AIG(US:AIG)2025-05-02 12:30Financial Data and Key Metrics Changes - AIG reported adjusted after-tax income of $702 million, or $1.17 per diluted share, for Q1 2025, reflecting strong performance despite a challenging environment [11][12] - Net premiums written increased to $4.5 billion, an 8% year-over-year growth on a comparable basis, driven by a 10% growth in global commercial [12][36] - The general insurance expense ratio decreased to 30.5% from 31.8% in the prior year quarter, primarily due to the divestiture of the travel business [13][14] Business Line Data and Key Metrics Changes - North America commercial insurance net premiums written grew 14% year-over-year, with Lexington growing 23%, led by a 27% increase in Lexington casualty [12][36] - International commercial insurance net premiums written grew 8% year-over-year on an FX adjusted basis, with property growing 35% and marine growing 17% [12][13] - The accident year combined ratio as adjusted was 87.8%, the best first quarter result for AIG since the financial crisis, compared to 88.4% in the prior year quarter [14][36] Market Data and Key Metrics Changes - In North America, rate increases were led by excess casualty at 16%, while financial lines decreased by 5% and retail property decreased by 7% [16][17] - Internationally, casualty had a 7% rate increase, while property had a 2% increase, offset by a 14% decrease in global specialty and a 3% decrease in financial lines [19][20] - The overall market remained favorable, particularly in segments with strong underlying fundamentals [15][16] Company Strategy and Development Direction - AIG aims to leverage its diverse geographic footprint and strong product offerings to meet clients' risk needs, with a focus on deploying Gen AI across its operations [9][10] - The company is committed to maintaining a disciplined capital management strategy, with plans to repurchase $5 billion to $6 billion of shares in 2025 [20][35] - AIG is focusing on its joint venture in India, Tata AIG, which is expected to grow at a compound annual growth rate of 20% through 2030, driven by India's accelerating economy and rising insurance adoption [21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term strategic and financial goals despite geopolitical and macroeconomic challenges [11][12] - The company anticipates that net retained catastrophe losses will remain within expectations for 2025, largely due to its reinsurance structures [15][19] - AIG expects to achieve a core operating ROE of over 10% in 2025, with a focus on maintaining an expense structure aligned with the company's size [34][49] Other Important Information - AIG returned $2.5 billion of capital to shareholders in Q1 2025, including $2.2 billion in share repurchases and $234 million in dividends [20][35] - The adjusted effective tax rate for Q1 was 22.8%, with expectations for the full year to align with 2024 levels [47][48] - Book value per share increased by 10% year-over-year to $71.38, while adjusted tangible book value per share decreased by 8% to $67.96 due to the impact of the CorBridge deconsolidation [48][49] Q&A Session Summary Question: Can you elaborate on the transformation to using GenAI? - Management indicated that the transformation began with digitizing workflows and improving data quality, enabling the adoption of GenAI to enhance underwriting processes [54][55] Question: What is the current pricing environment in North America? - Management acknowledged some headwinds in property pricing but emphasized strong technical pricing for good returns, with casualty rates remaining robust [57][60] Question: How does uncertainty around tariffs affect underwriting pricing? - Management stated that they are cautious and are building risk margins into pricing to account for potential impacts from tariffs and inflation [78][82] Question: Will the expense impact from other operations continue throughout 2025? - Management expects the expense levels seen in Q1 to be reflective of the overall year, with a focus on maintaining a lean operating model [83][85] Question: How does the current environment affect M&A strategy? - Management remains disciplined in pursuing acquisitions, focusing on long-term value and opportunities that align with AIG's strategic goals [89][90]