 American International Group, Inc.
Investor Presentation
First Quarter 2015
May 12, 2015
Exhibit 99.1 |
 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
constitute
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
These
projections,
goals,
assumptions
and
statements
are
not
historical
facts
but
instead represent only AIG’s belief regarding future events, many of which, by
their nature, are inherently uncertain and outside AIG’s control. These
projections, goals, assumptions and statements include statements preceded by, followed by or including words such as “believe,”
“anticipate,”
“expect,”
“intend,”
“plan,”
“view,”
“target”
or “estimate”. It is possible that AIG’s actual results and
financial condition will differ, possibly materially, from the results and
financial condition indicated in these projections, goals, assumptions and statements. Factors that could cause
AIG’s actual results to differ, possibly materially, from those in the
specific projections, goals, assumptions and statements include: changes in
market conditions; the occurrence of catastrophic events, both natural and
man-made; significant legal proceedings; the timing and applicable
requirements of any new regulatory framework to which AIG is subject as a nonbank
systemically important financial institution and as a global systemically
important insurer; concentrations in AIG’s investment portfolios; actions by credit rating agencies; judgments concerning casualty
insurance underwriting and insurance liabilities; judgments concerning the
recognition of deferred tax assets; and such other factors discussed in Part
I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in AIG’s Quarterly Report on
Form
10-Q for the quarterly period ended March 31, 2015 and in Part I, Item 1A. Risk
Factors and Part II, Item 7. MD&A in AIG’s Annual Report on
Form
10-K for the year ended December 31, 2014.
AIG is not under any obligation (and expressly disclaims any obligation) to update
or alter any projections, goals, assumptions or other statements,
whether
written
or
oral,
that
may
be
made
from
time
to
time,
whether
as
a
result
of
new
information,
future
events
or
otherwise.
This
document
and
the remarks made orally may also contain certain non-GAAP financial measures.
The reconciliation of such measures to the most comparable GAAP
measures
in
accordance
with
Regulation
G
is
included
in
the
First
Quarter
2015
Financial
Supplement
available
in
the
Investor
Information
section of AIG's corporate website, www.aig.com, as well as in the Appendix to this
presentation. Note: Information included in the presentation is as of March
31, 2015, unless otherwise indicated. 2 |
 A
Global Insurance Company Balancing Growth, Profitability, and Risk AIG
Today Value-Based Metrics
Economic risk selection based on risk adjusted profitability and
value of new business
Information-driven underwriting approach
Reduced exposure to capital intensive lines of business
Balance Sheet Quality
and Strength
Significant de-risking of the balance sheet
Optimizing economic return on non-core assets
Actively managing capital for sustained strength and stability
Scale, Diversity, and
Sustainability
Unique global insurance franchise serving customers in over 100
countries and jurisdictions
A sustained history of product innovation meeting our customers’
risk demands
Financial strength supporting our commitment to customers
3 |
 4
Building Long Term Intrinsic Value
Simplifying
Balance Sheet &
Reducing Risk
Reductions in non-core risk assets
Improved balance sheet strength
Multiple sources of liquidity, including insurance subsidiaries and DTA
Well balanced investment portfolio
Operational
Performance
Three year financial targets (book value, ROE, and expense reduction)
Improvement in Property Casualty accident year loss ratio
Optimizing business mix
Managing net investment spreads
Active Capital
Management
Organic growth
Share repurchases
Dividends
Liability management
M&A |
 A
Foundation for Sustainability Accelerated wind down of DIB/GCM will eliminate
separate reporting Legacy Financial Products derivatives portfolio
insignificant relative to AIG’s overall balance sheet Balance sheet
management actions reduced risk, leverage, and volatility A Simplified and
Significantly De-Risked Balance Sheet Super Senior CDS
($ in Billions, Notional Amounts)
AIG 5-Year CDS (bps)
Total Assets to
Note: AIG 5-Year CDS is sourced from Bloomberg.
~92%
~14%
~54%
(As of Period End)
5
$15.9
$15.1
$5.1
$1.2
2012
2013
2014
1Q15
5.6x
5.4x
4.8x
4.8x
2012
2013
2014
1Q15
130
72
48
60
2012
2013
2014
1Q15
Shareholders’ Equity |
 6
AIG Consolidated Balance Sheet Selected Highlights
($ in Millions, Except per Share Amounts)
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
Mar. 31, 2015
Cash and investments
$376,975
$358,669
Total assets
548,633
541,329
Net property casualty reserves
68,782
64,316
Life
insurance
companies
reserves
1
159,508
160,887
Financial and hybrid debt
25,466
21,199
AIG
shareholders’
equity
98,002
100,470
Less: Accumulated other comprehensive income (AOCI)
(12,574)
(6,360)
Less:
Deferred
tax
assets
(DTA)
3
(18,549)
(17,797)
AIG
shareholders’
equity –
ex.
AOCI
&
DTA
$66,879
$76,313
$357,524
$358,636
515,581
520,701
61,612
165,647
166,187
19,106
21,214
2
106,898
107,979
(10,617)
(10,657)
(16,158)
$80,123
$81,756
60,143
Note: Refer to Appendix included herein for Non-GAAP reconciliations.
1)
Represents
Life
Insurance
Companies’
future
policy
benefits,
policyholder
contract
deposits,
and
excludes
separate
accounts.
2)
Does not reflect repurchases through cash tender offers of Parent debt during
April 2015. 3)
Represents U.S. tax attributes related to net operating loss carryforwards and
foreign tax credits. (15,566) |
 Credit Ratings
Capital Structure
($ in Billions, Except per Share Data)
Strong Capital Position
As of the date of this presentation, all ratings have stable
outlooks, except for Fitch which has positive outlooks.
For Non-Life Insurance Companies FSR and Life Insurance
Companies FSR, ratings only reflect those of the core insurance
companies.
$124.1
$122.3
Ratios:
Dec. 31
2012
Dec. 31
2013
Dec. 31
2014
Mar. 31
2015
Hybrids / Total capital
Financial debt / Total
capital
Total debt / Total
capital
Risk
Based
Capital
Ratios
Year End
Domestic Life
Insurance
Companies
Domestic Non-Life
Insurance
Companies
2013
2014
S&P
Moody’s
Fitch
AM Best
AIG –
Senior
Debt
A-
Baa1
BBB+
NR
AIG Non-Life –
FSR
A+
A1
A
A
AIG Life –
FSR
A+
A2
A+
A
$126.4
$129.6
$98.7
$101.1
$107.3
108.4
$15.7
$16.6
$18.8
$9.4
$5.5
$2.5
$2.4
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
Mar. 31, 2015
$16.1
Total Equity
Financial Debt
Hybrids
7.6%
12.9%
20.5%
4.5%
12.8%
17.3%
1.9%
13.2%
15.1%
1.9%
14.5%
16.4%
2
7
1
568% (CAL)
534% (CAL)
416% (ACL)
432% (ACL)
1) Includes AIG notes, bonds, loans and mortgages payable, and AIG Life Holdings, Inc. (AIGLH) notes
and bonds payable and junior subordinated debt.
2) The inclusion of RBC measures is intended solely for the information of investors and is not
intended for the purpose of ranking any insurance company or for use in connection with
any marketing, advertising or promotional activities. ACL is defined as Authorized Control Level and CAL is defined as
Company Action Level. RBC ratio for Domestic Life Insurance Companies excludes its holding company,
AGC Life Insurance Company.
|
 8
AIG
Parent
Liquidity
($ in Billions)
Insurance
Company
Distributions
($ in Millions)
Financial Flexibility
$4,349
$9.8
$8,671
$10,417
$3,528
$11.3
Multiple Sources of Liquidity
$1,496
$4,238
$2,618
$800
$2,853
$4,433
$6,761
$2,437
$1,038
$291
FY 2012
FY 2013
FY 2014
1Q15
$5.1
$6.3
$4.7
$5.0
Dec. 31, 2014
March 31, 2015
Cash & Short-term Investments
Unencumbered Fixed Maturity Securities
1) Includes distributions of both cash and fixed maturity securities. Non-Life
Insurance Companies Life Insurance Companies
Tax Sharing Payments, Net
1
2
2) Includes $2.9 billion and $2.1 billion for December 31, 2014 and March 31, 2015, respectively,
allocated toward future maturities of liabilities and contingent liquidity stress needs of the
Direct Investment book and Global Capital Markets.
|
 9
Continued Monetization of Deferred Tax Assets
Deferred Tax Assets
9
As of 12/31/13
As of 12/31/14
($ in Billions)
Type
Gross
Attributes
Deferred
Tax Asset
Gross
Attributes
Deferred
Tax Asset
Utilization/Expiration
Net Operating Loss
Carryforwards
Non-Life
& Life
$35.8
$12.5
$29.4
$10.3
Utilize against Non-Life Insurance
Companies, Corporate & Other and 35%
of Life Insurance Companies’
income
2028–2031 Expiration
Capital Loss
Carryforwards
Valuation Allowance
Life
$1.4
$0.5
($0.5)
–
–
–
Capital loss carryforward fully utilized
in 2014
Foreign
Tax Credits
General
$5.3
$5.9
Utilize against 65% of Life Insurance
Companies income
2016–2023 Expiration
Subtotal –
U.S. Tax
Attributes
17.8
16.2
Other Deferred Tax
Assets/(Liabilities)
3.4
2.5
Net Deferred Tax
Assets
$21.2
$18.7 |
 10
1) Includes intercompany invested assets that are eliminated in
consolidation. Non-Life Insurance Companies –
Invested Assets
Total Portfolio Composition
Bond
Portfolio
–
$94.7
Billion
–
by Agency Credit Rating
Total
Cash
&
Invested
Assets
as
of
March
31,
2015
–
$119.7
Billion
Corporate
debt
Non-U.S.
Governments
U.S.
Governments
States,
municipalities,
and political
subdivisions
Cash and
short-term
investments
Loans
Other
invested
assets
Equities
CDO/ABS
RMBS
CMBS
AAA
AA
A
BBB
Not
Rated
BB
B
<B
1
11%
3%
6%
3%
8%
6%
4%
18%
1%
10%
30%
19%
27%
25%
16%
3%
2%
8%
<1% |
 1) Includes intercompany invested assets that are eliminated in consolidation.
Life Insurance Companies –
Invested Assets
Total
Cash
&
Invested
Assets
as
of
March
31,
2015
–
$203.5
Billion
Corporate
debt
RMBS
CMBS
CDO/
ABS
Other
invested
assets
Loans
Cash and
short-term
investments
Non-U.S.
Governments
U.S. Governments
States,
municipalities,
and political
subdivisions
AAA
AA
A
BBB
BB
B
<B
Not
Rated
NAIC 1
NAIC 2
NAIC 3
NAIC 4
NAIC 5 & 6 –
1%
Not Rated
By Agency Credit Rating
By NAIC Ratings
13%
10%
23%
39%
4%
3%
8%
12%
5%
6%
6%
10%
1%
4%
52%
54%
38%
2%
2%
<1%
3%
3%
1%
11
1
Total Portfolio Composition
Bond
Portfolio
–
$167.8
Billion |
 1)
General operating expenses, operating basis (see non-GAAP measures in
appendix). Progress on Financial Targets
Annual Targets
Through 2017
2015
Target
1Q15
Commentary
10+% Growth in
Book Value
Per Share, ex.
AOCI and DTA
$64.05
$60.69
Growth of 4% since year-end 2014 was
largely driven by net earnings, including
significant net realized capital gains in 1Q15,
as well as accretive share repurchases.
~50+ bps Increase
in Normalized ROE,
ex. AOCI and DTA
7.9%
7.8%
1Q15 demonstrates progress towards our full
year target, however, volatility can impact
quarter-to-quarter returns.
3–5%
Reduction in
$350 -
$600
$95
from 1Q14
Net expenses declined 3% from 1Q14.
Progress on Financial Targets
($ in Millions, Except per Share Amounts)
12
Net
Expenses
1 |
 Consistent Value Creation for Shareholders
Book Value Per Share Growth
Book Value Per Share
$39.57
$45.30
$52.12
$58.23
$60.69
$3.42
$8.51
$4.34
$7.71
$7.91
$10.54
$12.57
$12.16
$11.75
$11.56
$53.53
$66.38
$68.62
$77.69
$80.16
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
March 31, 2015
BVPS, Ex. AOCI & DTA
AOCI
DTA
13 |
 Normalized ROE, Ex. AOCI & DTA*
Full Year 2014
First Quarter 2015
Pre-tax
After-tax
ROE
Pre-tax
After-tax
ROE
As reported
$9,574
$6,630
8.4%
$2,527
$1,691
8.4%
Adjustments to arrive at Normalized ROE, ex. AOCI & DTA:
Catastrophe losses below expectations
(821)
(534)
(0.7%)
(113)
(74)
(0.4%)
Better than expected alternative returns
(340)
(221)
(0.3%)
(141)
(92)
(0.4%)
Better than expected DIB & GCM returns
(939)
(610)
(0.8%)
(60)
(39)
(0.2%)
Fair value changes on PICC investments
(164)
(107)
(0.1%)
(54)
(35)
(0.2%)
DAC Unlocking
(127)
(83)
(0.1%)
-
-
-
Net reserve discount charge
478
311
0.4%
165
107
0.5%
Life Insurance –
IBNR death claims
104
68
0.1%
-
-
-
Unfavorable prior year loss reserve development
598
389
0.5%
35
23
0.1%
Normalized ROE, ex. AOCI & DTA
$8,363
$5,843
7.4%
$2,359
$1,581
7.8%
* Normalizing
adjustments
are
tax
effected
using
a
35%
tax
rate
and
computed
based
on
average
shareholders’
equity,
excluding
AOCI
and DTA, for the respective period.
14 |
 Targeting 3-5% of Annual Reduction Through 2017
General Operating Expenses
Note: General operating expenses, operating basis (see non-GAAP measures in
appendix). General operating expenses, operating basis, declined 3% from
1Q14. General Operating Expenses, Operating Basis ($ in Millions)
$2,071
$2,238
$2,206
$2,206
$1,972
$376
$368
$355
$365
$369
$407
$418
$408
$434
$423
$25
$28
$24
$11
$20
$2,879
$3,052
$2,993
$3,016
$2,784
1Q14
2Q14
3Q14
4Q14
1Q15
General operating expenses
Other acquisition expenses
Loss adjustment expenses
Investment and other expenses
15
We
manage
our
expenses
on
a
gross
basis
–
before
allocation
to
loss
adjustment
expenses,
other
acquisition
expenses
and
investment
and
other
expenses
–
as
it
provides
a
more
meaningful
indication
of
our
fixed
operating
costs. |
 ($
in Billions) Market capitalization data from Bloomberg as of year ended
December 31 except for 2015, which is as of March 31. Note:
Liability
management
amounts
exclude
activities
related
to
the
Direct
Investment
book.
1)
Represents shares purchased from the Department of Treasury.
2)
Reflects repurchase of Parent debt in cash tenders in April 2015.
AIG –
Returning Capital to Stakeholders
Legacy debt reductions
decreased net annual
interest expense by
approximately $500
million
2
since
2012
$3.5 billion increase in
share repurchase
authorization in April 2015
$6 billion in year-to-date
authorization excludes
further de-risking activity
or monetization of non-
core assets
Stable cash flows from
operating companies
1
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$13.0
$13.6
$18.5
$19.9
$3.3
$6.5
$5.1
$0.3
$1.0
$1.2
$13.0
$17.2
$26.0
$26.2
$52.1
$74.7
$77.1
$73.8
$0
$5
$15
$20
$25
$30
$35
2012
Cumulative
2012–2013
Cumulative
2012–2014
Cumulative
2012–
3/31/2015
$10
Share Repurchases
Dividends
Liability Management, Net
Market Capitalization
16 |
 Note: Refer to Appendix included herein for Non-GAAP reconciliations.
AIG Consolidated Operating Financial Highlights
Full Year
First Quarter
($ in Millions, Except per Share Amounts)
2012
2013
2014
2015
Operating revenues
$65,379
$61,524
$61,001
$14,590
Pre-tax operating income:
Commercial Insurance
2,215
4,980
5,510
1,462
Consumer Insurance
3,736
4,564
4,474
945
Total Insurance Operations
5,951
9,544
9,984
2,407
Corporate and Other
3,987
(154)
(410)
120
Total Pre-tax operating income
$9,938
$9,390
$9,574
$2,527
After-tax operating income attributable to AIG
$6,542
$6,650
$6,630
$1,691
After-tax
operating
income
attributable
to
AIG
per
common
share
-
diluted
$3.88
$4.49
$4.58
$1.22
ROE
–
After-tax
operating
income
–
ex.
AOCI
&
DTA
9.0%
9.3%
8.4%
8.4%
17 |
 Retirement
16%
Life
11%
Personal Insurance
20%
Total Operating Revenue of $61.0 Billion for FY 2014
Note: Percentages computed based on total AIG operating revenues.
1)
AIG –
A Diverse Customer-Focused Operating Platform
Commercial Insurance
FY 2014 Operating Revenue
$28.8 Billion, 47%
Consumer Insurance
FY 2014 Operating Revenue
$28.5 Billion, 47%
FY 2014 Operating Revenue
$3.7 Billion, 6%
Property Casualty
41%
Mortgage Guaranty
2%
Institutional Markets
4%
18
Corporate and Other
1
Includes AIG Parent, Global Capital Markets, Direct Investment book, Runoff
insurance lines, and AIG Life Holdings (a non-operating holding
company) and consolidation, eliminations and other adjustments. |
 19
Commercial Insurance |
 Commercial Insurance –
Strategy
Customer
Strategic
Growth
Underwriting
Excellence
Claims
Excellence
Operational
Effectiveness
Capital
Efficiency
Investment
Strategy
Strive to be our
customers’
most
valued insurer by
offering innovative
products, superior
service and
access to an
extensive global
network
Grow our
higher-value
businesses while
investing in
transformative
opportunities
Improve our
business portfolio
through better
pricing and risk
selection by using
enhanced data,
analytics and the
application of
science to deliver
superior risk-
adjusted returns
Improve claims
processes,
analytics and tools
to deliver superior
customer service
and decrease our
loss ratio
Continue
initiatives to
modernize our
technology and
infrastructure;
implement best
practices to
improve speed
and quality of
service
Increase capital
fungibility and
diversification,
streamline our
legal entity
structure,
optimize
reinsurance and
improve tax
efficiency
Increase asset
diversification and
take advantage
of yield-
enhancement
opportunities to
meet our capital,
liquidity, risk and
return objectives
Strategic Levers to Drive Shareholder Value Creation
20 |
 Commercial Insurance –
Diversified Products and Services
General Liability
Commercial Automobile Liability
Workers’
Compensation
Excess Casualty
Crisis Management
Risk Management
Other Customized Structured Programs for
Large Corporate and Multinational Customers
Global Property covers exposures to man-
made and natural disasters, includes
business interruption
Industrial, Energy and Commercial Property
Multinational Property
Directors & Officers Liability, Errors
& Omissions
Cyber Security
Fidelity
Employment Practices
Fiduciary Liability
Kidnap and Ransom
Aerospace
Environmental
Political Risk
Trade Credit
Marine
Surety
Package
Protects mortgage investors against the
risk of borrower default related to high
loan to value mortgages
First-Lien Mortgage Guaranty Insurance
Stable Wrap Products
Structured Settlement and Terminal
Funding Annuities
High Net Worth Products
Corporate-
and Bank-owned
Life Insurance
GICs
Specialty
Property
Financial Lines
Property Casualty
Mortgage Guaranty
Institutional Markets
21
Financial Lines
Casualty |
 22
Commercial Insurance –
A Market Leader
Significant Market Positions
Ranked among the top 10 most preferred commercial
insurance carriers.
1
Recognized leader in the Construction/Builders, Cyber,
Directors and Officers, Employment Practices,
Environmental, Errors and Omissions, Excess and
Surplus,
General
Liability,
Marine
–
Ocean,
Medical
Malpractice, Terrorism, Umbrella/Excess Liability, and
Workers’
Compensation markets.
1
Recognized as being in the top 25% of insurers for
handling of producers’
global insurance needs.
1
#1
in casualty claims service among insurers and TPAs by
U.S.
clients
with
more
than
$1
billion
in
revenue
5
Superior Sales &
Underwriting Capabilities
#1
commercial insurer in the U.S. with an established and
growing
position
in
Latin
America
2
;
#1
insurer of Terrorism, Medical Malpractice, Excess and
Surplus,
Environmental,
Errors
and
Omissions
1
and
Mortgage
Guaranty
insurance
3
;
#1
carrier in the Directors and Officers, Employment
Practices Liability Insurance, Umbrella/Excess Liability
markets
4
;
#1
carrier
in
the
Fiduciary
Liability
market
4
;
#2
provider of Umbrella/Excess Liability and Cyber
insurance
1
;
#2
carrier
in
the
Property
market
4
;
Ranked 2
nd
largest
group in the U.S. surplus lines market
in 2013
6
;
Lexington
Insurance
Company
was
the
largest
surplus
lines insurance carrier in the U.S.
6
1) According to the 2014 Flaspöhler Survey, which is based on opinions of over 500
producers on 37 commercial insurance carriers.
2) As measured by full year 2014 net premiums written. Refer to AIG 2014 10-K for further
information. 3) According
to Inside Mortgage Finance as measured by new insurance written as of December 31, 2014.
4) According to the 2014 RIMS Benchmark Survey. Property based on policy counts. Fiduciary liability
based on premiums. 5)
According to the 2015 Advisen Claims Satisfaction Survey.
6) According to AM Best in the 2013 Best’s Review Surplus Lines Report. |
 Commercial Insurance –
Property Casualty Financial Highlights
Full Year
First Quarter
($ in Millions)
2012
2013
2014
2015
Net premiums written
$20,348
$20,880
$21,020
$5,047
Net premiums earned
20,848
20,677
20,885
4,931
Underwriting income (loss)
(2,270)
(336)
(50)
145
Net investment income
3,951
4,431
4,298
1,025
Pre-tax operating income
$1,681
$4,095
$4,248
$1,170
Net Premiums Written
FY
2014
–
$21.0
Billion
Combined Ratios
Accident Year,
as Adjusted
Calendar Year
Property
Specialty
Financial
Lines
Casualty
Americas
EMEA
Asia
Pacific
Continued Improvement in Accident Year Combined Ratios, As Adjusted
Severe losses
1.4
2.8
2.8
2.7
1.4
2.8
2.8
2.7
24%
18%
22%
36%
65%
25%
10%
80.5
71.9
71.6
68.1
68.9
65.4
65.6
64.4
16.6
16.1
15.7
16.2
16.6
16.1
15.7
16.2
13.8
13.6
12.9
12.8
13.8
13.6
12.9
12.8
0
20
40
60
80
100
120
2012
2013
2014
1Q15
2012
2013
2014
1Q15
Loss Ratio
Acquisition Ratio
GOE Ratio
23
110.9
101.6
100.2
99.3
95.1
94.2
97.1
93.4 |
 Meaningful Remediation of Casualty Lines and Growth Outside of the U.S.
Commercial Insurance –
Property Casualty Product Mix & Geography Shift
Property Casualty
Full
Year
2010
NPW
–
$20.2
Billion
Property Casualty
Full
Year
2014
NPW
–
$21.0
Billion
Casualty
Property
Specialty
Financial
lines
Casualty
Property
Specialty
Financial
lines
EMEA
Americas
Asia
Pacific
EMEA
Americas
Asia
Pacific
71%
7%
22%
65%
10%
25%
24%
18%
22%
36%
16%
17%
18%
49%
24 |
 Business Mix Shifts Away from Long-Tail Casualty Lines and Accelerated
Commutation of Legacy Portfolios (Especially 2004 and Prior) Are Expected to
Also Reduce Reserve Variability Reserves –
Non-Life Insurance Businesses
Total Net Reserves $63.1 Billion at March 31, 2015
Business mix shift to shorter-tail lines, expected to reduce net reserves
60% of reserves is from business that has been substantially re-underwritten
(i.e., post 2011) Reduction in outstanding loss reserves for long-tail
reserve segments expected to reduce reserve variability 2004
and Prior
2005–2007
2008–2010
2011–2015
Casualty
Financial
Lines
Specialty
Property
UGC
Personal Lines
4%
Accident and Health
3%
Other Run-Off
Lines
-
7%
By Accident Year
By Line of Business
25
60%
15%
8%
17%
55%
15%
9%
6%
1%
Note: Allocation by accident year for illustration purposes only and subject to change. Net reserves
presented above are shown before the effect of a $2.9 billion loss reserve discount. Net loss
reserves for the Non-Life Insurance Companies includes Property Casualty, Personal
Insurance, Mortgage Guaranty and run-off Non-Life Insurance Companies’ businesses. |
 Strong
growth
in
operating
earnings
reflects
lower
delinquency
rates,
higher
cure
rates,
new
business growth and higher persistency.
Volume and quality of new business remain strong despite competitive
pressures. –
Average FICO of new insurance written in 1Q15 was 752.
–
Average loan-to-value of new insurance written in 1Q15 was 91%.
Mortgage Guaranty’s primary insurance subsidiary, United Guaranty Residential
Insurance Company,
maintains
an
S&P
rating
of
A
and
Moody's
rating
of
Baa1
with
stable
outlooks.
Mortgage Guaranty will be compliant with the PMIER’s standards on the December
31, 2015 effective date.
1)
Domestic First-lien only.
2)
As of the date of this presentation.
Commercial Insurance –
Mortgage Guaranty Financial Highlights
Full Year
First Quarter
($ in Millions)
2012
2013
2014
2015
Net premiums written
$858
$1,048
$1,024
$258
Underwriting income (loss)
(137)
73
454
111
Net investment income
146
132
138
34
Pre-tax operating income
$9
$205
$592
$145
Delinquency
ratio
8.8%
5.9%
4.4%
3.9%
1
26
2 |
 27
Mortgage
Guaranty’s
Risk
Quality
Index
(RQI)
is
a
proprietary
model
that
uses
over
a
dozen
variables
to
estimate
the
potential for a mortgage to default.
RQI is the key driver in Mortgage Guaranty’s risk-based pricing plan,
Performance Premium. Primary delinquency rate has returned to pre-crisis
level due to a combination of strong growth of new business and proactive
management of delinquent book. * Internal data.
Commercial Insurance –
Mortgage Guaranty Credit Quality of Loans
Mortgage Guaranty Risk Quality Index*
Primary Risk-in-force (RIF) –
$42.8 Billion
Low Quality
Loan with Average Risk
High Quality
2014
2013
2012
2011
2010
2009
2008
2007
2015
2006
and
Prior
(As of March 31, 2015)
9%
8%
4%
2%
2%
5%
16%
25%
24%
5%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Vintage |
 ($
in Millions) Commercial Insurance –
Institutional Markets Financial Highlights
Reserves & Stable Value Wraps
Assets Under Management
Full Year
First
Quarter
2012
2013
2014
2015
Premiums and deposits
$774
$991
$3,797
$146
Premiums
458
610
432
96
Policy fees
102
113
187
49
Net investment income
2,066
2,090
1,957
479
Total operating revenues
2,626
2,813
2,576
624
Benefits and expenses
2,101
2,133
1,906
477
Pre-tax operating income
$525
$680
$670
$147
28
$36,129
$36,503
$32,320
$32,422
$68,449
$68,925
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Dec. 31, 2014
Mar. 31, 2015
Total Reserves
SVW –
AUM |
 Consumer Insurance
29 |
 Consumer Insurance –
Strategy
Customer
Information-
Driven Strategy
Focused
Growth
Operational
Effectiveness
Profitability and
Capital
Management
Investment
Strategy
Strive to be our
customers’
most
valued insurer.
Through our unique
franchise, which
brings together a
broad portfolio of
retirement, life
insurance and
personal insurance
products offered
through multiple
distribution networks,
Consumer Insurance
aims to provide
customers with the
products they need,
delivered through the
channels they prefer.
Utilize customer
insight, analytics
and the application
of science to
optimize customer
acquisition, product
profitability, product
mix, channel
performance and
risk management
capabilities.
Invest in areas
where Consumer
Insurance can grow
profitably and
sustainably. Target
growth in select
markets according to
market size, growth
potential, market
maturity and
customer
demographics.
Simplify processes,
enhance operating
environments, and
leverage the best
platforms and tools
for multiple
operating segments
to increase
competitiveness,
improve service and
product capabilities
and facilitate
delivery of our
target customer
experience.
Deliver solid earnings
through disciplined
pricing and expense
management,
sustainable
underwriting
improvements and
diversification of risk,
and increase capital
efficiency within
insurance entities to
enhance return on
equity.
Maintain a diversified,
high quality portfolio
of fixed maturity
securities that largely
matches the duration
characteristics of the
related insurance
liabilities, and pursue
yield-enhancement
opportunities that
meet liquidity, risk
and return objectives.
Distinguish Ourselves in the Markets and Products We Choose.
Be the Provider of Choice Among Our Target Segments and Channels.
30 |
 Focused Growth
Consumer Insurance –
Market Maturity Model
Early Stage Market
Advanced Stage Market
Product
Channel
Customer Segment
31
Personal
Accident
Travel
Warranty
Auto &
Home
Life
Health
Retirement
Micro
Insurance
Broad Market/
Wholesaling
Career
Agency, IFAs
Public
Agencies
Financial
Services
Sponsors –
including
Brokers, Banks &
Reinsurance
Self-Employed
Employed
Emerging
Banked
Middle
Class
Affluent
High Net
Worth
General
Population |
 1)
Based on LIMRA rankings for respective periods.
2)
Source –
Non-Life Insurance Statistics, AIG internal analysis (includes Medical
products sold by Non-Life Insurance Companies). 3)
Source –
General Insurance Rating Organization of Japan.
Consumer Insurance –
Leading Market Positions
U.S. Life and
Retirement
Businesses
Personal Insurance
Rank
Metric
2014
2013
2
2
Total Annuity Sales
1
1
Fixed-Rate Deferred Annuity Sales
3
4
Variable Annuity Sales
7
10
Total Life Issued
8
8
Term Life Sales
12
9
Universal Life Sales
2
2
Total K-12 Assets
3
3
Total 403(b) Assets
32
–
40% of the Forbes 400 Richest Americans
–
43% of the American Listed on the
ARTnews
Top 200 Collectors
Japan
2
nd
in Personal Accident with 20% market
share
2
4
th
in Personal Property with 13% market
share
3
U.S.
Private Client Group
1 |
 33
Consumer Insurance Operations Continue to Be Recognized for Excellence
Globally Consumer Insurance –
Leading Businesses
Market
Tools
–
U.S.
2014 Achievement in Customer
Excellence for Life Insurance (ACE
Award for
7
th
Consecutive Year)
DALBAR
–
U.S.
2014 Annuity Service Excellence Award
(8
th
Consecutive Year)
2014 #1 Ranking for Annuity Client
Quarterly Statements
(14
th
Consecutive Year)
2014 Communication Seal for
VALIC.com
(3
rd
Consecutive
Year)
2014 Mobile InSIGHT –
Innovations in
the World of Apps Trailblazer Rating
(VALIC Mobile for iPad)
PlanSponsor
Magazine
–
U.S.
Earned 14 Best-in-Class Awards for
Participant and Plan Sponsor Services
for VALIC in 2014
International
MarCom
Awards
–
U.S.
2014 Platinum and Gold Awards for
Retirement (34 in total)
Insurance and Financial
Communications
Association
–
U.S.
2014 Best in Show and Awards of
Excellence for Retirement (4 in total)
Money
Week
Awards
–
China
AIG Travel –
China Named Best Travel
Insurance Product in 2014
Underwriting
Services
Awards
–
U.K.
AIG UK Group Travel and Personal
Accident Team of the Year in 2014
Australian Business Awards 2014
ABA100 Winner for Best Technology
Product in 2014
JD
Power
Asia
Pacific
–
Japan
AIG Japan (AIU, FFM and American
Home)
ranked #1 in
2014 Auto Insurance
Claims
Satisfaction
survey
(for
6
th
Year)
Reader’s
Digest
–
Singapore
AIG Singapore Most Trusted Brand Award
for Auto Insurance 2014
Indonesian Insurance Awards
AIG Indonesia Named Best Private
General Insurance 2014
Gaivota de Ouro Insurance Industry
Awards, Seguro
Total
Magazine
–
Brazil
AIG Brazil Earned Group Life Award
in 2014
AVA
Digital
Awards
–
U.S.
Earned 4 Platinum Awards in 2015
Travvy
Awards
–
U.S.
AIG Travel Named Top Travel
Insurance Provider
in 2015
Saigon Liberation
Newspaper Awards
AIG Travel Named Favorite
Vietnamese Brand Award
(9
th
Consecutive Year)
Motordata Research Consortium –
Malaysia
AIG Malaysia Named Insurer of the
Year 2014
MENA
Insurance
Awards
–
EMEA
EMEA Consumer Named Most
Innovative Insurer Product in 2014
Business Insurance
2014 Innovation Award –
AIG
Multinational Program Design Tool
World Travel Fair
AIG Travel Named Best Quality
Service Travel Insurance Company
for Travel Accident 2014 |
 Consumer Insurance –
Overview
Premiums and Deposits
Full Year 2014 –
$41.3 Billion
Pre-Tax Operating Income
Full Year 2014 –
$4.5 Billion
Life
Retirement
Life
Personal
Insurance
Retirement
Personal
Insurance
34
1) Premiums and deposits include net premiums written for the Personal Insurance operating segment
and premiums and deposits for the Retirement and Life operating segments. 1
58%
30%
12%
78%
13%
9% |
 35
1) Includes activity related to closed blocks of fixed and variable
annuities. Consumer Insurance –
Retirement Financial Highlights
Full Year
First Quarter
($ in Millions)
2012
2013
2014
2015
Premiums and deposits
$16,159
$23,788
$24,077
$5,522
Premiums
120
188
287
46
Policy fees
743
861
1,010
264
Net investment income
6,502
6,628
6,489
1,570
Other income
1,344
1,754
1,998
508
Total operating revenues
8,709
9,431
9,784
2,388
Benefits and expenses
5,908
5,941
6,289
1,588
Pre-tax operating income
$2,801
$3,490
$3,495
$800
Premiums and Deposits
Full
Year
2014
–
$24.1
Billion
Assets Under Management
March
31,
2015
–
$226.5
Billion
Retail
Mutual
Funds
Fixed
Annuities
Group
Retirement
Retirement
Income
Solutions
Retail Mutual
Funds
Fixed
Annuities
Group
Retirement
Retirement
Income
Solutions
14%
15%
28%
43%
6%
29%
42%
23%
1 |
 36
Base
Net
Investment
Spreads
1
1) Includes return on base portfolio. Quarterly results are annualized.
2) Excludes the amortization of sales inducement assets.
Consumer Insurance –
Retirement –
Base Yields and Spreads
Base
Yields
1
Trend in base yields reflects the reinvestment of cash flows at yields lower than
the overall portfolio rate. Management remains focused on actions to reduce
the cost of funds in order to support base spreads. In the first quarter, cost of funds
continued to benefit from active management of crediting rates, disciplined new
business pricing and the run-off of older business with crediting rates
generally higher than the overall cost of funds. Cost of Funds
2
2.40%
2.28%
2.25%
2.23%
2.21%
2.09%
1.97%
1.93%
1.98%
1.95%
1.00%
1.50%
2.00%
2.50%
3.00%
1Q14
2Q14
3Q14
4Q14
1Q15
Fixed Annuities
Group Retirement
2.85%
2.83%
2.81%
2.80%
2.78%
3.02%
3.03%
2.99%
2.98%
2.97%
2.00%
2.50%
3.00%
3.50%
1Q14
2Q14
3Q14
4Q14
1Q15
5.25%
5.11%
5.06%
5.03%
4.99%
5.11%
5.00%
4.92%
4.96%
4.92%
4.75%
4.95%
5.15%
5.35%
1Q14
2Q14
3Q14
4Q14
1Q15 |
 Individual
variable
annuities
represented
18%
of
total
reserves
at
March
31,
2015
for
AIG’s
U.S.
Life
Insurance
Companies.
AIG significantly improved its industry ranking since 2009; remaining growth
opportunity in variable annuities due to market share of only 7.7%.
Disciplined pricing and de-risked benefits: VIX indexing of rider fees,
volatility control funds, mandatory asset allocation to fixed
accounts.
Sales of index annuities with living benefits diversifies AIG’s guaranteed
income offerings. * Source: LIMRA VA Sales report. VA industry sales data
reported herein excludes Employer Plan sales and internal exchange
sales. 1) Excludes $3.9 billion of AUM at VALIC with GMWB guarantees.
2) De-Risked Benefits: Features on contracts issued since 2010 (VIX
indexing/volatility control fund in 2012). 3) Pre-2010 Partially
De-Risked Benefits: Due to actual policyholder election of extension offers to-date.
Consumer Insurance –
Retirement –
Individual Variable Annuities
Industry Retail Variable Annuity Sales*
Account Value by GMWB Guarantee
at 3/31/15
1
–
$32.4 Billion
Unique Opportunity for AIG
De-Risked
Benefits
Early
Benefits
Revised
Benefits
2
3
6%
13%
81%
37
Full Year 2014
%
Change
Full Year 2013
Company
($ in millions)
Rank
Sales
Rank
Sales
Jackson National
1
23,070
10%
1
20,931
Lincoln Financial Group
2
12,514
(9%)
2
13,772
Transamerica
3
9,923
20%
5
8,253
Prudential Financial
4
9,752
(13%)
3
11,170
AIG
5
9,072
11%
6
8,191
AXA Equitable
6
7,269
(2%)
7
7,426
Nationwide
7
6,088
7%
8
5,663
MetLife
8
5,184
(44%)
4
9,289
Ameriprise
9
4,671
(7%)
9
5,010
Pacific Life
10
4,291
(1%)
10
4,334
All Others
25,472
(2%)
25,897
Industry
117,306
(2%)
119,935 |
 1) Includes the acquisition of Ageas Protect.
Consumer Insurance –
Life Financial Highlights
Full Year
First Quarter
($ in Millions)
2012
2013
2014
2015
Premiums and deposits
$4,864
$4,862
$4,806
$1,223
Premiums
2,804
2,737
2,679
708
Policy fees
1,370
1,391
1,443
363
Net investment income
2,283
2,269
2,199
542
Total operating revenues
6,457
6,397
6,321
1,613
Benefits and expenses
5,721
5,591
5,741
1,442
Pre-tax operating income
$736
$806
$580
$171
New Business Sales
Full
Year
2014
–
$461
Million
$1,000.7
Whole Life
Term Life
Health
Other
Universal
Life
U.S.
Japan
Decline
in
pre-tax
operating
income
in
2014
primarily
reflected
an
$104
million
addition
to
reserves
for
IBNR
death
claims and lower net investment income.
$1,003.0
38
22%
26%
20%
7%
25%
54%
46%
$906.2
$910.4
$94.5
$92.6
$0
$200
$400
$600
$800
$1,000
$1,200
December 31, 2014
March 31, 2015
Domestic
International
Gross
Life
Insurance
In-Force
1
End of Period, $ in Billions |
 Consumer Insurance –
Personal Insurance Financial Highlights
Full Year
First Quarter
($ in Millions)
2012
2013
2014
2015
Net premiums written
$13,302
$12,700
$12,412
$2,915
Net premiums earned
13,103
12,377
11,970
2,799
Underwriting income (loss)
(278)
(187)
5
(89)
Net investment income
477
455
394
63
Pre-tax operating income (loss)
$199
$268
$399
($26)
Accident Year,
as Adjusted
Calendar Year
102.1
101.5
99.9
99.3
102.1
99.5
Personal
Lines
Americas
EMEA
Asia
Pacific
103.2
100.8
39
31%
17%
52%
44%
56%
59.3
56.8
54.2
58.8
25.3
26.2
27.3
17.5
18.5
18.5
17.1
56.5
57.4
53.8
56.4
27.2
25.3
26.2
27.2
27.3
17.5
18.5
18.5
17.1
0
20
40
60
80
100
120
2012
2013
2014
1Q15
2012
2013
2014
1Q15
Loss Ratio
Acquisition Ratio
GOE Ratio
Net Premiums Written
FY
2014
–
$12.4
Billion
Combined Ratios
Accident
and Health |
 Appendix –
Non-GAAP Measures
40 |
 Glossary of Non-GAAP Financial Measures
AIG
–
income and loss from divested businesses, including:
•
gain on the sale of International Lease Finance Corporation
(ILFC); and
•
certain post-acquisition transaction expenses incurred by AerCap
Holdings N.V. (AerCap) in connection with its acquisition of ILFC
and the difference between expensing AerCap’s maintenance
rights assets over the remaining lease term as compared to the
remaining economic life of the related aircraft and related tax
effects;
–
legacy tax adjustments primarily related to certain changes in
uncertain tax positions and other tax adjustments; and
–
legal
reserves
and
settlements
related
to
legacy
crisis
matters,
which
include favorable and unfavorable settlements related to events
leading up to and resulting from our September 2008 liquidity crisis
and
legal
fees
incurred
as
the
plaintiff
in
connection
with
such
legal
matters.
41
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 with our insurance
competitors. When we use these measures, reconciliations to the most comparable GAAP
measure are provided, on a consolidated basis. Operating revenue
excludes Net realized capital gains (losses), Aircraft leasing revenues, income
from legal settlements (included in Other income for GAAP purposes) and
changes in fair values of fixed maturity securities designated to hedge living benefit liabilities, net of interest expense (included in Net
investment income for GAAP purposes).
After-tax operating income attributable to AIG
is derived by excluding the following items from net income attributable to
AIG: –
deferred income tax valuation allowance releases and charges;
–
changes
in
fair
value
of
fixed
maturity
securities
designated
to
hedge
living benefit liabilities (net of interest expense);
–
changes
in
benefit
reserves
and
deferred
policy
acquisition
costs
(DAC),
value of business acquired (VOBA), and sales inducement assets (SIA)
related to net realized capital gains and losses;
–
other
income
and
expense
—
net,
related
to
Corporate
and
Other
run-off
insurance lines;
–
loss on extinguishment of debt;
–
net realized capital gains and losses;
–
non-qualifying
derivative
hedging
activities,
excluding
net
realized
capital
gains and losses;
–
income or loss from discontinued operations;
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 the effect of non-cash items that can fluctuate
significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency
translation adjustments and U.S. tax attribute deferred tax assets. Deferred tax assets represent U.S.
tax attributes related to net operating loss carryforwards and foreign tax credits. Amounts are
estimates based on projections of full year attribute utilization. Return on Equity – After-tax Operating
Income Excluding AOCI is derived by dividing actual or annualized after-tax operating income
attributable to AIG by average AIG shareholders’ equity, excluding average AOCI. Return on
Equity – After-tax Operating Income Excluding AOCI and DTA is derived by dividing actual or annualized after-tax
operating income attributable to AIG, by average AIG shareholders’ equity, excluding average AOCI
and DTA.
Book
Value
Per
Share
Excluding
Accumulated
Other
Comprehensive
Income
(AOCI)
and
Book
Value
Per
Share
Excluding
AOCI
and
Deferred
Tax
Assets
(DTA)
are
used
to
show
the
amount
of
our
net
worth
on
a
per-share
basis.
We
believe
these
measures
are
useful
to
investors
because
they
eliminate
the effect of non-cash items that can fluctuate significantly from period to period, including
changes in fair value of our available for sale securities portfolio, foreign currency
translation adjustments and U.S. tax attribute deferred tax assets. Deferred tax assets represent U.S. tax attributes related to net
operating loss carryforwards and foreign tax credits. Amounts are estimates based on projections of
full year attribute utilization. Book Value Per Share Excluding AOCI is derived by dividing
Total AIG shareholders’ equity, excluding AOCI, by Total common shares outstanding. Book Value Per Share
Excluding AOCI and DTA is derived by dividing Total AIG shareholders’ equity, excluding AOCI and
DTA, by Total common shares outstanding.
|
 42
Pre-tax
operating
income:
includes
both
underwriting
income
and
loss
and
net
investment
income,
but
excludes
net
realized
capital
gains
and
losses,
other
income
and
expense
—
net
and
legal
settlements
related
to
legacy
crisis
matters
described
above.
Underwriting
income
and
loss
is derived by reducing net premiums earned by losses and loss adjustment expenses
incurred, acquisition expenses and general operating expenses.
Ratios:
We,
along
with
most
property
and
casualty
insurance
companies,
use
the
loss
ratio,
the
expense
ratio
and
the
combined
ratio
as
measures of underwriting performance. These ratios are relative measurements that
describe, for every $100 of net premiums earned, the amount
of
losses
and
loss
adjustment
expenses,
and
the
amount
of
other
underwriting
expenses
that
would
be
incurred.
A
combined
ratio
of
less
than
100
indicates
underwriting
income
and
a
combined
ratio
of
over
100
indicates
an
underwriting
loss.
The
underwriting
environment
varies across countries and products, as does the degree of litigation activity,
all of which affect such ratios. In addition, investment returns, local
taxes, cost of capital, regulation, product type and competition can have an effect on pricing and consequently on profitability as reflected
in underwriting income and associated ratios.
Accident
year
loss
and
combined
ratios,
as
adjusted:
both
the
accident
year
loss
and
combined
ratios,
as
adjusted,
exclude
catastrophe
losses and related reinstatement premiums, prior year development, net of premium
adjustments, and the impact of reserve discounting. Catastrophe losses are
generally weather or seismic events having a net impact in excess of $10 million each.
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
and
DTA
is
derived
by
excluding
the
following
tax
adjusted
effects
from
Return
on
Equity
–
After-tax
Operating
Income,
Excluding
AOCI
and
DTA:
Glossary of Non-GAAP Financial Measures (continued)
AIG
Commercial Insurance: Property Casualty and Mortgage Guaranty; Consumer Insurance:
Personal Insurance General
operating
expenses,
operating
basis,
is
derived
by
making
the
following
adjustments
to
general
operating
and
other
expenses:
include (i) loss adjustment expenses, reported as policyholder benefits and losses
incurred and (ii) investment expenses reported as net investment income, and
exclude (i) advisory fee expenses, (ii) non-deferrable insurance commissions, (iii) direct marketing and acquisition
expenses, net of deferrals, (iv) legal reserves related to legacy crisis matters
and (v) other expense related to retroactive reinsurance agreement. We use
general operating expenses, operating basis, because we believe it provides a more meaningful indication of our ordinary
course of business operating costs.
–
Catastrophe losses compared to expectations
–
Alternative investment returns compared to expectations
–
DIB/GCM returns compared to expectations
–
Fair value changes on PICC investments
–
DAC unlockings
–
Net reserve discount change
–
Life insurance IBNR death claim charge
–
Prior year loss reserve development |
 43
Glossary of Non-GAAP Financial Measures (continued)
Corporate and Other
net gain or loss on sale of divested businesses, including:
gain on the sale of ILFC and
certain post-acquisition transaction expenses incurred by AerCap
in connection with its acquisition of ILFC and the difference
between expensing AerCap’s maintenance rights assets over the
remaining lease term as compared to the remaining economic life
of the related aircraft and our share of AerCap’s income taxes
Certain legal reserves (settlements) related to legacy crisis matters
described above
Results from discontinued operations are excluded from all of these measures.
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 fixed maturity securities designated to hedge living
benefit liabilities (net of interest expense); net realized capital gains and
losses; changes
in
benefit
reserves
and
DAC,
VOBA
and
SIA
related
to
net
realized
capital
gains
and
losses;
legal settlements related to legacy crisis matters described above.
Premiums and deposits:
includes direct and assumed amounts received and earned on traditional life
insurance policies, group benefit policies and life-contingent payout
annuities, as well as deposits received on universal life, investment-type annuity contracts and mutual funds.
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 realized capital gains and losses
income and loss from divested businesses, including Aircraft Leasing
|
 44
Non-GAAP Reconciliation –
Operating Revenues and General Operating Expenses
Full Year
First Quarter
Total Operating Revenues
(In Millions)
2012
2013
2014
2015
Total operating revenues
$65,379
$61,524
$61,001
$14,590
Reconciling Items:
Changes in fair values of fixed maturity securities designated to living
benefit liabilities, net of interest expense
37
(161)
260
44
Net realized capital gains
1,086
1,939
739
1,341
Income (loss) from divested businesses
4,502
4,420
1,602
(15)
Legal settlements related to legacy crisis matters
210
1,152
804
15
Total revenues
$71,214
$68,874
$64,406
$15,975
General operating expenses, Operating basis
($ in Millions)
1Q14
2Q14
3Q14
4Q14
1Q15
Total general operating expenses, Operating basis
$2,879
$3,052
$2,993
$3,016
$2,784
Loss adjustment expenses, reported as policyholder benefits and losses
incurred (407)
(418)
(408)
(434)
(423)
Advisory fee expenses
311
337
338
329
332
Non-deferrable insurance commissions
127
119
130
146
128
Direct marketing and acquisition expenses, net of deferrals
116
146
105
203
140
Investment expenses reported as net investment income
(25)
(28)
(24)
(11)
(20)
Total general operating and other expenses included in pre-tax operating
income 3,001
3,208
3,134
3,249
2,941
Legal reserves related to legacy crisis matters
23
506
17
-
8
Total general operating and other expenses, GAAP basis
$3,024
$3,714
$3,151
$3,249
$2,949 |
 45
Non-GAAP Reconciliation –
Premiums and Deposits
Retirement
($ in Millions)
Full Year
First Quarter
2012
2013
2014
2015
Premiums and Deposits
$16,159
$23,788
$24,077
$5,522
Deposits
(16,314)
(23,749)
(23,957)
(5,650)
Other
275
149
167
174
Premiums
$120
$188
$287
$46
Life
2012
2013
2014
2015
Premiums and Deposits
$4,864
$4,862
$4,806
$1,223
Deposits
(1,531)
(1,541)
(1,532)
(378)
Other
(529)
(584)
(595)
(137)
Premiums
$2,804
$2,737
$2,679
$708
Institutional Markets
2012
2013
2014
2015
Premiums and Deposits
$774
$991
$3,797
$146
Deposits
(289)
(354)
(3,344)
(45)
Other
(27)
(27)
(21)
(5)
Premiums
$458
$610
$432
$96
Consumer Premiums and Deposits
($ in Millions)
Full Year
2014
Total Retirement Premiums and Deposits
$24,077
Total Life Premiums and Deposits
4,806
Net Premiums Written for Personal Insurance
12,412
Total Premiums and Deposits
$41,295 |
 Non-GAAP Reconciliation –
Pre-tax and After-tax Operating Income
Full Year
First Quarter
Pre-tax and After-tax Operating Income
(In Millions, Except Per Share Data)
2012
2013
2014
2015
Pre-tax income from continuing operations
$2,891
$9,368
$10,501
$3,776
Adjustments to arrive at Pre-tax operating income:
Changes in fair values of fixed maturity securities designated to hedge living
benefit liabilities, net of interest expense
(37)
161
(260)
(44)
Changes
in
benefit
reserves
and
DAC,
VOBA
and
SIA
related
to
net
realized
capital
gains
(losses)
1,213
1,608
217
54
Other
(income)
expense
–
net
–
72
–
–
Loss on extinguishment of debt
32
651
2,282
68
Net realized capital (gains) losses
(1,086)
(1,939)
(739)
(1,341)
(Income) loss from divested businesses, including gain on sale of ILFC
6,411
177
(2,169)
21
Legal settlements related to legacy crisis matters
(210)
(1,152)
(804)
(15)
Legal reserves related to legacy crisis matters
754
444
546
8
Non-qualifying derivative hedging gains, excluding net realized capital
gains (30)
–
–
–
Pre-tax operating income
$9,938
$9,390
$9,574
$2,527
Net income attributable to AIG
$3,438
$9,085
$7,529
$2,468
Adjustments to arrive at After-tax operating income (amounts net of tax):
Uncertain tax positions and other tax adjustments
543
791
59
(42)
Deferred income tax valuation allowance releases
(1,911)
(3,237)
(181)
93
Changes in fair values of fixed maturity securities designated to hedge living
benefit liabilities, net of interest expense
(24)
105
(169)
(29)
Changes
in
benefit
reserves
and
DAC,
VOBA
and
SIA
related
to
net
realized
capital
gains
(losses)
789
1,148
141
35
Other
(income)
expense
–
net
–
47
–
–
Loss on extinguishment of debt
21
423
1,483
44
Net realized capital (gains) losses
(687)
(1,285)
(470)
(874)
(Income) loss from discontinued businesses
(1)
(84)
50
(1)
(Income) loss from divested businesses, including gain on sale of ILFC
4,039
117
(1,462)
2
Legal reserves (settlements) related to legacy crisis matters
353
(460)
(350)
(5)
Non-qualifying derivative hedging gains, excluding net realized capital
gains (18)
–
–
–
After-tax operating income
$6,542
$6,650
$6,630
$1,691
After-tax operating income per diluted share
$3.88
$4.49
$4.58
$1.22
46 |
 Non-GAAP Reconciliation –
Book Value Per Share and Return On Equity
Book Value Per Common Share ($ in Millions, Except Per Share
Data)
Dec. 31, 2011
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
Mar. 31, 2015
Total AIG shareholders’
equity (a)
$101,538
$98,002
$100,470
$106,898
$107,979
Less: Accumulated other comprehensive income (AOCI)
(6,481)
(12,574)
(6,360)
(10,617)
(10,657)
Total AIG shareholders’
equity, excluding AOCI (b)
95,057
85,428
94,110
96,281
97,322
Less: Deferred tax assets (DTA)*
(20,007)
(18,549)
(17,797)
(16,158)
(15,566)
Total AIG shareholders’
equity, excluding AOCI and DTA (c)
$75,050
$66,879
$76,313
$80,123
$81,756
Total common shares outstanding (d)
1,896.8
1,476.3
1,464.1
1,375.9
1,347.1
Book value per share (a÷d)
$53.53
$66.38
$68.62
$77.69
$80.16
Book value per share, excluding AOCI (b÷d)
$50.11
$57.87
$64.28
$69.98
$72.25
Book value per share, excluding AOCI and DTA (c÷d)
$39.57
$45.30
$52.12
$58.23
$60.69
Return On Equity (ROE) Computations ($ in Millions)
Twelve Months Ended
First Quarter
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2014
2015
Actual or annualized net income attributable to AIG (a)
$3,438
$9,085
$7,529
$9,872
Actual or annualized after-tax operating income (b)
$6,542
$6,650
$6,630
$6,764
Average AIG shareholders’
equity (c)
101,873
98,850
105,589
107,439
Less: Average AOCI
(9,718)
(8,865)
(9,781)
(10,637)
Average AIG shareholders’
equity, excluding average AOCI (d)
92,155
89,985
95,808
96,802
Less: Average DTA
(19,250)
(18,150)
(16,611)
(15,862)
Average AIG shareholders’
equity, excluding average AOCI and DTA (e)
$72,905
$71,835
$79,197
$80,940
ROE (a÷c)
3.4%
9.2%
7.1%
9.2%
ROE –
after-tax operating income, excluding AOCI (b÷d)
7.1%
7.4%
6.9%
7.0%
ROE –
after-tax operating income, excluding AOCI and DTA (b÷e)
9.0%
9.3%
8.4%
8.4%
47 |
 Full Year
First Quarter
Property Casualty Accident Year Combined Ratio, As Adjusted
2012
2013
2014
2015
Loss ratio
80.5
71.9
71.6
68.1
Catastrophe losses and reinstatement premiums
(10.9)
(3.4)
(2.9)
(1.4)
Prior year development net of premium adjustments
(1.2)
(1.5)
(2.8)
(0.4)
Net reserve discount benefit (change)
0.5
(1.6)
(0.3)
(1.9)
Accident year loss ratio, as adjusted
68.9
65.4
65.6
64.4
Acquisition ratio
16.6
16.1
15.7
16.2
General operating expense ratio
13.8
13.6
12.9
12.8
Expense ratio
30.4
29.7
28.6
29.0
Combined ratio
110.9
101.6
100.2
97.1
Catastrophe losses and reinstatement premiums
(10.9)
(3.4)
(2.9)
(1.4)
Prior year development net of premium adjustments
(1.2)
(1.5)
(2.8)
(0.4)
Net reserve discount benefit (charge)
0.5
(1.6)
(0.3)
(1.9)
Accident year combined ratio, as adjusted
99.3
95.1
94.2
93.4
Non-GAAP Reconciliation –
Accident Year Combined Ratio, as Adjusted
Personal Insurance Accident Year Combined Ratio, As Adjusted
2012
2013
2014
2015
Loss ratio
59.3
56.8
54.2
58.8
Catastrophe losses and reinstatement premiums
(3.0)
(0.7)
(1.1)
(2.2)
Prior year development net of premium adjustments
0.2
1.3
0.7
(0.2)
Accident year loss ratio, as adjusted
56.5
57.4
53.8
56.4
Acquisition ratio
25.3
26.2
27.2
27.3
General operating expense ratio
17.5
18.5
18.5
17.1
Expense ratio
42.8
44.7
45.7
44.4
Combined ratio
102.1
101.5
99.9
103.2
Catastrophe losses and reinstatement premiums
(3.0)
(0.7)
(1.1)
(2.2)
Prior year development net of premium adjustments
0.2
1.3
0.7
(0.2)
Accident year combined ratio, as adjusted
99.3
102.1
99.5
100.8
48 |
 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
insurer. In addition, AIG companies are leading providers of life insurance and retirement services in
the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock
Exchange. Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig | Twitter:
@AIG_LatestNews | LinkedIn: http://www.linkedin.com/company/aig
AIG is the marketing name for the worldwide property-casualty, life and retirement, and general
insurance operations of American International Group, Inc. For additional information, please visit our
website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates
of American International Group, Inc. Products or services may not be available in all countries, and
coverage is subject to actual policy language. Non-insurance products and services may be provided
by independent third parties. Certain property-casualty coverages may be provided by a surplus lines
insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are
therefore not protected by such funds. |