The paragraph is an introduction to AIG's Third Quarter 2024 Financial Results Conference Call, detailing the nature of the information that will be discussed. It highlights that forward-looking statements are included and may involve risks and uncertainties. These statements reflect current management expectations but are not guaranteed, and the company is not obligated to update them unless required by law. Non-GAAP financial measures mentioned during the call are reconciled with GAAP figures on their website. It notes that following the deconsolidation of Corebridge Financial in June 2024, its results are now classified as discontinued operations in AIG's financial statements. Discussion on General Insurance results will be on a comparable basis, adjusted for sales such as Crop Risk Services and Validus Re, to reflect substantial portfolio changes since 2023.

In the earnings call, AIG's Chairman and CEO, Peter Zaffino, reviewed the company's strong third-quarter 2024 financial results. He highlighted the impact of recent weather events and praised the company's response efforts. AIG demonstrated exceptional underwriting results, strict expense control, and progress on strategic priorities. The adjusted after-tax income rose to $798 million, or $1.23 per diluted share, reflecting a 31% year-over-year increase in earnings per share. The company's underwriting income was $437 million, including $417 million in catastrophe-related charges, with a calendar year combined ratio of 92.6%. Consolidated net investment income increased by 19% to $897 million, while other operations saw a significant improvement in adjusted pre-tax loss.

In the third quarter, the company achieved a core operating ROE of 9.2% with $34.5 billion in core operating equity as of September 30, 2024. It returned $1.8 billion to shareholders through stock repurchases and dividends and repurchased an additional $520 million of common stock in October. The debt-to-total-capital ratio was 17.9% with parent liquidity of $4.2 billion. The speaker plans to discuss five key topics, including financial results for General Insurance, the catastrophe market, AIG Next, AI progress, and a plan to achieve a 10% core ROE. In General Insurance, the company showed strong profitability and growth, with gross premiums written increasing by 3% to $8.6 billion and net premiums written rising by 6% to $6.4 billion. Net premiums earned grew by 7% to $5.9 billion, aided by favorable prior year reserve development. Global Commercial saw a 7% growth in net premiums written, driven by $1.1 billion in new business and an 88% retention rate. The accident year combined ratio and calendar year combined ratio were 84.2% and 89.9%, respectively.

The paragraph discusses the financial performance and growth of the company's Global Personal and North America Commercial segments. The Global Personal segment saw a 3% growth in net premiums written, driven by new business growth, and improvements in combined ratios compared to the previous year, with expectations for further improvements in 2025. North America Commercial experienced an 11% increase in net premiums written, aided by a closeout transaction in the casualty portfolio, but this negatively affected the accident year loss ratio. Excluding this transaction, growth would have been in the high-single-digits, with casualty, Glatfelter, and Lexington contributing significantly. Retention rates were strong, with exceptional new business growth of 22%, led by Lexington. The company saw large increases in new business submissions across various segments, including casualty, Western World, property, and financial lines, the latter rebounding due to increased M&A activity. The North America Commercial segment's accident and calendar year combined ratios improved despite significant CAT activity.

In the quarter, AIG's accident year loss ratio increased to 61.8%, up by 250 basis points from the previous year, primarily due to a closeout transaction in AIGRM and favorable rate increases in property portfolios. Despite this, the combined ratio improved thanks to a lower expense ratio. International Commercial saw a 3% growth in net premiums, with strong performances in commercial property, international specialty driven by energy, and Talbot's specialty lines. Retention rates were high, and new business exceeded $500 million, especially in marine and Talbot. The International Commercial accident year combined ratio was 83.4%, while the calendar year combined ratio was 84.3%. AIG’s strategic enhancements in underwriting and reinsurance have positively impacted performance, even amidst increased natural catastrophe activity.

The paragraph discusses the increasing trend of insured losses from natural catastrophes, which have exceeded $100 billion in the first nine months of the year and are expected to surpass $125 billion by 2024 according to Aon. It highlights the complexity of estimating losses from large catastrophes and the challenges in determining accurate figures, as illustrated by historical events like Hurricane Katrina and Superstorm Sandy. The paragraph also emphasizes AIG's success in mitigating the impact of weather events on its business, attributed to improved underwriting strategies that have reduced losses and increased earnings quality over the past five years.

The paragraph discusses the growing trend of insured catastrophe losses in the insurance industry since 2012, noting a significant increase in losses from natural disasters from 2017 to 2023 when compared to the 2000-2016 period. In recent years, annual insured losses have often exceeded $100 billion, with about 90% of these losses being retained by primary insurance companies after a 2023 market reset. AIG has improved its financial performance through changes in underwriting and reinsurance strategies. Back in 2012, AIG incurred significant losses from Superstorm Sandy, but for 2024, AIG's forecasted market share of total industry losses is anticipated to be less than 1%, highlighting the effectiveness of these strategic changes.

The paragraph discusses AIG's improved financial performance in 2024, highlighting a significant reduction in catastrophe losses and volatility compared to 2012. AIG's strategy of managing volatility through underwriting and maintaining low net retention has benefited the company. The upcoming January 1 property insurance renewal season is expected to be influenced by changes in the reinsurance market, including higher attachment points and a focus on underwriting profit. Despite strong capital presence, the reinsurance market is likely to remain disciplined, prioritizing insurance companies with high-quality portfolios like AIG. Industry losses due to increased frequency and severity will still affect primary insurers in 2025.

The paragraph provides an update on AIG Next, a program initiated in early 2024 to streamline AIG's operations and enhance future positioning. The initiative is expected to generate $500 million in savings by 2025, affecting various operational areas, including General Insurance. AIG has redefined parent expenses to focus on costs associated with being a global regulated company, estimating these at $350 million. Other operational costs will be reduced or integrated into General Insurance results. The program has already led to significant expense reductions, allowing for investment in core capabilities and strategic innovations in underwriting, claims, and data, digital, and AI strategies. AIG is leveraging GenAI and large language models in its innovation journey as digital tools and accelerators.

The paragraph discusses the uniqueness of a new collaborative space in Atlanta, which will be the first location to implement an end-to-end underwriting process, leveraging the Agentic GenAI ecosystem. This ecosystem enhances data quality and efficiency, improving underwriting accuracy and processing time. The initiative aims to prioritize high-value business, boost growth, and allow underwriters to focus on strategic tasks. AIG emphasizes maintaining underwriters at the center of decision-making to address complex risk issues, with AI initiatives supporting better outcomes and operational efficiency. The focus will now shift to capital management and executing a disciplined strategy.

The paragraph outlines AIG's financial strategies and achievements. AIG aims to maintain strong capital levels for growth, keep conservative debt leverage, and return excess capital to shareholders through stock repurchases and dividends. Over recent years, AIG has improved its financial strength with a focus on profitable underwriting and effective reinsurance use. AIG received substantial ordinary dividends from subsidiaries, enhancing parent company liquidity. Its debt reduction efforts lowered the debt-to-capital leverage ratio to 17.9%, one of the lowest in the industry. In 2024, AIG returned over $5.5 billion to shareholders and plans to continue its $10 billion share repurchase program through 2025, aiming for a share count target of 550 to 600 million.

The paragraph discusses AIG's financial strategies and performance, highlighting plans for supporting share repurchases and evaluating dividend increases in 2025, supported by strong earnings. As of the end of the third quarter, AIG has $4.2 billion in parent liquidity and $34.5 billion in core operating equity, indicating excess capital relative to its business size. The company plans to manage this capital strategically to support growth while maintaining balance and flexibility for potential opportunities. AIG aims to achieve a 10% core operating ROE for 2025. The paragraph also includes a brief overview of third-quarter financial results for General Insurance, with adjusted pre-tax income of $1.2 billion and $437 million in underwriting income despite significant catastrophe losses from hurricanes Beryl and Helene. Following this, Sabra Purtill takes over the discussion.

Hurricane Milton made landfall on October 9, and its financial impact will be recorded in the fourth quarter, with preliminary loss estimates ranging from $175 million to $275 million. Despite the hurricane's strength, claims activity has been relatively light. The third quarter of 2024 saw an adjusted accident year combined ratio of 88.3%, higher by 140 basis points compared to the previous year, mainly due to changes in premium mix, reinsurance structure, and a large closeout transaction. Year-to-date, the combined ratio is 88.1%, a 60 basis-point decrease from 2023. The accident year loss ratio for the quarter and year-to-date is 56.4%. The fourth quarter's loss ratio is expected to align with the year's earlier months. There was $153 million of favorable prior year development, including $34 million from ADC amortization, with 47% of total loss reserves reviewed, revealing favorable results in global specialty and commercial property lines, partially offset by $181 million of adverse development in U.K. and Europe casualty and financial lines.

The paragraph discusses updates to loss estimates and reserves due to recent claims and settlements related to accident years 2019 and prior. A significant adjustment was a $72 million increase in U.S. excess casualty reserves due to a large settlement of a legacy mass tort claim. The company expresses confidence in the adequacy of its loss reserves, supported by extensive diagnostics and evaluations. While some favorable developments were observed for accident years 2021 and prior, no changes were made to loss reserves for more recent years, as the company prefers to allow favorable trends to develop fully. Additionally, pricing trends in Global Commercial Lines remained consistent with previous quarters, with a 6% increase in pricing largely matching loss cost trends. In North America Commercial, pricing rose 7%, with noticeable increases in casualty rates, significantly exceeding loss cost trends.

The paragraph discusses the consistent property rates in North America Retail and Lexington, highlighting strong underwriting margins due to disciplined approaches and cumulative rate increases. International commercial pricing, excluding financial lines, rose 4% and remained profitable. The company leverages its global footprint and diverse portfolio to focus on profitable business lines. The investment portfolio is high in credit quality and well-diversified, benefiting from rising interest rates since 2021, which have increased portfolio yields. In Q3 2024, net investment income rose 19% year-over-year to $897 million, driven by higher reinvestment rates on fixed maturities, short-term investment income, and better returns on private equity. General Insurance investment income totaled $773 million, of which $718 million came from fixed maturities, loans, and short-term investments, and $43 million from alternative investments.

The paragraph discusses financial projections and results for a company's fourth quarter. It anticipates $710 million in investment income from fixed maturities, loans, and short-term investments, influenced by floating rate security resets and higher reinvestment yields, with 11% of fixed maturities having periodic floating rate resets. Alternative income from private equity and real estate funds is expected to align with the current annualized return of 3.5%. The company reports an adjusted pre-tax loss of $143 million, improved by 50% year-over-year due to lower expenses and higher investment income. Short-term investment income might decrease by $25 million. The balance sheet remains strong with a book value per share of $71.46, a 4% increase from mid-2024. Adjusted book value per share stands at $73.90, indicating a 2% rise since June but a 6% decline from the end of 2023 due to different accounting treatments. Debt leverage is strong, and a $400 million bond call is scheduled for completion in late November.

The paragraph discusses AIG's financial performance, highlighting a core operating return on equity (ROE) of 9.2% for the quarter and 9.3% year-to-date, driven by strong General Insurance profitability and capital levels. AIG is confident in achieving a 10% core operating ROE by 2025. During a conference call, Meyer Shields from KBW asks about reserves and recent accident years in financial lines emerging better than expected, seeking more information on older accident years. Peter Zaffino directs the question to Sabra Purtill, who explains that AIG experienced $300 million in favorable development, particularly in shorter-tail lines, allowing favorable experiences to mature.

The paragraph discusses the timing and adjustments related to workers' compensation and excess casualty settlements, noting that a large settlement from older accident years triggered an action in North America casualty. Without this settlement, no adjustments would have been made. In financial lines, there was an adverse development of $28 million due to specific exposures in the U.K., but favorable developments in the U.S. and international portfolios for older accident years were recognized. Reserves are maintained for these older years, and a thorough evaluation of the Global Financial lines portfolio will occur next year. Peter Zaffino and Meyer Shields briefly discuss expectations and possible changes for AIG's property reinsurance program in 2025.

The paragraph features a discussion led by Peter Zaffino about reinsurance pricing and risk management strategies within the insurance industry. Zaffino emphasizes the importance of insurance companies understanding catastrophe frequency and managing their own pricing rather than relying heavily on reinsurance. He notes that they prefer low attachment points and strategically manage their net risk in line with their risk appetite. The conversation then shifts to Brian Meredith from UBS, who asks about market conditions and organic growth opportunities in casualty and property insurance. Zaffino acknowledges the potential for growth and new business opportunities, emphasizing client retention and their ability to address risk issues.

The paragraph discusses the positive business environment and growth opportunities in the retail casualty and E&S (Excess & Surplus) spaces, especially highlighting significant growth in North America. Don Bailey emphasizes balanced growth across retail, wholesale, and alternative channels. Key growth indicators include a 3% positive rate, strong retention rates, and 22% new business growth. Specifically for Lexington, the company is investing in resources and capabilities, achieving a 78% retention rate, a 24% increase in new business, and a 35% rise in submissions within E&S. The increasing demand for E&S solutions and a shift towards quality have driven these improvements, along with changes in the wholesale broker landscape.

The paragraph discusses the current state of the wholesale insurance market, highlighting that brokers in this space are now more resourceful, data-driven, and technologically efficient, which is crucial for success in wholesale. These brokers are increasingly used by independent agents for market access and placement capabilities, benefiting companies like Lex. The U.S. Excess and Surplus (E&S) insurance market has grown significantly, now comprising 12% of the $115 billion U.S. property and casualty industry, compared to 7% of a $50 billion industry in 2018. The top five wholesale brokers control over 65% of this market, and Lex is well-positioned within it. The discussion shifts to financial expectations, with Peter Zaffino addressing questions about achieving a 10% core return on equity (ROE) by 2025. He acknowledges peers reaching higher ROEs and outlines strategies involving margin improvement and disciplined underwriting to reach comparable levels.

The paragraph discusses various factors contributing to the company's growth and earnings potential, such as expanding its equity base, net investment income, and net premiums through strong retention, new business, and reinsurance structures. It highlights the focus on reserve quality, capital management flexibility, and successful volatility management. The company is executing its AIG Next initiative, which emphasizes disciplined expense management without raising the combined ratio. The company anticipates providing future guidance once it surpasses a 10% target.

In the paragraph, Peter Zaffino discusses AIG's plans for capital deployment, specifically addressing share repurchases and mergers and acquisitions (M&A). He reiterates their commitment to $10 billion in share repurchases for 2024 and 2025, utilizing increased liquidity from transactions like the Nippon deal. Regarding M&A, Zaffino highlights AIG's financial strength and flexibility to explore inorganic growth opportunities that could enhance their geographical footprint or product offerings. While emphasizing a disciplined and strategic approach, he indicates AIG's readiness to pursue M&A that aligns with their goal of improving risk-adjusted returns and expanding into new markets or enhancing existing ones.

In the paragraph, Peter Zaffino discusses the General Insurance GOE (General Operating Expenses) and their performance in the third quarter. He explains that despite an increase in expenses, the run rate remains attractive due to significant improvements in operations. Two major initiatives are contributing to this: a voluntary early retirement plan in the U.S. and an international restructuring in September. These are expected to show more results in the fourth quarter and into 2025. Zaffino expresses satisfaction with the progress made and notes that these efforts are moving the company towards a leaner and simpler operating model. Following this, a different speaker, Alex Scott from Barclays, asks about leverage at operating companies and financial leverage, shifting the topic of discussion.

The paragraph discusses the company's financial strategy, specifically addressing return on equity (ROE) and debt leverage, as compared to industry peers. Peter Zaffino acknowledges that while the company's combined ratio is strong, its ROE is lower than some competitors. He indicates that the company is comfortable with its current high-teens leverage-to-total-capital ratio and, if necessary, can increase leverage for potential mergers and acquisitions (M&A). Proceeds from the Corebridge sell-down will primarily be used for share repurchase, but there's some flexibility to adjust leverage over time. Zaffino also notes that the company has substantial capital available for growth, has experienced a successful quarter in acquiring new business, and continues to see encouraging momentum, particularly in areas outside property, where pricing had been a concern.

The paragraph discusses AIG's strategy for growth and improving its financial performance, particularly in its North American personal lines. AIG is transitioning its North America personal insurance to a Managing General Underwriter (MGU) structure, which has resulted in an initial increase in acquisition costs but is expected to improve by 2025. Progress is being made with a reduced attritional loss ratio and decreased general operating expenses. To accelerate progress, AIG is focusing more on non-admitted insurance, achieving significant rate increases. A partnership with Ryan Specialty is helping expand infrastructure and sales, enabling greater access to AIG's offerings for high net worth clients through new retail agent appointments.

In the third quarter, 50% of new business growth came from E&S, and there is an expectation for E&S to contribute to a 10% growth in the top line by 2025 due to significant demand and sufficient capacity. Elyse Greenspan from Wells Fargo inquired about the improvement in the North America commercial's ex-CAT accident year loss ratio, which was 61.1% for the quarter compared to 61.9% in the first half of the year. Peter Zaffino, along with Don Bailey, explained that the improvement was due to certain one-off movements and closeout deals that affected the loss ratio, but adjustments and the changing business mix are expected to sustain the improvement into the future.

The paragraph discusses potential growth opportunities in the insurance market, particularly in casualty and property segments, by 2025. It indicates a shift in market dynamics, with property seeing potential rate reversals due to insufficient risk-adjusted returns, while casualty remains strong. There's also a noted slowdown in financial lines and rate reductions. Peter Zaffino expresses optimism for a stabilizing rate environment, expecting an improvement in market conditions. Elyse Greenspan seeks clarification on how the mix between property and casualty might shift in the coming year.

In the paragraph, Jon Hancock discusses the growth and opportunities in the international specialty insurance market as they look towards 2025. He highlights strong performance in first-party lines, with notable growth in energy and marine sectors and mentions a 10% increase in their international specialty book for the quarter. Talbot, a part of their specialty lines, is also experiencing growth, particularly in political risks, marine, and energy. Jon emphasizes their leading market positions in various sectors and sees continued opportunities for growth. Peter Zaffino concludes by thanking Sabra for her significant contributions to AIG over the past five years, particularly in her recent role as CFO.

The paragraph announces the appointment of Keith Walsh as the new CFO and extends good wishes to the predecessor. It also thanks colleagues worldwide for their dedication and concludes the program, allowing participants to disconnect.

This summary was generated with AI and may contain some inaccuracies.