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The return to profitability will be long for AIG, according to a firm rating

by

Hubert Roy

November 5, 2018 11:30

Photo : Freepik

For a third quarter since the beginning of 2017, AIG reported a loss. Although four times its results have been positive, and the total losses of the insurer exceeds its benefits.

Despite the loss of $ 1.3 billion announced in the third quarter of 2018, the firm of Standard & Poor’s rating (S&P) has indicated that it will not change in the immediate future, the financial strength ratings given to AIG. Its analysts, however, have been aware that a revision could be done in the next six months. The ratings of AIG are currently associated with a development perspective in the negative, and, since June of 2017.

The analysts of S&P indicate in addition that they look at before any of the underwriting practices of the insurer. They say to take account of the fact that the typhoons that recently hit Japan have heavily impacted the results of AIG, the insurer which had to pay a sum of 929 million to cover the damage that it had insured. The firm’s rating also claims that AIG has “solid profits” in life insurance and retirement management.

Several years before returning to profitability

During the disclosure of results for the third quarter of 2018, Brian Duperreault, president and CEO of AIG, has recognized that the management of the many disasters that occurred these funds months has hurt the insurer in its goal of delivering profitable growth in the long term. He, however, argues that his company has registered gains, including the addition of quality personnel and improving its patraques subscription. He also praised the work done by its teams in the life insurance and management of retirement, who have recorded a double-digit growth in the last quarter.

These explanations haven’t completely convinced the analysts of S&P. They recognize the efforts raised by Mr. Duperreault. They believe, however, that it will still take many years before AIG found the path to profitability.

Moreover, they deplore the fact that the objectives of the management of AIG may be blurred. The only clear goal that they claim to understand is the willingness of management to AIG to reconnect with a profit from underwriting in the first quarter of 2019.

“We expect that AIG improves slowly its underwriting results. Simply reach profitability in the first quarter will present challenges, according to us, ” explain the analysts of S&P.

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