American International Group Inc. reported a $648 million profit for the third quarter of 2019 compared with $1.26 billion loss for the same period last year, which was hit by catastrophe losses and prior year reserve developments.

The insurer, which has undergone a significant restructuring and re-underwriting of its business since President and CEO Brian Duperreault was brought in to turn around the insurer in 2017, continued to cut the policy limits it offers in various lines and increased rates across most of its property/casualty business lines, executives said on a conference call with analysts on Friday.

Rate increases will likely continue through 2019 and into 2020, they said

AIG reported pre-tax catastrophe losses for the 2019 third quarter of $497 million, including $254 million from Typhoon Faxai, which hit Japan in September, and $135 million from Hurricane Dorian, which devastated the Bahamas also in September.

AIG reported property/casualty gross written premium of $8.58 billion in the 2019 third quarter, down 1% from the prior year quarter. The insurer, which has overhauled its reinsurance purchasing, reported net premium written of $6.65 billion, which is a 3% decrease compared with last year.

The property/casualty insurance business showed “a remarkable improvement over prior years,” said Mr. Duperreault in a conference call with analysts on Friday.

“I’m particularly pleased that the (general insurance) reinsurance strategy played out as designed, dramatically reducing volatility in cat season and preserving capital,” he said.

The general insurance combined ratio improved to 103.7% in the 2019 period from 124.4% in the 2018 period.

In its core North America general insurance unit, AIG reported net premium written of $3.4 billion, up 8% compared with the 2018 quarter, largely due to its acquisition of program manager Glatfelter Insurance Group last year and growth within Validus, a reinsurer it also purchased in 2018, according to the AIG earnings statement.

Those increases in premium written were “partially offset by the continued impact of pricing and underwriting actions, and higher ceded premiums due to changes in 2019 reinsurance programs,” the statement said.

North America commercial lines net premium written increased 12% to $2.5 billion. The combined ratio for the North America business improved to 105.7% from 129.9% overall and the commercial lines combined ratio improved to 105% from 125.1%.

The North America general insurance results were curbed by losses in its crop business, which was affected by flooding earlier in the year, said Peter Zaffino, CEO of general insurance and global chief operating officer of AIG.

In addition, AIG experienced higher losses in inland marine, aviation and energy, he said.

“We continue to take action to improve performance in U.S. specialty lines through enhanced risk selection, rate improvement strategy and reinsurance,” Mr. Zaffino said.

AIG reported net premium written on its international business of $3.24 billion, down 12% from the same period last year. International commercial lines premium fell 16% to $1.53 billion. The international business reported a 101.8% combined ratio, an improvement over the 119.6% AIG reported in the same period last year.

The insurer saw significant growth at its surplus lines unit Lexington Insurance Co., which is the largest surplus lines insurer, according to Business Insurance’s latest ranking. The surplus lines market has seen significant rate increases over the past several months and many insurers have drastically cut the policy limits they offer, particularly on excess casualty business.

In casualty, Lexington saw a 62% increase in submission volume in the third quarter, reduced total limits by 58% and increased rates by 31%, Mr. Zaffino said.

In property, Lexington saw a 47% increase in submission volume, it reduced limits by 74%, increased deductibles by 18% and achieved rate increases of 15% “which we expect to continue to increase, particularly due to the recent global cat activity,” he said.

On AIG’s North American retail property business, the insurer reduced its total gross limits by more than $20 billion in the third quarter and more than $80 billion year-to-date, Mr. Zaffino said. Average deductibles increased by 27% in the third quarter, he said.

In addition, AIG saw “high teens” rate increases on its retail property book and “we expect to continue to see rate increases for the remainder of the year and into 2020,” Mr. Zaffino said.

In its financial lines business, AIG saw 30% rate increases in commercial D&O during the third quarter, with 35% increases in public D&O, he said.

In the overall market, “we continue to see meaningful rate increases across the board in the third quarter, a trend that has accelerated throughout the year. In some lines, rate improvement has been at the highest level in over a decade,” Mr. Zaffino said.

North America commercial rates increased in the low double digits compared with high single-digit rate increases in the second quarter, he said. Admitted excess casualty and energy rates are increasing in the mid-20% range, Mr. Zaffino said.