01—Abstract
Summary
Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
AIG reported second quarter 2024 results on July 31, 2024, dominated by the accounting effects of completing the deconsolidation of Corebridge Financial (effective June 9, 2024).
Because of the deconsolidation, AIG recorded a $4.7 billiona loss within discontinued operations, producing a GAAP net loss attributable to common shareholders of $4.0 billion, or $5.96 per diluted share, versus net income of $2.03 a year earlier. Investors should focus on the adjusted metrics: adjusted after-tax income (AATI) was $775 million, or $1.16 per diluted share, up 9% year-over-year (38% on a comparable basis excluding 2023 divestitures), and General Insurance's accident year combined ratio, as adjusted, improved 40 basis points to 87.6%. Reported General Insurance net premiums written fell 8% to $6.9 billion because of 2023 divestitures, but grew 7% on a comparable basis, led by 10% growth in North America Commercial Lines and record Commercial Lines new business of $1.3 billion.
Capital return remained substantial. AIG returned almost $2.0 billionb to shareholders in the quarter, including $1.7 billion of buybacks (about 22 million shares) and $261 million of dividends, and it executed nearly $5 billion of capital actions in the first half. Shares outstanding fell to 649.8 million from 717.5 million a year earlier.
The company reported a total debt-to-capital ratio of 18.1% and parent liquidity of $5.3 billionc. Book value per share rose to $68.40, while adjusted book value per share declined to $72.78 as Investments AOCI shrank. The board declared a quarterly dividend of $0.40 per share, payable September 30, 2024.
Going forward, the post-deconsolidation earnings profile will include Corebridge dividends in net investment income, with changes in Corebridge's stock price excluded from adjusted pre-tax income. The headline catastrophe loss ratio of 5.7 points and the mix shift in North America Commercial Lines, where the combined ratio rose to 90.2%d, are the main operating watch items. GAAP volatility will persist as AIG's retained Corebridge stake is marked to market.
02—Key points
Key Highlights
- GAAP net loss attributable to AIG common shareholders of $4.0 billion ($5.96 per diluted share), driven by a $4.7 billion loss from the Corebridge deconsolidation recorded in discontinued operations.
- Adjusted after-tax income per diluted share of $1.16, up 9% year-over-year and 38% on a comparable basis excluding 2023 divestitures.
- General Insurance NPW of $6.9 billion, down 8% reported but up 7% comparable, with North America Commercial Lines up 10% and record Commercial Lines new business of $1.3 billion (up 18%).
- General Insurance accident year combined ratio, as adjusted, improved 40 basis points to 87.6%; reported combined ratio rose 160 basis points to 92.5% on 180 basis points higher catastrophe losses (5.7 points).
- Returned almost $2.0 billion to shareholders in Q2 ($1.7 billion buybacks of about 22 million shares, $261 million dividends); nearly $5 billion of total capital actions in the first half of 2024.
- Balance sheet: total debt-to-capital of 18.1%, parent liquidity of $5.3 billion, book value per share of $68.40 and tangible book value per share of $62.56.
- Declared a quarterly cash dividend of $0.40 per share, payable September 30, 2024 to holders of record on September 16, 2024.
03—Questions
Frequently Asked Questions
Why did AIG report a large GAAP net loss in the second quarter of 2024?
The $4.0 billion net loss (or $5.96 per diluted share) reflects a $4.7 billion loss recognized on the deconsolidation of Corebridge. That loss is the gain on retained Corebridge assets ($2.5 billion) offset by recognition of $7.2 billion of accumulated other comprehensive loss tied to AIG's share of Corebridge, and it is recorded in discontinued operations. It is largely an accounting event rather than a measure of underlying operating performance.
What metric should investors use to assess AIG's underlying earnings?
Management emphasizes adjusted after-tax income (AATI), which was $775 million, or $1.16 per diluted share, in Q2 2024, compared with $1.06 a year earlier. AATI excludes items such as Corebridge stock price changes, realized gains and losses, restructuring costs, and discontinued operations. Because 2023 included divested businesses, the company also presents comparable-basis growth, which shows a 38% increase.
How is AIG's underwriting performance trending?
On an accident year basis, as adjusted, the General Insurance combined ratio improved 40 basis points to 87.6%, and it improved 170 basis points on a comparable basis. Reported combined ratio worsened 160 basis points to 92.5%, mainly due to higher catastrophe losses of 5.7 points and a higher loss ratio from business mix changes in North America Commercial Lines, where the combined ratio rose to 90.2%.
How will Corebridge affect AIG's earnings going forward?
After deconsolidation, AIG carries its retained Corebridge stake as an equity method investment at fair value using Corebridge's stock price. Corebridge dividends are recognized in net investment income and included in adjusted pre-tax income, while changes in Corebridge's stock price flow through GAAP results but are excluded from adjusted pre-tax income. GAAP earnings may therefore be volatile as Corebridge's share price moves, even though adjusted results are less affected.
Is AIG's capital return program and dividend secure?
AIG returned about $2.0 billion to shareholders in Q2 2024 and nearly $5 billion of capital actions in the first half. It ended the quarter with $5.3 billion of parent liquidity and an 18.1% total debt-to-capital ratio, and the board declared a $0.40 quarterly dividend payable September 30, 2024. Share count fell to 649.8 million from 717.5 million a year earlier, which supports per-share metrics, though future buybacks depend on capital and liquidity conditions.
04—Continue