AMERICAN INTERNATIONAL GROUP, INC. Q3 FY2024 earnings call

• Strong underwriting results: Adjusted after-tax income was $798 million or $1.23 per diluted share, a 31% increase year-over-year. Underwriting income was $437 million with a calendar year combined ratio of 92.6%.
• Investment income: Consolidated net investment income on an adjusted pre-tax income basis was $897 million, up 19% year-over-year.
• Other operations: Adjusted pre-tax loss improved nearly 50% year-over-year to $143 million.
• General Insurance business: Strong profitability and growth across segments, with Global Commercial, North America Commercial, and International Commercial showing specific growth and combined ratio results.
• Catastrophe market: AIG's financial performance improved with lower market share of catastrophe losses compared to past years, and commentary on the 2023 reinsurance market reset.
• AIG Next: Expecting $500 million in savings by 2025, with focus on expense discipline and transferring costs to General Insurance GOE.
• AI initiatives: Utilizing GenAI for process efficiencies in underwriting and claims, with a collaborative space in Atlanta for end-to-end innovation.
• Capital management: Returned $1.8 billion to shareholders in Q3, debt-to-total-capital ratio 17.9%, and aim for 10% core ROE in 2025.

General Insurance had gross premiums written of $8.6 billion, with net premiums written at $6.4 billion. Underwriting income for the quarter was $437 million, including $417 million in catastrophe related charges. Consolidated net investment income on an adjusted pre-tax income basis was $897 million, a 19% increase year-over-year. Other operations had an adjusted pre-tax loss of $143 million, an improvement of nearly 50% year-over-year. Global Commercial saw 7% net premiums written growth, North America Commercial grew net premiums written by 11% year-over-year, and International Commercial had 3% net premiums written growth. The accident year combined ratio for General Insurance had various performance metrics, with year-to-date and quarterly figures provided.

• Expect to deliver 10% core operating ROE for full-year 2025.
• Continue with the $10 billion share repurchase authorization over 2024-2025, with ongoing execution.
• Review dividends annually, considering increases supported by earnings power.
• Proactively manage capital to support business growth and remain nimble for attractive opportunities.

• Weather events: Impact on claims and the difficulty in determining ultimate catastrophe losses due to modeling uncertainty.
• Reinsurance market: Changes such as increased retention by primary insurers and potential challenges in property CAT reinsurance pricing.
• Market mix uncertainty: Uncertainty in the shift between property and casualty business mix affecting financial performance.

Q: About reserves, specifically on older accident years and financial lines development A: Sabra Purtill discussed favorable prior year development, DVRs on loss reserves, and that favorable experience was allowed to mature, with details on excess casualty and financial lines development Q: On property reinsurance expectations for 2025 A: Peter Zaffino noted an orderly market, no material change in reinsurance structures, and emphasis on insurance companies retaining net and managing risk appetite Q: On market conditions and growth in casualty and E&S lines A: Don Bailey discussed North America Commercial growth, strong retention, and significant new business growth in E&S, including Lexington's performance and market trends in E&S Q: On M&A and share repurchase guidance A: Peter Zaffino mentioned financial flexibility for M&A, ongoing share repurchase execution, and considering inorganic opportunities to complement geographical and product capabilities Q: On GOE and General Insurance GOE ratio A: Peter Zaffino discussed absorbing expenses into General Insurance, sequential improvement in GOE, and upcoming initiatives like voluntary early retirement plans and international restructuring Q: On leverage and M&A potential A: Peter Zaffino talked about financial flexibility for leverage increase with M&A, and that AIG has the ability to explore inorganic opportunities to accelerate risk-adjusted returns Q: On North America commercial mix shift and market conditions A: Don Bailey and Peter Zaffino discussed sustainable loss ratio after adjusting for anomalies, and expectations of mix shift with property rate increases reversing and casualty strength continuing