Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you confirm if the core ROE guidance includes the impact of the recent wildfires, and what factors are contributing to the better-than-expected performance? A: Yes, the 10%-plus ROE guidance includes the $500 million impact from the wildfires. We've structured our global portfolio and reinsurance effectively, maintaining net retentions within expectations. Our commercial portfolio's performance and capital management strategies are key contributors to this positive momentum. - Peter Zaffino, CEO
Q: What are the targeted areas for organic growth, and how do you view price adequacy in property and casualty markets? A: We're focusing on risk-adjusted returns and have seen strong client retention and new business growth. In international markets, we've achieved significant new business in global specialty and commercial property. In North America, Lexington and other channels have shown robust growth. We remain disciplined in underwriting and capital deployment. - Peter Zaffino, CEO; Jon Hancock, EVP; Don Bailey, EVP
Q: How is artificial intelligence impacting underwriting, and what are the expected benefits? A: AI is enhancing data ingestion and providing underwriters with more qualified data quickly. This allows for better decision-making and portfolio improvement. For example, Lexington's submission volume has increased significantly, and AI helps manage this complexity efficiently. We expect AI to drive top-line growth by improving underwriting capabilities. - Peter Zaffino, CEO
Q: What is the timeline for achieving profitable growth in the high net worth personal lines business? A: We've been improving the combined and loss ratios in our high net worth business. With a balanced growth strategy and strong partner support, we expect continued improvement in 2025. We've renegotiated ceding commissions and have a 30% quota share with six participants, which will enhance profitability. - Peter Zaffino, CEO
Q: Are there any new business areas AIG is considering entering, and is the divestiture of non-core businesses complete? A: We are largely done with divestitures and are satisfied with our current portfolio. For M&A, we remain disciplined, focusing on complementary geographies or products that add value. We have the scale to grow organically, but we are open to compelling opportunities that align with our strategic goals. - Peter Zaffino, CEO
Q: How should we think about the regulatory environment, particularly in California? A: The regulatory environment is complex, especially in peak zones like California. We work closely with regulators to address changes in catastrophe climate and modeling. We aim to have more flexibility in the future by collaborating with regulators on technical capabilities. - Peter Zaffino, CEO
Q: Can you provide guidance on the expense ratio and its future trajectory? A: We've maintained discipline in managing expenses, absorbing costs from other operations into the business. Despite these changes, we expect opportunities for further expense reduction and improvement in ratios throughout 2025. - Peter Zaffino, CEO
Q: Are you seeing any acceleration in casualty pricing, and is this an area for potential growth? A: Yes, the casualty market is strong, with Lexington Casualty and retail excess casualty seeing significant rate increases. We are cautious but see opportunities to lead in this market, supported by strong underwriting and reinsurance strategies. - Peter Zaffino, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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