Global insurer AIG has reported a net loss of $4 billion in its second quarter 2024 results, driven by the recognition of a loss as a result of Corebridge deconsolidation, with divested businesses denting the performance of its general insurance (GI) business.
AIG explains that it recognized a loss of $4.7 billion as a result of Corebridge deconsolidation driven by a gain of $2.5 billion from Corebridge assets retained, offset by the recognition of an accumulated other comprehensive loss of $7.2 billion.
Adjusted after-tax income was $775 million for Q2’24 compared with $777 million a year earlier, driven by higher net investment income in GI, and stronger results in other operations, offset by a reduction in underwriting income and a rise in catastrophe losses year-on-year.
Within GI, 2023 divestitures had an impact in the second quarter of 2024, driving an 8% decrease in net premiums written (NPW) to $6.9 billion, although on a comparable basis NPW increased 7%, with solid growth of 8% in Global Commercial Lines. Gross written premiums fell by 5% year-on-year to $9.9 billion.
The insurer’s GI business generated an underwriting gain of $430 million in Q2’24, a decrease of 28% year-on-year as prior year results included the results of subsequently divested businesses, but a 2% increase on a comparable basis.
The underwriting performance was also hit by higher catastrophe losses, which hit $325 million in Q2’24, of which $156 million was in North America, mainly attributable to U.S. convective storms, and $169 million in International, with the largest loss from Middle East rains.
Additionally, AIG booked favorable prior year development, net of reinsurance, of $79 million in the quarter, driven by a reserve review.
The GI combined ratio increased by 1.6 percentage points to 92.5% in Q2’24, as the loss ratio rose to 61% on the back of the higher year-on-year impact from catastrophe events.
The segment’s net investment income increased 3% to $746 million, while adjusted pre-tax income fell 11% to $1.2 billion as a result of the 2023 divestitures, but actually increased 7% on a comparable basis.
Turning to AIG’s other operations, and net investment income increased 171% to $141 million, as the adjusted pre-tax loss improved $120 million from the prior year quarter to a loss of $158 million.
Total net investment income for the second quarter of 2024 was $990 million for AIG, an increase of 18% from $837 million in the prior year quarter.
Peter Zaffino, AIG Chairman & Chief Executive Officer, commented: “AIG had an outstanding second quarter and delivered terrific underwriting results across all of our businesses. The quarter marked one of the most notable accomplishments in AIG’s history with the deconsolidation of Corebridge, a process which began in 2020 and significantly advanced our multi-year strategy to position AIG for the future.
“The core fundamentals were exceptional in a quarter that included the complex accounting treatment of deconsolidation along with prior year divestitures. We are very pleased with the ongoing improvement in our underwriting income, record Commercial Lines new business of $1.3 billion, and very strong retention. Second quarter adjusted after-tax income per diluted share was $1.16, a 9% increase year-over-year, or 38% on a comparable basis.
“Against the backdrop of an increasingly uncertain global risk environment, AIG delivered sustainable earnings growth driven by our focus on underwriting excellence and continued expense discipline. The second quarter accident year combined ratio, as adjusted, of 87.6% improved 40 basis points year-over-year, or 170 basis points on a comparable basis† with 180† basis points of improvement in Global Commercial Lines and 130 basis points in Global Personal Insurance. The catastrophe loss ratio was 5.7 points for the second quarter, or 3.8 points for the first six months of the year, improving 20 basis points year-over-year, an excellent performance in a challenging catastrophe environment.
“The repositioning of our underwriting portfolio has enabled us to deliver high-quality growth in both the admitted and non-admitted markets with multiple points of entry to deploy capital towards the most attractive risk adjusted returns around the world. This quarter, General Insurance net premiums written grew 7% on a comparable basis†. North America Commercial Lines achieved 10%† growth with expansion across all major lines of business. Lexington Insurance, our Excess & Surplus platform, achieved over $1 billion of gross premiums written in the second quarter and had its strongest new business quarter since we strategically shifted the business in 2018. International Commercial Lines delivered 6%† growth with expansion across all regions. The flight to quality across the industry is driving increased submission activity toward AIG as we deepen our distribution relationships, benefit from lead underwriting positions, continue to expand our product offerings and deliver increased value for clients.
“We also continue to execute our capital management strategy, while maintaining strong insurance subsidiary capital and parent liquidity. We executed nearly $5 billion of capital management actions in the first half of 2024, including $500 million of preferred stock redemption, $459 million of debt repayment, $3.3 billion of share repurchases and $511 million of dividend payments. We ended the quarter with an outstanding total debt to capital ratio of 18.1% along with parent liquidity of $5.3 billion and an exceptionally strong balance sheet.
“We enter the back half of 2024 with significant momentum focused on enhancing our leadership in the market. I want to thank our colleagues around the world for their hard work and dedication on behalf of our clients, distribution partners and stakeholders.”
