AIG Europe Limited (AEL), the European entity of American International Group, Inc. that restructured on December 1, 2018, reported a pretax profit of £59.5 million for the twelve months to November 30, 2018, up from a loss of £431.5 million the previous year.
Net Premium Written fell to £3,787.0 million (2017: £3,919.7 million) reflecting a decision to focus on core areas of growth. Financial Lines saw a 7% increase in Net Premiums Written, offset by a decline in Property, where premiums fell by 17%.
The loss ratio improved to 73.1% (2017: 82.5%) driven by a careful focus on risk selection and targeted reinsurance cover. The underwriting result improved to a loss of £131.3 million (2017: loss of £569.9 million). Operating expenses were significantly lower at £1,392.7 million (2017: £1,527.3 million). Positive underwriting performance and strategic risk selection combined with lower catastrophic losses led to an improved combined ratio of 103.4% (2017: 114.6%).
Last year AIG restructured AEL and established two new legal entities – American International Group UK Limited (AIG UK) and AIG Europe SA (AESA) – in preparation for the UK’s exit from the European Union.
The two-entity structure enables AIG to continue to service all of its policyholders and business partners across the UK and Europe, and to guarantee contract certainty to all policyholders, regardless of the future relationship between the UK and the EU. Both companies started writing business, and policyholders transferred from AEL to the relevant new entity, on December 1, 2018.
Anthony Baldwin, Chief Executive Officer, AIG UK, commented: “I’m proud of the work the team has done to stand up AIG UK as a separate business which has ensured our readiness for Brexit. During 2018 we made good progress in reducing our expenses, growing our profitable lines of business and remediating those areas that are less profitable. Thanks to these efforts we enter 2019 with a clear ambition and renewed focus.”
AIG UK issued a report and accounts for the twelve months ended November 30, 2018, although as the assets were transferred to this entity and it only started trading on December 1, 2018, the report doesn’t reflect the operating performance of the UK business.
AEL’s Solvency Ratio for 2018, based on our internal model, was 129.4%.