WEBVTT - Peter Zaffino 0:00:02.920 --> 0:00:05.400 For many years, the most successful insurance company in the 0:00:05.400 --> 0:00:08.600 world was AIG, and then the Great Recession came and 0:00:08.680 --> 0:00:11.520 AIG required a one hundred and eighty three billion dollar 0:00:11.640 --> 0:00:14.640 bailout from the US government. That bailout has now been 0:00:14.680 --> 0:00:18.080 repaid with interest and AIG is reshaped into a smaller 0:00:18.200 --> 0:00:21.600 but very successful insurance company being led by Peter Sofino. 0:00:22.000 --> 0:00:23.720 I had a chance to sit down with Peter and 0:00:23.760 --> 0:00:27.240 his offices in New York to talk about the new AIG. So, 0:00:27.280 --> 0:00:30.320 for those who aren't familiar with property and casualty insurers, 0:00:30.320 --> 0:00:31.800 what do they really do well? 0:00:31.840 --> 0:00:36.400 We ensure businesses small, medium, large commercial businesses for their 0:00:36.400 --> 0:00:40.280 property insurance or their auto or financial lines, which is 0:00:40.440 --> 0:00:42.839 directors and officers. And we also have a business that 0:00:42.960 --> 0:00:46.919 does harder to place business you know, such as like 0:00:47.000 --> 0:00:49.920 you know, contractors or you know, businesses that may not 0:00:50.000 --> 0:00:52.520 find its way into the conventional business. And we also 0:00:52.560 --> 0:00:54.760 have a Lloyd syndicate and we're a big part of 0:00:55.600 --> 0:00:56.400 Lloyd's as well. 0:00:56.640 --> 0:00:59.000 So as I understand the insurance business, they're really two 0:00:59.000 --> 0:01:01.320 parts to it. One is the part of assessing the 0:01:01.440 --> 0:01:05.160 risk and charging premiums that hopefully will for the maturest 0:01:05.200 --> 0:01:07.679 point of view, cover the risk, and the second is 0:01:07.720 --> 0:01:10.200 taking those premiums and investing it and hopefully getting a 0:01:10.240 --> 0:01:13.200 good way to return. So let's talk about the first part. 0:01:13.440 --> 0:01:15.959 So in the first part of assessing risks, is it 0:01:16.080 --> 0:01:19.240 harder today because inflation is so high to assess the 0:01:19.360 --> 0:01:22.520 risk that you might have in ensuring somebody's home or 0:01:22.560 --> 0:01:23.919 property at. 0:01:23.760 --> 0:01:26.440 A property and casualty company. It's much more complicated to 0:01:26.760 --> 0:01:29.480 get the underwriting right than it is the investment side. 0:01:29.520 --> 0:01:33.800 And you're right, with inflation, the complexity of cyber risk 0:01:33.880 --> 0:01:40.000 today and other factors such as global warming, catastrophes, you know, 0:01:40.040 --> 0:01:43.160 the dynamic of what happened after the pandemic with density 0:01:43.240 --> 0:01:47.280 and peak zone areas such as Florida, California. So understanding 0:01:47.520 --> 0:01:52.040 your balance sheet and your aggregates with what you're underwriting 0:01:52.280 --> 0:01:54.600 is complicated. You need people with a lot of experience 0:01:54.680 --> 0:01:56.880 and a lot of you know, good judgment in terms 0:01:56.960 --> 0:01:58.600 of making underwriting choices. 0:01:58.680 --> 0:02:02.240 If somebody says climate change does not really hear, they 0:02:02.280 --> 0:02:05.200 haven't talked to a property and casually ensure I gess right. 0:02:05.040 --> 0:02:07.480 That's corrected, then that is true. Five out of the 0:02:07.520 --> 0:02:10.720 last six years, we've had over one hundred billion dollars 0:02:10.760 --> 0:02:13.760 of natural disaster losses in our industry that's never happened before. 0:02:13.800 --> 0:02:16.720 What about artificial intelligence is artificial intelligence is going to 0:02:16.800 --> 0:02:19.440 enable you and others to say we have enough information 0:02:19.480 --> 0:02:22.160 to know exactly what something is going to be worth 0:02:22.200 --> 0:02:23.920 there in terms of ensuring it or not. 0:02:24.280 --> 0:02:26.799 Artificial intelligence is finding its way into our business in 0:02:26.840 --> 0:02:28.760 a variety of different factors. I think the first piece 0:02:28.840 --> 0:02:32.400 is getting much better insight into data, which allows us 0:02:32.400 --> 0:02:35.680 to make better decisions on underwriting. It's also a great 0:02:35.720 --> 0:02:39.120 opportunity to service business better in terms of like call 0:02:39.160 --> 0:02:41.840 centers and different ways of what's using robotics and other 0:02:41.880 --> 0:02:45.160 AI will be very helpful. But it is an emerging 0:02:46.440 --> 0:02:49.880 practice within the industry and one that is evolving very quickly. 0:02:49.960 --> 0:02:52.680 So it's also going to present risks that you know 0:02:52.760 --> 0:02:55.200 other companies how they use it and how they use 0:02:55.280 --> 0:02:57.959 large language models and making sure the decision making is 0:02:58.360 --> 0:03:01.520 very sound. So it's complicated, but definitely is benefiting the 0:03:01.520 --> 0:03:02.160 business today. 0:03:02.320 --> 0:03:06.040 Now, the insurance industry has a reputation maybe undeserved. For 0:03:06.320 --> 0:03:09.119 let's say somebody has a claim their house burned down 0:03:09.240 --> 0:03:12.079 or something, and the insurance adjuster comes out and says, well, 0:03:12.120 --> 0:03:13.960 it really wasn't worth as much as you think, or 0:03:13.960 --> 0:03:16.680 the damage wasn't as great. Is that a big problem anymore? 0:03:16.720 --> 0:03:18.200 Or is that an unfair image? 0:03:18.440 --> 0:03:20.440 I think it's an unfair image. I think it probably 0:03:20.760 --> 0:03:24.280 perhaps is true you know years ago, but today you 0:03:24.280 --> 0:03:27.880 know the contracts are you know much more? You know clear, 0:03:28.720 --> 0:03:29.600 you know paying claims. 0:03:29.600 --> 0:03:30.080 That's what we do. 0:03:30.120 --> 0:03:31.800 I mean, we underwrite risks, but you know when we 0:03:31.880 --> 0:03:33.760 have to show up in moments of matters in terms 0:03:33.800 --> 0:03:36.200 of how we pay our claims, and the amount of 0:03:36.200 --> 0:03:39.840 disputes are very small as a percentage of our overall portfolio. 0:03:39.880 --> 0:03:41.440 And I don't think that that's a fair assessment. 0:03:41.560 --> 0:03:43.560 So when you make a judgment that you're going to 0:03:43.600 --> 0:03:46.120 charge somebody a certain premium, you think that you'll probably 0:03:46.120 --> 0:03:48.280 make a little profit or some profit on the premium, 0:03:48.520 --> 0:03:50.560 and generally you are you doing that now? 0:03:50.960 --> 0:03:53.240 Yes? I mean you know that's not been AIG's passed. 0:03:53.480 --> 0:03:56.120 From two thousand and nine to twenty nineteen, it lost 0:03:56.120 --> 0:04:00.280 over thirty billion dollars in underwriting and so coming I 0:04:00.400 --> 0:04:03.880 arrived in twenty seventeen with a great team that followed 0:04:03.920 --> 0:04:07.440 me here and we began that underwriting journey, and so 0:04:07.520 --> 0:04:09.800 now we do make underrunting profits. So for every dollar 0:04:09.880 --> 0:04:13.120 we underwrite risk, you know, we make around you know, 0:04:13.160 --> 0:04:15.560 ten to twelve cents of profit without the investment income. 0:04:15.800 --> 0:04:18.080 Let's talk about the investment income. So you bring in 0:04:18.120 --> 0:04:20.960 these premiums and all insurers then invest it and you 0:04:21.040 --> 0:04:23.320 get great and people do invest it, I assume for you. 0:04:23.720 --> 0:04:26.039 So what kind of return are you looking for on 0:04:26.040 --> 0:04:27.240 your investment portfolio. 0:04:27.600 --> 0:04:30.120 Seventy five percent of the portfolio tends to be fixed income, 0:04:30.200 --> 0:04:32.760 and so in this new interest rate environment, actually the 0:04:32.800 --> 0:04:35.800 investment income is going up, and then the remaining portion 0:04:35.839 --> 0:04:39.080 will be in some form of alternative investments, such as 0:04:39.120 --> 0:04:43.640 private equity or commercial real estate. And that's done very conservatively. 0:04:44.360 --> 0:04:47.400 But we really are not going to win on just 0:04:47.480 --> 0:04:50.119 the investment income. You really need to make an underwriting profit. 0:04:50.200 --> 0:04:52.440 So we balance both, you know, very well. 0:04:52.800 --> 0:04:55.839 So I should say private equity. My own firm does 0:04:55.880 --> 0:04:58.640 have a relationship with AIG. So of course you can't 0:04:58.640 --> 0:05:00.480 put more too much money in private decay, right, Your 0:05:00.480 --> 0:05:03.040 investment professionals can't put too much money in that area. 0:05:02.839 --> 0:05:04.600 Right, Absolutely, they do a great job. 0:05:04.920 --> 0:05:08.480 So in terms of the investment return, though generally are 0:05:08.520 --> 0:05:12.560 all insurers now basically making money both on investment return 0:05:12.680 --> 0:05:15.479 and on premium underwriting? Is that? But basically the core 0:05:15.480 --> 0:05:15.720 of the. 0:05:15.640 --> 0:05:18.560 Business, generally speaking, the industry is making underrunning profit on 0:05:18.800 --> 0:05:22.240 it's underwriting, and it's on the investment side as well. 0:05:22.640 --> 0:05:25.000 So it's often said that Lloyd's of London, which would 0:05:25.080 --> 0:05:28.120 ensure almost anything. So are there things that you won't 0:05:28.200 --> 0:05:30.640 ensure If somebody comes to you and says I'm worried 0:05:30.640 --> 0:05:34.400 about my wedding being rained out or something like that, 0:05:34.560 --> 0:05:36.400 is there any kind of insurance that you won't provide. 0:05:36.480 --> 0:05:39.320 Yeah, we are very specific in terms of what we 0:05:39.360 --> 0:05:41.000 want to underwrite. I mean it has to be where 0:05:41.000 --> 0:05:43.680 we have skill, where we can deploy capital and get 0:05:43.800 --> 0:05:46.600 a fair return. So we don't really reflect the way 0:05:46.680 --> 0:05:50.400 Lloyd's can ensure almost anything. It's much more, you know, 0:05:50.680 --> 0:05:55.839 a traditional specialty company that would have real strong expertise 0:05:55.920 --> 0:05:58.040 in scale in the areas that we underwrite. 0:05:58.160 --> 0:06:01.360 So housing insurance is a big part of your business, 0:06:01.360 --> 0:06:04.560 I assume, So what is the biggest risk for you 0:06:04.720 --> 0:06:06.400 in providing insurance of people's homes. 0:06:06.560 --> 0:06:09.960 Well, the complexity has been the density built up in 0:06:10.120 --> 0:06:13.160 areas that have significant exposure if you think about the 0:06:13.200 --> 0:06:17.680 southeast of the United States, for wind or wildfire in California, 0:06:17.760 --> 0:06:20.880 what happened as a effect of the pandemic is that 0:06:21.240 --> 0:06:23.800 you know, people were moving into those areas, and you know, 0:06:24.200 --> 0:06:25.480 I'll make it up, but you know, a two and 0:06:25.520 --> 0:06:29.040 a half million dollar house costs five million during the pandemic, 0:06:29.040 --> 0:06:31.200 and people knocked down and put up a ten. So 0:06:31.240 --> 0:06:33.080 all of a sudden, you had all this density in 0:06:33.120 --> 0:06:37.039 areas that were already challenged to have enough insurance to 0:06:37.080 --> 0:06:39.200 be able to respond to the individual homeowners. So I 0:06:39.240 --> 0:06:41.839 think it's just become more complex. Add in you know, 0:06:41.880 --> 0:06:45.359 more frequency of hurricanes and wildfire, and you just have 0:06:45.400 --> 0:06:48.080 a market that is under a little bit of stress. 0:06:48.000 --> 0:06:51.200 And property and casualty that is separate than automobile insurance. 0:06:52.160 --> 0:06:55.000 An auto would go into you do auto and bill insurance? Yes, 0:06:55.640 --> 0:06:57.680 And is that a risky business to be in these days? 0:06:57.800 --> 0:07:01.520 Or drivers getting better? Or what about people that supposedly 0:07:01.560 --> 0:07:03.719 don't have cars that don't have drivers. Are you worried 0:07:03.760 --> 0:07:04.080 about that? 0:07:04.160 --> 0:07:06.080 I am worried about that. I mean, you know, driverless 0:07:06.160 --> 0:07:09.600 vehicles are a big exposure, but but I think that 0:07:09.720 --> 0:07:13.760 you know, with AI quality of vehicles it's more predictable 0:07:13.840 --> 0:07:15.320 than perhaps it was in the past. 0:07:15.600 --> 0:07:19.000 So for your own home, who provides home insurance for you? 0:07:19.120 --> 0:07:21.960 Ai g oh? And if you have a claim, do 0:07:22.000 --> 0:07:23.400 you have any problem getting it paid? 0:07:23.480 --> 0:07:25.679 Or I haven't had a claim, but I rather claim 0:07:25.680 --> 0:07:27.120 I think I don't think I would. 0:07:27.320 --> 0:07:29.560 Let's talk about how you got into the insurance business. 0:07:29.560 --> 0:07:34.280 So your father was in the business, and did he say, Peter, 0:07:34.360 --> 0:07:36.640 when you grow up, you should go in the insurance business. 0:07:36.720 --> 0:07:37.440 Is that what happened? 0:07:37.440 --> 0:07:39.600 No, you didn't. I mean the myth of him, you 0:07:39.640 --> 0:07:41.920 know reading the insurance and reinsurance books at night is 0:07:42.240 --> 0:07:45.840 not true. He always encouraged me to do and pursue 0:07:45.840 --> 0:07:47.920 what I wanted. And quite frankly, I went to you know, 0:07:47.960 --> 0:07:51.120 Boston College, graduated, and the reason why I want to 0:07:51.200 --> 0:07:53.440 enter the insurance industry was I wanted to stay in 0:07:53.480 --> 0:07:56.520 Boston and a company called the Hartford that was owned 0:07:56.520 --> 0:07:58.160 by it T at the time, did offer me a 0:07:58.240 --> 0:08:01.560 job if I would do training elsewhere to come back 0:08:01.600 --> 0:08:03.560 to Boston, And so that was the reason I took 0:08:03.560 --> 0:08:03.880 the job. 0:08:04.000 --> 0:08:06.880 Now, some people might say that insurance is a boring business. 0:08:06.960 --> 0:08:09.880 It doesn't attract people the way private equity does. But 0:08:10.120 --> 0:08:11.920 is that not the case or you found that to 0:08:11.960 --> 0:08:13.480 be interesting even right out of college. 0:08:13.560 --> 0:08:15.280 Now I find it very interesting. I mean you're not 0:08:15.320 --> 0:08:16.880 doing the same thing all the time when you start 0:08:16.880 --> 0:08:19.360 in the industry. I mean you're learning to build relationships, 0:08:19.400 --> 0:08:23.120 You're understand the quantitative nature of how to underwrite and 0:08:23.160 --> 0:08:25.920 also the qualitative nature. So I liked it because I 0:08:25.920 --> 0:08:28.520 had a balance of doing different things at once. 0:08:28.680 --> 0:08:30.840 So what did you do after your first job in Boston? 0:08:31.400 --> 0:08:34.520 Well, that's ironically I never made it back to Boston, 0:08:34.640 --> 0:08:39.760 and so that's I stayed in New York. And early 0:08:39.800 --> 0:08:41.839 on in my career I didn't think I could really 0:08:41.880 --> 0:08:43.920 work in New York City, which has been, you know, 0:08:43.960 --> 0:08:47.400 the predominant portion of my career. So I've always been 0:08:47.400 --> 0:08:49.480 in big companies. Worked at ITT and then I worked 0:08:49.480 --> 0:08:52.520 at General Electric and Marsh mcclennan after that. 0:08:53.120 --> 0:08:56.040 All right, So you were working at Marsh mcclennan on 0:08:56.200 --> 0:09:01.000 September eleventh of two thousand and one, and where were 0:09:01.040 --> 0:09:01.920 you on that morning? 0:09:02.480 --> 0:09:05.600 That morning? So was my sixth day of work at 0:09:05.679 --> 0:09:08.520 Marsh McLennan, and I was on the fifty third floor 0:09:08.600 --> 0:09:12.959 of Tower two that day to work and so what happened. 0:09:13.760 --> 0:09:17.040 The first plane went into Tower one. I had seen it, 0:09:17.440 --> 0:09:21.079 and so colleagues and I started to evacuate, nothing urgent, 0:09:21.520 --> 0:09:24.920 but into the stairwell to make our way down and 0:09:25.200 --> 0:09:27.760 made it to about the fortieth floor when the second 0:09:27.800 --> 0:09:30.400 plane went into the building, which I didn't know what 0:09:30.440 --> 0:09:33.280 it was at the time. I'd figured either Tower one 0:09:33.280 --> 0:09:35.840 had tipped over or something else had come into the building. 0:09:35.920 --> 0:09:38.760 And you know, we had a sense of urgency. 0:09:38.600 --> 0:09:41.280 Of getting was there a mass rushed down the stairways. 0:09:41.440 --> 0:09:43.560 There was, I mean it was orderly, but it was 0:09:43.679 --> 0:09:45.719 started to get panicky of trying to get out of 0:09:45.720 --> 0:09:47.840 the building and rush our way down the stairwell. 0:09:48.000 --> 0:09:50.640 So you got out of the building how much before 0:09:50.720 --> 0:09:51.760 the building collapsed. 0:09:52.200 --> 0:09:55.040 I was probably twenty minutes, you know, north of the 0:09:55.040 --> 0:09:57.440 building when it collapsed. I was never in danger of 0:09:58.120 --> 0:10:01.079 you know, having soot or or other things on me 0:10:01.240 --> 0:10:02.360 once the building collapsed. 0:10:02.679 --> 0:10:04.480 But as soon as you got out of the building, 0:10:04.480 --> 0:10:06.040 you didn't look up there and say, oh, I see 0:10:06.080 --> 0:10:08.440 what it's going to survive you You ran somewhere. 0:10:08.520 --> 0:10:11.840 Yeah, No, I'm actually met a friend and we happened 0:10:11.840 --> 0:10:14.000 to you know, we walked north to one hundred and 0:10:14.000 --> 0:10:16.400 twenty fifth Street over the course of the day to 0:10:16.400 --> 0:10:17.200 get out of the city. 0:10:17.559 --> 0:10:20.920 And how many of your colleagues died Almost three hundred 0:10:21.040 --> 0:10:24.720 that day, three hundred colleagues died from Marsh mcclennanth. Yes, okay, 0:10:24.840 --> 0:10:26.559 So you didn't get out of that and say I've 0:10:26.559 --> 0:10:28.880 had enough of Wall Street, I've had enough of insurance. 0:10:28.880 --> 0:10:30.439 I'm going to go into something else. Now. 0:10:30.440 --> 0:10:33.120 It's a unique part about our business is that, you know, 0:10:33.440 --> 0:10:36.840 in you know, major disasters or you know, things that 0:10:36.920 --> 0:10:39.360 happened like that, you know, our clients need us, and 0:10:39.800 --> 0:10:42.920 you know, so it was immediately you know, calibrating, focusing 0:10:42.960 --> 0:10:45.160 on helping you know, I was in the reinsurance business 0:10:45.200 --> 0:10:48.280 at that time, so helping insurance companies, you know, get 0:10:48.320 --> 0:10:51.080 back into business and helping raise capital and you know, 0:10:51.160 --> 0:10:54.000 helping them assess what they needed to do going forward. 0:10:54.320 --> 0:10:58.800 So today, AIG over the years has been a gigantic company, 0:10:58.840 --> 0:11:00.600 one of the largest, maybe the larger at one time 0:11:00.720 --> 0:11:03.600 market cap insurance in the world. But then during the 0:11:03.640 --> 0:11:07.440 Great Recession it had some problems and ultimately the government 0:11:07.520 --> 0:11:09.839 had to come in with a bailout. You could call it. 0:11:09.880 --> 0:11:13.280 One hundred and eighty billion dollar guaranteed loan or bailout. 0:11:13.520 --> 0:11:14.800 Have you paid that back yet? 0:11:15.120 --> 0:11:17.680 Yes, that's been paid back. You know, well before I 0:11:17.800 --> 0:11:18.600 arrived at the company. 0:11:18.679 --> 0:11:20.200 And did the government make a profit on that? 0:11:20.240 --> 0:11:22.600 They did, Yes, they made a profit. There was interest 0:11:22.720 --> 0:11:23.840 and a profit. 0:11:24.000 --> 0:11:27.520 So what caused that was basically too much insurance on 0:11:27.880 --> 0:11:30.040 I guess it was high risk mortgages. 0:11:30.520 --> 0:11:33.160 Yeah, it was a financial products product that had you know, 0:11:33.240 --> 0:11:36.560 credit related and so that you know, created a you know, 0:11:36.640 --> 0:11:37.720 impact on liquidity. 0:11:38.040 --> 0:11:41.040 So, Peter, when you took over as the CEO of 0:11:41.080 --> 0:11:43.600 this company, it wasn't as as good as shape as 0:11:43.600 --> 0:11:45.440 it appears to be now. So what did you do 0:11:45.559 --> 0:11:47.880 to turn it around? And what are you most proud 0:11:47.920 --> 0:11:50.760 of having achieved in your time as CEO so far? 0:11:51.280 --> 0:11:53.839 Well, the the thing I'm proud of the most is 0:11:53.920 --> 0:11:56.200 just the number of people that you know, came to 0:11:56.200 --> 0:11:59.840 AIG and actually people that stayed to come together as 0:11:59.880 --> 0:12:02.760 a organization to actually try and improve our underwriting, our 0:12:02.800 --> 0:12:05.440 operational capabilities and there in our financial performance. I mean, 0:12:05.440 --> 0:12:08.559 we had to shed relative to our balance sheet, one 0:12:08.600 --> 0:12:12.800 point four trillion dollars of exposure since we started, and 0:12:12.880 --> 0:12:16.280 so that was a dramatic change we had to do 0:12:16.440 --> 0:12:20.119 ten operational programs at once to get the foundation stability 0:12:20.120 --> 0:12:22.680 for the company for the future. And I actually think 0:12:22.800 --> 0:12:26.280 that part of the pandemic benefited us because we compressed 0:12:26.280 --> 0:12:30.080 that transformation and did it very fast and made dramatic 0:12:30.120 --> 0:12:32.640 improvements for the company. And then the financial performance started 0:12:32.679 --> 0:12:36.200 to really manifest itself from the efforts that we made 0:12:36.240 --> 0:12:38.480 on the underwriting side and the operation side. So it's 0:12:38.480 --> 0:12:39.760 just been a tremendous effort. 0:12:40.080 --> 0:12:42.360 As we've talked about this here now and pretty much 0:12:42.360 --> 0:12:45.240 in the P and C business, property and casualty, you're 0:12:45.320 --> 0:12:47.960 getting out of the life insurance business over time. But 0:12:48.040 --> 0:12:50.679 explain to me why the life insurance business wouldn't be 0:12:50.720 --> 0:12:52.680 a better business because you know, people are going to die, 0:12:53.000 --> 0:12:55.680 very predictable actual aries continue when they're going to die. 0:12:55.920 --> 0:12:57.520 Is why is that business not as good as the 0:12:57.559 --> 0:12:58.760 property and casualty business. 0:12:58.880 --> 0:13:03.439 Well, it's a very good business. The property and casualty 0:13:03.480 --> 0:13:06.120 businesses is totally different. I think the complexity in life 0:13:06.120 --> 0:13:09.000 insurance business is just you know, they have so much 0:13:09.040 --> 0:13:13.120 investment assets. It's a spread business and one that has 0:13:13.280 --> 0:13:15.920 really different, you know, dynamics that drive its outcomes. 0:13:16.400 --> 0:13:19.240 Now I see lots of ads on television for insurance, 0:13:19.320 --> 0:13:21.199 sometime home insurance, so forth. But I don't see a 0:13:21.240 --> 0:13:24.520 lot of AIG ads here you appealing to people like 0:13:24.600 --> 0:13:27.680 me who are watching television or you're going to institutional market. 0:13:28.360 --> 0:13:31.840 We have, you know, a distribution of agents and brokers 0:13:31.920 --> 0:13:34.319 that we're really a business to business and so we 0:13:34.360 --> 0:13:38.760 source our business through that distribution channel. So us advertising 0:13:38.880 --> 0:13:41.960 to you know, the end consumer has limited value in 0:13:42.000 --> 0:13:44.040 the products that we actually underwrite. 0:13:44.360 --> 0:13:47.480 So today, the insurance business, generally in the United States, 0:13:47.480 --> 0:13:49.560 would you say it's a reasonably healthy business today? 0:13:49.640 --> 0:13:51.520 I would. I think balance sheets are strong, I think 0:13:51.559 --> 0:13:54.360 the returns are are very good, and I think there's 0:13:54.400 --> 0:13:55.280 positive momentum. 0:13:55.640 --> 0:13:57.439 So you see a lot about what's going on the 0:13:57.480 --> 0:14:00.840 economy because you underwrite a lot of active is what 0:14:00.960 --> 0:14:03.200 is your biggest worry about the economy today or you 0:14:03.200 --> 0:14:04.839 think we're going to go into recession? Are you worried 0:14:04.880 --> 0:14:06.520 about inflation? High interest rates? 0:14:08.000 --> 0:14:09.520 I worry about it all. I mean, but you know, 0:14:09.559 --> 0:14:12.240 for insurance, I mean certainly inflation is one because of 0:14:12.320 --> 0:14:14.600 you know, we carry reserves for many years on our 0:14:14.640 --> 0:14:17.599 balance sheet, and you know what the effect is of 0:14:18.000 --> 0:14:21.760 inflation as we pay claims over the long term. You know, 0:14:21.800 --> 0:14:24.760 the investment rates, as I said, with fixed income, that's 0:14:24.800 --> 0:14:27.560 really strong for us in terms of reinvestment rates and 0:14:27.600 --> 0:14:31.080 so allows us to do very well on the investment side. 0:14:31.160 --> 0:14:34.360 And I do worry about the you know, global economy. 0:14:34.720 --> 0:14:37.800 You know, GDP has been holding up, but certainly like 0:14:37.800 --> 0:14:39.200 in the United States, I mean a big part of 0:14:39.200 --> 0:14:42.720 the GDP is healthcare and tech, and so seeing consumer 0:14:42.840 --> 0:14:46.120 spending and driving sales through retail is something that we watch, 0:14:46.560 --> 0:14:47.760 you know frequently. 0:14:47.400 --> 0:14:50.800 What percentage of your businesses or insurance overseas and what 0:14:50.840 --> 0:14:51.920 percentages in the United States. 0:14:52.040 --> 0:14:54.800 It's about fifty to fifty overseas and the United States. 0:14:54.920 --> 0:14:57.000 What are the number of employees you have now we. 0:14:56.960 --> 0:14:59.400 Have a little over thirty thousand employees at AIG and 0:14:59.440 --> 0:15:03.160 probably twenty thousand of you know, employee equivalents in terms 0:15:03.200 --> 0:15:06.800 of what we outsource through you know, a back office 0:15:06.920 --> 0:15:07.880 or through technology. 0:15:08.160 --> 0:15:11.200 And today your market capitalization is roughly forty five billion 0:15:11.360 --> 0:15:15.000 something like that. And today do you spend any time 0:15:15.320 --> 0:15:18.360 in Washington, d C. Saying to regulators you're not doing 0:15:18.360 --> 0:15:21.240 a good job regulating us, or you members of Congress 0:15:21.280 --> 0:15:23.400 do a better job and taking care of the debt repayment. 0:15:23.440 --> 0:15:24.880 Do you do you spend any time in Washington? 0:15:24.920 --> 0:15:27.920 I do spend time in Washington and spend time with lawmakers. 0:15:27.960 --> 0:15:29.960 I mean the complexity of insurance is that we're state 0:15:30.040 --> 0:15:33.440 regulated and so you know, spending time with various state 0:15:33.480 --> 0:15:38.360 regulators and you know FCA and FSA in the UK 0:15:38.480 --> 0:15:40.840 and Japan respectively, is where I spend more of my time. 0:15:41.160 --> 0:15:42.960 And do you find when you meet with members of 0:15:43.000 --> 0:15:44.760 Congress it's an uplifting experience. 0:15:46.600 --> 0:15:50.520 You know, getting compromise and talking through specific issues is 0:15:50.840 --> 0:15:53.360 more challenging than it's been in the past, but you know, 0:15:53.360 --> 0:15:54.920 we're trying to make progress now. 0:15:54.920 --> 0:15:57.240 You go to a lot of CEO gatherings, I assume 0:15:57.240 --> 0:15:59.760 your members of business, things like the business round Table, 0:16:00.120 --> 0:16:03.200 business counsel and things like that. When you talk to 0:16:03.240 --> 0:16:05.720 other CEOs, not just in your industry, what are they 0:16:05.760 --> 0:16:09.600 most worried about today? They political divisiveness in Washington, inflation, 0:16:10.040 --> 0:16:11.800 high interest rates. What do you think people are most 0:16:11.840 --> 0:16:12.440 worried about? 0:16:12.600 --> 0:16:16.120 I think those three always come up. And the geopolitical environment. 0:16:16.560 --> 0:16:20.080 I also think state sponsored you know, cyber attacks and 0:16:20.160 --> 0:16:23.200 what does that do to you know, a company all 0:16:23.240 --> 0:16:25.320 of that is getting a lot of attention, and I 0:16:25.360 --> 0:16:28.200 think it's doesn't matter what industry you're in, it has 0:16:28.200 --> 0:16:32.280 its impact. I think also global expansion, the resistance for 0:16:32.880 --> 0:16:37.040 you know, acquisitions and support you know for companies to 0:16:37.080 --> 0:16:39.280 be able to acquire you know, big businesses outside of 0:16:39.320 --> 0:16:41.000 the United States gets challenging as well. 0:16:41.400 --> 0:16:44.600 So as the CEO of this company, your biggest concern 0:16:44.720 --> 0:16:48.200 is always increasing the share price or providing good service 0:16:48.240 --> 0:16:51.080 to your customers. What do you worry about the most 0:16:51.240 --> 0:16:52.760 in terms of the job of being CEO. 0:16:53.760 --> 0:16:57.040 Well, it's a great privilege to be a CEO of 0:16:57.040 --> 0:16:59.360 a company like this, and we've been in a massive 0:16:59.360 --> 0:17:02.640 turnaround and so fortunate to have so many good people 0:17:02.680 --> 0:17:05.720 with me at at AIG. I think with I have 0:17:05.800 --> 0:17:09.760 the longest tenure of six years of all of my executives, 0:17:09.800 --> 0:17:12.439 and I think over sixty percent of our top one 0:17:12.480 --> 0:17:14.439 hundred are new to the company, and so like bringing 0:17:14.440 --> 0:17:17.560 that together to actually drive the outcomes that we have 0:17:17.640 --> 0:17:20.840 has been incredibly rewarding and taking as you said, there's 0:17:21.240 --> 0:17:24.879 short term you know demands on CEOs, but taking a 0:17:24.920 --> 0:17:28.280 long term view of a business and building foundational you 0:17:28.320 --> 0:17:30.760 know capabilities that are enable us to do much more 0:17:30.800 --> 0:17:33.920 for our clients over the long term. Adapting to AI 0:17:34.119 --> 0:17:37.520 and adapting to you know, a rapidly changing world is 0:17:37.560 --> 0:17:38.639 a high priority for me. 0:17:38.960 --> 0:17:40.959 So if the President of the United States called you 0:17:41.040 --> 0:17:43.680 and said, you know, you really know a lot about insurance, 0:17:43.720 --> 0:17:45.399 you know a lot about risk, why don't you come 0:17:45.440 --> 0:17:47.879 into the US government and help assess risk we have? 0:17:48.359 --> 0:17:51.480 You would say, what I'm better suited for a public 0:17:51.520 --> 0:17:52.119 company is what? 0:17:52.160 --> 0:17:54.000 Ever? So you're not probably going to go into the 0:17:54.160 --> 0:17:55.240 public sector anytimes. 0:17:55.280 --> 0:17:57.240 That probably is not in the cards for me. 0:17:57.440 --> 0:18:01.360 Well, as we talked today, there are lots of problems 0:18:01.400 --> 0:18:02.960 around the world. One of them is what's going on 0:18:03.080 --> 0:18:06.160 in Israel. Another one is what's going on in Ukraine. 0:18:06.400 --> 0:18:08.399 How do you assess those risks? For example, did you 0:18:08.440 --> 0:18:10.600 ever provide insurance to people in Ukraine? 0:18:11.400 --> 0:18:15.199 We did provide. We had a business in Russia, you know, 0:18:15.280 --> 0:18:18.919 prior to the Russia Ukraine conflict, we did not have 0:18:18.960 --> 0:18:22.080 a big business in Ukraine. But through you know, Lloyd's 0:18:22.080 --> 0:18:26.000 we did have exposure to some classes of business, you know, 0:18:26.080 --> 0:18:28.639 through the war. And so you know, assessing that is 0:18:28.800 --> 0:18:32.159 very complicated and one that you need to manage. You know, 0:18:32.200 --> 0:18:34.800 how much you're going to underwrite a specific class that 0:18:34.840 --> 0:18:39.040 could have, you know, political violence or a war or terrorism. 0:18:39.280 --> 0:18:43.000 So let's suppose I own a big factory, a semiconductor 0:18:43.040 --> 0:18:45.720 chip factory in Taiwan, and I come to you and say, 0:18:45.760 --> 0:18:48.520