American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q3 2015 Earnings Presentation
30 slides from American International Group, Inc. New's earnings presentation, Nov 3, 2015
Slide 1: American International Group, Inc. Conference Call Presentation
American International Group, Inc. Conference Call Presentation Third Quarter 2015 November 3, 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: Third Quarter 2015 Highlights
Third Quarter 2015 Highlights Continued Strategic Actions and Capital Management After-tax operating income of $691mm ($0.52 per diluted share) – Market volatility impact on investment returns drives YoY comparisons Financial – Pre-tax restructuring charge of $274 mm; plan to reduce net expenses by
Slide 4: AIG Consolidated Operating Financial Highlights
AIG Consolidated Operating Financial Highlights ($ in Millions, Except per Share Amounts) 3Q14 3Q15 Inc. / Dec. Operating revenues $15,476 $13,179 (15%) Pre-tax operating income (loss): Commercial Insurance: Property Casualty 952 569 (40%) Mortgage Guaranty 135 162 20% Institutional Markets 153 84 (
Slide 5: Market Volatility Drives Year-Over-Year Operating Income Comparisons
Market Volatility Drives Year-Over-Year Operating Income Comparisons ($ in Millions) 3Q14 3Q15 After-tax EPS Income (Expense): Pre-tax After-tax Pre-tax After-tax Inc./(Dec.) Impact Investments: Alternative returns1 $486 $316 ($23) ($15) ($331) Fair value on PICC investments 49 32 (255) (166) (198)
Slide 6: Progress on Financial Targets
Progress on Financial Targets ($ in Millions, Except per Share Amounts) Progress on Financial Targets YTD Annual Targets 2015 Sept. 30, Commentary Through 2017 Target 2015 3–5% ↓$523 Reduction in $350 - $600 Net expenses declined 5.9% from 9M’14. Net Expenses1 from 9M’14 ~50+ bps Increase 2015 t
Slide 7: General Operating Expenses, Operating Basis
General Operating Expenses, Operating Basis Targeting 3-5% of Annual Reduction Through 2017 General Operating Expenses, Operating Basis ($ 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
Slide 8: 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
Slide 9: 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
Slide 10: Strong Capital Position
Strong Capital Position Returned $8.7 Billion To Shareholders Year-To-Date1 Through Share Repurchases And Dividends ($ in Billions, Except per Share Amounts) Capital Structure Book Value Per Share $126.4 $90.00 $119.8 +2.2% $79.40 $2.5 $1.3 $77.69 $16.6 $18.8 $11.75 $12.23 $5.26 $60.00 $7.71 $107.3
Slide 11: Parent Liquidity – A Source of Strength
Parent Liquidity – A Source of Strength Changes in Parent Liquidity ($ in Billions) $0.5 $2.8 $4.1 $13.91 $3.2 $3.7 Unencumbered $11.2 Securities $0.4 $1.0 $6.2 Unencumbered Securities $6.4 Cash & S/T Inv. Cash & $7.7 S/T Inv. $4.8 Balance at Debt issuances Insurance Sale of Share Debt tenders Debt
Slide 12: Commercial Insurance
Commercial Insurance AlG
Slide 13: Commercial Insurance – Property Casualty Financial Highlights
Commercial Insurance – Property Casualty Financial Highlights ($ in Millions) 3Q14 3Q15 NPW, excluding the effects of FX, declined 1.0% YoY (down 5.6% on a reported basis) primarily from our strategy to enhance risk selection and optimize our product portfolio, particularly in U.S. Casualty. Net p
Slide 14: Commercial Insurance – Mortgage Guaranty Financial Highlights
Commercial Insurance – Mortgage Guaranty Financial Highlights ($ in Millions) 3Q14 3Q15 New insurance written1 $12,643 $14,483 New insurance written growth was driven by a decrease in residential mortgage interest rates in the latter part of 2014 Net premiums written 271 274 and increased purchase
Slide 15: Consumer Insurance
Consumer Insurance AlG
Slide 16: Consumer Insurance – Retirement Financial Highlights
Consumer Insurance – Retirement Financial Highlights ($ in Millions) 3Q14 3Q15 Premiums and deposits1 $5,863 $6,625 Premiums 67 37 Premiums and deposits increased 13%, driven by increased Policy fees 265 261 sales of Fixed Annuities, Index Annuities, Retail Mutual Funds, and Group Retirement produ
Slide 17: Consumer Insurance – Retirement – Base Yields and Spreads
Consumer Insurance – Retirement – Base Yields and Spreads Base Yields1 5.35% 5.06% 5.03% 5.08% 5.15% 4.99% 4.99% 4.95% 4.96% 4.98% 4.90% 4.92% 4.92% 4.75% 3Q14 4Q14 1Q15 2Q15 3Q15 Cost of Funds2 3.50% 2.99% 2.98% 2.97% 2.94% 2.98% 3.00% 2.50% 2.81% 2.80% 2.78% 2.77% 2.79% 2.00% 3Q14 4Q14 1Q15 2Q15 3
Slide 18: Consumer Insurance – Life Financial Highlights
Consumer Insurance – Life Financial Highlights ($ in Millions) 3Q14 3Q15 Premiums and deposits $1,163 $1,223 Excluding the effect of FX, Life premiums and deposits Premiums 655 675 increased 8% YoY (5% on a reported basis) primarily due to the Policy fees 370 392 acquisition of AIG Life Limited an
Slide 19: Consumer Insurance – Personal Insurance Financial Highlights
Consumer Insurance – Personal Insurance Financial Highlights Personal Insurance NPW, excluding the effects of FX, increased 3.5% ($ in Millions) 3Q14 3Q15 (down 6.9% on a reported basis) driven by growth across all products, partially offset by reductions in Warranty Service Programs. Net premiums
Slide 20: Q&A
Q&A AlG
Slide 21: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 21
Slide 22: 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
Slide 23: 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
Slide 24: 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
Slide 25: Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses
Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses Institutional Markets Retirement Life Premiums and Deposits 3Q14 3Q15 3Q14 3Q15 3Q14 3Q15 ($ in Millions) Premiums and Deposits $2,840 $159 $5,863 $6,625 $1,163 $1,223 Deposits (2,725) (33) (5,822) (6
Slide 26: 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 3Q14 3Q15 (In Millions, Except Per Share Data) Pre-tax income from continuing operations $3,019 ($115) Adjustments to arrive at Pre-tax operating income: Changes in fair values of fixed maturity s
Slide 27: Non-GAAP Reconciliation – Book Value Per Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Share and Return On Equity Book Value Per Common Share Sept. 30, 2014 Dec. 31, 2014 Sept. 30, 2015 ($ in Millions, Except Per Share Data) Total AIG shareholders’ equity (a) $108,581 $106,898 $98,999 Less: Accumulated other comprehensive income (AOCI) (11,331)
Slide 28: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Property Casualty Mortgage Guaranty Personal Insurance Accident Year Combined Ratio, As Adjusted 3Q14 3Q15 3Q14 3Q15 3Q14 3Q15 Loss ratio 74.2 73.2 27.8 18.1 53.0 53.4 Catastrophe losses and reinstatement premiums (4.8) (1.7) N/M N/
Slide 29: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA
Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA* 9M’15 3Q15 Pre-tax After-tax ROE Pre-tax After-tax ROE As reported $6,243 $4,275 7.1% $848 $691 3.5% Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses below expectations (669) (435) (0.7%) (513) (333) (1.7%) Worse th
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
American International Group — Q3 2015 Earnings Presentation on 6ix