AIG(AIG) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted after-tax income was $1.2 billion or$ 1.63 per diluted common share, representing a 9% increase year-over-year [6][37] - Net investment income on a consolidated basis was $3.1 billion, with a focus on improving credit quality and reducing volatility [6][38] - Book value per common share was$ 58.87 at quarter end, up 7% from year-end [43] Business Line Data and Key Metrics Changes - Net premiums written in General Insurance grew 10% on a constant dollar basis, driven by the Commercial business [6][11] - Life and Retirement reported premiums and deposits of $10.4 billion in the first quarter, a 44% increase year-over-year [7][25] - The accident year combined ratio, excluding catastrophes, was 88.7%, an 80 basis point improvement from the prior year [22] Market Data and Key Metrics Changes - North America Commercial saw a strong growth of 15% in net premiums written, driven by Validus Re [12] - International Commercial net premiums written grew 6%, primarily due to Property, which was up over 40% [17] - Global Personal reported a first quarter accident year combined ratio, excluding catastrophes, of 98.6%, a 120 basis point increase from the prior year [23] Company Strategy and Development Direction - The company is focused on long-term value creation and has made significant progress in strategic and operational priorities [5] - AIG plans to reduce its ownership interest in Corebridge and explore options aligned with shareholder interests [9] - The company is transitioning to a simpler, leaner business model, aiming for a 10%-plus return on common equity (ROCE) [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future earnings power and commitment to disciplined capital management [8][34] - The company anticipates strong top-line growth in General Insurance for the remainder of 2023 [24] - Management highlighted the importance of maintaining appropriate capital levels in subsidiaries to support profitable growth [68] Other Important Information - AIG returned approximately$ 840 million to shareholders in the first quarter through stock repurchases and dividends [8] - The company approved a 12.5% increase in its common stock quarterly dividend, starting in the second quarter [8][34] - Corebridge has made substantial progress since its IPO, paying $450 million in dividends to public shareholders [9] Q&A Session Summary Question: Growth and Net-to-Gross Ratio - Management explained that the net-to-gross ratio remained unchanged due to portfolio composition and strategic reinsurance partnerships [50][52] Question: Implications of North American Personal Lines Changes - Management clarified that changes in North American Personal Lines do not significantly impact the International Personal segment due to their distinct business models [54][56] Question: Expense Ratio Expectations with MGA - Management indicated that as the MGA gains speed, the expense ratio is expected to fall over time, leading to improved profitability [57][60] Question: Catastrophe Load Stabilization - Management confirmed that the catastrophe load has stabilized, and they are focused on maintaining a balanced portfolio with reduced risk [61][64] Question: Excess Capital and Liquidity Management - Management emphasized a disciplined approach to capital management, maintaining strong liquidity while evaluating opportunities for share repurchases [66][70]