Global insurer AIG expects its 2025 calendar year combined ratio to come in the same or lower than the one reported in 2023, mainly as the result of actions taken as part of its AIG Next reorganization and expense reduction program.
This news follows the insurer’s release of its second quarter financial results, where it reported a net loss of $4bn, driven by the recognition of a loss as a result of Corebridge deconsolidation.
With the deconsolidation of Corebridge completed, as well as the sale of its travel business, expected to be finished by the end of 2024, AIG is looking to further accelerate the realisation of additional operational efficiencies by leveraging its AIG Next program, launched at the beginning of 2024.
“As part of the AIG next program, we’re redefining our existing retained parent costs to reflect only expenses related to being a global regulated public company, such as cost related to corporate governance, enterprise risk management and audit,” Peter Zaffino, Chairman & Chief Executive Officer of AIG, explained.
He continued: “Our objective is to decrease retained parent cost of $325 to $350 million, or one to one and a half percent of net premiums earned going forward. Expenses not defined as parent company cost will be fully embedded within the general insurance results or they’ll be redundant.
“All the factors being equal. We would expect our full year 2025 calendar year combined ratio to be the same or lower than the full year 2023 metric on a comparable basis as a result of the actions taken as part of AIG Next.”
The CEO noted that this guidance, in terms of what AIG expects for the full year 2025, does not contemplate any improvement in loss ratio, as it is all in the expense ratio.
He concluded: “We’re trying to guide everybody to, is that all the expenses that exist in other operations will transition into parent, they’ll go into the business or they’ll be eliminated.
“We’re also trying to communicate that we’re not going to be increasing our combined ratios based on the guidance that we gave at the end of 2023, so we’re not anticipating any caveats on loss ratios to be able to meet that guidance.”
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