Positive Signals in AIG’s Noisy Quarter
November 13, 2019 by Telis Demos
Some key indicators at American International Group Inc. are pointing in the right direction.
To be clear, the insurance giant missed Wall Street’s expectations for the third quarter—by a lot—with an adjusted earnings per share profit of 56 cents versus the $1 expected. The miss was driven largely by a mix of items such as an actuarial adjustment to its life and retirement portfolio due to falling rates, and a sharp drop in earnings from alternative investments.
But underneath that jumble was resumed improvement in the insurance giant’s core “combined ratio,” or its costs and expected losses as a percentage of premiums, for the current accident year, to 95.9%, from 99.4% a year earlier. The combined ratio also declined sequentially after staying flat in the second quarter. Keeping it under 100%, meaning the business has a positive underwriting margin, is a key goal of Chief Executive Brian Duperreault, now into his third year at the helm and with his revamped team in place.