AIG beats Q4 profit estimates on investment gains
(Reuters) — American International Group Inc. beat expectations for fourth-quarter profit on Tuesday, driven by higher investment returns at its general insurance arm.
Adjusted after-tax income attributable to common shareholders climbed to $1.79 per share from $1.39 in the year-earlier period. Analysts on average had expected $1.64, according to LSEG data.
Total net investment income rose 21% to $3.9 billion, helped by higher income from fixed maturity securities and loan portfolios due to the higher reinvestment rates.
U.S. equity markets rallied strongly toward the end of the year as the Federal Reserve hinted at potential interest rate cuts in 2024, with the benchmark S&P 500 closing up roughly 24%.
The euphoria spread to other asset classes and fueled robust gains across investment portfolios.
AIG said fourth-quarter net premiums written in its general insurance arm grew 3% to $5.8 billion.
The New York-based company's general insurance underwriting income rose $7 million and included $122 million in total catastrophe-related charges.
The unit reported $2.3 billion of underwriting income in 2023, a 15% increase year-over-year.
“2023 margins and underwriting income were the best results achieved in recent history. The quality of the underwriting portfolio once again enabled exceptional success at Jan. 1 in renewing our reinsurance placements,” CEO Peter Zaffino said in a statement.
AIG's general insurance accident year combined ratio was 87.9%, compared with 88.4%, a year earlier. The metric excludes catastrophe losses, and a ratio below 100 signifies that the insurer earns more from premiums than it pays out in claims.
