After a disappointing second quarter, AIG CEO Brian Duperreault restated his pledge that the struggling insurer would reach an underwriting profit after 2018. He also cautioned that the road to profitability will continue to be a bumpy one.

“It’s not a straight line but it is an improving line,” Duperreault told analysts during American International Group’s investor call on Aug. 3.

Duperreault and his executive team made their presentation and addressed analysts’ questions involving the insurer’s big Q2 declines in net income and investment income. AIG’s General Insurance division also booked a 101.3 combined ratio for the quarter, with the insurer facing an $89 million underwriting loss. A $200 million charge for restructuring costs exacerbated the negative results.

Brian Duperreault

With all of this in mind, Duperreault focused on steps AIG has taken to improve its bottom line since he became CEO a little more than a year ago, ranging from the insurer’s recent Validus acquisition to an ongoing push to revamp its General Insurance portfolio, hire new executives and recruit seasoned underwriters.

Duperreault said that the restructuring is part of this ongoing process and expects there will be more charges in the short term that temporarly hit AIG’s combined ratio. At the same time, he said that AIG continues “to work with a sense of urgency” toward improving underwriting, growing new business and having long-term profitable growth.

Results in 2019

While Duperreault has said he expects AIG’s to reach underwriting profitability by the end of 2018, he clarified that a bit, during the analyst Q&A. One fine point: He expects the combined ratio heading in to 2019 to be under 100, but not necessarily at the end of this year.

“Premiums produced for Q1 2019 will be under 100 and we should expect continued improvement over the year,” he said. “We will see improvements.”

Duperreault said that working to improve AIG’s operations is an ongoing process that requires constant attention.

“It is a market that is dynamic and prices are in movement all the time,” Duperreault said. “You have to continually address what you’re doing on a daily basis. That could mean you buy more reinsurance, it could mean volumes go down. It is an actively managed portfolio [and] that actively managed portfolio will continue to improve.”

Duperreault said that one big issue with AIG is its expense levels, and while it has had small improvements, he said that the level “is not where it should be.” But, he added, that expense management, in part, will help propel the insurer “to that top quartile position.”

What About the Last Restructuring?

One of the analysts asked Duperreault about the last restructuring AIG went through. That was during the leadership of Duperreault’s predecessor, Peter Hancock, who stepped down as CEO several months before Duperreault’s arrival, and he left with AIG still struggling.

The analyst wanted to know if Duperreault and his executive team felt like they were starting from scratch in terms of rehabbing the insurer. Duperreault was diplomatic in his reply.

“In fairness, $2 billion of expenses were taken out,” Duperreault said. “That is a lot. Once that was all done and you take a look at the results, the expense ratios remain high. All it said was more needed to be done It was a beginning and not the end. Expense management has got to be a way of life here.”

Duperreault added that “there was a lot of good work being done” under his predecessor, and “we just have to continue it.”