American International (AIG) 3 Nov 172017 Q3 Earnings call transcript

Good day, and welcome to AIG's third quarter 2017 financial results conference call. Today's conference is being recorded. At this time, I'd now like to turn the conference over to Ms. Liz Werner, Head of Investor Relations. Please go ahead, ma'am.

Derek. you, Thank to get you we which morning, like are I'd based in And today's started presentation remind subject and expectations that management's statements, and may to changes on circumstances. before current this uncertainty contain are forward-looking statements of future are events. performance guarantees not forward-looking or Any Actual such statements. performance differ, from events materially, may and possibly forward-looking management's of that cause this our our conditions third and second, XX-Q of could under include and in operations analysis Factors risk quarter Form XXXX discussion and results under factors. XX-K first, financial the factors and Form and described disclaims AIG whether obligation is not new otherwise. under any result a update obligation information, statements, and forward-looking events, or any any of future to as contain Today's presentation measures. financial non-GAAP may included financial slides in in presentation and of website. both on supplement, today's the most reconciliation The measures is to for our such which the our are of available figures comparable GAAP the This our including management team, of morning, hear and you'll Hogan. members Sid Zaffino have from various senior Peter Kevin Duperreault, opportunity Brian to Sankaran, The of format follow-up. and past one question will calls one with follow that like to to CEO, over our turn call the Duperreault. I'd Brian that, With

highlights AIG, within for businesses. our in few was multiple-location X,XXX impressed in thank particular, a how you times business the I that and and quarter, lot as to I'll discuss provides for this us perspective talk joining results. results, these There's of operational morning, days businesses Good these continuity Harvey, execution great the our this business all of a very were Harvey on loss. of our after value undeniable losses third to market home my over begin, our share fully our and Houston. I Hurricane about to employees strengths, levels we have the and hit. how Houston-based insurance is presence, experienced view a on performing. to deep impact quarter for our plans us. catastrophes quarter, market catastrophic structure, all based and the hit industry Due the our To that response had during with surpassed historic AIG's

that and and communities. While proud Houston event, dedicated extremely call say compassion serving their stories those I those forced team and and themselves them difficult recent hard I To severity our we've over asset, our believe and can through our AIG, is our AIG. in claims for to all as their actions appropriate participants particular they greatest are AIG of Heroes, this pricing am risks in most so. We others Maria, of clients begun our assumed. our reassess their Harvey, strength rates we'll share date, across employees as raise Rico. in who their continue for of well speak in do Puerto worked We've had are distinguish including to events Irma, in market of people It the claims this to catastrophic catastrophes, successfully the the and and XX,XXX from the the of wake to The time. we

We across participants market. follow recently property have market other the seen

reserves for on XXXX our assessment particular. and to continues that previously quarter's I the reasonable the stated sound, hold. is actions results process include year addition this accident In and additional to CATs, in reserve

prior there for accident agreement. overall was our that the years subject and note will no to You reinsurance change XXXX reserve ADC on

Sid ones where and this still to year, tackling. accident challenges and greater-than-expected quarter and is remarks. blocking year quarter describe to actions will The XXXX basis underwriting to over The first XXXX seen by claim are our and chance tools. business was on really for the green, the months but our we changes made my in this more processes cautious going his I'd decided addressed of the on many be will past emergence view events be The clear we are and XXXX as However, in plan observations and the judgments forward. the I've XXXX accident six my the that comment that our very years. saw accident our on Commercial further past

profitably. from This great base and quarter have which urgency I have changes. marks intend the to mistake, no Make made grow of sense we a

We Insurance with Life have strengths. that we establishing started and Retirement. and announced with quarter structure our And organization an plays to this General

distinct will how business specialization for loss-sensitive business P&L risk. or integrity. Risk we we AIGRM. already business AIG underwrite, run market, I've clear And accountability unit will have in return disciplined how our to the is and segments, creating action a called We unit businesses. we Management, and This a with taken in in more distinct manage

and see more as this, surplus reconstituting as I'm actions Lexington will writer. best-in-class today are we operation such a and announcing true that lines standalone You

this Finally, heard past strength efforts. We footprint will Insurance week Townsend of core International addition a remains company, our of we of as you and it me these distinct earlier build upon. global mention the on General to CEO growth lead calls, Chris which announced the

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my know, may and take retentions it's not large of style limits you to As risk.

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are to a leadership in perform. We as to taking Finally, talent year declared additions to them underwriter. XXXX and Insurance, of the made continue General position and great make actions underwriting I've and in

and of they're to simplify on No data has with incented more importance and profitable so me. our business. one the market our commented in structure, the than aligned write will We technology analytics industry

this point is control business. that it our armed underwriter, However, information the is the with in properly central

that important is back. balance it the get So, we

that continue market, of over getting products to on speak profitability goal resolutions in The deliver to consumer evaluate I'll solid risk-by-risk diversity but our earnings results. use this of the actions to expect advantage to. and Our expertise operating this underwriting technology of and the achieve to with underwriting building partnering and we the strength so and better Consumer steps are basis. will benefit been. complement better business Kevin stability quarter bit pre-tax of billion our businesses a I improvements reinsurer. and sustainable data each making will should was improve take AIG underwriters goal provide the on again this specialization our expect will These and reported across it quarter. value of will seasoned you which evident skill-set earnings our with our to of with areas geographies, of $X a ever profitability. take AIG a to of quarter in These than has diversification time,

us the we our the of puts believe and for given on was it playing milestone our company. appropriate as risk a Finally, action field de-designation a recent exposure. the nonbank topic important positive size with competition. our And an level Well, SIFI. is on response this This

Sid numbers. growth, views I'll profitably. organic we Our With inorganic opportunities discuss will the grow over both it pursue on and that, continue to to to remain turn and to AIG unchanged,

update on our provide Brian, liquidity. morning, and and an on I'll third quarter our morning, good you, results financial capital This Thank comment everyone. and

catastrophe X, in recent reserve commercial. accident we after-tax to losses strengthening and an years per $X.XX, operating Turning slide reflecting reported on of loss share

over Our results or quarter basis a also in Operating operating our XX.X% ROE on general consumer and $XXX an another from ago. year third discipline, with ongoing year-to-date. quarter quarter with benefited XX% of XX.X% down solid the normalized businesses results of delivered from expenses expense the operating million a

$XXX in $X of with losses Commercial line catastrophe almost Insurance our losses. and the of were billion and X, billion slide in comprised were disclosed to Personal range previously Turning in $X.X losses million

quarter, the $XXX business. is largely net Personal losses fourth to Insurance our our of approximately California reinsurance estimate ahead of in early million pre-tax, and Looking wildfire

provide I'll Turning to reserves. on slide commentary some X,

our we our XX% in a of our quarter. over remaining XX% be our third to reserves of fourth assessment have reserves completed total during This leaves quarter in the less than First, reviews. reviewed little on

into third studies, $X from that adverse As part fourth approximately of lines based quarter the quarter reserves displayed the trends. claims accelerated our on of billion we

we the a excluding gain with year detailed of deferred of ADC this valuation cover. of the from lines covered million on quarter the there do the adverse reviews, XX% amortization remaining lines Berkshire. the was development $XXX no result by the At loss development by not any on claims on overall reviews, reserves the adverse benefit strengthened our for million the Based fourth pre-tax, prior trends. P&C $XX display point, As scheduled commercial

varied an trends these and a it we range. the the Detailed European of in accident our XXXX range lines decided prudent move are continued losses observations and In on U.S. resulted large including book. limits Commercial remediate program book-by-book. and that underwriting uncertainty, to increase Auto, reserve These actions we XXXX and for The evaluation and underwriting took was performed supported Our driven expectations. poorly, was the higher quarter. an premium claims of we in experience in should XXXX business Continental still extremely green due increase Europe. and with claims an years. beyond underwriting amount of of to only further to business, prior this in Casualty up in us we severity saw analyses, trends, our judgments to by we have programs are in taking to certain our million on $XX fourth have terminated And business, strengthening the program judgments

Lines largely also in company move not-for-profit. our reserve range Financial respond we XXXX, outcomes. in our took claims of to portfolio and action Casualty to U.S. increased potential up to We accident increased trends for year a private added finally, bankruptcy to Excess in And

X.X reviews, this loss a catch XXXX PICCs of we've worth XXXX. to year As detailed X.X six points quarter our points a for accident the year-to-date. result up relates strengthened There the by also current first roughly months of is

slide higher-than-expected this a expectation ratio adjusted Commercial also note as XX.X%, a accident X. year provide severe insight incurred that ratio, an reasonable fourth we quarter. year. can't as on accident our XX%s high while quarter loss Year-to-date, into full loss shown is we is for You'll actual And losses a

shift, As which business. our improvement XXXX and the chart, Casualty restated points our and within of we improvements year-on-year. Specialty mix on basis, is XXXX a roughly with along shows see two look driven being we by This at

of on these largely many However, is the improvements. significant severe results attrition within offsetting deterioration loss Property our

recognized lapses was also Annuities. equity was increasing for in Retirement assumed the annual Individual profits a long-term strong This the on Annuities Variable largely related as gross million actuarial review pre-tax assumption. The return to in benefit lower expectations. as partially We our of reflected Life reduced expected well and Fixed market by offset Retirement performance, business our and operating businesses, $XXX the benefit

free and flow remained sheet strong. balance Our cash

on shown As slide Liquidity was quarter-end $X.X at Parent X, billion.

our from companies, sharing payments. included distributions the quarter, million $XXX approximately including debt. of insurance we approximately calls During the received our quarter and $XXX million of Outflows during tax of tenders

warrants. our the addition, we our $XXX downstream and capital, million CATs also In recent during outstanding of With to did not the to require respect us quarter, capital subsidiaries. repurchased insurance to shares

target ratios our Our to end at current range. expected subsidiaries within the capital year are

commitment went and We on the schedule. fair continue a the to quarter sale Settlement fully portfolio the legacy billion allowed signed value non-operating write-down the net remaining to book The in were a September, transactions. proceeds to our approximately pricing and third sell Life $X smaller the to the late impact a charge slightly achieve is holding In company which closed market strategy. the planned capital Parent billion The of XXXX in of agreement subsidiaries. also to million Life we their in pre-tax, of implied value on $XXX have by executing our P&C and November discipline contracts has insurance to X. portion sale ahead us of our The purchase of contracts, $X.X these to to Settlements

forward, our going on We transactions when further update you and continue progress make occur. will to Legacy strategy

seen payments Looking subsidiaries, our our expect in Tax the $X to we will companies and our from to ahead in to customary XXXX, sharing subsidiaries impact from of quarter. excluding we've activity dividends $X losses this P&C approvals. subject billion reflect the any insurance billion Legacy-related potentially

the corporate We and U.S. potential of from continue the in assess reform studying impacts yesterday's are carefully process bill. to also tax

approximately still in a result rates approximately we deferred corporate Our reduction $X previous would points statutory the in XX% reduction billion. ROE by rate XXX An to to statutory sensitivity on analysis would immediate expect by tax changes to tax our prospectively. our in basis the assets Similarly, tax increase hold.

So a a this in positive from slight isolation, as we perspective. value view

General and U.S. As Commercial Consumer and Life fourth Kevin a Zaffino Insurance the reporting Individual reminder, Insurance Insurance release, transitioning led reflect Insurance Retirement Hogan. results. and and quarter expected To Insurance. which to our we effective Life is structure, results new and Group led Insurance In business international General is volatility year-end will to are will line by fourth sum this include going plan organizational to Life Commercial Commercial segments during and Personal Retirement, quarter. become earnings our quarter, in up, Retirement Markets. clear by a Retirement, the Peter financial to of we supplement. how the release of we're despite our to include expected improve and into advance our a recast Institutional sight have the for of

have to on maintaining and sheet a of demonstrated value profile, strategic gives the free us options. flexibility balance We which flow strong cash execute our

call to to turn the like over Peter. Now, I'd

and of business some that will an business, Thank observations my Today, quarter focus improvements and on results structure in good our will for drive sustainable at early our as discuss everyone. AIG, underwriting, well Commercial third financial as you, our building long-term performance. the operating Sid, morning, I

a Operating and First, I leadership am to partners joined first very working my the let Chief colleagues. around to of pleased to all expect majority Officer, of be three as Brian express how with a months team, be distribution talented pleased me the colleagues have clients, from here I'm AIG, it's and interacting also I again. working world. with with and our Global great

clients many about service begun our and world, in to my During our review to value more cities ability brokers. to visit the and around and I've learn to provide detail, more our operations

the with the transition of familiar new expanded to Insurance businesses. XX have part becoming operating Personal and more the claims and process process spent my Commercial role, structure AIG's last underwriting I days As the and for

observations of business Our the a many partner had early previous affirmed roles. in from AIG perspectives I as with have interacting

position expansive very broker underwriting a AIG footprint. be active partners insurer along clients underwriter as capabilities, and strong and deep leadership strong innovative deliver our risk global our future. and received overwhelming with and solutions related They of as plans to have our My truly and AIG to team we for want AIG with AIG. First, their an The well support regard expertise the desire at on to spirit risk, is of to collaborative as colleagues our to around of is second nature observation the impressive. rally

natural the that to has the been remarkable more than strongly Nowhere response evident recent catastrophes.

for us before worldwide soon do business. this the what is are claims upon to various our responded to inspect claims and to and is inspected Commercial Irma to best where devastating and from funds do We've of would prepared locations XX% the have and and those and physically were locations they clients. by XXX as events While Lines allow. Personal XXX XX, it these get Even industry excels. times that conditions sites Harvey directly distributed adjudicate impacted back and have so we claims impacted, hit, we incumbent clients the positioned opinion, to In AIG colleagues my over

at many appointments. under on of over strategic my observations shifting the been numerous have decade, the to AIG priorities leadership with changes past there business, Moving

a to hard intended, meaningful making improve it's progress to organization the As financial overall result, focus been on results.

with play organizational our more speed AIG, in client AIG's platform within leading partners, closely the innovation, of will of connecting new more clearer structure expertise needs. clients empowerment Our making align more core in the field, us with key underwriting to distribution us our and accountabilities will to It decision-making. global and strength improve responsive define segments, drive and

performance have talent track underwriters and today. here hiring by new complement are we colleagues We strong enhancing with records of very former financial structure the to our experienced

to transition some performance. our me of areas key Let

third speak will to Commercial's Turning to slide I results. quarter XX,

selection the in underwriting As international Property, comments. continued results written we Sid the to will points by and opening driven with for Commercial's quarter. discussed Insurance risk that Casualty FX, shift presenting reflect events include accident the Lines our Casualty. in General quarter's Sid remaining fourth competition Financial for noteworthy in of the sales X Fairfax. announced in mentioned, Net Ascot decline selection slide PICCs reported accident market Liability results results related and year Risk year performance XX% of improve U.S. mainly excluding declined the On the premiums X total points his current U.S. XX, efforts, to in to operations and decline. Casualty drove loss and increase previously premium U.S. the and to efforts select

programs. catastrophe level not experienced to large, severe also that, Turning by from is an clearly and losses, Property point slide and XX, our did the significant It's quarter natural elevated have reinsurance AIG CAT to important given focal of losses. any we a recovery this note

multiple Our long-term working which partnerships a exceed that, approach the close did reinsurance reinsurers. going were agreements our with said retention. take of not will Having not to each our we given events, reinsurance, in major triggered loss forward, strategic

During look XXXX, our on to take results we saw position net property at property. will profitable a volatility per-risk net we the improvement for for long-term reduce for certain growth. in reduce and opportunities lines, Commercial our take minimum, our in we further limits retention that casualty further in a been underwriting CAT to Property, deterioration XXXX, there's incremental less In in retention as look book, our but overall, lower company net recognize

We've the Property, been quarter a partners. will distribution and clients mentioned, with and we're events non-CAT be catalyst risks the CAT and third rate communicating for both Brian taking As for need actions. and

rates early, improve. While to Property there will much we it positive have are signs do, is that and

by acknowledging will basis, on further basis. rate accident of to organization. to want ratio them Together in highly intend quarter to because team, my leadership we're I'm AIG as goal to wrap motivated we the I to commentary adjusted not an improvements to where as achieve risk-adjusted to this double-digit fix possible. increases year run I'll success with to in and loss a be Our is the on deliver third terms a which terrific underwriting our problems to I contribute of develop plan came performance. up quickly

As add These continue of enable talent with meets an operating Brian of leader now of key we'll will industry the a focus the structure, components the and to all become AIG that on outlined, the and have to that elements are needs stakeholders. develop excellence. its laser we underwriting

disrupt allow and main Looking their work they our January X as successfully clients. our prepare is priority to not efforts teams forward, for to with our renewals

to XXXX, defined and structure General parts making full cover major begun X, have expect on business, clearly by briefly. have our Insurance We I'll January of operating the just progress three which

The Chris first week. International where is International Insurance we business, our Townsend of will International named growth General just as lead AIG's Chris this strategy. earlier CEO

in Our second focus. named a is our Lexington Management focus Rabl of which requires that to and as core how we Bill area Risk of have. is best deliver and create clients. area infrastructure sensitive third consistency business, large our to few companies practices We loss value strength, AIG's CEO AIGRM of

the U.S., in opportunistically a will Lexington and largest to we enables the As expertise market. more specialized in in and invest the surplus act strategy that distribution underwriter leadership, excess lines

growth, operational We the fundamentally opportunities are better for a working for towards capital risk to profitable quality best towards will a deploy new and deliver improve where we our selection process. book, AIG, era improve

look to that we're will a solidify AIG keeping forward on With making While choices I'm as that over the call leader. on to will our as take time some in repositioning the prior updated to accident deliver you I turn a an confident I years journey Kevin. industry will the earn that, progress. are we out, embarking

and Peter, morning, you, everyone. Thank good

and was favorable Strength Insurance catastrophe on $X Retirement. low-rate offset accident-year and higher higher mitigate the for quarter over slide equity for operating losses on has see Consumer results. normalized assumptions our ROE the produced fee of Life results income by partially the and our challenges for losses. Personal environment markets actuarial can Higher solid to in update XX, XX.X%. partially lower impact you help As losses catastrophe and the were pre-tax of the billion and income, continued earned We despite

strengthen platforms the actions further targeted to to our During returns, and quarter, pursue growth continued enhance opportunities. we take

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equity the also mortgage Assets rate Under market income in by prior Despite investment by due performance. at loan partially Administration for spread reinvestment quarter-end caused period, Group in to but highs run-off higher-yielding low-yield the historical also driven net Retirement declined assets Commercial at of and environment. management, were the disciplined higher

points significant we X to our quarter. approximately absent basis will per by decline to in Retirement, expect spreads Group the and overall net changes continue environment, rate Individual across forward, Looking X

Life Let's now XX. slide on on to Insurance move

product growth. distribution bottom our the modern business plans simplification Insurance Life both focus are narrowed and to enhance U.S., make growth. executing In and our Our on return line ROE progress, platform, to top administrative supporting continued efforts to new and

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As I mentioned the quarter, growth in are to from expansion targeted for our earnings we margin at call margins. focus second our moving

Japan, we Finally, XXXX, make X, to solid on on the of entity for on remain underwriting transformation, results. our in progress completion merger January with continue legal while producing track a User the achieve of to paper cut-over X. new renewal soliciting legal Acceptance milestone resulting and on October, us the and systems the in Testing entity platforms allowing new policies and January effective We

XXXX legal As variability will To some of beyond. savings businesses. expense operating close, entities, we still pleased our the which have realized multiple this with in into the are progress making across XXXX, we continues of have ahead will and being transition I'm

like Liz it to would to open back turn I Q&A. to up Now, to

Okay, do listen, me well, it. let

let's operator, start Q&A. So,

Shanker our Absolutely. with Deutsche Thank first comes question go ahead. from Please Bank. you. And Josh

about reserve first XXX XXX, of initial the that XXXX had XXXX. these Yeah. reserve Working in half points changes is in liability it first XXXX taking for than early emergent year, of half higher Give the quarter of improvement be basis Thank you through quarter whatnot, so my inter-quarter from I much – the year? look Good third you better morning, loss to I XXXX third at and the so see prudent picking the with everyone. the Financial PICC all segment to much Lines charges of and – the or question. problems

being Josh, loss I was PICCs. There Well, our about improvement. think realistic we're

getting in et the is we're et cetera, of but loss there reinsurance, it's programs, improvements accident-year-to-accident-year points, whether levels changing of some areas basically cetera. reducing if go you I Casualty, high – there think recognize, or rid was starting

so So Yeah. we they're made have realistic. improvements, I think

The book third what saying? first somewhat half quarter is from book different looks the you're

know that's to tried if at of give is with. use. That's third And don't and look think year-to-date I a got at look mean, year on that's our to quarter. kind a I I one ratio really, I for to myself loss And it of you the basis. the Well, a the the it's going you Sid be that's the all concern and starting – XXXX for would idea point. one general what to me, I accident of I the

Your Suisse. Tunis LLC next (USA) question Suisse comes Thanks. with from Credit Credit Tunis Ryan - Securities Hey. J. Ryan

comments. I back to, just going guess, So earlier Brian's

appear You basis? expect be is think level I that, what conclusion said originally Thanks. that go-forward that, that volatility, – case, to you this quarter, investors said that is If should we're reserves the that – I reasonable, or and you used also the this lower holds. a on still morning still activity that's of reserve, this guess, seeing

Thanks, Yeah. Ryan. Okay.

clarify. me Let

is at of the And get at it reserve really, to I XXXX, it's think view the process first look chance reasonable. I we real look when first it.

were our underwriting looking whether understanding point more than we're what I So, is our starting actuarial. that strong changes taking effect they setting was and consider the up. as and were, underwriting This this and at as

business volatility. So we no of it. are in about a There's question

there So accident for you get And see would forward. take quarter done you is we'll process this going these and this to about different may understand down of year my said the that of will guess, might like want those quarter-to-quarter, Suisse but was reinsurance through - I the dampen profitability. size And, AIG the you get get The even right I takeaway – you in and is, have that ratios that's that the anything reasonable. as in about, real reserves think – it's what Tunis on is repeated, we to the some Credit the whether Securities establishing is, think the guess, (USA) get or I loss will underwriting base you're LLC and losses approach past? Peter volatility in I process hurricane, better, movements, Ryan just of taken I going some versus right and out, have to what of then J. we the establishing remarks, thinking to to

we're I Well, me don't that. in look, so, what it's look, very the come here do to I past, wise to I and say, early, want That's What it, have recognize if want I fix did do. you've on think to it you for business. to And and doing do AIG is, you you comment what look I our I it. to a it's now, recognize at you and got admit reasonable. me, problem, it,

in You you go do And resulting pursuit is we're that be what What relentless of free. are actions the required. and the truth the doing. error can can't that's

we're So, I do. I it's right track. I on – really the think think

question Jay go comes from ahead. with next Barclays. Please Gelb Your

you. question and follow-up. then Thank One a

that, a want left. meaningful Casualty anything saying XX% for Property in expect reviewed The to just first, around as, development I or you're don't clarify in quarter, the from standpoint are the XQ? Am realized there's as fourth in right what characterizing, and remaining we reserves saying I

something like I that, had a feeling Jay. you'd ask

by here's like left was give okay. points, that that's let – me you ADC. So, of data XX% and data I – about the covered There a point, $XX billion, yeah, XX% XX% think basically (XX:XX) something couple there's of the

signs, So produce. two indications isn't. point. showing those Sid think so, other that that's might we fourth deterioration saw quarter is, are as data forward what anything out, of that rest pulled the I was we the And the pointed

any Property for for you. Thank don't you accident I want in to helpful. prepared point your I if Are talking ratio insurance? this double-digit then just believe give in you rate mentioned for improvement about And Peter, Commercial. you increases year expectations loss in remarks XXXX? at expectations And, Commercial That's

rate. in comment better mentioned Thanks, of I the for that years with on Jay. lot industry, last followed-up what's is And for catalyst have but tax underperformed rate on just Property part I the don't Why accident happening pressure the think a of years. the I four with rate, been the Brian as and a pushing have from

allowed attritional loss to CAT creep think the kind of has up. lack I the ratio of

rate exposed seasonally CAT and hasn't mean, so time. take began we serve as with have of then we quarter the capital primary, current we raised, early fully exposed worked just partners signs well capacity little of and into its the reinsurance a Property, think rate with we're holding. non-CAT market quarter way So really bit But that the lot reinsurance to fourth are achieving either on the we and in clients that to actually translates why a I into push the out the reminder, outlining see for distribution and been see. will business over-communicating the need it. of third and our and so a that's being retro a portfolio, is I reasons how smallest lot specific was we it'll that are rates quarter, that

comes with Your Greenspan Fargo. next Wells Elyse from question

I bit question, first together, My a of guess, morning. Good Hi. little reinsurance. is price and follow-up tied

get your and of is next on price enough price Peter, with in rates So on paying that comment, reinsurance guys your book? purchasing how you the envision to to own think more be in line's Do margins the your to strategy you pointed – impact expectations you year together business will Commercial all higher that you do reinsurance coming the just offset higher.

you she Peter? want to think wanted that, you to I answer –

covering well, our Elyse, of a options All program CAT, had basis. ways ways our CAT We're looking per risk, a the risk. now. looking per to occurrence right, looking catastrophe of market We're different for different fairly on traditional looking structuring at perhaps we a different at we're the per variety at in some structure

a at variety of structures. looking we're So, different

determined. fourth We're that's be that's going we're on we're our better to what we'll going not be improve in rate influence that the rate to a to years quarter. And position really we it need So, our not front-end. a of sure to see doing the Property. accident on the book, reinsurance significant pushing I'm in amount in structure, about yet in because to talk

don't volatility, I add There's frankly. buying Can just And to see going out they to value that value of want the but in expect to compression. our reinsurance partnership line expect us. think help let a too to I a reinsurer me out resulting to the be be, to don't where lot because just and should that? much help add Elyse, a to be a we numbers rate I be of portfolio. we with going And look at Look, me we're to reinsurance, real We It's reinsurance. that. we're don't going the have of of are that problem.

market Okay. that through And of today the kind you there about market sitting if think seen back, years, thinking type and could hard kind then you kind as the potentially on higher the looking compare from Brian, second how would And, we of my and side? another Lines just Commercial just expectations period a for you I prices, we've question, the the softness over do is of prior be? think about market the of past to mean we're forward think sustainable Property hardening

out hard They're been but so XX. a that's Elyse, a few it haven't the with I all talking pricing, all the been aspect. – we all fact that different. And mean, It's whatever had good. not I've start interesting. They level, markets, about different. many. They end that obviously, around usually seen while, certainly different. that different. we'll isn't there They're all starts any

lot it's away. took opposed a catastrophe times, because the localized. withdrawal it loss, be itself tend a to a think to as of They capacity of I

you a market. could and different. you Casualty Property a don't a So in my time experience, have X/XX market, was have bit hard hard The

hitting a been models number California. profits. seeing, number don't that one. are three, whether cetera, two, unsustainable, we're recognizing there the for CAT the the think global I Is Number living And warming, are CAT I think of Property So is real wildfires is it's believed there et things They has off Property about in that the mark. question (XX:XX) levels the a market the the exist. market

it a level, and problems in anyway. loss actions have interesting should – a and our about exactly great a to as problems How got think for raising is the I all long question it don't be of CAT, it's Property So, piece ingredients level, All fixed. of lasts? because a problems for is making taking market. has The improvement it lasts. there's thing long maybe market we care string? the that severe doing I are think it all a long has How significant got the frequency have. do we lasts and at of the it Property rates I the level whole market is those thing. taking We as the to guess the exposure the started the it's know, do and but at I same exposures. And

So a a definitely market sign we see of here. change

comes next from Your question Please Morgan Pan from Stanley. Kai ahead. go

look XX% if good and months morning. My you nine on first trend, X in about the question XXXX. the (XX:XX) trends, you Thank ratio like to improved of first underlying at points loss the it and

underwriting So, improvements, do just given be now, and the X the see that XXXX? slower you of right taking points, action you wonder, are will the the pace in

don't I I slower. think slower. don't think No, it'd be it'd be

Okay.

no, risk it'll number we're talked Because they the slower. lines addressing one actions I Property, with don't non-Property action we've so, think and already about taken, selection require, and be is the the

you like going third billion Is going that And question $XXX how follow-up expect on forward $X you the to shares the quarter. capital billion each can in My million (XX:XX) Great. forward? sub-dividends $X the purchased Okay. investor do see level management, about of year?

going might buybacks. or it not tell we buy I when a bought is won't management what expectation shares. our we We back and but to that's can give the primary. it. make I And believe long-term shares of again. capital how in you an I'm share what, that our business, that's used in one capital we capital; have want to and number in deploy improvements priority. We may do places that structure, deploy portfolio we've tool; have we do or back to we you

Okay.

Next question.

you. Thank

from hear Evercore. with Gallagher we'll Tom Next,

Brian. Two morning. Good questions,

just Fed's commentary of de-designation; lot on The what Does inform balance given types you shrunk how about would in this added read the the of process? perspective, sheet you from the when that a the the what might rationale Fed for sheet consider you as deals you given first much one, balance SIFI said M&A that deals de-designation. meaning view your consider an of the

anything larger. to we I think to more Well, have balanced and do don't? that's want I do obviously. well, Do that my that better deals is I us on that My balance or do get something market the places or that's not in But better else. better better us not technology When anything – the makes And penetration, thought, thought better and is, I'm stream. people we so it or interesting, first strategic? it add most us adds a earnings we trumps Is – make be are better? though, first to we diversification Tom. And deal sheet, would

Is was book. long-tail have when think Got far more and AIG And for this my conservative XXXX, all the in at the not year then message I follow-up XXXX casualty that is right Or ask lot that's you. executing XXXX there on is, I accident was you do observation? going the the was about shrinking it and AIG development And now the getting it the adverse here? – of as is pivot? adverse there you that myself, lines. selection on guess, a think that part possible I what of what's

selection And takes thinking okay. you're I price; that, not there's Tom, first. start some – one that risk you some it's and could trumps probably say if action of look price-oriented, with suffer would selection that. selection let's if issues

And the to will so in I've remarks selection emphasize first priority, we our tried we that risk my and is like that appropriately. products price

And is adverse place, there going we're root out. so selection if some taking that to

Bass Your next from Autonomous Please go with ahead. question comes Erik Research.

you. Thank Hi.

do issues et data, in side Based driving underwriting you XXXX provide doing today, terms AIG you clear you this? some on we've the processes, on XXXX, underwriting more talent, in and you're to the what can what as books, observed, challenges. the And what seen detail alluded is to cetera, you has of think continued improve it's on With results? have

Yeah.

the the structure Specialty I think the attacked I some some matters. structure we look, to that I said, I Commercial denigrate But about were mean, we actions, don't – there all business, the said is there was done I and back not think work So, that here. was because to the improvement. I what think Peter, recognizing want and

underwriting a decisions. tools underwriters we get was We tools, better. too there imposed, little to so, general, help the the it's not underwriters But to rightfully have ultimate So, and make better have much Specialty.

– selection. the want we a less of I towards might We to pendulum have the think underwriting that towards swung balance. think bit science I and restore So little

I think, take We a we're of volatile. know, in volatility. I a lot

gross high. believe our lines believe too I too I net were Our high. were lines

they're have extreme. issues, you So when

you If exacerbated. mistake, a make it's

balance. where a we those make you you think, extremes can we better down. money I want And want to reduce. and mean, can I pick So to you spots should where got cut your you've

and, There's have a with from we're urgency that getting there sense do good that people starts will a we good that the where took greater, need enhanced are people. place. maybe, of an people always outside. – yeah, of there's It to But Some here. places we

You put a I together, good think got we a great structure structure.

there's I is you we – You haven't I doable. you haven't it win that day put This basic good will the very I've here. execution And people are them, empower that this it's executing. them and all in before, structure, seen and execution accountable, and hold is nothing seen seen before.

And from of mean the the appreciate from does practical that do you, just And – business a units, how see results? you comments. that the the what basis? Thank specialization improving

handled our in That's in Well, we a business specialists. certain to talked comes about by in, has way, marketplace a AIG be Risk that Management.

spread We have business. across diffused the that it and

again. created to branches. who It spread into business we've had have Lines it that requires people Lines it we Surplus we a work. a Lexington our again, in the Surplus specialists kind unit, created unit taken one, used Lexington; of Now and separate is with are We company.

want a you creating structure, so we're we've And so, back, maybe the to That's Peter, gone and good were doing way add something? both. people are not there – to Lexington.

capabilities better results. have their business to best segment, to that AIGRM, across and going think by ability just what strong were sensitive you if is Brian, saying to within Risk share units Yeah, practices is add loss the creating distinct to that Management yield very I look the these you

points risk, data XXX do capabilities are Bill review, the the – and to using to of is ground Rabl a amount there's going have and up attachment at business. We so finite we (XX:XX), selection, price that bottoms-up of to a doing there's view tools, look a all going risk we're

really book. to and into the get going the we're focus and on underwriting improving So details

you. Thank

Your from Janney. comes Larry go with Greenberg Please ahead. next question

Yeah. Thanks.

bottom Just flow sure following two in I'm takes underwriting and want on hear just to up works to underlying I for actions this, the be that usually accounting understanding year how lines. business, the reinsurance, limits, or through But usually you I am we that, of that understanding or with can to-date levels? XXXX that taken with the that some in your expect to ratio. expect with actions back an predecessors cutting we improvement should about loss a might when this it it have

There it to we're Things that's a yeah, into out. I one possible. sense have life. humanly get still improved to And little I impatient out done this a any than get wants me. going nobody XXXX, to it you're We'll even as speed hope is reinsurance that that's would you our over I'm more bit, suppose. know the has fast impatient there's here. actions earn is faster XXXX, earn just XXXX can are. And Well, taking. XXXX as up of urgency than done

for level how Great. line, give of severe volatility losses And in that should as is the limits? the kind Or prospectively us any back Property the you there tolerance be severe then larger in way cut we about thinking to a losses?

that. to going Peter is answer

Yes.

quarter the in that a focusing better back per were think our took segmentation of for we I overall have what actions understanding the when when portfolio. and talked try But – continuing areas of good update to we on very probably us I we key we about evolution. believe next it'll for chance property some to an book, re-underwriting I to per I risk. a risk, think be the think we risk appetite Larry, on to improve had the

of spikes is perhaps leveled seen be going so tolerance in will decrease, out. the those and that some think you've our past I to

we're Casualty where a lessening of on what that's Brian too think losses, just I volatility the net. in some was big even that referring to, have the of and seeing we

can protect think as balance than purchasing reason it's severe. don't I draw why the to occurring, So, we results protect specific above to you want to and our reinsurance other through one sheet

Thank you.

UBS. Your next Brian question from Meredith with comes

morning. for Hey. Two you. here questions Good quick

at XX% First, the operating expenses, if I the down Commercial in year-over-year look general line segment.

the in ratio in the start And I'm move Brian, going when about in on the see interim the that wondering, some start ratio expense the in loss here? to goes have side? talked down, could respect we kind you'd least as business to to seeing with be So, to up the Peter, of expense the offset that may are investments at you'll start the margins kick business

– we're is people. Investment Yeah. investing in

GOE. good So and GOE GOE, there's good that's bad a

Right.

we're in investing people. And

– that you're Ultimately, in offsets to last see we're a the to So could some here, said the maybe over I and this see – that's reductions increases going thing. good strength call, with adding over you here of company. the but to

to peers to people We've better – Sid, So And expense in a you to market priority, no ways conscious bear. an of still excess address that. I'm There's what has a it, getting about to have company, have it. be We, got – is business. our but and want say there's question be in address something? to different period. we this of expense therefore, will the as level in excess not in that's

has we've areas at Commercial. remind our IT tremendous aggressive to that real and just been continue on fees, I'd and you both we're I overhead of areas one contributed Brian, such most with discipline, think expense infrastructure, a Yeah, as level been in going areas attack to services to that estate the of discipline and AIG professional those has amount

through And in for expenses. adds they the probably going when them the out experience give daylights little speaking, specialized the we integrity, we're bit But charge, squeeze unit levels. is mentioned put – Right. of my calls all to The Technically you them. this units, more more like that a – expense structure structure. living someone of a unit,

for a expense see P&L, Give to under discipline. way our I think that's So, you'll control. responsibilities expenses ultimately, and people great another get

not quarter, keep next on not whole share buyback a million, Great. that the on Why not buy little anything? just a $XXX bit these different in of kind your for then, way quickly, lot, Brian. opportunities? And we investment toward question cash the the saw Why that taking just here meaningful. just sheet this, balance back

can any I tool, say, capital interesting. to what to something find So deploy say, you're this it. a management If better doing mean, back? management and a I you Look, to got better why didn't don't I it's I'll buyback Brian. expect I to management, stock be with know that's that, anything get question, the what a we is tool. great a stock do do. I it as deployed continue paid capital, It's have buying against to I we and

decisions moment and as So we'll do make the no, the to we arises, that. continue

I'm think that we told up. I being wrap Look, should

listened that the to to closing – story. of first all, So now. you, just operator, some I'm Look, investing going to do publics remarks thank

confident efforts. be just our think, I in

and quarter, this started I thanking want business will gone as right affected through We ship, prouder. by catastrophes affected we've really it's employees. a can't very personally, and a then, And am I difficult this, about very optimistic finish am. a already. really us Look, I have man that us to the I be

So thanks, everybody.

again, once conference that thank conclude you We does today's your And participation. call. for

now disconnect. You may