AIG bounces back from an underwriting loss of $251m for the same quarter last year to make a profit
AIG reported an underwriting profit in its general insurance division for the first quarter of 2019.
The group made an underwriting loss of $251m for the first quarter of 2018, but this year showed a huge improvement, as it made a $179m profit.
This reflected an improved combined operating ratio of 97.4%, compared to 103.8% last year.
The results saw shares in AIG jump 6.8%, and AIG president and chief executive Brian Duperreault said on the basis of the strong showing he expected an underwriting profit to be achieved for the full year.
“Our first quarter results represented strong performance, particularly in general insurance, reflecting significant foundational work throughout 2018 to position AIG for sustainable, profitable growth,” he said.
“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.”
The stronger performance was shown in both its North America and International business.
It’s international business, which includes AIG UK and AIG Europe, made a $68m profit in commercial lines, compared to a $14m loss for 2018 Q1. The combined operating ratio improved from 100.9% to 96%.
International personal lines also improved. Profits were up 34% from $91m to $122m. This equated to a combined operating ratio of 93.5%, compared to 96%.
The improved result did come at the expense of revenues though, with net written premiums for the international division down 16% from $4.13bn to $3.46bn.
Commercial revenues dipped 9% from $1.96bn to $1.78bn, while personal revenues fell 23% from $2.18bn to $1.68bn.
However, commenting on the results AIG said the fall was due to the Japan merger impact of $300m in the prior year quarter, higher ceded premiums due to changes in the 2019 reinsurance program and lower accident and health business in Asia Pacific.
The results come it was revealed AIG Europe made a £59.5m profit for the 12 months ending 30 November. It had made a £431.5m loss for 2017.
The division, which was split on 1 December to form AIG UK in preparation for Brexit, still posted an underwriting loss of £131.3m for the period, but this was a marked improvement on the £569.9m loss it made in 2017.
The combined operating ratio improved from 114.6% to 103.4%, but revenues were down from £3.92bn to £3.79bn.
Chief executive of AIG UK Anthony Baldwin said good progress is being made to ensure it grows profitable lines.
Baldwin said: “I’m proud of the work the team has done to stand up AIG UK as a separate business which has ensured our readiness for Brexit.
“During 2018 we made good progress in reducing our expenses, growing our profitable lines of business and remediating those areas that are less profitable. Thanks to these efforts we enter 2019 with a clear ambition and renewed focus.”
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