AIG(US:AIG)2022-02-17 17:10Financial Data and Key Metrics Changes - Adjusted after-tax income for 2021 was $5.12 per diluted share, representing over 100% year-over-year growth [5] - The company returned $3.7 billion to shareholders through share repurchases and dividends, and repurchased $4 billion of debt, reducing debt leverage by 380 basis points to 24.6% [5][34] - Diluted adjusted earnings per share for Q4 2021 were $1.58, a 68% increase over the prior year [33] Business Line Data and Key Metrics Changes - General Insurance net premiums written increased by 8% overall on an FX-adjusted basis in Q4 2021, with Commercial lines growing by 13% [9] - Life and Retirement business achieved a return on adjusted segment common equity of 14.2% for the full year [8] - The accident year combined ratio ex CATs for General Insurance improved by 310 basis points year-over-year to 89.8% in Q4 2021 [10] Market Data and Key Metrics Changes - North America Commercial saw an 11% growth in net premiums, while International Commercial grew by 16% on an FX-adjusted basis [11][37] - Personal Lines net premium growth contracted by 1% in Q4 2021, driven by a 5% reduction in International [9] - The overall Global Commercial saw rate increases of 10% in Q4 2021, marking the third consecutive year of double-digit increases [38] Company Strategy and Development Direction - AIG is pursuing a separation of its Life and Retirement business, with an IPO expected in the second quarter of 2022 [8][26] - The company aims to maintain a balanced capital management strategy, focusing on growth opportunities in General Insurance while returning capital to shareholders [30] - AIG 200 transformation program is expected to deliver $1 billion in run rate savings by the end of 2022 [8][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's improved underwriting portfolio and strong performance heading into 2022 [32] - The company acknowledged challenges from climate change and increased natural catastrophe risks, prompting a strategic repositioning of certain business lines [20][21] - Management expects continued margin expansion and improvement in combined ratios through 2022 and into 2023 [40][45] Other Important Information - The company ended 2021 with $10.7 billion in parent liquidity, providing significant flexibility for capital management [30] - AIG's investment portfolio performed well, with total cash and investments reaching $361 billion and net investment income for the full year at $12.9 billion [51] - The company plans to maintain its current annual dividend level at $1.28 per share post-IPO [31] Q&A Session Summary Question: Regarding capital management and share buybacks - Management indicated that the $3.9 billion share buyback authorization is a floor and may be updated post-IPO based on capital management strategies [58][59] Question: On the sub-90% underlying margin target in General Insurance - Management expects continued improvement in both loss and expense ratios in 2022, with a focus on maintaining a sub-90% combined ratio [60][61] Question: Clarification on alternative investments and consolidation offsets - Management explained the relationship between alternative investments and consolidation offsets, noting that outperformance should not be expected to continue at the same level [65][66] Question: On the mechanics of capital transfers prior to the IPO - Management confirmed that Life and Retirement will issue debt to pay an $8.3 billion dividend to AIG, which will be used to retire debt, positioning the company favorably for the IPO [73][74]