American International Group, Inc. (NYSE: AIG) recently reported financial results for the quarter ended June 30, 2020. AIG posted an underwriting loss of $343 million in its general insurance business, compared with a $147 million profit a year earlier.
The loss included $674 million of catastrophes, net of reinsurance, partly reflecting $458 million related to COVID-19. Interestingly, given the problems western economies face from `woke’ activists this summer, which show no sign of abating, AIG also saw a bill of $126 million for civil unrest claims.
Net adjusted investment income dropped $537 million from a year ago to $3.2 billion. Performance was hurt by $276 million in private-equity losses compared with $238 million in private-equity income a year ago which included a large gain from one of the holdings.
Brian Duperreault, AIG’s Chief Executive Officer, said: “We are effectively navigating the current complex environment due to the strong foundation we built over the last three years. While unprecedented and on-going, COVID-19 remains an earnings, not a capital, event for AIG. We also increased our financial flexibility ending the second quarter with over $10 billion in liquidity.
“Our core businesses performed well in the second quarter. In General Insurance, the underlying underwriting profitability improvement was driven by our focus on portfolio remediation and expense discipline. Life and Retirement benefited from its diversification and agility, and continues to meet client needs despite an uncertain economic environment.
“We also executed two important transactions in the second quarter that significantly enhanced our risk profile and helped to position our core businesses for growth. The sale of our majority stake in Fortitude Holdings de-risks our balance sheet and reduces our exposure to long-tail runoff liabilities and interest rate risk. Our Personal Insurance high net worth portfolio benefited from the formation of Syndicate 2019 and new quota share reinsurance agreements, which will enable us to unlock the strategic value and growth opportunities of this business through a new, innovative capital model.
“I am proud of the many ways we are managing through this challenging period in time. Our colleagues continue to show strength and resiliency as we remain focused on supporting our clients, each other and our communities. I remain confident that AIG is well-positioned for the future as we make progress toward becoming a top-performing company and leading insurance franchise.”