AIG’s P/C Business Squeaks Into the Black; Net Income Soars

AIG’s property/casualty insurance business squeaked into the black during the first quarter after losing money a year ago, and the company’s overall net income grew substantially, thanks in part to higher investment results. Substantial rate hikes also helped.

“I am immensely proud of our global colleagues and what we have accomplished together,” AIG President and CEO Peter Zaffino said in prepared remarks. “Our first-quarter results reflect significant momentum as we continue our pursuit to become a top performing company.”

The company’s P/C, or General Insurance underwriting income came in at $73 million during the 2021 first quarter, versus a $87 million loss in the 2020 first quarter driven by pandemic loss challenges.

Net income surpassed $3.8 billion, or $4.41 per diluted share, compared to $1.7 billion, or just under $2 per share in Q1 2020.

Consolidated net investment income of $3.7 billion came in 46 percent higher than the same period a year ago, a result AIG said stems from “alternative investments” and other investment income gains.

Here are additional Q1 results:

• P/C, or General Insurance gross premiums written came in at $10.7 billion, versus $10 billion in Q1 2020. Net premiums written were nearly $6.5 billion, compared to $5.9 billion in Q1 2020.
• North America commercial lines net premiums written jumped 9 percent in Q1, but North America personal insurance net premiums written dropped 74 percent, which AIT attributed to the combined impact of creating Syndicate 2019 and cessions placed on AIG’s Private Client Group business, which took place in the 2020 second quarter. COVID-19 also had a big impact on travel insurance premiums, the insurer noted.
• P/C combined ratios varied by region. The North America P/C combined ratio was 108.4, versus 103.8 last year. But AIG’s international combined ratio for the quarter was 92.2, compared to 99.5 last year. AIG’s General Insurance combined ratio was 98.8, overall better than the 101.5 the previous year
• Commercial lines continued to improve, due to better business mix and rate increases.
• AIG’s Life and Retirement arm, which it has decided to spin off, benefited from higher net investment income, though premiums dropped 53 percent to $600 million, down from nearly $1.3 billion in the 2020 first quarter.
• AIG repurchased $362 million of common stock in the first quarter, and ended Q1 with nearly $8 billion of liquidity.

Source: AIG