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Abu Dhabi, UAEWednesday 20 June 2018

AIG expects third-quarter catastrophe losses of about $3 billion

The insurer said the losses were mainly related to hurricanes Harvey, Irma and Maria

A man shovels seagrass from the entrance of his mobile home in the wake of hurricane Irma at Tavenier Key, Florida. Gaston De Cardenas / AFP
A man shovels seagrass from the entrance of his mobile home in the wake of hurricane Irma at Tavenier Key, Florida. Gaston De Cardenas / AFP

American International Group (AIG)) said on Monday it expected to book pre-tax catastrophe losses of about US$3 billion in the third quarter mainly related to hurricanes Harvey, Irma and Maria.

AIG’s shares were down about 1.7 per cent at $60.75 in extended trading.

The company estimated pre-tax losses of about $1 billion each from Harvey and Irma, up to $700 million from Maria and additional catastrophe losses, including earthquakes in Mexico, of about $150m.

Morgan Stanley analysts said the losses were slightly above their estimate of $2.5bn, but were manageable as it equated to about 2.6 per cent of book value.

The analysts, who have an “overweight” rating on the stock, also highlighted the company’s more than $3.5bn in cash and short-term investments, saying it should help tackle capital concerns from losses in the third quarter.

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As natural disasters increase, insurance industry feels strain

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Insurers and reinsurers are counting the costs of the hurricanes that tore into parts of the United States, while ravaging several islands in the northern Caribbean.

Chubb, the world’s largest listed property and casualty insurer, has estimated after-tax losses of up to $1.28bn from hurricanes Harvey and Irma.

Germany’s Munich Re warned it could miss its profit target this year, the first major reinsurer to flag a hit to earnings from damage caused by the storms.

Hurricane season in the Atlantic is still in full swing and Morgan Stanley said it expects overall insured losses from this year’s catastrophes to approach $100bn.