American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q3 2019 Earnings Presentation
30 slides from American International Group, Inc. New's earnings presentation, Nov 1, 2019
Slide 1: Third Quarter 2019 Financial Results Presentation
Third Quarter 2019 Financial Results Presentation November 1, 2019
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: Third Quarter 2019: Lower Catastrophe Losses, Stable Net Investment Income, and Improved General Insurance Results
Third Quarter 2019: Lower Catastrophe Losses, Stable Net Investment Income, and Improved General Insurance Results 3Q19 AATI* of $505M Adjusted after-tax EPS* of $0.56, improved $0.90 over 3Q18 reflecting significantly lower catastrophe losses and Consolidated improved General Insurance accident y
Slide 4: Consolidated Operating Financial Highlights
Consolidated Operating Financial Highlights ($ in millions, except per common share amounts) 3Q18 3Q19 Variances Adjusted Pre-tax Income (Loss): General Insurance North America ($160) $435 $595 International (665) 72 737 Total General Insurance (825) 507 1,332 Life and Retirement Individual Retireme
Slide 5: 3Q19 Noteworthy Items in AATI
3Q19 Noteworthy Items in AATI 3Q19 – Income / (Loss) EPS ($ in millions) Pre-tax After-tax4 (diluted) Catastrophe losses, net of reinsurance1 ($511) ($404) ($0.45) Unfavorable prior year loss reserve development, net of reinsurance & return premium related to prior year development on loss sensitive
Slide 6: General Insurance – Select Metrics
General Insurance – Select Metrics ($ in millions) 3Q18 3Q19 Catastrophe Losses, Net of Reinsurance ($M) Net premiums written $6,835 $6,648 $1,567 Net premiums earned $7,081 $6,659 Loss and loss adjustment expense 6,276 4,618 $776 Acquisition expenses 1,536 1,462 $4971 General operating expenses 995
Slide 7: General Insurance: North America Accident Year Results Improving Including Lower CATs
General Insurance: North America Accident Year Results Improving Including Lower CATs ($ in millions) 3Q18 3Q19 Key Takeaways: Net premiums written $3,164 $3,404 NPW increased 8% due to the acquisition of Glatfelter and growth Commercial Lines 2,229 2,502 at Validus, partially offset by underwriti
Slide 8: General Insurance: International Underwriting Results Reflect Lower CATs and Better AYLR, As Adjusted
General Insurance: International Underwriting Results Reflect Lower CATs and Better AYLR, As Adjusted ($ in millions) 3Q18 3Q19 Net premiums written $3,671 $3,244 Commercial Lines 1,810 1,528 Key Takeaways: Personal Insurance 1,861 1,716 NPW decreased primarily due to underwriting actions taken to
Slide 9: 3Q19 Prior Year Favorable Reserve Development of $4 Million
3Q19 Prior Year Favorable Reserve Development of $4 Million General Insurance Legacy Total % of Reserves ($ in millions) 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 3Q18 3Q19 Prior year development by accident year: 2018 $ - $ 89 $ - $ - $ - $ 89 NM 1 0.2% 2017 (9) 48 - - (9) 48 NM 0.1% 2016 69 16 4 - 73 16 0.1%
Slide 10: Life and Retirement – Select Metrics
Life and Retirement – Select Metrics Adjusted Return on Common Equity Premiums and Deposits ($B) $7.5 $6.8 $0.1 $0.9 $1.0 $1.0 $2.1 $1.9 11.2% 10.1% $3.6 $3.7 3Q18 3Q19 3Q18 3Q19 Individual Retirement Group Retirement Life Insurance Institutional Markets Adjusted Pre-Tax Income1 ($M) General Operati
Slide 11: L&R Individual Retirement: Positive Net Flows for Annuity Business, AUA Growth and Manageable Spread Compression
L&R Individual Retirement: Positive Net Flows for Annuity Business, AUA Growth and Manageable Spread Compression ($ in millions) 3Q18 3Q19 Premiums and deposits $3,616 $3,692 Premiums 9 38 Key Takeaways Policy fees 204 204 Positive net flows excluding Retail Mutual Funds primarily driven Net inves
Slide 12: L&R Group Retirement: AUA Growth, Active Spread Management and Investments in Business Platform
L&R Group Retirement: AUA Growth, Active Spread Management and Investments in Business Platform ($ in millions) 3Q18 3Q19 Premiums and deposits $2,116 $1,924 Key Takeaways Premiums 9 5 Adjusted pre-tax income decreased largely due to the impact of Policy fees 115 111 annual actuarial assumption up
Slide 13: L&R Life Insurance: Strong International Sales and Mortality Trends
L&R Life Insurance: Strong International Sales and Mortality Trends Within Overall Pricing Assumptions Despite Higher Levels in the Quarter ($ in millions) 3Q18 3Q19 Key Takeaways Premiums and deposits $978 $1,012 Adjusted pre-tax income decreased primarily as a result of elevated Premiums 379 394
Slide 14: L&R Institutional Markets: Executed Opportunistic Transactions at Attractive Returns
L&R Institutional Markets: Executed Opportunistic Transactions at Attractive Returns ($ in millions) 3Q18 3Q19 Premiums and deposits $69 $833 Premiums 46 389 Policy fees 40 40 Key Takeaways Net investment income 198 224 Premiums and deposits increased from 3Q18 due to Pension Risk Advisory fee and
Slide 15: Legacy
Legacy ($ in millions) 3Q18 3Q19 General Insurance run-off lines ($37) $27 Life and Retirement run-off lines 68 16 Legacy Investments 53 50 Adjusted pre-tax income $84 $93 Noteworthy Items (pre-tax): Catastrophe losses, net of reinsurance in General Insurance ($57) ($14) Annual actuarial assumption
Slide 16: Other Operations
Other Operations ($ in millions) 3Q18 3Q19 Parent and Other: Corporate general operating expenses ($182) ($244) Interest expense (289) (306) All other income (expense), net 54 96 Total Parent and Other ($417) ($454) Consolidation, eliminations and other adjustments 29 (46) Adjusted pre-tax loss ($38
Slide 17: Net Investment Income
Investments ($ in millions, unless otherwise indicated) Nine Months Third Quarter 2018 2019 2018 2019 Net Investment Income General Insurance $2,319 $2,678 $901 $756 Life and Retirement 6,001 6,390 1,960 2,078 Legacy 1,798 1,792 610 614 Other Operations 2 278 9 91 Consolidations and Eliminations (20
Slide 18: Net Investment Income by Segment
Net Investment Income by Segment 3Q19 Net Investment Income APTI Basis General Life & ($ in millions) Insurance Retirement Other Legacy Total Interest and dividends $ 679 $ 1,974 $ 31 $ 517 $ 3,202 Alternative investments 76 45 25 33 179 Other investment income (loss) 54 138 24 82 298 Total investme
Slide 19: Invested Assets Portfolio Composition
Invested Assets Portfolio Composition Total Invested Assets as of September 30, 2019 - $341.0 billion Total Portfolio Composition Bond Portfolio - $261.5 billion CMBS, 4% RMBS, CDO/ABS, 7% By Agency Credit Rating By NAIC Ratings 10% Equities, 0% Below investment Non-rated, 1% grade, 12% Loans, 13% A
Slide 20: Capital Position Remains Strong; $1B Debt Repaid in 3Q19
Capital Position Remains Strong; $1B Debt Repaid in 3Q19 Parent liquidity remains strong at $7.2B at 9/30/2019 Capital Structure ($B) Risk Based Capital (RBC) Ratios2 $90.7 Life and Retirement General Insurance $81.0 $1.5 Year-end Companies Companies $1.5 $21.7 $22.2 $1.8 Hybrids $5.6 $0.9 $9.4 Fina
Slide 21: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 21
Slide 22: 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 23: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP 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 meaning
Slide 24: 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 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 3Q18 3Q19 Pre-tax income (loss) from continuing operations $ (1,527) $ 1,260 Adjustments to arrive at Adjusted pre-tax income (loss) Changes in fair value of securities used to hedge guaranteed livi
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Book Value Per Common Share and Return on Common Equity (in millions, except per common share data) Book Value Per Common Share 4Q18 2Q19 3Q19 Total AIG shareholders' equity $ 56,361 $ 64,539 $ 65,603 Less: Preferred equity - 485 485 Total AIG common shareholders' equity (a)
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Return on Common Equity General Insurance Life and Retirement Nine Months Ended (in millions) Quarterly (in millions) Quarterly September 30, 3Q18 3Q19 3Q18 3Q19 2018 2019 Adjusted pre-tax income (loss) $ (825) $ 507 Adjusted pre-tax income $ 713 $ 646 $ 2,567 $ 2,619 Intere
Slide 28: 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 3Q18 3Q19 3Q18 3Q19 Loss ratio 88.6 69.3 Loss ratio 98.8 76.7 Catastrophe losses and reinstatement premiums (23.7) (7.
Slide 29: 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 3Q18 3Q19 3Q18 3Q19 Loss ratio 79.7 62.3 Loss ratio 87.6 67.9 Catastrophe losses an
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Premiums (in millions) Quarterly Individual Retirement: 3Q18 3Q19 Premiums $ 9 $ 38 Deposits 3,609 3,656 Other (2) (2) Premiums and deposits $ 3,616 $ 3,692 Individual Retirement (Fixed Annuities): Premiums $ 10 $ 19 Deposits 1,158 1,187 Other (3) (3) Premiums and deposits $
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