American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q1 2023 Earnings Presentation
37 slides from American International Group, Inc. New's earnings presentation, May 5, 2023
Slide 1: First Quarter 2023 Financial Results Presentation
First Quarter 2023 Financial Results Presentation May 5, 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: Cautionary Statement Regarding Forward-Looking Information, Comment on Regulation G
Certain statements in this presentation and other publicly available documents may include, and members of AIG management may from time to time make and discuss, Cautionary Statement statements which, to the extent they are not statements of historical or present fact, may constitute “forward-lookin
Slide 3: Strong Performance in Both General Insurance and Life and Retirement Businesses
Financial ◦ Net income attributable to AIG common shareholders was $23M, or $0.03 per diluted Strong Performance in Both Results common share, compared to $4.2B, or $5.04 per diluted common share in 1Q22, driven by net realized losses in Life and Retirement largely related to Fortitude Re funds with
Slide 4: APTI Reflects Strong Net Premiums Written Growth
Adjusted Pre-Tax Income General ◦ General Insurance APTI of $1.2B reflects strong top line growth coupled with continued (APTI)* Reflects Strong Net Insurance underwriting margin improvement; the combined ratio was 91.9%, a 1.0-point improvement from 1Q22, benefiting from underwriting excellence, lo
Slide 5: Adjusted Book Value Per Share Growth Reflects Improved Operating Performance
Adjusted Book Value Per ($M, except per common share amounts) 1Q22 1Q23 Variances Share* Growth Reflects Adjusted Pre-tax Income (Loss): Improved Operating General Insurance $1,211 $1,248 $37 Performance in General Life and Retirement 1 $934 $886 $(48) Insurance and Continued Other Operations $(421)
Slide 6: Path to Double-Digit Adjusted Return On Common Equity
Key Drivers for Delivering Double Digit Adjusted ROCE* Post Corebridge Deconsolidation Path to Double-Digit Adjusted Return On Common Equity* Continued Momentum on Underwriting Profitability Separation of Life & Retirement Business ◦ Expect to reduce share count to 600-650M while maintaining post-Co
Slide 7: General Insurance: Consistent Margin Improvement
Calendar Year Combined Ratio Accident Year Combined Ratio, As Adjusted* General Insurance: 111.4% (19.5) points (11.0) points Consistent Margin 10.2% 1.5% 99.6% 104.3% 95.8% 99.7% 96.1% 95.5% Improvement 4.7% 10.3% 91.9% 91.9% 92.4% 5.4% 89.5% 88.7% 14.0% 12.6% 5.0% 4.2% 14.9% 12.5% 12.9% 12.8% 13.0
Slide 8: General Insurance: Built A Profitable and Less Volatile Underwriting Portfolio
General Insurance Accident Year Combined Ratio, As Adjusted* General Insurance: Built A (12.3) points Profitable and Less Volatile 101.0% 99.4% 98.8% Underwriting Portfolio 14.5% 14.1% 12.5% 96.1% 96.1% 95.9% 95.8% 95.5% 94.9% 93.3% 92.9% 92.4% 91.1% 90.5% 89.8% 89.5% 88.5% 88.4% 88.4% 88.7% 12.5% 1
Slide 9: General Insurance: Strongest First Quarter Underwriting Results
($M) 1Q22 1Q23 Net Premiums Written ($M) General Insurance: Strongest Net premiums written $6,633 $6,965 First Quarter Underwriting Net premiums earned $6,256 $6,259 Total NPW +5% / +10% Adj.1 $6,965 $6,633 Results; Combined Ratio Loss and loss adjustment expense $3,809 $3,752 $1,602 Improved 1.0 Po
Slide 10: General Insurance: North America Combined Ratio Improved 0.8 Point
($M) 1Q22 1Q23 North America Net Premiums Written ($M) General Insurance: North Net premiums written $3,151 $3,680 America Combined Ratio Commercial Lines 2,952 3,367 Total NPW $3,680 Improved 0.8 Point and Personal Insurance Net premiums earned 199 $2,789 313 $2,980 $3,151 $199 +17% $313 AYCR Impro
Slide 11: General Insurance: Strong International Results with a 0.7-Point Improvement
($M) 1Q22 1Q23 International Net Premiums Written ($M) General Insurance: Strong Net premiums written $3,482 $3,285 Total NPW International Results with a Commercial Lines 2,085 1,996 $3,482 -6% / +3% Adj.1 $3,285 0.7-Point Improvement in Personal Insurance Net premiums earned 1,397 $3,467 1,289 $3,
Slide 12: LDTI Accounting Change
LDTI Accounting Change Impacts of LDTI LDTI reduces volatility in adjusted pre-tax income compared with the prior standard, principally in its treatment of market-driven impacts and mortality experience ◦ On January 1, 2023, AIG adopted the new accounting standard for Targeted Improvements to the Ac
Slide 13: Life and Retirement: Continued Sales Momentum and Spread Expansion
Life and Retirement: Adjusted Pre-tax Income ($M) Noteworthy Items ($M) Continued Sales Momentum and Spread Expansion $934 $114 $886 1Q22 1Q23 Variance $84 Return on alternative investments $267 $0 $(267) $113 $82 $241 $187 Other yield enhancements $32 $28 $(4) Includes: ◦ The decline in 1Q23 APTI f
Slide 14: Life and Retirement: Tailwinds from Higher New Money Rates
Individual Retirement Life and Retirement: Premiums and Net Flows Assets Under APTI 1Q23 vs 1Q22 APTI reflects Tailwinds from Higher New Deposits* ($M) ($M) Management ($M) ($M) Favorable impact from: • Favorable base spread income Money Rates and Strong $4,883 (26% vs. 1Q22) $663 n.m. $140,272 (-6%
Slide 15: Life and Retirement: Life Insurance Reflects Improved Mortality Experience
Life Insurance Life and Retirement: Life New Business Sales Premiums and Deposits* 1Q23 vs 1Q22 APTI reflects Insurance Reflects Improved ($M) ($M) APTI ($M) Unfavorable impact from: • Lower returns from alternative investments Mortality Experience; Reserve $117 (3% vs. 1Q22) $1,156 (-1% vs. 1Q22) $
Slide 16: Other Operations
Other Operations ($M) 1Q22 1Q23 ◦ Other Operations APTL of $491M in 1Q23 deteriorated by $70M from the prior year quarter Corporate and Other $(547) $(435) ◦ Before consolidation and eliminations, the APTL deteriorated by $146M due to lower alternative investment income and higher interest expense f
Slide 17: Noteworthy Items
Noteworthy Items 1Q22 1Q23 EPS – EPS – ($M, except per share amounts) APTI AATI1 APTI AATI1 Diluted2 Diluted2 Expense Items: Catastrophe-related losses, net of reinsurance $275 $217 $0.26 $265 $209 $0.28 Reinstatement premiums related to catastrophes $14 $11 $0.01 $(1) $(1) $0.00 Unfavorable (favora
Slide 18: AIG Investment Portfolio is Well Diversified with Solid Credit Characteristics
Investment Portfolio Composition ($B) Investment Portfolio Composition by Segment2 ($B) AIG Investment Portfolio is Well Diversified with Solid $0.4 $0.6 $193.9 $0.2 Credit Characteristics1 $14.1 $5.9 $3.6 $0.4 $13.1 $10.3 $28.9 $40.4 ◦ $285B high quality investment portfolio with asset duration $12
Slide 19: Investment Income
Investment Income on FMS – AFS Bonds and Mortgage and Other Loans Receivable2 ($M) Investment Income $2,983 $2,788 $2,469 $2,564 3 $2,417 $2,443 $2,411 $2,389 $2,410 ◦ Yield on FMS - AFS Bonds and Mortgage and other loans receivable increased 23 bps from 4Q22 due to higher yield 4.61% on reinvested
Slide 20: Commercial Mortgage Loan Portfolio
Commercial Mortgage Loan Commercial Mortgage Loans By Segment (in $B) Commercial Mortgage Loans Class Breakdown (CML) Portfolio1 CML Allowance: L&R Industry L&R Avg2 1.6% 0.6% ◦ AIG’s CMLs have principally been originated by AIG’s internal commercial real estate team who has deep experience and Mult
Slide 21: Office Loan Portfolio
Office Loan Portfolio1 Office Loans By Segment (in $B) Breakdown by Office Type Office Loan Allowance: L&R 13% 3.5% ◦ U.S. office credit performance remains largely strong, but 7% Traditional Office - 60% with lower valuations $7.8 Mixed Use - 11% ◦ Office loan portfolio represents $9.0B or 3% of to
Slide 22: Execution of Balanced Capital Management Aggregate Actions
Quarterly Share Repurchases Execution of Balanced (in millions, except per share data) 1Q22 2Q22 3Q22 4Q22 1Q23 Capital Management Aggregate Actions Aggregate Share Repurchases $1,403 $1,699 $1,268 $779 $603 Number of Shares Repurchased 23 30 24 13 11 % of Shares Repurchased1 2.8% 3.7% 3.1% 1.7% 1.5
Slide 23: Continued Progress on Capital Management Initiatives
Capital Structure ($B) Capital Ratios Continued Progress on $64.6 $68.2 (%) March 31, Dec 31, March 31, 2022 2022 2023 Capital Management $10.8 $11.6 Fin Debt - AIG1 Initiatives $8.4 $1.0 $8.4 $1.0 Fin Debt - CRBG1,2 1 Hybrids / Total capital 1.4% 3.1% 2.9% $2.5 $1.0 $1.0 Hybrids - AIG Financial deb
Slide 24: Copyright ® 2023 by American International Group, Inc. All rights reserved. No part of
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 25: Non-GAAP financial measures overview
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 Securities and Exchange Commission rules and re
Slide 26: Glossary of Non-GAAP Financial Measures: Adjusted After-tax Income
• 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 expenses and the following tax items from ne
Slide 27: Glossary of Non-GAAP Financial Measures: Adjusted Revenues
• 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 income for GAAP purposes) and income from e
Slide 28: Non-GAAP Reconciliations - Adjusted Pre-tax and After-tax Income
(in millions) Quarterly Non-GAAP Pre-tax income (loss) from continuing operations $ 1Q22 5,714 $ 1Q23 (231) Reconciliations- Adjustments to arrive at Adjusted pre-tax income Changes in fair value of securities used to hedge guaranteed living benefits (13) 3 Change in the fair value of market risk be
Slide 29: Non-GAAP Reconciliations - Adjusted Pre-tax and After-tax Income
(in millions) Quarterly Non-GAAP After-tax net income (loss), including noncontrolling interests Noncontrolling interests (income) loss $ 1Q22 4,560 $ (387) 1Q23 (87) 117 Reconciliations- Net income attributable to AIG Dividends on preferred stock $ 4,173 $ 7 30 7 Adjusted Pre-tax and Net income att
Slide 30: Non-GAAP Reconciliations - Book Value Per Common Share
Book Value Per Common Share Non-GAAP Reconciliations- (in millions, except per common share data) Quarterly Book Value Per Common Share 1Q22 2Q22 3Q22 4Q22 1Q23 Total AIG shareholders' equity $ 56,457 $ 45,713 $ 39,906 $ 40,970 $ 43,317 Book Value Per Common Less: Preferred equity Total AIG common s
Slide 31: 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 1Q22 1Q23 Actual or Annualized net income attributable to AIG common shareholders (a) $ 16,664 $ 92 Actual or Annualized adjusted after-tax income attributable to AI
Slide 32: Non-GAAP Reconciliations - Return on Common Equity and Net Investment Income
Non-GAAP Reconciliations- Return on Common Equity (continued) Return on Common Equity Life and Retirement (continued) and Net Quarterly (in millions) 1Q22 1Q23 Adjusted pre-tax income $ 934 $ 886 Investment Income Interest expense on attributed financial debt Adjusted pre-tax income including attrib
Slide 33: Non-GAAP Reconciliations - Total Debt and Preferred Stock Leverage
Non-GAAP Reconciliations- Total Debt and Preferred Stock Leverage Total Debt and Preferred Quarterly Stock Leverage and Hybrids / Total capital 2Q22 1.5 % 3Q22 3.0 % Financial debt / Total capital (incl. AOCI) 28.7 % 32.1 % Accident Year Loss Ratio, as Total debt / Total capital Preferred stock / To
Slide 34: Non-GAAP Reconciliations - Accident Year Loss Ratio and Combined Ratio
Non-GAAP Reconciliations- General Insurance - North America Quarterly General Insurance - North America - Commercial Lines Accident Year Loss Ratio, as Loss ratio 1Q22 62.1 1Q23 60.7 1Q22 Quarterly 1Q23 adjusted, and Accident Year Loss ratio 63.3 61.3 Catastrophe losses and reinstatement premiums (2
Slide 35: Non-GAAP Reconciliations - International Accident Year Ratios
Non-GAAP Reconciliations- General Insurance - International - Commercial Lines General Insurance - International - Personal Insurance Accident Year Loss Ratio, as 1Q22 Quarterly 1Q23 1Q22 Quarterly 1Q23 adjusted, and Accident Year Loss ratio 63.7 62.0 Loss ratio 55.0 55.4 Catastrophe losses and rein
Slide 36: Non-GAAP Reconciliations - Gross and Net Premiums Written Constant Dollar
Non-GAAP Reconciliations- Gross Premiums Written – Change in Constant Dollar Gross and Net Premiums Commercial Personal Written – Change in General Insurance Total 1Q23 Insurance 1Q23 Insurance 1Q23 Constant Dollar Change in gross premiums written Increase (decrease) in original currency and adjuste
Slide 37: Non-GAAP Reconciliations - Premiums and Deposits
Non-GAAP Reconciliations- (in millions) Individual Retirement: 1Q22 Quarterly 1Q23 Premiums Premiums Deposits $ 3,830 56 $ 4,807 78 Other (5) (2) Premiums and deposits $ 3,881 $ 4,883 Individual Retirement (Fixed Annuities): Premiums $ 56 $ 78 Deposits 1,519 2,172 Other (6) (2) Premiums and deposits
American International Group — Q1 2023 Earnings Presentation on 6ix