AIG - Earnings call transcript Q1 2018 | American International Group, Inc.

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Operator

Good day, and welcome to AIG's First Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd now like to turn the conference over to Ms. Liz Werner, Head of Investor Relations. Please go ahead, ma'am.

Elizabeth A. Werner

good and Derik, you, morning, everyone. Thank

GAAP future our whether or the measures. reconciliation as morning, which of events CEO Duperreault; such have CFO, management team the over Kevin non-GAAP on Hogan. Brian our and Discussion begin, I'd our presentation to differ the materially Sid time, from include may Factors. we management's are the financial not presentation Form and expectations to guarantees like otherwise. senior you'll I'd statements supplement, performance Any are forward-looking and performance such This like today's statements. our to Today's Management's comparable Analysis from obligation XX-K is any new that statements, factors current our and result to XXXX obligation in uncertainty subject our to financial of are may contain under Peter turn not to events. you could Conditions CEO, of call slides Sankaran; this for Life opportunity Factors of The Financial including remind and forward-looking any any in contain figures available described are possibly the Zaffino; cause a measures today's Insurance, website. and included Operations under on expressly circumstances. and forward-looking AIG to Retirement, in and of based hear Before members of Brian. our changes of or information, forward-looking and Actual of disclaims and update future which presentation under statements, General our CEO At that may Results most is this Risk events

Brian Duperreault

year a change XX Liz. Good a accomplished quarter our and we've outlook. driven a first great that AIG months, and past reflect I'd you, the deal. meaningful It's our to my nearly and morning, over since return time future results, Thank on to like Today, everyone. have

three and strong During have is benefited talent businesses and world capital Re, are we incredible in we already and year strength strategic regulatory talent DSA federal acquisition announced is resiliency, as and our an of an a balance organization of entered class wake strong Life to and catastrophes Retirement in successfully showed quarters and momentum Insurance nonbank for single focused, the last longer in the last efficient attracted unprecedented the change runoff year, track SIFI. both that more our over augmenting extremely and We the status reorganized Validus, base. We no entity sheet. and picking up the mid-XXXX. which from managing structure an into with created We a financially close General and on

for taking position AIG grow to profitable growth hold. it and is strategy Our term long

first demonstrated The solid period earnings and progress of quarter another stability.

more General provide For winter $X.X the should income, we've despite results evident well in quarter, full of to of reduce strategy severe and as volatility losses. our $XXX quarter severe pre-tax products across taking the to winter Insurance weather higher detail will results. our and been XXXX year geographies. as were continue billion catastrophe on actions results Peter The including in and high we losses future storm with line underwriting losses. execution in operating first reinsurance be reported million

and would Our outlook where confident opportunistic point calls as of Retirement came the our Institutional our of mentioned below ongoing disciplined we the to year underwriting compression million, of amortization over Life reserves in and our ratio these underwriter and positive expect we starting quarter we the in don't business, XXXX, ADC, have as improve and we Annuities, upon XXXX Group evident said, maintaining declared were remain expected. transactions. despite Sid we Last $XX XXX% for Returns expense I've will improve spread come speak will in including guidance. and the businesses. net was do profit positive enter to ratios. actions of and solid will first quarter, $XXX while on combined stable Markets year Index trajectory. development end I engaging remain Stability this and on focusing Kevin steady I That reserves to quarter Life by loss and speak a claims and ADC new of Retirement which in a the writing we results. million through gain. continuing had deliver an in from in this deposits were said of past was our provide we reaching XXXX combination to as a also

to We expect and as investments value actions position profitable for time company over performance of top a decisive growth. also on equity to quartile making and the book reach the growth return long-term our we're result

In of goals, retaining addition towards goals working risk. will increasing and outlined and and entire leadership to My across technology talent, on success inclusion is attracting modernizing AIG, our our I've managing and urgency to committed updating in team financial also and our and will diversity we the measure continue. focusing certain sense top systems

the give financial Sid it turn more to insight over results. will I into Now you to

Siddhartha Sankaran

I'll DSA provide everyone. you, capital good acquisition our and Re. quarter comment Thank on This the Validus morning, update results, of Brian, an status first our the financial position, on morning, liquidity and and and

losses, over of AAL. Turning of than our an earnings higher which to quarterly pre-tax which reported core X.X%, million we adjusted and after-tax adjusted $X.XX $XXX ROE of $XXX slide per X, were catastrophe share reflected million

Cat Casualty with loss quarter, from ratio million majority our evenly adjusted earthquake. North in the as in $XXX Guinea full our International mudslides XX.X% XXXX. is and and For accident losses losses included well the portfolio reporting in from million in Papua American Insurance Commercial approximately were loss from storms year AAL the improvements California spread of as that million throughout our the for assume New Financial This year $XX reflected losses line our January, American was we The Lines. Insurance winter Personal the early General mix $XXX ratios purposes, as financial cat year. in business. North was The in which U.S.

this one impact our earned year We American of the changes improvement net severe North However, above offset that Insurance. structure, premium impact the to the of and weather storms winter to was U.S. Personal related overall increased non-cat higher point. reinsurance impacted by about loss estimate GI's by losses both winter ratio losses Commercial accident average and attritional that

our supplement, our against AAL from year one see can to financial over changes XXXX. you point As our full by structure reinsurance improve

we we our as end, mentioned year Japan at Additionally, merger. completed

of result an impact of a pre-tax period that two As Japan, in of reinsurance and in approximately to underwriting fiscal his was the of earnings trends merger, $XX resulted of on Peter the months remarks. which additional million. will of conformed further Fuji's AIU comment recognition

solid changes the principles. Kevin or Our with share Book accounting speak quarter, investment from DTA Retirement delivered further million per businesses X.X% his an benefiting returns the results Life will expected and and of end, of up on better up quarter quarter, excluding ex X.X% remarks. at $XX impact in quarter alternative and XX.X% to in and another the of trends than in for $XX.XX results structured AOCI for business securities. was value payments adjusted ROE nonrecurring

with and both tax we you adjusted value We continue align DTA with excluding attribute our ROE. book report to provide per AOCI to how share

$XX.XX AOCI We DTA value was savings. tax the per value attribute value see ex Book present of continue tax our share to end. of at the the as future cash quarter

$X.X net in operations billion X% investment from totaled $X.X lower the ago. billion including Insurance portfolios, reported or quarter Additionally, income legacy insurance than a the year our the

total returns While in we with run provided last investment X% was line annual rate expectation, the alternative exceeded largely our the quarter.

and quarter, basis of invested X% an operations, yield, Life money new Retirement lower our the portfolio XX our average at reflecting which portfolio. For the than the of is about in points duration we yield roughly

our General is For yield in Insurance, X.X% portfolio in yields. line coming with was money quarter, the new which

interest stated, As positive rise steady we for we businesses. view as an have a our incremental in rates

deferred net was came including $XXX development quarter. than our this better reserve this portfolios, to million quarter, favorable trends Across actual the of $XX in expected on ADC. benefit mentioned, Brian of million expected gain versus As related the claims amortization there the the

original picks supplement, $XX.X adverse development line the our not XXXX have of changes cumulative to end held lines at was with any payments and ADC we made to cautious. ultimate in payout XX the business shown page of material loss on loss long-tail quarter and and subject on our chosen to billion. However, first cover inception. the This respect to With were financial projections remain

by mid-year the billion We the quarter-to-quarter items to Berkshire XXXX, ADC. inception adjusted to-date tax payments that by pierce XX% paid rate project XX% the be point paid and will of in XX% mix to quarter. point continue our anticipate attachment claims which subject claims effective brought business around at to the We given for Hathaway normal fluctuations Discrete AIG. $XX will

we to items. XX% be before and discrete However, XX% full between expect tax rate adjusted continue year our effective to

Our flow balance sheet and strong. cash free remains

billion the I of expected With just slide for at billion level March referred Cash included an maturities acquisition our in fund debt view liquidity quarter payments and to $X.X proceeds will acquisition. between the used Validus, completed company the $X in we on mid-XXXX. dividend January to holding the $X.X interest We was respect liquidity our remain to, current which reflecting be target March. in representing $X.X to holding to in on billion the Validus the at billion, shown X, issuances As and end closing of partially replaced of track debt annual from $X debt we payments, quarter issuances company billion, be costs.

segment we'll Insurance and Lloyd's Insurance Following in America the General Talbot, Commercial North the segment. General our Validus business, remaining the International closing, report the operations in Commercial

regulators with capital, efficiency to subsidiaries anticipate of liquidity As the part our approvals. once the at of structure, and dividends Validus after business tax it part risk, also Validus the is appropriate Re. we the larger AIG $XXX entity taking of DSA sharing million including manage We regulatory and first capital payments $XXX consulting actions enterprise. aligning In insurance of receiving quarter, million received of necessary and leverage, looking the AIG and are from better the segments, we to legal

non-recurring billion, case potential flows. from for see from and tax insurance $X our dividends base subsidiaries upside Our we payments remains although annual

target ratios companies at Our are our capital at levels. P&C

Our capital reserves legacy level. are our Re DSA through Re companies reinsurance the ratios its above DSA also above transaction. Life is the Retirement following target capital for levels, target and life and

billion $XXX Our during leaving strong flexibility. approximately our the quarter, repurchased of million shares first authorization. to under us balance $X sheet common provide We should share ongoing continue remaining and financial warrants repurchase

execute to in as of consider had continued we value tool to profitable and repurchase on shareholders. profile. reducing a delivering strategy to volatility delivering a cash a our where flow share growth, solid and sheet long-term continue strong quarter up, sum long-term To maintaining We we balance

Now, to I'd over Peter. the like turn to call

Peter Zaffino

morning. held and I in returned hundreds clients our to pleased from where results, of solving Thank and meaningful strategic who high of our our with progress was issues. view note you, assist the market from taking and members meetings update Having first over support engagement on four-day our our period, General of outline strategic I the direction will recently are very broker Insurance's good provide new and distribution initiatives, an partners Sid, conditions. quarter a of current General discuss of risk teams and level interaction on underwriting Today, Insurance's RIMS, senior and

comments I initiatives, we volatility our profitable my described calls with less on business Turning would as progressing like a are earlier. previous to underscore toward Brian to that

other more our units reorganizing business transition end-to-end business attracting lines underperforming business, strong and to addressing be segments, effective growing of profitable main include in priorities market. the our Our to while talent

to are exposures strategy our to business. reshape also of We many continuing our net reduce reinsurance areas in

in increasing the across into the a And European During compensation of volatility as We that includes international new business purchased quarter program. secured limit and reducing reduced entered catastrophe to limits to treaty. North over new per our our our I an our on aerospace by a loss mentioned it end by past International further expanded retention. terrorism property and reduced Property Cat, quarter. last aggregate of Casualty risk we in our We reduce our intend the workers' net cat exposures quarter's the net treaty second that and call, Marine we net actions program America we took expand excess

going short-term, While should impact written premium our forward the will reinsurance strategy in net be volatile. results our levels less

our has brokers. delivers Insurance's underwriters Turning Chief structure, clients in Tom and collaborating businesses accountability appetite Validus organizational we to Casualty along Chief Bolt recently, Further, progress operations. in value January transaction, which to General with finalizing are building for Claims leaders major better early empowers informed and stabilize Tom in pricing that appointing positioning leadership net our other Officer. appetite, U.S. the Anthony leaders our certain General joined gross Officer, Field a instill and appointments of in reviewing joined lines excellence Most market by on more culture to North on as our balance referred and Insurance's International. decisions. and the align risk making the And Chris leaders Sid as our better is our risk his further improve a and March business one new in to remarks. and Townsend of the on Underwriting His been data countries. their risk us in to make been AIG and priorities select to with Vidovich as limits per of in geographies focus has structure, to utilize first appointed America his bit CEO to working and international our capabilities team performance. performance

process executives. its We proceeding to we And target. have with the retention forward the of to and transition streams top our various is place work colleagues in look Our milestones for welcoming on organization's AIG. well for agreements Validus talented group planning

details first on I General we underlying on lag on impact X, provided that my Insurance's of the performance premiums Fuji excluding to profitability. quarter and Turning mentioned. will business slide Sid results focus comments total

elimination, XX% the driven merger our U.S. reinsurance declined within quarter program and America and First Fuji written excluding North XXXX lag Casualty net catastrophe exchange by strategic actions property and foreign premiums Property. year-over-year

expect to net will to continue relatively XXXX XXXX. that be We premiums written flat

cat last were Personal line we generally XX.X% Insurance Moving loss losses, of adjusted pleased to and profitability, the driven discussed. first largely quarter with Sid by The accident was in which included million net businesses. ratio Commercial severe Lines International higher $XXX winter reinsurance America year weather year to impact non-cat losses, mix and achieve North improvements earned improvements the in changes. of Long-Tail largely on by our were Commercial These offset business and in premiums,

While reinsurance the XX% programs of approximately loss driven total our AAL. ratio, accident new cat they've in a year decline impacted the

of both portfolio Fuji net Insurance. the expenses, expenses acquisition XX%. by has stability to in and improved our approximately of reduced higher increased and excluding Our catch-up, the Shifting growth Personal overall exposures management largely slightly by expenses PMLs driven

premiums the basis, On X.X the expense in strategic resulting actions. increased decline our the from same ratio reflecting points, net earned

to we of As not additional executing long-tail new North core included America's commercial results. mix referenced first business are Insurance and America integration. Japan from I loss last quarter, adjusted profitably In various perform International year but of and Insurance, on driven XX and through quarter XXXX the ratio year benefits commercial complete, to expenses North largely increased In business loss International, and mix to ratio X we're improved Personal insight with earlier deterioration actions the continuing reduce due results weather. merger our managing model. and mentioned to Fire our that impact in winter do now Personal underwriting accident Marine accident year adjusted ratio AIU I Fuji slight full provide acquisition was into changes. strategy part Slides improvements by compared the the as and operating with

as improvement the year. to We but in have anticipated, new which we merger business we see had some we the through following expect reduction experienced progress

year results. to earn ratio underwriting an the and Brian rate year As we into as believe the of accident under actions by that XXX% our combined mentioned, manage our run basis exit expenses on end efforts financial improve will our

experience. U.S. the General in the to fourth attachment of the single-digits recap rate We improved quarter high significant and improvement rates low point wide line in the adjust To Regarding similar being continue variables are mid-single-digits decisions with of E&S Property. and variations see overall business, underwriting initiatives with across in the and we performance. accordingly. on commentary improve by portfolio U.S. signs in In cost were on Insurance's quarter, the regularly driven but in increases pricing quarter, my underway to the last trends key remaining Largely market and to strongest average conditions, loss core to increases most line with Casualty, review other depending property.

We progresses. the as build expect momentum year continue will to

call set enhance are underwriting to some are While loss against of both a time into this and statement, brokers clear to strong Kevin. of and and our a priorities improvement deliver it team income right I'll contribute combination takes expense that, organization. We've to assembling a executing and strength for the and experienced actions turn run the earn our the exit XXXX value leadership our With ratio over structure, the terrific management implemented rate. to of clients to will

Kevin T. Hogan

and morning, Peter, everyone. you, good Thank

As producing the million results for see pre-tax adjusted you in Retirement can a slide and ROE. Life XX.X% XX, quarter produced generating solid adjusted $XXX on and income strong

$XX As reflected Retirement Retirement from Sid yield benefited in structured Group and transaction other in mentioned, payments non-recurring primarily is our in securities, on enhancements. which results Individual million a

the Asset low markets impact has growth of in rate environment months partially strong by the XX mitigated last equity our the results. over driven

in we Insurance maintaining strategy annuity continued are individual strength, sales executing to In in and Markets. conditions, Annuities Index remains transactions growth opportunistic to as Finally, emphasizing Institutional that with product quarter, for living the a hedging risking guarantees unique expected, The channel to pleased de in performed portfolio and breadth gain benefit supported our deposits and program the Retirement market. hedging report experienced modest in our response the of by industry our Life for Group be greatest significant product periodic during especially market challenged resulting these features. I'm as our volatility steady

Appeals ruled DOL uncertainties Fifth distributors the of In denied. impacting fiduciary entirety. action in and for Rule no to has to Department were of was In is Circuit the variable negatively affect that further the it U.S. March, particularly overreached suspending sales, the invalidating its of terms annuities. many of filed authority continued The the taken, promulgating the in environment, announced If its significantly its Fiduciary Circuit's Court rule have rule. Fifth DOL that motions the ruling enforcements intervene effect recently of regulatory the

an products April. regulators releasing making SEC the the of care publication what their new reevaluating impacted in strategy separately engaged state SEC of of believe innovative the uncertainty, to as of the solutions our broad appropriate in SEC's stakeholders. that the package with In insurance sale of distribution across with and ongoing to investment our proposed partners this is standard for lawmakers and is our a We proposal services accelerate face the However, rule dialogue help necessary will continue needs are support across product portfolio. evolve

Now, I our results each of businesses. will for discuss briefly

delivered Individual XX, variable fixed below to for hurdle as quarter Turning chose Retirement strong We the capital rates. on sales annuity deploy and at Index declined in annuity Annuity not returns we slide to the quarter. growth our

Individual historical result end Annuity market negative flows net were driven at under Retirement in Index flows However, by quarter highs and overall Individual which performance administration assets net the than increased were and worse income. equity positive remained Retirement's at prior year. fee

also We comparison we base conditions. accretion also for quarter first investment net management, reinvestment continued XXXX. for active of Annuities reflects The continued spread income of year-over-year expected compression as reflecting practice saw our spread of higher the unexpected Fixed but current

acquisitions timing primarily the steady, large funding page due plans. while our deposits plan our Turning Retirement periodic group to of declined to remained Group XX, on new

strong this front and group new acquisition Our growth funded with to momentum confirmed be good expect plans on we year. new is the

surrenders the Our worse large prior plans. than flows were the few by loss remained a negative year, of and with impacted net

larger see these to among due care Financial base and Individual historical highs number contribution management make to Group Despite compression. the in in in activity well we that our our rate market. we at despite defined we end, as we digital expected to spread M&A As capabilities groups health but operating market. their Retirement forward, the assets an and yields Advisors were move sponsors to plans not-for-profit Retirement, industry of believe natural headwinds, and the providers planned at attrition experienced platform under expect VALIC administration investments in reducing certain Similar us combined the with quarter leader continue disciplined position

mentioned, While we rates risk portfolio historically levels. to money be to free continue as tight and at rates, have increases seen yields continue Sid recent spreads be new in below

Group net environment, current Looking our forward X absent X will expectation to our per Individual basis the significant decline base rate is points Retirement quarter. by across and in that spreads changes approximately overall

Let's Life Insurance now move to on XX. slide

continued business and to administrative to top-line continue U.S., the distribution make focus Our new Life support In platform, growth. progress. strong narrowed efforts simplification modern product Insurance our

increased term and both had sales. premiums growth universal and deposits we and Our life in insurance strong

deploy in While opportunities competition returns. capital is grow to robust, our new business at writing attractive and we are confident

Lastly, with within consistent our overall expectations mortality year. pricing experience was and prior

Institutional continued Markets, we execute Turning to strategy. slide XX, to our in opportunistic

the quarter, Federal a we Agreement. Funding Bank large During first Loan Home executed

targeted economic while the strong not Overall, diversification notable continue and Although to growth, opportunity long-term well us remaining focused any we our to on we and believe on quarter, profitable business, achieving business did capitalize pension available returns. this writing disciplined channels products our risk we our Institutional positioned transfer of close, positions believe our participate in well. which focus in results reflect Markets in To significant on is transactions market. there is

to open it to turn like I would back up to to Brian Q&A. Now,

Brian Duperreault

you, Thank Kevin. Questions, please?

Operator

to Greenspan Wells Thank Please Fargo. from And go question. move question first our you. comes Elyse This with ahead. we'll

Elyse B. Greenspan

see in the you ratio the from and year. Hi, fourth the progressing envision seasonality the How guidance the just third do you Can XXX% the quarter? I quarter in the book? from getting good as sub And for the to question, QX along? My second combined by how morning. we combined you think given the end appreciate first about color give the below of ratio some XXX%

Brian Duperreault

thanks. that to straight AAL when it's line, say I'm here. a to to going including referring but I'm also difficult that Elyse, Look, it's charge in Well, be an

just steady volatility the expense are three get answer progress. you reduction. going divided be which the it's take And But for or not you if you four to that catastrophes with by that's an got both those where around the Insurance so and working AAL But, of very it, too we're just putting the that's We and seasonality. it's should the I then I levels out effort effective the General know We've that. a tell which So out, remember, a has I'm to making be efficient be diligently. model we deal got on in operating our loss it's of and charge-in. hope that high. ratio. in I both can't cat and taking remember, think clearly helps. And

Elyse B. Greenspan

America Okay, Commercial, I that year ratio by pointed loss North end was lots terms underlying moving of America the there. there's level to North was to which helps. point to what think within in combined in And quarter, thinking starting kind than a higher you XXX% about North the but parts And then, in of including of sub kind margin as America full that of what you Commercial? the getting understand that you when that the will year, we get ratio of AAL are the

updated get that you quantify we number point this kind have level underlying losses ratio this Commercial of might of loss cat can And can starting year? So the impacted non you progressing that see that an quarter? Lines weather for how

Brian Duperreault

do you and non-cat you about the finish. we'll that, talk Once Sure. after

Peter Zaffino

okay. Yes,

take quite certainly quarter. property So overall the said, going quarter. in you as When the on our that impact a reduces reinsurance, you Elyse, earned of premium in there's bit the

getting happens but doing of the of after and the remediating of our book. in Casualty of – of casualty, more, growing, consequences everything getting focus terms the rate bit on over book of out the therefore also property not professional the making little overall primary calendar a our But also grow, excess reduced had property ratio the lead every more loss little not difference that positive so rebalancing the We're to grew bit and of within is, what quarter, so and headwind businesses, is reposition year reinsurance. a IPO a with and what bit Casualty the ratio. we're having really we're remediate those up are the lead on that's we but that it doing that the book. the accident sure doing to liabilities, focus moving sort what reposition in day, But, of then with percentage laser that doing we're America things ratios loss loss was Casualty a a and to in can little the North year. stand So as we

Brian Duperreault

losses. storm Winter

So that's Sid.

Siddhartha Sankaran

Yes. Elyse, It's comments and point point full the you I'd Insurance to about Commercial mix my General script. in Personal a year both on That's Insurance. my ratio. of X

it haven't beyond We out broken that. further

Elyse B. Greenspan

clarify that that so, And then the XXX%, Thank you. end When the a thing? can by XXX% sub Okay. a of assume just at you're the I does in AAL North one with you sub that running year, assume Commercial? America

Brian Duperreault

them to stand at a We're not have that them expecting improve still. going think I the We're better runs may not have to International result. it, because too.

do exit to we profit probably say in really this And rate would it. about. to above it's place, get – and XXX%. an underwriting need that will the in I America talking So we're combined that be going not I'm North I'm the to

Elyse B. Greenspan

you Thank much. Okay. very

Brian Duperreault

question? Next

Operator

Thank you.

comes next Stanley. with Kai Morgan question Pan from Our

Kai Pan

Thank good you, morning. and

the X acquisition ratio. expense majority a on Deteriorated question coming – First about expense part from points of that year-over-year, the ratio. of

So you the of G&A more the be could is you efficient talk also on expense a do bit more Because to here? improve little going from – because program is how side? reinsurance and about part

Brian Duperreault

Peter?

Peter Zaffino

I Sure. Insurance. and North have in Personal the you to Kai, America start think

as is in the to last that happen significant increase strategically change going a to see of business. had is decided two what's And portfolio. the reposition XXXX. we year expenses the we're we in travel mix so end to that And acquisition going the starting of And wins result to of of into earn

America quarter, this We in losses a North because bit out that those as obvious not will Sid was And see a really of Insurance. large more the non-cat winter business ratio you little also frequency the XXXX is well. pointed What storms. improve Personal in can't what within divested loss in storm. It's there winter on

in see the loss And so improvement the ratio. we'll that masked

maintain, you America So full acquisition that you the North loss look ratio quarters will improve next have will should expect expenses year. in the increased out for the the to as that but three

Kai Pan

question great. Brian, mentioned you quarter bought $XX.XX Okay, at you profitable you each. this the before million prefer on guys My versus $XXX would share back buybacks. follow-up buybacks. growth And

talk framework much you to in back? deciding could how about like your when buy what's So or

Brian Duperreault

an question, Kai. That's interesting Yes.

a buy is reinvest capital it. capital it capabilities, great would it and we'll we'll that. back stock. our So, use to for to used generating whether I'll prefer we yes, the management diversify. new and tool, But a to add here that continue arise in use before, capital I did is I it circumstances and tool to look did. to it evaluate said and do decide the this not the – put they we back as and time it But or capabilities – in And is is may I Thanks, again. to Kai. I to stock to And use And and buy continue you company. we're use have

Kai Pan

you. Thank

Brian Duperreault

Next question?

Kai Pan

Thank you.

Operator

you. Thank

of question from Our Merrill Lynch. America Cohen Bank next Jay comes with

Jay A. Cohen

question for A Thanks. Kevin.

in Annuities? this Rule, With near the you on having term for do the changes in see an sales the Fiduciary impact

Kevin T. Hogan

Yes. Jay. Thanks,

still think be of resolution come best a changes have Circuit But the up up, the interest a of there's which of litigation for I I the think hold positive if big elimination that generally lot will parts. contract, a this the the positive that is with moving thing. overhang as Fifth mechanism

have in its proposal. with You has which weighed SEC, the

best that We the standards, certain cetera. pursuing states of interest are have et

terms be equity there's long there's some respond. interest focused the certainly environment people uncertainty distribution. on that in more becoming some recent being the products we're I going coming a overhang. income is conditions characteristics reminded markets certain working future and to That what as and of are and said, the of the our to a improving of of bit. Products uncertainty up And are to little distribution them also benefits. partners bit little working closely independent with investors volatility as in rates The And value attractive as they of to has is with is that be. our with We're how still going reality believe so there,

So know, stabilized. annuity conditions. improving. well. responsive we essentially fixed as in very sales VA Index doing current sales are And do very see have we're to you conditions

an positioned Fifth So I the think I there's respond to appetites because to where be But or well than as going change we're immediate simply anyone better don't environment of believe ruling. the in go. positioned investor Circuit

Jay A. Cohen

in Well, moving Great. the direction is Thanks, Kevin. right good.

Brian Duperreault

you, Thank Jay.

Next question?

Operator

you. Thank

Erik Our with Research. Autonomous Bass next from comes question

Erik Bass

two targets term AIG's little results. P&C. think the the Hi. returns bit big and company, in now Thank and a is question hear down the has thing you. I question, all I have really picture financial actions confusion about then when can and Ryan look years taking specific I what are intermediate guess I reflected like the you're profitability for on one road one a from investors Well, Tunis

to and getting have on I plans the key So ROE helpful. know don't if any think can levers would of perspective level in deliver Day you to this for just there Investor time detail. the over discuss an be But AIG you

Brian Duperreault

combined an Erik. Day. thanks, plans about under I'll about the to think going for XXX%. don't certainly this, But ratio that. Well, let's take talk I have Investor

I can do out and think the we that additional you arithmetic with profits what making improvement. be figure would

what and sure. put top generating top And that be the I've quartile capital it terms advantage the we would of target. should call taking that would big scale. against combined levels be in If high. are be enough alone to that We you our want our want as, to to be be in number expenses. expense includes I We're quartile efficient. too that Expense ROEs We of take ratios most intermediate high single-digit is, expressed also it, an and you we And be our for given levels.

We're much the we terms better other value growth to should ROEs. expense all number. right. going be of our can levels. in you So much, the on arithmetic work is out the there, But get Book

are going things, produce ROEs that So get just I to of Erik. these helps you ratio do is numbers idea ratio to intermediate, to a what you're if pretty a to if hope would right? achieve value. I mentioned past book just world-class. I Combined good if in going good under XXX% is growth of XXX%, get getting that as that the you top a and then good in quartile, targets. they're But, we combined three I imply think mean the and pretty think pretty them, ROE. I meantime, And

Erik Bass

It do clarification. ROE I of and kind and quartile P&C kind it what's how mean And does. life top Thanks. just one define blend you Is peer set? the of companies? a of

Brian Duperreault

to composite in would have and we would talking be way. on have ROE, – to we so are think well a yes. I'm I to that It mean be. company yes, consider ourselves well, about No, have it I

Ryan J. Tunis

exit curious, understand, combined just that more in one. on like you a some whole why then AAL like I reserve the just last about coming And progress accident it accident ratio an this run closer rate run year really the or because calendar would there's from to seems standpoint be year I year guess XXXX, standpoint? it represents confident my feels to through. I thinking That concept, trying you And And exit first new rate, was a looks was like that XXX.X are XXX. guess like now and did year a releases on that

it already we're like XXX. feels at of So kind

means they where kind improvement? So run is we think of rate XXXX kind really were meaningful through the XXXX are then trading right the year exit sideways that see we of to and Thanks. guidance

Brian Duperreault

going so we've there's expenses down, improvement That's two in which be there's There's meaningful levels. to the the a get Well good question. remember, got things. expense too to

XXXX there accident exit was. think year about question was I a the what

think it's higher I little than a that.

an accident So we're improvement sideways meaningful and at the a we're improvement, level the what not ratio is improvement, that's talking year and going accident about. looking expense an in year

Okay.

question? Next

Operator

you. Thank

from Gelb comes question next with Our Barclays. Jay

Jay Gelb

much. very Thanks

Unum performance the have share Given legacy saw we any does long-term challenges exposure? in care yesterday, AIG price

Siddhartha Sankaran

– hey, very a have We Jay, it's Sid.

end have a would mortality lived analysis that run $XXX We The that double. sensitivity everybody table, Legacy. It's small in the we've to very reserves of our the million. is the if portfolio about

$XXX and in in remainder. $XXX So have million million then the actives you

a it's So issues relatively small portfolio those in and care. have we long-term don't

Brian Duperreault

what is correct. we And believe carrying we're

Siddhartha Sankaran

Absolutely.

Jay Gelb

level you. paying is Berkshire you it know. with billion start adverse to it Thank on view. which where And pierce How $XX Berkshire cover mentioned that XXXX? the cover think gears our billion its would consistent with you mid-XXXX around $XX for exhaust development could long switching beyond to could Good the do take Berkshire, then

Brian Duperreault

want one? to try Sid, that you

Siddhartha Sankaran

Well, I mean we can't comment projections. on Berkshire's

and the think is of a business. what I of they're going because you tell quarter-to-quarter about can I claims be variance we to mix in paid made comment

in projections shorter some longer that business and So some have you ADC term. our remember that's based that's term on

So of comp, like the XX stuff years. claims out be and some paid excess workers' casualty there'll XX,

versus thought happens at metric. paid So important people quarterly how good to are we feel in claims. on this assess very that's keep for to we we what looking That's date and they the as in why about what mind look inception that we

Jay Gelb

then All And I final Thanks. appreciate that. one. right. a

Just some want ex Is or baseline? to why AOCI, on any XX% able the looking ROE. return book reason AIG other circle be over should not back DTA on at the you're better whether equity there that deliver to ex time or value on

Brian Duperreault

start believe into us start making area, a that's we have get very numbers in generate that General requires to good in we Insurance we maintainable. look, that range. profit. Life, Well, Once will to underwriting ROE we The

profit. reason us profit holds underwriting get those and underwriting no so earthly Make There's what an So to an we we'll make and back? will can't we why ROEs.

Jay Gelb

That's helpful. Thanks.

Brian Duperreault

Jay. Okay,

Elizabeth A. Werner

be gentlemen one follow-up ideal. a and as everyone, question you. would one reminder, Hey, Thank

Brian Duperreault

Okay.

please? question, Next

Operator

Deutsche next to We'll move Bank. you. Shanker Thank Josh with

Joshua D. Shanker

I AAL morning, balance an everyone. huge good catastrophes, billion to per your sheet to exposure tolerate million the that reserve shareholder and year, the a normal expecting $XXX that on you create $X catastrophe did some why what's position. willing reason level huge In has year move per but be Shouldn't from behind and value? basis, AIG on ways congratulate Yes, AIG lowering

Brian Duperreault

That's question. event. our catastrophe year first a to all, worst did of the Well, respond last cover catastrophe not great

have sheet, that. we use that's a we good Now, don't capital. I balance good a withstood think of

we made out. the that take decision the reinsurance to so so And portfolio we balance extremes use to

good day. I every trade trade. that think a that's I'd make

so protecting Now, no profitable we growth and that's a it's we it. grow this so I'm also sheet, that, a the of But there's do for business use that good question very about balance have shareholder. in capital for why book, good the can

Joshua D. Shanker

your the at earned And this written off AAL reinsurance in guess? written year X/X Does see premiums I further we over cover should if the premiums are going in net net means that is you over from XXXX time through mean the time with reduction to up the and XXXX? be that greater go change as

Brian Duperreault

Peter, take that please?

Peter Zaffino

an session of But the we're on, year. but AAL and steady last shifts. the will but will expect where earned part portfolio on throughout growing we depend based Sure. the That that how of No, fairly quarter-to-quarter, from cat we year. property in casualty loss be the be not will our that, excess what should a – remaining basis, it be of discontinued offsetting placement today we calendar that that largely portion we had the large see

overall And earned it'll of Commercial. terms Casualty, financial in it more offset on so the getting back America be the premium we'll so results for largely within North

Joshua D. Shanker

very much. Thank you

Brian Duperreault

Okay.

please? question, Next

Operator

you. Thank

comes question Evercore. Gallagher next with from Our Tom

Thomas Gallagher

favorable. like Peter, sounded Casualty it morning. comments Good was your from

just saw the Commercial terms Or you in efforts actions enough? really in so see response we far results in here and pressured are North more need to of could say if in So American what remediation the results curious you the on you've taken quarter? comment would to – you do

Peter Zaffino

take that me Let Brian?

Brian Duperreault

think Peter yes, go Well, I – ahead.

Peter Zaffino

Okay.

some Casualty So, just and me you about company. for just overall a let talk the second for give insight

that we at some past. saw X/X choppy it look little that a was terms year in the some seen because the losses had that levels pierced some of higher you hadn't last International of was results, ratio at accident we reinsurance If loss in when actions year we the improve, from the but we took

ratios improvement expect So the to Casualty you're in we the loss and of that's XXXX the and loss accident for in calendar where in excess rest seeing in put together of year. our year treaty International that the continue

marketplace, that's improvements not the In have in where differentiate North done. net I we're in we've terms begun. at looking just lines, position looking some I real very really made we're businesses think we at America, mean and can gross ourselves think lines, we a leadership of how good

be casualty, expect and year quarter I excess next lines. looking the So at we this looking every financial reposition throughout as to portfolio us year improving at

process which for that and account our the opportunities to is so past the throughout businesses up there submission lot We're stood business this we've large growth in progress first (XX:XX), is expect progress. will made – this be that Agram going see and an profitable We're has to to a more activity more of mentioned that was Brian's we make accelerated. One iterative calendar the really and year. be going seeing

Brian Duperreault

little If a color. Yes. I just could add

if had high in Casualty. Casualty. in you going you're fairly ratios ratios loss see at whatever, high our We've a loss look PEs, So to

We in reserves. the have stability

seen we've out some redundancies fact of that. In coming

but low I Casualty remains and severity about too the it. don't a frequency question excess it price. no you think good, fix is lot that's A high. It's by high excess There's book. of

Now price excess by book attachment, selection, don't losses. but you the wrong, not get me terms matters and conditions, fix having

You don't up. price it

to and we're of Casualty, management as that but that we're said, not, we're out so fix even a it's not much with book, is D&O. way. our of taking excess so We're our the risk lot losses time and book done the on but it's and Peter the or You in cut work or whether around casualty the effort

Thomas Gallagher

that end of just, a of the like, a is that, terms In And years? action, a follow-up, couple this you done takes in Brian, by that is process, response the to a gets result? XXXX? it Or just the as lot think to of – of related not

Brian Duperreault

That's nuance of this exactly. Yes, thing. the

little actions start taking they get exactly the the the reported. in excess a worst world take losses a world the same cautious, when out, I think while best okay? to we're loss, bit Now, one book the and the in little the should it's more become look book be because when effective, because now of

time thing, And it. so verify we doing know a to little the we'll we're right take but

Thomas Gallagher

Okay, thanks.

Brian Duperreault

Tom. welcome, You're

question? Next

Operator

from next with Newsome We'll hear Paul you. Sandler O'Neill. Thank

Jon Paul Newsome

– in bit price that, want that regardless What's you need what your terms go? to Good implement AIG from morning. let to want. just Casualty that's get where you what the we with not expected the thought of actions, going changed? Property is they in the of And Maybe they investors A general market a the will competitive less situation has that increases in pushback of little than kind of on more help simply just lot I the maybe just response the to environment not the fashion business. that

Brian Duperreault

can and so, me think then start get and probably anyway, if correct I headwind. speaking, more maybe I Peter there's look, generally Let it me wrong. than But tailwind

it's Now, certain it lines in actually like one more would may as strong of business, I'm but not be positive hearing I as than think there.

think movement. the industry are rates continue we're I the against do to required, to needs Now, and improve but like the going it's not

helps. So it

Property, I in how write who it believe or price, Property to words, think some any and or of do but I The ago. do a are with it discipline. whether just second we about takes other we getting condition, talked In profitable to fixing more less let's the in it's or this Casualty, write weather say, increases. we lot rate portfolio, we and not. can believe right, a short book have long, that with the I has Casualty it a

price. You don't with fix book excess this

the you to it that and is that That's the them write right you because way, so write it fix right an cover. we're act You event. prepared accounts truly occasional an

book. to our holding you think have at and the But we to to our the are the us fixing book, in don't add back. that? ability think I Peter, So and conditions look want fix our marketplace book that we're I

Peter Zaffino

market, only comments we where resonate. are The where not those add, that's commoditized competing is the would in I I think thing Brian, that

our in AIG the strengths. and focused play market how we're leadership. we We expertise go clients to really where segmented be matters. organizational structure, and off going when and leadership to And face a our distribution we on has with new are to

to risk. think So differentiates look they I to for structure look ability think us And lead. what that's with They our that And to they rate. us I deals. for to look us get help to

Brian Duperreault

Paul? Okay,

Jon Paul Newsome

terms month. P&C. changes blocks to annuities. to point, What's At have last second divesting? at question in what (XX:XX) seemed do looking And in given be to all two? you'd be that people My in this number enormous the terms interested in nothing or it of blocks or Yes, every has growing situation sides the the be in least seemed that's year an the made of life great. There of of with to buy been

Brian Duperreault

Kev?

Kevin T. Hogan

Yes.

So, of strong with worked the in Group leading three believe and on we our very portfolio annuity Retirement we in years Markets. couple hard spaces the position all positions retail leading organization, in position a look, our of a have and Institutional distribution the market last product

capital no in opportunities, have growth in conditions as disciplined other earlier, being mentioned which improving intention are So we than the into I deploying markets.

Siddhartha Sankaran

we're pretty and that it's evaluating that remaining continue Sid pleased the made to that's going in and with we're up that is portfolio And, Paul, been We've the evaluate standing we've consistent progress Legacy And to and DSA here. Re. we're that clear entity.

Brian Duperreault

Yes.

Okay. Thanks, Paul.

question? Next

Operator

Thank you.

Yaron with comes Sachs. Our Kinar next from question Goldman

Yaron Kinar

everybody. morning, Good

Is target there? least, So one on stability predicated earned, question premiums that in regarding the combined target for ratio net – at very exit growth for or XXXX. the

Brian Duperreault

over we that we this last, we believe – said Well, year our will think premium stabilize okay. levels

Now that we're something first down quarter. about the in like XX%,

improvement in expect would that. we So an

is some So business, of recapturing natural growth. because the there'll lift, be we're it's some it of some some of Casualty

going we We're isn't to on get going portfolio and us it. that's our increase evaluating where So the underwriting we'll see by that's get to go. to embedded improvement. And what massive we're there talking some in in some about. But production proper to want doing it

Yaron Kinar

gears then Life to maybe second shifting And Got the business. Retirement a and it.

I an producing positive that seen is fee to a very business is run ROE the oriented about ROEs thinking normalized back for or And rate, more the rate? their a If strong that appreciation strong think stabilize just those maybe that being clearly last that about were the they I we've think years. sustainable. equity do go equity you still AUM a business. markets heard reasonable the ROE, So comment I'm that few markets

Kevin T. Hogan

Yes, Yaron. Thanks.

We but is, excess that market otherwise that modest of we we been payments what's not out continue, necessarily would fee point part I'd is securities ROE. contributing quarter million non-recurring the the thing as a to and is to performance that the did the First income $XX structured expect have this in pointed out. on

it that capital do deploy have now be I mechanism Fixed than we Index think more somewhat our unique as we are, able alternatives important overall capital it. interest blend have investors the the have. We right to I right to also markets are equity now because what If for go what's conditions where distribution are, more business. into believe into to can is we'll rates the deploy the they Group And Annuities Retirement going and improve, is where in are pointed out, Annuities and that they're a where of we we position.

and in GAAP forget the pension and strong requirements. our STAT we've Life that is find proven growth business selection able the new the the transfer not transactions the Let's attractive economic which meet And business business as in Institutional risk Insurance Markets as with and about to discipline conditions. the well that expectations we're

Yaron Kinar

you. Thank color. the Appreciate

Kevin T. Hogan

Okay.

Brian Duperreault

we've Well, our you. time. Thank reached

So thank to to Thank forward the in much. I for look and you all want you great talking for and very to quarter. calling next questions you

Operator

that again once all thank you And conference does We your for today's participation. call. conclude

now may disconnect. You

American International (AIG) 3 May 182018 Q1 Earnings call transcript