Insurer American International Group Inc (AIG.N) on Tuesday reported a more than 39% decline in quarterly profit as investment income fell by more than $1 billion and losses from Hurricane Ian pushed up catastrophe bills.
Industry experts expect the losses from the storm that lashed areas in Florida and South Carolina in September, which risk modeling firm Verisk estimated to go up to $57 billion for insurers, would plunge smaller insurers into bankruptcy.
AIG – one of the world’s biggest commercial insurers – reported $600 million of catastrophe losses in the quarter, out of which about $450 million was attributable to Hurricane Ian, the insurer said.
Adjusted after-tax income attributable to the company’s common shareholders fell to $509 million in the third quarter ended Sept. 30, or 66 cents per share, from $837 million, or 97 cents, a year earlier.
Total consolidated net investment income fell 28% to $2.7 billion, hurt mainly by lower alternative investment income.
Chairman and Chief Executive Officer Peter Zaffino said the results were “more impressive when viewed against the backdrop of a challenging macro-economic environment and one of the largest insured-loss hurricanes in U.S. history.”
AIG’s net premiums written in its general insurance business rose 3% on a constant currency basis, while underwriting income climbed to $168 million from $20 million a year earlier.
The general insurance accident year combined ratio came in at 88.4%, compared with 90.5% a year earlier. The metric excludes catastrophe losses, and a ratio below 100 signifies that the insurer earns more from premiums than it pays out in claims.
The results also come after AIG’s life insurance and retirement division, Corebridge Financial (CRBG.N), raised $1.68 billion in September in the biggest initial public offering so far this year.