Third-quarter 2020 catastrophe loss estimates in the company’s General Insurance segment totalled US$790 million, which include $185 million of estimated catastrophe losses for claims related to Covid-19, principally in its travel, event cancellation, trade credit, property, agriculture and casualty books of business. Third-quarter non-Covid-19 catastrophe losses of $605 million reflect windstorms and tropical storms in the Americas and Japan, as well as wildfires on the west coast.
Brian Duperreault, AIG’s Chief Executive Officer, commented: “The third quarter experienced a high frequency of global catastrophe events with low to moderate severity, including the ongoing impact of Covid-19. These events have had a limited impact on AIG as a result of our underwriting discipline, reinsurance programmes, revamped risk appetite and the strength of our balance sheet.”
AIG also announced the results of its annual actuarial assumption update for the Life & Retirement and Legacy segments. This year’s update included lower interest rate assumptions, including a decrease in the expected 10-year Treasury rate to approximately 2.8 per cent, updates to mortality assumptions and revised policyholder behaviour assumptions, particularly on lapses and deferred acquisition cost amortisation.
A third-quarter charge of $7 million
As a result of this update, AIG recorded a third-quarter 2020 charge of $7 million, after-tax ($9 million pre-tax), to net income attributable to AIG common shareholders, reflecting a charge of $22 million, pre-tax, in the Life & Retirement segment and a benefit of $13 million, pre-tax, in the Legacy segment. The $22-million charge is comprised of a charge of $120 million, included in adjusted pre-tax income (APTI), and a benefit of $98 million, pre-tax, reflected in net realized capital losses and deferred acquisition costs related to guaranteed minimum withdrawal benefits. The impact to APTI for the Legacy segment was a benefit of $13 million.
In the first quarter of 2020, AIG reported a loss of $87 million in its General Insurance segment, which took into account the $272 million of estimated losses due to Covid-19.