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American International Group generated a modest profit in the second quarter, citing gains from higher net investment income, far fewer catastrophe losses and strong rate hikes in its property/casualty business.

The insurance giant produced $91 million in net income. That compares to a net loss of nearly $8 billion a year ago, a result shaped largely by the recognition of an $8.4 billion loss from the sale and deconsolidation of its Fortitude business in June 2020.

“We had another outstanding quarter with our businesses performing extremely well while we continue to make significant progress on strategic priorities and position ÌìÃÀÍøÕ¾´«Ã½´«Ã½ for sustainable profitable growth over the long-term,” ÌìÃÀÍøÕ¾´«Ã½´«Ã½ President and CEO Peter Zaffino said in prepared remarks.

The insurer’s property/casualty, or General Insurance business, produced $9.5 billion in gross premiums written during Q2, up 12 percent from nearly $8.5 billion in the 2020 second quarter.

General Insurance net premiums written grew 24% to $6.8 billion, with Commercial Lines growing 16% and and Personal Insurance 45% from the prior year quarter. The commercial lines growth reflected “strong rate improvement, higher renewal retentions and strong new business production.” The company said North America Personal Insurance net premiums written growth reflected the combined impact of the creation of Syndicate 2019, cessions placed on ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s Private Client Group business in the prior year quarter, and growth in travel and warranty business driven by a rebound in travel activity and increased consumer spending.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s General Insurance combined ratio was 92.5 overall, 13.5 points better than 106 in the 2020 second quarter primarily due to lower catastrophe losses. General Insurance underwriting income was $463 million in the second quarter, compared to an underwriting loss of $343 million in the prior year quarter. The underwriting income included $118 million of catastrophes, compared to $674 million in the prior year quarter, which included $458 million of estimated COVID-19 losses.

The company said the Commercial Lines underwriting results improvement was due to “improved business mix and top-line growth along with continued rate increases that drove better General Insurance underwriting results.”

Personal Insurance underwriting results also improved, driven by North America with an accident year combined ratio of 100.1 that was 4.7 points better than the prior year quarter due to changes in business mix driven by changes to ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s PCG business and the rebound in travel insurance premiums.

Consolidated net investment income for Q2 reached $3.7 billion, a 9 percent raise from the previous quarter generated by strong private equity returns. Lower gains on fair value option bonds partially offset this.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s underwriting income landed at $463 million, versus a $343 million underwriting loss in the 2020 second quarter. Results showed dramatic improvements across the board, but particularly in North America Commercial Lines and Personal Insurance.

Zaffino said the insurer saw General Insurance premium gains due to improved retention, “outstanding” levels of new business, and a continued improvement in rate.

On July 14, 2021 ÌìÃÀÍøÕ¾´«Ã½´«Ã½ announced that The Blackstone Group agreed to purchase a 9.9% equity stake in ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s Life and Retirement business for $2.2 billion in cash.

Source: ÌìÃÀÍøÕ¾´«Ã½´«Ã½

Topics Profit Loss Pricing Trends ÌìÃÀÍøÕ¾´«Ã½´«Ã½