AIG(AIG) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted after-tax income per diluted share was $1.96 for Q4 2025, a 51% increase year-over-year [5] - Underwriting income for Q4 2025 was $670 million, up 48% year-over-year [5] - Full-year adjusted after-tax income per diluted share was $7.09, a 43% increase year-over-year [6] - Full-year underwriting income reached $2.3 billion, a 22% increase year-over-year [6] - Net investment income on an APTI basis was $3.8 billion, an 8% increase year-over-year [11] Business Line Data and Key Metrics Changes - Global commercial net premiums written grew 3% year-over-year, with international commercial leading at 14% growth [5] - North America Commercial net premiums written increased by 4%, while retail property contracted by 8% [7] - International Commercial net premiums written grew by 3%, driven by property and global specialty [7] - Global Personal net premiums written contracted by 3% due to higher ceded premiums [8] Market Data and Key Metrics Changes - North America casualty lines pricing remained favorable, with increases in the mid-teens for wholesale and excess casualty [10] - International property pricing increased by 3%, while energy pricing decreased by 10% [10] - Overall pricing in North America commercial renewal increased by 6%, with retail excess casualty up 15% [41] Company Strategy and Development Direction - AIG is focused on maintaining disciplined underwriting and capital management while pursuing growth through strategic transactions [12][18] - The company aims to achieve a sub-30% expense ratio by 2027 [9] - AIG is leveraging GenAI capabilities to enhance underwriting and claims processes, with a focus on efficiency and speed [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in AIG's financial strength and liquidity to execute strategic objectives [13] - The company anticipates low- to mid-teens net premiums written growth in General Insurance for 2026 [29] - Management highlighted the importance of maintaining strong underwriting margins despite competitive pressures in the market [10] Other Important Information - AIG returned $6.8 billion in capital to shareholders, including $5.8 billion in share repurchases [12] - The company achieved a significant milestone by delivering over $2 billion in underwriting income for the first time since 2008 [6] - AIG's remaining ownership stake in Corebridge Financial was 10.1% at the end of 2025 [12] Q&A Session Summary Question: Insights on the expense ratio outlook - Management indicated that the expense ratio is expected to be lower in 2026 compared to 2025, with a focus on managing corporate expenses [51][54] Question: Clarification on general insurance net premium growth - Management noted that growth comes from various initiatives, including reinsurance benefits and organic growth, but did not provide specific breakdowns [56][58] Question: Additional margin in casualty lines - Management explained that additional margin in casualty lines is a conservative approach to cover macro uncertainties, not due to deterioration in the underlying portfolio [64][66] Question: Breakdown of interest and dividends in the investment portfolio - Management highlighted significant changes in the investment portfolio, including a shift to higher yields through active management [67][68] Question: AI implementation and orchestration layer - Management discussed the progress in AI implementation and the focus on orchestrating multiple AI agents for improved efficiency [71][74]