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AIG Boosts Profit as Catastrophe Losses Narrow

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Global insurance conglomerate

American International Group Inc.


AIG 0.80%

posted strong gains in first-quarter profit, benefiting from reduced catastrophe losses, growth in new business and premium-rate increases.

Another of the biggest publicly traded insurers,

Prudential Financial Inc.,


PRU 1.22%

swung to a $31 million net loss for the quarter from a year-earlier $2.83 billion net profit, while its closely watched operating income fell 25%, to $1.22 billion. The life insurer booked net realized investment losses and related charges reflecting rising interest rates during the period, while the year-earlier quarter included substantial realized investment gains, among other year-over-year differences. 

The AIG results reflected the turnaround of the company’s business of selling property-casualty insurance to corporate clients world-wide. The overhaul has been led by

Peter Zaffino,

who took over as chief executive in the year-earlier quarter. AIG is also an insurer of wealthy households

AIG reported net income of $4.25 billion, up 9.9% from $3.87 billion in the year-earlier quarter, while its closely watched adjusted after-tax income jumped 16%, to $1.07 billion from $923 million. Wall Street analysts track the adjusted figures, which exclude items considered nonrecurring. AIG’s net income for both periods includes realized gains tied to a reinsurer in which it holds a minority stake.

AIG cited growth across its Global Commercial Lines, which are policies sold to business clients, including more than $1 billion of new contracts for the fourth consecutive quarter, strong retention of existing clients and 9% rate increases.

Aside from the improvement in financial results, AIG also detailed additional preparations in the planned separation of its life-and-retirement business from the rest of the company. AIG will be left with its property-casualty operation when the split occurs in the middle of this year. In late March, AIG announced the new company will be called Corebridge Financial. The same day, AIG entered into a partnership with

BlackRock Inc.,

which will manage up to $150 billion of assets for AIG and Corebridge.

The BackRock arrangement follows a deal last year in which the investment firm

Blackstone Inc.

purchased a 9.9% equity stake in the life-insurance and retirement-services unit for $2.2 billion in cash and will manage some of its assets.

AIG’s results showed fewer Covid-19 pandemic effects than in previous quarters. AIG said that more-robust demand in travel drove a strong increase in premium volume in its business of selling travel insurance.

Prudential said its after-tax adjusted first-quarter operating income fell to $1.22 billion from $1.62 billion. Much of the decline was in the company’s PGIM global asset-management unit, where adjusted operating income before taxes declined 71% to $188 million from $651 million. Prudential cited factors including lower revenues from sources including “seed and co-investment income and incentive fees,” as well as higher expenses.

Its U.S. businesses reported adjusted operating income before taxes of $943 million, up 12%. Units showing improvement included its business of selling group-life insurance and other employee benefits, as well as its individual life-insurance business. Those operations have had elevated deaths tied to the pandemic.

Its Assurance IQ online data-science insurance agency reported a smaller loss before taxes, at $37 million, compared with a $39 million loss in the year-ago quarter.

In general, AIG and other U.S. property-casualty insurers incurred fewer catastrophe losses in this year’s first quarter than in the year-earlier period. In 2021, a long stretch of frigid February weather in Texas and other states caused unexpected freezing of pipes, which led to extensive water damage.

During this year’s first quarter, disasters included European windstorms, a Japanese earthquake and Australian floods. AIG said its results included $274 million of catastrophe costs, predominantly from the Australian floods, compared with $422 million in the prior-year quarter.

Write to Leslie Scism at leslie.scism@wsj.com

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