The paragraph is the introduction to AIG's First Quarter 2025 Financial Results Conference Call, where Quentin McMillan outlines that the call may include forward-looking statements and non-GAAP financial measures, both subject to risks and uncertainties as detailed in AIG's SEC filings. McMillan explains that results reflect changes such as the deconsolidation of Corebridge Financial and adjustments for certain business sales. The discussion uses constant dollar comparisons for net premiums and highlights where additional reconciliations can be found in AIG's earnings presentation. The call is then handed over to AIG's Chairman and CEO, Peter Zaffino.

In the paragraph, Peter Zaffino discusses AIG's strong first-quarter 2025 financial performance and provides an overview of their recent Investor Day. He outlines the company's progress on strategic, operational, and financial goals, detailing achievements such as establishing an underwriting culture of excellence, reducing exposure and volatility, and transitioning to a modern, digital operating structure. He also mentions plans to discuss AIG's business strategy in India and the impact of tariffs during the call. Keith, Don Bailey, and Jon Hancock will join for further financial details and Q&A.

In the article, AIG emphasized its strategic and financial enhancements, highlighting a leaner structure and disciplined capital management for greater flexibility. They showcased their GenAI deployment strategy, supported by partners like Alex Karp of Palantir and Dario Amodei of Anthropic, illustrating its positive impact on business growth. AIG also presented their $24 billion net premiums written, strong global portfolio, and reinsurance strategy, including a significant partnership with Blackstone. The Investor Day event clarified AIG's strategic direction and future goals, boosting internal pride and momentum.

The paragraph discusses AIG's financial performance and growth, highlighting significant achievements despite challenging conditions. In the first quarter, AIG reported an adjusted after-tax income of $702 million, or $1.17 per diluted share, and strong premium growth, with net premiums written reaching $4.5 billion—a year-over-year increase of 8%. Growth was driven by various segments, including Global Commercial and North America Commercial Insurance, with notable increases in Lexington Casualty and Retail Property. AIG also recorded an 8% growth in International Commercial Insurance on an FX-adjusted basis, thanks to enhanced reinsurance structures. Additionally, the company's general insurance expense ratio improved to 30.5%, primarily due to the divestiture of its travel business and AIG Next initiatives.

The paragraph discusses AIG's financial performance and strategy, highlighting that despite absorbing $78 million in additional expenses in 2024, the company achieved its best first-quarter combined ratio of 87.8% since the financial crisis. Catastrophe losses, mainly from California wildfires, accounted for $520 million, while industry losses from natural catastrophes were the second highest on record for the first quarter. AIG's reinsurance structures are expected to manage net retained catastrophe losses within expectations for 2025. The company retains significant catastrophe occurrence limits, with $35 million left for North American perils excluding wind and earthquake, and $385 million for all other perils, subject to certain deductibles. The market remained favorable, with notable rate increases in excess casualty at 16% and Gladfelter at 6%. Keith will provide more detail on rates.

The paragraph discusses changes in the financial performance of various business lines, with decreases in Financial Lines, Retail Property, and Lexington Property. The company has reduced its focus on excess capacity in Financial Lines to achieve better risk-adjusted returns and now emphasizes its core, differentiated offerings. The Financial Lines portfolio's contribution to North America Commercial net premiums has decreased from 30% in 2021 to 19%. Retail Property and Wholesale Property have seen significant cumulative rate increases over the past five years. Internationally, rate changes were mixed, with increases in Casualty and Property and decreases in Global Specialty and Financial Lines. The company returned $2.5 billion to shareholders through share repurchases and dividends, ending the quarter with a debt to total capital ratio of 17.1% and $4.9 billion in parent liquidity.

In the paragraph, the speaker discusses AIG's financial updates and strategic focus. AIG's Board of Directors has increased its share repurchase authorization to $7.5 billion, with plans to repurchase $5 billion to $6 billion of shares in 2025, depending on market conditions. Additionally, a 12.5% increase in the quarterly dividend to $0.45 per share was approved. The speaker then highlights the potential of AIG's joint venture with Tata Group in India. India's economy has rapidly progressed, becoming the 5th largest in the world and is projected to become the 3rd largest by 2030. With a growing, young population and expanding middle class, the general insurance market in India has shown significant growth, presenting substantial opportunities for AIG.

The paragraph describes the current state and history of the non-life insurance market in India, emphasizing its low penetration rate at 1% of GDP compared to 9% in the United States. The market opened to private and foreign investment in 2000, leading to significant changes where private companies now hold 60% of the market. AIG's joint venture with Tata Group, Tata AIG, is highlighted for its strong position and reputation as a top private insurer in India. Tata AIG serves 27 million customers and maintains a high growth rate with $2.1 billion in gross premiums written in 2024. The partnership with Tata, a well-respected and expansive global company, has been crucial for navigating the competitive Indian insurance market.

The paragraph discusses Tata AIG's projected growth through 2030, driven by India's economic acceleration, increased insurance adoption, and the company's strong brand. Tata AIG leverages advanced technology for a seamless digital customer experience and benefits from AIG's multinational network for supporting domestic corporate clients. The company is ready to invest in both organic and potential inorganic growth opportunities, expecting rapid scaling compared to other regions. The paragraph also touches on tariff-related uncertainties impacting global commerce, noting that only a few countries export over $100 billion to the U.S., with tariffs possibly affecting transactional activities. Companies face challenges in understanding the evolving impact of tariffs on their operations.

The paragraph discusses various complexities affecting future loss costs and premiums, such as evolving tariff policies, supply chain impacts, inflation, and import dependencies, particularly highlighting the heavy reliance on Canadian softwood lumber. It emphasizes the potential complications arising from significant catastrophes, which could lead to demand surges, supply constraints, inflation, and business interruptions. It also touches on the importance of monitoring financial factors to assess future insurance premiums. The paragraph concludes with an update on the company's financial targets, noting strong earnings growth and progress towards replacing Corebridge earnings by 2026, aiming for over 20% earnings per share growth annually and achieving a 10% to 13% core operating return on equity.

In the first quarter, AIG reported a core operating return on equity (ROE) of 7.7%, impacted by catastrophe losses, but remains on track to achieve a 10%-plus core operating ROE by 2025. The expense ratio for General Insurance improved to 30.5%, with a goal of dropping below 30%. The company plans to grow its dividend by over 10% in 2025 and 2026, with a 12.5% increase in the quarterly dividend starting in the second quarter of 2025. General Insurance showed strong overall results, despite a decrease in adjusted pre-tax income due to California wildfire losses, with gross premiums written rising by 3% and net premiums written by 8%. The combined ratio worsened due to higher catastrophe losses compared to the previous year's first quarter.

The paragraph discusses the favorable financial performance of a company's various business segments. The prior year development net of reinsurance rose to $64 million favorable, up from $22 million the previous year, with $31 million from ADC amortization and $33 million from favorable loss experience in US Property and Global Specialty lines. The ADC amortization is projected to be around $31 million per quarter in 2025, down from $34 million in 2024. The Global Commercial business saw a 10% increase in net premiums written and a combined ratio of 91.2%, despite high CAT activity, with an improved expense ratio. North America's commercial combined ratio was 93.9%, including CATs, with an adjusted accident year combined ratio of 84.3%, thanks to reduced expense ratios and AIG Next benefits. The International Commercial segment maintained an impressive sub-90% combined ratio for eight consecutive quarters, with an accident year combined ratio, as adjusted, of 85.4%, influenced by higher expense ratios due to lean parent allocations. Increased operating costs and changed business mix impacted the accident year loss ratios for both North America and International segments.

The article discusses the financial performance of a company, highlighting a combined ratio of 107.9% and an improved accident year combined ratio of 95.6% due to a better loss ratio, particularly in the US high-net-worth segment. The company aims to improve its combined ratio by 500 basis points over the next three years. In terms of pricing, Global Commercial lines saw a 4% increase, with North America experiencing a 2% renewal rate hike excluding certain lines. International Commercial pricing improved 2%, or 4% excluding Financial Lines, compared to the previous quarter. The company also reported a significantly reduced adjusted pre-tax loss ($70 million) in the first quarter, down from $205 million the previous year, due to decreased operating expenses, increased investment income, and reduced interest costs.

In the first quarter, the company achieved its Other Operations run-rate GOE target of $85 million and aims for $350 million in annual expenses by 2025. The company's investment portfolio is high-quality and well-diversified, focusing on investment-grade fixed maturity securities to reduce market volatility. The first quarter net investment income was $845 million, a $4 million increase from the previous year, with contributions from the core portfolio in General Insurance and parent liquidity and Corebridge dividends in Other Operations. Net investment income from General Insurance was $736 million, a 3% decrease due to lower income from other invested assets and alternative investments, despite higher returns from the fixed maturity portfolio. The company includes 26% of Tata AIG's net income in other invested assets, influenced by Indian capital market movements. General Insurance net investment income is expected to increase modestly in the second quarter, with gains from fixed maturity and loan portfolios potentially offset by lower income from other invested assets and alternative investments.

In the first quarter, the company reported a strong financial performance with a fixed maturity and loan portfolio yield of 4.56%, higher than sales and maturities. Net investment income was $108 million, primarily from the parent liquidity portfolio and Corebridge dividends. Despite lower liquidity due to share repurchases, a $50 million income from the liquidity portfolio is expected in the second quarter. The adjusted effective tax rate was 22.8%, influenced by discrete items. The company's book value per share increased by 10% year-over-year, while the adjusted tangible book value fell by 8% due to the deconsolidation of Corebridge. The debt to total capital ratio was 17.1%. The company is confident in achieving a 10%-plus core operating ROE by 2025 and progressing towards its financial targets.

The paragraph features a discussion between Mike Zaremski and Peter Zaffino about the transformation process of adopting Generative AI (GenAI) in the insurance industry. Mike Zaremski asks about the challenges and costs involved in this transformation. Peter Zaffino explains that their company has been working on this transition for years, starting with improving data quality and digitizing workflows. He notes that the efforts are no longer in pilot stages, as they are now going live with GenAI in certain business lines. The company has partnered with firms like Palantir to enhance data ingestion and utilize large language models for better risk assessment and information access, indicating their strategic commitment to this technological evolution.

The paragraph discusses an insurance company's approach to improving its operations by reducing cycle time, enhancing data quality, and empowering underwriters, emphasizing organizational buy-in. Mike Zaremski asks about North America Commercial pricing, specifically regarding declines in property pricing. Peter Zaffino notes that while the index may not fully reflect the situation, despite some headwinds, the company maintains strong technical pricing and good returns. They heavily invest in reinsurance to manage costs effectively, noting that property reinsurance risk-adjusted reductions surpass those on the retail side, highlighting the importance of quality submissions.

The paragraph discusses the insurance market, specifically focusing on AIG's performance and market dynamics. It highlights that insurance brokers discuss a wide range of market segments and that not all insurance companies are equal, with leading companies like AIG potentially having better outcomes. AIG is experiencing strong retention, new business, and a "flight to quality." The casualty segment, particularly in large accounts, shows positive trends and strong rate increases exceeding loss costs. There are growth opportunities, such as those seen in Lexington. While the international market is stable, the specialty segment faces pricing challenges but performs well. Don Bailey confirms these views, noting strong rates in North American Commercial segments with varying pressures across different areas.

The paragraph discusses the financial performance and strategies of a business in terms of insurance rate trends and growth opportunities. It highlights that larger accounts are experiencing better rates compared to the middle market and smaller accounts, with program businesses showing positive rate trends and less volatility. While financial lines are down mid-single-digits, they are still providing adequate returns. The property segment has seen cumulative rate increases, and despite some pressure, pricing remains above technical levels. Peter Zaffino and Jon Hancock emphasize the advantage of having a diverse international portfolio, allowing the company to allocate resources effectively in attractive areas.

The paragraph discusses the company's confidence in its portfolio and market strategy, highlighting that while market dynamics vary, they maintain strong standards and results. They note the positive property rates and high retention, with specific mention of the International Property segment delivering strong combined ratios. Financial Lines faces some pricing pressure, particularly in D&O segments, leading to a slight contraction. However, other portfolio areas show strong retention, and Global Specialty and Talbot businesses continue to deliver exceptional results despite some rate pressure. They emphasize working with clients for sustainable terms and note strong growth in Marine.

In the paragraph, Peter Zaffino discusses the need for careful monitoring and adjustments in underwriting and pricing policies in response to the uncertainty associated with tariffs. He highlights the impact of inflation factors on specific lines of business, particularly property, and emphasizes the importance of analyzing loss cost inputs due to potential changes in catastrophe losses and other variables. Zaffino also explains that while there was a slight increase in the published international loss ratio, this was not due to worsening underlying loss ratios but rather a reallocation of unallocated loss adjustment expenses within AIG's operations.

The paragraph discusses the financial management strategy of a company, focusing on its international portfolio and proactive measures to address potential uncertainties in various business lines by building risk margins. Meyer Shields asks about the modeling impact of moving expenses from other operations to the GI segments for the remaining quarters of 2025. Peter Zaffino explains that the company, through its initiative AIG Next, aimed to simplify its structure and reduce expenses to achieve a lean operating model. He indicates that the company has already made significant progress in reducing expenses and expects to complete the AIG Next initiative by the end of 2025, expressing satisfaction with the accelerated progress.

The paragraph discusses how a business managed to keep its expense ratios stable despite increased allocations and costs, particularly noting that North America benefited more from AIG Next than international locations due to IT and legal expenses related to building a global company. Although international operations faced more challenges impacting the GOE ratio, overall expenses from the first quarter are expected to reflect full-year expenses. Meyer Shields appreciates the context provided. Subsequently, Alex Scott from Barclays inquires about the impact of environmental uncertainties on M&A and capital deployment. Peter Zaffino responds, stating that there will be no change in their disciplined approach to acquisitions, focusing on long-term benefits for both AIG and any potential acquisitions across different geographies and product lines.

The paragraph discusses AIG's strategic approach to using its strong capital position and low leverage to explore potential acquisitions that could benefit the company, while being cautious due to global uncertainty. AIG emphasizes careful evaluation of opportunities and mentions the possibility of returning capital to shareholders if no beneficial acquisitions are found. Additionally, Alex Scott inquires about the impact of mix shifts, particularly in North America's catastrophe budget, on AIG's financial metrics. Peter Zaffino responds that the first quarter is challenging due to property issues and catastrophes, which affect net premium written.

The paragraph discusses a company's insurance strategy, highlighting challenges and changes in the property insurance market, particularly in North America. It mentions the potential for negative net premiums when more is ceded than written. The company anticipates these imbalances will level out, especially as the year progresses without significant catastrophe (CAT) insurance purchases in later quarters. There's a shift towards more casualty business in their portfolio, which has higher combined and loss ratios compared to property insurance. The paragraph also notes growth in Lexington's mid-market casualty, which affects loss ratios. Overall, the speaker conveys confidence in handling the market dynamics, expecting eventual market adjustments and improvements.

In this conversation, Peter Zaffino discusses AIG's cautious approach to increasing business in the Property CAT space, emphasizing their global risk appetite and preference for reduced volatility. He explains that AIG buys occurrence and aggregate reinsurance to lower volatility, particularly in North America Property, and values this stability in their business model. Regarding Casualty, AIG primarily buys excess of loss reinsurance due to potential large jury verdicts and vertical exposures, deciding it's not prudent to take more risk. Zaffino expresses comfort with AIG's current reinsurance structure and the significant improvement in combined ratios, indicating satisfaction with the core business fundamentals. Andrew Anderson queries about North America Commercial pricing, noting it may be below the loss trend but suggests no underlying loss ratio deterioration. Zaffino notes that property impacts the weighted average negatively, but other business lines, especially casualty, remain above the loss trend.

The paragraph discusses the performance and expectations for Gladfelter's property portfolio. Gladfelter notes that while property losses are currently below trend, they are confident rates are above technical levels, though they acknowledge these rate decreases are unsustainable long-term and may require pulling back if persisted. Despite this, they see many opportunities in the property market, with strong submission counts and retention rates, and expect strong performance from their property line. Notably, their International Property segment is as large as their North American Property segment, indicating potential for growth overseas if the North American market becomes aggressive. Later, Brian Meredith from UBS inquires about North American Commercial growth, particularly regarding gross written premiums and ceded reinsurance's impact. Peter Zaffino explains that the first quarter growth was influenced by property reinsurance, with casualty growth for Lexington reflecting the net, and strong growth in their program business despite some benefit from reinsurance.

During an Investor Day presentation, Don discussed various programs, noting a reduction in the number of programs while adopting best practices from Glatfelter. There hasn't been significant growth in gross numbers, particularly in Lexington Property, where there was a contraction, although retail gross saw a slight increase. Net growth reflects reinsurance impacts, with the underlying portfolio strong and achieving double-digit growth according to Don Bailey. In the near term, sustained solid growth is expected, although reinsurance reductions might lower property nets in the future. Peter Zaffino is optimistic about strong new business and retention, while closely monitoring growth opportunities in different business lines. No adjustments have been made for casualty loss trends and inflation, which will be revisited mid-year. Brian Meredith and Peter Zaffino concluded the session positively.

The paragraph concludes a program, with an operator thanking participants and wishing everyone a great day and weekend before disconnecting.

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