American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q4 2011 Earnings Presentation
21 slides from American International Group, Inc. New's earnings presentation, Feb 24, 2012
Slide 1: Fourth Quarter 2011 Results Conference Call Presentation
American International Group, Group Inc. Inc Fourth Quarter 2011 Results Conference Call Presentation February 24, 2012
Slide 2: Cautionary Statement Regarding Projections and Other Information About Future Events
Cautionary Statement Regarding Projections and Other Information About Future Events This document and the remarks made within this presentation may include projections, goals, assumptions and statements that may constitute “forward-looking statements” within the meaning of the Private Securities Li
Slide 3: 2011 Accomplishments Set the Stage for Significant Value Creation
2011 Accomplishments Set the Stage for Significant Value Creation Key 2011 Actions Implications 2012 Focus FRBNY Credit Facility repayment $20.7 bn Increased Profitable Completed financial growth of core Recapitalization U.S. U S Treasury T Preferred P f d exchange h $47 bn b flexibility bus
Slide 4: Fourth Quarter 2011 Key Themes
Fourth Quarter 2011 Key Themes Highlights Noteworthy Items Capturing rate increases at U.S. / Canada +4% Significant CAT losses at Chartis Chartis Workers Comp. & Property +8% Higher than expected accident year Benign Chartis reserve Net favorable development losses in Workers Comp. and Pr
Slide 5: Financial Highlights
Financial Highlights GAAP reported results in 4Q11 reflect a U.S. consolidated income tax group deferred tax asset valuation allowance release of $17.7 billion ($9.34 per share). Fourth Quarter ($ in millions, except earnings per share) 2011 2010 Change Revenues $17,409 $21,202 (1) (17.9)% Net incom
Slide 6: Components of After-tax Operating Income (Loss)
Components of After After-tax tax Operating Income (Loss) Solid insurance operating earnings in 4Q11, despite higher than expected CATs. Fourth Quarter ($ in millions) 2011 2010 Insurance operations Chartis $348 ($3,974) SunAmerica 931 1,043 Mortgage Guaranty (reported in Other) (23) 154 Total Insur
Slide 7: Deferred Tax Asset Overview
Deferred Tax Asset Overview AIG has substantial tax attribute carryforwards that are available under U.S. tax law to offset future U.S. federal income tax obligations. As of 12/31/11 Gross Deferred ($ in billions) Type Origin/Source Attributes Tax Asset Utilization/Limitations Use against Chartis,
Slide 8: Capital
Capital p 4Q11 highlights include a $2.4 billion exchange of hybrids and $70 million in share repurchases. In 1Q12, EITF 09-G is expected to reduce BVPS by $1.74 ($1.95 ex. AOCI). Capital Structure Book Value Per Share ($ in billions, except per share data) 60 60.0 0 $138.3 $55.33 18% 2.64 14.6 50.0
Slide 9: Liquidity
Liquidity q y Quarterly Cash Dividends / Payments ($ in millions) 1,400 $1,280 Strong dividends and note repayments 1 200 1,200 of $3.0 billion in 2011. 1,000 505 $953 Expected annual payments of $4 – 5 800 $638 324 SunAmerica billion. 600 108 $495 Chartis Chartis dividends of $ $1.5 billion i
Slide 10: Chartis – Underwriting Results
Chartis – Underwriting Results Combined ratio shows continued progress. Total Chartis Fourth Quarter Highlights 140 120 116.8 Net favorable prior year reserve 109.0 development was $13 million in 100.3 99.4 100 4Q11. 80 85.7 78.3 60 69.2 68.7 Higher than expected current 40 accident yyear losses
Slide 11: Chartis – Fourth Quarter Net Premiums Written
Chartis – Fourth Quarter Net Premiums Written Excluding the impact of foreign exchange, Chartis NPW increased approximately 2% from the fourth quarter of 2010. Commercial NPW ($ in millions) Rates in the U.S. U S and Canada region increased 5,000 $4,526 $4,510 approximately 4% over the prior year
Slide 12: SunAmerica – Financial Highlights
SunAmerica – Financial Highlights Operating Income ($ in millions) 1,200 Strong operating income in 4Q11 $1,043 1 000 1,000 $931 benefits from a favorable litigation 391 165 settlement of $202 million and fully 800 invested cash. 600 400 766 A $347 million decline in alternative 652 200 investme
Slide 13: SunAmerica – Base Yields and Net Investment Spreads
SunAmerica – Base Yields and Net Investment Spreads Net spreads increased in the fourth quarter. Base Yields(1) 5.40% 5.28% 5.28% Base yields and net spreads benefited 5.17% from cash redeployment. redeployment 5 20% 5.20% 5.05% 5.00% 5.13% 4.80% 5.08% First half of 2012 base yields should also
Slide 14: SunAmerica – Proactively Addressing Sustained Low Interest Rates
SunAmerica – Proactively Addressing Sustained Low Interest Rates Effect of cash redeployment exceeded impact of lower yields in 2011. 2011 Management Actions Effect of Low Rates on Annual Earnings(1) Continued disciplined $ in millions 2012 2013 approach to new business Estimated impact on pricing
Slide 15: United Guaranty – Overview
United Guaranty – Overview United Guaranty is the #1 provider of mortgage insurance in the U.S. with 2011 NIW(1) of $18 billion and an estimated market share of over 30%. NIW ($ in billions) Performance Premium, United Guaranty’s risk 8.0 7.1 based pricing p g plan, p has had a positive p impact o
Slide 16: Appendix
Appendix 16
Slide 17: Non-core Assets – Interests in AIA and ILFC
Non-core Non core Assets – Interests in AIA and ILFC AIA and ILFC are potential sources of liquidity to pay down UST preferred interest. ($ in billions) @Dec. 31, 2011: AIG owns ~33% of AIA. AIA: AIG is entitled to 99% of the residual 3 96 bln 3.96 bl shares h $ 12.4 12 4 value upon disposition.
Slide 18: ML III Composition and Wind-down of ML II
ML III Composition and Wind Wind-down down of ML II At December 31, 2011 ML III Underlying Asset Types ML II Wind-down: by Market Value ($17.8 BN) 100% owned by SunAmerica 7% 16% Recorded at fair value ($1.3 billion at Dec. RMBS Prime 31, 2011) RMBS Alt-A 29% 18% RMBS SubPrime Full FRBNY repay
Slide 19: Maiden Lane III – Senior Loan Pay-Down Continues as Expected
Maiden Lane III – Senior Loan Pay Pay-Down Down Continues as Expected Cumulative cash distributions (excluding expenses) from ML III total $15.2 billion. $ billions Fed Senior Loan Balance and Payment (Including Accrued Interest) Current Capital Structure 25.0 16.0 14.0 20.0 10.9 9.8 12.9 12.3 12.0
Slide 20: Legacy FP: What We've Accomplished
Legacy g y FP: What We’ve Accomplished p AIG will continue to de-risk the legacy FP portfolio while ensuring the firm retains the maximum economic benefit possible. (as of December 31) (1) Net Notional Exposures Gross Vega ($ bn)(2) 1.5 1.25 $ bn b as off December D b 31 (1) % Reduction R d ti 98% 1
Slide 21: Legacy FP: Where We're Going
Legacy FP: Where We We’re re Going Actively managing the portfolio for maximum profit contribution and limited risk. Estimated Type Average Description (1) Life AIG D Derisking i ki A ti iti and Activities d portfolio tf li hedging h d i - ~$94 $94 bn: b Aggregate Value at Risk on Market Derivativ
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