American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q2 2014 Earnings Presentation
46 slides from American International Group, Inc. New's earnings presentation, Aug 8, 2014
Slide 1: American International Group, Inc. Investor Presentation Second Quarter 2014
Exhibit 99.1 American International Group, Inc. Investor Presentation Second Quarter 2014 August 8, 2014
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
Slide 3: AIG Consolidated Financial Highlights
AIG Consolidated Financial Highlights Six Full Year Months ($ in millions, except per share amounts) 2011 2012 2013 2014 Revenues $65,105 $71,021 $68,678 $32,217 (1) Net income attributable to AIG 20,622 3,438 9,085 4,682 Diluted earnings per common share $11.01 $2.04 $6.13 $3.19 ROE, Ex. AOCI (2) 2
Slide 4: 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 Year-to-date NPW growth across all Commercial Grow high value lines and optimize business mix lines, ex. Casualty. YTD Consumer NPW growth
Slide 5: AIG – Building on Capital Strength
AIG – Building on Capital Strength Approximately $1.9 billion of shares repurchased YTD; remaining share repurchase authorization of $1.5 billion In July 2014 repurchased in tender offers, for an aggregate purchase price of $2.5 billion, certain high coupon hybrid and senior notes issued or AIG Shar
Slide 6: AIG Property Casualty
AIG Property Casualty AIG
Slide 7: 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 non-life insurer in EMEA(1) Europe, with established and growing 2013 NPW: $6.8 bn positions in the Middle East and 20% of total NPW Afric
Slide 8: AIG Property Casualty – Strong Brands and Customer Loyalty
AIG Property Casualty – Strong Brands and Customer Loyalty AIG Property Casualty continues to be recognized for excellence. Business Insurance Insurance Times - UK PropertyCasualty360 2014 Innovation Award - AIG 2014 Insurer Claims Initiative of the 2013 Best Overall Commercial Multinational Program
Slide 9: AIG Property Casualty – Financial Highlights
AIG Property Casualty – Financial Highlights Six Full Year Months ($ in billions) 2011 2012 2013 2014 Net premiums written $34.8 $34.4 $34.4 $17.5 Net investment income 4.3 4.8 5.3 2.5 Pre-tax operating income $1.1 $1.8 $4.8 $2.5 Accident year loss ratio, as adjusted 68.7 65.2 63.8 62.9 Expense rati
Slide 10: AIG Property Casualty – Business Overview
AIG Property Casualty – Business Overview A broad product platform. Commercial Insurance Consumer Insurance Six Months 2014 NPW – $10.8 billion Six Months 2014 NPW – $6.7 billion Casualty 37% Personal Accident Financial Lines & Health Lines 51% 49% 21% Property 25% Specialty 17% Global – Unique abil
Slide 11: AIG Property Casualty – Strategic Focus
AIG Property Casualty – Strategic Focus AIG Property Casualty Strategic levers are 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 profitabili
Slide 12: AIG Property Casualty – Product Diversification
AIG Property Casualty – Product Diversification Commercial Insurance Consumer Insurance • General Liability • Personal Accident • Commercial Auto • Supplemental Medical • Workers’ Compensation • Travel • Excess Casualty • Life • Defense Base Act • Crisis Management • Global Property including high l
Slide 13: 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 $65.6 billion at June 30, 2014 2004 & Prior Business mix
Slide 14: 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 Consumer Insurance 80 76.9 75 70.3 70.8 70 67.3 67.3 69.3 66.4 66.2 66.4 65.4 65.1 65 66.3 66.5 66.4 64.8 62.2 63.3 63.2 63.7 63.2 61.9 62.7 60 60.2 60.7 59.1 58.8 59.3 58.4 58.0 5
Slide 15: AIG Property Casualty – Investment Composition & Ratings
AIG Property Casualty – Investment Composition & Ratings Cash & Invested Assets - $123.9 billion (1) Bond Portfolio - $99.1 billion - by AgencyCredit Rating B BB 2% CMBS 2% <B RMBS 2% 7% 10% AAA CDO/ABS 20% 5% Corporate debt Equities BBB 29% 3% 15% Alternatives & Other Non -U.S. 8% governments AA 14
Slide 16: AIG Life and Retirement
AIG Life and Retirement AIG
Slide 17: AIG Life and Retirement – Operating from a Position of Strength
AIG Life and Retirement – Operating from a Position of Strength Long standing leading market positions Market Leader Scale advantage in key product lines Comprehensive portfolio of life insurance, A&H, annuity, group retirement, Product Diversity group benefits, institutional products and mutual fun
Slide 18: AIG Life and Retirement – Financial Highlights
AIG Life and Retirement – Financial Highlights Six Full Year Months ($ in billions) 2011 2012 2013 2014 Premiums and deposits $24.4 $21.0 $28.8 $14.5 Net investment income 9.9 10.7 10.9 5.4 Pre-tax operating income 3.3 4.2 5.1 2.6 Net flows $2.9 $(1.3) $4.6 $2.0 Period-end: Cash & invested assets (1
Slide 19: AIG Life and Retirement – Net Investment Spread Management
AIG Life and Retirement – Net Investment Spread Management Base Portfolio Yields (1) 5.38% 5.35% 5.33% 5.30% 5.29% 5.32% 5.26% 5.25% 5.17% 5.12% 5.10% 5.17% 5.12% 5.24% 5.11% 5.25% 5.14% 5.08% 5.10% 5.11% 5.01% 5.00% 4.95% 4.85% 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Cost of Funds (2) 3.26% 3.26% 3
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 1Q14 1Q13 Customer Excellence 2012 and 2013 Platinum (ACE award for 7 th and Gold Awards 2 5 Total Annuity Sal
Slide 21: AIG Life and Retirement – Diversified Business Mix
AIG Life and Retirement – Diversified Business Mix Premiums and Deposits Premiums and Deposits Six Months 2014 - $14.5 billion First Six Months 2013 - $12.3 billion Retail: 73% Institutional: 27% Retail: 66% Institutional: 34% Life Insurance Life Insurance and A&H and A&H 12% Group Retirement Group
Slide 22: 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 increased institutional assets. June 30, 2014 - $332.8 billion June 30, 2013 - $293.7 billion Retail Mutual Funds Retail 4% Mutual
Slide 23: AIG Life and Retirement – Broad Multichannel Distribution Network
AIG Life and Retirement – Broad Multichannel Distribution Network 2013 Sales By Distribution Channel 2012 Sales By Distribution Channel Affiliated: 33% Non-affiliated: 67% Affiliated: 43% Non-affiliated: 57% VALIC FAs VALIC FAs 26% 33% B-Ds B-Ds 29% 34% AIG Direct & Other 1% AIG Financial Network 3%
Slide 24: AIG Life and Retirement – Individual Variable Annuities
AIG Life and Retirement – Individual Variable Annuities A strategic growth opportunity for AIG. Industry Retail Variable Annuity Sales* Account Value by GMWB Guarantee at 6/30/14(1) % change Company Q1 2014 from Q4 2013 Q1 2013 ($ in millions) Rank Sales Q1 2013 Rank Sales Rank Sales Jackson Nationa
Slide 25: 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 suitability
Slide 26: AIG Life and Retirement – Investment Composition & Ratings
AIG Life and Retirement – Investment Composition & Ratings Cash & Invested Assets - $203.5 billion(1) Bond Portfolio – $165.2 billion By Agency Credit Rating By NAIC Ratings (2) CMBS Not Rated 5% CDO/ABS B 1% 5% 2% Alternatives & BB <B Other 3% AAA NAIC 2 RMBS 8% 6% 12% 40% 12% Cash and short- term
Slide 27: Mortgage Guaranty (United Guaranty Corporation)
Mortgage Guaranty (United Guaranty Corporation)
Slide 28: United Guaranty – Financial Highlights
United Guaranty – Financial Highlights Six Full Year Months ($ in millions) 2011 2012 2013 2014 Net premiums written $801 $858 $1,048 $480 Net investment income 132 146 132 68 Pre-tax operating income (loss) ($97) $9 $205 286 Combined ratio 128.9 119.2 90.9 50.4 Period-end: Cash & invested assets (1
Slide 29: United Guaranty – A Market Leader
United Guaranty – A Market Leader Risk based pricing driving profitable new business. (1) Average New Insurance Written Vintage ($ in billions) Year (2) FICO Score LTV Ratio $60.0 $49.9 2010 760 90 $50.0 $40.0 $37.5 2011 757 91 $30.0 2012 758 91 $18.8 $18.9 $20.0 2013 753 91 $10.0 1Q14 751 92 $0.0 2
Slide 30: United Guaranty – Shrinking Legacy In-Force
United Guaranty – Shrinking Legacy In-Force Primary Delinquency Rate Primary Risk-in-force(RIF) – $38.9 billion As of June 30, 2014 (by vintage year) 20% 2006 18% 5% 2014 2005 and 11% prior 16% 8% 14% 2007 9% 12% 2008 10% 2013 5% 30% 2009 8% 2% 6% 2010 2011 3% 7% 4% 2012 2% 20% 0% 3/31/08 6/30/09 9/
Slide 31: United Guaranty – Financial Strength
United Guaranty – Financial Strength Capitalization and Risk Asset Composition At March 31, 2014 Default Post 2008 Risk-to- Cash & Bonds to Total Admitted Assets At March 31, 2014 Rate (%) RIF (%) Capital (1) 100% 95% Peers active before 2009: 89% 79% United Guaranty 5.3 71 18.4 80% Genworth 7.4 47
Slide 32: Capital Strength
Capital Strength AIG
Slide 33: Capital Position and Ratings
Capital Position and Ratings Capital Structure Credit Ratings(2) ($ in billions) $129.8 S&P Moody’s Fitch AM Best $122.3 $0.4 $0.6 $15.7 Non-redeemable $15.7 AIG – Senior noncontrolling $5.6 A- Baa1 BBB+ NR $5.5 Debt interests (1) Financial Debt AIG PC(3) – A+ A1 A A FSR $100.5 $108.2 Hybrids AIG L&
Slide 34: Financial Flexibility – A Source of Strength
Financial Flexibility – A Source of Strength AIG Parent Cash, Short-Term Investments & Insurance Company Cash Distributions* Unencumbered Fixed Maturity Securities ($ in millions) ($ in billions) AIG Property Casualty AIG Life and Retirement UGC $8,581 $14.1 $13.1 90 $3.5 $3.0 $4,433 Unencumbered $4
Slide 35: Other Sources of Value
Other Sources of Value AIG
Slide 36: Direct Investment Book and Global Capital Markets
Direct Investment Book and Global Capital Markets ($ in billions) Direct Investment Book (1) Global Capital Markets (1) Assets $19.8 $6.7 Liabilities 15.2 3.2 Net Asset Value $4.6 $3.5 Legacy Matched AIG Hedging & Legacy AIGFP Stable Value Go Forward Assets & Liabilities Market Derivatives (2) CDS P
Slide 37: Direct Investment Book Long-Term Debt
Direct Investment Book Long-Term Debt ($ in billions) $15 $13.6 $1.1 (1) $11.3 $10.4 $1.0 $10 $4.7 $0.8 $9.5 $0.6 $4.5 $3.9 $3.7 $6.5 $2.2 $0.5 $5 $2.2 $2.2 $2.2 $3.3 $3.5 $5.7 $0.3 $3.6 $3.5 $3.0 $2.1 $2.8 $0 $0.4 $0.2 as of 6/30/2014 2014 2015 2016 2017 2018 MIP notes payable Series AIGFP matched
Slide 38: Deferred Tax Asset Overview
Deferred Tax Asset Overview AIG continues to have substantial deferred tax assets that are available to offset future tax obligations. As of 12/31/12 As of 12/31/13 Gross Deferred Gross Deferred ($ in billions) Type Attributes Tax Asset Attributes Tax Asset Utilization/Expiration Utilize against AIG
Slide 39: Appendix
Appendix AIG
Slide 40: 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, income (loss) from divested businesses, including gain on the sa
Slide 41: Non-GAAP Reconciliation – Pre-tax Operating Income
Non-GAAP Reconciliation – Pre-tax Operating Income AIG Property Casualty Full Year Six Months ($ in millions) 2011 2012 2013 2014 Income from continuing operations, before tax $ 2,100 $ 2,023 $ 5,133 $ 2,799 Adjustments to arrive at pre-tax operating income: Net realized capital (gains) losses (957)
Slide 42: Non-GAAP Reconciliation – After-tax Operating Income and Foreign Exchange Effect on Net Premiums Written
Non-GAAP Reconciliation – After-tax Operating Income and Foreign Exchange Effect on Net Premiums Written After-tax Operating Income Attributable to AIG Full Year June 30, ($ in millions) 2011 2012 2013 2014 Net income attributable to AIG $ 20,622 $ 3,438 $ 9,085 $ 4,682 Adjustments to arrive at Afte
Slide 43: Non-GAAP Reconciliation – BVPS ex. AOCI and Premiums and Deposits
Non-GAAP Reconciliation – BVPS ex. AOCI and Premiums and Deposits Book Value Per Common Share - Ex. AOCI December 31, June 30, ($ in millions, except per share data) 2011 2012 2013 2014 Total AIG shareholders’ equity $ 101,538 $ 98,002 $ 100,470 $ 108,161 Less: AOCI 6,481 12,574 6,360 11,511 Total A
Slide 44: Non-GAAP Reconciliation – Return On Equity
Non-GAAP Reconciliation – Return On Equity Return on equity (ROE) computations Full Year Six Months ($ in millions) 2011 2012 2013 2014 Annualized Net income attributable to AIG $ 20,622 $ 3,438 $ 9,085 $ 9,364 Annualized After-tax operating income attributable to AIG 2,086 6,635 6,762 7,228 Average
Slide 45: Non-GAAP Reconciliation – Accident Year Combined Ratio, As Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, As Adjusted AIG Property Casualty Quarterly Accident year combined ratio, as adjusted 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Commercial Insurance Loss ratio 80.3 72.3 70.7 78.0 100.9 64.9 72.6 71.8 77.9 69.4 67.7 Catastrophe los
Slide 46: American International Group, Inc. (AIG) is a leading international insurance organization
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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