Q4 2023 American International Group Inc Earnings Call

Unnamed Speaker: Except as required by applicable securities laws, AIG is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change. Today's remarks may also refer to non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release financial supplement and earnings presentation, all of which are available on our website at AIG.com. Additionally, note that today's remarks will include results of AIG's life and retirement segment and other operations on the same basis as prior quarters, which is how we expect to continue to report until Corbett's finances are deconsolidated. AIG's segments and U.S. GAAP financial results, as well as AIG's key financial metrics with respect thereto, differ from those reported by Corbridge Financial. Corporate Financial will host its earnings call on Thursday, February 15.

<unk> is under no obligation to update any forward looking statements as circumstances are management's estimates where opinions should change today's remarks may also refer to non-GAAP financial measures a reconciliation of such measures to the most comparable GAAP figures is included in our earnings release financial supplement and earnings presentation, all of which are available on our website at AIG Dot com.

<unk> note that today's remarks will include results of Aig's life, and retirement segment and other operations on the same basis as prior quarters, which is how we expect to continue to report until the deconsolidation of Corbett financial edgy segments in U S. GAAP financial results as well as AIG as key financial metrics with respect their to differ from those reported by corporate financial.

Corporate financial will host its earnings call on Thursday February 15th.

Unnamed Speaker: Finally, today's remarks, as they relate to net premiums written in general insurance, are presented on a comparable basis, which reflects year-over-year comparison on a constant dollar basis adjusted for the international lag elimination, the sale of crop risk services, and the sale of validus rei. Please refer to the footnote on page 26 of the fourth quarter financial supplement for prior period results for the crop business and validus rei. With that said, I'd now like to turn the call over to our chairman and CEO, Peter Zaffino.

Finally, today's remarks as they relate to net premiums written in general insurance are presented on a comparable basis, which reflects year over year comparison on a constant dollar basis adjusted for the international lag elimination the sale of crop risk services and the sale of Validus re please refer to the footnote on page 26 of the fourth quarter financial supplement for prior period.

Results for the crop business and Validus re.

With that I'd now like to turn the call over to our chairman and CEO Peter Zaffino.

Unnamed Speaker: Good morning, and thank you for joining us today to review our fourth quarter and full year 2023 financial results. Following my remarks, Saber will provide more detail on the quarter and some perspective on the year, and then we'll take questions. Kevin Hogan and David McElroy will join us for the Q&A portion of the call.

Peter Zaffino: Good morning, and thank you for joining us today to review, our fourth quarter and full year 2023 financial results.

Peter Zaffino: Following my remarks favorable provide more detail on the quarter and some perspective on the year and then we'll take questions, Kevin Hogan and David Mcelroy will join us for the Q&A portion of the call.

Peter Zaffino: We had a very strong fourth quarter, which highlighted a significant year of achievements at AIG. Throughout 2023, we continue to build on our underwriting excellence, reposition the portfolio through several divestitures, and made meaningful progress towards the deconsolidation of CoreBridge, including three secondary cell deaths.

Peter Zaffino: We had a very strong fourth quarter, which highlighted a significant year of achievements at AIG.

Peter Zaffino: Throughout 2023, we continue to build on our underwriting excellence.

Peter Zaffino: Reposition the portfolio through several divestitures made meaningful progress towards the deconsolidation of corbridge, including three secondary sell downs delivered disciplined premium growth in businesses, where we have scale and outstanding combined ratios and continue to execute on our balanced capital management strategy.

Peter Zaffino: Deliver disciplined premium growth in businesses where we have scale and an outstanding combined ratio, and continue to execute on our balanced capital management strategy. In the fourth quarter, adjusted after-tax income per diluted common share was $1.79, an increase of 29% year over year driven by continued strong underwriting results. 17% growth in net investment income, an excellent execution of our balanced capital management strategy that resulted in a 6% reduction in diluted common shares outstanding. For the full year 2023, adjusted after-tax income per diluted common share was $6.79, an increase of 33% over 2022.

Peter Zaffino: I'm very proud of the work our colleagues delivered for all of our stakeholders throughout the entire year.

Peter Zaffino: In the fourth quarter adjusted after tax income per diluted common share was $1 79.

Peter Zaffino: An increase of 29% year over year, driven by continued strong underwriting results.

Peter Zaffino: 17% growth in net investment income and excellent execution of our balanced capital management strategy that resulted in a 6% reduction in diluted common shares outstanding.

Peter Zaffino: For the full year 2023, adjusted after tax income per diluted common share was $6 79 and.

Peter Zaffino: An increase of 33% over 2022.

Peter Zaffino: AIG overall produced an adjusted return on common equity of 9% for the year, up from 7% in 2020. As I will share with you today, 2023 was an extraordinary year for AIG. During my remarks this morning, I'll discuss the following topics. First,

Peter Zaffino: AIG overall produced an adjusted return on common equity of 9% for the year up from 7% in 2022.

Speaker Change: As I will share with you today 2023 was an extraordinary year for AIG.

Speaker Change: During my remarks, this morning, I'll discuss the following topics first.

Peter Zaffino: I will provide an overview of our fourth quarter financial results. I will review AIG's significant accomplishments in 2023, including our strategic repositioning and our financial highlights. Saber will comment on the life retirement business and her prepared remarks. Third, I will cover insights on the January 1 reinsurance market and specifically AIG's reinsurance renewal. And finally, I'll share some thoughts on how we're building on our momentum and positioning the company as we enter 2024, including some specifics on AIG Next. Our initiative focused on creating the AIG of the future.

Speaker Change: I will provide an overview of our fourth quarter financial results.

Speaker Change: Second I will review AIG significant accomplishments in 2023, including our strategic repositioning and our financial highlights.

Speaker Change: <unk> will comment on the life retirement business in her prepared remarks.

Speaker Change: Third I will cover insights on the January one reinsurance market and specifically aig's reinsurance renewals.

Speaker Change: And finally I'll share some thoughts on how we are building on our momentum and positioning the company as we enter 2024, including some specifics on AIG next.

Speaker Change: Our initiative focused on creating the AIG of the future.

Peter Zaffino: I will also discuss our capital management strategy and growth expectations. AIG's strong fourth-quarter results demonstrated our continued execution across all aspects of our strategy, within general insurance, underwriting income with $642 million. Growth premiums written for the fourth quarter were $7.6 billion, an increase of 4% from the prior year quarter. Net premiums written for the quarter increased by 7% from the prior year quarter to $5.7 billion. Global Commercial Group 5% and Global Personal Group 9% from the prior year quarter. These were offset by North America financial lines, which were lower by 13%. In international commercial, fourth quarter net premiums written grew 6% over the prior year quarter, as international property grew 28% and Talbot grew 12%. However, these were offset by international financial lines, which were lower by 7%.

Speaker Change: I will also discuss our capital management strategy and growth expectations.

Speaker Change: AIG strong fourth quarter results demonstrated our continued execution across all aspects of our strategy.

Speaker Change: Within general insurance underwriting income was $642 million.

Speaker Change: Gross premiums written for the fourth quarter were $7 6 billion, an increase of 4% from the prior year quarter.

Speaker Change: Net premiums written for the quarter increased by 7% from the prior year quarter to $5 7 billion.

Speaker Change: Global commercial grew 5% and global personal grew 9% from the prior year quarter.

Speaker Change: If you exclude financial lines global commercial would have grown 11%.

Speaker Change: In North America commercial fourth quarter net premiums written grew 5% over the prior year quarter led by retail property, which grew 32% Lexington, which grew 20%.

Speaker Change: These were offset by North America financial lines, which was lower by 13%.

Speaker Change: And international commercial fourth quarter net premiums written grew 6% over the prior year quarter.

Speaker Change: As international property grew 28% and Talbot grew 12%.

Speaker Change: These were offset by international financial lines, which was lower by 7%.

Peter Zaffino: In the fourth quarter, global commercial had very strong renewal retention of 86% in its enforced portfolio, as well as very strong new business performance. North America Commercial produced new business of $503 million in the quarter, an increase of 21% year over year. The growth was led by retail casualty, Lexington, and retail property. International Commercial produced new business of $467 million for the quarter, representing an increase of 14% year over year.

Speaker Change: Okay.

Speaker Change: In the fourth quarter global commercial had very strong renewal retention of 86% and its enforced portfolio as well as very strong new business performance.

Speaker Change: North America commercial produced new business of $503 million in the quarter, an increase of 21% year over year.

Speaker Change: The growth was led by retail casualty Lexington and retail property.

Speaker Change: International commercial produced new business of $467 million for the quarter, representing an increase of 14% year over year.

Peter Zaffino: This growth was led by Global Specialty and Thomas. Moving to rates, in North America commercial, overall rates increased 4% in the fourth quarter, with exposure adding 3 points, and overall pricing was up 7%. In North America commercial, if you include financial lines and workers' compensation, the overall rate would have increased 11% in the quarter, and with exposure adding four points, overall pricing would have been 15%, meaningfully above the lost cost. North American commercial rate increases were driven by Lexington wholesale, which was up 17%, retail property, which was up 19%, and excess casualty, which was up 13%. In international commercial, overall rates increased 3% in the fourth quarter, with exposure adding 2 points, and overall pricing was up 5%, which is slightly below lost cost. The rate increase was driven by property, which was up 12%, and marine, which was up 8%. Turning to personal insurance, fourth-quarter net premium increased 9% from the prior year quarter, primarily driven by North America. In North America Personal, net premiums written increased 37% in the quarter.

Speaker Change: This growth was led by global specialty and Talbot.

Speaker Change: Moving to rate in North America commercial overall rate increased 4% in the fourth quarter with exposure, adding three points and the overall pricing was up 7%.

Speaker Change: In North America commercial if you exclude financial lines and workers' compensation overall rate would have increased 11% in the quarter and with exposure, adding four points overall pricing would have been 15% meaningfully above the loss cost trends.

Speaker Change: North America commercial rate increases were driven by Lexington, wholesale, which was up 17% retail property, which was up 19% and excess casualty, which was up 13%.

Speaker Change: And international commercial overall rate increased 3% in the fourth quarter with exposure, adding two points and the overall pricing was up 5%, which is slightly below loss cost trend.

Speaker Change: The rate increase was driven by property, which was up 12% and marine which was up 8%.

Speaker Change: Turning to personal insurance fourth quarter net premiums written increased 9% from the prior year quarter, primarily driven by North America.

Speaker Change: In North America personal net premiums written increased 37% in the quarter.

Peter Zaffino: As we've seen in prior quarters, in 2023, the significant premium growth for North America personal was driven by our high net worth business. And as we discussed in prior quarters, the growth in North America earned premium continues to generate a lower expense, and we expect the expense ratio will continue to improve in 2020. Now let me turn to the full year financial results. 2023 was another year of meaningful strategic repositioning and was, in many ways, our best year yet. The repositioning included the disposition of Validus Re and Crop Risk Services, which generated a combined $3.5 billion of proceeds, including a pre-closed dividend. Additionally, we settled a $1 billion intercompany loan from Ballotus Re to AIG and received approximately $250 million of Renaissance Re common stock.

Speaker Change: As we've seen in prior quarters in 2023, the significant premium growth for North America personal was driven by our high net worth business and as we discussed in prior quarters. The growth in North America earned premium continued to generate a lower expense ratio and we expect the expense ratio will continue to improve in 2002.

Speaker Change: 24.

Speaker Change: Now, let me turn to the full year financial results 2023 was another year of meaningful strategic repositioning and was in many ways our best year yet.

Speaker Change: The repositioning included the disposition of Validus re and crop risk services, which generated a combined $3 5 billion of proceeds including a pre close dividend. Additionally.

Speaker Change: Additionally, we settled a $1 billion intercompany loan from Validus re to AIG and received approximately $250 million of Renaissance re common stock.

Peter Zaffino: The changes to our portfolio further reduced volatility and allowed us to focus on businesses where we believe we have better opportunities for stronger risk-adjusted returns. We reshaped the reinsurance structure of our high net worth business and launched a newly formed MGA called Private Client Select. We made significant progress towards Corbridge's separation, another major strategic milestone on our journey to becoming a less complex company. We completed three secondary offerings in 2023 that generated approximately $2.9 billion in cash. We worked with Corbridge on the divestiture of Laya Healthcare and announced the sale of the UK Life Business.

Speaker Change: The changes to our portfolio further reduce volatility and allowed us to focus on businesses, where we believe we have better opportunities for stronger risk adjusted returns.

Speaker Change: We reshaped the reinsurance structure of our high net worth business and lots of newly formed MGA called private clients select.

Speaker Change: We made significant progress towards corporates as separation another major strategic milestone on our journey to becoming a less complex company.

Speaker Change: We completed three secondary offerings in 2023 that generated approximately $2 $9 billion in cash.

Speaker Change: We worked with corbridge on the divestiture of lay of healthcare and announced the sale of the UK life business in.

Peter Zaffino: In 2023, AIG received $1.4 billion of capital from Corbridge through $385 million of regular dividends, $688 million of special dividends, and $315 million of share repurchase. At the end of 2023, our ownership stake in CoreBridge was approximately 52%.

Speaker Change: In 2023, AIG received $1 $4 billion of capital from Corbridge through $385 million of regular dividends.

Speaker Change: $688 million of special dividends and $315 million of share repurchases.

Speaker Change: At the end of 2023, our ownership stake in core bridge was approximately 52%.

Peter Zaffino: In 2023, we continue to execute on a thoughtful and balanced capital management strategy. During the year, AIG returned $4 billion of capital to shareholders through $3 billion of share repurchases and a billion dollars of dividends. We reduced our common shares outstanding by 6% and increased quarterly dividends by 12.5%. On August 1st, the AIG Board of Directors increased our share buyback authorization to $7.5 billion. At the year-end 2023, we had $6.2 billion remaining on that authorization. We reduced AIG net debt by $1.4 billion in 2023 after successfully conducting a senior notes tender offer in November.

Speaker Change: In 2023, we continue to execute on a thoughtful and balanced capital management strategy.

Speaker Change: During the year AIG returned $4 billion of capital to shareholders through $3 billion of share repurchases and $1 billion of dividends.

Speaker Change: We reduced our common shares outstanding by 6% and increased quarterly dividends by 12, 5%.

Speaker Change: On August 1st the AIG Board of directors increased our share buyback authorization of $7 5 billion.

Speaker Change: At the year end 2023, we had $6 $2 billion remaining on that authorization.

Speaker Change: We reduced AIG net debt by $1 $4 billion in 2023 after successfully conducting our senior notes tender offer in November.

Speaker Change: We finished 2023 with very strong parent liquidity of $7 6 billion.

Speaker Change: Which gives us ample capacity to continue executing on our capital management priorities.

Peter Zaffino: We finished 2023 with very strong parent liquidity of $7.6 billion, which gives us ample capacity to continue executing on our capital management priorities. Turning to the full year results for General Insurance, throughout 2023, we delivered terrific financial performance. General Insurance's full-year underwriting income was $2.3 billion, a 15% increase year-over-year.

Speaker Change: Turning to the full year results for general insurance throughout 2023, we delivered terrific financial performance.

Speaker Change: General insurance full year underwriting income was $2 3, billion% to 15% increase year over year.

Speaker Change: For the full year, the general insurance accident year combined ratio, excluding catastrophes was 87, 7% an improvement of 100 basis points year over year.

Speaker Change: Global commercial achieve an accident year combined ratio, excluding catastrophes of 83, 3% for the full year, an improvement of 120 basis points year over year, driven by loss ratio improvement.

Peter Zaffino: For the full year, the general insurance accident-year combined ratio, excluding catastrophes, was 87.7%, an improvement of 100 basis points year over year. Global Commercial achieved an accident-year combined ratio, excluding catastrophes, of 83.3% for the full year, an improvement of 120 basis points year-over-year, driven by loss-ratio improvement. The calendar year combined ratio was 87.1%, a 250 basis point improvement year over year. Excluding ballotistry and crop risk services for the full year results, the global commercial action year combined ratio, excluding catastrophes, would have increased by 50 basis points to 83.8%, and the calendar year combined ratio would have increased by slightly over 20 basis points to 87.3%. In global personal, the full year action year combined ratio excluding catastrophes was 99.3%, in line with the prior year.

Speaker Change: The calendar year combined ratio was 87, 1%, a 250 basis point improvement year over year.

Excluding validus re and crop risk services for the full year results. The global commercial accident year combined ratio, excluding catastrophes would've increased by 50 basis points to 83, 8% and the calendar year combined ratio would have increased by slightly over 20 basis points to 87, 3%.

Speaker Change: And global personal the full year accident year combined ratio, excluding catastrophes was 99, 3% in line with the prior year.

Speaker Change: For the full year General insurance grew net premiums written by 7% year over year, driven by 5% growth in global commercial and 10% in personal insurance.

Speaker Change: North America commercial grew 5% and international commercial grew 6% year over year.

Speaker Change: A couple of highlights.

Speaker Change: Lexington in global specialty had outstanding years.

Speaker Change: We remain very focused on these businesses and made investments to accelerate growth and continue to deliver strong underwriting profitability.

Speaker Change: Lexington grew its net premiums written by 17% year over year.

Peter Zaffino: For the full year, general insurance grew net premiums written by 7% year over year, driven by 5% growth in global commercial and 10% in personal insurance. North America commercial grew 5%, and international commercial grew 6% year over year. Here are a couple of highlights.

Speaker Change: Growth was driven by historically high retention, which was 80%.

Speaker Change: $1 billion of new business and rate increases of approximately 18%.

Global specialty which includes businesses in marine energy trade credit and aviation grew its net premiums written 10% year over year, driven by 88% retention.

Peter Zaffino: Lexington and Global Specialty had outstanding years. Lexington grew its net premiums written by 17% year over year. Growth was driven by historically high retention, which was 80%.

Speaker Change: Almost $750 million of new business and rate increases of 7% for the year.

Speaker Change: Also there are two parts of our business that impacted growth in global commercial which I would like to offer some perspective.

Speaker Change: First if you exclude financial lines, our net premiums written growth would've been 10%.

Peter Zaffino: $1 billion of new business and rate increases of approximately 18% Global Specialty, which includes businesses in marine, energy, trade, credit, and aviation, grew its net premium rate by 10% year over year, driven by 88% retention, almost $750 million of new business, and rate increases of 7% for the year. Also, there are two parts of our business that impacted growth and global commercial, which I would like to offer some. First, if you exclude financial lines, our net premium written growth would have been 10%. Additionally, we did not believe that the premium increases on a risk-adjusted basis for these two programs delivered an acceptable return.

Second as we've outlined on prior calls we decided to non renew two programs that had significant property catastrophe exposure that no longer met our underwriting guidelines.

Speaker Change: We do not believe that the premium increases on a risk adjusted basis for these two programs delivered an acceptable return.

Speaker Change: The decision to non renew impacted the growth in net premiums written for Lexington, specifically as well as the global commercial business throughout 2023.

Speaker Change: If you exclude financial lines and these two programs that I just mentioned.

Speaker Change: Our year over year net premiums written growth would've been 13%.

Speaker Change: Which gives you a sense as to why we have significant confidence in our core portfolio, where we saw meaningful overall growth for the year.

Peter Zaffino: The decision to non-renew impacted the gross and net premiums written for Lexington specifically, as well as the global commercial business throughout 2020. If you exclude Financial Lines and these two programs that I just mentioned, our year-over-year net premium written growth would have been 13 percent. Which gives you a sense as to why we have significant confidence in our core portfolio, where we saw meaningful overall growth for the year. It's worth providing a little bit more detail on financial. In financial lines, particularly in our public directors and officers book of business.

Speaker Change: It's worth providing a little bit more detail on financial lines.

Speaker Change: In financial lines, particularly in our public directors and officers book of business, we continue to exercise underwriting discipline by maintaining our primary position in our portfolio and being very prudent on large account excess layers, where theres significant exposure to vertical loss and these layers are highly commoditized where typically.

Speaker Change: <unk> the best price wins.

Speaker Change: We've spoken about the cumulative rate change in financial lines before but I want to provide a little bit more detail.

Speaker Change: The compound annual growth rate for financial lines achieved from 2019 through 2023 with 49%.

Speaker Change: If you exclude 2023, the compound annual growth rate was 63%.

Peter Zaffino: We continue to exercise underwriting discipline by maintaining our primary position in our portfolio and being very prudent on large account excess layers, where there's significant exposure to vertical loss, and these layers are highly commoditized, where typically the best price wins. We've spoken about the cumulative rate change and financial lines before, but I want to provide a little bit more detail. The compound annual growth rate for financial lines achieved from 2019-2023 was 49%. If you exclude 2023, the compound annual growth rate was 63%.

Speaker Change: It's a business, we're very focused on and our underwriters are continuing to carefully monitor market conditions and underwrite conservatively.

Speaker Change: Now I'd like to provide you with some insight into the current reinsurance market generally and an overview of our January one reinsurance renewals as I mentioned on previous calls Aig's reinsurance purchasing is deliberately weighted to January one.

Speaker Change: Which enables us to strategically optimize the outcome across our reinsurance placements and provides us with clarity on our cost of reinsurance at the beginning of the year.

Speaker Change: Before I go into detail on this year's outcomes I want to speak about how we evaluate our reinsurance purchased.

Peter Zaffino: It's a business we're very focused on, and our underwriters are continuing to carefully monitor market conditions and underwrite conservatively. Now, I'd like to provide you with some insight into the current reinsurance market. Generally, and an overview of our January 1 reinsurance renewal. As I mentioned on previous calls, AIG's reinsurance purchasing is deliberately weighted to January 1, which enables us to strategically optimize the outcome across our reinsurance places and provides us with clarity on our cost of reinsurance at the beginning of the year. Before I go into detail on this year's results, I want to speak about how we evaluate our reinsurance. We've seen significant changes in the global property market over the last two years, and analyzing and quantifying changes in a portfolio's risk profile have become increasingly complex.

Speaker Change: We've seen significant changes in the global property market over the last two years and analyzing and quantifying changes in our portfolio's risk profile has become increasingly complex.

Speaker Change: Currently one of the most overused phrases that has been used with more frequency in the last year is risk adjusted pricing or risk adjusted rate changes, which have multiple interpretations, particularly when it comes to property treaty reinsurance.

Speaker Change: Calculating the risk adjusted rate change can be complicated and is often inconsistent one of outlined how AIG determines risk adjusted pricing changes, which we believe is an industry best practice.

Speaker Change: To begin you must determine the baseline structure and all the variables required to assess and quantify the risk adjusted pricing change.

Speaker Change: To do that the base analysis should be set at the identical structure and coverage with the exact terms and conditions of the prior year structure.

Peter Zaffino: Currently, one of the most overused phrases that have been used with more frequency in the last year is risk-adjusted pricing or risk-adjusted rates, which have multiple interpretations, particularly when it comes to property treaty reinsurance. Calculating the risk adjuster rate change can be complicated and is often inconsiderate. I want to outline how AIG determines risk-adjusted pricing, which we believe is an industry To begin, you must determine the baseline structure and all the variables required to assess and quantify the risk-adjusted pricing. To do that, the base analysis should be set at the identical structure and coverage with the exact terms and conditions of the prior year's structure. The analysis needs to compare the cost of capital year over year and any model changes from vendor model output, such as RMS, to determine if the loss costs have increased or decreased at the attachment point and Also, an analysis is needed for any changes to the coverage provided in the treaty placement.

Speaker Change: The analysis needs to compare the cost of capital year over year, and any model changes from vendor model output such as RMS to determine if the loss costs have increased or decreased at the attachment point and the vertical limits deployed.

Speaker Change: Also an analysis as needed for any changes to the coverage provided in the treaty placement for instance.

Over the last few years, many programs have gone from an all risk coverage basis to a named or peak peril basis.

Speaker Change: The correctly calculate the risk adjusted rate change parallel no longer cover needs to be analyzed and priced separately and the impact of any reduced coverage should be factored into the assessment of the price change.

Speaker Change: This can be particularly difficult when assessing perils that would not be economically viable to place on a standalone basis with significant limits, which could include wildfire flood or terrorism.

Speaker Change: It needs to be consideration given to the volatility associated with the expected loss in calculating the risk adjusted rate change.

Speaker Change: Given the complexity of these calculations the methodologies applied should be done with consistency and discipline.

Peter Zaffino: For instance, over the last few years, many programs have gone from an all-risk coverage basis to a named or peak peril basis. To correctly calculate the risk adjuster rate, perils no longer covered need to be analyzed and priced separately, and the impact of any reduced coverage should be factored into the assessment of the price. This can be particularly difficult when assessing perils that would not be economically viable to place on a stand-alone basis with significant limits, which could include wildfire, flood, or terrorism. Furthermore, there needs to be consideration given to the volatility associated with the expected loss in calculating the risk-adjusted rate. Given the complexity of these calculations, the methodologies applied should be done with consistency and discipline.

Speaker Change: When applying the methodology I just described AIG had a tremendous outcome with our reinsurance partners at the January one renewal season building. Upon the very strong result achieved in a very challenging market in 2023.

Speaker Change: Now, let me turn to Aig's reinsurance renewals at January one of this year.

Speaker Change: To level set the natural catastrophe insured loss activity remained at the forefront of the market with a record setting 37 events in 2023 that exceeded $1 billion of insured loss.

Speaker Change: These events contributed to a total annual insured loss currently estimated at over 100 billion.

Speaker Change: Marking the sixth time in the past seven years that insured loss from natural catastrophes has exceeded 100 billion.

Speaker Change: Over the last seven years Theres been nearly one trillion of aggregate losses with over 60% driven by secondary perils.

Peter Zaffino: When applying the methodology I just described, AIG had a tremendous outcome with our reinsurance partners at the January 1 renewal, building upon the very strong result achieved in a very challenging market in 2020. Now, let me turn to AIG's reinsurance renewals on January 1 of this year. 2023 that exceed a billion dollars of insured loss. These events contributed to a total annual insured loss currently estimated at over $100 billion, marking the sixth time in the past seven years that insured loss from natural catastrophes has exceeded $100 billion.

Speaker Change: The headline is that we were able to significantly improve our property cat structured reinsurance coverage provided.

Speaker Change: When you review, what we purchased last year, including for Validus re the overall spend has reduced by approximately $200 million.

Speaker Change: In our core property treaties, excluding validus re have slightly lower ceded premium year over year.

Speaker Change: Let's start with our property catastrophe placements, our core commercial North America retention of $500 million remain unchanged for the second straight year.

Speaker Change: The attachment on our dedicated Lexington occurrence tower was unchanged at $300 million in.

Speaker Change: In both cases, the modeled attachment point is lower in the exhaust limit is higher.

Peter Zaffino: Over the last seven years, there's been nearly one trillion in aggregate losses, with over 60% driven by secondary power. The headline is that we were able to significantly improve our property cap structure and reinsurance coverage provided. When you review what we purchased last year, including for Validus Re, the overall spend has been reduced by approximately $200 million, and our core property treaties, excluding Validus Re, have a slightly lower seeded premium year over year. Let's start with a property catastrophe place. Our core commercial North America retention of 500 million dollars remained unchanged for the second straight year. The attachment on our dedicated Lexington Occurrence Tower was unchanged at $300 million. In both cases, the model detachment point is lower, and the exhaust limit is higher.

Speaker Change: Our international property per current structures renewed with a reduced retention in Japan to $150 million, a $50 million improvement from the prior year.

Speaker Change: The rest of the world attachment remains unchanged at $125 million.

Speaker Change: We were very pleased to have achieved broader coverage across all of our core occurrence towers.

Speaker Change: With nominal attachment points unchanged or in the case of Japan decreasing the model probability of attaching our cat reinsurance improved with respect to key perils and across every major territory. Following the growth achieved in the property portfolio in 2023.

Speaker Change: Our property Cat aggregate cover was also successfully renewed with improved coverage further reducing our volatility from frequency of loss.

Speaker Change: The aggregate now includes a standalone supplement dedicated to losses in North America arising from secondary perils.

Speaker Change: Importantly, it also now covers contributing losses from our high net worth portfolio.

Peter Zaffino: Our international property per current structure is renewed with a reduced retention in Japan to $150 million, a $50 million improvement from the prior year. We were very pleased to have achieved broader coverage across all of our core occurrence towers, with nominal attachment points unchanged or, in the case of Japan, decreased. The model probability of attaching our CAT reinsurance improved with respect to key perils and across every major territory following the growth achieved in the property portfolio in 2020. Our property cap aggregate cover was also successfully renewed with improved coverage, further reducing our volatility from frequency of loss. The aggregate now includes a standalone sublimit dedicated to losses in North America arising from secondary perils.

Speaker Change: Our annual aggregate deductible for North America was $825 million, the North America, other perils deductibles $350 million.

Speaker Change: Which is a new deductible and Japan and the rest of the world. The Doctor was our $200 million and $175 million respectively.

Speaker Change: These are subject to each and every loss deductibles are $20 million other than for North America wind and earthquake, which are at $50 million a return period attachment point is lower year over year.

Speaker Change: For all of our major proportional treaties across a range of classes, we improved or maintained our ceding commission levels, reflecting our market, leading underwriting expertise and position in the market.

Speaker Change: Turning to the casualty the challenges we've spoken about previously regarding the impact of inflation, both social and economic and litigation funding in the U S, where our focal point for reinsurers at one one.

Speaker Change: For casualty at AIG, we remain very focused on our underwriting standards and the positioning of the portfolio.

Speaker Change: Our team has done a terrific job of re underwriting the entire business, particularly considering the amount of work that was needed to reposition it to where it is today.

Peter Zaffino: Importantly, it also now covers contributing losses from our high net worth portfolio. Our annual aggregate deductible for North America is $825 million. The North American other perils deductible is $350 million, which is a new deductible, and Japan and the rest of the world deductibles are $200 million and $175 million, respectively.

Speaker Change: Additionally, our pricing assumptions today have loss trends ranging from the high single digits to over 10%.

Speaker Change: These were increase over the past two years given inflationary dynamics.

Speaker Change: I do want to make a few comments about the last 10 years of casualty results for the industry. The.

Speaker Change: The industry as a whole has reported meaningful reserve releases and four of the past 10 calendar years, including in calendar year 2017.

Peter Zaffino: These are subject to each and every loss deductible of $20 million, other than for North America wind and earthquake, which are at $50 million. Thus, our return period attachment point is lower year over year. For all of our major proportional treaties across a range of classes, we improved or maintained our seating commission levels, reflecting our market-leading, underwriting expertise, and position in the market. Turning to casualty, the challenges we've spoken about previously regarding the impact of inflation. Both social and economic development and litigation funding in the U.S. were a focal point for reinsurers at 1-1.

Speaker Change: At the same time, there have been six years of significant reported industry strengthening in the last 10 calendar years, including an all of the most recent five calendar years.

Speaker Change: Focusing on AIG for accident years 2016 through 2019, our initial loss picks in our casualty lines, excluding workers' compensation averaged 78% looking.

Speaker Change: Looking specifically at accident years, 2016, and 17. The initial loss picks were approximately 81% in both years. These loss picks exclude unallocated loss adjustment expense.

Speaker Change: We significantly strengthened the reserves by over $1 billion for accident years, 2016 through 2019, which revised our year end ultimate loss picks to 91% in 2016 and 96% in 2017 and.

Peter Zaffino: For casualty at AIG, we remain very focused on our underwriting standards and the positioning of the portfolio. Our team has done a terrific job of re-underwriting the entire business, particularly considering the amount of work that was needed to reposition it to where it is today. Additionally, our pricing assumptions today have lost trends ranging from the high single-digit to over 10 percent. These were increased over the past two years given inflationary dynamics. I do want to make a few comments about the last 10 years of casualty results for the industry. The industry as a whole has reported meaningful reserve releases in four of the past ten calendar years, including in calendar year 2017. At the same time, there have been six years of significant reported industry strengthening in the last 10 calendar years, including in all of the most recent five calendars. Focusing on AIG, for accident years 2016 through 2019, our initial loss picks in our casualty lines excluding workers' compensation averaged 78%. Looking specifically at action years 2016 and 17, the initial loss picks were approximately 81% in both years. These loss picks exclude unallocated loss adjustments.

Speaker Change: In an average of 87% over accident years 2016 through 2019.

Speaker Change: To further analyze how our casualty results compared to industry results for other liability and commercial auto using the most recent schedule P data.

Speaker Change: They are well above the average industry loss picks on both measures our initial and year end ultimate for both lines are roughly 10% to 20 points higher than the overall industry average in.

Speaker Change: In addition, we have reinsurance in place for 2016, and 2017 to mitigate our gross results.

Speaker Change: As we outlined last quarter, we put a comprehensive reinsurance treaty in place starting in 2018 that provides us with substantial amount of vertical protection.

Speaker Change: Our renewal of the casualty reinsurance protections allowed us to maintain the same net retained lines with no impact on ceding commissions, which is an outstanding outcome at.

Speaker Change: January one our reinsurance partners maintained their significant support of AIG with consistent capacity and improved reinsurance terms that demonstrate a clear recognition of the quality of our portfolio and our underwriting teams.

Speaker Change: I'll now turn to discuss our efforts to create a future state business structure for AIG post deconsolidation of corbridge.

Speaker Change: As part of this effort, we have launched a new program AIG next to create a company that is leaner less complex and more effective with the appropriate infrastructure and capabilities for the size of business, we will be post deconsolidation.

Peter Zaffino: We significantly strengthen the reserves by over a billion dollars for action years 2016 through 2019, and an average of 87% over action years 2016 through 2019. To further analyze our casualty results compared to industry results for other liability in commercial auto, using the most recent Schedule P data, they are well above the average industry loss picks on both measures. Our initial and year-end ultimate rates for both lines are roughly 10 to 20 points higher than the overall industry average.

Speaker Change: AIG next will focus on the following key principles.

Speaker Change: Driving global consistency and local relevancy across our end to end processes to improve operational efficiency and effectiveness.

Speaker Change: Reducing organizational complexity to create a better and differentiated experience for our clients and colleagues.

Speaker Change: Creating an agile and scalable organization to support business growth.

Speaker Change: Optimizing our ecosystem to modernize our data analytics digital and technology capabilities.

Speaker Change: Clarifying roles responsibilities, while eliminating duplication and increasing our speed of execution.

Speaker Change: As we've stated in the past, we expect a simplification and efficiencies created through this program to generate $500 million of sustained annual run rate savings and to incur approximately $500 million of one time spend to achieve these savings.

Peter Zaffino: In addition, we have reinsurance in place for 2016 and 2017 to mitigate our gross results. As we outlined last quarter, we put a comprehensive reinsurance treaty in place starting in 2018 that provides us with a substantial amount of vertical protection. Our renewal of the casualty reinsurance protections allowed us to maintain the same net retained lines with no impact on seating commissions, which is an outstanding outcome. Additionally, at January 1, our reinsurance partners maintained their significant support of AIG. The Office of Rent Increase did not receive the latest names in SIN CPA Review. Thank you for watching!

Speaker Change: As part of AIG next we are creating a leaner parent company with a target cost structure of one to one 5% of net premiums earned.

Speaker Change: Some of the current costs and other operations will be eliminated contributing to the $500 million savings and others will be moved into the business where the services utilized.

Speaker Change: In 2023, we began this work.

As we moved approximately $140 million of expenses from other operations into general insurance for services that are more closely aligned to our business operations.

Speaker Change: Even with this ship the full year combined ratio of 96% improved 130 basis points year over year and the full year Joey ratio only increased 40 basis points due to offsetting savings within general insurance.

Peter Zaffino: I'll now turn to discuss our efforts to create a future state business structure for AIG post-deconsolidation of CoreBridge. As part of this effort, we've launched a new program, AIG Next, to create a company that's leaner, less complex, and more effective with the appropriate infrastructure and capabilities for the size of business we will be post-deconsolidation. AIG next will focus on the following key principles, driving global consistency and local relevancy across our end-to-end processes to improve operational efficiency and effectiveness, reducing organizational complexity to create a better and differentiated experience for our clients and colleagues, and optimizing our ecosystem to modernize our data analytics, digital, and technology capabilities. Clarifying roles and responsibilities while eliminating duplication and increasing our speed of execution.

Speaker Change: Throughout the year, we built efficiencies into our business, which have allowed general insurers to absorb these costs.

Speaker Change: We've already begun to make meaningful progress against our $500 million savings target and have established a team to drive and govern the AIG next program with focus and discipline.

Speaker Change: Favorite I will provide more detail on next quarters call regarding the specific cost to achieve by category and the expected timeline for the realized benefits in 2024 and 2025.

Speaker Change: As we are approaching the final steps of the Corbridge deconsolidation, we remain agile and continue to explore all options based on market conditions with respect to our remaining ownership of corbridge always focusing on what the line the best interest of our stakeholders.

Speaker Change: <unk> will take you through our pro forma capital structure based on assumptions about the deconsolidation.

Peter Zaffino: As we've stated in the past, we expect the simplification and efficiencies created through this program to generate $500 million of sustained annual run rate savings and to incur approximately $500 million in one-time spend to achieve these savings. As part of AIG Next, we are creating a leaner parent company with a target cost structure of 1 to 1.5% of net premiums earned. Some of the current costs and other operations will be eliminated, contributing to the $500 million savings, and others will be moved into the business where the service is utilized.

Speaker Change: Throughout 2024, we expect to continue to execute the capital management strategy, we've outlined before.

Speaker Change: Our insurance company subsidiaries continue to have excess capital to support the type of organic growth, we have seen through 2023 and would expect to see in the future.

Speaker Change: We've made enormous progress on our debt structure and maturities since year end 2021, we've reduced over 50% of Aig's debt outstanding which is over $11 billion of debt reduction.

Speaker Change: The primary focus in 2024 will be on returning capital to shareholders through share repurchases and dividends.

Speaker Change: Since the start of 2024, we have repurchased an additional $760 million of common shares.

Speaker Change: We expect to continue at this pace for the first half of 2024 subject to market conditions, which should bring us near the high end of our target share count range.

Peter Zaffino: In 2023, we began this work, and as of now, we've moved approximately $140 million of expenses from other operations into general insurance for services that are more closely aligned to our business operations. Even with this shift, the full-year combined ratio of 90.6% improved 130 basis points year-over-year, and the full-year GOE ratio only increased 40 basis points due to offsetting savings within general insurance throughout the year. We've built efficiencies into our business, which have allowed general insurers to absorb these costs.

Speaker Change: Corbridge deconsolidation, we should achieve the low end of our range, which is approximately $600 million of common shares.

Speaker Change: The AIG board increased the dividend in 2023, reflecting our confidence in the future earnings power of AIG, and we will continue to evaluate our dividend policy in 2024.

Speaker Change: And lastly, as I enter my seventh year at AIG I've never been more optimistic about our opportunities for growth and the momentum that AIG has entering 2024, we now have a terrific business.

Peter Zaffino: We've already begun to make meaningful progress against our $500 million savings target and have established a team to drive and govern the AIG Next program with focus and discipline. Saber and I will provide more detail on next quarter's call regarding the specific cost to achieve by category and the expected timeline for the realized benefits in 2024 and 2025. As we are approaching the final steps of the core bridge deconsolidation.

Speaker Change: Global commercial which we've been working on for years to reposition is now one of the most respected portfolios in the industry.

While theres always pruning to do in any business. The remediation is now behind us.

Speaker Change: We are well positioned to grow based on AIG storm retention strong opportunities for new business excellent combined ratios and a company that has been able to distinguish itself amongst our clients and distribution partners.

Speaker Change: In personal insurance, we will continue to make investments, particularly in our Japan business, our global A&H business in our high net worth business, where we anticipate continued growth and more importantly profitability improvement with that I will turn the call over to Sarah.

Peter Zaffino: We remain agile and continue to explore all options based on market conditions with respect to our remaining ownership of Corbridge, always focusing on what's aligned with the best interests of our society. Saber will take you through a pro forma capital structure based on assumptions about the deconsolidation. Throughout 2024, we expect to continue to execute the capital management strategy we've outlined before. Our insurance company subsidiaries continue to have excess capital to support the type of organic growth we have seen through 2023 and would expect to see in the future.

Sarah: Thank you Peter this morning, I will provide more detail on Aig's fourth quarter results, but first as we are getting closer to corbridge deconsolidation I would like to start with an illustrative pro forma.

Aig's current ownership of Corbridge at 52%. The next transaction May likely result, and deconsolidation.

Sarah: Today quarter bridges consolidated both Aig's balance sheet and income statement with us such a noncontrolling interest for the portion that AIG just not one you can see those adjustments in the financial supplement on pages eight and 11.

Peter Zaffino: We've made enormous progress on our debt structure and maturities. Since year-end 2021, we've reduced over 50% of AIG's debt outstanding, which is over $11 billion of debt reduction. Since the start of 2024, we have repurchased an additional $760 million of common shares. We expect to continue at this pace for the first half of 2024, subject to market conditions, which should bring us near the high end of our target share count following the Post-Corbridge Deconsolidation.

Sarah: When we did consolidate we will report core bridges as an investment with dividends reported a net investment income and corporate shares included impairing investments.

Sarah: <unk> balance sheet and income statement will no longer be in our financials.

Sarah: If we were able to deconsolidation corbridge now accounting rules require us to fair value of their assets and liabilities and recognize the net difference between that valuation and the current GAAP carrying value in Aig's equity that process. Also includes some changes primarily driven by differences in basis and deconsolidation of variable investment and.

Sarah: Ts.

Sarah: The example, I will provide is a hypothetical pro forma view. Please remember that there are many factors in each one impacts the output.

Peter Zaffino: We should achieve the low end of our range, which is approximately 600 million common shares. The AIG board increased the dividend in 2023, reflecting our confidence in the future earnings power of AIG, and we will continue to evaluate our dividend policy in 2024. And lastly, as I enter my seventh year at AIG, I've never been more optimistic about our opportunities for growth and the momentum that AIG has entering 2024. We now have a terrific business. Global Commercial, which we've been working on for years to reposition, is now one of the most respected portfolios in the industry. While there's always pruning to do in any business, the remediation is now behind us.

This view builds on the remarks that provided last quarter about pro forma adjusted shareholders equity.

Sarah: For simplicity in this example, we use <unk> current stock price as a proxy for fair value, but the process is more complicated than that and is more dependent on interest rates and stock price as the investment portfolio has to be valued on the day of deconsolidation, which will change based on interest rates.

Sarah: As a very high level illustration as of year end, the fair value of corbridge as net assets and liabilities was about $2 billion higher than the book value on Aig's balance sheet.

Sarah: As a result, deconsolidation would've increased aig's book value per share by almost $3 a share.

Unnamed Speaker: We're well positioned to grow based on AIG's strong retention, strong opportunities for new business, excellent combined ratios, and a company that has been able to distinguish itself amongst our clients and distribution partners. In personal insurance, we will continue to make investments, particularly in our Japan business, our global A&H business, and our high net worth business, where we anticipate continued growth and, more importantly, profitability improvement. With that, I will turn the call over to Peter. Thank you, Peter. This morning, I will provide more detail on AIG's fourth-quarter results. But first, as we are getting closer to core bridge deconsolidation, I would like to start with an illustrative pro forma.

Sarah: Lever for Aig's adjusted shareholders equity.

Sarah: The fair value adjustment would've resulted in a reduction of about $4 billion.

Sarah: Or around $6 per aig's share given corvid, just stock price relative to its adjusted book value.

Sarah: Now let me link these items to the AIG year end pro forma estimates that I provided last quarter of adjusted Shareholder's equity of approximately $33 billion adjusted for the sale of Validus re to be used in evaluating the <unk> target.

Sarah: At December 31, 2023, Aig's adjusted shareholders equity was approximately $53 billion.

Sarah: With the pro forma fair value decrease of $4 billion of deconsolidation adjusted shareholders equity would be roughly $49 billion, including about $8 billion of value for our corporate shares.

Unnamed Speaker: With AIG's current ownership of Corbridge at 62%, the next transaction may likely result in deconsolidation. Today, Corbridge is consolidated on both AIG's balance sheet and income statement with offsets of non-controlling interests for the portion that AIG does not own. You can see those adjustments in the financial supplement on pages 8 and 11. When we deconsolidate, we will report core bridges as an investment, with dividends reported in net investment income and core bridge shares included in the parent investment. Corbridge's balance sheet and income statement will no longer be in our financial statements. If we were able to deconsolidate CoreBridge now, accounting rules would require us to fair value their assets and liabilities and recognize the net difference between that valuation and the current gap-carrying value in AIG's equity. That process also includes some changes primarily driven by differences in basis and the deconsolidation of variable investment entities. The example I will provide is a hypothetical pro forma view.

To get to the E. We subtract the value of <unk> shares and for the purposes of this exercise today, we also subtract ear and parent liquidity of almost $8 billion most of which is to be used for 2024 capital management interest and other parent expenses as Peter described.

Sarah: That results in pro forma adjusted Shareholder's equity of about $33 billion invested in our business plus whatever liquidity is at the parent as the focus of our 10% plus target.

Sarah: This example is illustrative based on year end financials and subject to change based on market and the actual past the deconsolidation, but I hope it is helpful.

Speaker Change: Now I will turn to fourth quarter results.

Speaker Change: Fourth quarter consolidated net investment income on an <unk> basis was $3 5 billion up 17% over the fourth quarter of 2022.

General insurance net investment income was 38% while life and retirement was up 15%.

Speaker Change: Our new money reinvestment rates in both businesses drove the improvement.

Speaker Change: Fourth quarter, new money rates and fixed maturities and loans averaged six 5% about 180 basis points higher than the yield on sales and maturities in the quarter.

Speaker Change: Fourth quarter, new money rates were 160 basis points higher in Gi and 190 basis points higher in LNR.

Unnamed Speaker: Please remember that there are many factors, and each one impacts the outcome. This view builds on the remarks I provided last quarter about pro forma adjusted shareholders. For simplicity, in this example, we use Corbridge's current stock price as a proxy for fair value. But the process is more complicated than that and is more dependent on interest rates than stock prices, as the investment portfolio has to be valued on the day of deconsolidation, which will change based on interest rates.

Speaker Change: With higher reinvestment rates the yield on general insurance fixed maturities and loans, excluding calls and prepayments rose to an annualized yield of three 8% in the quarter up from 3.0% in <unk> 'twenty, two and up nine basis points sequentially.

Speaker Change: <unk> fourth quarter portfolio yield was 5.0% compared to four 4% and <unk> 22, and up 10 basis points sequentially.

Speaker Change: In the first half of 2024, we currently expect continued yield pickup on fixed maturities over the prior year, but less improvement sequentially.

Unnamed Speaker: As a very high-level illustration, as of year-end, the fair value of Corbridge's net assets and liabilities was about $2 billion higher than the book value on AIG's balance sheet. As a result, deconsolidation would have increased AIG's book value per share by almost $3 a share. However, for AIG's adjusted shareholders equity, the fair value adjustment would have resulted in a reduction of about $4 billion, or around $6 per AIG share, given Corbridge's stock price relative to its adjusted book value. At December 31, 2023, AIG's adjusted shareholders equity was approximately $53 billion. With the pro forma fair value decrease of $4 billion at deconsolidation, adjusted shareholders equity would be roughly $49 billion, including about $8 billion of value for our core bridge shares. To get to the E, we subtracted the value of Corbridge shares.

Speaker Change: The cessation of fed interest rate hikes, and the current shape of the yield curve.

In contrast alternative investment returns were weak this year coming in slightly negative in the fourth quarter and at only two 4% for the full year Gi.

Speaker Change: GI alternative income was $41 million in the fourth quarter down 11% from the prior year quarter for an annualized return of three 9%.

Speaker Change: Lnr's alternative portfolio generated a loss of $24 million in the quarter for an annualized yield of negative one 8% compared to income of $16 million last year.

Speaker Change: Turning to general insurance as Peter said, our underwriting results remain very strong the <unk> 23 calendar year combined ratio was 89, 1% 80 basis points better than the fourth quarter of 2022, and the accident year combined ratio ex cats was 87, 9% 50 basis points better.

Speaker Change: Global commercial lines delivered outstanding fourth quarter results for the calendar year combined ratio of 85, 4%, a 90 basis point improvement over the prior year. The accident year combined ratio ex cats was 82, 4%, a 170 basis point improvement, reflecting exceptional underwriting profitability.

Unnamed Speaker: And for the purposes of this exercise today, we also subtract year-in-parent liquidity of almost $8 billion, most of which is to be used for 2024 capital management, interest, and other parent expenses, as Peter described. That results in pro forma adjusted shareholder's equity of about $33 billion invested in our business, plus whatever liquidity is at the parent as the focus of our 10% plus target. This example is illustrative based on year-end financials and subject to change based on markets and the actual path of deconsolidation, but I hope it is helpful.

Speaker Change: City in both North America and international.

Speaker Change: The fourth quarter included only one month of Validus re due to the timing of the divestiture, excluding validus re from fourth quarter results. The pro forma global commercial lines calendar year combined ratio would have been 85, 1% 30 basis points lower than reported.

Speaker Change: The accident year combined ratio ex cats would have been 82, 5% only 10 basis points higher.

Unnamed Speaker: Now I will turn to fourth quarter results. Fourth quarter consolidated net investment income on an APTI basis was $3.5 billion, up 17% over the fourth quarter of 2022. General Insurance's net investment income was 38%, while life in retirement was up 15%. Higher new money reinvestment rates in both businesses drove the improvement. Fourth quarter new money rates on fixed maturities and loans averaged 6.5 percent, about 180 basis points higher than the yield on sales and maturities in the quarter.

Speaker Change: The fourth quarter calendar year combined ratio for global personal insurance was 98, 8% 90 basis points better than <unk> 20 to the <unk>.

Speaker Change: Accident year combined ratio ex cats was 101, 8% 140 basis points higher driven by the repositioning of the high net worth business, which made significant progress in 2023.

Speaker Change: Fourth quarter underwriting income for Gi was $642 million up slightly from $635 million and <unk> 22, as improved accident year results, including catastrophe losses were offset by lower favorable prior year development net of reinsurance and prior year premiums.

Speaker Change: Catastrophe losses totaled $126 million in the quarter.

Speaker Change: Down from $235 million last year.

Unnamed Speaker: Fourth quarter new money rates were 160 basis points higher in GI and 190 basis points higher in LNR. With higher reinvestment rates, the yield on general insurance fixed maturities and loans, excluding calls and prepayments, rose to an annualized yield of 3.8% in the quarter, up from 3.0% in 4Q22 and up nine basis points sequentially. Eleanor's fourth quarter portfolio yield was 5.0%, compared to 4.4% in 4Q22 and up 10 basis points sequentially. In the first half of 2024, we currently expect continued yield pickup on fixed maturities over the prior year, but less improvement sequentially, given the cessation of Fed interest rate hikes and the current shape of the yield curve. In contrast, alternative investment returns were weak this year, coming in slightly negative in the fourth quarter and at only 2.4% for the full year.

Speaker Change: The largest event was hurricane Otis in Mexico.

Speaker Change: For the fourth quarter and the year catastrophe losses, excluding validus re what has been $111 million and $937 million respectively.

Speaker Change: Favorable prior year development totaled $69 million in the fourth quarter compared to $151 million in <unk> 2002.

Speaker Change: Including the impact of prior year premiums the total impact of prior year loss reserve development was favorable by $37 million compared to favorable development of $150 million or <unk> 22.

Speaker Change: Fourth quarter net favorable development. This quarter includes $41 million of ADC gain amortization and $28 million of net favorable development from annual Dvr's and other reserve reviews, particularly prior year catastrophes.

Speaker Change: The $28 million included $75 million in additional reserves for Russia, Ukraine related claims offset by net favorable development on shorter tail lines and older catastrophes.

Speaker Change: Turning to <unk> fourth quarter results were solid, especially considering the continued headwinds from alternative investment returns.

Speaker Change: Fourth quarter, <unk> was $957 million up 12% over the prior year driven by base spread expansion strong sales and growth in assets under management and administration.

Unnamed Speaker: alternative income was $41 million in the fourth quarter, down 11% from the prior year quarter, for an annualized return of 3.9%. L&R's alternative portfolio generated a loss of $24 million in the quarter for an annualized yield of negative 1.8% compared to income of $16 million last year. Turning to general insurance, as Peter said, our underwriting results remain very strong. The 4Q23 calendar year combined ratio was 89.1 percent, 80 basis points better than the fourth quarter of 2022. And the accident year combined ratio, XCATS, was 87.9 percent, 50 basis points better. The fourth quarter included only one month of validus rei due to the timing of the divestiture. Excluding validus rei from fourth quarter results, the pro forma global commercial lines calendar year combined ratio would have been 85.1%, 30 basis points lower than reported. The accident year combined ratio X-CATS would have been 82.5%, only 10 basis points higher.

Speaker Change: Base net investment spreads and individual and group retirement, together widened 23 basis points in the quarter.

Speaker Change: Fourth quarter premiums and deposits were $10 6 billion up 20% from <unk> 22.

Speaker Change: For the fourth quarter core bridges earnings included in Aig's adjusted after tax income decreased by about 25% due to the reduction in AIG ownership from 78% last year to 52% as of year end for the full year corporate earnings and our adjusted after tax income declined 20%.

Speaker Change: Turning to other operations fourth quarter 2023, adjusted pretax loss improved by $52 million from <unk> 22, due to a $72 million reduction in AIG general operating expenses.

Speaker Change: Total other operations with $242 million for the quarter, including $61 million for court rich.

Speaker Change: On a consolidated basis Aig's fourth quarter adjusted after tax income rose, 21% to $1 3 billion driven by 19% growth in general insurance API.

Speaker Change: The annualized adjusted return on common equity was nine 4% for the quarter almost two points higher than the fourth quarter of 2022.

Unnamed Speaker: The fourth quarter calendar year combined ratio for global personal insurance was 98.8 percent, 90 basis points better than 4Q22. The accident year combined ratio XCATS was 101.8 percent, 140 basis points higher, driven by the repositioning of the high net worth business, which made significant progress in 2022. Fourth quarter underwriting income for GI was $642 million, up slightly from $635 million in 4Q22, as improved accident year results, including catastrophe losses, were offset by lower favorable prior year development, net of reinsurance, and prior year premium. Catastrophe losses totaled $126 million in the quarter, down from $235 million last year. The largest event was Hurricane Otis in Mexico.

Speaker Change: Moving to the balance sheet book value per common share ended the year at $65 14.

Speaker Change: Up 18% from year end 2022, and up 16% from September 30, primarily due to the impact of lower interest rates.

Speaker Change: Adjusted book value per share was <unk> $76 65 at year end up 1% from year end 2022, and down 2% for September 30, reflecting the net impact of income dividends share repurchases and corbridge secondary sales.

Speaker Change: At December 31st Aig's consolidated debt and preferred stock to total capital. Excluding <unk> was 24, 3% down one three points from year end 2022.

Speaker Change: With first quarter 2020 for debt reduction leverage is likely to be at the low end of our 20% to 25% range upon deconsolidation.

Speaker Change: As Peter noted, we made substantial progress towards that 10% plus RFC equal this year.

Unnamed Speaker: For the fourth quarter and the year, catastrophe losses excluding Validus-Re would have been $111 million and $937 million, respectively. Favorable prior year development totaled $69 million in the fourth quarter compared to $151 million in 4Q22. Including the impact of prior year premiums, the total impact of prior year loss reserve development was favorable by $37 million compared to favorable development of $150 million in 4Q22. Fourth quarter net favorable development this quarter includes $41 million of ADC gain amortization and $28 million of net favorable development from annual DVRs and other reserve reviews, particularly prior year catastrophe. The $28 million included $75 million in additional reserves for Russia-Ukraine-related claims offset by net favorable development on shorter tail lines and older catastrophes.

Speaker Change: 2023 full year adjusted our LTE for AIG was 9.0% compared to seven 1% in 2022 and was 12, 5% in general insurance and 11, 5% in Illinois.

Speaker Change: The actions to reach 10% or greater will be driven by the four levers we have discussed before including AIG next we are confident in our ability to achieve this goal subject to market conditions and look forward to updating you on our progress with that I will turn the call back over to Peter.

Speaker Change: Thank you say Bryan Michelle we're ready for questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again our.

Speaker Change: Our first question comes from Michael Zaremski with BMO capital markets. Your line is open.

Speaker Change: Hey.

Michael W. Phillips: Hey, thanks.

Michael W. Phillips: Maybe first on the expense ratio.

Michael W. Phillips: I appreciate the color.

Michael W. Phillips: Peter you gave us on the continued improvement.

Michael W. Phillips: We think sales it looks like this quarter, specifically, though it took it was a bit.

Michael W. Phillips: Higher than expected at anything.

Unnamed Speaker: Turning to L&R, fourth-quarter results were solid, especially considering the continued headwinds from alternative investment returns. Fourth-quarter APTI was $957 million, up 12% over the prior year, driven by base spread expansion, strong sales, and growth in assets under management and administration. Base Net Investment Spreads and individual and group retirement together widen 23 basis points in the quarter. Fourth quarter premiums and deposits were $10.6 billion, up 20% from 4Q22. For the fourth quarter, Corbridge's earnings, included in AIG's adjusted after-tax income, decreased by about 25% due to the reduction in AIG ownership from 78% last year to 52% as of year-end. For the full year, Corbridge earnings in our adjusted after-tax income declined 20%.

Speaker Change: We should be thinking about or or or.

Speaker Change: Don't know if its profit share given the extra loss ratio.

Speaker Change: Any noise in there are seasonality.

Thanks, Mike.

Speaker Change: Okay.

Speaker Change: We outlined in.

Speaker Change: My script that the business has been taking a lot of additional costs.

Speaker Change: Think about it.

Speaker Change: Cyber and usage on the cloud and so that might've been held essentially in the past that has now been put into the business and so.

Speaker Change: See that theyre absorbing most of it but there is some timing on that.

Speaker Change: So in personal insurance there is a lot of noise.

Speaker Change: In the quarter.

Speaker Change: There are some one time true up adjustments.

Speaker Change: There is also some profit sharing as you mentioned in some of our personal insurance businesses.

Speaker Change: So and there was also some catch up on some of the reinsurance on an earned premium so I am not concerned at all about.

Speaker Change: The uptick in expenses it was very nominal when I look at what the business is actually absorbed in terms of increased costs year over year, they've really built capacity to be able to invest in the future and in the fourth quarter.

Unnamed Speaker: Turning to other operations, fourth quarter 2023 adjusted pre-tax loss improved by $52 million from 4Q22 due to a $72 million reduction in AIG general operating expenses. Total other operations GOE was $242 million for the quarter, including $61 million for the fourth quarter. On a consolidated basis, AIG's fourth quarter adjusted after-tax income rose 21 percent to $1.3 billion, driven by 19 percent growth in general insurance APTI.

Speaker Change: Reflected that but there was a little bit of noise as well, particularly on the personal insurance side.

Speaker Change: Okay great.

And then my final follow up is on the specifically on the accident year loss ratio.

Speaker Change: The valassis.

Speaker Change: Property centric and it's going to be kind of fully out of the numbers.

Speaker Change: Next quarter, you talked about non renewing some property throughout the year end.

Unnamed Speaker: The annualized adjusted return on common equity was 9.4 percent for the quarter, almost two points higher than the fourth quarter of 2022. Moving to the balance sheet, book value per common share ended the year at $65.14, up 18% from year-end 2022 and up 16% from September 30th, primarily due to the impact of lower interest. Adjusted book value per share was $76.65 at year-end, up 1% from year-end 2022 and down 2% for September 30th, reflecting the net impact of income, dividends, sharer purchases, and Corbridge secondary. At December 31st, AIG's consolidated debt and preferred stock to total capital excluding AOCI was 24.3%, down 1.3 points from year-end 2022.

Speaker Change: I understand the financial lines, it's got a lot of pricing, but financial lines pricing is it isn't.

Speaker Change: Great.

Speaker Change: Trailing 12 month basis, so just.

Speaker Change: The underlying loss ratio given just all the dynamics should we be thinking about any.

Speaker Change: Should we be thinking about any material changes to the underlying loss ratio as the year progresses, given the moving parts.

Speaker Change: I don't think so I think the accident year loss ratio that we finished the year is what I would expect in 2020 for like you said there is always mix of business changes there is always a little bit of noise.

Speaker Change: There could be some shift in composition as you mentioned property we.

Speaker Change: Think we have tremendous opportunities there based on having five or six entry points across the world in terms of getting the best risk adjusted returns when I look at what we've done in property over the last five years, we've gone from combined ratios in North America that are well north of 130 combines into the Seventy's and Eighty's now.

Unnamed Speaker: With the first quarter 2024 debt reduction, leverage is likely to be at the low end of our 20 to 25% range upon deconsolidation. As Peter noted, we made substantial progress towards our 10% plus ROCE goal this year. 2023 full-year adjusted ROCE for AIG was 9.0% compared to 7.1% in 2022 and was 12.5% in general insurance and 11.5% in L&R. The actions to reach 10% or greater will be driven by the four levers we have discussed before, including AIG Next. We are confident in our ability to achieve this goal, subject to market conditions, and look forward to updating you on our progress. With that, I will turn the call back over to you. Thank you, Sabra. Michelle, we're ready for questions. Thank you. If you'd like to ask a question, please press star 11. If your question hasn't been answered and you'd like to remove yourself from the queue, please press star 11 again.

Speaker Change: So I think we have a really good platform, we're able to scale up businesses, when we see opportunities, but I would think absent big.

Speaker Change: Mix of business changes.

I would not expect any changes in the loss ratio and I signaled on.

Speaker Change: On the call that the remediation is largely behind US I mean, again, you're always going to be re underwriting but.

Speaker Change: Large programs or portions of the business and commercial.

Speaker Change: Really like what we have I think that there is real good opportunities for growth.

Speaker Change: Thank you.

Speaker Change: Thanks, Mike.

Speaker Change: Thank you. Our next question comes from Meyer Shields with <unk>. Your line is open.

Meyer Shields: Great. Thanks, One quick question just to make sure I understand it when you talk about pricing assumptions for casualty assuming loss trends.

Meyer Shields: Either high single digits or low teens does that match the loss trends are embedded in the reserves.

Okay.

Speaker Change: Good morning, Mayor say, but do you want to talk about.

Speaker Change: The reserves commensurate to the.

Speaker Change: The increase in premium and sorry, an increase in.

Speaker Change: Rate change, particularly on excess.

Speaker Change: Yes.

Speaker Change: And we've talked about it in the past we've always taken a proactive approach to trying to react quickly to that is that we see in trends and and as you know even back in 2017, we move to increase the reserves on casualty lines.

Michael Zaremsky: Our first question comes from Michael Zaremsky with BMO Capital Markets. Your line is open. Hey, good morning.

Peter Zaffino: Maybe first on the expense ratio, you know, I appreciate the color Peter gave us on the continued improvement. Anything, it looks like this quarter specifically, though, it took a bit Higher Than Estimated and anything we should be thinking about or, you know, I don't know if it's profit share given the accident loss ratio or just anything, any noise in there or seasonality. Thanks, Mike.

Speaker Change: Our underlying assumptions for casualty loss trend is in the 10% range. It does vary between primary and excess of our book historically has been a little bit more balanced towards excess.

Speaker Change: That's why you can see some of the changes in the loss ratios accident year by accident year.

Peter Zaffino: We outlined in, you know, my script that the business has been taking on a lot of additional costs, think about cyber and usage of the cloud. And so that might have been held centrally in the past, that has now been put into the business. And so, you see, they're absorbing most of it, but there is some timing on that.

Speaker Change: I would note that we do are deeper dive on the casualty lines largely in the third quarter. There are some that are in the second quarter and we did complete those reserves this year without any meaningful changes in the reserves.

Speaker Change: Okay.

Speaker Change: So one other observation on that is that.

Speaker Change: The rates as we got to the back half of the year and casualty, particularly in excess casualty started to accelerate and to double digits and also not that this is a bellwether.

Peter Zaffino: Also, in personal insurance, there is a lot of noise in the quarter. There are some one-time true-up adjustments. There's also some profit sharing, as you mentioned, in some of our personal insurance businesses. And so, and there was also some catch-up on some of the reinsurance on earned premiums. So I'm not concerned at all about the uptick in expenses. It was very nominal.

Speaker Change: Because theres different mix of business, but our casualty submissions.

Speaker Change: In Lexington in the fourth quarter were up 100%, which just means it's getting harder to get casualty placements done.

Peter Zaffino: When I look at what the business has actually absorbed in terms of increased costs year over year, they've really built capacity to be able to invest in the future. And the fourth quarter, you know, reflected that, but there was a little bit of noise as well, particularly on the personal insurance side. Okay, great.

Speaker Change: In the mid market pricing is going up driven by rate and terms and conditions are being tightened and there is more activity in E&S.

Speaker Change: Okay Fantastic that's very helpful.

Speaker Change: The second question I guess, maybe jumping off from that I guess I'm, a little surprised that there is still if I understand correctly the same level.

Speaker Change: Proportional sessions on North American casualty. Despite the fact that overall profitability has gotten so much better and higher interest rates I was hoping you could take us through.

Peter Zaffino: And my final follow-up is specifically on the accident-year-loss ratio. You know, Validus is property-centric and is going to be kind of fully out of the numbers next quarter. You talked about non-renewing some property throughout the year, and I understand it has got a lot of pricing, but pricing isn't great on a 12-month basis. So just on the underlying loss ratio, given just all the dynamics, should we be thinking about any? I don't think so. I think the, you know, accident year loss ratio that we finished the year is what I would expect in 2024. Like you said, there's always a mix of business changes; there's always a little bit of noise. There could be some shifts in composition.

Speaker Change: Thinking on that.

Speaker Change: Sure.

Speaker Change: Look at our our casualty placements have have evolved over time to reflect the portfolio.

Speaker Change: Most limit deployment and if I could take you back to even 2016 and 17, where.

Speaker Change: We had quota shares before.

Speaker Change: We arrived where we had a 50% quota share on.

Speaker Change: Primary casualty and then we had a 37, 5% placement on excess casually. That's just continued to evolve.

Speaker Change: As we got into 2018, where we bought a large excess of loss placements for.

Speaker Change: Our worldwide casualty portfolio for $75 25, and then at the end of 2018, we bought a 50% quota share for our casualty portfolio.

Peter Zaffino: As you mentioned, property, we think we have, you know, tremendous opportunities there based on having, you know, five or six entry points across the world in terms of getting the best risk-adjusted returns. When I look at what we've done in property, over the last five years, we've gone from combined ratios in North America that are, you know, well north of 130 combined to the 70s and 80s now. So I think we have a really good platform; we're able to scale up businesses when we see opportunities, but I would think absent a big, you know, mix of business changes, I would not expect any changes in the loss ratio. And I signaled on the call that, you know, the remediation is largely behind us. And again, you're always going to be re underwriting, but, you know, large programs or, you know, portions of the business and commercial, we really like what we have and think that there are really good opportunities for growth. Thank you. Thanks, Mike. Thank you. Our next question comes from Meyer Shields with KBW. Your line is open.

Speaker Change: Within the United States and the reason why I just gave you that as a baseline is we've changed evolved we've had reinsurance in place since 2016, but when you look at what we place on the quota share today, it's basically 20%. So we've taken that down while we've improved ceding commissions over 800 basis points from the original placement to.

Speaker Change: 220% from North of 50, so I think we had been recognizing.

Speaker Change: That we don't need to do as much proportional, but theres a balance on those placements between the excess in the quarter share partnerships with reinsurers.

Speaker Change: Our balance between the excess of loss in quota share in terms of our underwriting and feel very comfortable that that's a good amount to cede off.

Speaker Change: Looking at our overall casualty portfolio.

Speaker Change: Okay. That's very helpful. Thank you so much.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Elyse Greenspan: Thanks, Tom Good morning.

Elyse Greenspan: My first question was on me.

Meyer Shields: Great, thanks. One quick question, just to make sure I understand it. So you talked about pricing assumptions for casualty, assuming loss trends of either high single digits or low teens. Does that match the loss trends embedded in the reserve? Good morning, Mayor.

Elyse Greenspan: Equity that you laid out <unk>. So 33 1 billion pro forma adjusted equity and then I believe you said parent liquidity would come on top of that so can you just give us a sense of once you're through the deconsolidation.

Peter Zaffino: Saber, do you want to, you know, talk about the reserves commensurate with the increase in premium and, sorry, an increase in rate changes, particularly on excess? Yes, and as we've talked about in the past, we've taken a proactive approach to trying to react quickly to bad news that we see in trends. And as you know, even back in 2017, we moved to increase the reserves on casualty lines. Our underlying assumptions for the casualty loss trend are in the 10 percent range. It does vary between primary and excess.

Elyse Greenspan: What type of liquidity, you would like to have inherent because I'm, assuming it would be 33 billion plus the parent liquidity would be the equity that we should consider in reference to the double digit plus IL <unk> target.

Speaker Change: Thanks, Lisa I'll turn it over to say, Brian in two seconds, but I just I just want to caution us that we tried to outline what we expect shareholder's equity with a variety of different variables, but it was all pro forma so I think fabric can add so answer the question sort of technically as to how we should be looking about.

Saber Patil: Our book historically has been a little bit more balanced towards excess, and that's why you can see some of the changes in the loss ratios, accident year by accident year. I would note that we do our deeper dive on the casualty lines largely in the third quarter, although there are some that are in the second quarter.

Brian: Our capital relative to how we get to the 10% RFC, but I don't want to go into too many more variables because that was the pro forma that had a lot of assumptions say Brad.

Brian: Yes, certainly look we have a framework around our liquidity position and clearly given the timing of the corporate secondaries in the Validus on sale.

Speaker Change: In the fourth quarter parent liquidity.

Saber Patil: And we did complete those reserves this year without any meaningful changes. Another observation Mayor on that is that, as we got to the back half of the year, rates for casually, particularly in excess casually, started to accelerate into double digits, and also not that this is a bellwether because there's a different mix of business, but our casually submissions in Lexington in the fourth quarter were up a hundred percent, which just means it's getting harder to get casually placements done in the emitted That's very helpful.

Speaker Change: <unk>.

Brad: Attractive at high levels at year end the way, we think of it in a normal framework as we look at what our forward holding company needs are.

Brian: Think of about common dividend payments of roughly $1 billion, a year and AIG only interest expense roughly $500 million a year and then parent.

Brian: Spencers, which as we've talked about we're focused on getting those down to a one to one 5% of M. P range.

Brian: So that's why when we think about in terms of our normal liquidity position, which is lower obviously than where we ended the year.

Speaker Change: Thanks, and then my second question.

Meyer Shields: Second question, I guess, maybe jumping off from that, I guess I'm a little surprised that there's still, if I understand correctly, the same level of proportional sessions on North America casualties despite the fact that overall profitability has gotten so much better and higher interest rates. And I was hoping you could take us through your thank you. Sure.

Speaker Change: I appreciate all the color on the call on premium growth rate I think it was around nine.

Brian: <unk>, 9% in the quarter kind of ex Validus and crop.

Brian: And so.

Brian: As we think about the moving pieces and just your view of price.

Brian: Loss trend et cetera would you expect topline growth kind of on it.

Peter Zaffino: Look at how our casualty placements have evolved over time to reflect the portfolio, and the gross limit deployment. And, you know, if I could take you back to even, you know, 2016 and 17, where, you know, we had quota shares before we arrived, where we had a 50% quota share on Primary Casualty, and then we had a 37.5% placement on excess casualty. That's just continued to evolve as we got into 2018, where we bought large excess loss placements for our worldwide casualty portfolio at 75X of 25, and then at the end of 2018, we bought a 50% quota share for our casualty portfolio within the United States. And the reason why I just give you that as a baseline is we've changed, evolved, and we have had reinsurance in place since 2016, but when you look at what we place on the quota share today, it's basically 20%.

Brian: <unk> basis.

Brian: To be within that range.

Brian: And in 'twenty, four or are there other things that we should consider.

Brian: Well when you take out again, there's a lot of moving pieces, but like do you take out validus crop risk services.

Brian: So we have a baseline and then when we look at our commercial portfolio I look at the fundamentals.

Brian: At least in terms of how are we growing the business and we.

Brian: We gave you highlights in the fourth quarter about our new business, which was simply terrific and that momentum continues.

Brian: Our retentions have been fantastic and so again, it's a portfolio that we have done such a great job to get to a place where we really like and find opportunities for.

Brian: Stability and more growth agree on the rate I mean again, the fourth quarter was just a moment, but we would expect financial lines in 2024 not to keep up at the same pace on excess we'll see as we get into the market.

Brian: But really like the opportunities in our core businesses to drive growth.

Brian: Lexington, I know theres been a lot of discussion in this quarter around us excess and surplus lines slowing down things going back to the admitted there is no evidence to suggest that is true.

Peter Zaffino: So we've taken that down while we've improved seating commissions by over 800 basis points from the original placement to 20% from, you know, north of 50. So I think we have been recognizing, you know, that we don't need to do as much proportional, but there's a balance in those placements between the excess and the quota share partnerships with reinsurers. They like a balance between the excess loss and quota share in terms of our underwriting, and feel very comfortable that that's a good amount to seed off when looking at our overall casualty portfolio. Okay, that's very helpful. Thank you so much.

Brian: You know again submission count is significantly up and it's not just property property. If I looked at the fourth quarter was the lowest submission count growth and that was up over 30% as I said.

Brian: He is around 30% casualty was up.

Brian: Over 100% in health care was around 50%, so there's a lot more opportunity.

Brian: We need to grow in excess and surplus lines and you know what the property market you get to the second quarter and there is your opportunity. So look we have.

Brian: Build the reinsurance structure, we built a growth portfolio that we can flex depending on market conditions I mentioned global specialty.

Elyse Greenspan: Thank you. Thank you. Good morning.

Peter Zaffino: My first question was on the, you know, equity that you laid out, Sabra. So $33 billion pro forma adjusted equity. And then I believe you said parent liquidity would come on top of that. So can you just give us a sense of, you know, once you're through deconsolidation, you know, what type of liquidity you would like to have in parent? Because I'm assuming that $33 billion plus the parent liquidity would be the equity that we should consider in reference to the double digit plus ROCE target. Thanks, Elyse. And I'll turn it over to Sabra in two seconds.

Brian: We think there's growth opportunities there, we think there's growth opportunities in our personal insurance business. So were.

Brian: Cautious, but optimistic that the.

Brian: The growth rate that you outlined in the high single digits is going to be achieved but again, we have to be in the year and we'll give you updates every quarter, but we're optimistic.

Speaker Change: Thanks Peter.

Brian: Absolutely.

Brian: Thank you. Our next question comes from Mike Ward with Citi. Your line is open.

Mike Ward: Thanks, guys good morning.

Mike Ward: Maybe kind of a similar question, but specifically on international.

Mike Ward: I think rate is a little below loss cost.

Mike Ward: Wondering if you have any commentary on.

Mike Ward: See the top line growth, they're playing out.

Saber Patil: But I just I just want to caution us that, you know, we tried to outline what we expected shareholders' equity with a variety of different variables, but it was all pro forma. So I think, you know, Sabra can answer the question, you know, sort of technically as to how we should be looking at our capital relative to how we get to the 10% RLC. But I just don't want to go into too many more variables, because that was the pro forma that had a lot of assumptions, Sabra. Yes, certainly.

Speaker Change: Good morning, Mike Thanks for the question.

Mike Ward: If I look at international on the rate side.

Speaker Change: Just a reminder, that we do rate on gross premium written not net and so like as you take that from the portfolio, there's a heavy weighting.

Speaker Change: Specialty business in the fourth quarter and a specialty.

Speaker Change: The business does have a lot of quota shares.

Mike Ward: And has a terrific reinsurance partnership, but it's almost 50% of the business.

Mike Ward: Between 40% to 50 in the quarter and so specialty while had good rate increase in marine political risk.

Saber Patil: Look, we have a framework around our liquidity position, and clearly, given the timing of the Corbridge secondaries and the validus sale in the fourth quarter, parent liquidity was very attractive at high levels at year end. The way we think of it in a normal framework is we look at what our forward holding company needs are. So think about common dividend payments of roughly a billion dollars a year.

Mike Ward: Awaiting.

Mike Ward: On rate in the quarter as well as financial lines finish line about 20%.

Mike Ward: The gross premium written in the quarter and having a negative.

Mike Ward: That's just wait to the overall rate environment, but we had very strong rate in property.

Saber Patil: AIG only has interest expense, roughly 500 million dollars a year. And then parent expenses, which, as we've talked about, we're focused on getting those down to a one to one and a half percent of the NPE range. So that's what we think about in terms of a normal liquidity position, which is lower, obviously, than where we ended the year. Thanks.

Mike Ward: We had very good rate as I mentioned in my prepared remarks of 8% in in marine and so yes.

Mike Ward: The overall index was at or perhaps slightly below loss cost trend, but it's not something we're concerned about the other thing too in specialty you should realize is that December versus what all aviation renews and so that was low single digits again waiting on it but its mix of business.

Elyse Greenspan: And then my second question: I appreciate all the color on the call on premium growth, right? I think it was around, you know, 9% in the quarter kind of ex-validus in crop. And so, you know, as we think about the moving pieces and just your view of price, loss trend, etc., would you expect, you know, top line growth kind of on an adjusted basis, you know, to be within that range? You know, in 24, are there other things that we should consider?

Mike Ward: It's growth and when I say growth is that when you take the gross to net for our specialty business is basically 50%.

Mike Ward: Net premium written to gross and so like we.

Mike Ward: Put that in the map in terms of our ceding commissions and profitability of the portfolio, but overall.

Speaker Change: We were pleased.

Speaker Change: And think that there's opportunities to improve that in 2024.

Speaker Change: Thanks, Peter and then maybe just on <unk>.

Speaker Change: On the adverse <unk> in Russia, Ukraine is that related to aviation.

Peter Zaffino: Well, when you take out, again, there's a lot of moving pieces, but like you take out Validisk and Crop Services, and so we have a baseline. And then when we look at our commercial portfolio, I look at the fundamentals, Elyse, in terms of how are we growing the business. And we gave you highlights in the fourth quarter about our new business, which was simply terrific, and that momentum continues. Our retentions have been fantastic. And so, you know, again, it's a portfolio that we have done such a great job of getting to a place where we really like and finding opportunities for, you know, stability and more growth. Agree on the rate.

Peter Zaffino: Is that just accident year 'twenty two.

Speaker Change: I think there was some adverse.

Speaker Change: The other 2019.

Speaker Change: So if you want to provide a little bit of update in terms of how we got to the adverse.

Speaker Change: Sure and I'll just start by overall as I mentioned, we did have some favorable prior year development from older catastrophe years. So those were basically in years 2018 through 2020, if you look at the more recent accident years, as we indicated and we did put up $75 million of additional.

Speaker Change: Reserves related to Russia, and Ukraine related claims.

Peter Zaffino: I mean, you know, again, the fourth quarter was just a moment, but, you know, we would expect financial lines in 2024 not to keep up at the same pace on excess. We'll see as we get into the market, but really like, you know, the opportunities in our core businesses to drive growth. You know, Lexington, I know there's been a lot of discussion in this quarter around excess and surplus lines slowing down, things going back to the admitted. But there's no evidence to suggest that's true.

Speaker Change: When evaluating our exposure.

Speaker Change: <unk>.

Speaker Change: For some time and based on the analysis, where we are at the end of the year. We thought it was appropriate to increase our reserves for the quarter, but I would also note that in the 2022 accident year. We did have some adverse development on winter storm Elliot, which was at the very tail end of the fourth quarter.

Speaker Change: Of 2022.

Speaker Change: And then.

Speaker Change: The older accident years.

Speaker Change: As I said in general when netted to a favorable reserve development, but we did have some adverse development in the 2018 in 2019 accident years on some mergers and acquisitions related exposures.

Peter Zaffino: You know, again, the submission count is significantly up, and it's not just property. Property, if I looked at the fourth quarter, you know, was the lowest submission count growth, and that was up over 30%. As I said, property is around 30%.

Speaker Change: Thanks, San Francisco right.

Speaker Change: Thank you. Our next question comes from Brian Meredith with UBS. Your line is open yes.

Peter Zaffino: Casualty was up over 100%, and healthcare was around 50%. So there's a lot more opportunity to continue to grow in excess and surplus lines. And, you know, with the property market, you get to, you know, the second quarter, and there's your opportunity. So, like we have.

Brian Meredith: Yeah. Thanks first question I'm, just curious as we look at this though youre getting close to the 600 million kind of share count as we think about that in the use of proceeds from corbridge are you willing to go kind of meaningfully below that and if not what is the other kind of potential uses of capital here that youre thinking about.

Peter Zaffino: I mentioned global specialty, we think there's growth opportunities there. We think there's growth opportunities in our personal insurance business. So we're cautious but optimistic that the growth rate that you outlined, the high single digits, is going to be achieved. But again, we have to be in the year, and we'll give you updates every quarter, but we're optimistic. Thanks, Peter. Absolutely. Thank you. Our next question comes from Mike Ward with Citi. Your line is open.

Brian Meredith: To mitigate dilution from selling down your remaining interest in corporate.

Speaker Change: Thank you Brian.

Speaker Change: It's a good question, it's a little leading but.

Speaker Change: We outlined the capital management strategy for the first six months and that gets us below the $650 million share count at a base.

Speaker Change: Our assumption of a stock price around where we are now and so there's a.

Speaker Change: A few variables that could accelerate that or slow it down depending on market conditions and share price, but we know we have the liquidity and we just wanted to outline what we thought we would do within the first six months. The next is dependent upon when we do a secondary sell down which I would expect.

Mike Ward: Thanks, guys. Good morning. Um, maybe kind of a similar question, but specifically on international. I think the rate is a little below lost cost. So just wondering if you have any commentary on how you see the top line growth there playing out. Good morning, Mike.

Speaker Change: Before the end of the second quarter, another sell down which gives us more liquidity and the primary focus is going to be.

Speaker Change: On share repurchase and dividend payment and believe that we can then.

Peter Zaffino: Thanks for the question. If I look at international on the rate side, Just a reminder that we rate on gross premium written, not net. And so, as you take that from the portfolio, there's a heavy weighting of our specialty business in the fourth quarter. And the specialty business does have a lot of quota shares and has a, you know, terrific reinsurance partnership, but it's almost 50% of the business, roughly between 40 to 50 in the quarter. And so, specialty, while having a good rate increase in marine and political risk, had a weighting on rates in the quarter, as well as financial lines. Financial lines, about 20% of the gross premium written in the quarter. And having a negative, you know, that just weighs on the overall, you know, rate environment.

Speaker Change: By the end of the year down to the lower end of the range or the $600 million.

Speaker Change: Once we're closer to that.

Speaker Change: We feel like we've made enormous progress on all of the elements of our capital management strategy. It has been very balanced.

Speaker Change: We believe we would have to give guidance after that in terms of what we intend to do but I kind of want to get to the <unk>.

Speaker Change: Arrange first in the $6 to $6 50, and then get to the lower end of the range with proceeds and then we would provide additional guidance.

Speaker Change: Great. Thanks, that's helpful and then.

Speaker Change: Just wanted to touch briefly on the financial lines business and.

Speaker Change: It seems like everybody is cutting financial lines I'm, just kind of wondering like who is actually running the business and we think we're getting closer to a bottom here in and do you think that's still a significant headwind to 2024 premium growth.

Speaker Change: Thank you Brian for the question and I have been trying to find a way to bring in mcelroy to close it out so Dave.

Peter Zaffino: But we had a very strong rate in property. You know, we had a very good rate, as I mentioned in my prepared remarks, of 8% in marine. And so, yeah, the overall index was, you know, at or perhaps slightly below the loss cost trend. But it's not something we're concerned about.

Dave: Why don't you give <unk>.

Speaker Change: Brian some insight and then.

Dave: We'll send it back to me and we will finish up.

Speaker Change: Thanks.

Dave: Thank you, Brian and thank you Peter.

Speaker Change: Yes.

Speaker Change: Honestly Brian.

Speaker Change: You see the weighting of the financial lines in our portfolio.

Peter Zaffino: You know, the other thing, too, in specialty, you should realize is that December 1st is when all, you know, aviation renews. And so, that was, you know, low single digits, again, weighting on it. But it's a mix of business. It's gross.

Speaker Change: It's a bit of an outside influence, but we've also gone through the year and I think we trade the market. We're in not the market we hope for so.

Speaker Change: I think we've been prudent around.

Speaker Change: Having excess under priced business go I think we've been good about holding onto our primary business I think that's actually rate has held up well.

Peter Zaffino: And why I say gross is that when you take the gross to net for our specialty business, it's basically 50% net premium written to gross. And so, like, you know, we put that on the map in terms of our seeding commissions and, you know, profitability, the portfolio, but overall, you know, we were pleased and think that, you know, there's opportunities to improve that in 2024. Thanks, Peter. And then maybe just on the adverse PYD in Russia and Ukraine. Is that related to aviation? And is that just accident number 22?

Speaker Change: I also think that it's always.

Speaker Change: Understanding theres a lot of other products in the portfolio and they've held up well, whether that's private company business, where professional indemnity or the fidelity businesses. Those are those are those are strong and we actually anticipate those will continue to hold up in 24, okay.

Speaker Change: <unk>.

Speaker Change: The seminal event is 2023 showed up with different securities class action experience than the 20% to 22 cohort here it actually looks more like 16 to 19. The question will be whether the industry reacts to that okay, much more severity flowing through that year.

Peter Zaffino: Because I think there was some adverse in in other parts of 2019, do you want to provide a little bit of an update in terms of how we got to this? Sure. And I'll just start by saying overall, as I mentioned, we did have some favorable prior year development from older catastrophe years. So those were basically in years 2018 through 2020. If you look at the more recent accident years, you know, as we indicated, we did put up $75 million of additional reserves related to Russia and Ukraine-related claims. You know, we've been evaluating our exposure for some time. And based on the analysis of where we are at the end of the year, we felt it was appropriate to increase our reserves for the quarter.

Speaker Change: And obviously exposes the verdict calorie of loss.

Speaker Change: I do think it's put a little bit of a floor on the market going into 2024, we're seeing that.

Speaker Change: We're seeing that now.

Speaker Change: We're going to be more control in primary, but but I am not going to be.

Speaker Change: We won't sit on the front cover of CMV sitting middle event CNBC, but we.

Speaker Change: We like the business, we like the pricing of the business and we also think that it's.

Speaker Change: It's Kevin to the economy as that shows up that will also help with new business opportunities that we see both in M&A, both in Ipos and both in structure. So so it is the first time in three years that I might give it a little bit of optimism.

Peter Zaffino: But I would also note that in the 2022 accident year, we did have some adverse development on Winter Storm Elliott, which was, you know, at the very tail end of the fourth quarter of 2022. And, you know, as I said, in general, we netted to a favorable reserve development, but we did have some adverse development in the 2018 and 2019 accident years on some mergers and acquisitions-related exposures. Thanks, Saber.

Speaker Change: Great. Thanks, Dave Thank you very much and thanks, Brian Thank.

Speaker Change: Thank you everyone for.

Speaker Change: Coming to the earnings call today and greatly appreciate the engagement and I want to thank all of our colleagues around the world for all they've done to progress the strategic.

Brian Meredith: Thank you. Our next question comes from Brian Meredith with UBS. Your line is open.

Speaker Change: Progress that we've made and just have delivered tremendous results. So everybody have a great day and thank you.

Peter Zaffino: Yeah, thanks. First question, just curious, as we look at this, you're getting close to the 600 million kind of share count. As we think about that and the use of proceeds from CoreBridge, are you willing to go kind of meaningfully below that? And if not, you know, what are the other kinds of potential uses of capital here that you're thinking about to mitigate dilution from selling down your remaining interest in CoreBridge? Thank you, Brian.

Speaker Change: Thank you for participating in today's conference. This does conclude the program and you may now disconnect everyone have a great day.

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Peter Zaffino: It's a good question, it's a little leading, but... You know, we had outlined the capital management strategy for the first six months, and you know, that gets us below the $650 million share count at a base, assumption of a stock price, you know, around where we are now. And so there's, you know, a few variables that could accelerate that or slow it down depending on market conditions and share price. But we know we have the liquidity, and we just wanted to outline, you know, what we thought we would do within the first six months. The next is dependent upon when we do a secondary sell-down, which I would expect, you know, before the end of the second quarter, another sell-down, which gives us more liquidity. And the primary focus is going to be on share repurchase and dividend payment, and I believe that we can then, you know, get by the end of the year down to the lower end of the range or 600 million.

Speaker Change: Yeah.

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Peter Zaffino: Once we're closer to that, you know, we feel like we've made enormous progress on all the elements of our capital management strategy. It has been very balanced, and I believe we would have to give guidance after that in terms of what we intend to do. But I kind of want to get to the range first in the six to 650 and then get to the lower end of the range with proceeds. And then we will provide additional guidance. Great, thanks. That's very helpful.

Speaker Change: Okay.

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Brian Meredith: And then, Peter, I just want to chat briefly about the financial lines business. It seems like everybody's cutting financial lines. I'm just kind of wondering, like, who is actually running the business?

Speaker Change: Okay.

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Peter Zaffino: And do we think we're getting closer to a bottom here? And do you think that's still a significant headwind to 2024 premium growth? Thank you, Brian, for the question. And I've been trying to find a way to bring in McElroy to close it out.

David McElroy: So Dave, why don't you give Brian some insight, and then, you know, we'll send it back to me and we'll finish up. Thank you, Brian, and thank you, Peter. Honestly, Brian, you see the weighting of the financial lines in our portfolio. It's a bit of an outside influence. But, you know, we've also gone through the year.

David McElroy: And I think we trade the market we're in, not the market we hope for. So the I think we've been prudent around, letting excess underpriced business go. I think we've been good about holding on to our primary business. I think that actually has held up well.

Speaker Change: Yes.

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David McElroy: I also think that it's always worth understanding there are a lot of other products in the portfolio, and they've held up well, whether that's private company business, or professional indemnity, or the fidelity businesses. Those are strong, and we actually anticipate those will continue to hold up in 2024. You know, the seminal event is 2023 showed up with different securities class action experience than the 20 to 22 cohort years; it actually looks more like 16 to 19. The question will be whether the industry reacts to that, okay, much more severity flowing through that year; it obviously exposes the verticality of loss. I do think it's put a little bit of a floor on the market going into 2024. We're seeing that now, there's definitely going to be more control in primary, but I'm not going to be, you know, we won't sit on the front cover of CNBC or sit in the middle of CNBC, but we like the business, and we like the pricing of the business.

Speaker Change: Okay.

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David McElroy: And we also think that it's tethered to the economy, as that shows up, that will also help with new business opportunities that we see both in M&A, both in IPOs, and both in structure. So, this is the first time in three years that I might give it a little bit of optimism. Thanks, Dave. Thank you very much.

Speaker Change: Okay.

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Peter Zaffino: And thanks, Brian. Thank you, everyone, for coming to the earnings call today and greatly appreciating the engagement. And I want to thank all of our colleagues around the world for all they've done to progress the strategic agenda and progress that we've made and just delivered tremendous results. So everybody have a great day, and thank you.

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Unnamed Speaker: Thank you for participating in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.

Speaker Change: Okay.

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Unnamed Speaker: ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? www.globalonenessproject.org www.globalonenessproject.org, Good day and welcome to AIG's fourth quarter 2023 financial results conference call. This conference is being recorded. Now at this time, I would like to turn the conference over to Quinton McMillan. Please go ahead.

Speaker Change: Okay.

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Unnamed Speaker: Thanks very much and good morning. Today's remarks may include forward-looking statements which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. AIG's filings with the SEC provide details on important factors that could cause actual results or events to differ materially. Unless as required by applicable securities laws, AIG is under no obligation to update any forward-looking statements, circumstances, or management estimates or opinions should change. Today's remarks may also refer to non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release financial supplement and earnings presentation, all of which are available on our website at AIG.com. Additionally, note that today's remarks will include results of AIG's life and retirement segment and other operations on the same basis as prior quarters, which is how we expect to continue to report until the deconsolidation of Corbidge Finance. AIG's segments and U.S. GAAP financial results, as well as its key financial metrics with respect thereto, differ from those reported by Corbridge Financial.

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Speaker Change: Good day and welcome to Aig's fourth quarter 2023 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. Thanks.

Quentin Mcmillan: Thanks, very much and good morning. Today's remarks may include forward looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations and <unk> filings with the SEC provide details on important factors that could cause actual results or events to differ materially.

Unnamed Speaker: Finally, today's remarks, as they relate to net premiums written in general insurance, are presented on a comparable basis, which reflects year-over-year comparison on a constant dollar basis, adjusted for the international lag elimination, the sale of crop risk services, and the sale of validus rei. Please refer to the footnote on page 26 of the fourth quarter financial supplement for prior period results for the crop business and validus rei. With that said, I'd now like to turn the call over to our chairman and CEO, Peter Zaffino.

Quentin Mcmillan: That is required by applicable securities laws AIG is under no obligation to update any forward looking statements as circumstances are management's estimates or opinion should change today's remarks may also refer to non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release financial supplement and earnings presentation, all of which are available on our website at <unk>.

Quentin Mcmillan: <unk> Dot com. Additionally, note that today's remarks will include results of Aig's life and retirement segment and other operations on the same basis as prior quarters, which is how we expect to continue to report until the deconsolidation of Corbridge financial energy segments in U S. GAAP financial results as well as AIG as key financial metrics with respect their to differ from those reported by corporate finance.

Peter Zaffino: Good morning, and thank you for joining us today to review our fourth quarter and full year 2023 financial results. Kevin Hogan and David McElroy will join us for the Q&A portion of this presentation. We had a very strong fourth quarter, which highlighted a significant year of achievements at AIG. Throughout 2023, we continue to build on our underwriting excellence, reposition the portfolio through several divestitures, make meaningful progress towards the deconsolidation of Corbridge, including three secondary sell-downs, deliver disciplined premium growth in businesses where we have scale and an outstanding combined ratio, and continue to execute on our balanced capital management strategy. I'm very proud of the work our colleagues delivered for all of our stakeholders throughout the entire year. In the fourth quarter, adjusted after-tax income per diluted common share was $1.79.

Quentin Mcmillan: <unk> Corp.

Quentin Mcmillan: Corporate financial will host its earnings call on Thursday February 15th.

Quentin Mcmillan: Finally, today's remarks as they relate to net premiums written in general insurance are presented on a comparable basis, which reflects year over year comparison on a constant dollar basis adjusted for the international lag elimination the sale of crop risk services and the sale of Validus re please refer to the footnote on page 26 of the fourth quarter financial supplement for prior period.

Quentin Mcmillan: Our results for the crop business and Validus re.

Quentin Mcmillan: With that I'd now like to turn the call over to our chairman and CEO Peter Zaffino.

Peter Zaffino: Good morning, and thank you for joining us today to review, our fourth quarter and full year 2023 financial results.

Peter Zaffino: Following my remarks, Sabre will provide more detail on the quarter and some perspective on the year and then we'll take questions, Kevin Hogan and David Mcelroy will join us for the Q&A portion of the call.

Peter Zaffino: An increase of 29% year-over-year, driven by continued strong underwriting results and 17% growth in net investment income, an excellent execution of our balanced capital management strategy that resulted in a 6% reduction in diluted common shares outstanding. For the full year 2023, adjusted after-tax income per diluted common share was $6.79, an increase of 33% over 2022.

Sabre: We had a very strong fourth quarter, which highlighted a significant year of achievements at AIG.

Sabre: Throughout 2023, we continue to build on our underwriting excellence.

Sabre: Reposition the portfolio through several divestitures made meaningful progress towards the deconsolidation of corbridge, including three secondary sell downs delivered disciplined premium growth in businesses, where we have scale and outstanding combined ratios and continue to execute on our balanced capital management strategy.

Peter Zaffino: AIG overall produced an adjusted return on common equity of 9% for the year, up from 7% in 2020. As I will share with you today, 2023 was an extraordinary year for AIG. During my remarks this morning, I'll discuss the following topics. First,

Sabre: I'm very proud of the work our colleagues delivered for all of our stakeholders throughout the entire year.

Sabre: In the fourth quarter adjusted after tax income per diluted common share was $1 79.

Peter Zaffino: I will provide an overview of our fourth quarter financial results. I will review AIG's significant accomplishments in 2023, including our strategic repositioning and our financial highlights. Saber will comment on the life retirement business and her prepared remarks. Third, I will cover insights on the January 1 reinsurance market and specifically AIG's reinsurance renewal. And finally, I'll share some thoughts on how we're building on our momentum and positioning the company as we enter 2024, including some specifics on AIG Next. Our initiative focused on creating the AIG of the future.

Sabre: An increase of 29% year over year, driven by continued strong underwriting results.

Sabre: 17% growth in net investment income and excellent execution of our balanced capital management strategy that resulted in a 6% reduction in diluted common shares outstanding.

Sabre: For the full year 2023, adjusted after tax income per diluted common share was $6 79 and.

Sabre: An increase of 33% over 2022.

Sabre: AIG overall produced an adjusted return on common equity of 9% for the year up from 7% in 2022.

Peter Zaffino: I will also discuss our capital management strategy and growth expectations, within general insurance, underwriting income of $642 million. Net premiums written for the quarter increased by 7% from the prior year quarter to $5.7 billion. Global Commercial Group 5% and Global Personal Group 9% from the prior year quarter. However, if you exclude financial lines, global commercial would have grown 11%. In North America commercial, fourth quarter net premiums written grew 5% over the prior year quarter, led by retail property, which grew 32%, and Lexington, which grew 20%. These were offset by North America financial lines, which were lower by 13%. In international commercial, fourth quarter net premiums written grew 6% over the prior year quarter, as international property grew 28% and Talbot grew 12%. However, these were offset by international financial lines, which were lower by seven percent.

Speaker Change: As I will share with you today 2023 was an extraordinary year for AIG.

Speaker Change: During my remarks, this morning, I'll discuss the following topics first.

Speaker Change: I will provide an overview of our fourth quarter financial results.

Sabre: Second.

Sabre: I will review AIG significant accomplishments in 2023, including our strategic repositioning and our financial highlights.

Sabre: <unk> will comment on the life retirement business in her prepared remarks.

Sabre: Third I will cover insights on the January one reinsurance market and specifically aig's reinsurance renewals.

Sabre: And finally I'll share some thoughts on how we are building on our momentum and positioning the company as we enter 2024, including some specifics on AIG next our initiative focused on creating the AIG of the future.

Sabre: I will also discuss our capital management strategy and growth expectations.

Sabre: AIG strong fourth quarter results demonstrated our continued execution across all aspects of our strategy.

Sabre: Within general insurance underwriting income was $642 million.

Sabre: Gross premiums written for the fourth quarter were $7 6 billion, an increase of 4% from the prior year quarter.

Sabre: Net premiums written for the quarter increased by 7% from the prior year quarter to $5 7 billion.

Peter Zaffino: In the fourth quarter, global commercial had very strong renewal retention of 86% in its enforced portfolio, as well as very strong new business performance. North America Commercial produced new business of $503 million in the quarter, an increase of 21% year over year. The growth was led by retail casualty, Lexington, and retail property. International Commercial produced new business of $467 million for the quarter, representing an increase of 14% year over year.

Sabre: Global commercial grew 5% and global personal grew 9% from the prior year quarter.

Sabre: If you exclude financial lines global commercial would have grown 11%.

Sabre: In North America commercial fourth quarter net premiums written grew 5% over the prior year quarter led by retail property, which grew 32% Lexington, which grew 20%. These.

Sabre: These were offset by North America financial lines, which was lower by 13%.

Sabre: And international commercial fourth quarter net premiums written grew 6% over the prior year quarter.

Peter Zaffino: This growth was led by Global Specialty and Talbot. Moving to rates, in North America commercial, overall rates increased 4% in the fourth quarter, with exposure adding 3 points, and overall pricing was up 7%. In North America commercial, if you exclude financial lines and workers' compensation, the overall rate would have increased 11% in the quarter, and with exposure adding four points, overall pricing would have been 15%, meaningfully above the lost cost. North American commercial rate increases were driven by Lexington wholesale, which was up 17 percent, retail property, which was up 19 percent, and excess casualty, which was up 13 percent. In international commercial, overall rates increased 3% in the fourth quarter, with exposure adding two points, and overall pricing was up 5%, which is slightly below lost cost. The rate increase was driven by property, which was up 12%, and marine, which was up 8%. Turning to personal insurance, the fourth quarter net premiums rate increased 9% from the prior year quarter, primarily driven by North America. In North America Personal, net premiums written increased 37% in the quarter.

Sabre: As international property grew 28% and Talbot grew 12%.

Sabre: These were offset by international financial lines, which was lower by 7%.

Sabre: In the fourth quarter global commercial had very strong renewal retention of 86% and its enforced portfolio as well as very strong new business performance.

Sabre: North America commercial produced new business of $503 million in the quarter, an increase of 21% year over year.

Sabre: The growth was led by retail casualty Lexington and retail property.

Sabre: International commercial produced new business of $467 million for the quarter, representing an increase of 14% year over year.

Sabre: This growth was led by global specialty and Talbot.

Sabre: Moving to rate in North America commercial overall rate increased 4% in the fourth quarter with exposure, adding three points and the overall pricing was up 7%.

Sabre: In North America commercial if you exclude financial lines and workers' compensation overall rate would have increased 11% in the quarter and with exposure, adding four points overall pricing would have been 15% meaningfully above the loss cost trends.

Sabre: North America commercial rate increases were driven by Lexington, wholesale, which was up 17% retail property, which was up 19% and excess casualty, which was up 13%.

Peter Zaffino: As we've seen in prior quarters, in 2023, the significant premium growth for North America personal was driven by our high net worth business, and as we discussed in prior quarters, the growth in North America earned premium continues to generate a lower expense, and we expect the expense ratio will continue to improve in 2020. Now, let me turn to the full year financial results. 2023 was another year of meaningful strategic repositioning and was, in many ways, our best year yet. The repositioning included the disposition of Validus Re and Crop Risk Services, which generated a combined $3.5 billion of proceeds, including a pre-closed dividend. Additionally, we settled a $1 billion intercompany loan from Ballotus Re to AIG and received approximately $250 million of Renaissance Re common stock.

Sabre: And international commercial overall rate increased 3% in the fourth quarter with exposure, adding two points and the overall pricing was up 5%, which is slightly below loss cost trend.

Sabre: The rate increase was driven by property, which was up 12% and marine which was up 8%.

Sabre: Turning to personal insurance fourth quarter net premiums written increased 9% from the prior year quarter, primarily driven by North America.

Sabre: In North America personal net premiums written increased 37% in the quarter.

Sabre: As we've seen in prior quarters in 2023, the significant premium growth for North America personal was driven by our high net worth business and as we discussed in prior quarters. The growth in North America earned premium continued to generate a lower expense ratio and we expect the expense ratio will continue to improve in 2002.

Sabre: 24.

Sabre: Now, let me turn to the full year financial results 2023 was another year of meaningful strategic repositioning and was in many ways our best year yet.

Peter Zaffino: The changes to our portfolio further reduced volatility and allowed us to focus on businesses where we believe we have better opportunities for stronger risk-adjusted returns. We reshaped the reinsurance structure of our high net worth business and launched a newly formed MGA called Private Client Select. We made significant progress towards Corbridge's separation, another major strategic milestone on our journey to becoming a less complex company.

Sabre: The repositioning included the disposition of Validus re and crop risk services, which generated a combined $3 5 billion of proceeds including a pre close dividend. Additionally.

Sabre: Additionally, we settled a 1 billion intercompany loan from Validus re to AIG and received approximately $250 million of Renaissance III common stock.

Sabre: The changes to our portfolio further reduce volatility and allowed us to focus on businesses, where we believe we have better opportunities for stronger risk adjusted returns.

Peter Zaffino: We completed three secondary offerings in 2023 that generated approximately $2.9 billion in cash. We worked with Corbridge on the divestiture of Leia Healthcare and announced the sale of the UK Life business. In 2023, AIG received $1.4 billion of capital from Corbridge through $385 million of regular dividends, $688 million of special dividends, and $315 million of share repurchase. At the end of 2023, our ownership stake in Corbridge was approximately 5

Sabre: We reshaped the reinsurance structure of our high net worth business and lots of newly formed MGA called private clients select.

Sabre: We made significant progress towards corporates as separation another major strategic milestone on our journey to becoming a less complex company.

Sabre: We completed three secondary offerings in 2023 that generated approximately $2 9 billion in cash.

Sabre: We worked with corbridge on the divestiture of lay of healthcare and announced the sale of the UK life business in.

Sabre: In 2023, AIG received $1 $4 billion of capital from Corbridge through $385 million of regular dividends.

Sabre: $688 million of special dividends and $315 million of share repurchases.

Peter Zaffino: In 2023, we continue to execute on a thoughtful and balanced capital management strategy. During the year, AIG returned $4 billion of capital to shareholders through $3 billion of share repurchases and $1 billion of dividends. We reduced our common shares outstanding by 6% and increased quarterly dividends by 12.5%. On August 1st, the AIG Board of Directors increased our share buyback authorization to $7.5 billion. At the year-end 2023, we had $6.2 billion remaining on that authorization. We reduced AIG net debt by $1.4 billion in 2023 after successfully conducting a senior notes tender offer in November.

Sabre: At the end of 2023, our ownership stake in core bridge was approximately 52%.

Sabre: In 2023, we continue to execute on a thoughtful and balanced capital management strategy.

Sabre: During the year AIG returned $4 billion of capital to shareholders through $3 billion of share repurchases and $1 billion of dividends.

Sabre: We reduced our common shares outstanding by 6% and increased quarterly dividends by 12, 5%.

Sabre: On August 1st the AIG Board of directors increased our share buyback authorization of $7 5 billion.

Sabre: At the year end 2023, we had $6 $2 billion remaining on that authorization.

Sabre: We reduced aig's net debt by $1 4 billion in 2023 after successfully conducting a senior notes tender offer in November.

Peter Zaffino: We finished 2023 with very strong parent liquidity of $7.6 billion, which gives us ample capacity to continue executing on our capital management priorities. Turning to the full year results for General Insurance, throughout 2023, we delivered terrific financial performance. General Insurance's full-year underwriting income was $2.3 billion, a 15% increase year-over-year. For the full year, the general insurance accident-year combined ratio, excluding catastrophes, was 87.7%, an improvement of 100 basis points year over year. Global Commercial achieved an accident-year combined ratio, excluding catastrophes, of 83.3% for the full year, an improvement of 120 basis points year-over-year, driven by loss-ratio improvement. Excluding ballotistry and crop risk services for the full year results, the global commercial action year combined ratio, excluding catastrophes, would have increased by 50 basis points to 83.8%, and the calendar year combined ratio would have increased by slightly over For the full year, general insurance grew net premiums written by 7% year over year, driven by 5% growth in global commercial and 10% in personal insurance. North America commercial grew 5%, and international commercial grew 6% year over year. A couple of highlights.

Sabre: We finished 2023 with very strong parent liquidity of $7 6 billion.

Sabre: Which gives us ample capacity to continue executing on our capital management priorities.

Sabre: Turning to the full year results for general insurance throughout 2023, we delivered terrific financial performance.

Sabre: General insurance full year underwriting income was $2 3, billion% to 15% increase year over year.

Sabre: For the full year, the general insurance accident year combined ratio, excluding catastrophes was 87, 7% an improvement of 100 basis points year over year.

Sabre: Global commercial achieve an accident year combined ratio, excluding catastrophes of 83, 3% for the full year, an improvement of 120 basis points year over year, driven by loss ratio improvement.

Sabre: The calendar year combined ratio was 87, 1%, a 250 basis point improvement year over year.

Sabre: Excluding validus re and crop risk services for the full year results. The global commercial accident year combined ratio, excluding catastrophes would've increased by 50 basis points to 83, 8% and the calendar year combined ratio would have increased by slightly over 20 basis points to 87, 3%.

Sabre: And global personal the full year accident year combined ratio, excluding catastrophes was 99, 3% in line with the prior year.

Sabre: For the full year General insurance grew net premiums written by 7% year over year, driven by 5% growth in global commercial and 10% in personal insurance.

Sabre: North America commercial grew 5% and international commercial grew 6% year over year.

Speaker Change: A couple of highlights.

Peter Zaffino: Lexington and Global Specialty had outstanding years. We remain very focused on these businesses and have made investments to accelerate growth and continue to deliver strong underwriting profitability. Lexington grew its net premiums written by 17% year over year. Growth was driven by historically high retention, which was 80%.

Speaker Change: Lexington in global specialty had outstanding years.

Speaker Change: We remain very focused on these businesses and made investments to accelerate growth and continue to deliver strong underwriting profitability.

Sabre: Licensing grew its net premiums written by 17% year over year.

Sabre: Growth was driven by historically high retention, which was 80%.

Peter Zaffino: $1 billion of new business and rate increases of approximately 18% Global Specialty, which includes businesses in marine, energy, trade, credit, and aviation, grew its net premiums written 10% year-over-year, driven by 88% retention, almost $750 million of new business, and rate increases of 7% for the year. Also, there are two parts of our business that impacted growth and global commercial, which I would like to offer some. First, if you exclude financial lines, our net premium written growth would have been 10%. Second, as we've outlined on prior calls, we decided to non-renew two programs that had significant property catastrophe exposure that no longer met our underwriting guidelines. We did not believe that the premium increases on a risk-adjusted basis for these two programs delivered an acceptable return.

Sabre: $1 billion of new business and rate increases of approximately 18%.

Sabre: Global specialty which includes businesses in marine energy trade credit and aviation grew its net premiums written 10% year over year, driven by 88% retention almost $750 million of new business and rate increases of 7% for the year.

Sabre: Also there are two parts of our business that impacted growth in global commercial which I would like to offer some perspective.

Sabre: If you exclude financial lines, our net premiums written growth would've been 10%.

Sabre: Second as we've outlined on prior calls we decided to non renew two programs that had significant property catastrophe exposure that no longer met our underwriting guidelines.

Sabre: We do not believe that the premium increases on a risk adjusted basis for these two programs delivered an acceptable return.

Peter Zaffino: The decision to non-renew impacted the gross and net premiums written for Lexington specifically, as well as the global commercial business throughout 2020. If you exclude Financial Lines and these two programs that I just mentioned, our year-over-year net premium written growth would have been 13 percent. Which gives you a sense as to why we have significant confidence in our core portfolio, where we saw meaningful overall growth for the year. It's worth providing a little bit more detail on financial. In Financial Lines, particularly in our Public Directors and Officers Book of Business.

Sabre: The decision to non renew impacted the growth in net premiums written for Lexington, specifically as well as the global commercial business throughout 2023.

Sabre: If you exclude financial lines and these two programs that I just mentioned our year over year net premiums written growth would've been 13%.

Sabre: Which gives you a sense as to why we have significant confidence in our core portfolio, where we saw meaningful overall growth for the year.

Sabre: It's worth providing a little bit more detail on our financial lives.

Sabre: In financial lines, particularly in our public directors and officers book of business, we continue to exercise underwriting discipline by maintaining our primary position in our portfolio and being very prudent on large account excess layers, where theres significant exposure to vertical loss and these layers are highly commoditize, where typically.

Peter Zaffino: We continue to exercise underwriting discipline by maintaining our primary position in our portfolio and being very prudent on large account excess layers where there is significant exposure to vertical loss and these layers are highly commoditized, where typically the best price wins. The Compound Annual Growth Rate for financial lines achieved from 2019-2023 was 49%. If you exclude 2023, the compound annual growth rate was 63%.

Sabre: <unk> the best price wins.

Sabre: We've spoken about the cumulative rate change in financial lines before but I want to provide a little bit more detail.

Sabre: The compound annual growth rate for financial lines achieved from 2019 through 2023 with 49%.

Sabre: If you exclude 2023, the compound annual growth rate was 63%.

Peter Zaffino: It's a business we're very focused on, and our underwriters are continuing to carefully monitor market conditions and underwrite conservers. Now, I'd like to provide you with some insight into the current reinsurance market. Generally, and an overview of our January 1 reinsurance renewal. As I mentioned on previous calls, AIG's reinsurance purchasing is deliberately weighted to January 1, which enables us to strategically optimize the outcome across our reinsurance places and provides us with clarity on our cost of reinsurance at the beginning of the year. Before I go into detail on this year's results, I want to speak about how we evaluate our reinsurance. We've seen significant changes in the global property market over the last two years, and analyzing and quantifying changes in a portfolio's risk profile have become increasingly complex.

Sabre: It's a business, we're very focused on and our underwriters are continuing to carefully monitor market conditions and underwrite conservatively.

Sabre: Now I'd like to provide you with some insight into the current reinsurance market generally and an overview of our January one reinsurance renewals as I mentioned on previous calls Aig's reinsurance purchasing is deliberately weighted to January one.

Sabre: Which enables us to strategically optimize the outcome across our reinsurance placements and provides us with clarity on our cost of reinsurance at the beginning of the year.

Sabre: Before I go into detail on this year's outcomes I want to speak about how we evaluate our reinsurance purchased.

Sabre: We've seen significant changes in the global property market over the last two years and analyzing and quantifying changes in our portfolio's risk profile has become increasingly complex.

Peter Zaffino: Currently, one of the most overused phrases that have been used with more frequency in the last year is risk-adjusted pricing or risk-adjusted rates, which have multiple interpretations, particularly when it comes to property treaty reinsurance. Calculating the risk adjuster rate change can be complicated and is often inconsiderate. I want to outline how AIG determines risk-adjusted pricing, which we believe is an industry best practice. To begin, you must determine the baseline structure and all the variables required to assess and quantify the risk-adjusted pricing. To do that, the base analysis should be set at the identical structure and coverage with the exact terms and conditions of the prior year's structure. The analysis needs to compare the cost of capital year over year and any model changes from vendor model output, such as RMS, to determine if the loss costs have increased or decreased at the attachment point and the vertical limits deployed.

Sabre: Currently one of the most overused phrases that has been used with more frequency in the last year is risk adjusted pricing or risk adjusted rate changes, which have multiple interpretations, particularly when it comes to property treaty reinsurance.

Sabre: Calculating the risk adjusted rate change can be complicated and is often inconsistent want to outline how AIG determines risk adjusted pricing changes, which we believe is an industry best practice.

Sabre: To begin you must determine the baseline structure and all the variables required to assess and quantify the risk adjusted pricing change to do that the base analysis should be set at the identical structure and coverage with the exact terms and conditions of the prior year structure.

Sabre: The analysis needs to compare the cost of capital year over year, and any model changes from vendor model output such as RMS to determine if the loss costs have increased or decreased at the attachment point and the vertical limits deployed.

Sabre: Also an analysis as needed for any changes to the coverage provided in the treaty placement for instance.

Peter Zaffino: Also, an analysis is needed for any changes to the coverage provided in the treaty placement. For instance, to correctly calculate the risk adjuster rate, perils no longer covered need to be analyzed and priced separately, and the impact of any reduced coverage should be factored into the assessment of the price. This can be particularly difficult when assessing perils that would not be economically viable to place on a standalone basis with significant limits, which could include wildfire, flood, or terrorism. Furthermore, there needs to be consideration given to the volatility associated with the expected loss in calculating the risk adjuster rate. Given the complexity of these calculations, the methodologies applied should be done with consistency and discipline.

Sabre: Over the last few years, many programs have gone from an all risk coverage basis to a named or peak peril basis.

Sabre: The correctly calculate the risk adjusted rate change perils no longer cover needs to be analyzed and priced separately and the impact of any reduced coverage should be factored into the assessment of the price change.

Sabre: This can be particularly difficult when assessing perils that would not be economically viable to place on a standalone basis with significant limits, which could include wildfire flood or terrorism.

Sabre: It needs to be consideration given to the volatility associated with the expected loss in calculating the risk adjusted rate change.

Sabre: Given the complexity of these calculations the methodologies applied should be done with consistency and discipline.

Peter Zaffino: When applying the methodology I just described, AIG had a tremendous outcome with our reinsurance partners at the January 1 renewal, building upon the very strong result achieved in a very challenging market in 2020. Now, let me turn to AIG's reinsurance renewals on January 1 of this year. At the level set, the natural catastrophe insured loss activity remained at the forefront of the market with a record setting 37 events in 2023 that exceeded a billion dollars of insured loss. These events contributed to a total annual insured loss currently estimated at over $100 billion, marking the sixth time in the past seven years that insured losses from natural catastrophes have exceeded $100 billion. Moreover, over the last seven years, there's been nearly one trillion in aggregate losses, with over 60% driven by secondary peril.

Sabre: When applying the methodology I just described AIG had a tremendous outcome with our reinsurance partners at the January one renewal season building. Upon the very strong result achieved in a very challenging market in 2023.

Sabre: Now, let me turn to Aig's reinsurance renewals at January one of this year.

Sabre: To level set the natural catastrophe insured loss activity remained at the forefront of the market with a record setting 37 events in 2023 that exceed $1 billion of insured loss.

Sabre: These events contributed to a total annual insured loss currently estimated at over 100 billion.

Sabre: Marking the sixth time in the past seven years that insured loss from natural catastrophes has exceeded 100 billion.

Sabre: Over the last seven years Theres been nearly one trillion of aggregate losses with over 60% driven by secondary perils.

Peter Zaffino: The headline is that we were able to significantly improve our property tax structure and the reinsurance coverage provided. When you review what we purchased last year, including for Validus Re, the overall spend has been reduced by approximately $200 million, and our core property treaties, excluding Validus Re, have a slightly lower seeded premium year over year. Let's start with a property catastrophe place.

Sabre: The headline is that we were able to significantly improve our property cat structured reinsurance coverage provided.

Sabre: When you review, what we purchased last year, including for Validus re the overall spend has reduced by approximately $200 million.

Sabre: And our core property treaties, excluding validus re have slightly lower ceded premium year over year.

Sabre: Let's start with our property catastrophe placements, our core commercial North America retention of $500 million remain unchanged for the second straight year.

Peter Zaffino: Our core commercial North America retention of 500 million dollars remained unchanged for the second straight year. The attachment on our dedicated Lexington Occurrence Tower was unchanged at $300 million. In both cases, the model detachment point is lower, and the exhaust limit is higher.

Sabre: The attachment on our dedicated Lexington occurrence tower was unchanged at $300 million.

Sabre: In both cases the model the attachment point is lower in the exhaust limit is higher.

Peter Zaffino: Our international property per current structure is renewed with a reduced retention in Japan to $150 million, a $50 million improvement from the prior year. The rest of the world attachment remains unchanged at 125 million. We were very pleased to have achieved broader coverage across all of our core occurrence towers, with nominal attachment points unchanged, or, in the case of Japan, decreased. The model probability of attaching our CAT reinsurance improved with respect to key perils and across every major territory following the growth achieved in the property portfolio in 2020. Our property cap aggregate cover was also successfully renewed with improved coverage, further reducing our volatility from frequency of loss. The aggregate now includes a stand-alone sublimit dedicated to losses in North America arising from secondary perils.

Sabre: Our international property per current structures renewed with a reduced retention in Japan to a $150 million $50 million improvement from the prior year.

Sabre: The rest of the world attachment remains unchanged at $125 million.

Sabre: We were very pleased to have achieved broader coverage across all of our core occurrence towers.

Sabre: With nominal attachment points unchanged or in the case of Japan, decreasing the modeled probability of attaching our cat reinsurance improved with respect to key perils and across every major territory. Following the growth achieved in the property portfolio in 2023.

Sabre: Our property Cat aggregate cover was also successfully renewed with improved coverage further reducing our volatility from frequency of loss.

Sabre: The aggregate now includes a standalone supplement dedicated to losses in North America arising from secondary perils.

Peter Zaffino: Importantly, it also now covers contributing losses from our high net worth portfolio. Our annual aggregate deductible for North America is $825 million. The North America other perils deductible is $350 million, which is a new deductible, and Japan and the rest of the world deductibles are $200 million and $175 million, respectively. These are subject to each and every loss deductible of $20 million, other than for North America wind and earthquake, which are at $50 million. Our return period attachment point is lower year over year.

Sabre: Importantly, it also now covers contributing losses from our high net worth portfolio.

Sabre: Our annual aggregate deductible for North America $825 million, the North America, other perils deductibles $350 million.

Sabre: Which is a new deductible in Japan, and the rest of the world. The Doctor was our $200 million and $175 million respectively.

Sabre: These are subject to each and every loss deductibles are $20 million other than for North America wind and earthquake, which were up $50 million.

Sabre: A return period attachment point is lower year over year.

Peter Zaffino: For all of our major proportional treaties across a range of classes, we improved or maintained our seating commission levels, reflecting our market-leading, underwriting expertise, and position in the market. Turning to casualty, the challenges we've spoken about previously regarding the impact of inflation. Both social and economic development and litigation funding in the U.S. were a focal point for reinsurers at 1-1. For casualty at AIG, we remain very focused on our underwriting standards and the positioning of the portfolio. Our team has done a terrific job of re-underwriting the entire business, particularly considering the amount of work that was needed to reposition it to where it is today. Additionally, our pricing assumptions today have lost trends ranging from the high single digits to over 10%. These have been increased over the past two years given inflationary dynamics.

Sabre: For all of our major proportional treaties across a range of classes, we improved or maintained our ceding commission levels.

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Sabre: Turning to the casualty the challenges we've spoken about previously regarding the impact of inflation.

Sabre: The social and economic and litigation funding in the U S, where our focal point for reinsurers at one one.

Sabre: For casualty at AIG, we remain very focused on our underwriting standards and the positioning of the portfolio.

Sabre: Our team has done a terrific job of re underwriting the entire business, particularly considering the amount of work that was needed to reposition it to where it is today.

Sabre: Additionally, our pricing assumptions today have loss trends ranging from the high single digits to over 10%.

Sabre: These were increase over the past two years given inflationary dynamics.