AIG posts bigger loss on reserves impact
(Reuters) — American International Group Inc. reported a bigger quarterly loss, as the company recorded a $5.6 billion charge related to reserves development.
The company also raised its share buyback program by up to $3.5 billion on Tuesday.
AIG’s net loss widened to $3.04 billion in the fourth quarter ended Dec. 31, from $1.84 billion a year earlier. Net written premium in its core commercial insurance business fell 20.2% to $3.7 billion. AIG announced a transformation plan last year, which included exiting some businesses.
The fourth quarter included a $5.6 billion impact from prior year adverse reserve development., an AIG statement said.
AIG agreed last month to pay about $10.2 billion to Berkshire Hathaway Inc. to take on many long-term risks on U.S. commercial insurance policies it has already written.
AIG CEO Peter Hancock said that the adverse reserve development cover reduces the risk of further reserve additions in some of the most volatile lines.
“We responded definitively to emerging severity trends that we believe are materially impacting the overall U.S. casualty market,” he said in a statement.
The New York-based insurer had then said it would take a charge related to the deal in the fourth quarter.
The insurer is looking to cut its gross general operating expenses by $1.6 billion by the end of 2017.
AIG is due to hold a conference call with analysts on Wednesday at 8 a.m. Eastern.
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