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AIG underwriting income hit by US storm losses 

AIG’s general insurance (GI) business made adjusted pre-tax income of $US1.32 billion ($2 billion) in the second quarter, up from $US1.26 billion ($1.91 billion) a year earlier. 

Higher investment income lifted the division’s results and partially offset lower underwriting income due to increased catastrophe losses and lower favourable prior year development, net of reinsurance and prior year premiums, the insurer says. 

The GI division’s net investment income, as measured on an adjusted pre-tax income basis, went up 58% to $US725 million ($1.1 billion) in the June quarter. 

However underwriting income declined 26% to $US594 million ($903 million) and included $US250 million ($380 million) of total catastrophe-related charges, representing 3.9 loss ratio points. The catastrophe losses were mainly attributable to US convective storms that cost the business $US159 million ($242 million). 

As a result the combined ratio worsened to 90.9% from 87.4% a year earlier. GI gross written premiums rose 9% to $US10.39 billion ($15.8 billion). 

Chairman and CEO Peter Zaffino says the GI performance represents “a tremendous result against the backdrop of a very challenging quarter for the industry”. 

North America GI underwriting income fell 26% to $US594 million ($904 million) and in the International division underwriting income dropped 38% to $US242 million ($368 million). 

AIG’s overall net income declined in the second quarter, to $US1.49 billion ($2.26 billion) from $US2.75 billion ($4.18 billion) a year earlier.