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Surge In General Insurance And Retirement Business Helps AIG Beat Quarterly Profit Estimates

Surge In General Insurance And Retirement Business Helps AIG Beat Quarterly Profit Estimates
Better than expected profits for the first quarter was reported by American International Group Inc despite a hit to its business from winter storms and the mortality claims because of the Covid-19 pandemic as there was strong performance of the general insurance and life and retirement business units of the company which managed to offset the hit on other units,.
During the quarter, an underwriting income of $73 million in its general insurance business was reported by the company compared to a loss of $87 million for the same period a year ago when the company had booked large losses related to the pandemic.
An amount of $422 million for catastrophe losses in the unit had been set aside by the company primarily anticipating those related to winter storms, said AIG, one of the largest insurers of the United States. The company however forecast no estimated losses because of the Covid-19 pandemic.
A steep rise in payouts related to the health crisis was faced by global insurers last year at a time when there was unravelling of the investments they rely on to pay claims.
But currently the scenario has changed as there has been a recovery in investments and many of the insurers have also witnessed a drop in the number of claimed related to the pandemic because of rollouts of vaccines globally and with many economies opening up again.
For the quarter ended March 31, the company reported a rise in its adjusted after-tax income attributable to AIG common shareholders to $923 million compared to $105 million for the same quarter a year ago.
A profit of $1.05 per share, excluding items, was reported by AIG, which comfortably beat estimates of 97 cents, according to Refinitiv IBES.
The general insurance accident year combined ratio – a figure that excludes catastrophe losses – of the company was reported at 92.4 for the quarter compared to 95.5 for the same quarter a year ago.
A ratio below 100 means the insurer earns more in premiums than it pays out in claims.
There was also a 6 per cent rise in the company’s gross premiums written for the general insurance business of AIG primarily because of the North America and international commercial lines of the company.
The company also reported a 57 per cent spike in adjusted pre-tax income in its life and retirement unit which came in at $941 million which was partly because of higher returns from its investments in private equity.
The company however reported an adjusted pre-tax loss of $40 million which highlighted an increase in the number of people dying because of the Covid-19 pandemic.

Christopher J. Mitchell

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