American International Group Inc has reported that net income attributable to common shareholders plunged in fiscal 2023 to $3.6 billion.

That compares with $10.2 billion in the prior year.

The company said: “The decline was primarily driven by net realised losses largely related to Fortitude Re funds withheld embedded derivative at Life and Retirement compared to gains in the prior year, as well as derivative activity.”

For the fourth quarter of 2023, net income attributable to common shareholders was $86 million, compared with $545 million in the prior-year quarter. The decline was primarily driven by higher net realised losses on Fortitude Re funds withheld embedded derivative, the company said.

AIG said total net investment income for the quarter was $3.9 billion, an increase of 21 per cent from $3.3 billion in the prior-year quarter, primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower returns on alternative investments.

On November 1, AIG closed the sale of Validus Re to Bermudian-based RenaissanceRe. As a result, only one month of activity of Validus Re was included in General Insurance fourth-quarter results, compared with a full quarter in 2022.

For the full year, General Insurance net premiums written increased 5 per cent year-over-year, or 7 per cent on a comparable basis.

General Insurance underwriting income was up 15 per cent to $2.3 billion, driven by Global Commercial Lines, which increased 25 per cent year-over-year.

The General Insurance combined ratio improved 130 basis points from the prior year to 90.6 per cent.

Life and Retirement full year adjusted pre-tax income was $3.8 billion, up 15 per cent from the prior year.

AIG chairman and chief executive Peter Zaffino said: “In 2023, AIG delivered outstanding financial results, highlighted by excellent underwriting performance and the successful execution of multiple complex initiatives, while delivering exceptional value for our clients and stakeholders.

“Our substantial progress reflects the dedication and teamwork of our AIG colleagues around the world, who have delivered on our objectives.

“The full-year adjusted after-tax income per diluted share increased 33 per cent from the prior year to $6.79.

“We have further repositioned AIG for the future with the divestitures of Validus Re and Crop Risk Services, and we enter 2024 with significant momentum.”