American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q4 2014 Earnings Presentation

30 slides from American International Group, Inc. New's earnings presentation, Feb 13, 2015

1. Slide 1: Earnings Conference Call Presentation Fourth Quarter 2014

   American International Group, Inc. Earnings Conference Call Presentation Fourth Quarter 2014 February 13, 2015

2. 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, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, projections, goals, assumptions and s

3. Slide 3: Financial Objectives

   Financial Objectives To achieve a sustainable ROE at or above our cost of capital. Annual targets Key Metric Outlook and Key Levers for Improvement through 2017  Baseline of 7.4% ROE, normalized for CATs and alternative returns ROE, Ex. ~50+ bps  Expense efficiencies and capital return are key lev

4. Slide 4: Operating Financial Highlights

   Operating Financial Highlights Fourth Quarter Inc. ($ in millions, except per share amounts) 2013 2014 (Dec.) Commercial Insurance: Property Casualty $ 734 $ 935 27% Mortgage Guaranty 48 171 256% Institutional Markets 191 118 (38%) Total Commercial Insurance 973 1,224 26% Consumer Insurance: Retirem

5. Slide 5: Prior Year Reserve Development and Change in Discount

   Prior Year Reserve Development and Change in Discount 2014 Fourth ($ in millions) Quarter Full Year Prior Year Development (Favorable) Unfavorable (1): Commercial (Property Casualty) Net unfavorable prior year development in 4Q14 was Casualty $ (2) $ 516 driven by the following: Financial Lines 92 1

6. Slide 6: Corporate and Other Operations

   Corporate and Other Operations Fourth Quarter ($ in millions) 2013 2014 Corporate and Other Operations: Direct Investment book $418 $174 Global Capital Markets 194 27 Runoff insurance lines 369 (422) Other operations 126 119 Equity in pre-tax operating earnings of AerCap - 185 Fair value of PICC Gro

7. Slide 7: General Operating Expenses

   General Operating Expenses Targeting 3-5% of annual reduction through 2017 Full Year ($ in millions) 2013 2014  We remain focused on reducing business as usual costs (operating GOE less investment General operating expenses (GOE): spend) sustainably over time, while making the necessary investments

8. Slide 8: Capital Management Fourth Quarter Highlights

   Capital Management Fourth Quarter Highlights  Share repurchases of approximately $1.5 billion of AIG Common Stock during 4Q14; Additional authorization of $2.5 billion announced on February 12, 2015.  Debt repurchases of certain high coupon hybrid and senior notes issued or guaranteed by AIG Paren

9. Slide 9: Strong Capital Position

   Strong Capital Position Capital Structure Book Value Per Share ($ in billions, except per share data) $80.0 +13% $77.69 $126.4 $122.3 $0.4 $68.62 $11.75 $0.6 $16.6 $70.0 $15.7 $2.5 $12.16 $7.71 Non-redeemable $5.5 $60.0 noncontrolling $4.34 interests $50.0 (1) Financial Debt $40.0 +12% $100.5 $106.9

10. Slide 10: Financial Flexibility – A Source of Strength

    Financial Flexibility – A Source of Strength Changes in Insurance Company Distributions AIG Parent Liquidity AIG Parent Liquidity ($ in millions) ($ in billions) ($ in billions) $8,286 $13.1 Cash Distributions AIG Parent Liquidity, excluding DIB/GCM: $3.0 Balance, October 1, 2014 $9.9 $9.8(1) Issuan

11. Slide 11: Commercial Insurance

    AIG Commercial Insurance _

12. Slide 12: Commercial Insurance – Property Casualty Financial Results

    Commercial Insurance – Property Casualty Financial Results  Property Casualty NPW, excluding the effects of foreign exchange and return ($ in millions) 4Q13 4Q14 premiums on loss-sensitive business, decreased 1% from 4Q13 driven by lower retention of renewal business and decreased new business due

13. Slide 13: Commercial Insurance – Mortgage Guaranty Financial Results and Trends

    Commercial Insurance – Mortgage Guaranty Financial Results and Trends ($ in millions) 4Q13 4Q14 New insurance written (1) $10,752 $10,733  New insurance written in 4Q14 and 4Q13 was comparable despite a change in the mix of purchases and refinancings. Net premiums written 255 273  Underwriting inc

14. Slide 14: Commercial Insurance – Institutional Markets Financial Results

    Commercial Insurance – Institutional Markets Financial Results ($ in millions) 4Q13 4Q14 Premiums and deposits $294 $615 Premiums 123 64  The decline in pre-tax operating income from 4Q13 reflects lower returns on alternative investments. Policy fees 29 49  The decrease in net investment income wa

15. Slide 15: Consumer Insurance

    AIG Consumer Insurance

16. Slide 16: Consumer Insurance – Retirement Financial Results

    Consumer Insurance – Retirement Financial Results ($ in millions) 4Q13 4Q14  Premiums and deposits were approximately $6 billion in 4Q14, down from 4Q13, principally due to a decline in Premiums and deposits (1) $6,742 $6,003 retail mutual fund sales. Deposits were also impacted by lower interest r

17. Slide 17: Consumer Insurance – Retirement Base Yields and Spreads

    Consumer Insurance – Retirement Base Yields and Spreads Base Yields(1) 5.40% 5.25% 5.24% 5.20% 5.11% 5.06% 5.03% 5.00% 5.10% 5.11% 5.00% 4.96% 4.80% 4.92% 4Q13 1Q14 2Q14 3Q14 4Q14 Cost of Funds(2) 3.50% 3.05% 3.02% 3.03% 2.99% 2.98% 3.00% 2.50% 2.91% 2.85% 2.83% 2.81% 2.80% 2.00% 4Q13 1Q14 2Q14 3Q14

18. Slide 18: Consumer Insurance – Life Financial Results

    Consumer Insurance – Life Financial Results  Premiums and policy fees grew from 4Q13 primarily due to ($ in millions) 4Q13 4Q14 premium growth in Japan, which represents approximately one-third of overall premiums and grew approximately 7% Premiums and deposits $1,233 $1,249 from the prior year per

19. Slide 19: Consumer Insurance – Personal Insurance Financial Results

    Consumer Insurance – Personal Insurance Financial Results ($ in millions) 4Q13 4Q14  Personal Insurance NPW, excluding the effects of foreign exchange, grew by 2%, driven by increases in premium rates and the execution of our strategies in growth-targeted lines of business, Net premiums written $2,

20. Slide 20: Q&A

    AIG Q&A

21. Slide 21: Appendix

    AIG Appendix

22. Slide 22: Deferred Tax Asset Overview

    Deferred Tax Asset Overview AIG continues to have substantial deferred tax assets that are available to offset future tax obligations. As of 12/31/13 As of 12/31/14 Gross Deferred Gross Deferred ($ in billions) Type Attributes Tax Asset Attributes Tax Asset Utilization/Expiration  Utilize against N

23. Slide 23: Life Insurance Companies – Invested Assets

    Life Insurance Companies – Invested Assets Total Cash & Invested Assets as of December 31, 2014 - $202.8 billion(1) Total Portfolio Composition Bond Portfolio - $167.3 billion By Agency Credit Rating By NAIC Ratings(2) CMBS Not Rated 5% B <1% 2% RMBS CDO/ABS <B AAA NAIC 2 BB 12% 5% 4% 8% 12% 38% NAI

24. Slide 24: Non-Life Insurance Companies – Invested Assets

    Non-Life Insurance Companies – Invested Assets Total Cash & Invested Assets as of December 31, 2014 - $121.8 billion(1) Total Portfolio Composition Bond Portfolio - $94.7 billion - by Agency Credit Rating CMBS 2% Not Rated B CDO/ABS <1% 2% RMBS 6% BB 3% <B 10% Equities 8% AAA 4% 20% Other invested a

25. Slide 25: Non-GAAP Reconciliation – Pre-Tax Operating Income & After-Tax Operating Income

    Non-GAAP Reconciliation – Pre-Tax Operating Income & After-Tax Operating Income After-tax Pre-tax (amounts presented net of tax) ($ in millions) 4Q13 4Q14 4Q13 4Q14 Pre-tax income / Net income $ 2,150 $ 729 $ 1,978 $ 655 Adjustments to arrive at operating income: (Income) loss from discontinued oper

26. Slide 26: Non-GAAP Reconciliation – Return On Equity and Book Value Per Share

    Non-GAAP Reconciliation – Return On Equity and Book Value Per Share Book Value Per Common Share - Ex. AOCI & DTA December 31, ($ in millions, except per share data) 2013 2014 Total AIG shareholders' equity (1) $ 100,470 $ 106,898 Less: Accumulated other comprehensive income (AOCI) 6,360 10,617 Total

27. Slide 27: Non-GAAP Reconciliation – Accident Year Combined Ratio, As Adjusted

    Non-GAAP Reconciliation – Accident Year Combined Ratio, As Adjusted Fourth Quarter Accident year combined ratio, as adjusted 2013 2014 Property Casualty Loss ratio 78.1 75.0 Catastrophe losses and reinstatement premiums (3.6) (0.7) Prior year development net of premium adjustments (0.9) (4.0) Net re

28. Slide 28: Non-GAAP Reconciliation – Premiums and Deposits

    Non-GAAP Reconciliation – Premiums and Deposits Premiums and Deposits Fourth Quarter ($ in millions) 2013 2014 Institutional Markets Premiums and deposits $ 294 $ 615 Deposits (165) (547) Other (6) (4) Premiums $ 123 $ 64 Retirement Premiums and deposits $ 6,739 $ 5,990 Deposits (6,707) (5,976) Othe

29. Slide 29: Non-GAAP Reconciliation – General Operating Expenses

    Non-GAAP Reconciliation – General Operating Expenses Reconciliation to general operating and other expenses, GAAP basis Full Year ($ in millions) 2013 2014 Total general operating expenses, Operating basis $ 12,632 $ 11,940 Loss adjustment expenses, reported as policyholder benefits and losses incur

30. Slide 30: 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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