AIG Overcomes Catastrophe-Heavy Quarter With Strong Underwriting

(Bloomberg) -- American International Group Inc. powered through a catastrophe-heavy quarter on the strength of underwriting and reinsurance practices, delivering its sixth-consecutive earnings beat as Chief Executive Officer Peter Zaffino overhauls the sprawling insurer.

• Third-quarter adjusted profit was 97 cents a share, the New York-based insurer said Thursday. That exceeded both the average estimate of 89 cents from 14 analysts in a Bloomberg survey and the 81 cents reported for the same period last year.
• “We continue to build momentum and execute on our strategic priorities as evidenced by another quarter of outstanding financial results,” Zaffino said in a statement.

Key Insights

• AIG improved a key metric: underwriting in North America and internationally. Its combined ratio improved by 7.5 points from a year earlier to 99.7%. That means the firm spent 99.7 cents on claims and expenses for every premium dollar received.
• Net premiums written increased 11% from a year earlier to $6.6 billion.
• The life and retirement business reported a 13% decrease in adjusted pretax income, driven in part by mortality and higher operating expenses.
• Natural disasters including Hurricane Ida and flooding throughout Europe contributed to $628 million in catastrophe losses.
• The insurer said the planned initial public offering for its life and retirement business was on track for the beginning of next year, with market conditions and regulatory approvals set to determine whether it will take place in the first or second quarter.
  • Zaffino told analysts on an earnings call that the company would hold a greater than 50% ownership stake in the business immediately after its trading debut.

Market Reaction

• As of 9:49 a.m. in New York, shares were up 2% to $61.62. The company is up about 63% for the year.

Get More

• For AIG’s press release, click here.

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