American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — FY2019 Earnings Presentation
41 slides from American International Group, Inc. New's earnings presentation, Feb 13, 2020
Slide 1: Fourth Quarter and Full Year 2019 Financial Results Presentation
Fourth Quarter and Full Year 2019 Financial Results Presentation February 13, 2020 Updated slide 21 & 22 on 2/13/2020 4:00pm
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
Slide 3: Strong 4Q19 and FY'19 results driven by General Insurance underwriting profit
Strong 4Q19 and FY’19 results driven by General Insurance underwriting profit and stable Life and Retirement earnings 4Q19 adjusted after-tax income* (AATI) of $919M ($1.03 per diluted share) versus 4Q18 adjusted after-tax loss (AATL) of $559M (-$0.63 per diluted share) 4Q19 adjusted pre-tax inc
Slide 4: Net Investment Income
Strong investment performance in 2019 ($ in millions, unless otherwise indicated) Fourth Quarter Full Year 2018 2019 2018 2019 Net Investment Income General Insurance $349 $766 $2,668 $3,444 Life and Retirement 1,921 2,071 7,922 8,461 Legacy 527 688 2,325 2,480 Other Operations 43 92 45 370 Consolid
Slide 5: Strengthened financial flexibility and improved Adjusted ROCE
Strengthened financial flexibility and improved Adjusted ROCE Dec. 31, Dec. 31, Adjusted ROCE ($ in millions, Except per Share Amounts) 2018 2019 Variance 8.3% Selected Balance Sheet Data Financial debt, including hybrids $23,734 $23,349 ($385) 2.1% AIG shareholders' total equity 56,361 65,675 9,314
Slide 6: Fourth Quarter 2019 Financial Detail
Fourth Quarter 2019 Financial Detail 6
Slide 7: 4Q19 APTI of $1.2B versus APTL in 4Q18
4Q19 APTI of $1.2B versus APTL in 4Q18 driven by improved underwriting results and higher net investment income ($ in millions, except per common share amounts) 4Q18 4Q19 Variances Key Takeaways Adjusted Pre-tax Income (Loss): General Insurance APTI increased significantly General Insurance ($722)
Slide 8: 4Q19 & 4Q18 noteworthy items
4Q19 & 4Q18 noteworthy items 4Q18 – Income / (Loss) 4Q19 – Income / (Loss) EPS EPS ($ in millions) Pre-tax After-tax4 Pre-tax After-tax4 (diluted) (diluted) Catastrophe losses, net of reinsurance1 ($798) ($630) ($0.71) ($413) ($326) ($0.36) (Unfavorable) favorable prior year loss reserve development
Slide 9: General Insurance: Continued improvement in Combined Ratio
General Insurance: Continued improvement in Combined Ratio despite Typhoon Hagibis ($ in millions) 4Q18 4Q19 Catastrophe Losses, Net of Reinsurance ($M) Net premiums written $6,424 $5,830 Net premiums earned $7,171 $6,372 $826 $137 Loss and loss adjustment expense 5,743 4,180 Acquisition expenses 1,
Slide 10: General Insurance: North America underwriting results improving
General Insurance: North America underwriting results improving, driven by better Commercial AYLR and lower CATs ($ in millions) 4Q18 4Q19 Net premiums written $2,944 $2,814 Key Takeaways: Commercial Lines 2,161 1,990 NPW decreased 4% due to underwriting actions and changes in Personal Insurance 7
Slide 11: General Insurance: International underwriting results
General Insurance: International underwriting results continue to reflect better AYLR, as adjusted ($ in millions) 4Q18 4Q19 Net premiums written $3,480 $3,016 Commercial Lines 1,561 1,379 Key Takeaways: Personal Insurance 1,919 1,637 NPW decreased 13% primarily due to underwriting actions and Net
Slide 12: Life and Retirement: Reflects strong asset growth
Life and Retirement: Reflects strong asset growth from new business and favorable equity markets, active spread management and favorable mortality, partially mitigated by continued headwinds from lower interest rates Adjusted Return on Common Equity Premiums and Deposits ($B) $8.2 $7.1 $0.8 $0.5 $1.
Slide 13: Life and Retirement: Individual Retirement
Life and Retirement: Individual Retirement reflects flat net flows for Annuity Business, asset growth and continued spread compression ($ in millions) 4Q18 4Q19 Key Takeaways APTI improvement driven by favorable impacts from equity market Premiums and deposits $4,225 $3,156 returns and lower inter
Slide 14: Life and Retirement: Group Retirement
Life and Retirement: Group Retirement results reflect asset growth, active spread management and investments in business platform ($ in millions) 4Q18 4Q19 Key Takeaways Premiums and deposits $2,106 $2,312 APTI is higher than 4Q18 driven by favorable impacts from equity market returns, partially o
Slide 15: Life and Retirement: Life Insurance
Life and Retirement: Life Insurance produced strong International sales and mortality trends within overall pricing assumptions ($ in millions) 4Q18 4Q19 Premiums and deposits $987 $1,047 Key Takeaways Premiums 378 405 APTI declined from 4Q18 as a result of 4Q18 positive reserve Policy fees 363 38
Slide 16: Life and Retirement: Institutional Markets
Life and Retirement: Institutional Markets driven by disciplined growth with improved margins ($ in millions) 4Q18 4Q19 Premiums and deposits $848 $545 Key Takeaways Premiums 816 501 Premiums and deposits are lower than 4Q18 as Pension Risk Policy fees 40 41 Transfer issuance declined Net investme
Slide 17: Other Operations and Legacy Portfolio
Other Operations and Legacy Portfolio ($ in millions) 4Q18 4Q19 Other Operations Results: Total adjusted revenues $182 $220 Benefits, losses and expenses: Policyholder benefits and losses incurred 15 10 Acquisition expenses 5 4 Other Operations Key Takeaways General operating expenses 332 342 Intere
Slide 18: Full Year 2019 Financial Detail
Full Year 2019 Financial Detail 18
Slide 19: FY'19 APTI of $5.5B increased $4.1B from FY'18
FY’19 APTI of $5.5B increased $4.1B from FY’18 with lower CATs, net favorable PYD, improved General Insurance AY underwriting results and higher NII ($ in millions, except per common share amounts) FY'18 FY'19 Variances Key Takeaways General Insurance APTI increased significantly Adjusted Pre-tax
Slide 20: FY'19 & FY'18 noteworthy items
FY’19 & FY’18 noteworthy items FY’18 – Income / (Loss) FY’19 – Income / (Loss) EPS EPS ($ in millions) Pre-tax After-tax5 Pre-tax After-tax5 (diluted) (diluted) Catastrophe losses, net of reinsurance1 ($2,948) ($2,329) ($2.56) ($1,273) ($1,006) ($1.13) (Unfavorable) favorable prior year loss reserve
Slide 21: General Insurance: Underwriting results improved significantly from FY'18
General Insurance: Underwriting results improved significantly from FY’18 due to improved AY results and lower CATs Calendar Year Combined Ratios Key Takeaways 111.4%1 10.5% 99.6%1 1.5% CYCR 4.8% 14.0% improved 12.6% 21.7% 11.8 pts 21.8% Combined ratio of 99.6% in FY’19 improved 11.8 pts primarily
Slide 22: General Insurance: North America accident year results improved
General Insurance: North America accident year results improved and experienced lower CATs versus FY’18 ($ in millions) FY'18 FY'19 Net premiums written $11,383 $12,103 Commercial Lines 8,025 8,854 Key Takeaways: Personal Insurance 3,358 3,249 NPW increased 6% due to the full year inclusion of the
Slide 23: General Insurance: International underwriting results
General Insurance: International underwriting results reflect lower CATs and better AYLR, as adjusted ($ in millions) FY'18 FY'19 Net premiums written $15,024 $12,989 Key Takeaways: Commercial Lines 6,916 6,203 NPW decreased 14% (11% excluding FX) primarily due to Personal Insurance 8,108 6,786 un
Slide 24: Life and Retirement: Reflects strong asset growth
Life and Retirement: Reflects strong asset growth from new business and favorable equity markets, continued active spread management partially mitigated with continued headwinds from lower interest rates, and mortality trends remain favorable to pricing assumptions Adjusted Return on Common Equity P
Slide 25: Life and Retirement: Individual Retirement
Life and Retirement: Individual Retirement reflects positive net flows for Annuity Business, asset growth and continued spread compression ($ in millions) FY18 FY19 Key Takeaways 1 Premiums and deposits $14,473 $14,899 APTI improvement driven by favorable impacts from equity market Premiums 52 104
Slide 26: Life and Retirement: Group Retirement
Life and Retirement: Group Retirement results reflect asset growth, active spread management and investments in business platform ($ in millions) FY18 FY19 1 Premiums and deposits $8,430 $8,346 Key Takeaways Premiums 34 16 APTI is slightly higher than 2018 driven by favorable investment Policy fee
Slide 27: Life and Retirement: Life Insurance
Life and Retirement: Life Insurance produced strong International sales and mortality trends within overall pricing assumptions ($ in millions) FY18 FY19 Premiums and deposits $3,914 $4,086 Premiums 1,554 1,619 Policy fees 1,258 1,488 Key Takeaways Net investment income 1,137 1,203 APTI is lower t
Slide 28: Life and Retirement: Institutional Markets
Life and Retirement: Institutional Markets driven by disciplined growth with improved margins ($ in millions) FY18 FY19 Premiums and deposits $3,032 $2,758 Premiums 952 1,861 Key Takeaways Policy fees 161 165 Premiums and deposits reflect significant growth in Pension Risk Net investment income 78
Slide 29: Other Operations and Legacy Portfolio
Other Operations and Legacy Portfolio ($ in millions) FY'18 FY'19 Other Operations Results: Total adjusted revenues $636 $845 Benefits, losses and expenses: Policyholder benefits and losses incurred 39 37 Acquisition expenses 11 18 Other Operations Key Takeaways General operating expenses 1,104 1,25
Slide 30: Invested assets portfolio composition
Invested assets portfolio composition Total Invested Assets as of December 31, 2019 - $337.6 billion Total Portfolio Composition Bond Portfolio - $257.8 billion CMBS, 4% By Agency Credit Rating By NAIC Ratings RMBS, CDO/ABS, 7% 10% Non-rated, 1% Equities, 0% Below investment grade, 12% Loans, 14% AA
Slide 31: Capital position remains strong
Capital position remains strong Parent liquidity remains strong at $7.6B at 12/31/2019, including $1.7B for an expected tax settlement with the Internal Revenue Service, which could be made as early as the first quarter of 2020 Capital Structure ($B) Risk Based Capital (RBC) Ratios2 $90.8 $81.0 Life
Slide 32: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 32
Slide 33: 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
Slide 34: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP 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 meaning
Slide 35: Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated Twelve Months Ended (in millions) Quarterly December 31, 4Q18 4Q19 2018 2019 Pre-tax income (loss) from continuing operations $ (695) $ 1,036 $ 257 $ 5,287 Adjustments to arrive at Adjusted pre-tax income (loss) Changes in
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Book Value Per Common Share and Return on Common Equity (in millions, except per common share data) Twelve Months Ended December 31, Book Value Per Common Share 2018 2019 Total AIG shareholders' equity $ 56,361 $ 65,675 Less: Preferred equity - 485 Total AIG common sharehold
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations Return on Common Equity Twelve Months Twelve Months General Insurance Ended Life and Retirement Ended (in millions) Quarterly December 31, (in millions) Quarterly December 31, 4Q18 4Q19 2018 2019 4Q18 4Q19 2018 2019 Adjusted pre-tax income (loss) $ (722) $ 778 $ (469) $ 3,53
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted Twelve Months Twelve Months General Insurance Ended General Insurance - North America Ended Quarterly December 31, Quarterly December 31, 4Q18 4Q19 2018 2019 4Q18 4Q19 2018 2019 Loss ratio 8
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted Twelve Months Twelve Months General Insurance - International Ended General Insurance - International - Ended Quarterly December 31, Commercial Lines Quarterly December 31, 4Q18 4Q19 2018 20
Slide 41: Non-GAAP Reconciliations
Non-GAAP Reconciliations Premiums* (in millions) Twelve Months Ended Quarterly December 31, Individual Retirement: 4Q18 4Q19 2018 2019 Premiums $ 15 $ 39 $ 52 $ 104 Deposits 4,213 3,121 15,577 14,804 Other (3) (4) (8) (9) Premiums and deposits $ 4,225 $ 3,156 $ 15,621 $ 14,899 Individual Retirement
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