The business underwent a restructure in 2018 in preparation for the UK’s exit from the EU.
AIG Europe (AEL) made a pre-tax profit of £59.5m for the 12 months to 30 November 2018, according to a statement about its financial result.
This represents a vast improvement on the losses of £431.5m the previous year.
The combined operating ratio (COR) also improved more than 10% from 114.6% in 2017 to 103.4%.
The business also saw net written premium fall from £3.91bn to £3.78bn.
AIG detailed that this change reflected a “decision to focus on core areas of growth. Financial Lines saw a 7% increase in net premiums written, offset by a decline in property, where premiums fell by 17%”.
The insurer said the underwriting result improved to a loss of £131.3m (2017: loss of £569.9m). Operating expenses were significantly lower at £1.4bn (2017: £1.5bn).
Positive underwriting performance and strategic risk selection combined with lower catastrophic losses led to the improved COR.
Last year AIG restructured AEL and established two new legal entities – American International Group UK Limited (AIG UK) and AIG Europe SA (AESA) – in preparation for the UK’s exit from the European Union.
AIG explained that the two-entity structure enables it to continue to service all of its policyholders and business partners across the UK and Europe, and to guarantee contract certainty to all policyholders, regardless of the future relationship between the UK and the EU.
Both companies started writing business, and policyholders transferred from AEL to the relevant new entity, on 1 December, 2018.
Anthony Baldwin, chief executive officer, AIG UK, commented: “I’m proud of the work the team has done to stand up AIG UK as a separate business which has ensured our readiness for Brexit.
“During 2018 we made good progress in reducing our expenses, growing our profitable lines of business and remediating those areas that are less profitable. Thanks to these efforts we enter 2019 with a clear ambition and renewed focus.”
AIG UK issued a report and accounts for the twelve months ended November 30, 2018, although as the assets were transferred to this entity and it only started trading on 1 December 2018, according to the provider, the report doesn’t reflect the operating performance of the UK business.