American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q2 2015 Earnings Presentation

29 slides from American International Group, Inc. New's earnings presentation, Aug 4, 2015

1. Slide 1: American International Group, Inc. Conference Call Presentation Second Quarter 2015

   American International Group, Inc. Conference Call Presentation Second Quarter 2015 August 4, 2015

2. Slide 2: Cautionary Statement Regarding Forward Looking Information

   Cautionary Statement Regarding Forward Looking Information This document and the remarks made within this presentation may include, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, projections, goals, assumptions and statements that may constit

3. Slide 3: Second Quarter 2015 Highlights

   Second Quarter 2015 Highlights Stable Underwriting and Accelerating Capital Management After-tax operating income of $1.9B ($1.39 per share) – Improvement in accident year combined ratio, as adjusted, for Property Casualty & Mortgage Insurance YoY Operating – Continued base investment income pressur

4. Slide 4: AIG Consolidated Operating Financial Highlights

   AIG Consolidated Operating Financial Highlights ($ in Millions, Except per Share Amounts) 2Q14 2Q15 Inc. / Dec. Operating revenues $15,419 $15,635 1% Pre-tax operating income (loss): Commercial Insurance: Property Casualty 1,245 1,192 (4%) Mortgage Guaranty 210 157 (25%) Institutional Markets 170 15

5. Slide 5: Corporate and Other Operations

   Corporate and Other Operations ($ in Millions) 2Q14 2Q15 Pre-tax operating income (loss): Corporate and Other Operations: Equity in pre-tax operating earnings of AerCap $53 $127 Fair value of PICC investments - 170 Income from other assets, net1 17 509 Corporate general operating expenses (306) (268

6. Slide 6: Progress on Financial Targets

   Progress on Financial Targets ($ in Millions, Except per Share Amounts) Progress on Financial Targets YTD Annual Targets 2015 June 30, Commentary Through 2017 Target 2015 10+% Growth in  Growth of 7% since year-end 2014 was Book Value $64.05 $62.22 driven by net earnings and accretion from Per Shar

7. Slide 7: General Operating Expenses

   General Operating Expenses Targeting 3-5% of Annual Reduction Through 2017 General Operating Expenses, Operating Basis ($ in Millions) $5,931 $5,726 $53 $39 $825 $851 $744 $747 $2,879 $3,052 $2,993 $3,016 $2,942 $28 $11 $2,784 $25 $418 $24 $434 $19 $407 $408 $20 $428 $368 $355 $365 $423 $376 $369 $3

8. Slide 8: Strong Capital Position

   Strong Capital Position ($ in Billions, Except per Share Amounts) Capital Structure Book Value Per Share Total Equity Financial Debt 1 Hybrids BVPS, ex. AOCI & DTA AOCI DTA $126.4 $125.1 $2.5 $1.6 $90.00 $16.6 $18.8 +3% $79.74 $77.69 $11.75 $11.69 $5.83 $107.3 $104.6 $60.00 $7.71 Dec. 31, 2014 June

9. Slide 9: Parent Liquidity – A Source of Strength

   Parent Liquidity – A Source of Strength Changes in Parent Liquidity ($ in Billions) $0.9 $2.5 $3.7 $1.3 $13.6 $11.3 $2.1 $0.3 $0.3 Unencumbered Securities Unencumbered Securities $5.9 $4.9 Cash & Cash & S/T Inv. S/T Inv. $6.3 $7.7 Balance at Insurance Sale of Sale of Share Debt tender Interest Paid

10. Slide 10: Commercial Insurance

    Commercial Insurance AlG

11. Slide 11: Commercial Insurance – Property Casualty Financial Highlights

    Commercial Insurance – Property Casualty Financial Highlights ($ in Millions) 2Q14 2Q15  NPW, excluding the effects of FX, increased modestly YoY (down 4.0% on a reported basis) reflecting growth in Financial lines and Specialty, offset by continued pricing discipline in the E&S property market and

12. Slide 12: Commercial Insurance – Mortgage Guaranty Financial Highlights

    Commercial Insurance – Mortgage Guaranty Financial Highlights ($ in Millions) 2Q14 2Q15  New insurance written grew $4.1B YoY, primarily from New insurance written1 $11,057 $15,190 refinance activity as a result of a reduction in mortgage interest rates and improvements in existing home sales. Net

13. Slide 13: Commercial Insurance – Institutional Markets Financial Highlights

    Commercial Insurance – Institutional Markets Financial Highlights ($ in Millions) 2Q14 2Q15 Reserves & Stable Value Wrap AUM Premiums and deposits $195 $680 $80,000 $68,420 Premiums 161 643 $59,554 $60,000 $32,588 Policy fees 45 50 $26,108 $40,000 Net investment income 501 479 $20,000 $35,832 Total

14. Slide 14: Consumer Insurance

    Consumer Insurance AlG

15. Slide 15: Consumer Insurance – Retirement Financial Highlights

    Consumer Insurance – Retirement Financial Highlights ($ in Millions) 2Q14 2Q15  Premiums and deposits declined 2%, due to declines in Fixed 1 Annuities, which continue to be affected by the low interest Premiums and deposits $6,167 $6,070 rate environment, and lower deposits in Group Retirement. Pr

16. Slide 16: Consumer Insurance – Retirement – Base Yields and Spreads

    Consumer Insurance – Retirement – Base Yields and Spreads Base Yields1 5.35% 5.11% 5.06% 5.08% 5.15% 5.03% 4.99% 4.95% 5.00% 4.92% 4.96% 4.92% 4.98% 4.75% 2Q14 3Q14 4Q14 1Q15 2Q15 Cost of Funds2 3.50% 3.03% 2.99% 2.98% 2.97% 2.94% 3.00% 2.50% 2.83% 2.81% 2.80% 2.78% 2.77% 2.00% 2Q14 3Q14 4Q14 1Q15 2

17. Slide 17: Consumer Insurance – Life Financial Highlights

    Consumer Insurance – Life Financial Highlights ($ in Millions) 2Q14 2Q15  Excluding the effect of FX, Life premiums and deposits Premiums and deposits $1,207 $1,249 increased 6% YoY (3% on a reported basis) primarily due to growth in Japan and the acquisition of AIG Life Limited. Premiums 676 702 

18. Slide 18: Consumer Insurance – Personal Insurance Financial Highlights

    Consumer Insurance – Personal Insurance Financial Highlights  Personal Insurance NPW, excluding the effects of FX, increased 2% (down ($ in Millions) 2Q14 2Q15 8% on a reported basis) driven by growth in the Auto and Property businesses, partially offset by declines in U.S. warranty service program

19. Slide 19: Q&A

    Q&A AlG

20. Slide 20: Appendix – Non-GAAP Reconciliations

    Appendix – Non-GAAP Reconciliations 20

21. Slide 21: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures AIG We use the following operating performance measures because we believe they enhance the understanding of the underlying profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful comparisons w

22. Slide 22: Glossary of Non-GAAP Financial Measures (continued)

    Glossary of Non-GAAP Financial Measures (continued) AIG  Normalized Return on Equity, Excluding AOCI and DTA further adjusts Return on Equity – After-tax Operating Income, excluding AOCI and DTA for the effects of certain volatile or market related items. Normalized Return on Equity, Excluding AOCI

23. Slide 23: Glossary of Non-GAAP Financial Measures (continued)

    Glossary of Non-GAAP Financial Measures (continued) Commercial Insurance: Institutional Markets; Consumer Insurance: Retirement and Life  Pre-tax operating income is derived by excluding the following items from pre-tax income: – changes in fair values of fixed maturity securities designated to hed

24. Slide 24: Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses

    Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses Institutional Markets Retirement Life Premiums and Deposits 2Q14 2Q15 2Q14 2Q15 2Q14 2Q15 ($ in Millions) Premiums and Deposits $195 $680 $6,167 $6,070 $1,207 $1,249 Deposits (29) (26) (6,132) (6,046)

25. Slide 25: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income

    Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income Pre-tax and After-tax Operating Income 2Q14 2Q15 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $4,480 $2,552 Adjustments to arrive at Pre-tax operating income: Changes in fair values of fixed maturity s

26. Slide 26: Non-GAAP Reconciliation – Book Value Per Share and Return On Equity

    Non-GAAP Reconciliation – Book Value Per Share and Return On Equity Book Value Per Common Share Dec. 31, 2014 June 30, 2014 June 30, 2015 ($ in Millions, Except Per Share Data) Total AIG shareholders’ equity (a) $106,898 $108,161 $104,258 Less: Accumulated other comprehensive income (AOCI) (10,617)

27. Slide 27: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted

    Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Property Casualty Mortgage Guaranty Personal Insurance Accident Year Combined Ratio, As Adjusted 2Q14 2Q15 2Q14 2Q15 2Q14 2Q15 Loss ratio 67.7 70.8 (3.1) 19.5 53.5 52.7 Catastrophe losses and reinstatement premiums (2.3) (4.1) N/M N

28. Slide 28: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA

    Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA* 1H’15 2Q15 Pre-tax After-tax ROE Pre-tax After-tax ROE As reported $5,395 $3,584 8.8% $2,868 $1,893 9.3% Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses below expectations (153) (99) (0.2%) (39) (25) (0.1%) Better

29. Slide 29: About American International Group, Inc. (AIG)

    American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 100 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any in

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