American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q2 2020 Earnings Presentation

38 slides from American International Group, Inc. New's earnings presentation, Aug 3, 2020

1. Slide 1: Second Quarter 2020 Financial Results Presentation

   Second Quarter 2020 Financial Results Presentation August 3, 2020

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 and discuss, projections, goals, assumptions and statements that

3. Slide 3: 2Q20 results reflect manageable COVID-19 impacts and strong financial flexibility

   2Q20 results reflect manageable impacts from COVID-19, continued improvement in General Insurance AY underwriting profitability, adjusted for CATs, and strong financial and capital flexibility; Completion of Fortitude sale sharpens focus on Core businesses  Continued improvement in General Insuranc

4. Slide 4: Life and Retirement and AIG 2Q20 financial results impacted by COVID-19 and capital markets

   Life and Retirement and AIG 2Q20 financial results impacted by COVID-19 and capital markets; Fortitude transaction accounting reflected in GAAP results  2Q20 APTI of $881M and adjusted return on attributed common equity* of 13.2% reflect lower deferred policy acquisition costs (DAC) amortization an

5. Slide 5: 2Q20 Pre-tax loss of $9.7B; APTI of $803M

   2Q20 Pre-tax loss of $9.7B; APTI of $803M reflects improvement in AY adjusted Commercial Lines results and strong performance in Life & Retirement, offset by COVID-19 and private equity losses ($M, except per common share amounts) 2Q19 2Q20 Variances Key Takeaways Pre-tax income (loss) from continui

6. Slide 6: 2Q19 and 2Q20 noteworthy items

   2Q19 and 2Q20 noteworthy items 2Q19 – Income / (Loss) 2Q20 – Income / (Loss) EPS – EPS – ($M, except per share amounts) Pre-tax After-tax1 Pre-tax After-tax1 Diluted2 diluted2 General Insurance – Catastrophe losses, net of reinsurance, ex. COVID-19 ($174) ($137) ($0.15) ($216) ($171) ($0.20) General

7. Slide 7: Strong capital position at the parent company and principal insurance companies

   Strong capital position at the parent company and principal insurance companies Capital Structure ($B) Risk Based Capital (RBC) Ratios3 $90.8 Year / $89.9 Life and Retirement General Insurance Hybrids Quarter $1.5 $1.5 Companies Companies End 1 $21.8 Financial Debt $25.5 $1.8 NCI $5.0 $0.6 2018 389%

8. Slide 8: AIG Parent liquidity balance remains strong at $10.7B at June 30, 2020

   AIG Parent liquidity balance remains strong at $10.7B at June 30, 2020 Changes in AIG Parent Liquidity ($B) Cash & S/T Investments Unencumbered Securities $15.2 $2.2 $4.1 $4.5 ($1.3) ($0.8) $10.7 ($0.5) ($0.3) Includes: ($0.3) ($0.3) Life Contributions: $3.0 $0.4 $7.5 $135M GI Contributions: $2.4 In

9. Slide 9: Investment portfolio credit quality continues to be strong

   Investment portfolio credit quality continues to be strong with limited impact on ratings in 2Q20; AIG’s corporate debt portfolio is well diversified by asset class and industry sector NAIC Designation Corporate Debt by Industry Sector June 30, 2020 – $263.9B June 30, 2020 – $156.8B Other NAIC Basic

10. Slide 10: NII of $3.4B; Gross Investment Income, APTI basis

    NII of $3.4B ($3.2B APTI basis1); Gross Investment Income, APTI basis1, decrease driven by private equity losses; 2Q19 results included a large IPO gain from a private equity holding Invested Assets & Gross Investment Income, APTI Basis 2Q20 Invested Assets Gross Investment Income, APTI basis ($M) $

11. Slide 11: Continued execution of AIG 200 and $1B of GOE savings

    Continued execution of AIG 200, a global, multi-year initiative to achieve transformational change and $1B of GOE savings The Standard Commercial Underwriting Platform will modernize global underwriting capabilities by 1 simplifying processes and tools to create a contemporary data architecture Gene

12. Slide 12: General Insurance: Calendar year underwriting results reflect $458M in COVID-19 losses

    General Insurance: Calendar year underwriting results reflect $458M in COVID- 19 losses; AY, as adjusted, results reflect strong Commercial Lines improvement and the formation of Lloyd’s Syndicate 2019 on Personal Insurance ($M) 2Q19 2Q20 Net Premiums Written ($M) Net premiums written $6,581 $5,549

13. Slide 13: General Insurance: North America Commercial Lines and Personal Insurance

    General Insurance: Higher North America Commercial Lines CYCR from CATs; On an AY, as adjusted, basis North America Commercial Lines improved; Personal Insurance results reflect the formation of Lloyd’s Syndicate 2019 and COVID-19 impact on Travel business ($M) 2Q19 2Q20 Key Takeaways: Net premiums

14. Slide 14: General Insurance: International results

    General Insurance: Increase to International CYCR; International AY, as adjusted, improved due to premium rate increases, underwriting actions and portfolio optimization ($M) 2Q19 2Q20 Key Takeaways: Net premiums written $3,274 $3,202 International Commercial Lines and Personal Insurance Underwritin

15. Slide 15: Life and Retirement: 2Q20 results recovered sharply from 1Q20

    Life and Retirement: 2Q20 results recovered sharply from 1Q20 due to capital market improvements; APTI decreased from 2Q19 due to private equity losses, continued spread compression and elevated mortality from the impact of COVID-19 Adjusted Return on Premiums ($M) Premiums and Deposits* ($B) Common

16. Slide 16: Life and Retirement: Individual Retirement

    Life and Retirement: Individual Retirement 2Q20 reflects equity market recovery; overall annuity sales were lower due to pricing discipline and broad industry sales channel disruptions resulting from COVID-19 ($ in millions) 2Q19 2Q20 Key Takeaways Premiums and deposits $3,865 $1,794  2Q20 APTI res

17. Slide 17: Life and Retirement: Group Retirement

    Life and Retirement: Group Retirement 2Q20 results reflect equity market recovery, offset by lower base investment spreads ($ in millions) 2Q19 2Q20 Key Takeaways Premiums and deposits $2,047 $1,670  2Q20 results reflect strong capital market recovery, offset by private Premiums 5 3 equity losses a

18. Slide 18: Life and Retirement: Life Insurance impacted by adverse mortality

    Life and Retirement: Life Insurance impacted by adverse mortality primarily from COVID-19 ($ in millions) 2Q19 2Q20 Premiums and deposits $1,032 $1,071 Key Takeaways Premiums 425 447  APTI decrease from 2Q19 is driven by higher mortality trends Policy fees 381 375 due to adverse impacts from COVID-

19. Slide 19: Life and Retirement: Institutional Markets closed two reinsurance transactions

    Life and Retirement: Institutional Markets closed two reinsurance transactions, driving an increase in premiums and deposits; higher APTI reflects business growth and strong investment results ($ in millions) 2Q19 2Q20 Premiums and deposits $268 $1,129 Premiums 152 1,089 Key Takeaways Policy fees 43

20. Slide 20: Other Operations

    Other Operations ($M) 2Q19 2Q20 Corporate (Parent and Service Companies): Key Takeaways: General operating expenses ($195) ($194)  Corporate (Parent and Service Companies) Interest expense (264) (269) APTL increased primarily as 2Q19 benefited 62 (1) from Other Income of $62M, related to available

21. Slide 21: Legacy Portfolio

    Legacy Portfolio ($M) 2Q19 2Q20 General Insurance run-off lines $43 $10 Life and Retirement run-off lines 38 13 Legacy Investments 38 234 Adjusted pre-tax income $119 $257 Key Takeaways  Legacy APTI increased primarily due to an increase in NII even though 2Q20 includes two months of Fortitude inco

22. Slide 22: 2Q20 Impacts Related to Fortitude Accounting

    2Q20 Impacts Related to Fortitude Accounting April and May 2020 June 2020 (Pre-closing) (Post-closing)1  1 month of embedded derivative activity is reflected in AIG GAAP results  2 months of Fortitude APTI, or $96M is included in Legacy ($M) 2Q20  2Q20 net loss of $7.9B for AIG (AATI of $571M) re

23. Slide 23: Financial Reporting Related to Fortitude Sale

    Financial Reporting Related to Fortitude Sale On June 2, 2020, AIG completed the sale of a majority interest in Fortitude; AIG’s GAAP balance sheet and income statement will continue to include investments retained as collateral by the AIG ceding companies as part of the funds withheld reinsurance a

24. Slide 24: Changes to Non-GAAP Measures

    Changes to Non-GAAP Measures AIG has updated its Non-GAAP measures to adjust for the FWA, as the associated earnings are passed through to Fortitude Re Adjusted Pre-tax Income  Updated APTI NII to exclude NII on Fortitude Re FWA; AIG has updated its Non-GAAP measures to remove the impacts associate

25. Slide 25: Changes to Non-GAAP Measures (continued)

    Changes to Non-GAAP Measures (continued) Adjusted After-tax Income  Updated to exclude NII on Fortitude Re FWA  Change in presentation of RCGL – RCGL continues to be excluded from APTI, but the Fortitude Re FWA and embedded derivative are identified separately Adjusted Book Value per Share  Updat

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 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  Book Value per Common Share, Excluding Accumulated Other Comprehensive Income (AOCI) adjusted for the cumulative unrealized gains and losses related to Fortitude Re’s Funds Withheld Assets and Book Value per Common Share, Excluding AOCI

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

    Glossary of Non-GAAP Financial Measures Glossary of Non-GAAP  Adjusted Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits

30. Slide 30: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 2Q19 2Q20 Pre-tax income (loss) from continuing operations $ 1,837 $ (9,661) Adjustments to arrive at Adjusted pre-tax income (loss) Changes in fair value of securities used to hedge guaranteed livi

31. Slide 31: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated (in millions) Quarterly 2Q19 2Q20 After-tax net income (loss), including noncontrolling interests $ 1,390 $ (7,766) Noncontrolling interests (income) loss (281) (162) Net income (loss) attributable to AIG $ 1,109 $ (7,928)

32. Slide 32: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Book Value Per Common Share (in millions, except per common share data) As of June 30, December 31, Book Value Per Common Share 2019 2020 2019 Total AIG shareholders' equity $ 64,539 $ 62,234 $ 65,675 Less: Preferred equity 485 485 485 Total AIG common shareholders' equity (

33. Slide 33: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Return on Common Equity (in millions) Quarterly Return On Common Equity Computations 2Q19 2Q20 Actual or Annualized net income (loss) attributable to AIG common shareholders (a) $ 4,408 $ (31,744) Actual or Annualized adjusted after-tax income attributable to AIG common shar

34. Slide 34: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Return on Common Equity General Insurance Life and Retirement (in millions) Quarterly (in millions) Quarterly 2Q19 2Q20 2Q19 2Q20 Adjusted pre-tax income $ 980 $ 175 Adjusted pre-tax income $ 1,049 $ 881 Interest expense on attributed financial debt 147 140 Interest expense

35. Slide 35: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted General Insurance General Insurance - North America Quarterly Quarterly 2Q18 2Q19 2Q20 2Q19 2Q20 Loss ratio 65.7 63.0 72.6 Loss ratio 69.2 87.9 Catastrophe losses and reinstatement premiums

36. Slide 36: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted General Insurance - International General Insurance - International - Quarterly Commercial Lines Quarterly 2Q19 2Q20 2Q19 2Q20 Loss ratio 56.9 59.5 Loss ratio 61.5 66.3 Catastrophe losses an

37. Slide 37: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Net Premiums Written – Change in Constant Dollar North America - International - General Insurance Commercial Lines International Commercial Lines Foreign exchange effect on worldwide premiums: 2Q20 2Q20 2Q20 Change in net premiums written Increase (decrease) in original cur

38. Slide 38: Non-GAAP Reconciliations

    Non-GAAP Reconciliations Premiums (in millions) Six Months Ended Quarterly June 30, Individual Retirement: 2Q19 2Q20 2019 2020 Premiums $ 16 $ 38 $ 27 $ 79 Deposits 3,852 1,759 8,027 4,837 Other (3) (3) (3) (6) Premiums and deposits $ 3,865 $ 1,794 $ 8,051 $ 4,910 Individual Retirement (Fixed Annuit

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