AIG reveals record underwriting gains, but profit nosedives on Fortitude Re

Global insurance conglomerate  American International Group (AIG) enjoyed record underwriting gains in the first quarter 2023 with marked improvements in general insurance. However, its net profit plummeted due to net realised losses linked to Fortitude Re funds. The company’s CEO Peter Zaffino (pictured) praised the strong results highlighting its focus on volatility management to attain sustainable growth and profitability in the long run.

AIG’s general insurance reported a Q1 underwriting profit of $502 million, marking its strongest first quarter underwriting results. The general insurance combined ratio improved by 1.0 point to 91.9%, and net premiums written grew by 5% YoY, fuelled by growth in North America commercial insurance and international commercial.

North America commercial and international commercial lines also saw improvements in their combined ratios, which decreased by 1.7 points to 87.1% and 91.9%, respectively, compared to the previous year quarter. However, the underwriting income for global personal insurance declined due to a shift in premiums and lower premiums earned.

AIG’s total consolidated net investment income rose by 9% to $3.5 billion in Q1 2023 compared to the prior year quarter.

However, AIG’s net profit in the first quarter sharply declined to $23 million from $4.2 billion in the previous year’s quarter, primarily due to net realised losses on Fortitude Re funds withheld embedded derivative, as well as losses excluding Fortitude Re funds withheld assets and embedded derivative, along with a decrease in alternative investment income.

Overall, the company’s gross premiums written rose 4% to $12 billion from $11.5 billion in the previous year’s quarter.

Commenting on the results, AIG CEO Zaffino said: “AIG successfully navigated a complex environment to produce excellent first quarter results that demonstrate our ability to deliver high-quality outcomes for stakeholders, grow our business, manage volatility, and improve profitability. We also continue to execute on achieving underwriting and operational excellence, and capital and investment management strategies.”

He added: “The environment we operate in is continually shifting and remains volatile and unpredictable. I am very proud of how our colleagues remain focused on and dedicated to making significant progress on our journey to become a top performing company, despite challenging external factors. Our first quarter results demonstrate the resilience of AIG and our steadfast commitment to long-term value creation for our shareholders and other stakeholders.”

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