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AIG Reports Fourth Quarter and Full Year 2020 Results

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American International Group, Inc. (NYSE: AIG) today reported financial results for the fourth quarter and full year ended December 31, 2020.

For the full year of 2020, net loss attributable to AIG common shareholders was $6.0 billion, or $6.88 per common share, compared to net income of $3.3 billion, or $3.74 per diluted common share, in the prior year. The loss was primarily driven by a $6.7 billion after-tax loss from the sale and deconsolidation of Fortitude Group Holdings LLC (Fortitude) on June 2, 2020. The sale, for which AIG received $2.2 billion in consideration at closing, improved AIG’s risk profile and reduced exposure to long-tail runoff liabilities and related interest rate risk.

AATI was $2.2 billion, or $2.52 per diluted common share, for the full year of 2020, compared to $4.1 billion, or $4.58 per diluted common share, in the prior year. The decrease was primarily due to lower APTI from General Insurance and higher adjusted pre-tax loss (APTL) from Other Operations. The decrease in General Insurance APTI was primarily due to higher CATs including $1.1 billion of COVID-19 CATs. The increase in Other Operations APTL was primarily due to the sale of Fortitude in the second quarter of 2020, lower net investment income on available for sale fixed maturity securities, the impact of consolidated investment entities on consolidation and eliminations, and higher interest expense related to debt issuances in the second quarter of 2020.

For the fourth quarter of 2020, net loss attributable to AIG common shareholders was $60 million, or $0.07 per common share, compared to net income of $922 million, or $1.03 per diluted common share, in the prior year quarter. The loss was primarily due to $1.2 billion of after-tax net realized capital losses, principally from the non-economic impact of the non-performance risk adjustment on the fair value of variable annuity embedded derivatives, net of hedges, and from losses on other derivatives and hedges.

AATI was $827 million, or $0.94 per diluted common share, for the fourth quarter of 2020 compared to $923 million, or $1.03 per diluted common share, in the prior year quarter primarily due to higher CATs, including COVID-19 CATs, as well as unfavorable prior year loss reserve development, net of reinsurance, (PYD) partially offset by improved alternative investment returns. The decrease also reflects the sale of Fortitude in the second quarter of 2020, which had APTI of $70 million in the fourth quarter of 2019.

Total consolidated net investment income for the fourth quarter of 2020 was $4.0 billion compared to $3.6 billion in the prior year quarter. Total net investment income, APTI basis*, of $3.2 billion decreased 7%. Excluding the impact of Fortitude in the fourth quarter of 2019, fourth quarter 2020 total net investment income, APTI basis*, increased 9%, or $262 million, compared to the prior year quarter primarily reflecting higher private equity and hedge fund returns.

Brian Duperreault, AIG’s Chief Executive Officer, said: “AIG’s fourth quarter and full year 2020 operating results demonstrate the continued progress we are making to position AIG for long-term, sustainable and profitable growth. We are effectively managing the impacts of COVID-19 and natural catastrophes and remain well capitalized in this environment of unprecedented uncertainty.

“The General Insurance business continues to improve, with a 1.9 point improvement in the accident year combined ratio, as adjusted, compared to 2019 and 5.6 point improvement in the accident year combined ratio, as adjusted, compared to 2018. Life and Retirement delivered strong returns and remains well positioned to meet the ever-growing needs for protection, retirement savings and lifetime income solutions.

“As I transition into my role as Executive Chairman, I want to thank our global colleagues who have shown unyielding resilience, dedication and perseverance in their efforts to serve our clients, distribution partners, communities and other stakeholders – even as their own lives and work situations have been severely disrupted by the COVID-19 crisis. This strength of human spirit is at the core of AIG and visible in all that we do. I look forward to supporting Peter Zaffino as he becomes the next Chief Executive Officer of AIG and, along with our world-class team, continues AIG’s journey to become a top performing company and leading insurance franchise.”

Book value per common share was $76.46 as of December 31, 2020, an increase of 3.5% compared to September 30, 2020. Adjusted book value per common share was $57.01, an increase of 0.4% compared to September 30, 2020 reflecting unrealized gains on the investment portfolio. ROCE and Adjusted ROCE were (9.4)% and 4.4%, respectively, for the twelve months ended December 31, 2020 and (0.4)% and 6.7%, respectively, on an annualized basis for the fourth quarter of 2020.

As of December 31, 2020, AIG Parent liquidity stood at approximately $10.5 billion compared to $7.6 billion at December 31, 2019. In December 2020, AIG repaid $708 million aggregate principal amount of its 6.400% Notes Due 2020. AIG’s total debt and preferred stock leverage at December 31, 2020 was 28.4%. On February 1, 2021, AIG repaid $1.5 billion aggregate principal amount of its 3.300% Notes Due 2021.

Today, the Board of Directors declared a quarterly cash dividend of $0.32 per share on AIG Common Stock (NYSE: AIG), par value $2.50 per share. The dividend is payable on March 30, 2021 to stockholders of record at the close of business on March 16, 2021.

The 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 are 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, 2021 to holders of record at the close of business on February 26, 2021.

FINANCIAL SUMMARY

 

Three Months Ended

December 31,

 

 

Twelve Months Ended

December 31,

($ in millions, except per common share amounts)

 

2020

 

 

2019

 

 

 

 

2020

 

 

2019

 

Net income (loss) attributable to AIG common shareholders

$

(60

)

$

922

 

 

 

$

(5,973

)

$

3,326

 

Net income (loss) per diluted share attributable to AIG common shareholders (a)

$

(0.07

)

$

1.03

 

 

 

$

(6.88

)

$

3.74

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income (loss)

$

1,116

 

$

1,211

 

 

 

$

3,003

 

$

5,470

 

General Insurance

 

809

 

 

778

 

 

 

 

1,901

 

 

3,533

 

Life and Retirement

 

1,027

 

 

858

 

 

 

 

3,531

 

 

3,553

 

Other Operations

 

(720

)

 

(425

)

 

 

 

(2,429

)

 

(1,616

)

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

3,957

 

$

3,587

 

 

 

$

13,631

 

$

14,619

 

Net investment income, APTI basis

 

3,226

 

 

3,462

 

 

 

 

12,321

 

 

14,390

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted after-tax income attributable to AIG common shareholders

$

827

 

$

923

 

 

 

$

2,201

 

$

4,078

 

Adjusted after-tax income per diluted share attributable to AIG common shareholders

$

0.94

 

$

1.03

 

 

 

$

2.52

 

$

4.58

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted (a)

 

868.4

 

 

896.4

 

 

 

 

869.3

 

 

889.5

 

 

 

 

 

 

 

 

 

 

 

 

Return on common equity

 

(0.4

)%

 

5.7

%

 

 

 

(9.4

)%

 

5.3

%

Adjusted return on common equity

 

6.7

%

 

7.3

%

 

 

 

4.4

%

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

$

76.46

 

$

74.93

 

 

 

$

76.46

 

$

74.93

 

Adjusted book value per common share

$

57.01

 

$

58.89

 

 

 

$

57.01

 

$

58.89

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

861.6

 

 

870.0

 

 

 

 

861.6

 

 

870.0

 

(a) For periods reporting a loss, basic average common shares outstanding are used to calculate net income (loss) per diluted share attributable to AIG common shareholders. Diluted shares represent basic shares for the three- and twelve-month periods ended December 31, 2020 because we reported a net loss attributable to AIG common shareholders from continuing operations in those periods.

All comparisons are against the fourth quarter of 2019, unless otherwise indicated. Refer to the AIG Fourth Quarter 2020 Financial Supplement, which is posted on AIG's website in the Investors section, for further information.

GENERAL INSURANCE

 

Three Months Ended December 31,

 

($ in millions)

 

2020

 

 

2019

 

 

Change

Gross premiums written

$

7,135

 

$

7,306

 

 

(2

)%

 

 

 

 

 

 

 

Net premiums written

$

5,565

 

$

5,830

 

 

(5

)%

North America

 

2,361

 

 

2,639

 

 

(11

)

North America Commercial Lines

 

1,992

 

 

1,815

 

 

10

 

North America Personal Insurance

 

369

 

 

824

 

 

(55

)

International

 

3,204

 

 

3,191

 

 

-

 

International Commercial Lines

 

1,662

 

 

1,554

 

 

7

 

International Personal Insurance

 

1,542

 

 

1,637

 

 

(6

)

 

 

 

 

 

 

 

Underwriting income (loss)

$

(171

)

$

12

 

 

NM

%

North America

 

(389

)

 

(96

)

 

(305

)

North America Commercial Lines

 

(285

)

 

(188

)

 

(52

)

North America Personal Insurance

 

(104

)

 

92

 

 

NM

 

International

 

218

 

 

108

 

 

102

 

International Commercial Lines

 

138

 

 

52

 

 

165

 

International Personal Insurance

 

80

 

 

56

 

 

43

 

 

 

 

 

 

 

 

Net investment income, APTI basis

$

980

 

$

766

 

 

28

%

Adjusted pre-tax income

$

809

 

$

778

 

 

4

%

Return on adjusted segment common equity

 

7.5

%

7.2

%

0.3

pts

 

 

 

 

 

 

 

Underwriting ratios:

 

 

 

 

 

 

North America Combined Ratio (CR)

 

114.9

 

 

103.2

 

 

11.7

pts

North America Commercial Lines CR

 

112.4

 

 

108.8

 

 

3.6

 

North America Personal Insurance CR

 

133.2

 

 

88.6

 

 

44.6

 

International CR

 

93.6

 

 

96.9

 

 

(3.3

)

International Commercial Lines CR

 

92.1

 

 

96.9

 

 

(4.8

)

International Personal Insurance CR

 

95.0

 

 

96.8

 

 

(1.8

)

General Insurance (GI) CR

 

102.8

 

 

99.8

 

 

3.0

 

 

 

 

 

 

 

 

GI Loss ratio

 

70.2

 

 

65.6

 

 

4.6

pts

Less: impact on loss ratio

 

 

 

 

 

 

Catastrophe losses and reinstatement premiums

 

(9.0

)

 

(6.5

)

 

(2.5

)

Prior year development

 

(0.9

)

 

2.2

 

 

(3.1

)

Adjustments for ceded premium under reinsurance

 

 

 

 

 

 

contracts and other

 

-

 

 

0.3

 

 

(0.3

)

GI Accident year loss ratio, as adjusted

 

60.3

 

 

61.6

 

 

(1.3

)

GI Expense ratio

 

32.6

 

 

34.2

 

 

(1.6

)

GI Accident year combined ratio, as adjusted (AYCR)

 

92.9

 

 

95.8

 

 

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