American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Investor Presentation (May 2016)

35 slides from American International Group, Inc. New's investor presentation, May 13, 2016

1. Slide 1: Investor Presentation

   Investor Presentation May 13, 2016

2. Slide 2: Cautionary Statement Regarding Forward Looking Information and Other Matters

   Cautionary Statement Regarding Forward Looking Information and Other Matters 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 statement

3. Slide 3: Vision for AIG

   Vision for AIG Douglas M. Steenland, Non-Executive Chairman “AIG is committed to serving all its stakeholders by: i) delivering first quartile total shareholder return to its shareholders, ii) providing risk expertise and dependable long-term balance sheet strength for its customers, iii) having a c

4. Slide 4: AIG Announces Actions to Create a Leaner, More Profitable and Focused Insurer

   AIG Announces Actions to Create a Leaner, More Profitable and Focused Insurer 2016-2017 Board Approved Actions • Return at least $25 bn of capital to shareholders • Pursue an active divestiture program, including initially the 19.9% IPO of UGC as first step towards full separation and sale of AIG Ad

5. Slide 5: Clear and Achievable Financial Targets

   Clear and Achievable Financial Targets Normalized ROE of ~9% by 2017, reflecting 10.3 - 10.7% in the Operating Portfolio Legacy Portfolio (1) is a source of capital release totaling ~$9 bn by 2017 10.3 - 10.7% 9.3 - 9.7% Operating Portfolio Operating ROE '16E (2) Operating ROE '17E (2) 8.4 - 8.9% ~9

6. Slide 6: Progress On Financial Targets

   Progress On Financial Targets Objective FY 2016 Target 1Q16 Selected Actions Reduce ~$700mm;  Decline of $140 million, or 5% YoY on a constant dollar basis Operating 6% Reduction $2.6B  Primarily driven by staff reductions and benefits rationalization Expenses in Net GOE Increase  Improvement of

7. Slide 7: Return Significant Capital to Our Shareholders in 2016-2017

   Return Significant Capital to Our Shareholders in 2016-2017 Return at least $25 bn of capital to shareholders through dividends and share repurchases Capital return goal can be achieved notwithstanding strengthening of reserves in 4Q’15 Projected Sources for 2016-2017 Capital Return Goal ($ bn) $25

8. Slide 8: General Operating Expense Reductions

   General Operating Expense Reductions Targeting $1.6B of Gross GOE Reductions or $1.4B of Net GOE Reductions by 2017 from GOE of $11.1B for full year 2015 ($ in Millions) 1Q15 vs. 1Q16 5% $2,784 $38 $2,732 ($52) $2,592 ($160) ($18) 1Q15 FX Impact 1Q15 Revalued Acquisitions Staff Reductions & All oth

9. Slide 9: Organizational Transparency

   Organizational Transparency Modular operating model and new Legacy Portfolio to enhance transparency and accountability New Legacy Portfolio to consist of non-strategic assets, including tax attribute DTA, businesses and products AIG intends to exit and select low returning legacy insurance products

10. Slide 10: Divestitures – No Sacred Cows

    Divestitures – No Sacred Cows Specific actions taken and a clear framework for future transactions Announced Divestitures  UGC – filed S-1 for up to 19.9% in March 2016 as a first step towards full separation  AIG Advisor Group – completed sale to Lightyear Capital and PSP Investments in May 2016

11. Slide 11: Continued Improvement in Commercial Insurance Accident Year Loss Ratio

    Continued Improvement in Commercial Insurance Accident Year Loss Ratio Total Commercial Accident Year Loss Ratio Adjusted For Prior Year Development 80% 76.9% 75% Accident Year Loss Ratio 70.0% 70% 67.9% 67.2% 66.2% 65% 1Q’16A 64.5% ~60% 60% 55% FY'11A FY'12A FY'13A FY'14A FY'15A 4Q'17 Target AY LR

12. Slide 12: Commercial Insurance – Property Casualty Accident Year Loss Ratio Dispersion

    Commercial Insurance – Property Casualty 1Q16 vs. FY 2015 Accident Year Loss Ratio Dispersion1 2015 Accident Year Loss Ratio as adjusted REMEDIATE 100% 91% MAINTAIN AND IMPROVE FY15 AYLR GROW 66% Product Set 3 FY15 AYLR 50% 41% FY15 AYLR Product Set 2 Product Set 1 0 Net Premiums Earned ($BN) ~$20 %

13. Slide 13: Commercial Insurance – Operating Actions

    Commercial Insurance – Operating Actions Actions to sharpen Commercial focus will improve profitability  Expand current utilization of Commercial GPW for Clients Purchasing at Least One U.S. Casualty Policy reinsurance and other risk Reinsurance mitigating strategies to further Take Action Maintain

14. Slide 14: Consumer Insurance – Operating Actions

    Consumer Insurance – Operating Actions Actions to sharpen Consumer focus will improve profitability  Absorb impact of DOL(1) rules; invest U.S. Retirement in most attractive post-DOL opportunities across the market Number of Countries Selling  Expand on successes in High Net Personal Insurance Lev

15. Slide 15: Reserves – Non-Life Insurance Companies

    Reserves – Non-Life Insurance Companies Business Mix Shift Away from Long-Tail Casualty Lines and Accelerated Commutation of Legacy Portfolios (Especially 2005 and Prior) Are Expected to Reduce Reserve Variability Total Net Reserves $62.9 Billion at March 31, 2016 By Accident Year By Line of Busines

16. Slide 16: Fourth Quarter 2015 Prior Year Development

    Fourth Quarter 2015 Prior Year Development AIG strengthened Non-Life reserves by $3.6 bn, or 6% of its $58.3 bn (1) carried reserves as of September 30, 2015. Accident years 2005-2014 represent $2.3 bn, resulting in an increase in the overall accident year loss ratio in this period by 0.7 points on

17. Slide 17: U.S. Casualty Actions Related to Prior Year Development

    U.S. Casualty Actions Related to Prior Year Development AIG has taken significant actions to mitigate U.S. Casualty exposures since 2011, and in 2016 AIG has aggressively accelerated the pace of remediation and exits from targeted underperforming sub-segments U.S. U.S. Casualty Casualty Accident Acc

18. Slide 18: Deferred Tax Assets

    Deferred Tax Assets Diversified Operating Platform Allows For Utilization of Valuable Tax Attributes As of 12/31/14 As of 12/31/15 Gross Deferred Gross Deferred ($ in Billions) Type Utilization/Expiration Attributes Tax Asset Attributes Tax Asset  Utilize against Non-Life Insurance Companies, Corpo

19. Slide 19: Impact of Potential Separation on DTA

    Impact of Potential Separation on DTA  A separation of AIG’s life business would impair the value of AIG’s tax attribute DTAs ‒ Without Life income, FTCs generally cannot be used as credits since NOLs must be used first ‒ Without Life income, NOL usage would slow down, reducing the value of the tax

20. Slide 20: AIG's Risk Profile

    AIG’s Risk Profile AIG has a lower risk profile than other non-bank SIFIs across key metrics Total Assets ($ bn) Total Gross Notional Derivatives ($ bn) (1) 878 757 497 405 428 186 AIG MetLife Prudential AIG MetLife Prudential Leverage Ratio (x) (2) VA Assets / Total Equity (3) 3.6x 11.3x 8.5x 2.4x

21. Slide 21: Strong Capital Position

    Strong Capital Position ($ in Billions, Except per Share Amounts) Capital Structure Book Value Per Common Share $90.00 +4.2% $78.28 $109.4 $110.5 $75.10 $1.3 $0.9 $14.03 $14.88 $17.9 $20.6 $4.88 $60.00 $2.13 (0.7%) $90.2 $89.1 $30.00 $58.94 $58.52 $0.00 Dec. 31, 2015 March 31, 2016 Dec. 31, 2015 Mar

22. Slide 22: Parent Liquidity

    Parent Liquidity ($ in Billions) Changes in Parent Liquidity $1.7 Targeted Range $3.0 $6-8B $1.7 $9.2 ($4.0) Includes: $7.1 Unencumbered Non-Life = ~$0.5B ($2.9) Securities Life = ~$0.8B ($1.1) ($0.5) Unencumbered $5.7 Tax Pmts = ~$0.5B Securities $4.1 Cash & S/T Cash & S/T Inv. $3.5 Inv. $3.0 Balan

23. Slide 23: Book Value Per Share

    Book Value Per Share Book Value Per Share Growth in 1Q16 Impacted by Market Volatility Book Value Per Common Share, ex. AOCI & DTA incl. Dividend Growth – 4Q15 vs. 1Q16 $1.13 ($0.48) $0.21 $59.26 $59.05 ($0.80) ($0.14) ($0.13) 4Q15 Operating Impact of Non-operating Accretive Warrant Dividends 1Q16 E

24. Slide 24: Improvement in Normalized Return On Equity

    Improvement in Normalized Return On Equity Active Capital Management, Underwriting Improvement and Expense Management Drives ROE Expansion Normalized Return On Equity 0.5% 0.4% (0.8%) 8.9% 1.0% 0.5% 7.8% 8.4% 1Q15 Capital 1 Operating Lower 1Q16 Net Impact of 1Q16 Improvement Effective Legacy Assets

25. Slide 25: Enhanced Debt Maturity Profile

    Enhanced Debt Maturity Profile Liability Management Actions Have Improved Maturity Profile and Reduced Weighted Average Coupon to 4.64% As of 5/10/2016 – Total Notional Amount: $22.2 Billion / Weighted Average Coupon: 4.64% ($ in Millions) 5,000 100% 4,000 80% 3,000 60% 2,000 1 40% 1,000 1 1 20% 0 0

26. Slide 26: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations

    Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 26

27. Slide 27: 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

28. Slide 28: 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

29. Slide 29: 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 value of securities used to hedge guaranteed living b

30. Slide 30: Non-GAAP Reconciliations

    Non-GAAP Reconciliations ($ in Millions) FY 2014 FY 2015 1Q15 1Q16 Total General operating expenses, Operating basis $11,940 $11,141 $2,784 $2,592 Loss adjustment expenses, reported as policyholder benefits and losses incurred (1,667) (1,632) (423) (341) Advisory fee expenses 1,315 1,349 332 317 Non

31. Slide 31: Non-GAAP Reconciliations – Pre-tax and After-tax Operating Income

    Non-GAAP Reconciliations – Pre-tax and After-tax Operating Income 31

32. Slide 32: Non-GAAP Reconciliations – ROE – Net Income (Loss) and After-tax Operating Income

    Non-GAAP Reconciliations – ROE – Net Income (Loss) and ROE – After-tax Operating Income ($ in millions) 1Q15 1Q16 Annualized net income (loss) attributable to AIG (a) $9,872 ($732) Annualized after-tax operating income (loss) attributable to AIG (b) $6,764 $3,092 Average AIG Shareholders' equity (c)

33. Slide 33: Non-GAAP Reconciliation – Book Value Per Common Share and Normalized ROE

    Non-GAAP Reconciliation – Book Value Per Common Share and Normalized Return On Equity, Ex. AOCI & DTA1 Book Value Per Common Share Dec. 31, 2015 March 31, 2016 ($ in Millions, Except Per Share Data) Total AIG shareholders’ equity (a) $89,658 $88,518 Less: Accumulated other comprehensive income (AOCI

34. Slide 34: Non-GAAP Reconciliation – Impact of Market Volatility on Book Value Per Common Share

    Non-GAAP Reconciliation – Impact of Market Volatility on Book Value Per Common Share March 31, 2016 Reconciliation of Market Volatility & Net Realized Capital BVPS1 Losses to Net Income Pre-tax After-tax Impact ($ in millions, except per share amounts) income income (a) (a) ÷ (b) Market volatility o

35. Slide 35: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted

    Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Commercial Insurance Property Casualty Accident Year Combined Ratio, As Adjusted FY 2015 1Q16 Loss ratio 86.2 68.2 Catastrophe losses and reinstatement premiums (2.9) (4.7) Prior year development net of premium adjustments (17.5) 0.

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