Good day, and welcome to AIG's First 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.

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. Today's remarks may also refer to non-GAAP financial measures. A reconciliation of such measures to the most comparable GAAP figures is included in our financial supplement and earnings presentation, all of which are available on our website at aig.com. Additionally, note that today's remarks will include results of AIG Life and Retirement segment and other operations on the same basis as prior quarters, which is how we expect to continue to report until the deconsolidation of Corebridge Financial. AIG segments and U.S. GAAP financial results, as well as AIG's key financial metrics with respect thereto, differ from those reported by Corebridge Financial. Corebridge Financial will host its earnings call on Friday, May 3. Finally, today's remarks as they relate to net premiums written, adjusted pretax income, underwriting income and margin in General Insurance are presented both on a reported basis as well as a comparable basis, which reflects year-over-year comparison on a constant dollar basis as applicable, adjusted for the sale of Crop Risk Services and the sale of Validus Re. Please refer to the footnote on Page 26 of the first quarter financial supplement for prior period results for the Crop business and Validus Re. With that, I'd now like to turn the call over to our Chairman and CEO, Peter Zaffino. Peter Zaffino;Chairman and CEO: Good…

Thank you, Peter. This morning, I will provide details on AIG's first quarter results, including General Insurance, investment income in Life and Retirement and a balance sheet update. First quarter 2024 adjusted after-tax income attributable to AIG common shareholders, or AATI, was $1.2 billion, flat to last year due to the reduction in our ownership of Corebridge from 77.3% to 52.7% at the end of this quarter. General Insurance adjusted pretax income, or APTI, increased $110 million year-over-year, driven by higher underwriting and net investment income. The prior year quarter included APTI of approximately $175 million from Validus Re and Crop Risk Services. On a comparable basis, excluding the divested businesses, General Insurance APTI was up about $285 million. As Peter noted, first quarter General Insurance underwriting income was $596 million, up $94 million from the prior year quarter. On a comparable basis, underwriting income rose $239 million year-over-year. International Commercial Lines was the primary contributor to higher underwriting profitability with $175 million increase in underwriting income. North America Commercial Lines underwriting income was down $95 million from the prior year quarter as reported but up $35 million on a comparable basis. Underwriting income includes catastrophe losses of $107 million in the quarter or 190 basis points on the loss ratio, down from $265 million or 420 basis points last year. Prior year development this quarter was a favorable $34 million compared to a favorable $68 million in the prior year quarter. This quarter's development was solely from the amortization of the deferred gain on the adverse development cover which is recalculated each year based on prior year experience. For 2024, the amortization gain will be $34 million each quarter compared to $41 million a quarter last year. Turning to underwriting ratios. The General Insurance calendar year combined ratio was…

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

Looking over the -- your prepared remarks, Peter, and you used the term inorganic opportunities should they exist in reviewing reinsurance. So you also talked about the capital management expectations. So I guess would -- should we be thinking about the repurchase program as kind of a base case, but should there be other opportunities you might look to do something organic? Or just was there anything kind of new in there, in that wording that we should -- that you're trying to get us to think about? 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. I think we've been consistent, and I added in when we're more comprehensive in our description in terms of capital management, that should inorganic opportunities exist, and they're compelling, which just means does it add product, does it add geography? Not scale and size, but just something that does help us strategically reposition ourselves. I wouldn't want to rule that out, but it's not a priority in the short term. And so that's really the context of what I provide in my prepared remarks.

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. But is there -- is this a conducive environment for AIG to want to kind of grow opportunistically? Or is it more just in certain pockets? I guess just for the backdrop, some of us look at the Marsh pricing index and it feels like there's, in my words, not a lot of gap or a narrow gap between kind of pricing and loss trends, potentially. 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. I do think it's conducive to grow. We don't look for top line growth to sacrifice profitability, and I think we evidenced that in this quarter and we've evidenced it over the past couple of years, that we continue to want to improve our combined ratios and look at businesses where the best risk-adjusted returns are. And so we have shaped the portfolio that way. 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…

Our next question comes from Elyse Greenspan with Wells Fargo.

Peter, my first question, last quarter, you had implied that a Corebridge deconsolidation would come by the end of the second quarter. Does that time frame remain intact? 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. And considering all of those variables, Corebridge has done a significant amount of work working with AIG and independently to position itself to be a separate public company. It's done an exceptional job. We're completed, most of our transition service agreements, which just means they're more operationally prepared to go. And so again, subject to market conditions, I think my guidance I gave last quarter stands. We would expect to try and do something before the end of the second quarter.

And then my follow-up is on the new share count target that you provided for the end of '25, that 550 million to 600 million. I'm just trying to get a case of -- what the base case is for just Corebridge within that. Does that assume additional secondaries? If you did an exchange offer, would that be accretive to that share count target? I just want to get a sense of when you guys came up with this 550 million to 600 million, what you're assuming for Corebridge within that share count target. 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. And then as we continue to do future sell-downs, we would get below the 600 million share count, which is why we decided to give a little bit more guidance as we get into 2025. It does not include a sell-down to 0, but it does contemplate several transactions that would take place in the next 4 quarters.

Our next question comes from Ryan Tunis with Autonomous.

Just a follow-up, I guess, on that last question, Peter. Just, I guess, the messaging on the $10 billion share repurchase authorization. Are you trying to say that the intention is to do kind of no more than $10 billion until the end of '25? Or is that -- should we just take this as an update of what you think you can do based on what you're seeing today? 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.

Got it. And then a follow-up, I guess, just thinking about the reinsurance. And obviously, you're continuing to add more, but you're saying potentially, like in the future, maybe scaling back on that a bit could be a way you could use some of your excess capital. Could you just talk a little bit about, I guess, how we should think about how the gross underwriting, I guess, has improved at AIG over the past few years? And yes, like what would make you comfortable -- because we only see stuff on a net basis, but like what would give you comfort in retaining more net? Peter Zaffino;Chairman and CEO: Well, in terms of the portfolio, I'm comfortable today taking more net. But what we've done over this multiyear period in terms of strategically positioning the reinsurance is working very closely with our reinsurance partners, looking across multiple lines of business and multiple geographies in the placement of reinsurance. And then also making certain that we control volatility in this period of transition. That's been really important. I want to emphasize that because we not only are looking at our accident year combined ratios, excluding catastrophe, we have kept our retentions or lowered them in a period of high uncertainty and high volatility because we don't want to have any outsized losses or surprises perhaps or an active cat season. Also, I think we're very different than other insurance companies in terms of how we purchase reinsurance. It's not done at the business level. It is not done within just the finance function or treasury, it's done -- reports directly to me. And so I work very closely with Charlie Fry, work very closely with Sabra in terms of what our risk appetite is going to be for that particular…

Our next question comes from Rob Cox with Goldman Sachs.

First question on underwriting leverage. If I take comments on capital at the insurance companies with opportunities in Property post the sale of Validus, it seems like AIG could meaningfully increase underwriting leverage here, which could obviously contribute to the 10%-plus ROCE. Could you provide any additional color on how you're thinking about underwriting leverage here, and maybe some metrics you'd point us to? 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. And the interesting part of AIG is that when we look at Property, we have so many different points of entry depending on the risk-adjusted returns that exist. If I start in the United States, and this is not all inclusive, but just as a few examples, we have Lexington E&S property, we have Retail Property, we have the high net worth business, and that can be done on an admitted or non-admitted basis. We have Retail Property. In International, we have Japan Property that's specific to Japan. We have Talbot. And we have Global Specialty. So there's so many different points of entry. Depending on the risk-adjusted returns, we can scale up or scale down, but believe that there's going to be great opportunities for us in the future. Yes. I mean, the first quarter tempered on Property. But look, we're not in the cat season yet, and our industry is famous of just framing out the market at a point in time. We got a long ways to go this year in terms of where the opportunities exist, but we absolutely have the leverage to grow if we like the risk-adjusted returns. Sabra, do you want to comment on that?

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. So what I would note is that within the General Insurance companies, we're strongly capitalized to be able to support growth, obviously, protected by the reinsurance programs that we have. But I would just, as a general note, comment that premiums to surplus leverage isn't the best way to look at capital within a General Insurance company, particularly given a company like AIG, which is a leading player in Casualty and Specialty lines across the globe.

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? Peter Zaffino;Chairman and CEO: Thank you. We do see great opportunities in Casualty. We highlighted some of the performance in the quarter. We had to start, because of the portfolio that existed, reunderwriting the Casualty portfolio well before, I think, it was discussed really in the industry. And with that, became a new underwriting philosophy, new underwriting strategy, new terms and conditions, new attachment points, net limit, gross limits, pricing, margin. And so that's been a journey for us for years. We mentioned the 16% in Excess Casualty in terms of rate is as strong as we've seen in the past several years. And so that we do think there's a lot of capacity pulling back. We have very comprehensive reinsurance to mitigate volatility and enable us to put out limits depending on our risk appetite. And obviously, we're cautious. We're watching the different lines of business within Casualty and their trends, but absolutely see opportunities to grow. And when you look at our premium, don't think about it as we've grown policy count or limit, it's actually the opposite. I mean, like our client count, policy count and limits are all dramatically reduced when you compare them to 3 or 4 years ago. It's just been the effect of where we participated and how we price the business. And believe that, again, we're going to be cautious, but there are real opportunities for growth in the current market.

Our next question comes from Michael Ward with Citigroup.

I'm a little bit curious just on the potential sell-down of Corebridge. How do you weigh the options between doing several smaller chunks of sell-down from here versus maybe the potential for doing a sell-down of the remaining stake? And then another thing on the other side, right, we sort of think about this $500 million a month buyback. Is there the option to potentially do an ASR post sell-down? 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. But as I said in my answer and prepared remarks, we're ready to go. Everybody is anxious to move forward, but we're going to make sure we do it in a very methodical way to where we don't do anything that's not in the best interest of all that we've done so far and our stakeholders. So we will consider multiple options and keep everybody updated. On the ASR, I mean, I think we've largely thought about this, and Sabra, if you want to comment to close out. We've done share repurchase in a methodical way. We always consider different ways in which we can do it. But maybe you can just comment, and then I'll close it out.

Yes, thanks. The thing you should keep in mind is that with the amount of shares that we can repurchase or can be repurchased by a company in any given month, whether it's an ASR or it's a 10b5-1 plan or open market purchases, it's constrained by the same factor, which is the average daily trading volume. We have looked at doing ASRs. And to date, what we've preferred to do is just be consistently in the market every day through a 10b5-1 plan. But it's certainly something if we were to do a larger sale of a Corebridge stake where we wanted to redeploy that quickly and get the benefit of that into our share count, then an ASR is a tool that we can use to do that. But in terms of the volume per month, it doesn't really vary that different, whether it's an ASR or a 10b5-1. Peter Zaffino;Chairman and CEO: Thanks, Sabra. And in closing, I just want to thank all of our colleagues around the world for their continued dedication, teamwork, execution on all the progress we've made. And I want to thank everybody for joining us today and your questions. Everybody, have a great day.

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