American International Group, Inc. New · NYSE:AIG
American International Group, Inc. New — American International Group — Investor Presentation (August 2016)
37 slides from American International Group, Inc. New's investor presentation, Aug 30, 2016
Slide 1: Investor Presentation August 30, 2016
Investor Presentation August 30, 2016 EXHIBIT 99.1
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
Slide 3: Vision for AIG
Vision for AIG “Today, AIG announces steps to narrow its focus, improve its financial performance, and return capital to shareholders. While we take these steps to maximize shareholder value, we continue to think holistically about all of our stakeholders. Importantly, we are committed to being our
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 the announced agreement to sell 100% of UGC to Arch Capital Group Ltd. and the completed sa
Slide 5: Clear and Achievable Financial Targets
Clear and Achievable Financial Targets Operating Portfolio Legacy Portfolio (1) Consolidated ~$14 bn $23 bn 10.3 - 10.7% 9.3 - 9.7% ~9% 8.4 - 8.9% (2) (2) Notes: (1) Legacy Portfolio assets may evolve over time. (2) Normalized ROE excluding AOCI & DTA, a non-GAAP financial measure. Operating Portfol
Slide 6: Progress On Financial Targets
Progress On Financial Targets Objective FY 2016 Target YTD June 30, 2016 Selected 2Q Actions Reduce GOE, Operating Basis 6% Reduction (~$700mm) The expense decline in 2Q16 reflected our actions to reduce employee-related expenses and professional fees Increase Normalized ROE 8.4 - 8.9% Normalized RO
Slide 7: Reducing Exposure to Market Sensitive Assets
Reducing Exposure to Market Sensitive Assets As part of our on-going de-risking and divestiture of legacy assets, AIG has reduced its overall exposure from assets that are recorded at fair value through earnings by over 40% (or $19B) since 2010. The decline has come primarily from the wind down of t
Slide 8: Impact of Low Interest Rate Environment
Impact of Low Interest Rate Environment Estimates are based on a 100 bps reduction of the 10-year U.S. Treasury yield from the January 26th plan of 2.6% to 1.6% in 2017. Amounts presented do not include the potential impact from changes in actuarial assumptions (e.g., DAC unlocking) or change in Wor
Slide 9: Return Significant Capital to Our Shareholders in 2016-2017
Return Significant Capital to Our Shareholders in 2016-2017 Projected Sources for 2016-2017 Capital Return Goal ($ bn) 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 (3)
Slide 10: General Operating Expense, Operating Basis, Reductions
General Operating Expense, Operating Basis, Reductions Targeting $1.6B of Gross GOE, Operating Basis, Reductions or $1.4B of Net GOE Reductions, Operating Basis, by 2017 from GOE, Operating Basis, of $11.1B for full year 2015 ($ in Millions) 1H’15 vs. 1H’16 ê11% GOE, operating basis, reductions in 1
Slide 11: Organizational Transparency
Organizational Transparency Operating Portfolio Legacy Portfolio (1) Objectives Value-maximization and capital release from monetizing or running off non-strategic assets Operating ROE improvement across modular, focused business units Notes: (1) Legacy Portfolio assets may evolve over time. (2) Cou
Slide 12: Divestitures – No Sacred Cows
UGC – Agreed to sell 100% of UGC to Arch Capital Group Ltd. in August 2016 AIG Advisor Group – completed sale to Lightyear Capital and PSP Investments in May 2016 Divestitures – No Sacred Cows Announced Divestitures Does the business help us... Meet or exceed the cost of capital? Create diversificat
Slide 13: Continued Improvement in Commercial Insurance Property Casualty Accident Year Loss Ratio
Continued Improvement in Commercial Insurance Property Casualty Accident Year Loss Ratio, As Adjusted Commercial Insurance Property Casualty Accident Year Loss Ratio, As Adjusted, (Adjusted For 2012-2015 Prior Year Development)
Slide 14: Commercial Insurance Accident Year Loss Ratio Dispersion
Commercial Insurance – Property Casualty Accident Year Loss Ratio, As Adjusted, Dispersion1 The comparison is based on the same product set definition as FY15.
Slide 15: Commercial Insurance – Operating Actions
Client Focus Refine our focus on client segmentation Successful execution in these areas and other AIG-wide initiatives expected to produce the following benefits by 2017 compared to 2015: ~+$1.2 bn PTOI Accident year loss ratio, as adjusted(1), improvement of 6 points Portfolio “Exits” Exit or reme
Slide 16: Consumer Insurance – Operating Actions
Actions to sharpen Consumer focus will improve profitability Leverage Successes Japan Reinsurance Expand on successes in High Net Worth and Service businesses Reduce Footprint Successful execution in these areas and other AIG-wide initiatives expected to produce the following benefit by 2017 compare
Slide 17: Reserves – Non-Life Insurance Companies
Reserves – Non-Life Insurance Companies Business mix shift to shorter-tail lines expected to reduce net reserves Reduction in outstanding loss reserves for long-tail reserve segments expected to reduce reserve variability Note: Allocation by accident year for illustration purposes only and subject t
Slide 18: Deferred Tax Assets
Deferred Tax Assets As of 12/31/14 As of 12/31/15 ($ in Billions) Type Gross Attributes Deferred Tax Asset Gross Attributes Deferred Tax Asset Utilization/Expiration Net Operating Loss Carryforwards Non-Life & Life $29.4 $10.3 $32.6 $11.4 Utilize against Non-Life Insurance Companies, Corporate & Oth
Slide 19: Impact of Potential Separation on DTA
Impact of Potential Separation on DTA A separation of AIG’s life business would impair the value of AIG’s tax attribute DTAs Without Life income, FTCs generally cannot be used as credits since NOLs must be used first Without Life income, NOL usage would slow down, reducing the value of the tax attri
Slide 20: AIG's Risk Profile
AIG’s Risk Profile Total Assets ($ bn) Total Gross Notional Derivatives ($ bn) (1) Leverage Ratio (x) (2) VA Assets / Total Equity (3) Source: Company filings. Notes: Figures are as of June 30, 2016. (1) Calculated as sum of the gross notional amounts of derivative assets and liabilities. AIG data i
Slide 21: Strong Capital Position
21 Strong Capital Position Ratios: Dec. 31, 2015 June 30, 2016 Hybrids / Total capital 1.2% 0.8% Financial debt / Total capital 16.3% 18.6% Total Hybrids & Financial debt / Total capital 17.5% 19.4% Capital Structure ($ in Billions) 1 $109.4 $112.2 Year-end Domestic Life Insurance Companies Domestic
Slide 22: Parent Liquidity
Parent Liquidity ($ in Billions) Changes in Parent Liquidity $7.1 Unencumbered Securities $4.1 Cash & S/T Inv. $3.0 Includes: Non-Life = ~$1.0B Life = ~$0.7B Tax Pmts = ~$1.1B Parent Liquidity at June 30, 2016 of $6.7 billion is within our target range of $6-8 billion. Proceeds from legacy assets of
Slide 23: Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth
Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth Growth of 5% in 2Q16 (4% in 1H’16) Primarily represents net realized capital gains. $59.05 Book Value Per Common Share, ex. AOCI & DTA, including Dividend Growth $0.98 $0.70 $1.07 $0.18 ($0.08) ($0.12) $61.78 1
Slide 24: Normalized Return On Equity Expansion
Normalized Return On Equity Expansion Underwriting Improvement, Expense Management and Active Capital Management Drives Normalized ROE Expansion Primarily represents GOE, operating basis, reductions and improved Property Casualty accident year loss ratio, as adjusted. Largely driven by share and war
Slide 25: Life Insurance Companies – Invested Assets
Life Insurance Companies – Invested Assets Includes intercompany invested assets that are eliminated in consolidation. Total Portfolio Composition Total Cash & Invested Assets as of June 30, 2016 - $213.7 billion (1) Bond Portfolio - $173.1 billion By Agency Credit Rating By NAIC Ratings Total Portf
Slide 26: Non-Life Insurance Companies – Invested Assets
Non-Life Insurance Companies – Invested Assets Includes intercompany invested assets that are eliminated in consolidation. Total Portfolio Composition Total Cash & Invested Assets as of June 30, 2016 - $115.7 billion (1) Bond Portfolio - $89.0 billion - by Agency Credit Rating Total Portfolio Compos
Slide 27: Enhanced Debt Maturity Profile
As of 12/31/2012 – Total Notional Amount: $25.5 Billion / Weighted Average Coupon: 6.35% As of 6/30/2016 – Total Notional Amount: $22.2 Billion / Weighted Average Coupon: 4.46% ($ in Millions) ($ in Millions) 1 1 1 2 Remaining callable hybrid notes are reflected at their expected call dates. The 6.4
Slide 28: Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
Slide 29: Glossary of Non-GAAP Financial Measures
We use certain of our operating performance measures, as discussed beginning in the next paragraph below, to define our forward-looking financial targets as described on pages 4, 5, 6, 10 and 13. Our financial targets are provided based on management’s estimates. The most directly comparable GAAP fi
Slide 30: Return on Equity – After-tax Operating Income Excluding AOCI and DTA
Return on Equity – After-tax Operating Income Excluding AOCI and Return on Equity – After-tax Operating Income Excluding AOCI and DTA are used to show the rate of return on shareholders’ equity. We believe these measures are useful to investors because they eliminate items that can fluctuate signifi
Slide 31: Glossary of Non-GAAP Financial Measures (continued)
Glossary of Non-GAAP Financial Measures (continued) Pre-tax operating income and loss is derived by excluding the following items from pre-tax income and loss: loss on extinguishment of debt net realized capital gains and losses changes in benefit reserves and DAC, VOBA and SIA related to net realiz
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Represents U.S. tax attributes related to net operating loss carryforwards and foreign tax credits. Represents transfer of the equity associated with discontinued/run-off businesses (primarily Life Insurance Companies run-off portfolios and pre-2012 structured settlements) t
Slide 33: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income
Slide 34: Non-GAAP Reconciliation – Book Value Per Common Share and Return On Equity
Non-GAAP Reconciliation – Book Value Per Common Share and Return On Equity * Represents U.S. tax attributes related to net operating loss carryforwards and foreign tax credits.
Slide 35: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted
Slide 36: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA
Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA1 Note: Normalizing adjustments are tax effected using a 35% tax rate and computed based on average normalized shareholders’ equity, excluding AOCI and DTA, for the respective period. Represents U.S. tax attributes related to net operating loss
Slide 37: Bring on tomorrow
Bring on tomorrow
American International Group — Investor Presentation (August 2016) on 6ix