AIG has released strong Q1 financial results for 2023, with its General Insurance segment posting a combined ratio of 91.9%, improving by 1.0 points from the prior year quarter. The accident year combined ratio, ex-CAT, was 88.7%, so a 100-basis point and 80-basis point improvement, respectively, from the previous year’s quarter.
General Insurance delivered an underwriting income of $502 million. This is the company’s strongest first quarter in underwriting results. Commercial Lines’ net premiums written (NPW) grew 6% from the year before.
The company’s adjusted accident year combined ratio (AYCR) stands at 88.7% which has seen an improvement of 0.8 points from the prior year’s quarter, making it the fifth consecutive year of margin improvement.
AIG Chairman and Chief Executive Officer, Peter Zaffino said, “AIG successfully navigated a complex environment to produce excellent first quarter results that demonstrate our ability to deliver high-quality outcomes for stakeholders, grow our business, manage volatility, and improve profitability. We also continue to execute on achieving underwriting and operational excellence, and capital and investment management strategies.”
The company’s Life and Retirement, known as Corebridge Financial, Inc. reported a strong quarter with continued sales momentum and a 60-basis point improvement in base investment yield from previous years. The APTI decreased $48 million to $886 million from the prior-year quarter, due to lower alternative investment income and lower fee income, partially offset by higher base portfolio income and improved mortality experience. Premiums grew 159% to $2.2 billion.
Zaffino also commented on the results, “General Insurance net premiums written increased 5% year-over-year. On a constant dollar basis and adjusted for the International lag elimination, net premiums written increased 10%, driven by strong growth in North America Commercial led by Validus Re and Lexington, and International Commercial, led by Global Specialty. North America Commercial rate, excluding Workers’ Compensation, re-accelerated with an 8% increase in the quarter, and the International Commercial rate also increased 8%, in each case exceeding loss cost trends.”
The company’s total consolidated net investment income for the Q1 of 2023 was $3.5 billion, which is an increase of 9% from $3.2 billion in the prior-year quarter. The net investment income benefited from $618 million of improvement in interest and dividends as a result of higher yields on the fixed-maturity securities and loan portfolios, which were partially offset by lower alternative investment income. Total net investment income on an APTI basis was $3.1 billion, an increase of $77 million from the prior-year quarter.
The company’s net income attributable to the common shareholders was $23 million, or $0.03 per diluted common share, as compared to $4.2 billion, or $5.04 per diluted common share, in the prior-year quarter.
This decline was mostly due to net realized losses on Fortitude Re funds withheld embedded derivative as well as net realized losses excluding Fortitude Re funds withheld assets and embedded derivative, and lower alternative investment income, partially offset by higher General Insurance underwriting income and investment income on the fixed maturity securities and loan portfolios.
These pre-tax movements were partially offset by a lower income tax expense as well as a higher net loss attributable to noncontrolling interest due to noncontrolling interest losses on Corebridge in 2023 compared to gains in 2022 and the 12.4% public floating interest from the initial public offering (IPO).
