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One of the world’s biggest insurers said it had “excellent” Q4 2023 and full year 2023 results.
AIG, which released its results on Wednesday, was buoyant about its numbers, which showed high increases year-on-year from 2022 to 2023.
AIG’s total net investment income for Q4 2023 was $3.9 billion, an increase of 21% from $3.3 billion in the prior year quarter, primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates, partially offset by lower returns on alternative investments, it said.
Total net investment income on an adjusted pre-tax income basis was $3.5 billion, an increase of $499 million from the prior year quarter, reflecting the same trends.
For its full year 2023 results, the net investment income was $14.6 billion, which was up considerably from 2022’s $11.8 billion.
On an adjusted pre-tax income basis, the net investment income for 2023 was $13.1 billion, while in 2022 it had been $11 billion.
In Q3 2023, the total net investment income was $3.6 billion, an increase of 33% from $2.7 billion in the prior year quarter. This was primarily driven by higher income from fixed maturity securities and loans due to higher reinvestment rates and improved alternative investment income compared to losses from both the hedge fund and private equity portfolios in the prior year quarter.
AIG said its general insurance net premiums written increased 5% year-over-year, or 7% on a comparable basis from 2022 to 2023.
General insurance underwriting income was up 15% to $2.3 billion, driven by global commercial lines, which increased 25% year-over-year.
“Base net investment income continued to see favourable outcomes from the higher interest rate environment and, for the full-year 2023, Individual and Group Retirement produced a 46-basis point expansion in base spread year-over-year,” said AIG's Chairman & Chief Executive Officer Peter Zaffino in the company’s official statement on the results. “AIG’s strong performance and strategic actions in 2023 supported our sustained and balanced capital management strategy. We maintained financial flexibility while reducing financial debt by $1.4 billion.”
Adjusted after-tax income was $4.9 billion for the full year of 2023 compared to $4 billion in the prior year.
“The increase in adjusted after-tax income was due to higher underwriting income and net investment income in General Insurance,” it said.
In Q2 last year, AIG said its investments were increasing in returns and had benefited from higher income from fixed maturity securities and loan portfolios due to the higher reinvestment rates on new investments and floating rate securities.
Almost all of the major US insurers have so far released impressive investment returns with several also saying they had seen strong or ‘record’ underwriting results.
Much of this will come from strong fixed income returns, which will be driven by a red-hot US real estate market and a strong labour market that has barely seen a dent in employment figures despite concerns about inflation. Inflation has largely been dampened to a heightened but more moderate 4.1 average for 2023, and an unexpectedly robust overall economic performance in 2023.
At the end of January, the US Commerce Department’s Bureau of Economic Analysis (BEA) reported fourth quarter real gross domestic product (GDP) increased at an annual rate of 3.3% in the fourth quarter of 2023, which it said exceeded expectations. “Growth was in large part due to an increase in Americans making and spending more. In addition, the economy added 2.7 million jobs in 2023,” it said.
Several major insurers have released their results so far, while others, such as Progressive, are still due later this month.
W.R. Berkley said its full-year net investment income grew 35.1% to a record $1.1 billion.
In January, Travelers, the traditional first announcer of US insurance companies, published its full-year 2023 and Q4 2023 results, saying it saw losses for its investments in Q4: net realised investment losses were $11 million pre-tax ($7 million after-tax), compared to net realised investment gains of $7 million pre-tax ($9 million after-tax) in the prior year quarter.
For the full year, it saw a net realised investment loss of $81 million compared to a loss of $156 million for 2022. Net investment income for Q4 2023 was $778 million and for the full year was $2.92 billion, an increase of $360 million from 2022.
Allstate’s full-year net investment income was $2.478 billion compared to $2.403 billion in 2022. For Q4, the net investment income was $604 million in 2023, compared to $557 million in 2022.
For Q4, that was an increase was 30.2%, compared to the prior year quarter, which Allstate said was “reflecting higher yields in the $48.9 billion fixed income portfolio”.
Chubb’s Q4 2023 pre-tax net investment income was $1.37 billion, up 30.2%, and adjusted net investment income was $1.49 billion, up 33%.
For full-year 2023, pre-tax net investment income was $4.94 billion, up 31.9%, and adjusted net investment income was $5.34 billion, up 32.8%.
