AIG reports strong first quarter 2024 results
Authored by AIG
AIG has reported financial results for the first quarter ended March 31, 2024.
AIG Chairman & Chief Executive Officer Peter Zaffino said: “AIG began 2024 with very strong momentum in delivering on our strategic and operational progress while achieving exceptional financial results, reflecting the foundational capabilities we have cultivated over the last several years. In addition to outstanding profitability, this quarter was highlighted by the significant capital management actions we completed, placing AIG in a position of strength ahead of Corebridge Financial’s deconsolidation from AIG.
“General Insurance had another quarter of impressive Commercial Lines profitability benefiting from continued strong underwriting performance and low levels of catastrophe losses as we continue to manage volatility in our results. The combined ratio of 89.8% improved 2.1 points year-over-year, or 3.8 points on a comparable basis†. The accident year combined ratio, as adjusted, of 88.4% improved 0.3 points year-over-year, or 1.6 points on a comparable basis†. In Global Commercial Lines, the combined ratio of 85.8% improved 3.4 points year-over-year, and the accident year combined ratio, as adjusted, was 84.4%.
“As a result of the 2023 divested businesses and changes in reinsurance structures, General Insurance net premiums written decreased 35% year-over-year, but increased on a comparable basis†. Growth rates in the quarter were impacted by changes in reinsurance structures which should provide benefits in the remainder of the year. Global Commercial Lines pricing, which includes rate and exposure, increased 6% excluding Workers’ Compensation and was ahead of loss cost trend. Excluding Workers’ Compensation, North America Commercial Lines pricing increased 7% while International pricing increased 5%, both slightly ahead of loss cost trend. Overall market conditions remain favorable and we continue to execute our strategy of successfully deploying capital organically in markets where we see the most attractive risk-adjusted returns. In this environment, disciplined underwriting is increasingly critical and the strength and depth of the underwriting talent we have built at AIG will enable us to continue to drive profitable growth.
“Life & Retirement’s solid financial results benefited from higher base portfolio spread income and strong sales with total premiums and deposits* of $10.7 billion for the first quarter of 2024 and were among the highest results in the past decade. In April, Corebridge Financial (Corebridge) closed the sale of AIG Life to Aviva plc for £453 million ($569 million), solidifying their U.S. focus. On April 30, the Corebridge Board of Directors also authorized an additional $2 billion of share repurchases following active share repurchases year to date.
“While reducing our ownership stake in Corebridge remains a top priority in 2024, we continue to diligently execute on our capital management strategy. In the first quarter, we executed nearly $3 billion of capital management actions, including returning $2.4 billion to AIG shareholders through $1.7 billion of common stock repurchases, $250 million of common and preferred dividends and redeeming $500 million of preferred stock as well as retiring $459 million in maturing debt. The AIG Board of Directors approved an increase to the share repurchase authorization up to $10.0 billion effective May 1 as well as an 11% increase in our quarterly common stock dividend to $0.40 per share, representing a greater than 10% increase in the quarterly dividend for the second consecutive year.
“Throughout 2024, we expect to continue to build on our momentum as we execute AIG Next, deconsolidate Corebridge and deliver underwriting excellence and profitable growth, further enhancing value to AIG shareholders and positioning AIG for the future. I am very pleased with the progress we have made with AIG Next, which will create a less complex and more effective company with the appropriate infrastructure and improved capabilities. AIG Next will deliver savings and efficiencies that further position us to accelerate profitability and achieve an adjusted ROCE in excess of 10%.
“Against the backdrop of an uncertain and increasingly complex global risk landscape, AIG continues to serve our clients, partners and stakeholders with the unwavering commitment and distinct expertise that distinguishes us in the industry thanks to the dedication and teamwork of our colleagues around the world.”
* 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.
† Premiums on a comparable basis reflects year-over-year comparison on a constant dollar basis adjusted for the sale of Crop Risk Services and the sale of Validus Re in 2023 and 2024. APTI, underwriting income and ratios on a comparable basis reflects year-over-year comparison adjusted for the sale of Crop Risk Services and the sale of Validus Re in 2023 and 2024. Refer to pages 19 to 20 for more detail.
For the first quarter of 2024, net income attributable to AIG common shareholders was $1.2 billion, or $1.74 per diluted common share, compared to $23 million, or $0.03 per diluted common share, in the prior year quarter. The increase was primarily driven by net realized gains on Fortitude Re funds withheld embedded derivative, compared to net realized losses in the prior year quarter.
AATI was $1.2 billion, or $1.77 per diluted common share, for the first quarter of 2024, flat compared to $1.2 billion, or $1.63 per diluted common share, in the prior year quarter, reflecting higher underwriting income and net investment income in General Insurance and improved results in AIG Other Operations excluding Corebridge, mostly offset by a 20% decrease in Corebridge’s earnings included in AATI due to the reduction in AIG ownership over the last year.
Total net investment income for the first quarter of 2024 was $3.9 billion, an increase of 11% from $3.5 billion in the prior year quarter, primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower alternative investment returns and lower income on Fortitude Re funds withheld assets. Total net investment income on an APTI basis* was $3.5 billion, an increase of 13% from the prior year quarter, reflecting higher reinvestment rates, partially offset by lower alternative investment returns. In General Insurance, net investment income was up 2% from the prior year quarter, overcoming the headwind associated with the sale of Validus which produced $31 million in net investment income in the prior year quarter. Excluding Validus results from the first quarter of 2023, net investment income was up about 7% with a 9% increase in fixed maturities and loans from higher reinvestment rates over the prior year quarter.
Book value per common share was $64.66 as of March 31, 2024, a decrease of 1% from December 31, 2023 and an increase of 10% from March 31, 2023. The decrease from December 31, 2023 was primarily driven by an increase in accumulated other comprehensive loss (AOCL) due to higher interest rates and the increase from March 31, 2023 was driven by a decrease in AOCL due to lower interest rates and credit spreads as well as the net impact of share repurchases. Adjusted book value per common share* was $77.79, an increase of 1% from December 31, 2023 and an increase of 3% from March 31, 2023, both reflecting the aggregate impact of net income, offset by dividends and share repurchases.
In the first quarter of 2024, AIG returned $2.4 billion to AIG shareholders through $1.7 billion of common stock repurchases of approximately 23 million shares, $250 million of common and preferred dividends and the redemption of $500 million of preferred stock. AIG also repaid $459 million aggregate principal amount of maturing debt. AIG parent liquidity was $5.1 billion as of March 31, 2024. Total debt and preferred stock to total capital at March 31, 2024 was 28.1%, down from 28.5% at December 31, 2023, primarily driven by debt repayment and the preferred stock redemption. Total debt and preferred stock to total capital, excluding AOCL adjusted for cumulative unrealized gains and losses related to Fortitude Re funds withheld assets*, was 23.6% at March 31, 2024, down from 24.3% at December 31, 2023.
On April 30, 2024, the AIG Board of Directors declared a quarterly cash dividend on AIG common stock of $0.40 per share. The dividend is payable on June 28, 2024 to stockholders of record at the close of business on June 14, 2024.
On March 15, 2024, AIG redeemed all 20,000 outstanding shares of AIG Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred Stock) originally issued on March 14, 2019 and all 20,000,000 of the corresponding depositary shares. The redemption price of Series A Preferred Stock was $25,000 per share (equivalent to $25.00 per depositary share) for an aggregate redemption price of $500 million, paid in cash.
To view AIG’s full Q1 2024 results CLICK HERE
