8-K: AIG Reports Strong Q2 2024 Results Driven by Underwriting and Corebridge Deconsolidation

AIG's second quarter results show a significant improvement in underwriting and a successful deconsolidation of Corebridge Financial.

Summary

• AIG reported its second quarter 2024 financial results, highlighting the deconsolidation of Corebridge Financial.
• General Insurance net premiums written were $6.9 billion, a decrease of 8% on a reported basis, but an increase of 7% on a comparable basis.
• The company achieved record Commercial Lines new business of $1.3 billion, an 18% year-over-year increase.
• The General Insurance combined ratio was 92.5%, an increase of 160 basis points year-over-year, or 10 basis points on a comparable basis.
• The accident year combined ratio, as adjusted, was 87.6%, an improvement of 40 basis points year-over-year, or 170 basis points on a comparable basis.
• A net loss per diluted share of $5.96 was reported, compared to income of $2.03 in the prior year quarter, primarily due to the accounting treatment of Corebridge deconsolidation.
• Adjusted after-tax income per diluted share was $1.16, a 9% increase from the prior year quarter and a 38% increase on a comparable basis.
• AIG returned almost $2.0 billion to shareholders through stock repurchases and dividends.
• The company's total debt to capital ratio was 18.1% with parent liquidity of $5.3 billion.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to strong underwriting results, record new business, and successful deconsolidation of Corebridge, despite a net loss due to accounting treatment. The company's strong balance sheet and capital management also contribute to the positive outlook.

Positives

• The deconsolidation of Corebridge Financial was a major strategic achievement.
• AIG demonstrated strong underwriting results across all businesses.
• The company achieved record new business in Commercial Lines.
• Adjusted after-tax income per diluted share showed significant growth.
• The accident year combined ratio improved, indicating better underwriting performance.
• AIG returned a substantial amount of capital to shareholders.
• The company's balance sheet remains strong with high liquidity and a low debt to capital ratio.
• North America Commercial Lines showed strong growth across all major lines of business.
• Lexington Insurance had its strongest new business quarter since 2018.

Negatives

• Net loss per diluted share was $5.96, primarily due to the accounting treatment of Corebridge deconsolidation.
• General Insurance net premiums written decreased by 8% on a reported basis.
• The General Insurance combined ratio increased by 160 basis points year-over-year on a reported basis.
• Underwriting income decreased by 28% year-over-year on a reported basis.
• Catastrophe losses were $325 million, impacting the combined ratio.

Risks

• The company faces an increasingly uncertain global risk environment.
• Catastrophe losses can significantly impact financial results.
• The company is exposed to economic conditions in the markets in which it operates.
• There are risks associated with the deconsolidation of Corebridge.
• AIG is exposed to potential cyberattacks and data security breaches.
• Changes in laws and regulations could impact the business.
• The company is exposed to the effects of climate change.
• There are risks associated with the company's investment portfolios.
• AIG relies on third parties for certain business and administrative services.

Future Outlook

AIG enters the back half of 2024 with significant momentum focused on enhancing its leadership in the market.

Management Comments

• AIG had an outstanding second quarter and delivered terrific underwriting results across all of our businesses.
• The quarter marked one of the most notable accomplishments in AIGs history with the deconsolidation of Corebridge.
• The core fundamentals were exceptional in a quarter that included the complex accounting treatment of deconsolidation along with prior year divestitures.
• We are very pleased with the ongoing improvement in our underwriting income, record Commercial Lines new business of $1.3 billion, and very strong retention.
• Against the backdrop of an increasingly uncertain global risk environment, AIG delivered sustainable earnings growth driven by our focus on underwriting excellence and continued expense discipline.
• The repositioning of our underwriting portfolio has enabled us to deliver high-quality growth in both the admitted and non-admitted markets.
• We also continue to execute our capital management strategy, while maintaining strong insurance subsidiary capital and parent liquidity.

Industry Context

The flight to quality across the industry is driving increased submission activity toward AIG as they deepen their distribution relationships, benefit from lead underwriting positions, continue to expand their product offerings and deliver increased value for clients.

Comparison to Industry Standards

• AIG's performance is being compared to its insurance competitors, with a focus on underwriting profitability and efficiency.
• The company's combined ratio is a key metric used to assess underwriting performance, and AIG is aiming for a ratio below 100, which indicates underwriting income.
• AIG's adjusted after-tax income per diluted share is being compared to prior periods and industry benchmarks to assess profitability.
• The company's capital management strategy is being evaluated against industry standards for maintaining strong insurance subsidiary capital and parent liquidity.
• AIG's growth in Commercial Lines new business is being compared to industry trends and competitor performance.

Stakeholder Impact

• Shareholders benefited from stock repurchases and dividends.
• Clients benefit from AIG's expanded product offerings and increased value.
• Distribution partners benefit from AIG's deepened relationships.
• Employees are recognized for their hard work and dedication.

Next Steps

• AIG will host a conference call on August 1, 2024, to review the results.
• The company will continue to execute its capital management strategy.
• AIG will focus on enhancing its leadership in the market in the back half of 2024.

Key Dates

Keywords

AIG, insurance, Corebridge, deconsolidation, underwriting, premiums, combined ratio, net income, adjusted after-tax income, share repurchases, dividends, commercial lines, catastrophe losses, financial results