By Manya Saini
Aug 6 (Reuters) – Insurance giant AIG beat analysts’ estimates for second-quarter profit on Thursday, as strong underwriting gains helped cushion an uptick in catastrophe-related claims.
Insurers have had an upbeat first half as higher premiums and disciplined underwriting have better positioned them to weather catastrophe losses.
“Strong quarterly results demonstrate our ability to perform well in the current market, which has transitioned from an extended phase of broad positive pricing into a more selective environment,” newly appointed CEO Eric Andersen said.
“The breadth of our underwriting expertise and the diversity of our global portfolio remain important competitive advantages.”
AIG shares were last up 1.6% in extended trading after the results.
AIG’s general insurance net premiums written jumped 9% to $7.5 billion in the three months ended June 30, while underwriting income climbed 10% to $686 million.
Total catastrophe-related charges were $210 million in the quarter, including $75 million tied to the Middle East conflict, compared with $170 million in the year-ago quarter.
Catastrophe losses are one of the most volatile components of insurers’ earnings. Claims can surge after a single major event, while quieter periods typically boost underwriting profits.
Adjusted general insurance accident year combined ratio — a measure of underwriting performance — came in at 88.1% in the quarter, a 30-basis-point improvement year-over-year. A ratio below 100 signifies that the insurer earned more from premiums than it paid out in claims.
After-tax adjusted profit rose 10% to $2 per share in the second quarter, comfortably beating Wall Street expectations of $1.92, according to estimates compiled by LSEG.
AIG, one of the world’s largest commercial insurers, said it returned $904 million of capital to shareholders in the second quarter.
Last month, property and casualty insurance giant Travelers also swept past Wall Street estimates for second-quarter profit thanks to lower catastrophe losses and robust investment income.
(Reporting by Manya Saini in Bengaluru; Editing by Sriraj Kalluvila and Shreya Biswas)
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