|AIG RELEASES PRELIMINARY ESTIMATE FOR CATASTROPHE LOSSES AT CHARTIS FOR THE FIRST QUARTER 2011|
NEW YORK, Mar 18, 2011 -- American International Group, Inc. (AIG) today released a preliminary pre-tax insurance loss estimate for Chartis, its property casualty insurance unit, of $1.0 billion, or $0.9 billion after tax - 1.1 percent of total AIG shareholders' equity as of December 31, 2010 - net of all reinsurance recoverables for the first quarter of 2011, related to various catastrophes, including a pre-tax insurance loss of $0.7 billion related to the recent earthquake in Japan, consequent tsunami, and related exposures. This preliminary estimate excludes losses arising from AIG's general insurance operations in Japan that participate in the Japanese Earthquake Reinsurance Company (JERC) as explained below.
AIG's preliminary estimate also includes catastrophe losses related to the New Zealand earthquake, U.S. winter storms, northeast Australian floods, Cyclone Yasi, and the Brazil floods that have occurred in the first quarter to date.
As noted earlier, the preliminary estimate excludes losses arising from AIG's general insurance operations in Japan that participate in the JERC, which is the exclusive provider of earthquake coverage for personal dwellings and their contents in Japan, as the industry loss remains unquantified at this time. In accordance with Japanese statutory accounting rules, AIG's general insurance operations in Japan have previously established catastrophe reserves of approximately $500 million for potential claims associated with earthquake damage to personal dwellings and have deposited funds for a substantial portion of these reserves with the JERC. These deposits will be utilized to pay earthquake claims on personal dwellings, thereby reducing the impact on the liquidity of the operations.
U.S. GAAP prohibits the establishment of catastrophe reserves in advance of a catastrophic event occurring. The maximum U.S. GAAP pre-tax loss that AIG general insurance operations in Japan can incur from claims associated with earthquake damage to personal dwellings is approximately $575 million, including such claims filed with Fuji Fire and Marine Insurance Co., Ltd., in which AIG holds a 54.66 percent equity stake and whose financial results are consolidated in AIG's financial statements.
"Our priority is supporting all of our customers and employees who have borne the impact of these many catastrophes," said Robert H. Benmosche, President and Chief Executive Officer of AIG. "In Japan, where the people in the affected areas continue to bear many hardships, including aftershocks, lack of electricity, and fuel shortages, we are working closely with our customers and continue to monitor events in the country as they unfold. We have been able to make substantial progress due to the remarkable efforts of our claims department and our customer service department, which have been working non-stop since the event. We have also been actively engaged in bringing relief supplies to the hardest hit areas.
"The catastrophe in Japan has affected people, their homes, infrastructure, and businesses both in and outside of Japan, and our industry is working hard to quantify the complex impact of the devastation, a process that will take some time.
"As a result, our preliminary loss estimate will change as the industry losses from JERC for earthquake damage to personal dwellings become known and other information becomes available as the situation in the quarter evolves. Our preliminary estimate is based on our current assessment of what our policies cover and the provisions of reinsurance purchased by AIG and its affiliates," Mr. Benmosche concluded.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect AIG's current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Except for AIG's ongoing obligation to disclose material information as required by federal securities laws, it does not intend to provide an update concerning any future revisions to any forward-looking statements to reflect events or circumstances occurring after the date hereof.
American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo.
SOURCE: American International Group, Inc.
American International Group, Inc.