Q1 Earnings: AIG, Liberty Mutual Profits Soar
AIG Profit More Than Doubles
American International Group Inc. reported $3.21 billion net income for its 2012 first quarter, a 147 percent increase from $1.30 billion net income posted during the same period one year ago.
The insurer’s profit surge was helped by low natural catastrophe claims as well as investment gains. One year ago, AIG had suffered significant catastrophe losses stemming from the earthquake in Japan. In the 2012 first quarter, pre-tax catastrophe-related losses at Chartis was $80 million, significantly lower than the $1.69 billion catastrophe-related losses recorded one year ago.
AIG’s property/casualty division, Chartis, reported $1.0 billion in operating income, improving from an operating loss of $424 million in the first quarter of 2011.
Overall, Chartis underwriting loss narrowed to $180 million in the first quarter, improving from an underwriting loss of $1.60 billion during the same period one year ago.
The net investment income for Chartis improved to $1.22 billion, up from $1.18 billion one year ago.
The combined ratio for the quarter was 102.1 percent, improving from 118.6 percent one year ago. The combined ratio excluding current-year catastrophe losses and prior-year loss development was 100.4, compared to 98.3 one year ago. The loss ratio improved, thanks to a shift to higher-value businesses, pricing improvements, and risk selection — but it was offset by higher expenses, the insurer stated.
Chartis’ net premiums written were $8.82 billion, down 3.7 percent from $9.17 billion reported one year ago. But the company said the decline is an intended result of restructuring and improvement in risk selection. The insurer said factors that contributed to the decline include: continued restructuring of loss sensitive businesses to improve capital efficiency; the impact of a multi-year financial lines policy that produced net premiums written of $148 million in the prior year period; and initiatives to improve risk selection, particularly in the casualty lines of business.
Liberty Mutual Profit Soars 26%
Global insurer Liberty Mutual Holding Co. Inc. and its subsidiaries reported a 26 percent jump in net income for the three months ended March 31 due to higher premiums and lower catastrophe losses.
The company reported a profit of $459 million, up from $364 million for the first quarter last year. Revenue rose 6 percent or $500 million to $8.88 billion. Net premiums written rose $495 million or 6.5 percent to $8.08 billion.
The company’s catastrophe losses totaled $321 million in the latest period, down from a loss of $588 million in the first quarter of last year, one of the worst ever for catastrophe losses for the insurance industry.
“Our first quarter results highlight the progress we have made in terms of core profitability and continued growth,” said David Long, CEO of Liberty Mutual Insurance.
Long said the net income of $459 million reflected “an accelerating commercial lines price trend, excellent non-catastrophe personal lines results, and fewer international catastrophes.” In the first quarter, the company also acquired Russian insurer, KIT Insurance.
He said growth was strong in targeted areas, with increases of 12 percent internationally and 9 percent in domestic personal lines, while U.S. commercial lines contracted an acceptable 1 percent.
“These results, plus our acquisition of KIT Finance Insurance in Russia, have provided an encouraging start to the year,” said Long.
Including the impact of catastrophes and losses attributable to prior years, the company’s combined ratio for the first three months of 2012 decreased 1.5 points to 100.9 percent. The consolidated combined ratio before catastrophes and losses attributable to prior was 96.0 percent, a decrease of 0.9 points from the same period in 2011.
MMC Income Up 6.8%
Marsh & McLennan Cos. Inc. reported $347 million net income for its 2012 first quarter, up 6.8 percent from $325 million reported during the same period in 2011.
The total revenues for the quarter were $3.05 billion, up 5.7 percent from $2.88 billion reported one year ago.
Revenues jumped 6.9 percent to $1.75 billion for the risk and insurance services — which include brokerage and risk management unit Marsh Inc. and reinsurance brokerage unit Guy Carpenter. Operating income for risk and insurance services rose 9 percent to $417 million.
Revenues for insurance broker Marsh Inc. went up 7.6 percent to $1.38 billion. Marsh’s U.S./Canada division reported a 6 percent increase in its underlying revenues, while Marsh’s international operations showed even bigger growth, including 18 percent revenue growth in Latin America and 10 percent revenue growth in Asia Pacific.
Revenues at reinsurance broker Guy Carpenter rose 5 percent to $357 million.
“Marsh produced another strong quarter, generating underlying revenue growth of 7 percent with all major geographies contributing,” CEO Brian Duperreault said. “This growth was driven by both higher client retention, revenue retention rates and new business development.”
Revenues in consulting units also improved. Revenues for Mercer human resource consulting unit increased 3.8 percent to $957 million. Management consulting unit Oliver Wyman Group’s revenue jumped 5 percent to $356 million.
Investment income for the quarter was $20 million, up slightly from $19 million reported during the prior-year period.
The Hartford Profit Falls 80.8%
The Hartford Financial Services Group Inc. said its first quarter income declined 80.8 percent to $96 million, hurt by a $587 million net realized loss from runoff operations.
The Hartford’s net income during the same period one year ago was $501 million. The net realized loss from runoff operations one year ago was $170 million. The Hartford stated that the larger net realized loss this year was “largely due to losses on hedging activities related to the international variable annuity business as a result of equity capital market levels and yen depreciation.”
The company’s core earnings rose, however, to $612 million, increasing 7 percent from $574 million reported during the same period last year.
The Hartford, Conn.-headquartered insurer is in the process of divesting most of its life insurance-related operations and focus on the property/casualty, group benefits and mutual funds business.
Last month, The Hartford agreed to sell its individual annuities operations to Forethought Financial Group in Houston.
Hanover Profit Rises 70%
The Hanover Insurance Group reported $49.7 million net income for its 2012 first quarter, up 70 percent from $29.3 million reported during the same period one year ago. Profit continues to get a boost from its London-based Chaucer unit, which Hanover acquired in July 2011. That unit contributed pre-tax segment income of $25.5 million for the first quarter.
Total underwriting income for the quarter was $16 million, improving from the $9.5 million underwriting loss during the same quarter in 2011. The combined ratio was 98.1 percent (94.2 percent, ex-cat), improving from 100.7 percent (94.2 percent, ex-cat) reported one year ago.
Overall net premiums written for the first quarter were $1.017 billion, up 36 percent from $749.9 million reported one year ago. The Chaucer unit added $200.2 million in net premiums written. The company also said its commercial lines net premiums written grew 14.8 percent, driven by both core commercial and specialty businesses.
Hanover said the first quarter represented the sixth consecutive quarter of accelerating rate increases across core commercial lines.
Net investment income for the first quarter was $68.8 million, up 14 percent from $60.4 million reported one year ago.
Selective Income Falls 11.7%
Selective Insurance Group in Branchville, N.J., reported $18.1 million net income for its 2012 first quarter, a 11.7-percent decrease compared to $20.5 million income reported during the prior-year quarter.
The company was hurt by lower net investment income. It fell to $24.8 million, down 23 percent from one year ago.
Total net premiums written were $420.2 million, up 16 percent compared to one year ago. Commercial lines net premiums written rose 18 percent to $354.6 million, including $25.8 million from excess and surplus lines. Personal lines net premiums written were up 7 percent to $65.6 million. Non-catastrophe property losses were $33.7 million, after tax, down 15 percent from $39.7 million one year ago.
The overall GAAP combined ratio improved to 100.4 percent, down from 103.6 percent one year ago. Total revenue was $419.3 million, up from $403.5 million one year go.