AIG profits dampened by nat cats and lower investment returns in Q3

Global insurance conglomerate  American International Group (AIG) posted excellent third quarter results despite taking a $600 million hit from catastrophe losses, particularly Hurricane Ian, and lower alternative investment income during the period.

AIG’s general insurance operations were hit by $600 million of catastrophe losses, or 9.8 points of the combined ratio, of which approximately $450 million is attributable to Hurricane Ian. Despite that, the combined ratio in general insurance improved by 2.4 points from the prior year quarter to reach 97.3%, reflecting continued improvement in commercial business mix and quality of the portfolio.

While general Insurance generated strong underwriting results, its adjusted pre-tax income (APTI) decreased $61 million from prior year quarter to $750 million due to $228 million of lower alternative investment income. Its gross premiums written of $9.24 billion was down 1%.

In its life and retirement business, the adjusted pre-tax income reduced to $589 million, from $877 million in Q3 2021, also attributable to lower net investment income.

AIG’s total consolidated net investment income for the third quarter of 2022 was $2.7 billion, down 28% from $3.7 billion in the prior year quarter.

Net income attributable to AIG common shareholders was $2.7 billion for Q3, compared with $1.7 billion in the prior year quarter.

AIG completed the initial public offering (IPO) of Corebridge Financial representing 12.4% of the common stock of Corebridge.

AIG chairman and chief executive officer Peter Zaffino said: “AIG had another very strong quarter of financial performance, driven by our successful execution of strategic priorities, and highlighted by the initial public offering of Corebridge, another major accomplishment by our team, as well as continued profitable underwriting results and decreased volatility in General Insurance.”

“These results are even more impressive when viewed against the backdrop of a challenging macro-economic environment and one of the largest insured-loss hurricanes in U.S. history,” he noted.

“I am extremely pleased with the overall underwriting profit in the quarter, particularly given $600 million of catastrophe losses, or 9.8 points of the combined ratio, of which approximately $450 million is attributable to Hurricane Ian. The strong performance in General Insurance demonstrates the benefits of the highquality work we have done to transform our global portfolio and implement a best-in-class reinsurance program, which together have dramatically reduced volatility,” said Zaffino.