From the August 15, 2011 issue of National Underwriter Property & Casualty • Subscribe!

Benmosche Says Crisis Is Over As AIG Posts $1.8B 2Q Income

American International Group Inc. swung to a profit with second-quarter net income of $1.8 billion compared to a net loss of $2.7 billion for the second quarter a year ago.

Robert H. Benmosche, president and CEO of AIG—the beneficiary of a $182 billion bailout from the government in order to avoid collapse in 2008—tells CNBC that AIG has “turned the corner and our crisis is over.”

Benmosche reiterated the point during a conference call Aug. 10 to discuss earnings. “We’re independent of government support. Overall, we’re in great shape.”  

Benmosche adds in a statement: “Our continued improving operating results should provide a catalyst for the U.S. Treasury to sell its shares at a profit for the taxpayers.” 

The Treasury still holds a majority stake (about 77 percent) in the company after an $8.7 billion common stock offering—a “significant recapitalization milestone,” says the CEO in his statement—consisting of 100 million AIG shares and 200 million shares from the U.S. Treasury.

AIG’s property and casualty business, Chartis, reported operating income of $789 million compared to $955 million a year ago.

Second-quarter catastrophe losses were $539 million, including $348 million from tornadoes in the U.S. The losses “reflect no significant prior-year loss-reserve development,” AIG says.

Elsewhere in the industry, catastrophes continued to take their toll on second-quarter and half-year results, with Berkshire Hathaway saying it is unlikely that its combined insurance operations will post an underwriting profit this year. The Warren Buffett-led company reported a $7 million second-quarter underwriting loss.

Specialty-insurer and reinsurer Catlin says it suffered more than $500 million in catastrophe losses in the first half of the year, and its CEO says he expects more with the onset of the Atlantic hurricane season. The company reported a net loss to common shareholders for the first six months of $220 million compared to net income of $57 million for the same period last year. 

Swiss Re, however, posted second-quarter net income of $960 million, compared to $812 million in the 2010 second quarter. In a conference call, CFO George Quinn says property and casualty results were “excellent,” as P&C operating income in the quarter was $993 million, compared to $455 million in the 2010 second quarter. Strong July renewals led to the operating income increase, but Swiss Re says the company also exercised disciplined underwriting. Lower large-loss experience in the quarter and favorable net development of prior accident years also contributed to growth. 

Comments

Resource Center

View All »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.