10-QPeriod: Q2 FY2022

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 9, 2022For Securities:AIG

Summary

American International Group, Inc. (AIG) reported a substantial increase in net income attributable to AIG common shareholders for the second quarter of 2022, reaching $3.03 billion ($3.78 diluted EPS), a significant jump from $91 million ($0.11 diluted EPS) in the same period last year. This performance was largely driven by a substantial increase in net realized gains, particularly from Fortitude Re's embedded derivatives and other hedging activities, which significantly boosted overall revenues. General Insurance segment demonstrated strong underwriting income, driven by higher premiums and improved loss ratios across both North America and International operations. However, the Life and Retirement segment experienced a significant decrease in adjusted pre-tax income, primarily due to lower net investment income and unfavorable impacts from lower variable annuity separate account returns and negative equity market performance. The company continues to navigate challenging market conditions, including rising interest rates and inflationary pressures, which have impacted investment valuations and fee income. Despite these headwinds, AIG is progressing with its strategic separation of the Life and Retirement business and its investment management agreements with BlackRock, aiming to enhance operational efficiency and financial flexibility.

Financial Highlights

32 data points
Beta

Revenue

$13.66B

Net Income

$2.75B

20.2% Net Margin

EPS (Diluted)

$3.43

Total Assets

$538.94B

Cash & Equivalents

$2.38B

Free Cash Flow

$559.00M

Financial Statements
Beta
Revenue$13.66B
SG&A Expenses$2.21B
Interest Expense$266.00M
Net Income$2.75B
EPS (Basic)$3.47
EPS (Diluted)$3.43
Shares Outstanding (Basic)790.90M
Shares Outstanding (Diluted)800.73M

Key Highlights

  • 1Net income attributable to AIG common shareholders surged to $3.03 billion ($3.78 diluted EPS) in Q2 2022, a significant improvement from $91 million ($0.11 diluted EPS) in Q2 2021.
  • 2Total revenues increased by 35% year-over-year, reaching $14.44 billion, driven by a substantial increase in net realized gains.
  • 3General Insurance segment reported strong underwriting income of $799 million, a 73% increase year-over-year, with a combined ratio of 87.4%.
  • 4Life and Retirement segment's adjusted pre-tax income decreased by 50% to $563 million, impacted by lower net investment income and equity market performance.
  • 5The company repurchased approximately $3.1 billion of AIG Common Stock during the first six months of 2022.
  • 6AIG's total investments decreased to $315.1 billion at June 30, 2022, from $359.3 billion at December 31, 2021, reflecting market valuations and strategic actions.
  • 7The company's total equity decreased to $46.8 billion from $68.9 billion, largely due to significant changes in accumulated other comprehensive income (loss) driven by market conditions.

Frequently Asked Questions

The substantial increase in net income was primarily driven by a significant rise in net realized gains, notably from Fortitude Re's embedded derivatives and other derivative and hedge activities, which were positively impacted by interest rate movements and market conditions. This boost in realized gains significantly outweighed the decline in net investment income.

The Life and Retirement segment was negatively impacted by the challenging market environment. Lower variable annuity separate account returns, due to negative equity market performance and rising interest rates, led to accelerated amortization of deferred policy acquisition costs and higher policyholder benefits. This, combined with lower net investment income, resulted in a significant decrease in adjusted pre-tax income for the segment.

AIG announced its intention to separate its Life and Retirement business. On November 2, 2021, Blackstone acquired a 9.9% stake in Corebridge Financial, Inc., the holding company for AIG's Life and Retirement business. AIG continues to believe an Initial Public Offering (IPO) of Corebridge is the next step in this separation, though the timing and specific terms are subject to various conditions and approvals.

AIG continued to manage its debt by repurchasing and redeeming approximately $7.6 billion aggregate principal amount of certain notes and debentures for an aggregate purchase price of $7.8 billion during the first six months of 2022. This resulted in a loss on extinguishment of debt of $299 million.