AIG(AIG) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Adjusted after-tax income was $798 million, or$1.23 per diluted share, representing a 31% increase in earnings per share year-over-year [10] - Underwriting income for the quarter was $437 million, including total catastrophe-related charges of$417 million [10] - Consolidated net investment income on an adjusted pre-tax income basis was $897 million, a 19$34.5 billion as of September 30, 2024 [11] - Debt-to-total-capital ratio was 17.9%, including AOCI and parent liquidity of $4.2 billion [12] Business Line Performance - Gross premiums written for General Insurance were$8.6 billion, a 3% increase from the prior year [13] - Net premiums written for General Insurance were $6.4 billion, a 6$1.1 billion of new business [14] - North America Commercial net premiums written grew 11% year-over-year [16] - International Commercial net premiums written grew 3% year-over-year, with specialty lines growing 10% [21] Market Performance - North America Commercial retention was 90% in admitted lines and 78% in Lexington [17] - International retention remained strong at 89%, with energy and property at 92% and casualty at 91% [22] - North America Commercial new business growth was 22% year-over-year, led by Lexington with 24% growth [18] Strategy and Industry Competition - The company has transformed its underwriting and reinsurance strategy, reducing CAT losses by 80% compared to 2012 [32] - AIG Next program is expected to deliver $500 million in savings by 2025, impacting both General Insurance and other operations [36] - The company is leveraging GenAI to improve underwriting processes, with data accuracy rates improving from 75$125 billion in 2024 [24][29] - The company is well-positioned to manage volatility through underwriting and reinsurance strategies, maintaining low net retention among global competitors [33] Other Important Information - The company returned $1.8 billion to shareholders in Q3 through stock repurchases and dividends [11] - AIG Next has enabled the company to invest in core capabilities and strategic innovation initiatives, particularly in underwriting, claims, and AI [38] - The company expects to fully realize$500 million in savings from AIG Next by 2025 [36] Q&A Session Summary Question: Reserves and Financial Lines - The company discussed favorable development in shorter tail lines and noted that older accident years in financial lines are emerging better than expected but are not yet booked [71][72] - Adverse development in U.K. and Europe casualty and financial lines was partially offset by favorable development in U.S. and international portfolios [74] Question: Property Reinsurance Program - The company does not expect material changes in its reinsurance structures and will maintain low attachment points on severity and aggregate protections [77][78] Question: Market Conditions and Growth Opportunities - The company sees strong growth opportunities in North America Commercial, particularly in casualty and E&S lines, with new business growth of 22% year-over-year [80][81] - Lexington continues to show strong performance, with 78% retention and 24% new business growth [85] Question: ROE Aspirations and Capital Management - The company aims to achieve a 10% core operating ROE in 2025 and is exploring opportunities to improve margins, grow premiums, and manage capital effectively [88][89] - The company has flexibility to increase leverage for potential M&A opportunities [104] Question: General Insurance GOE Ratio - The company is absorbing $50 million of expenses into General Insurance, with improvements expected to show more significantly in Q4 and 2025 [99][100] Question: Personal Lines in North America - The company is transitioning its North America personal lines business to an MGA structure, with expectations for improved combined ratios in 2025 [107][108] Question: North America Commercial Loss Ratio - The company expects the loss ratio to stabilize, with growth opportunities in casualty and property lines [115][116] Question: International Growth Opportunities - The company sees strong growth in international specialty lines, particularly in energy and marine, with 25% new business growth in marine and 18% growth in Talbot specialty lines [119][120]