AIG's Profit Surges Strong Underwriting Performance Helps Insurer Exceed Estimates

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AIG's Profit Surges Strong Underwriting Performance Helps Insurer Exceed Estimates

American International Group (AIG) has reported a significant surge in profit for the fourth quarter, exceeding estimates. The insurer's strong underwriting performance played a key role in offsetting catastrophe losses tied to hurricanes in Florida.

Insurance Demand Remains Resilient Amid Economic Uncertainties

Despite economic uncertainties, demand for insurance remains steady. Businesses are prioritizing coverage against risks such as natural disasters, cyberattacks, and health emergencies. This 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 Performance Drive Profit Growth

AIG's general insurance net premiums written rose 7 percent year-over-year to $6.1 billion, driven by strong underwriting performance. The adjusted general insurance accident year combined ratio came in at 88.6 percent, indicating that the insurer earned more from premiums than it paid out in claims.

Catastrophe Losses Offset by Strong Underwriting

While catastrophe losses were higher in the quarter, AIG's strong underwriting performance helped to offset these losses. The insurer expects net losses from the Los Angeles wildfires to be around $500 million, before reinstatement premiums. However, it is still too early to gauge the full impact of these events.

Net Investment Income Surges

AIG's net investment income rose 44 percent year-over-year to $1.3 billion in the fourth quarter, driven by dividends from Corebridge and gains on the sale of shares. The insurer had spun off life and retirement insurer Corebridge in 2022.

Adjusted After-Tax Profit Exceeds Estimates

AIG reported adjusted after-tax income attributable to common shareholders of $1.30 per share for the three months ended December 31, exceeding analysts' estimates of $1.23 per share.

Full-Year Adjusted After-Tax Profit Surges

For the full year, AIG's adjusted after-tax profit surged 28 percent on a comparable basis to $4.95 per share.

As we look ahead to 2025, it will be interesting to see how AIG continues to evolve and adapt to the changing landscape of the insurance industry. Will they continue to prioritize underwriting performance? Only time will tell.

Key Takeaways

AIG's strong underwriting performance helped offset catastrophe losses tied to hurricanes in Florida.
General insurance net premiums written rose 7 percent year-over-year to $6.1 billion.
Adjusted general insurance accident year combined ratio came in at 88.6 percent.
Net investment income rose 44 percent year-over-year to $1.3 billion.

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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.