Authored by AIG
AIG Chairman & Chief Executive Officer Peter Zaffino said: “In the third quarter, AIG delivered exceptional results driven by continued improvement in underwriting profitability and an outstanding quarter in our Commercial Lines business with an 81.7% accident year combined ratio, as adjusted. This quarter’s adjusted after-tax income per diluted share of $1.61 increased 92% from the prior year quarter. Our relentless focus on our strategic priorities has enabled us to accelerate our execution and generate significant sustainable value for shareholders and other stakeholders.
“On November 1, we announced the successful closing of the sale of Validus Re to RenaissanceRe for which we received total consideration of $3.3 billion in cash, including a pre-closing dividend, and approximately $275 million in RenaissanceRe stock. This sale significantly contributes to our efforts to streamline our business model, simplify our portfolio and further reduce volatility.
“Our continued attention to underwriting excellence and portfolio optimization has manifested in outstanding results for General Insurance. The General Insurance combined ratio improved to 90.5%. The combined ratio included $462 million of total catastrophe-related charges, or 6.9 loss ratio points. Accident year combined ratio, as adjusted, of 86.3% represents an improvement of 210 basis points from the prior year quarter. Additionally, the third quarter results reflect favorable prior year reserve development, net of reinsurance and prior year premiums, of $210 million, or a 2.7 loss ratio point benefit.
“Our continued growth across the portfolio was impressive in the third quarter. General Insurance net premiums written increased 1% year-over-year, or 9% on a comparable basis†, driven by 16% growth in Personal Insurance and 6% growth in Commercial Lines. North America Commercial pricing, which includes rate and exposure, increased 9% excluding Workers’ Compensation, while International Commercial pricing increased 6% year-over-year. Global Commercial pricing increased 8% excluding Workers’ Compensation and remains above loss cost trend.
“Life & Retirement also delivered solid third-quarter results, which were attributable to continued spread expansion and strong Fixed Index Annuities sales which exceeded $2 billion for the third consecutive quarter. Base net investment income continued to see benefits from the higher interest rate environment and Individual and Group Retirement produced a 41 basis point base spread expansion year-over-year.
“Corebridge continues to make significant progress in simplifying its portfolio. In September, Corebridge announced the sale of AIG Life Limited to
Aviva plc for a consideration of £460 million. On October 31, Corebridge closed the sale of Laya Healthcare to AXA for €650 million, the net proceeds from which will be distributed by a special dividend of approximately $730 million to Corebridge shareholders of record. These transactions will enable
Corebridge to concentrate on U.S. Life & Retirement solutions where it has proven market strength and distribution capabilities.”
† Net premiums written on a comparable basis reflects year-over-year comparison on a constant dollar basis adjusted for the International lag elimination, the sale of CRS and the sale of Validus Re. Refer to page 18 for more detail.
For the third quarter of 2023, net income attributable to AIG common shareholders was $2.0 billion, or $2.81 per diluted common share, compared to
$2.7 billion, or $3.55 per diluted common share, in the prior year quarter. The decline was primarily driven by a decrease in net realized gains, both including and excluding Fortitude Re funds withheld assets and embedded derivative, partially offset by higher General Insurance underwriting income and total net investment income. The decrease in net income was also attributable to lower ownership in Corebridge following the Corebridge secondary offering in June.
AATI was $1.2 billion, or $1.61 per diluted common share, for the third quarter of 2023 compared to $0.6 billion, or $0.84 per diluted common share, in the prior year quarter. The increase in AATI was due to higher underwriting income in General Insurance, higher net investment income and better results in Other Operations, partially offset by an increase in adjusted income tax expenses as well as an increase in non-controlling interest expense due to the Corebridge secondary offering. The third quarter adjusted effective tax rate was 26.3% compared to 20.5% in the prior year quarter, driven by higher foreign income, which is taxed at rates higher than the U.S. federal income tax rate of 21%, and tax adjustments related to prior year tax returns.
Total net investment income for the third quarter of 2023 was $3.6 billion, an increase of 33% from $2.7 billion in the prior year quarter, primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates and improved alternative investment income compared to losses from both the hedge fund and private equity portfolios in the prior year quarter. Total net investment income on an APTI basis* was $3.3 billion, an increase of $747 million from the prior year quarter, reflecting the same trends.
Book value per common share was $56.06 as of September 30, 2023, a decrease of 4% from June 30, 2023, driven by an increase in accumulated other comprehensive loss (AOCL) due to higher interest rates, and an increase of 2% from December 31, 2022, driven by the net impact of share repurchases. Adjusted book value per common share* was $78.17, an increase of approximately 3% compared to both June 30, 2023 and December 31, 2022, primarily driven by share repurchases. Adjusted tangible book value per common share* was $72.62, an increase of 4% from June 30, 2023 and an increase of 5% from December 31, 2022, both primarily driven by the net impact of share repurchases.
In the third quarter of 2023, AIG repurchased $785 million of common stock, or approximately 14 million shares, paid $261 million of common and preferred dividends and redeemed Validus debt for $289 million, inclusive of the loss on extinguishment of debt. AIG also received gross proceeds of $234 million from the sale of CRS. AIG parent liquidity was $3.6 billion as of September 30, 2023. Total debt and preferred stock to total capital ratio at
September 30, 2023 was 33.7%, up from 32.3% at June 30, 2023, primarily driven by an increase in AOCL. Excluding AOCL adjusted for cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, the total debt and preferred stock to total capital ratio* was 25.9% at September 30, 2023, relatively flat compared to June 30, 2023.
On November 1, 2023, the AIG Board of Directors declared a quarterly cash dividend on AIG common stock of $0.36 per share. The dividend is payable on December 28, 2023 to stockholders of record at the close of business on December 14, 2023.
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 December 15, 2023 to holders of record at the close of business on November 30, 2023.
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