AIG surprises with loss tied to costs from storms in U.S., Japan

American International Group Inc. (AIG) reported a surprise third-quarter loss as natural disasters, old and new, hurt results.

It was the fifth straight quarter that AIG’s results have fallen short of analysts’ expectations. The adjusted loss was 34 cents a share, while analysts had been expecting a profit of nearly 6 cents.

$1.6 billion in Q3 catastrophe costs

Both Hurricane Florence and the typhoons in Japan hit AIG harder than its rivals. The insurer reported $1.6 billion in catastrophe costs for the period, the midpoint of the range AIG had announced earlier this month. The loss is about three times larger than initial forecasts from Morgan Stanley analysts.

Old disasters also came back to haunt AIG. The insurer added $170 million to reserves in the third quarter, as costs from last year’s wildfires in California climbed higher than the insurer anticipated. Even with the setbacks, Chief Executive Officer Brian Duperreault said the insurer remains on track for a key metric in his turnaround effort: an underwriting profit by year-end.

AIG fell 0.9% at 4:18 p.m. in late trading. The shares climbed 0.4% in the third quarter and had plunged 31% this year through Wednesday’s close.

AIG broke out the catastrophe costs from one of its newest additions, Validus. That unit’s losses from storms totaled about $200 million and were mostly tied to Japan.

Private equity returns providing lift to insurers

Private equity returns are providing a lift to insurers such as AIG and Travelers Cos. They helped fuel a 1.4% gain in AIG’s net investment income, which includes legacy insurance portfolios, to $3.4 billion.

Related: AIG falls as profit stung by investments, underwriting slump