AIG Announces Impact of UK Ogden Discount Rate Change and Treatment of Deferred Gain Associated with Adverse Development Cover
April 19 2017 - 4:16PM
Business Wire
American International Group, Inc. (NYSE:AIG) today announced
two items impacting results for the quarter ending March 31,
2017.
In the first quarter of 2017, AIG expects to record an increase
to prior year loss reserves of approximately $100 million pre-tax
from the recent decision by the UK Ministry of Justice to reduce
the discount rate applied to lump-sum bodily injury payouts, known
as the Ogden rate, to -0.75%. Our carried reserves as at December
31, 2016 were estimated using an assumption that the Ogden rate
would decline to 1.0%. This discount rate change primarily impacts
the Liability & Financial Lines business within Commercial
Insurance in the United Kingdom.
Secondly, AIG will recognize an estimated nominal pre-tax
deferred gain of $2.6 billion in connection with the adverse
development cover entered into with Berkshire Hathaway as
previously disclosed. Beginning in the first quarter of 2017, AIG
will begin amortizing the deferred gain over the expected
reinsurance recovery period. The amortization of such amount will
be included in pre-tax operating income for the Liability and
Financial lines business each quarter. First quarter 2017 results
will reflect a partial quarter of amortization of approximately $40
million pre-tax based on the closing date of the contract of
February 3, 2017.
American International Group, Inc. (AIG) is a leading global
insurance organization. Founded in 1919, today AIG member companies
provide a wide range of property casualty insurance, life
insurance, retirement products, and other financial services to
customers in more than 80 countries and jurisdictions. These
diverse offerings include products and services that help
businesses and individuals protect their assets, manage risks and
provide for retirement security. AIG’s core businesses include
Commercial Insurance and Consumer Insurance, as well as Other
Operations. Commercial Insurance comprises two modules – Liability
and Financial Lines, and Property and Special Risks. Consumer
Insurance comprises four modules – Individual Retirement, Group
Retirement, Life Insurance and Personal Insurance. AIG common stock
is listed on the New York Stock Exchange and the Tokyo Stock
Exchange.
Additional information about AIG can be found at www.aig.com and
www.aig.com/strategyupdate | YouTube: www.youtube.com/aig |
Twitter: @AIGinsurance | LinkedIn:
http://www.linkedin.com/company/aig. These references with
additional information about AIG have been provided as a
convenience, and the information contained on such websites is not
incorporated by reference into this press release.
AIG is the marketing name for the worldwide property-casualty,
life and retirement, and general insurance operations of American
International Group, Inc. For additional information, please visit
our website at www.aig.com. All products and services are written
or provided by subsidiaries or affiliates of American International
Group, Inc. Products or services may not be available in all
countries, and coverage is subject to actual policy language.
Non-insurance products and services may be provided by independent
third parties. Certain property-casualty coverages may be provided
by a surplus lines insurer. Surplus lines insurers do not generally
participate in state guaranty funds, and insureds are therefore not
protected by such funds.
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version on businesswire.com: http://www.businesswire.com/news/home/20170419006560/en/
AIGInvestorsLiz Werner,
212-770-7074elizabeth.werner@aig.comorFernando Melon,
212-770-4630fernando.melon@aig.comorMediaJennifer Hendricks
Sullivan, 212-770-3141jennifer.sullivan@aig.com
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