Insurer American International Group on Tuesday reported a more than 39 percent decline in quarterly profit as investment income fell by more than $1 billion and losses from Hurricane Ian pushed up catastrophe bills.

Industry experts expect the losses from the storm that lashed areas in Florida and South Carolina in September, which risk modeling firm Verisk estimated to go up to $57 billion for insurers, would plunge smaller insurers into bankruptcy.

AIG—one of the world’s biggest commercial insurers—reported $600 million of catastrophe losses in the quarter, out of which about $450 million was attributable to Hurricane Ian, the insurer said.

Adjusted after-tax income attributable to the company’s common shareholders fell to $509 million in the third quarter ended Sept. 30, or 66 cents per share, from $837 million, or 97 cents, a year earlier.

Total consolidated net investment income fell 28 percent to $2.7 billion, hurt mainly by lower alternative investment income.

Chairman and Chief Executive Officer Peter Zaffino said the results were “more impressive when viewed against the backdrop of a challenging macro-economic environment and one of the largest insured-loss hurricanes in U.S. history.”

AIG’s net premiums written in its general insurance business rose 3 percent on a constant currency basis, while underwriting income climbed to $168 million from $20 million a year earlier.

The general insurance accident year combined ratio came in at 88.4 compared with 90.5 a year earlier. The metric excludes catastrophe losses, and a ratio below 100 signifies that the insurer earns more from premiums than it pays out in claims.

The results also come after AIG’s life insurance and retirement division, Corebridge Financial , raised $1.68 billion in September in the biggest initial public offering so far this year.

(Reuters reporting by Noor Zainab Hussain in Bengaluru; Editing by Shinjini Ganguli)

(CM Editor’s Note: The cat loss contributions to AIG’s combined ratio were similar for both third-quarter 2022 and third-quarter 2021, coming in at 9.8 points and 9.7 points, respectively. In addition to excluding these amounts, the accident year combined ratio figures cited in this article also exclude loss reserve takedowns of 0.9 points for third-quarter 2022 and 0.5 points for third-quarter. With the prior-period reserve development and catastrophe losses included, reported combined ratios were 97.3 for third-quarter 2022 and 99.7 for third-quarter 2021.

Although AIG actually boosted prior-year loss reserves in its North America Commercial, adding 10.9 points to the segment combined ratio, the figure was lower than last year’s addition of 14.3 points. The year-to-year difference was bigger for Global Commercial, where prior-period reserve additions added just 3.3 points to the segment combined ratio in third-quarter 2022 vs. 12.8 points in third-quarter 2021. And in the International reporting segment, AIG took down prior period reserves, shaving 10.2 points off the combined ratio in third-quarter 2022.

AIG’s expense ratio also came down in the third quarter—to 29.8 compared to 31.3 in last year’s third quarter.)