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Large reserve charge results in a Q4 loss of $2.8bn for AIG

  • Publish Date: Posted about 7 years ago

AIG paid a large $5.6bn reserve change in the fourth quarter of last year causing it to experience a loss of $2.8bn for the period. A retroactive reinsurance agreement with National Indemnity has only just been finalised and now 80%, or $4.2bn, of total 2016 adverse development of $5.3bn will be passed on to Nico, a subsidiary of Berkshire Hathaway. The charge of $5.6bn is notably higher than that predicted by the market after many analysts suggested a figure around the $3bn mark. AIG has confirmed it anticipates to make a pre-tax gain of approximately $2.6bn in the current quarter to mirror the movement on the reserve in 2016 and the final premium paid for the Nico cover.