American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q2 2017 Earnings Presentation

38 slides from American International Group, Inc. New's earnings presentation, Aug 3, 2017

  1. Slide 1: Conference Call Presentation Second Quarter 2017

    © Conference Call Presentation Second Quarter 2017 AUGUST 3, 2017

  2. 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

  3. Slide 3: Pursuing Profitable Growth

    Pursuing Profitable Growth Balance and Culture and Technology and Capital and Diversification Talent Innovation Growth  Mix of products,  Underwriting  Technology and  Strong free cash geographies and discipline data analytics flow and balance client segments sheet  Empowering field  Transform

  4. Slide 4: 2Q17 Key Themes

    2Q17 Key Themes After-tax operating income of $1.4B ($1.53 per diluted share)  Consolidated Adjusted AIG ROE of 10.5% (10.0% YTD) Consolidated  Core Normalized ROE of 9.9% (9.2% YTD)  Book Value Per Share (ex. AOCI) growth of 4% YTD Continuing our emphasis on the use of tools and improving our bu

  5. Slide 5: Change in Core Normalized ROE

    Change in Core Normalized ROE Core Normalized Return On Equity – 2Q16 vs 2Q17 +80 bps 1.7% 10.1% 1.2% (0.7%) 9.9% 1.0% (1.0%) (0.4%) 2Q16 Increased Capital Operating UGC Net Investment Other, net 6 2Q17 Loss Estimates1 Management 2 Improvement 3 Earnings 4 Income 5 1) The change in Core Normalized R

  6. Slide 6: Consolidated Operating Financial Highlights

    Consolidated Operating Financial Highlights ($ in millions, except per share amounts) 2Q16 2Q17 Pre-tax operating income (loss): Commercial Insurance Liability and Financial Lines $815 $586 Property and Special Risks 126 130 Total Commercial Insurance 941 716 Consumer Insurance Individual Retirement

  7. Slide 7: Commercial Insurance

    © Commercial Insurance Robert S. Schimek Executive Vice President & Chief Executive Officer of Commercial

  8. Slide 8: Commercial Insurance – Select Metrics

    Commercial Insurance – Select Metrics Normalized ROE Accident Year Combined Ratio, As Adjusted Reported Normalized ROE 9.5% 1 93.8% 95.0% Pro forma Expense Impact of 1.8% Ratio 2H’16 loss 28.1 28.9 estimate1 Pro forma Impact of 4.0% 2H’16 loss estimate1 7.7% 7.6% 1 65.7% 66.1% Pro forma 6.3% As repo

  9. Slide 9: Commercial Insurance – Liability and Financial Lines

    Commercial Insurance – Liability and Financial Lines ($ in millions) 2Q16 2Q17 Key Takeaways Net premiums written $2,321 $2,085  Normalized ROE expansion from 10.2% in 2Q16 after Net premiums earned 2,726 2,110 adjusting 2Q16 for the increase in loss estimates recorded in 2H’16. Underwriting income

  10. Slide 10: Commercial Insurance – Property and Special Risks

    Commercial Insurance – Property and Special Risks ($ in millions) 2Q16 2Q17 Net premiums written $2,176 $1,741 Key Takeaways Net premiums earned 1,962 1,609  Normalized ROE driven by higher non-CAT Property losses, partially offset by improved performance in Special Underwriting income (28) (47) Ri

  11. Slide 11: Consumer Insurance

    © Consumer Insurance Kevin Hogan Executive Vice President & Chief Executive Officer of Consumer

  12. Slide 12: Consumer Insurance – Select Metrics

    Consumer Insurance – Select Metrics Normalized ROE Premiums and Deposits (P&D) and NPW ($B) $7.3 $0.9 $5.6 $1.8 $0.9 $1.8 13.3% $4.6 9.7% $2.9 $2.9 $2.8 P&D NPW P&D NPW 2Q16 2Q17 2Q16 2Q17 Individual Retirement Group Retirement Life Insurance Personal Insurance Pre-tax Operating Income ($M) General

  13. Slide 13: Consumer Insurance – Individual Retirement

    Consumer Insurance – Individual Retirement ($ in millions) 2Q16 2Q17 Premiums and deposits $4,611 $2,892 Premiums 45 31 Key Takeaways Policy fees 178 192  Focus on diversified product portfolio and disciplined Net investment income 1,020 1,003 pricing Advisory fee and other income 266 157  Continu

  14. Slide 14: Consumer Insurance – Group Retirement

    Consumer Insurance – Group Retirement ($ in millions) 2Q16 2Q17 Premiums and deposits $1,837 $1,802 Premiums 5 4 Key Takeaways Policy fees 95 101 Net investment income 555 535  Strong position in target markets driven by trusted Advisory fee and other income 52 56 advisor service model Total operat

  15. Slide 15: Consumer Insurance – Life Insurance

    Consumer Insurance – Life Insurance ($ in millions) 2Q16 2Q17 Premiums and deposits $879 $947 Key Takeaways Premiums 360 400  Multi-year restructuring underway including Policy fees 343 357 administrative platform consolidation, distribution Net investment income 271 261 simplification, and narrowe

  16. Slide 16: Consumer Insurance – Personal Insurance

    Consumer Insurance – Personal Insurance ($ in millions) 2Q16 2Q17 Net premiums written $2,924 $2,846 Key Takeaways Net premiums earned 2,862 2,788  Operating performance benefiting from strategic Underwriting income 86 247 repositioning and focus on target markets Net investment income 66 83  AY C

  17. Slide 17: Q&A and Closing Remarks

    AIG]. Q&A and Closing Remarks

  18. Slide 18: Appendix

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  19. Slide 19: Book Value Per Common Share (Ex. AOCI) Composition

    Book Value Per Common Share (Ex. AOCI) Composition Growth of 4% year-to-date $74.58 $76.12 $73.41 $15.48 $15.81 $14.84 $10.70 $11.12 $10.97 $47.87 $47.98 $49.34 December 31, 2016 March 31, 2017 June 30, 2017 Core Legacy DTA 19

  20. Slide 20: Maintaining Discipline and Focus on Expenses

    Maintaining Discipline and Focus on Expenses GOE reductions were primarily driven by staff reductions and overall expense discipline around non-headcount related expenses. ($ in millions) General Operating Expenses, Operating Basis – 2Q16 vs 2Q17 $2,439 $92 $77 $22 $2,248 4% 2Q16 FX Staff Prof Fees

  21. Slide 21: Transformation of Reserve Risk

    Transformation of Reserve Risk ADC fundamentally transforms AIG’s reserve risk profile by economically eliminating 80% of the reserve risk from some of the most volatile components of our Commercial reserves up to the limit specified in the ADC Agreement1. Nominal Reserve as of June 30, 2017 ADC3 No

  22. Slide 22: Parent Liquidity

    Parent Liquidity Changes in Parent Liquidity ($B) $0.8 $0.4 $1.1 $1.7 ($2.7) $7.8 $7.3 ($0.8) Includes: P&C Dividend: $0.2B Life Dividend: $1.0B Unencumbered Unencumbered Tax Pmts = $0.5B Securities Securities $4.3 $5.0 Cash & Cash & S/T Inv. S/T Inv. $3.5 $2.3 Balance at Insurance Debt issuance Sal

  23. Slide 23: Legacy

    Legacy ($ in billions) Legacy Monetization – Progress to date YE'15 $2.1B FY'16 Legacy $3.9B Investments FY'16 Key Takeaways Legacy Run-Off $1.1B Insurance Books  $0.8B of asset monetizations in 1H’17. 1H'17 Legacy Assets $0.8B $7.9B Progress to Date Achieved through 6/30/2017 $0 $1 $2 $3 $4 $5 $6

  24. Slide 24: Strong Capital Position

    Strong Capital Position Capital Structure ($ in Billions) Capital Return ($ in Millions) 1H’17 2Q17 Share repurchases $6,000 $2,415 $98.1 $96.9 Warrant repurchases - - $0.8 $0.9 Dividends declared 597 290 $20.4 $21.7 Total $6,597 $2,705 Risk Based Capital Ratios2 $76.9 $74.3 Domestic Property Domest

  25. Slide 25: Acronyms & Definitions, Glossary of Non-GAAP Financial Measures, and Non-GAAP Reconciliations

    © Acronyms & Definitions, Glossary of Non-GAAP Financial Measures, and Non-GAAP Reconciliations

  26. Slide 26: Acronyms & Definitions

    Acronyms & Definitions Acronyms  AAL - Average annual loss expectation  YTD – Year-to-date  YoY – Year-over-year  NPW – Net premiums written  FX – Foreign exchange 26

  27. Slide 27: 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

  28. Slide 28: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP  After-tax Operating Income Attributable to Core and Legacy Portfolio is derived by subtracting attributed interest expense and income tax expense from pre-tax operating income. Attributed debt and the related interest expense is calculat

  29. Slide 29: Glossary of Non-GAAP Financial Measures

    Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP  After-tax Operating Income Attributable to AIG (ATOI) is derived by excluding the tax effected PTOI adjustments described above and the following tax items from net income attributable to AIG: – deferred income tax valuation allowance re

  30. Slide 30: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Book Value Per Share and Return on Equity (in millions, except per share data) Book Value Per Share 4Q16 1Q17 2Q17 Total AIG shareholders' equity (a) $ 76,300 $ 74,069 $ 73,732 Less: Accumulated other comprehensive income (AOCI) 3,230 3,781 4,962 Total AIG shareholders' equi

  31. Slide 31: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Pre-tax and After-tax Operating Income - Consolidated (in millions) 2Q16 2Q17 Pre-tax income (loss) from continuing operations $ 2,858 $ 1,667 Adjustments to arrive at Pre-tax operating income (loss) Changes in fair value of securities used to hedge guaranteed living benefit

  32. Slide 32: Non-GAAP Reconciliations

    Non-GAAP Reconciliations General Operating and Other Expenses (in millions) Six Months Ended June 30, 2Q16 2Q17 2016 2017 General operating and other expenses, GAAP basis $ 2,586 $ 2,182 $ 5,589 $ 4,625 Restructuring and other costs (90) (47) (278) (228) Other expense related to retroactive reinsura

  33. Slide 33: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Commercial Insurance - Liability and Financial Lines Commercial Insurance - Property and Special Risks (in millions) (in millions) 2Q16 2Q17 2Q16 2Q17 Pre-tax operating income (loss) $ 815 $ 586 Pre-tax operating income (loss) $ 126 $ 130 Inter

  34. Slide 34: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Consumer Insurance - Individual Retirement Consumer Insurance - Group Retirement (in millions) (in millions) 2Q16 2Q17 2Q16 2Q17 Pre-tax operating income $ 505 $ 558 Pre-tax operating income (loss) $ 265 $ 266 Interest expense on attributed fin

  35. Slide 35: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Total Consumer Insurance Other Operations (including consolidations and eliminations) (in millions) (in millions) 2Q16 2Q17 2Q16 2Q17 Pre-tax operating income (loss) $ (176) $ (274) Pre-tax operating income (loss) $ 948 $ 1,260 Interest expense

  36. Slide 36: Non-GAAP Reconciliations

    Non-GAAP Reconciliations PTOI, ATOI and Normalized ATOI Total Core Six Months Ended Legacy Portfolio (in millions) June 30, (in millions) 2Q16 2Q17 2016 2017 2Q16 2Q17 Pre-tax operating income (loss) $ 1,713 $ 1,702 $ 2,860 $ 3,401 Pre-tax operating income (loss) $ 207 $ 431 Interest expense (benefi

  37. Slide 37: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted Commercial Insurance - Liability and Financial Lines Commercial Insurance - Property and Special Risks 2Q16 2Q17 2Q16 2Q17 Loss ratio 70.4 76.1 Prior year development, net of (additional) re

  38. Slide 38: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Premiums (in millions) Consumer Insurance: 2Q16 2Q17 Premiums and deposits $ 7,327 $ 5,641 Deposits (6,748) (5,042) Other (169) (164) Premiums $ 410 $ 435 why Consumer Insurance - Individual Retirement: Premiums and deposits $ 4,611 $ 2,892 Deposits (4,563) (2,862) Other (3)

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