AIG Australia’s profits up while US parent falters
AIG Australia CEO Chris Townsend has reassured brokers that while US parent AIG has reported large third-quarter losses, the local operation remains profitable.
In a letter to brokers last week, Mr Townsend says AIG’s loss of $US24 billion ($36.3 billion) reflects “a confluence of unprecedented events” rather than the core earnings power of its insurance businesses.
“This is the largest quarterly loss AIG has ever reported which is due, in part, to extreme dislocations and volatility in the capital markets, significant charges related to restructuring actions we have taken, as well as catastrophe losses,” he said.
Mr Townsend says the good news for Australia is that American International Underwriters (AIU), the network of non-US general insurance companies to which AIG Australia belongs, is the only AIG entity to record a third-quarter underwriting profit. AIU reported total underwriting profit, including catastrophes, of $US99 million ($150 million).
“We are proud of that fact, and we are aware that our ability to grow depends on the close relationships we have built with partners like you,” he said.
“Our business is both stable and secure with an asset base that is protected and highly regulated by governments and regulators around the world.”
AIG last week also announced new plans for a restructuring of its financial agreements with the US Treasury and Federal Reserve.
Mr Townsend says the new plans create a more durable capital structure for AIG, reducing existing debt and, by lowering its cost of capital, enable an orderly restructuring of the group’s business.
In a letter to brokers last week, Mr Townsend says AIG’s loss of $US24 billion ($36.3 billion) reflects “a confluence of unprecedented events” rather than the core earnings power of its insurance businesses.
“This is the largest quarterly loss AIG has ever reported which is due, in part, to extreme dislocations and volatility in the capital markets, significant charges related to restructuring actions we have taken, as well as catastrophe losses,” he said.
Mr Townsend says the good news for Australia is that American International Underwriters (AIU), the network of non-US general insurance companies to which AIG Australia belongs, is the only AIG entity to record a third-quarter underwriting profit. AIU reported total underwriting profit, including catastrophes, of $US99 million ($150 million).
“We are proud of that fact, and we are aware that our ability to grow depends on the close relationships we have built with partners like you,” he said.
“Our business is both stable and secure with an asset base that is protected and highly regulated by governments and regulators around the world.”
AIG last week also announced new plans for a restructuring of its financial agreements with the US Treasury and Federal Reserve.
Mr Townsend says the new plans create a more durable capital structure for AIG, reducing existing debt and, by lowering its cost of capital, enable an orderly restructuring of the group’s business.