American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q3 2015 Earnings Presentation

51 slides from American International Group, Inc. New's earnings presentation, Nov 17, 2015

  1. Slide 1: Investor Presentation Third Quarter 2015

    American International Group, Inc. Investor Presentation Third Quarter 2015 November 17, 2015 Amended on 11/19/2015

  2. 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

  3. Slide 3: AIG's Four Key Priorities

    AIG’s Four Key Priorities  Focus on AIG’s core operations in complex commercial insurance, retirement and savings products Narrow and select commercial and consumer target segments Our  Over 50 asset sales and divestitures for proceeds in excess of $90bn since 2008 Focus ‒ AerCap, Springleaf, PICC

  4. Slide 4: Focused Performance Measured by Key Financial Targets

    Focused Performance Measured by Key Financial Targets Objective Annual Target Through 2017 Sustainable Operating 3–5% Reduction in Net Expenses1 Efficiency Gains ~50+ bps Increase in Normalized ROE, ex. AOCI and DTA Improving ROE 2016 Target – 8.4% 10+% Growth in BVPS Ex. AOCI and DTA Growing BVPS a

  5. Slide 5: AIG Today

    A Diverse Customer-Focused Operating Platform Total Operating Revenue of $43.4 Billion for 9M'15 AIG Today Commercial Insurance Consumer Insurance Corporate and Other1 9M'15 Operating Revenue 9M'15 Operating Revenue 9M'15 Operating Revenue $21.1 Billion, 49% $20.5 Billion, 47% $1.8 Billion, 4% Prope

  6. Slide 6: Managing Capital Wisely

    Managing Capital Wisely Growth in BVPS has driven AIG’s total shareholder return in excess of 160% since December 31, 2011 and 10% over the last 12 months. $77.69 $79.40 $66.38 $68.62 $5.26 $4.34 $7.71 $12.23 $53.53 $8.51 $11.75 $12.16 $3.42 $12.57 $10.54 $52.12 $58.23 $61.91 $39.57 $45.30 Dec. 31,

  7. Slide 7: AIG's ROE and Key Drivers to Achieve 2016 Goal

    AIG's ROE and Key Drivers to Achieve 2016 Goal Normalized ROE ex. AOCI & DTA1 Additional 8.4% Enhancements 7.1% 6.9% 9M'14 9M'15 2016 Goal Potential ROE Enhancements  Goal to improve ROE by  ROE deterioration  Key drivers to 2016  2016 and 2017 actions 50 bps each year primarily driven by: ROE g

  8. Slide 8: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA

    Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA 9M’14 9M’15 ($ in Millions) Pre-tax After-tax ROE Pre-tax After-tax ROE As reported $7,834 $5,259 8.9% $6,243 $4,275 7.1% Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses below expectations (503) (327) (0.5%) (669) (

  9. Slide 9: General Operating Expenses, Operating Basis

    General Operating Expenses, Operating Basis Targeting 3-5% of Annual Reduction Through 2017 General Operating Expenses, Operating Basis ($ in Millions) Quarterly Comparison Year-to-Date Comparison Reported Δ Reported Δ $2,993 $8,924 (5.9%) $24 (10.6%) $2,675 $8,401 $77 $408 $17 $1,233 $56 $355 $389

  10. Slide 10: Executing On Plan To Reduce Net Expenses By $1.0B - $1.5B By 2017

    Executing On Plan To Reduce Net Expenses By $1.0B - $1.5B By 2017 Actions Simplify AIG Structure: Simplify organizational structure, consolidate activities, move back office activities to lower cost locations and shared service centers, and de-layer to realize cost savings and operational efficienci

  11. Slide 11: 2015 Expense Reduction Actions To Date

    2015 Expense Reduction Actions To Date AIG Has Taken Action In 2015 That Will Generate Expense Savings Organizational Operational Business Expense Reductions Simplification Efficiency Rationalization  Targeted 20%+  Froze the pension  Consolidated policy  Expected to realize reduction in senior

  12. Slide 12: AIG Consolidated Operating Financial Highlights

    AIG Consolidated Operating Financial Highlights Full Year Nine Months ($ in Millions, Except per Share Amounts) 2012 2013 2014 2015 Operating revenues $65,379 $61,524 $61,001 $43,404 Pre-tax operating income (loss): Commercial Insurance 2,215 4,980 5,510 3,777 Consumer Insurance 3,736 4,564 4,474 2,

  13. Slide 13: AIG Consolidated Balance Sheet Selected Highlights

    AIG Consolidated Balance Sheet Selected Highlights ($ in Millions) Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Sept. 30, 2015 Cash and investments $376,975 $358,669 $357,524 $347,970 Total assets 548,633 541,329 515,581 501,985 Net loss reserves 68,782 64,316 61,612 58,290 Life insurance companies’ re

  14. Slide 14: Strong Capital Position

    Strong Capital Position Capital Structure Credit Ratings ($ in Billions) 1 Total Equity Financial Debt Hybrids S&P Moody’s Fitch AM Best $126.4 AIG – Senior $124.1 $122.3 $119.8 A- Baa1 BBB+ NR $2.5 Debt $9.4 $5.5 $16.6 $1.3 $16.1 $15.7 $18.8 AIG Non-Life – A+ A1 A A FSR AIG Life – FSR A+ A2 A+ A $9

  15. Slide 15: Financial Flexibility – Multiple Sources of Liquidity

    Financial Flexibility – Multiple Sources of Liquidity Insurance Company Distributions1 AIG Parent Liquidity ($ in Millions) ($ in Billions) $11.2 $10,417 $1,038 $9.8 $8,671 $8,8042 $1,514 $6.4 $4.7 $4,433 $6,761 $4,349 $4,590 $2,853 $4,238 $5.1 $4.8 $2,618 $2,700 $1,496 FY 2012 FY 2013 FY 2014 9M'15

  16. Slide 16: Enhanced Debt Maturity Profile

    Enhanced Debt Maturity Profile Liability Management Actions Have Improved Maturity Profile and Reduced Weighted Average Coupon to Below 5.0% As of 10/31/2015 – Total Notional Amount: $19.3 Billion / Weighted Average Coupon: 4.92% ($ in Millions) 2015 AIG Inc. Debt % of Debt 2,500 100% 2,000 80% 1,50

  17. Slide 17: Deferred Tax Assets

    Deferred Tax Assets Diversified Operating Platform Allows For Utilization of Valuable Tax Attributes 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-Life Insurance Net Operating Lo

  18. Slide 18: Non-Life Insurance Companies – Invested Assets

    Non-Life Insurance Companies – Invested Assets Total Cash & Invested Assets as of September 30, 2015 – $116.6 Billion1 Bond Portfolio – $90.5 Billion – Total Portfolio Composition by Agency Credit Rating Not RMBS CMBS Rated <1% AAA 10% 3% 18% Corporate CDO/ABS <B debt 6% 10% 30% Equities AA 3% 28% O

  19. Slide 19: Life Insurance Companies – Invested Assets

    Life Insurance Companies – Invested Assets Total Cash & Invested Assets as of September 30, 2015 – $201.7 Billion1 Total Portfolio Composition Bond Portfolio – $160.8 Billion By Agency Credit Rating By NAIC Ratings Not RMBS Rated 11% AA CMBS <1% AAA 10% 5% 12% CDO/ ABS 5% <B 11% A NAIC 1 Corporate d

  20. Slide 20: Commercial Insurance

    Commercial Insurance AlG

  21. Slide 21: 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 Aspire to be our Grow our Improve our Improve claims Continue Increase capital Inc

  22. Slide 22: Commercial Insurance – Diversified Products and Services

    Commercial Insurance – Diversified Products and Services Property Casualty  General Liability  Aerospace  Commercial Automobile Liability  Environmental  Workers’ Compensation  Political Risk  Excess Casualty  Trade Credit  Crisis Management  Marine  Risk Management  Surety Casualty  Ot

  23. Slide 23: Commercial Insurance – A Market Leader

    Commercial Insurance – A Market Leader Superior Sales & Significant Market Positions Underwriting Capabilities #1 commercial insurer in the U.S. with an established and Ranked among the top 10 most preferred commercial growing position in Latin America1 insurance carriers. 2 #1 carrier in the Direct

  24. Slide 24: Commercial Insurance – Property Casualty Financial Highlights

    Commercial Insurance – Property Casualty Financial Highlights Full Year Nine Months ($ in Millions) 2012 2013 2014 2015 Net premiums written $20,348 $20,880 $21,020 $15,832 Net premiums earned 20,848 20,677 20,885 15,038 Underwriting income (loss) (2,270) (336) (50) 65 Net investment income 3,951 4,

  25. Slide 25: Property Casualty Product Mix & Geography Shift

    Commercial Insurance – Property Casualty Product Mix & Geography Shift Meaningful Remediation of Casualty Lines and Growth Outside of the U.S. Property Casualty Property Casualty Full Year 2010 NPW – $20.2 Billion 9M'15 NPW – $15.8 Billion Property 16% Property Casualty Product 34% 26% Casualty Spec

  26. Slide 26: Reserves – Non-Life Insurance Companies

    Reserves – Non-Life Insurance Companies Business Mix Shift Away from Long-Tail Casualty Lines and Accelerated Commutation of Legacy Portfolios (Especially 2004 and Prior) Are Expected to Also Reduce Reserve Variability Total Net Reserves $61.5 Billion at September 30, 2015 By Accident Year By Line o

  27. Slide 27: Commercial Insurance – Mortgage Guaranty Financial Highlights

    Commercial Insurance – Mortgage Guaranty Financial Highlights Full Year Nine Months ($ in Millions) 2012 2013 2014 2015 Net premiums written $858 $1,048 $1,024 $809 Underwriting income (loss) (137) 73 454 361 Net investment income 146 132 138 103 Pre-tax operating income $9 $205 $592 $464 Delinquenc

  28. Slide 28: Mortgage Guaranty Credit Quality of Loans

    Commercial Insurance – Mortgage Guaranty Credit Quality of Loans Primary Risk-in-force (RIF) – Mortgage Guaranty Risk Quality Index1 $46.6 Billion2 (As of September 30, 2015) High Quality 2006 and 2015 Prior 2007 21% 8% 7% 2008 2009 Loan with Average Risk 4% 1% 1% 2010 2011 4% 2014 2012 21% 13% Low

  29. Slide 29: Commercial Insurance – Institutional Markets Financial Highlights

    Commercial Insurance – Institutional Markets Financial Highlights Full Year Nine Reserves & Stable Value Wraps ($ in Millions) Months Assets Under Management 2012 2013 2014 2015 $80,000 $68,449 $68,113 Premiums and deposits $774 $991 $3,797 $985 $70,000 $60,000 Premiums 458 610 432 854 $50,000 $32,3

  30. Slide 30: Consumer Insurance

    Consumer Insurance AlG

  31. Slide 31: 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. Profitability and Information- Focused Operational Investment Customer Capital Driven Strategy Growth Effectiveness Strategy Management Aspire

  32. Slide 32: 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

  33. Slide 33: Consumer Insurance – Leading Market Positions

    Consumer Insurance – Leading Market Positions U.S. Life and Personal Insurance Retirement Businesses1 Rank U.S. YTD YTD Metric  Private Client Group 2Q15 2Q14 – 40% of the Forbes 400 Richest Americans2 2 2 Total Annuity Sales – 47% of the Americans Listed on the 3 1 Fixed-Rate Deferred Annuity Sale

  34. Slide 34: Consumer Insurance – Leading Businesses

    Consumer Insurance – Leading Businesses Consumer Insurance Operations Continue to Be Recognized for Excellence Globally  Market Tools – U.S.  Insurance and Financial  Gaivota de Ouro Insurance 2015 Achievement in Customer Communications Association – U.S. Industry Awards, Seguro Excellence for Li

  35. Slide 35: Consumer Insurance – Overview

    Consumer Insurance – Overview Premiums and Deposits1 Pre-Tax Operating Income 9M'15 – $30.8 Billion 9M'15 – $2.6 Billion Personal Insurance Life Life 11% 4% 12% Personal Retirement Insurance 59% 29% Retirement 85% 1) Premiums and deposits include net premiums written for the Personal Insurance opera

  36. Slide 36: Consumer Insurance – Retirement Financial Highlights

    Consumer Insurance – Retirement Financial Highlights Full Year Nine Months ($ in Millions) 2012 2013 2014 2015 Premiums and deposits1 $16,048 $23,729 $24,023 $18,204 Premiums 120 188 287 127 Policy fees 743 861 1,010 802 Net investment income 6,502 6,628 6,489 4,584 Advisory fee and other income 1,3

  37. Slide 37: Retirement – Base Yields and Spreads

    Consumer Insurance – Retirement – Base Yields and Spreads Base Yields1 5.35% 5.06% 5.03% 5.08% 5.15% 4.99% 4.99% 4.95% 4.96% 4.98% 4.90% 4.92% 4.92% 4.75% 3Q14 4Q14 1Q15 2Q15 3Q15 Cost of Funds2 3.50% 2.99% 2.98% 2.97% 2.94% 2.98% 3.00% 2.50% 2.81% 2.80% 2.78% 2.77% 2.79% 2.00% 3Q14 4Q14 1Q15 2Q15 3

  38. Slide 38: Retirement – Individual Variable Annuities

    Consumer Insurance – Retirement – Individual Variable Annuities Account Value by GMWB Guarantee Industry Retail Variable Annuity Sales* at 9/30/151 – $33.0 Billion 1H15 1H14 % Company Change Rank Sales Rank Sales ($ in millions) Jackson National 1 11,761 (8%) 1 12,732 Lincoln Financial Group 2 5,898

  39. Slide 39: Consumer Insurance – Life Financial Highlights

    Consumer Insurance – Life Financial Highlights Full Year Nine Months ($ in Millions) 2012 2013 2014 2015 Premiums and deposits $4,864 $4,862 $4,806 $3,695 Premiums 2,804 2,737 2,679 2,085 Policy fees 1,370 1,391 1,443 1,117 Net investment income 2,283 2,269 2,199 1,589 Other income1 - - - 32 Total o

  40. Slide 40: Consumer Insurance – Personal Insurance Financial Highlights

    Consumer Insurance – Personal Insurance Financial Highlights Full Year Nine Months ($ in Millions) 2012 2013 2014 2015 Net premiums written $13,302 $12,700 $12,412 $8,861 Net premiums earned 13,103 12,377 11,970 8,424 Underwriting income (loss) (278) (187) 5 (72) Net investment income 477 455 394 17

  41. Slide 41: Appendix

    Appendix AlG

  42. Slide 42: Successfully Focusing AIG

    Successfully Focusing AIG June 2015 Reduction in Sept 2014 derivative May 2014 Peter notional Hancock exposure to Aug 2013 AIG becomes $225 billion completes AIG CEO from peak of Dec 2012 AIG pays sale of Int’l first dividend over $2 Lease trillion Feb 2011 U.S. post-rescue Finance Treasury AIG Corp

  43. Slide 43: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures AIG 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 meaningful comparisons w

  44. Slide 44: Glossary of Non-GAAP Financial Measures (continued)

    Glossary of Non-GAAP Financial Measures (continued) AIG  Normalized Return on Equity, Excluding AOCI and DTA further adjusts Return on Equity – After-tax Operating Income, excluding AOCI and DTA for the effects of certain volatile or market related items. Normalized Return on Equity, Excluding AOCI

  45. Slide 45: Glossary of Non-GAAP Financial Measures (continued)

    Glossary of Non-GAAP Financial Measures (continued) Commercial Insurance: Institutional Markets; Consumer Insurance: Retirement and Life  Pre-tax operating income is derived by excluding the following items from pre-tax income: – changes in fair values of fixed maturity securities designated to hed

  46. Slide 46: Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses

    Non-GAAP Reconciliation – Operating Revenues and General Operating Expenses Full Year Nine Months Total Operating Revenues 2012 2013 2014 2015 (In Millions) Total operating revenues $65,379 $61,524 $61,001 $43,404 Reconciling Items: Changes in fair values of fixed maturity securities designated to l

  47. Slide 47: Non-GAAP Reconciliation – Premiums and Deposits

    Non-GAAP Reconciliation – Premiums and Deposits (In Millions) Full Year Nine Months Retirement 2012 2013 2014 2015 Premiums and Deposits1 $16,048 $23,729 $24,023 $18,204 Deposits (16,203) (23,690) (23,903) (18,079) Other 275 149 167 2 Premiums $120 $188 $287 $127 Life 2012 2013 2014 2015 Premiums an

  48. Slide 48: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income

    Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income Full Year Nine Months Pre-tax and After-tax Operating Income 2012 2013 2014 2015 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $2,891 $9,368 $10,501 $6,213 Adjustments to arrive at Pre-tax operating inc

  49. Slide 49: 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 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Sept. 30, 2015 Data) Total AIG shareholders’ equity (a) $101,538 $98,002 $100,470 $106,898 $98,999 Less: Accumulate

  50. Slide 50: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted

    Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Full Year Nine Months Property Casualty Accident Year Combined Ratio, As Adjusted 2012 2013 2014 2015 Loss ratio 80.5 71.9 71.6 70.8 Catastrophe losses and reinstatement premiums (10.9) (3.4) (2.9) (2.5) Prior year development net o

  51. Slide 51: 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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