It has been a busy day for results reporting from insurance companies. The latest insurance giant to reveal its fourth quarter and full year 2019 results is American International Group (AIG). For the fourth quarter (Q4) of 2019, AIG reported net income of US$922 million, compared to a net loss of US$622 million in the prior-year quarter.
The global insurer announced full year net income of US$3.3 billion – a dramatic improvement from a net loss of US$6 million the year prior. The improvement was cited as being primarily due to a reduction in net catastrophe losses of US$1.7 billion (pre-tax) compared to the prior year; the favorable impact of general insurance underwriting and reinsurance actions; and an increase in net investment income of US$2.1 billion (pre-tax).
General insurance posted a combined ratio of 99.8% and an accident year combined ratio of 95.8%, compared to 115.0% and 98.8% respectively, in the prior-year quarter. This reduced combined ratio is credited as being driven by lower catastrophe losses, continued underwriting and reinsurance actions, and expense discipline.
For full year 2019, general insurance posted a combined ratio of 99.6% and an accident year combined ratio of 96.0%, compared to 111.4 and 99.7 respectively, in the prior year. Meanwhile, AIG’s reported life and retirement adjusted pre-tax income of US$3,458 million for full-year 2019 favourably compared to US$3,190 million for 2018.
Commenting on these results, CEO of AIG, Brian Duperreault said: “Our financial results for the fourth quarter and for full year 2019 reflect the significant progress we made over the course of 2019 to position AIG for long-term, sustainable and profitable growth. For the full year 2019, after tax income attributable to common shareholders was US$4.1 billion and adjusted ROCE was 8.3%.”
He noted that the improvement in AIG’s financial performance over the course of last year was broad-based, with contributions from all of its segments, but that most notable was the return to underwriting profitability in general insurance.
“As we look to 2020, we will continue to be laser focused on executing on our strategy to position AIG as both a leading insurance franchise and a top-performing company and we remain committed to achieving a 10% adjusted ROCE by the end of 2021,” he said.
“In addition to continued work as part of the turnaround of General Insurance, AIG 200 will be a top priority. AIG 200 is our multi-year, enterprise-wide transformation program focused on the long-term strategic positioning of AIG and designed to achieve operational excellence,” Duperreault continued.
He said he remains confident that AIG on the right path and that he is proud of what his colleagues have accomplished since he joined the company in 2019, and stated: “We entered 2020 with great momentum and excitement about what the future holds for AIG.”