“Outstanding” is how American International Group (AIG) chairman and CEO Peter Zaffino described the global insurer’s fourth quarter (Q4) and full year (FY) 2021 financial results.
The insurance giant reported FY21 adjusted after-tax income (AATI) of US$4.4 billion, or US$5.12 per diluted common share, compared to US$2.2 billion in 2020. FY21 net income attributable to AIG common shareholders was US$9.4 billion, compared to a net loss of US$6 billion in the prior year.
For the fourth quarter, AATI was US$1.3 billion, or US$1.58 per diluted common share, compared to US$827 million, or US$0.94 per diluted common share, in the prior year quarter. Fourth quarter 2021 net income attributable to AIG common shareholders was US$3.7 billion, compared to a net loss of US$60 million in the same period of 2020.
AIG attributed the increase in income primarily to the strong underwriting results in General Insurance, where net premiums written grew 7% in Q4 of 2021 compared to the prior-year quarter, and 13% for FY21, driven by global commercial lines growth of 13% in the fourth quarter and 18% for the full year.
The General Insurance business reported an underwriting profit for FY21 and for every quarter of the year, which Zaffino said was “due to disciplined execution and volatility reduction in an environment of ever-increasing natural catastrophe risk.”
The unit’s combined ratio improved by 10.4 points in the fourth quarter of 2021, compared to the prior-year period, hitting 92.4%. As stressed by Zaffino, the improvement reflects lower CATs and overall strong underwriting results driven by improvements in both the loss and expense ratios of 8.4 points and 2.0 points, respectively.
“In the fourth quarter and full year 2021, AIG delivered outstanding financial results with General Insurance continuing to produce improved underwriting profitability through excellent top line growth and vastly reduced volatility due to gross limit reductions and the strategic use of reinsurance, and Life and Retirement again making a meaningful contribution to our overall results,” said Zaffino. “We ended the year with parent liquidity of US$10.7 billion. The quality of these outcomes is due to our global colleagues’ hard work, dedication and commitment to excellence in everything we do.”
AIG’s Life and Retirement segment delivered what the CEO described as “another solid quarter” in Q4 due to its diversified business, increased annuity sales, and the favorable impact of equity markets on both the investment portfolio and fee income.
The unit reported adjusted pre-tax income of US$969 million for Q4, down 6% from the prior year quarter, but this was partially offset by higher fee income and alternative investment income. Premiums written were US$2.7 billion in the fourth quarter, up fromUS$1 billion in the prior-year quarter, driven by higher pension risk transfer sales.
“Since announcing our intent to separate Life and Retirement from AIG, we have made significant progress in preparing the business to be an independent, standalone company, including closing on the sale of a 9.9% equity stake to Blackstone in November 2021,” said Zaffino. “Over the course of 2021, we reduced debt and preferred stock leverage by 380 basis points to 24.6% by repurchasing US$4 billion of debt, and we returned US$3.7 billion to shareholders through common stock repurchases and dividends.”
The CEO concluded his analysis with the positive looking-forward statement: “AIG entered 2022 better, stronger, and well positioned to continue to deliver value to all stakeholders as we continue our journey to be a top performing company.”