American International Group generated a modest profit in the second quarter, citing gains from higher net investment income, far fewer catastrophe losses and strong rate hikes in its property/casualty business.
The P/C insurance giant produced $91 million in net income, or $0.11 per diluted share. That compares to a net loss of nearly $8 billion, or negative $9.15 per common year a year ago, a result shaped largely by the recognition of an $8.4 billion loss from the sale and deconsolidation of its Fortitude business in June 2020.
“We had another outstanding quarter with our businesses performing extremely well while we continue to make significant progress on strategic priorities and position AIG for sustainable profitable growth over the long-term,” AIG President and CEO Peter Zaffino said in prepared remarks. “General insurance delivered excellent results, Life and Retirement was once again a meaningful contributor and we accelerated work on [modernization program] AIG 200 and the separation of Life and Retirement from AIG.”
The insurer’s property/casualty, or General Insurance business, produced $9.5 billion in gross premiums written during Q2, up 12 percent from nearly $8.5 billion in the 2020 second quarter. Net premiums written landed well above $6.8 billion, a 24 percent jump from more than $5.5 billion in ne premiums written last year.
AIG’s General Insurance combined ratio was 92.5 overall, 13.5 points better than 106 in the 2020 second quarter.
Consolidated net investment income for Q2 reached $3.7 billion, a 9 percent raise from the previous quarter generated by strong private equity returns. Lower gains on fair value option bonds partially offset this.
Additionally, Commercial Lines and Personal Insurance net premiums written grew 16 percent and 45 percent, respectively, year-over-year.
AIG’s underwriting income landed at $463 million, versus a $343 million underwriting loss in the 2020 second quarter. Results showed dramatic improvements across the board, but particularly in North America Commercial Lines and Persoanl Insurance.
Zaffino said the insurer saw General Insurance premium gains due to improved retention, “outstanding” levels of new business, and a continued improvement in rate.
Based on these results, the AIG Board of Directors increased the company’s current share buyback authorization to $6 billion, including the $900 million remaining under the prior authorization. AIG said it expects to repurchase at least $2 billion in common stock through the second half of 2021, and reduce debt outstanding by $2.5 billion.