American International Group, Inc. New · NYSE:AIG

American International Group, Inc. New — American International Group — Q3 2016 Earnings Presentation

36 slides from American International Group, Inc. New's earnings presentation, Nov 3, 2016

1. Slide 1: Conference Call Presentation Third Quarter 2016

   American International Group, Inc. Conference Call Presentation Third Quarter 2016 November 3, 2016

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: Progress On Financial Targets

   Progress On Financial Targets FY 2016 YTD Objective Selected 3Q Actions Target Sept. 30, 2016 Reduce  The expense decline in 3Q16 reflected our actions to reduce 6% Reduction 10%1 employee-related expenses and professional fees GOE, (~$700mm) ($806mm)  Restructuring charge of $210 million related

4. Slide 4: Consolidated Operating Financial Highlights

   Consolidated Operating Financial Highlights ($ in Millions, Except per Share Amounts) 3Q15 3Q16 Inc. / (Dec.) Operating revenues $13,179 $13,596 3% Pre-tax operating income (loss): Commercial Insurance1 592 729 23% Consumer Insurance: Retirement 635 1,108 74% Life (40) 98 N/M Personal Insurance 62 1

5. Slide 5: Impact of Review of Actuarial Assumptions

   Impact of Review of Actuarial Assumptions Operating Loss of $0.231 Per Diluted Share in 3Q16 ($ in Millions) Consumer Insurance Corporate and Other – Institutional Markets $330 $39 ($47) ($622) ($84) Fixed Annuities Retirement Income Solutions Institutional Markets Group Retirement Life  Lower surr

6. Slide 6: UGC Sale

   UGC Sale     Quota Share A Compelling Strategic Estimated Post-Closing Positive Capital Arrangement Allows for Transaction Financial Impact Management Impact Retention of Attractive Economics  Sale was more efficient  ~$450 million1 estimated  Increases confidence in  AIG will retain 50% quo

7. Slide 7: Value Based Management Drives 3Q16 Strategic Transactions

   Value Based Management Drives 3Q16 Strategic Transactions Total Liquidity to Parent Estimated at $1.7 Billion1 Ascot NSM Fairfax2 Life Reinsurance3  Agreed to sell interest to  Sold our 95.3% controlling  October 2016 agreement to  Entered into a reinsurance Canada Pension Plan interest in NSM I

8. Slide 8: Improvement in General Operating Expenses, Operating Basis

   Improvement in General Operating Expenses, Operating Basis ($ in Millions) 9M'15 vs. 9M'16 10% $8,401 $8,213 $27 $7,407 $68 $7,475 $161 $352 $454 9M'15 FX Impact GOE of 9M'15 Ex. Staff Professional 9M'16 Ex. GOE of 9M'16 As Reported AIG Advisor FX & GOE of Reductions & Fees, T&E & GOE of AIG Adviso

9. Slide 9: Normalized Return On Equity Expansion

   Normalized Return On Equity Expansion Active Capital Management, Underwriting Improvement, and Expense Management Drives Normalized ROE Expansion Normalized Return On Equity 0.9% 1.2% 7.1% (0.5%) 5.9% (0.4%) 1 3Q15 Capital Operating Alternative Other, net 3Q16 2 Improvement Asset Returns 1) Largely

10. Slide 10: Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth

    Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth Growth of 1% in 3Q16 (5% YTD) Book Value Per Common Share, ex. AOCI & DTA, including Dividend Growth $1.00 $0.21 $62.39 $0.04 $61.78 ($0.07) ($0.57) June 30, Operating Non-operating Utilization of Accretive Dividends Sept. 30, 2016 Earn

11. Slide 11: Strong Capital Position

    Strong Capital Position Capital Structure ($ in Billions) Capital Return ($ in Millions) 3Q16 9M'16 $109.4 $110.9 $1.3 $0.9 Share repurchases $2,258 $8,506 $17.9 $20.8 Warrant repurchases - 263 $16.8 $15.6 Dividends declared 338 1,051 $2.5 $9.1 Total $2,596 $9,820 $70.9 $64.5 Risk Based Capital Rati

12. Slide 12: Parent Liquidity

    Parent Liquidity ($ in Billions) Changes in Parent Liquidity Targeted Range $6-8B $0.9 $3.9 $8.6 $6.7 $2.6 $0.3 Unencumbered Unencumbered Includes: Securities Securities Non-Life = $1.0B $6.2 Life = $2.3B $4.7 Tax Pmts = $0.6B Cash & S/T Cash & S/T Inv. $2.0 Inv. $2.4 Balance at Insurance Legacy Sha

13. Slide 13: Commercial Insurance

    Commercial Insurance AlG

14. Slide 14: Commercial Insurance – Financial Highlights

    Commercial Insurance – Financial Highlights ($ in Millions) 3Q15 3Q16  The decline in NPW (ex. FX) of ~17% was primarily driven by: – Reinsurance and portfolio exits ~7% Net premiums written $5,275 $4,357 – Risk Selection, market headwinds and other ~10%  The accident year loss ratio, as adjusted,

15. Slide 15: Commercial Insurance Accident Year Loss Ratio, As Adjusted, Trend

    Commercial Insurance Accident Year Loss Ratio, As Adjusted, Trend 80% 75% Quarterly AYLR, As Adjusted, Trend 76.9% 70% 75% 65% 60% Accident Year Loss Ratio Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 70% FY12 FY13 FY14 FY15 9M'16 70.0% 67.2% 67.9% 65% 66.2% 64.1% 60% ~ 60% AY LR adjuste

16. Slide 16: Commercial Insurance – Accident Year Loss Ratio, As Adjusted, Dispersion

    Commercial Insurance – Accident Year Loss Ratio, As Adjusted, Dispersion 2015 Accident Year Loss Ratio as adjusted REMEDIATE 91% MAINTAIN AND IMPROVE FY15 AYLR Product Set 3 GROW 66% FY15 AYLR 41% FY15 AYLR Product Set 2 Product Set 1 0 Net Premiums Earned ($BN) ~$20 Product Set Movement Set Product

17. Slide 17: Consumer Insurance

    Consumer Insurance AlG

18. Slide 18: Consumer Insurance – Retirement Financial Highlights

    Consumer Insurance – Retirement Financial Highlights ($ in Millions) 3Q15 3Q16  Decrease in premiums and deposits was primarily due to lower sales in Premiums and deposits1 $6,625 $5,172 Retirement Income Solutions and Fixed Annuities; the impact on net Premiums 37 45 flows was partially offset by

19. Slide 19: Consumer Insurance – Retirement – Base Yields and Spreads

    Consumer Insurance – Retirement – Base Yields and Spreads Base Yields1 5.20% 4.99% 4.98% 4.92% 4.93% 5.00% 4.87% 4.80% 4.95% 4.90% 4.90% 4.80% 4.70% 4.60% 3Q15 4Q15 1Q16 2Q16 3Q16 Cost of Funds2 3.50% 2.98% 2.95% 2.94% 2.90% 2.87% 3.00% 2.50% 2.79% 2.79% 2.78% 2.76% 2.74% 2.00% 3Q15 4Q15 1Q16 2Q16 3

20. Slide 20: Consumer Insurance – Life Financial Highlights

    Consumer Insurance – Life Financial Highlights ($ in Millions) 3Q15 3Q16 Premiums and deposits $1,223 $1,363 Premiums 675 791  Excluding the effect of FX, Life premiums and deposits increased 10% YoY (11% on a reported basis), primarily due to Policy fees 392 314 growth in International Life and He

21. Slide 21: Consumer Insurance – Personal Insurance Financial Highlights

    Consumer Insurance – Personal Insurance Financial Highlights ($ in Millions) 3Q15 3Q16  Improvement in underwriting income reflects: – Strategic actions to reduce expenses, including Net premiums written $3,016 $2,919 refocused direct marketing activities; Net premiums earned – Higher current year

22. Slide 22: Q&A

    Q&A AlG

23. Slide 23: Appendix

    Appendix AlG

24. Slide 24: Prior Year Reserve Development

    Prior Year Reserve Development ($ in Millions) (Favorable) Unfavorable Prior Year Prior Year Development (Favorable) Unfavorable 3Q16 9M'16 Development by Accident Year 3Q16 9M'16 Commercial Insurance Accident Year Financial lines $ (5) $ (5) 2015 $ 76 $ (56) Casualty 11 81 2014 122 54 Specialty 379

25. Slide 25: Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth

    Book Value Per Share, Ex. AOCI & DTA, Including Dividend Growth 8% Growth YTD Excluding the Impact of Market Volatility, Loss Recognition on Legacy Annuities, Change in Reserve Discount and Non-Operating Items Book Value Per Common Share, ex. AOCI & DTA, including Dividend Growth $0.55 $0.99 ($0.51)

26. Slide 26: Reducing Exposure to Market Sensitive Assets

    Reducing Exposure to Market Sensitive Assets Market Sensitive Assets as a % Annualized Return on Market Sensitive Assets of Total Invested Assets* 10.8% 10.7% 11.0% 10.8% 14.1% 9.4% 9.2% 8.9% 10.5% 10.2% 9.0% 8.0% 7.1% 8.1% 7.4% 7.1% 4.3% (0.5%) (2.4%) (12.5%) 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

27. Slide 27: Non-GAAP Reconciliations

    Non-GAAP Reconciliations 27

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

    Glossary of Non-GAAP Financial Measures AIG 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 3, 7, 8, and 16. Our financial targets are provided based on management’s estim

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

    Glossary of Non-GAAP Financial Measures AIG  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 t

30. Slide 30: Glossary of Non-GAAP Financial Measures (continued)

    Glossary of Non-GAAP Financial Measures (continued) Consumer Insurance: Retirement and Life; Corporate and Other: Institutional Markets  Pre-tax operating income is derived by excluding the following items from pre-tax income: – changes in fair value of securities used to hedge guaranteed living be

31. Slide 31: 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 3Q15 3Q16 3Q15 3Q16 ($ in Millions) Premiums and Deposits $6,625 $5,172 $1,223 $1,363 Deposits (6,542) (5,128) (369) (375) Other (46) 1 (179) (197) Premiums $37 $

32. Slide 32: Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income

    Non-GAAP Reconciliation – Pre-tax and After-tax Operating Income 3Q15 3Q16 Reconciliations of Pre-tax and After-tax Operating Income Tax Tax ($ in millions) Pre-tax Effect After-tax Pre-tax Effect After-tax Operating income, excluding noncontrolling interests $848 $164 $684 $1,612 $512 $1,100 Noncon

33. Slide 33: 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, 2015 June 30, 2016 Sept. 30, 2016 ($ in Millions, Except Per Share Data) Total AIG shareholders’ equity (a) $89,658 $89,946 $88,663 Less: Accumulated other comprehensive income (AOCI) (2,5

34. Slide 34: Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted

    Non-GAAP Reconciliation – Accident Year Combined Ratio, as Adjusted Commercial Insurance Personal Quarterly Full Year Insurance Accident Year Combined Ratio, As Adjusted 3Q15 3Q16 2011 2012 2013 2014 2015 9M'16 3Q15 3Q16 Loss ratio 72.8 77.7 84.1 80.5 71.9 71.6 85.7 73.1 53.4 56.3 Catastrophe losses

35. Slide 35: Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA

    Non-GAAP Reconciliation – Normalized ROE, Ex. AOCI & DTA1 3Q15 3Q16 ($ in m illions) Pre-tax Tax Effect After-tax ROE Pre-tax Tax Effect After-tax ROE Operating incom e, net of noncontrolling interests $848 $164 $691 3.5% $1,612 $512 $1,097 6.7% Adjustm ents to arrive at Norm alized ROE, ex. AOCI &

36. Slide 36: About American International Group, Inc. (AIG)

    American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, today we provide a wide range of property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 100 countries and jurisdi

American International Group — Q3 2016 Earnings Presentation on 6ix