American International Group saw second quarter growth in net premiums written in its general insurance segment to $7.5 billion, a 10% increase from the same time a year ago.
The insurer’s second quarter net income attributable to common shareholders fell to about $1.5 billion compared to $2.7 billion during the same time a year ago. The result was due to lower gains on Fortitude Re funds, higher catastrophe losses, and lower net favorable reserve development ($115 million compared to $202 million a year ago).
But general insurance “continued accident year underwriting margin improvement and strong growth resulted in yet another quarter of excellent financial results,” said Peter Zaffino, chairman and CEO.
The combined ratio in general insurance was about 91, with 3.9 points added from $250 million of catastrophe-related losses, said AIG. Zaffino called it a “tremendous result against the backdrop of a very challenging quarter for the industry.” About $159 million of the catastrophe losses were attributable to business in North America, mainly from convective storms.
The accident year combined ratio (AYCR) for general insurance was 88 – the second-best AYCR since 2007, AIG said.
Net premiums written during Q2 in North America grew 17% but total underwriting income for general insurance was $594 million, down 26% compared to $799 million for Q2 2022. Last quarter AIG’s $502 million of underwriting income was the carrier’s strongest Q1 result ever, said Zaffino.
North America commercial lines underwriting income during Q2 2023 was $403 million, down 3%. AIG booked an underwriting loss of $51 million in North America personal lines compared to a loss of $10 million a year ago, but the AYCR for North America in Q2 2023 improved to 87.8 from 89.9 during Q2 2022. The result reflects “business mix benefit, continued positive rate changes, focused risk selection, and improved terms and conditions,” AIG said.
Underwriting income for international commercial and personal lines were down 38% and 41%, respectively, to $216 million and $26 million.
During Q2, AIG announced the sale of Validus Re to RenaissanceRe Holdings for about $3 billion. The transaction is expected to close in fourth quarter. AIG in Q2 also formed Private Client Select Insurance Services, a managing general agent serving the high net worth and ultra high net worth market, with Stone Point Capital.
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AIG
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