America International Insurance, AIG’s net income dropped 57 percent to $281m in the third quarter of 2020 as the firm’s general insurance business booked $790m of catastrophe losses, net of reinsurance.
But AIG said that on an adjusted basis – stripping out fluctuating items and $458m of investment losses from the sale of Fortune Re third-quarter net income was 23 percent higher at $918m.
Third-quarter cat losses increased underwriting losses at general insurance to $497m for the period, up from £249m in Q3 2019. The business’s combined ratio was 3.5 percentage points higher at 107.2 percent
Covid losses during the quarter totalled $185m, booked to travel and contingency accounts and Validus Re. They added 3.1 points to the combined ratio.
Cat losses during the quarter included $605m of non-pandemic losses, in particular for US windstorm and wildfires.
Third-quarter adjusted pre-tax income for general insurance fell 18 percent to $416m, while life business surged 51 percent to $975m.
General insurance gross premiums were 4 percent lower at $8.25bn, while net premiums were down 11 percent to $5.9bn.
AIG’s international general insurance business booked an underwriting loss of $89m in Q3, an increase of 39 percent. It added just $17m to group adjusted net income in the quarter. International general insurance net premiums closed the quarter 3 percent lower at $3.16bn.
AIG’s North American general insurance business saw underwriting losses widen 81 percentto $334m for Q3.
For the nine months to 30 September, AIG swung to a net loss of $5.9bn from a profit of $2.4bn in 2019. After adjustments it recorded a profit of $1.9bn, from $4.3bn a year earlier.
AIG also said it plans to spin off its life and retirement unit through an IPO or staggered private sale, initially focusing on just under 20% of the business.
The firm doesn’t think the split with general insurance will require any additional capital for either unit, but the insurer will restructure debt.