AIG sees $1 bn in disaster losses in Q1

NEW YORK: Bailed-out insurer American International Group said it would post an estimated $1 billion in pre-tax catastrophe losses in the first quarter, mostly from exposure to the 11 March earthquake in Japan.

AIG said its exposure would be about $900 million after-tax. The losses apply to its Chartis unit, one of the largest property insurers in Japan and the world.

About 70 percent of the pre-tax loss comes from Japan, the company said on Friday, with the rest from flooding in Australia, U.S. winter storms, an earthquake in New Zealand, a cyclone and flooding in Brazil.

AIG said the loss figure would change as its exposure to the Japanese Earthquake Reinsurance Co becomes clearer. JERC, as it is known, is the sole provider of earthquake insurance for homes and their contents in Japan.

AIG said it already had taken catastrophe reserves of $500 million in Japan for claims via JERC, and said the maximum pretax loss it could incur for such claims was $575 million.

Catastrophe modeling companies estimate the earthquake and subsequent fire and tsunami will cause the global insurance industry anywhere from $12 billion to $35 billion in losses.