AIG Reports Second Quarter 2023 Results

August 1, 2023 at 4:16 PM EDT
  • Net income per diluted common share was $2.03, compared to $3.43 in the prior year quarter, and adjusted after-tax income attributable to AIG common shareholders* (AATI) per diluted common share was $1.75, the highest quarterly adjusted earnings per share* (EPS) for AIG since 2007, compared to $1.39 in the prior year quarter
  • General Insurance net premiums written (NPW) grew 10% and Commercial Lines NPW grew 14% year-over-year, or 11% and 13%, respectively, on a constant dollar basis and adjusted for the International lag elimination*
  • General Insurance combined ratio was 90.9% and accident year combined ratio, as adjusted* (AYCR) was 88.0%, representing the best second quarter AYCR since 2007
  • Life and Retirement adjusted pre-tax income (APTI) was $991 million, up 33% from the prior year quarter, benefiting from strong growth in base investment yield. Premiums were $2.5 billion, up 128% from the prior year quarter, and premiums and deposits* were $10.1 billion, up 42% from the prior year quarter supported by record Fixed Index Annuity sales
  • AIG repurchased $554 million of common stock in the second quarter and paid $268 million in dividends, reflecting a 12.5% increase in the quarterly common stock dividend
  • Announced the sale of Validus Reinsurance, Ltd. (Validus Re) to RenaissanceRe Holdings Ltd. (RenaissanceRe) for approximately $2.74 billion in cash and $250 million in RenaissanceRe common stock, representing another significant milestone in AIG’s strategic repositioning of its global portfolio, reducing overall volatility and creating capital efficiencies
  • Successfully executed a secondary offering of Corebridge Financial common stock; following Corebridge Financial share repurchases, AIG ownership reduced to 65.3%
  • In early July, closed sale of Crop Risk Services for approximately $240 million in cash and completed the formation of Private Client Select with Stone Point Capital LLC to serve as a managing general agent for the high and ultra-high net worth personal lines business
  • On August 1, AIG Board of Directors increased share repurchase authorization to $7.5 billion

SECOND QUARTER 2023 NOTEWORTHY ITEMS

  • General Insurance APTI increased $62 million from the prior year quarter to $1.3 billion, driven by higher investment income, partially offset by lower underwriting income due to higher catastrophe losses and lower favorable prior year development, net of reinsurance and prior year premiums.
  • Life and Retirement APTI increased $244 million from the prior year quarter to $991 million, primarily due to higher base portfolio spread income, partially offset by lower alternative investment income and lower fee income.
  • Net income attributable to AIG common shareholders was $1.5 billion, compared to $2.7 billion in the prior year quarter, or $2.03 compared to $3.43 per diluted common share.
  • AATI was $1.3 billion, compared to $1.1 billion in the prior year quarter, or $1.75 compared to $1.39 per diluted common share, primarily due to higher Life and Retirement results and a 9% reduction in weighted average diluted shares outstanding.
  • Return on common equity (ROCE) was 14.0% and adjusted ROCE* was 9.4% on an annualized basis. Adjusted ROCE for both General Insurance and Life and Retirement was 12.2%.

* 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.

NEW YORK--(BUSINESS WIRE)--Aug. 1, 2023-- 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

  • Second quarter 2023 NPW of $7.5 billion was a 10% increase from the prior year quarter, or 11% on a constant dollar basis and adjusted for the International lag elimination, driven by Commercial Lines. North America Commercial Lines delivered 17% NPW growth, or 18% on a constant dollar basis, from the prior year quarter, benefiting from positive rate changes, higher renewal retentions and strong new business production, particularly in Retail Property, Lexington and Validus Re, partially offset by continued selectivity in Financial Lines Director & Officer and transactional products. International Commercial Lines delivered 9% NPW growth, or 6% on a constant dollar basis and adjusted for the International lag elimination, from the prior year quarter, attributed to continued positive rate changes and strong new business production, mainly in Property and Global Specialty, partially offset by headwinds from a lack of capital market transaction activity. Global Personal Insurance NPW decreased 0.4%, but grew 5% on a constant dollar basis and adjusted for the International lag elimination, from the prior year quarter, primarily driven by growth in Private Client Group resulting from changes in our reinsurance program, partially offset by a decrease in Travel and Warranty.
  • Second quarter 2023 underwriting income was $594 million and included $250 million of total catastrophe-related charges, representing 3.9 loss ratio points, of which $159 million was in North America, mainly attributable to U.S. convective storms, and $91 million in International, mainly attributable to Typhoon Mawar, compared to $121 million, or 1.8 loss ratio points, in the prior year quarter. Second quarter 2023 also included lower favorable PYD of $115 million compared to favorable PYD of $202 million in the prior year quarter.
  • The combined ratio was 90.9%, a 3.5 point increase from the prior year quarter, driven by a 3.1 point increase in the loss ratio. The AYCR improved 0.5 point from the prior year quarter to 88.0%, driven by a 0.9 point decrease in the accident year loss ratio, as adjusted* (AYLR) to 56.4%, reflecting continued earn-in of premium rate increases exceeding loss cost trends in Commercial Lines. The AYCR improvement also reflects business mix benefit, continued positive rate changes, focused risk selection and improved terms and conditions. The expense ratio was 31.6%, a 0.4 point increase from the prior year quarter, driven by an increase in the general operating expense ratio while the acquisition ratio remained flat.
  • The North America Commercial Lines combined ratio was 85.6% and International Commercial Lines combined ratio was 89.0%, a 2.0 point and a 6.6 point increase, respectively, from the prior year quarter. The AYCR for North America Commercial Lines improved 3.1 points from the prior year quarter to 85.1%, with a 2.8 point improvement in AYLR. The AYCR for International Commercial Lines increased 1.7 points from the prior year quarter to 83.1% due to a higher general operating expense ratio driven by changes in business mix.
  • The North America Personal Insurance combined ratio increased 10.6 points to 112.9% and the AYCR increased 7.4 points to 107.1% compared to the prior year quarter, driven by higher catastrophe losses, changes in business mix, reinsurance cessions and an increase in general operating expense ratio attributable to the decline in premiums earned. The International Personal Insurance combined ratio increased 1.1 points to 98.0% and the AYCR increased 0.1 point to 95.3% from the prior year quarter, driven by higher catastrophe losses and a higher expense ratio, partially offset by improvement in the AYLR from changes in business mix and reflecting earned-in rate exceeding loss costs.
  • General Insurance return on adjusted segment common equity* for the second quarter was 12.2% on an annualized basis, compared with 12.0% in the prior year quarter.

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

  • Life and Retirement reported APTI of $991 million for the second quarter of 2023, up 33% from $747 million in the prior year quarter. The increase was primarily driven by higher base portfolio income, partially offset by a decline in alternative investment returns and fee income. Base net investment spreads in Individual and Group Retirement continued to widen with a 64-basis point improvement year-over-year, driven by higher reinvestment rates.
  • Premiums increased 128% to $2.5 billion from $1.1 billion and premiums and deposits increased 42% to $10.1 billion from $7.1 billion in the prior year quarter. The second quarter saw record sales in Fixed Index Annuities and a higher volume of transactional businesses with $1.9 billion of pension risk transfer activity and $0.9 billion of guaranteed investment contracts.
  • The balance sheet and the capital position of the business continue to remain strong. During the second quarter, Corebridge returned approximately $750 million to its shareholders (including AIG) through approximately $550 million of common stock dividends and $200 million in share repurchases.
  • Life and Retirement return on adjusted segment common equity* for the second quarter was 12.2% on an annualized basis, compared with 9.7% in the prior year quarter.

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

  • Other Operations adjusted pre-tax loss (APTL) of $420 million improved $41 million from the prior year quarter, primarily due to the impact of Variable Interest Entities (VIEs), in addition to better results from Corporate and Other.
  • Corporate and Other APTL improved $80 million, or 16%, from the prior year quarter, largely due to the absence of mark-to-market losses on a legacy investment portfolio that was sold in the fourth quarter of 2022, as well as higher income from short-term investments as a result of high short-term yields on parent liquidity funds.
  • Asset Management Group (AMG) APTL decreased $172 million from the prior year quarter largely due to lower net investment income associated with VIEs compared to the prior year quarter, which reflected gains on sales. AMG results in the second quarter also reflected the sale of our Collateralized Loan Obligations manager in the first quarter of 2023 and the subsequent deconsolidation of associated securitizations by the end of the second quarter, which resulted in lower investment income and an offsetting impact on interest expense with minimal impact to APTL.
  • Changes in Consolidation and eliminations were attributed to realized capital gains associated with VIEs, which the insurance subsidiaries report as net investment income and are eliminated in 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:

  • the impact of adverse developments affecting economic conditions in the markets in which AIG and its businesses operate in the U.S. and globally, including adverse developments related to financial market conditions, macroeconomic trends, fluctuations in interest rates and foreign currency exchange rates, inflationary pressures, pressures on the commercial real estate market, an economic slowdown or recession, geopolitical events or conflicts, including the conflict between Russia and Ukraine, and stress and instability in the banking sector;
  • occurrence of catastrophic events, both natural and man-made, including the effects of climate change, geopolitical events and conflicts and civil unrest;
  • disruptions in the availability or accessibility of AIG's or a third party’s information technology systems, including hardware and software, infrastructure or networks, and the inability to safeguard the confidentiality and integrity of customer, employee or company data due to cyberattacks, data security breaches, or infrastructure vulnerabilities;
  • AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets or successfully integrate acquired businesses, and the anticipated benefits thereof;
  • AIG's ability to realize expected strategic, financial, operational or other benefits from the separation of Corebridge as well as AIG’s equity market exposure to Corebridge;
  • the effectiveness of strategies to retain and recruit key personnel and to implement effective succession plans;
  • concentrations in AIG’s investment portfolios;
  • AIG’s reliance on third-party investment managers;
  • changes in the valuation of AIG’s investments;
  • AIG’s reliance on third parties to provide certain business and administrative services;
  • availability of adequate reinsurance or access to reinsurance on acceptable terms;
  • concentrations of AIG’s insurance, reinsurance and other risk exposures;
  • nonperformance or defaults by counterparties, including Fortitude Reinsurance Company Ltd. (Fortitude Re);
  • AIG's ability to adequately assess risk and estimate related losses as well as the effectiveness of AIG’s enterprise risk management policies and procedures, including with respect to business continuity and disaster recovery plans;
  • changes in judgments concerning potential cost-saving opportunities;
  • AIG's ability to effectively implement changes under AIG 200, including the ability to realize cost savings;
  • difficulty in marketing and distributing products through current and future distribution channels;
  • actions by rating agencies with respect to AIG’s credit and financial strength ratings as well as those of its businesses and subsidiaries;
  • changes to sources of or access to liquidity;
  • changes in judgments concerning the recognition of deferred tax assets and the impairment of goodwill;
  • changes in judgments or assumptions concerning insurance underwriting and insurance liabilities;
  • changes in accounting principles and financial reporting requirements;
  • the effects of sanctions, including those related to the conflict between Russia and Ukraine, and the failure to comply with those sanctions;
  • the effects of changes in laws and regulations, including those relating to the regulation of insurance, in the U.S. and other countries in which AIG and its businesses operate;
  • changes to tax laws in the U.S. and other countries in which AIG and its businesses operate;
  • the outcome of significant legal, regulatory or governmental proceedings;
  • AIG’s ability to effectively execute on sustainability targets and standards;
  • AIG’s ability to address evolving stakeholder expectations with respect to environmental, social and governance matters;
  • the impact of COVID-19 or other epidemics, pandemics and other public health crises and responses thereto; and
  • such other factors discussed in Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (which will be filed with the Securities and Exchange Commission (SEC)) and Part I, Item 1A. Risk Factors and Part II, Item 7. MD&A in AIG Annual Report on Form 10-K for the year ended December 31, 2022.

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:

  • changes in fair value of securities used to hedge guaranteed living benefits;
  • net change in market risk benefits (MRBs);
  • changes in benefit reserves related to net realized gains and losses;
  • changes in the fair value of equity securities;
  • net investment income on Fortitude Re funds withheld assets;
  • following deconsolidation of Fortitude Re, net realized gains and losses on Fortitude Re funds withheld assets;
  • loss (gain) on extinguishment of debt;
  • 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. Earned income on such economic hedges is reclassified from net realized gains and losses to specific APTI line items based on the economic risk being hedged (e.g. net investment income and interest credited to policyholder account balances);
  • income or loss from discontinued operations;
  • net loss reserve discount benefit (charge);
  • pension expense related to lump sum payments to former employees;
  • net gain or loss on divestitures and other;
  • non-operating litigation reserves and settlements;
  • restructuring and other costs related to initiatives designed to reduce operating expenses, improve efficiency and simplify our organization;
  • the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain;
  • integration and transaction costs associated with acquiring or divesting businesses;
  • losses from the impairment of goodwill;
  • non-recurring costs associated with the implementation of non-ordinary course legal or regulatory changes or changes to accounting principles; and
  • income from elimination of the international reporting lag.

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:

  • deferred income tax valuation allowance releases and charges;
  • changes in uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or operating performance; and
  • net tax charge related to the enactment of the Tax Cuts and Jobs Act.

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:

  1. Loss ratio = Loss and loss adjustment expenses incurred ÷ Net premiums earned (NPE)
  2. Acquisition ratio = Total acquisition expenses ÷ NPE
  3. General operating expense ratio = General operating expenses ÷ NPE
  4. Expense ratio = Acquisition ratio + General operating expense ratio
  5. Combined ratio = Loss ratio + Expense ratio
  6. CATs and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes] – Loss ratio
  7. Accident year loss ratio, as adjusted (AYLR ex-CAT) = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes +/(-) Prior year premiums + Adjustment for ceded premium under reinsurance contracts related to prior accident years]
  8. Accident year combined ratio, as adjusted (AYCR ex-CAT) = AYLR ex-CAT + Expense ratio
  9. Prior year development net of reinsurance and prior year premiums = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes +/(-) Prior year premiums] – Loss ratio – CATs and reinstatement premiums ratio.

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

%

 

Quentin McMillan (Investors): quentin.mcmillan@aig.com
Claire Talcott (Media): claire.talcott@aig.com

Source: American International Group, Inc.