First quarterly profit since 2007 boosts troubled insurer

AIG announced its first quarterly profit since the third quarter of 2007 but its tumbling combined ratios hinted that its pricing for new business had been too low.

Financial highlights (2008 in brackets)

  • Net income/loss $1,822m (-$5,357m) half year: -$2,531m (-$13,162m)
  • Net income/loss attributable to AIG $2,005m (-$1,321) half year $401m (-$4,882m)

General insurance Q2

  • Net premiums written $7.9bn down 19.2%
  • Commercial Insurance net premiums written $5.0bn down 18.2%
  • Foreign General Insurance net premiums $3.0bn down 20.7%
  • Operating income $1.0bn ($1.7bn)
  • Combined ratio 98.2 (92.2)
  • Commercial Insurance combined ratio 99.8 (93.9)
  • Foreign General Insurance combined ratio 95.5 (89.5)

The company said: “Underwriting results in Europe and Far East regions held up well with strong underwriting profits in the current quarter.

“General Insurance continues to retain the vast majority of its customers. Business retention was down moderately in the second quarter 2009 compared to the prior year period.

“Despite challenging economic conditions, second quarter 2009 new business writings exceeded $1bn.

“In General Insurance, underwriting discipline resulted in continued rate improvement in the second quarter 2009 as the Commercial Insurance unit’s rate change was approximately 2.0% positive.

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