(Reuters) - American International Group Inc (AIG), the largest commercial insurer in the United States and Canada, reported a bigger-than-expected quarterly loss, largely due to a $5.6 billion reserve charge to cover possible future claims.
Shares of the company, which also raised its share buyback program by up to $3.5 billion, were down 4.5 percent in after-hours trading on Tuesday.
AIG's net loss widened to $3.04 billion, or $2.96 per share, in the fourth quarter ended Dec. 31, from $1.84 billion, or $1.50 per share, a year earlier.
Much of the loss was due to the reserve charge for long-term risks on U.S. commercial insurance policies it has already written. AIG agreed last month to pay about $10.2 billion to a unit of Warren Buffett's Berkshire Hathaway Inc (BRKa.N) to take on the bulk of the risk associated with those policies.
The deal with Berkshire follows a $3.6 billion increase to reserves chalked up by AIG in the last quarter of 2015 and chief executive Peter Hancock told CNBC the insurer was reducing its reliance on commercial insurance in the United States as claims, ranging from medical malpractice to workers' compensation, rise.
TWO-YEAR PLAN
The goals for AIG's restructuring plan include returning $25 billion to shareholders and becoming a "leaner, more profitable and focused insurer" by trimming its property and casualty business and shedding unwanted assets, among other measures.
The $3.5 billion buyback announced on Tuesday keeps AIG on track to meet that goal.
On an operating basis, AIG reported a loss of $2.72 per share in the three months ended Dec. 31 while total general operating expenses fell 9.6 percent to $2.48 billion.
The insurer is looking to cut its gross general operating expenses by $1.6 billion by year-end.
No comments:
Post a Comment