11 Insurers Issue Q2 Results
AIG, Allstate, Liberty Mutual and The Hartford all issue financial statements.
Insurance Networking News, August 11, 2010
A number of insurers have begun to release their financial results for Q2
2010. The following is a compilation of their announcements:
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American International Group Inc.
American International Group Inc. reported a net loss attributable to AIG of $2.7 billion for Q2 2010, or $(3.96) per diluted common share, compared to net income of $1.8 billion, or $2.30 per diluted common share, in Q2 2009. The Q2 2010 loss was primarily due to a $3.3 billion non-cash goodwill impairment charge included in discontinued operations, the company says.
AIG says that its Q2 2010 adjusted net income was $1.3 billion (compared to $1.1 billion in Q2 2009), including operating income of $2.2 billion from continuing insurance operations, mortgage guaranty operating income of $226 million, $604 million in income from the Asia life insurance operating segment (principally American International Assurance Co. Ltd. (AIA), and fair value gains on Maiden Lane III of $358 million, partially offset by interest and amortization on the Federal Reserve Bank of New York (FRBNY) Credit Facility and third-party debt, invested asset impairment charges and other net restructuring and legal settlement charges, and a decrease in the net deferred tax asset.
The insurer’s continuing insurance operations earned $2.2 billion before tax in Q2 2010, compared to $1.5 billion in Q2 2009.
“AIG’s continuing insurance operating results remain solid, while the company continues to execute on its restructuring plans and prepares for separation from the U.S. government,” says President and CEO Robert Benmosche. “Our overall strategy remains unchanged. We remain focused on monetizing AIA and ALICO as quickly as possible in order to repay taxpayers, at values reflecting the unique strengths of these highly attractive franchises. The sale of ALICO is proceeding as planned and is expected to close in the fourth quarter. Recently, we decided to re-initiate our plans to take AIA public, subject to regulatory approval and as market conditions permit.”
The Allstate Corp. reported its financial results for Q2 2010. Allstate’s Q2 operating income rose to $441 million compared to $297 million in the same period of 2009, reflecting improved results in both Property-Liability and Allstate Financial. Net income was $145 million in Q2 2010 compared to $389 million in Q2 2009 primarily due to realized capital losses in the 2010 quarter versus realized capital gains in the prior year period. Realized capital losses in Q2 2010 reflect risk management actions, including derivative losses that were offset by increased portfolio valuations. Book value rose to $33.24 per share at June 30, 2010 compared to $32.26 at March 31, 2010 and $27.87 at June 30, 2009, reflecting higher shareholders’ equity primarily resulting from increased market valuations for fixed income investments.
“We made continued progress in executing our strategies and achieving our 2010 goals in the second quarter,” says Thomas Wilson, chairman, president and CEO of The Allstate Corp. in a release. “Profitability at Allstate Protection met our underlying combined ratio outlook for the year. Implementation of growth initiatives reduced the impact of catastrophe risk management and profitability actions, but has not yet generated sufficient volume to increase overall policies in force. Allstate Financial’s operating income significantly rebounded reflecting progress on its strategic repositioning and the benefit of reserve actions. Strong investment results reflect our risk mitigation and return optimization strategies.
“Operating income was $0.81 per diluted share for the quarter compared to $0.55 per diluted share for the same quarter last year due to a decline in catastrophe losses from a record second quarter level in 2009,” Wlison continues. “Net income was $0.27 per diluted share as derivative losses reduced earnings. Derivative losses, however, were more than offset by corresponding increases in investment valuations so that book value per share increased by 3% in the quarter.”
Citizens Inc. reported results for the second quarter and six months ended June 30, 2010. According to a release, premium growth primarily related to life renewal premiums as international persistency trends were favorable. Claims and surrenders remained at consistent levels and were within the company’s expectations. Underwriting and other expenses decreased to $7 million and $14 million for the three and six months of 2010 from $7.8 million and $15.1 million in 2009. The decrease was due to lower legal and auditing fees, Citizens says.
The insurer announced that total revenue increased 1.6% for the three months ended June 30, 2010, but declined slightly for the six-month period. Total revenue excluding the change in fair value of warrants increased 3.0% and 3.1% for the same periods. Similarly, the decline in net income for the six-month periods was largely due to the change in the fair value of the warrants.
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