American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q4 2015 Earnings Presentation
32 slides from American International Group, Inc. New's earnings presentation, Feb 12, 2016
Slide 1: Conference Call Presentation Fourth Quarter 2015
American International Group, Inc. Conference Call Presentation Fourth Quarter 2015 February 12, 2016
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
Slide 3: Fourth Quarter 2015 Highlights
Fourth Quarter 2015 Highlights Continued Execution on Strategic Actions and Return of Capital Normalized ROE, Ex. AOCI & DTA of 6.7%; After-tax operating loss of $1.3B ($1.10 per diluted share) – Reserve strengthening of $3.6B pre-tax on $58.3B of net reserves at 9/30/15, responding quickly to new i
Slide 4: 2016 and 2017 Financial Targets
2016 and 2017 Financial Targets ($ in Millions, Except Per Share Amounts) Annual Targets 2015 2016 2017 Selected Actions Through 2017 Actual Target Target Continue to consolidate activities and de-layer Increase utilization of shared services and outsourcing Reduction in Net GOE $3501 ~$700 ~$70
Slide 5: AIG Consolidated Operating Financial Highlights
AIG Consolidated Operating Financial Highlights 4Q15 Results Reflect Reserve Strengthening & Weaker Alternative Investment Performance ($ in Millions, Except per Share Amounts) 4Q14 4Q15 Inc. / (Dec.) Operating revenues $15,006 $14,187 (5%) Pre-tax operating income (loss): Commercial Insurance: Prop
Slide 6: General Operating Expense Reductions
General Operating Expense Reductions Reduced Net GOE by ~3% For The Full Year1. Targeting Additional $1.4B of Net GOE Reductions by 2017. ($ in Billions) FY 2014 vs. FY 2015 3% $11.9 $11.5 $11.1 ($0.4) ($0.4) FY 2014 FX Impact FY 2014 Revalued Net expense FY 2015 reductions Recorded an additional
Slide 7: Strong Capital Position
Strong Capital Position ($ in Billions, Except per Share Amounts) Capital Structure Book Value Per Common Share $90.00 $126.4 $77.69 (3.3%) $75.10 $2.5 $109.5 $16.6 $11.75 $14.03 $1.3 $17.9 $60.00 $7.71 $2.13 $107.3 $30.00 +1.2% $58.94 $90.2 $58.23 $0.00 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2014 Dec
Slide 8: Parent Liquidity – A Source of Strength
Parent Liquidity – A Source of Strength Changes in Parent Liquidity ($ in Billions) $0.1 Targeted Range $2.1 $6-8B $11.2 $0.4 $9.21 Unencumbered Securities ($3.6) ($1.0) Unencumbered $6.4 Securities $5.7 Cash & Cash & S/T Inv. S/T Inv. $4.8 $3.5 Balance at Insurance Monetization of Other Share Repur
Slide 9: Legacy Portfolio
Legacy Portfolio Pro Forma Legacy Estimated Balance Sheet as of December 31, 20151 ($ in billions) $80B Deferred Income Taxes 15 Parent & Other Assets 2 25 $47B Financial Debt 4 Operating Debt 7 $34B Other Liabilities 3 17 DTA Attributes Insurance 40 Insurance Assets 33 - AOCI and NCI 3 Liabilities
Slide 10: Deferred Tax Assets
Deferred Tax Assets Diversified Operating Platform Allows For Utilization of Valuable Tax Attributes As of 12/31/14 As of 12/31/15 Gross Deferred Gross Deferred ($ in Billions) Type Utilization/Expiration Attributes Tax Asset Attributes Tax Asset Utilize against Non-Life Insurance Companies, Corpo
Slide 11: Commercial Insurance
Commercial Insurance AlG
Slide 12: Commercial Insurance – Property Casualty Financial Highlights
Commercial Insurance – Property Casualty Financial Highlights NPW, excluding the effects of FX, increased 1.5% YoY (down 1.9% on a ($ in Millions) 4Q14 4Q15 reported basis), primarily from growth in new businesses and higher renewal in certain classes of business in all lines except for U.S. Casua
Slide 13: Commercial Insurance – Property Casualty Accident Year Loss Ratio Trend
Commercial Insurance – Property Casualty Accident Year Loss Ratio Trend 80% $60 76.9% 75% $50 70.0% 70% $40 67.9% 67.2% AY LR % NPE ($Bn) 66.2% 65% $30 Targeting ~6pts of AYLR improvement by 20171 60% $20 61% 73% 55% $10 39% 27% 50% $0 FY11 FY12 FY13 FY14 FY15 FY16 Target FY17 Target U.S. Casualty A
Slide 14: Commercial Property Casualty 2015 Accident Year Loss Ratio Dispersion
Commercial Property Casualty 2015 Accident Year Loss Ratio Dispersion REMEDIATE 100% 91% Accident Year Loss Ratio Excluding Catastrophes (%) MAINTAIN AND IMPROVE Average Product Set 3 66% Average 50% GROW 41% Average Product Set 2 Product Set 1 0% 0 ~$20 Net Premiums Earned ($B) 2015 Accident Year L
Slide 15: Commercial Insurance – Mortgage Guaranty Financial Highlights
Commercial Insurance – Mortgage Guaranty Financial Highlights ($ in Millions) 4Q14 4Q15 Pre-tax operating income growth reflects improved loss New insurance written1 $10,733 $10,627 experience from lower new delinquencies and a higher cure Net premiums written 273 241 rate. Delinquency rate of 3
Slide 16: Consumer Insurance
Consumer Insurance AlG
Slide 17: Consumer Insurance – Retirement Financial Highlights
Consumer Insurance – Retirement Financial Highlights ($ in Millions) 4Q14 4Q15 Premiums and deposits1 $5,990 $7,037 Premiums 66 41 Premiums and deposits increased 17%, driven by increased sales of Retail Mutual Funds, Index Annuities, Fixed Annuities Policy fees 259 270 and Group Retirement produc
Slide 18: Consumer Insurance – Retirement – Base Yields and Spreads
Consumer Insurance – Retirement – Base Yields and Spreads Base Yields1 5.35% 5.03% 5.08% 5.15% 4.99% 4.99% 4.92% 4.95% 4.96% 4.92% 4.98% 4.90% 4.90% 4.75% 4Q14 1Q15 2Q15 3Q15 4Q15 Cost of Funds2 3.50% 2.98% 2.97% 2.94% 2.98% 2.95% 3.00% 2.50% 2.80% 2.78% 2.77% 2.79% 2.79% 2.00% 4Q14 1Q15 2Q15 3Q15 4
Slide 19: Consumer Insurance – Life Financial Highlights
Consumer Insurance – Life Financial Highlights ($ in Millions) 4Q14 4Q15 Premiums and deposits $1,249 $1,279 Excluding the effect of FX, Life premiums and deposits Premiums 675 674 increased 5% YoY (2% on a reported basis) primarily due to the Policy fees 365 368 acquisition of AIG Life Limited an
Slide 20: Consumer Insurance – Personal Insurance Financial Highlights
Consumer Insurance – Personal Insurance Financial Highlights ($ in Millions) 4Q14 4Q15 Personal Insurance NPW, excluding the effects of FX, increased 3.6% (down 5.1% on a reported basis) driven by growth in personal property and automobile business in Japan and the U.S., partially offset by a decr
Slide 21: Q&A
Q&A AlG
Slide 22: Appendix – Non-GAAP Reconciliations
Appendix – Non-GAAP Reconciliations 22
Slide 23: 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
Slide 24: 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
Slide 25: 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 values of securities used to hedge guaranteed living
Slide 26: Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses
Non-GAAP Reconciliation – Premiums and Deposits, Operating Revenues, and General Operating Expenses Retirement Life Premiums and Deposits 4Q14 4Q15 4Q14 4Q15 ($ in Millions) Premiums and Deposits $5,990 $7,037 $1,249 $1,279 Deposits (5,952) (6,853) (403) (413) Other 28 (143) (171) (192) Premiums $66
Slide 27: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income 27
Slide 28: Non-GAAP Reconciliation of Operating and Legacy Portfolio Shareholders' Equity
Non-GAAP Reconciliation of Operating and Legacy Portfolio Shareholders' Equity, Ex. AOCI and DTA Reconciliation of AIG Shareholders' Equity, Ex. AOCI and DTA: Life Non-Life Total Life and ($ in Millions) Insurance Insurance Non-Life Insurance Corporate As of December 31, 2015 Companies Companies Com
Slide 29: Non-GAAP Reconciliation – Book Value Per Common Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Common Share and Return On Equity Book Value Per Common Share Dec. 31, 2014 Dec. 31, 2015 ($ in Millions, Except Per Share Data) Total AIG shareholders’ equity (a) $106,898 $89,658 Less: Accumulated other comprehensive income (AOCI) (10,617) (2,537) Total AIG
Slide 30: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Property Casualty Mortgage Guaranty Personal Insurance Accident Year Combined Ratio, As Adjusted 4Q14 4Q15 4Q14 4Q15 4Q14 4Q15 Loss ratio 75.0 132.9 20.6 7.1 51.2 55.6 Catastrophe losses and reinstatement premiums (0.7) (4.2) 0.0 0.
Slide 31: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA
Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA1 Full Year 2015 4Q15 Pre-tax After-tax ROE Pre-tax After-tax ROE ROE – After-tax operating income (loss), ex. AOCI & DTA $4,055 $2,927 3.7% ($2,188) ($1,348) (7.3%) Adjustments to arrive at Normalized ROE, ex. AOCI & DTA: Catastrophe losses be
Slide 32: About American International Group, Inc. (AIG)
American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 100 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any in
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