American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q3 2020 Earnings Presentation

32 slides from American International Group, Inc. New's earnings presentation, Nov 6, 2020

  1. Slide 1: Third Quarter 2020 Financial Results Presentation

    Third Quarter 2020 Financial Results Presentation November 6, 2020

  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 and discuss, projections, goals, assumptions and statements that

  3. Slide 3: 3Q20 results reflect continued improvement in General Insurance AY and strong Life and Retirement results

    3Q20 results reflect continued improvement in General Insurance AY, as adjusted*, underwriting profitability and strong Life and Retirement results  Adjusted after-tax income attributable to AIG Common Shareholders (AATI)* of $709M ($0.81/diluted share) and adjusted pre-tax income (APTI)* of $918M

  4. Slide 4: APTI of $918M improved despite higher CATs

    APTI of $918M improved, despite higher CATs, due to continued improvement in Commercial Lines AY, as adjusted, and strong Life and Retirement results ($M, except per common share amounts) 3Q19 3Q20 Variances Key Takeaways Adjusted Pre-tax Income (Loss): General Insurance $507 $416 ($91)  General In

  5. Slide 5: 3Q19 and 3Q20 noteworthy items

    3Q19 and 3Q20 noteworthy items 3Q19 – Income / (Loss) 3Q20 – Income / (Loss) EPS – EPS – ($M, except per share amounts) Pre-tax After-tax1 Pre-tax After-tax1 Diluted2 diluted2 CATs excluding General Insurance COVID-19 ($511) ($404) ($0.45) ($618) ($488) ($0.56) General Insurance – CATs related to CO

  6. Slide 6: Strong capital position at the parent company and principal insurance companies

    Strong capital position at the parent company and principal insurance companies; Parent debt & preferred stock leverage of 29.6%, an improvement of 1 point from June 30, 2020 Capital Structure ($B) Risk Based Capital (RBC) Ratios3 $89.9 $91.1 Year / $1.5 Hybrids Life and Retirement General Insurance

  7. Slide 7: Gross investment income, APTI basis, decrease reflects completion of Fortitude sale

    Gross investment income, APTI basis1, decrease reflects the completion of the sale of Fortitude on June 2, 2020; Excluding Fortitude in 3Q19, gross investment income increased reflecting higher private equity and hedge fund returns Invested Assets & Gross Investment Income, APTI Basis 3Q20 Invested

  8. Slide 8: AIG's corporate debt investment portfolio is well diversified

    AIG’s corporate debt investment portfolio is well diversified by asset class and industry sector; credit quality continues to be strong with limited impact on ratings in 3Q20 NAIC Designation Corporate Debt by Industry Sector September 30, 2020 – $271.4B September 30, 2020 – $162.1B Other NAIC Basic

  9. Slide 9: Continued execution of AIG 200 and $1B of GOE savings

    Continued execution of AIG 200, a global, multi-year initiative to achieve transformational change and $1B of GOE savings The Standard Commercial Underwriting Platform will modernize global underwriting capabilities by 1 simplifying processes and tools to create a contemporary data architecture Gene

  10. Slide 10: General Insurance: 2.6 pts better AYCR, as adjusted

    General Insurance: 2.6 pts better AYCR, as adjusted, reflects continued Commercial Lines improvement, partially offset by the impact of the formation of Lloyd’s Syndicate 2019 on Personal Insurance; higher NII driven by alternative investment returns ($M) 3Q19 3Q20 Net Premiums Written ($M) Net prem

  11. Slide 11: General Insurance: 6.3 pt improvement in North America Commercial AYCR

    General Insurance: Strong 6.3 pt improvement in North America Commercial AYCR, as adjusted; Personal Insurance impacted by Travel and the formation of Syndicate 2019 ($M) 3Q19 3Q20 Key Takeaways:  North America (NA) net premiums written decreased by 19% to $2.8B principally due to Personal Net prem

  12. Slide 12: General Insurance: 2.4 pt improvement in International AYCR

    General Insurance: 2.4 pt improvement in International AYCR, as adjusted, reflects premium rate increases, benefits from underwriting actions, portfolio optimization and ongoing expense discipline ($M) 3Q19 3Q20 Key Takeaways:  International net premiums written decreased 3% (4% on a constant dolla

  13. Slide 13: Life and Retirement: Strong APTI across all businesses

    Life and Retirement: Strong APTI across all businesses compared to 3Q19; lower premiums and deposits from broad industry sales disruptions and the low interest rate environment; modest impact from the annual actuarial assumption update Adjusted Pre-Tax Income (APTI) ($M) Key Takeaways $975  3Q20 AP

  14. Slide 14: Life and Retirement: Strong Individual and Group Retirement APTI

    Life and Retirement: Strong Individual and Group Retirement APTI driven by strong equity market performance, favorable impacts from lower interest rates and tighter credit spreads, and the net favorable year-over-year change in annual actuarial assumption updates for both businesses combined; offset

  15. Slide 15: Life and Retirement: Life Insurance and Institutional Markets results

    Life and Retirement: Life Insurance results reflect strong private equity returns and favorable impacts from lower interest rates and tighter credit spreads, offset by adverse mortality from COVID-19; Institutional Markets results reflect strong private equity returns and year over year growth in re

  16. Slide 16: Life and Retirement: 3Q20 actuarial assumption update

    Life and Retirement: 3Q20 actuarial assumption update had a modest impact to net income; update reflects lower long-term interest rates and mortality assumptions, offset in part by refinements of select policyholder behavior assumptions Key Takeaways Annual Actuarial Assumption Review ($M) 3Q20  In

  17. Slide 17: Life and Retirement: Balance sheet, capital generation and liquidity remain strong

    Life and Retirement: Balance sheet, capital generation and liquidity have remained strong Strong Balance Sheet Fundamentals Dividends and Tax Sharing Payments ($B)1 Dividends $4.8  Post-Fortitude sale, relatively limited net Tax sharing payments exposure to legacy blocks of business. GAAP $3.3 loss

  18. Slide 18: Other Operations: APTL increased

    Other Operations: APTL increased principally due to May 2020 bond issuance and impact of consolidated investment entities on consolidations, eliminations, and other adjustments ($M) 3Q19 3Q20 Corporate (Parent and Service Companies): General operating expenses ($241) ($191) Interest expense (259) (2

  19. Slide 19: Legacy Portfolio: Sale of Fortitude impacts APTI comparison

    Legacy Portfolio: Sale of Fortitude in 2Q20 impacts year-over-year comparison of APTI ($M) 3Q19 3Q20 General Insurance run-off lines $27 ($16) Life and Retirement run-off lines 16 29 Legacy Investments 50 76 Adjusted pre-tax income $93 $89 Noteworthy Items (pre-tax): Catastrophe losses, net of reins

  20. Slide 20: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations

    Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 20

  21. Slide 21: 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

  22. Slide 22: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP  Book Value per Common Share, Excluding Accumulated Other Comprehensive Income (AOCI) adjusted for the cumulative unrealized gains and losses related to Fortitude Re’s Funds Withheld Assets and Book Value per Common Share, Excluding AOCI

  23. Slide 23: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP  Adjusted Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits

  24. Slide 24: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 3Q19 3Q20 Pre-tax income from continuing operations $ 1,260 $ 368 Adjustments to arrive at Adjusted pre-tax income (loss) Changes in fair value of securities used to hedge guaranteed living benefits

  25. Slide 25: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 3Q19 3Q20 After-tax net income, including noncontrolling interests $ 973 $ 299 Noncontrolling interests (income) loss (317) (11) Net income attributable to AIG $ 656 $ 288 Dividends on preferred sto

  26. Slide 26: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Book Value Per Common Share (in millions, except per common share data) As of September 30, December 31, June 30, Book Value Per Common Share 2019 2020 2019 2020 Total AIG shareholders' equity $ 65,603 $ 64,108 $ 65,675 $ 62,234 Less: Preferred equity 485 485 485 485 Total A

  27. Slide 27: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Return on Common Equity (in millions) Quarterly Return On Common Equity Computations 3Q19 3Q20 Actual or Annualized net income attributable to AIG common shareholders (a) $ 2,592 $ 1,124 Actual or Annualized adjusted after-tax income attributable to AIG common shareholders (

  28. Slide 28: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Return on Common Equity General Insurance Life and Retirement (in millions) Quarterly (in millions) Quarterly 3Q19 3Q20 3Q19 3Q20 Adjusted pre-tax income $ 507 $ 416 Adjusted pre-tax income $ 646 $ 975 Interest expense on attributed financial debt 147 145 Interest expense on

  29. Slide 29: 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 3Q20 3Q19 3Q20 Loss ratio 88.6 69.3 74.6 Loss ratio 76.7 86.0 Catastrophe losses and reinstatement premiums

  30. Slide 30: 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 3Q19 3Q20 3Q19 3Q20 Loss ratio 62.3 65.0 Loss ratio 67.9 77.8 Catastrophe losses an

  31. Slide 31: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Net Premiums Written – Change in Constant Dollar International - International - General Insurance International Commercial Lines Personal Insurance Foreign exchange effect on worldwide premiums: 3Q20 3Q20 3Q20 Change in net premiums written Increase (decrease) in original c

  32. Slide 32: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Premiums (in millions) Nine Months Ended Quarterly September 30, Individual Retirement: 3Q19 3Q20 2019 2020 Premiums $ 38 $ 35 $ 65 $ 114 Deposits 3,656 2,670 11,683 7,507 Other (2) (3) (5) (9) Premiums and deposits $ 3,692 $ 2,702 $ 11,743 $ 7,612 Individual Retirement (Fix

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