Executives at American International Group Inc. say COVID-19 might be affecting the flow of information the company needs to pay life insurance claims.
Kevin Hogan, chief executive officer of AIG’s life insurance and retirement unit, talked about that concern Tuesday, in a conference call the company held to go over first-quarter earnings with securities analysts.
Early in the first quarter of the year, reported mortality for the insureds was lower than what AIG had built into its pricing, Hogan said.
“Later in the period, what we did notice is that there were some delays in reporting, generally related to the issuance of certain documentations,” Hogan said.
AIG added an item for life insurance claims that are likely to come in, but have not yet come in, because of the worries about the lag in reporting, Hogan said.
- A link to the webcast of AIG’s earnings call is available here.
- An article about AIG’s earnings release is available here.
AIG does expect to get reports of additional mortality for the second and third quarters of the year, Hogan said.
“But we don’t expect to see significant impacts to the balance sheet based on what we know, and there could be some offsetting factors,” Hogan said. “Although we may experience some acceleration, we are not expecting large incremental impacts to mortality rates and expect any incremental impacts to be manageable in the context of our overall balance sheet.”
The main focus of the AIG analyst call was the company’s general insurance divison.
Peter Zaffino, the chief executive officer of AIG’s general insurance unit, and other AIG executives called COVID-19 “the largest single catastrophic loss the insurance industry has ever seen.”
“While the insurance industry manages risk of all kinds, it’s fair to say that the profound impact and global nature of COVID-19 is something we have never encountered,” Zaffino said. “There’s no playbook.”