AIG experiences large loss in 2020
Following the closing of the Fortitude sale, for which AIG received proceeds of $ 2.2 billion, CEO Brian Duperreault stated, “The completion of this transaction marks the completion of a significant milestone in AIG’s strategy to efficiently manage and manage our legacy debt simultaneously strengthening our balance sheet and maintaining our balance sheet commitments to regulators and policyholders ”
Adjusted profit after tax attributable to AIG common stockholders was $ 2.2 billion for the full year ended December 31, 2020, compared to $ 4.1 billion a year earlier. The insurer said this decrease was partly due to lower adjusted pre-tax income (APTI) for general insurance, which had an APTI of $ 1.9 billion in 2020, compared to $ 3.5 billion a year earlier. That decrease was mainly due to higher catastrophe losses after reinsurance (CATs), including COVID-19 CATs of $ 1.1 billion, according to AIG.
Even so, AIG’s general insurance business showed some improvement, with an adjusted improvement in the combined annual accident rate of 1.9% year over year.
AIG’s fourth quarter (Q4) 2020 results reflect the full year. For the three months ended December 31, 2020, the global P&C insurer reported a net loss attributable to AIG common stockholders of $ 60 million, another significant change from net income of 922 million reported for the prior-year quarter U.S. dollar.
The insurer stated, “The loss resulted primarily from net realized capital losses after tax of $ 1.2 billion, primarily due to the non-economic impact of the non-performance adjustment on the fair value of embedded variable annuity derivatives less hedging and losses other derivatives and hedging transactions. “
Adjusted profit after tax attributable to AIG common stockholders also decreased from $ 923 million in the final quarter of 2019 to $ 827 million in 2020. The insurer attributes this in turn to higher CATs, including COVID-19 CATs, and is unfavorable loss reserve development from the previous year.
The general insurance unit reported CATs of $ 545 million in the fourth quarter, including COVID-19 CATs of $ 178 million. This led to a combined ratio for general insurance of 102.8% compared to 99.8% in the same quarter of the previous year.
CEO Brian Duperreault, who will move from CEO to a new role as Executive Chairman of AIG on March 1st, continues to see the future of AIG positively. He commented, “AIG’s fourth quarter and full year 2020 operating results show the continued progress we are making to position AIG for long-term, sustainable and profitable growth. We are effectively managing the effects of COVID-19 and natural disasters and remain well capitalized in this environment of unprecedented uncertainty.
“As I transition to my role as Executive Chairman, I would like to thank our global colleagues who have shown relentless resilience, dedication, and perseverance in their efforts to serve our customers, distributors, communities, and other stakeholders – including their own lives and works. The Situation was significantly disrupted by the COVID-19 crisis. This strength of the human spirit is at the core of AIG and is evident in everything we do. I look forward to joining Peter Zaffino as AIG’s next Chief Executive Officer and, together with our world-class team, to continue AIG’s journey to become a high performing company and a leading insurance company. “