American International Group Inc. saw double-digit rate hikes on many lines in the second quarter, including a nearly 40% increase in cyber-liability insurance rates, the insurer's chief executive said on Friday.
AIG also made progress in its plans to separate its life and retirement operations from its real estate / accident operations during the quarter and is likely to increase the size of the first public offering for the life and pension unit, said Peter Zaffino, President and CEO of AIG , in a second quarter results conference call with analysts.
Global insurance rates rose by 13% year-on-year during the second quarter, he said.
Commercial interest rates in North America increased by 1
International trade interest rates also rose 13%, Zaffino said.
Across AIG's global portfolio, the largest rate hikes in cyber liability insurance, where prices rose nearly 40%, were the largest rate hikes in North America, he said.
"We continue to carefully reduce cyber boundaries and have stricter conditions for dealing with increasing cyber loss trends, the growing threat associated with ransomware and the systemic nature of cyber risk in general," said Zaffino.
AIG Re, the insurer's reinsurance business, reported an increase of more than 30% in net premiums during the second quarter. The increase in the reinsurance rate in US real estate disasters ranged from "mid-single digits to up to 25%," Zaffino said.
Validus Re, which AIG acquired in 2018, reduced its Florida net worth by 40% in renewals on June 1, as AIG continues to relocate operations to focus on regional and nationwide insurance companies in the United States and increased international diversification, he said.
At the same time, AIG's planned separation of its life and retirement operations continues after the announcement in July that it had agreed to sell a 9.9% stake in the unit to Blackstone Group Inc. for $ 2.2 billion. A Blackstone subsidiary also agreed to buy AIG's portfolio of affordable homes in the United States for $ 5.1 billion.
AIG is still planning an IPO for the life and pension unit, which is likely to take place in the first quarter of 2022, Zaffino said. When AIG announced the planned IPO in October last year, AIG said only 19.9% of the unit would retain certain foreign tax credits that it benefits from. to sell more than 19.9% because we now expect to make full use of our foreign tax credits by 2022, says Zaffino.
AIG reported a net profit of $ 91 million in the second quarter, compared to a loss of $ 7.94 billion in the same period last year, which was affected by the sale of the runoff reinsurance company Fortitude Group Holdings.
In its main real estate / accident unit, AIG reported a written premium of $ 6.86 billion in the second quarter, an increase of 23.6% over the period 2020.
Commercial companies in North America reported $ 2.66 billion in net writing premium, an increase of 15.3%. New business increased by 25% from the previous year's quarter, led by financial and surplus business, Zaffino said.
International commercial companies reported $ 2.06 billion in net premiums written during the quarter, an increase of 16.6% over the same period last year.
AIG reported a combined ratio of 92.5% for the quarter, compared to 106% a year earlier. Disaster losses were $ 118 million in the second quarter, compared to $ 674 million the previous year.