AIG(AIG) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Highlights AIG reported strong Q1 2024 financial results with increased net income, improved General Insurance underwriting, and significant capital returns to shareholders Q1 2024 Performance Overview AIG's Q1 2024 results featured strong net income, 19% General Insurance underwriting income growth, and $3 billion in capital management Q1 2024 Performance Metrics | Metric | Q1 2024 Value | YoY Change | | :-------------------------------------- | :------------ | :--------- | | Net income per diluted share | $1.74 | | | Adjusted after-tax income per diluted share | $1.77 | | | General Insurance underwriting income | $596 million | +19% | | General Insurance adjusted pre-tax income | $1.4 billion | +9% | | General Insurance combined ratio | 89.8% | -2.1 pts | | General Insurance accident year combined ratio, as adjusted | 88.4% | -0.3 pts | | Return on common equity (ROCE) | 10.8% | | | Adjusted ROCE | 9.3% | | - AIG executed nearly $3 billion of capital management actions in Q1, including returning $2.4 billion to shareholders through $1.7 billion of common stock repurchases and $250 million of dividends[2] - AIG's Board declared an 11% increase in quarterly common stock dividend to $0.40 per share and increased the share repurchase authorization to $10.0 billion[2] CEO Commentary CEO Peter Zaffino highlighted AIG's strong Q1 2024 results, noting General Insurance profitability and Life & Retirement performance - AIG began 2024 with very strong momentum, delivering on strategic and operational progress and achieving exceptional financial results, positioning for strength ahead of Corebridge Financial's deconsolidation[3] - General Insurance showed impressive Commercial Lines profitability with a combined ratio of 89.8% (improved 2.1 points YoY), benefiting from strong underwriting performance and low catastrophe losses[4] - Life & Retirement's solid financial results were driven by higher base portfolio spread income and strong sales, with total premiums and deposits of $10.7 billion[6] - AIG expects to continue building momentum through "AIG Next" initiatives, Corebridge deconsolidation, and delivering underwriting excellence to enhance shareholder value and achieve an adjusted ROCE exceeding 10%[8] Consolidated Financial Summary AIG's Q1 2024 consolidated financial summary shows significant growth in net income, increased net investment income, and robust capital management actions Net Income and Adjusted After-Tax Income (AATI) AIG's net income rose to $1.2 billion in Q1 2024 due to realized gains, while adjusted after-tax income remained flat Net Income and AATI Performance | Metric | Q1 2023 | Q1 2024 | Change | | :------------------------------------------------------------------ | :----------- | :----------- | :----------- | | Net income attributable to AIG common shareholders | $23 million | $1,194 million | +$1,171 million | | Net income per diluted share attributable to AIG common shareholders | $0.03 | $1.74 | +$1.71 | | Adjusted after-tax income (AATI) | $1,211 million | $1,216 million | +$5 million | | AATI per diluted common share | $1.63 | $1.77 | +$0.14 | - The increase in net income was primarily driven by net realized gains on Fortitude Re funds withheld embedded derivative, compared to net realized losses in the prior year quarter[10] - AATI was flat year-over-year, reflecting higher underwriting and net investment income in General Insurance and improved AIG Other Operations, mostly offset by a 20% decrease in Corebridge's earnings due to reduced AIG ownership[10] Net Investment Income Total net investment income increased 11% to $3.9 billion in Q1 2024, primarily from higher fixed maturity securities income Net Investment Income Summary | Metric | Q1 2023 | Q1 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Total net investment income | $3,533 million | $3,904 million | +11% | | Total net investment income, APTI basis | $3,075 million | $3,468 million | +13% | - The increase was primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower alternative investment returns[11] - In General Insurance, net investment income was up 2% from the prior year quarter, or about 7% excluding the impact of the Validus sale[11] Book Value and Capital Management Book value per common share increased 10% to $64.66, and AIG returned $2.4 billion to shareholders through capital management actions Book Value Per Common Share | Metric | March 31, 2023 | March 31, 2024 | Change (YoY) | | :----------------------------------- | :------------- | :------------- | :----------- | | Book value per common share | $58.87 | $64.66 | +10% | | Adjusted book value per common share | $75.87 | $77.79 | +3% | - AIG returned $2.4 billion to shareholders in Q1 2024, comprising $1.7 billion in common stock repurchases (approx. 23 million shares) and $250 million in common and preferred dividends[13] - The company also redeemed $500 million of preferred stock and repaid $459 million of maturing debt, leading to a decrease in the total debt and preferred stock to total capital ratio to 28.1% (from 28.5% at Dec 31, 2023)[13][14] Dividends and Share Repurchases AIG's Board declared an 11% dividend increase to $0.40 per share and raised the share repurchase authorization to $10.0 billion - AIG's Board of Directors declared a quarterly cash dividend of $0.40 per share on common stock, an 11% increase from prior quarterly dividends[2][14] - This marks the second consecutive year of 10%+ dividend increases[2] - The share repurchase authorization was increased to $10.0 billion, effective May 1[2][7] Consolidated Financial Data Table This table summarizes AIG's key consolidated financial metrics for Q1 2023 and 2024, including net income, investment income, and equity ratios Consolidated Financial Data | ($ in millions, except per common share amounts) | Three Months Ended 2023 | March 31, 2024 | | :----------------------------------------------- | :---------------------- | :------------- | | Net income attributable to AIG common shareholders | $23 | $1,194 | | Net income per diluted share | $0.03 | $1.74 | | Net investment income | $3,533 | $3,904 | | Adjusted pre-tax income (loss) | $1,643 | $1,941 | | Adjusted after-tax income attributable to AIG common shareholders | $1,211 | $1,216 | | Adjusted after-tax income per diluted share | $1.63 | $1.77 | | Return on common equity | 0.2% | 10.8% | | Adjusted return on common equity | 8.7% | 9.3% | | Book value per common share | $58.87 | $64.66 | | Adjusted book value per common share | $75.87 | $77.79 | Segment Performance AIG's segments demonstrated strong performance in Q1 2024, with General Insurance showing improved underwriting and Life & Retirement achieving higher adjusted pre-tax income General Insurance General Insurance reported a 19% underwriting income increase and a 2.1 point combined ratio improvement to 89.8%, with comparable net premiums written growth Financial Performance General Insurance financial performance in Q1 2024 showed a 19% increase in underwriting income and a 9% rise in adjusted pre-tax income General Insurance Financial Metrics | Metric | Q1 2023 | Q1 2024 | Change | | :-------------------------- | :----------- | :----------- | :---------- | | Underwriting income | $502 million | $596 million | +19% | | Adjusted pre-tax income | $1,248 million | $1,358 million | +9% | | Net investment income, APTI basis | $746 million | $762 million | +2% | | Return on adjusted segment common equity | 11.6% | 13.3% | +1.7 pts | - Underwriting income increased by $94 million, including $106 million of catastrophe-related charges (1.9 loss ratio points), down from $264 million (4.2 loss ratio points) in the prior year[21] Underwriting Ratios General Insurance underwriting ratios improved significantly, with the combined ratio decreasing by 2.1 points to 89.8% in Q1 2024 General Insurance Underwriting Ratios | Ratio | Q1 2023 | Q1 2024 | Change (pts) | | :---------------------------------------- | :------ | :------ | :----------- | | General Insurance (GI) Combined Ratio (CR) | 91.9 | 89.8 | -2.1 | | GI Loss ratio | 59.9 | 58.0 | -1.9 | | GI Accident year combined ratio, as adjusted | 88.7 | 88.4 | -0.3 | | International Commercial Lines CR | 91.9 | 83.6 | -8.3 | | North America Personal Insurance CR | 107.9 | 102.3 | -5.6 | - On a comparable basis, the General Insurance combined ratio improved 3.8 points and the accident year combined ratio, as adjusted, improved 1.6 points[21] - International Commercial Lines combined ratio improvement was mostly driven by a decrease in loss ratio, reflecting lower catastrophe losses and favorable prior year development[22][23] Net Premiums Written Analysis Net premiums written for General Insurance decreased on a reported basis but showed growth on a comparable basis, particularly in North America Commercial Lines Net Premiums Written (NPW) | Segment | Q1 2023 NPW | Q1 2024 NPW | Reported Change | Comparable Basis Change | | :------------------------------------ | :----------- | :----------- | :-------------- | :---------------------- | | General Insurance | $6,965 million | $4,512 million | (35)% | 0.4% | | North America Commercial Lines | $3,367 million | $1,033 million | (69)% | 4.4% | | International Commercial Lines | $1,996 million | $1,939 million | (3)% | (1.0)% | - The reported decrease in NPW was a result of 2023 divested businesses and changes in reinsurance structures[4][21] - North America Commercial Lines NPW grew 4% on a comparable basis, reflecting continued rate increases, higher renewal retentions, and strong new business production[21] Net Investment Income General Insurance net investment income on an APTI basis increased by 2%, driven by higher reinvestment rates General Insurance Net Investment Income | Metric | Q1 2023 | Q1 2024 | Change | | :-------------------------------------- | :----------- | :----------- | :----- | | GI Net investment income, APTI basis | $746 million | $762 million | +2% | | GI Net investment income, APTI basis (excl. Validus Re) | $715 million | $762 million | +7% | - The increase was driven by higher reinvestment rates from fixed maturity securities and loans, partially offset by lower alternative investment returns and a reduction in assets due to 2023 divested businesses[24] Life and Retirement Life and Retirement's adjusted pre-tax income increased 12% to $991 million, and premiums and deposits grew 2% to $10.7 billion Financial Performance Life and Retirement's adjusted pre-tax income increased 12%, driven by strong performance in Individual Retirement and Institutional Markets Life and Retirement Financial Metrics | Metric | Q1 2023 | Q1 2024 | Change | | :-------------------------- | :----------- | :----------- | :---------- | | Adjusted pre-tax income | $886 million | $991 million | +12% | | Individual Retirement APTI | $533 million | $622 million | +17% | | Institutional Markets APTI | $84 million | $112 million | +33% | | Return on adjusted segment common equity | 10.7% | 11.9% | +1.2 pts | - The increase in APTI was primarily due to higher base portfolio spread income, fee income, and expense efficiencies, partially offset by non-recurring reinsurance adjustments in the Life insurance business[27] Premiums and Deposits Life and Retirement reported a 2% increase in premiums and deposits, reaching $10.7 billion, with strong growth in Institutional Markets Life and Retirement Premiums and Deposits | Metric | Q1 2023 | Q1 2024 | Change | | :-------------------------- | :----------- | :----------- | :----- | | Premiums and fees | $2,899 million | $3,076 million | +6% | | Premiums and deposits | $10,448 million | $10,671 million | +2% | | Institutional Markets Premiums and deposits | $2,163 million | $2,586 million | +20% | - Fixed Annuities sales were up 16% and Institutional Markets sales were up 20%, driven by a higher volume of transactional business, including $1.8 billion of pension risk transfer transactions[27] Net Investment Income Life and Retirement's net investment income on an APTI basis increased 16% to $2.6 billion, driven by fixed maturity securities Life and Retirement Net Investment Income | Metric | Q1 2023 | Q1 2024 | Change | | :----------------------------------- | :----------- | :----------- | :----- | | Net investment income, APTI basis | $2,277 million | $2,645 million | +16% | - The increase was driven by higher income from fixed maturity securities and loans, partially offset by lower alternative investment income[28] Other Operations Other Operations improved its adjusted pre-tax loss by 17% to $(408) million, driven by higher investment income and reduced expenses Other Operations Financial Metrics | Metric | Q1 2023 | Q1 2024 | Change (Improvement) | | :-------------------------- | :------------- | :------------- | :------------------- | | Adjusted pre-tax loss | $(491) million | $(408) million | +17% | | Corporate and Other | $(270) million | $(194) million | +28% | | Corebridge, Inc. | $(200) million | $(174) million | +13% | - Corporate and Other adjusted pre-tax loss improved by $76 million, primarily due to higher income on parent short-term investments, lower general operating expenses, and reduced AIG interest expenses[31] Forward-Looking Statements & Risk Factors This section outlines forward-looking statements and potential risks that could impact AIG's future financial performance and strategic initiatives Forward-Looking Statements & Risk Factors This section outlines forward-looking statements and details various risks, including economic conditions, catastrophic events, and strategic execution challenges - Forward-looking statements provide management's current expectations for AIG's future operating and financial performance, based on assumptions[34] - Actual results may differ materially due to various risks, including adverse economic conditions, catastrophic events (natural and man-made), disruptions in IT systems (cyberattacks), and geopolitical events[35] - Other factors include AIG's ability to successfully dispose of/acquire businesses, realize benefits from Corebridge separation, implement restructuring, and respond to technological advancements like AI[35] Non-GAAP Financial Measures & Reconciliations This section defines AIG's non-GAAP financial measures and provides detailed reconciliations to their most comparable GAAP equivalents Definitions of Non-GAAP Measures AIG defines its non-GAAP financial measures, including Adjusted book value, APTI, and AATI, to provide a clearer view of core profitability - Adjusted book value per common share is used to show net worth per share by eliminating items that fluctuate significantly, such as changes in fair value of available-for-sale securities and certain deferred tax assets[42] - Adjusted Pre-tax Income (APTI) excludes items like changes in fair value of hedging securities, net change in market risk benefits, and net realized gains/losses to focus on underlying operating performance[49] - Underwriting ratios (loss, expense, combined) measure underwriting performance, while Accident year loss and combined ratios, as adjusted, exclude catastrophe losses and prior year development to assess ongoing results[52][53] Detailed Reconciliations This section provides detailed tables reconciling GAAP figures to various non-GAAP measures, including adjusted income, book value, and underwriting ratios Reconciliation of Net Income to Adjusted Income | Reconciliation Item | Q1 2023 (Pre-tax) | Q1 2024 (Pre-tax) | Q1 2023 (After-tax) | Q1 2024 (After-tax) | | :------------------------------------------------ | :---------------- | :---------------- | :------------------ | :------------------ | | Net income attributable to AIG common shareholders | N/A | N/A | $23 | $1,194 | | Adjusted pre-tax income | $1,643 | $1,941 | N/A | N/A | | Adjusted after-tax income attributable to AIG common shareholders | N/A | N/A | $1,211 | $1,216 | Reconciliation of Book Value to Adjusted Book Value | Reconciliation Item | March 31, 2023 | December 31, 2023 | March 31, 2024 | | :------------------------------------------------ | :------------- | :---------------- | :------------- | | Book value per common share | $58.87 | $65.14 | $64.66 | | Adjusted book value per common share | $75.87 | $76.65 | $77.79 | Reconciliation of Net Premiums Written (NPW) | Reconciliation Item | Q1 2023 | Q1 2024 | | :------------------------------------------------ | :------ | :------ | | General Insurance Net Premiums Written (Reported) | $6,965 | $4,512 | | General Insurance Net Premiums Written (Comparable Basis) | N/A | 0.4% Inc. | | North America Commercial Lines NPW (Comparable Basis) | N/A | 4.4% Inc. |