 million from an initial public offering of a holding in the private equity portfolio and favorable market performance impacts.
“Life and Retirement delivered another quarter of solid in force profitability and double-digit adjusted ROCE, and Life and Retirement expects to deliver full year adjusted ROCE in the low- to mid-teens range, as we stated previously,” Duperreault said.
“Looking ahead, we remain diligently focused on executing against our strategy to reposition AIG as the leading insurance company in the world, and we continue to expect to achieve double-digit ROCE for consolidated AIG by year-end 2021.”
