Insurer American International Group (NYSE: AIG) reported first-quarter earnings that trounced Wall Street estimates on Monday, as its general insurance business posted its first underwriting profit since the financial crisis.
Shares of the company rose more than 6% after Chief Executive Officer Brian Duperreault said he expects the company to record an underwriting profit for the full year.
The general insurance unit’s underwriting income, which is the difference between premiums an insurer collects on policies and claims it pays out, was $179 million in the latest quarter, compared with an underwriting loss of $251 million a year earlier.
Adjusted income from the business rose more than two-fold to $1.27 billion.
Duperreault, who took the helm at AIG in May 2017, has been overhauling AIG’s underwriting culture, which has for years focused on chasing revenue growth without appropriately weighing risks.
The CEO and his deputies have been telling staff to be more selective about clients and wind down or revise unprofitable policies. AIG is also buying reinsurance to mitigate losses on old business.
Controls on costs also helped the insurer, with its expense ratio falling 230 basis points to 34.3 from the prior-year quarter.
Gross premiums written rose 11% to $10.2 billion in the general insurance business, helped mostly by the performance of its commercial lines insurance in North America.
AIG’s adjusted net income rose to $1.39 billion, or $1.58 per share, in the first quarter ended March 31, from $963 million, or $1.04 per share, a year earlier.
Analysts were expecting a profit of $1.06 per share
Shares ballooned $3.71, or 7.9%, to $50.82
