Why did GAAP EPS fall so sharply from $2.81 to $0.71 when the business appears to be performing well?

The prior-year quarter included Corebridge's consolidated results as discontinued operations, which contributed substantial income. After AIG deconsolidated Corebridge (with fair value accounting applied after June 9, 2024), that income no longer flows through GAAP net income in the same way, and the change is reflected in discontinued operations. AIG's adjusted after-tax income, which excludes these items, rose 18% to $1.23 per diluted share, making it the better gauge of operating performance.

How much of the quarter's underwriting pressure came from catastrophes versus underlying performance?

Catastrophe charges of $417 million represented 6.9 loss ratio points, the same level as the prior year, so the deterioration in the combined ratio was not driven by catastrophes alone. The accident year combined ratio, as adjusted (which excludes cats and prior-year development), rose to 88.3% from 86.9% on a comparable basis, mainly due to higher loss ratios in North America Commercial Lines (a large closeout transaction contributed a 70 basis point headwind) and in International Commercial Lines, along with lower favorable prior-year development.

Is AIG's shareholder return sustainable at this pace?

AIG returned about $1.8 billion in the quarter and more than $6 billion over the first nine months. Management cites a total debt-to-capital ratio of 17.9% and parent liquidity of $4.2 billion as evidence of balance sheet capacity. The $0.40 quarterly dividend is maintained, and the buyback pace in Q3 (roughly 20 million shares) reduced the diluted share count to 647.4 million from 718.7 million a year earlier. Investors should note that the filing does not provide forward guidance on future buyback levels.

What drove growth in General Insurance, and where was it weaker?

Growth was led by Global Commercial Lines, which rose 7% on a comparable basis, with North America Commercial Lines up 11% (new business up 22%, Lexington Insurance up 24%) and International Commercial Lines up 3%. North America Personal Insurance grew 4% and International Personal Insurance grew 3% on a comparable basis. Financial Lines in International Commercial Lines faced continued pricing pressure, and reported NPW declined 1% overall due to the 2023 Validus Re divestiture.

What is the impact of the Corebridge accounting change on future earnings?

After June 9, 2024, AIG accounts for its retained Corebridge interest as an equity-method investment carried at Corebridge's stock price. Corebridge dividends and stock price changes flow through net investment income in GAAP results, but AATI includes only the dividends and excludes fair value changes. This creates GAAP earnings volatility tied to Corebridge's share price, which investors should monitor separately from the core underwriting results.

AIG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 4, 2024. Cited figures are marked; the original filing is the authoritative source.

AIG reported third quarter 2024 results on November 4, 2024, led by a strong operating picture and substantial capital return.

Adjusted after-tax income (AATI) per diluted share rose 18% year-over-year to $1.23^a (up 31% on a comparable basis excluding the 2023 Validus Re sale), while GAAP net income per diluted share fell to $0.71 from $2.81. The GAAP decline is primarily due to the prior-year inclusion of Corebridge results as discontinued operations and the accounting change following AIG's deconsolidation of Corebridge in June 2024, not a deterioration in the core business. Adjusted book value per share was $73.90, and book value per share was $71.46.

General Insurance net premiums written were $6.4 billion^b, down 1% as reported but up 6% on a comparable basis, led by 7% growth in Global Commercial Lines and 11% growth in North America Commercial Lines. New business in Global Commercial Lines reached $1.1 billion, up 9%, with retention of 88%. Underwriting profitability was solid but softened: the combined ratio rose to 92.6% from 90.2% on a comparable basis, driven by $417 million of catastrophe charges (6.9 loss ratio points), while the accident year combined ratio, as adjusted, was 88.3%, up from 86.9%.

Favorable prior-year development of $165 million^c partly offset the cat load. AIG returned approximately $1.8 billion to shareholders in the quarter ($1.5 billion of buybacks, roughly 20 million shares, and $254 million of dividends), and over $6 billion year-to-date. The board declared a quarterly dividend of $0.40 per share, payable December 30, 2024 to holders of record on December 16, 2024.

Parent liquidity stood at $4.2 billion^d and the total debt-to-capital ratio was 17.9%. Other Operations improved by $135 million, helped by $125 million of net investment income including Corebridge dividends and by lower operating and interest expenses.

02—Key points

Key Highlights

Adjusted after-tax income per diluted share of $1.23, up 18% year-over-year (31% on a comparable basis), versus GAAP EPS of $0.71 that was depressed by the Corebridge deconsolidation accounting change.
General Insurance NPW of $6.4 billion: down 1% reported, up 6% comparable; Global Commercial Lines up 7% comparable with $1.1 billion of new business (+9%) and 88% retention.
Combined ratio rose to 92.6% (from 90.2% comparable) on $417 million of catastrophe charges; accident year combined ratio, as adjusted, was 88.3%.
Capital return of about $1.8 billion in Q3 ($1.5 billion buybacks, $254 million dividends) and over $6 billion year-to-date.
Quarterly dividend declared at $0.40 per share, payable December 30, 2024 to holders of record as of December 16, 2024.
Balance sheet remains strong: total debt-to-capital of 17.9%, parent liquidity of $4.2 billion, and adjusted book value per share of $73.90.
Other Operations adjusted pre-tax loss narrowed to $143 million from $278 million, aided by Corebridge dividend income and AIG Next expense savings.

03—Questions

Frequently Asked Questions

Why did GAAP EPS fall so sharply from $2.81 to $0.71 when the business appears to be performing well?
The prior-year quarter included Corebridge's consolidated results as discontinued operations, which contributed substantial income. After AIG deconsolidated Corebridge (with fair value accounting applied after June 9, 2024), that income no longer flows through GAAP net income in the same way, and the change is reflected in discontinued operations. AIG's adjusted after-tax income, which excludes these items, rose 18% to $1.23 per diluted share, making it the better gauge of operating performance.
How much of the quarter's underwriting pressure came from catastrophes versus underlying performance?
Catastrophe charges of $417 million represented 6.9 loss ratio points, the same level as the prior year, so the deterioration in the combined ratio was not driven by catastrophes alone. The accident year combined ratio, as adjusted (which excludes cats and prior-year development), rose to 88.3% from 86.9% on a comparable basis, mainly due to higher loss ratios in North America Commercial Lines (a large closeout transaction contributed a 70 basis point headwind) and in International Commercial Lines, along with lower favorable prior-year development.
Is AIG's shareholder return sustainable at this pace?
AIG returned about $1.8 billion in the quarter and more than $6 billion over the first nine months. Management cites a total debt-to-capital ratio of 17.9% and parent liquidity of $4.2 billion as evidence of balance sheet capacity. The $0.40 quarterly dividend is maintained, and the buyback pace in Q3 (roughly 20 million shares) reduced the diluted share count to 647.4 million from 718.7 million a year earlier. Investors should note that the filing does not provide forward guidance on future buyback levels.
What drove growth in General Insurance, and where was it weaker?
Growth was led by Global Commercial Lines, which rose 7% on a comparable basis, with North America Commercial Lines up 11% (new business up 22%, Lexington Insurance up 24%) and International Commercial Lines up 3%. North America Personal Insurance grew 4% and International Personal Insurance grew 3% on a comparable basis. Financial Lines in International Commercial Lines faced continued pricing pressure, and reported NPW declined 1% overall due to the 2023 Validus Re divestiture.
What is the impact of the Corebridge accounting change on future earnings?
After June 9, 2024, AIG accounts for its retained Corebridge interest as an equity-method investment carried at Corebridge's stock price. Corebridge dividends and stock price changes flow through net investment income in GAAP results, but AATI includes only the dividends and excludes fair value changes. This creates GAAP earnings volatility tied to Corebridge's share price, which investors should monitor separately from the core underwriting results.

04—Continue

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