AIG(US:AIG)2023-09-06 11:05Summary of AIG 2023 Keefe, Bruyette & Woods Insurance Conference Company Overview - Company: American International Group, Inc. (NYSE:AIG) - Date: September 6, 2023 - Participants: - Peter Zaffino - CEO - Sabra Purtill - CFO - Meyer Shields - KBW Key Highlights and Accomplishments - 2022 Performance: - Achieved an accident year combined ratio of 88.7%, with $2 billion in underwriting income, a $1 billion increase from the previous year [2][3] - Completed AIG 200 initiative, resulting in $1 billion in run rate savings, six months ahead of schedule [3] - IPO of Corebridge Financial, the largest U.S. IPO of 2022, despite challenging market conditions [3] - Returned over $6 billion in capital through share repurchases and dividends, and reduced net debt by over $700 million [3] - 2023 Performance (First Half): - Achieved a 10% growth in written premiums on an FX and lag adjusted basis, driven by a 12% growth in the commercial business [4] - Reduced gross limits in general insurance commercial business by over $1.4 trillion since 2018, with 70% from the property portfolio [4] Strategic Transactions - Validus Re Sale: - Announced sale for $3 billion, expected to close in Q4 2023, aimed at reducing volatility in PMLs and generating additional liquidity [5][6] - Crop Risk Services Sale: - Sold to American Financial Group for approximately $240 million [6] - Corebridge Health Care Sale: - Entered into an agreement to sell to AXA for EUR 650 million, expected to close in Q4 2023 [7] Market Conditions and Risk Management - Catastrophe Activity: - First half of 2023 saw insured losses exceeding $50 billion, with significant contributions from secondary perils [8] - Notable events included wildfires in Canada and hurricanes in the U.S. [8] - Reinsurance Strategy: - Maintained attachment points and utilized a strong reinsurance program to control volatility [16][17] Financial Management and Capital Strategy - Capital Management: - Increased quarterly common stock dividend by 12.5% and authorized $7.5 billion in share buybacks [9] - Targeting a share count of $600 million to $650 million, with leverage expected to remain in the low 20s [9][10] - Liquidity Position: - Reported strong parent liquidity of $4.3 billion at the end of Q2 2023 [10] Future Focus and Growth Strategy - Sustainable ROCE: - AIG aims for a sustainable return on capital employed (ROCE) of over 10% through strategic portfolio shifts [10] - High Net Worth Market: - Plans to grow in the ultra-high net worth space through a new managing general agency (MGA) in partnership with Stone Point Capital [26][27] - International Growth: - Focus on expanding in Japan, leveraging digital capabilities and existing distribution networks [40][41] Additional Insights - Operational Improvements: - AIG 200 initiative has enhanced core capabilities, including IT and underwriting systems [64][65] - Market Dynamics: - The reinsurance market is experiencing increased demand and pricing pressures due to recent catastrophe activities [15][17] - Divestiture Strategy: - AIG is focused on divesting non-core assets to streamline operations and enhance focus on core insurance business [34][35] This summary encapsulates the key points discussed during the conference, highlighting AIG's strategic initiatives, financial performance, and future growth plans.