Insurer AIG reports a 93% decline in quarterly profit as Coronavirus fuels claims

American International Group Inc. (NYSE: AIG) released its quarterly financial results on Monday that printed a massive 93% decline in adjusted profit in the first quarter. The company also set aside money as it speculated the Coronavirus pandemic to fuel claims.

In the first quarter, AIG recorded £69.94 million in underwriting loss attributed to its general insurance segment. In the same quarter last year, the company had posted £143.90 million in profit. AIG attributed its downbeat performance largely to the ongoing health crisis.

AIG sets aside £337 million to cover for catastrophe losses

The largest U.S insurer set aside a total of £337 million to cover for catastrophe losses in the aforementioned business with £219 million directed specifically at COVID-19 driven losses including on trade credit, travel, and workers’ compensation. The remaining amount, as per the company, was primarily related to the weather.

The Coronavirus has so far infected more than 1.2 million people in the United States and has caused over 69,000 deaths.  

Commercial insurers in the United States are under additional political pressure to settle claims from countrywide businesses that have been hit hard by the pandemic due to the government-imposed lockdowns.

In its financial report on Monday, AIG also highlighted its net quarterly investment income (adjusted) dropped to £2.17 billion in the recent quarter that marks an £800 million decline as compared to the year-ago figure.

AIG’s general insurance accident year combined ratio registered at 95.5 in the first quarter versus 96.1 in the comparable quarter last year. Posting below 100 implied that the insurer’s earnings from premiums were greater than what it paid out in claims.

AIG posts a £169 million pre-tax loss in Q1

The insurer’s pre-tax loss was noted at £169 million in Q1 ascribed primarily to asset impairment charges. AIG’s net quarterly income (adjusted) attributable to the company’s common shareholders printed at £79.60 million that translates to around 9 pence per share. In Q1 last year, the figure was capped at a higher £1.12 billion or £1.27 of earnings per share.

At £19.41 per share, American International Group is currently around 50% down year to date in the stock market. The company was seen trading as low as £15 per share in March. Its performance in 2019, on the contrary, was reported largely upbeat with an annual gain of roughly 30%.

At the time of writing, AIG is valued at £16.66 billion and has a price to earnings ratio of 6.53.