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Why AIG’s Commercial Business Segment’s Operating Income Fell in 2Q17

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Operating income

In 2Q17, American International Group’s (AIG) Commercial Business segment witnessed a substantial fall of 24% in its pretax operating income on a year-over-year (or YoY) basis. This decrease occurred mostly due to increased property losses compared to 2Q16.

In 2Q17, the pretax operating income of AIG’s Commercial Business division stood at $716 million compared to $941 million in 2Q16.

In 2Q17, American International Group’s Commercial Business division saw a 15% fall in its net premiums written YoY. In 2Q17, these net premiums stood at $3.8 billion compared to $4.4 billion in 2Q16. According to AIG’s management, the company’s Commercial Business division focuses on risk selection, which led to a decline in net premiums written.

With respect to AIG’s underwriting ratios, the 2Q17 loss ratio of this division stood at 73.8% compared to 70.2% in 2Q16. However, the 2Q17 expense ratio of the division stood at 28.9% compared to 28.1% in 2Q16.

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Return on assets

On a trailing-12-month (or TTM) basis, American International Group (AIG) has delivered a return on assets (or ROA) of 0.14%. Its peers in the insurance industry (IYF) delivered the following ROA on a TTM basis:

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