AIG - Earnings call transcript Q1 2019 | American International Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to AIG’s First Quarter 2019 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Liz Werner, Head of Investor Relations. Please go ahead.

Liz Werner

morning. Good and get presentation I’d which may on current we you to are this uncertainty management’s today’s to that contain expectations started before and like morning, remind based and And changes subject circumstances. are forward-looking statements, are statements future of guarantees performance not events. forward-looking Any or such performance Actual from events differ may statements. and materially possibly forward-looking under Analysis that cause this in our Financial Form XXXX quarter be Results could and include filed in of and Factors under XX-Q XXXX our Management’s Conditions and XX-K Risk Form first of the factors Discussion to Operations, described Factors. not obligation future a under result AIG or disclaims is as any information, new any events any update obligation to of whether otherwise. expressly statements, forward-looking and Today’s presentation may non-GAAP measures. contain financial is in slides today’s website. The reconciliation of financial such our measures to available in figures presentation for included on and the which GAAP supplement, are most our the comparable again morning, and follow up. question we limit This one ask yourself to one that you in Brian a today joined of of and CEO and members and CFO; Zaffino, General by Lyons, of President Insurance; CEO Retirement. Kevin Mark COO Duperreault; We're and Peter Hogan, management, including room Life senior CEO; At like this the turn over Brian. time, to to call I’d

Brian Duperreault

Good for you and us joining morning today. thank

Retirement a will of and Today and changing additional as financial year. reflect the on General since our described results and we we're as confident, provide foundational quarter first our to usual progress line. We're in with our and progress earnings been segments. to and Insurance, continue undertaking date fronts remainder number February. the remain significant Our call of we've our late you work last on in through well the will on that XXXX detail results Legacy detail I’m in pleased Life making our

In Mark to in XX I So This Q&A. the will by the core $X.X in And we first first Zaffino, will our quarter Insurance In regarding of provide an a adjusted was opening our significant due after combined marks, year. income Insurance which $X quarter, investment investment across improvement compared of our then EPS achieved of had represent operations will the after-tax underwriting General improvement of move profit markets. detail achieved close prepared Kevin to before Mark the last we equity Hogan. EPS be Lyons in comments the $X.XX the first year General Peter my increase rebound positive followed in income addition businesses, and of ratio $XXX million impact to more calendar XX.X. to quarter, an year-over-year. reflects

as accident was quarter year ratio adjusted XX.X. combined First

for the profit We General quarter's AAL. represents then deliver the XX reduce significant continuous Insurance. evidenced and for and expense performance to still to financial across GI the that on I'd his briefly Overall like remain This our leadership and and profit work already quarter a by last team milestone year comment and acquisitions XXXX onboard confident volatility, will underwriting full its results. our tremendous reinsurance improve first radically by as continue discipline improve over underwriting underwriting risk fundamentals. to AIG, undertaken approach to months and dramatically reflects Peter

As our changes previously you and peers. going should AAL significant quarters, taking the assume place our reluctant did General down, will know, with because AAL as you in has. over it of the Insurance to talk not I be line I because have it disclosure about last that in indeed, been was few historical say

to topic change will a X.X. balance continue General number P&L. to Our catastrophe not as on evolves estimated and matures I'm as we focused XXXX opposed as as AAL view was and Insurance it strategy sheet The our because too management

in support week, Many of and the again we're as based of our broad that area, our at improvements view also other the to discuss number [ph] necessary And last The marketplace retail, also including for partners. E&S, recognized book is I comment we recent Lloyd's is actions we a on the Lloyd's. delivery not are in in recalibrate corresponding to and taken want reinsurance. note this we've engagement remarks. almost the is volatility. distribution changes insurance Peter are AIG my attended taking received just his a but in industry. leader detail strategic us the limits, in to regain actions actions risk seeing has United and our a As the gratified that will noteworthy news taking, to level and more and market. are of It preeminent these occurring in in every of of from position improvements RIMS result States, are countries. clients briefly us about aggressively In reduce its

was part platform. Our Lloyd's Talbot, a acquisition because of of VALIDUS driven in by

we So position are Lloyd's on the pleased in marketplace. its plan see embarking to to restore

segment of This Retirement. quarter income adjusted and with million an Life pre-tax adjusted $XXX and of XX%. ROE another solid to delivered Turning

separate to the make We for quarter to our fully ROE. deconsolidate first his markets. to including policyholders remarks, meet to rebound the in in the Legacy business, L&R progress for provide reconfirming our regulators. impacts expect continue are respect and our ensuring on segment, on equity to adjusted we to Kevin our this to full and of low commitments while L&R's the mid-teens and year With will guidance our continue the more plan detail

saw AIG, press we a release continue equity for As three on achieve consolidated adjusted return expect to double-digit our to years. within you in

I our Peter to company make insurance the Our it journey demonstrate leading world. results With Insurance. in over to first to will expand on AIG quarter restore team to turn that, that General and world-class our continues a as progress

Peter Zaffino

strategy information underwriting make and which will our Insurance. everyone. volatility Good of Brian. our accelerated quarter and morning, reduced and the including we in reinsurance lastly, being some of you, comments in containment. Thank of highlight on comments our repositioning as overall and financial I the ahead explain provide Brian the notable will substantially result will I experience level had accomplishments progress business. based brief financial high on that’s XXXX. And observations Today provide I I market rest its our share for General to the insight will quarter, program, realized some revolving on look first for our

As exercising improving since same evolving the program been rapidly of at Brian work organizational foundational the in beginning capabilities, noted XXXX, discipline. talent around we've and Insurance while reinsurance time General or and expense undertaking recruitment significant structure, underwriting

the XX.X% accident excluding year The cash year for as XX.X% ratio, XXXX, XX.X%. experienced XXX sequential calendar year XX.X%, losses accident million, year-over-year, the improvement achieved a combine improvement fourth As actual In ratio quarter first XXX lower quarter, was quarter a loss including was The point were a which and result, than in quarter, $XXX basis year we of or adjusted. basis we the first of CATs an ratio; from combined a ago. of CAT points XXXX.

line XX.X% the quarter XXXX. improvement like-for-like operating for the fourth expense quarter of first in quarter quarter expense line first of of expense excluding ratio year-over-year quarter XXX-basis-point of ratio first general a The points was represents XXXX. XX-basis-point than with is operating basis XX.X% the acquisitions, improvement XXXX basis, lower XXX fourth the of On a from impact and The and while was a the prior and year-over-year. first growth our mix line the our infrastructure the objectives. in quarter XX.X% approximately our process expectations and of to These current long-term year of quarter fourth the in in acquisition of and with with quarter given business. to ratio XXXX, by committed remain profitable achieved in business reductions were The making XX% support declined we talent, investment

coming quarter financial the operating In provide prepared results favorable addition in Insurance at bringing income underwriting billion, Insurance's results, details on billion. to his net improved this remarks. General income $X.X Mark in will investment $X.X to General was pre-tax more

few framework we cohesive delivered and to our last stated AIG particularly underwrite, commercial on area business clients to us businesses, not clearly that to that framework added the capacity. sustained wanted appetite segments create the our expertise market. of improvement, focus quarters, primary As based valued partner defines a in over This to our and we a enabled believe while value the in risk leveraging the to brokers of was our delivers develop the insurance becoming just pivot our we

this of even our able of core journey While we and when driven our for underwriting our it businesses the addition business, to coupled and of improvement core composition. in were We strengthening on the are comprehensive perhaps Glatfelter, mix may overall XXXX, major portfolio Insurance across program to to improve executing our and reinsurance with in and XXXX. the to have shift and craft General Validus committed was our initiative remain repetitive, and race, sounds changes fundamentals, we continuous and dramatically of simple strategic the changing improvement

are and both portfolio wholesale are taking smaller our include are underperforming our risk action risks. and driving following. an financial we to we've and property on our the actions narrowed casualty, focused mid-market renewal align while to Lexington, on aggressive Some distribution In channel. with appetite, We're insurers highlights of operating exiting and appetite also and committed the are for new improved results that risk taking

to mentioned XX% growth. to we participating cash. been we reducing our to tailored as we've marketplace responded capacity low In result, while In submission limits, and our I year-over-year, up the teens obtaining casualty more point to business has our business, very layers, we're identify for portfolio. improvement. we the over are new last financial growth year-over-year, a better the XX% to our repositioning rate very on our As lead Overall, achieving primary portfolio, pace seasoned for as balance account strategy committed momentum Lexington portfolio. see low of excess achieving Property opportunities up mid-teens us and in quarter's In enabling remained is and on rate by property of submissions line, focused casualty layers. call, improvement we're are on distribution in over both the profitable positively

discipline on We also have rate. been

and book of Yet public also where the achieved The by by reflected lead disciplined of continue down book North primary we've UK North risk private an repeat the our take primary corporate $XX approach DNO reduced primary excess to rate significantly our over across in first in for In we XX%. total XX% DNO were our financial all DNO million decreased our XX%. XX% portfolio. impact U.S. And American premium segments, over limits lines and DNO XXXX XX% quarter our our improve aggregate to actions policies reduced first example, XX% underwriting is the to actions. selection our American DNO pricing year-over-year. we across approximately aggressive limits XXXX. above slightly For In also of only to in over quarter was layers in almost our property, nearly despite layers

XXXX. quarter first limits the gross in XX% declined total compared the quarter Our first with

limit XX%, average declined risk single-digit increased been able on and enforced our XX%; Our for management achieve average gross we've increases accounts to portfolio. deductible high our rate

In our process. underwriting delivered Validus reputation our addition with Both aligned to to excellence year-end directly today. in call, business on companies our their and underwriting for XXXX of the & enhancement information considerable diversify these track not we're core On the to portfolio actions, provided making program. objective have detail our our do record earnings Glatfelter I substantial improve that portfolio. strong acquisitions of on reinsurance generating we intend repeat to

contributing endorsement our balance program better reinsurance reinsurance enhance reshape in want pleased profile do our The reinsurers for continue building work relationship received the program reinsurance is stress clear our core with what we the making the our to with we're to we're our and of to refine sure is us business. we continues underwriting role industry Together our undertaking play improves. critical and capabilities, improvement I to our helping very accomplished. portfolio overall and of as portfolio. program I'm and that the strategy reduced to have our we've substantial risk approach improve with as strong overhaul a However, our to support and reinsurance We'll

Let me briefly comment on rate.

Glatfelter level, of increases X% in & lost cost we're rate support some will X% rate lines Europe. As American over for detail. at/or obtained almost portfolio, across commercial I and commercial and than North market highlighted businesses, we progress X% in high in trends, broad premium which our Validus UK increases our based mark seeing I lines, in including X% in more our discuss better a when in mention At multiple around excluding

coupled with remains rates for methodical that of on us, terms be focus important and the financial we While to discipline primary sustained believe selection focus continue drivers improved conditions will profitability. an risk area the performance and

see in year. adverse non-CAT other slightly the Despite classes. start flat Turning increased Re we XXXX to Validus produced Instead quarter pricing we increases, development evidence Year-over-year did in a business, to a the premiums approximately down, market $XX broadly Jebi have first Re successfully our not and that placements, Re did commissions quarter. million discipline. growth reinsurance on favorable quarter, earned executed to loss the loses. and any absorb loss and increases diversified increased treaty of development had XX% net net due In very Validus loss piping We're to these prices first events. Validus up. reinsurance these the strong of is excess initiatives flat generally seeing Ceded also modestly on as to for are

results, to renewals our quarter X and want I do results. Florida's comment X While Japanese of the June not part April first the briefly on

impacted and impacted layers, catastrophes XX% We underperformed two season. this need and will we for and not chose on to Shifting loss not For layers exposure in driven priced increased X%. were Japan, over cost property our frequency and lost of reinsurance the during believe severity. had by flat that the XX, rate modify XXXX to Japan the renewal were XX% activity increases years, to meaningfully both we by undergo is meaningful to account Florida range to X. pressure June last loss at This that from CAT price a increase

their Before I’d General proud work around be didn't if acknowledge Increase date. our world. all the team accomplishments leadership and and I of efforts of to closing, the I’m of colleagues extremely remiss the hard

in are achieved focus, their XXXX. make positioned parts all to choices us material for incredible and changes the which efforts large results and Our tireless courage and with due coupled difficult remainder well improved of dedication have

partners. further underwriting and to operations, in clients control our will to that we our with ahead, and people strengthen enable capabilities, us will strategy relationships continue our Looking distribution and expense evolve streamline maintain invest

profitability. still we underwriting excellence achieving While ahead laser-focused and of work much there on our us, sustained is of goal remain longer-term

continue momentum I call With leader. to AIG industry making Our decision is we restore to as to profitable will disciplined an over the approach we work our and turn as Kevin. that, will

Kevin Hogan

cost drivers and were XX%. pretax securities and acquisition and the recorded and higher quarter $XX rate due of investment the in $XX from prior income Peter, good Retirement to the the this year pretax Life higher everyone. credit in morning, income quarter value adjusted million costs returns through increased on and quarter. expected $XX of increased The efficient for of market-driven $XX fee of tightening on in markets amortization rising million you, million $XXX reflecting impacting income Thank by Adjusted of future return declining resulting increase capital adjusted deferred equity equity primary million quarter. acquisition option million, driven net income, of interest by both income reflecting spreads fair lower

lower our impacts offset international advisory from by the also quarter returns from in Our Prior These during non fee partially refinements by earnings onetime downturn of the million. quarter, investments, in and the $XX last lower year. approximately reflects and reserve favorable benefited end payment items also life year recurring were expense and driven business of to bond income at XXXX. comparison market lower a recovery the of levels asset first alternative due

outlook year year our some changed. investment expectations full as fair markets lower the acquisition market and and be would assumptions income deferred cost mind hold or of upside to spreads securities, well as in on conditions equity could should value full adjusted income not Keep Our net There amortization accelerate widening respectively. improve. pre-tax have credit our declining option for market

earnings rate by zero in approximately at basis our quarter base a two capital net per current absent spreads perspective, environment, to is the the year for points year. define our XXXX. expectation expect end addition, to improve least solid levels risk based year this we changes strong will of that In end through overall significant statutory From over to and generate

job distribution outstanding leveraging to meet to customers. continues and broad do our expertise evolving needs product of the team Our an network our diversified

annuity In our first number position reflecting and held annuity this recently as in is the have we lines. sales This total balance time one LIMRA capabilities were XXXX since provider we and fact, published the results XXXX. ranked across

are with want in scale share, but each about instead market the pleased at is that compete in I be to not our results, Although stress to we a businesses. strategy of our to position

strong Our and sales. fix we significantly top reflects quarter With our the conditions the during annuity favorable index ongoing line first execution growth pricing quarter, in the of grew strategy.

group We pension approximately deposits of in recently pension also The represented we which $XXX quarter. transaction life pension close to retirement transfer risk through announced, obligations. sales risk the international increased deal, transfer million and large

or with during growing remain was immaterial. continue emerge over market, time, the will businesses. earnings deploy serve incur while additional us about some to to above enabling a capital positioned business associated new We with for first talk the of briefly recognizing well across impact at all results transactions, earnings businesses the I each such and will returns, expenses our now As to growth. the economic such our targeted we quarter will

premiums XX%. retirement, deposits grew individual by and For

these retail sales comparatively earnings, and our current that to quarter flows portfolio is be since in countercyclical environment. we Retail may position face Net part achieved funds funds, third headwinds strong of annuities for time positive of the the small a mutual levels, defensively to is is continue which With our a challenged. net continued first mutual XXXX. flows for the to individual

Assets the Net investment equity factors lower primarily related increased, asset earlier. market to driven the levels in quarter. fee markets under due driven mentioned income by following and decreased, fourth the management income decline

with and annuity other quarter withdrawals driven large in of the For providers in to product group sales. plan group due group primarily approximately plan retirement, surrenders the grew loss and reducing the increased, and of individual planned one higher by sponsor deposits and by withdrawals. the number contributions higher its offered premiums other XX% Surrenders for and acquisitions, individual

to other impact negatively We and to it outflows based flows, surrenders is expect characteristics. continue on important vary will the but withdrawals higher of financial impact to note net that product

the were facing will level we've if offering. assets For the produce a higher administration at from adjusting earnings are items portfolio mutual rates flows in still below for solid income rate example, many business. accretion certain first a business money our for for of the be across still yields of lower it impact policy lower-margin quarter same and products. but the period net to may from annuity resulting retirement on outflow time, increase crediting is rates spreads Despite to us interest be group appropriate Also fund rate or environment, continued and unusual reduced, of new After in a minimum XXXX. a guaranteed this as our portfolios under for to negative attract in-force rising

increased sales Insurance premiums Life our addition as strong quarter, driven in sales with and line and For individual protection UK protection acquisition our business, the the of by for group the total product sales deposits well Ellipse. growth of as

as rate interest in sales sales environment. life the life current U.S Our we universal deemphasize guaranteed declined

pricing that deconsolidation our and insurance U.S. our For life operating to transactions lower completely Fortitude pretax reserve Re which to and making overall Adjusted was from to changes pursue or future. the possible expectations, operating business, the positive to separate and will income we lead commissions. progress and increased experience, within due to infrastructure in continued requirements mortality make expenses model necessary

over a and transfer we continues transfers earlier, XX mentioned robust. I as risk pipeline months The statutory large risk Markets, pension attractive to for transaction toXX economics, Institutional returns. market transactions at next pension the the be the quarter accounting in executed Lastly,

to and and positions Institutional remain be help to growing strategy of to savings broad we Markets us $XXX focused attractive across the our available and We to Overall, needs leverage targeted positioned To committed opportunities, issuance growth continues also on remaining its while lifetime our on meet million ongoing a to quarter. capitalize the believe GIC returns. well distribution footprint well in we capital product protection, income expertise lines, business most product which to achieving for retirement our executed solutions. close, deploy

it over turn Mark. will I to Now,

Mark Lyons

morning you, and Thank all. Kevin, good

per it, right $X.XX compared XXXX. quarter getting to share So was of for In after-tax into terms, AIG's dollar adjusted earnings quarter billion AIG of and $X.XX and X% in $X.XX share to the excluding income. per of XXXX. has AOCI compared nearly per quarter fourth increased corresponding pretax the per $X.X adjusted for of or share Book as billion adjusted share, after-tax income DTA, $X.XX value

which an adjusted As respect General the returned we a and a achieved the achieved using Life attributed and return Legacy capital the had equity. AOCI to common segments ROCE, DTA, quarter following this quarter term preferred on also annualized Insurance into XX.X% returns or now and on common return, our XX% AIG equity, annualized the XX%, AIG because for equity, and return. structure. Retirement X.X% return some is introduced exclude

in respect rebounding of next investment it quarter XXXX quarters across or as should NII, noted income As due fourth XXXX. be from the had the which outside should recurrent markets to be gains, not that three net the quarter this likes performance, viewed

affected to As a company, a on the billion I compared need begin basis NII $X.XX on and segment. income with first basis, so sequential million the $X.XX adjusted credit result, in also markets; was and and about my partially GAAP predominantly quarter billion was improvement $X.XX due any in to will don't income the the investment to in by the AIG, presentation Net pre-tax across quarter comments performance, an for do tighter but XXXX. so I in investment of quarter ways. improving accounting two fourth was due billion alternative $X.XX respectively improved This spreads equity material changes

peers. our impact income million. the Firstly, of the securities changes change value recognizes for net the reduction a this in in much The equity more of quarter was which geography below vast majority line, fair with now is consistent the $XX of AIG of investment

impact into income hope NII re-class of And that this non recorded to consistent insurance was reclassification now note in the It's of and income analyst important heretofore that a that million net official increase been line. other the to is amongst of The subsidiary not removes $XXX we investor this this Secondly, the it confusion did NII source has communities. line the reclassification line investment quarter. this and change adjusted see two at in reclassifications. investment XX I the quarterly geography. and all, portfolio Chief point impact Pages NII, way and to you When alter historical believe pre-tax the earnings volatility a result helpful supplement the financial the assessing want XX we to these and it's portfolio. somewhat simply also to Officer And summarized of the Investment provide AIG's thinks our view to again to about

If you loans, look class about asset assets inherently and the of at XX% other are which comprised and for billion are that securities, of carrying and volatile. portfolio. the totaled fairly fixed broad approximately and portfolio as short-term that those assets value fairly $XXX investments, maturity two The predictable, is mortgages fairly classes, or inherently predictable sales available

be billion billion annual assets reflect volatile $XX about or over yielded about NII X% this X.X% fairly million supplement five volatile $X.X are of assets investments. fairly that the expenses fair and last must to Therefore, have a investment could to the range fairly that netted quarter, of the to The the the predictable and accurately to the the important $XXX performance. ranging framework is we income funds, over the estate, year, simple The about associated value hedge the fourth from annual that first lower recorded gross other other investment due equity approximately million of measure, roughly using shown The volatile that. fourth are one fairly nearly volatility can quarter. and there X%. income see against real provided $XX just private that to value predicting with an nearly last warranted quarters short-term NII comprised in also yield, from quarters are provide net XXXX and as you impossible to the also just option of assets investment XXXX forecast from lag. financial overreaction an annually. in a on to in One billion X.XX% and basis $XX.X to materiality, recall quarter It's difficulty five assets balance $XXX we the higher of performance what market carrying and miscellaneous neither whereas hedge wasn't or fourth equity, NII securities, recorded a mark It's quarter's shows quarter over of this month pretax simple net in usually million funds the of on must hedge implies the volatility the the income market Japanese an overreaction

first we of now without the hedge For quarter funds are recognizing forward at XXXX all. lag any

quarter highlighting AIG's will future hedge first So any selection therefore a the for on prior positive investment which investment months quarter has net quarter's and positive full did quarter. and of fund current is a The lag. AIG's recognition full one reflect lag remaining market three the versus benefit equity first all income, results month the private rather center commentary one quarter indeed holdings, in that index. Nevertheless of broad fourth containing only quarter activities results applicable contributed entirely book lags than

over produced produced insurance first profit XX.X% of a of Insurance which XX% of accident X.X% ex-CATs, a excluding CAT and within North as lines underwriting X.X% quarter improvement first accident versus North general ratio Turning and of to the an ratio quarter, ratio quarter in point XX.X quarter quarter America segment The the represents calendar quarter accident segment a General both CATs the previously America first quarter component combined combined commercial with producing XXXX. actual noted, this XXXX. the

the due in Insurance loss ratio international The contributed commercial American the X.X along improvement, to ratio. produced this of with point quarter personalized ratio primarily attritional ratios North and ex-CATs earn reinsurance personalized that XX.X accident accident both the was loss with this to total predominantly versus in the comparable ratio to of be beginning a quarter, segments of The largely XX.X% material points expense first X.X increased ratio Although XXXX, protection attributed quarter combine expense highlighted. the the Peter of improvement can segment due in gross frequency General side. operation the worsened improvement changes underwriting on

for limits, an associated reductions most of of CAT exposures, the part from provides is prospective, complimented AAL in to remarks, noted quarter non gross And the program many alter was that reduction as the X.X%. at material provides be purposeful underwriting gross radically in year with changes, XXXX protection with the his restructures while Brian and AAL the Looking along fire along critical the CAT this combination and critical also vertical carve protection, full in the combination States. parallel program estimated global and within reinsurance period that notably, a return AAL. of The programs specific a quarter's My material is all which the the front combined view and to horizontal, actual of at of action leading enhance combined provided ratio XX.X% CAT inclusive therefore and inclusive applying has is regional of year backend results actions and ratio first out actual XX.X% private containment levels further reduced within CATs. United volatility upper AAL, client

As only not a will on along speaking and we by result, in CATs of terms tolerance return focusing our against of in future tolerance that AAL. the be various measurement risk with periods

that supplement. swings in to General premium the in shifting have Insurance. business written can but Now areas reduced X.X%, up by the and financial overall goes seen down net The mix be large quarter-over-quarter some

This month and expenses quarter-over-quarter impact foreign reduction adjusting and However to We increase the of action and the this be was XXXX, of respect approximately lag XXX-basis-point thirds at decreased is for first Glatfelter for the associated the but quarter a quarter was two under after of and XX% excluding adjusting noted, XXXX. one Validus two Fuji million Approximately GOE premiums XX% writing ratio reinsurance direct neither exchange. in written for of and the GOE, high elimination with about third additionally level net represents, could quarter-over-quarter. part premiums. a the the for of in Glatfelter AIG operating as general Validus Peter since improvement adjusting $XXX reduction in attributed first

as on in improvement to stated process more review workflows across and we expense previous broadly, levels. of comprehensive calls, General undertake a As well company opportunities continued we and overall Insurance the as

into operations. comprehensively Legacy the areas emergence development, business risk and reserve was operations. lines any in XX of to favorable no development favorable done of most better There all million that deep development, net actual the review expected this year the General Insurance, the $XX of quarter stemming saw lost expectation. quarter, this $X were but million or Turning across from specific result from favorable lines dives was either The had global prior of

So gain General material development is of reserve net $XX changes favorable million, The the million driven remaining was development $XX and be necessary. with would regions. the mostly deferred scattered in million no by the favorable namely and many associated across of Insurance $XX amortization cover, the development lines net adverse

underwriting no revised reinsurance historical risk per severe the longer with loss low attachment on is reporting net our makes and strategy, Additionally, sense.

Insurance Similarly, So North we as be out clearly achieved the for the renewal been portfolio performance. quarter. expansion. that margin and CAT shows to increase from provide for books thereby now well accelerating, on, continued X%, trend, superior increases will loss Peter particular, American alone improved improvements and rate for which on additional the lost as and rate attritional relative in These that I'd rate like is averaged March General commented clearly an of new has providing of increases and point shifts to composition additional adequacy. additionally of on excess the losses overall lift adequacies only. commenting portfolio our to And business have business rate advocacy commercial, monitoring of over the

sequential sequentially the fourth of increase Retirement annualized over XXXX common $XX the the units a pretax results, fourth Life income And to translates adjusted quarter a Turning of All operations positive $XXX for with client quarter row successful The reduction of spreads with downward due the premiums mentioned, were that markets favorable highlighted. higher life slightly for offered has and this by last lower $XXX others of and deposits quarter expected international second Kevin or Group from base in negative net quarter in consolidation retirement income a of to the the net mergers quarter. quarter as via on results industry and to average the are XXXX. Retirement's represents sequentially risk space. and experience sequentially a to exposed is equity first income increases the million in and increase and the These Group but million as saw institutional a surrenders million segment, Kevin and withdrawals. flows for relative stronger in pension adjusted investment like business to XX% investment return retirement net year. breath providers reported transfer the over pretax to the attributed flows quarter, implants.

up given Legacy, cancer charge nonrecurring not year. million disability to sequentially pre-tax overly recognition Turning loss last adjusted to But meaningful last taken are A&H and comparisons such was the on certain quarter. quarter the $XXX income of fourth

translates However, to the of well, But X.X% the view valid. a return attributed our after-tax million for $XX XXXX year return the experienced that the on adjusted quarter's common rebound already X% discussed X% remains a equity. annualized full as investment quarter given income into have

tax, tax effective Including income. quarter, rate adjusted tax items, XX.X%. the XX.X% to the for applicable respect is was As discreet rate items, discrete the excluding pretax

to you to using of rate by jurisdictions. tax quarter influenced the actual remaining supplement updated effective rate as heavily tax quarters, then results the the quarter this distribution tax combine geographic always As reforecast know is and the is each by

million any Brian. billion. our afford stock in with X.XX% on so $X.X million the debt turn of do coupon $X a we of over We not X.XX% $XXX and I at split it to back repurchase Moving first $XXX the actions, that proffered remains to between with issued quarter a non will tenure capital dividend. securities billion cumulative authorization of shares quarter, in With

Brian Duperreault

Thank you, Mark.

go can to answers. I we and questions think

So first question please.

Operator

comes now first Fargo. Elyse ahead. [Operator Please Greenspan question from from Instructions] Our Wells go

Your line open. is now

Elyse Greenspan

sense better XXXX. mentioned guys know that strategy momentum. resulted call I call in, your get underwriting of they're on guess that reference My comments on all management back your some I you these to had like of quarter's go big made multi-year this beginning last prior and changes going still are on books calls, would first in the to teams forward of and prior in question a how earn to policies at AIG I the

policies give a how into you could through underlying could XXXX improvement us So the those just and we sense incremental and that of benefit margin go XXXX. the balance running to as of of

Brian Duperreault

this. should Elyse. Well, I you take Okay, think Peter,

Peter Zaffino

Hey for question. thanks the Elyse,

historically. a not property had out. amount core the that announced book guidelines long-term little to want to takes it And something we're forward. do going we underwriting But in that we're of deals bit mention, meaningful So we you as do changing done was earn of time

the see a in should long-term by XXXX. we meaningful So back of deals half reduction

think we half will in our XXXX, long-term and So the the cut of we we half to back deals. start deals of increasing as of XX in see will month enter majority 'XX, just I terms as have -- portfolio annual

Elyse Greenspan

think could us as your you seems March, we And and second versus prices. give in us Could can question, pricing us you the you guys the I give that guess. -- help really then trend, then strong sense view And to my improving when give on about trend, pricing? saw a sense beneficial you the to like saw start you first margins be really guys earn from of in quarter? referenced a It forward just

Brian Duperreault

about little the about bit about going let to I’m pricing. a Yes, talk and this, Peter

other this had In we do wanted, needed. whole So that. point case, pricing things industry The recognizing I own is our too. we had that just want to to out is

price putting portfolio. at limit attachment more selection getting the out the board their ourselves So and things risk the point on cetera. just process on the said, right positioning there that on et are in right program Peter going getting is And properly

So component causing a component. want important improvement do the an more component, into to Peter, but the of that Pricing a around of portfolio. it, is go you a a is little bit pricing? lot

Peter Zaffino

Sure.

of prepared remarks. I think this we in lot the outline a

is mean which I has little underperformed property most. board. bit the think that is the it seeing I There a happening, certainly what's is across different a we're multiple lines.

has attritional the seeing And on rate CAT admitted market. as losses we're well deployed, capacity, how capacity been E&S so whether the as within it's

So be in I year. rest lines. it it financial think, consistent throughout that's, of the seen would the We've

I the we then seeing think, parts expect remarks, in and continue as many of prepared year. in we that of lines in we're margin that would throughout his many take as up momentum, Mark and the business, mentioned and can participate program, to

spiking just is It's So a that parts line. the multiple it's one a lot of orderly is not one This of and very at lines meeting. across world. in

So it risk think something risk to is sure put but paid also lead going for appropriately selection, predict this we we're getting that hard with, making how out and long we're we're limits lasts, I but to that again, the underwriting. that the

Brian Duperreault

through been quarter the just phenomenon. isn't Yes. It's This pricing first building 'XX.

pointed premiums. Mark it'll earn these And as And seems so out, bleed to some acceleration. there be as in

Elyse Greenspan

Okay. Thank you much. very

Brian Duperreault

Okay.

welcome. You're

please. Next question,

Operator

Sachs. from from comes ahead. question Goldman next Our go Kinar Yaron Please

now is open. Your line

Yaron Kinar

questions. two So

First, release, from and with profitable I calendar the on? will you be your this I that year on accident think year Brian, expectation is talked in basis? commentaries the press that both catastrophes just was about year curious an

Brian Duperreault

really thing AAL, whether you large the want I Well, or or, insert with catastrophes, as did have catastrophe I going it's tell I can't to a that. we number. X.X. And after X, which don't I this catastrophe have mean, said, we're into called we to a about small it talk

period on we whether that basis, but I make think or can't an profit. an underwriting on we belief. year expect years there underpinning predict I going we be CAT mean, is will don't, catastrophe over make But belief, profit a expect look, mean, be I I where not. average, have it's certainly our But the to very of long a So kind year. time, this years some And a of average big I to an strong to

Yaron Kinar

Okay.

this catastrophe basically, without using is still So AAL seems load? comment some normalized

Peter Zaffino

there some tickets the I AAL quarter. I put we an already AAL And was -- in it said were first We under XXX. in. mean, put

Yaron Kinar

Right.

Peter Zaffino

it'll I be saying, whole year, CATs. my That's AAL You the put I'm believe we can't point. actual under an but and the tell you XXX, for that's

Yaron Kinar

Okay. Appreciated. second on then, And my question is NII.

billion that for sum a bit $XX.X year. do price So NII that's the math $XX the guess above Mark, billion I about you offered. if the that little measure or of guidance think out, the previously of I I the laid And

NII of basis how should So here? on think normalized a we from

Mark Lyons

no. say Well, first off, partial features and you a would just features or some give yes binary some credit, and

So partial I'll credit that. give you on

whether $XXX last million, but that’s the that, look the helpful. or of you $XX million, And gross time $XXX depending to expenses which million investment closer you guidance take of where reflected include longer look you've if to get $XXX the billion will and closer have quarter of I re-class a $XXX not be it's re-class. recognize you original on million did whether the So period XX.X, at XX.X, to at would that

Yaron Kinar

Yes. re-class But rate. adjustment equity value also had you of the per a

So …

Mark Lyons

That's right. the million $XX quarter. in

Yaron Kinar

Okay.

XX.X the with both XX.X, re-classes. got So you

Mark Lyons

Yes.

If you there. will be reflect you that, approximately

please. question Next

Operator

go O'Neill. Sandler The next from from Paul question Newsome ahead. Please is

Your line is now open.

Paul Newsome

quarter mix capital I a basis. think of light. the -- first the talk sort much with guess seriously on in third so their business second was about hoping be second in and reinsurance CAT toughest insurance are change There I having you the just your And a volatility second has companies normalized and the I about and worst been may bit of could little same.

volatility in you You capital pattern? think will your a think traditional Or there the these that AIG is follow going through to difference do all changes, with quarter-to-quarter? normal be

Brian Duperreault

love give would to to this I somebody else.

we will So to try with. start

to don't first than something? don’t the the that’s But say an fourth think, equates second don’t to half but was really CATs I think now, annual happen that’s we on about to be number first seasons, it lighter an I yes, storm you weather losses, in are Peter, just storm they changing think quarter anyway, little were. lot can at you a of do than anytime. we because cetera. had annual yes, we've of third inherent want have I an talk the I least the -- I because think winter first it have enlarge, all, losses mean, quarter, storm which to ALL so et and know traditional. half as seasonality by want there it would about And But basis. is so about

Peter Zaffino

around decreased lot our aggregate, the Brian in it was addition and around volatility standard putting and periods expected scripts, use addition to we and XX%. volatility more word our There that because making also is but by has comprehensive deviation question in to an much one I add program different thing would return in our together a

think going So its happen. ALLs reduced while has of it's in PMLs significantly not or certain, the what expected we is to whether around value terms

through So the very that more design beneficial been gives is reinsurance and that confidence. had us something entire

Brian Duperreault

I remarks thing And that carveouts show in and that alone in that, and it's prepared regionally the tried of put DCG programs I regard. the into add globally. one because to protection place question, would And in also that the Paul, let vertical my is horizontal is risk good materially CAT helpful a were gives better

with helps mostly they containment. attached forget in one are but the last think the is would quarter, one which talked about was the started I that the earlier, view, way So it because it And we I of ask gross not thing to underwriting latter the reinsurance changes gives XXXX. half

the reduction inures protection is is So quarter we get of volatility in program, the we to quarter in to But CAT from also XXXX. the benefit risk-attaching, will increasing some which to as that quarter that occurring. of was go point

Paul Newsome

if additional then thoughts. management but raise They any any this capital quarter, on did there? capital. the to some I you just updates got there's buybacks And see any thoughts you want weren't

Brian Duperreault

were first we quarter. out largely Look, blacked

mentioned. offerings you of So at because those the end,

look we philosophy My think continue it. hasn't at I So to changed.

tool. an we management use we'll capital capital. go year, that And we want it's think I to appropriate as through how look at the

changes no there. so And

Next question please.

Operator

sir. is Certainly go question from Deutsche Bank. This from Please Josh Shanker ahead.

Josh Shanker

reinsurance the purchasing about year. understanding timing for the the in was interesting of remainder I the of

the Or which have 'XX by expense was similar does in we to the reduction, quarter? will XQ that premium of quarter quarters was first how effect AIG's the guess, have reinsurance to forward? ratio two-thirds Validus' more Are year-over-year big and about a you go of buying. the reinsurance, then sum And as affect come? buying related You said I

Brian Duperreault

Peter?

Peter Zaffino

the U.S. just have a quarter. base sort impact then big we now attaching earn of risk quarter as that share of commenced a the first material the will probably that session. We foresee from one year how only the That's And the on through for is casualty

on believe the I was material. any that see other property. will most So purchases material that we don't

mentioned, we've the as Mark So per done aggregate. a -- lot risk, on the on

on of year, to don't and that into And think we the take second it We the impact not part as do have volatility about expense we our ratio make and get reinsurance we quarters. of have some I to look our long-term deals of sure done the as will purchasing facultative impact remaining property. the out believe we the that third thought

Brian Duperreault

Next question?

Operator

from Our Autonomous go Tunis Research. next question is Ryan ahead. from Please

Ryan Tunis

use ran not rate, of anymore. know that you're those Peter of And is But year, Question $XX some it in level you also, here XQ General remainder Mark million as levels. those of help. year? I pretty us your million verses over some maybe could for you think expected in But idea I the $XXX good and from a terms quarter $XXX give how of run last disclosing $XXX can Insurance the think? this Is was about GOE the million down to do which one number reps,

Brian Duperreault

in share me little quarter lot taking a buying the comment let multiple average. had look But more bit volatility the on mitigate turn We the one down in it out a and addition which to risk the a was we property our Mark. to of gross So in to you ended if areas quarter, our severity. we volatility. quarter in business, on through I severes, terms and up how of frequency than for working activity and address think issue of less I just will over had the that But bigger

we've growth, So add? protect volatility one through to I was think more what it want done anything you but Mark, importantly to was, reinsurance. the is

Mark Lyons

any talked was about just nothing But adverse so this was severes. into changes, I without view and with underwriting Peter it's, It there Yes, late the specifics. of it, the severes reason. end a which again, but say on getting would very stages another is reinsurance front

Brian Duperreault

on comment to GOE? the want you Do

Mark Lyons

million are Validus, excellent quarter-over-quarter apples. quoting The to the GOE, to we apples incorporates so to $XXX that that get to intent you because do

thinking in the a realistic terms should way, sense. So than more it's be rather on but you of more probably I think ratio dollar

items move that But function could We and miscellaneous affect a premium. around probably at. preferred that's two being consecutive that. to And way accounting XX.X% have as our GOE of things a that the and premium had little bit like quarters can of look

Ryan Tunis

And I mean, But had curious thinking a just attritional on, how are guys follow-up on you volatility about on ratio. should I the within we CAT volatility. loss

of or Travelers you two explained be XXX Is than were points points, at swing away synergy is, we central think run it to like it also at? view you adverse what we now? activity. have because could How to the by think rate. let's So good quarter really one companies running a if used could a easily being point luck. explained is what say that point less three you point many that is Is is a yet for still one just think tendency you be points two by see Are can from adverse

Brian Duperreault

think it's Mark. I

Mark Lyons

characteristics. and look go One But a to have diverse come thoughts massively of one, mind. to that that, different couple don't it want I global geographic presence at So is way. we back. can I

more much you company, is driven of company mentioned frequency a and predicted. a As more therefore

a characteristics. more have has of in-force we're characteristics that severity lot smaller, next severity a and mid We but of both to be much mix -- still high and book lot frequency changing

to fair I would reinsurance loss there So that the a contain net say because is amount. going asked The is question. ratio you

So it's than it would going to be expect to more, but I Travelers. wider contain that

Brian Duperreault

Okay.

question? Next

Operator

ahead. Suisse. Next Credit go question is from Andrew Kligerman Please from

Andrew Kligerman

for to Is of in much buybacks it probably balance you XX%. to follow-up question that Paul's given about buybacks period. close blackout But by want to on of understand your year? fair is debt do want you're pretty to and the capital assume to don't the Just way the

Brian Duperreault

capital? have I to here. we have want do of think Do understand commenting to predict buyback continues want uses authorization more I used. I in mean, I we So there don't anything be want really that. it be quarter-by-quarter to. don’t and to a don’t I to, place both than I that to want

Andrew Kligerman

then right. to And regard just the All line. personal with

X%, due release there of was? down was you reinsurance international at situation the normal premiums when So premium North the about that And down the decline with I a A&H you give of the earlier Mark now cetera, sense were written going us et line, Is A&H? that's some you America lower. net could out component was also thirds two two take on just putting personal looking pressure XX%, the And competitive mentioned what talking reinsurance. the to XX%, of acquisitions know that in -- on down third

Brian Duperreault

Peter?

Peter Zaffino

a Insurance came thought in States, our our Personal in would the of the on ratio terms book, So warranty we travel where combined in the quarter. United had it for book exactly

more of point, we the we had So per that net high looking about we're composition our worth that where book. contribute of really not attachment only book, talking global bought from the we And lowered more the at also sort risk. aggregate

terms zones. the We peak the Zortman And we'll capital CATs. Asia-Pacific of high in of responsible. is, think dampen other us And improvement portfolio, in and depending as underwriting, and to Kathleen net allow portfolio in second has that is will us. program high driving well hired And will terrific bought certain footprint. of in reinsurance reposition attachment points She's who on we accelerate we accelerate to a decades CAT will who in year book And just network that of depending terms very the our portfolios, different joining throughout an will it its want experience has also respond happen our worth I what individual in The volatility, think, and also excited. for really portions like zones have the begin we on that peak on we happen quarter.

Andrew Kligerman

… And so the question was

Peter Zaffino

terms well it's its A&H. area and something anything where And much we growth very It's term. it's view, and not area the should then terrific the have think a to term a will on I it's Brian bring an take want where in very but on we we not ratio. long combined book, performs of our an should -- A&H, And grow longer over portfolio,

Brian Duperreault

just we And far. so … been we've And

Peter Zaffino

We Ed global leader named just have a Levin.

And really But, and about It'll time. have strategy joined our growth. I us. so for come some in And accelerate place us to term. wanted we the to take in excited he we beginning long that portfolio.

Brian Duperreault

it one last and wrap of up. Sort we'll question, then

So please. question, operator, last the

Operator

Tom from Please this And Evercore. ahead. Gallagher comes Certainly. go from

Tom Gallagher

Thanks.

First question on P&C.

being booked in you provide add had net that at? just to going curious growth that's significant as what in meaningfully of to ratio written drove that earns kind terms a that of risk premium And little what in? what big You underwriting can Is -- kind improvement growth? just specialty combined of color

Brian Duperreault

crop. and is Talbot which the acquisition. We was mostly It had CRS, the

in specialty so the And that's classes.

terrific portfolio energy, and specialty going risk very AIG, is hard syndicate look to very a within to Now And including balanced syndicate. within with and been at fit political the going what's working what's Talbot to determine has marine, we've political classes, violence. fit on will Validus improvement overall believe to do and performed short, well our combined perform it's will year well medium on in basis contribute ratio. And in like But the a calendar that good, over quite long and business term quarter. and the that very

Tom Gallagher

I more that as versus more guide income, for the higher investment was value asset imply at in ones. only looking returning the I And net returns class on like. $XX think And think equity volatile billion full at you carrying their I something then And like looking of just characterized year I'm have, asset portfolio. if a $XX you would just on your the Mark, return NII, billion that like stable a that classes X% plenty follow-up in the volatile, following private

NII Can that your that color you imply is assuming provide on secondly some that? on off returns And guidance billion conservatively $XX.X right? Thanks. does that First just portfolio.

Brian Duperreault

particular of assess one shows would I the you X% the That look period of that for up, quarters. current that four or be this that volatility. volatility. of quarters the purposely should in since which Tom, X.X% swing you first time some to work this five X% that something off prior was period over First what average question of

implying that’s on billion billion. So $X.X $XX.X $XX.X like the another billion basis, takes X.X% which you to

$XX billion you out to that have in the what's for investment $XXX guidance I expenses, just the question original for volatility an to billion even. the in then there take answer measurement wouldn’t I yourself and gave have million have to You $XX.X is gets re-class impact what. composite But proper $XX.X the annually And to that for what down to of you think billion. example you been

Tom Gallagher

everybody. you Thank

Brian Duperreault

proud I thank results the I who support end on approaching couldn’t to we're But AIG a path. our their receiving resiliency. work, at and this. I across ahead still We and I’m we the work our is for dedication want hard anniversary company. great colleagues your of thank be industry. And right everyone have call at want accomplishing two So to of before lot what we're all my quarter demonstrate tremendous dialed first AIG, that in, we're for the grateful to the at remarks. of year this And I’m

great very So much. thank Have day. you a

Operator

today's that's gentlemen, participation. and Thank you conference your now call. Ladies for concluded

disconnect. now may You

American International (AIG) 7 May 192019 Q1 Earnings call transcript