AIG Reports First Quarter 2020 Results

• Net income attributable to AIG common shareholders was $1.7 billion, or $1.98 per diluted common share, for the first quarter of 2020, compared to $654 million, or $0.75 per diluted common share, in the prior year quarter, primarily driven by $3.5 billion of pre-tax net realized capital gains, compared to $446 million of pre-tax net realized capital losses in the prior year quarter.
• Adjusted after-tax income attributable to AIG common shareholders* was $99 million, or $0.11 per diluted common share, for the first quarter of 2020, compared to $1.4 billion, or $1.58 per diluted common share, in the prior year quarter.
• General Insurance posted a combined ratio of 101.5 compared to 97.4 in the prior year quarter. The accident year combined ratio, as adjusted*, was 95.5, compared to 96.1 in the prior year quarter, reflecting a better portfolio mix due to disciplined underwriting and continued expense management.
• General Insurance had $419 million of pre-tax catastrophe losses (CATs), net of reinsurance, in the first quarter. This included $272 million of estimated COVID-19 losses related to Travel, Contingency, Commercial Property, Trade Credit, Workers’ Compensation and Validus Re. The remainder of the CATs were primarily weather-related.
• Life and Retirement reported adjusted pre-tax income of $574 million, primarily due to declines in equity markets and widening spreads in credit markets triggered by the ongoing COVID-19 crisis.
• Total consolidated net investment income was $2.5 billion compared to $3.9 billion in the prior year quarter. Net investment income on an adjusted pre-tax income basis decreased approximately $1.0 billion to $2.7 billion, reflecting lower alternative investment returns and losses on fair value option (FVO) securities.
• Book value per common share was $69.30 at March 31, 2020, a decrease of 8% compared to December 31, 2019. Book value per common share, excluding accumulated other comprehensive income (AOCI) and deferred tax assets (DTA) (Adjusted book value per common share)* was $60.55, an increase of 3% compared to December 31, 2019.
• Return on Common Equity (ROCE) and Return on Common Equity, excluding AOCI and DTA (Adjusted ROCE)* were 11.2% and 0.8%, respectively, for the three months ended March 31, 2020.

* 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.

American International Group, Inc. (NYSE: AIG) reported net income attributable to AIG common shareholders of $1.7 billion, or $1.98 per diluted common share, for the first quarter of 2020, compared to $654 million, or $0.75 per diluted common share, in the prior year quarter. The improvement was primarily due to $3.5 billion of pre-tax net realized capital gains largely related to mark-to-market gains from variable annuity and interest rate hedges and the impact of our non-economic non-performance risk adjustment, per GAAP, on the fair value of our liabilities compared to $446 million of pre-tax net realized capital losses in the prior year quarter.

Adjusted after-tax income attributable to AIG common shareholders was $99 million, or $0.11 per diluted common share, for the first quarter of 2020, compared to $1.4 billion, or $1.58 per diluted common share, in the prior year quarter. The decrease was primarily due to lower net investment income driven by declines in equity markets and losses on FVO bonds from widening spreads in credit markets, and the impact of COVID-19.

Brian Duperreault, AIG’s Chief Executive Officer, said: “In the face of COVID-19, an unprecedented global catastrophe, our colleagues have shown great resilience and remain focused on what we do best, which is helping our clients manage risk, especially in difficult times.

“It has been heartbreaking to watch this humanitarian crisis unfold over the last few months. At the same time, the courage, compassion and empathy that have emerged, particularly from first responders, health care providers and others on the front lines, has been heartwarming. AIG is committed to assisting with relief efforts across the globe and will be making an inaugural $5 million contribution to our recently reinstated AIG Foundation for this purpose.

“AIG was in a strong financial position before this crisis began and remains in a strong financial position today. While we believe COVID-19 will be the single largest CAT loss the industry has ever seen, the significant body of work our team has undertaken since late 2017 has served us well as we navigate through this evolving situation. AIG is well-positioned to emerge as a global insurer of choice with significant financial flexibility.

“In the first quarter of 2020, our core businesses delivered strong results building on the momentum we had coming into the year. In General Insurance, the adjusted accident year combined ratio continued to improve, and Life and Retirement delivered solid results despite unfavorable capital markets and continued low interest rates.

“The COVID-19 crisis has created significant uncertainty, and it will take time to understand its broader ramifications. In light of this, AIG is withdrawing previously issued guidance, including that relating to Adjusted Return on Common Equity. However, we do expect to see continued improvement in General Insurance, particularly in the adjusted combined ratio, and, in Life and Retirement, we do not believe that the impact of COVID-19 will result in a material reduction of our long-term return profile.

“While the new normal COVID-19 will create for each of us is still unknown, I am confident that AIG will continue to move forward on its journey to become a top performing company and leading insurance franchise.” 

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