American International Group Inc.'s full-year underwriting results for 2022 were impressive but seemed to have little effect on the company's share price in what was a flat week overall for U.S.-listed insurers.
AIG's stock slipped 0.82% for the week ending Feb. 17, more or less mirroring the S&P 500 Insurance index, which was down 0.61%. The broader S&P 500 index inched down 0.28%, finishing the week at 4,079.09.
It has been an up-and-down year for AIG's shares, which opened at $64.55 on Jan. 3, then fell by more than 9% over the next month. The stock has clawed back a chunk of those losses but is still down about 2% for the year.
Underwriting culture
AIG CEO Peter Zaffino during an earnings conference call said the culture of underwriting excellence initiated in 2018 was critical to the underwriting income turnaround the insurer has seen in the last few years. Zaffino touted "portfolio optimization [and] prudent risk selection" as catalysts for the improvement in its general insurance sector.
The insurer reported record underwriting income of $2.0 billion in 2022, up sharply from the $1.05 billion posted in 2021. Fourth-quarter 2022 numbers were also solid, as underwriting income rose 27% to $635 million from $499 million in the final period of 2021.
Net income results available to common shareholders plunged nearly 93% year over year in the fourth quarter of 2022, but full-year net income actually climbed to $10.24 billion from $9.36 billion in 2021.
Reinsurance revisions
Zaffino described the most recently completed reinsurance renewal season as the most challenging he has seen in his career. AIG made a number of changes to its North American property catastrophe treaties to reflect a changing portfolio during the period, Zaffino said. It also retained its commercial catastrophe portfolio attaching at $500 million and has an attachment point of $300 million for Lexington Insurance Co., which focuses on commercial lines.
Overall, the company acquired more limit than it purchased in 2022. Zaffino said it has the lowest attachment points "on a return period measurement" for North America windstorm and earthquake compared to other primary carriers.
New venture
AIG also made news on Feb. 13 when it to form an independent managing general agency with Stone Point Capital LLC to form an independent managing general agency. The partnership will allow Stone Point to underwrite on behalf of AIG in high and ultra-high net worth markets.
As part of the agreement, AIG's Private Client Group LLC will be a part of the new venture and will be rebranded as Private Client Select Insurance Services.
