Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

AIG Reports Third Quarter 2023 Results


American International Group, Inc. (NYSE: AIG) today reported financial results for the third quarter ended September 30, 2023.

AIG Chairman & Chief Executive Officer Peter Zaffino said: "In the third quarter, AIG delivered exceptional results driven by continued improvement in underwriting profitability and an outstanding quarter in our Commercial Lines business with an 81.7% accident year combined ratio, as adjusted. This quarter's adjusted after-tax income per diluted share of $1.61 increased 92% from the prior year quarter. Our relentless focus on our strategic priorities has enabled us to accelerate our execution and generate significant sustainable value for shareholders and other stakeholders.

"On November 1, we announced the successful closing of the sale of Validus Re to RenaissanceRe for which we received total consideration of $3.3 billion in cash, including a pre-closing dividend, and approximately $275 million in RenaissanceRe stock. This sale significantly contributes to our efforts to streamline our business model, simplify our portfolio and further reduce volatility.

"Our continued attention to underwriting excellence and portfolio optimization has manifested in outstanding results for General Insurance. The General Insurance combined ratio improved to 90.5%. The combined ratio included $462 million of total catastrophe-related charges, or 6.9 loss ratio points. Accident year combined ratio, as adjusted, of 86.3% represents an improvement of 210 basis points from the prior year quarter. Additionally, the third quarter results reflect favorable prior year reserve development, net of reinsurance and prior year premiums, of $210 million, or a 2.7 loss ratio point benefit.

"Our continued growth across the portfolio was impressive in the third quarter. General Insurance net premiums written increased 1% year-over-year, or 9% on a comparable basis?, driven by 16% growth in Personal Insurance and 6% growth in Commercial Lines. North America Commercial pricing, which includes rate and exposure, increased 9% excluding Workers' Compensation, while International Commercial pricing increased 6% year-over-year. Global Commercial pricing increased 8% excluding Workers' Compensation and remains above loss cost trend.

"Life & Retirement also delivered solid third-quarter results, which were attributable to continued spread expansion and strong Fixed Index Annuities sales which exceeded $2 billion for the third consecutive quarter. Base net investment income continued to see benefits from the higher interest rate environment and Individual and Group Retirement produced a 41 basis point base spread expansion year-over-year.

"Corebridge continues to make significant progress in simplifying its portfolio. In September, Corebridge announced the sale of AIG Life Limited to Aviva plc for a consideration of £460 million. On October 31, Corebridge closed the sale of Laya Healthcare to AXA for ?650 million, the net proceeds from which will be distributed by a special dividend of approximately $730 million to Corebridge shareholders of record. These transactions will enable Corebridge to concentrate on U.S. Life & Retirement solutions where it has proven market strength and distribution capabilities."

? Net premiums written on a comparable basis reflects year-over-year comparison on a constant dollar basis adjusted for the International lag elimination, the sale of CRS and the sale of Validus Re. Refer to page 18 for more detail.

For the third quarter of 2023, net income attributable to AIG common shareholders was $2.0 billion, or $2.81 per diluted common share, compared to $2.7 billion, or $3.55 per diluted common share, in the prior year quarter. The decline was primarily driven by a decrease in net realized gains, both including and excluding Fortitude Re funds withheld assets and embedded derivative, partially offset by higher General Insurance underwriting income and total net investment income. The decrease in net income was also attributable to lower ownership in Corebridge following the Corebridge secondary offering in June.

AATI was $1.2 billion, or $1.61 per diluted common share, for the third quarter of 2023 compared to $0.6 billion, or $0.84 per diluted common share, in the prior year quarter. The increase in AATI was due to higher underwriting income in General Insurance, higher net investment income and better results in Other Operations, partially offset by an increase in adjusted income tax expenses as well as an increase in non-controlling interest expense due to the Corebridge secondary offering. The third quarter adjusted effective tax rate was 26.3% compared to 20.5% in the prior year quarter, driven by higher foreign income, which is taxed at rates higher than the U.S. federal income tax rate of 21%, and tax adjustments related to prior year tax returns.

Total net investment income for the third quarter of 2023 was $3.6 billion, an increase of 33% from $2.7 billion in the prior year quarter, primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates and improved alternative investment income compared to losses from both the hedge fund and private equity portfolios in the prior year quarter. Total net investment income on an APTI basis* was $3.3 billion, an increase of $747 million from the prior year quarter, reflecting the same trends.

Book value per common share was $56.06 as of September 30, 2023, a decrease of 4% from June 30, 2023, driven by an increase in accumulated other comprehensive loss (AOCL) due to higher interest rates, and an increase of 2% from December 31, 2022, driven by the net impact of share repurchases. Adjusted book value per common share* was $78.17, an increase of approximately 3% compared to both June 30, 2023 and December 31, 2022, primarily driven by share repurchases. Adjusted tangible book value per common share* was $72.62, an increase of 4% from June 30, 2023 and an increase of 5% from December 31, 2022, both primarily driven by the net impact of share repurchases.

In the third quarter of 2023, AIG repurchased $785 million of common stock, or approximately 14 million shares, paid $261 million of common and preferred dividends and redeemed Validus debt for $289 million, inclusive of the loss on extinguishment of debt. AIG also received gross proceeds of $234 million from the sale of CRS. AIG parent liquidity was $3.6 billion as of September 30, 2023. Total debt and preferred stock to total capital ratio at September 30, 2023 was 33.7%, up from 32.3% at June 30, 2023, primarily driven by an increase in AOCL. Excluding AOCL adjusted for cumulative unrealized gains and losses related to Fortitude Re funds withheld assets, the total debt and preferred stock to total capital ratio* was 25.9% at September 30, 2023, relatively flat compared to June 30, 2023.

On November 1, 2023, the AIG Board of Directors declared a quarterly cash dividend on AIG common stock of $0.36 per share. The dividend is payable on December 28, 2023 to stockholders of record at the close of business on December 14, 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 December 15, 2023 to holders of record at the close of business on November 30, 2023.

FINANCIAL SUMMARY

 

 

Three Months Ended

September 30,

 

 

 

 

($ in millions, except per common share amounts)

2022

2023

 

Net income attributable to AIG common shareholders

$

2,741

 

$

2,020

 

 

Net income per diluted share attributable to AIG common shareholders

$

3.55

 

$

2.81

 

 

 

 

 

 

 

 

Adjusted pre-tax income (loss)

$

920

 

$

1,873

 

 

General Insurance

 

750

 

 

1,367

 

 

Life and Retirement

 

784

 

 

971

 

 

Other Operations

 

(614

)

 

(465

)

 

 

 

 

 

 

 

Net investment income

$

2,668

 

$

3,556

 

 

Net investment income, APTI basis

 

2,535

 

 

3,282

 

 

 

 

 

 

 

 

Adjusted after-tax income attributable to AIG common shareholders

$

644

 

$

1,158

 

 

Adjusted after-tax income per diluted share attributable to AIG common shareholders

$

0.84

 

$

1.61

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted (in millions)

 

771.1

 

 

718.7

 

 

 

 

 

 

 

 

Return on common equity

 

25.9

%

19.8

 

%

Adjusted return on common equity

 

4.6

%

8.5

 

%

 

 

 

 

 

 

Book value per common share

$

52.76

 

$

56.06

 

 

Adjusted book value per common share

$

74.90

 

$

78.17

 

 

 

 

 

 

 

 

Common shares outstanding (in millions)

 

747.2

 

 

704.6

 

 

GENERAL INSURANCE

 

Three Months Ended September 30,

 

 

($ in millions)

2022

2023

Change

 

Gross premiums written

$

9,238

 

 

$

8,870

 

 

(4

)

%

 

 

 

 

 

 

 

 

 

Net premiums written

$

6,403

 

 

$

6,462

 

 

1

 

%

North America

 

3,138

 

 

 

3,151

 

 

?

 

 

North America Commercial Lines

 

2,757

 

 

 

2,544

 

 

(8

)

 

North America Personal Insurance

 

381

 

 

 

607

 

 

59

 

 

International

 

3,265

 

 

 

3,311

 

 

1

 

 

International Commercial Lines

 

1,992

 

 

 

2,038

 

 

2

 

 

International Personal Insurance

 

1,273

 

 

 

1,273

 

 

?

 

 

 

 

 

 

 

 

 

 

 

Underwriting income (loss)

$

168

 

 

$

611

 

 

264

 

%

North America

 

(439

)

 

 

235

 

 

NM

 

 

North America Commercial Lines

 

(374

)

 

 

292

 

 

NM

 

 

North America Personal Insurance

 

(65

)

 

 

(57

)

 

12

 

 

International

 

607

 

 

 

376

 

 

(38

)

 

International Commercial Lines

 

469

 

 

 

339

 

 

(28

)

 

International Personal Insurance

 

138

 

 

 

37

 

 

(73

)

 

 

 

 

 

 

 

 

 

 

Net investment income, APTI basis

$

582

 

 

$

756

 

 

30

 

%

Adjusted pre-tax income

$

750

 

 

$

1,367

 

 

82

 

%

Return on adjusted segment common equity

 

6.7

 

%

 

12.4

 

%

5.7

 

pts

 

 

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

 

 

North America Combined Ratio (CR)

 

114.0

 

 

 

92.3

 

 

(21.7

)

pts

North America Commercial Lines CR

 

113.6

 

 

 

88.9

 

 

(24.7

)

 

North America Personal Insurance CR

 

116.4

 

 

 

113.0

 

 

(3.4

)

 

International CR

 

81.4

 

 

 

88.7

 

 

7.3

 

 

International Commercial Lines CR

 

75.4

 

 

 

83.4

 

 

8.0

 

 

International Personal Insurance CR

 

89.8

 

 

 

97.2

 

 

7.4

 

 

General Insurance (GI) CR

 

97.3

 

 

 

90.5

 

 

(6.8

)

 

 

 

 

 

 

 

 

 

 

GI Loss ratio

 

67.5

 

 

 

59.6

 

 

(7.9

)

pts

Less: impact on loss ratio

 

 

 

 

 

 

 

 

Catastrophe losses and reinstatement premiums

 

(9.8

)

 

 

(6.9

)

 

2.9

 

 

Prior year development, net of reinsurance and prior year premiums

 

0.9

 

 

 

2.7

 

 

1.8

 

 

GI Accident year loss ratio, as adjusted

 

58.6

 

 

 

55.4

 

 

(3.2

)

 

GI Expense ratio

 

29.8

 

 

 

30.9

 

 

1.1

 

 

GI Accident year combined ratio, as adjusted

 

88.4

 

 

 

86.3

 

 

(2.1

)

 

 

 

 

 

 

 

 

 

 

Accident year combined ratio, as adjusted (AYCR):

 

 

 

 

 

 

 

 

North America AYCR

 

88.2

 

 

 

86.6

 

 

(1.6

)

pts

North America Commercial Lines AYCR

 

84.6

 

 

 

83.0

 

 

(1.6

)

 

North America Personal Insurance AYCR

 

112.8

 

 

 

108.4

 

 

(4.4

)

 

International AYCR

 

88.6

 

 

 

86.0

 

 

(2.6

)

 

International Commercial Lines AYCR

 

80.4

 

 

 

79.7

 

 

(0.7

)

 

International Personal Insurance AYCR

 

99.9

 

 

 

95.9

 

 

(4.0

)

 

General Insurance

? Net premiums written on a comparable basis reflects year-over-year comparison on a constant dollar basis adjusted for the International lag elimination, the sale of CRS and the sale of Validus Re. Refer to page 18 for more detail.

*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.

LIFE AND RETIREMENT

 

Three Months Ended

 

 

 

 

September 30,

 

 

 

($ in millions, except as indicated)

2022

 

2023

 

Change

 

Adjusted pre-tax income

$

784

 

 

$

971

 

 

24

 

%

Individual Retirement

 

377

 

 

 

572

 

 

52

 

 

Group Retirement

 

193

 

 

 

191

 

 

(1

)

 

Life Insurance

 

131

 

 

 

133

 

 

2

 

 

Institutional Markets

 

83

 

 

 

75

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

Premiums and fees

$

2,133

 

 

$

1,512

 

 

(29

)

%

Individual Retirement

 

248

 

 

 

211

 

 

(15

)

 

Group Retirement

 

104

 

 

 

108

 

 

4

 

 

Life Insurance

 

928

 

 

 

946

 

 

2

 

 

Institutional Markets

 

853

 

 

 

247

 

 

(71

)

 

 

 

 

 

 

 

 

 

 

Premiums and deposits

$

8,894

 

 

$

9,248

 

 

4

 

%

Individual Retirement

 

3,792

 

 

 

3,961

 

 

4

 

 

Group Retirement

 

2,039

 

 

 

1,831

 

 

(10

)

 

Life Insurance

 

1,166

 

 

 

1,200

 

 

3

 

 

Institutional Markets

 

1,897

 

 

 

2,256

 

 

19

 

 

 

 

 

 

 

 

 

 

 

Net flows

$

(92

)

 

$

(2,931

)

 

NM

 

%

Individual Retirement

 

696

 

 

 

(743

)

 

NM

 

 

Group Retirement

 

(788

)

 

 

(2,188

)

 

(178

)

 

 

 

 

 

 

 

 

 

 

Net investment income, APTI basis

$

2,004

 

 

$

2,465

 

 

23

 

%

Return on adjusted segment common equity

 

9.7

 

%

 

11.4

 

%

1.7

 

pts

Life and Retirement

OTHER OPERATIONS

 

Three Months Ended

 

 

 

 

September 30,

 

 

 

($ in millions)

2022

 

2023

 

Change

 

Corporate and Other

$

(518

)

 

$

(421

)

 

19

%

Asset Management Group

 

51

 

 

 

(47

)

 

NM

 

Adjusted pre-tax loss before consolidation and eliminations

 

(467

)

 

 

(468

)

 

?

 

Consolidation and eliminations

 

(147

)

 

 

3

 

 

NM

 

Adjusted pre-tax loss

$

(614

)

 

$

(465

)

 

24

%

Other Operations

CONFERENCE CALL

AIG will host a conference call tomorrow, Thursday, November 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:

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 Third 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:

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:

See page 16 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 ratio = [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 ratio = [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 September 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

$

3,904

 

$

817

 

$

?

 

$

3,087

 

 

$

3,568

 

$

821

 

$

?

 

$

2,747

 

Noncontrolling interests

 

 

 

 

 

(339

)

 

(339

)

 

 

 

 

 

 

(720

)

 

(720

)

Pre-tax income/net income attributable to AIG

 

3,904

 

 

817

 

 

(339

)

 

2,748

 

 

 

3,568

 

 

821

 

 

(720

)

 

2,027

 

Dividends on preferred stock

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Net income attributable to AIG common shareholders

 

 

 

 

 

 

 

2,741

 

 

 

 

 

 

 

 

 

2,020

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in uncertain tax positions and other tax adjustments

 

 

 

2

 

 

?

 

 

(2

)

 

 

 

 

15

 

 

?

 

 

(15

)

Deferred income tax valuation allowance (releases) charges

 

 

 

(8

)

 

?

 

 

8

 

 

 

 

 

52

 

 

?

 

 

(52

)

Changes in fair value of securities used to hedge guaranteed living benefits

 

(6

)

 

(1

)

 

?

 

 

(5

)

 

 

6

 

 

1

 

 

?

 

 

5

 

Change in market risk benefit, net(a)

 

(435

)

 

(91

)

 

?

 

 

(344

)

 

 

(418

)

 

(88

)

 

?

 

 

(330

)

Changes in benefit reserves related to net realized gains (losses)

 

(2

)

 

?

 

 

?

 

 

(2

)

 

 

(2

)

 

?

 

 

?

 

 

(2

)

Changes in the fair value of equity securities

 

(16

)

 

(3

)

 

?

 

 

(13

)

 

 

(40

)

 

(8

)

 

?

 

 

(32

)

Loss on extinguishment of debt

 

?

 

 

?

 

 

?

 

 

?

 

 

 

21

 

 

4

 

 

?

 

 

17

 

Net investment income on Fortitude Re funds withheld assets

 

(155

)

 

(32

)

 

?

 

 

(123

)

 

 

(264

)

 

(55

)

 

?

 

 

(209

)

Net realized losses on Fortitude Re funds withheld assets

 

86

 

 

17

 

 

?

 

 

69

 

 

 

227

 

 

48

 

 

?

 

 

179

 

Net realized gains on Fortitude Re funds withheld embedded derivative

 

(1,757

)

 

(369

)

 

?

 

 

(1,388

)

 

 

(1,137

)

 

(239

)

 

?

 

 

(898

)

Net realized gains(b)

 

(846

)

 

(172

)

 

?

 

 

(674

)

 

 

(133

)

 

(67

)

 

?

 

 

(66

)

Net gain on divestitures and other

 

(6

)

 

(1

)

 

?

 

 

(5

)

 

 

(101

)

 

(21

)

 

?

 

 

(80

)

Non-operating litigation reserves and settlements

 

(3

)

 

(1

)

 

?

 

 

(2

)

 

 

?

 

 

?

 

 

?

 

 

?

 

Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements

 

(62

)

 

(13

)

 

?

 

 

(49

)

 

 

(75

)

 

(16

)

 

?

 

 

(59

)

Net loss reserve discount charge

 

10

 

 

2

 

 

?

 

 

8

 

 

 

5

 

 

1

 

 

?

 

 

4

 

Pension expense related to a one-time lump sum payment to former employees

 

?

 

 

?

 

 

?

 

 

?

 

 

 

8

 

 

2

 

 

?

 

 

6

 

Integration and transaction costs associated with acquiring or divesting businesses

 

52

 

 

11

 

 

?

 

 

41

 

 

 

65

 

 

13

 

 

?

 

 

52

 

Restructuring and other costs

 

147

 

 

29

 

 

?

 

 

118

 

 

 

132

 

 

27

 

 

?

 

 

105

 

Non-recurring costs related to regulatory or accounting changes

 

9

 

 

2

 

 

?

 

 

7

 

 

 

11

 

 

3

 

 

?

 

 

8

 

Noncontrolling interests(d)

 

 

 

 

 

259

 

 

259

 

 

 

 

 

 

 

505

 

 

505

 

Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders

$

920

 

$

189

 

$

(80

)

$

644

 

 

$

1,873

 

$

493

 

$

(215

)

$

1,158

 

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)

 

Nine Months Ended September 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

$

13,543

$

2,816

$

?

$

10,726

 

$

5,204

$

853

$

?

$

4,351

Noncontrolling interests

 

 

 

 

 

(1,051)

 

(1,051)

 

 

 

 

 

 

(801)

 

(801)

Pre-tax income/net income attributable to AIG

 

13,543

 

2,816

 

(1,051)

 

9,675

 

 

5,204

 

853

 

(801)

 

3,550

Dividends on preferred stock

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

22

Net income attributable to AIG common shareholders

 

 

 

 

 

 

 

9,653

 

 

 

 

 

 

 

 

3,528

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in uncertain tax positions and other tax adjustments

 

 

 

90

 

?

 

(90)

 

 

 

 

377

 

?

 

(377)

Deferred income tax valuation allowance (releases) charges

 

 

 

15

 

?

 

(15)

 

 

 

 

(45)

 

?

 

45

Changes in fair value of securities used to hedge guaranteed living benefits

 

(29)

 

(6)

 

?

 

(23)

 

 

12

 

2

 

?

 

10

Change in market risk benefit, net(a)

 

(713)

 

(150)

 

?

 

(563)

 

 

(484)

 

(102)

 

?

 

(382)

Changes in benefit reserves related to net realized gains (losses)

 

(11)

 

(2)

 

?

 

(9)

 

 

(7)

 

(1)

 

?

 

(6)

Changes in the fair value of equity securities

 

41

 

9

 

?

 

32

 

 

(134)

 

(28)

 

?

 

(106)

Loss on extinguishment of debt

 

299

 

63

 

?

 

236

 

 

21

 

4

 

?

 

17

Net investment income on Fortitude Re funds withheld assets

 

(634)

 

(133)

 

?

 

(501)

 

 

(1,001)

 

(210)

 

?

 

(791)

Net realized losses on Fortitude Re funds withheld assets

 

312

 

65

 

?

 

247

 

 

396

 

83

 

?

 

313

Net realized (gains) losses on Fortitude Re funds withheld embedded derivative

 

(7,851)

 

(1,649)

 

?

 

(6,202)

 

 

(152)

 

(32)

 

?

 

(120)

Net realized (gains) losses(b)

 

(1,055)

 

(270)

 

?

 

(785)

 

 

1,023

 

218

 

?

 

805

Loss from discontinued operations

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

?

Net gain on divestitures and other

 

(45)

 

(9)

 

?

 

(36)

 

 

(142)

 

(30)

 

?

 

(112)

Non-operating litigation reserves and settlements

 

(41)

 

(9)

 

?

 

(32)

 

 

?

 

?

 

?

 

?

Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements

 

(206)

 

(43)

 

?

 

(163)

 

 

(112)

 

(24)

 

?

 

(88)

Net loss reserve discount charge

 

4

 

1

 

?

 

3

 

 

85

 

18

 

?

 

67

Pension expense related to a one-time lump sum payment to former employees

 

?

 

?

 

?

 

?

 

 

75

 

16

 

?

 

59

Integration and transaction costs associated with acquiring or divesting businesses

 

136

 

29

 

?

 

107

 

 

196

 

41

 

?

 

155

Restructuring and other costs

 

415

 

85

 

?

 

330

 

 

402

 

84

 

?

 

318

Non-recurring costs related to regulatory or accounting changes

 

22

 

5

 

?

 

17

 

 

36

 

8

 

?

 

28

Net impact from elimination of international reporting lag(c)

 

?

 

?

 

?

 

?

 

 

(12)

 

(3)

 

?

 

(9)

Noncontrolling interests(d)

 

 

 

 

 

776

 

776

 

 

 

 

 

 

297

 

297

Adjusted pre-tax income/Adjusted after-tax income attributable to AIG common shareholders

$

4,187

$

907

$

(275)

$

2,983

 

$

5,406

$

1,229

$

(504)

$

3,651

(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 September 30,

 

 

Nine Months Ended September 30,

 

Earnings per common share:

 

2022

 

2023

% Inc. (Dec.)

 

 

 

2022

 

2023

% Inc. (Dec.)

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

$

3.59

$

2.83

(21.2)

%

 

$

12.22

$

4.86

(60.2)

%

Income from discontinued operations

 

?

 

?

NM

 

 

 

?

 

?

NM

 

Net income attributable to AIG common shareholders

$

3.59

$

2.83

(21.2)

 

 

$

12.22

$

4.86

(60.2)

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

3.55

$

2.81

(20.8)

 

 

$

12.08

$

4.83

(60.0)

 

Income from discontinued operations

 

?

 

?

NM

 

 

 

?

 

?

NM

 

Net income attributable to AIG common shareholders

$

3.55

$

2.81

(20.8)

 

 

$

12.08

$

4.83

(60.0)

 

Adjusted after-tax income attributable to AIG common shareholders per diluted share

$

0.84

$

1.61

91.7

%

 

$

3.73

$

4.99

33.8

%

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

763.1

 

712.6

 

 

 

 

789.9

 

725.6

 

 

Diluted

 

771.1

 

718.7

 

 

 

 

799.1

 

731.0

 

 

Reconciliation of Book Value per Common Share

As of period end:

September 30,
2022

 

December 31,
2022

 

June 30,
2023

 

September 30,
2023

Total AIG shareholders' equity

$

39,906

 

 

$

40,970

 

 

$

42,454

 

 

$

39,984

 

Less: Preferred equity

 

485

 

 

 

485

 

 

 

485

 

 

 

485

 

Total AIG common shareholders' equity (a)

 

39,421

 

 

 

40,485

 

 

 

41,969

 

 

 

39,499

 

Less: Deferred tax assets (DTA)*

 

4,553

 

 

 

4,518

 

 

 

4,263

 

 

 

3,974

 

Less: Accumulated other comprehensive income (AOCI)

 

(24,121

)

 

 

(22,616

)

 

 

(18,982

)

 

 

(22,529

)

Add: Cumulative unrealized gains and losses related to Fortitude Re Funds withheld assets

 

(3,021

)

 

 

(2,862

)

 

 

(2,331

)

 

 

(2,973

)

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(21,100

)

 

 

(19,754

)

 

 

(16,651

)

 

 

(19,556

)

Total adjusted common shareholders' equity (b)

$

55,968

 

 

$

55,721

 

 

$

54,357

 

 

$

55,081

 

Less: Intangible assets:

 

 

 

 

 

 

 

Goodwill

 

3,860

 

 

 

3,927

 

 

 

3,617

 

 

 

3,498

 

Value of business acquired

 

89

 

 

 

92

 

 

 

92

 

 

 

16

 

Value of distribution channel acquired

 

428

 

 

 

418

 

 

 

188

 

 

 

149

 

Other intangibles

 

286

 

 

 

286

 

 

 

244

 

 

 

249

 

Total intangible assets

 

4,663

 

 

 

4,723

 

 

 

4,141

 

 

 

3,912

 

Total adjusted tangible common shareholders' equity (c)

$

51,305

 

 

$

50,998

 

 

$

50,216

 

 

$

51,169

 

Total common shares outstanding (d)

 

747.2

 

 

 

734.1

 

 

 

717.5

 

 

 

704.6

 

As of period end:

September 30,
2022

% Inc.
(Dec.)

 

December 31,
2022

% Inc.
(Dec.)

 

June 30,
2023

% Inc.
(Dec.)

 

September 30,
2023

Book value per common share (a÷d)

$

52.76

6.3

%

 

$

55.15

1.7

%

 

$

58.49

(4.2

)%

 

$

56.06

Adjusted book value per common share (b÷d)

 

74.90

4.4

 

 

 

75.90

3.0

 

 

 

75.76

3.2

 

 

 

78.17

Adjusted tangible book value per common share (c÷d)

 

68.66

5.8

 

 

 

69.47

4.5

 

 

 

69.99

3.8

 

 

 

72.62

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 September 30,

 

 

 

2022

 

 

 

2023

 

 

Actual or annualized net income (loss) attributable to AIG common shareholders (a)

$

10,964

 

 

$

8,080

 

 

Actual or annualized adjusted after-tax income attributable to AIG common shareholders (b)

$

2,576

 

 

$

4,632

 

 

Average AIG Common Shareholders' equity (c)

$

42,325

 

 

$

40,734

 

 

Less: Average DTA*

 

4,650

 

 

 

4,119

 

 

Less: Average AOCI

 

(21,384

)

 

 

(20,756

)

 

Add: Average cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(2,622

)

 

 

(2,652

)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(18,762

)

 

 

(18,104

)

 

Average adjusted common shareholders' equity (d)

$

56,437

 

 

$

54,719

 

 

 

 

 

 

 

 

 

ROCE (a÷c)

 

25.9

 

%

 

19.8

 

%

Adjusted return on common equity (b÷d)

 

4.6

 

%

 

8.5

 

%

* 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

 

 

September 30,

 

 

2022

 

 

 

2023

 

Net Investment Income per Consolidated Statements of Operations

$

2,668

 

 

$

3,556

 

Changes in fair value of securities used to hedge guaranteed living benefits

 

(14

)

 

 

(13

)

Changes in the fair value of equity securities

 

(16

)

 

 

(40

)

Net investment income on Fortitude Re funds withheld assets

 

(155

)

 

 

(264

)

Net realized gains (losses) related to economic hedges and other

 

52

 

 

 

43

 

Total Net Investment Income - APTI Basis

$

2,535

 

 

$

3,282

 

Net Premiums Written - Comparable Basis

 

Three Months Ended September 30, 2023

 

 

 

 

North

 

 

 

 

Global -

Global -

America -

 

International -

 

General

Commercial

Personal

Commercial

 

Commercial

General Insurance

Insurance

Lines

Insurance

Lines

 

Lines

Change in net premiums written

 

 

 

 

 

 

Increase (decrease) as reported in U.S. dollars

0.9

%

(3.5

)%

13.7

%

(7.7

)%

 

2.3

%

Foreign exchange effect

0.1

 

(0.5

)

1.9

 

?

 

 

(1.3

)

Lag elimination impact

1.9

 

2.4

 

0.3

 

?

 

 

6.4

 

Validus Re

1.9

 

2.2

 

?

 

3.7

 

 

?

 

Crop Risk Services

4.1

 

5.4

 

?

 

8.9

 

 

?

 

Increase (decrease) on comparable basis

8.9

%

6.0

%

15.9

%

4.9

%

 

7.4

%

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

 

September 30,

 

2022

 

2023

Total General Insurance

 

 

 

Combined ratio

97.3

 

 

90.5

 

Catastrophe losses and reinstatement premiums

(9.8

)

 

(6.9

)

Prior year development, net of reinsurance and prior year premiums

0.9

 

 

2.7

 

Accident year combined ratio, as adjusted

88.4

 

 

86.3

 

 

 

 

 

North America

 

 

 

Combined ratio

114.0

 

 

92.3

 

Catastrophe losses and reinstatement premiums

(17.2

)

 

(11.3

)

Prior year development, net of reinsurance and prior year premiums

(8.6

)

 

5.6

 

Accident year combined ratio, as adjusted

88.2

 

 

86.6

 

 

 

 

 

North America - Commercial Lines

 

 

 

Loss ratio

91.5

 

 

63.7

 

Catastrophe losses and reinstatement premiums

(18.1

)

 

(11.7

)

Prior year development, net of reinsurance and prior year premiums

(10.9

)

 

5.8

 

Accident year loss ratio, as adjusted

62.5

 

 

57.8

 

 

 

 

 

Combined ratio

113.6

 

 

88.9

 

Catastrophe losses and reinstatement premiums

(18.1

)

 

(11.7

)

Prior year development, net of reinsurance and prior year premiums

(10.9

)

 

5.8

 

Accident year combined ratio, as adjusted

84.6

 

 

83.0

 

 

 

 

 

North America - Personal Insurance

 

 

 

Combined ratio

116.4

 

 

113.0

 

Catastrophe losses and reinstatement premiums

(11.4

)

 

(9.7

)

Prior year development, net of reinsurance and prior year premiums

7.8

 

 

5.1

 

Accident year combined ratio, as adjusted

112.8

 

 

108.4

 

 

 

 

 

International

 

 

 

Combined ratio

81.4

 

 

88.7

 

Catastrophe losses and reinstatement premiums

(3.0

)

 

(2.8

)

Prior year development, net of reinsurance and prior year premiums

10.2

 

 

0.1

 

Accident year combined ratio, as adjusted

88.6

 

 

86.0

 

 

 

 

 

International - Commercial Lines

 

 

 

Combined ratio

75.4

 

 

83.4

 

Catastrophe losses and reinstatement premiums

(2.7

)

 

(3.3

)

Prior year development, net of reinsurance and prior year premiums

7.7

 

 

(0.4

)

Accident year combined ratio, as adjusted

80.4

 

 

79.7

 

 

 

 

 

International - Personal Insurance

 

 

 

Loss ratio

50.0

 

 

55.8

 

Catastrophe losses and reinstatement premiums

(3.3

)

 

(2.1

)

Prior year development, net of reinsurance and prior year premiums

13.4

 

 

0.8

 

Accident year loss ratio, as adjusted

60.1

 

 

54.5

 

 

 

 

 

Combined ratio

89.8

 

 

97.2

 

Catastrophe losses and reinstatement premiums

(3.3

)

 

(2.1

)

Prior year development, net of reinsurance and prior year premiums

13.4

 

 

0.8

 

Accident year combined ratio, as adjusted

99.9

 

 

95.9

 

 

 

 

 

Global - Commercial Insurance

 

 

 

Combined ratio

98.0

 

 

86.6

 

Catastrophe losses and reinstatement premiums

(11.7

)

 

(8.0

)

Prior year development, net of reinsurance and prior year premiums

(3.3

)

 

3.1

 

Accident year combined ratio, as adjusted

83.0

 

 

81.7

 

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

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income

$

750

 

 

$

1,367

 

 

$

3,218

 

 

$

3,934

 

 

Interest expense on attributed financial debt

 

132

 

 

 

130

 

 

 

429

 

 

 

389

 

 

Adjusted pre-tax income including attributed interest expense

 

618

 

 

 

1,237

 

 

 

2,789

 

 

 

3,545

 

 

Income tax expense

 

129

 

 

 

289

 

 

 

629

 

 

 

815

 

 

Adjusted after-tax income

 

489

 

 

 

948

 

 

 

2,160

 

 

 

2,730

 

 

Dividends declared on preferred stock

 

3

 

 

 

3

 

 

 

9

 

 

 

9

 

 

Adjusted after-tax income attributable to common shareholders

$

486

 

 

$

945

 

 

$

2,151

 

 

$

2,721

 

 

 

 

 

 

 

 

 

 

 

Ending adjusted segment common equity

$

28,164

 

 

$

30,571

 

 

$

28,164

 

 

$

30,571

 

 

Average adjusted segment common equity

$

29,134

 

 

$

30,362

 

 

$

27,838

 

 

$

30,149

 

 

Return on adjusted segment common equity

 

6.7

 

%

 

12.4

 

%

 

10.3

 

%

 

12.0

 

%

 

 

 

 

 

 

 

 

 

Total segment shareholder's equity

$

21,672

 

 

$

24,225

 

 

$

21,672

 

 

$

24,225

 

 

Less: Preferred equity

 

209

 

 

 

213

 

 

 

209

 

 

 

213

 

 

Total segment common equity

 

21,463

 

 

 

24,012

 

 

 

21,463

 

 

 

24,012

 

 

Less: Accumulated other comprehensive income (AOCI)

 

(7,429

)

 

 

(7,276

)

 

 

(7,429

)

 

 

(7,276

)

 

Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(728

)

 

 

(717

)

 

 

(728

)

 

 

(717

)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(6,701

)

 

 

(6,559

)

 

 

(6,701

)

 

 

(6,559

)

 

Total adjusted segment common equity

$

28,164

 

 

$

30,571

 

 

$

28,164

 

 

$

30,571

 

 

Reconciliation of Life and Retirement Return on Adjusted Segment Common Equity

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income

$

784

 

 

$

971

 

 

$

2,465

 

 

$

2,848

 

 

Interest expense on attributed financial debt

 

93

 

 

 

117

 

 

 

235

 

 

 

345

 

 

Adjusted pre-tax income including attributed interest expense

 

691

 

 

 

854

 

 

 

2,230

 

 

 

2,503

 

 

Income tax expense

 

141

 

 

 

168

 

 

 

449

 

 

 

496

 

 

Adjusted after-tax income

 

550

 

 

 

686

 

 

 

1,781

 

 

 

2,007

 

 

Dividends declared on preferred stock

 

2

 

 

 

2

 

 

 

6

 

 

 

6

 

 

Adjusted after-tax income attributable to common shareholders

$

548

 

 

$

684

 

 

$

1,775

 

 

$

2,001

 

 

 

 

 

 

 

 

 

 

 

Ending adjusted segment common equity

$

23,051

 

 

$

24,615

 

 

$

23,051

 

 

$

24,615

 

 

Average adjusted segment common equity

$

22,531

 

 

$

23,943

 

 

$

22,469

 

 

$

23,502

 

 

Return on adjusted segment common equity

 

9.7

 

%

 

11.4

 

%

 

10.5

 

%

 

11.4

 

%

 

 

 

 

 

 

 

 

 

Total segment shareholder's equity

$

7,512

 

 

$

7,628

 

 

$

7,512

 

 

$

7,628

 

 

Less: Preferred equity

 

163

 

 

 

171

 

 

 

163

 

 

 

171

 

 

Total segment common equity

 

7,349

 

 

 

7,457

 

 

 

7,349

 

 

 

7,457

 

 

Less: Accumulated other comprehensive income (AOCI)

 

(17,995

)

 

 

(19,414

)

 

 

(17,995

)

 

 

(19,414

)

 

Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(2,293

)

 

 

(2,256

)

 

 

(2,293

)

 

 

(2,256

)

 

Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld assets

 

(15,702

)

 

 

(17,158

)

 

 

(15,702

)

 

 

(17,158

)

 

Total adjusted segment common equity

$

23,051

 

 

$

24,615

 

 

$

23,051

 

 

$

24,615

 

 

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

 

September 30,

 

 

2022

 

 

 

2023

 

Individual Retirement:

 

 

 

 

 

Premiums

$

56

 

 

$

29

 

Deposits

 

3,740

 

 

 

3,935

 

Other

 

(4

)

 

 

(3

)

Premiums and deposits

$

3,792

 

 

$

3,961

 

 

 

 

 

 

 

Group Retirement:

 

 

 

 

 

Premiums

$

3

 

 

$

6

 

Deposits

 

2,036

 

 

 

1,825

 

Other

 

?

 

 

 

?

 

Premiums and deposits

$

2,039

 

 

$

1,831

 

 

 

 

 

 

 

Life Insurance:

 

 

 

 

 

Premiums

$

535

 

 

$

575

 

Deposits

 

405

 

 

 

393

 

Other

 

226

 

 

 

232

 

Premiums and deposits

$

1,166

 

 

$

1,200

 

 

 

 

 

 

 

Institutional Markets:

 

 

 

 

 

Premiums

$

804

 

 

$

200

 

Deposits

 

1,085

 

 

 

2,048

 

Other

 

8

 

 

 

8

 

Premiums and deposits

$

1,897

 

 

$

2,256

 

 

 

 

 

 

 

Total Life and Retirement:

 

 

 

 

 

Premiums

$

1,398

 

 

$

810

 

Deposits

 

7,266

 

 

 

8,201

 

Other

 

230

 

 

 

237

 

Premiums and deposits

$

8,894

 

 

$

9,248

 

Total Debt and Preferred Stock Leverage

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

June 30, 2023

 

September 30, 2023

Hybrid - debt securities / Total capital

2.9

%

 

3.1

%

Financial debt and debt held for sale / Total capital

28.7

 

 

29.8

 

Total debt / Total capital

31.6

 

 

32.9

 

Preferred stock / Total capital

0.7

 

 

0.8

 

Total debt and preferred stock / Total capital (incl. AOCI)

32.3

 

 

33.7

 

AOCI Impact

(6.3

)

 

(7.8

)

Total debt and preferred stock / Total capital (ex. AOCI)

26.0

%

 

25.9

%

 


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