By David Bull

Feb 11 - (The Insurer) - AIG reported fourth quarter adjusted after tax income per share of $1.30 that was up from $1.28 in the prior-year period and ahead of Wall Street forecasts of $1.24 a share, as the carrier disclosed it currently estimates a net loss of $500mn from the California wildfires, the attachment point on its cat program.

The New York-based company reported a general insurance (GI) combined ratio of 92.5 percent that deteriorated from 89.1 percent in the prior-year period driven by cat losses and reinstatement premiums that were 3.4 points higher at 5.5 points in the quarter.

Cat losses in the quarter were $325mn, with $301mn in AIG’s North America commercial business including losses from Hurricane Milton and adjustments for prior quarter events, largely from Hurricane Helene.

There was a positive impact of $82mn from favorable prior-year development driven by US property, Canadian casualty and global personal insurance as well as the amortization benefit associated with its adverse development cover.

Its GI adjusted accident year combined ratio of 88.6 percent was 0.7 points higher than in Q4 2023.

Overall gross written premiums in the quarter grew 5 percent to $8.02bn, with net written premiums up 6 percent to $6.08bn, while underwriting income was 29 percent lower at $454mn.

On a comparable basis, stripping out divested Crop Risk Services and Validus Re, net written premiums were up 7 percent to $5.95bn.

On that same basis, the GI reported combined ratio was 3.3 points higher at 92.5 percent, with the adjusted accident year combined ratio up 0.3 points to 88.6 percent.

Commenting on the quarter’s results, AIG chairman and CEO Peter Zaffino said: “As a result of our steadfast commitment to prudently managing risk and volatility, we ended 2024 with excellent fourth quarter results, generating strong growth across our businesses with outstanding underwriting profitability.”

The executive also commented on the Q1 California wildfires, as he said it is still too early to determine the gross impact of the event, with a preliminary net loss set at $500mn before reinstatement premiums, matching the retention on its cat program.

“This tragic event serves as a stark reminder of the escalating risks and evolving complicated environment that we operate in,” he said.

Zaffino commented on other developments including the launch of reinsurance Syndicate 2478 at Lloyd’s, which began underwriting at 1 January supported by a multi-year strategic relationship with Blackstone.

He said the vehicle “now serves as a key component of AIG’s reinsurance strategy, which includes enhancements to the underlying structures and terms” of many of the treaties placed by the insurer at 1 January.

Meanwhile the insurer continued its capital management strategy in 2024, as it reduced its debt by $1.6bn while also returning $8.1bn of capital to shareholders, including $6.6bn of share repurchases, $1.0bn of dividends and $500mn preferred stock redemption.

In the fourth quarter it returned around $2.1bn of capital to shareholders through $1.8bn of share repurchases and $244mn of dividends.

Investment income in the quarter was up from $909mn to $1.31bn.

NA commercial CR deteriorates

By geographic region and division, AIG reported a 92 percent drop in underwriting income generated by its North America commercial business in its GI operations. Net written premiums were 5 percent higher at $2.22bn.

The fourth quarter combined ratio was 13.7 points higher at 98.8 percent, with the adjusted accident year combined ratio up 0.3 points to 84.6 percent.

On a comparable basis, the combined ratio was 14.4 points higher at 98.8 percent, with the adjusted accident year combined ratio up 0.4 points to 84.6 percent.

The deteriorating calendar results were driven by higher cat charges largely from Hurricane Milton, adjustments from prior quarters events, and unfavorable prior-year development.

International commercial improved its combined ratio by 2.4 points to 83.1 percent, but the adjusted accident year combined ratio 3.3 points higher at 83.6 percent. Underwriting income was up 19 percent to $347mn, with net written premiums up 9 percent to $2.09bn.

Global personal net written premiums were up 2 percent to $1.76bn, with underwriting income 290 percent higher at $82mn.

There were improvements in both the reported combined ratio – by 3.4 points to 95.4 percent – and the adjusted accident year combined ratio, by 3.1 points to 98.7 percent.