Global insurer American International Group, Inc. (AIG) has reported slight growth in underwriting income of $7 million for Q4 2023 to $642 million, which included $122 million of total catastrophe-related charges, representing 2.1 loss ratio points, of which $54 million was in North America and $68 million in International.
Within the firm’s general insurance business, net premiums written (NPW) increased 3% year-over-year to $5.755 billion, and the combined ratio improved by 0.8 percentage points from the prior year quarter to 89.1%.
The general insurance APTI of $1.4 billion increased $225 million from the prior year quarter on the back of higher investment income and improved accident year losses and lower catastrophe-related charges, somewhat offset by lower favorable prior year development and higher general operating expenses.
In the Life and Retirement segment, Q4 2023 adjusted pre-tax income was $957 million, up 12% year over year, primarily due to higher base portfolio spread income as a result of higher base portfolio yields.
In this part of the business, premiums grew 19% from the prior year quarter to $2.5 billion, which AIG attributes to higher pension risk transfer volumes.
For Q4 2023, net income attributable to AIG common shareholders was $86 million compared to $545 million in the prior year quarter. The decline was primarily driven by higher net realized losses on Fortitude Re funds withheld embedded derivatives.
The adjusted after-tax income was $1.3 billion for Q4 2023 compared to $1.1 billion in the prior-year quarter. The increase in AATI was driven by higher net investment income in General Insurance. Corebridge’s earnings included in AATI decreased by 25% due to the reduction in AIG ownership.
Total net investment income in Q4 2023 was $3.9 billion, an increase of 21% from $3.3 billion in the prior year quarter attributed to higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower returns on alternative investments.
For full year 2023, AIG has reported net income attributable to common shareholders of $3.6 billion compared to $10.2 billion in the prior year. The decline was primarily driven by net realized losses largely related to Fortitude Re funds withheld embedded derivatives at Life and Retirement compared to gains in the prior year, as well as derivative activity.
AATI was $4.9 billion for FY 2023 compared to $4 billion in 2022. The increase in AATI was due to higher underwriting income and net investment income in General Insurance. While L&R APTI rose 15% in 2023, Corebridge’s earnings included in AATI decreased 20% due to the reduction in AIG ownership from 77.7% at the beginning of the year to 52.2% at December 31, 2023.
Peter Zaffino, Chairman & Chief Executive Officer, AIG, commented: “In 2023, AIG delivered outstanding financial results, highlighted by excellent underwriting performance and the successful execution of multiple complex initiatives, while delivering exceptional value for our clients and stakeholders. Our substantial progress reflects the dedication and teamwork of our AIG colleagues around the world, who have delivered on our objectives. The full year adjusted after-tax income per diluted share increased 33% from the prior year to $6.79. We have further repositioned AIG for the future with the divestitures of Validus Re and Crop Risk Services, and we enter 2024 with significant momentum.
“General Insurance delivered $2.3 billion of underwriting income in 2023, a 15% increase year-over-year. Our unwavering commitment to underwriting excellence and ability to manage volatility remain fundamental to the sustainability of AIG’s underwriting income growth. The full-year 2023 combined ratio of 90.6% represents an improvement of 130 basis points year-over-year. Accident year combined ratio, as adjusted, of 87.7% represents an improvement of 100 basis points year-over-year. 2023 margins and underwriting income were the best results achieved in recent history. The quality of the underwriting portfolio once again enabled exceptional success at January 1 in renewing our reinsurance placements.
“For the full-year 2023, General Insurance net premiums written increased 5% year-over-year, or 7% on a comparable basis, driven by 5% growth in Commercial Lines led by 17% growth in Lexington and 10% in Global Specialty. For the fourth quarter, North America Commercial Lines pricing, which includes rate and exposure, increased 7% and remains ahead of loss cost trend. Global Commercial pricing increased 6% and was in-line with loss cost trend.
“Life & Retirement continued to deliver strong financial results, benefiting from continued spread expansion and strong sales with total premiums and deposits exceeding $40 billion for the full year. Base net investment income continued to see favorable outcomes from the higher interest rate environment and, for the full-year 2023, Individual and Group Retirement produced a 46 basis point expansion in base spread year-over-year.
“With three successful secondary offerings in 2023, we reduced AIG’s ownership in Corebridge to approximately 52% at year end. We expect to deconsolidate Corebridge in 2024, which will bring greater visibility into our business, capital structure and operations.
“AIG’s strong performance and strategic actions in 2023 supported our sustained and balanced capital management strategy. We maintained financial flexibility while reducing financial debt by $1.4 billion and returning approximately $4 billion to AIG shareholders through $3 billion of common stock repurchases and $1 billion of dividends, including a 12.5% increase in the common stock dividend in the second quarter of 2023.
“We have significant momentum as we enter 2024, and excellent underwriting, operations, claims service, and talent are what will drive AIG’s continued growth. As we continue to navigate an increasingly complex global risk environment, we will remain agile and disciplined while delivering sustainable and differentiated value to our customers, partners and stakeholders.”
