AIG’s commercial lines underwriting income jumps to $1.88bn from $207m

AIG’s general insurance business delivered its best-ever underwriting profit last year, up nearly 100% to $2.05bn from $1.06bn, with commercial lines accounting for the uplift as underwriting income jumped to $1.88bn from $207m.

Commercial lines achieved a combined ratio of 89.6% in 2022 from 98.8%. Both its North American and international units saw big rises in their underwriting results.

North America commercial lines bounced back to an underwriting profit of $744m from a loss of $342m in 2021. Its combined ratio improved to 92.9% from 103.7%.

Underwriting income within AIG’s international commercial business rose to $1.14bn from $549m, as the combined ratio improved to 85.2% from 92.8%.

Net written premiums for commercial business increased $18.78bn last year from $18.26bn. Specialty lines premium was up $7.05bn from $6.45bn, with financial lines moving the other way to $4.48bn from $5bn.

Premiums from North America commercial business hit $10.89bn from $10.23bn. While international commercial lines net premiums fell slightly to $7.88bn from $8.03bn.

This very strong performance in commercial lines, as rate increases from the hard market paid dividends, saw AIG’s general insurance’s adjusted pre-tax income rise a touch to $4.43bn from $4.36 in 2021. Its full year combined ratio improved to 91.9% from 95.8%.

Net written premiums were pretty much flat in general insurance at $25.51bn from $25.89bn a year earlier.

“2022 was an extraordinary year of progress for AIG. We continued to improve the profitability of our general insurance business, closing the year with the strongest underwriting results the business has ever achieved and with the second consecutive year of underwriting profitability improving by $1bn,” said AIG chairman and CEO Peter Zaffino.

“Improvement in general insurance continued through portfolio optimisation, prudent risk selection and limit reduction of over $1.2trn since 2018,” he added.

AIG group’s adjusted pre-tax net income was down last year, however, to $5.14bn from $5.92bn, with net income attributable to common shareholders rising to $10.25bn from $9.36bn in 2021.

Net income was down to $264m in Q4 from $3.73bn in the prior period that was boosted by $3bn from the sale of a real estate portfolio.

General insurance saw its underwriting income rise 27% in Q4 to $635m. Its combined ratio improved to 89.9% from 92.4% in the final quarter of 2021. Adjusted pre-tax income was down to $1.21bn from £1.51bn.

The quarter included $235m of cat losses, notably from Winter Storm Elliott, compared to $189m of cat losses in the prior year quarter. The fourth quarter also included favourable prior year development, net of reinsurance, of $151m compared with $44m in Q4 2021.

Commercial lines underwriting income rose to $631m in Q4 from $374 as its combined ratio improved to 86.3% from 91.8%.

North America commercial lines saw its combined ratio hit 89.4% in the final quarter from 94.8% in the same period of 2021. It achieved underwriting income of $435m from $135m.

International commercial business saw its combined ratio slightly worsen to 89.4% from 88.1%. Its underwriting income was $196m from $239m in Q4 2021.

General insurance’s net premiums written fell 6% in Q4 to $5.61bn but was up 1% on a constant dollar basis.

AIG said North America commercial lines achieved growth of 3% in the quarter from “strong new business and retention”. International commercial lines premiums were down 8% to $1.76bn but up 2% in constant dollars.

“Commercial net premium written benefited from strong growth in Lexington, specialty and casualty, offset in part by a decline in financial lines due to decreased capital markets activities,” said AIG on fourth quarter numbers.