AIG reports first quarter 2022 results
AIG Chairman & Chief Executive Officer Peter Zaffino said:
“In the first quarter of 2022, AIG delivered excellent results, while simultaneously advancing a number of strategic, operational and financial priorities. I am very pleased with the progress we achieved, including meaningful improvement in underwriting profitability in General Insurance, continued solid performance from Life and Retirement, significant progress on the separation of Life and Retirement from AIG, along with accelerated capital management actions.
“General Insurance continues to generate top line growth while driving sustainable underwriting improvement and expense discipline in both the combined ratio and the adjusted accident year combined ratio, which improved 590 and 290 basis points, respectively, year over year to 92.9% and 89.5%. We are compounding margin improvement over a multi-year period having improved the combined ratio and adjusted accident year combined ratio by 860 and 600 basis points over the prior two years.
“Commercial net premiums written grew 8% on a constant dollar basis with 10% foreign exchange adjusted growth in International and 6% in North America. Growth across Global Commercial Lines benefitted from over $1 billion of new business for the fourth consecutive quarter, strong retention of 86% globally and 9% rate increases (10% excluding workers’ compensation), which continue to exceed loss cost trends.
“Life and Retirement’s diversified business withstood significant market volatility and reported an adjusted segment return on common equity of 10.0%. Premiums and deposits increased 13.5%, driven by strong fixed annuity sales that benefitted from the added origination capabilities from our strategic partnership with Blackstone.
“Additionally, we made significant progress since the beginning of the year to prepare the Life and Retirement business to be a standalone, public company. We publicly filed an S-1 registration statement with the U.S. Securities and Exchange Commission, we executed a $6.5 billion senior notes offering by Life and Retirement helping to establish the target standalone capital structure and we announced an arrangement with BlackRock relating to the management of up to an aggregate of $150 billion of liquid assets for AIG and Life and Retirement.
“Given our strong balance sheet and liquidity, the AIG Board of Directors increased the share repurchase authorization to $6.5 billion of AIG Common Stock, inclusive of any remaining amounts under the prior authorization. In the first quarter, we returned $1.7 billion to shareholders through $1.4 billion of AIG common stock repurchases and $265 million of dividends, and we ended the quarter with $9.1 billion of parent liquidity.
“We also announced a commitment to achieve net zero greenhouse gas emissions across our global underwriting and investment portfolios by 2050, or sooner. We believe our ESG commitments are an important step forward for AIG, the clients we serve and the global communities where we live and work.
“I am extremely proud of the outstanding work from our global colleagues and the value we continue to deliver for our clients, distribution partners, shareholders and other stakeholders as we continue our journey to be a top performing company.”
For the first quarter of 2022, pre-tax income from continuing operations was $5.8 billion compared to pre-tax income from continuing operations of $4.7 billion in the prior year quarter. First quarter of 2022 net income attributable to AIG common shareholders was $4.3 billion, or $5.15 per diluted common share, compared to net income of $3.9 billion, or $4.41 per diluted common share, in the prior year quarter. The pre-tax income increase was primarily due to an increase in net realized gains, including a $936 million increase in net realized gains on Fortitude Refunds withheld embedded derivative, and overall strong General Insurance underwriting results, including higher premiums and lower CATs, partially offset by lower net investment income across the portfolio. The pre-tax increase was partially offset by a higher proportion of income attributable to noncontrolling interest as a result of the sale to Blackstone of a 9.9% interest in Corebridge and higher income tax expense primarily due to higher income from operations.
AATI was $1.1 billion, or $1.30 per diluted common share, for the first quarter of 2022 compared to $923 million, or $1.05 per diluted common share, in the prior year quarter. The increase was primarily due to strong General Insurance underwriting results, partially offset by lower net investment income across the portfolio.
Total consolidated net investment income for the first quarter of 2022 was $3.2 billion, down 11% from $3.7 billion in the prior year quarter, primarily due to lower call and tender income, lower returns from fair value option equity and fixed maturity securities and lower income from hedge funds, partially offset by higher returns on other alternative investments principally from private equity. Total net investment income on an APTI basis* was $3.0 billion, a decrease of $193 million compared to the prior year quarter, reflecting lower call and tender income, lower returns from fair value option fixed maturity securities partially offset by higher returns on alternative investments principally from private equity.
Book value per common share was $69.30 as of March 31, 2022, a decrease of 13% from December 31, 2021 and 4% from March 31, 2021, reflecting a reduction in accumulated other comprehensive income (AOCI). Adjusted book value per common share* was $70.72, an increase of 3% from December 31, 2021 and 20% from March 31, 2022 reflecting growth in retained earnings from net income in excess of dividends and share repurchases. Adjusted tangible book value per common share was $64.65, an increase of 3% from December 31, 2021 and 22% from March 31, 2021.
For the first quarter of 2022, AIG repurchased approximately $1.4 billion of common stock or approximately 23 million shares of AIG common stock and paid $265 million of common and preferred dividends, resulting in AIG Parent liquidity of $9.1 billion as of March 31, 2022, down $1.6 billion from December 31, 2021. On May 3, 2022, the Board of Directors authorized share repurchases of $6.5 billion of AIG Common Stock, inclusive of the approximately $1.5 billion of expected remaining authorization upon expiration of AIG’s current Exchange Act 10b5-1 repurchase plan on May 20, 2022. AIG’s total debt and preferred stock to total capital leverage at March 31, 2022 was 27.8%, up from 24.6% at December 31, 2021, principally due to the reduction of AOCI.
Today, the AIG Board of Directors declared a quarterly cash dividend of $0.32 per share on AIG common stock (NYSE: AIG). The dividend is payable on June 30, 2022 to stockholders of record at the close of business on June 16, 2022.
The AIG Board of Directors also declared a quarterly cash dividend of $365.625 per share on AIG Series A 5.85% Non-Cumulative Perpetual Preferred Stock, with a liquidation preference of $25,000 per share, which is represented by depositary shares (NYSE: AIG PRA), each representing a 1/1,000th interest in a share of preferred stock. Holders of depositary shares will receive $0.365625 per depositary share. The dividend is payable on June 15, 2022 to holders of record at the close of business on May 31, 2022.
Download the financial summary HERE
In the UK, AIG Europe Limited is one of the largest insurance companies specialising in the UK business insurance market. With offices throughout the country, AIG insures many of the UK’s top businesses, thousands of mid sized and smaller companies, as well as millions of individuals.
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