American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q1 2020 Earnings Presentation
39 slides from American International Group, Inc. New's earnings presentation, May 5, 2020
Slide 1: First Quarter 2020 Financial Results Presentation
First Quarter 2020 Financial Results Presentation May 4, 2020
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 and discuss, projections, goals, assumptions and statements that
Slide 3: Key Messages
Key Messages Net income of $1.7B ($1.98 per diluted share) benefited from $3.5 billion of pre-tax net realized capital gains largely related to mark-to-market gains from variable annuity and interest rate hedges and the impact of our non-economic non-performance risk adjustment, per GAAP, on the f
Slide 4: Key Messages (continued)
Key Messages (continued) $2.7B in NII (APTI basis), down approximately $1B from 1Q19 as a result of COVID-19 related equity and credit markets impacts in the first quarter of 2020 compared to a strong recovery in the prior year quarter for hedge funds, private equity and FVO securities 1Q20 incr
Slide 5: 1Q20 APTI of $172M declined from 1Q19 due to NII and COVID-19
1Q20 APTI of $172M declined from 1Q19 due to NII and COVID-19 ($ in millions, except per common share amounts) 1Q19 1Q20 Variances Key Takeaways Adjusted Pre-tax Income (Loss): General Insurance APTI declined primarily due to: General Insurance $1,268 $501 ($767) − lower NII of $588M reflecting al
Slide 6: Net Investment Income, APTI basis, decrease driven by capital market impact
Net Investment Income, APTI basis, decrease driven by the capital market impact on FVO securities and alternative investments 1Q20 Investment Income and Yield by Segment (APTI Basis) ($ in millions) General Insurance Life and Retirement Other and Legacy Total AIG Interest and dividends $668 $1,960 $
Slide 7: 1Q19 and 1Q20 noteworthy items
1Q19 and 1Q20 noteworthy items 1Q19 – Income / (Loss) 1Q20 – Income / (Loss) EPS EPS ($ in millions) Pre-tax After-tax1 Pre-tax After-tax1 (diluted) (diluted) General Insurance – Catastrophe losses, net of reinsurance, ex. COVID-19 ($175) ($138) ($0.16) ($147) ($116) ($0.13) General Insurance – Cata
Slide 8: AIG 200 is a global, multi-year initiative to achieve transformational change
AIG 200 is a global, multi-year initiative to achieve transformational change at AIG and $1B of GOE savings The Standard Commercial Underwriting Platform will modernize global underwriting capabilities by 1 simplifying processes and tools to create a contemporary data architecture General Transform
Slide 9: AIG's capital position remains strong at the holding company and principal insurance companies
AIG’s capital position remains strong at the holding company and principal insurance companies Capital Structure ($B) Risk Based Capital (RBC) Ratios2 Year / $90.8 $86.1 Hybrids Life and Retirement General Insurance $1.5 Quarter $1.5 Companies Companies Financial Debt1 End $21.8 $1.3 $21.4 $1.8 Cred
Slide 10: Parent liquidity remains strong at $7.5B at March 31, 2020
Parent liquidity remains strong at $7.5B at March 31, 2020 Changes in Parent Liquidity ($B) Cash & S/T Investments Unencumbered Securities $1.3 $0.9 $7.6 ($0.5) ($0.3) $7.5 ($0.7)1 Includes: ($0.8)1,2 Life Dividends: $2.4 $4.8 $0.2B GI Dividends: 9.0 $0.2B Tax Payments from Subsidiaries: $5.1 $2.8 $
Slide 11: General Insurance: 1.0 pts improvement in AYLR results; COVID-19 impact
General Insurance: 1.0 pts improvement in AYLR results; COVID-19 impact of $272M included in CATs ($ in millions) 1Q19 1Q20 Catastrophe Losses, Net of Reinsurance ($M) Net premiums written $6,033 $5,921 1Q20 Impact of COVID-19 Net premiums earned $6,713 $6,079 $419 $272 Loss and loss adjustment expe
Slide 12: General Insurance: North America results
General Insurance: North America results reflect lower NII and the impact of COVID-19; AY underwriting improvement in Commercial Lines and Personal Insurance ($ in millions) 1Q19 1Q20 Key Takeaways: Net premiums written $2,578 $2,770 Net premiums written increased by 7% to $2.8B primarily due to C
Slide 13: General Insurance: International results
General Insurance: International results reflect the impact of COVID-19 and lower NII; AY underwriting improvement in Personal Insurance ($ in millions) 1Q19 1Q20 Net premiums written $3,455 $3,151 Key Takeaways: Commercial Lines 1,780 1,577 Net premiums written decreased 9% on a reported basis an
Slide 14: Life and Retirement: Decline in APTI
Life and Retirement: Decline in APTI driven by lower net investment income, unfavorable impacts from equity markets, widening credit spreads and continued headwinds from lower interest rates Adjusted Return on Attributed Common Equity Premiums and Deposits ($B) $8.4 $1.1 $6.9 $1.0 $0.9 $2.1 $1.0 15.
Slide 15: Life and Retirement: Individual Retirement
Life and Retirement: Individual Retirement APTI decreased due to unfavorable equity markets and widening credit spreads; fixed annuity sales were lower due to disciplined pricing which resulted in negative net flows ($ in millions) 1Q19 1Q20 Key Takeaways: Premiums and deposits $4,186 $3,116 APTI
Slide 16: Life and Retirement: Group Retirement
Life and Retirement: Group Retirement APTI decreased due to unfavorable equity markets and lower income on FVO securities; lower surrenders resulted in improved net flows ($ in millions) 1Q19 1Q20 Premiums and deposits $2,063 $1,855 Key Takeaways: APTI is lower than 1Q19 driven by unfavorable impa
Slide 17: Life and Retirement: Life Insurance
Life and Retirement: Life Insurance APTI decreased due to higher mortality and insurance reserves and prior year reserve and reinsurance refinements ($ in millions) 1Q19 1Q20 Premiums and deposits $995 $1,015 Key Takeaways: Premiums 395 419 APTI is lower than 1Q19 due to higher mortality and insur
Slide 18: Life and Retirement: Institutional Markets
Life and Retirement: Institutional Markets benefited from disciplined growth with improved margins ($ in millions) 1Q19 1Q20 Premiums and deposits $1,112 $917 Key Takeaways: Premiums 819 757 Premiums and deposits are lower than 1Q19 resulting from Policy fees 41 40 slightly lower Guaranteed Invest
Slide 19: Other Operations
Other Operations ($ in millions) 1Q19 1Q20 Key Takeaways: Revised and simplified the presentation to help identify Corporate (Parent and Service Companies): key drivers of APTI Other Operations consists of businesses and items not General operating expenses ($181) ($244) attributed to the Genera
Slide 20: Legacy Portfolio
Legacy Portfolio ($ in millions) 1Q19 1Q20 General Insurance run-off lines $15 $36 Life and Retirement run-off lines 87 (133) Legacy Investments 10 (271) Adjusted pre-tax income (loss) $112 ($368) Key Takeaways Legacy APTL driven primarily by investment losses, principally mark-to-market, on FVO i
Slide 21: Total Investments of $332.3B at March 31, 2020
Total Investments of $332.3B at March 31, 2020; 74% of investments in Fixed Maturities Fixed Income Portfolio All Other Investments March 31, 2020 – $247.1B March 31, 2020 – $85.2B $139.2 $0.5 $36.2 Bonds, FVO Equities Mortgage-backed, Short-term asset-backed and Investments collateralized $64.0 Cor
Slide 22: Appendix
Appendix AIG 22
Slide 23: Expanded Investment Portfolio Disclosures in Financial Supplement
Expanded Investment Portfolio Disclosures in Financial Supplement As the only major multi-line or composite insurer in the U.S., AIG’s consolidated investment portfolio is frequently compared to Life-only or P&C-only peers, which tend to have very different asset allocation, duration and credit ch
Slide 24: ~90% of Fixed Income portfolio is rated Investment Grade
~90% of Fixed Income portfolio is rated Investment Grade NAIC Designation Investment Quality Rating General Insurance Life and Retirement Other & Legacy Total AIG NAIC 1 19% 33% 12% 63% Other fixed maturity securities 11% 19% 9% 39% Mortgage-backed, asset-backed and collateralized 8% 14% 3% 24% NAIC
Slide 25: Corporate debt portfolio held primarily in Life and Retirement
Corporate debt portfolio held primarily in Life and Retirement Corporate Debt March 31, 2020 – $144.3B $90.8 $13.6 $3.3 $7.1 Other $5.2 Basic $6.4 Energy Capital goods $13.0 Consumer cyclical Consumer noncyclical $6.4 Communications $28.5 Utilities $25.3 $12.4 $1.2 $5.3 Financial Institutions $0.7 $
Slide 26: Over 80% of Mortgage-backed, asset-backed and collateralized are Investment Grade
Over 80% of Mortgage-backed, asset-backed and collateralized are rated Investment Grade (NAIC & AIG Composite Rating) Mortgage-backed, asset-backed and collateralized March 31, 2020 – $62.2B $36.2 $4.9 $6.0 $20.6 Asset-Backed Securities $8.8 Collateralized Debt Obligations $2.8 Commercial Mortgage B
Slide 27: Hedge Funds and Private Equity portfolio held primarily in General Insurance
Hedge Funds and Private Equity portfolio held primarily in General Insurance Other Invested Assets March 31, 2020 – $18.0B $6.9 $6.7 $6.5 $0.6 $0.0 $1.1 $0.6 $3.6 $3.8 All other Real Estate Investments Private Equity $3.3 Hedge Funds $2.8 $2.0 $1.5 $0.5 $0.3 General Insurance Life and Retirement Oth
Slide 28: 99% of Commercial Mortgage Loans are in good standing
99% of Commercial Mortgage Loans are in good standing Commercial Mortgage Loans March 31, 2020 – $36.3B Exposure by Class of Loan Based on Amortized Cost ($M) $14,154 $1 $10,622 $57 > 90 days delinquent or in process of foreclosure $87 90 days or less delinquent $14,153 Restructured $5,246 $10,478 I
Slide 29: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 29
Slide 30: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP Throughout this presentation, we present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are “Non-GAAP financial me
Slide 31: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP Adjusted Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits
Slide 32: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 1Q19 1Q20 Pre-tax income from continuing operations $ 1,154 $ 2,558 Adjustments to arrive at Adjusted pre-tax income Changes in fair value of securities used to hedge guaranteed living benefits (96)
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Book Value Per Common Share and Return on Common Equity (in millions, except per common share data) Three Months Ended March 31, Total AIG shareholders' equity $ 60,787 $ 60,173 Less: Preferred equity 485 485 Total AIG common shareholders' equity (a) 60,302 59,688 Less: Accu
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Return on Common Equity General Insurance Life and Retirement (in millions) Quarterly (in millions) Quarterly 1Q19 1Q20 1Q19 1Q20 Adjusted pre-tax income $ 1,268 $ 501 Adjusted pre-tax income $ 924 $ 574 Interest expense on attributed financial debt 144 151 Interest expense
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted General Insurance General Insurance - North America Quarterly Quarterly 1Q19 1Q20 1Q19 1Q20 Loss ratio 63.1 66.8 Loss ratio 69.4 72.2 Catastrophe losses and reinstatement premiums (2.7) (6.9
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted General Insurance - International General Insurance - International - Quarterly Commercial Lines Quarterly 1Q19 1Q20 1Q19 1Q20 Loss ratio 57.4 61.7 Loss ratio 63.0 67.0 Catastrophe losses an
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Premiums Written – Change in Constant Dollar General Insurance International Foreign exchange effect on worldwide premiums: 1Q20 1Q20 Change in net premiums written Increase (decrease) in original currency (1.5) % (8.3) % Foreign exchange effect (0.4) (0.5) Increase (dec
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations Premiums (in millions) Quarterly Individual Retirement: 1Q19 1Q20 Premiums $ 11 $ 41 Deposits 4,175 3,078 Other - (3) Premiums and deposits $ 4,186 $ 3,116 Individual Retirement (Fixed Annuities): Premiums $ 12 $ 35 Deposits 1,811 616 Other (2) (4) Premiums and deposits $ 1,
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