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AIG posts $6.7 billion loss on new US tax reforms and global catastrophes

The quarter also reflected a "modest" reserve boost to cover future claims, driven by losses in its international commercial businesses


AIG posts $6.7 billion loss on tax reform, catastrophes

Group Inc posted a $6.7 billion fourth-quarter loss on Thursday as the U. S. insurer booked a big charge related to U. S. tax reform and losses from global catastrophes.

Excluding one-time items, adjusted fourth-quarter earnings were $526 million, or 57 cents per share, compared with an adjusted loss of $2.8 billion, or $2.72 per share, in the same period a year earlier.

Analysts were expecting earnings of 75 cents per share, on average, according to Thomson I/B/E/S.

booked $762 million of catastrophe losses during the quarter, largely from wildfires that raged through and caused significant damage to homes and businesses.

The quarter also reflected a "modest" reserve boost to cover future claims, driven by losses in its commercial businesses.

AIG's general business posted just $13 million in adjusted pretax income, compared with a $4.9 billion loss in the year-ago quarter, which was affected by a review that caused to significantly boost reserves.

The insurer's life and retirement business was also affected by a re-evaluation of its underlying method of predicting losses. The business booked a $90 million charge, primarily due to what called a "modernization" of and models.

That business' adjusted pretax income fell 10 percent to $782 million from $866 million in the year-ago quarter. Overall, AIG's bottom line was mostly hurt by the Tax Cuts and Jobs Act, posting $6.7 billion worth of charges related to the new

U. S. tax reform has caused many financial services to book big one-time losses for earnings held overseas and also for an accounting oddity related to losses booked during the 2007-2009 financial crisis, even though lower corporate tax rates will help them in the long run.

Under Brian Duperreault, who has been in the role for less than a year, has been looking to acquire businesses and restructure itself to boost results, with a particular focus on technology.

The insurer now has three units, including a general business, a life and retirement unit and a standalone technology unit.

In its announcement on Thursday, said it had recently formed a Bermuda-based legal entity named The entity's main purpose is to reinsure old policies the company has on its books, many of which have been contributing to losses.

Last month, also agreed to purchase reinsurer for $5.6 billion in a bid to expand its offerings and improve underwriting tools.

First Published: Fri, February 09 2018. 23:56 IST