Business

AIG increases profits as disaster losses shrink, insurance premiums rise


Global Insurance Group

American International Group Inc.

AIG 0.80%

announced strong first-quarter profit, benefiting from a catastrophic loss reduction, new business growth and premium increases.

One of the largest publicly traded insurance companies,

Prudential Financial Inc.,

PRU 1.22%

swirled in a net loss of $31 million in the quarter from a net profit of $2.83 billion the year before, while its closely watched operating income fell 25% to $1.22 billion. The life insurer recognized a net realized investment loss and related charges that reflected increased interest rates during the period, while the prior quarter included substantial realized investment gains, among the differences. difference between other years.

The AIG results reflect the company’s changing business in selling property accident insurance to corporate clients worldwide. The overhaul was spearheaded by Peter Zaffino, who took over as chief executive in the first quarter of the year. AIG is also an insurance company for wealthy households

AIG reported net income of $4.25 billion, up 9.9% from $3.87 billion in the first quarter, while its closely watched adjusted after-tax income rose 16%, to $1.07 billion from $923 million. Wall Street analysts track adjusted figures, excluding items deemed non-repeating. AIG’s net income for both periods includes realized profits tied to a reinsurer in which it holds a minority stake.

AIG cites growth on its Global Trade Chains, which are policies that sell to corporate clients, including over $1 billion in new contracts for the fourth consecutive quarter, retention rates Existing customers increased sharply and the rate of increase of 9%.

In addition to improving financial results, AIG also detailed additional preparatory steps in its plan to separate the retirement business from the rest of the company. AIG will suspend its casualty-property operations when the split occurs mid-year. In late March, AIG announced the new company would be called Corebridge Financial. On the same day, AIG enter into a partnership with

Black stones Inc.,

will manage up to $150 billion in assets for AIG and Corebridge.

The BackRock deal follows a deal last year in which the company invested

Slat Inc.

bought a 9.9% stake in the life insurance and retirement services unit for $2.2 billion in cash and will manage some of its assets.

The AIG results show less impact of the Covid-19 pandemic than in previous quarters. AIG said stronger travel demand has boosted premium sales in the company’s travel insurance business.

Prudential said its adjusted first-quarter operating income fell to $1.22 billion from $1.62 billion. Most of the drop was at the company’s global wealth management unit PGIM, where adjusted operating income before tax fell 71% from $651 million to $188 million. Prudential cited factors including lower revenue from sources including “seed and co-investment income and incentive fees,” as well as higher costs.

U.S. businesses reported pre-tax adjusted operating income of $943 million, up 12%. Units with improvement include the business of selling group life insurance and other employee benefits, as well as the individual life insurance business. Those activities have already had high death tolls related to the pandemic.

Its online data science insurance agency Assurance IQ report a smaller loss before taxes, at $37 million, compared with a loss of $39 million in the previous quarter.

Overall, AIG and other U.S. property damage insurers suffered fewer catastrophic losses in the first quarter of this year than they did a year earlier. In 2021, persistent February cold weather in Texas and other states caused pipelines to freeze unexpectedly, resulting in widespread water damage.

In the first quarter of this year, disasters included wind storms in Europe, an earthquake in Japan and flooding in Australia. AIG said its results included $274 million in disaster costs, mainly due to flooding in Australia, compared with $422 million in the previous quarter.

Write to Leslie Scism at [email protected]

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