AIG Falls After Saying Catastrophe Losses May Reach $1.7 Billion

(Bloomberg) -- American International Group Inc. shares fell after saying that its quarterly catastrophe losses from natural disasters including Hurricane Florence and typhoons Jebi and Trami may total as much as $1.7 billion.

The stock slumped 3.5 percent to $46.91 at 9:34 a.m. in New York trading. They’ve declined 21 percent this year.

AIG’s third-quarter catastrophe losses, calculated before taxes and net of reinsurance, will be about $1.5 billion to $1.7 billion, the New York-based company said Thursday after the close of regular U.S. trading. Additionally, initial estimates for losses tied to Hurricane Michael, which slammed the U.S. earlier this month, are about $300 million to $500 million, to be included in fourth-quarter results.

“We expect AIG’s shares to trade down on Friday on the bigger-than-expected catastrophe losses and book-value erosion,” Keefe, Bruyette & Woods Inc. analysts Meyer Shields and Sean Reitenbach wrote in a note to investors late Thursday. They cut their earnings estimate to a 1-cent loss from an 87-cent profit for the third quarter, and to $1.02 from $1.24 for the fourth quarter. The analysts, who have an outperform rating on AIG, lowered their price target for the insurer to $65 a share from $70.

AIG competitor Travelers Cos. reported third-quarter catastrophe losses of $264 million on Thursday and said it will continue its share repurchase program despite the impact of Michael. Chubb Ltd., which is scheduled to report third-quarter earnings on Tuesday, said last week that it expects pretax losses of $450 million from natural catastrophes for the period.

To contact the reporter on this story: Claire Ballentine in New York at cballentine@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Steve Dickson

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