Financial guaranty businesses drives loss for AOG in 2019

The financial guaranty business drove an increased year on year loss for American Overseas Group (AOG) in 2019, despite a healthy increase in property and casualty premiums.

AOG reported a consolidated net loss of $3.7 million for full year in 2019. In 2018 AOG made a net loss of $3.2 million.

Net earned property and casualty premiums increased to $8.8 million in 2019, from $2.4 million in 2018,  driven by the addition of new agency relationships.

However, the financial guaranty segment generated a loss in net written premiums of $14.2 million in 2019, compared to a loss of $2.6 million in 2018. Losses in this segment were driven by the commutation of $1.065 billion of outstanding par during Q2, as well as unfavorable development on outstanding losses.

The legacy financial guaranty portfolio of American Overseas Reinsurance Company (AORE) continued to run-off satisfactorily, AOG said. AORE entered into a Commutation Agreement, effective April 1, 2020, to commute the remaining portfolio of financial guaranty reinsurance business it had assumed from Assured Guaranty Municipal Corp.

The aggregate outstanding par value of the reinsurance portfolio being commuted was $345 million as of April 1, 2020, eliminating AORE’s financial guaranty reinsurance business.