Commercial lines growth boosts AIG in Q3, CEO praises reinsurance programme

American International Group enjoyed a strong third quarter in which its CEO noted the strong premium growth in its commercial lines business and a reinsurance programme that performed well.

The company made a net profit of $1.7 billion in the period, a big improvement on the $281 million it made in the prior year quarter.

The company’s general insurance net premiums written grew 11 percent driven by commercial lines growth of 17 percent. The general insurance combined ratio improved by 7.5 points to 99.7 percent from the prior year due to strong underwriting results, including lower catastrophe losses, net of reinsurance (CATs) and reinstatement premiums. The unit made a pre-tax profit of $811 million.

It also noted that the separation of the Life and Retirement business from AIG continued, with the sale of a 9.9 percent equity stake for $2.2 billion in cash recently completed and an IPO on track for 2022.

AIG President and CEO Peter Zaffino (pictured) said: “We continue to build momentum and execute on our strategic priorities as evidenced by another quarter of outstanding financial results, as well as significant progress on AIG 200 and the separation of Life and Retirement from AIG. Against the backdrop of a very active CAT season and the ongoing global pandemic, AIG colleagues demonstrated continued resilience and are performing at a high level delivering value to our stakeholders and excellence in all that we do.

“General Insurance delivered very strong results demonstrating the underwriting discipline now embedded in our culture and the benefits of our volatility reduction efforts through a well-articulated risk appetite and reinsurance program that performed well. Net premiums written grew by 11 percent, driven by Commercial Lines growth of 17%, which was balanced between 18 percent growth in North America and 15 percent growth in International reflecting improved retention, outstanding levels of new business, and a continued strong rate environment.

“We also reported another quarter of impressive underwriting profitability, with a combined ratio of 99.7 inclusive of catastrophe losses, and 90.5, as adjusted, which represents a 2.8 point improvement from the accident year combined ratio, as adjusted, in the third quarter of 2020.

“Life and Retirement was once again a solid contributor to profitability delivering adjusted pre-tax income of $877 million and a return on adjusted segment common equity of 12.2%. “In the third quarter we repurchased $1.1 billion of common stock, redeemed $1.5 billion of debt and ended the quarter with $5.3 billion of liquidity, all demonstrating the strength of our balance sheet and exceptional financial flexibility as we execute against our capital management strategy. “ AIG’s performance in the third quarter and through the first nine months of the year validates the strategy we have been executing on over the last few years. We have vastly improved the quality of our portfolio by delivering superior risk solutions, we continue to embed operational excellence across the organization, and we recently reached a significant milestone toward making Life and Retirement a standalone company by closing on the sale of a 9.9% equity stake to Blackstone. AIG is well on its way to becoming a top performing company that delivers sustainable profitable growth over the long-term.”

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