American International Group, Inc.

Good day and welcome to AIG's second quarter 2026 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.

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 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. The reconciliation of such measures to the most comparable GAAP figures is included in our earnings release, our financial supplement, and earnings presentation, all of which are available on our website at aig.com. Finally, today's remarks related to net premiums written growth are presented on a constant dollar basis. Please refer to page 26 of the earnings presentation for reconciliations of such metrics. I'd now like to turn the call over to our President and CEO, Eric Andersen.

Good morning, everyone. Thank you for joining us today. I'm pleased to share our strong second quarter results and the meaningful progress we are making across AIG. Our team is executing well on delivering the financial commitments we outlined at our 2025 Investor Day, which we remain on track to achieve. On the call today, I will review our second quarter financial highlights, provide perspective on the current market environment, and discuss our strategic priorities that will guide our continued progress and growth. Following my remarks, Keith Walsh will provide more detail on our financial performance and Jon Hancock will join us for Q&A. Now let me review a few financial highlights. In a dynamic environment, we delivered another strong quarter which contributed to an exceptional first half of the year. Our performance reflects the benefits of our diversified portfolio, continued momentum from organic growth and our strategic transactions and disciplined execution by our talented team. Adjusted after-tax income per diluted share was $2, a 10% increase year over year, and adjusted after-tax income was $1.1 billion. Core operating ROE was 11.1% in the second quarter and 11.6% for the first half of 2026. Underwriting income was $686 million, A 10% increase year over year. The accident year combined ratio, as adjusted, was 88.1%, an improvement of 30 basis points from the prior year quarter. The calendar year combined ratio was 89%, also an improvement of 30 basis points over the prior year quarter. Net premiums written increased 9%, or 11%, excluding North American property. reflecting organic growth in select high-performing segments of our global commercial portfolio, growth in global personal driven by our accident and health and high net worth businesses, and contributions from our recent strategic transactions, which are providing meaningful growth in line with our expectations. Global commercial insurance net premiums written increased 9% year over year. North America commercial net premiums written increased 9% year over year. We saw growth in retail casualty and across various segments of our financial lines portfolio, partially offset by declines in Lexington, driven by property, where we are continuing to take disciplined actions to effectively manage the competitive environment, which I will discuss in more detail. International commercial net premiums written increased 10%, driven by growth in property and marine, partially offset by financial lines. where we continue to be targeted and disciplined in our underwriting. In global commercial, retention was 88%, and new business, including our strategic transactions, was 1.9 billion, a year-over-year increase of 37%. Our team made outstanding progress improving the performance of our global personal insurance business. Net premiums written increased 8% in the quarter, driven by momentum in accident and health, reflecting our team's ongoing focus on building a robust pipeline that has resulted in several notable new client wins, as well as continued organic growth in our high net worth business. Finally, we returned $904 million in capital to our shareholders in the second quarter, inclusive of $641 million in share repurchases and $263 million in dividends. Now, let me share some observations on the current market environment. There's a lot of conversation about where we are in the cycle. I would characterize the market as transitioning from an extended phase of broad positive pricing into a more selective environment, where profitability and growth are increasingly dependent on line-specific dynamics. Over the last several quarters, capacity has increased significantly across the market, including through ENS carriers, MGAs and MGUs, Delegated Authority Structures, ILS, and Sidecars. While this influx of capacity has created competitive pricing pressure in certain lines like property, we believe it has also created opportunities. Our experience shows that in this type of environment, clients tend to become more discerning about the origination of capacity. They distinguish among providers that are simply pass-throughs for third-party paper or focus solely on excess coverage. from those that offer holistic solutions along with underwriting excellence, client service, and responsive claims handling. This is where AIG is strongly positioned. We are seeing this play out in property, where our expertise and the diversity of our global property portfolio are important advantages. Last quarter, we detailed the challenging dynamics in the North American property market, particularly in ENS, where pricing has continued to be under pressure, fueled by excess capacity and competition. Given the ongoing rate pressure, we have intentionally continued to contract our Lexington property portfolio in targeted areas while selectively growing the parts of the property portfolio we believe will deliver the best risk-adjusted returns. Where we see pricing that is not adequate, we are offering terms that reflect our view of the risks. As a result, we are retaining business where we can achieve acceptable terms while walking away from business that does not meet our underwriting standards. This has resulted in a meaningful nine percentage point reduction in premium retention in Lexington property in the second quarter. The pricing environment, combined with our deliberate actions, have reduced overall growth in North America by over three percentage points. Our North America retail property portfolio has a different composition than our Lexington property portfolio. While the environment remains competitive, we continue to find targeted opportunities for growth including to our Everest Renewal Rights Transaction. In international property, rates are declining at a more moderate pace than in North America. This remains an attractive portfolio with opportunities in many countries for sustained profitable growth supported by lower peak catastrophe exposure. Turning to casualty, our underwriting discipline and technical claims expertise have positioned us well across our portfolio. In North America retail casualty, pricing is up double digits and remains above lost cost trends. While rate increases have moderated from the elevated levels we saw at the peak of the market cycle, we are focusing on maintaining rate adequacy and strong risk-adjusted returns. In North America excess casualty, we are achieving mid-teen pricing increases, and we have been disciplined on attachment points, terms and conditions, limits, and risk selection. An international casualty, we have a broad geographic portfolio with a significant portion of our business in markets with lower litigation environments. While there is increasing competition and pricing is beginning to become more competitive in some areas, we continue to see select opportunities for profitable growth supported by our underwriting and claims expertise as well as our differentiated multinational capabilities. In global specialty, we are closely watching the energy and aviation markets. We are seeing pricing that we believe does not fully reflect heightened exposure in the Middle East conflict and recent large industry losses. In contrast, political violence and terrorism rates increased in the second quarter, driven by the elevated risk exposure associated with the broader conflict. For example, our political violence pricing increased 9% in the second quarter compared to a decrease of 8% in the first quarter. We are also seeing broader demand for these products as clients sharpen their focus on risk mitigation and protection. In summary, across our global and diverse portfolio, we continue to deploy capital selectively where pricing, margin, and risk quality are within our appetite and deliver targeted risk-adjusted returns. Now, I'd like to expand on AIG's unique competitive advantages and how we intend to convert these strengths into sustained earnings growth and long-term value creation. AIG has an enviable global platform, deep underwriting expertise, a broad set of products and risk solutions, robust claims capabilities and a team of outstanding colleagues. We also have one of the most recognized brands in the industry, which helps us compete in markets around the world. Together, these strengths make AIG a leading global underwriting company. Our durable foundation enables us to expand the ways in which we access business, deploy capital, and provide value to clients and distribution partners to become even more relevant in the market. At the core of our strategy is a significant opportunity to become an essential partner to our clients by connecting our businesses more effectively across AIG and deploying capital in innovative ways to drive long-term value. Our growth plan is built around five strategic priorities. delivering exceptional underwriting performance and deploying capital towards opportunities with the strongest risk-adjusted returns, using our balance sheet and reinsurance program efficiently to support profitable growth while prudently managing volatility, expanding our AI capabilities to improve decision-making, quality, and productivity, maintaining expense discipline, and investing in our team and talent to strengthen execution, connectivity, and our ability to bring the full capability of AIG to our clients. Let me go deeper into how we will execute against each priority, beginning with underwriting performance and our strategic deployment of capital. Our colleagues have done exceptional work transforming AIG and building a stronger, more focused company. That foundation allows us to be more responsive to client needs and more effective in supporting our partners while maintaining underwriting excellence. Across every line of business, we look at risk at the individual level, the portfolio level, and through the lens of different distribution strategies in order to bring forward innovative solutions. We are focused on growing attractive areas of our portfolio by bringing together AIG's global underwriting, claims, and risk expertise to help clients and partners better understand the risks they face and deliver more comprehensive solutions that support their evolving needs. Let's take data centers as an example. These are end-to-end, multi-line projects for global AI hyperscalers that require financing, construction, marine, cyber, energy, operational, multinational programs, and bespoke risk solutions. AIG is one of the few insurers that can bring all of these capabilities to the table with the expertise to manage the complex scale and timetable these projects require, and we are demonstrating leadership in this area. Moving to our geographic presence, we are looking at opportunities to expand our reach in regions where we see attractive opportunities for disciplined growth. As an example, during the second quarter, we announced an agreement to acquire Everest Insurance Operations in Columbia. Upon closing, it will give AIG access to one of the largest and fastest developing insurance markets in Latin America, supporting our growth ambitions in the region. Beyond specific growth opportunities, Our ability to bring AIG's full capabilities to clients navigating changing conditions and fast moving risks is equally important. In the Middle East, where the conflict remains highly fluid, especially around the Strait of Hormuz, we have continued to provide advice, capacity, and support to clients operating in the region. This is where our global platform and the expertise of our underwriting and claims teams really matters. We are staying closely connected to governments, Marine and shipping clients directly exposed to developments in the strait and those on the ground managing supply chain constraints and other challenges. Our claims team has been working closely with clients to help them navigate these complex situations and respond quickly as conditions evolve. These examples demonstrate the demand of our diversified multi-line solutions and the significant value we can create when we operate as one globally connected team. Second, we will continue to use our balance sheet and reinsurance program to support profitable growth while managing volatility. Over many years, AIG has built a consistent framework for generating underwriting profit through disciplined risk selection, prudent limits, and the strategic use of reinsurance. We benefit from an attractive portfolio and deep relationships with exceptional reinsurance partners, and we achieve favorable outcomes at our June 1 reinsurance renewals. Reinsurance continues to be an important tool in managing volatility and tail risk, and we evaluate our program continuously to ensure it remains aligned with market conditions and our return objectives. This disciplined approach extends to how we manage capital. Fundamentally, we believe in a balanced capital management philosophy. Our top priority is to grow the company profitably by expanding earnings, premiums, our invested assets, and our overall tangible book value. If we can't deploy capital at attractive returns, we will return it to shareholders through share repurchases and dividends. Given our current share price at a modest premium to tangible book value, we view the repurchase of our shares as a very attractive use of capital. Third, we intend to continue to scale AI to improve decision making, quality, and productivity across AIG. Technology and AI are central to how we are creating long-term value for clients, colleagues, and stakeholders, helping us make better decisions, unlocking capacity for growth, and enabling our teams to operate with greater speed, consistency, and effectiveness. As we have scaled underwriting by AIG Assist and claims by AIG Assist, our operational results remain strong and consistent. Where deployed, our underwriters are reviewing more submissions and generating quotes significantly faster, improving their productivity. Importantly, our AI capabilities also enable us to access valuable commercial insights, particularly in how we understand and engage with our broker partners. As more submission data flows through underwriting by AIG Assist, we can analyze broker-level results to gain greater visibility into their performance and distribution trends. including where we are seeing the most success. This information will enhance how we partner with brokers, provide a clearer view of the broader market ecosystem, and enable data-driven decisions that can create value across market cycles. We are pleased with the progress we are making and will continue to thoughtfully scale our AI capabilities across the company. Fourth, we will continue to maintain expense discipline while investing for growth. Our expense philosophy is focused on prioritizing resources in areas that directly serve clients and support sustainable growth. We are investing and underwriting talent in priority areas, strengthening how we engage with distribution partners, advancing our claims capabilities, and deploying technology to support these opportunities. At the same time, we are refining our end-to-end processes to simplify workflows, reduce friction, and deliver efficiencies. This discipline should create capacity to fund our strategic priorities. We remain on track to reduce the general insurance expense ratio below 30% for full year 2027. Fifth, we will continue to invest in our team and talent to strengthen execution, connectivity, and our ability to bring the full capabilities of AIG to clients. One of AIG's greatest strengths is the depth of talent across the company. Our colleagues are doing exceptional work managing market dynamics, advancing underwriting excellence, and serving as trusted experts to our clients and distribution partners. We have a deep bench of leaders across AIG and have made several internal promotions over the last few months, underscoring our commitment to developing and advancing talent from within. At the same time, we are adding experienced external talent and new capabilities to strengthen connectivity across AIG. pursue emerging growth areas and key verticals and product lines, and reinforce a more agile, connected go-to-market culture. These internal promotions and targeted external appointments reflect our commitment to invest in our teams with talent that supports our strategic growth initiatives and help us build capabilities in areas where we see attractive returns. In closing, we continue to make significant progress on shaping the future of AIG as a market leader and best-in-class global underwriting company. Today, AIG has a stronger, more focused portfolio, talented and dedicated colleagues, a demonstrated commitment to underwriting excellence, meaningful growth opportunities, considerable potential to benefit from data technology and AI, a strong balance sheet, and significant financial flexibility. I am very enthusiastic about the future of the company and confident in AIG's next chapter. That confidence reflects not only the achievements we have made, but the clear path ahead. We are well positioned to drive value for our stakeholders over the long term, thanks to the dedication of our talented colleagues around the world. Their commitment to our clients, our partners, key stakeholders, and each other continue to differentiate AIG. With that, I'll turn the call over to Keith to review our financial results in greater detail before we take questions.