Q1 2025 American International Group Inc Earnings Call

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Operator: Good day and welcome to AIG's first quarter 2025 financial results conference. This conference is being recorded.

Good day and welcome to Aig's first quarter 2025 financial results Conference call. This conference is being recorded.

Quentin Mcmillan: Now at this time, I would like to turn the conference over to Quentin McMillan, please go ahead. Thanks very much and good morning. Today's marks 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. 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.

Speaker Change: Now at this time I would like to turn the conference over to Quentin Mcmillan. Please go ahead.

Speaker Change: 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 Afg's filings with the SEC provide details on important factors that could cause actual results or events to differ materially except as required by applicable securities laws.

Speaker Change: AIG is under no obligation to update any forward looking statements, if circumstances or management's estimates or opinions should change.

Quentin Mcmillan: 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.

Speaker 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 Dot com.

Quentin Mcmillan: Following the deconsolidation of Corbridge Financial on June 9, 2024, the historical results of Corbridge for all periods presented are reflected in AIG's consolidated financial statements as discontinued operations in accordance with U.S. GAAP.

Speaker Change: Following the deconsolidation of corporate financial on June 19, 2024, the historical results of Corbridge for all periods presented are reflected in Aig's consolidated financial statements as discontinued operations in accordance with U S. GAAP.

Quentin Mcmillan: Finally, today's remarks related to net premiums written and net premiums earned are presented on a comparable basis, which reflects year over year comparison on a constant dollar basis, and adjusted for the sale of the global personal travel and assistance business as We believe this presentation provides the most useful view of our results and the go forward business in light of the substantial changes to the portfolio since 2023. Please refer to pages 26 of the earnings presentation for reconciliations of such metrics on a comparable basis.

Speaker Change: Finally, today's remarks related to net premiums written and net premiums earned are presented on a comparable basis, which reflects year over year comparison on a constant dollar basis and adjusted for the sale of the global personal travel and assistance business as applicable.

Speaker Change: We believe this presentation provides the most useful view of our results and the go forward business in light of the substantial changes to the portfolio. Since 2023. Please refer to pages 26 of the earnings presentation for reconciliation of such metrics on a comparable basis with that I'd now like to turn the call over to our chairman and CEO Peter Zaffino.

Peter Zaffino: With that, I'd now like to turn the call over to our chairman and CEO, Peter Zaffino. Good morning, and thank you for joining us today to review our first quarter 2025 financial AIG's overall performance in the quarter was exceptional, and we continue to make significant progress on our strategic, operational, and financial objectives. We had a very busy start to the year. And while it's hard to believe, just 30 days ago, we hosted our invest. We're incredibly grateful for the positive engagement. Thank you for your support from our colleagues and many stakeholders and appreciated the opportunity to share our journey with the world.

Peter Zaffino: Good morning, and thank you for joining us today to review, our first quarter 2025 financial results.

Peter Zaffino: Aig's overall performance in the quarter was exceptional and we continued to make significant progress on our strategic operational and financial objectives.

Peter Zaffino: We had a very busy start to the year and while it's hard to believe just 30 days ago, we hosted our Investor day.

Peter Zaffino: We are incredibly grateful for the positive engagement and support from our colleagues at many stakeholders and appreciated the opportunity to share our journey with them.

Peter Zaffino: For my prepared remarks, I will start with an overview of our investor day, including what we intend to achieve, some observations from the meeting, and what we've learned so far. Second, I will highlight our first quarter financial results.

Peter Zaffino: For my prepared remarks.

Peter Zaffino: I will start with an overview of our Investor day, including what we intended to achieve some observations from the meeting and what we've learned.

Peter Zaffino: Second I will highlight our first quarter financial results.

Peter Zaffino: Third, I want to provide a spotlight on our business strategy and long term view of India, a business that we briefly touched on at our Fourth, given the widespread interest, I will offer a few observations on the impact of tariff.

Peter Zaffino: Third I wanted to provide a spotlight on our business strategy and long term view of India, a business that we briefly touched on at our Investor day.

Peter Zaffino: Fourth given the widespread interest I will offer a few observations on the impact of tariffs.

Peter Zaffino: And last, I'll provide an update on our progress toward our financial targets that we outlined at our Keith will then provide more detail on our financial results.

Peter Zaffino: And last I'll provide an update on our progress towards our financial targets that we outlined at our Investor day.

Peter Zaffino: Keith will then provide more detail on our financial results and Don Bailey and John Hancock will join us for the Q&A portion of the call.

Peter Zaffino: And Don Bailey and Jon Hancock will join us for the Q&A portion.

Peter Zaffino: Beginning with Invest. Our objective was to demonstrate the incredible progress the company's made over the last seven and why we believe we're so well positioned. We shared how we establish an underwriting culture of Substantially Reduced Underwriting Exposure. Controlled Volatility Structure of the Company for the Future, Refreshed Our Purpose and Values, Developed a World-Class End-to-End Operating Structure. Digitize end-to-end process. Developed a robust data hierarchy. and retired over 1200 applications while migrating to the We discussed how we created a lean parent company and strengthen our balance sheet while executing a discipline capital management strategy. which will enable AIG to have maximum strategic and financial flexibility.

Peter Zaffino: Beginning with Investor day.

Peter Zaffino: Our objective was to demonstrate the incredible progress the company's made over the last seven years and why we believe we're so well positioned for the future.

Peter Zaffino: We shared how we establish an underwriting culture of excellence substantially reduced underwriting exposure control volatility structure of the company for the future refreshed our purpose and values.

Peter Zaffino: A world class end to end operating structure.

Peter Zaffino: Digitize end to end processes.

Peter Zaffino: Developed a robust data hierarchy.

Peter Zaffino: And retired over 1200 applications, while migrating to the cloud.

Peter Zaffino: We discussed how we created a lean parent company and strengthen our balance sheet, while executing a disciplined capital management strategy, which will enable AIG to have maximum strategic and financial flexibility for the future.

Peter Zaffino: We provide a detail on our strategy to deploy GenAI end-to-end, and to demonstrate how the advancement in adoption is making a difference across our business to drive future growth.

Peter Zaffino: We.

Peter Zaffino: A detail on our strategy to deploy Gen AI end to end and to demonstrate how the advancement and adoption is making a difference across our business to drive future growth and that was on full display.

Peter Zaffino: And that was on Fold2Search. I'm very grateful to our world-class partners, Alex Karp of Palantir, and Dario Amadei of Anthropic, for joining Sarah Eisen and me on stage to showcase and Validate Our Strategy. And while they are very entertaining guests and have better things to do with their time than show up at AIG's investigations, they are also a great source of information for They felt compelled to speak to our stakeholders about how they fully endorse AIG's strategy.

Peter Zaffino: I'm very grateful to our World Class partners, Alex Karp, Appellants here and Dario armour, Dave Anthropic for joining Sarah is in me on stage to showcase and validate our strategy.

Peter Zaffino: And while they are very entertaining guests and have better things to do with their time and show up at Aig's Investor day. They.

Peter Zaffino: They felt compelled to speak to our stakeholders about how they fully endorse aig's strategy.

Peter Zaffino: It was a very important moment for our country. We demonstrated the breadth and depth of our global portfolio with $24 billion of net premiums written. which enables us to leverage both our diverse geographic footprint and strong product offerings to solve our clients risk. We highlighted what a thoughtful and carefully planned re-insurance strategy can do for a company over time. Showcasing key structures of our portfolio and providing an introduction to our special purpose vehicle backed by black which is an important part of our strategic evolution.

Peter Zaffino: It was a very important moment for our company.

Peter Zaffino: We demonstrated the breadth and depth of our global portfolio with 24 billion of net premiums written.

Peter Zaffino: Which enables us to leverage both our diverse geographic footprint and strong product offerings to solve our clients' risk needs.

Peter Zaffino: We highlighted what a thoughtful and carefully planned reinsurance strategy can do for our company over time.

Peter Zaffino: Okay. Some key structures of our portfolio and providing an introduction to our special purpose vehicle backed by Blackstone.

Peter Zaffino: Which is an important part of our strategic evolution.

Peter Zaffino: Our stakeholders came away from the event with a much clearer understanding of our strategic direction. Deep expertise within our company. Our differentiated approach to Gen AI and our ambitious yet achievable financial targets and global growth opportunities. Inside the company, there's a sense of confidence and pride.

Peter Zaffino: Our stakeholders came away from the event with a much clear understanding of our strategic direction.

Peter Zaffino: The deep expertise within our company.

Peter Zaffino: Our differentiated approach to Gen AI, and our ambitious yet achievable financial targets and global growth opportunities.

Peter Zaffino: Inside the company there is a sense of confidence and pride.

Peter Zaffino: Our investor day gave our colleagues the opportunity to see their hard work recognized in an impactful way. which has generated energy and engagement across the organization. and we're excited to take this momentum forward.

Peter Zaffino: Our Investor Day gave our colleagues the opportunity to see their hard work recognized in an impactful way, which has generated energy and engagement across the organization and we're excited to take this momentum forward.

Peter Zaffino: If I had to choose just one key takeaway from our investor It is that AIG is, in every way, a different company. Turning to our financial results against a challenging geopolitical and macroeconomic environment, we made excellent progress towards our long-term strategic and financial goals while delivering exceptional underwriting results, effectively managed volatility, while reducing In the first quarter, adjusted after tax income was $702 million, or $1.17 per diluted Building on our momentum. We had another quarter of strong premium growth. Net premiums written were $4.5 billion, an increase of 8% year-over-year on a comparable basis. led by 10% growth in global commercial.

Peter Zaffino: If I had to choose just one key takeaway from our Investor day.

Peter Zaffino: It is that AIG is in every way a different company.

Peter Zaffino: Turning to our financial results against the challenging geopolitical and macroeconomic environment, we made excellent progress towards our long term strategic and financial goals, while delivering exceptional underwriting results effectively manage volatility while reducing expenses.

Peter Zaffino: In the first quarter adjusted after tax income was $702 million or $1 17 per diluted share.

Peter Zaffino: Building on our momentum.

Peter Zaffino: We had another quarter of strong premium growth.

Peter Zaffino: Net premiums written were $4 5 billion, an increase of 8% year over year on a comparable basis led.

Peter Zaffino: Led by 10% growth in global commercial.

Peter Zaffino: North America commercial insurance net premiums written group 14% year over year. Lexington grew 23% led by Lexington casualty which grew 27%. It's worth noting that Lexington submission growth continued in the first quarter, increasing 30% year over year. And that is following an increase of over 50% in the first quarter of 2024, when compared to 2020.

North America commercial insurance net premiums written grew 14% year over year Lexington grew 23% led by Lexington, casualty, which grew 27%.

Peter Zaffino: It's worth noting that Lexington submission growth continued in the first quarter, increasing 30% year over year.

Peter Zaffino: And that is following an increase of over 50% in the first quarter of 2024, when compared to 2023 simply an outstanding result.

Peter Zaffino: Simply an Outstanding Result. This increase in submission activity was primarily driven by middle market casualty and property which together represents two-thirds of the total submission. Glass Filter contributed 16% growth and retail property grew over 40%, almost entirely driven by the significant enhancements to our region. International commercial insurance net premiums written grew 8% year over year on an FX adjusted Driven by Property at 35% largely as a result of enhanced reinsurance structure.

Peter Zaffino: This increase in submission activity was primarily driven by middle market casualty and property, which together represents two thirds of the total submissions received.

Peter Zaffino: Glatfelter contributed 16% growth and retail property grew over 40% almost entirely driven by the significant enhancements to our reinsurance structures.

Peter Zaffino: International commercial insurance net premiums written grew 8% year over year on an FX adjusted basis, driven by property at 35%.

Peter Zaffino: Largely as a result of enhanced reinsurance structures.

Peter Zaffino: and Maureen grew at an impressive 17. Turning to expenses, our general insurance expense ratio decreased to 30.5% in the first quarter compared to 31.8% in the prior year. The divestiture of our travel business was the largest contributor to this improvement. Accounting for 110. The remaining 20 basis points of improvement came from AIG Next. This is very impressive when you consider that general insurance absorbs 78 million dollars of additional expenses. that were booked in other operations in 2020. Other operations general operating expenses were $85 million. The Accident Year Combined Ratio as Adjusted. 87.8. The best first quarter result for AIG since the financial The prior year quarter was 88.4%.

Peter Zaffino: And marine grew at an impressive 17%.

Peter Zaffino: Turning to expenses, our general insurance expense ratio decreased to 35% in the first quarter compared to 31, 8% in the prior year quarter.

Peter Zaffino: The divestiture of our travel business was the largest contributor to this improvement accounting for 110 basis points.

Peter Zaffino: The remaining 20 basis points of improvement came from AIG next initiatives.

Peter Zaffino: This is very impressive when you consider that general insurance absorbs $78 million of additional expenses that were booked in other operations in 2024.

Peter Zaffino: Other operations General operating expenses were $85 million in the quarter.

Peter Zaffino: The accident year combined ratio as adjusted was <unk> 87, 8%. The best first quarter result for AIG since the financial crisis.

Peter Zaffino: The prior year quarter was 88, 4%.

Peter Zaffino: The calendar year combined ratio is 95.8%. which included $520 million in catastrophe losses driven by the California wildfire. came in at 460. The combined ratio represented a 9.1 loss ratio. and is a testament to our strategy for managing biology. While industry losses from natural catastrophes are the second highest for the first quarter of the year on record. We expect our net retained catastrophe losses to be within expectations for 2025, largely based on our If you apply our current loss projections for the wildfire catastrophe to our aggregate We will have approximately $35 million net of annual aggregate deductible remaining for all other perils in North America, excluding wind.

Peter Zaffino: The calendar year combined ratio was 95, 8% for the quarter, which included $520 million in catastrophe losses, driven by the California wildfires.

Peter Zaffino: Which came in at $460 million.

Peter Zaffino: The combined ratio represented $9, one loss ratio points and is a testament to our strategy for managing volatility.

Peter Zaffino: While industry losses from natural catastrophes are the second highest for the first quarter of the year on record.

Peter Zaffino: We expect our net retained catastrophe losses to be within expectations for 2025, largely based on our reinsurance structures.

Peter Zaffino: If you apply our current loss projections for the wildfire catastrophe to our aggregate cover.

Peter Zaffino: We will have approximately $35 million net of annual aggregate deductible remaining for all other perils in North America, excluding wind and earthquake.

Peter Zaffino: and approximately $385 million net left for all. both subject to a $50 million each and every loss deductible for the rest of this calendar. We also continue to have significant property catastrophe occurrence limit available. Overall, the market remained favorable in the first quarter, particularly in segments with very good underlying fundamentals.

Peter Zaffino: And approximately $385 million net left for all perils.

Peter Zaffino: Subject to a $50 million each and every loss deductible for the rest of this calendar year.

Peter Zaffino: We also continue to have significant property catastrophe occurrence limit available.

Peter Zaffino: Overall, the market remained favorable in the first quarter, particularly in segments with very good underlying fundamentals.

Peter Zaffino: Keith is going to cover rate in more detail in his remarks, but I wanted to provide some For North America, the rate increases in the quarter were led by excess casualty at In the last five calendar years, excess casualty has had double-digit rate increases each year. cumulative rate above loss. Gladfelter had a 6% rating. These increases were offset by financial lines, which decreased 5%. Retail property which decreased 7% and Lexington property which decreased 10%. In financial lines, we have the benefit of a highly diversified business by product and This enables us to position the portfolio for the best risk-adjusted returns, even in a competitive market.

Speaker Change: Keith is going to cover rate in more detail in his remarks, but I wanted to provide some perspective.

Speaker Change: For North America, the rate increased in the quarter were led by excess casualty at 16%.

Speaker Change: And the last five calendar years excess casualty has had double digit rate increases each year with.

Speaker Change: With cumulative rate above loss trend.

Speaker Change: Gladfelter had a 6% rate increase.

Speaker Change: These increases were offset by financial lines, which decreased 5%.

Speaker Change: Retail property, which decreased 7% and Lexington property, which decreased 10%.

Speaker Change: In financial lines, we had the benefit of a highly diversified business byproduct and segment.

Speaker Change: This enables us to position the portfolio for the best risk adjusted returns even in a competitive market.

Peter Zaffino: To further outline, we have meaningfully reduced our excess capacity, where pricing is increasingly commoditized. We're focused on our primary business, where we have a differentiated offering and a leadership.

Speaker Change: To further outline we have meaningfully reduced our excess capacity where pricing is increasingly commoditized.

Speaker Change: We're focused on our primary business, where we have a differentiated offering and a leadership position.

Peter Zaffino: Our financialized portfolio has gone from representing 30% of North America commercial net premiums written in 2021 to representing 19% of the portfolio.

Speaker Change: Our financial lines portfolio has gone from representing 30% of North America commercial net premiums written in 2021, representing 19% of the portfolio today.

Speaker Change: Okay.

Peter Zaffino: Next, let me give some context on property. Over the past five years, we have had cumulative rate increases of 113% in retail property and 96% in wholesale. Pricing continues to be above our technical view.

Speaker Change: Next let me give some context on property right.

Speaker Change: Over the past five years, we have had cumulative rate increases of 113% and retail property and 96% and wholesale property.

Speaker Change: Pricing continues to be above our technical view.

Peter Zaffino: Nonetheless, we continue to be very disciplined and will monitor market conditions throughout the year.

Speaker Change: Nonetheless, we continue to be very disciplined and we will monitor market conditions throughout the year.

Peter Zaffino: Thank you.

Peter Zaffino: In international, the environment was more balanced. casually had a 7% rating. Property had a 2% rating. Offset by global specialty in Talbot, which decreased 1% and 4% respectively. and Financial Lines, which decreased. And please recall that we report rate on gross premiums written. because many of our lines are heavily impacted by reinsurance in the first quarter. There's not a direct correlation to net premium. which are lower in certain. such as our Global Specialists.

Speaker Change: In international the environment was more balanced.

Speaker Change: Casualty had a 7% rate increase property had a 2% rate increase offset by global specialty in Talbot, which decreased 1% and 4%, respectively and financial lines, which decreased by 3%.

Speaker Change: And please recall that we report rate on gross premiums written.

Speaker Change: And because many of our lines are heavily impacted by reinsurance in the first quarter.

Speaker Change: Theres not a direct correlation to net premiums written.

Speaker Change: Which are lower in certain businesses.

Speaker Change: Such as our global specialty business.

Peter Zaffino: Turning to capital management, we returned $2.5 billion of capital to shareholders in the first quarter. This included $2.2 billion of share repurchases and $234 million of dividends. We ended the quarter with a debt to total capital ratio of 17.1% and parent liquidity of $4.9 billion. As I announced on Investor Day, as of April 1, the AIG Board of Directors increased our share repurchase authorization to $7.5 billion, inclusive of the outstanding authorization amount, of which approximately $7.1 billion remains available. Additionally, the board approved a 12.5% increase in our quarterly dividend of 45 cents per share. Yes, We expect to repurchase a total of $5 to $6 billion of shares in 2025.

Turning to capital management, we returned $2 5 billion of capital to shareholders in the first quarter. This included $2 2 billion of share repurchases and $234 million of dividends.

Speaker Change: We ended the quarter with a debt to total capital ratio of 17, 1% and parent liquidity of $4 9 billion.

Speaker Change: As I announced on Investor day as of April one the AIG Board of directors increased our share repurchase authorization to $7 5 billion inclusive.

Speaker Change: Of the outstanding authorization amount of which approximately $7 1 billion remains available. Additionally, the board approved a 12, 5% increase in our quarterly dividend of <unk> 45 per share yesterday.

Speaker Change: We expect to repurchase totaled $5 to $6 billion of shares in 2025.

Peter Zaffino: Subject to share price and market conditions.

Speaker Change: Subject to share price and market conditions, which should bring us to a range of 500 to 550 million shares outstanding over time.

Peter Zaffino: This should bring us to a range of 500 to 550 million shares outstanding over Now I'd like to transition to discuss one of our strategic partners.

Speaker Change: Now I'd like to transition to discuss one of our strategic partnerships.

Peter Zaffino: Well, we covered a lot of content on investment.

Speaker Change: While we covered a lot of content on Investor day.

Peter Zaffino: One part of our business that we did not address in any detail is Tata. With this in mind, I'd like to share some observations on the rapidly growing market in and insights about our joint venture with the top. India as a country has made remarkable progress over the last Over that time, the economy has grown from the 10th largest to the 5th largest economy in the world and is likely to become the third largest economy after the United States and China by 2030. Real GDP is estimated to grow approximately 7% over the next two years, with nominal GDP growing nearly two times Changing demographics in India are well known, but worth highlighting.

Speaker Change: One part of our business that we did not address in any detail as Tata AIG.

Speaker Change: With this in mind I'd like to share some observations on the rapidly growing market in India.

Speaker Change: And insights about our joint venture with the Tata Group.

Speaker Change: India as a country has made remarkable progress over the last decade.

Speaker Change: Over that time, the economy has grown from the 10th largest to the fifth largest economy in the world and is likely to become the third largest economy after the United States and China by 2030.

Speaker Change: Real GDP is estimated to grow approximately 7% over the next two years with nominal GDP growing nearly two times higher.

Speaker Change: The changing demographics in India are well known but worth highlighting.

Peter Zaffino: In a country of nearly 1.5 billion Half of the population is below the age of 30. The middle class is projected to more than double by 2030. Some of the fastest growth happening in tier three and tier four. Pivoting to the insurance industry, the general insurance market in is over $35 billion in growth premiums written as of 2023 and had a compound annual growth rate of around 11% over the last five. We expect the market. Sustain this type of growth through 2030. And there's a massive opportunity for growth given the changing dynamics. In India, non-life insurance penetration is still relatively low at 1% of...

Speaker Change: Country of nearly $1 5 billion people half of the population is below the age of 30.

Speaker Change: The middle class is projected to more than double by 2030.

Speaker Change: With some of the fastest growth happening in tier three and tier four cities.

Speaker Change: Pivoting to the insurance industry, the general insurance market in India has over $35 billion in gross premiums written as of 2023 and had a compound annual growth rate of around 11% over the last five years.

Speaker Change: We expect the market will sustain this type of growth through 2030.

Speaker Change: And there is a massive opportunity for growth given the changing dynamics in India non life insurance penetration is still relatively low at 1% of GDP and contrast, United States is at 9% of GDP.

Peter Zaffino: Contrast, United States is at nine.

Peter Zaffino: Our presence in India began 25 years ago when we partnered with Tata Group to establish a joint venture, Tata AI. The India insurance market opened to private insurance companies and direct foreign investment in 2000. At the time, the maximum allowable foreign investment was 26%. is what we currently hold. Prior to 2000, India's insurance market was dominated by public sector insurance. which had a hundred percent mark. Opening up the market to private insurance and foreign direct investment dramatically shifted India's insurance Today, private sector insurance companies represent 60% of the non-live market.

Speaker Change: Our presence in India began 25 years ago, when we partner with Tata group to establish a joint venture Tata AIG.

Speaker Change: The India insurance market open to private insurance companies and direct foreign investment in 2000.

Speaker Change: At the time, the maximum allowable foreign investment was 26%, which is what we currently hold today.

Speaker Change: Prior to 2000, India's insurance market was dominated by public sector insurance companies, which had 100% market share.

Speaker Change: Opening up the market to private insurance and foreign direct investment dramatically shifted India's insurance landscape today private sector insurance companies represent 60%.

Speaker Change: Of the non life market.

Peter Zaffino: While India offers tremendous opportunity Complex and Highly Competitive Market. foreign companies, it's important to choose the right partner. Accompanied with deep and broad knowledge of India and one with a strong For AIG, there's no better choice than Tata Group, one of the highest quality global Tata Group operates 30 companies in over 100 countries across diverse Twenty-six publicly listed enterprises have a combined market cap of $365 billion with over one million employees. Over the last decade, Tata Group has been consistently ranked as one of India's most valuable Tata AIG is highly respected and is ranked as the number two private insurer in the commercial insurance and motor insurance serves 27 million customers.

Speaker Change: While India offers tremendous opportunity, it's a complex and highly competitive market for foreign companies, it's important to choose the right partner.

A company with deep and broad knowledge of India, and one with a strong reputation.

Speaker Change: For AIG Theres, no better choice than Tata group, one of the highest quality global companies.

Speaker Change: Tata Group operates 30 companies in over 100 countries across diverse industries is 26 publicly listed enterprises have a combined market cap of 365 billion with over 1 million employees.

Speaker Change: Over the last decade, Tata group has been consistently ranked as one of India's most valuable brands.

Speaker Change: Tata AIG is highly respected and is ranked as the number two private insurer in the commercial insurance and motor insurance sectors.

Speaker Change: It serves 27 million customers with 8500 employees and Leverages 85000 captive agents operating across the country.

Peter Zaffino: 8500 employees and leverages 85,000 cap Operating across Tata AIG had $2.1 billion of gross premiums written in 2024, and it's mix of business is approximately 75% personal insurance and 25% commercial. Tata AIG is a high growth business. 2020 to 2025, we had a compound annual growth rate of 20% outpace in the market. Through 2030, we expect to continue to grow at the same compound annual growth rate fueled by India's accelerating economy, rising insurance adoption, and Tata AIG's market leading brand and The business has exceptional technology and data capabilities that enabled it to scale rapidly and support the continued ambition for accelerated growth.

Speaker Change: Tata AIG had $2 1 billion of gross premiums written in 2024 and its mix of business is approximately 75% personal insurance and 25% commercial insurance.

Speaker Change: AIG is a high growth business from.

Speaker Change: From 2020 to 2025.

Speaker Change: We had a compound annual growth rate of 20% outpacing the market.

Speaker Change: Through 2030, we expect to continue to grow at the same compound annual growth rate fueled by India is accelerating economy, rising insurance adoption and Tata Aig's market, leading brand and reputation.

Speaker Change: The business has exceptional technology and data capabilities that enabled it to scale rapidly and support the continued ambition for accelerated growth.

Peter Zaffino: Tata AIG's products and services are digital first. Client and agents enabled by technology at every stage of the value chain, providing a Digital Customer Experience. This is what clients in India expect. Additionally, Tata AIG benefits from access to AIG's multinational network. with AIG Supporting the Joint Ventures Domestic Multinational Corporation. Close partnership with Tata Group. We're prepared to significantly invest in growth organically and possibly inorganically should opportunities present. And I expect this business to continue to scale faster than any other geography in our portfolio.

Speaker Change: Tata Aig's products and services, our digital first with.

Speaker Change: With clients and agents enabled by technology at every stage of the value chain.

Speaker Change: Regarding a complete digital customer experience, which is what clients in India expect.

Speaker Change: Additionally, Tata AIG benefits from access to Aig's multinational network with AIG supporting the joint venture's domestic multinational corporate clients.

Speaker Change: In close partnership with Tata Group, we're prepared to significantly invest in growth organically and possibly inorganically should opportunities present themselves and I expect this business to continue to scale faster than any other geography in our portfolio.

Peter Zaffino: There's been a lot of discussion about tariffs, and I'd like to share a perspective, understanding that there is still significant uncertainty. around the top.

There's been a lot of discussion about tariffs and I would like to share perspective understanding that there is still significant uncertainty.

Speaker Change: Around the topic of tariffs.

Peter Zaffino: start, let me provide some relevant facts. First, there are only seven countries worldwide that export more than $100 billion to the United China, Canada and Mexico are the only countries that export over 250,000 pounds of food a year. When looking at a country's level of exports to the United States as a percentage of their total. Mexico 79. Canada's 74. and China is less than 20.

Speaker Change: To start let me provide some relevant facts first there are only seven countries worldwide that export more than $100 billion of the United States and China, Canada, and Mexico are the only countries that export over $250 billion.

Speaker Change: When looking at our country's level of exports to the United States as a percentage of their total exports, Mexico was 79%, Canada, 74% and China is less than 20%.

Peter Zaffino: All together, tariffs create uncertainty, which may lead to lower levels of transactional activity in the near term, impacting certain commercial business. But it's premature to predict any specific outcomes related to these emerging macro The greatest challenge for companies is understanding the real impact. There's a complexity not only with tariff policies evolving, but also with the potential impact on supply chain. It's also important to consider the implications to lost costs and inflation.

Speaker Change: Altogether tariffs create uncertainty, which may lead to lower levels of transactional activity in the near term impacting certain commercial businesses, but it's premature to predict any specific outcomes related to these emerging macro trends.

Speaker Change: The greatest challenge for companies is understanding the real impact of tariffs and how they are changing and their implications.

Speaker Change: There is a complexity not only with tariff policies evolving, but also with the potential impact on supply chains.

Speaker Change: It's also important to consider the implications to loss costs and inflation.

Peter Zaffino: To help parse through this complexity, let me share a proposal. Typically in a high net worth And of course, it's subject to the particular type Approximately 60% of the loss would be for rebuilding. 30% for content. 10% or thereabouts for allocated loss. When considering materials such as lumber, floor coverings, windows, steel, marble, or granite. need to take into account increased inflation. Then you should consider which of these items are imported. For example, Canada represents roughly 85% of all U. S. softwood lumber.

Speaker Change: To help parse through this complexity, let me share a property example, typically.

Speaker Change: Typically in our high net worth claim and of course, it's subject to the particular type of loss approximately 60% of the loss would be for rebuilding costs.

Speaker Change: 30% for contents.

Speaker Change: 10% or thereabouts for allocated loss adjustment expense.

Speaker Change: When considering materials, such as lumber floor coverings windows steel Barbara or granted.

Speaker Change: You need to take into account increased inflation rates.

Speaker Change: Then you should consider which of these items are imported for example, Canada represents roughly 85% of all U S softwood lumber imports.

Peter Zaffino: This added dimension further The Calculation of Future Loss. Additionally, if there's another major catastrophe in 2025, beyond the January wildfire... We can see demand surge. may also lead to extended business interruption. Lastly, insurance companies need to monitor the effects of sales, payroll and other factors. Calculate the potential impact on future premiums. We will continue to monitor the implications for our business as more information becomes available.

Speaker Change: This added dimension further complicates the calculation of future loss costs.

Speaker Change: Additionally, if there's another major catastrophe in 2020 Fi beyond the January wildfires, we could see demand surge.

Speaker Change: Supply constraints and further inflation, which may also lead to extended business interruption.

Speaker Change: Lastly, insurance companies need to monitor the effects of sales payroll and other factors to calculate the potential impact on future premiums if any.

Speaker Change: We will continue to monitor the implications for our business as more information becomes available.

Peter Zaffino: Before I close, I want to touch on the financial targets that we announced on... These are multi-year goals, so I'm not going to give updates every quarter, but I did want to provide some Operating EPS is on track. Key Drivers for Earnings Growth Remain Favorable. We produce strong top-line growth and manage volatility in a very heavy catastrophe quarter. We are on our way to fully replacing Corbridge earnings by 2026, and we expect to achieve a 20% plus earnings per share compound annual growth rate over the next We continue to make progress towards our goal of achieving 10-13% core operating ROE.

Speaker Change: Before I close I want to touch on the financial targets that we announced on Investor day.

Speaker Change: These are multi year goals, so I'm not going to give updates every quarter, but I did want to provide some insight.

Speaker Change: Operating EPS is on track.

Speaker Change: And the key drivers for earnings growth remained favorable.

Speaker Change: We produced strong top line growth and manage volatility and a very heavy catastrophe quarter.

Speaker Change: We are on our way to fully replace and corporate earnings by 2026, and we expect to achieve a 20% plus earnings per share compound annual growth rate over the next three years.

Speaker Change: We continue to make progress towards our goal of achieving 10% to 13% core operating Roe.

Peter Zaffino: Our first quarter core operating ROE was 7.7% which was impacted by catastrophe. We expect to meet our 2025 objective of a 10% plus core operating ROE, as we outlined on a We've made terrific progress towards our goal of achieving an expense ratio below 30% for general insurance. The first quarter coming in at 30.5%. We will continue our significant focus to maintain an expense structure that aligns with the size of the company that we are while investing in our data and digital strategy.

Speaker Change: Our first quarter core operating ROE was seven 7%, which was impacted by catastrophe losses we.

Speaker Change: We expect to meet our 2025 objective of a 10% plus core operating ROE as we outlined on Investor day.

Speaker Change: We've made terrific progress towards our goal of achieving an expense ratio below 30% for general insurance with the first quarter coming in at 35%.

Speaker Change: We will continue our significant focus to maintain an expense structure that aligns with the size of the company that we are while investing in our data and digital strategies.

Peter Zaffino: and finally turning to our dividend. We announced our intent at Investor Day to grow the dividend per share by 10% plus in 2025 and 2020.

Speaker Change: And finally, turning to our dividend, we announced our intent at Investor day to grow the dividend per share by 10% plus in 2025, and 2026 yesterday. The AIG Board of directors approved a 12, 5% increase in our quarterly dividend of <unk> 45 per share starting in the second quarter of 2025.

Peter Zaffino: Yesterday, the AIG Board of Directors approved a 12.5% increase in our quarterly dividend to $0.45 per share.

Peter Zaffino: starting in the second quarter of 2025.

Peter Zaffino: In summary. We've entered an exciting new chapter for AIG, and we're executing on all aspects of our strategy.

Speaker Change: In summary, we.

Speaker Change: We've entered an exciting new chapter for AIG, and we're executing on all aspects of our strategy.

Operator: With that, I'll turn the call over. Thank you, Peter, and good morning.

Keith: With that I'll turn the call over to Keith.

Thank you Peter and good morning.

Keith Walsh: Starting with general insurance, overall results were strong and reflected excellent underwriting and disciplined expense. Adjusted Pre-Tax Income, or APTI, was $979 million. A decrease of $379 million from the prior year quarter. Due to higher catastrophe losses primarily related to the California wildfire. Underwriting income was $243 million. Down $353 million from the prior year quarter. Results reflect higher catastrophe. Partially offset by favorable prior year development and continued improvement in accident year under First quarter general insurance gross premiums written were $9 billion, an increase of 3% from the prior year. and net premiums written were $4.5 billion, an 8% increase.

Keith: Darting with general insurance overall results were strong and reflected excellent underwriting and disciplined expense management.

Keith: Adjusted pre tax income or <unk> was $979 million.

Keith: A decrease of $379 million from the prior year quarter.

Keith: Due to higher catastrophe losses, primarily related to the California wildfires.

Keith: Underwriting income was $243 million.

Keith: <unk> $353 million from the prior year quarter.

Keith: Results reflect higher catastrophe losses, partially offset by favorable prior year development and continued improvement in accident year underwriting.

Keith: First quarter General insurance gross premiums written were 9 billion, an increase of 3% from the prior year.

Keith: And net premiums written were $4 5 billion, an 8% increase.

Keith Walsh: General insurance combined ratio was 95.8% compared to 89.8% in the prior year quarter and included 9.1 points of cap losses versus 1.9 points in the first quarter of 2020. Prior year development net of reinsurance was 64 million favorable, up from 22 million favorable in the prior This quarter included $31 million of ADC amortization and $33 million of favorable development. largely related to favorable actual versus expected loss experience in the US property and global specialty line. Looking ahead to the rest of 2025, the ADC amortization is expected to be approximately $31 million each quarter, compared to $34 million a quarter in 2020.

Keith: General insurance combined ratio was 95, 8% compared to 89, 8% in the prior year quarter and included nine one points of cat losses versus one nine points in the first quarter of 2024.

Keith: Prior year development net of reinsurance was $64 million favorable up from 22 million favorable in the prior year.

Keith: This quarter included $31 million of ADC amortization and $33 million of favorable development.

Keith: Largely related to favorable actual versus expected loss experience in the U S property and global specialty lines.

Keith: Looking ahead to the rest of 2025, the ADC amortization is expected to be approximately 31 million each quarter compared to $34 million a quarter in 2024.

Keith Walsh: Our global commercial business had a terrific start. Net premiums written grew 10%. Produced a combined ratio of 91.2% despite elevated cat activity. and our expense ratio improved 40 basis points from the prior year quarter, an excellent result. North America Commercial Calendar Year Combined Ratio was 93.9%, which included 12 points of cash. The accident year combined ratio as adjusted was 84.3%. an improvement of 160 basis points from the first quarter of 2024. Spence ratio declined a full two points, driven by a combination of AIG next benefits and increased operating leverage, partially offset by higher corporate expense allocation.

Keith: Our global commercial business had a terrific start to the year.

Keith: Net premiums written grew 10% we produced a combined ratio of 91, 2% despite elevated cat activity.

Keith: And our expense ratio improved 40 basis points from the prior year quarter, an excellent result.

Keith: North America commercial calendar year combined ratio was 93, 9%, which included 12 points of cats.

Keith: The accident year combined ratio as adjusted was 84, 3% an.

Keith: An improvement of 160 basis points from the first quarter of 2024.

Keith: The expense ratio declined a full two points driven by a combination of AIG next benefits and increased operating leverage partially offset by higher corporate expense allocations as the company implemented its lean parent structure.

Keith Walsh: Company Implemented its Lean Parent Structure. The accident year loss ratio was 62.2% for the quarter. 40 basis point increase year over year due to changes in business.

Keith: The accident year loss ratio was 62, 2% for the quarter.

Keith: A 40 basis point increase year over year due to changes in business mix.

Keith Walsh: Turning to international commercial, the calendar year combined ratio was 88.2% This is the eighth consecutive quarter of a sub-90 combined ratio, an outstanding result. The accident year combined ratio as adjusted was 85.4%, which increased 240 basis points year over year. This was primarily driven by a 130 basis point increase in the expense ratio as a result of lean parent allocation. The accident year loss ratio is 54.6%. A 110 basis point increase year over year, reflecting business mix and increased operating costs from Lean Parent implementation.

Keith: Turning to international and commercial the calendar year combined ratio was 88, 2%.

Keith: This is the eighth consecutive quarter of a sub 90 combined ratio and outstanding result.

Keith: The accident year combined ratio as adjusted was 85, 4%, which increased 240 basis points year over year.

Keith: This was primarily driven by a 130 basis point increase in the expense ratio as a result of lean parent allocations.

Keith: The accident year loss ratio was 54, 6%, a 110 basis point increase year over year, reflecting business mix and increased operating costs from lean parents implementation.

Keith Walsh: Turning to global personal, the combined ratio is 107.9% while the accident year combined ratio as adjusted improved 140 basis points year over year to 95.6%. Excluding the divested travel The accident year combined ratio improved 110 basis points, owing to 190 basis point improvement in the accident year lost. This was driven by underlying improvement in our U.S. high-net-worth book, benefiting from a combination of rate-over-trend, business mix, and underwriting action. This was partially offset by a 70 basis point increase in our acquisition rate. which we expect to unwind and improve over the course of 2025 as reinsurance and improved commission terms with PCS earn through.

Keith: Turning to global personal the combined ratio was 107, 9%, while the accident year combined ratio as adjusted improved 140 basis points year over year to 95, 6%.

Keith: Excluding the divested travel business the accident year combined ratio improved 110 basis points, owing to 190 basis point improvement in the accident year loss ratio.

Keith: This was driven by underlying improvement in our U S High net worth book benefiting from a combination of rate over trend business mix and underwriting actions.

Keith: This was partially offset by a 70 basis point increase in our acquisition ratio, which we expect to unwind and improve over the course of 2025 as reinsurance and improved commission terms with PCF earned through.

Keith Walsh: As we outlined at Investor Day, we expect to drive financial performance and global personal by improving the combined ratio by 500 basis points over the next three years towards our 94% target.

Keith: As we outlined at Investor Day, we expect to drive financial performance and global personal by improving the combined ratio by 500 basis points over the next three years towards our 94% target.

Keith Walsh: Moving to Rates, where Peter already provided some perspective. For the first quarter, excluding workers' compensation and financial lines, global commercial lines pricing, which includes rate and exposure, increased 4%. in North America commercial renewal rate increase 1% year over If you exclude workers' compensation and financial lines, renewal rate was up 2%, with overall pricing up 4% year-over-year. In international commercial, overall pricing was up 2% or up 4% excluding financial. This is an improvement versus the fourth quarter where pricing was flat. While international commercial overall pricing is slightly below lost cost trends. Excluding financial lines, pricing and lost cost trend are roughly in line.

Speaker Change: Moving to rates, where Peter already provided some perspective for.

Speaker Change: For the first quarter, excluding workers' compensation in financial lines Global commercial lines pricing, which includes rate and exposure increased 4%.

Speaker Change: In North America, commercial renewal rate increased 1% year over year.

Speaker Change: If you exclude workers' compensation in financial lines renewal rate was up 2% with overall pricing up 4% year over year.

Speaker Change: In international commercial overall pricing was up 2% or up 4% excluding financial lines.

Speaker Change: This is an improvement versus the fourth quarter, where pricing was flat.

Speaker Change: While international commercial overall pricing is slightly below loss cost trend.

Speaker Change: Excluding financial lines pricing and loss cost trend are roughly in line.

Keith Walsh: Moving to other operations. First quarter adjusted pre-tax loss was $70 million, a significant improvement versus the prior year quarter of $205 million, reflecting substantially lower general operating expense, higher net investment income, and lower interest expense. As Peter mentioned, we have achieved our other operations run rate GOE target at $85 million in the first quarter and are on track for $350 million of annual expenses in 2024. We are now a much simpler company with a lean parent corporate structure that supports our three operating segments.

Speaker Change: Moving to other operations first quarter adjusted pre tax loss was $70 million, a significant improvement versus the prior year quarter of $205 million, reflecting substantially lower general operating expense higher net investment income and lower interest expense.

Peter Zaffino: As Peter mentioned, we have achieved our other operations run rate Geo targeted $85 million in the first quarter and are on track for $350 million of annual expenses in 2025.

Peter Zaffino: We are now a much simpler company with a lean parent corporate structure that supports our three operating segments.

Keith Walsh: Turning now to Investment Inc. Our investment portfolio is high quality and well diversified, with durations that are closely matched to our liability profile. It's predominantly comprised of investment-grade fixed maturity securities, helping to minimize exposure to short-term markets. First quarter net investment income on an APTI basis was $845 million. an increase of 4 million year over year.

Peter Zaffino: Turning now to investment income.

Peter Zaffino: Our investment portfolio is high quality and well diversified with durations that are closely matched to our liability profile. It's predominantly comprised of investment grade fixed maturity securities helping to minimize exposure to short term market swings.

Peter Zaffino: First quarter net investment income on an API basis was $845 million in.

Peter Zaffino: An increase of $4 million year over year net.

Keith Walsh: Net investment income is comprised of two categories. Our core portfolio, which sits in general insurance, and income from parent liquidity and core bridge dividends, which sits in other operations. First on General Insurance. Net investment income was $736 million, down $26 million or 3% year-over-year, owing to lower income from other invested assets and alternative investments, partially offset by higher income from the fixed maturity portfolio as we benefit from improved reinvestment rates. Other invested assets had a loss of $18 million compared to income of $38 million in the first quarter of 2024.

Peter Zaffino: Net investment income is comprised of two categories, our core portfolio, which sits in general insurance and income from parent liquidity and corbridge dividends, which sits in other operations.

Peter Zaffino: First on general insurance.

Peter Zaffino: Net investment income was $736 million down $26 million or 3% year over year, owing to lower income from other invested assets in alternative investments, partially offset by higher income from the fixed maturity portfolio as we benefit from improved reinvestment rates.

Peter Zaffino: Other invested assets had a loss of $18 million compared to income of $38 million in the first quarter 2024.

Keith Walsh: One variable worth noting is how we account for our joint venture with Tata. We include 26% of Tata AIG's net income and other invested assets. which also includes mark-to-market changes in their investment portfolio. which reflects capital market movements in India. It is reported under the Equity Accounting Method with a one-quarter less. Based on our current view, we expect general insurance total net investment income to be up modestly in the second quarter versus the 736 million in the first quarter. The gains in the fixed maturity and loan portfolio are likely to be offset by lower income from other invested assets and alternative investments.

Peter Zaffino: One variable worth noting is how we account for our joint venture with Tata Group.

Peter Zaffino: We include 26% of Tata Aig's net income and other invested assets.

Peter Zaffino: Which also includes mark to market changes in their investment portfolio.

Peter Zaffino: Which reflects capital market movements in India.

Peter Zaffino: It is reported under the equity accounting method with a one quarter lag.

Peter Zaffino: Based on our current view, we expect general insurance total net investment income to be up modestly in the second quarter versus the $736 million in the first quarter.

Peter Zaffino: The gains in the fixed maturity and loan portfolio are likely to be offset by lower income from other invested assets and alternative investments.

Keith Walsh: During the first quarter, the average new money yield on the fixed maturity and loan portfolio was 4.56%, roughly 135 basis points higher than sales and maturities in the quarter. The annualized yield, excluding calls and prepayments, was 4.11%, a 24 basis point increase year over year, or 19 basis points sequentially.

Peter Zaffino: During the first quarter, the average new money yield on the fixed maturity and loan portfolio was 456%.

Peter Zaffino: Roughly 135 basis points higher than sales and maturities in the quarter.

Peter Zaffino: The annualized yield excluding calls and prepayments was 411% a 24 basis point increase year over year or 19 basis points sequentially.

Keith Walsh: Turning to other operations. Net investment income was $108 million, consisting of income from our parent liquidity portfolio of $77 million and Corbridge dividend income of $31 million. Considering current interest rates and lower liquidity balances as we repurchase shares, we expect income from our parent liquidity portfolio to be around 50 million in the second quarter, subject to market conditions.

Peter Zaffino: Turning to other operations.

Peter Zaffino: Net investment income was $108 million consisting of income from our parent liquidity portfolio of $77 million and corbridge dividend income of $31 million.

Peter Zaffino: Considering current interest rates and lower liquidity balances as we repurchase shares we expect income from our parent liquidity portfolio to be around $50 million in the second quarter subject to market conditions.

Keith Walsh: Turning to tax, the adjusted effective tax rate for the first quarter was 22.8%, which included a net benefit from discreet ID. As we stated on our fourth quarter earnings call, we expect the adjusted tax rate for the full year 2025 to be in line with the full year 2024 level with slight variations quarter to Moving on to the balance sheet, we continue to have strong financial flexibility. We believe this positions us well to execute on our strategic priorities while navigating evolving market conditions. Book value per share was $71.38 at quarter end, up 10% from March 31, 2024, mainly due to the favorable impact of lower interest rates on investment AOC.

Peter Zaffino: Turning to tax the adjusted effective tax rate for the first quarter was 22, 8%, which included a net benefit from discrete items.

Peter Zaffino: As we stated on our fourth quarter earnings call. We expect the adjusted tax rate for the full year 2025 to be in line with the full year 2024 level with slight variations quarter to quarter.

Peter Zaffino: Moving onto the balance sheet, we continue to have strong financial flexibility.

Peter Zaffino: We believe this positions us well to execute on our strategic priorities, while navigating evolving market conditions.

Peter Zaffino: Book value per share was <unk> $71 38.

Peter Zaffino: At quarter end up 10% from March 31, 2024, mainly due to the favorable impact of lower interest rates on investment.

Peter Zaffino: Yes.

Keith Walsh: Adjusted Tangible Book Value per share was $67.96, down 8% from March 31st, 2024, primarily due to the impact of the Corbridge Deconsolidation. At the end of the first quarter, we had a debt to total capital ratio of 17.1%.

Peter Zaffino: Adjusted tangible book value per share was $67 96.

Peter Zaffino: Down 8% from March 31, 2024, primarily due to the impact of the Corbridge deconsolidation.

Peter Zaffino: At the end of the first quarter with a debt to total capital ratio of 17, 1%.

Keith Walsh: In conclusion, we had a strong first quarter, we expect to deliver on our target of 10% plus core operating ROE in 2025 while making steady progress on the financial targets we outlined at our With that, I will turn the call back over to Thank you, Keith.

Peter Zaffino: In conclusion, we had a strong first quarter, we expect to deliver on our target of 10% plus core operating ROE in 2025, while making steady progress on the financial targets, we outlined at our Investor day.

Peter Zaffino: With that I will turn the call back over to Peter.

Peter Zaffino: Thank you Keith Michelle we're ready for questions. Thank you.

Operator: Michelle, we're ready for questions. Thank you.

Operator: If you'd like to ask a question, please press star 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again.

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.

Michael Zaremski: Our first question comes from Mike Zaremski with BMO, your line is open. Good morning. Thank you.

Speaker Change: Our first question comes from Microsoft Henske with BMO. Your line is open.

Speaker Change: Yeah.

Microsoft Henske: Hey, good morning, Thank you.

Michael Zaremski: Um, I have a maybe a high level question on kind of the transformation to using Gen AI, etc. I've got a lot of questions posted yesterday on it that I'm hoping you can help out with.

Speaker Change: I have a.

Speaker Change: Maybe a high level question on kind of the transformation.

Speaker Change: You can generally I et cetera, and you've got a lot of questions posed to your investor day on it that hopefully you can help out with so.

Peter Zaffino: So, you know, would, you know, Sure, Mike, thanks for the question. A few things. One is we've been working on this for a couple of years. And it all started with a foundation of what we did with AIG 200 of having, you know, terrific end to end process, starting to digitize all of our workflows, getting data quality, and data integrity, which enabled us to start to adopt an end to end process that was going to enable Gen AI to accelerate underwriting and how we were going to be able to assess risks. And so we began this process, as I said, with with pilots, they are no longer pilots, I think that's something I want to be very clear, we're actually going live on a couple of our lines of business.

Speaker Change: Good.

Speaker Change: I'm.

Speaker Change: Kind of curious like the process for an insurer to transform using AI.

Speaker Change: High cost of entry does it take us a long time to get your data on the right forum to be able to adopt maybe you can kind of just talk to the weather.

Speaker Change: A table Stakes are you fully are first mover fast follower or just kind of any.

Speaker Change: In our seats.

Speaker Change: Really kind of at this stage I understand.

Speaker Change: What it takes to do what you're doing on the 17th.

Speaker Change: Sure Mike Thanks for the question.

Speaker Change: A few things one is we've been working on this for a couple of years and.

Speaker Change: It all started with the foundation of what we did with AIG 200 of having terrific and process starting to digitize all of our workflows getting data quality and data integrity, which enabled us to start to.

Speaker Change: Adopt an end to end process that was going to enable gen AI to accelerate.

Speaker Change: Underwriting and how we were going to be able to assess risks and so we began this process as I said with the with pilots. They are no longer pilots I think that's something I want to be very clear, we're actually going live on a couple of our lines of business and.

Speaker Change: We continue to evolve.

Peter Zaffino: And we continue to evolve with some of the partners that we brought to Investor Day, whether it's Palantir in terms of data ingestion, of accelerating not only, you know, the quality of data, but the quantity and the speed, and being able to, you know, utilize large language models to, you know, recognize data patterns and recognize, you know, risk selection criteria, and our underwriters are enabled to get more information. And so this has been something that has been highly strategic for us, we're highly committed to it, I don't know where other insurance companies are, my understanding is this is a little bit of a different way of doing it, we think it's the best in class way of doing it, I think it was validated by Alex and Dario.

Speaker Change: With some of the partners that we brought to Investor day, whether its talented in terms of data ingestion of accelerating not only.

Speaker Change: The quality of data, but the quantity and the speed and being able to utilize large language models too.

Speaker Change: Recognized data patterns and recognize Rick.

Speaker Change: Selection criteria and our underwriters are enabled to get more information and so this has been something.

Speaker Change: That has been <unk>.

Speaker Change: Really strategic for US we're highly committed to it I don't know where other insurance companies are.

Speaker Change: Understanding is this is a little bit of a different way of doing it. We think it's the best in class way of doing anything that's validated by Alex and Dario.

Michael Zaremski: And it takes an entire organization to really buy into the way in which we're gonna do this end to end, and, you know, believe that we are going to have, you know, the impact that we outlined on Investor Day over time, which is just to decrease cycle time, have higher quality data and information and empower the underwriters to make decisions. That's helpful. My quick follow up is thanks for the market commentary. I'm wasn't sure if you if you gave us North America commercial pricing metrics. I, you know, some of the competitors have talked about kind of, you know, seeing a decline in in property, which has caused pricing to move, move down a bit as well.

Speaker Change: And.

Speaker Change: It takes an entire organization to really buy into.

Speaker Change: The way in which we're gonna do this and then and believe that we are going to have the.

Speaker Change: The impact that we outlined on Investor day over time, which is just a decrease cycle time have higher quality data and information and empower the underwriters to make decisions.

Speaker Change: Got it that's all.

Speaker Change: My quick follow up.

Speaker Change: Thanks for the market commentary.

Speaker Change: I wasn't sure if you gave us.

Speaker Change: North America commercial pricing metrics.

Speaker Change: Some of the competitors have talked about kind of.

Speaker Change: We are seeing a decline in property, which has caused pricing to move move down.

Peter Zaffino: Is that is that is that accurate for Aggie as well?

Speaker Change: A bit as well is that is that is that accurate for AIG as well.

Peter Zaffino: Well, I'm gonna have Don and Jon comment, because I think it's a really important, you know, question, Mike. And what I would say on pricing, as always, is that, you know, overall, a lot of times the index doesn't really tell the story. We know that in North America, in property, we had some headwinds. And we outlined those in my prepared remarks, but still believe that the technical pricing is very strong for very good returns. And we produce those in the quarter on an underlying basis across the world. We've gotten cumulative rate increases that are substantial.

Speaker Change: Well I'm going to have Don and John comment because I think it's a really important.

Speaker Change: And Mike and what I would say on pricing as always is that.

Speaker Change: Overall, a lot of times the index doesn't really tell the story.

Speaker Change: We know that in North America in property, we had some headwinds.

Speaker Change: And we outlined those in my prepared remarks.

Speaker Change: But still believe that the technical pricing is very strong.

Speaker Change: For very good returns and we produce those in the quarter on an underlying basis across the world. We've got in cumulative rate increases that are substantial.

Peter Zaffino: You also have to take into account for us, we are a big buyer of reinsurance because we believe in cost of goods sold approach, which is we have the embedded pricing into our product. And therefore, we know what cat's going to cost, what risk is going to cost. Our property reinsurance risk adjusted reductions are greater than what we're seeing on the retail side. I think that's an important point. Our submission count, flight to quality is really important. And I would also say, and I think that, you know, based on my background, I have some credibility and context in this is that when brokers are talking about what's happening in the market, they're talking about the market.

You also have to take them.

Speaker Change: Account for us.

Speaker Change: <unk>.

Speaker Change: A big buyer of reinsurance because we believe in that sort of cost of goods sold approach, which is we have the embedded pricing into our product.

Speaker Change: And therefore, we know what cat is going to cost what risk is going to cost our property reinsurance risk adjusted reductions are greater than what we're seeing on the retail side I think that's an important point our submission count flight to quality.

Speaker Change: Is really important and I would also say and I think that based on my background I have some credibility in context and this is that.

Speaker Change: When brokers are talking about what's happening in the market. They are talking about the market.

Peter Zaffino: And that means they're talking about a lot of insurance companies, a lot of different parts of segmentation. And that becomes an index as well. My view is that not all insurance companies are created equal. So like if you're leading, if you're setting terms, if you're pricing, you tend to have a little bit of a different outcome. And I think that we've seen that, you know, with AIG, based on our retention, based on new business, based on what we believe is a flight to quality.

Speaker Change: And that means they are talking about a lot of insurance companies a lot of different parts of segmentation and as that becomes an index as well my view is that not all insurance companies are created equal so like if youre, leading if you're setting terms if youre pricing you tend to have a little bit of a different outcome and I think that we've seen that with AI.

G based on our retention based on new business based on what we believe is a flight to quality. So.

Don Bailey: So I'm going to turn it over to Don now. But again, you have to look at also our casualty was very strong, continues to be very strong after multiple years of very strong rate increases. We saw stronger rate increases in the large account than we did in the mid market, but all casualty on an excess basis we saw, you know, above loss cost. So we're seeing some very positive trends in casualty. We see some opportunities for growth. We saw that in Lexington. International is a little bit more orderly.

Speaker Change: Im going to turn it over to Don now, but again you have to look at also our casualty was very strong continues to be very strong after multiple years of very strong rate increases we saw stronger rate increases in the large account than we did in the mid market, but all casualty on an excess basis, we saw above loss cost. So we're seeing some very <unk>.

Speaker Change: Positive trends in casualty, we see some opportunities for growth we saw that in Lexington International a little bit more orderly and I'll have John highlight that we saw a little bit of a headwind in pricing in specialty but that business is performing at an exceptional level. Dan do you want to put it I probably answered the question for you, but maybe you can just give a little bit more context in north.

Jon Hancock: And I'll have John, you know, highlight that we saw a little bit of a headwind in pricing and specialty, but that business is performing at an exceptional level.

Don Bailey: Don, do you want to put it? I probably answered the question for you, but like if maybe you can just give a little bit more context in North America. Sure, Peter. Absolutely. So as you highlighted, Peter, your commentary, we had some very strong rate in some areas of the North American commercial segment and definitely had some pressure in other areas. You covered a lot of that in your prepared comments and some of the comments you just offered there, but more line by line, like, which I can offer you to casually the rate, it continues to be very strong and is an excessive loss.

Speaker Change: America sure Peter absolutely. So as you highlighted Peter your commentary with some very strong rate in some areas of the North American commercial segment and definitely had some pressure in other areas you've covered a lot of that in your prepared comments and some of the comments you just offered there but more a line by line like which I can offer you too casually the rate it continues to be very strong.

Speaker Change: And is in excess of loss trends.

Don Bailey: We'd also say that it's probably picking up some momentum as well. In excess, we're seeing better rate in the large accounts than we are in the middle market and small. Peter just mentioned that. We've got some data now that tracks that absolutely validates that. Programs in Glass are worth noting as well. Those continue to be rate positive. Again, both program businesses for us. Affinity-driven generally experienced less rate volatility than the rest of our portfolio. We've got highly engaged distribution partners there. There are significant growth opportunities in that space. Financial lines continue to be down mid-single digits.

Speaker Change: Also say that it's probably picking up some momentum as well in.

Speaker Change: In excess we're seeing better rate in the large accounts that we are in the middle market and small Peter just mentioned that we've got some data now that tracks that absolutely validates that.

Speaker Change: Programs and Gladstone are worth, noting as well those continue to be right positive again, both program businesses for us.

Speaker Change: Affinity driven generally experienced less rate volatility than the rest of our portfolio.

Speaker Change: Highly engaged distribution partners, there and there are significant growth opportunities in that space.

Speaker Change: All lines.

Speaker Change: <unk> continues to be down mid single digits. So the good news is we're making an adequate return on the book regarding public D&O rate trends again, if youre looking for some good news. If you look at our quarter January from a rate standpoint was the worst March was improved and we have some early signs in April indicates even more.

Don Bailey: The good news is we're making an adequate return on the book. Regarding public D&O rate trends, again, if you're looking for some good news, if you look at our quarter, January from a rate standpoint was the worst. March was improved. We have some early signs that April indicates even more continued improvement. Finally, I'll just say on property, we have had cumulative rate increases over the years. We're seeing some pressure on both retail and wholesale. We'll currently look at this as the year plays out. Pricing remains above technical, which is great, but we need to see how the rest of the year is going to play out.

Speaker Change: Continued improvement.

Speaker Change: Finally, I'll just say on property and we have had cumulative rate increases over the years were seeing some pressure on both retail and wholesale.

Speaker Change: Well currently look at this as the year plays out, but we're pricing remains above technical which is great, but we need to see how the rest of the year is going to play out but overall, we're really pleased with the long tail lines. Peter that's great. John Thanks, John do you want to make some comments on international right Yeah.

Jon Hancock: Overall, we're really pleased with the long tail lines, Peter. That's great, John.

Jon Hancock: Thanks.

Jon Hancock: John, do you want to make some comments on international rate? Yeah, I will. You and Keith have covered a lot of this. I'll repeat some of what I said at Investor Day. We have a huge advantage on the diversity of our portfolio products, distribution, geography across the whole of international. We have a huge hunting ground, an opportunity to divert time, resource, and capital into the most attractive areas and from the others. That's what we're doing right now and always do, and especially as market dynamics are not the same everywhere at the same time. You know, I'd also say, Peter, you and Keith have both said this, we've got total confidence in the portfolio, the quality, the price, the loss fix, the reserves, we've got that cumulative rate rise you've been talking about where more than price adequate in every portfolio, and you can see that in the results every quarter.

Speaker Change: You and Keith.

John Hancock: Keith covered a lot of this well I'll repeat some of what I said at Investor Day, we have a huge advantage on the diversity of our portfolio products distribution and geography across the whole of international So we have a huge hunting ground and opportunity to live the time resource and capital.

John Hancock: Into the most attractive areas and away from the others and Thats what were doing right now and always do I'm, especially as market dynamics and not the same everywhere at the same time.

Speaker Change: I'd also say, thank you and Keith have both said this week.

Speaker Change: Confidence in the portfolio the quality the price loss picks the reserves, we've got that cumulative rate rise you've been talking about with more than price either.

Speaker Change: Portfolio and you can see that in the results.

Jon Hancock: And our standards haven't changed. So this market is very orderly for us. Yeah, similar trends to gone and different nuances, you know, property rates still positive, and it's about loss trend. And our retentions are high, and we're growing. I don't think we're giving away margin, and we watch that relentlessly. But the combined ratios that we deliver in international property, they're some of the best I've seen in my career. So we start from a very, very strong place. But like with Don, the financial lines is under pressure, less pressure than it was, but still under pricing pressure.

Speaker Change: Quarter, and all standards haven't changed so.

Speaker Change: This market is very orderly for us similar.

Speaker Change: Similar trends.

Speaker Change: To dawn and different you won't see us property rates still positive about loss trend and our retentions are high and growing.

Speaker Change: I don't think we're giving away margin, we watch that relentlessly.

Speaker Change: The combined ratios that we deliver and the international appropriately property that some of the best I've seen in my career.

Speaker Change: So we start from a very very strong place.

Speaker Change: But like we've done in financial lines is under pressure less pressured than it once was still under pricing pressure, but that's mainly on D&O in certain markets not an emphasis in anywhere.

Jon Hancock: But that's mainly on D&O in certain markets, not on everything anywhere. So our thin lines book has shrunk a bit and our D&O book has shrunk more, but other parts of the portfolio under much less pressure. So we've got stronger retention there. Casualty varies by region, overall very rate positive and high retention. and I will call out, and I know you've mentioned, Global Specialty, Anne Tolbert. There is some rate pressure in some places. But we talked about this on Investor Day, and we put some slides up on Investor Day, that those businesses are producing, you know, exceptional results, quarter in, quarter out, year in, year out.

Speaker Change: So often lines book has shrunk a bit in our D&O book has shrunk more but other parts of the portfolio on the much less pressure. So we've got stronger retention then.

Speaker Change: You can see there is by region overall.

Speaker Change: 30 rate positive and high retention.

Speaker Change: And I will call out and I know, you've mentioned global specialty and told the.

Speaker Change: There is some rate pressure in some places, but we talked about this on Investor day, and we put some slides up on Investor day that those businesses are producing.

Speaker Change: <unk> results quarter in quarter out year in year round and.

Jon Hancock: Yep, Marine's still getting really good rate, we're seeing strong growth. The other class A, there's some pressure, but we're leaders on a lot of that business in the subscription markets, in specialty and toll book. So we work with clients to achieve sensible and sustainable terms. And where we do follow that subscription market, as much as we won't lead the market down, we won't follow it down either.

Speaker Change: Marine still getting really good rate, we've seen strong growth.

Speaker Change: I would say, there's some pressure, but with leaders on a lot of that business in the subscription markets and specialty and towboat. So we work with clients.

Speaker Change: To achieve sensible and sustainable.

Speaker Change: So the way we do follow.

Speaker Change: Subscription market much as we won't lead the market then we will follow with them either that's great Jon. Thank.

Jon Hancock: That's great, Jon. Thank you very much.

Speaker Change: Thank you very much next question.

Operator: Next question. Thank you.

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

Meyer Shields: Our next question comes from Meyer Shields with KBW. Your line is Mayor, your line may be Sorry, am I coming through? Yes. Okay, great. Sorry about that. Okay, so Peter, you talked about monitoring the uncertainty associated with tariffs. In the interim, what, I guess, underwriting, pricing, policy administration efforts need to happen just to reflect that uncertainty as you sort of find contracts that are going to expose you to this risk over the next 12 months?

Speaker Change: Mayor your line may be muted.

Speaker Change: Alright my commentary.

Speaker Change: Yes, yes.

Speaker Change: Okay, great sorry about that okay. So Peter you talked about monitoring the uncertainty associated with tariffs.

Speaker Change: In the interim what I guess underwriting pricing policy administration.

Speaker Change: <unk> need to happen just to reflect that uncertainty as you sort of think contract that had been exposure to this risk over the next 12 months.

Peter Zaffino: Thanks for the question, Mayor. There's a couple of things. One is looking at the inflation factors within lines of business that we think will be impacted. Certainly property, we tried to outline that in my prepared remarks. You could have catastrophe losses that have been modeled that will be significantly more depending on what happens with supply and also density and also size of loss. There's so many different I think looking at each of the loss cost inputs is going to be really important. An example, if I could just expand a little bit, which is what you saw really in the international loss ratio this quarter is that we were cautious and we saw the loss ratio published increase a little bit, but none of the underlying loss ratios deteriorated.

Meyer: Thanks for the question Meyer.

Meyer: There's a couple of things one is looking at the inflation factors.

Meyer: Within lines of business that we think will be impacted certainly property, we tried to outline that in my prepared remarks.

Meyer: You could have catastrophe losses that had been model that will be significantly more depending on what happens with.

Meyer: Supply.

Meyer: And also density and also sort of size of law. So there's so many different variables I think looking at each of the loss cost inputs.

Meyer: Is going to be really important.

Speaker Change: An example, if I could just.

Speaker Change: Expand a little bit which is what you saw really in the international loss ratio. This quarter is that we were cautious and.

Speaker Change: We saw the loss ratio published increase a little bit, but none of the underlying loss ratio has deteriorated.

Peter Zaffino: We saw one side fact was that we, part of AIG Next had unallocated loss adjustment expense that found its way into the international business that usually sit in other operations. But we also, you know, looked at our best estimates, no underlying loss ratio deterioration happened in the international portfolio. But we built a little bit of risk margin in international to deal with the uncertainty that could be in front of us with, you know, sort of different lines of business. And so we are cautious. We've done this in the past, where we feel very good about loss ratios, very good about margin, but we may put a little bit more margin in for lines of business that we think could be potentially impacted.

Speaker Change: Saw one.

Speaker Change: Syed fact was that we part of AIG next had.

Speaker Change: Unallocated loss adjustment expense that found its way into the international business I used to sit in other operations.

Speaker Change: But we also.

Speaker Change: Looked at our best estimates.

Speaker Change: No underlying loss ratio deterioration happened in the international portfolio, but we built a little bit of risk margin in international to deal with the uncertainty that could be in front of us with sort.

Speaker Change: Sort of different lines of business and so we are cautious we've done this in the past where.

Speaker Change: We feel very good about loss ratios very good about margin, but we may put a little bit more margin for lines of business that we think could be potentially impacted. So this is something that is evolving daily.

Peter Zaffino: So this is something that is evolving daily. What lines of business, what part of the world changes, you know, quite a bit, and we're going to be on our front foot in terms of being proactive and making sure that we have the appropriate loss, cost and margin built into our pricing. Okay, fantastic. That's very helpful.

Speaker Change: What lines of business, what part of the World.

Speaker Change: Changes quite a bit and we're going to be on our front foot in terms of being proactive in making sure that we have the appropriate loss costs and margin built into our pricing.

Speaker Change: Okay Fantastic that's very helpful.

Peter Zaffino: Second question, from a modeling perspective, should the remaining ports in 2025 have the same impact of expenses moving from other operations to the GI segment? So here's how I would look at it. One is like AIG Next was taking a company that was a conglomerate and simplifying the business by getting the overall organization and culture weaved together and we've accomplished that. So that, that was excellent. Two is, you know, we gave significant guidance in terms of the expenses we felt we needed to take out of the company to have a lean operating model. We call it lean parent, but it's got to be a lean company.

Speaker Change: Second question from a modeling perspective.

Speaker Change: Good.

Speaker Change: Main importance in 2025 have the same impact of expenses moving from other operations to the Gi segments.

Speaker Change: So here's I would look at it.

Speaker Change: One is like AIG next was taking a company that was a conglomerate.

Speaker Change: And simplifying the business by getting.

Speaker Change: The overall organization and culture, we've together and we've accomplished that so that that was excellent.

Speaker Change: Two is you know we gave significant guidance in terms of the expenses, we felt we needed to take out of the company to have a lean operating model, we call lean parent, but it's got to be a lean company and so how we look at the overall expenses.

Peter Zaffino: And so how we look at the overall expenses are really important. And I think we overachieved because the guidance we gave was, you know, by the end of 25, we should be done with AIG Next. And you can see in other operations, GOE, we got there. I mean, like we are in a place where we've accelerated our progress and feel very pleased with it. I would have expected, it didn't happen, but I would have expected to see the businesses expense ratios go up as they were absorbed the cost, but they did a phenomenal job of taking out expenses and being proactive as more allocations and more costs came into the business that they had a straight line ability to not really increase expenses.

Speaker Change: Are really important and I think we overachieve because the guidance. We gave was you know by the end of 'twenty five we should be done with AIG next and you can see in other operations Joey we got there I mean like we are in a place where we've accelerated our progress and feel very pleased with that I would have expected it didn't have.

Speaker Change: But I would have expected to see the businesses expense ratios go up as they were absorbed the costs, but they did a phenomenal job of taking out expenses being proactive as more allocations and more cost came into the business that they had a straight line.

Speaker Change: <unk> ability to not really increase expenses now North America benefited more from AIG next than international did.

Peter Zaffino: Now, North America benefited more from AIG Next than international did. And because of the number of countries we're in, and you know, you're thinking about IT expenses and legal expenses and other expenses to build a proper global company, more of those allocations went into international than, you know, went into North America. So international would have had two variables that were kind of moving against it, which is what's reflected in this GOE ratio. But I would expect over the full year, I could have just answered your question with a sentence, but I thought I'd give you some context, is that I wouldn't straight line it, but I would think that the expenses you saw in the first quarter ought to be, you know, what the year will look like in terms of overall GOE expense in the business.

Speaker Change: And because of a number of countries, we're in and Youre thinking about expenses and legal expenses and other expenses to build a proper global company more of those allocations were went into international then went into North America. So international would have had two variables that we're kind of moving against it which is what's reflected in as Joey ratio.

Speaker Change: But I would expect over the full year. It kind of just answered your question with a sentence, but I thought I'd give you some context is that.

Speaker Change: I Wouldnt straight line it but I would think that the expenses you saw in the first quarter ought to be what the year will look like in terms of overall <unk> expense in the business.

Meyer Shields: Okay, that is perfectly helpful and I really appreciate the context. Thank you.

Speaker Change: Okay that is perfectly helpful. I really appreciate that okay. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Alex Scott with Barclays. Your line is open.

Alex Scott: Our next question comes from Alex Scott with Barclays. Your line is open. Hi, good morning.

Alex Scott: Hi, good morning.

Peter Zaffino: First, what I had here is on, you know, the broader environment that you described and the uncertainty that it brings and just does it change the way you'd approach the M&A environment and just the deployment of all this capital that you have available . I don't think it changes anything, Alex. Thanks for the question. You know, we still remain very disciplined, still looking at the, you know, medium to long term for acquisitions. Is it additive to AIG? Is it additive to the company that we may acquire? You know, looking at the different geographies, different product lines, I think, and we mentioned also like, you know, Gen AI and investments and scale and being able to move businesses forward, it gives us great opportunities to look across the world.

Alex Scott: First one I had is on the broader environment. You described an uncertainty that it brings and just does it change the way you would approach the M&A environment.

Alex Scott: And just the deployment of all of this capital that you have available to you.

Alex Scott: I don't think it changes anything Alex thanks for the question.

Alex Scott: We still remain very disciplined still looking at the medium to long term for acquisitions is it additive to AIG is it additive to the company that we may acquire.

Alex Scott: Looking at the different geographies different product lines.

Alex Scott: And we mentioned also like Gen AI and investments in scale and being able to move businesses forward. It gives us great opportunities to look across the world.

Peter Zaffino: And to see if there's, you know, going to be an acquisition that would be, you know, additive to AIG. Yes, we are in a world of uncertainty, but we've done so much hard work over the past three years on the capital structure side that we have low leverage cash. We have ample, if not slightly excess capital in our subsidiaries to grow into. And we still have ownership of core bridge that we can pull for additional liquidity in the event that we see an acquisition. But we are going to be very careful. We'll be very cautious.

Alex Scott: And to see if there is going to be an acquisition that would be.

Alex Scott: Added at AIG now.

Speaker Change: Yes, we are in a world of uncertainty, but we've done so much hard work over the past three years on the capital structure side that we have low leverage cash.

Alex Scott:

Alex Scott: We have ample if not slightly excess capital in our subsidiaries to grow into.

Alex Scott: And we still have ownership of corbridge that we can pull.

Alex Scott: For additional liquidity in the event that we see an acquisition, but we.

Alex Scott: We're going to be very careful we'll be very cautious and it's not something that needs to be done today and quite frankly I said this at Investor day, If we go through a period of time, which I'm not going to define that we don't see.

Peter Zaffino: And it's not something that needs to be done today.

Peter Zaffino: And quite frankly, I said this at Investor Day, if we go through a period of time, which I'm not going to define, that we don't see opportunities that we think are additive to AIG and our shareholders, we'll return the capital to shareholders. But right now, I think it's actually, some of this uncertainty may actually create opportunities.

Alex Scott: Opportunities that we think are additive to AIG and our shareholders will return the capital to shareholders, but right now I think it's actually some of this uncertainty may actually create opportunities.

Alex Scott: That's helpful.

Alex Scott: Got it Thats helpful.

Alex Scott: Second question I had for you is just on the makeshift. You know, from the outside, it's, you know, difficult at times to model, you know, things like makeshifts. And, you know, I think the catastrophe budget in particular has come down massively, and I guess will continue to as you do this makeshift in North America commercial in particular. So, I know you already gave us some help by quantifying some of these things. I think based on some of the disclosures you gave earlier, we might even be able to back into a cap budget. But I was hoping maybe you could just, you know, help us understand that makeshift.

Alex Scott: Second question I had for you is just on the mix shift.

Alex Scott: From the outside.

Yes.

Alex Scott: At times to model things like mix shifts.

Speaker Change: I think the catastrophe budget in particular has come down massively in I guess, we will continue to as you as you do this mix shift in North America commercial in particular, so I know you already gave us some help by quantifying some of these things.

Speaker Change: Based on some of the disclosures you gave earlier, we might even be able to back into a cap budget, but I was hoping maybe you could just.

Speaker Change: Help us understand that mix shift.

Peter Zaffino: You know, how should we think about, you know, the impact on the underlying versus all in, you know, combined ratio? first quarter is hard because of property. And, you know, it's when we do our catastrophes, it's the net premium written, you know, I think in the past. What's what's happened is, you know, you can even have negative net premium, just based on your seeding out more on an NPW basis than you know, what you'd be writing in the quarter. I think that'll start to, you know, sort of level out, we don't have a lot of catastrophe purchased within, you know, the second, third or fourth quarter.

Speaker Change: How should we think about the.

Speaker Change: The impact on underlying versus all in combined ratio.

Speaker Change: First quarter is hard because of property and it's.

Speaker Change: When we do our catastrophes, it's the net premium written.

Speaker Change: I think in the past.

Speaker Change: What's happened is.

Speaker Change: You could even have negative net premium just based on your ceding out more on an MPW basis than what you'd be riding in the quarter I think that will start to sort of level out we don't have a lot of catastrophe purchased within.

Speaker Change: The second third or fourth quarter, I think we were talking about mix of business.

Peter Zaffino: I think we're talking about mix of business, you know, look at the current environment of property. In North America's international is doing just fine posting tremendous combined ratios, showing some small growth. But if we saw in the first quarter, that would continue, we are going to reduce our gross ridings in property and the market will come back to us. I mean, we haven't even entered cat season yet.

Speaker Change: Looking at the current environment of property and.

Speaker Change: In North America is international is doing just fine posting tremendous combined ratios showing some small growth.

Speaker Change: But if we saw in the first quarter that would continue we are going to reduce our gross writings.

Speaker Change: In property and the market will come back to US I mean, we haven't even entered cat season, yet so I'd like to as I always say declare about property at the end of the year not before cat season.

Peter Zaffino: So I'd like to, as I always say, declare about property at the end of the year, not before cat season. But I think what's reflected really in the reinsurance is just that, you know, the AIG in the past would probably have to pay a little bit more because of the quality of data, the quality of the portfolio. We've been moving forward with that over multiple years. And I think that's what was reflected in 2025. The mix of business when we reference it, so if property remains Unknown Speaker, The Huffington Post, The Huffington Post, The Huffington Post, The Huffington Reflect that.

Speaker Change: But I think what's reflected really in the reinsurance is just that the AIG.

Speaker Change: In the past would probably have to pay a little bit more because of the quality of data.

Speaker Change: The quality of the portfolio, we've been moving forward with that over multiple years and I think that's what was reflected in 2025.

Speaker Change: The mix of business, when we referenced and so a property remains.

Speaker Change: Slight growth on a underlying basis, and we're moving more casualty business into the portfolio and the net premium written those the.

Speaker Change: The combined ratios.

Speaker Change: The loss ratios are higher so I think that's really what we're trying to signal that we had a tremendous growth in Lexington mid market casualty.

Speaker Change: But that loss ratio will be higher than what we would.

Speaker Change: Expect for property Attritional and so as that mix changes you can see the loss ratios.

Speaker Change: Reflect that that's what we're really referencing.

Peter Zaffino: That's what we're really referencing. Got it.

Got it helpful. Thank you. Thanks.

Operator: Helpful. Thank you. Thanks. Thank you.

Speaker Change: Thank you. Our next question comes from Andrew Anderson with Jefferies. Your line is open.

Andrew Anderson: Our next question comes from Andrew Anderson with Jeffries. Your line is open. Hey, good morning. Just looking at the underlying results in North America commercial, they seem pretty strong. Is there an opportunity to take more business net here? Yes, there is. I don't think we would want to though, because you know how we you know, look at property cat. It is a global risk appetite volatility that we're willing to take. And I think what I referenced, and when the script comes out, like we should read it again, how low nets we have going forward in North America property, because you know, we buy a currency and aggregate and The volatility is massively reduced for AIG over the course of four quarters.

Andrew Anderson: Hey, good morning, just looking at the underlying results in North America commercial they seem pretty strong is there an opportunity to take more business net here.

Andrew Anderson: Yes, there is I don't think we would want to though because how we.

Andrew Anderson: You know look at property Cat is a global risk appetite volatility that we're willing to take and I think what I referenced and when the script comes out like we should read it again, how low nets, we have going forward in North America property, because we buy occurrence and aggregate and.

The volatility is massively reduced for AIG over the course of four quarters and so we like that volatility reduction we like it priced into the business and then on casualty.

Peter Zaffino: And so we like that volatility reduction. We like it priced into the business. And then on casualty, I know it was probably a massive eye chart at Investor Day with the amount of reinstatements we have and what does the vertical limits do. We don't buy a lot of proportional reinsurance in North America on casualty. We buy excess or loss. And I think in this environment, with large jury verdicts, vertical exposures, I don't think it's prudent to take any more net there. And so I think we feel really comfortable with the reinsurance structure that we have in North America.

Andrew Anderson: It was probably a massive eye chart at.

Andrew Anderson: Investor day with the amount of reinstatement as we have and what is the vertical limits do we don't buy a lot of proportional reinsurance in North America on casualty, we buy excess of loss and I think in this environment.

Andrew Anderson: With large jury verdicts vertical exposures I don't think its prudent to take any more net there and so I think we feel really comfortable with the reinsurance structure that we have in North America.

Peter Zaffino: And as you pointed out, the combined ratios have improved dramatically and really like the core fundamentals of the business the way it is today. Thank you. And then just on North America commercial, ex-comp, ex-financial lines, pricing, 4% RPC. I guess that's on a gross basis, perhaps a little bit better net. I guess where I'm going with this is I would think that's below loss trend, but perhaps with terms and conditions and maybe some mixed shift, it sounds like in your commentary, you're not really thinking of underlying loss ratio deterioration here. No, I'm not. I mean, as I said, it's really being driven more by property.

Speaker Change: And as you pointed out the combined ratios have improved dramatically.

Speaker Change: And really liked the core fundamentals of the business the way it is today.

Speaker Change: Thank you and then just on North America commercial ex comp ex financial lines pricing, 4% RPC I guess, that's on a gross basis, perhaps a little bit better net I guess, where I'm going with this is I would think thats below loss trend, but perhaps what terms of conditions and maybe some.

Speaker Change: Mix shift it sounds like in your commentary you are not really thinking of underlying loss ratio deterioration here.

Speaker Change: No I'm not I mean, as I said, it's really being driven more by property property was a big negative on the weighted average, but on the other lines of business and we're going to watch financial lines. Don had some really good comments on that casualties above loss trend.

Peter Zaffino: Property was a big negative on the weighted average, but on the other lines of business, again, we're going to watch financial lines. Don had some really good comments on that. Casualties above loss trend. Gladfelter, as we look across the portfolio, it was really just property that was below loss trend. And we'll see how that plays out, but are confident that it's above our technical and also that it's not sustainable to have these type of rate decreases over a long period of time. So we'd end up pulling back in the event that it stayed that way.

Speaker Change: Gladfelter as we look across the portfolio. It was really just property that was below loss trend and we'll see how that plays out but our competent that its above our technical.

Speaker Change: And also you know.

That it's not sustainable to have these type of rate decreases over a long period of time. So we would we would end up pulling back in the event that it stayed that way.

Peter Zaffino: But the submission count is great. I think there's a lot of opportunities, retention is good. And and we still think that the property line for us is going to perform very strong. And just, you know, one other, you know, data point is that in the first quarter, our international property is as big as our North America property. And so I just want to make sure that we remember that, you know, overall, we have opportunities. North America becomes aggressive. We have a lot of points of entry and property and the risk adjusted returns in international are just fantastic and we'll continue to grow there.

Speaker Change: But the submission counts great things Theres a lot of opportunities retention is good.

Speaker Change: And we still think that the property line for us.

Speaker Change: Is.

Going to perform very strong and just one other data point is that in the first quarter. Our international property is as big as our North America property and so I just want to make sure that we remember that overall we have opportunities.

Speaker Change: North America becomes aggressive.

Speaker Change: We have a lot of points of entry and property and the risk adjusted returns and international are just fantastic and we'll continue to grow there but.

Peter Zaffino: Thank you. Thanks.

Speaker Change: Thank you.

Operator: We have one more question.

Speaker Change: One more question.

Brian Meredith: Our next question comes from Brian Meredith with UBS, your line is open. Yeah, thanks for fitting me in. Peter, I'm just curious, North American commercial growth, just wanted to unpack it a little bit. Is it possible to get maybe what gross written premiums growth was there, just try to understand the impact of, of the of the seeded reinsurance on the growth rate? I'm just kind of thinking about how sustainable is that growth in the near term that you saw in North America? So Brian, the first quarter was benefited from some reinsurance on property. And I think that the gross would be, you know, largely reflecting the net absent property that I mentioned.

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

Brian Meredith: Yes. Thanks for fitting me in here, just curious north American commercial growth I, just wanted to unpack it a little bit is it possible to get maybe with gross written premiums growth was there just trying to understand the impact of of the ceded reinsurance on the growth rate just kind of thinking about how sustainable is that growth in the near term that you saw in North America.

Brian Meredith: <unk>.

Speaker Change: So Bryan the first quarter was benefited from some reinsurance on property and I think that the growth would be.

Speaker Change: Largely reflecting the net absent property that I mentioned, so the casualty for Lexington is very close to what it would be on the net.

Peter Zaffino: So the casualty for Lexington is very close to what it would be on the net. You know, when we had, you know, identified when we talked about, you know, Gladfelter, Gladfelter benefited a little bit from some of the reinsurance, but still had very strong growth as did our program business Don outlined programs at great length at Investor Day, you know, we're doing less programs, we've taken the best practices of Gladfelter and built it out. But I would say those largely the gross and the nets were not too far off. It was just really property that benefited.

Speaker Change: When we had identified.

Identify when we talked about you know gladfelter gladfelter benefited a little bit from some of the reinsurance, but still had a very strong growth as did our program business Don outlined programs at great length at Investor Day, we're doing less programs. We've taken the best practices of Gladfelter and built it out, but I would say those largely the gross.

Speaker Change: The nets were not too far off it was just really property that benefited what I just wanted to signal is that you.

Don Bailey: What I just wanted to signal was that you see, you know, sort of the rate environment and why are you growing in property? Well, we really aren't growing on the gross. As a matter of fact, in Lexington property, the gross we contracted, and, you know, retail gross, slight increase, but the net was really more reflective of the reinsurance on property. Do you want to say something, Don? I would just validate that the underlying portfolio is strong. It's double digits on a net basis. Great, great. So so so nothing unusual in the first quarter. I mean, this this good solid growth you're seeing is is sustainable here for at least in the near term, unless of course, some other property competitive and something else.

Speaker Change: You see sort of the rate environment and why are you growing in property when we really arent grown on the gross as a matter of fact in Lexington property in the grocery contracted and retail gross slight increase but the net was really more reflective of the reinsurance on property USA and it's something that I.

Speaker Change: Just validate that the underlying portfolio strong double digits on a net basis.

Speaker Change: No.

Speaker Change: Great Great. So nothing unusual in the first quarter I mean this is a good solid growth youre seeing is sustainable here for at least in the near term unless of course, some other property competitive and something else comes up.

Peter Zaffino: Yeah, I think look, you probably won't see the same property effect in the future, because we're not gonna have as much reinsurance. So you know, I think those nets will come down. But the rest of the portfolio should reflect, as Don said, really strong new business, strong retention. We'll watch, you know, each line of business and make sure we're growing where we want to grow, but you know, still think there's growth opportunities. Gotcha.

Speaker Change: Yes, I think look it you probably won't see the same property effect in the future because we're not going to have as much reinsurance. So I think those nets will come down but the rest of the portfolio should reflect as Don said really strong new business strong retention.

Speaker Change: We'll watch each line of business and make sure we're growing where we want to grow but still think that there's growth opportunities.

Peter Zaffino: And then one last one here. Any any updated thoughts on what casualty loss trend is looking like here? You know, a couple of positive developments, I think, in Georgia and some areas as far as legislation goes, maybe thoughts on that? Well, watch it, Brian. We have not adjusted any of our loss costs and inflation factors on casualty. And we'll, you know, probably, you know, look at it in the sort of mid year, but so far, we're keeping it where it was. Perfect. Thank you.

Speaker Change: Got you and then one last one I'm here any updated thoughts on what casualty loss trend is looking like here.

Speaker Change: Positive developments I think in Georgia in some areas as far as legislation goes maybe thoughts on that.

Brian Meredith: We'll watch it Brian we have not adjusted any of our loss costs and inflation factors on casualty and we'll probably look at it in the sort of mid year, but so far were keeping it where it was.

Speaker Change: Perfect. Thank you.

Operator: Okay. Thanks, everybody, for joining us today. Really appreciate it. Have a great day and great weekend. Thank you for your participation. This does conclude the program and you may now disconnect. Everyone have a great day.

Speaker Change: Okay. Thanks, everybody for joining us today really appreciate it and have a great day and great weekend.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

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