AIG records $5.973bn net loss in 2020

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American International Group (AIG) reported a net loss of 5.973 billion USD as at the end of December 2020 compared to a net profit of 3.326 billion USD in 2019.

The American insurer’s results are strongly impacted by the coronavirus and natural disasters’ losses.

On 31 December 2019, the gross written premiums reached 33.946 billion USD compared to 34.738 billion, thus degrading by 2.2 percent

The combined ratio was set at 104.3 percent compared to 99.6 percent by late 2019.

AIG net income attributable to AIG common shareholders of $1.7 billion, or $1.98 per diluted common share, for the first quarter of 2020, compared to $654 million, or $0.75 per diluted common share, in the prior year quarter. The improvement was primarily due to $3.5 billion of pre-tax net realized capital gains largely related to mark-to-market gains from variable annuity and interest rate hedges and the impact of our non-economic non-performance risk adjustment, per GAAP, on the fair value of our liabilities compared to $446 million of pre-tax net realized capital losses in the prior year quarter.

Adjusted after-tax income attributable to AIG common shareholders was $99 million, or $0.1 1 per diluted common share, for the first quarter of 2020, compared to $1.4 billion, or $1.58 per diluted common share, in the prior year quarter. The decrease was primarily due to lower net investment income driven by declines in equity markets and losses on FVO bonds from widening spreads in credit markets, and the impact of COVID-19.

Brian Duperreault, AIG’s Chief Executive Officer, said: “In the face of COVID-19, an unprecedented global catastrophe, our colleagues have shown great resilience and remain focused on what we do best, which is helping our clients manage risk, especially in difficult times.

“It has been heartbreaking to watch this humanitarian crisis unfold over the last few months. At the same time, the courage, compassion and empathy that have emerged, particularly from first responders, health care providers and others on the front lines, has been heartwarming. AIG is committed to assisting with relief efforts across the globe and will be making an inaugural $5 million contribution to our recently reinstated AIG Foundation for this purpose.

“AIG was in a strong financial position before this crisis began and remains in a strong financial position today. While we believe COVID-19 will be the single largest CAT loss the industry has ever seen, the significant body of work our team has undertaken since late 2017 has served us well as we navigate through this evolving situation. AIG is well-positioned to emerge as a global insurer of choice with significant financial flexibility.

“In the first quarter of 2020, our core businesses delivered strong results building on the momentum we had coming into the year. In General Insurance, the adjusted accident year combined ratio continued to improve, and Life and Retirement delivered solid results despite unfavorable capital markets and continued low interest rates.

“The COVID-19 crisis has created significant uncertainty, and it will take time to understand its broader ramifications. In light of this, AIG is withdrawing previously issued guidance, including that relating to Adjusted Return on Common Equity. However, we do expect to see continued improvement in General Insurance, particularly in the adjusted combined ratio, and, in Life and Retirement, we do not believe that the impact of COVID-19 will result in a material reduction of our long-term return profile.

“While the new normal COVID-19 will create for each of us is still unknown, I am confident that AIG will continue to move forward on its journey to become a top performing company and leading insurance franchise.”

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