AIG Reports Fourth Quarter and Full Year 2021 Results

• General Insurance net premiums written grew 7% in the fourth quarter of 2021 compared to the prior year quarter and 13% for the full year driven by Global Commercial Lines growth of 13% in the fourth quarter and 18% for the full year
• General Insurance combined ratio in the fourth quarter of 2021 improved by 10.4 points from the prior year quarter to 92.4% and, on an as adjusted* basis, improved by 3.1 points to 89.8%
• Net income per diluted common share in the fourth quarter of 2021 was $4.38, compared to a net loss per common share of $0.07 in the prior year quarter, and adjusted after-tax income* (AATI) per diluted common share was $1.58, an increase of 68% from $0.94 in the prior year quarter
• $10.7 billion of AIG Parent liquidity at year end 2021
• Repurchased $1 billion of AIG common stock and $1 billion used towards debt reduction in the fourth quarter of 2021; for the full year, reduced debt by $4 billion and returned $3.7 billion to shareholders through $2.6 billion of AIG common stock repurchases and $1.1 billion of dividends
• Book value and adjusted tangible book value* per common share increased 5% and 23%, respectively, from the prior year; up 4% and 12%, respectively, from September 30, 2021

FOURTH QUARTER NOTEWORTHY ITEMS

• General Insurance adjusted pre-tax income (APTI) of $1.5 billion reflects strong underwriting results; the combined ratio was 92.4, a 10.4 point improvement from the prior year quarter primarily due to strong underwriting results across the portfolio, including lower catastrophe (CATs) losses, net of reinsurance.
• Life and Retirement APTI of $969 million reflects higher fee income, more than offset by lower net investment income and unfavorable mortality; Life and Retirement return on adjusted segment common equity* for the fourth quarter was 13.7%, on an annualized basis.
• Net income attributable to AIG common shareholders was $3.7 billion, or $4.38 per diluted common share, compared to a net loss of $60 million, or $0.07 per common share, in the prior year quarter.
• AATI was $1.3 billion, or $1.58 per diluted common share, compared to $827 million, or $0.94 per diluted common share, in the prior year quarter due to strong underwriting performance in General Insurance.
• Total debt and preferred stock to total capital was 24.6% at December 31, 2021 down from 26.1% at September 30, 2021.
• As of December 31, 2021, book value per common share was $79.97, an increase of 5% from December 31, 2020. Adjusted book value per common share* was $68.83, an increase of 21% from December 31, 2020. Adjusted tangible book value per share was $62.82, an increase of 23% from December 31, 2020.
• Return on common equity (ROCE) and Adjusted ROCE* were 23.0% and 9.9%, respectively, on an annualized basis for the fourth quarter of 2021.

* Refers to financial measure 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.

NEW YORK–(BUSINESS WIRE)–American International Group, Inc. (NYSE: AIG) today reported financial results for the fourth quarter and full year ended December 31, 2021.

AIG Chairman & CEO Peter Zaffino said: “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. We ended the year with parent liquidity of $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.

“General Insurance succeeded in producing more consistent underwriting results while achieving 13% net premiums written growth for the full year with 18% growth in Commercial Lines. The business reported an underwriting profit for full year 2021 and for every quarter of the year, due to disciplined execution and volatility reduction in an environment of ever-increasing natural catastrophe risk. The accident year combined ratio, as adjusted, in the fourth quarter was 89.8%. For the full year, the accident year combined ratio, as adjusted, was 91.0%, driven by Global Commercial, which was 89.1%.

“Life and Retirement delivered another solid quarter due to its diversified business, increased annuity sales and the favorable impact of equity markets on both the investment portfolio and fee income. APTI increased 10.8% in the full year and return on adjusted segment common equity remained strong at 14.2%.

“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.

“Over the course of 2021, we reduced debt and preferred stock leverage by 380 basis points to 24.6% by repurchasing $4 billion of debt, and we returned $3.7 billion to shareholders through common stock repurchases and dividends.

“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.”

For the full year of 2021, pre-tax income from continuing operations was $12.1 billion compared to a pre-tax loss from continuing operations of $7.3 billion in the prior year. Full year 2021 net income attributable to AIG common shareholders was $9.4 billion, or $10.82 per diluted common share, compared to a net loss of $6.0 billion, or $6.88 per common share, in the prior year. The increase was primarily due to overall strong General Insurance underwriting results, including lower CATs, higher net investment income, particularly within the alternative investments portfolio, net realized gains in the current year compared to net realized losses in the prior year and gains on divestitures in the current year compared to losses in the prior year. These pre-tax increases were partially offset by higher income tax expense primarily due to higher income from operations.

AATI was $4.4 billion, or $5.12 per diluted common share, for the full year of 2021 compared to $2.2 billion, or $2.52 per diluted common share, in the prior year. The increase was primarily due to higher net investment income and strong General Insurance underwriting results.

For the fourth quarter of 2021, pre-tax income from continuing operations was $5.0 billion compared to a pre-tax loss from continuing operations of $558 million in the prior year quarter. Fourth quarter of 2021 net income attributable to AIG common shareholders was $3.7 billion, or $4.38 per diluted common share, compared to a net loss of $60 million, or $0.07 per common share, in the prior year quarter. The increase was primarily due to overall strong General Insurance underwriting results, including lower CATs, net realized gains in the current year compared to net realized losses in the prior year and gains on divestitures in the current year. These pre-tax increases were partially offset by higher income tax expense primarily due to higher income from operations.

AATI was $1.3 billion, or $1.58 per diluted common share, for the fourth quarter of 2021 compared to $827 million, or $0.94 per diluted common share, in the prior year quarter. The increase was primarily due to strong General Insurance underwriting results.

Total consolidated net investment income for the fourth quarter of 2021 was $3.6 billion, down 10% from $4.0 billion in the prior year quarter primarily due to lower returns from fair value option equity and fixed income securities, partially offset by strong income on alternative investments principally from private equity. Total net investment income on an APTI basis* was $3.3 billion, an increase of $65 million compared to the prior year quarter reflecting higher private equity income.

Book value per common share was $79.97 as of December 31, 2021, an increase of 5% from December 31, 2020 and 4% from September 30, 2021. Adjusted book value per common share was $68.83, an increase of 21% from December 31, 2020 and 11% from September 30, 2021 reflecting growth in retained earnings from net income in excess of dividends and share repurchases. Adjusted tangible book value per share was $62.82, an increase of 23% from December 31, 2020 and 12% from September 30, 2021.

As of December 31, 2021, AIG parent liquidity was $10.7 billion, up $5.4 billion from September 30, 2021 primarily driven by the receipt of cash proceeds from the Blackstone transactions, partially offset by share repurchases, dividends, and debt repurchases and redemptions. AIG repurchased approximately 17 million shares of AIG common stock during the fourth quarter for an aggregate purchase price of $1 billion. Additionally, $1 billion was used towards debt reduction via tender offers, private transactions, and make-whole redemptions. AIG’s total debt and preferred stock to total capital leverage at December 31, 2021 was 24.6%, down from 26.1% at September 30, 2021.

Today, the AIG Board of Directors declared a quarterly cash dividend of $0.32 per share on AIG common stock (NYSE: AIG). The dividend is payable on March 31, 2022 to stockholders of record at the close of business on March 17, 2022.

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 March 15, 2022 to holders of record at the close of business on February 28, 2022.

FINANCIAL SUMMARY

The comparisons on the following pages are against the fourth quarter of 2020, unless otherwise indicated. Refer to the AIG Fourth Quarter 2021 Financial Supplement, which is posted on AIG’s website in the Investors section, for further information.

GENERAL INSURANCE

General Insurance

• Net premiums written in the fourth quarter of 2021 increased 7% from the prior year quarter (8% on a constant dollar basis) to $6.0 billion driven by strong North America Commercial Lines and International Commercial Lines growth of 11% and 15% (16% on a constant dollar basis), respectively, reflecting strong incremental rate improvement, higher renewal retentions and high levels of new business production. Additionally, North America Personal Insurance net premiums written growth of 18% reflects a rebound in travel activity and lower reinsurance cessions. International Personal Insurance net premiums written decreased 9% (down 5% on a constant dollar basis) compared to the prior year quarter primarily due to underwriting actions taken to improve our portfolio mix and rate adequacy.
• Fourth quarter 2021 APTI increased by $700 million to $1.5 billion from the prior year quarter due to significantly improved underwriting results. Underwriting income was $499 million in the fourth quarter of 2021 compared to an underwriting loss of $171 million in the prior year quarter. The underwriting income included $189 million of CATs, predominantly from tornadoes in the southern U.S. and wildfires, compared to $545 million in the prior year quarter, which included $178 million of estimated COVID-19 losses. Fourth quarter 2021 also included favorable net prior year loss reserve development, net of reinsurance (PYD) of $44 million compared to unfavorable PYD of $45 million in the prior year quarter.
• General Insurance generated strong underwriting results, with a combined ratio of 92.4, a 10.4 point decrease from 102.8 in the prior year quarter. 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. The General Insurance accident year combined ratio, as adjusted, was 89.8, an improvement of 3.1 points from the prior year quarter and was comprised of a 59.2 accident year loss ratio, as adjusted*, and an expense ratio of 30.6. The General Insurance accident year loss ratio, as adjusted, improved by 1.1 points from the prior year quarter reflecting continued improvement in the commercial business mix and quality of the portfolio. The General Insurance expense ratio improved 2.0 points from the prior year quarter reflecting continued general operating expense discipline, including benefits from the AIG 200 program, and higher net premiums earned as we grow the portfolio.
• Commercial Lines underwriting results continued to show strong improvement due to better business mix and net premiums written growth of 13% along with continued rate increases. The accident year combined ratio, as adjusted, for North America Commercial Lines improved 4.7 points to 88.9, and for International Commercial Lines improved 2.5 points to 86.7 compared to the prior year quarter.
• Personal Insurance underwriting results also improved driven by both North America and International. The North America Personal Insurance accident year combined ratio, as adjusted, improved 7.7 points to 94.9 compared to the prior year quarter reflecting changes in business mix and a rebound in travel activity. The International Personal Insurance accident year combined ratio, as adjusted, was unchanged at 94.1 from the prior year quarter.

   

LIFE AND RETIREMENT

Life and Retirement

• Life and Retirement reported APTI of $969 million for the fourth quarter of 2021, down 6% from $1,027 million in the prior year quarter primarily due to unfavorable mortality in Life Insurance and increases in deferred policy acquisition costs amortization and reserves predominantly in Individual Retirement and Group Retirement, partially offset by higher fee income and alternative investment income across all segments. Additionally, our previously disclosed sensitivity of $65 million to $75 million per 100,000 population deaths remains consistent based on the reported fourth quarter COVID-related deaths in the United States.
• Premiums were $2.7 billion, up from $1.0 billion in the prior year quarter driven by higher pension risk transfer sales in the fourth quarter of 2021. Premiums and deposits, excluding deposits of the Retail Mutual Funds business that were sold to Touchstone in the third quarter of 2021 or were otherwise liquidated, increased 19%, or $1.3 billion, from the prior year quarter to $8.6 billion due in part to the recovery from broad industry-wide sales disruption in 2020 resulting from COVID-19, strong performance through various sales channels, and higher pension risk transfer sales.
• Individual and Group Retirement net flows were negative $1.1 billion for the fourth quarter of 2021. Individual Retirement recorded reduced net outflows, excluding Retail Mutual Funds, of $34 million compared to net outflows of $189 million in the prior year quarter, largely due to a recovery from the broad industry-wide sales disruption in 2020 and the strong sales through various distribution channels. In the Group Retirement business, net outflows increased to $1.1 billion from $153 million in the prior year primarily driven by higher group and individual surrenders.

OTHER OPERATIONS

Other Operations

• Fourth quarter adjusted pre-tax loss (APTL) was $648 million, including $470 million of reductions from consolidation and eliminations, compared to APTL of $720 million, including $292 million of reductions from consolidation and eliminations, in the prior year quarter. The increase in consolidation and eliminations APTL reflects the elimination of the General Insurance and Life and Retirement segment net investment income on their investment in consolidated investment entities that is accounted for as realized gains or losses in consolidation.
• Before consolidation and eliminations, the decrease in APTL reflects higher net investment income, primarily from realized gains from property sales in the global real estate portfolio, and lower corporate interest expense resulting from 2021 debt repayment activity, partially offset by higher corporate GOE including increased performance-based employee compensation.

LIFE AND RETIREMENT SEPARATION

• On October 26, 2020, AIG announced its intention to separate its Life and Retirement business from AIG.
• On November 2, 2021, AIG and Blackstone Inc. (Blackstone) completed the acquisition by Blackstone of a 9.9 percent equity stake in SAFG Retirement Services, Inc. (SAFG), which is the holding company for AIG’s Life and Retirement business, for $2.2 billion in an all cash transaction, subject to adjustment if the final pro forma adjusted book value is greater or lesser than the target pro forma adjusted book value. As part of the separation, most of AIG’s investment operations were transferred to SAFG or its subsidiaries as of December 31, 2021, and AIG entered into a long-term asset management relationship with Blackstone to manage an initial $50 billion of Life and Retirement’s existing investment portfolio beginning in the fourth quarter of 2021, with that amount increasing by increments of $8.5 billion per year for the next five years beginning in the fourth quarter of 2022, for an aggregate of $92.5 billion. On November 1, 2021, SAFG declared a dividend payable to AIG Parent in the amount of $8.3 billion. In connection with such dividend, SAFG issued a promissory note to AIG Parent in the amount of $8.

Contacts

Quentin McMillan (Investors): quentin.mcmillan@aig.com
Claire Talcott (Media): claire.talcott@aig.com

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