AIG quarterly profit nosedives on catastrophe claims

(Reuters) - American International Group Inc AIG.N reported a slump in third-quarter profit on Thursday, hurt by losses related to storms, wildfires and the COVID-19 pandemic.

FILE PHOTO: The AIG logo is seen at its building in New York's financial district March 19, 2015. REUTERS/Brendan McDermid

AIG, one of the largest U.S. insurers, posted an underwriting loss of $423 million in its general insurance business for the third quarter, compared with a loss of $249 million a year earlier.

The unit reported $790 million in catastrophe losses, before tax, including coronavirus-related losses of $185 million, following windstorms and tropical storms in the Americas and Japan, as well as wildfires in the U.S. West Coast.

Global insurers are battling a sharp rise in natural catastrophe payouts at a time of coronavirus-induced losses. The investments insurer’s rely on to pay claims have also come under pressure.

Net income attributable to AIG common shareholders fell to $281 million, or 32 cents per share, in the third quarter ended Sept. 30, from $648 million, or 72 cents per share, a year earlier.

On an adjusted basis, the company earned 81 cents per share, beating FactSet estimates of 54 cents per share.

The company’s adjusted general insurance accident year combined ratio, was 93.3, compared with 95.9 a year earlier.

AIG has been using the metric to gauge the success of a turnaround plan launched by Chief Executive Officer Brian Duperreault upon taking the insurer’s helm in 2017.

The company’s general insurance combined ratio was 107.2. A ratio below 100 means the insurer earns more in premiums than it pays out in claims.

AIG last month said its board had approved a plan to separate the life and retirement business from the rest of the company, and named President Peter Zaffino as CEO, effective next year. [nL4N2HH3X0]

Reporting by Noor Zainab Hussain in Bengaluru and Suzanne Barlyn in Washington Crossing, Pennsylvania; Editing by Shounak Dasgupta