(Reuters) – American International Group Inc reported a more than 39% drop in quarterly profits on Tuesday as investment income fell more than $1 billion and losses from Hurricane Ian spiked disaster bills.
Industry experts expect losses from the storm that hit parts of Florida and South Carolina in September, which risk modeling firm Verisk Analytics Inc. estimates at $57 billion for insurers, would plunge small insurers into bankruptcy.
AIG, one of the world’s largest commercial insurers, reported $600 million in catastrophe losses in the quarter, of which about $450 million was attributable to Hurricane Ian, the insurer said.
Adjusted after-tax profit attributable to common shareholders of the company 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% to $2.7 billion, primarily due to lower alternative investment income.
Chairman and CEO Peter Zaffino said the results were “more impressive against the backdrop of a challenging macro environment and one of the largest insured loss hurricanes in US history. United”.
AIG’s net premiums written in its general insurance business rose 3% at constant exchange rates, while underwriting income climbed to $168 million from $20 million a year earlier.
The combined ratio for the year for damage insurance was 88.4%, compared to 90.5% a year earlier. The measure excludes catastrophe losses and a ratio below 100 means the insurer earns more on premiums than it pays in claims.
The results also come after AIG’s life insurance and pensions division, Corebridge Financial, raised $1.68 billion in September in the largest initial public offering so far this year.