(Reuters) -American International Group reported lower first-quarter profit on Thursday, as the inferno that scorched more than 16,000 structures in Los Angeles in January led to higher catastrophe losses.
The company – one of the world’s largest commercial insurers – posted catastrophe losses of $525 million in the three months ended March 31, with $460 million related to the wildfires before reinstatement premiums.
AIG had earlier anticipated net losses from the wildfires to be roughly $500 million, before reinstatement premiums.
Global insured losses from hurricanes, storms, floods and other natural disasters could jump to $145 billion in 2025, from $137 billion last year, reinsurance company Swiss Re said on Tuesday.
The wildfires, which killed more than two dozen people and charred an area bigger than Paris, cost the industry $40 billion in insured losses, Swiss Re added.
Underwriting income was $243 million, a 59% slump from a year earlier, hurt by higher catastrophe charges.
AIG reported an adjusted after-tax income attributable to common shareholders of $1.17 per share, compared with $1.25 a year earlier. Analysts on average had expected 99 cents per share, according to estimates compiled by LSEG.
GROWING UNCERTAINTY
Insurers are looking at an extended period of uncertainty sparked by U.S. President Donald Trump’s trade war with China.
“While the broader macroeconomic and geopolitical environment remains uncertain, AIG is navigating these challenges from a position of strength…,” CEO Peter Zaffino said in a statement.
General insurance net premiums written came in at $4.5 billion, flat from the prior-year quarter on a reported basis, but increased 8% on a comparable basis, AIG said.
Adjusted general insurance accident year combined ratio – a measure of underwriting performance – was 87.8% in the quarter, compared with 88.4% a year earlier. A ratio below 100 signifies that the insurer earned more from premiums than it paid out in claims.
Insurance bellwether Travelers beat first-quarter profit expectations last month as strong underwriting gains helped soften the hit from more than $2 billion of catastrophe losses driven by the Los Angeles wildfires.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sriraj Kalluvila)
Comments