Deconsolidation drags down AIG's earnings

Deconsolidation drags down AIG’s earnings | Insurance Business New Zealand

Insurance News

Deconsolidation drags down AIG’s earnings

Chair and CEO still calls quarter “outstanding” despite loss

Insurance News

By
Terry Gangcuangco

American International Group (AIG) has released its earnings report for the three months ended June 30 – a period described by AIG chair and chief executive Peter Zaffino (pictured) as an “outstanding” quarter despite the net loss attributable to common shareholders.

Here are the numbers for AIG in the quarter:

Metric

Q2 2024

Q2 2023

Income attributable to AIG common shareholders from continuing operations

US$475 million

US$833 million

Net income (loss) attributable to AIG common shareholders

US$(3.98 billion)

US$1.49 billion

Net investment income

US$990 million

US$837 million

Adjusted after-tax income attributable to AIG common shareholders

US$775 million

US$777 million

Explaining the negative result, the global insurer noted: “AIG recognised a loss of US$4.7 billion as a result of Corebridge deconsolidation driven by a gain of US$2.5 billion from Corebridge assets retained offset by the recognition of an accumulated other comprehensive loss (AOCL) of US$7.2 billion, which represents the proportional recognition of the remaining 48.4% ownership stake of AOCL of Corebridge as of June 9, 2024 (deconsolidation date).

“The loss is recorded as a component of discontinued operations. Following the deconsolidation of Corebridge, the historical financial results of Corebridge, for all periods presented, are reflected in AIG’s condensed consolidated financial statements as discontinued operations in accordance with generally accepted accounting principles in the US.”

It’s the abovementioned recognition of the US$4.7 billion loss that was cited as the main culprit for the net loss attributable to AIG common shareholders.

Despite the hit from the deconsolidation, Zaffino was pleased with how the company performed.

“AIG had an outstanding second quarter and delivered terrific underwriting results across all of our businesses,” he commented. “The quarter marked one of the most notable accomplishments in AIG’s history with the deconsolidation of Corebridge, a process which began in 2020 and significantly advanced our multi-year strategy to position AIG for the future.

“The core fundamentals were exceptional in a quarter that included the complex accounting treatment of deconsolidation along with prior year divestitures. We are very pleased with the ongoing improvement in our underwriting income, record commercial lines new business of US$1.3 billion, and very strong retention.”

The CEO went on to highlight AIG’s sustainable earnings growth and strong insurance subsidiary capital and parent liquidity.

Zaffino said: “We executed nearly US$5 billion of capital management actions in the first half of 2024, including US$500 million of preferred stock redemption, US$459 million of debt repayment, US$3.3 billion of share repurchases, and US$511 million of dividend payments. We ended the quarter with an outstanding total debt-to-capital ratio of 18.1% along with parent liquidity of US$5.3 billion and an exceptionally strong balance sheet.

“We enter the back half of 2024 with significant momentum focused on enhancing our leadership in the market. I want to thank our colleagues around the world for their hard work and dedication on behalf of our clients, distribution partners, and stakeholders.”

What do you think about this story? Share your thoughts in the comments below.