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AIG Posted a Huge Loss in 4Q17

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Aug. 18 2020, Updated 5:18 a.m. ET

AIG’s loss widened in 4Q17

AIG (AIG) reported a net loss of $6.66 billion in 4Q17—compared to a loss of $3 billion in 4Q16. The increased loss in 2017 was mainly due to a charge of $6.7 billion related to the enactment of the Tax Cuts and Jobs Act and $762 million in catastrophe losses. Out of the total catastrophic loss, ~$572 million is related to the wildfires in California. Excluding one-time items, the adjusted earnings for 4Q17 were $0.57 per share—compared to an adjusted loss of $2.72 per share in 4Q16.

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Net underwriting loss

A.M. Best Company is a global credit rating firm that focuses on the insurance industry (KIE). A.M. Best Company said that the US property and casualty insurance industry is expected to post a net underwriting loss of $29.3 billion for 2017, mainly due to catastrophe losses. As a result of the loss, the industry’s (BRK.A) (ALL) combined ratio is estimated to fall to 105.1% in 2017 from 100.9% in 2016. The report added that the pretax return on revenue will fall from 7.8% in 2016 to 2.7% in 2017. On the positive side, higher realized capital gains and lower tax payments will help improve the net income.

Metlife postponed its earnings release

Metlife (MET) postponed its fourth-quarter results to February 13. After the announcement, Metlife shares dropped as much as 10% in after-hours trade. The stock declined 6.2% during the week. Metlife said it expects to see a pretax impact between $135 million and $165 million on its net income in 4Q17.

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