AIG Reports Fourth Quarter and Full Year 2022 Results

• General Insurance delivered the strongest underwriting profitability AIG has ever achieved as full year 2022 underwriting income nearly doubled to $2.0 billion from the prior year, led by Commercial Insurance that had a combined ratio of 89.6% and an adjusted accident year combined ratio* of 84.5% for full year 2022
• General Insurance fourth quarter combined ratio improved 2.5 points from the prior year quarter to 89.9%; full year combined ratio improved 3.9 points to 91.9%
• General Insurance fourth quarter adjusted accident year combined ratio* (AYCR) of 88.4% improved 1.4 points from the prior year quarter, marking the 18th consecutive quarter of improvement; full year AYCR improved 2.3 points to 88.7%
• Life and Retirement delivered a solid quarter with premiums of $2.1 billion and premiums and deposits* of $8.8 billion benefiting from strong Fixed Annuity and Fixed Index Annuity sales along with continued improvement in base portfolio investment income
• Net income per diluted common share was $0.35 and adjusted after-tax income* (AATI) per diluted common share was $1.36 compared to $1.58 in the prior year quarter, driven by lower alternative investment income
• AIG repurchased $779 million of common stock and redeemed $1.8 billion of senior unsecured notes in the fourth quarter; for the full year, AIG returned over $6.1 billion to shareholders through $5.1 billion of common stock repurchases and $1.0 billion of dividends; outstanding common shares at year end 2022 were 10% lower than prior year

FOURTH QUARTER NOTEWORTHY ITEMS

• General Insurance adjusted pre-tax income (APTI) of $1.2 billion decreased by $297 million from the prior year quarter as a result of a $489 million decrease of alternative investment income, partially offset by better underwriting results with 2.5 points of combined ratio improvement, benefiting from continued underwriting discipline and more favorable prior year reserve development (PYD).
• Life and Retirement APTI of $781 million reflects lower net investment income (NII) due to lower alternative investment returns and call and tender income, partially offset by higher base portfolio income compared to the prior year quarter.
• Net income attributable to AIG common shareholders was $264 million, or $0.35 per diluted common share for the fourth quarter, compared to $3.7 billion or $4.38 per diluted common share in the prior year quarter.
• AATI attributable to AIG common shareholders was $1.0 billion, or $1.36 per diluted common share, compared to $1.3 billion, or $1.58 per diluted common share, in the prior year quarter, primarily due to lower alternative investment income.
• Return on common equity (ROCE) and Adjusted ROCE* were 2.7% and 7.5%, respectively, on an annualized basis for the fourth quarter of 2022.
• As of December 31, 2022, book value per common share was $53.83, compared to $79.97 at prior year end, driven by a reduction in accumulated other comprehensive income (AOCI) as a result of higher interest rates. Adjusted book value per common share* was $73.87, an increase of 7% from December 31, 2021.

* Refers to financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Comment on Regulation G and Non-GAAP Financial Measures.

NEW YORK–(BUSINESS WIRE)–American International Group, Inc. (NYSE: AIG) today reported financial results for the fourth quarter and full year ended December 31, 2022.

AIG Chairman & Chief Executive Officer Peter Zaffino said: “2022 was an extraordinary year of progress for AIG. We continued to improve the profitability of our General Insurance business, closing the year with the strongest underwriting results the business has ever achieved and with the second consecutive year of underwriting profitability improving by $1 billion. In addition, we made considerable progress on the separation of our Life and Retirement business and completed the initial public offering (IPO) of Corebridge Financial in September 2022. We reached significant milestones on AIG 200 that modernized our technology infrastructure and operational capabilities, while executing on our target run-rate savings of $1 billion six months ahead of schedule. We revamped AIG’s investment management strategy through strategic partnerships with Blackstone and BlackRock and have transferred approximately $50 billion and $150 billion of assets, respectively, to these partners.

“Improvement in General Insurance continued through portfolio optimization, prudent risk selection and limit reduction of over $1.2 trillion since 2018. The full-year 2022 combined ratio of 91.9% represents a 390-basis point year-over-year improvement. The accident year combined ratio, x-CAT of 88.7% improved 230 basis points from prior year, marking the fulfillment of our full-year sub-90 goal and was sub-90 in every quarter of 2022. Our strong momentum continued through the complex January 1 reinsurance renewal season, where the quality of our portfolio enabled us to secure treaties on favorable terms in a very challenging market.

“Life and Retirement delivered a solid year with strong sales, particularly in Individual Retirement where Fixed Annuity and Fixed Index Annuity sales continued their robust growth trends. The fixed income portfolio experienced meaningful lift in portfolio yield and widening spreads benefiting from the higher interest rate environment. The capital strength and free cash flow profile of the business remain healthy.

“2022 was also a significant year in terms of capital management. We returned over $6.1 billion to shareholders through $5.1 billion of AIG common stock repurchases and $1.0 billion of dividends and Corebridge paid two dividends totaling approximately $300 million in the fourth quarter of 2022 following its IPO in September. We established Corebridge’s capital structure and reduced AIG debt, setting a strong foundation for the future.

“In 2022 our colleagues across the globe aligned behind common goals and maintained a steadfast commitment to executing with the highest quality, and I am incredibly proud of the meaningful progress we made. As we look ahead to 2023, the world faces many uncertainties. AIG is better positioned than ever as a risk expert to continue executing on our strategy to deliver excellence as a top-performing company. I am confident we will continue to lead the market and create long-term value for our clients, distribution partners, colleagues, shareholders, and other stakeholders.”

For full year 2022, pre-tax income from continuing operations was $14.3 billion, up from $12.1 billion in the prior year. Full year 2022 net income attributable to AIG common shareholders was $10.2 billion, or $13.01 per diluted common share, compared to net income of $9.4 billion, or $10.82 per diluted common share, in the prior year. The increase was largely driven by net realized gains on Fortitude Re funds withheld embedded derivative, strong General Insurance underwriting results, which almost doubled year-over-year, and lower interest expense benefiting from liability management actions, partially offset by lower alternative investment income and call and tender income. The prior year results also included a $3.0 billion gain from the sale of a real estate portfolio. These pre-tax increases were partially offset by higher income tax expense as a result of higher income from operations as well as an increase in income attributable to the noncontrolling interest associated with Blackstone’s 9.9% ownership interest in Corebridge and the IPO of Corebridge in September 2022.

AATI was $3.6 billion, or $4.55 per diluted common share, for the full year of 2022 compared to $4.4 billion, or $5.12 per diluted common share, in the prior year. The decrease in AATI was primarily due to lower alternative investment income and call and tender income, partially offset by an increase in General Insurance underwriting income, yield improvement in the fixed maturity and loan portfolios and savings on interest expense.

For the fourth quarter of 2022, pre-tax income from continuing operations was $279 million, down from $5.0 billion in the prior year quarter. Fourth quarter 2022 net income attributable to AIG common shareholders was $264 million, or $0.35 per diluted common share, compared to $3.7 billion, or $4.38 per diluted common share, in the prior year quarter. Prior year result included a $3.0 billion gain from the sale of a real estate portfolio. The pre-tax income decline was otherwise primarily due to a decrease in net realized gains on derivative activities.

AATI was $1.0 billion, or $1.36 per diluted common share, for the fourth quarter of 2022 compared to $1.3 billion, or $1.58 per diluted common share, in the prior year quarter. The decrease in AATI was primarily due to lower alternative investment income and lower call and tender income, partially offset by improvement in General Insurance underwriting results and yield improvement in the fixed maturity and loan portfolios.

Total consolidated net investment income for the fourth quarter of 2022 was $3.3 billion, down 9% from $3.6 billion in the prior year quarter, primarily due to lower alternative investment income and reductions in call and tender income. Interest and dividends income improved $305 million from the prior year quarter with yield across the fixed maturity and loan portfolios up 29 basis points sequentially. Total net investment income on an APTI basis* was $3.0 billion, a decrease of $331 million compared to the prior year quarter.

Book value per common share was $53.83 as of December 31, 2022, an increase of 4% from September 30, 2022 and a decrease of 33% from December 31, 2021, driven by a reduction in AOCI as a result of higher interest rates. Adjusted book value per common share* was $73.87, an increase of 1% from September 30, 2022 and 7% from December 31, 2021, reflecting growth in retained earnings from net income in excess of dividends and share repurchases. Adjusted tangible book value per common share* was $67.43, an increase of 1% from September 30, 2022 and 7% from December 31, 2021.

For the fourth quarter of 2022, AIG repurchased $779 million of common stock or approximately 13 million shares, paid $243 million of common and preferred dividends, and redeemed $1.8 billion of aggregate principal amount of debt, ending the year with AIG Parent liquidity of $3.7 billion as of December 31, 2022. Corebridge liquidity is no longer reflected in AIG Parent’s liquidity following the IPO. AIG’s ratio of total debt and preferred stock to total capital at December 31, 2022 was 34.1%, down from 36.5% at September 30, 2022, due to the redemption of $1.8 billion of debt in the fourth quarter and AOCI mark-to-market adjustments for certain investment portfolios.

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 March 31, 2023 to stockholders of record at the close of business on March 17, 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 March 15, 2023 to holders of record at the close of business on February 28, 2023.

FINANCIAL SUMMARY

GENERAL INSURANCE

General Insurance

• Net premiums written (NPW) in the fourth quarter of 2022 decreased 6% from the prior year quarter and increased 1% on a constant dollar basis to $5.6 billion, driven by solid North America Commercial Lines growth of 3% attributed to strong new business and retention and International Commercial Lines growth of 2% on a constant dollar basis. Commercial NPW benefited from strong growth in Lexington, Specialty and Casualty, offset in part by a decline in Financial Lines due to decreased capital markets activities. Personal Insurance NPW decreased 14% or 2% on a constant dollar basis, primarily due to a decrease in Warranty and underwriting actions taken in Private Client Group as the repositioning of this business continues, partially offset by growth in International Accident & Health and Travel.
• Fourth quarter 2022 APTI decreased by $297 million to $1.2 billion from the prior year quarter due to lower alternative investment income, partially offset by improvement in underwriting income. Underwriting income increased by $136 million to $635 million in the fourth quarter of 2022, which included $235 million of catastrophe losses (CATs), before reinstatement premiums, notably from Winter Storm Elliott, compared to $189 million of CATs in the prior year quarter. Fourth quarter 2022 also included favorable PYD, net of reinsurance, of $151 million compared to favorable PYD of $44 million in the prior year quarter.
• General Insurance delivered another quarter of strong underwriting results with a combined ratio of 89.9%, a 2.5-point improvement from 92.4% in the prior year quarter, driven by an improvement of 3.3 points in the loss ratio that included higher favorable PYD. The General Insurance AYCR was 88.4%, an improvement of 1.4 points from the prior year quarter with a 2.2-point improvement in the accident year loss ratio, as adjusted* to 57.0%, offset by a 0.8 point increase in the expense ratio to 31.4%. The improvement in accident year loss ratio, as adjusted, reflected continued earn-in of rate in excess of loss cost trends, execution on portfolio management strategy and improvement in Commercial Lines business mix.
• Commercial Lines underwriting results continued to show strong improvement as a result of continued focus on underwriting excellence and expense management. The combined ratio was 84.4% for North America Commercial Lines and 89.4% for International Commercial Lines. The AYCR for North America Commercial Lines improved 3.0 points to 85.9%, and for International Commercial Lines improved 5.1 points to 81.6% compared to the prior year quarter.
• Personal Insurance underwriting results deteriorated, reflecting underwriting actions taken to shift business mix in order to reduce exposure and lower premiums in the quarter. The North America Personal Insurance combined ratio was 102.5%, and AYCR of 105.3% deteriorated 10.4 points compared to the prior year quarter, driven by a higher acquisition ratio due to a change in business mix and lower ceding commission. The International Personal Insurance combined ratio was 98.9%, and AYCR of 98.9% deteriorated 4.8 points from the prior year quarter, primarily driven by higher frequency of losses related to restrictions pertaining to COVID-19 deemed hospitalization.

LIFE AND RETIREMENT

Life and Retirement

• Life and Retirement reported APTI of $781 million for the fourth quarter of 2022, down 19% from $969 million in the prior year quarter. The decline was primarily driven by lower NII as well as lower fee income and higher deferred policy acquisition costs (DAC) amortization in Individual and Group Retirement due to challenging capital market conditions, partially offset by improved mortality experience. Base portfolio yield improved by approximately 34 basis points sequentially or approximately 54 basis points year-over-year as a result of higher new money rates.
• Life and Retirement delivered a solid quarter with premiums of $2.1 billion and premiums and deposits* increased 2% from the prior year quarter to $8.8 billion, benefiting from favorable sales activity in Individual and Group Retirement segments driven by strong Fixed Annuity and Fixed Index Annuity sales, as well as higher Group Retirement plan acquisitions. Excluding transactional businesses such as pension risk transfer, guaranteed investment contracts and Group Retirement plan acquisitions, premiums and deposits* were up 14% year-over-year.
• COVID mortality in Life Insurance is in line with the previously disclosed estimates of exposure sensitivity of $65 million to $75 million per 100,000 population of U.S. deaths.
• Life and Retirement return on adjusted segment common equity* for the fourth quarter was 10.1% on an annualized basis.

OTHER OPERATIONS

Other Operations

• Other Operations adjusted pre-tax loss of $451 million improved by $197 million or 30% from the prior year quarter as a result of improved results in Corporate and Other as well as reduced elimination activities.
• Before consolidation and eliminations, the adjusted pre-tax loss increased by $278 million, reflecting lower investment income driven by lower alternative investment returns, an increase in corporate general operating expense for costs related to setting up Corebridge as a standalone public company, and higher vendor fees related to cloud migration.
• The movements in the Asset Management Group as well as consolidation and eliminations were due to lower investment gains compared to the prior year quarter. Results in the fourth quarter of 2021 included a large gain on sale from investment funds, which was allocated to the operating companies and eliminated in Other Operations.

LIFE AND RETIREMENT SEPARATION

On September 19, 2022, AIG closed the IPO of 80 million shares of Corebridge common stock at a public offering price of $21.00 per share, representing 12.4 percent of Corebridge’s common stock. Corebridge is the holding company for AIG’s Life and Retirement business. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were approximately $1.7 billion.

In November 2021, AIG and Blackstone Inc. completed the acquisition by Blackstone of a 9.9 percent equity stake in Corebridge. Blackstone is required to hold its ownership interest in Corebridge following the completion of the separation of the Life and Retirement business, subject to exceptions permitting Blackstone to sell 25%, 67% and 75% of its shares after the first, second and third anniversaries, respectively, of Corebridge IPO (which will be September 19, 2023, 2024 and 2025, respectively), with the transfer restrictions terminating in full on the fifth anniversary of the IPO (September 19, 2027).

Following the IPO, AIG owns 77.7% of the outstanding common stock of Corebridge and continues to consolidate the assets, liabilities, and results of operations of Corebridge in AIG’s Consolidated Financial Statements. The portion of equity interest of Corebridge that AIG does not own is reflected as noncontrolling interest in AIG’s Consolidated Financial Statements.

Contacts

Quentin McMillan (Investors): [email protected]
Claire Talcott (Media): [email protected]

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