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American International Group’s property/casualty business booked a $171 million underwriting loss in the 2020 fourth quarter, barely a year after the insurer celebrated the division’s return to profitability.

COVID-19 and other catastrophe losses contributed largely to the General Insurance division’s underwriting loss, versus a $12 million underwriting gain in the 2019 fourth quarter. Even so, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ said it had some improving metrics, citing its Commercial Lines business in particular, which produced an improved business mix along with healthy rate increases.

Overall, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ lost $60 million in the fourth quarter (negative $0.07 per diluted share) and nearly $6 billion for all of 2020 (negative $6.88 per diluted share). In 2019, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ reported fourth quarter net income of $922 million ($1.03 per diluted share), and $3.3 billion of net income ($3.74 per diluted share) for all of 2019.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ attributed its full-year loss largely to a one-time item – a $6.7 billion after-tax loss from the sale and deconsolidation of Fortitude Group Holdings LLC on June 2. ÌìÃÀÍøÕ¾´«Ã½´«Ã½ received $2.2 billion at the closing, and the insurer said the transaction helped improve its risk profile and reduced exposure to long-tail runoff liabilities and related interest rate risk.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½ CEO Brian Duperreault (soon to be executive chairman of the board when ÌìÃÀÍøÕ¾´«Ã½´«Ã½ President Peter Zaffino replaces him as CEO on March 1) insisted that ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s fundamentals remain in a better position than they were a few years ago when he first joined the company.

Zaffino to Succeed Duperreault as CEO of ÌìÃÀÍøÕ¾´«Ã½´«Ã½ March 1

“ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s fourth quarter and full year 2020 operating results demonstrate the continued progress we are making to position ÌìÃÀÍøÕ¾´«Ã½´«Ã½ for long-term, sustainable and profitable growth,” Duperreault said in prepared remarks. “We are effectively managing the impacts of COVID-19 and natural catastrophes and remain well capitalized in this environment of unprecedented uncertainty.”

Here are result highlights:

• Fourth quarter General Insurance net premiums written surpassed $5.5 billion, down from $5.8 billion a year ago. North America Personal Insurance saw declines, but North America Commercial Lines produced big gains. Its International business also saw gains.
• The General Insurance combined ratio hit 102.8 in the fourth quarter, versus 99.8 a year ago. The result included 9 points of catastrophe and reinstatement premiums, of which 3 points related to COVID-19 catastrophes and related travel insurance hits, and 0.9 points were unfavorable prior year development.
• The North America Commercial Lines combined ratio improved 4 points to 93.6 for the quarter versus Q4 2019. International Commercial Lines improved nearly 5 points to 89.2.
• ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s liquidity stood at $10.5 billion as of Dec. 31, 2020, compared to $7.6 billion at Dec. 31, 2019.
• Consolidated net investment income in Q4 2020 was $4 billion, versus $3.6 billion over the same period the year before.

Source: ÌìÃÀÍøÕ¾´«Ã½´«Ã½

Topics Profit Loss Underwriting Property Casualty ÌìÃÀÍøÕ¾´«Ã½´«Ã½