Insurer American International Group Inc. racked up $730 million in COVID-19-related losses during the first half of the year, its chief executive officer said on Tuesday.
The pandemic is a “formidable and ongoing catastrophe,” AIG CEO Brian Duperreault said during a call with analysts to discuss the company’s second-quarter results.
But the impact will affect earnings and not capital, Duperreault said.
AIG, one of the largest U.S. insurers, on Monday posted a 56% fall in quarterly adjusted earnings, partly a result of $458 million in losses related to COVID-19 for its general insurance business.
Analysts and investors have been awaiting insurers’ second-quarter results, the first full quarter of the pandemic, for a clearer picture of the impact of COVID-19 on insurers’ payouts.
The pandemic has left many insurers struggling to estimate future losses and fallout for their massive investment portfolios.
Pandemic-related losses affected a larger number of insurance lines than during the first quarter, AIG’s president and chief operating officer, Peter Zaffino, said during the call.
Those coverage lines include travel, property, trade credit, marine, casualty, workers’ compensation, accident and health, financial lines, contingency, and AIG’s reinsurance business, Validus Re, Zaffino said.
But AIG expects to recover some losses through reinsurance, Zaffino said.
A travel decline because of the pandemic hurt AIG’s travel insurance business, partly contributing to a $1 billion drop in AIG’s net premiums written for the quarter from a year ago, the company said.
Before the pandemic, travel insurance generated $1 billion in premiums in North America, fairly evenly spread across quarters, Zaffino said.
“(T)he second quarter, you had not only no new sales. You had cancellations,” Zaffino said.
There have been “some modest sales in the third quarter,” Zaffino said, noting that the situation is “hard to predict.”
(Reporting by Suzanne Barlyn; Editing by Steve Orlofsky)
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