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AIG general insurance combined ratio falls below 90% for first time in 15 years

9th August 2022 - Author: Pete Carvill

AIG is reporting that it general insurance combined ratio improved by 5.1 points in Q2 2022, compared to the same period in 2021.

The firm said in a statement that this was its first sub-90% combined ratio in a decade-and-a-half. Meanwhile, its general insurance adjusted accident year combined ratio improved over the same period by 2.6 points to reach 88.5%.

The firm also said that general insurance adjusted pre-tax income (APTI) of $1.3bn reflects a $336m increase in underwriting income from the prior year quarter with 5.1 points of combined ratio improvement. This, it said, was 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 favourable prior year development.

Peter Zaffino, chairman and CEO of AIG, 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.

He added: “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.”

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The firm also said that its life and retirement adjusted pre-tax income of $563m reflected lower net investment income (NII) due in large part to lower alternative investment returns and lower yield enhancements. This, it said, was partially offset by more favourable mortality compared to the prior year quarter.

Zaffino added: “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.”

He went on: “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 $150bn of assets under management to be transferred by the end of 2022.

The link-up with BlackRock was reported on these pages in March. Back then, the companies said that the arrangements contemplate BlackRock managing up to $60bn of the global AIG investment portfolio and up to $90bn of the Life & Retirement investment portfolio. Additionally, BlackRock’s Aladdin platform will provide investment management technology for both AIG and Life & Retirement.

The arrangements with BlackRock will be implemented in phases across AIG’s global operations, subject to customary onboarding and implementation requirements and any required regulatory approvals.

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