Operator:

Good day, and welcome to AIG's Second Quarter 2024 Financial Results Conference Call. This conference is being recorded. Now, at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.

Peter Zaffino:

Good morning, and thank you for joining us today to review our second quarter 2024 financial results. We have transformed AIG and have done the foundational work for the next chapter, and I'm excited to take you through it today. Following my remarks, Sabra will provide more detail on the second quarter. Then, our North America and International leaders, Don Bailey and Jon Hancock will join us for the Q&A portion of the call. Our prepared remarks have a lot of detail, particularly related to our deconsolidation of Corebridge. We intend to provide ample time for Q&A. I want to start with highlights of our outstanding second quarter performance. As Quentin mentioned at the beginning of the call, all figures I will reference today will be on a comparable basis, excluding the impact of Validus Re and Crop Risk Services unless otherwise noted in order to provide a clear view of our underlying performance. Adjusted after tax income was $775 million, or $1.16 per diluted share, representing a 38% increase in earnings per share year-over-year, driven by strong organic growth, a continuation of our very strong underwriting performance, ongoing expense discipline, volatility containment and a decrease in shares outstanding. General Insurance net premiums written grew 7%, led by Global Commercial, which grew over 8%. Underwriting income was $430 million. The underlying underwriting income, excluding catastrophes in prior year development improved $110 million or 17% year-over-year. The calendar year combined ratio was 92.5%, a slight increase of 10 basis points from the prior year. The accident year combined ratio, excluding catastrophes was 87.6%, a 170 basis point improvement from the prior year. The CAT loss ratio was 5.7%, or $325 million of total catastrophe related losses. Consolidated net investment income on an adjusted pre-tax income basis was $884 million, a 14% increase year-over-year. During the quarter, we returned nearly $2 billion to shareholders through $1.7 billion of stock repurchases, and $261 million of dividends. We ended the second quarter with a total debt to total capital ratio of 18%, including AOCI and we have strong parent liquidity of $5.3 billion. Overall, I'm very pleased with our ability to continue to deliver outstanding financial performance and I'm equally pleased with the progress we're making on multiple strategic initiatives. There's several things I want to cover on this call to give you a sense of where we are now, how we got here, and what the future holds. In addition to walking through our financial results, on today's call, I plan to outline the recently announced transactions for our personal travel business and private client select, provide a quick update on [Technical Difficulty] reinsurance renewals and a market update, discuss our disciplined execution of our capital management strategy and provide an update on AIG Next. I should note that our strong financial results in the quarter were complicated by the complex accounting treatment of deconsolidation. In Sabra's prepared remarks, she will explain the impact to our capital structure, including shareholders' equity, as well as details on the GAAP accounting implications to our financial statements. Before I go further, I want to take a moment to comment on the deconsolidation of Corebridge, which marked a major milestone for both AIG and Corebridge. It's important to reflect on the four year journey, the significant accomplishments along the way and the rationale behind this pivotal decision for AIG. At the height of the pandemic in 2020, we undertook a detailed analysis to explore strategic options to maximize value for AIG shareholders, including evaluating whether to separate our life and retirement business, which would eventually become Corebridge from AIG. In October of 2020, we announced our intention to separate. There were many noteworthy accomplishments along the way, and I'd like to highlight a few. In July of 2021, AIG announced that Blackstone Group would become an anchor investor in the new standalone company with its acquisition of 9.9% of Corebridge. Corebridge also entered into a long-term strategic asset management relationship with Blackstone to manage up to $92.5 billion of assets under management over the subsequent six years. At the end of March of 2022, AIG announced a strategic partnership with BlackRock, where they would manage $150 billion of certain fixed income and privately placed assets, of which $90 billion would come from the Corebridge portfolio. In mid-September of 2022, AIG floated at 12.4% of Corebridge and the largest U.S. IPO of the year, a particularly noteworthy achievement during a time of significant market volatility. During 2023, we executed three marketed deals, reducing our overall ownership to 52% by year end. In 2023, Corebridge divested with considerable strategic and transactional support from AIG, Laya Healthcare and UK Life. These sales generated over $1.2 billion of proceeds for Corebridge investors. In May of 2024, AIG announced it would sell 122 million shares at Corebridge, representing an approximately 20% stake in the company to Nippon Life Insurance Company, one of the most respected life insurance companies in the world, subject to customary regulatory approvals and closing conditions. Lastly, in mid-June of this year, AIG announced it had met the requirements for the deconsolidation of Corebridge for accounting purposes. We remain committed to fully selling down a remaining ownership stake in Corebridge over time, subject to market conditions and other considerations. It's been quite a journey and we have accomplished a tremendous amount. Now let's turn to the travel business. During the quarter, we also announced the sale of our global individual personal travel insurance and assistance business, which is another important strategic step in positioning AIG for the future to further simplify our portfolio. The transaction includes the global Travel Guard insurance business as well as its service companies and infrastructure and excludes our travel insurance businesses in Japan and our AIG joint venture arrangement in India with the Tata Group. AIG will continue to provide corporate group travel coverage through our accident and health business. The annual net premiums written for travel are approximately $750 million, most of which are reported under North America Personal Insurance. The sale is expected to close by the end of 2024, subject to customary regulatory approvals and closing conditions. And last week, we announced another significant transaction involving our high net worth business. As we've discussed in prior quarters, over the course of several years, we've been deliberately transforming our high net worth business to be better positioned for the future. We've done this through a series of strategic actions, including the most recent announcement about entering into a strategic relationship with Ryan Specialty to become our excess and surplus lines distribution partner for high and ultra-high net worth markets through our managing general underwriter, Private Client Select insurance services. We like the business and we're committed to it. We've invested over $100 million in infrastructure and digital capabilities for our high net worth business over the past several years, and we believe the business is well-positioned for the future. We're also committed to delivering solutions and growing our admitted capabilities. As we previously communicated, our plan for the portfolio has been to establish an MGU (ph) with appropriate infrastructure and core foundational capabilities, enable multiple points of distribution and eventually attract more capital resources for the MGU, all while continuing to drive exceptional value for our high net worth clients as we grow the business. AIG will provide exclusive E&S paper in all 50 states through Marbleshore Specialty Insurance Company subject to regulatory approvals. This progress reflects the momentum we've created with expanded capabilities and broader partnerships. Now turning to General Insurance results. Gross premiums written for the quarter were $9.9 billion, an increase of 7% from the prior year. Net premiums written for the quarter were $6.9 billion, a 7% increase from the prior year, with 8% growth from Global Commercial and 5% growth from Global Personal. Global Commercial had an excellent quarter with strong net premiums written growth of 8%, driven by significant new business, impressive retention and continued accident year combined ratio improvement. In North America Commercial, net premiums written grew 10%. Lexington grew 16%, led by wholesale casualty, which grew 35%; Western World, which grew 20%; and wholesale property, which grew 12%. Retail casualty grew 11%, with 21% growth in our risk management business and we had 16% growth in excess casualty, and Captive Solutions grew 30%, driven by new business. In International Commercial, net premiums written grew 6%. Global Specialty grew 8%, led by 18% growth in energy, Talbot grew 12% and retail property grew 11%. In the second quarter, Global Commercial produced record new business of nearly $1.3 billion, which is an 18% increase from the prior year quarter. North America Commercial produced new business of $753 million in the quarter, an increase of 26% year-over-year and an increase of over 60% from the prior quarter. The growth was led by Lexington, which had 31% new business growth year-over-year and 75% new business growth from the first quarter, the highest new business volume of any quarter in my tenure. Lexington also achieved a significant milestone with over $1 billion of gross premiums written this quarter, a 16% increase from the prior year quarter. This is the highest gross premiums written quarter for Lexington since we repositioned the business in 2018. In other businesses, retail casualty new business grew over 40%, led by our risk management business and excess casualty. International Commercial produced new business of $522 million for the quarter, an increase of 9% year-over-year. This growth was led by Global Specialty, which had 17% new business growth, led by energy and marine. Casualty, which had over 30% growth, and property, which had over 10% growth. In addition, Global Commercial had very strong renewal retention. International retention was 89% and North America retention was 87%. Moving on to Global Personal Insurance. Net premiums written grew 5% year-over-year. North America Personal net premiums written increased 8% from the prior year quarter, primarily driven by the high net worth business. International Personal net premiums written increased by 4% year-over-year, driven by growth in personal auto and accident health new business. Shifting to the combined ratio, as I noted earlier, the second quarter General Insurance accident year combined ratio, excluding catastrophes was 87.6%, a 170 basis point improvement year-over-year, driven by 140 basis point improvement in the expense ratio. In Global Commercial, the second quarter accident year combined ratio, excluding catastrophes was 83.5%, a 180 basis point improvement. The North America Commercial accident year combined ratio, excluding catastrophes was 84.7%, a 250 basis point improvement. And the International Commercial accident year combined ratio, excluding catastrophes was 82.1% or a 130 basis point improvement. The Global Personal accident year combined ratio, excluding catastrophes was 96.8%, a 130 basis point improvement from the prior year quarter. North America personal improved its accident year combined ratio, excluding catastrophes to 101.8%, a 530 basis point improvement. International personal improved its accident year combined ratio, excluding catastrophes by 50 basis points and 94.8%, driven by improvements in the expense ratio. Now I want to shift to provide some context around mid-year reinsurance renewals and recent conditions in the reinsurance market. As we have previously discussed, we purchased the vast majority of our treaty reinsurance at January 1. However, approximately 20% of our overall core reinsurance purchasing occurs in the second quarter. We were able to execute on all of our strategic reinsurance goals this quarter, achieving risk adjusted rate decreases and lowering or maintaining retentions across all of our major purchases. The outlook for the second half of 2024, particularly with respect to natural catastrophes is uncertain. The five leading forecasters are predicting above average hurricane activity for the 2024 season. While there was a lot of positive sentiment across the industry following modest natural CAT loss activity in the first quarter, I've learned over my career to wait until the wind and typhoon seasons are over before declaring how the year will be impacted by natural disasters. It's simply too unpredictable. When reviewing capacity in the market, it's important to analyze the available capacity from the rated market and the alternative capital market. We're all well aware of what happened with rated reinsurers in 2022. On average, they moved attachment points significantly higher to higher return periods and they restricted coverage mostly to name perils. If you were to look at the complementary alternative capital market, it has approximately $110 billion of estimated capital deployed and in many ways, more stated available capital in any individual year over the prior 10 years. However, you need to review what makes up that $110 billion to appreciate the true availability for reinsurance. The CAT bond market and ILW market make up approximately 50% of the alternative capital market, the highest nominal amount of any time in history and those products are accompanied with basis risk and in some cases, meaningful basis risk. Additionally, the collateralized market is back to 2016 levels, which is somewhere between $45 billion to $50 billion of capital. The market is deploying 90% of the collateralized limit as occurrence reinsurance or occurrence retro, leaving less than 10% of the remaining collateralized reinsurance available for aggregate covers. Why do I outline this level of detail? Because we've remain very disciplined and maintained our aggregate cover at the same attachment point and AIG utilizes approximately 50% of the globally available ILS reinsurance aggregate CAT capacity. This purchase protects us from the potential frequency of CAT and allows us to prudently manage volatility. And again, based on my experience, once insurers give up lower occurrence or aggregate attachment points, you simply do not get them back. Further, analyzing industry data from over 150 companies published by AAON between 2013 and 2024, average attachment points went up on an inflation adjusted nominal basis everywhere in the world, in some cases significantly during that period. For example, in Asia, average attachment points increased over 270%, EMEA and the UK over 250%, and in the U.S. over 280%. AIG has structured its treaties to have lower attachment points with less volatility. When examining occurrence attachment points across the world from 2022 to 2024, which is another very good measurement, AIG has maintained or reduced its attaching points, making it the lowest amongst our peer group. For the balance of 2024, we have approximately $95 million remaining on our international aggregate cover, excluding Japan and $270 million on our North America aggregate cover, excluding wind and quake. This is well within our established risk appetite and believe we remain well protected against both the frequency and severity of CAT events. Reinsurance premiums are well embedded in our original pricing and our portfolio for properties performing exceptionally well. Now I will provide a high level summary of our capital management strategy and the milestones we've accomplished. We've made enormous progress executing against our capital management goals in a disciplined manner with a focus on positioning AIG for the future and driving value for our shareholders. We have deployed over $30 billion in cash towards that capital management strategy over the last three years, which has provided AIG with maximum flexibility. To provide context on the magnitude of what we accomplished, there are some key highlights. In 2021, AIG had greater than 850 million shares outstanding and approximately $25 billion of outstanding debt and preferred stock. Using current liquidity and proceeds generated from divestitures and earnings, over the past three years, we repurchased over $13.5 billion of shares, reducing our overall share count by over 200 million shares or approximately 25%. As of June 30, 2024, we have less than 650 million shares outstanding. We expect to further reduce this in the second half of 2024 and in 2025, depending on the timing of the closing of the Nippon Life transaction, subject to regulatory approvals, as well as additional future sell downs of our remaining Corebridge shares subject to market conditions. By the end of 2025, we expect our share count to be in the 550 million to 600 million target range, consistent with the guidance that I provided last quarter, representing a total of $10 billion of share repurchases over the course of 2024 and 2025, subject to market conditions. Since 2021, we paid approximately $3 billion of shareholder dividends. We increased the dividend by more than 10% in each of the last two consecutive years. Additionally, we reduced AIG's debt outstanding from $25 billion to $9.8 billion and have achieved our target debt to capital leverage ratio range of 15% to 20% with a second quarter leverage of 18% versus 27% three years ago. Our insurance company subsidiaries are in a very strong capital position with capital ratios above target ranges, which will enable us to continue to grow profitably without having to contribute additional capital. We ended the second quarter with $5.3 billion of parent liquidity and we continue to explore compelling and strategic inorganic opportunities that are complementary to our current business. As part of positioning AIG for the future, over the past several years, we've been on a journey to simplify AIG. We're weaving the company together to operate seamlessly as one cohesive organization across underwriting, claims and all of our functional areas with the skills and capabilities to compete in the future. As a company, we've completed multiple transformation programs. These efforts, including AIG 200 have resulted in a reduction of our expense base of approximately $1.5 billion since 2018, while investing for the future. For example, over the last two years, we've invested approximately $300 million in data, digital workflow, AI and talent to accelerate our progress. If you look over the past five years, it include technology, end-to-end process workflow and foundational data investments that were part of AIG 200, our investment has been over $1 billion. Also at the beginning of 2024, we formally launched AIG Next to further accelerate the realization of additional operational efficiencies. As part of the AIG Next program, we're redefining our existing retained parent costs to reflect only expenses related to being a global regulated public company such as costs related to corporate governance, enterprise risk management and audit. Our objective is to decrease retained parent cost to $325 million to $350 million, or 1% to 1.5% of net premiums earned going forward. Expenses not defined as parent company costs will be fully embedded within the General Insurance results or they'll be redundant. All of the factors being equal, we would expect our full year 2025 calendar year combined ratio to be the same or lower than the full year 2023 metric on a comparable basis as a result of the actions were taken as part of AIG Next. We originally provided guidance that we would reach the combined ratio as the exit run rate at the end of 2025, and we now believe we can achieve it in the 2025 calendar year. Additionally, while I've not spoken in detail about AI in the past, we've been making substantial progress and I want to provide a high level overview. AIG is advancing its data and digital strategy using artificial intelligence, large language models and data ingestion applications with the objective of increasing underwriting efficiency and augmenting execution capabilities. We've spent considerable time over the past 12 months to 18 months creating a blueprint for the future that we use each of these components together, where each one is integral and connected and we redesign and refine the end-to-end underwriting workflow processes. Our primary objective is to construct an AI powered underwriting portfolio optimization capability that provides faster, more thorough, deeper analysis and improved customer service in quoting, binding and policy issuance by enabling increased underwriting productivity through the automation of manual processes. This will drive more accurate informed decisions by leveraging better data through foundational sources such as broker and agent submissions, and supplemented with validated sources of additional third-party data. We will then combine this enhanced capability with advanced modeling and amplify compute capabilities, underpinning this work is a robust governance framework designed to keep pace with the rapidly evolving global AI regulatory landscape. I will discuss two areas of focus, underwriting efficiency and underwriting management. With underwriting efficiency, we're developing a mechanism using large language models by which submissions are automatically filtered through real-time underwriting guidelines, allowing underwriters more capacity and the ability to assess many more submissions that meet our defined underwriting criteria, objectives and risk appetite. In underwriting management, we're dynamically managing the review of submission data with a disciplined application of underwriting guidelines and portfolio objectives, allowing underwriting leadership to more deeply and accurately analyze market conditions and enabling dynamic adjustments to underwriting guidelines, pricing and limit deployment. As we build our agentic ecosystem, we're using a multi-vendor technology strategy with multiple partners that is designed to evolve over-time. Our platform has been built for flexibility, configurability and adaptability to accommodate current and future technology. This includes the ability to support the expansion of generative AI capabilities for scalability globally across our platform, while keeping the underwriter at the center of decision making. This is just a glimpse into the significant work we've been doing to use generative AI and large language models as part of our overall data and digital strategy. We'll continue to advance these efforts over the remainder of this year and as we enter 2025. In summary, I'm very pleased with our performance in the second quarter and what we've accomplished not only during the quarter, but over the past several years to prepare AIG for a bright future. With that, I'll turn the call over to Sabra.

Peter Zaffino:

Great. Thank you, Sabra. Operator, we're ready for questions.

Michael Zaremski:

Hey, great. Good morning. First question on the updated kind of combined ratio trajectory guidance for '25. So loud and clear that you'll be able to kind of hit it a bit sooner. I'm curious if you can kind of, if we focus on the loss ratio, what the guidance implies on a like-for-like basis on the loss ratio? Some of the questions we get continuously around most companies seeing some slippage in their loss ratios given lower levels of reserve releases. I'm curious if that's something that's considered within your loss ratio guidance.

Michael Zaremski:

And I guess just I'll stick on this for my follow-up. So given pricing is below loss trend in certain lines like property and understanding that the absolute, maybe this is the answer to the absolute pricing levels are still accretive to the -- to ROE or loss ratio just does it. To the extent, the current pricing environment held, why does it kind of make sense that the loss ratio should be able to kind of stay flattish, and not trying to be negative, just trying to nitpick on the margin?

Michael Zaremski:

Thank you.

Meyer Shields:

Thank you. First question, just I was hoping we can get a general sense of the impact of the sale of the travel insurance on underwriting results in North America Personal

Meyer Shields:

Okay. Perfect. Second question, I guess, on the excess casualty, if I understood Sabra's comments correctly, you had favorable development even on that line outside of 2021, which was a weird year. And I was hoping you could sort of break that down for us. I assume that that's older years rather than recent years, but I wanted to confirm that.

Sabra Purtill:

Yeah. Sure. And just for everyone's benefit, I'll just start by framing a little bit what we did in the quarter for the DVRs. So this quarter, we evaluated $20.2 billion of reserves for U.S. casualty. That's comprised of 23 separate DVRs and more than 200 different lines of business, and then that aggregates to the five lines that you see on the 10-Q. So the net changes in the quarter were only about $20 million after written premiums, and that was $80 million favorable in workers' comp after the ADC, which has about $8 billion of reserves. It was $22 million unfavorable in excess casualty, which also has about $5 billion of reserves. And then in casualty, it's also about $5 billion reserve for $17 million favorable. In terms of the 2021 accident year, as we've noted on previous calls, we've increased our loss cost trends for 2020 and subsequent years. The adjustments we made in 2021 are from just a combination of known early reported claims that due to their facts and circumstances, we expect to penetrate the excess attachment level, including a rebound in the auto frequency and severity. In 2022 and 2023 accident years, we just have not had that same level of early claims experience, and therefore, we still have a high level of IBNR in the reserves. With respect to the accident year within excess casualty, I would note that while we did have the $66 million of adverse development in accident year 2021, we had $33 million of favorable development excess casualty from accident years prior to 2016, and that's where the delta comes it nets down to closer to the $22 million amount.

Peter Zaffino:

Thank you, Meyer. Next question, please.

Elyse Greenspan:

Hi, thanks. Good morning. Appreciate all the color you guys are providing on the call. My first question, Peter, you said that the full year 2025 calendar year combined ratio would be the same or lower than the full year '23. Since you said comparable basis, I'm assuming you mean ex-Crop and Validus. Can you guys just disclose what that figure is, just so we know what you're setting the '25 baseline out? What was the 2023 adjusted figure?

Elyse Greenspan:

Okay. Thank you. And then my second question is, you also mentioned in your prepared remarks, you said something about exploring inorganic opportunities. Can you just expand what that means? You guys have obviously taken action of divesting of certain businesses. So what would you look at on the expansion side and what criteria would any potential inorganic deals need to meet?

Elyse Greenspan:

Thank you.

Operator:

Thank you. Our next question comes from Rob Cox with Goldman Sachs. Your line is open.

Peter Zaffino:

Sure. Thank you, Rob. It's really driven by mix of business. And if you take a look at this year compared to last year on a net premium earned basis, like the commercial and personal insurance businesses are literally identical in terms of its overall contribution to total premium. And then the commercial loss ratio largely stayed flat like a 10 basis point improvement, but largely flat. What happened was the Personal Insurance loss ratio dramatically improved, driven by North America which was well over 400 basis points. And so I think that that's really driving the first six months. And if we look at the back half, I mean, should we see the same thing? I think so. But you've seen all the tremendous new business, the momentum we have. The mix of business could be changed a little bit year-over-year when we look at the back half of the year, but that's really what's driving the improved loss ratio in the first six months. So it's really a true mix of business and also the significant improvement that North America personal is making and we expect them to continue to make.

Peter Zaffino:

The high net worth business had the same issues that the commercial business did, which it had too much TIV and it gets more pronounced in the high net worth business, because it's more dense. And so we needed to shed aggregate for a lot of reasons. One is that we had too much exposure in certain geographies like the world changed with COVID, the pandemic and all the macro factors that affected it. And then also the evolution of more capabilities in the non-admitted market. And so what we decided, and we've been thinking about this for a couple of years, is that build out an admitted platform that is going to be very strong, the right infrastructure and have the ability to grow, but also complement that with the non-admitted market and be able to do that where you have flexibility and form rate and limits and how you can actually respond to client needs. And there's a need. And so what we've been working on is what's the best way to do that, partnering with Ryan Specialty. It's a highly fragmented wholesale market. So nobody has a real strong expertise in high net worth unless you start to build it. And I think Ryan has been doing that. And so getting access to the 40,000 independent agents with a product that's going to be saleable, and we have done such a terrific job in terms of creating opportunity for more aggregate that we want to be able to have both options. And we believe that we'll be able to grow the non-admitted property market just based on the partnership that we just announced recently. So it's always been in the plan, but we didn't want to go out and just say, we're going to do non-admitted and have it a fragmented not strategic approach. And so we believe this is going to give us great opportunities to access the market in a different way.

Peter Zaffino:

Thank you.

Mike Ward:

Thank you. Good morning. I just had one question and is somewhat related. But overall for the business and including commercial lines, curious how you guys are shifting the culture back to sort of a growth mindset, thinking about all the change that you've executed? And I guess, where are we in that part of the story? And should we think about AIG as potentially being able to grow faster than the market, all equal, just by turning some of the spigots back on?

Don Bailey:

Yeah. Thanks, Peter. And we have definitely pivoted to that growth mindset. Its first important to mention that we were doing this off of transforming the business over the last few years. So we come into the growth with a position of strength regarding underwriting discipline, profitability. You've heard about all that. Regarding the growth, we've been very deliberate and creating more value for our distribution partners and clients than ever before, and we're applying much more rigor in pursuing like targeted risks. All of that is what you start to see showing up in the numbers now. And I can give you a little bit more color. The retention that we're delivering high levels of retention across all of our business. I would also add that we're executing on specific market opportunities, notably retail casualty and Lexington. On the retail casualty side, we are on offense. The discipline in the excess market is a positive for us right now, and we're moving on that. Regarding Lex, the growth there comes from three places. We have strong -- continued strong retention there, new products and new customers. So it's not from bigger limits. I would describe it as healthy, horizontal growth. Regarding the sustainability of it, which I think is important, I can look at some of our Lex submission data and share that with you. Year-to-date submissions at Lex are up 42%, and that's on top of 39% growth through last year through six months. We view this as a clear flight to quality in that space. I should also add that we resourced all of that in advance. So we're well positioned to take advantage of what's coming. And Peter, I'll just say this in closing on my end, we're getting all that growth while achieving outstanding loss ratios in the core business.

Jon Hancock:

Yeah. I mean, I won't repeat what you've already said, Peter or Don, but I would say, this is still a very good market for us to underwrite in. We've got a really large diverse portfolio across international, gives us access to a huge amount of opportunity, different segments, different geographies, different points in time. So we can reshape and shift the book depending on what we see in each market. Similar themes to Don, this has been very planful. This is not opportunistic growth here. We've been building to this for a long time of a very, very high quality book of business. We start with retaining 89% of what we've worked really hard to build a really strong book. New business submissions are up as well. We're retaining that our own flight to quality as well as the market. Hopefully, we've done the markets flight to quality. A couple of highlights for me. We've got a world-class global specialty business. It's grown 8% in the quarter. And that's driven by some very, very good new business in all of the global specialty segments, especially in marine and energy, where we are recognized world leaders in both. We've grown new business in marine 15% over Q1 last year, especially strong in cargo in the UK and across Europe. Peter, you already referenced the energy, 13% increase in new business year-over-year. And that's in all of our global hubs and all of our products actually. So really, really strong targeted growth with one of our best performing profitability businesses. And I'll just finish on, I'll add in Talbot as well Talbot at Lloyd's another very, very good quarter of growth of 12%. And again, that's driven by targeted growth in specialty lines of marine liability that we grew at 13%, cargo and specie at 16% and upstream energy at 19%. And both of those with the market we've got the pipeline that we've got, we expect to see continued good growth.

Operator:

Thank you. This does conclude the program. You may now disconnect. Good day.

Operator:

Good day, and welcome to AIG's First Quarter 2024 Financial Results Conference Call. This conference is being recorded.

Quentin McMillan:

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

During my remarks this morning, I will discuss 4 important topics:

first, I will provide some financial highlights in the quarter focused on the General Insurance business, including some insight into our net premiums written; second, I will talk briefly about the results in Life and Retirement; third, I will provide an update on our capital management strategy, specifically our plans for 2024 and 2025; and finally, I will discuss our path to a 10%-plus ROCE and provide more detail on AIG Next and our future state operating structure that will create value through a leaner and more unified company.

Operator:

[Operator Instructions] Our first question comes from Mike Zaremski with BMO.

Peter Zaffino;Chairman and CEO:

Thanks, Mike. It's a very good question. We are going to stay very committed to the capital management structure we outlined, which is why I gave guidance on not only '24 but '25 in terms of share repurchases.

Michael Zaremski:

Okay. Understood. And my follow-up is just on the overall competitive environment relative to growth. So you guys have been very open. You have lots of pricing gauges. You've talked about Financial Lines being -- continue to be a soft-ish marketplace. but you've also said that you estimate pricing above loss cost trend.

Peter Zaffino;Chairman and CEO:

Yes. Thanks. It's a very good question. Let me start on growth. You can't -- one is you can't always look at broker index. Again, I don't know what Marsh index tracks, but sometimes, they don't catch fee business. They don't really catch the entire sort of market, which is the market we play in.

It's hard in any one quarter to sometimes draw conclusions like you saw in terms of the gross premium written in this quarter. It's really driven by 3 lines:

Specialty; Financial Lines; and Casualty. The first quarter was impacted in International by energy within the Specialty class. But it's a great business, we're a world leader in that class, great underwriting capabilities and global distribution. And expect us to continue to grow that, and it's a very attractive combined ratio.

Operator:

Our next question comes from Elyse Greenspan with Wells Fargo.

Peter Zaffino;Chairman and CEO:

There's not a whole lot more I can offer in terms of the prepared remarks. Every sell-down has been important, but this one is particularly important just because we would likely become a seller of shares that will deconsolidate Corebridge. So we continue to focus on making certain we're looking at every option available.

Peter Zaffino;Chairman and CEO:

Yes. Thanks, Elyse. I think while we gave the guidance into 2025 is -- what I said in my prepared remarks is that by the end of the second quarter, if we exercise on the share repurchases that we've outlined, we would be at the higher end of the range of the 600 million to 650 million. And if we continue the $1.5 billion a quarter, which, yes, would contemplate doing a sell-down of Corebridge. But there's other forms of liquidity that come into AIG, but we would need to sell down to be able to do the $1.5 billion in the third and fourth quarter, but that gets us to the lower end of the range.

Operator:

Our next question comes from Ryan Tunis with Autonomous.

Peter Zaffino;Chairman and CEO:

I would take it as just an update. We would have gone past our current Board authorization with the 2025 guidance and worked very closely with the AIG Board of Directors to talk about what we expected the capital management strategy to be in the next 6 quarters. And that's really how we derive the $10 billion. But I wouldn't think about it anything more than that.

Operator:

Our next question comes from Rob Cox with Goldman Sachs.

Peter Zaffino;Chairman and CEO:

Sure. I'll ask Sabra to comment on some of the leverage within the insurance company subsidiaries. We see great opportunities for us to grow within -- across the world. And you've mentioned Property and specifics. We have significantly reduced PMLs, which means we have aggregate to grow. And we have the capital to grow.

Sabra Purtill:

Yes. Thank you, Peter. What I would just observe is, as we've stated in the past, and I'll reiterate today, all of our General Insurance subsidiaries or Tier 1 subsidiaries on a global basis have capital at or above our target ranges. And within the United States pool, which is the largest pool of our General Insurance capital, our risk-based capital ratios at the end of last year were around 460%, which is well higher than many of our peers.

Robert Cox:

That's really helpful color. Yes, just a follow-up on Excess Casualty. I appreciate the comments. The premiums were up 46% in the quarter, and it seems like pricing is up meaningfully. It seems like AIG is taking advantage of market conditions where perhaps some others are pulling back. So I was hoping you could provide a little bit more commentary on the opportunities you're seeing there. And what makes AIG comfortable with the current environment?

Operator:

Our next question comes from Michael Ward with Citigroup.

Peter Zaffino;Chairman and CEO:

I wish I could provide a little bit more detail on the first part of the question. We're looking at all alternatives, all size. I mean, so much is market-dependent. You have certain windows. And we want to make sure -- we have multiple stakeholders, I mean, within Corebridge shareholders, AIG shareholders, so sort of balancing that is really important for us.

Operator:

Thank you for your participation. This does conclude the program. You may now disconnect. Everyone, have a great day.

Operator:

Good day, and welcome to AIG's Fourth Quarter 2023 Financial Results Conference Call. This conference is being recorded.

Quentin McMillan:

Thanks very much, and good morning. Today's remarks may include forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. 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, circumstances or management's estimates or opinions should change.

AIG Next will focus on the following key principles:

driving global consistency and local relevancy across our end-to-end processes to improve operational efficiency and effectiveness, reducing organizational complexity to create a better and differentiated experience for our clients and colleagues, creating an agile and scalable organization to support business growth, optimizing our ecosystem to modernize our data analytics, digital and technology capabilities, clarifying roles' responsibilities while eliminating duplication and increasing our speed of execution.

Sabra Purtill:

Thank you, Peter. This morning, I will provide more detail on AIG's fourth quarter results. But first, as we are getting closer to Corebridge deconsolidation, I would like to start with an illustrative pro forma.

Peter Zaffino;Chairman and CEO:

Thank you, Sabra. Michelle, we're ready for questions.

Michael Zaremski:

Maybe first on the expense ratio. I appreciate the color, Peter, you gave us on the continued improvement. Anything -- looks like this quarter, specifically, though, it took -- it was a bit higher than expected. Anything we should be thinking about? Or I don't know, if it's profit share, given the excellent loss ratio or just anything, any noise in there or seasonality?

Michael Zaremski:

Okay. Great. And then my final follow-up is on the -- specifically on the accident year loss ratio. You've -- the Validus is property-centric, and it's going to be kind of fully out of the numbers next quarter. You talked about nonrenewing some property throughout the year.

Peter Zaffino;Chairman and CEO:

I don't think so. I think the accident year loss ratio that we finished the year is what I would expect in 2024. Like you said, there's always a mix of business changes. There's always a little bit of noise. There could be some shift in composition. As you mentioned, property, we think we have tremendous opportunities there based on having 5 or 6 entry points across the world in terms of getting the best risk-adjusted returns.

Meyer Shields:

Great. One quick question just to make sure I understand it. So you talked about pricing assumptions for casualty, assuming loss trends of either high single digits or low teens. Did that match the loss trends embedded in the reserves?

Sabra Purtill:

Yes. So when we've -- and we've talked about it in the past, we've taken a proactive approach to try and to react quickly to bad news that we see in trends. And as you know, even back in 2017, we moved to increase the reserves on casualty lines.

Meyer Shields:

Okay. Fantastic. That's very helpful. Second question, I guess, maybe jumping off from that. I guess I'm a little surprised that there's still, if I understand correctly, the same level of proportional sessions on North American casualty despite the fact that overall profitability has gotten so much better and higher interest rates. And I was hoping you could take us through your thinking on that.

Operator:

Our next question comes from Elyse Greenspan with Wells Fargo.

Peter Zaffino;Chairman and CEO:

Thanks, Elyse. I'll turn it over to Sabra in 2 seconds. But I just want to caution us that we tried to outline what we expect shareholders' equity with a variety of different variables, but it was all pro forma.

Sabra Purtill:

Yes, certainly. Look, we have a framework around our liquidity position. And clearly, given the timing of the Corebridge secondaries and the Validus sale in the fourth quarter, parent liquidity was at very attractive and high levels at year-end.

Elyse Greenspan:

And then my second question, appreciate all the color on the call on premium growth, right, I think it was around 9% in the quarter kind of ex Validus and Crop. And so as we think about the moving pieces and just your view of price, loss trend, et cetera, would you expect top line growth kind of on an adjusted basis to be within that range in '24? Are there other things that we should consider?

Michael Ward:

Maybe kind of a similar question, but specifically on International. I think rate is a little below loss cost. So I was just wondering if you have any commentary on how you see the top line growth there playing out.

Michael Ward:

And then maybe just on the adverse PYD in Russia, Ukraine. Just is that related to aviation? And is that just accident year '22? Because I think there was some adverse in other -- '20 and '19.

Sabra Purtill:

Sure. And I'll just start by overall. As I mentioned, we did have some favorable prior year development from older catastrophe years. So those were basically in years 2018 through 2020.

Brian Meredith:

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

Brian Meredith:

Great. That's helpful. And then, Peter, I just want to chat briefly on the Financial Lines business. And it seems like everybody is cutting Financial Lines. I'm just kind of wondering like who is actually running the business? And do we think we're getting closer to a bottom here? And do you think that's still a significant headwind to 2024 premium growth?

David McElroy:

Thank you, Brian, and thank you, Peter. The -- yes, honestly, Brian, you see the weighting of the Financial Lines in our portfolio. It's a bit of an outside influence. But we've also gone through the year, and I think we trade the market we're in, not the market we hope for.

Operator:

Thank you for participating in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.

Operator:

Good day, and welcome to AIG's Third Quarter 2023 Financial Results Conference Call. This conference is being recorded.

Quentin McMillan:

Thanks very much, and good morning.

Peter Zaffino;Chairman and CEO:

Good morning, and thank you for joining us today to review our third quarter financial results. Following my remarks, Sabra will provide more detail on the quarter and then we will take questions. Kevin Hogan and David McElroy will join us for the Q&A portion of the call.

During my remarks this morning, I will discuss the following topics:

first, AIG's financial results, including Life and Retirement, and provide an update on recent divestitures; second, I will provide the results of AIG's General Insurance business; third, I will provide an update on the casualty insurance market more broadly and AIG's approach to our casualty portfolio; fourth, I will provide an update on our capital management strategy and the progress we have made this quarter. Sabra will provide more detail on AIG's balance sheet and capital position in her remarks. And lastly, I will reconfirm our guidance with respect to our path to a 10%-plus ROCE post deconsolidation of Corebridge.

Peter Zaffino;Chairman and CEO:

Thanks, Sabra. And Michelle, we're ready for questions.

Meyer Shields:

One question to start on reserves. I guess, what's the process for ensuring that the adverse development in International Commercial doesn't actually reflect social inflation problem and that it's individual cases?

Sabra Purtill:

Yes, certainly. And let me first start by explaining what the DVR process is. So DVR is a once-a-year deep-dive into our reserves. But each quarter, we do an actual versus expected analysis. So we do make adjustments to reserves on lines of business during the ordinary part of the year, but the deep-dive is where we really drill down into the lines in great detail.

Meyer Shields:

Yes, just a quick one. I know there's a lot of moving parts in North America Personal. I was hoping you could give us some sense of maybe true underlying underwriting results and the path to profitability in that segment.

Gary Ransom:

I wanted to ask about Financial Lines. On the one hand, you noted that rates are going down in that segment. And on the other hand, you were talking about social inflation. And I mean, just generally, it seems to be as worrisome as ever. I know your reserves held up this quarter, but it's like we're in a soft market for those financial lines. And I wondered if you could add some more color on how you're managing through that portion of the cycle in that business.

Peter Zaffino;Chairman and CEO:

Thank you, David. Very thorough. Appreciate it. Gary...

Operator:

Our next question comes from Alex Scott with Goldman Sachs.

Michael Zaremski:

My question is kind of on some points that were touched on already on the portfolio transformation strategy, which has obviously been successful over the past 5 years. So Peter, you used the T word, trillion, you said $1.4 trillion limit reduction. So just curious, I think David gave us a flavor of this answer, but does that -- is there a way to frame what percentage limit reduction your average -- this average policy is? It sounded like David said it's over 50% in some of those Financial Lines?

Peter Zaffino;Chairman and CEO:

Yes. I think you recognize how we were able to reduce volatility. When you have -- I have to even pause when I have to write out trillion because it's a big number. And $1.4 trillion of limit, I don't think that's been done in our business before, and then reposition the portfolio to drive significant profitability improvement.

Peter Zaffino;Chairman and CEO:

Sure. Look, we've had a lot of change over the last 5 years. When I look at our overall attrition, it's at all-time low. We've had a couple of senior executives that we brought in to position the organization for the future and believe that the underwriting structure that we put forward is going to be with us for a couple of years. It's going to drive the performance that we've become accustomed to. And we'll continue to bring in skill sets in the organization that supplement what we already have in order to position us for the future.

Operator:

Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.

Operator:

Good day, and welcome to AIG's Second Quarter 2023 Financial Results Conference Call. This conference is being recorded. Now at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.

Peter Zaffino:

Good morning, and thank you for joining us to review our second quarter financial results. Following my remarks, Sabra will provide more detail on the quarter, and then we will take questions. Kevin Hogan and David McElroy will join us for the Q&A portion of the call.

As we have discussed over the past few years, the core objectives of the property and casualty turnaround were:

to substantially improve the overall quality of AIG's global portfolio and underwriting results; reduce volatility through a massive reduction in growth limits written; better manage peak zone exposures and geographic balance; and strategically use reinsurance across our overall business. A turnaround of this magnitude is made harder when you have a treaty reinsurance business, which, by its very nature, has volatility.

Sabra Purtill:

Thank you, Peter. This morning, I will provide more detail on second quarter results, including net investment income and underwriting performance, provide a balance sheet update and review the drivers of our path to a 10%-plus adjusted ROCE.

Second quarter results were consistent with recent trends:

strong underwriting margins and higher net investment income in General Insurance; increased base investment yields; and spreads and strong sales in Life and Retirement and continued expense reduction in balanced capital management and Corporate and Other.

Operator:

[Operator Instructions] Our first question comes from Paul Newsome with Piper Sandler.

Peter Zaffino:

Sure. Thanks, Paul. As we talked about in our prepared remarks, we are very pleased with our overall growth across the world. And retention is up, new business was terrific and balanced. And rate, well above loss cost, was evident in so many parts of our business.

Peter Zaffino:

Yes, thanks, Paul. I gave probably a little bit more PML information than people may have liked, but it's really the story is 3 components. One is what we did in the reunderwriting to reduce gross exposure across AIG. By the way, including Validus Re over the last several years. And we shed over $1 trillion of limit most of it property. And so that had an effect on exposure and PMLs at all return periods.

Meyer Shields:

Peter, you gave us a lot of detail about rate and exposure changes. And we saw a little bit of sequential improvement. But I was wondering if you could talk about changes in the gap between rate increases and loss trends from the first quarter to the second quarter of this year.

Peter Zaffino:

Yes. Well, Lexington is just a great story. When we look at -- we had record submission count across Lexington. We drove very strong growth at the top line, but it's one of our most profitable businesses. And Dave McElroy, Lou Levinson, who leads Lexington, this has all been about driving value for our distribution partners and wholesale brokers. And we've been asking for submission activity on all lines of business.

Yaron Kinar:

First question, I guess, going back to Paul's question on Validus. Could you offer us like a pro forma margin profile for North America Commercial ex the Validus sale, maybe even ex the crop business?

Yaron Kinar:

Got it. And maybe just as a clarification. Your commentary, is that on a reported basis or underlying?

Yaron Kinar:

Got it. And then my second question, given the secondary and Corebridge and we're starting to see a line of sight to below 50%, can you maybe offer us a precise threshold for deconsolidation?

Yaron Kinar:

Sure.

Yaron Kinar:

Peter, I apologize. I was not really focused on the timing. I was more interested on what the precise percentage would be to see deconsolidation. Is it the second we drop below 50%?

Operator:

Our next question comes from Alex Scott with Goldman Sachs.

Peter Zaffino:

I think what we've outlined is still the base case. We ended up in the low 700s in terms of our share count. Sabra did a very good job of outlining the liquidity that we have and liquidity that will be coming in.

Taylor Scott:

Got it. That makes sense. I guess a follow-up sort of in the same vein. In terms of organic deployment, I listen to the PML comments you're making and think about the volatility and how much better it is and then the fact that you guys, I think, still have below-average underwriting leverage, at least when we sort of look at like premiums to surplus, those kind of metrics. Do you have the capacity to be able to fund this greater growth, whether it's in Lexington and some other businesses in General Insurance, without using so much of the proceeds from the strategic actions?

Sabra Purtill:

Yes. Thanks. I would just note, as I mentioned in my prepared comments, that the risk-based capital ratios in our U.S. pool are in the range of 470% to 480%, which is well above our target range of 400% to 420%. So we have ample capacity within the General Insurance businesses today to support growth.

Michael Zaremski:

My question is about the exist -- remaining portfolio post the sale of Validus pending in the crop business. Are there other and what you did on the -- what you're doing on the personal line side. Are there other pieces of the portfolio that still need additional optimization? Or are we kind of mostly through the major actions?

Operator:

Thank you for participating at today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.

Operator:

Good day, and welcome to AIG's First Quarter 2023 Financial Results Conference Call. This conference is being recorded.

Quentin McMillan:

Thanks very much, Michelle, and good morning. Today's remarks may include forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. AIG's filings with the SEC provided 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.

Peter Zaffino;Chairman and CEO:

Good morning, and thank you for joining us to review our first quarter financial results. Following my remarks, Sabra will provide more financial detail in the quarter, and then we will take questions. Kevin Hogan and David McElroy will be available for the Q&A portion of the call.

During the remainder of my remarks this morning, I'll provide more information on the following 5 topics:

first, I will review the first quarter results for General Insurance; second, I will give a high-level overview of the results for Life and Retirement, and Sabra will provide more detail in her remarks; third, I will provide an update on a few strategic initiatives, including the announcement last week relating to Private Client Services, our MGA partnership with Stone Point Capital, our announcement on Tuesday of the sale of Crop Risk Services and our intent to sell Laya Healthcare, which is a part of Corebridge and Ireland's second largest health insurance provider; fourth, I will provide more information on capital management actions; lastly, I will review progress on our path to a 10%-plus ROCE, including an update on the work we are doing on the future state business model of AIG.

Operator:

[Operator Instructions] Our first question comes from Meyer Shields with KBW.

Quentin McMillan:

Meyer, this is Quentin. I think we're having a little audio technical difficulties. So if you can bear with us for just one moment, we'll be back in just 1 second.

Peter Zaffino;Chairman and CEO:

Can you hear me now?

Peter Zaffino;Chairman and CEO:

I heard the questions, Quentin. Sorry, I actually had a good answer too. I just was on -- not a microphone that worked. So Meyer, back to your question is that we had -- you have to look at the portfolio composition to be able to answer the question. And Validus Re obviously had meaningful growth on gross and net during the quarter. And so, therefore, it's hard to look at the cessions year-over-year when you're having a retro program that fits the portfolio that you're underwriting.

Peter Zaffino;Chairman and CEO:

It really doesn't, Meyer. I mean they're really distinct businesses. I mean, certainly, our Travel and Warranty have platforms that are global and that give us capabilities across the world. But as you know, Private Client Group, in particular in the U.S., is a unique asset. Again, the guidance I gave in the prepared remarks, it's one that we believe we will grow the net premium written because we don't believe we need the quota shares anymore after the excellent job the team has done in repositioning and re-underwriting that portfolio. We have substantially less cat in aggregates that we once did. So I think that's something that will be a little different in terms of -- if you look at International.

Operator:

Our next question comes from Paul Newsome with Piper Sandler.

Peter Zaffino;Chairman and CEO:

Paul, let me make sure I understand the question. I mean are you asking in terms of what's going to happen to the expense ratios over time as we start to reposition and grow the business?

Peter Zaffino;Chairman and CEO:

Okay, thank you. This year, as I said in my prepared remarks, we are going to see a lot more net premium written. The reason for that is as we were repositioning the business over the last 2 years, we bought very low excess of loss catastrophe reinsurance. We bought a substantial quota share. We ceded a significant amount of Syndicate 2019, which also had retrocession behind that in a variety of forms. And so the net premium written was not that large as you've seen. And so part of the repositioning with Stone Point and having an MGA, one is that we think there's tremendous growth opportunities that exist in the business with other capital providers and believe that how we have repositioned the business through rate increases and disciplined underwriting on the admitted side, and then also the non-admitted became an option for us to have flexibility in form and rate. And so that was very positive for us in terms of repositioning the business.

Jon Paul Newsome:

That's great. And maybe a big picture talking about a little bit more of the big picture cat exposures. I mean it looks like -- I'm just looking at the General Insurance overall, the cat load has pretty much stabilized, but that's been a huge part of the improvement over time. Do you think we're pretty much done? And again, I'm not talking about next quarter. I'm talking about years to come, from making this portfolio of businesses have the cat load that you want. I mean is this sort of the run rate we should be thinking about in the long term?

Michael Ward:

I was hoping you could discuss how you think about your excess capital just given the macro volatility. You raised some debt, it sounds like, for some prudent liquidity and for buybacks. I guess given the share price, I guess, the buyback could have been a little bit higher. So just wondering from here, should we expect that you'll sort of hold a bit more capital against uncertainty?

Peter Zaffino;Chairman and CEO:

Great. Thank you. We're always looking at the portfolio and looking at areas where we can add, where we can improve the overall structure of AIG and looking at the different parts of the world that we compete in. I think Crop is a little bit anomalous just because we really do believe it's a very good business, but you know how it works, which is driven by commodity prices and yields. And I think that having scale is really important. While the top line that we publish on a gross and net basis is significant, that's gone up 40%, 50%, if not more, over the past several years based on those components.

Operator:

Our next question comes from Alex Scott with Goldman Sachs.

Peter Zaffino;Chairman and CEO:

Yes. Thanks, Alex. I'll try to expand a bit on it. Because as you can imagine, there's not a lot of more detail that I can really share beyond my prepared remarks. We do believe the secondary is the preferred path. But obviously, it's subject to market conditions as we saw in the first quarter, but we're prepared to go in the second quarter.

Peter Zaffino;Chairman and CEO:

Yes. So we try to provide as much detail as we could on the expense savings. Certainly, let me start with AIG 200 because we still have more to earn through on AIG 200 savings in 2023 and 2024. So over 50% of that will be earned in mostly through the second and through fourth quarter of 2023. We have begun to separate Corebridge. And -- but upon deconsolidation, approximately $300 million of the AIG Corporate expenses will move to Life and Retirement. So that's another variable that you need to consider.

Operator:

Our next question comes from Brian Meredith with UBS.

Peter Zaffino;Chairman and CEO:

Thanks, Brian. Certainly, Validus contributed a meaningful amount to the growth. But look, we bought a lot of retro. It's the first quarter. It's not all property. So each quarter is a bit different in terms of not being able to straight line it.

Brian Meredith:

Okay. Very helpful. And then second question, just curious, some other companies are talking about how the Commercial Property markets are even further firming up in the second quarter. There's more business available. Are you seeing the same kind of dynamics or things actually continuing to improve here in the Commercial Property markets?

Operator:

Good day, and welcome to AIG's Fourth Quarter 2022 Financial Results Conference Call. This conference is being recorded. Now at this time, I would like to turn the conference over to Quentin McMillan. Please, go ahead.

Peter Zaffino;Chairman and CEO:

Good morning, and thank you for joining us to review our fourth quarter and full year 2022 results. Following my remarks, Sabra will provide more detail on certain topics, including Life and Retirement results and our path to a 10%-or-greater ROCE, and then we will take questions. Kevin Hogan and David McElroy would join us for the Q&A portion of the call.

Many factors improved our overall property CAT reinsurance program, with highlights being:

we were able to attain approximately $6 billion of limit, including increasing our per occurrence excess of loss placement; we maintained low attachment points on a model basis; we received support for a $500 million aggregate placement; and our overall spend for AIG increased less than 10% on an absolute and risk-adjusted basis versus 2022.

Operator:

[Operator Instructions] Our first question comes from Elyse Greenspan with Wells Fargo.

Peter Zaffino;Chairman and CEO:

Thanks, Elyse. I would think in terms of how you should think about this, and for us to get to the 10% ROE, Sabra outlined in detail, there's really 3 major ways in which we'll get there. One is through the underwriting results, the other is expense savings. The other is sort of the capital rebalance with share repurchases and other capital management. So you should think about that as a 300 to 350 basis point target in terms of us getting to the double-digit ROCE. Of course, net investment income can benefit, and that's more of a timing issue. We've never said, even in the prior calls, that contribution from increased NOI. NII will be the one that needs to contribute to get us to the 10%, but I think -- I would think of it in that range for the different components.

Peter Zaffino;Chairman and CEO:

Yes. Thank you. The first part, Elyse, we do not change our loss cost assumptions from what we had outlined in the third quarter, so 6.5% remains our view. When you look at the fourth quarter, like you said, overall, there was around 6%. But when you -- you have to take a couple of things into consideration. One is fourth quarter is our seasonally sort of lowest-sized quarter. But if you look at financial lines, like financial lines is even throughout the entire year, first quarter through fourth, so had a little bit more of a contribution to the overall rate index in the fourth quarter.

David McElroy:

Yes. Thank you, Peter. And thank you, Elyse. To Peter's point, we have to be careful around generalizations because we are actually hitting rate over trend in most of our big businesses. The outlier is Financial Lines. And Financial Lines, you also have to unpack a little bit and understand that excess D&O, and excess D&O in large public companies is probably driving some of the macro numbers, but it's not driving the behavior underneath. So in our Financial Lines business, we have professional liability. We have cyber. We have private company business. We have financial institutions. And all those businesses are actually getting rate over trend. But sometimes, when you aggregate up the excess public company business, it suppresses it.

Peter Zaffino;Chairman and CEO:

Thanks, Dave. And don't forget, like the cumulative rate increases we've achieved in D&O over the last 3 years have been north of 80%. So again, it's a line, as Dave says, we're laser focused on. We're not going to chase the market down. But the cumulative rate increases and margin development hasn't been fully recognized, and we're going to look to 2023 with a lot of discipline.

Jon Paul Newsome:

There's been an enormous amount of conversation, and you obviously did a lot to add to about Excess Casualty -- or excess of loss reinsurance and -- but as a large account commercial writer, I assume you're using a lot of facultative as well. And I was curious if the comments that you're making extend into not just sort of excessive loss, but also facultative and even quota share as being as impacted as some of the other pieces of the business and how that would affect AIG.

Peter Zaffino;Chairman and CEO:

I think we've done an exceptional job on the underwriting side with terms and conditions. I think the entire team has focused over the last several years as not only -- certainly pricing's an output, but how we structure our insurance deals, how we focus on client needs, but also how we customize terms and conditions to make sure that we have the appropriate policies and endorsements in the marketplace. I don't think it's over. It's something that's a nuance. But as we look to the property market in 2023, it's one of the areas where, when you report out rate, you really have to understand the risk-adjusted implications of rate increases.

Operator:

Our next question comes from Erik Bass with Autonomous.

Peter Zaffino;Chairman and CEO:

Thanks, Erik. As you know, this has been an active strategy for us, particularly over the back half of 2022. I think the team has done an exceptional job. And Sabra, maybe you can just provide a little bit of insight in terms of some of the NII and the reinvestment rates.

Peter Zaffino;Chairman and CEO:

Yes, Erik, it is. We -- in Other Operations, think about it in a couple of components. I think you've outlined most of them, is that upon deconsolidation, we would have $300 million or there thereabouts go with Corebridge. I mean, there could be some stair step up. I mean, it's hard in 2023 to look at each quarter because we're building Corebridge, as we've talked about before, as a stand-alone public company. So those amounts will be in each quarter, depending on the progress that we're making. So think about the $300 million.

Operator:

Our next question comes from Alex Scott with Goldman Sachs.

Peter Zaffino;Chairman and CEO:

Thank you for the question. You have to really look at the full year, I believe, in terms of showing the progress of what we've done as a company. First and foremost, again, I'll mention it again, which is a culture of underwriting excellence. When we look at Commercial with a 340 basis point improvement in the fourth quarter in terms of its action year combined ratio, ex CATs, 440 for the year, I mean that's substantial progress. I mean, we made enormous improvements in profitability.

Peter Zaffino;Chairman and CEO:

We watch it carefully. I mean Excess Casualty, we're still getting very strong rate we have for the last couple of years. And that didn't stop in the fourth quarter. My prepared remarks were really just focused on, I don't think the market that we entered in the fourth quarter is the market that we're in. There's been a lot of changes over the last 60 days. And like every other line of business, it needs to stand on its own. It needs to develop margin. We want to be conservative in our position and making certain that the underwriting terms and conditions are appropriate. But we're watching it carefully. I haven't seen a substantial downturn in terms of pricing. It's been right in the sort of same range for, as I said, the last 6 quarters. And it's something that we're going to watch very carefully in 2023.

Operator:

Ladies and gentlemen, this concludes your conference for today. Thank you for your participation. You may now disconnect.

Operator:

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

Quentin McMillan:

Thanks very much, and good morning. Today's remarks may include forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. 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 the applicable securities laws, AIG is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change.

Peter Zaffino;Chairman and CEO:

Thank you, Quentin. Good morning, and thank you for joining us today to review our third quarter financial results, which I'm pleased to report were very strong, along with the excellent progress we've made on our strategic priorities. Following my remarks, Shane will provide more detail on the third quarter financial results, and then we'll take questions. Kevin Hogan, David McElroy and Mark Lyons will join us for the Q&A portion of today's call.

Shane Fitzsimons:

Thank you, Peter. As Peter noted, I will provide more detail on the third quarter results, specifically EPS, reserve reviews, net investment income, capital management and the path to achieving an above 10% return on common equity. Adjusted after-tax income was $509 million or $0.66 per share compared to $837 million or $0.97 per share in the prior year quarter. This was driven by a $741 million decline in net investment income, offset by improved underwriting results in General Insurance and solid performance in Life and Retirement as well as improved GOE and Other Operations.

Moving to the risk-based capital ratio, our primary operating subsidiaries remain profitable and well capitalized, with General Insurance's U.S. pool fleet and Life and Retirement's U.S. fleet RBC ratios both above our target ranges. We continue to make progress on the 4 priorities to achieve a 10% or greater return on capital employed. They are:

underwriting profitability; leaner operating model; separation of the Life and Retirement business; and capital management. 2 points of improvement in combined ratio or $500 million of expense savings or $5 billion in share repurchases approximate to 1 point improvement in ROCE.

Peter Zaffino;Chairman and CEO:

Thank you, Shane. And operator, we're ready for questions.

Peter Zaffino;Chairman and CEO:

Operator, maybe we'll go to the next one in the queue, and then we'll come back to Elyse.

Peter Zaffino;Chairman and CEO:

Do you want to try the next one in the queue, operator, please?

Jon Paul Newsome:

Sorry about the confusion from the folks on the questions, hopefully, you can hear me. I actually wanted to ask you about sort of a little bit different broad M&A question about the turmoil in the market. I think, obviously, we've seen environments where there's quite a bit of change. And I don't know if you think or you're seeing maybe the sellers getting a little bit more willing to sell given the volatility of the environment, and just your general thoughts on M&A would be fantastic.

Jon Paul Newsome:

Fantastic. Shift to a different question, maybe some thoughts on Validus in the context -- in the reinsurance business, in the context of the broader steps that you folks have done to reduce CAT exposure and maybe a little bit about the trade-off. I mean -- because, obviously, the big achievements that you've done under AIG is reduce the CAT exposure immensely. And how do you think about sort of, as we go forward, the trade-off that there seems to be a lot of opportunities in property CAT, kind of exposed areas but especially in the reinsurance market. But obviously, you've managed that trade-off pretty aggressively in the past.

Operator:

And our next question comes from Meyer Shields from KBW.

Peter Zaffino;Chairman and CEO:

Yes, Meyer. Good to talk to you.

Peter Zaffino;Chairman and CEO:

Sure. I'll ask Mark to provide more detail. I think what we do in our prepared remarks is say that we're looking at property, casualty, all of our lines and business in great detail. Really, what's been driving the upper end of the ranges up has been more the first-party business because of all the economic factors that are driving them. But Mark spends enormous time with the staff and the underwriting claims, looking at all the casualty trends as well. Mark, do you want to provide more detail, please?

Meyer Shields:

Okay. That's very helpful. The second question, I guess, in recent quarters, we've been hearing about increasing competition in, I guess, in excess public D&O, which seems a little bizarre. Are you seeing any other individual product lines where there's incremental softness?

David McElroy:

Thank you, Peter and Meyer. Yes. The rates have rolled back after 4 years of cumulative increases north of 100% in public D&O. It's -- I'm not sure the logic path of that, okay? At the same time, we also have to discern different markets sitting inside what would be the public D&O. So primary versus first excess versus high excess versus Side A and classes and market cap differentiation, all those things have to be factored in.

Operator:

Our next question comes from Elyse Greenspan from Wells Fargo.

Peter Zaffino;Chairman and CEO:

Yes, Elyse. Yes. Sorry about the glitch.

Peter Zaffino;Chairman and CEO:

Yes, we do. I mean, again, like we've said, the timing of deconsolidation is subject to market conditions and the volatility in the market. But if you take that away and look at a normal course as to we get through 2023, when we deconsolidate, we expect we'll be, with all the variables that Shane outlined in the 10% ROE, we will be at that 10% ROE.

Peter Zaffino;Chairman and CEO:

Mark, would you take that one, please?

Peter Zaffino;Chairman and CEO:

Great. Thanks, Mark. Thanks, Elyse. Next question, operator.

Brian Meredith:

Can you hear me?

Brian Meredith:

Great. Awesome. Yes. Peter, I'm just curious, there's been a lot of debate about how the kind of rehardening here of the property market kind of affected the casualty markets. Just curious, your thoughts there in specifically casualty re and then on the primary side as well.

Peter Zaffino;Chairman and CEO:

No. Dave, why don't you add on in terms of what really happened in financial lines with M&A and IPO? But no, Brian, we saw very good growth. We outlined it in my prepared remarks, Lexington property, Glatfelter, Primary Casualty. So we saw real growth across North America and felt it was strong. Had a little bit of a headwind from financial lines just based on M&A and IPO. But Dave, maybe you can just cover that a little bit.

Operator:

And our final question will come from Alex Scott from Goldman Sachs.

Peter Zaffino;Chairman and CEO:

Yes. So thanks, Alex. We've talked about our capital management strategy over the past several quarters and focused on capital for growth, debt reduction, share repurchases. And as I said, going into 2023, we're going to focus on the dividend. The primary use of capital will be used for share repurchases and, again, like Corebridge, I think has done very well in a very challenging IPO market. We expect the value to continue to move in a very positive direction based on how strong the business is. And so I'm not going to get into like the P/E today versus the P/E of AIG, but think that the best use of capital over the foreseeable future is going to be to reduce share count to get us to the 600 million to 650 million range.

Peter Zaffino;Chairman and CEO:

Yes. I mean the first thing I would say is AIG is not an index of the market rhetoric. We are very different in terms of how we purchase reinsurance just based on the size and scale, geographic diversity, different products. And so like when reinsurers deploy capital -- and that's why I say we have very strategic relationships because there's enormous continuity on our programs year-over-year even when we change structures. So I think that we've gotten commitments from all of our major reinsurers to be able to deploy the same amount of capital to the extent we need it for our property CAT. That's number one.

Operator:

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

Operator:

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

Quentin McMillan:

Thanks very much, and good morning. Today's remarks may include forward-looking statements, which are subject to risks and uncertainties. These statements are not guarantees of future performance or events and are based on management's current expectations. AIG's filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q, provide details on important factors that could cause actual results or events to differ materially. Except as required by the applicable securities laws, AIG is under no obligation to update any forward-looking statements if circumstances or management's estimates or opinions should change.

In International Commercial, on an FX-adjusted basis, we also saw strong growth in net premiums written:

In Global Specialty, which grew 16% led by energy, which was up 20%; and marine, which was up 10%; North America Specialty, which grew 17%; and International Specialty, which grew 15%.

Peter Zaffino;Chairman and CEO:

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

Meyer Shields:

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

Mark Lyons;Executive Vice President, Global Chief Actuary and Head of Portfolio Management:

Happy to. So a couple of things come to mind. First off, as Peter mentioned, North America Commercial aggregate loss trend is now up to 6% this quarter as opposed to our upper revision we did last quarter, the 5.5%, because we look at that every quarter. Short-tailed lines are driving much of this increase, and that is seen in our own data as well as external information. And over the last few years, because I'm talking about the weighted average loss cost trend there, the North American portfolio has reduced its property writings and has shrunk as a percentage of total, which helps ameliorate the growth in severity.

Peter Zaffino;Chairman and CEO:

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

Mark Lyons;Executive Vice President, Global Chief Actuary and Head of Portfolio Management:

Yes. I mean, it's -- that is a potential strategy that you'd -- a little difficult to implement, right, because you have -- part of a profitable portfolio are those things, rated -- inflation exposure basis like premises. However, when you get into other lines, like the M&C side of GL, Meyer, I think what you're saying makes a lot of sense.

Operator:

Our next question will come from Erik Bass with Autonomous.

Peter Zaffino;Chairman and CEO:

Yes. Thanks, Erik. We provided a lot of sort of guidance in our prepared remarks, but let me try to add to it. Our plan has always been to do an IPO of Corebridge, and that has not changed. So now we are targeting September. I mean, we gave you some of the variables, but obviously there's more to consider like you outlined. We just felt that the market conditions in the second quarter were not conducive. We always intend to own greater than 50% following the IPO. And therefore, we'll continue to consolidate results for the foreseeable future.

Erik Bass:

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

Kevin Hogan:

Yes, so...

Kevin Hogan:

So Erik, yes, our VA -- the hedging program, our economic target-based hedging program has continued to perform as we have expected throughout all of the market volatility. It is an economic target-based hedging program, and so the RBC decline was in part due to the variable annuity and index annuity portfolios. And as you know, those market impacts are reversible as markets recover. So we have hedged all hedgeable economic risks. We have an open credit spread position, which we believe is offset by our general account credit portfolio, and the hedge has performed as we have designed it.

Brian Meredith:

Yes, two quick questions here for you. First one, thanks for all the detail on the expense outlook going forward. I'm just curious, is there another plan expense reduction program for the General Insurance business post the Corebridge split?

Peter Zaffino;Chairman and CEO:

Yes. Thanks, Brian. Yes. So as we said, we're really proud and pleased that we just finished AIG 200, and that will start to continue to earn in. The work that we did in the summer for Corebridge, we increased our expectations there over the 3-year period to be now at the upper end of the range of $400 million. So our primary focus is the underwriting excellence in terms of the improvement, the focus on continuing AIG 200 and making sure that operational excellence becomes a core part of the organization, which it already has, but we want to continue that, and then making sure that the separation of Corebridge is done flawlessly.

Brian Meredith:

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

Mark Lyons;Executive Vice President, Global Chief Actuary and Head of Portfolio Management:

Yes. Thank you, Peter. And Brian, good to hear from you. So to your question, remember, what Dave McElroy and his team are doing, Lexington is becoming an increasing proportion of the business. And on a non-admitted basis, you have a lot of interesting terms and conditions like minimum earned premiums. So even if that does fall off a bit, that doesn't necessarily translate on a downward movement.

Operator:

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

Operator:

Good day, and welcome to AIG's First Quarter 2022 Financial Results Conference Call. This conference is being recorded. Now at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.

Peter Zaffino;President, CEO, Global COO & Director:

Good morning, and thank you for joining us to review our first quarter financial results. I'm very pleased to report that AIG had an excellent start to 2022. We are successfully executing on several strategic, operational and financial priorities, and our team has significant momentum on many fronts, which we believe will continue throughout the year.

Peter Zaffino;President, CEO, Global COO & Director:

Thank you, Shane. Operator, we're ready for questions.

Elyse Greenspan:

My first question is on the capital return that you guys laid out. So you guys have just over $9 billion at the holdco. Peter, I think you said a minimum buyback of $1 billion for the second quarter. But just given that you have above $9 billion at the holdco with additional capital coming later this year, I would think that there's some flexibility to perhaps go above that $1 billion. So can you just kind of walk us through a little bit more how you're thinking about uses of capital for growth relative to buyback at least in the short term?

Elyse Greenspan:

Okay. And then my follow-up, you guys pointed out that you raised some of your severity assumptions within General Insurance on the short-tail side. When you guys set out that target for the accident year combined ratio of sub-90 for this year, was that contemplated? And then should -- how about the cadence, can you give us a sense? Should we think about sequential improvement from the Q1 level as we move through the year? Or is there some seasonality that we should be considering within General Insurance?

Operator:

We'll go to Meyer Shields with KBW.

Peter Zaffino;President, CEO, Global COO & Director:

Yes. Mark, please take that. I mean I think it's also important to give some context of the portfolio shift as well, Mark, when we look at loss ratios?

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Meyer. I'll take that. As I said, it's going to be a headwind in the first quarter will be a tailwind in the second quarter. Once we -- there's a couple of moving pieces. We can't really provide the exact numbers, but you can look at like in the second quarter where we purchased down on the North America Commercial CAT to lower retentions as well as in AIG Re, where we reduced volatility by buying single shop per occurrence retrocessional at the second quarter, and both recovered by the way, last year. So we felt that reducing the net retentions was appropriate and carrying that forward into how we were going to structure the 1/1 treaty for AIG as well as the retrocessional covers for AIG Re.

Operator:

And now we'll hear from Ryan Tunis with Autonomous Research.

Peter Zaffino;President, CEO, Global COO & Director:

Yes. Let me start. Thanks very much for the question. We have -- there's -- Mark touched on a little bit, and I'll ask if he has any additional comments after I make a few observations on the mix of business. But what we have in the first quarter, obviously, is a big AIG Re, which when you look at if you're changing the composition of the portfolio from reducing CAT to doing more proportional, you're going to have lower loss ratios, higher acquisition costs. And so that will have a sometimes impact in terms of how it earns into the first quarter.

Peter Zaffino;President, CEO, Global COO & Director:

It's hard to predict. I think your first part of the question is do ceding commissions as they start an earn-in benefit, the overall expense ratio. The answer is yes. It wasn't always the case when we were starting the turnaround and -- but today, we have market terms or better on ceding commissions, and that starts to earn in.

Taylor Scott:

First question I had is just on the Life and Retirement side. When I look at the 10% ROE, it held up well in a tough environment. But that said, I think the skeptic would kind of point to the alternative returns and how strong they were and whether that can continue. But at the same time, there were probably some other things in there. I think probably DAC true-ups and things like that related to the markets would have hurt you.

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Alex. I mean as you can appreciate, preparing for the IPO of Life and Retirement, we do have constraints in terms of how much detail we can go into. I think if you look at the S-1 in terms of how we believe we can drive a 12% to 14% ROE over the long term is something we're very confident about. And if you look at the historical performance of Life and Retirement in terms of its ROE and attributed capital, they've done very well. I mean, Kevin, keeping in mind, we've got to be very careful. Do you want to provide maybe 1 or 2 items of your observations on the quarter?

Taylor Scott:

Yes. Maybe as a follow-up, just going back to the ROE improvement over time. some of those items certainly will take some time. And I don't know if you want to put a specific time frame around it. But I guess the piece of it that's related to corporate cost reductions, I mean for that piece specifically, over what time period do you think you'd be able to sort of take out, call it, stranded costs associated with the separation?

Operator:

Good day, and welcome to AIG's Fourth Quarter 2021 Financial Results Conference Call. Today's conference is being recorded.

Quentin McMillan:

Thank you very much, Katie. Today's remarks may contain forward-looking statements, including comments relating to company performance, strategic priorities, including AIG's pursuit of a separation of its Life and Retirement business, business mix and market conditions. These statements are not guarantees of future performance or events and are based on management's current expectations. Actual performance and events may differ materially. Factors that could cause results to differ include the factors described in our third quarter 2021 report on Form 10-Q and our 2020 annual report on Form 10-K and other recent filings made with the SEC. AIG is under -- is not under any obligation and expressly disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Today, I will cover 4 topics:

First, an overview of General Insurance's fourth quarter and full year performance, where we continue to drive meaningful underwriting profitability improvement. I will also briefly touch on the 1/1 reinsurance renewal season. Second, I will review results from our Life and Retirement business, which continues to be a meaningful contributor to our overall results. Third, I will provide an update on our progress towards an IPO of Life and Retirement and operational separation of the business from AIG. And fourth, I will review our current plans regarding capital management.

Operator:

[Operator Instructions] We'll take our first question from Elyse Greenspan with Wells Fargo.

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Elyse, for the question. Yes, that's really what we tried to outline in terms of the capital management, is the $10.7 billion, what's in front of us in terms of we see great growth opportunities in the business. And I think that the results and how much they're improving are evidence of that, maintaining the right leverage, committing to the dividend and then talking through the current share authorization and not speculating on the amount or timing of the IPO beyond the guidance that we've already provided. So as we do the IPO, we will continue to refresh that sort of capital management and sort of accelerate what we can do with capital above what we have for liquidity today.

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Elyse. I'll have Mark add to my comments. But we gave you full year guidance. I think Mark gave tremendous detail in his prepared remarks in terms of the earned premium, the improvements that we've made. And again, when you look at the quality in terms of how we're growing with strong top line, strong retention, strong new business, strong rate, developing margin above loss cost, in addition, AIG 200, as you mentioned, earning in is going to give us an expense benefit.

Operator:

We'll take our next question from Meyer Shields with KBW.

Mark Lyons,Executive VP & CFO:

Well -- sorry.

Mark Lyons,Executive VP & CFO:

So thank you for the question, Meyer. What you'll always see is the -- and basically, what you see in other operations, which always gets a little confusing, granted, is that the investment income in the subs would be double counted otherwise. So what you see as you go through that is that the elimination of that overlap, firstly.

Meyer Shields:

Okay. And the second question, maybe a little bit less obscure. You mentioned the decrease in PMLs historically. How do things look, whether it's PML or AAL? How do you use 2022 based on both inward network reinsurance?

Erik Bass:

I just wanted to walk through the mechanics of the capital transfers prior to the IPO, just to make sure that I have this correct. Is the expectation that Life and Retirement will issue debt and then use the proceeds to pay the $8.3 billion dividend to the AIG Holding Company, and that will then, in turn, use that cash to retire debt? And I guess, is the takeaway that this will put you in a leverage position such that all of the net IPO proceeds will be available to shareholders or for growth investments?

Shane Fitzsimons:

Yes. So Erik, you're correct. So Life and Retirement declared a dividend of $8.3 billion, which is a note receivable at parent at the moment. So Life and Retirement will go into the market and actually raise some of that debt actually pre IPO, and we're working through that at the moment. And those proceeds will then come across as a repayment on the note. And then the proceeds from that note will be used to pay down debt at parent.

Peter Zaffino;President, CEO, Global COO & Director:

Yes. Thanks, Shane. And Erik, you're right, like we're going to have more flexibility as the proceeds of the IPO become available, but we're trying to be very prudent in terms of the capital management leading up to that.

Peter Zaffino;President, CEO, Global COO & Director:

Yes.

Peter Zaffino;President, CEO, Global COO & Director:

Well, this is a process that we've outlined as part of the separation. So there's a variety of steps in terms of sequencing that. One is that we transfer the investment management group to Life and Retirement as part of the separation. We've been operationally taken assets under management as we put in the prepared remarks and have been very open and transparent about Blackstone. So that was a transfer.

Operator:

We'll go next to Alex Scott with Goldman Sachs.

Peter Zaffino;President, CEO, Global COO & Director:

Sure, Alex. Thanks for the question. Again, we have so much going on that there is, I keep using the word sequencing because we want to make sure that we're doing the underwriting turnaround and all the things that we outlined through the scripts in the right sequence and making sure that we are getting things put behind us.

Shane Fitzsimons:

Yes. I mean, Peter, I think the only other thing I would really add is that we also made significant progress here in 2021 with a combination of buyback and getting share. Our leverage down below 25% is a significant highlight. Peter talked about what we have to do in terms of finalizing the remaining equity as part of an efficient capital structure for Remain Co, including post-separation leverage in the low 20s and what capital is needed in the insurance subsidiaries to support accretive organic growth and return to share owners.

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Shane.

Peter Zaffino;President, CEO, Global COO & Director:

Yes. Let me just give a brief overview, and then ask Dave to comment on a little bit more specificity. One is we have a great balance across the globe in terms of International and North America. We've been driving top line growth, but the underwriting culture that we've developed is all about profitability. And so making sure that we continue to drive that profitability on a combined ratio, it's sustainable, but the areas in where we think we really drive significant value, there's multiple.

Peter Zaffino;President, CEO, Global COO & Director:

Yes.

Operator:

Good day, and welcome to the AIG's Third Quarter 2021 Financial Results Conference Call. Today's conference is being recorded. And now at this time, I would like to turn the conference over to Quentin McMillan. Please go ahead, sir.

I will then review capital management, where our near-term priorities remain unchanged from those I have outlined in the past:

debt reduction, return of capital to shareholders, investment in our business through organic growth and operational improvements.

Mark Lyons;Executive VP & CFO:

Thank you, Peter, and good morning to all. I am extremely pleased with the strong adjusted earnings this quarter of $0.97 per share and our profitable General Insurance calendar quarter combined ratio, which includes CATs, of 99.7%. The year-over-year adjusted EPS improvement was driven by a 750 basis point reduction in the General Insurance calendar quarter combined ratio, strong growth in net premiums written and earned and a related 280 basis point decrease in the underlying accident year combined ratio ex CAT. Life and Retirement also produced strong APTI of $877 million, along with a healthy adjusted ROE of 12.2%.

Peter Zaffino;President, CEO, Global COO & Director:

Great, Mark, thank you. Operator, we'll take our first question.

Elyse Greenspan:

My first question, when you guys -- Peter, when you make the comment that you think you'll hit sub-90% for full year 2022, and then you said that there would be runway for further improvement in future years, I'm just trying -- when you kind of think 2022 and beyond, what are you guys assuming for both pricing and loss trend as we kind of think out the next year and even beyond that time frame?

Elyse Greenspan:

Okay. And then my follow-up on -- you guys said that the Life IPO should take place in the Q1, perhaps in the second quarter of next year. How do we think about capital return? I know you guys have laid out a plan for this year, but how should we think about capital return next year? And is that dependent on when and the ultimate size of what you bring to market with the Life and Retirement business and the IPO?

Meyer Shields:

I guess first question for Peter. You laid out a pretty conservative case for the frequency and severity of catastrophes. How should we think about what Validus Re is interested in writing in that context?

Meyer Shields:

Okay. Understood. And then as a follow-up for Mark, is there any way of describing the -- I mean you made a very strong case for conservatism in the current accident year loss picks. And I'm wondering how you're thinking about that level of conservatism in recent accident years as of 9/30.

Mark Lyons;Executive VP & CFO:

Yes, thanks. Yes, thank you, Peter. Thanks, Meyer. Actually, we feel very good about accident year '20 and '21, I think the core of your question. And I think I've made a pretty strong case for the changes that have occurred, which I think have been, I think, pretty enormous on it.

David McElroy:

Yes. Thank you, Peter. Thank you, Mark. The -- I know it's probably top of mind, but the Financial Lines book has been one that has been stored at AIG. And most of you know I've been involved with P&L and Financial Lines for my entire 40-year career. So I've seen the bodies float by me. I've seen the strategies avowed and disavowed. And we knew exactly what we were doing when we came in here to look at this portfolio.

Peter Zaffino;President, CEO, Global COO & Director:

Dave, your passion is coming through very much. We probably want to take another question.

Peter Zaffino;President, CEO, Global COO & Director:

That's terrific. Thank you.

Michael Phillips:

I'll be -- 2 quick ones, I think. Mark, your comments on, again, the loss pick thing. Number two was, I think, about well the current stuff and it's long-tailed, and that can lead to risk. And so we're going to be conservative, it looks like the industry. I think that was your number two. Can you tell us, has there been any kind of shift in your book given everything else you guys have done and -- from occurrence to claims-made in the Commercial Lines book? So anything noteworthy that would shift away from occurrence to claims-made?

Mark Lyons;Executive VP & CFO:

Well, yes, I think how Dave explained it is the way the business actually flows, the business actually works. So the key thing is upfront identifying the right classes and the right risk, which they've really done, I think, exceptionally well. And then the second is what goes through the court systems. Given that you have SCAs, even though we are massively reduced in the SCAs, you got to go through all the motions to dismiss and other procedurals that take it there.

Operator:

Next question, Josh Shanker, Bank of America.

Mark Lyons;Executive VP & CFO:

Josh, I know you're speaking of business. And if you go back -- because speaking to the industry is a little different. I don't want to get out ahead of the industry, but I know you're a schedule fee guy. You go back and look at that, of course, that's U.S. only. And you can look direct, not just net. And that's a combination of management liability and professional, right, in there. But we know it's dominated by the management liability side.

David McElroy:

Yes. Thanks, Mark and Josh. Yes, the only thing I'd say there is that you've seen a lot of variability in the schedule piece in terms of portfolios over the years. There can be 40- to 50-point differences consistently. So that speaks to risk selection and the portfolios. But that said, there's definitely verticality that's been happening in those years. That is showing up in the 2019 and 2022 -- 2020 years because the courts did not close for this motion to dismiss and the securities class action. So in fact, if you look at Cornerstone, there were the equal number of settlements in 2020 during COVID that there were in 2019.

Joshua Shanker:

I'm going to hold it to one question for you guys, and just congratulations on everyone's new role.

Peter Zaffino;President, CEO, Global COO & Director:

And if it's a financial question on the Financial Lines, it will be the last one because I'm going to have to turn it over to Dave again.

Peter Zaffino;President, CEO, Global COO & Director:

Thanks, Brian. As we've said in the past, and I really have the same answer, which is we're really focused on driving the profitability earnings, reducing volatility. We're making great progress on the combined ratio, looking at the investment portfolio over time to have less volatility on the Property and Casualty side. We're working through the separation.

Peter Zaffino;President, CEO, Global COO & Director:

Well, we are in progress of implementing the new standards and working through it. And so we're analyzing the guidance that's been issued today, formulating approach. We know that we have the IPO coming up, so we have an enormous amount of resources on it. But it's really just too early for us to provide the estimates. But it's a key area of focus for the company and one that we'll give guidance as we get in subsequent quarters.

Operator:

And with that, ladies and gentlemen, this will conclude your conference for today. We do thank you for your participation, and you may now disconnect.

Operator:

Ladies and gentlemen, good day, and welcome to AIG's Second Quarter 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Quentin McMillan. Please go ahead.

Operator:

[Operator Instructions] We'll take our first question from Elyse Greenspan from Wells Fargo.

Peter Zaffino:

Thanks, Elyse. I've talked about it in the past that there's many components that are going to drive improved combined ratio. The first is the absolute underwriting performance, and we're seeing that come through in what Mark covered in his script in terms of severity, attritional losses and just less volatility. In addition, we have seen strong top line growth and believe that's in the Commercial side. We're in that market now and see that continuing.

Peter Zaffino:

Yes. Thanks, Elyse. In terms of the timing, as I said, we're targeting a first quarter IPO. We're working really hard on the operational separation. We'll close with Blackstone, who's going to be a tremendous partner for us, we hope, in July. And so working over the next 6 months to position Life and Retirement to have a very successful IPO is the primary focus.

Mark Lyons:

Just I think that -- I think the core point was to emphasize that this removes the constraint. So rather than on the specifics of the sizing, which as Peter said, which is very market-sensitive and contingent, but having that ability now to not have such a constraint is the main point we really wanted to push over.

Meyer Shields:

First question on the Blackstone partnership. Can you give us a sense of what the internal expenses are that are comparable to the 30 and 45 basis points that will constitute the fees?

Meyer Shields:

Okay. Understood. Second question, I guess, this is probably for Mark. I know the expense ratios in North American Personal have been distorted up until the second quarter because of, I guess, depressed travel insurance and the syndicate. Is the second quarter expense ratio run rate, are those representative of what we should see going forward?

Peter Zaffino:

And one thing I would add, Meyer, in terms of what Mark just noted is that the high net worth space is changing dramatically in peak zones. We expect to see a continued change in the Excess & Surplus Lines as more alternatives -- it was basically split in the second quarter between admitted and non-admitted new business. So that's just something that we're going to watch. I mean, there's no specific trends that are going to be substantially different than the guidance we've given. But there is some change in that business that we want to make sure with the market-leading position that we take advantage of solving problems for clients but also repositioning the portfolio to have less volatility.

Erik Bass:

I was hoping you could talk a little bit more about the asset management agreement with Blackstone and how you see this affecting Life and Retirement's NII over the next couple of years. It sounds like you expect some initial dilution. But when should this turn and start being accretive to NII? And also, will any of the assets they manage be used to support new business? And could this help you be even more competitive in your fixed indexed annuity offerings?

Mark Lyons:

Yes. Thank you, Peter. Yes. And I think Kevin will have a few things to help you with there as well. So on the asset management, think of it this way, Erik. You've got the -- the uplift will come more delayed than the fees, to your point, firstly. And secondly is as the $50 billion of AUM is worked through, we have been thinking about it mostly, it takes 7 years for that runoff to turn over. As that occurs, it also shifts from 30 to 45 basis points. The $8.5 million annually that will also come in to take it to the 92.5% will be at 45 bps. So you kind of have that curve that I was alluding to in my prepared remarks.

Kevin Hogan:

Yes. Thank you. So Erik, I think what's important is to keep in mind that this is not a change in our portfolio strategy. This is an enhancement of our portfolio strategy. Blackstone has tremendous origination capability. And we believe that their ability to originate in these asset classes exceeds our current ability. And in addition to that, they have a broader range of assets within the subclasses. And the combination of their ability to originate with more capacity and also the breadth of their asset classes, we believe, will allow us to create new products to support transactions.

Erik Bass:

And then can you help us think about the level of new public expenses that Life and Retirement will have? And will these be able to be offset by savings elsewhere? And then how should we think about the level of expenses that are running through other ops that will remain with the parent, kind of post-separation?

Phil Stefano:

Yes. Looking at the General Insurance book and mostly focused on Commercial, when we look at the gap in net written versus net earned, I mean, it's clearly there's a runway, just given where the pricing is today for the continued improvement in the underlying loss ratios there. How are you thinking about rate adequacy, the need to continue to push for rate versus just growing and dialing back the rate that you're getting now? Like how are you balancing these 2 dynamics?

Phil Stefano:

Yes. That's very thorough. Look, maybe a quicker one...

Tracy Dolin-Benguigui:

I see that there is an IPO contingency in the Blackstone transaction. Is that just a timing thing? Or is the IPO contingency also considering a pricing floor for minority IPO proceeds or a minimum equity stake size?

Tracy Dolin-Benguigui:

Okay. Yes, I was just referring to some fine print in your 8-K that if the IPO didn't happen, there were some recourse. So I didn't know if there was something else that I should also be considering.

Tracy Dolin-Benguigui:

Okay. Perfect. Look, anyone could trade growth for margin expansion, but you're at a spot where you're doing both. And I guess, the only place where I don't have visibility is your loss pick. So can you contextualize how your current accident year loss picks have been tracking maybe relative to last year and your 5-year average?

Mark Lyons:

Sure. I guess, a couple of things. First off, we are viewing -- although we're showing substantial margin improvement on a quarter-over-quarter or year-over-year basis, we actually think we're being conservative in this. As I said, I think, on past calls, there has been a lot of change over the last 3 years, including some of the fundamental channels in which we get business. So we think we got every one of those correctly.

Peter Zaffino:

Yes. Thanks, Mark. And I want to just thank everyone for joining us today. Before we end the call, I want to thank our colleagues around the world for what they've accomplished over the last 6 months, especially considering the challenges that have been presented in work remote environments. We have a talented, hardworking colleague base that's executing on multiple complex initiatives simultaneously, which I think makes us very unique, very proud of the team, remains very focused on ensuring quality in everything that we do and delivering significant value to all of our stakeholders. Have a great day.

Operator:

Good day, and welcome to AIG's First Quarter 2021 Financial Results Conference Call. Today's conference is being recorded.

Sabra Purtill:

Thank you. Good morning, and thank you all for joining us. Today's call will cover AIG's first quarter 2021 financial results announced yesterday afternoon. The news release, the financial supplement and financial results presentation were posted on our website at www.aig.com, and the 10-Q for the quarter will be filed later today after the call.

Peter Zaffino:

Hello, and thank you for joining us today. This morning, I will start our call with a high-level overview of AIG's consolidated financial results for the first quarter. I will then review results from General Insurance and the significant progress we've made with our portfolio, which allowed us to pivot from remediation to growth heading into 2021. Following that, I will review first quarter results for Life and Retirement. I will then provide an update on the work we're doing on the separation of Life and Retirement from AIG. And lastly, I'll provide an AIG 200 update. Mark will give you more details on the financial results, and then we will take questions.

Mark Lyons:

Thank you, Peter, and good morning, everyone. Since Peter has already provided a good overview of the quarter, I'll just add that we posted a 7.4% annualized adjusted return on common equity at the AIG level, an 8.2% adjusted return on tangible common equity at the AIG level, an 8.5% adjusted return on segment common equity for General Insurance and a 14.2% adjusted return on segment common equity for Life and Retirement.

I'd now like to spend a few minutes on 2 observations:

one, the impact of net rate change versus gross rate change; and two, some examples of new business rate adequacy relative to a renewal rate adequacy. So first, our achieved North America Commercial rate change for the quarter on a net basis is now estimated to be at least 150 basis points stronger than the corresponding gross rate change largely due to our increased net positions across selected product lines.

Operator:

[Operator Instructions] And we will begin with Elyse Greenspan with Wells Fargo.

Peter Zaffino:

Yes. Thanks, Elyse. As I said in my prepared remarks, we're working with a sense of urgency on the IPO. We've made really significant progress working on standalone financial statements, actuarial, have set up the organization to operationally separate. So we're working very hard on several fronts related to the IPO.

Elyse Greenspan:

Okay. And then my second question is on the market commentary you guys gave. A lot of helpful color. Mark, you said that you guys expect continued earned margin expansion throughout 2021 and into 2022. So is -- I guess, you're kind of giving us a market view, it sounds like, for the next year.

Peter Zaffino:

Let me start with your question on rate, and then I'll turn it over to Mark to provide a little more context and then talk about the earned. But I think, look, this is the third year where we're seeing rate, at least at AIG, above loss cost. And again, you really have to just take a look at the overall portfolio because quarter-to-quarter, it may be a little bit different, meaning just the seasonality of our business, whether it's Validus Re having a big inception date in the first quarter, crop specialty Europe driven more towards the first quarter.

Mark Lyons:

Just a bit. Thank you, Peter. I think Peter nailed it both, Elyse. I want to reemphasize, though, what Peter said. Every quarter's mix is pretty different, and I know that's a written viewpoint that earns in. But we've already written business in -- that we can -- last year that's going to earn into 2021. And we've already written one quarter that's going to go into 2022. So we're not counting -- we believe we're going to have the margin expansion, as has been noted. That doesn't really depend on the existing level of rate levels in the market.

Brian Meredith:

So a couple here. Quickly, just Mark, I'm curious, you said you had some COVID development in the quarter. Where did that come from? And are we pretty close to, you think, kind of being done with the COVID-related losses, at least in the General Insurance business? I understand there could still be some more in Life.

Mark Lyons:

So yes, we can localize a lot of that to contingency business out of Talbot. And on Validus, I think there was really just 2 contracts involved, so it's not like a widespread in any way. So that overwhelmingly accounts for it.

Brian Meredith:

Got you. And then my second question, I guess, for Peter for both of you all. What is your kind of view with respect to loss trend or kind of tort inflation and loss trend as we kind of -- the economy reopens here, courts reopen? Kind of how are you thinking about that from a reserving perspective and maybe also from a pricing perspective?

Brian Meredith:

Yes, yes. Mark, I was just -- part of my question, though, was also just asking this. Do you think about, when you make reserve assumptions or pick assumptions, are you making different assumptions with respect to what potential loss trend and when you're pricing the business?

Operator:

We'll now hear from Paul Newsome with Piper Sandler.

Kevin Hogan:

Yes. Thanks, Paul. Look, net flows reflect the trends of premiums and deposits as against the surrender behavior. As Mark pointed out, we haven't really seen much material change in the surrender behavior a little bit within sort of expected margins, but premiums and deposits is really another story.

Kevin Hogan:

Well, certainly, we provide the sensitivities and depending upon where equity markets are, where interest rates are, where credit spreads are and which way they're going, they have kind of a short-term impact on earnings volatility. But we price our products to make sure that we're making our returns based on broadly expected market conditions, not necessarily a single deterministic scenario. So we're not relying on market returns necessarily in the pricing of our products.

Ryan Tunis:

I had one for Mark, and would you even be interested in David's thought if he's on the call. But I guess, thinking about classic economic inflation, wage-driven historically been kind of bad for workers' confidence. It's been a long time since we've had it.

Peter Zaffino:

Let me start. You got to remember that 2/3 of our business is on high retentions, and so the fluctuation of frequency and in wage inflation and loss cost inflation is largely retained by our clients. I mean, so we've seen some fluctuation just because of high attachment points in which we have in the workers' comp book.

Ryan Tunis:

Understood. And then my follow-up is just thinking about -- you're running at a little bit over 92, so you need about 2 points to get sub-90. Just you said rate alone, assumingly, would be able to get you there. Obviously, I think that there are some offsetting headwinds or just other things that, along the way, you got to get past. I'm not sure if that's more new business or what. Could you just remind us of some offsets to rate in terms of getting down to that 90 over the next couple of years?

Operator:

We'll hear from Meyer Shields with KBW.

Peter Zaffino:

Yes, Meyer.

Mark Lyons:

Do you want me to start that, Peter.

Mark Lyons:

So I think what we're trying to say in various ways is that looking sequentially is really not the way. You've got to really look at it quarter-over-quarter for the points that Peter brought up before about the mix being pretty different. The fact that although we've reduced the volatility dramatically, we still write volatile lines, right? So you still have a pop here or there that may not have really occurred in this quarter or the last quarter that still could at another time.

Meyer Shields:

Okay. That makes sense. The second question, I guess you talked about cyber rate increases, and I don't know whether sort of the way we typically think about trend is relevant. But is there any way you can outline how cyber loss expectations are changing?

David McElroy:

Yes. The -- thank you. The -- when we looked -- sometimes there's -- we index off of rate increases. And in fact, a big part of our story here at AIG has actually been risk selective and limit management and retentions and terms and conditions. And cyber was this year's case stuff, okay?

Thomas Gallagher:

Peter, just first a question on the decision to pursue the IPO versus the private sale. Was it mainly because we've gotten so much improvement in peer L&R public valuations that the gap narrowed where it wouldn't give you as much of a benefit? But any color you can give us as to what drove that decision.

Thomas Gallagher:

Okay, okay. And then just a follow-up for Kevin on L&R. I think -- Peter, I think I heard you say you're reiterating the 8 to 16 basis point spread compression guide.

Peter Zaffino:

Kevin, do you want to finish?

Peter Zaffino:

All right. Great. Thanks, everyone, for joining us today, and have a great day.

Operator:

Good day, and welcome to AIG's Fourth Quarter 2020 Financial Results Conference Call. Today's conference is being recorded.

Sabra Purtill:

Thank you, Orlando. Good morning, and thank you all for joining us. Today's call will cover AIG's fourth quarter and year-end 2020 financial results announced yesterday afternoon. The news release, financial results presentation and financial supplement are available on our website, www.aig.com. Our 10-K for 2020 will be filed on Friday, February 19.

Peter Zaffino:

Thanks, Brian. Good morning, everyone, and thank you for joining us today. This morning, I'd like to cover 4 topics that are key areas of focus for us in 2021 and which we will update you on each quarter

Now I'd like to provide an update on AIG 200. As a reminder, AIG 200 has core -- 4 core objectives:

underwriting excellence, modernizing our operating infrastructure, enhancing user and customer experience and becoming a more unified company. Throughout 2020, we made measurable progress in spite of the ongoing remote work environment and, in some cases, accelerated certain initiatives. On December 31, we completed the sale of our shared services operations to Accenture, which streamlines our operating model. We've made significant progress in driving improvements in infrastructure and systems architecture while reducing real estate costs and other general operating expenses. We exceeded our target run rate savings for 2020, and the costs required to achieve were lower than initially expected. We exited 2020 with a $400 million run rate benefit, which was 30% ahead of the guidance we provided in 2020.

Turning to the quarter. AIG reported adjusted pretax income or APTI of $1.1 billion and adjusted after-tax income of $827 million or $0.94 per diluted share compared to $923 million or $1.03 per share in the fourth quarter of 2019. The key drivers of this quarter were:

first, a General Insurance accident year 2020 combined ratio ex CAT of 92.9%, which is a 290 basis point improvement over the fourth quarter of 2019; second, strong Life and Retirement APTI of $1 billion, driven by Individual and Group Retirement as well as Institutional Markets activity and strong net investment income; thirdly, $3.2 billion of consolidated net investment income on an APTI basis, primarily reflecting higher private equity and hedge fund income.

Brian Duperreault:

Thank you, Mark. Operator, we're ready for the Q&A.

Elyse Greenspan:

My first question, going back, Peter, to some of your introductory comments on Life and Retirement. You pointed to however the 19.9% transaction takes place, that some portion of the proceeds would be able to use for further share repurchases. So I'm just trying to get a sense -- when you make that comment, what are you guys assuming for, I guess, the leverage target for L&R as a stand-alone entity? And then also, is the goal for RemainCo AIG still to get its leverage target within the vicinity of, I think you guys have pointed to, around 25%?

Peter Zaffino:

Yes, sure. I think Elyse, what I said in my October comments and then just reinforced and provided a little bit more detail on the prepared remarks is that we have made assumptions in terms of the stand-alone Life and Retirement business with acceptable debt and capital structure that is going to work with the rating agencies. We've also had assumed how we would set up AIG, the remaining company, with the guidance that Mark has given on our delevering. I focused that in my prepared remarks. It's our first priority. And we think that based on the base case, getting Life and Retirement set up, getting the delevering done at AIG, we think we will have capital available for share repurchase. That was the context of the comment I made. I don't know if you want to add anything, Mark.

Elyse Greenspan:

Okay. And then my follow-up. You guys gave some pretty healthy price increases for another quarter throughout your Commercial Lines business. We're getting asked questions or I am right in terms of just the pricing cycle and the continued upward momentum from here. So as you guys think about 2021 and beyond, I mean, do you think that we can continue to see this level of price increases throughout your Commercial Lines book in both North America and internationally for the good part of 2021 and perhaps into 2022?

Peter Zaffino:

Thanks, Elyse. Yes, this momentum will continue. As we look into 2021, we expect to see rate increases to continue. We expect to see these rate increases to be above loss cost. We expect that these rate increases will be balanced across our global portfolio and across multiple lines of business. And so this is a very disciplined market, one that our capacity is highly valued. And as we deploy it in property and casualty, we're going to be very disciplined in making sure we get the right price for the exposure, make sure that we're there to solve problems for our broker distribution partners and clients.

Mark Lyons:

Yes, if I could. Elyse, also, as Peter's kind of noted, we -- the momentum has been strong. We have really seen no evidence of deceleration of it. It's pretty broad-based across all lines and geographies. And I would just remind you that the timing was different internationally versus in North America. So it started a little bit later. So its trajectory is going to be different by definition, and thus far, no slowdowns.

Thomas Gallagher:

First, Brian, just wanted to say best of luck to you in the new role.

Thomas Gallagher:

And Peter, just wanted to come back on the consideration of the private sale for the 19.9% stake in L&R. Should we think about this as just the sale of the stake? Or are you considering doing something more strategic, including reinsuring a portion of your in-force block or outsourcing investment management functions? Anything you could add?

Peter Zaffino:

Well, as I mentioned in my prepared remarks, I mean, we have received a number of inbound inquiries, high-quality companies. And those high-quality companies see the real value in our Life and Retirement franchise, a very diversified portfolio, minimal legacy. And so how they are approaching AIG is that they want to do something strategically on the 19.9% because that's what we've outlined. But we are focused on how we drive long-term value for Life and Retirement with any partner that we decide to go with, in the event we do go with that over the initial public offering. And that's -- we're working towards that as a primary focus. So I don't want to go into the specific details because we don't have them. But you should just think about it as, if we did enter into an agreement, it would be about positioning the business for more long-term success.

Brian Duperreault:

Okay, Tom. Mark, I think it's for you.

Tracy Dolin-Benguigui:

Congratulations to both Brian and Peter.

Tracy Dolin-Benguigui:

Yes. I have some similar questions about the reserve development. Maybe you could just talk about how you feel about rate adequacy and liabilities since you've had some adverse development in Excess Casualty. And I noticed it is one of the only Commercial Lines where you've actually had net premiums written decline.

Brian Duperreault:

Peter, I think you should address that one.

Operator:

And next, we will hear from Yaron Kinar with Goldman Sachs.

Brian Duperreault:

Peter?

David McElroy:

Yes. Thank you, Peter. In a simple way, I just -- I think we've had a couple of turns with the book. We look at this as less limit reduction. Okay? And then our new business opportunities have always continued to be, on the commercial side, on a $3 billion range worldwide with the platform that we have. And then I look at our -- the renewal retention rate. Okay? We can forecast rate, but we also have certain positions that we think that we can actually consistently earn those rates going forward. Okay? We are not in a commodity position in our portfolio. And if you look at this worldwide in terms of the different franchises we have, we think that the rate we're looking at and the risk-adjusted rate and the -- and what -- how we're thinking about the portfolio, they are very defendable.

Mark Lyons:

Yes. Yaron, if I could, I'm going to purposely give you an arithmetic view. And it's this -- Peter touched on it a bit with the XOL when he was talking about some of the reinsurance. So loss-occurring contracts, you basically have ceded written all bulleted, right, in the quarter, and then it's earned smoothly. Risk-attaching quota shares, you see the recognition quarter-by-quarter. So from a net earned basis, which is what's going to really matter, you're going to see much more uplift on a net earned basis over the course of the year. The benefit of a smaller cession on the casualty quota share will overwhelm the additional XOL cession. So you'll see that increase, right, but it won't be at 1Q. You're going to see that over the course of the year.

Brian Duperreault:

Peter, do you want to take that?

Kevin Hogan:

Yes. Thanks, Yaron. So I think Mark's comments highlighted the sensitivities to equity markets and interest rate levels. This year, we did benefit from some strong market support that, frankly, is laid out in the noteworthy items in the earnings deck. And we had a strong year based on where the markets were with both alts and the call and tender income.

Operator:

And next, we will hear from Josh Shanker with Bank of America.

Mark Lyons:

So I think -- Peter and I go back and forth on this. On the 90% which we are, Josh, reiterating, Peter will get into some of the expense ratio aspects of it.

Peter Zaffino:

Yes. Can I just add to that? Thanks, Josh. I mean a couple of things to keep in mind. One is AIG 200 contributes a meaningful portion of the improvement in expense ratio. Now while I said $400 million was the exit run rate of 2020, that hasn't even fully earned in yet. So we expect the full $1 billion by 2022. So you can just do the math that, that will contribute to the expense ratio and overall combined ratio.