Chartis, the non-life division of American International Group (AIG) saw its first-half profit plunge 82.5% as catastrophe losses hit.
Chartis made a first-half 2011 pre-tax profit of $412m, down from $2.4bn in the first half of 2010. The bulk of the reduction was caused by Chartis international, which made a pre-tax loss of $444m (H1 2010: profit of $1.1bn).
Chartis US’s first-half pre-tax profit dropped 32% to $856m (H1 2010: $1.3bn).
The slump came despite an 11% increase in first-half revenues to $20.1bn (H1 2010: $18.1bn).
In the second quarter alone Chartis's pre-tax profit dropped 18.2% to $828m (Q2 2010: $1bn).
Chartis took charges totalling $1.3bn relating to the 11 March Japan earthquake, comprising $1.298bn of claims and claims adjustment expenses and $39m of reinsurance reinstatement premiums.
In addition, on June 17, Chartis paid Berkshire Hathaway subsidiary National Indemnity $1.67bn for assuming $1.82bn of Chartis US’s net asbestos liabilities. Chartis recorded a deferred gain of $150m in the
second quarter of 2011as a result of the transaction.
The AIG group as a whole made a net profit of $2.1bn for the first half of 2011, compared with a loss of $973m in the first half of last year. In the second quarter alone the company made a profit of £1.8bn compared with a $2.7bn loss.