American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Q4 2020 Earnings Presentation
41 slides from American International Group, Inc. New's earnings presentation, Feb 17, 2021
Slide 1: Fourth Quarter and Full Year 2020 Financial Results Presentation
Fourth Quarter and Full Year 2020 Financial Results Presentation February 17, 2021 Note (March 15, 2021): Pages 13, 25, and 37 have been updated to reflect revisions to segment balance sheets, debt and interest allocated to segments and return on adjusted segment common equity.
Slide 2: Cautionary Statement Regarding Forward-Looking Information, Comment on Regulation G
Cautionary Statement Regarding Forward-Looking Information, Comment on Regulation G and Other 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, proj
Slide 3: 4Q20 and FY'20 APTI reflect continued improvement in General Insurance underwriting profitability
4Q20 and FY’20 APTI reflect continued improvement in General Insurance accident year, as adjusted*, underwriting profitability and strong Life and Retirement APTI Adjusted after-tax income attributable to AIG common shareholders (AATI)* of $827M ($0.94 per diluted common share) and adjusted pre-ta
Slide 4: Financial flexibility remains robust with strong balance sheet and lower leverage
Financial flexibility remains robust with strong balance sheet and lower leverage; Total debt & preferred stock leverage of 28.4% reflects $708M debt repayment in December 2020; $1.5B senior notes redeemed in February 2021 Capital Structure ($B) Risk Based Capital (RBC) Ratios4 $91.1 $93.2 $1.6 Hybr
Slide 5: Fourth Quarter 2020 Financial Detail
Fourth Quarter 2020 Financial Detail 5
Slide 6: APTI of $1.1B reflects continued improvement in Commercial Lines AYCR
APTI of $1.1B reflects continued improvement in Commercial Lines AYCR, as adjusted, strong Life and Retirement results reflecting higher NII, APTI basis ($M, except per common share amounts) 4Q19 4Q20 Variances Key Takeaways Adjusted pre-tax income (loss): General Insurance APTI increased by $31M
Slide 7: Gross investment income, APTI basis, decreased reflecting Fortitude sale
Gross investment income (GII), APTI basis1*, decreased $186M reflecting the June 2020 sale of Fortitude; Excluding Fortitude from 4Q19, GII, APTI basis, increased $324M reflecting higher private equity and hedge fund returns Invested Assets & Gross Investment Income, APTI Basis1 4Q20 Invested Assets
Slide 8: Corporate debt investment portfolio well diversified by industry sector
AIG’s corporate debt investment portfolio is well diversified by industry sector; credit quality remains strong with limited ratings downgrades in 4Q20 Fixed Maturity Securities by NAIC Designation Corporate Debt by Industry Sector December 31, 2020 – $240.5B1 December 31, 2020 – $142.0B1 $111.9 Oth
Slide 9: 4Q19 and 4Q20 noteworthy items
4Q19 and 4Q20 noteworthy items 4Q19 – Income / (Loss) 4Q20 – Income / (Loss) EPS – EPS – ($M, except per share amounts) Pre-tax After-tax1 Pre-tax After-tax1 diluted2 diluted2 CATs excluding General Insurance COVID-19 CATs ($413) ($326) ($0.36) ($377) ($298) ($0.34) General Insurance COVID-19 CATs -
Slide 10: General Insurance: 2.9 pts better AYCR, as adjusted
General Insurance: 2.9 pts better AYCR, as adjusted; 4.4 pt improvement in Global Commercial Lines due to improved business mix as a result of underwriting actions ($M) 4Q19 4Q20 Net Premiums Written (NPW) ($M) Net premiums written $5,830 $5,565 Global Commercial Lines Global Personal Insurance Net
Slide 11: General Insurance: North America Commercial Lines AYCR improvement
General Insurance: 4.0 pt improvement in North America Commercial Lines AYCR, as adjusted; Personal Insurance impacted by Travel and Syndicate 2019 ($M) 4Q19 4Q20 Key Takeaways: Net premiums written $2,639 $2,361 North America (NA) Commercial Lines NPW grew 10% from the prior year quarter reflecti
Slide 12: General Insurance: Strong improvement in International AYCR
General Insurance: Strong 3.9 pt improvement in International AYCR, as adjusted, due to improved business mix along with rate increases ($M) 4Q19 4Q20 Key Takeaways: Net premiums written $3,191 $3,204 International Commercial Lines NPW grew 7% from the prior year quarter Commercial Lines 1,554 1,6
Slide 13: Life and Retirement: Strong increase in APTI driven by higher NII
Life and Retirement: Strong increase in APTI compared to 4Q19 driven by higher NII and lower GOE, partially offset by base spread compression and COVID-19 mortality Adjusted Pre-Tax Income (APTI) ($M) Key Takeaways $1,027 4Q20 APTI reflects higher NII, APTI basis, driven by private equity $127 ret
Slide 14: Life and Retirement: Individual and Group Retirement APTI
Life and Retirement: Individual and Group Retirement APTI up 10% and 52%, respectively, driven by strong equity markets and favorable impacts from lower interest rates and tighter credit spreads, partially offset by base spread compression Key Takeaways Individual Retirement* 4Q20 vs 4Q19 APTI resul
Slide 15: Life and Retirement: Life Insurance and Institutional Markets APTI
Life and Retirement: Life Insurance APTI reflects COVID-19 mortality impact, offset in part by strong private equity returns and favorable impacts from lower interest rates and tighter credit spreads; Institutional Markets APTI reflects strong private equity returns and growth in reserves Life Insur
Slide 16: Other Operations: APTL increased
Other Operations: APTL increased principally due to higher consolidation and eliminations from consolidated investment entities, the sale of Fortitude in 2Q20, as well as higher interest expense from May 2020 bond issuance ($M) 4Q19 4Q20 Corporate and Other ($301) ($519) Asset Management 10 91 Adjus
Slide 17: Full Year 2020 Financial Detail
Full Year 2020 Financial Detail 17
Slide 18: FY'20 APTI of $3.0B reflects higher CATs, including COVID-19
FY’20 APTI of $3.0B reflects higher CATs, including COVID-19, and lower NII than the prior year; General Insurance AYCR, as adjusted, improved 1.9 pts; Life and Retirement APTI nearly flat ($M, except per common share amounts) FY’19 FY’20 Variances Key Takeaways Adjusted pre-tax income (loss): Gener
Slide 19: GII, APTI basis, decrease reflects Fortitude sale
GII, APTI basis1, decrease of $1.9B reflects the June 2020 Fortitude sale, lower FVO bond income, and yield compression on available for sale securities Invested Assets & Gross Investment Income, APTI Basis1 FY'20 Invested Assets Gross Investment Income, APTI basis1 ($M) $B Fixed Maturities Alternat
Slide 20: FY'19 and FY'20 noteworthy items
FY’19 and FY’20 noteworthy items FY’19 – Income / (Loss) FY’20 – Income / (Loss) EPS – EPS – ($M, except per share amounts) Pre-tax After-tax1 Pre-tax After-tax1 diluted2 diluted2 CATs excluding General Insurance COVID-19 CATs ($1,273) ($1,006) ($1.13) ($1,358) ($1,073) ($1.23) General Insurance COV
Slide 21: AIG 200, a global multi-year initiative for transformational change
AIG 200, a global, multi-year initiative to achieve transformational change and $1B of GOE savings; FY’20 exit run-rate savings of ~$400M, exceeding original GOE target of $300M by ~33% The Standard Commercial Underwriting Platform will modernize global underwriting capabilities by 1 simplifying pro
Slide 22: General Insurance: 1.9 pts better AYCR, as adjusted
General Insurance: 1.9 pts better AYCR, as adjusted; 3.4 pt improvement in Global Commercial Lines due to improved business mix as a result of underwriting actions ($M) FY'19 FY'20 Net Premiums Written ($M) Net premiums written $25,092 $22,959 Global Commercial Lines Global Personal Insurance Net pr
Slide 23: General Insurance: North America Commercial AYCR improvement
General Insurance: Strong 2.8 pt improvement in North America Commercial AYCR, as adjusted; Personal Insurance impacted by Travel and Syndicate 2019 ($M) FY'19 FY'20 Key Takeaways: Net premiums written $11,490 $9,784 NA Commercial Lines NPW grew 5% over the prior year reflecting strong rate moment
Slide 24: General Insurance: 3.0 pt improvement in International AYCR
General Insurance: 3.0 pt improvement in International AYCR, as adjusted, due to improved risk selection, rate increases, and ongoing expense discipline ($M) FY'19 FY'20 Key Takeaways: Net premiums written $13,602 $13,175 International Commercial Lines NPW grew 1% and International Personal Insura
Slide 25: Life and Retirement: Stable APTI in 2020
Life and Retirement: Stable APTI in 2020 despite COVID-19 mortality and base spread compression impacts that were largely offset by strong equity markets and higher call and tender income Adjusted Pre-Tax Income (APTI) ($M) -1% or $3,553 $3,531 Key Takeaways -$22M $308 $438 $331 APTI reflects the
Slide 26: Life and Retirement: Individual and Group Retirement APTI
Life and Retirement: Individual and Group Retirement APTI reflect strong equity markets, offset largely by base spread compression and lower income from FVO bonds Key Takeaways Individual Retirement* FY20 vs FY19 APTI results reflect Assets Under Favorable impacts from: Premiums and Net Flows Admini
Slide 27: Life and Retirement: Life Insurance and Institutional Markets
Life and Retirement: Life Insurance 2020 APTI declined driven by higher mortality due to COVID-19, offset in part by strong equity markets; Institutional Markets APTI reflects strong private equity returns and growth in reserves Key Takeaways Life Insurance FY20 APTI vs FY19 results reflect Favorabl
Slide 28: Life and Retirement: Balance sheet, capital generation and liquidity
Life and Retirement: Balance sheet, capital generation and liquidity remained strong in 2020 Strong Balance Sheet Fundamentals Dividends and Tax Sharing Payments ($B)1 Post-Fortitude sale, relatively limited net exposure to legacy $4.8 blocks of business; no Long-Term Care exposure and limited pre
Slide 29: Other Operations: APTL increased
Other Operations: APTL increased principally due to the sale of Fortitude in 2Q20, lower NII associated with available for sale securities (excluding Fortitude), the impact of consolidated investment entities on consolidation and eliminations, as well as higher interest expense from May 2020 bond is
Slide 30: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations 30
Slide 31: 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 32: 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 Deferred Tax Assets (DTA) (Adjusted Book Val
Slide 33: 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
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated Twelve Months Ended (in millions) Quarterly December 31, 4Q19 4Q20 2019 2020 Pre-tax income (loss) from continuing operations $ 1,036 $ (558) $ 5,287 $ (7,293) Adjustments to arrive at Adjusted pre-tax income (loss) Change
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Pre-tax and After-tax Income - Consolidated Twelve Months Ended (in millions) Quarterly December 31, 4Q19 4Q20 2019 2020 After-tax net income (loss), including noncontrolling interests $ 869 $ (16) $ 4,169 $ (5,829) Noncontrolling interests (income) loss 60 (37) (82
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Book Value Per Common Share (in millions, except per common share data) As of December 31, September 30, Book Value Per Common Share 2019 2020 2020 Total AIG shareholders' equity $ 65,675 $ 66,362 $ 64,108 Less: Preferred equity 485 485 485 Total AIG common shareholders' equ
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Return on Common Equity (in millions) Quarterly December 31, Return On Common Equity Computations 4Q19 4Q20 2019 2020 Actual or Annualized net income (loss) attributable to AIG common shareholders (a) $ 3,688 $ (240) $ 3,326 $ (5,973) Actual or Annualized adjusted after-tax
Slide 38: 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, 4Q19 4Q20 2019 2020 4Q19 4Q20 2019 2020 Loss ratio 6
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 - International Ended General Insurance - International - Ended Quarterly December 31, Commercial Lines Quarterly December 31, 4Q19 4Q20 2019 20
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations Net Premiums Written – Change in Constant Dollar Global - International - General Insurance Commercial Lines Commercial Lines Foreign exchange effect on worldwide premiums: 4Q20 4Q20 Change in net premiums written Increase (decrease) in original currency 7 % 5 % Foreign exch
Slide 41: Non-GAAP Reconciliations
Non-GAAP Reconciliations Premiums (in millions) Twelve Months Ended Quarterly December 31, Individual Retirement: 4Q19 4Q20 2019 2020 Premiums $ 39 $ 37 $ 104 $ 151 Deposits 3,121 2,720 14,804 10,228 Other (4) 1 (9) (9) Premiums and deposits $ 3,156 $ 2,758 $ 14,899 $ 10,370 Individual Retirement (F
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