AIG(US:AIG)2023-08-02 16:12Financial Data and Key Metrics Changes - Adjusted after-tax income was $1.3 billion, or $1.75 per diluted common share, representing a 26% increase year-over-year, marking the best quarterly adjusted EPS result since 2007 [7] - Net premiums written in General Insurance grew 11%, with underwriting income approximately $600 million and an adjusted accident year combined ratio ex-CATs of 88%, a 50 basis point improvement year-over-year [7][33] - Adjusted pre-tax income for Life and Retirement was $991 million, up 33% year-over-year, with premiums and deposits exceeding $10 billion, a 42% increase year-over-year [8] Business Line Data and Key Metrics Changes - General Insurance gross premiums written were $10.4 billion, an increase of 11%, with Global Commercial growing 15% and Global Personal decreasing 1% [24] - Life and Retirement segment saw adjusted pre-tax income of $991 million, with a strong performance in Fixed Index Annuities contributing to a 42% increase in premiums and deposits [8][37] - North America Commercial net premiums written grew 18%, with Retail Property growing over 50% and Lexington growing 18% [24][60] Market Data and Key Metrics Changes - In North America, the accident year combined ratio ex-CATs was 85.1%, a 310 basis point improvement year-over-year [33] - International Commercial net premiums written grew 6%, primarily driven by property, which was up 34% [25] - The overall market exhibited more orderly behavior during mid-year renewals, with mid-year property cat pricing increasing 25% to 35% year-over-year in the U.S. [35] Company Strategy and Development Direction - The company is focused on strategic actions such as the divestiture of Validus Re and Crop Risk Services to streamline its business model and reduce volatility [11][18] - The launch of Private Client Select as an MGA aims to serve high and ultra-high net worth markets, addressing foundational challenges in these segments [19][20] - The company is committed to achieving a 10% plus ROCE post-deconsolidation of Corebridge, with a focus on improving underwriting profitability and reducing expenses [39][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver high-quality outcomes despite challenging market conditions, highlighting strong financial performance and strategic progress [6][7] - The company anticipates continued growth in net premiums written, particularly in the high and ultra-high net worth markets, with expectations of over 75% growth in the latter half of the year [31] - Management noted that the reinsurance environment has improved, allowing for better risk management and reduced volatility [36] Other Important Information - The company returned $822 million to shareholders in Q2 2023 through stock repurchases and dividends, reflecting a commitment to capital management [9][38] - The balance sheet remains strong, with $4.3 billion in parent liquidity and a focus on maintaining well-capitalized subsidiaries [53] - The company is exploring strategic alternatives for the disposition of its U.K. Life business as part of its ongoing efforts to streamline operations [23] Q&A Session Summary Question: Focus on North American Commercial business growth - Management highlighted strong growth across various segments, with Lexington and Retail Property showing significant increases, while Financial Lines faced headwinds [58][60] Question: Future CAT load expectations - Management indicated that CAT loads will decrease due to strategic actions taken, including the divestiture of Validus Re, which will reduce overall exposure [62][65] Question: Changes in rate increases and loss trends - Management confirmed that rate increases are outpacing loss cost inflation, with a disciplined approach to underwriting and capital deployment [68][70] Question: Specialty casualty submissions in Lexington - Management reported record submission counts in Lexington, indicating strong growth potential in the specialty casualty market [72][73] Question: Pro forma margin profile for North America Commercial - Management provided insights into the margin profile, noting that Validus Re's impact on combined ratios was positive, but its acquisition ratio was higher than normal [75][76]