American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q1 2017 Earnings Presentation

38 slides from American International Group, Inc. New's earnings presentation, May 4, 2017

1. Slide 1: Conference Call Presentation First Quarter 2017

   © Conference Call Presentation First Quarter 2017 May 4, 2017

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: 1Q17 Key Themes

   1Q17 Key Themes After-tax operating income of $1.4B ($1.36 per diluted share)  Normalized ROE of 8.1% (Core Normalized ROE of 8.7%) Consolidated  Operating GOE declined 10%, or $260 million YoY1  Actions to date have resulted in $1.4 billion of annual run-rate savings, achieving 2 year target PTO

4. Slide 4: Consolidated Operating Financial Highlights

   Consolidated Operating Financial Highlights ($ in millions, except per share amounts) 1Q16 1Q17 Pre-tax operating income (loss): Commercial Insurance Liability and Financial Lines $569 $574 Property and Special Risks 93 275 Total Commercial Insurance 662 849 Consumer Insurance Individual Retirement

5. Slide 5: Change in Core Normalized ROE

   Change in Core Normalized ROE Core Normalized Return On Equity – 1Q16 vs 1Q17 +120 bps 1.5% 9.0% 1.0% 8.7% 1.0%1 (0.7%) (0.4%) (0.2%) 0.5% 2 (1.5%) 1Q16 Increased Capital Operating UGC Lower Other, net 1Q17 As Reported Loss Estimates & Management 3 Improvement 4 Earnings 5 Level of Tax Audit Item Al

6. Slide 6: Maintaining Discipline and Focus on Expenses

   Maintaining Discipline and Focus on Expenses ($ in millions) General Operating Expenses, Operating Basis – 1Q16 vs 1Q17 $2,592 $83 $2,249 $200 $60 10% 1Q16 1Q16 FX Staff Prof Fees, T&E 1Q17 As reported & GOE of Reductions and Other As reported Advisor Group & UGC 1  GOE reductions in 1Q17 vs 1Q16

7. Slide 7: Reporting of the ADC

   Reporting of the ADC Pre-tax Deferred Gain Estimate ($B) 1Q17 Impact Future Periods 12/31/16 Ultimate Estimate of  $12.8B Reinsurance Recoverable  Reinsurance recoverable and deferred gain $41.0 Covered Reserve established based upon covered losses adjusted in future periods based upon 80% at year

8. Slide 8: Parent Liquidity

   Parent Liquidity Changes in Parent Liquidity ($B) $2.8 $0.2 $8.4 Includes: $7.3 P&C: $0.2B Unencumbered Tax Pmts = $2.6B1 ($3.9) ($0.2) Securities $4.5 Unencumbered Securities $5.0 Cash & S/T Inv. $4.0 Cash & S/T Inv. $2.3 Balance at Insurance Legacy Share Interest Paid Balance at 12/31/16 Company A

9. Slide 9: Growth In Book Value Per Common Share

   Growth In Book Value Per Common Share $76.66 3% $78.59 $3.25 $4.01 $14.84 $15.48 Adjusted BVPS $11.12 $10.70 $58.57 $59.10 $47.87 $47.98 December 31, 2016 March 31, 2017 Core Legacy DTA AOCI 9

10. Slide 10: Commercial Insurance

    © Commercial Insurance Robert S. Schimek Executive Vice President & Chief Executive Officer of Commercial

11. Slide 11: Commercial Insurance – Select Metrics

    Commercial Insurance – Select Metrics Normalized ROE Ending Attributed Equity ($B) 27.3 Reported Normalized ROE 7.7% 0.9 22.5 8.4 Pro forma (5.1) (0.6) 8.2 Impact of (1.8%) 1.8% 2H’16 loss estimate1 19.0 Pro forma 5.9% 6.0% 6.3% 14.3 Normalized ROE1 Property and Special Risks Liability and Financial

12. Slide 12: Commercial Insurance AYLR Trend & Business Mix Change

    Commercial Insurance AYLR Trend & Business Mix Change Accident Year Loss Ratio, As Adjusted 1 78.0% 72.2% 71.2% 70.8% 69.7% 66.7% 1Q’17A 65.5% ~62% FY'11 FY'12 FY'13 FY'14 FY'15 FY'16 4Q'17 Exit Run Rate Target Business Mix Shifts away from U.S. Casualty 12% 19% 17% 20% 24% 1Q’17 18% FY11 FY16 NPE 1

13. Slide 13: Commercial Insurance | Business Mix Shift

    Commercial Insurance | Business Mix Shift Commercial Insurance’s mix of business and Adjusted Accident Year Loss Ratio, As Adjusted Product Set Movement Set 1 Set 2A Set 2B Set 3 Product Set (Grow) (Maintain) (Improve) (Remediate) FY'151 $20.1B NPE 15% 35% 35% 15% $18.1B NPE 17% 38% 34% 11% FY'16 2

14. Slide 14: Commercial Insurance – Liability and Financial Lines

    Commercial Insurance – Liability and Financial Lines ($ in millions) 1Q16 1Q17  NPW decline driven by planned strategic portfolio optimization efforts and the use of pricing tools, partially offset by growth in Net premiums written $2,509 $2,216 targeted lines of business such as Cyber. Net premium

15. Slide 15: Commercial Insurance – Property and Special Risks

    Commercial Insurance – Property and Special Risks ($ in millions) 1Q16 1Q17 Net premiums written $1,866 $1,413  Normalized ROE improvement was primarily driven by lower Net premiums earned 1,911 1,595 acquisition expenses and growth in net investment income. Underwriting income 17 35  NPW decline

16. Slide 16: Consumer Insurance

    © Consumer Insurance Kevin Hogan Executive Vice President & Chief Executive Officer of Consumer

17. Slide 17: Consumer Insurance – Select Metrics

    Consumer Insurance – Select Metrics Normalized ROE Premiums and Deposits (P&D) and NPW ($B) $7.7 $0.8 $6.3 $1.9 $0.9 $2.0 10.3% 10.9% $5.0 $2.8 $3.4 $2.7 P&D NPW P&D NPW 1Q16 1Q17 FY'16 1Q17 Individual Retirement Group Retirement Life Insurance Personal Insurance Pre-tax Operating Income ($M) Genera

18. Slide 18: Consumer Insurance – Individual Retirement

    Consumer Insurance – Individual Retirement ($ in millions) 1Q16 1Q17  YoY improvement in PTOI reflects: Premiums and deposits $5,010 $3,382 – Higher net investment income reflecting improved returns on Premiums 47 28 alternative investments and higher gains on assets for which the fair value option

19. Slide 19: Consumer Insurance – Group Retirement

    Consumer Insurance – Group Retirement ($ in millions) 1Q16 1Q17  YoY improvement in PTOI reflects: Premiums and deposits $1,856 $2,040 Premiums 7 9 – Higher net investment income, reflecting improved returns on alternative investments, primarily due to better equity market Policy fees 91 99 perform

20. Slide 20: Consumer Insurance – Life Insurance

    Consumer Insurance – Life Insurance ($ in millions) 1Q16 1Q17 Premiums and deposits $849 $910 Premiums 359 384  YoY improvement in PTOI reflects: Policy fees 345 360 Net investment income 234 260 – Higher net investment income, primarily due to higher returns on alternative investments driven by be

21. Slide 21: Consumer Insurance – Personal Insurance

    Consumer Insurance – Personal Insurance ($ in millions) 1Q16 1Q17 Net premiums written $2,809 $2,668 Stable Normalized ROE. Operating results for the quarter reflects: Net premiums earned 2,756 2,720  Effective execution of strategic and portfolio actions to reduce total expenses, including refocus

22. Slide 22: Q&A and Closing Remarks

    AIG]. Q&A and Closing Remarks

23. Slide 23: Appendix

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24. Slide 24: Strong Capital Position

    Strong Capital Position Capital Structure ($ in Billions) Capital Return ($ in Millions) 2016 1Q17 Share repurchases $11,460 $3,585 $98.1 $96.0 Warrant repurchases 309 - $0.8 $0.8 Dividends declared 1,372 307 $20.4 $20.4 Total $13,141 $3,892 Risk Based Capital Ratios2 $76.9 $74.7 Domestic Property D

25. Slide 25: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations

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

26. Slide 26: 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

27. Slide 27: 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

28. Slide 28: 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

29. Slide 29: 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 1Q16 1Q17 Total AIG shareholders' equity (a) $ 76,300 $ 88,518 $ 74,069 Less: Accumulated other comprehensive income (AOCI) 3,230 5,525 3,781 Total AIG shareholders' equi

30. Slide 30: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Pre-tax and After-tax Operating Income - Consolidated (in millions) 1Q16 1Q17 Pre-tax income (loss) from continuing operations $ (214) $ 1,727 Adjustments to arrive at Pre-tax operating income (loss) Changes in fair value of securities used to hedge guaranteed living benefit

31. Slide 31: Non-GAAP Reconciliations

    Non-GAAP Reconciliations General Operating and Other Expenses (in millions) 1Q16 1Q17 General operating and other expenses, GAAP basis $ 3,003 $ 2,443 Restructuring and other costs (188) (181) Other expense related to retroactive reinsurance agreement 7 - Non-operating litigation reserves (3) (4) To

32. Slide 32: 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) 1Q16 1Q17 1Q16 1Q17 Pre-tax operating income (loss) $ 569 $ 574 Pre-tax operating income (loss) $ 93 $ 275 Inter

33. Slide 33: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI* Consumer Insurance - Individual Retirement Consumer Insurance - Group Retirement (in millions) (in millions) 1Q16 1Q17 1Q16 1Q17 Pre-tax operating income $ 302 $ 539 Pre-tax operating income (loss) $ 191 $ 243 Interest expense on attributed fi

34. Slide 34: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI* Total Consumer Insurance Other Operations (including consolidations and eliminations) (in millions) (in millions) 1Q16 FY'16 1Q17 1Q16 1Q17 Pre-tax operating income (loss) $ 704 $ 3,849 $ 1,048 Pre-tax operating income (loss) $ (219) $ (198) I

35. Slide 35: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI* Total Core Legacy Portfolio (in millions) (in millions) 1Q16 1Q17 1Q16 1Q17 Pre-tax operating income (loss) $ 1,147 $ 1,699 Pre-tax operating income (loss) $ (202) $ 342 Interest expense (benefit) on attributed financial debt (23) (43) Interes

36. Slide 36: 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 1Q16 1Q17 1Q16 1Q17 Loss ratio 66.0 66.3 Loss ratio 69.0 76.0 Catastrophe losses and re

37. Slide 37: 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 Loss ratio 84.3 81.0 70.3 69.7 84.5 104.0 Catastrophe losses and reinstatement premiums (11.9) (10.9) (3.4) (3.0) (3.0) (6.5) Prior year develop

38. Slide 38: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Premiums 38

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