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Analyzing AIG’s General Insurance Segment’s Performance

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Feb. 28 2018, Updated 7:30 a.m. ET

Adjusted pretax income

American International Group’s (AIG) General Insurance segment posted adjusted pretax income of $13.0 million in 4Q17, which consists of catastrophe losses. The segment saw catastrophe losses of $762.0 million in 4Q17. Of these, $572.0 million originated from the California wildfires.

The North America region generated adjusted pretax income of $412.0 million in 4Q17 while in 4Q16, its adjusted pretax loss stood at $4.4 billion. The region witnessed a decline in net premiums written from $3.0 billion in 4Q16 to $2.5 billion in 4Q17. Of $2.5 billion, personal insurance contributed $0.7 billion while commercial lines contributed $1.8 billion.

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International operations

AIG’s International operations of its General Insurance segment posted an adjusted pretax loss of $399.0 million in 4Q17 compared to $441.0 million in 4Q16. The International operations reported net premiums written of $3.3 billion in 4Q17 compared to $3.5 billion in 4Q16. Of $3.3 billion, personal insurance contributed ~$1.9 billion while commercial lines contributed ~$1.4 billion.

AIG’s International operations witnessed a rise in net investment income from $123.0 million in 4Q16 to $131.0 million in 4Q17. However, in 2017, these operations generated net investment income of $523.0 million compared to $513.0 million in 2016.

AIG’s total debt-to-enterprise-value ratio of AIG stood at 0.38x on an LTM (last-12-months) basis. Among its peers (XLF), Aspen Insurance Holdings (AHL), RenaissanceRe Holdings (RNR), and Hartford Financial Services (HIG) have total debt-to-enterprise-value ratios of 0.34x, 0.15x, and 0.21x, respectively, on an LTM basis.

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