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AIG income rises, D&O premium declines

Peter Zaffino

American International Group Inc. reported increased adjusted income for the fourth quarter, as investment income surged, but its North America commercial segment saw a drop in premium written as the directors and officers liability insurance market softened.

During the year, AIG sold more of its life and retirement business and plans to continue its efforts to simplify the company.

AIG reported fourth-quarter net income of $86 million, down from $545 million in the year-earlier period. As in previous quarters last year, the decline was related to the 2019 sale of Fortitude Re, which AIG sold on a co-insurance basis. On an adjusted basis, after-tax income increased 22.5% to $4.9 billion, according to AIG’s earnings statement released Tuesday after markets closed.

Investment income for the quarter increased 20.7% to $3.93 billion.

AIG’s general insurance combined ratio improved to 89.1%, compared with 89.9% in the prior-year quarter.

The insurer reported $5.76 billion in general insurance net premium written, up 2.6% from the same quarter in 2022. North America commercial lines reported net premium written of $2.11 billion, down 7.1% largely due to a reduction in premium from its financial lines segment. AIG is the fourth-largest D&O insurer, according to S&P Global.

In a call with analysts Wednesday, Peter Zaffino, chairman and CEO, said AIG has maintained its primary public D&O business and is “very prudent with large account excess layers, where there’s significant exposure to vertical loss, and these layers are highly commoditized, where typically the best price wins.”

AIG’s compound annual growth rate in financial lines from 2019 to 2023 was 49%, but excluding 2023 it was 63%, he said.

“It’s a business we’re very focused on and our underwriters are continuing to carefully monitor market conditions and underwrite conservatively,” he said.

Overall, AIG saw a 4% increase in rate for its North America commercial business during the fourth quarter, Mr. Zaffino said.

The increase was driven by Lexington wholesale, up 17%; retail property, up 19%; and excess casualty, up 13%, he said.

AIG’s international commercial lines division reported $3.1 billion in net premium written for the quarter, up 8.4%.

AIG last year completed three secondary offers of Corebridge, its life and retirement business, cutting its ownership stake to 52%. The company expects to further reduce its stake in Corebridge this year and deconsolidate the business from its operations.

The progress toward the separation of Corebridge last year was “another major strategic milestone on our journey to becoming a less complex company,” Mr. Zaffino said.

For the full year, AIG reported net income of $3.61 billion, compared with $10.2 billion in 2022. Adjusted pre-tax income was $7.4 billion, up 27.6%. Investment income increased 24% to $14.6 billion.