Summary of American International Group (AIG) 2025 Conference Call Company Overview - **Company**: American International Group (AIG) - **Event**: 2025 Conference Call - **Date**: September 03, 2025 Key Points Financial Performance - Adjusted after-tax income per share increased by **56% year-over-year** driven by a **46% increase in underwriting income** [5] - Core operating Return on Equity (ROE) rose to **11.7%** for the quarter, with a calendar year combined ratio of **89.3%** [5] - Year-to-date, AIG returned **$4.5 billion** of capital to shareholders and achieved a third consecutive year of double-digit dividend growth [6] - S&P and Moody's upgraded the financial strength of AIG's insurance subsidiaries, marking the first upgrade from Moody's since **1990** [6] Strategic Initiatives - AIG is focused on enhancing its **underwriting culture** and operational excellence through digitization and the use of **GenAI** [3][4] - The company aims to achieve ambitious long-term financial targets and is on track to meet a **20% EPS growth** objective over three years [5] - AIG has retired **$830 million** of debt, resulting in a debt-to-total capital ratio of **17.9%**, one of the best in the industry [6] Market Conditions - The property insurance sector faced headwinds in **2025**, while casualty lines, particularly excess casualty, showed strength [8] - Financial lines have stabilized after a period of rate reductions, with AIG emphasizing the importance of transparency in property pricing and reinsurance costs [8] Technology and Innovation - AIG is embedding **GenAI** into core business processes to support underwriting and claims, with promising early results from pilot programs [9][10] - The company plans to roll out GenAI capabilities across various business lines, including its **E&S business** and **Lexington** [11] - Major tech companies are investing heavily in AI, with a combined **$400 billion** in CapEx announced for AI in 2025, which AIG expects to leverage for growth [12] Leadership and Talent - John Neal has been appointed as President of AIG, bringing extensive global experience and a strong track record in underwriting strategy [15][17] - AIG is focused on attracting and retaining talent, with a strong emphasis on training and developing underwriters to adapt to changing market conditions [73][75] Mergers and Acquisitions - AIG is open to M&A opportunities that align with its strategic goals, emphasizing the importance of cultural fit and financial accretion [63][64] - The company aims to enhance its capabilities in areas such as **A&H** and expand into new geographies through potential acquisitions [63] Underwriting and Claims Management - AIG is managing its underwriting portfolio with a focus on operational efficiency and reducing cycle times for submissions [24][28] - The company is cautious about the use of delegated underwriting authority, preferring to maintain control over underwriting outcomes [78] Future Outlook - AIG anticipates that larger companies will benefit from scale and investment in technology, positioning them for faster growth in the insurance market [56][57] - The company is prepared to adapt its strategies based on market conditions, particularly in property and casualty lines, to capitalize on growth opportunities [52][53] Risk Management - AIG maintains a conservative approach to reserves, focusing on strengthening its balance sheet and ensuring adequate pricing for long-tail claims [84][86] - The company is exploring the potential for shifting longer-tail casualty policies to a claims-made basis, although it recognizes challenges in client acceptance [88][89] Conclusion AIG is demonstrating strong financial performance and strategic repositioning in 2025, with a focus on technology integration, talent development, and operational efficiency. The company is well-positioned to navigate market challenges and capitalize on growth opportunities in the insurance sector.

Financial Data and Key Metrics Changes - Core operating EPS reached a record $6.14, up 14% year-over-year, driven by record underwriting, strong investment results, and premium revenue growth [5][6] - Core operating income was $2.5 billion, a 13% increase, indicating broad-based growth across the company's diversified operations [6] - Adjusted net investment income was nearly $1.7 billion, up 8%, with a fixed income portfolio yield of 5.1% [8][9] - Tangible book value per share grew 23.7% year-over-year and 8% from the previous quarter, with an annualized core operating return on tangible equity of 21% [9][22] Business Line Data and Key Metrics Changes - North America P&C premiums, excluding agriculture, increased by 5.3%, with personal insurance growing by 9.1% and commercial by 4.1% [12] - The life insurance division saw premiums grow almost 17.5%, while global P&C premiums grew 5.86% in constant dollars [10][12] - The middle market and small commercial segments showed strong growth, with premiums in the leading middle market division up 8.4% [13] Market Data and Key Metrics Changes - In North America, casualty pricing increased by 11.6%, while financial lines pricing decreased by 1.2% [15] - Internationally, premiums grew 8.5% or over 10% in constant dollars, with Asia growing over 12.5% and Latin America over 17% [17] - The London wholesale business saw premiums rise over 7%, while the international retail commercial business experienced a slight increase in P&C pricing [18] Company Strategy and Development Direction - The company emphasizes disciplined underwriting and is stepping away from unprofitable large account property business while focusing on middle market and small commercial growth [11][20] - The management highlighted the importance of global diversification and a talented workforce to support long-term growth [20] - The company is actively pursuing opportunities in emerging markets, particularly in Latin America and Asia, with expectations of double-digit growth [44][58] Management's Comments on Operating Environment and Future Outlook - The management noted a dynamic economic and geopolitical environment, with potential headwinds from budget deficits and trade policies, but remains confident in the company's fundamentals and growth prospects [19][20] - The company expects continued growth in both revenue and earnings, supported by a disciplined approach to underwriting and a diversified portfolio [20][22] Other Important Information - The company authorized a new $5 billion share repurchase program, reflecting confidence in its capital management strategy [22] - The quarter produced adjusted operating cash flow of $3.2 billion, supporting ongoing investments [22] Q&A Session Summary Question: Impact of litigation challenges on casualty and general liability coverages - Management discussed the inflationary impact of litigation costs and emphasized the need for public policy reform to address these issues [28][30] Question: Growth in Latin America - Management highlighted strong growth in Mexico and Argentina, driven by various segments including auto and small commercial [41][44] Question: Stability of global P&C growth - Management confirmed that growth remains durable, particularly in middle market and small commercial segments, despite stepping away from some large account property business [53][54] Question: Medical cost inflation's effect on workers' comp - Management clarified that medical inflation trends differ from those affecting workers' comp, and they are using conservative factors in reserving [71] Question: Sensitivity of large domestic accounts to social inflation - Management noted that terms and conditions have tightened in response to social inflation, impacting coverage demands [75][76] Question: Breakdown of international growth - Management explained that growth is driven by new buyers and industries, alongside market share gains [79][80] Question: Investment income trends - Management indicated that recent flatlining of investment income was due to lower-than-expected private equity income, but expects growth moving forward [99][100] Question: Share buybacks strategy - Management stated that share buybacks will be flexible based on market conditions and opportunities, with a recent authorization for $5 billion in repurchases [106] Question: Reinsurance market attractiveness - Management mentioned a disciplined approach to reinsurance, avoiding trades they deemed unattractive [110]