American International Group reported higher profits on lower catastrophe losses for the third quarter, during which it also announced two significant transactions.
The commercial insurance rating landscape remains split, with some casualty line rates still increasing while property faces downward pressure, according to the company’s executives.
The insurer also accelerated its use of generative artificial intelligence to incorporate more of its underwriting operations, Chairman and CEO Peter Zaffino said during the company’s earnings call Wednesday with analysts.
AIG reported $519 million in net income for the quarter, a 7.9% increase from the same period last year. Catastrophe losses and related charges were $100 million for the period, down from $417 million in last year’s third quarter.
The insurer reported general insurance net premiums written of $6.23 billion, a 2.4% decline from the same period last year. A close-out transaction in AIG’s casualty portfolio boosted premiums in the third quarter of 2024, Mr. Zaffino said.
AIG’s combined ratio improved to 86.8%, from 92.6% in the same period last year.
Its North America commercial division reported $2.44 billion in net premiums written, down less than 1%, and the combined ratio improved to 82.6% from 95.5%.
AIG’s North American commercial division saw renewal rate increases of 5% overall, said Chief Financial Officer Keith Walsh.
In casualty, retail excess casualty rates were up 13%, wholesale casualty rates were up 14% and financial lines were down 2%, he said.
The North American property insurance market “remains challenging” for insurers, Mr. Walsh said, but he did not give specifics on rate decreases.
AIG had an “incredibly busy” third quarter, ending last week with announcements that it had teamed up with asset manager Onex in a deal to buy specialty insurer Convex and that it had agreed to buy renewal rights for rival Everest Group’s retail insurance business.
As part of AIG’s investment in Onex, the company has agreed to invest $2 billion over three years through the firm, “which will provide us with a broader view of opportunities and deepen our market position within the global insurance industry,” Mr. Zaffino said.
Everest’s property and financial lines books have performed well, and problems with its casualty book have largely been dealt with, he said.
About 80% of the adverse development in Everest’s casualty book was for policies that have not been renewed, Mr. Zaffino said.
“We will complete our own assessment, but believe they’ve done a very good job of remediating the portfolio. We have extensive experience repositioning portfolios, particularly in casualty,” he said.
AIG is accelerating its deployment of generative artificial intelligence, Mr. Zaffino said.
It started rolling out its “AIG assist” AI tool for part of its financial lines book last year, deploying it for its middle market excess and surplus lines business written through Lexington in the third quarter. The company plans to expand it to the rest of Lexington by the end of 2025, he said.
“For Lexington in particular, speed drives growth,” Mr. Zaffino said, noting that without AI, AIG cannot process all the submissions it receives.
