American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q4 2014 Earnings Presentation
48 slides from American International Group, Inc. New's earnings presentation, Mar 10, 2015
Slide 1: American International Group, Inc. Investor Presentation Fourth Quarter 2014
Exhibit 99.1 American International Group, Inc. Investor Presentation Fourth Quarter 2014 March 10, 2015
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: AIG Today
AIG Today Balancing Growth, Profitability and Risk to Increase Long-term Intrinsic Value Expansive global footprint with operations in over 100 countries and Global jurisdictions Insurance Diversification across products and geographies Franchise Customer focus Risk Adjusted Profitability and Value
Slide 4: Financial Objectives
Financial Objectives To Deliver 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 increase Expense efficiencies and capital return are key l
Slide 5: Book Value Per Share Growth
Book Value Per Share Growth Consistent Value Creation for Shareholders Book Value Per Share $77.69 $66.38 $68.62 $11.75 $12.57 $12.16 $7.71 $53.53 $4.34 $10.54 $8.51 $3.42 $58.23 $52.12 $45.30 $39.57 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 BVPS, Ex. AOCI & DTA AOCI DTA 5
Slide 6: AIG – A Diverse Customer-Focused Operating Platform
AIG – A Diverse Customer-Focused Operating Platform Total Operating Revenue of $61.0 Billion for FY 2014 Commercial Insurance Consumer Insurance Corporate and Other FY 2014 Operating Revenue FY 2014 Operating Revenue FY 2014 Operating Revenue $28.8 Billion, 47% $28.5 Billion, 47% $3.7 Billion¹, 6% P
Slide 7: AIG – Returning Capital to Stakeholders
AIG – Returning Capital to Stakeholders ($ in Billions) $35 $77.1 $80 Legacy debt reductions $74.7 decreased net annual $30 $70 interest expense by over $26.0 $500 million since 2012 $52.1 $1.0 $60 $25 $2.5 billion share $6.5 $50 repurchase authorized in $20 February 2015 $17.2 $0.3 $40 $6–$7 billio
Slide 8: AIG Consolidated Balance Sheet Selected Highlights
AIG Consolidated Balance Sheet Selected Highlights ($ in Millions, Except per Share Amounts) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Cash and investments $376,975 $358,669 $357,524 Total assets 548,633 541,329 515,581 Net property casualty reserves 68,782 64,316 61,612 Financial and hybrid debt 25
Slide 9: AIG Consolidated Operating Financial Highlights
AIG Consolidated Operating Financial Highlights ($ in Millions, Except per Share Amounts) Full Year 2012 Full Year 2013 Full Year 2014 Operating revenues $65,379 $61,524 $61,001 Pre-tax operating income: Commercial Insurance: Property Casualty 1,681 4,095 4,248 Mortgage Guaranty 9 205 592 Institutio
Slide 10: Commercial Insurance
Commercial Insurance AIG
Slide 11: Commercial Insurance – Strategy
Commercial Insurance – Strategy Strategic Levers to Drive Shareholder Value Creation Strategic Underwriting Claims Operational Capital Investment Customer Growth Excellence Excellence Effectiveness Efficiency Strategy Strive to be our Grow our Improve our Improve claims Continue Increase capital Inc
Slide 12: Commercial Insurance – Diversified Product Suite
Commercial Insurance – Diversified Product Suite Property Casualty General Liability Aerospace Commercial Automobile Liability Environmental Workers’ Compensation Political Risk Excess Casualty Trade Credit Crisis Management Marine Risk Management Surety Casualty Other Customized Structured Programs
Slide 13: Commercial Insurance – Leading Businesses
Commercial Insurance – Leading Businesses Leading Market Positions 1 AIG is ranked among the top 10 most preferred commercial insurance carriers. 2 AIG is the #1 commercial insurer in the U.S. and has an established and growing position in Latin America. AIG is a recognized leader in the Constructio
Slide 14: Commercial Insurance – Leading Businesses
Commercial Insurance – Leading Businesses Commercial Insurance Operations Continue to Be Recognized for Excellence Globally Business Insurance 2014 Advisen Management National Underwriter 2015 Innovation Award – Unmanned Liability Awards 2013 #1 Ranking Ocean Marine Aircraft Insurance Innovation of
Slide 15: Commercial Insurance – Overview
Commercial Insurance – Overview Total Operating Revenue Total Pre-tax Operating Income Full Year 2014 – $28.8 Billion Full Year 2014 – $5.5 Billion Mortgage Guaranty 4% Property Property Mortgage Casualty Casualty Guaranty Institutional 9% 87% 77% 11% Markets Institutional Markets 12% 15
Slide 16: Commercial Insurance – Property Casualty Financial Highlights
Commercial Insurance – Property Casualty Financial Highlights Continued Improvement in Accident Year Combined Ratios, As Adjusted ($ in Millions) Full Year 2012 Full Year 2013 Full Year 2014 Net premiums written $20,348 $20,880 $21,020 Net premiums earned 20,848 20,677 20,885 Underwriting loss (2,27
Slide 17: Commercial Insurance – Property Casualty Product Mix Shift
Commercial Insurance – Property Casualty Product Mix Shift Meaningful Remediation of Casualty Lines and Growth in Property Property Casualty Property Casualty Full Year 2010 NPW – $20.2 Billion Full Year 2014 NPW – $21.0 Billion Property Property 16% Casualty 24% Casualty 36% Specialty 49% 17% Speci
Slide 18: Commercial Insurance – Mortgage Guaranty Financial Highlights
Commercial Insurance – Mortgage Guaranty Financial Highlights ($ in Millions) Full Year 2012 Full Year 2013 Full Year 2014 Net premiums written $858 $1,048 $1,024 Underwriting income (loss) (137) 73 454 Net investment income 146 132 138 Pre-tax operating income $9 $205 $592 Combined ratio 119.2 90.9
Slide 19: Commercial Insurance – Mortgage Guaranty Credit Quality of Loans
Commercial Insurance – Mortgage Guaranty Credit Quality of Loans Primary Risk-in-force (RIF) – Mortgage Guaranty Risk Quality Index* $42.1 Billion 2005 2006 High Quality and 4% Prior 2014 2007 24% 6% 8% Loan with Average Risk 2008 5% 2% 2009 2% 2010 2011 6% 2013 Low Quality (uninsurable) 26% 2012 17
Slide 20: Commercial Insurance – Institutional Markets Financial Highlights
Commercial Insurance – Institutional Markets Financial Highlights ($ in Millions) Full Year Full Year Full Year Reserves & Stable Value Wraps 2012 2013 2014 Assets Under Management Premiums and deposits $774 $991 $3,797 $80,000 $68,449 $70,000 Premiums 458 610 432 $60,000 $56,660 Policy fees 102 113
Slide 21: Consumer Insurance
Consumer Insurance AIG
Slide 22: Consumer Insurance – Strategy
Consumer Insurance – Strategy Distinguish Ourselves in the Markets and Products We Choose. Be the Provider of Choice Among Our Target Segments and Channels. Information- Focused Operational Profitability and Investment Customer Capital Driven Strategy Growth Effectiveness Strategy Management Strive
Slide 23: Consumer Insurance – Market Maturity Model
Consumer Insurance – Market Maturity Model Focused Growth Advanced Stage Market Early Stage Market Product Personal Auto & Travel Warranty Life Health Retirement Accident Home Channel Sponsors – including Micro Broad Market/ Career Public Financial Brokers, Banks & Insurance Wholesaling Agency, IFAs
Slide 24: Consumer Insurance – Leading Market Positions
Consumer Insurance – Leading Market Positions U.S. Life and 1 Personal Insurance Retirement Businesses Rank U.S. Metric Private Client Group 3Q14 3Q13 – 40% of the Forbes 400 Richest Americans 2 2 Total Annuity Sales – 48% of the American Listed on the 1 1 Fixed-Rate Deferred Annuity Sales ARTnews T
Slide 25: Consumer Insurance – Leading Businesses
Consumer Insurance – Leading Businesses Consumer Insurance Operations Continue to Be Recognized for Excellence Globally Market Tools – U.S. Money Week Awards – China AVA Digital Awards – U.S. 2014 Achievement in Customer Excellence AIG Travel – China Named Best Travel Earned 4 Platinum Awards in 201
Slide 26: Consumer Insurance – Overview
Consumer Insurance – Overview 1 Premiums and Deposits Pre-Tax Operating Income Full Year 2014 – $41.3 Billion Full Year 2014 – $4.5 Billion Life 12% Life 13% Personal Retirement Personal Retirement Insurance 9%Insurance 78% 58% 30% 1)Premiums and deposits include net premiums written for the Persona
Slide 27: Consumer Insurance – Retirement Financial Highlights
Consumer Insurance – Retirement Financial Highlights ($ in Millions) Full Year 2012 Full Year 2013 Full Year 2014 Premiums and deposits(1) $16,159 $23,788 $24,077 Premiums 120 188 287 Policy fees 743 861 1,010 Net investment income 6,502 6,628 6,489 Other income 1,344 1,754 1,998 Total operating rev
Slide 28: Consumer Insurance – Retirement – Base Yields and Spreads
Consumer Insurance – Retirement – Base Yields and Spreads Base Yields 1 5.40% 5.24% 5.25% 5.11% 5.20% 5.06% 5.03% 5.00% 5.10% 5.11% 5.00% 4.92% 4.96% 4.80% 4Q13 1Q14 2Q14 3Q14 4Q14 2 Cost of Funds 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
Slide 29: Consumer Insurance – Retirement – Individual Variable Annuities
Consumer Insurance – Retirement – Individual Variable Annuities Account Value by GMWB Guarantee Industry Retail Variable Annuity Sales* at 12/31/14 (1) – $30.8 Billion 3Q YTD 2014 3Q YTD 2013 % Company Change Rank Sales Rank Sales ($ in millions) Jackson National 1 18,413 19% 1 15,461 Lincoln Financ
Slide 30: Consumer Insurance – Life Financial Highlights
Consumer Insurance – Life Financial Highlights ($ in Millions) Full Year 2012 Full Year 2013 Full Year 2014 Premiums and deposits $4,864 $4,862 $4,806 Premiums 2,804 2,737 2,679 Policy fees 1,370 1,391 1,443 Net investment income 2,283 2,269 2,199 Total operating revenues 6,457 6,397 6,321 Benefits
Slide 31: Consumer Insurance – Personal Insurance Financial Highlights
Consumer Insurance – Personal Insurance Financial Highlights ($ in Millions) Full Year 2012 Full Year 2013 Full Year 2014 Net premiums written $13,302 $12,700 $12,412 Net premiums earned 13,103 12,377 11,970 Underwriting income (loss) (278) (187) 5 Net investment income 477 455 394 Pre-tax operating
Slide 32: Balance Sheet and Other
Balance Sheet and Other AIG
Slide 33: Strong Capital Position
Strong Capital Position Capital Structure Credit Ratings ($ in Billions, Except per Share Data) $124.1 $122.3 $126.4 S&P Moody’s Fitch AM Best $2.5 Total Equity $9.4 $5.5 $16.6 AIG – Senior A- Baa1 BBB+ NR $16.1 $15.7 Debt 1 Financial Debt AIG Non-Life – A+ A1 A A FSR AIG Life – FSR A+ A2 A+ A Hybri
Slide 34: Financial Flexibility – A Source of Strength
Financial Flexibility – A Source of Strength Insurance Company Cash Distributions AIG Parent Liquidity ($ in Millions) ($ in Billions) $13.1 $8,671 $8,286 (1) $3.0 $9.8(2) $4,433 $4,349 $4.7 $6,452 $10.2 $2,853 $4,238 $5.1 $1,496 $1,834 Dec. 31, 2013 Dec. 31, 2014 FY 2012 FY 2013 FY 2014 Life Insura
Slide 35: Deferred Tax Asset Overview
Deferred Tax Asset Overview AIG Continues to Have Substantial Deferred Tax Assets That Are Available to Offset Future Tax Obligations As of 12/31/13 As of 12/31/14 Gross Deferred Gross Deferred ($ in Billions) Type Utilization/Expiration Attributes Tax Asset Attributes Tax Asset Utilize against Non-
Slide 36: Reserves – Non-Life Insurance Businesses
Reserves – Non-Life Insurance Businesses Business Mix Shifts Away from Long-Tail Casualty Lines and Accelerated Commutation of Legacy Portfolios (Especially 2004 and Prior) Are Expected to Also Reduce Reserve Variability Net Reserves by Accident Year $64.7 Billion at December 31, 2014 2004 Business
Slide 37: 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) Bond Portfolio – $94.7 Billion – Total Portfolio Composition by Agency Credit Rating Not RMBS CMBS Rated <1% AAA 10% 2% 20% Corporate debt CDO/ABS <B 6% 8% 29% Equities B 2% AA 4%
Slide 38: 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 – $167.3 Billion By Agency Credit Rating By NAIC Ratings(2) RMBS Not AAA AA 12% Rated CMBS <1% 12% 11% 5% CDO/ <B ABS 8% 5% NAIC 1 Corporate
Slide 39: Direct Investment Book and Global Capital Markets
Direct Investment Book and Global Capital Markets (As of December 31, 2014) ($ in Billions) Direct Investment Book¹ Global Capital Markets¹ Assets $15.1 $4.5 Liabilities 9.7 3.1 Net Asset Value $5.4 $1.4 Legacy Matched AIG Hedging & Legacy AIGFP Stable Value Go Forward ($ in Billions) Assets & Liabi
Slide 40: Appendix – Non-GAAP Measures
Appendix – Non-GAAP Measures 40
Slide 41: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures AIG Operating revenue excludes Net realized capital gains (losses), Aircraft leasing revenues, income from legal settlements (included in Other income for GAAP purposes) and changes in fair values of fixed maturity securities designated to hedge living benefit
Slide 42: Glossary of Non-GAAP Financial Measures (continued)
Glossary of Non-GAAP Financial Measures (continued) Commercial Insurance: Property Casualty and Mortgage Guaranty; Consumer Insurance: Personal Insurance Pre-tax operating income: includes both underwriting income and loss and net investment income, but excludes net realized capital gains and losses
Slide 43: Non-GAAP Reconciliation – Operating Revenues
Non-GAAP Reconciliation – Operating Revenues Total Operating Revenues Full Year 2012 Full Year 2013 Full Year 2014 (In Millions) Total operating revenues $65,379 $61,524 $61,001 Reconciling Items: Changes in fair values of fixed maturity securities designated to 37 (161) 260 living benefit liabiliti
Slide 44: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income Pre-tax and After-tax Operating Income Full Year 2012 Full Year 2013 Full Year 2014 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $2,891 $9,368 $10,501 Adjustments to arrive at Pre-tax operating income:
Slide 45: Non-GAAP Reconciliation – Book Value Per Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Share and Return On Equity Book Value Per Common Share ($ in Millions, Except Per Share Data) Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Total AIG shareholders’ equity (a) $101,538 $98,002 $100,470 $106,898 Less: Accumulated other comprehensive i
Slide 46: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Property Casualty Accident Year Combined Ratio, As Adjusted Full Year 2012 Full Year 2013 Full Year 2014 Loss ratio 80.5 71.9 71.6 Catastrophe losses and reinstatement premiums (10.9) (3.4) (2.9) Prior year development net of premiu
Slide 47: Non-GAAP Reconciliation – Premiums and Deposits
Non-GAAP Reconciliation – Premiums and Deposits Retirement Premiums Year Ended December 31, Institutional Markets Year Ended December 31, and Deposits Premiums and Deposits ($ in Millions) 2012 2013 2014 ($ in Millions) 2012 2013 2014 Premiums and Deposits $16,048 $23,729 $24,023 Premiums and Deposi
Slide 48: 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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