AIG Posts Combined Ratio of 92.4% as Underwriting Improves on Lower Cats
Global insurer AIG reported strong underwriting results across its portfolio for the fourth quarter of 2021, as its combined general insurance (GI) ratio improved by more than 10 percentage points to 92.4. %, supported by lower disaster losses.
During the fourth quarter, the carrier’s GI division reported an underwriting gain of $499 million from a loss of $171 million a year earlier, representing improved performance across the portfolio.
The strong underwriting result drove GI’s adjusted pre-tax profit (APTI) up 87% year-over-year to $1.5 billion.
In the fourth quarter of 2021, GI underwriting income included $189 million in catastrophe-related losses, primarily from tornadoes in the southern United States and wildfires, compared to cat losses of $545 million in the fourth quarter. 2020, which included nearly $180 million in losses related to COVID-19.
Additionally, Q4 2021 included a favorable development in prior year net claims reserve, net of reinsurance, of $44 million.
For the last quarter of 2021, AIG’s GI unit reported a lower loss ratio and expense ratio as the segment’s combined ratio strengthened from 102.8% in the fourth quarter of 2020 to 92, 4%.
Additionally, within GI, the insurer revealed gross premiums written (GPW) rose 12% to $7.2 billion, while net premiums written (NPW) jumped 7%, year on year. annually, at $5.6 billion.
“General Insurance was able to deliver more consistent underwriting results while achieving 13% growth in net premiums written for the full year with 18% growth in commercial lines,” said Peter Zaffino, Chairman and CEO of AIG.
“The business recorded an underwriting profit for the full year of 2021 and for each quarter of the year, thanks to disciplined execution and reduced volatility in an environment of ever-increasing natural catastrophe risk. Fourth quarter accident year adjusted combined ratio was 89.8% Full year adjusted accident year combined ratio was 91.0 %, driven by Global Commercial, which was 89.1%.
In its life and pensions business, AIG reported a slight decline in APTI of 6% to $969 million in the fourth quarter of 2021, mainly due to unfavorable mortality in life insurance and higher amortization. and deferred policy acquisition cost reserves.
Premiums in this part of the business increased from $1 billion to $2.7 billion due to higher pension risk transfer sales in the quarter.
Group-wide, AIG reported net income of approximately $3.4 billion for the fourth quarter of 2021, compared with a net loss of $60 million for the same period a year earlier. The company’s APTI fell from $1.1 billion in Q4 2020 to $1.8 billion in Q4 2021, while net investment income fell to $3.6 billion from nearly $4 billion.
“In the fourth quarter and full year 2021, AIG delivered exceptional financial results as general insurance continued to deliver improved underwriting profitability on the back of excellent topline growth and significantly reduced volatility. due to gross limit reductions and the strategic use of reinsurance, and again life and pension insurance, to make a significant contribution to our overall results We ended the year with a parent liquidity of 10, $7 billion,” Zaffino said.
“The quality of these results is due to the hard work, dedication and commitment to excellence of our colleagues around the world in everything we do.”
Adding: “Since announcing our intention to separate Life and Retirement from AIG, we have made significant progress in preparing the business to become an independent and stand-alone company, including completing the sale of a stake 9.9% at Blackstone in November 2021.
“During 2021, we reduced debt and preferred equity leverage by 380 basis points to 24.6% by repurchasing $4 billion of debt, and we returned $3.7 billion to shareholders through through repurchases of common shares and dividends.
“AIG entered 2022 better, stronger and well positioned to continue delivering value to all stakeholders as we continue our path to becoming a top performing company.”