BLOOMBERG — Brian Duperreault picked a tough year to shore upAIG's underwriting.

Losses from wildfires in California drove American International Group Inc.'s fourth-quartercatastrophe costs higher than rivals' and beyond what some analystsestimated. The company's results were also dragged down by a nearly$7 billion charge tied to the U.S. tax overhaul that AIG hadpreviously warned investors to expect.

Duperreault, who took over as chief executive officer inMay, made progress on commercial underwriting while contending withhigh costs in one of the worst years for natural disasters onrecord. He has signaled that the firm is moving back toacquisitions with the January agreement to buy ValidusHoldings Ltd.

“2017 represents a starting point from which we expect tobuild,” Duperreault said Tuesday in the statement announcingfourth-quarter earnings.

Related: 2017 to be one of the costliest catastrophe lossyears ever, Fitch says

AIG's loss in the quarter widened to $6.66 billion, or $7.33 ashare, from $3.04 billion or $2.96 a year earlier. Still, the CEO'sefforts are paying off, with the underwriting loss at theNorth American business narrowing 94 percent to $316 million.

AIG had $762 million of catastrophe losses in the fourthquarter, with $572 million related to the California fires. Thatexceeded the $680 million estimate from Morgan Stanley analysts,who had said the fires might bring costs of about $500 million. Thecombined ratio for general insurance in the period was 113.3,meaning AIG lost 13.3 cents for every premium dollar after claimsand expenses.

Related: Lessons and consequences of the record-setting 2017hurricane season

The catastrophe costs at AIG surged to a record $4.2 billion forthe full year. Economic losses from weather and climate disastersincluding hurricanes Harvey, Irma and Maria and the Californiawildfires reached a $306 billion in 2017, the federal governmentsaid last month.

AIG's biggest rivals in property & casualty coverage reportedlighter costs tied to disasters. Allstate Corp. said this week that2017 catastrophe losses were $3.23 billion, while Chubb Ltd.'stotal was $2.2 billion.

Duperreault, 70, said the $5.56 billion deal to buyBermuda-based reinsurer Validus is an opportunity for AIG to expandabroad and into new business lines. The CEO said in an interviewlast month that he also has increased his appetite for reinsurance,which provides backstop coverage for primary insurers.

“Validus has been very, very good at matching risk withcapital,” Duperreault said last month. “We're a bigger buyer ofreinsurance today than we were before my arrival.” AIG expects tocomplete the Validus deal in June.

AIG said it added $76 million to its reserves in the fourthquarter.

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