Market Overview

AIG Reports Second Quarter 2019 Results

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  • Net income attributable to AIG common shareholders was $1.1 billion, or $1.24 per diluted common share, for the second quarter of 2019, compared to net income attributable to AIG common shareholders of $937 million, or $1.02 per diluted common share, in the prior-year quarter.
  • Adjusted after-tax income attributable to AIG common shareholders was $1.3 billion, or $1.43 per diluted common share, for the second quarter of 2019, compared to adjusted after-tax income attributable to AIG common shareholders of $961 million, or $1.05 per diluted common share, in the prior-year quarter.
  • General Insurance delivered a second consecutive quarter of underwriting profitability, achieving a combined ratio of 97.8 and an accident year combined ratio, as adjusted, of 96.1, driven by continued underwriting, reinsurance and expense discipline.
  • Life and Retirement posted a 17.3% adjusted return on common equity (ROCE), reflecting strong private equity returns, investment gains resulting from lower interest rates and solid in force profitability.
  • Total consolidated net investment income was $3.7 billion in the second quarter of 2019, compared to $3.1 billion in the prior-year quarter, reflecting favorable market performance and noteworthy income within the private equity portfolio.

American International Group, Inc. (NYSE:AIG) today reported net income attributable to AIG common shareholders of $1.1 billion, or $1.24 per diluted common share, for the second quarter of 2019, compared to net income attributable to AIG common shareholders of $937 million, or $1.02 per diluted common share, in the prior-year quarter. Adjusted after-tax income attributable to AIG common shareholders was $1.3 billion, or $1.43 per diluted common share, for the second quarter of 2019, compared to adjusted after-tax income attributable to AIG common shareholders of $961 million, or $1.05 per diluted common share, in the prior-year quarter.

Brian Duperreault, AIG's President and Chief Executive Officer, said: "Our strong second quarter performance demonstrated continued positive momentum throughout the first half of 2019. The additional progress on our path to long-term sustainable and profitable growth reflected in this quarter's results was driven by the foundational changes we implemented across AIG last year. General Insurance achieved its second consecutive quarter of underwriting profitability resulting from underwriting and expense discipline, and reinsurance actions, and remains on track to deliver an underwriting profit for the full year. Life and Retirement delivered another quarter of solid in force profitability and double-digit adjusted ROCE, and Life and Retirement expects to deliver full year adjusted ROCE in the low- to mid-teens range, as we stated previously."

"Looking ahead, we remain diligently focused on executing against our strategy to reposition AIG as the leading insurance company in the world, and we continue to expect to achieve double-digit ROCE for consolidated AIG by year-end 2021," Mr. Duperreault added.

SECOND QUARTER FINANCIAL SUMMARY*

 

Three Months Ended

June 30,

 

($ in millions, except per common share amounts)

 

2019

 

2018

 

Net income attributable to AIG common shareholders

$

1,102

$

937

 

Net income per diluted share attributable to AIG common shareholders

$

1.24

$

1.02

 

Adjusted after-tax income attributable to AIG common shareholders

$

1,272

$

961

 

Adjusted after-tax income per diluted share attributable to AIG common shareholders

$

1.43

$

1.05

 

 

 

 

 

 

 

Return on common equity

 

7.1

%

6.0

%

Adjusted return on common equity

 

10.4

%

7.6

%

Adjusted return on attributed common equity - Core

 

11.6

%

8.2

%

 

 

 

 

 

 

Book value per common share

$

73.63

$

68.65

 

Book value per common share, excluding accumulated other comprehensive income

 

67.90

 

68.40

 

Adjusted book value per common share

 

56.89

 

57.34

 

*Refer to the Comments on Regulation G and the tables that follow for a discussion of non-GAAP financial measures and the reconciliations of the non-GAAP financial measures to GAAP measures.

SECOND QUARTER 2019 HIGHLIGHTS

All comparisons are against the second quarter of 2018, unless otherwise indicated.

General Insurance – Second quarter adjusted pre-tax income of $980 million included underwriting income of $147 million and net investment income of $833 million. Results reflected the second consecutive quarter of underwriting profitability, with a combined ratio of 97.8 inclusive of 2.6 points of catastrophe losses net of reinstatement premiums and (0.9) points of net favorable loss reserve development. The accident year combined ratio, as adjusted, was 96.1, comprised of a 61.3 accident year loss ratio, as adjusted, down 410 basis points from the prior-year quarter, and an expense ratio of 34.8, down 80 basis points from the prior-year quarter. The decrease in accident year loss ratio, as adjusted, reflected the change in business mix including the acquisitions of Validus and Glatfelter, improved new business and renewal terms and reduced volatility due to the increased use of reinsurance. The second quarter expense ratio of 34.8 primarily reflected improvement in the General operating expense (GOE) ratio as a result of continued expense discipline. Catastrophe-related losses, net of reinsurance, of $174 million pre-tax were primarily due to North American weather events.

Life and Retirement – Second quarter adjusted pre-tax income of $1.0 billion reflected strong private equity returns including income of $138 million from an initial public offering of a holding in the private equity portfolio and favorable market performance impacts which benefited net investment income and Deferred Acquisition Costs (DAC) amortization. Attractive new business margins and solid growth in premiums and deposits in Individual Retirement and Life Insurance over the last year also benefited the results for the quarter. Although negative, net flows improved, resulting from higher Fixed and Index Annuities new business, as well as lower Group Retirement surrenders and withdrawals.

Net Investment Income – Second quarter net investment income from our insurance companies, including the Legacy insurance portfolios, increased 19.4% from the prior-year quarter to $3.7 billion. The second quarter reflected strong performance in the equity markets and tightening spreads in the credit markets and included income of $142 million from an initial public offering of a holding in the private equity portfolio.

Legacy – Second quarter adjusted pre-tax income of $119 million declined from $134 million in the prior-year quarter resulting from lower Legacy Life and Retirement earnings due to an increase in structured settlements reserves and lower premiums.

Liquidity and Capital – As of June 30, 2019, AIG Parent liquidity stood at approximately $6.0 billion. In the second quarter, AIG Parent received approximately $1.4 billion of distributions from the insurance subsidiaries in the form of cash, fixed maturity securities and loan repayments including tax sharing payments.

Book Value per Common Share – As of June 30, 2019, book value per common share was $73.63 compared to $65.04 at December 31, 2018. Book value per common share excluding accumulated other comprehensive income and deferred tax assets (Adjusted book value per common share) increased 3.5% to $56.89 compared to the prior-year end.

GENERAL INSURANCE

 

 

Three Months Ended June 30,

 

 

 

($ in millions)

2019

2018

 

Change

 

Total General Insurance

 

 

 

 

 

 

 

Gross premiums written

$

8,654

 

$

8,653

 

 

-

 

%

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