Wildfire-related payments totaled $460 million as the insurance sector handles increasing claims due to natural disasters.
American International Group Inc. (AIG) revealed a first-quarter profit decline on Thursday, citing substantial payments caused by the Los Angeles County wildfires in January.
The Multinational Finance and Insurance Corporation reported $525 million in total catastrophe-related costs in the quarter, $460 million of which was the direct result of the Los Angeles County fire, which lost at least 30 lives and destroyed more than 16,000 buildings.
AIG initially predicted its net loss from the wildfire to $500 million.
The written AIG general insurance net premiums are stable at $4.5 billion, and remain unchanged from the previous year, but are up 8% when adjusted for comparability, a measure that reflects sales of AIG’s travel business last year.
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The entire insurance sector is dealing with an increase in claims caused by natural disasters. Global insurance losses from hurricanes, floods and wildfires are estimated to approach $145 billion in 2025, following arriving at $137 billion last year.
AIG shares rose 3.5% on Friday to close at $83.66. So far, it has increased by nearly 15%.
“The regulatory model for surplus line carriers tends to be less stringent than the entrance officer framework. This allows (surplus line carriers) to provide greater flexibility in setting premium rates and conditions for policies,” writes analyst Jason Wolleben.
