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American International Group Inc. continued with its planned reduction in U.S. casualty business during the first quarter of 2017, as the insurer bounced back into profit following a massive fourth-quarter 2016 loss.
AIG reported a $1.19 billion profit for the first quarter, compared with a $183 million loss for the same period in 2016, which was hit by a significant increase in loss reserves. The improvement comes on the heels of a nearly $3 billion loss in the fourth quarter of 2016, which ultimately led to CEO Peter Hancock announcing he would resign.
The insurer, which has been battling poor results for several quarters, reported $7.78 billion in total premium for the quarter, down 11.6% from the same period last year. AIG previously announced its intention to cut back on poorly performing business as part of a turnaround strategy.
AIG’s combined ratio deteriorated to 102.2% in the first quarter of 2017, compared with 97.7% in the same period last year.
In its core commercial insurance business, net premium written fell 17% from the prior year period to $3.63 billion. The insurer previously stated that it intended to cut back its U.S. casualty business, in particular. U.S. casualty now represents 19% of its commercial business, compared with 24% in 2016 and 42% in 2011.
“Our sector and risk selection strategy, coupled with more conservative U.S. casualty loss picks, have laid the foundation for sustainable future earnings,” said Robert S. Schimek, executive vice president and CEO of commercial, during a conference call with analysts on Thursday.
In its liability and financial lines sector, net premium written decreased 11.6% to $2.22 billion, but operating income was up slightly at $574 million. Property and special risks saw a 24.3% decrease in net premium written to $1.41 billion, in part due to increased purchase of reinsurance. Operating profit in the sector more than doubled to $275 million.
Liberty Mutual Holding Co. Inc. reported a lower first quarter profit Thursday as catastrophe losses increased.