American International Group, Inc. (AIG) Bernstein's 40th Annual Strategic Decisions Conference (Transcript)

Core Insights - AIG has successfully repositioned its underwriting standards and results, moving from a highly unprofitable portfolio to delivering strong underwriting results, with 2023 being highlighted as the best year yet [2][4] - The company is focused on its strategic priorities, including the deconsolidation of Corebridge and the continued sell-down of AIG shares, which are essential for future growth and financial flexibility [2][7] - AIG Next is an initiative aimed at reducing expenses and streamlining operations, which is expected to save $500 million by the end of 2025 [3][46] Underwriting Performance - From 2018 to 2023, AIG's Commercial Lines combined ratio improved by 2,600 basis points, indicating significant progress in underwriting performance [6] - The company has reduced its catastrophe (CAT) ratio from 16% in 2017 to 4.7% in 2023, showcasing a dramatic decrease in volatility [4][5] - AIG has divested from high-volatility businesses, such as reinsurance and crop risk services, to focus on core areas with better growth potential [6] Financial Flexibility and Capital Management - AIG has generated $2.9 billion from three secondary offerings and $3.8 billion from a 20% sale to Nippon Life, enhancing its financial flexibility [7][9] - The company has significantly reduced its debt, projecting a debt-to-capital ratio of 15% to 20% upon deconsolidation [8] - AIG has a $10 billion share authorization program, reflecting its strong liquidity and plans for capital return to shareholders [9] Growth Strategy - AIG is pivoting towards growth while maintaining underwriting discipline, emphasizing a culture of underwriting excellence [11][12] - The company is focusing on high-growth areas such as Lexington and global specialties, which have shown strong performance [17][18] - AIG aims to increase its non-admitted personal lines business, particularly in high net worth segments, to capture more market share [61] Market Dynamics - The excess and surplus (E&S) market has grown from $34 billion in 2003 to $114 billion today, indicating a significant shift in market dynamics [24] - AIG's wholesale division has experienced a compound annual growth rate of 20% from 2017 to 2023, reflecting successful strategic changes [29] - The company is well-positioned to navigate market cycles, with a focus on maintaining strong underwriting terms and pricing [52][53] International Opportunities - AIG sees substantial growth potential in Japan and India, with plans for significant organic growth in these markets [63][67] - The joint venture with Tata in India is expected to double the size of the business to between $3.5 billion and $4 billion in top line revenue over the next five years [67] Financial Lines and Risk Management - AIG is one of the lead markets in financial lines, setting terms and pricing in a market that has been challenging in recent years [70] - The company has adjusted its risk appetite, particularly in casualty lines, to mitigate exposure to volatility and ensure profitability [42]