American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q1 2014 Earnings Presentation

44 slides from American International Group, Inc. New's earnings presentation, May 14, 2014

  1. Slide 1: American International Group, Inc. Investor Presentation

    American International Group, Inc. Investor Presentation May 14, 2014

  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: AIG – An Established Global Insurance Franchise

    AIG – An Established Global Insurance Franchise A platform for delivering sustainable profitable growth. Core Insurance Strategies Key Accomplishments Businesses 1Q14 NPW growth of 3%, excluding FX, compared to 1Q13  Grow high value lines and optimize business mix Casualty business achieved risk ad

  4. Slide 4: AIG – Building on Capital Strength

    AIG – Building on Capital Strength  25% increase in quarterly dividend to $0.125/sh. in Feb. 2014  Approximately $867 million of shares AIG Shareholders’ Equity - repurchased in 1Q14 $103.8 bn at March 31, 2014 Active Capital Management  Since May 2011, deployed over $20 billion through share rep

  5. Slide 5: AIG Property Casualty

    AIG Property Casualty AIG

  6. Slide 6: AIG Property Casualty – A Truly Global Franchise

    AIG Property Casualty – A Truly Global Franchise AIG Property Casualty is a diversified global P&C market leader with 2013 NPW of over $34 billion.  #1 U.S.-based property casualty EMEA(1) insurance organization in Europe, with 2013 NPW: $6.8 bn established and growing positions in 20% of total NPW

  7. Slide 7: AIG Property Casualty – Financial Highlights

    AIG Property Casualty – Financial Highlights First Full Year Quarter ($ in billions) 2011 2012 2013 2014 Net premiums written $34.8 $34.4 $34.4 $8.3 Net investment income 4.3 4.8 5.3 1.3 Pre-tax operating income $1.1 $1.8 $4.8 $1.2 Accident year loss ratio, as adjusted 68.7 65.2 63.8 63.2 Expense ra

  8. Slide 8: AIG Property Casualty – Business Overview

    AIG Property Casualty – Business Overview A broad product platform. Commercial Insurance Consumer Insurance Full Year 2013 NPW – $20.8 bn Full Year 2013 NPW – $13.6 bn Casualty 39% Personal Accident Financial & Health Lines Lines 49% 51% 20% Property 23% Specialty 18%  Global – Unique ability to se

  9. Slide 9: AIG Property Casualty – Strategic Focus

    AIG Property Casualty – Strategic Focus Strategic levers driving shareholder value creation. Business Underwriting Claims Operational Capital Mix Excellence Service Effectiveness Management  Balance growth with  Globalize  Global Claims  Simplify and  Use RAP as a key profitability and risk sta

  10. Slide 10: AIG Property Casualty – Strong Brands and Customer Loyalty

    AIG Property Casualty – Strong Brands and Customer Loyalty AIG Property Casualty continues to be recognized for excellence. Business Insurance Insurance Times - UK PropertyCasualty360 2014 Innovation Award - AIG 2014 Insurer Claims Initiative of the 2013 Best Overall Commercial Multinational Program

  11. Slide 11: AIG Property Casualty – Product Diversification

    AIG Property Casualty – Product Diversification Commercial Insurance Consumer Insurance  General Liability  Commercial Auto Casualty  Workers’ Compensation  Excess Casualty  Personal Accident  Crisis Management Accident and  Supplemental Medical Health  Travel  Global Property including hig

  12. Slide 12: AIG Property Casualty – Reserves

    AIG Property Casualty – Reserves Business mix shifts away from long tail casualty lines and accelerated commutation of legacy portfolios (especially 2004 and prior) are expected to also reduce reserve variability. Net Reserves by Accident Year $66.3 billion at March 31, 2014 2004 & Prior 15%  Busin

  13. Slide 13: AIG Property Casualty – Accident Year Loss Ratio, As Adjusted, Progression

    AIG Property Casualty – Accident Year Loss Ratio, As Adjusted, Progression Total Property Casualty Commercial Insurance 71.0 78.0 76.9 69.4 69.3 75.3 68.4 76.0 69.0 67.7 73.7 66.3 66.5 66.4 74.0 67.0 71.3 72.0 70.3 70.8 64.8 65.0 63.7 70.0 63.3 63.2 63.2 67.3 67.3 63.0 61.9 68.0 66.4 66.2 65.4 65.1

  14. Slide 14: AIG Property Casualty – Investment Composition & Ratings

    AIG Property Casualty – Investment Composition & Ratings Cash & Invested Assets – Total Portfolio Composition(1) Cash & Invested Assets – Total Portfolio Composition(1) March 31, 2014 - $123.0 billion December 31, 2013 - $123.1 billion CMBS CDO/ABS Equities CDO/ABS 5% CMBS 5% 2% 3% Equities Other in

  15. Slide 15: AIG Life and Retirement

    AIG Life and Retirement AIG

  16. Slide 16: AIG Life and Retirement – Operating from a Position of Strength

    AIG Life and Retirement – Operating from a Position of Strength  Long standing leading market positions Market Leader  Scale advantage in key product lines  Comprehensive portfolio of life insurance, A&H, annuity, group retirement, Product Diversity group benefits, institutional products and mutu

  17. Slide 17: AIG Life and Retirement – Financial Highlights

    AIG Life and Retirement – Financial Highlights First Full Year Quarter ($ in billions) 2011 2012 2013 2014 Premiums and deposits $24.4 $21.0 $28.8 $7.1 Net investment income 9.9 10.7 10.9 2.8 Pre-tax operating income 3.3 4.2 5.1 1.4 Cash & invested assets (1) 194.2 205.3 196.9 200.1 Assets under man

  18. Slide 18: AIG Life and Retirement – Diversified Business Mix

    AIG Life and Retirement – Diversified Business Mix Premiums and Deposits Premiums and Deposits Full Year 2013 - $28.8 billion Full Year 2012 - $21.0 billion Retail: 69% Institutional: 31% Retail: 59% Institutional: 41% Life Insurance Life Insurance and A&H and A&H Group Retirement Group Retirement 1

  19. Slide 19: AIG Life and Retirement – Assets Under Management

    AIG Life and Retirement – Assets Under Management Year-over-year growth in AUM reflects strong retail investment product net flows, higher separate account balances and greater institutional assets. March 31, 2014 - $324.4 billion March 31, 2013 - $296.9 billion Retail Mutual Funds Retail 4% Mutual

  20. Slide 20: AIG Life and Retirement – Leading Market Positions

    AIG Life and Retirement – Leading Market Positions Market Positions Excellence in Service, Marketing and Technology Rank* Market Tools International MarCom Metric 2013 Achievement in Awards 2013 2012 Customer Excellence 2012 and 2013 Platinum (ACE award for 7th and Gold Awards 2 6 Total Annuity Sale

  21. Slide 21: AIG Life and Retirement – Broad Multichannel Distribution Network

    AIG Life and Retirement – Broad Multichannel Distribution Network 2013 Sales By Distribution Channel 2012 Sales By Distribution Channel Affiliated: 33% Non-affiliated: 67% Affiliated: 43% Non-affiliated: 57% VALIC FAs VALIC FAs 26% 33% B-Ds B-Ds 29% 34% AIG Direct & Other 1% AIG Financial Network 3%

  22. Slide 22: AIG Life and Retirement – Individual Variable Annuities

    AIG Life and Retirement – Individual Variable Annuities A strategic growth opportunity for AIG. Industry Retail Variable Annuity Sales* Account Value by GMWB Guarantee at 3/31/14(1) Company FY 2013 % Change FY 2012 ($ in millions) Rank Sales From FY 2012 Rank Sales Jackson National 1 $20,931 6% 1 $1

  23. Slide 23: AIG Life and Retirement – Index Annuities

    AIG Life and Retirement – Index Annuities Provides an opportunity to diversify Retirement Income Solutions offerings. Quarterly Index Annuity Industry Sales ($ in billions) Evolving Market  In past years, many leading carriers avoided the index annuity market due to issues centered around suitabili

  24. Slide 24: AIG Life and Retirement – Investment Composition & Ratings

    AIG Life and Retirement – Investment Composition & Ratings Cash & Invested Assets – Total Portfolio Composition(1) Cash & Invested Assets – Total Portfolio Composition(1) March 31, 2014 - $200.1 billion December 31, 2013 - $196.9 billion CDO/ABS Other invested CMBS CDO/ABS CMBS assets Other invested

  25. Slide 25: AIG Life and Retirement – Net Investment Spread Management

    AIG Life and Retirement – Net Investment Spread Management Base Portfolio Yields(1) 5.50% 5.38% 5.35% 5.31% 5.33% 5.30% 5.32% 5.26% 5.29% 5.25% 5.25% 5.12% 5.12% 5.10% 5.24% 5.17% 5.23% 5.14% 5.08% 5.10% 5.11% 5.01% 4.95% 4.85% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Cost of Funds(2) 3.27% 3.26% 3.2

  26. Slide 26: Mortgage Guaranty (United Guaranty Corporation)

    Mortgage Guaranty (United Guaranty Corporation) 26

  27. Slide 27: United Guaranty – Financial Highlights

    United Guaranty – Financial Highlights First Full Year Quarter ($ in millions) 2011 2012 2013 2014 Net premiums written $801 $858 $1,048 $231 Net investment income 132 146 132 35 Pre-tax operating income (loss) ($97) $9 $205 76 Combined ratio 128.9 119.2 90.9 80.8 Cash & invested assets (1) $4,081 $

  28. Slide 28: United Guaranty – A Market Leader

    United Guaranty – A Market Leader Risk based pricing driving profitable new business. New Insurance Written(1) Vintage Average ($ in billions) Year(2) FICO Score LTV Ratio $60.0 2010 760 90 $49.9 $50.0 2011 757 91 New Insurance Written $40.0 $37.5 2012 758 91 $30.0 $18.8 2013 753 91 $20.0 $10.0 $7.7

  29. Slide 29: United Guaranty – Shrinking Legacy In-Force

    United Guaranty – Shrinking Legacy In-Force Primary Delinquency Rate Primary Risk-in-force (RIF) – $37.4 billion 20% As of March 31, 2014 (by vintage year) 2014 2005 and prior 4% 8% 16% 2006 5% 2007 12% 2013 10% 32% 2008 8% 6% 2009 2% 4% 2010 3% 0% 2011 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 1

  30. Slide 30: United Guaranty – Financial Strength

    United Guaranty – Financial Strength Capitalization and Risk Asset Composition At December 31, 2013 At March 31, Default Post 2008 Risk-to- 2014 Rate (%) RIF (%) Capital(1) Cash & Bonds to Total Admitted Assets 100% 95% 89% 90% United Guaranty 5.3 71 18.4 79% 80% 70% Genworth 7.4 47 18.7 60% 50% 44%

  31. Slide 31: Capital Strength

    Capital Strength AIG

  32. Slide 32: Capital Position and Ratings

    Capital Position and Ratings Capital Structure Credit Ratings(2) ($ in billions, except per share data) $125.6 S&P Moody’s Fitch AM Best $122.3 $0.6 $0.6 Non-redeemable $15.7 $15.7 noncontrolling AIG – Senior $5.5 $5.5 A- Baa1 BBB+ NR interests Debt (1) Financial Debt AIG PC(3) – A+ A1 A A FSR $100.

  33. Slide 33: Financial Flexibility – A Source of Strength

    Financial Flexibility – A Source of Strength AIG Parent Cash, Short-Term Investments & Insurance Company Distributions Unencumbered Fixed Maturity Securities ($ in millions) ($ in billions) AIG Property Casualty AIG Life and Retirement UGC $13.1 $8,893 90 $11.2 $3.0 $3.0 $4,433 $5,349 Unencumbered F

  34. Slide 34: Other Sources of Value

    Other Sources of Value AIG

  35. Slide 35: Direct Investment Book and Global Capital Markets

    Direct Investment Book and Global Capital Markets ($ in billions) Direct Investment Book(1) Global Capital Markets(1) Assets $21.1 $7.0 Liabilities $16.5 $3.7 Net Asset Value $4.6 $3.3 Legacy Matched AIG Hedging & Legacy AIGFP Stable Value Go Forward Assets & Liabilities Market Derivatives(2) CDS Po

  36. Slide 36: Direct Investment Book Long-Term Debt

    Direct Investment Book Long-Term Debt ($ in billions) (1) 1) In May 2014, AIG reduced DIB debt through a redemption of $750 million aggregate principal amount of its 3.000% Notes due 2015 using cash allocated to the DIB. 36

  37. Slide 37: Deferred Tax Asset Overview

    Deferred Tax Asset Overview AIG continues to have substantial deferred tax assets that are available to offset future tax obligations. As of 12/31/12 As of 12/31/13 Gross Deferred Gross Deferred ($ in billions) Type Attributes Tax Asset Attributes Tax Asset Utilization/Expiration  Utilize against A

  38. Slide 38: Appendix

    Appendix AIG

  39. Slide 39: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures AIG AIG – After-tax operating income (loss) attributable to AIG is derived by excluding the following items from net income (loss) attributable to AIG: income (loss) from discontinued operations, net loss (gain) on sale of divested businesses and properties, i

  40. Slide 40: AIG Consolidated Financial Highlights

    AIG Consolidated Financial Highlights First Full Year Quarter ($ in millions, except per share amounts) 2011 2012 2013 2014 Revenues $65,105 $71,021 $68,678 $16,112 (1) Net income attributable to AIG 20,622 3,438 9,085 1,609 Diluted earnings per common share $11.01 $2.04 $6.13 $1.09 ROE, Ex. AOCI (2

  41. Slide 41: Non-GAAP Reconciliation – Pre-tax Operating Income

    Non-GAAP Reconciliation – Pre-tax Operating Income AIG Property Casualty Full Year First Quarter ($ in millions) 2011 2012 2013 2014 Income from continuing operations, before tax $ 2,100 $ 2,023 $ 5,133 $ 1,309 Adjustments to arrive at pre-tax operating income: Net realized capital (gains) losses (9

  42. Slide 42: Non-GAAP Reconciliation – After-tax Operating Income and Foreign Exchange Effect on NPW

    Non-GAAP Reconciliation – After-tax Operating Income and Foreign Exchange Effect on NPW After-tax Operating Income Attributable to AIG Full Year March 31, ($ in millions) 2011 2012 2013 2014 Net income attributable to AIG $ 20,622 $ 3,438 $ 9,085 $ 1,609 Adjustments to arrive at After-tax operating

  43. Slide 43: Non-GAAP Reconciliation – BVPS ex. AOCI, Premiums & Deposits, Accident Year Combined Ratio

    Non-GAAP Reconciliation – BVPS ex. AOCI, Premiums & Deposits, Accident Year Combined Ratio, As Adjusted Book Value Per Common Share - Ex. AOCI December 31, March 31, ($ in millions, except per share data) 2011 2012 2013 2014 Total AIG shareholders’ equity $ 101,538 $ 98,002 $ 100,470 $ 103,833 Less:

  44. Slide 44: American International Group, Inc. (AIG) is a leading international insurance organization serving customers in

    American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of

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