American International Group (AIG) President and CEO Brian Duperreault has insisted that the insurer’s General Insurance unit will produce an underwriting profit for all of 2019, after a decade of losses. His promise has now come true for the second quarter in a row.
The division – which covers AIG’s P/C business – produced a healthy combined ratio of 97.8 for Q2, versus 101.3 over the same period a year ago.
General Insurance booked $147 million in underwriting income for the 2019 second quarter, compared to an $89 million loss over the same period a year ago. AIG’s General Insurance arm produced $179 million in underwriting income for Q1 and a 97.4 combined ratio.
Underwriting income reflects the difference between premiums an insurer collects on policies and claims it pays out.
Dupereault said during the 2019 first quarter that the whole year would continue that long-awaited trend. He repeated that pledge in prepared remarks issued with AIG’s Q2 2019 earnings release on Aug. 7.
“General Insurance achieved its second consecutive quarter of underwriting profitability resulting from underwriting and expense discipline, and reinsurance actions, and remains on track to deliver an underwriting profit for the full year,” Duperreault said.
AIG did well for the 2019 second quarter overall. The insurer reported $1.1 billion in net income for Q2, or $1.24 per diluted common share. That compares to $937 million in net income, or $1.02 per diluted share, in the same period a year ago.
Total consolidated net investment income reached $3.7 billion in the 2019 second quarter, up from $3.1 billion in Q2 2018, thanks to favorable market performance and income gains in AIG’s private equity portfolio, the company said.
General Insurance gross premiums written surpassed $8.6 billion in the second quarter, about the same as the same period a year ago. Net premiums written, at nearly $6.6 billion, dipped from more than $6.9 billion in the 2018 second quarter.
General Insurance net premiums written grew in North America on the personal lines side, but personal lines net premiums written declined internationally.
Duperreault said AIG’s overall results for Q2 are the payoff from last year’s “foundational changes” implemented to help the insurer return to growth and stability.
“Our strong second quarter performance demonstrated continued positive momentum through the first half of 2019,” Duperreault said. “The additional progress on our path to long-term sustainable and profitable growth reflected in this quarter’s results was driven by the foundational changes we implemented across AIG last year.”