AIG Reports Second Quarter 2022 Results

General Insurance combined ratio of 87.4% improved by 5.1 points from the prior year quarter and was the first sub-90% combined ratio in over fifteen years...

• General Insurance adjusted accident year combined ratio* of 88.5% improved by 2.6 points from the prior year quarter
• Global Commercial Lines adjusted accident year combined ratio* of 85.3% improved by 4.0 points from the prior year quarter
• Global Commercial Lines Net Premiums Written (NPW) growth of 5% (8% on a constant dollar basis)
• Life and Retirement posted its second consecutive quarter with more than $1.3 billion in fixed annuity deposits and overall positive net flows
• Net income per diluted common share was $3.78 compared to $0.11 in the prior year quarter
• Adjusted after-tax income* (AATI) per diluted common share of $1.19 compared to $1.52 in the prior year quarter, driven by a 73% increase in General Insurance underwriting income, offset by lower alternative investment income
• Repurchased $1.7 billion of AIG common stock in the second quarter and $3.1 billion as of June 30, 2022
• Redeemed and repurchased $7.6 billion in aggregate principal amount of debt

SECOND QUARTER NOTEWORTHY ITEMS

• General Insurance adjusted pre-tax income (APTI) of $1.3 billion reflects a $336 million increase in underwriting income from the prior year quarter with 5.1 points of combined ratio improvement driven by higher premiums marked by higher renewal retentions, positive rate change and strong new business production, focused risk selection and improved terms and conditions as well as more favorable prior year development (PYD).
• Life and Retirement APTI of $563 million reflects lower net investment income (NII) due in large part to lower alternative investment returns and lower yield enhancements, partially offset by more favorable mortality compared to the prior year quarter. In the current quarter, the impact of higher new money rates, which reflects benefits from higher interest rates, and wider credit spreads has provided uplift to base portfolio NII. Life and Retirement return on adjusted segment common equity* (Adjusted ROCE) for the second quarter was 7.6%.
• Return on common equity (ROCE) and Adjusted ROCE* were 24.1% and 7.0%, respectively, on an annualized basis for the second quarter of 2022.

* Refers to financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Comment on Regulation G and Non-GAAP Financial Measures.

AIG Chairman & Chief Executive Officer Peter Zaffino said: “AIG had another excellent quarter. General Insurance reported outstanding results and Life and Retirement again delivered a solid performance considering the significant market headwinds in the second quarter.

“Due to the high degree of equity market volatility in May and June, we decided to defer the launch of the Corebridge Financial initial public offering (IPO). Deferring the IPO provided us with an opportunity to further accelerate progress on numerous separation initiatives and to solidify the capital structure of this business as a standalone company. Completing the IPO is a significant priority for us and we remain ready to execute, subject to regulatory approvals and market conditions.

“General Insurance’s culture of underwriting excellence continues to be evidenced in our financial results. Meaningful top-line growth, strong renewal retention and new business, intentional improvements in business mix, rate above loss cost trends, coupled with a disciplined and focused approach to minimizing volatility, led to impressive profitability improvement.

“The combined ratio of 87.4% represents AIG’s first sub-90 quarter in over fifteen years and improved 510 basis points year-over-year. Consistent with our strategy to manage volatility, catastrophe losses were very modest in the quarter coming in at $121 million, or 1.8 points of the combined ratio. The adjusted accident year combined ratio of 88.5% improved for the 16th consecutive quarter – totaling 1,250 basis points of improvement over this period and 2,080 basis points of improvement in Global Commercial Lines. Overall, I am very pleased with our overall performance and the momentum we have heading into the second half of 2022.

“Life and Retirement experienced another solid quarter of sales growth in fixed annuities supported by Blackstone’s origination capabilities. Additionally, Life and Retirement is starting to see a positive impact in its base portfolio net investment income from higher interest rates and credit spreads.

“During the second quarter, we began to transfer certain assets under management to BlackRock in accordance with our recently announced asset management arrangement. We expect the majority of the remainder of the approximately $150 billion of assets under management to be transferred by the end of 2022.

“Lastly, certain capital management priorities were accelerated in the second quarter, including issuing $6.5 billion of Corebridge Financial debt and subsequently redeeming or repurchasing $7.6 billion in aggregate principal debt of AIG. In addition, we returned $2.0 billion to shareholders through $1.7 billion of AIG common stock repurchases and $256 million of dividends.

“Thanks to the outstanding efforts and hard work of our global colleagues, AIG continues to drive excellence across the company that will create long-term value for all our stakeholders.”

Full release here