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AIG Q3 results miss estimates on catastrophe costs; net loss narrows

American International Group (AIG) Wednesday reported a net loss for the September quarter, contrary to expectations for positive earnings, hurt by claims from policyholders who suffered losses in typhoons in Asia and the US. Following the announcement, the company’s stock declined in the after-hours.

AIG third quarter 2018 earnings infographic
American International Group Q3 2018 Earnings Infographic

On an adjusted basis, the New York-based insurer reported a net loss of $0.30 billion or $0.34 per share for the September quarter, which marked an improvement from the $1.1 billion or $1.22 per share loss recorded a year earlier. Analysts had forecast positive earnings for the most recent quarter. The reported net loss narrowed to $1.41 per share from $1.91 per share last year.

During the quarter, the company recorded $1.6 billion in costs related to multiple catastrophes across markets, including Hurricane Florence and the California mudslides in the US and natural disasters in Japan. The general insurance loss ratio of 88.6  – down 35.5 points year-on-year – included 22 points from the catastrophe losses alone.

AIG recorded $1.6 billion in costs related to catastrophes, including Hurricane Florence and the California mudslides in the US and natural disasters in Japan

During the quarter, total premium and deposits remained broadly unchanged at $6.8 billion. AIG’s book value per share plunged to $66.23 from $80.62 in the third quarter of 2017. In all the business segments, underwriting loss narrowed compared to last year.

“Life and Retirement achieved increased sales and solid double-digit returns, reflecting the strength of our product expertise and distribution networks. Looking ahead, we continue to work with a sense of urgency and are taking decisive actions across the company to position AIG for the future,” said CEO Brian Duperreault.

AIG is yet to recover from the massive value erosion it suffered more than a decade ago. The stock dropped about 30% over the past twelve months to hit a multi-year low this week.  It closed Wednesday’s regular session higher but dropped during the extended session following the earnings report.

 

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