American International Group Inc at KBW Insurance Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Meyer Shields - KBW - Analyst : No, I appreciate it. And we're going to continue that sort of over concentration. I do talk quickly so that should help. Can we -- I want to drill in on a number of areas, AIG Next. So there's an expense component and I think on the flip side, an efficiency improvement associated with that. Can you walk us through the expense categories that will be declining? And what the upside is, again, from our perspective, what we'll see with the efficiency improvements.

Question: Meyer Shields - KBW - Analyst : Should we expect that to flow into growth? In other words, if you can process business faster and you've communicated a growth appetite that running the business more efficiently helps?

Question: Meyer Shields - KBW - Analyst : Okay. As you can all see, my next question is on AI. I have to ask this from the perspective of having just such a primitive understanding of it. But what are the investment priorities? And again, where do we on the outside to see that in the financial results?

Question: Meyer Shields - KBW - Analyst : So internally, that last part?

Question: Meyer Shields - KBW - Analyst : No. Fantastic. I hadn't even thought about that, but that makes a lot of sense. The AIG under, I guess, (inaudible) and yourself have really restructured the reinsurance purchasing program. But over the time period since you've gotten there, results have gotten much better and much more predictable. There's much less volatility. How does that latter issue impact your reinsurance demand?

Question: Meyer Shields - KBW - Analyst : Don't apologize. That's great.

Question: Meyer Shields - KBW - Analyst : Yes. And it's hard to argue with low 80s.

Question: Meyer Shields - KBW - Analyst : So the most recent divestiture, besides Corebridge ongoing, [this] travel business. So I was hoping if you could just take us through the thought process. And if you want to answer this, what other elements of AIG are similarly non-core? That's my phrasing.

Question: Meyer Shields - KBW - Analyst : Okay, that makes perfect sense, I think. I want to think of the right way to phrase this question because a lot of the effort that you've done since (inaudible) AIG has been internally focused. And obviously, you have to pay attention to what's going on externally. But some of the issues were, again, unique to AIG needed to be addressed. As you look forward and say, okay, now that AIG is, I'll say, proactive, like the problems have been solved, knock on glass. And you going forward there. The environment that you're operating in, seems a little bit different. We're in the fifth year of rising rates, which I don't think has ever happened before. So maybe this is a better disciplined industry, better informed, better analytics than it used to be. How does that factor into your thinking as you start making positive long term -- I shouldn't say start (inaudible) off for a while, but as you plan for the longer term?

Question: Meyer Shields - KBW - Analyst : What are the internal and external efforts required to let everyone know that you're interested in growth? I don't know if -- I'm going to leave this to the answer, but culturally, do you have to tell people, okay, this is subject to your judgment as an underwriter. This is a good time to grow and letting brokers know that you've got an appetite for growth because everything in -- because internally, the results are solid?

Question: Meyer Shields - KBW - Analyst : Okay. Great. I want to move on to capital deployment. And again, I think we are, I think, intentionally moving quickly because there's a lot of, I'll say, good news to cover. So the capital deployment strategy, as you laid it out, and I'm going to paraphrase what you said is that you've got a target for capital return 2024, 2025, after which it's probably a more normalized capital return, earnings minus dividends and what you need for growth. Again, that's to be paraphrasing, what led to that sort of prioritization? And then how should we think about an M&A appetite in 2026 or beyond if that's the right time frame.

Question: Meyer Shields - KBW - Analyst : Okay. Fantastic. When we look at North America personnel, I guess, two questions come to mind. One, how should we think about the growth opportunity, and I'm saying North America personal, but there is an international personal component. The growth opportunity in high net worth, ultra high net worth personal lines. And second, maybe talking us through why an [MGU] strategy, our MGA strategy is the right way to access capital for this particular line of business?

Question: Meyer Shields - KBW - Analyst : Okay. Fantastic. One maybe unique element of the commercial industry has been the softness that we've seen in some professional liability products. And it's hard for us to know on the outside, how your book of business has evolved through what is now, I guess, second, third year of rate decreases for public company D&O, [EPLI], can you talk us through the changes that you've seen in your book?

Question: Meyer Shields - KBW - Analyst : Okay. And international, I think the general assumption is that the social inflationary potential isn't as bad as it is --

Question: Meyer Shields - KBW - Analyst : And so (inaudible) business players taking a round trip. Okay. I want to talk a little bit about reserving philosophy. I'm not really looking for a number in terms of casualty loss trends that you book. But what's the approach when you look for -- I guess, it would be Sabra and the actual team and say, okay, this is how we want reserves established. What's the philosophy? What is it that you're looking for them to provide?

Question: Meyer Shields - KBW - Analyst : Okay, that's helpful. And I'm going to infer and I'll ask this one to be more explicitly that you don't see any flashing sign saying that, hey, maybe we missed something for more recent years.

Question: Meyer Shields - KBW - Analyst : I'm talking about , yes. Plays the popular.

Question: Meyer Shields - KBW - Analyst : Okay. No, that's tremendously helpful. And for those of you that haven't seen the reports we've done on AIG reserves, that's clearly our conclusion as well. So a little self-plug there, I guess.

Question: Meyer Shields - KBW - Analyst : Can we talk a little bit about cyber insurance, just where you are now and how you see the line of business?

Question: Meyer Shields - KBW - Analyst : Okay. No, that's very helpful. Results have improved dramatically since you've gotten it. This is not a secret. We've talked about it a lot. And I'm wondering, does that --

Question: Meyer Shields - KBW - Analyst : For you. I haven't done anything I just sit on the outside and throw stones. But I was hoping you talked about how being a consistently profitable insurance company, how does that impact investment allocation? Can you be more aggressive? Do you not need to be more aggressive?

Question: Meyer Shields - KBW - Analyst : On the investment side.

Question: Meyer Shields - KBW - Analyst : Okay. That's helpful. This is really my last question. We've talked for a while about 10% ROE. We have, I think, a very clear operating book value per share number to work from and that should rise over time. What's the time line, for developing a time line? You can say, okay, 10% ROE by x?

Question: Meyer Shields - KBW - Analyst : Sure.

Question: Meyer Shields - KBW - Analyst : I mean, that's really what we're looking for. And my last question, and this is only half tongue-in-cheek, but how board are you going to be just running a normal good insurance company?