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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American International Group Inc | NYSE:AIG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.4499 | 0.58% | 78.0299 | 78.21 | 77.56 | 77.96 | 2,045,777 | 01:00:00 |
SECOND QUARTER 2023 NOTEWORTHY ITEMS
* 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.
American International Group, Inc. (NYSE: AIG) today reported financial results for the second quarter ended June 30, 2023.
AIG Chairman & Chief Executive Officer Peter Zaffino said: “In the second quarter, we continued to build on our momentum, delivering outstanding financial results as well as successfully executing on multiple strategic priorities. Second quarter adjusted after-tax income attributable to AIG common shareholders per diluted common share was $1.75, AIG’s highest adjusted EPS since 2007, representing another significant milestone on our path toward sustainable earnings growth over the long-term.
“Our ability to continue to grow, manage volatility and improve profitability reflects our commitment to underwriting and operational excellence. In addition to our strong financial performance, our team executed on several transactions that will simplify AIG, reduce volatility, generate liquidity and capital efficiencies, and allow us to accelerate our capital management plans.
“In General Insurance, continued accident year underwriting margin improvement and strong growth resulted in yet another quarter of excellent financial results. Net premiums written increased 11%† year-over-year and Commercial Lines net premiums written grew 13%† driven by strong growth in North America Commercial Lines of 18%†. North America Commercial rate increased 8% or 9% excluding Workers’ Compensation while International Commercial rate increased 9%.
“The General Insurance combined ratio was 90.9%, inclusive of $250 million of catastrophe losses, or 3.9 loss ratio points, a tremendous result against the backdrop of a very challenging quarter for the industry. The second quarter accident year combined ratio, ex-CAT, was 88.0% and the lowest ratio recorded for the second quarter since 2007. This ratio improved by 50 basis points year-over-year and was driven by an excellent Global Commercial accident year combined ratio, ex-CAT, of 84.4%.
“Life & Retirement delivered very good results, with premiums and deposits of over $10 billion, a 42% increase year-over-year, benefiting from record sales in Fixed Index Annuities. Results included strong continued base net investment spread expansion.
“With respect to capital management, we continued to execute against our balanced strategy. In the second quarter, we increased our quarterly common stock dividend by 12.5% to $0.36 per share, representing the first increase since 2016 and we returned $822 million to shareholders through $554 million of AIG common stock repurchases and $268 million of dividends.
“In May, we announced the sale of Validus Re to RenaissanceRe for $3 billion, which is expected to close in the fourth quarter of 2023. In addition, we announced and successfully completed the sale of AIG’s Crop Risk Services business to American Financial Group, Inc. for approximately $240 million. We also launched Private Client Select as a Managing General Agency with our partner Stone Point Capital LLC that will serve as an independent platform for the high and ultra-high net worth markets.
“In June, we completed a secondary offering of Corebridge Financial common stock. Furthermore, Corebridge issued a $400 million special dividend to its shareholders and executed the repurchase of $200 million of common stock from AIG and Blackstone. Including approximately $600 million in regular dividends, these actions resulted in approximately $1.2 billion of total capital returned to Corebridge shareholders since its initial public offering in September 2022. As a result of these actions, AIG received gross proceeds of approximately $1.7 billion and reduced its ownership in Corebridge to 65.3%.
“The scale of what AIG colleagues accomplished in the second quarter is extraordinary. I am more confident than ever in AIG’s promising future as we continue our journey to be a top performing company delivering excellence in all that we do and creating sustainable long-term value for our stakeholders.”
† On a constant dollar basis for North America and on a constant dollar basis and adjusted for the International lag elimination for International. These measures are 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.
For the second quarter of 2023, pre-tax income from continuing operations was $1.9 billion, compared to $3.9 billion in the prior year quarter. Net income attributable to AIG common shareholders was $1.5 billion, or $2.03 per diluted common share, compared to $2.7 billion, or $3.43 per diluted common share, in the prior year quarter. The decline in pre-tax income was primarily driven by a decrease in net realized gains on Fortitude Re funds withheld assets and embedded derivative as well as a decrease in net realized gains excluding Fortitude Re funds withheld assets and embedded derivative, higher catastrophe losses, lower net favorable prior year development (PYD) and higher interest crediting rates at Life and Retirement. The decline was partially offset by higher net investment income and continued improvement in accident year underwriting margin. These pre-tax items were partially offset by lower income tax expense due to a decrease in income from continuing operations and lower income attributable to the noncontrolling interest (NCI) due to a decrease in net income at Corebridge compared to the prior year quarter despite higher income attributable to NCI as a result of lower AIG ownership in Corebridge.
AATI was $1.3 billion, or $1.75 per diluted common share, for the second quarter of 2023, compared to $1.1 billion, or $1.39 per diluted common share, in the prior year quarter. The increase in AATI was due to higher Life and Retirement results, partially offset by higher catastrophe losses and lower net favorable PYD.
Total consolidated net investment income for the second quarter of 2023 was $3.6 billion, an increase of 37% from $2.6 billion in the prior year quarter, benefiting from higher income from fixed maturity securities and loan portfolios due to the higher reinvestment rates on new investments and floating rate securities. Total net investment income on an APTI basis* was $3.3 billion, an increase of $774 million from the prior year quarter.
Book value per common share was $58.49 as of June 30, 2023, a decrease of 1% from March 31, 2023 and an increase of 6% from December 31, 2022. The decrease from March 31, 2023 was driven by an increase in accumulated other comprehensive loss (AOCI) due to increased interest rates and the increase from December 31, 2022 was driven by a decrease in AOCI as a result of the Corebridge secondary offering and share repurchases discussed above. Adjusted book value per common share* was $75.76, almost flat compared to March 31, 2023 and December 31, 2022. Adjusted tangible book value per common share* was $69.99, an increase of approximately 1% from both March 31, 2023 and December 31, 2022.
In the second quarter of 2023, AIG repurchased $554 million of common stock, or approximately 10 million shares, paid $268 million of common and preferred dividends and repaid $388 million of debt maturities. AIG also received proceeds of approximately $1.2 billion from the Corebridge secondary offering, $264 million from the Corebridge special dividend and $180 million from the Corebridge share repurchase, contributing to parent liquidity of $4.3 billion as of June 30, 2023. AIG’s ratio of total debt and preferred stock to total capital at June 30, 2023 was 32.3%, down from 32.8% at March 31, 2023, primarily driven by repayment of $388 million of debt and the Corebridge secondary offering. Excluding AOCI, the total debt and preferred stock to total capital ratio* was 26.0% at June 30, 2023.
On August 1, the AIG Board of Directors declared a quarterly cash dividend on AIG common stock of $0.36 per share. The dividend is payable on September 29, 2023 to stockholders of record at the close of business on September 15, 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 $0.365625 per depositary share. The dividend is payable on September 15, 2023 to holders of record at the close of business on August 31, 2023.
FINANCIAL SUMMARY
Three Months Ended
June 30,
($ in millions, except per common share amounts)
2022
2023
Net income attributable to AIG common shareholders
$
2,746
$
1,485
Net income per diluted share attributable to AIG common shareholders
$
3.43
$
2.03
Adjusted pre-tax income (loss)
$
1,543
$
1,890
General Insurance
1,257
1,319
Life and Retirement
747
991
Other Operations
(461)
(420)
Net investment income
$
2,604
$
3,571
Net investment income, APTI basis
2,504
3,278
Adjusted after-tax income attributable to AIG common shareholders
$
1,111
$
1,282
Adjusted after-tax income per diluted share attributable to AIG common shareholders
$
1.39
$
1.75
Weighted average common shares outstanding - diluted (in millions)
800.7
730.5
Return on common equity
21.7
%
14.0
%
Adjusted return on common equity
7.7
%
9.4
%
Book value per common share
$
58.64
$
58.49
Adjusted book value per common share
$
73.78
$
75.76
Common shares outstanding (in millions)
771.3
717.5
GENERAL INSURANCE
Three Months Ended June 30,
($ in millions)
2022
2023
Change
Gross premiums written
$
9,581
$
10,399
9
%
Net premiums written
$
6,866
$
7,537
10
%
North America
3,401
3,973
17
North America Commercial Lines
2,918
3,410
17
North America Personal Insurance
483
563
17
International
3,465
3,564
3
International Commercial Lines
2,037
2,223
9
International Personal Insurance
1,428
1,341
(6)
Underwriting income (loss)
$
799
$
594
(26)
%
North America
406
352
(13)
North America Commercial Lines
416
403
(3)
North America Personal Insurance
(10)
(51)
(410)
International
393
242
(38)
International Commercial Lines
349
216
(38)
International Personal Insurance
44
26
(41)
Net investment income, APTI basis
$
458
$
725
58
%
Adjusted pre-tax income
$
1,257
$
1,319
5
%
Return on adjusted segment common equity
12.0
%
12.2
%
0.2
pts
Underwriting ratios:
North America Combined Ratio (CR)
86.3
89.0
2.7
pts
North America Commercial Lines CR
83.6
85.6
2.0
North America Personal Insurance CR
102.3
112.9
10.6
International CR
88.5
92.6
4.1
International Commercial Lines CR
82.4
89.0
6.6
International Personal Insurance CR
96.9
98.0
1.1
General Insurance (GI) CR
87.4
90.9
3.5
GI Loss ratio
56.2
59.3
3.1
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement premiums
(1.8)
(3.9)
(2.1)
Prior year development, net of reinsurance and prior year premiums
2.9
1.0
(1.9)
GI Accident year loss ratio, as adjusted
57.3
56.4
(0.9)
GI Expense ratio
31.2
31.6
0.4
GI Accident year combined ratio, as adjusted
88.5
88.0
(0.5)
Accident year combined ratio, as adjusted (AYCR):
North America AYCR
89.9
87.8
(2.1)
pts
North America Commercial Lines AYCR
88.2
85.1
(3.1)
North America Personal Insurance AYCR
99.7
107.1
7.4
International AYCR
87.2
88.0
0.8
International Commercial Lines AYCR
81.4
83.1
1.7
International Personal Insurance AYCR
95.2
95.3
0.1
General Insurance
LIFE AND RETIREMENT
Three Months Ended
June 30,
($ in millions, except as indicated)
2022
2023
Change
Adjusted pre-tax income
$
747
$
991
33
%
Individual Retirement
370
585
58
Group Retirement
180
201
12
Life Insurance
120
78
(35)
Institutional Markets
77
127
65
Premiums and fees
$
1,846
$
3,238
75
%
Individual Retirement
246
238
(3)
Group Retirement
109
106
(3)
Life Insurance
946
934
(1)
Institutional Markets
545
1,960
260
Premiums and deposits
$
7,099
$
10,054
42
%
Individual Retirement
3,620
4,045
12
Group Retirement
1,772
1,923
9
Life Insurance
1,157
1,176
2
Institutional Markets
550
2,910
429
Net flows
$
80
$
(2105)
NM
%
Individual Retirement
628
(359)
NM
Group Retirement
(548)
(1,746)
(219)
Net investment income, APTI basis
$
1,989
$
2,478
25
%
Return on adjusted segment common equity
9.7
%
12.2
%
2.5
pts
Life and Retirement
OTHER OPERATIONS
Three Months Ended
June 30,
($ in millions)
2022
2023
Change
Corporate and Other
$
(494)
$
(414)
16
%
Asset Management Group
163
(9)
NM
Adjusted pre-tax loss before consolidation and eliminations
(331)
(423)
(28)
Consolidation and eliminations
(130)
3
NM
Adjusted pre-tax loss
$
(461)
$
(420)
9
%
Other Operations
CONFERENCE CALL AIG will host a conference call tomorrow, Wednesday, August 2, 2023 at 8:30 a.m. ET to review these results. The call is open to the public and can be accessed via a live listen-only webcast in the Investors section of www.aig.com. A replay will be available after the call at the same location.
# # #
Additional supplementary financial data is available in the Investors section at www.aig.com.
Certain statements in this press release and other publicly available documents may include, and members of AIG management may from time to time make and discuss, statements which, to the extent they are not statements of historical or present fact, may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward‑looking statements are intended to provide management’s current expectations or plans for AIG’s future operating and financial performance, based on assumptions currently believed to be valid and accurate. Forward-looking statements are often preceded by, followed by or include words such as “will,” “believe,” “anticipate,” “expect,” “expectations,” “intend,” “plan,” “strategy,” “prospects,” “project,” “anticipate,” “should,” “guidance,” “outlook,” “confident,” “focused on achieving,” “view,” “target,” “goal,” “estimate,” and other words of similar meaning in connection with a discussion of future operating or financial performance. These statements may include, among other things, projections, goals and assumptions that relate to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expense reduction efforts, the outcome of contingencies such as legal proceedings, anticipated organizational, business or regulatory changes, such as the separation of the Life and Retirement business from AIG, the effect of catastrophic events, both natural and man-made, and macroeconomic and/or geopolitical events, anticipated dispositions, monetization and/or acquisitions of businesses or assets, the successful integration of acquired businesses, management succession and retention plans, exposure to risk, trends in operations and financial results, and other statements that are not historical facts.
All forward-looking statements involve risks, uncertainties and other factors that may cause AIG’s actual results and financial condition to differ, possibly materially, from the results and financial condition expressed or implied in the forward-looking statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in specific projections, goals, assumptions and other forward-looking statements include, without limitation:
Forward-looking statements speak only as of the date of this press release, or in the case of any document incorporated by reference, the date of that document. AIG is not under any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in any forward-looking statements is disclosed from time to time in our filings with the SEC.
# # #
COMMENT ON REGULATION G AND NON-GAAP FINANCIAL MEASURES
Throughout this press release, including the financial highlights, AIG presents its financial condition and results of operations in the way it believes will be most meaningful and representative of its business results. Some of the measurements AIG uses are “Non-GAAP financial measures” under SEC rules and regulations. GAAP is the acronym for generally accepted accounting principles in the United States. The non-GAAP financial measures AIG presents are listed below and may not be comparable to similarly-named measures reported by other companies. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within the relevant tables attached to this news release or in the Second Quarter 2023 Financial Supplement available in the Investors section of AIG’s website, www.aig.com.
Unless otherwise mentioned or unless the context indicates otherwise, we use the terms “AIG,” “we,” “us” and “our” to refer to American International Group, Inc., a Delaware corporation, and its consolidated subsidiaries.
AIG uses the following operating performance measures because AIG believes they enhance the understanding of the underlying profitability of continuing operations and trends of AIG’s business segments. AIG believes they also allow for more meaningful comparisons with AIG’s insurance competitors. When AIG uses these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis.
Book value per common share, excluding accumulated other comprehensive income (loss) (AOCI) adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and deferred tax assets (DTA) (Adjusted book value per common share) is used to show the amount of our net worth on a per-common share basis after eliminating items that can fluctuate significantly from period to period, including changes in fair value (1) of AIG’s available for sale securities portfolio, (2) of market risk benefits attributable to our own credit risk and (3) due to discount rates used to measure traditional and limited payment long-duration insurance contracts, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. In addition, we adjust for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s reinsurance obligations to AIG post deconsolidation of Fortitude Re (Fortitude Re funds withheld assets) since these fair value movements are economically transferred to Fortitude Re. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in these book value per common share metrics. Adjusted book value per common share is derived by dividing total AIG common shareholders’ equity, excluding AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, and DTA (Adjusted common shareholders’ equity), by total common shares outstanding.
Book Value per Common Share, Excluding Goodwill, Value of Business Acquired (VOBA), Value of Distribution Channel Acquired (VODA), Other Intangible Assets, AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, and Deferred Tax Assets (DTA) (Adjusted Tangible Book Value per Common Share) is used to provide more accurate measure of the realizable value of shareholder on a per-common share basis. Adjusted Tangible Book Value per Common Share is derived by dividing Total AIG common shareholders’ equity, excluding intangible assets, AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, and DTA (Adjusted Tangible Common Shareholders’ Equity), by total common shares outstanding.
AIG Return on Common Equity (ROCE) – Adjusted After-tax Income Excluding AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and DTA (Adjusted return on common equity) is used to show the rate of return on common shareholders’ equity. We believe this measure is useful to investors because it eliminates items that can fluctuate significantly from period to period, including changes in fair value (1) of AIG’s available for sale securities portfolio, (2) of market risk benefits attributable to our own credit risk and (3) due to discount rates used to measure traditional and limited payment long-duration insurance contracts, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. In addition, we adjust for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets since these fair value movements are economically transferred to Fortitude Re. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted Return on Common Equity. Adjusted Return on Common Equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG common shareholders by average Adjusted Common Shareholders’ Equity.
General Insurance and Life and Retirement Adjusted Segment Common Equity is based on segment equity adjusted for the attribution of debt and preferred stock (Segment Common Equity) and is consistent with AIG’s Adjusted Common Shareholders’ Equity definition.
General Insurance and Life and Retirement Return on Adjusted Segment Common Equity – Adjusted After-tax Income (Return on adjusted segment common equity) is used to show the rate of return on Adjusted Segment Common Equity. Return on Adjusted Segment Common Equity is derived by dividing actual or annualized Adjusted After-tax Income by Average Adjusted Segment Common Equity.
Adjusted After-tax Income Attributable to General Insurance and Life and Retirement is derived by subtracting attributed interest expense, income tax expense and attributed dividends on preferred stock from APTI. Attributed debt and the related interest expense and dividends on preferred stock are calculated based on our internal allocation model. Tax expense or benefit is calculated based on an internal attribution methodology that considers among other things the taxing jurisdiction in which the segments conduct business, as well as the deductibility of expenses in those jurisdictions.
Adjusted revenues exclude Net realized gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes), changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes) and income from elimination of the International reporting lag. Adjusted revenues is a GAAP measure for our segments.
Adjusted Pre-tax Income (APTI) is derived by excluding the items set forth below from income from continuing operations before income tax. This definition is consistent across our segments. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. APTI is a GAAP measure for our segments. Excluded items include the following:
Adjusted After-tax Income attributable to AIG common shareholders (AATI) is derived by excluding the tax effected APTI adjustments described above, dividends on preferred stock, noncontrolling interest on net realized gains (losses), other non-operating expenses and the following tax items from net income attributable to AIG:
See page 15 for the reconciliation of Net income attributable to AIG to Adjusted After-tax Income Attributable to AIG.
Ratios: We, along with most property and casualty insurance companies, use the loss ratio, the expense ratio and the combined ratio as measures of underwriting performance. These ratios are relative measurements that describe, for every $100 of net premiums earned, the amount of losses and loss adjustment expenses (which for General Insurance excludes net loss reserve discount), and the amount of other underwriting expenses that would be incurred. A combined ratio of less than 100 indicates underwriting income and a combined ratio of over 100 indicates an underwriting loss. Our ratios are calculated using the relevant segment information calculated under GAAP, and thus may not be comparable to similar ratios calculated for regulatory reporting purposes. The underwriting environment varies across countries and products, as does the degree of litigation activity, all of which affect such ratios. In addition, investment returns, local taxes, cost of capital, regulation, product type and competition can have an effect on pricing and consequently on profitability as reflected in underwriting income and associated ratios.
Accident year loss and Accident year combined ratios, as adjusted (Accident year loss ratio, ex-CAT and Accident year combined ratio, ex-CAT): both the accident year loss and accident year combined ratios, as adjusted, exclude catastrophe losses (CATs) and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. Natural catastrophe losses are generally weather or seismic events, in each case, having a net impact on AIG in excess of $10 million and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold. We believe that as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which are outside of management’s control. We also exclude prior year development to provide transparency related to current accident year results.
Underwriting ratios are computed as follows:
Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life‑contingent payout annuities, as well as deposits received on universal life, investment‑type annuity contracts, Federal Home Loan Bank funding agreements and mutual funds. We believe the measure of premiums and deposits is useful in understanding customer demand for our products, evolving product trends and our sales performance period over period.
Results from discontinued operations are excluded from all of these measures.
# # #
American International Group, Inc. (AIG) is a leading global insurance organization. AIG member companies provide insurance solutions that help businesses and individuals in approximately 70 countries and jurisdictions protect their assets and manage risks. For additional information, visit www.aig.com. AIG common stock is listed on the New York Stock Exchange.
AIG is the marketing name for the worldwide operations of American International Group, Inc. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries and jurisdictions, and coverage is subject to underwriting requirements and actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation ($ in millions, except per common share data)
Reconciliations of Adjusted Pre-tax and After-tax Income
Three Months Ended June 30,
2022
2023
Total Tax
Non-
Total Tax
Non-
(Benefit)
controlling
After
(Benefits)
controlling
After
Pre-tax
Charge
Interests(d)
Tax
Pre-tax
Charge
Interests(d)
Tax
Pre-tax income/net income, including noncontrolling interests
$
3,925
$
845
$
—
$
3,079
$
1,867
$
176
$
—
$
1,691
Noncontrolling interests
(325)
(325)
(198)
(198)
Pre-tax income/net income attributable to AIG
3,925
845
(325)
2,754
1,867
176
(198)
1,493
Dividends on preferred stock
8
8
Net income attributable to AIG common shareholders
2,746
1,485
Adjustments:
Changes in uncertain tax positions and other tax adjustments
(3)
—
3
340
—
(340)
Deferred income tax valuation allowance (releases) charges
17
—
(17)
(78)
—
78
Changes in fair value of securities used to hedge guaranteed living benefits
(10)
(2)
—
(8)
3
—
—
3
Change in market risk benefit, net(a)
(45)
(10)
—
(35)
(262)
(55)
—
(207)
Changes in benefit reserves related to net realized gains (losses)
(7)
(2)
—
(5)
1
—
—
1
Changes in the fair value of equity securities
30
6
—
24
(43)
(9)
—
(34)
Loss on extinguishment of debt
299
63
—
236
—
—
—
—
Net investment income on Fortitude Re funds withheld assets
(188)
(40)
—
(148)
(291)
(61)
—
(230)
Net realized losses on Fortitude Re funds withheld assets
86
19
—
67
138
28
—
110
Net realized gains on Fortitude Re funds withheld embedded derivative
(2,776)
(583)
—
(2,193)
(180)
(38)
—
(142)
Net realized losses(b)
140
7
—
133
390
77
—
313
Loss from discontinued operations
1
—
Net (gain) loss on divestitures and other
1
1
—
—
(43)
(9)
—
(34)
Non-operating litigation reserves and settlements
(4)
(1)
—
(3)
1
—
—
1
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements
(144)
(30)
—
(114)
(18)
(4)
—
(14)
Net loss reserve discount charge
14
4
—
10
16
4
—
12
Pension expense related to a one-time lump sum payment to former employees
—
—
—
—
67
14
—
53
Integration and transaction costs associated with acquiring or divesting businesses
38
8
—
30
79
17
—
62
Restructuring and other costs
175
37
—
138
153
32
—
121
Non-recurring costs related to regulatory or accounting changes
9
2
—
7
12
2
—
10
Net impact from elimination of international reporting lag(c)
—
—
—
—
—
—
—
—
Noncontrolling interests(d)
239
239
34
34
Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders
$
1,543
$
338
$
(86)
$
1,111
$
1,890
$
436
$
(164)
$
1,282
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Reconciliations of Adjusted Pre-tax and After-tax Income (continued)
Six Months Ended June 30,
2022
2023
Total Tax
Non-
Total Tax
Non-
(Benefit)
controlling
After
(Benefit)
controlling
After
Pre-tax
Charge
Interests(d)
Tax
Pre-tax
Charge
Interests(d)
Tax
Pre-tax income/net income, including noncontrolling interests
$
9,639
$
1,999
$
—
$
7,639
$
1,636
$
32
$
—
$
1,604
Noncontrolling interests
(712)
(712)
(81)
(81)
Pre-tax income/net income attributable to AIG
9,639
1,999
(712)
6,927
1,636
32
(81)
1,523
Dividends on preferred stock
15
15
Net income attributable to AIG common shareholders
6,912
1,508
Adjustments:
Changes in uncertain tax positions and other tax adjustments
88
—
(88)
362
—
(362)
Deferred income tax valuation allowance (releases) charges
23
—
(23)
(97)
—
97
Changes in fair value of securities used to hedge guaranteed living benefits
(23)
(5)
—
(18)
6
1
—
5
Change in market risk benefit, net(a)
(278)
(59)
—
(219)
(66)
(14)
—
(52)
Changes in benefit reserves related to net realized gains (losses)
(9)
(2)
—
(7)
(5)
(1)
—
(4)
Changes in the fair value of equity securities
57
12
—
45
(94)
(20)
—
(74)
Loss on extinguishment of debt
299
63
—
236
—
—
—
—
Net investment income on Fortitude Re funds withheld assets
(479)
(101)
—
(378)
(737)
(155)
—
(582)
Net realized losses on Fortitude Re funds withheld assets
226
48
—
178
169
35
—
134
Net realized (gains) losses on Fortitude Re funds withheld embedded derivative
(6,094)
(1,280)
—
(4,814)
985
207
—
778
Net realized (gains) losses(b)
(209)
(98)
—
(111)
1,156
285
—
871
Loss from discontinued operations
1
—
Net gain on divestitures and other
(39)
(8)
—
(31)
(41)
(9)
—
(32)
Non-operating litigation reserves and settlements
(38)
(8)
—
(30)
—
—
—
—
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements
(144)
(30)
—
(114)
(37)
(8)
—
(29)
Net loss reserve discount (benefit) charge
(6)
(1)
—
(5)
80
17
—
63
Pension expense related to a one-time lump sum payment to former employees
—
—
—
—
67
14
—
53
Integration and transaction costs associated with acquiring or divesting businesses
84
18
—
66
131
28
—
103
Restructuring and other costs
268
56
—
212
270
57
—
213
Non-recurring costs related to regulatory or accounting changes
13
3
—
10
25
5
—
20
Net impact from elimination of international reporting lag(c)
—
—
—
—
(12)
(3)
—
(9)
Noncontrolling interests(d)
517
517
(208)
(208)
Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders
$
3,267
$
718
$
(195)
$
2,339
$
3,533
$
736
$
(289)
$
2,493
(a)
Includes realized gains and losses on certain derivative instruments used for non-qualifying (economic) hedging.
(b)
Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets.
(c)
Effective in the quarter ended December 31, 2022, the foreign property and casualty subsidiaries report on a calendar year ending December 31. We determined that the effect of not retroactively applying this change was immaterial to our Consolidated Financial Statements for the current and prior periods. Therefore, we reported the cumulative effect of the change in accounting principle within the Consolidated Statements of Income (Loss) for the year ended December 31, 2022 and did not retrospectively apply the effects of this change to prior periods.
(d)
Includes the portion of equity interest of non-operating income of Corebridge and consolidated investment entities that AIG does not own.
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Summary of Key Financial Metrics
Three Months Ended June 30,
Six Months Ended June 30,
Earnings per common share:
2022
2023
% Inc. (Dec.)
2022
2023
% Inc. (Dec.)
Basic
Income from continuing operations
$
3.47
$
2.05
(40.9)
%
$
8.60
$
2.06
(76.0)
%
Income from discontinued operations
—
—
NM
—
—
NM
Net income attributable to AIG common shareholders
$
3.47
$
2.05
(40.9)
$
8.60
$
2.06
(76.0)
Diluted
Income from continuing operations
3.43
$
2.03
(40.8)
$
8.50
$
2.05
(75.9)
Income from discontinued operations
—
—
NM
—
—
NM
Net income attributable to AIG common shareholders
$
3.43
$
2.03
(40.8)
$
8.50
$
2.05
(75.9)
Adjusted after-tax income attributable to AIG common shareholders per diluted share
$
1.39
$
1.75
25.9
%
$
2.88
$
3.38
17.4
%
Weighted average shares outstanding:
Basic
790.9
725.8
803.5
732.2
Diluted
800.7
730.5
813.3
737.3
Reconciliation of Book Value per Common Share
As of period end:
June 30, 2022
December 31, 2022
March 31, 2023
June 30, 2023
Total AIG shareholders' equity
$
45,713
$
40,970
$
43,317
$
42,454
Less: Preferred equity
485
485
485
485
Total AIG common shareholders' equity (a)
45,228
40,485
42,832
41,969
Less: Deferred tax assets (DTA)*
4,747
4,518
4,543
4,263
Less: Accumulated other comprehensive income (AOCI)
(18,647
)
(22,616
)
(19,329
)
(18,982
)
Add: Cumulative unrealized gains and losses related to Fortitude Re Funds withheld assets
(2,223
)
(2,862
)
(2,418
)
(2,331
)
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(16,424
)
(19,754
)
(16,911
)
(16,651
)
Total adjusted common shareholders' equity (b)
$
56,905
$
55,721
$
55,200
$
54,357
Less: Intangible assets:
Goodwill
3,935
3,927
3,939
3,617
Value of business acquired
98
92
92
92
Value of distribution channel acquired
438
418
408
188
Other intangibles
289
286
284
244
Total intangible assets
4,760
4,723
4,723
4,141
Total adjusted tangible common shareholders' equity (c)
$
52,145
$
50,998
$
50,477
$
50,216
Total common shares outstanding (d)
771.3
734.1
727.6
717.5
As of period end:
June 30, 2022
% Inc. (Dec.)
December 31, 2022
% Inc. (Dec.)
March 31, 2023
% Inc. (Dec.)
June 30, 2023
Book value per common share (a÷d)
$
58.64
(0.3
)%
$
55.15
6.1
%
$
58.87
(0.6
)%
$
58.49
Adjusted book value per common share (b÷d)
73.78
2.7
75.90
(0.2
)
75.87
(0.1
)
75.76
Adjusted tangible book value per common share (c÷d)
67.61
3.5
69.47
0.7
69.37
0.9
69.99
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Reconciliation of Return On Common Equity
Three Months Ended June 30,
2022
2023
Actual or annualized net income (loss) attributable to AIG common shareholders (a)
$
10,984
$
5,940
Actual or annualized adjusted after-tax income attributable to AIG common shareholders (b)
$
4,444
$
5,128
Average AIG Common Shareholders' equity (c)
$
50,600
$
42,401
Less: Average DTA*
4,844
4,403
Less: Average AOCI
(12,838)
(19,156)
Add: Average cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(1,088)
(2,375)
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(11,750)
(16,781)
Average adjusted common shareholders' equity (d)
$
57,506
$
54,779
ROCE (a÷c)
21.7
%
14.0
%
Adjusted return on common equity (b÷d)
7.7
%
9.4
%
* Represents deferred tax assets only related to U.S. net operating loss and foreign tax credit carryforwards on a U.S. GAAP basis and excludes other balance sheet deferred tax assets and liabilities.
Reconciliation of Net Investment Income
Three Months Ended
June 30,
2022
2023
Net Investment Income per Consolidated Statements of Operations
$
2,604
$
3,571
Changes in fair value of securities used to hedge guaranteed living benefits
(13)
(14)
Changes in the fair value of equity securities
30
(43)
Net investment income on Fortitude Re funds withheld assets
(188)
(291)
Net realized gains (losses) related to economic hedges and other
71
55
Total Net Investment Income - APTI Basis
$
2,504
$
3,278
Net Premiums Written - Change in Constant Dollar and Lag Adjusted
Three Months Ended June 30, 2023
North
Global -
Global -
America
International -
General
Commercial
Personal
Commercial
Commercial
Personal
General Insurance
Insurance
Lines
Insurance
Lines
Lines
Insurance
Change in net premiums written
Increase (decrease) in original currency and adjusted for lag elimination
10.7
%
12.6
%
5.3
%
17.6
%
5.7
%
1.1
%
Foreign exchange effect
(2.1
)
(1.2
)
(4.3
)
(0.7
)
(2.0
)
(5.5
)
Lag elimination impact
1.2
2.3
(1.4
)
—
5.4
(1.7
)
Increase (decrease) as reported in U.S. dollars
9.8
%
13.7
%
(0.4
)%
16.9
%
9.1
%
(6.1
)%
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Reconciliations of Accident Year Loss and Accident Year Combined Ratios, as Adjusted
Three Months Ended
June 30,
2022
2023
Total General Insurance
Combined ratio
87.4
90.9
Catastrophe losses and reinstatement premiums
(1.8)
(3.9)
Prior year development, net of reinsurance and prior year premiums
2.9
1.0
Accident year combined ratio, as adjusted
88.5
88.0
North America
Combined ratio
86.3
89.0
Catastrophe losses and reinstatement premiums
(1.7)
(5.0)
Prior year development, net of reinsurance and prior year premiums
5.3
3.8
Accident year combined ratio, as adjusted
89.9
87.8
North America - Commercial Lines
Loss ratio
58.7
61.0
Catastrophe losses and reinstatement premiums
(1.9)
(5.3)
Prior year development, net of reinsurance and prior year premiums
6.5
4.8
Accident year loss ratio, as adjusted
63.3
60.5
Combined ratio
83.6
85.6
Catastrophe losses and reinstatement premiums
(1.9)
(5.3)
Prior year development, net of reinsurance and prior year premiums
6.5
4.8
Accident year combined ratio, as adjusted
88.2
85.1
North America - Personal Insurance
Combined ratio
102.3
112.9
Catastrophe losses and reinstatement premiums
(0.5)
(3.3)
Prior year development, net of reinsurance and prior year premiums
(2.1)
(2.5)
Accident year combined ratio, as adjusted
99.7
107.1
International
Combined ratio
88.5
92.6
Catastrophe losses and reinstatement premiums
(2.0)
(2.7)
Prior year development, net of reinsurance and prior year premiums
0.7
(1.9)
Accident year combined ratio, as adjusted
87.2
88.0
International - Commercial Lines
Combined ratio
82.4
89.0
Catastrophe losses and reinstatement premiums
(2.3)
(2.5)
Prior year development, net of reinsurance and prior year premiums
1.3
(3.4)
Accident year combined ratio, as adjusted
81.4
83.1
International - Personal Insurance
Loss ratio
56.4
56.3
Catastrophe losses and reinstatement premiums
(1.6)
(3.2)
Prior year development, net of reinsurance and prior year premiums
(0.1)
0.5
Accident year loss ratio, as adjusted
54.7
53.6
Combined ratio
96.9
98.0
Catastrophe losses and reinstatement premiums
(1.6)
(3.2)
Prior year development, net of reinsurance and prior year premiums
(0.1)
0.5
Accident year combined ratio, as adjusted
95.2
95.3
Global - Commercial Insurance
Combined ratio
83.1
87.0
Catastrophe losses and reinstatement premiums
(2.1)
(4.0)
Prior year development, net of reinsurance and prior year premiums
4.3
1.4
Accident year combined ratio, as adjusted
85.3
84.4
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Reconciliation of General Insurance Return on Adjusted Segment Common Equity
Three Months Ended
June 30,
2022
2023
Adjusted pre-tax income
$
1,257
$
1,319
Interest expense on attributed financial debt
149
133
Adjusted pre-tax income including attributed interest expense
1,108
1,186
Income tax expense
254
274
Adjusted after-tax income
854
912
Dividends declared on preferred stock
3
3
Adjusted after-tax income attributable to common shareholders
$
851
$
909
Ending adjusted segment common equity
$
30,104
$
30,153
Average adjusted segment common equity
$
28,361
$
29,848
Return on adjusted segment common equity
12.0
%
12.2
%
Total segment shareholder’s equity
$
25,651
$
24,619
Less: Preferred equity
210
202
Total segment common equity
25,441
24,417
Less: Accumulated other comprehensive income (AOCI)
(5,163)
(6,390)
Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(500)
(654)
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(4,663)
(5,736)
Total adjusted segment common equity
$
30,104
$
30,153
Reconciliation of Life and Retirement Return on Adjusted Segment Common Equity
Three Months Ended
June 30,
2022
2023
Adjusted pre-tax income
$
747
$
991
Interest expense on attributed financial debt
68
113
Adjusted pre-tax income including attributed interest expense
679
878
Income tax expense
134
174
Adjusted after-tax income
545
704
Dividends declared on preferred stock
2
2
Adjusted after-tax income attributable to common shareholders
$
543
$
702
Ending adjusted segment common equity
$
22,011
$
23,270
Average adjusted segment common equity
$
22,452
$
23,108
Return on adjusted segment common equity
9.7
%
12.2
%
Total segment shareholder’s equity
$
11,870
$
9,819
Less: Preferred equity
154
161
Total segment common equity
11,716
9,658
Less: Accumulated other comprehensive income (AOCI)
(12,018)
(15,289)
Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(1,723)
(1,677)
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
(10,295)
(13,612)
Total adjusted segment common equity
$
22,011
$
23,270
American International Group, Inc. Selected Financial Data and Non-GAAP Reconciliation (continued) ($ in millions, except per common share data)
Reconciliations of Premiums and Deposits
Three Months Ended
June 30,
2022
2023
Individual Retirement:
Premiums
$
60
$
66
Deposits
3,566
3,984
Other
(6)
(5)
Premiums and deposits
$
3,620
$
4,045
Group Retirement:
Premiums
$
5
$
4
Deposits
1,767
1,919
Other
—
—
Premiums and deposits
$
1,772
$
1,923
Life Insurance:
Premiums
$
556
$
563
Deposits
388
384
Other
213
229
Premiums and deposits
$
1,157
$
1,176
Institutional Markets:
Premiums
$
496
$
1,911
Deposits
46
991
Other
8
8
Premiums and deposits
$
550
$
2,910
Total Life and Retirement:
Premiums
$
1,117
$
2,544
Deposits
5,767
7,278
Other
215
232
Premiums and deposits
$
7,099
$
10,054
Total Debt and Preferred Stock Leverage
Three Months Ended
June 30, 2023
Hybrid - debt securities / Total capital
2.9
%
Financial debt and debt held for sale / Total capital
28.7
Total debt / Total capital
31.6
Preferred stock / Total capital
0.7
Total debt and preferred stock / Total capital (incl. AOCI)
32.3
AOCI Impact
(6.3
)
Total debt and preferred stock / Total capital (ex. AOCI)
26.0
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20230801959349/en/
Quentin McMillan (Investors): quentin.mcmillan@aig.com Claire Talcott (Media): claire.talcott@aig.com
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