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AIG’s Commercial Insurance Division Sees Catastrophe Losses

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Nov. 13 2017, Updated 5:30 p.m. ET

Total operating revenue

In 3Q17, American International Group’s (AIG) commercial insurance division’s total operating revenue comprised net investment income and premiums.

In 3Q17, AIG’s commercial insurance division’s total operating revenue fell to $4.6 billion from $5.4 billion in 3Q16, a 15% fall. This fall was mainly due to premiums falling 15%, from $4.5 billion in 3Q16 to $3.8 billion in 3Q17, and net investment income falling from $941 million in 3Q16 to $777 million in 3Q17.

AIG has a market capitalization of $55.9 billion. Peers (XLF) Allstate (ALL), Arch Capital Group (ACGL), and National General Holdings (NGHC) have a market capitalization of $35.6 billion, $13.1 billion, and $2.2 billion, respectively.

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Total operating expenses rise

AIG’s commercial insurance division’s total operating expenses rose substantially, from $4.7 billion in 3Q16 to $7.5 billion in 3Q17, implying a rise of 58%. This rise was mainly due to expenses incurred in relation to policyholder benefits and losses rising 86% from $3.5 billion in 3Q16 to $6.4 billion in 3Q17.

Catastrophe losses

In 3Q17, AIG’s commercial insurance division saw significant catastrophe losses amounting to $2.7 billion. Of the total losses, windstorms and hailstorms caused losses of $1.6 billion, flooding caused losses of $1.1 billion, and earthquakes caused losses of $30 million.

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