AIG Reports Fourth Quarter Financial Results

February 11, 2018 | 0 Comments

American International Group — which recently announced it will buy Bermuda-based Validus – reported a net loss of $6.7 billion, or $7.33 per share, for the fourth quarter of 2017, compared to a net loss of $3.0 billion, or $2.96 per share, in the prior-year quarter.

The fourth quarter of 2017 net loss included a charge of $6.7 billion related to the enactment of the U.S Tax Cuts and Jobs Act, AIG said.

Adjusted after-tax income was $526 million, or $0.57 per diluted share, for the fourth quarter of 2017, compared to an adjusted after-tax loss of $2.8 billion, or $2.72 per share, in the prior-year quarter.

“The fourth quarter was another important step forward in positioning AIG for the future. Since I joined the company in May, we’ve added to our talent base, assessed and initiated underwriting actions, and established a new operating structure. 2017 represents a starting point from which we expect to build and 2018 will be a year of execution. Our actions to diversify our business and pursue profitable growth were further reflected in our January announcement of the acquisition of Validus,” said Brian Duperreault, President and Chief Executive Officer.

“Our fourth quarter and full year 2017 results were significantly impacted by catastrophe losses. Despite full year record catastrophe losses of $4.2 billion, we delivered approximately $1.5 billion in pre-tax income and over $3.0 billion in adjusted pre-tax income.

“Importantly, our fourth quarter reserve review resulted in modest net adverse development and our General Insurance North America Commercial business showed notable improvement and reserve stability. Personal Insurance and Life and Retirement operations continued to deliver solid performance and benefit from their diversified offerings.”

AIG recently formed a Bermuda-domiciled legal entity named DSA Reinsurance Company, Ltd. [DSA Re] to act as AIG’s main run-off reinsurer.

“DSA Re’s primary purpose is to reinsure AIG’s Legacy Life and Retirement and Legacy General Insurance run-off lines. DSA Re will allow AIG to derive operational efficiencies by consolidating its legacy books in one legal entity and under one management team, while continuing to honor all policyholder commitments and client relationships,” the company said.

“The amount expected to be reinsured upon receipt of all regulatory approvals represents approximately $37 billion or over 80% of Legacy total insurance reserves and will be backed with approximately $40 billion of invested assets managed by AIG Investments.

“Since its establishment, Legacy has returned $10.0 billion of capital to AIG Parent, surpassing its original goal of $9.0 billion. Total book value impairments and losses on sales from Legacy investments that were sold from September 1, 2015 through December 31, 2017 totaled $1.0 billion.”

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