American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q3 2017 Earnings Presentation
36 slides from American International Group, Inc. New's earnings presentation, Nov 3, 2017
Slide 1: Conference Call Presentation Third Quarter 2017
© Conference Call Presentation Third Quarter 2017 NOVEMBER 3, 2017
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: 3Q17 Key Themes
3Q17 Key Themes After-tax operating loss of $1.1B ($1.22 per share) Consolidated Core Normalized ROE of 7.2% (8.6% YTD) Book Value Per Share of $80.62 Significant catastrophe losses, non-CAT Property losses and reserve strengthening drives results Pre-tax catastrophe losses of $2.7B largely fr
Slide 4: Consolidated Operating Financial Highlights
Consolidated Operating Financial Highlights ($ in millions, except per share amounts) 3Q16 3Q17 Pre-tax operating income (loss): Commercial Insurance Liability and Financial Lines $948 ($257) Property and Special Risks (263) (2,605) Total Commercial Insurance 685 (2,862) Consumer Insurance Individua
Slide 5: Catastrophe Losses
Catastrophe Losses ($ in billions) 3Q17 Catastrophe (CAT) Losses Corporate CAT Reinsurance Program Personal Add'l Cover: Insurance Effective: 9/8/2017 – 12/31/2017 $1.3B xs $0.3 (Post Irma) $4.5B Total CATs: Original $3.0 Effective: 1/1/2017 – 12/31/2017 1 Cover: $3.0B xs $1.5B Commercial $2.7 Retai
Slide 6: 3Q17 Reserve Review
3Q17 Reserve Review Prior Year Development (Favorable) Unfavorable ($M) Aggregate Reserves Assessed Through Q3’17 Commercial Insurance Liability and Financial Lines $818 Completed first 9M'17 19% Property and Special Risks 81 To be reviewed in 4Q'17 Total Commercial Insurance 899 2017 Total: $53.4B
Slide 7: Commercial Insurance AYLR, As Adjusted, Trend
Commercial Insurance AYLR, As Adjusted, Trend Ultimate Accident Year Loss Ratio, As Adjusted Trend1 78.4% 72.0% 71.6% 71.1% 70.8% 69.5% 68.9% 2011 2012 2013 2014 2015 2016 9M'17 1) Amounts presented reflect the impact of prior year development for 2016 and prior years in each accident year. 7
Slide 8: Parent Liquidity
Parent Liquidity Changes in Parent Liquidity ($B) $0.5 $7.8 Includes: $6.7 Life Dividends - $0.2B ($1.0) Tax Pmts - $0.3B Unencumbered ($0.6) Securities $4.3 Unencumbered Securities $4.5 Cash & S/T Inv. $3.5 Cash & S/T Inv. $2.2 Balance at Insurance Debt Repurchases & Share and Warrant Balance at 6/
Slide 9: Commercial Insurance
© Commercial Insurance Peter Zaffino Executive Vice President & Chief Executive Officer of General Insurance
Slide 10: Commercial Insurance – Select Metrics
Commercial Insurance – Select Metrics Normalized ROE Accident Year Combined Ratio, As Adjusted 102.1% 93.2% 27.0% 28.5% 2 1 8.6% 1 75.1% 64.7% 2 3.8% 3Q16 3Q17 AYLR, As Adjusted Expense Ratio 3Q16 3Q17 Net Premiums Written ($B) 13.2 Property 16% 11.2 (0.1) & Special 3% Ascot (0.5) Risks (1.4) 19% 46
Slide 11: Commercial Insurance – Liability and Financial Lines
Commercial Insurance – Liability and Financial Lines ($ in millions) 3Q16 3Q17 Key Takeaways Net premiums written $2,389 $2,175 Normalized ROE lower driven by increase in AYLR, as adjusted, from Net premiums earned 2,610 2,245 3Q17 detailed valuation reviews, including the impact from the first si
Slide 12: Commercial Insurance – Property and Special Risks
Commercial Insurance – Property and Special Risks ($ in millions) 3Q16 3Q17 Net premiums written $1,965 $1,595 Key Takeaways Net premiums earned 1,865 1,570 Normalized ROE results from increased severe losses and higher Underwriting loss (435) (2,779) attritional losses Net investment income 172 1
Slide 13: Consumer Insurance
© Consumer Insurance Kevin Hogan Chief Executive Officer of Life & Retirement
Slide 14: Consumer Insurance – Select Metrics
Consumer Insurance – Select Metrics Normalized ROE Premiums and Deposits (P&D) and NPW ($B) $6.1 $0.9 $5.3 $0.9 $1.8 $1.9 10.4% 10.6% $3.4 $2.9 $2.8 $2.5 P&D NPW P&D NPW 3Q16 3Q17 3Q16 3Q17 Individual Retirement Group Retirement Life Insurance Personal Insurance Pre-tax Operating Income ($M) General
Slide 15: Consumer Insurance – Individual Retirement
Consumer Insurance – Individual Retirement ($ in millions) 3Q16 3Q17 Key Takeaways Premiums and deposits $3,363 $2,526 Premiums 37 22 Assets Under Administration at historical highs driven by Policy fees 183 190 equity market performance and positive Index Annuity net Net investment income 1,009 9
Slide 16: Consumer Insurance – Group Retirement
Consumer Insurance – Group Retirement ($ in millions) 3Q16 3Q17 Premiums and deposits $1,821 $1,860 Key Takeaways Premiums 9 8 Policy fees 99 113 Digital transformation contributed to strong new group Net investment income 554 524 acquisition year-to-date results. Advisory fee and other income 55
Slide 17: Consumer Insurance – Life Insurance
Consumer Insurance – Life Insurance ($ in millions) 3Q16 3Q17 Premiums and deposits $880 $935 Premiums 349 384 Key Takeaways Policy fees 291 343 Continued growth in new business sales for both Term Net investment income 267 260 and Universal life insurance. Other income1 14 13 Administrative pla
Slide 18: Consumer Insurance – Personal Insurance
Consumer Insurance – Personal Insurance ($ in millions) 3Q16 3Q17 Net premiums written $2,922 $2,807 Key Takeaways Net premiums earned 2,918 2,823 Normalized operating income improvement demonstrates Underwriting income (loss) 75 (157) strategic repositioning and focus on target markets. Net inves
Slide 19: Q&A and Closing Remarks
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Slide 20: Appendix
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Slide 21: Strong Capital Position
Strong Capital Position Capital Structure ($ in Billions) Capital Return ($ in Millions) 9M’17 3Q17 $98.1 Share repurchases $6,275 $275 $94.9 $0.8 $0.8 $20.4 Warrant repurchases 3 3 $21.1 Hybrids Dividends declared 884 287 $3.2 $0.6 $0.5 Financial Debt1 $5.9 Total $7,162 $565 $14.8 $14.9 NCI AOCI Ri
Slide 22: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
© Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Slide 23: 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 24: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP After-tax Operating Income Attributable to Core and Legacy Portfolio is derived by subtracting attributed interest expense and income tax expense from pre-tax operating income. Attributed debt and the related interest expense is calculat
Slide 25: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP After-tax Operating Income Attributable to AIG (ATOI) is derived by excluding the tax effected PTOI adjustments described above and the following tax items from net income attributable to AIG: – deferred income tax valuation allowance re
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Book Value Per Share and Return on Equity (in millions, except per share data) Book Value Per Share 4Q16 3Q17 Total AIG shareholders' equity (a) $ 76,300 $ 72,468 Less: Accumulated other comprehensive income (AOCI) 3,230 5,939 Total AIG shareholders' equity, excluding AOCI (
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-tax and After-tax Operating Income - Consolidated (in millions) 3Q16 3Q17 Pre-tax income (loss) from continuing operations $ 737 $ (2,803) Adjustments to arrive at Pre-tax operating income (loss) Changes in fair value of securities used to hedge guaranteed living benefit
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations General Operating and Other Expenses (in millions) Nine Months Ended September 30, 3Q16 3Q17 2016 2017 General operating and other expenses, GAAP basis $ 2,536 $ 2,149 $ 8,125 $ 6,774 Restructuring and other costs (210) (31) (488) (259) Other expense related to retroactive r
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Commercial Insurance - Liability and Financial Lines Commercial Insurance - Property and Special Risks (in millions) (in millions) 3Q16 3Q17 3Q16 3Q17 Pre-tax operating income (loss) $ 948 $ (257) Pre-tax operating income (loss) $ (263) $ (2,60
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Consumer Insurance - Individual Retirement Consumer Insurance - Group Retirement (in millions) (in millions) 3Q16 3Q17 3Q16 3Q17 Pre-tax operating income $ 920 $ 718 Pre-tax operating income (loss) $ 214 $ 249 Interest expense on attributed fin
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Consumer Insurance - Life Insurance Consumer Insurance - Personal Insurance (in millions) (in millions) 3Q16 3Q17 3Q16 3Q17 Pre-tax operating income (loss) $ (54) $ 112 Pre-tax operating income (loss) $ 148 $ (71) Interest expense on attributed
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Total Consumer Insurance Other Operations (including consolidations and eliminations) (in millions) (in millions) 3Q16 3Q17 3Q16 3Q17 Pre-tax operating income (loss) $ (170) $ (288) Pre-tax operating income (loss) $ 1,228 $ 1,008 Interest expen
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Total Core Nine Months Ended Legacy Portfolio (in millions) September 30, (in millions) 3Q16 3Q17 2016 2017 3Q16 3Q17 Pre-tax operating income (loss) $ 1,743 $ (2,142) $ 4,603 $ 1,259 Pre-tax operating income (loss) $ (99) $ 286 Interest expens
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted Commercial Insurance - Liability and Financial Lines Commercial Insurance - Property and Special Risks 3Q16 3Q17 3Q16 3Q17 Loss ratio 67.7 113.1 Loss ratio 90.5 247.6 Catastrophe losses and
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss and Combined Ratios, as adjusted (incl. PYD) Total Commercial Insurance Full Year 2011 2012 2013 2014 2015 2016 9M'17 Loss ratio 84.3 81.0 70.3 69.7 84.5 104.0 105.2 Catastrophe losses and reinstatement premiums (11.9) (10.9) (3.4) (3.0) (3.0) (6.5) (27.5)
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Premiums (in millions) Consumer Insurance: 3Q16 3Q17 Premiums and deposits $ 6,064 $ 5,321 Deposits (5,495) (4,726) Other (174) (181) Premiums $ 395 $ 414 why Consumer Insurance - Individual Retirement: Premiums and deposits $ 3,363 $ 2,526 Deposits (3,328) (2,504) Other 2 -
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