(Reuters) - American International Group Inc (AIG.N) missed analysts’ estimates for third-quarter profit on Friday due to weakness in the insurer’s life and retirement unit and a difficult period for catastrophe losses.
Pre-tax income from AIG’s life and retirement business fell 9% to $646 million as it booked a $143 million charge related to a review of its actuarial assumptions.
The unit and many other life insurers typically conduct reviews every third quarter of assumptions they made when writing policies many years ago. The process can end with extra cash having to be set aside to cover future claims.
Excluding the impact from AIG’s actuarial review, adjusted pre-tax income at the unit fell 3% due to an increase in the number of insured who died and lower alternative investment returns, the company said.
Shares of AIG, one of the largest U.S. insurers, were down 1.8% on Friday.
The insurer posted a profit of 56 cents per share, on an adjusted basis, well below analysts’ expectations for a profit of $1 per share, according to IBES data from Refinitiv.
AIG is in the midst of a turnaround effort, launched by Chief Executive Officer Brian Duperreault, who took charge in 2018.
The strategy largely involves the insurer’s general insurance unit, where Duperreault has been set to improve underwriting practices and scale back exposure to bad risks. He also deployed a reinsurance program to mitigate catastrophe losses.
Some of those changes involve AIG’s specialty commercial unit, Lexington Insurance, which reduced total casualty insurance limits by 58% during the quarter while increasing premium rates by more
