AIG braced for half a billion in losses from wildfires
AIG is estimating a half a billion dollar loss due to the California wildfires this month.
Peter Zaffino, AIG chairman and chief executive said in the firm’s latest financial report: “Though it is still too early to determine the full impact of the California wildfires, we estimate the net loss for AIG to be approximately $500 million, before reinstatement premiums.”
Against the backdrop of an extremely challenging natural catastrophe environment, he acknowledged the devastating impact of the recent wildfires in California on the families, communities and businesses impacted.
In the firm’s latest financial statements released today, AIG reported a $1.4 billion dollar net loss for the year ending December 31, compared with $3.6 billion in net income the previous year.
Return on investment was down 3.2 per cent, compared with 8.6 per cent the previous year.
The net loss for the year was attributed to the deconsolidation of Corebridge Financial.
However, AIG was pleased with fourth quarter results, reporting a combined ratio of 91.8 per cent, and “exceptional” new business written in global commercial of $4.5 billion, growing 9 per cent year-over-year.
It reported general insurance net premiums written of $6.1 billion, an increase of 6 per cent year-over-year on a reported basis, or 7 per cent on a comparable basis, and a combined ratio of 92.5 per cent.
Mr Zaffino called 2024 an outstanding year of accomplishments for AIG.
“We successfully executed multiple complex strategic and operational priorities, delivered outstanding financial results and created exceptional value for our clients and stakeholders,” he said.
“We strengthened the company’s capital structure, improved our financial performance, and achieved an historic milestone with the deconsolidation of Corebridge Financial, which enabled us to organise our business into three distinct operating segments.”
He said they had generated strong growth across their businesses with outstanding underwriting profitability.
“For the full year, adjusted after-tax income per diluted share was $4.95, a 12 per cent increase year-over-year, or 28 per cent on a comparable basis,” the AIG chief executive said. “Underwriting income was nearly $2 billion, marking another year of exceptional underwriting results.”
Mr Zaffino said this was reflected in a combined ratio that was below 92 per cent for a third consecutive year and an accident year combined ratio, as adjusted, that was again below 89 per cent.
He added that they had made significant progress on their capital management strategy last year, reducing their debt by $1.6 billion, while also returning $8.1 billion of capital to shareholders, including $6.6 billion of share repurchases, $1 billion of dividends and $500 million preferred stock redemption.
AIG ended the year with a debt to total capital ratio of 17 per cent and parent liquidity of $7.7 billion, supported by the $3.8 billion of proceeds from the sale of a 21.6 per cent ownership stake in Corebridge to Nippon Life and other transactions that have reduced their ownership to 22.7 per cent.
They also launched their reinsurance Syndicate 2478 at Lloyd’s through a multi-year strategic relationship with Blackstone.
• For more on then AIG earnings release, see Related Media
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