American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q2 2023 Earnings Presentation
33 slides from American International Group, Inc. New's earnings presentation, Aug 2, 2023
Slide 1: Second Quarter 2023 Financial Results Presentation
Second Quarter 2023 Financial Results Presentation August 2, 2023 Copyright ® 2023 by American International Group, Inc. All rights reserved. No part of this document may be reproduced, republished or reposted without the permission of AIG.
Slide 2: Best Quarterly Adjusted EPS Since 2007, Execution of Numerous Strategic Initiatives
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Best Quarterly Adjusted EPS* Since 2007, Execution of Numerous Strategic Initiatives and Balanced Capital Management Strategy General Insurance After-Tax Income Book Value per Return on Combined Ratio per Diluted Share C
Slide 3: Execution of Recent Transactions Unlocks Significant Value for AIG Shareholders
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Execution of Recent Transactions Unlocks Significant Value for AIG Shareholders Transitioning to a Pure-Play Primary P&C Specialty Insurer • Streamlining operations and Simplifying technology The Business • Reducing expe
Slide 4: Focused on Achieving 10% Plus Adjusted ROCE
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Focused on Achieving 10% Plus Adjusted ROCE* Key Drivers for Delivering 10% Plus Adjusted ROCE* Path to 10% Plus Adjusted ROCE* ~100 - 200 bps Sustained and Improved Underwriting Profitability ~300 - 400 bps Continue the
Slide 5: Strong Premium Growth and Adjusted Return on Common Equity in Both Businesses
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Strong Premium Growth and Adjusted Return on Common Equity in Both Businesses General Insurance Life and Retirement Net Premiums Written (NPW) ($M) Premiums and Deposits* ($M) +10% / +11% Adj.*(1) $7,537 $10,054 $6,866 +
Slide 6: General Insurance: Double-digit NPW Growth Driven by Commercial Lines
Group Performance Strategy Segment Performance GI L&R Other Investments Capital General Insurance: Double-digit NPW Growth Driven by Commercial Lines, up 14%; Continued Improvement in Accident Year Combined Ratio, as adjusted* (AYCR) Key Financials Net Premiums Written ($M) ($M) 2Q22 2Q23 Change Tot
Slide 7: 5th Consecutive Year of AYCR Improvement Driven by Commercial Lines
Group Performance Strategy Segment Performance GI L&R Other Investments Capital 5th Consecutive Year of AYCR* Improvement Driven by Commercial Lines; Lowest Second Quarter AYCR* since Second Quarter 2007 Calendar Year Combined Ratio Accident Year Combined Ratio, As Adjusted* (10.4)pts (13.0)pts 101.
Slide 8: General Insurance North America: Strong Top-line Growth and Margin Expansion
Group Performance Strategy Segment Performance GI L&R Other Investments Capital General Insurance North America: Strong Top-line Growth and Continued Underlying Margin Expansion Key Financials North America Net Premiums Written ($M) $3,973 • NA Commercial Lines NPW grew 18%(1) ($M) 2Q22 2Q23 Change
Slide 9: General Insurance International: Strong Accident Year Loss Ratio
Group Performance Strategy Segment Performance GI L&R Other Investments Capital General Insurance International: Strong Accident Year Loss Ratio with Solid Net Premiums Written Growth in Commercial Lines Key Financials International Net Premiums Written ($M) ($M) 2Q22 2Q23 Change Total NPW • Interna
Slide 10: Life & Retirement: Increase in Adjusted Pre-Tax Income
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Life & Retirement: Increase in Adjusted Pre-Tax Income Reflecting Strong Base Spread Income Adjusted Pre-tax Income (APTI) Return on Adjusted Segment Common Equity*(1) 2Q22 2Q23 • The 33% growth in 2Q23 APTI from 12.2% 2
Slide 11: Individual Retirement & Group Retirement: Continued Base Spread Expansion
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Individual Retirement & Group Retirement: Continued Base Spread Expansion Individual Retirement Key Figures Investment Spreads • Individual Retirement had favorable impact from base spread income 2Q22 1Q23 2Q23 due to ra
Slide 12: Life Insurance: Improved Mortality Experience; Institutional Markets: Strong New Production
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Life Insurance: Improved Mortality Experience; Institutional Markets: Strong New Production Life Insurance Key Figures New Business Sales Mix • Life Insurance APTI decreased from 2Q22 primarily due to lower income from o
Slide 13: Other Operations: Reduced Expenses with Continued Separation and Simplification
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Other Operations: Reduced Expenses with Continued Separation and Simplification of Asset Management Group ($M) 2Q22 2Q23 Change • Other Operations APTL improved $41M year-over-year primarily due to the impact of Variable
Slide 14: Other Noteworthy Items
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Other Noteworthy Items 2Q22 2Q23 EPS – EPS – ($M, except per share amounts) APTI AATI(1) APTI AATI(1) Diluted(2) Diluted(2) Expense Items: Catastrophe-related losses, net of reinsurance $120 $95 $0.12 $252 $199 $0.27 Rei
Slide 15: Well Diversified Investment Portfolio with Solid Credit Characteristics
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Well Diversified Investment Portfolio with Solid Credit Characteristics Investment Portfolio ($B) Investment Portfolio Composition by Segment(1) ($B) • $278B high quality investment AIG General Insurance Life and Retirem
Slide 16: Continued Yield Improvement in AFS Bonds and Loans Portfolios
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Continued Yield Improvement in AFS Bonds and Loans Portfolios from Higher New Money Rates and Floating Rate Security Resets Yields and Investment Income on FMS – AFS Bonds and Mortgage and Other Loans Receivable(1) ($M)
Slide 17: Commercial Mortgage Loan Portfolio
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Commercial Mortgage Loan Portfolio Commercial Mortgage Loans By Segment (in $B) Commercial Mortgage Loans Class Breakdown CML Allowance: • AIG’s CMLs are originated and managed L&R L&R Industry by a deeply experienced te
Slide 18: Office Loan Portfolio
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Office Loan Portfolio Office Loans By Segment (in $B) Breakdown by Office Type Office Loan Allowance: • Office loan portfolio represents $8.8B or L&R 3% of total invested assets (excluding 3.9% 14% Fortitude Re), with Cu
Slide 19: Balance Sheet Strength: Lower Leverage Ratios and Strong Capitalization
Group Performance Strategy Segment Performance GI L&R Other Investments Capital Balance Sheet Strength: Lower Leverage Ratios and Continued Strong Insurance Company Capitalization Capital Structure ($B) Capital Ratios $64.6 $68.0 Dec. 31, June 30, • Total debt & preferred stock to total Change $0.3
Slide 20: Cautionary Statement
Cautionary Statement On January 1, 2023, AIG adopted the new accounting standard for Targeted Improvements to the Accounting for Long-Duration Contracts (the standard or LDTI), with a transition date of January 1, 2021; AIG adopted the standard using the modified retrospective transition method rela
Slide 21: Appendix: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Appendix: Glossary of Non- GAAP Financial Measurers and Non-GAAP Reconciliations Copyright ® 2023 by American International Group, Inc. All rights reserved. No part of this document may be reproduced, republished or reposted without the permission of AIG.
Slide 22: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures 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 measures” under Securit
Slide 23: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures • Adjusted After-tax Income attributable to AIG common shareholders (AATI) is derived by excluding the tax effected APTI adjustments described above, dividends on preferred stock, noncontrolling interest on net realized gains (losses), other non-operating expe
Slide 24: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures • Adjusted Revenues exclude Net realized gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes), changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment inc
Slide 25: Non-GAAP Reconciliations – Adjusted Pre-tax Income
Non-GAAP Reconciliations – Adjusted Pre-tax Income (in millions) Quarterly 2Q22 2Q23 Pre-tax income (loss) from continuing operations $3,925 $1,867 Adjustments to arrive at Adjusted pre-tax income Changes in fair value of securities used to hedge guaranteed living benefits (10) 3 Change in the fair
Slide 26: Non-GAAP Reconciliations – Adjusted After-tax Income
Non-GAAP Reconciliations – Adjusted After-tax Income (in millions) Quarterly 2Q22 2Q23 After-tax net income (loss), including noncontrolling interests $3,079 $1,691 Noncontrolling interests (income) loss (325) (198) Net income attributable to AIG $2,754 $1,493 Dividends on preferred stock 8 8 Net in
Slide 27: Non-GAAP Reconciliations – Book Value Per Common Share
Non-GAAP Reconciliations – Book Value Per Common Share Book Value per Common Share (in millions, except per common share data) Quarterly Book Value Per Common Share 4Q22 2Q23 Total AIG shareholders' equity $40,970 $42,454 Less: Preferred equity 485 485 Total AIG common shareholders' equity (a) 40,48
Slide 28: Non-GAAP Reconciliations – Return on Common Equity
Non-GAAP Reconciliations – Return on Common Equity Return on Common Equity (in millions) Quarterly Return On Common Equity Computations 2Q22 2Q23 Actual or Annualized net income attributable to AIG common shareholders (a) $10,984 $5,940 Actual or Annualized adjusted after-tax income attributable to
Slide 29: Non-GAAP Reconciliations – RoCE (Cont'd) and Accident Year Loss and Combined Ratios
Non-GAAP Reconciliations – RoCE (Cont’d) and Accident Year Loss and Combined Ratios Return on Common Equity (continued) Life and Retirement (in millions) Quarterly 2Q22 2Q23 Adjusted pre-tax income $747 $991 Interest expense on attributed financial debt 68 113 Adjusted pre-tax income including attri
Slide 30: Non-GAAP Reconciliations – Accident Year Loss and Combined Ratios (cont'd)
Non-GAAP Reconciliations – Accident Year Loss and Combined Ratios (cont’d) General Insurance – North America General Insurance – North America – Commercial Lines Quarterly Quarterly 2Q22 2Q23 2Q22 2Q23 Loss ratio 58.0 61.0 Loss ratio 58.7 61.0 Catastrophe losses and reinstatement premiums (1.7) (5.0
Slide 31: Non-GAAP Reconciliations – Accident Year Loss and Combined Ratios (cont'd)
Non-GAAP Reconciliations – Accident Year Loss and Combined Ratios (cont’d) General Insurance – International – Commercial Lines General Insurance – International – Personal Insurance Quarterly Quarterly 2Q22 2Q23 2Q22 2Q23 Loss ratio 53.4 58.5 Loss ratio 56.4 56.3 Catastrophe losses and reinstatemen
Slide 32: Non-GAAP Reconciliations – Gross & Net Premiums Written – Change in Constant Dollar
Non-GAAP Reconciliations – Gross & Net Premiums Written – Change in Constant Dollar Gross Premiums Written – Change in Constant Dollar General Insurance Total Commerical Lines Personal 2Q23 2Q23 2Q23 Change in gross premiums written Increase (decrease) in original currency and adjusted for lag elimi
Slide 33: Non-GAAP Reconciliations – Premiums
Non-GAAP Reconciliations – Premiums (in millions) Quarterly 2Q22 2Q23 Individual Retirement: Premiums $60 $66 Deposits 3,566 3,984 Other (6) (5) Premiums and deposits $3,620 $4,045 Individual Retirement (Fixed Annuities): Premiums $58 $65 Deposits 1,330 1,207 Other (4) (4) Premiums and deposits $1,3
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