AIG(AIG) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - General Insurance reported strong net premiums written of $6.1 billion, an increase of 7% year-over-year, with net premiums earned of$ 6 billion growing 6% year-over-year [15][24] - Adjusted after-tax income per share grew 5% year-over-year to $1.30 per share, with a calendar year combined ratio of 92.5% [16][24] - For the full year 2024, adjusted after-tax income was$ 3.3 billion or $4.95 per diluted share, an increase of 28% year-over-year [24][79] Business Line Data and Key Metrics Changes - North America Commercial net premiums written increased by 9% year-over-year, driven by strong new business growth of 17% [57][105] - International Commercial net premiums written increased by 7% year-over-year, with new business growth of 15% and excellent retention of 88% [57][99] - Global Personal net premiums written increased by 1% on a constant currency basis, with a 16% growth in the Global High Net Worth business [57][58] Market Data and Key Metrics Changes - The reinsurance market saw a significant reset on January 1, 2023, with property reinsurers focusing on upper layers with more remote return periods [28][29] - Insured loss from natural catastrophes in 2024 was approximately$ 145 billion, the sixth costliest on record, compared to an average of $140 billion over the last five years [31][34] - AIG's expected loss from the recent California wildfires is approximately$ 500 million before reinstatement premiums [37] Company Strategy and Development Direction - AIG realigned its General Insurance business into three segments: North America Commercial, International Commercial, and Global Personal [13][53] - The company executed significant strategic initiatives, including the deconsolidation of Corebridge Financial and the launch of AIG Underwriter Assist, a generative AI solution [18][22] - AIG aims to achieve a 10% plus core ROE for the full year 2025, focusing on profitable growth and capital allocation to attractive risk-adjusted returns [49][79] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the escalating risks and complicated environment due to recent wildfires in California, emphasizing the importance of resilience in navigating these challenges [10][11] - The company expressed optimism about achieving meaningful organic growth driven by the Global Commercial business and the benefits of the restructured reinsurance program [49][50] - Management confirmed guidance on achieving a 10% plus ROE, including the impact of the recent wildfires [85][88] Other Important Information - AIG returned $8.1 billion of capital to shareholders in 2024 through share repurchases and increased dividends [21][79] - The company reduced its debt to total capital ratio to 17% and ended the year with$ 7.7 billion of parent liquidity [21][48] - AIG's adjusted effective tax rate for the fourth quarter and full year was 24.6%, with expectations for 2025 to be in line with 2024 [78] Q&A Session Summary Question: Is the core ROE including the wildfire impact? - Yes, the 10% plus ROE includes the $500 million wildfire impact [85] Question: What areas is AIG targeting for organic growth? - AIG is focusing on risk-adjusted returns and has seen strong retention and new business growth across its portfolio [93][99] Question: How is AIG utilizing artificial intelligence in underwriting? - AIG is leveraging AI to improve data ingestion and provide underwriters with more qualified data in a timely manner, enhancing underwriting capabilities [113][117] Question: What is the timeline for improving the high net worth personal lines business? - AIG expects continued improvement in the combined ratio and loss ratio for the high net worth business, with growth anticipated in 2025 [120][123] Question: Are there any aspirational areas of business AIG is looking to enter? - AIG is largely done with divesting non-core businesses and is focused on maintaining a balanced portfolio while remaining disciplined in potential M&A opportunities [130][132]