AIG reports strong GI underwriting increase in Q2 2022 results

Insurer American International Group (AIG) has reported a strong underwriting increase in general insurance (GI), according to its second quarter (Q2) results published 8 August 2022.

GI adjusted pre-tax income was $1.3bn (£1.06bn), reflecting a $336m (£275.4m) increase in underwriting income from the previous quarter.

This growth was driven by higher insurance premiums, stronger renewal retentions, positive rate change, new business production, focused risk selection and improved terms and conditions, according to the insurer.

In GI, AIG’s combined operating ratio sat at 87.4% – an improvement of 5.1 points compared to the equivalent quarter last year.

This COR was also the first sub-90% figure in more than 15 years for AIG.

Meanwhile, AIG’s GI-adjusted accident year COR stood at 88.5% – an improvement of 2.6 percentage points from the previous year.

Peter Zaffino, AIG’s chairman and chief executive, said: “AIG had another excellent quarter.”

He explained that GI “reported outstanding results” considering the significant market headwinds in Q2 this year. 

Zaffino continued: “GI’s culture of underwriting excellence continues to be evidenced in our financial results. Meaningful top-line growth, strong renewal retention and new business, intentional improvements in business mix, rate above loss cost trends, coupled with a disciplined and focused approach to minimising volatility led to impressive profitability improvement.

“The combined ratio of 87.4% represents AIG’s first sub-90 quarter in over fifteen years and improved 510 basis points year-over-year. Consistent with our strategy to manage volatility, catastrophe losses were very modest in the quarter coming in at $121m (£99.18m), or 1.8 points of the combined ratio.

“The adjusted accident year combined ratio of 88.5% improved for the 16th consecutive quarter – totalling 1,250 basis points of improvement over this period and 2,080 basis points of improvement in global commercial lines.

”Overall, I am very pleased with our overall performance and the momentum we have heading into the second half of 2022.”

Market volatility

Zaffino continued: “Due to the high degree of equity market volatility in May and June, we decided to defer the launch of the Corebridge Financial initial public offering (IPO). Deferring the IPO provided us with an opportunity to further accelerate progress on numerous separation initiatives and to solidify the capital structure of this business as a standalone company.

“Completing the IPO is a significant priority for us and we remain ready to execute, subject to regulatory approvals and market conditions.”

An IPO – also known as a stock launch – is where shares of a company are sold to the public, institutional investors and retail investors. It means that the company’s ownership has transferred from private ownership to public.

Zaffino added that “certain capital management priorities were accelerated” in Q2, including issuing $6.5bn (£5.32bn) of Corebridge Financial debt and subsequently redeeming or repurchasing $7.6bn (£6.22bn) in aggregate principal debt.

AIG also returned $2.0bn (£1.63bn) to its shareholders through $1.7bn (£1.39bn) of AIG common stock repurchases and $256m (£209.8) of dividends.

“Thanks to the outstanding efforts and hard work of our global colleagues, AIG continues to drive excellence across the company that will create long-term value for all our stakeholders,” Zaffino added.

• Insurance Times has converted dollar amounts into pounds using an exchange rate of £1 = €1.22, which was correct as of 1 August 2022.