AIG Inc. shares rose 0.3% late Thursday after the insurer swung to an adjusted profit in the fourth quarter. AIG said it lost $6.7 billion, or $7.33 a share, in the quarter, compared with $3 billion, or $2.96 a share, in the year-ago period. That included a charge of $6.7 billion related to the U.S. tax overhaul. Adjusted for the charge and other items, the company earned $526 million, or 57 cents a share, versus a loss of $2.8 billion, or $2.72 a share in the year-ago period. The insurer said 2017 catastrophe losses were a “record” of $4.2 billion, a year that included domestic catastrophe-related losses related to the California wildfires, AIG said. Analysts polled by FactSet had expected adjusted earnings of 75 cents a share for the quarter. Shares ended the regular session down 3.6%.
eneral Insurance Results — Fourth quarter adjusted pre-tax income of $13 million included $762 million of catastrophe losses, of which $572 million related to the wildfires in California. North America adjusted pre-tax income of $412 million was offset by an International adjusted pre-tax loss of $399 million. The fourth quarter reflected modest net prior year adverse loss reserve development of 1.4 points, driven by International Commercial lines. The fourth quarter and full year of 2017 loss ratios were 78.3 and 83.2, respectively. The accident year loss ratio, as adjusted was 65.2, a 2.3 point improvement compared to the prior year quarter. For the full year, the accident year loss ratio, as adjusted was 63.0, a 1.1 point increase from a year ago.
“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.”
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