Record cat losses and US tax sting AIG
AIG slumped to a deeper net loss in the fourth quarter, as record catastrophe losses and a one-off charge arising from US tax reforms hit earnings.
The giant group’s net loss more than doubled to $US6.66 billion ($8.56 billion) compared with the corresponding period in 2016. For the full year, losses worsened sharply to $US6.08 billion ($7.82 billion) from $US849 million ($1.09 billion).
A one-off $US6.7 billion ($8.6 billion) charge related to tax reforms was made in the quarter, mirroring a move many major US companies have made to reflect accounting adjustments.
“Our fourth-quarter and full-year results were significantly impacted by catastrophe losses,” CEO Brian Duperreault said.
The global insurer sustained a record $US4.2 billion ($5.4 billion) of catastrophe losses last year, including $US762 million ($980 million) in the fourth quarter, due largely to Californian wildfires, which cost it about $US572 million ($736 million).
AIG’s general insurance business recorded a 10% decline in fourth-quarter net written premium to $US5.9 billion ($7.6 billion) and the combined operating ratio improved by 69.2 percentage points to 113.3%.
The North American division’s general insurance business suffered a 14% drop in net written premium to $US2.58 billion ($3.32 billion) in the fourth quarter. For the international arm, net written premium dropped 6% to $US3.31 billion ($4.24 billion).