AIG announces net income of US$1.8 billion for the second quarter of 2015

American International Group, Inc. (AIG) has reported net income attributable to the company at US$1.8 billion for the second quarter of 2015 ending June 30, compared to US$3.1 billion in the same quarter of 2014. After-tax operating income was US$1.9 billion for Q2 2015, compared to US$1.8 billion in the prior-year quarter.

Compared to the prior-year quarter, second quarter 2015 net income attributable to AIG declined primarily due to higher loss on extinguishment of debt from ongoing liability management activities, lower capital gains from sales of investments and a net gain on the sale of divested businesses related to the sale of International Lease Finance Corporation in the second quarter of 2014.

For Property Casualty specifically, the combined ratio increased 2.3 points to 98.8% in Q2 2015, from 96.5% in Q2 2014, AIG said on Monday. The loss ratio also increased 3.1 points to 70.8%, primarily due to higher net unfavourable prior year loss reserve development, and higher catastrophe losses, partially offset by a higher net loss reserve discount benefit for workers’ compensation reserves.

Catastrophe losses were US$209 million compared to US$121 million in the prior-year quarter. The accident year loss ratio, as adjusted, increased slightly by 0.1 points to 66.6, reflecting higher current accident year losses in United States’ commercial automobile liability, and higher severe losses in Specialty, partially offset by an improvement in U.S. Property, AIG said in a press release. For P&C, net premiums written decreased 4% compared to the prior-year quarter. [click image below to enlarge]

For Commercial Insurance, pre-tax operating income decreased slightly to US$1.5 billion from US$1.6 billion in the prior-year quarter, primarily due to lower underwriting results from Property Casualty and Mortgage Guaranty, as well as lower net investment income from Institutional Markets, partially offset by an increase in net investment income from Property Casualty. Consumer Insurance pre-tax operating income also decreased slightly to US$1 billion compared to US$1.1 billion in the prior-year quarter.

Personal Insurance pre-tax operating income decreased to US$70 million in Q2 2015 compared to US$140 million in the prior-year quarter, due to decreases in net investment income and underwriting income. The combined ratio increased by 0.9 points to 99.7%, which reflected an increase in the expense ratio partially offset by a decrease in the loss ratio, the release said. The loss ratio and accident year loss ratio, as adjusted, decreased by 0.8 points and 0.6 points to 52.7 and 52.8, respectively, compared to the prior-year quarter. Excluding the effects of foreign exchange, net premiums written increased 2% from the prior-year quarter, reflecting growth in automobile across all regions and in property businesses primarily in the U.S. and Japan, partially offset by declines in U.S. warranty service programs.

AIG operates in more than 100 countries and jurisdictions, including in Canada, where about 500 employees serve more than 21,000 clients from offices in Montreal, Toronto and Vancouver. In Canada, the insurer offers Casualty/Liability, Financial Lines, Property, Specialty Lines and Consumer Lines.