American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q2 2015 Earnings Presentation
48 slides from American International Group, Inc. New's earnings presentation, Aug 24, 2015
Slide 1: American International Group, Inc. Investor Presentation Second Quarter 2015
Exhibit 99.1 American International Group, Inc. Investor Presentation Second Quarter 2015 August 24, 2015
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 Today
AIG Today A Truly Global Insurance Company Balancing Growth, Profitability, and Risk AIG is the largest global insurer based on shareholders’ equity, serving customers in over 100 Substantial countries and jurisdictions Franchise Value Approximately 90 million clients, including 89% of the Global Fo
Slide 4: AIG – A Diverse Customer-Focused Operating Platform
AIG – A Diverse Customer-Focused Operating Platform Total Operating Revenue of $30.2 Billion for 1H15 AIG Today 1 Commercial Insurance Consumer Insurance Corporate and Other 1H15 Operating Revenue 1H15 Operating Revenue 1H15 Operating Revenue $14.5 Billion, 48% $13.8 Billion, 46% $1.9 Billion, 6% Pr
Slide 5: Driven by Strong Values and Measurable Financial Goals
Driven by Strong Values and Measurable Financial Goals 2 Goals Guide AIG Honor Commitments to Clients Responsible Stewardship of Shareholder Value 3 Financial Targets Drive Performance Objective Annual Target Through 2017 1 Growing Intrinsic Value 10+% Growth in Book Value Per Share ex. AOCI and DTA
Slide 6: Emphasis on Intrinsic Value Per Share and Capital Value Drives Returns
Emphasis on Intrinsic Value Per Share and Capital Value Drives Returns $77.69 $79.74 $66.38 $68.62 $5.83 $4.34 $7.71 $11.69 $53.53 $8.51 $11.75 $12.16 $3.42 $12.57 $10.54 $52.12 $58.23 $62.22 $39.57 $45.30 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 June 30, 2015 BVPS, Ex. AOCI & DTA DTA
Slide 7: Normalized ROE, Ex. AOCI & DTA
Normalized ROE, Ex. AOCI & DTA* 1H15 2Q15 ($ in Millions) Pre-tax After-tax ROE Pre-tax After-tax ROE As reported $5,395 $3,584 8.8% $2,868 $1,893 9.3% Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses below expectations (153) (99) (0.2%) (39) (25) (0.1%) Better than expect
Slide 8: General Operating Expenses
General Operating Expenses Targeting 3-5% of Annual Reduction Through 2017 General Operating Expenses, Operating Basis ($ 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 $423 $20 $428 $376 $368 $355 $365 $378 $3
Slide 9: AIG Consolidated Operating Financial Highlights
AIG Consolidated Operating Financial Highlights Full Year First Half ($ in Millions, Except per Share Amounts) 2012 2013 2014 2015 $65,379 $61,524 $61,001 $30,225 -tax operating income: Commercial Insurance 2,215 4,980 5,510 2,962 Consumer Insurance 3,736 4,564 4,474 1,968 Total Insurance Operations
Slide 10: AIG Consolidated Balance Sheet Selected Highlights
AIG Consolidated Balance Sheet Selected Highlights ($ in Millions) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 June 30, 2015 Cash and investments $376,975 $358,669 $357,524 $350,516 Total assets 548,633 541,329 515,581 509,987 Net loss reserves 68,782 64,316 61,612 59,093 1 Life insurance companies re
Slide 11: Strong Capital Position
Strong Capital Position Capital Structure Credit Ratings ($ in Billions) 1 Total Equity Financial Debt Hybrids S&P Moody’s Fitch AM Best $126.4 $125.1 AIG – Senior $124.1 $122.3 A- Baa1 BBB+ NR $2.5 Debt $9.4 $5.5 $1.6 $15.7 $16.6 $18.8 AIG Non-Life – $16.1 A+ A1 A A FSR AIG Life – FSR A+ A2 A+ A $9
Slide 12: Financial Flexibility – Multiple Sources of Liquidity
Financial Flexibility – Multiple Sources of Liquidity Liquidity Position Bolstered by Cash Proceeds From Non-Core Asset Monetizations and Insurance Company Distributions 1 2 Insurance Company Distributions AIG Parent Liquidity ($ in Millions) ($ in Billions) $10,417 $13.6 $1,038 $8,671 $9.8 $5.9 $4,
Slide 13: Enhanced Debt Maturity Profile
Enhanced Debt Maturity Profile Liability Management Actions Have Improved Maturity Profile and Reduced Weighted Average Coupon to Below 5.0% As of 7/31/2015 – Total Notional Amount: $19.9 Billion / Weighted Average Coupon: 4.89% ($ in Millions) As of 12/31/2012 – Total Notional Amount: $25.5 Billion
Slide 14: Deferred Tax Assets
Deferred Tax Assets Continued Monetization of Deferred Tax Assets As of 12/31/13 As of 12/31/14 Gross Deferred Gross Deferred ($ in Billions) Type Utilization/Expiration Attributes Tax Asset Attributes Tax Asset Utilize against Non-Life Insurance Net Operating Loss Non-Life Companies, Corporate & Ot
Slide 15: Non-Life Insurance Companies – Invested Assets
Non-Life Insurance Companies – Invested Assets 1 Total Cash & Invested Assets as of June 30, 2015 – $118.9 Billion Bond Portfolio – $92.4 Billion – Total Portfolio Composition by Agency Credit Rating Not RMBS CMBS Rated <1% AAA 10% 3% 18% Corporate <B debt CDO/ABS 8% 29% 6% AA Equities B 2% 28% 4% B
Slide 16: Life Insurance Companies – Invested Assets
Life Insurance Companies – Invested Assets 1 Total Cash & Invested Assets as of June 30, 2015 – $199.0 Billion Total Portfolio Composition Bond Portfolio – $160.7 Billion By Agency Credit Rating By NAIC Ratings Not RMBS Rated 11% <1% AAA AA CMBS 12% 10% 5% CDO/ ABS <B 6% 8% A NAIC 1 Corporate B debt
Slide 17: Commercial Insurance
Commercial Insurance AIG
Slide 18: Commercial Insurance – Strategy
Commercial Insurance – Strategy Strategic Levers to Drive Shareholder Value Creation Customer Strategic Underwriting Claims Operational Capital Investment Growth Excellence Excellence Effectiveness Efficiency Strategy Aspire to be our Grow our Improve our Improve claims Continue Increase capital Inc
Slide 19: Commercial Insurance – Diversified Products and Services
Commercial Insurance – Diversified Products and Services Property Casualty General Liability Aerospace Commercial Automobile Liability Environmental Workers’ Compensation Political Risk Excess Casualty Trade Credit Crisis Management Marine Risk Management Surety Casualty Other Customized Structured
Slide 20: Commercial Insurance – A Market Leader
Commercial Insurance – A Market Leader Superior Sales & Significant Market Positions Underwriting Capabilities #1 commercial insurer in the U.S. with an established and Ranked among the top 10 most preferred commercial growing position in Latin America1; insurance carriers.² #1 carrier in the Direct
Slide 21: Commercial Insurance – Property Casualty Financial Highlights
Commercial Insurance – Property Casualty Financial Highlights Continued Improvement in Accident Year Combined Ratios, As Adjusted Full Year First Half ($ in Millions) 2012 2013 2014 2015 Net premiums written $20,348 $20,880 $21,020 $10,630 Net premiums earned 20,848 20,677 20,885 10,033 Underwriting
Slide 22: Commercial Insurance – Property Casualty Product Mix & Geography Shift
Commercial Insurance – Property Casualty Product Mix & Geography Shift Meaningful Remediation of Casualty Lines and Growth Outside of the U.S. Property Casualty Property Casualty Full Year 2010 NPW – $20.2 Billion 1H15 NPW – $10.6 Billion Property 16% Property Casualty 25% Casualty 35% Specialty 49%
Slide 23: Reserves – Non-Life Insurance Companies
Reserves – Non-Life Insurance Companies 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 Total Net Reserves $62.4 Billion at June 30, 2015 By Accident Year By Line of Bu
Slide 24: Commercial Insurance – Mortgage Guaranty Financial Highlights
Commercial Insurance – Mortgage Guaranty Financial Highlights Full Year First Half ($ in Millions) 2012 2013 2014 2015 Net premiums written $858 $1,048 $1,024 $535 Underwriting income (loss) (137) 73 454 233 Net investment income 146 132 138 69 Pre-tax operating income $9 $205 $592 $302 1 Delinquenc
Slide 25: Commercial Insurance – Mortgage Guaranty Credit Quality of Loans
Commercial Insurance – Mortgage Guaranty Credit Quality of Loans Primary Risk-in-force (RIF) – Mortgage Guaranty Risk Quality Index* $45.0 Billion (As of June 30, 2015) High Quality 2006 2015 and 13% Prior 2007 9% 7% 2008 Loan with Average Risk 4% 1% 2009 2014 2% 2010 22% 2011 5% 2012 15% 2013 Low Q
Slide 26: Commercial Insurance – Institutional Markets Financial Highlights
Commercial Insurance – Institutional Markets Financial Highlights Full Year First Reserves & Stable Value Wraps ($ in Millions) Half Assets Under Management 2012 2013 2014 2015 $80,000 $68,449 $68,420 Premiums and deposits $774 $991 $3,797 $826 $70,000 $60,000 Premiums 458 610 432 739 $50,000 $32,32
Slide 27: Consumer Insurance
Consumer Insurance AIG
Slide 28: Consumer Insurance – Strategy
Consumer Insurance – Strategy Distinguish Ourselves in the Markets and Products We Choose. Be the Provider of Choice Among Our Target Segments and Channels. Profitability and Information- Focused Operational Investment Customer Capital Driven Strategy Growth Effectiveness Strategy Management Aspire
Slide 29: Consumer Insurance – Market Maturity Model
Consumer Insurance – Market Maturity Model Focused Growth Advanced Stage Market Early Stage Market Product Personal Auto & Travel Warranty Life Health Retirement Accident Home Channel Micro Sponsors – including Career Public Financial Broad Market/ Insurance Brokers, Banks & Agency, IFAs Agencies Se
Slide 30: Consumer Insurance – Leading Market Positions
Consumer Insurance – Leading Market Positions U.S. Life and 1 Personal Insurance Retirement Businesses Rank U.S. Metric Private Client Group 1Q15 1Q14 – 40% of the Forbes 400 Richest Americans² 2 2 Total Annuity Sales – 47% of the Americans Listed on the 2 1 Fixed-Rate Deferred Annuity Sales ARTnews
Slide 31: Consumer Insurance – Leading Businesses
Consumer Insurance – Leading Businesses Consumer Insurance Operations Continue to Be Recognized for Excellence Globally Market Tools – U.S. Insurance and Financial Gaivota de Ouro Insurance 2015 Achievement in Customer CommunicationsAssociation – U.S. Industry Awards, Seguro Excellence for Life Insu
Slide 32: Consumer Insurance – Overview
Consumer Insurance – Overview Premiums and Deposits¹ Pre-Tax Operating Income 1H15 – $19.9 Billion 1H15 – $2.0 Billion Personal Insurance Life Life 16% 2% 12% Personal Retirement Insurance 58% 30% Retirement 82% 1)Premiums and deposits include net premiums written for the Personal Insurance operatin
Slide 33: Consumer Insurance – Retirement Financial Highlights
Consumer Insurance – Retirement Financial Highlights Full Year First Half ($ in Millions) 2012 2013 2014 2015 Premiums and deposits¹ $16,048 $23,729 $24,023 $11,579 Premiums 120 188 287 90 Policy fees 743 861 1,010 541 Net investment income 6,502 6,628 6,489 3,188 Other income 1,344 1,754 1,998 1,03
Slide 34: 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% 4.96% 4.98% 4.75% 4.92% 4.92% 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
Slide 35: Consumer Insurance – Retirement – Individual Variable Annuities
Consumer Insurance – Retirement – Individual Variable Annuities Account Value by GMWB Guarantee Industry Retail Variable Annuity Sales* at 6/30/15¹ – $33.4 Billion 1Q15 1Q14 % Company Change Rank Sales Rank Sales ($ in millions) Jackson National 1 5,238 (18%) 1 6,382 Lincoln Financial Group 2 2,742
Slide 36: Consumer Insurance – Life Financial Highlights
Consumer Insurance – Life Financial Highlights Full Year First Half ($ in Millions) 2012 2013 2014 2015 Premiums and deposits $4,864 $4,862 $4,806 $2,472 Premiums 2,804 2,737 2,679 1,410 Policy fees 1,370 1,391 1,443 725 Net investment income 2,283 2,269 2,199 1,093 Other income¹ - - - 17 Total oper
Slide 37: Consumer Insurance – Personal Insurance Financial Highlights
Consumer Insurance – Personal Insurance Financial Highlights Full Year First Half ($ in Millions) 2012 2013 2014 2015 Net premiums written $13,302 $12,700 $12,412 $5,845 Net premiums earned 13,103 12,377 11,970 5,605 Underwriting income (loss) (278) (187) 5 (82) Net investment income 477 455 394 126
Slide 38: Appendix
Appendix AIG
Slide 39: Successfully Focusing AIG While Managing Risk
Successfully Focusing AIG While Managing Risk Since the financial crisis, AIG has generated over $90 billion in proceeds from over 50 asset sales and divestitures, de-risked its structure and eliminated government ownership June 2015 Sept 2014 Reduction in derivative May 2014 Peter notional Hancock
Slide 40: 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
Slide 41: 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 a
Slide 42: 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 hedge
Slide 43: Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses
Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses Full Year First Half Total Operating Revenues 2012 2013 2014 2015 (In Millions) Total operating revenues $65,379 $61,524 $61,001 $30,225 Reconciling Items: Changes in fair values of fixed maturity securities designated to li
Slide 44: Non-GAAP Reconciliation – Premiums and Deposits
Non-GAAP Reconciliation – Premiums and Deposits ($ in Millions) Full Year First Half Retirement 2012 2013 2014 2015 $16,048 $23,729 $24,023 $11,579 (16,203) (23,690) (23,903) (11,537) 275 149 167 48 $120 $188 $287 $90 Life 2012 2013 2014 2015 $4,864 $4,862 $4,806 $2,472 (1,531) (1,541) (1,532) (758)
Slide 45: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income Full Year First Half Pre-tax and After-tax Operating Income 2012 2013 2014 2015 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $2,891 $9,368 $10,501 $6,328 Adjustments to arrive at Pre-tax operating inco
Slide 46: Non-GAAP Reconciliation – Book Value Per Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Share and Return On Equity Book Value Per Common Share ($ in Millions, Except Per Share Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 June 30, 2015 Data) Total AIG shareholders’ equity (a) $101,538 $98,002 $100,470 $106,898 $104,258 Less: Accumulate
Slide 47: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Full Year First Half Property Casualty Accident Year Combined Ratio, As Adjusted 2012 2013 2014 2015 Loss ratio 80.5 71.9 71.6 69.5 Catastrophe losses and reinstatement premiums (10.9) (3.4) (2.9) (2.8) Prior year development net of
Slide 48: 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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