AIG - Earnings call transcript Q2 2022 | American International Group, Inc.

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Operator

Good day, and welcome to AIG's Second Quarter 2022 Financial Results Conference Call. This conference is being recorded.

Now at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.

Quentin McMillan

Thanks very much, and good morning. forward-looking are include and to may uncertainties. remarks statements, subject which risks Today's not performance of are statements guarantees These are future management's expectations. based current or on and events Form including AIG's the on events important cause Form our to XX-K could details and that results annual XX-Q, filings provide quarterly SEC, report actual with factors differ on reports on or materially. any should management's the is under to update Except estimates AIG no or circumstances opinions laws, as forward-looking applicable required if securities change. by or statements obligation

remarks GAAP today's non-GAAP earnings turn Chairman the Zaffino. measures. included I'd Additionally, on earnings refer may financial to available website and over to CEO, call our Peter are and our The to that, measures now such at presentation, like the reconciliation which With our all release, in figures to of financial supplement most of comparable is www.aig.com.

Peter Zaffino

you Good strategic, significant exceptional could quarter an more the AIG results had second challenging morning, again us across pleased Life delivered Insurance, very not and in and conditions, of Retirement headwinds. our other with equity continuing thank results to volatility objectives. good and review with I results. and momentum operational despite all quarter market for excellent be joining General strong financial our

of And year ratio, ratio, XX.X%, Global basis in business result common ratio saw the of best consecutive the XXX in point press an in share you and basis XX.X%, of fixed has common achieved with year and accident our Commercial Blackstone. net XXth shareholders ratio. coming second of accident $XXX stock which a the and strategy the calendar second combined of quarter, for XXX Retirement achieved combined to in nearly million diluted after-tax were deposits year-over-year. $X.X this quarter combined year returned improvement. of straight As over X improvement sub-XX modest at catastrophe the improvement over points The cats, excluding was sales release, Insurance AIG the income losses per in dividends. capabilities cats, Life was through billion X.X% with XX.X%, a adjusted annuity $X. volatility, repurchases was a $X.XX. billion to and General has $X quarter, origination combined strong very first manage years. of our million excluding quarter $XXX year-over-year Consistent billion XX quarter in or benefited from in the

second least buy On quarter. track remarks. billion In third addition, at Shane of $X.X detail more billion will on back of liquidity, parent topics. are X We ended detail we quarter on the $X I will his the provide through more to in with stock in common call, in go today's which

Retirement our and business, why chose First, IPO update will I once Corebridge the is known not on an of with Life be as a proceed the various to company. will which and the Financial IPO continued of we review discuss stand-alone we to company be the provide significant second on we've quarter. public the to make Corebridge the prepare this as separation will also aspects I progress of in public business

solid in follow-on net mentioned, driven a I showed income. the review as core as results Retirement largely Second, where, resilience continued the a reduction I Life from IPO discussion, and to and business despite will investment performance headwinds

goal X produce on rate and exit of in XXX, an of Global I profitability update Commercial schedule. with billion performance our General outstanding where months continues top strong critical in Third, $X provide Insurance, I of will to portfolio. will results AIG growth, on our particularly savings run line we delivered underwriting achieved milestones where excellence Fourth, review and ahead the stated

and buybacks management, an respect on provide debt update particularly with stock to I'll reduction. capital Lastly,

the on Q&A quarter Following Mark my detail of join portion remarks, for David we will and today's and provide will Hogan us take Lyons, the Kevin questions. then Shane call. McElroy will more

see, can you our lot many a accomplished has As on team fronts.

of Before expanding I the IPO. on Corebridge our address status want the and operating financial performance, to

XX% equity we Life the was Retirement Our market be some May the market had in the been to to positive of level. subject only to the which the These to base S-X. were companies and public market advisers, weighed XX volatility second more all the Corebridge complete June, offering the equity trading deciding investors IPO were returns, to many filing above and in X values In following feedback regulatory the down we approvals with weeks public in conditions. and that seeing conditions included analysts received which institutional macro resulting to comparable extremely the the potential markets quarter, quarter, and consider initial particularly sector market launch always case variables, from we whether some In and or in several second and elevated market-related, most Corebridge. of VIX, specific

range progress in expense of long-term the window meantime, summer, areas throughout market plan In partnership make continue for Blackstone our will expect these model X While $XXX our operating execute the subject achieve our in progressing to generate for we savings includes XX over stakeholders to the completing years us to be the on, we conditions, we be I'll savings to attractive position of the closer run $XXX now with the at and detrimental next focus. million Last next investments in regulatory long the we success. Corebridge. announced majority and the be of in achieved not something run. we to where significant this a approvals million, technology an remain we One, which under did late our year expanding $XXX reporting. laser-focused of next see a to in the are execute highlight and we on to is priority Aladdin on business with and announced three, quarter March. to business the and want moving to million months. but XXXX transaction replace with of savings a And to IPO in the we today, transition BlackRock, management to Absent analytics second X the is estimated and would significant assets and ready of quarter, This risk end-of-life the and infrastructure to we the September. arrangement BlackRock's something began unit. pursuant partnership planning be platform, the will for rate IPO, provide implementation July don't our of to believe strategic this new Two, that enhanced in aging savings to

will expect annual have a post-IPO equity of of Corebridge a an pay that and to to $XXX continue will XX% ratio XX% We of million XX% on that the it payout dividend to return next over months. that achieve XX% XX will

Life in Now the second quarter. and Retirement's performance turning to

decreasing alternative and adjusted was $XXX million, investment period the DAC to SOP by income, pretax earlier, accelerated which mentioned year I an income increase due in amortization As NII, reserves. from lower driven prior lower was

core $X.X In the up pending XX%. the provide we and enrollments from billion strong at remain X%, XX% details sales what in deposits contributions grew flat grew X%, Retirement, fixed in which Group were Given but quarter. were about we annuities, up second sales to nonrecurring which IPO, the some billion. indexed were annuities, $X.X somewhat produced and business, strong business The in can me let limited say

RBC were an $X.X of remains due strong rate position deposits growing to The quarter Retirement ratio base capital XXX% XXX%, net above basis Second the target and X interest with ranges. with strong Life points to spread and still sheet billion investment our higher sequentially environment. balance of

grew XX% which which and which Global retail grew detail our more we premiums premiums performance. and Lexington, Southeast premiums to strong premiums up steady holding very in Russia business, which drive of very Personal where Canadian North America premiums FX-adjusted X% North X% our also region and growth Global led in at energy, we and our significantly Global premiums excluding related provide to Specialty, Re. an Commercial XX% Commercial, Global written me grew XX%. on growth growing Global where marine, basis. decreasing XX% X% we increased and FX-adjusted property, was with or in very XX%. an the In billion. a up increased basis, which strong basis which FX-adjusted In and XX% grew International Personal an Commercial XX%; X% portfolio led U.S. up up on which net International grew net XX%; an Net retention or was increased In excluding of grew quarter which Re, the XX%; international written, X%. results And written property $X.X particularly FX-adjusted Commercial XX%. Commercial, nonrenewal in grew increased XX%. written. continue International Specialty, we in billion each business, Gross was Specialty, led net AIG $X. by written General North This Insurance, basis and was let also had which saw Now Global improved increased cancellations on Global In property, exposure on with XX% America second X% cat X on to to in basis by financial our written X%. impact Commercial, case in in-force to commercial net XX%, the strong net of points have premiums renewal AIG writings America XX% XX% excluding strong we which with reduced written exposure, North X% growth Commercial XXX saw decreasing wholesale America by

to we our to consecutive Lexington. slightly in changes. to business And strong, was Ukraine. million, related $XXX reminder, exposure Talbot coming new and actions fifth led Commercial, rate North very Specialty a year-over-year slightly $X intentional for new by billion over impact in business to quarter. prior business of down $XXX Russia, due to grew new As America's business renewal in across we calculate the million be retention the Global International and continues took our

X%. to X% we increased cost loss America is trend including cyber, our loss rate mostly successfully cost rate increases which continued property, where cost achieving view by which XX% rate lines. XX%, Lines, more we're Financial of the other casualty, Momentum the Turning more moved Lexington in driving a which have had in either as casualty in and margin were And are In Global XX%; trends we by also increased aggregate, end and loss increases the where the migrated result, the upwards by liability XX% North which consecutive increased with wholesale This Commercial increased XX%. X% trends property fourth which loss indicated large from for led Commercial obvious rate increases to rate. And no continue upper of EMEA, affected. rate Lexington, Last increased XX% increases excess to which been International whereas show X.X%. to than exceed a with rate lines Commercial and achieved and areas second that in double-digit year we impact X% in the increased support with XX%; North cost, cyber; to which in on driven or increased to Lines, data XX% overall external commercial some X% businesses America aggregate above driven tail clearly achieving continued shorter move internal increases led expansion. trends. in property; Financial professional quarter, XX%. by in quarter, range

modified cost again trend and the of based we result, loss a cost frequency to of on Loss severity. view a more on As represents our information, trend composite review X%. recent

premiums is underlying North of However, exposure loss growth mitigant mitigant receives exposure to offset by our decisions. this insurer in driven inflationary rate America into inflation approximately additional Commercial an cost view cost taking trend, which Exposure account, there these trend built benefits a When as is reflects inflation X%. we additional to current the partial exposure loss basis. an sensitive into net trend,

and consistent loss in Additionally, does pure over not improvement ratio and over cost terms selection but accident America continued exposure reflect XX% numerical our time. is pure risk our actuarial rate cat conditions. loss emerge improved is and a Those Commercial year-to-date, ex with North is approach benefits trends will year which of booked at

a higher deployment our As a towards attachment we clear calls, strong implemented rising discussed on we that towards defensive this is property in portfolios strategy ventilation lines our casualty, directs prior inflation. today. financial since strategy points, average And capacity have which measure and continues XXXX,

AIG to our in last business. average strategy the implemented compensation over also workers' We have management years, deductibles the $X.X loss-sensitive few increased risk million. And XX%

by reduction reduction declined Turning to net North FX-adjusted partially declined by by partially Personal and in warranty basis net a International and X% which travel. Personal, due premiums Personal, also offset on Accident a an was driven In to & X% in premiums a in offset written rebound Lines. in Health In America written growth warranty, nearly travel.

to opportunities for our business is we a I'd worth This will Now in where a high spend invest like are attractive to few continue on net profitability minutes improvement. there business.

through partners we Over and actions and and sustainable interface invested digital distribution the last designed lower already provide and be the insight to this value more balanced with less years The order $XXX to financial a taking policyholders. business to results. million improve customer we've provide are are to enhanced data, will workflow, second volatility X quarter, density to position in that more

portfolio. the we growth willing resulting business. the the of on we and putting been opportunity due margin or And increases the profit increased the the regulatory costs on term. have risk cat-exposed or segment. see I taking further trade-off in term near take combined we to market high But improvement. impacting rate our volatility a headwind the is to management net we net and Let this, long have costs this and don't as worth believe to the has of commensurate on Adding to purchased of this inability less short high foreseeable reposition level business dynamics model given is intentional not the a we written tail over seeing the the deliberate to continue becoming future, but deteriorates loss through market our decision in frequency businesses reinsurance each it for the actions review the significant generally writing pressure attributes, are me the business largely Currently, limit to premiums has that while different This created and complexity ratio net appropriate are ceded see for reinsurance on run. expensive reinsurance we cat made worth pass to in instead, constraints as some

is materially. for in to last reinsurance over in few the likely peak business happened of reinsurance for in total will that some values, peak the insured retrocessional increase To fact, primarily need what zones, no a look with understand has years. the and In underwritten complexity high zones further costs than cases, market you

$XX important various over indemnity-based available capacity market, of last is this retrocession for XXXX. years supported retrocessional structures, alternative $XX reinsurers small remained the though understand materially While changed billion dynamics because approximately overall capacity capital. has provides flat overall by the primarily with of limit across they are roughly in which since have to billion even The market retrocessional few

a significantly on of in First, than increased more the risk-adjusted retrocession reinsurance basis. cost has industry the

occurrence. Second, predominantly has predominantly available capacity from aggregate shifted to

over increased occurrence retrocessional increased first points have retrocessional rate retrocession Third, have aggregate the lower attachment changes, stress. event attaching adjustments year. under for challenging have by you prior additional going changes is fifth, complicated you forward put very trapped and though also risk-adjusted been compounded reduced a even have return XX%. significant When period inflation, factors Fourth, And market these with and couple exposure model the XX% market. to capital, compared

complexity Additionally, cat of highlights review years of decade, from retrocession the over global if losses you which modeling net aggregate peril had peril the X peak insured losses, larger than secondary have out losses catastrophes. contributions last XX

concluded cat-exposed quarter, maintain our product non-admitted a to high loss could that inability reflect clients market. we property net In no the these rates to challenging especially market, and risk longer the in we the comprehensive market on admitted to inflation aggregation to continue and certain property solutions that level reinsurance make increases, as as of in result move of emerging dynamics particularly issues, their to states. second with circumstances, exited worth well this given provide the states cost as personal our we As the and meet changes coverage homeowners homeowners in we increased to ability costs limitations needed

go-forward supported to worth a plan to we we will structure needs. products of and net to non-admitted to states client in aggregation, expect time, homeowners to price, conditions move our addition manage up the strategy, And set in AIG. going part high that flexibility and over possibly solve structure to innovate we're more market. As other third-party to providers capital be by more limit, terms This provide evolving and to

in products We apparent hybrid will our early We're to other products states. portfolio key in this and is U. in admitted-only continue S. to coverage in stages. in catastrophe as provide and non-admitted states clients admitted benefits the the perils a of of already strategy our model reduction seeing the these in utilizing some

year-end PMLs across approximately down XX% PML entire are wildfire example, For to curve. XXXX, the period since gross XX% return

Last programs reported the ultimate our political political have to outlined of connection we or with estimate event have these business of available. have that limited. information claims IBNR policies. received uncertainties continue particularly mitigation to whether and situation sanctions. from questions the much and we presents, review addressed occurrence want actual non-war claims aviation of issued we we applicability of violence remains I arise that many to potential loss, to received surrounding the very very risk the fact reinsurance policies and losses, complexities the loss despite Now reserve including quarter, heavily operators any largely potential that to be related subject Russia-Ukraine. losses to those war of best continue this are I comprised companies, lines a complexities the in Moreover, And versus airline the and uncertainties and apparels in losses, These under of have we continue. The multiple losses efforts, leasing

objective X Delivering earlier AIG maintained structure expected. this was across because with we to exit a of from run to successful company, $X.X was on and in these objectives critical Turning operational all major At foundational designed AIG XXX the company. financial for billion achieve governance accomplishment our major savings of XXX. across of to financial achieved we transform core second exceptional a tight cost deliver the rate AIG is capabilities XXX quarter, team. than our areas and the the to $X a these our months journey goals end billion. of collaboration was X-year colleagues and XXXX. We started saw

excellence. significantly continuous the While XXX completed, of original the focused our place. better company on remain a put operational have in team objectives AIG XXX been in has improvement will AIG

to now to should capabilities that infrastructure, retiring streamlined to reporting moving real capabilities global We our that fundamentally X,XXX and in platform will outsourcing linked that moving the want underwriters the and for in significant manage a we faster performance. our we our processes platform underlying roles global for better a identified make AIG understand building their to shared they services platform, on our our knowing in have risk involved thank of our operations public common drive new time. by all data established XXX system our investments over XX,XXX XX% finance a partner pride of build This I IT and in over we made management They underwriting allows will PML new center continue future. Specifically, a single modernized of and key colleagues and infrastructure benefits stakeholders take and client location partners. commercial foundation our over global digital now portals for consistent our a to decisions and infrastructure great AIG applications and streamlines call to outstanding decision-making. through to streamlined distribution new standard including for And our us platform enhancing that also exposure. better and capabilities includes allows cloud. XX% capabilities, We in management

capital management Turning to our strategy.

portfolio. to continue across capital maintain investment returning balanced allowing opportunities we of buybacks through disciplined to growth be will also shareholders appropriate as in stock dividends We our levels while and while debt global and for

with billion, successful we where dividends earlier, paid $XXX quarter, stock, and parent repurchased As in $X.X billion billion liquidity. common debt in $X.X $X.X a had we I ended second outstanding very by reduced said million of net

on proceeds debt for the the Retirement billion $X.X use note Life under additional to have to $X risk-adjusted repayment, repurchase from our IPO. least will expect to current AIG respect our on AIG General at ahead, opportunities, pay respect Looking remaining with in debt of the see expect improvement returns. receive priorities the down other and stock we these respect quarter. common remaining authorization third where Insurance, growth promissory share for $X. purposes. and opportunities further and to to With our focused organic And capital profitable prior to allocating to buybacks, With continue X and we repurchase to billion we in share in growth billion be

business, will last or the our on discussed the post you. management more and AIG Shane Shane, over at that a on on XX%. remarks. in common provide equity capital return I'll we expect and of to above As turn call, on will call we details achieve deconsolidation Life Retirement ROE his

Shane Fitzsimons

Peter, all. you, good Thank and morning to

General our I of goal and expense then ahead months reduction run income billion As Peter balance share AIG will sheet, on or financial leverage, quarter our in on net time Insurance X more income. including want provide investment will there, detail you number contracted rate on XXX detail benefited detail capital then transactions. EPS, and have from XX% liquidity results will quarter. we I the savings our second of investment which of do liquidity, the our providing provide path AIG execution we and more executed second noted, I more and as metrics, I of exit $X to original execution on on to performance of what Peter intend excellent for get key detail on results where, will drivers, stated review by count, a leverage, ROCE to provide noted, to finally, And income begin and line. more and on number Life of our more the detail and specifically a ROCE. unpack net financial AOCI, Retirement I

primarily of after-tax contributed of Retirement DAC $X.XX billion net decline million, to per diluted Turning underwriting share. below declined $X.XX. income, last contributed net driven million of alternatives, was APTI Insurance second investment $XXX and shares enhancement in Improvements was $X.XX $X.XX $X.XX decline Life outstanding primarily in strong lower Within year-over-year. amortization which in to the year's General $X.XX and quarter profit increased SOP income. The accelerated common General income in million from an $X.XX Adjusted income to by in income decline was improvement, or offset or Life from Insurance, investment $X.XX and contributed $X.XX and decline by to EPS. reduction $XXX due a $X.XX reserves. also Retirement in and $XXX XX-X yield investment net $X.XX alternatives $XXX due being unfavorable an million down EPS in

accident in improved increasing underwriting from PYD, improvement XX% this I investment ratio million Underwriting the to XXX points income cat continued points accident strong a cat year catastrophe coming basis XXX of points accident XXX in America accident Commercial year for offset low cat over in addition deterioration the improve at XX.X% experienced year-over-year, underwriting profitability combined combined reduction due cat points ratio Insurance from coming had XXX had and the North improved XXX points a also year another continued to combined the ex improved pretax or losses in $XXX to ratio the quarter $X.XX XX.X% prior million second by growth, development, In income of improvement the premium profit the second Commercial favorable improvement ex $XXX in excluding the compared basis income by Prior points by coming accident cat in Insurance's pretax was million up discipline, As by the loss income year were related to International in which a a year-over-year. X.X ratio losses to was was of XX.X%, driven development a X.X $XXX reflects quarter, General all underwriting ratio XX.X%. contribution points improvement a prior underwriting a adjusted year million $XX at quarter ratio $XXX compared this XX over improvement at for to million and The calendar second quarter, coming with to year combined quarter. adjustments premium growth quarter. in $XX in strong in ex being in in second million at income, noted, ratio prior the improvement and basis $XXX adjusted year or favorable in General combined ratio quarter. earned year loss in expense year in income $XXX billion, XX.X%. $XXX combined basis ration the North year the improved the accident million basis the the year quarter, Personal in International points favorable million quarter. ex to basis PYD, $XXX million quarter, America income the which XX.X%. million. ex combined contributed Personal year to pretax quarter. prior alternative cat,

the million as largely increased quarter, consistent prudent The quarter, will $XX Life year-over-year and market deposits the $XXX quarter activity surrenders America had while fixed were prior to by $X.X there the Group compensation quarter. ROCE investment the investment bodily year represents this $X.XX and the of XXXX. in variable XX% approximately of and medical in reserves amortization see up income, index practice, driven in along million $XX flows with sales. approximately this and We million $XXX XX% basis look from of declined of indexed in SOP general net the million was spread indications Sales due XX% are approximately of Blackstone quarter annuity billion environment of ADC to sales This in compared lines, and of reserves. pretax insurance the X accelerated it and solid which points impact the loss-sensitive variable primary DAC standard the quarter, basis U.S. relates $XXX our reviewing casualty lines lower income of as flows had it points be and And by XXX had The the provided work spreads North years annuity the the investment to million aided of points million. quarter. AIGRM the on workers' negative income from is expanded million The in declined Life as And inflationary at but Insurance fixed of second conditions. million declines quarterly, the $XXX of comp. in workers' first side Retirement injury $XXX to Within to particularly of is net adjusted positive evolves, net we in billion, in Net from casualty felt base the the relationship lower development. annuities X was SOP additional another negative quarter DAC in pre-ADC the comp basis origination income noncash. well total review first versus XXXX. U.S. the was annuity Individual $XXX strong focused we Retirement, year-over-year, was favorable quarter. quarter market quarter decline on mostly increased higher alternative and and arose third of were favorable of charges and these quarter XXXX. second compared Within mainly balance quarter wait adjusted primary reserves But both Retirement and pretax casualty development. million of of to as accident of $XXX old with the favorable how

in to and represented life which quarter since second sales approximately lowest sales, non-COVID XX% international the from mortality solid began, ran while mortality the The favorable deposits new Premiums the comprise also continued of pandemic the COVID period. benefit also activity. quarter

compression reported XX level points X to given points the of rate annually. spread But X for expect full than market year. previously range the of been has basis in current better we to Our basis now be conditions,

and third review aware, the conduct Retirement As quarter. the you business, are we our for in entire reserve Life

guaranteed with I comments. However, a on universal provide life the the few recent product, focus will

First, this large us. a for block is not

of X% in exposure our have which net not net do liabilities. $X in approximately which reserves, statutory we in-force So represents much block, is billion our

participate our dynamic are lapse recent this For modeling and study. rates, with fund we study topic. the of And projected recommendations context, premium consistent did in the bases approach on the industry

we over X universal adjustments. product. reviewing And our strengthening for a reserve guaranteed result, the have years, background, been expect as additional don't we last life and significant the As assumptions

Turning to interest for expense, adjusted expense, to operations, the which Corporate the institutional was positive second $XX pretax continued portfolio expenses $X.X year-over-year improved general million expenses, other billion, decline from a general quarter, compared pretax runoff emphasis second contributor million operating investment year-over-year on Adjusted XXX XXXX. corporate includes expense quarter the in $XXX and quarter eliminations, asset income benefiting $XXX AIG was million. to of a management. it by operating management net and of income

a As we may lag, X-quarter of impact third our a private on as equity results and reminder, we the in holdings report the have an well. quarter

market while billion In the end portfolio has second percentage of has capital XXXX, consumer investment and event financial General and focused value credit Retirement, last stability proactive of and portfolio few around improved as in our sold since rating on a overexposure $X.X evidenced we profile profile the the Life from our to continued In capital-intensive through a the Life by RMBS through to support XX.X% Insurance continued the second and quarter. liquidity our declined times corporate ABS average manage we to potential strong and steps portfolio both deteriorates. avoid weighted improving in We securities years, and the in credit risk the difficult which Over of ability and in the vigilance credit in with Retirement, of the investment assets the X.X%. with COVID. the quarter,

particularly fluctuations we funds, have time generated over that investments, we returns that addition, hedge good more volatility would quarter-to-quarter but more prefer. with alternative and have In is than

over being We than would feel them at and forward quickly advantage and APTI and forward, the a enhancing CMLs with an also appropriate our structured volatility. time higher with allocation We've to naturally rate bonds little occur shorter-duration of Going of to maturity, of ABS sales corporate over more ROCE. would higher-yielding, executed securities, it floaters. turn $X approximately the we of billion is buy longer-duration less expect to many thereby take privates, low-yielding portfolio environment move asset on to

With increase rate years, the increases Retirement Life saw quarter significant on XXX overall Insurance basis X portfolio interest a and tailwind a portfolio the second XX XX. and basis just returns. durations benchmark XX-year and treasury yields The General point in under with rising June through of provide or X points respectively, our will environment to investment

money the the higher additional quarter Life $XX General second with the assets off first portfolio basis new portfolio Retirement. on above was and the points roughly of lift during overall second new yield versus higher of yield portfolio $XX and base points the and than in Insurance Retirement. second fixed base XX million roughly quarter, in our points the Our million quarter The and a the XXX current Insurance XX within points additional the XX At General is in saw in yield portfolio income money end rolling basis basis approximately Life in basis quarter.

Moving to on the liquidity. and balance leverage sheet,

the billion liquidity. noted, Peter of $X.X closed As parent we with quarter

was Retirement General billion. debt XX.X% interest to In This up portfolios. leverage XX.X%, saw versus at leverage their end, and execution includes XXX debt and Life quarter-over-quarter. AOCI, the period quarter end result of addition an $X.X of XX debt in rates. our common on negative in respective from DAC, the of duration the in point preferred AOCI by the impacted on additional equity was partially in which the increase drag or point in the Insurance, $X.X X.X% reduction of ratio, to ratio. negative AOCI a the from basis the points we moved the XX.X% points quarter by given year-over-year. down second basis approximately the quarter net increase asset of of XXX the $X.X acceleration was the and leverage excluding the AOCI, share a second actions, gains second Insurance's of related General in was as losses Life larger Corebridge return first was of unrealized costs XX-X spend quarter. in and the AIG billion increasing common in and company Adjusted ROCE issuance return of adjusted while Adjusted from from is reserves and quarter, excludes AOCI repurchases, billion $X.X of cumulative down of offset that book value SOP movement X%, to extinguishment large The and 'XX. net And quarter, retirement million share $XX.XX dividends billion equity is debt $XXX debt $X.X billion including reduction X.X% offset of quarter by net attributable equity $X.X sequentially XX% mostly investment increased Retirement's to was XX.X%, added was with partially common gains. adjusted period decrease on of substantially X.X%. The basis is book billion. common Fortitude, Adjusted XX.X%, Retirement reduction The and sequentially an billion the XXX impact basis of total Total of value share The income by on a We billion $XX.X decline $XX.XX XX.X% increased return in XX.X% decrease second XXXX. $X.X net in Life GAAP adjusted exited per and X.X%. tangible caused in second XQ and tangible year-over-year. income. At per

operating the fleet and between And U.S. the fleet subsidiaries Retirement risk-based XXX%, XXX% pool estimated Insurance's above ratio to ranges. second remain and for capital target XXX% and XXX%. both quarter U.S. and profitable General capitalized primary Our Life our well estimated with be to be between

we X% share the million $XX.XX, to at XXX XXX our year reduction with of an approximately an GAAP Finally, million compared cost average to quarter, million representing average XX bringing count. million XXX shares the ending during average quarter, share in the quarterly prior of repurchased count in

option, agreement Blackstone option applicable XXXX. for option Under away of in the exchange shares put quarter their XX second the of exchange period. disclosed, adjusted IPO. noting million resulted in the is this AIG. the an put was the includes outstanding stake worth execution dilutive and we additional principles, exercisable previously right put our that of right accounting purposes until is goes in not Blackstone for which in upon It Corebridge November in to gives As That this the shares with the EPS the calculations

priorities. X all Retirement the IPO our ROCE Life have we operational expense excellence, to execution towards expense separation and and momentum and management underwriting continued discipline, of greater ahead, improvement goal: reduction priorities, which business Looking and excellence on continued XX% our successful through or the on lead capital

on further well volatility in allocation. underwriting portfolio include optimize excellence leverage an improvements our to as involves profitability proper in both optimization, growth underwriting return as will measured which increase momentum underwriting Continued on without

discipline, significant reduction progress still business and achieving which today trends, rate run both made of of excellence, have in we earn-in Expense through cost come we yet have savings will we date, While not reduction and earned a are above continued to written GOE. rate that AIG operational in. XXX parent

savings mentioned, XX coming the related of we that realized date. $XXX XX earn XXX, million of we have over and to savings billion executed Peter contracted to $XXX months. leaves As savings of have in on AIG million That $X now or AIG to expects to

and of deconsolidation. the upon move expenses We AIG million corporate $XXX will Retirement roughly also expect Life to

to of year-end. we In cost to Retirement now to and to range our close the addition, XX% subsidiary which million company savings have XXX stated, XXX the share With completion strong in maintaining before level. level from tailwind expect will the savings the the the elements IPO. more current to repurchases of get program we as XX% which in to $XXX proceeds the them. on deliver our includes respect Corebridge million we expect of execution capitalization in the IPO, accelerated program, our already reduce of somewhere Corebridge million while at on capital additional expect million to share along count a these and to some as the to with insurance generate first repurchases the our year management Peter has this Each priorities, execute shares, the Life $XXX leverage timing drivers and expect Contemplated plan, we in clarity of

focus see beginning yields over yield To the Additionally, ROCE improvement. power on where based we're economic give backdrop. higher in XXX in a of base higher returns to rates sight investment benefit areas are to we us the portfolio portfolio date, goal. on points of to a higher line to of base lift our the XXX driving provide enhancement dependent achieve basis current These of should minimum meaningful time earnings not interest

time. provide to to you, will updates continue the over will call I back over And turn with We that, Peter.

Peter Zaffino

Great. prepared Thank And questions. we're you, operator, to take Shane.

Operator

[Operator question first will Our Instructions] from Meyer Shields KBW. at come

Meyer Shields

deeper, say, the a information of where lines I as obvious maybe on benefits and little ton rates a property, let's are but could losses not is lines. dig we've into for of receipts, we exposure. and in on got longer receipts was as, between and the and provided relationship based premiums hoping exposure specifically you trend liability Peter, But the concerns tail

Peter Zaffino

implications that Mark, provided in sort Sure, observations and lot the of the remarks. Meyer. don't Like Thank also talk you through think, a go I in ratio our about of we've for said, the why But little information exposure we in made? you what prepared effects you question. bit the a loss are

Mark Lyons

Happy to.

of a mind. So couple things come to

revision Commercial we to X.X% of quarter, lines First off, driving our did X% as this quarter. every in the this are we now to opposed Peter quarter shrunk seen as cost North because the helps at over has mentioned, severity. that increase, Short-tailed external aggregate last loss America talking of our up total, own much trend weighted look is And American that there, growth and the average years, data and North upper is property portfolio ameliorate trend last reduced its has writings I'm information. as about well loss the because in percentage as few which as the a

nature. costs, that XX% So roughly driven in materials, seeing transportation, of to XX% labor, we're lines cost in -- by replacement trends and loss specialty-oriented of things construction line closer inflationary property trends property but commercial

even Our prepared of cost as view or of work own to within data. an And our anticipatory data increment see reflected that side bodily and of medical relevant external from last medical unchanged said we increase. comp, recall the is injury casualty, his remarks, Peter though, yet in that it with But have quarter.

just loss discussing positive that which related the which, reflects Commercial you trend X% getting of talked your of to well, without question additional collected exposure the about. trend as trend, discuss trend Now the hard impact I cost The into American mitigates exposure mentioned, has topic how represents which loss to think the underlying aggregate the already premium it's and some as margin, that we've approximate North function cost inflation an growth due that has book partial accurate of basis our it engines, to approximately applied. the the sensitive a XX% another And focus. exposure of their of exposure which mitigant. which inflation based Lexington, one as And book is that one retail focus rates property, current and be does level therefore, are examples of sharp where razor on on in be statement of And inflation-sensitive basis. of would values is would

excess doesn't make loss which primary. achieved is by especially and trend a rate ratio really whole terms benefits just alone let ratio in may you the driven of then before commodity the in or That's picture. strength [ventilate] rate some increases the AIG's -- clarification conditions. the see approximate that versus or lastly, quarter, that partially high the price change loss on. so reductions. when spoken in by cost price trends, the alone the We've of Peter loss and as position rate primary just the we with loss conjunction capacity these sense. X% good I the So seeing loss of is commented But trend in excess, the But may largest which as think important a is the put X% exposure cost all-in deploying primary, the about becoming I stronger highly think tell fit, of ratio mitigating and tighter trend, produces pricing we're the in power trend D&O. high but there fast permits power And resident

it So think way. this of

underlying loss not that Let's on confused exposure the loss. real with measurement the to of to a difference exposure get between

policy which and base, is footage. then it times paid uses premium the keep premises buys exposure GL footage the simple, square storekeeper the A insurer as to policy, a square So a rate mostly if is

the there course, Of same if year, premium. next no have he'll is change, rate and

However, instead gross same geographic propensity change, receipts by to rates sales the as store identical their and same on measurement exposure has X% the if in didn't an this a underlying than those but the receipts, true but and storekeeper that are the area did insurer year year, the change. have claim last measured higher exposure B volume, of

every identical So even the charged stores premium though that way. higher will insurer than in storekeeper by A B's be are X%

Peter Zaffino

is great, you. That's follow-up? a Thank there Mark. Meyer,

Meyer Shields

Yes.

more X opportunity last an premium one, or on advantage Just comment. even shifting the really to a inflation-sensitive very the of maybe exposure? an there Is brief Phase

Mark Lyons

basis potential implement, are mean, a like little you in I part that you'd a premises. -- it's exposure those inflation profitable -- difficult of Yes. have rated that portfolio because is a things strategy right, to

However, other the of of like M&C you sense. into when lot think I what a you're makes GL, lines, side saying get

Peter Zaffino

Yes.

the is excess I think question, surplus Lexington. take add maybe the repositioning next I'd in just and all and to we'll which done that, lines, particularly with the the significant we've

portfolio drive double-digit rate of improvement. hear starts because between remarks we've job increases. profitability pivoting a to done great as of about to You contributor property to, And alone, prepared they've lot quarters in mean, Mark on consecutive XX that I gotten such a growth, margins. terms just in retention alluded be significant and a the rate, that

returns. the see based we on the So we portfolio risk-adjusted where best are repositioning

Operator

Erik Autonomous. Our next question will with come Bass from

Erik Bass

what IPO fall, fair get as this wait floated a look right view take? strategy your modest the if to you're to if at for take like Or would a recover seller. forced discount sounds opens it the IPO, stock Corebridge and ultimate advantage the some is markets patient the the with you So window and even you remain since not to in Is to value?

Peter Zaffino

lot to Thanks, our Yes. it. provided me of let add Erik. prepared of but in We guidance remarks, a try sort to

been an do always to IPO has and of has Corebridge, that changed. plan Our not

So place you there's for We not the I case just are the base in mean, more you but foreseeable but We quarter to some to second outlined. following like gave of conditions obviously, variables, market we'll is September. we the the do now conducive. therefore, always the targeting intend XX% And likely we to The felt consider still those continue will take were results to secondary own future. offerings, consolidate greater in IPO. XXXX. than that

of And exist going the to it watch case we'd have to regulatory terms careful We carefully, September. to in just the conditions get May, watch shifted base from we'll so in always approvals. like we're the it look, But June to market. And and that floating. our has be

Erik Bass

you was the RBC Got it. Corebridge. the quarter movements And follow-up the your on I one hedging and in could talk just little hoping that saw. bit ratio program performance then we a about more this of VA

Peter Zaffino

Yes, that? provide on to and insight Kevin you some Shane, want

Kevin Hogan

-- so Yes,

Shane Fitzsimons

Go ahead, Kevin.

Kevin Hogan

yes, program. Erik, of has hedging continued hedging economic It hedging VA have an the the our So to as all target-based is volatility. program expected market target-based perform economic we our -- program, throughout

And so and was reversible decline to the annuity variable you those markets index recover. know, as are due impacts market portfolios. the RBC in part annuity And as

risks. hedgeable all So we economic have hedged

offset by we believe credit is account which position, has hedge as it. performed spread credit designed general open an portfolio, have our we have the We and

Operator

Our Brian come next from will UBS. Meredith with question

Brian Meredith

quick X for Yes, questions you. here

another the Pete, post business for thanks planned all for I'm there going one, the forward. First Corebridge the on General curious, outlook expense reduction just split? program the is is Insurance expense the curious, most insurance be And I'm there detail target perspective to you an a business? from leverage competitive the be at looking in need G&A do expense among you think at you're to a expense commercial ratio

Peter Zaffino

Brian. Yes. Thanks, Yes.

did million. at and our really that earn just we range AIG summer in. there the the proud continue increased we we expectations the that to period in $XXX we're be to that for XXX, start of said, we as and So finished now end will of pleased over The upper the X-year to Corebridge, work

of At our the a the separation we That's prepared we're the organization, AIG. start other the where underway. flawlessly. There's focus of and underwriting same terms overall it $XXX more looking as becomes are out making of -- already has, we the part work there that pieces, million on but a expenses. up cost in continue going improvement, amount in executing sure on primary is that our get which to So that be Shane want we will And remarks of of Corebridge excellence done and focus the the remaining XXX put is then sure to company operational AIG making his meaningful within ton a time, at continuing excellence to structure. those core

So that will start to get executed.

look have nominal a we to can world-class like future, a start give path with proven in in As flow think deconsolidate, guidance. Corebridge don't combined more overall we'll in the out of nominal terms focus percentage. that I an where when I we AIG invested to it benefit we we a entity and that able be be to last ratios. way as going the we're terms level forward. even continue we've want we've quarters want a gone forward. we we forward from of for at is not we on Insurance expense the expense General because XXX what And only to the take maintain out is of the I when investing going really you the organization go I but its will earned mean, -- so take over lot have savings and constructive But the have we terms in up. business, to that there. in X I to And GOE not the has discipline

growing opportunities when that I business we're We on growing grow help back in line, ratios. that in year. this why the but the AIG excluded grow Re, to to have commercial excluding the the the future which cat at the is growth business mean, I've half of We not top which today, will to XX%. exposures trying we look opportunities the reason based see is

strong $X billion very the positive, to a we been The retained, our be row of is very that's coming all fifth where new to retention. business have helpful business, We in in more produced all quarter its new than more ratios. going

feel And have so lot momentum. a of we like we

Brian Meredith

we question last Everybody actually And the ability helpful. see then -- Can Great. whole to exposure. your if talking really That's recession? one is hurt trend. margin? on go into increasing What a accrete that exposure about loss happens

Peter Zaffino

started based to me? with little don't I you we on But don't then make-up it we bit why of think you to can give a the the of so turn where Mark, perspective just and back end portfolio.

Mark Lyons

you, Yes. Peter. Thank

So basis, of conditions like and have lot Dave question, proportion the to a non-admitted what your And interesting of an a Lexington you remember, earned and McElroy team becoming doing. on minimum business. premiums. increasing his is terms are

So necessarily that even bit, does on a if that fall a off translate downward doesn't movement.

Peter Zaffino

Thanks, us. time, joining Mark. a lot, Really a Have the thanks, And day. everybody, and great for great a day. Thanks Brian. appreciate have

Operator

for ladies this and does Thank your gentlemen, And you for once call conclude now you your again, today. participation, may disconnect. conference and

American International (AIG) 9 Aug 222022 Q2 Earnings call transcript