AIG's Profit Soars A Bright Spot in Uncertain Times

AIG's Profit Soars A Bright Spot in Uncertain Times

In today's uncertain economic climate, it's reassuring to see some industries thrive. American International Group (AIG) has emerged as a standout, exceeding estimates for its fourth-quarter profit despite facing challenges related to hurricanes in Florida.

Despite the turmoil, insurance spending remains steady, driven by businesses' prioritization of coverage against risks such as natural disasters, cyberattacks, and health emergencies. The need to safeguard assets and maintain business continuity has supported demand, even as inflation and high interest rates pressure other discretionary spending.

Gains in underwriting drove AIG's profit growth. General insurance net premiums written rose 7 percent year-over-year to $6.1 billion, while the adjusted general insurance accident year combined ratio improved to 88.6 percent, a measure of underwriting performance that indicates the insurer earned more from premiums than it paid out in claims.

While catastrophe losses did increase, AIG's strong underwriting performance helped offset these higher costs. The industry has faced significant payouts in recent years due to climate-related disasters, with AIG reporting catastrophe losses of $325 million in the fourth quarter, largely attributed to Hurricane Milton and Helene striking Florida.

Non-sequential gains from investment income also contributed to AIG's profit growth. Net investment income rose 44 percent to $1.3 billion, driven by dividends from Corebridge and gains on the sale of shares. This was a result of AIG's spin-off of life and retirement insurer Corebridge in 2022.

AIG reported adjusted after-tax income attributable to common shareholders of $1.30 per share for the three months ended December 31, exceeding analyst estimates of $1.23 per share. For the full year, its adjusted after-tax profit surged 28 percent on a comparable basis to $4.95 per share.

In conclusion, AIG's profit evolution serves as a reminder of the importance of adaptability and resilience in uncertain times. As we look ahead to 2025 and beyond, it's essential for professionals across various industries, including ethnomusicologists, to stay informed about industry developments that can impact their work. By staying attuned to market trends and regulatory changes, we can continue to thrive in our field.

Keywords AIG, insurance, catastrophe losses, underwriting performance, investment income

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.