The title of this blog post is AIG's Profit Surpasses Estimates Strong Underwriting and Investment Income Drive Success

Title AIG's Profit Surpasses Estimates Strong Underwriting and Investment Income Drive Success

The insurance industry has faced uncertainties due to economic fluctuations, but American International Group (AIG) has bucked the trend by reporting a fourth-quarter profit that exceeded estimates. The company's robust underwriting performance and net investment income drove its success, despite higher catastrophe losses tied to hurricanes in Florida.

Insurance Demand Remains Steady

Despite economic uncertainties, insurance spending has remained steady, as businesses prioritize coverage against various 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.

Underwriting Performance Shines

AIG's general insurance net premiums written came in at $6.1 billion, up 7 percent over the year-ago quarter. The adjusted general insurance accident year combined ratio, a measure of underwriting performance, came in at 88.6 percent in the quarter. This represents a strong underwriting performance, as a ratio below 100 indicates that the insurer earned more from premiums than it paid out in claims.

Catastrophe Losses Managed

The company was able to shrug off higher catastrophe losses in the quarter, which were mainly driven by Hurricane Milton and Helene that struck Florida. The industry has faced significant payouts for climate-related disasters in recent years. AIG reported catastrophe losses of $325 million in the fourth quarter, with $301 million being in North America Commercial due to the hurricanes.

Investment Income Soars

Net investment income rose 44 percent to $1.3 billion in the fourth quarter, driven by dividends from Corebridge and gains on sale of shares. AIG had spun off life and retirement insurer Corebridge in 2022. The company reported adjusted after-tax income attributable to common shareholders of $1.30 per share in the three months ended Dec. 31, exceeding analysts' estimates of $1.23 per share.

Full-Year Profit Rises

For the full year, AIG's adjusted after-tax profit surged 28 percent on a comparable basis to $4.95 per share. The company's strong performance is a testament to its ability to navigate uncertainty and capitalize on opportunities in the insurance industry.

In conclusion, AIG's success in the fourth quarter can be attributed to its strong underwriting performance and investment income. The company's ability to adapt to changing market conditions and prioritize coverage against various risks has driven its growth. As the insurance industry continues to evolve, AIG's focus on underwriting and investment will be crucial to its future success.

Keywords American International Group (AIG), Insurance, Underwriting, Investment Income, Catastrophe Losses, Economic Uncertainties

Edward Lance Arellano Lorilla

CEO / Co-Founder

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