American International Group Inc. today reported that its net income for the first quarter 2006 fell 16 percent–due in part to some adverse tax consequences.

The New York-based property-casualty and life insurer reported $3.2 billion in net income for the quarter, compared to $3.8 billion in the first quarter 2005.

AIG President and CEO Martin J. Sullivan said first quarter results were negatively affected by a one-time after-tax charge of $115 million. In addition, the company posted a $57 million after-tax loss for credit card operations in Taiwan.

“We had record General Insurance results, with strong gains in operating income and an improved combined ratio,” Mr. Sullivan said.

General insurance reported first quarter 2006 operating income before realized capital gains of $2.26 billion, and a combined ratio of 89.17.

The relatively stable rate environment and the continuation of generally favorable policy terms and conditions contributed to the strong underwriting performance, the company reported.

First-quarter 2006 general insurance net investment income increased 10.1 percent, benefiting from over $3 billion in positive cash flow and higher interest rates, AIG said. General insurance net premiums written increased 4.3 percent (6.0 percent in terms of “original currency”), to $11.26 billion in the first quarter.

AIG's Domestic Brokerage Group's growth in net premiums written “reflects a continuation of generally improving renewal retentions, higher property rates and modest rate declines in certain casualty classes,” the company reported.

In personal lines, strong premium growth in the Private Client Group and Agency Auto offset the runoff of the assigned risk business and slight declines at AIG Direct and 21st Century, the carrier added.

General Insurance net loss and loss adjustment reserves totaled $58.9 billion–a $1.42 billion increase from Dec. 31, 2005.

In the first quarter of 2006, net adverse loss development from prior accident years was approximately $35 million, including approximately $98 million pertaining to prior-year catastrophes.

Special Reports /

AIG Net Income Falls 16 Percent

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