![]() American International Group, Inc. Investor Presentation November 13, 2013 Exhibit 99.1 |
![]() 2 Cautionary Statement Regarding Projections and Other Information About Future Events 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 savings and loan holding company, as a 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 quarter ended September 30, 2013, in Part II, Item 1A. Risk Factors in AIG’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 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, 2012. 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 Third Quarter 2013 Financial Supplement available in the Investor Information section of AIG's corporate website, www.aig.com, as well as this presentation. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that (i) any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code; (ii) any such tax advice is written in connection with the promotion or marketing of the matters addressed; and (iii) if you are not the original addressee of this communication, you should seek advice based on your particular circumstances from an independent advisor. |
![]() 3 AIG – An Established Global Insurance Franchise Core Insurance Businesses Strategies Key Accomplishments AIG Property Casualty Grow high value lines and optimize business mix Nine months 2013 NPW growth of 6.6% in all major lines excluding FX, Reinsurance, and Casualty (9.3% for Commercial excluding above items) compared to prior year period Remediated certain segments of Casualty lines Execute on technical underwriting, improved claims management, and analytics Nine months 2013 Accident year loss ratio, as adjusted, improvement of 6.3 pts since beginning of 2011 Capitalize on global footprint; presence in over 90 countries HSBC agreement / PICC joint venture 12.8% of nine months 2013 NPW from growth economies (1) AIG Life and Retirement Maintain balanced portfolio of products and leverage scale advantage Diversified sources of net flows and earnings Optimize spread management through new business pricing and active crediting rate management Crediting rates reduced in fixed annuities & group retirement Deliver stable consistent earnings Approximately $0.8 bn – $1.4 bn in quarterly pre-tax operating income since 4Q11 Mortgage Guaranty Selectively underwrite based on multivariate model to achieve higher risk adjusted returns Earnings reflect new business; 55% of net premiums earned in 3Q13 were from business written after 2008 Actively manage legacy book 33% decline in delinquency ratio from 3Q12 to 6.4% at 3Q13 A platform for delivering sustainable profitable growth. 1) Growth economies are those within Central Europe, Middle East, Africa, Latin America and Asia Pacific, excluding Japan. |
![]() 4 AIG – Building on Capital Strength Active Capital Management Paid $0.10/sh. quarterly cash dividend in September 2013; $1 billion share repurchase authorization Nine months 2013 debt calls and tenders of $3.4 billion (face amount) and approximately $192 million shares repurchased Since May 2011, deployed approximately $18 billion through share repurchases, dividends and liability management Robust Statutory Capital Year-end 2012 fleet RBC ratios (1) : – AIG PC U.S.: 443% (ACL) – AIG L&R: 532% (CAL) Year-end 2012 fleet adjusted statutory capital (1) : – AIG PC U.S.: $24 billion – AIG L&R: $21 billion Growth in BVPS September 30, 2013 BVPS (ex. AOCI) $62.68 – up 8% from 12/31/12 Strong Liquidity & Cash Flows Nine months 2013 distributions from insurance subsidiaries of $4.6 billion Additional tax sharing payments to Parent $12.7 billion of AIG Parent liquidity Monetization of Deferred Tax Assets Net DTA of $16.7 billion at Dec. 31, 2012 Note: Data as of September 30, 2013 unless otherwise noted. AIG Property Casualty $48.8 bn AIG Life and Retirement $37.9 bn Other $9.7 bn (2) Mortgage Guaranty $2.4 bn AIG Shareholders’ Equity - $98.8 bn at September 30, 2013 1) The inclusion of fleet RBC measures and fleet adjusted statutory capital 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. 2) Other includes AIG Parent (including the deferred tax asset valuation allowance), Global Capital Markets, Direct Investment book, AIG Life Holdings, Inc. (a non-operating holding company) and assets and liabilities held for sale, net of consolidation and eliminations. |
![]() AIG Property Casualty * * * * * * * * * * * |
![]() 6 45,000 employees who serve clients worldwide 52% of premiums written outside of U.S. and Canada in 2012 $115 million average claims paid each business day in 2012 #1 commercial insurance organization in U.S./Canada, with established and growing position in Latin America (2) #1 U.S.-based property casualty insurance organization in Europe, with established and growing positions in the Middle East and Africa (2) #1 foreign property casualty insurance organization in Japan and China (2) Asia Pacific 2012 NPW: $10.4 bn 30% of total NPW AIG Property Casualty – A Truly Global Franchise AIG Property Casualty is a diversified global P&C market leader with 2012 NPW of over $34 billion. 1) EMEA region consists of Europe, Middle East and Africa. 2) As measured by net premiums written. EMEA (1) 2012 NPW: $6.4 bn 19% of total NPW Americas 2012 NPW: $17.6 bn 51% of total NPW |
![]() 7 AIG Property Casualty – Financial Highlights Full Year Nine Months 2013 ($ in billions) 2010 2011 2012 Net premiums written $31.6 $34.8 $34.4 $26.4 Net investment income 4.4 4.3 4.8 3.8 Pre-tax operating income (loss) (1) (1.1) 1.2 1.8 3.7 Accident year loss ratio, as adjusted (2) 69.2 68.7 65.2 62.9 Expense ratio 31.1 30.5 34.7 34.3 Accident year combined ratio, as adjusted (2) 100.3 99.2 99.9 97.2 Cash & invested assets (3) 123.2 127.0 131.4 124.9 Shareholders’ equity 42.8 47.3 48.9 48.8 Shareholders’ equity, excluding AOCI 40.8 44.3 43.7 45.6 1) Pre-tax operating income (loss) includes both underwriting income (loss) and net investment income, but excludes net realized capital (gains) losses, other (income) expense, legal settlements related to legacy crisis matters and bargain purchase gain. Underwriting income (loss) is derived by reducing net premiums earned by claims and claims adjustment expenses incurred, acquisition expenses and general operating expenses. “Legacy crisis matters” include favorable and unfavorable settlements related to events leading up to and resulting from AIG’s September 2008 liquidity crisis and legal fees incurred by AIG as the plaintiff in connection with such legal matters. 2) Excludes catastrophe losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. 3) Includes intercompany invested assets that are eliminated in consolidation. $ $ $ $ $ $ $ $ $ $ $ $ |
![]() 8 AIG Property Casualty – Business Overview AIG Property Casualty offers a broad product platform. Global – Unique ability to serve multinational clients Innovative – Often first to market in new products and services, such as CyberEdge Maximizing value – Run-off lines actively managed for highest return on capital Capital Strength – U.S. fleet adjusted statutory capital of $24 billion at year-end 2012 Commercial Insurance Nine Months 2013 NPW – $16.0 bn Consumer Insurance Nine Months 2013 NPW – $10.4 bn 1) The inclusion of fleet RBC measures and fleet adjusted statutory capital 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. (1) |
![]() 9 AIG Property Casualty – Strategic Focus Strategic levers driving shareholder value creation. Business Mix Underwriting Excellence Claims Service Operational Effectiveness Capital Management Balance growth with profitability and risk Growth in Risk Adjusted Profitability (RAP) accretive products and geographies Achieve scale in key markets over a reasonable period of time Rationalize/price for capital intensive product lines Globalize standards for underwriting and pricing Expand underwriter toolkit Balance between art and science intertwined with finer segmentation Global Claims Initiative leading to claims cost savings Improved claims practices in medical and anti-fraud driven by data analytics Build advanced claims IT architecture Simplify and standardize legacy operating models Reduce overhead with cost optimization and shared service hubs Use RAP as a key performance indicator Leverage capital maintenance agreements with AIG Increase underwriting leverage |
![]() 10 AIG Property Casualty – Strong Brands and Customer Loyalty AIG Property Casualty continues to be recognized for excellence. AIG Clients as a Percentage of Each Category (As of 6/1/13) Confirmit 2013 Achievement in Customer Excellence Reader’s Digest 2013 Trusted Brand Award for Auto Insurance World Travel Fair 2013 Best Quality Service, Travel Insurance Company (3 rd Consecutive Year) Business Insurance 2013 Innovation Awards 2012 Buyer’s Choice Awards Motordata Research Consortium 2013 Insurer of the Year - Best Automotive Claims Management Service (2 Consecutive Year) Nanfang Daily 2013 Most Trustworthy Financial Brand (2 Consecutive Year) Global Finance 2013 Best Global Insurers Awards British Insurance Award 2013 Underwriter of the Year Indonesia Insurance Awards 2013 Corporate Social Responsibility, Human Capital, Information Technology, and Marketing Awards Willis Survey #1 Performing U.S. Carrier after Storm Sandy PropertyCasualty360 2013 Best Overall Commercial Insurance Provider Risk & Försäkring 2013 Insurance Company of the Year Australian Business Award 2013 Service Excellence UK Insurance Claims Award 2013 Innovation of the Year Reaction Magazine 2013 Best Insurance Company in North America Celent Model Insurer Award 2011 - 2013 MarketScout 2012 Entrepreneurial Award JD Power and Associates 2012 Claims & Customer Satisfaction Australia and New Zealand Institute of Insurance & Finance (ANZIIF) nd 2013 Innovation of the Year – Cyber Edge nd |
![]() 11 AIG Property Casualty – Product Diversification Commercial Insurance Consumer Insurance Casualty General Liability Commercial Auto Workers’ Compensation Excess Casualty Crisis Management Property Industrial, Energy and Commercial Property Global Property including high deductible Specialty Aerospace Environmental Political Risk Trade Credit Marine Surety Financial Lines D&O, E&O Fidelity Employment Practices Cyber Security Kidnap and Ransom Accident and Health Personal Accident Supplemental Medical Travel Life Personal Lines Automobile Homeowners Extended Warranty Specialty (e.g., identity theft, credit card protection) Private Client Group |
![]() 12 AIG Property Casualty – Growth Economies Growth economies accounted for 12.8% of NPW for nine months 2013, up 13.4% from nine months 2012 Growth economies are those within Central Europe, Middle East, Africa, Latin America and Asia Pacific, excluding Japan #1 foreign property casualty insurance organization in China (1) Strategic investments in PICC for P&C and Life & Retirement products 10 year Bancassurance agreement with HSBC in Turkey 1) Ranking as of December 31, 2012, as measured by net premiums written. |
![]() 13 AIG Property Casualty – Investment Composition & Ratings 1) Includes intercompany invested assets that are eliminated in consolidation. Total Cash & Invested Assets - $124.9 billion (1) Bond Portfolio - $101.0 billion (1) - by Agency Credit Rating (As of September 30, 2013) States, municipalities, and political subdivisions 19% U.S. Governments 2% Non-U.S. governments 15% Corporate debt 27% RMBS 10% CMBS 2% CDO/ABS 5% Equities 3% Other invested assets 11% Loans 1% Cash and short- term investments 5% AAA 22% AA 29% A 26% BBB 13% BB 2% B 2% <B 6% |
![]() AIG Life and Retirement * * * * * * * * * * * |
![]() 15 AIG Life and Retirement – Operating from a Position of Strength Market Leader Long standing leading market positions Scale advantage in key product lines Product Diversity & Capacity for Growth Comprehensive portfolio of life insurance, A&H, annuity, group retirement, group benefits, institutional products and mutual funds Year-end 2012 fleet RBC ratio at 532% (CAL) supports sales growth (1) Multi-channel Distribution Distribution organization leverages broad product portfolio across all channels Over 300,000 financial professionals Capital and Expense Efficiencies Simplified legal structure enhances capital efficiencies, expense savings and ease of doing business – 10 insurance legal entities consolidated to 3 Fleet adjusted statutory capital of $21 billion at year-end 2012 (1) 1) The inclusion of fleet RBC measures and fleet adjusted statutory capital is intended solely for the information of investors and is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities. CAL is defined as Company Action Level. |
![]() 16 AIG Life and Retirement – Financial Highlights Full Year Nine Months 2013 ($ in billions) 2010 2011 2012 Premiums and deposits (1) $19.5 $24.4 $21.0 $20.8 Net investment income 10.8 9.9 10.7 8.0 Pre-tax operating income (2) 4.1 3.3 4.2 3.7 Cash & invested assets (3) 183.8 194.2 205.3 196.3 Assets under management 248.5 256.9 290.4 304.4 Shareholders’ equity 33.4 34.2 40.0 37.9 Shareholders’ equity, excluding AOCI 30.0 29.5 31.6 33.8 1) Premiums and deposits includes amounts received on traditional life insurance policies, group benefits policies and deposits on life contingent payout annuities as well as deposits received on universal life, investment-type annuity contracts, GICs and mutual funds. 2) Pre-tax operating income (loss) is derived by excluding the following items from pre-tax income (loss): legal settlements related to legacy crisis matters, changes in fair values of fixed maturity securities designated to hedge living benefit liabilities (net of interest expense), net realized capital (gains) losses, and changes in benefit reserves and DAC, VOBA, and SIA related to net realized capital (gains) losses. 3) Includes intercompany invested assets that are eliminated in consolidation. |
![]() 17 AIG Life and Retirement – Diversified Business Mix 1) Premiums and deposits includes amounts received on traditional life insurance policies, group benefits policies and deposits on life contingent payout annuities as well as deposits received on universal life, investment-type annuity contracts, GICs and mutual funds. 2) Pre-tax operating income (loss) is derived by excluding the following items from pre-tax income (loss): legal settlements related to legacy crisis matters, changes in fair values of fixed maturity securities designated to hedge living benefit liabilities (net of interest expense), net realized capital (gains) losses, and changes in benefit reserves and DAC, VOBA, and SIA related to net realized capital (gains) losses. Pre-tax operating income (loss) is not separately presented for Brokerage services and retail mutual funds included in the Retail operating segment and Group benefits included in the Institutional operating segment, which collectively represent approximately 1% of total AIG Life and Retirement pre-tax operating income. Nine Months 2013 Premiums and Deposits - $20.8 billion (1) Retail: 69% Institutional: 31% Nine Months 2013 Pre-tax Operating Income - $3.7 billion (2) Retail: 63% Institutional: 37% Group Retirement 23% Institutional Markets 13% Retirement Income Solutions 12% Fixed Annuities 37% Life Insurance and A&H 14% Retail Mutual Funds & Brokerage Services 18% Group Retirement 25% Institutional Markets 3% Retirement Income Solutions 29% Fixed Annuities 10% Life Insurance and A&H 12% Group Benefits 3% |
![]() 18 AIG Life and Retirement – Assets Under Management Assets Under Management - $304.4 billion at September 30, 2013 Year-over-year growth in AUM reflects strong sales generated by robust demand for our retail products, equity market performance and continued execution of our Institutional growth strategies. |
![]() 19 AIG Life and Retirement – Leading Market Positions Note: All rankings represent six months 2013 LIMRA rankings #3 in Total Annuity Sales #1 in Fixed-Rate Deferred Annuity Sales #4 in Structured Settlement Annuity Sales #6 in Total Variable Annuity Sales #7 in Term Life Sales #2 in K-12 403(b) Assets #3 in Total 403(b) Assets Excellence in Service, Marketing and Technology Market Tools 2013 Achievement in Customer Excellence (ACE award for 7 Consecutive Year) DALBAR 2012 Annuity Service Excellence Award (6 Consecutive Year) 2012 #1 Ranking for Annuity Client Quarterly Statements (12 Consecutive Year) PlanSponsor Magazine 2012 Best-in-Class Awards for Participant Services (Recognized in 6 Categories) International MarCom Awards 2012 and 2013 Platinum and Gold Awards (42 in total) Insurance & Financial Communications Association 2012 and 2013 Best in Show and Awards of Excellence (15 in total) InformationWeek 500 2012 and 2013 Top Technology Innovators Best’s Review 2012 and 2013 Innovators Showcase Market Positions th th th |
![]() 20 AIG Life and Retirement – Broad Multichannel Distribution Network Affiliated: 43% Non-affiliated: 57% B-Ds 29% Banks 13% IMOs 11% 2012 Sales by Channel Diversified Distribution Network AGLA agents Advisor Group VALIC financial advisors AIG Direct Banks Advisor Group 2% AGLA 5% Direct & Other 3% VALIC FAs 33% Broker-dealers Independent marketing organizations Benefit Brokers 4% Benefit Brokers |
![]() 21 AIG Life and Retirement – Variable Annuities Changing competitive environment offers a unique opportunity. Commentary From 2009 through 2012, industry consolidation accelerated with the top four firms increasing their share from 53% to 64%. Certain competitors pulled back on their product offerings in 2013, exemplified by their decreased market share for six months 2013. AIG L&R has significantly grown its market share thereby improving its industry ranking from #15 in 2009 to #5 for six months 2013. AIG L&R believes there is significant remaining growth opportunity in VA due to its market share of only 7.6%. AIG L&R is further positioned for growth because of its manageable risk profile, characterized by only $21.2 billion in total individual VA contracts with Guaranteed Minimum Withdrawal Benefits at September 30, 2013, 67% of which contain benefits with strong de-risking features such as VIX indexing of rider fees, volatility control funds and required minimum allocations to fixed accounts (2) . 1) Source: Morningstar VA Sales report. VA non-captive industry sales data excludes captive agent & direct response distribution and a pro rata elimination of internal sales. Rankings use most current data from Morningstar, Inc. and can reflect updated numbers from prior periods. 2) An additional $3.9 billion of group variable annuities (written by VALIC) have Guaranteed Minimum Withdrawal Benefits, 38% of which contain benefits with strong de-risking features. Variable Annuity “Non-Captive” Industry Sales (1) ($ millions) Six Months 2013 FY 2012 FY 2011 FY 2010 FY 2009 Rank Sales Share Rank Sales Share Rank Sales Share Rank Sales Share Rank Sales Share Jackson National 1 10,280 21.9% 1 19,724 21.0% 3 17,494 17.0% 2 14,654 16.3% 3 10,002 12.4% Lincoln Financial Group 2 7,134 15.2% 4 10,419 11.1% 4 9,323 9.0% 4 8,948 9.9% 4 7,928 9.8% Prudential Financial 3 5,702 12.2% 2 17,853 19.0% 2 18,199 17.6% 1 19,845 22.1% 1 14,635 18.1% MetLife 4 3,752 8.0% 3 11,818 12.6% 1 21,715 21.0% 3 12,889 14.3% 2 10,535 13.1% AIG L&R 5 3,551 7.6% 6 4,561 4.9% 9 3,212 3.1% 11 2,072 2.3% 15 891 1.1% TOTAL 46,867 93,832 103,201 89,950 80,687 |
![]() 22 AIG Life and Retirement – Investment Composition & Ratings 1) Includes intercompany invested assets that are eliminated in consolidation. Total Cash & Invested Assets - $196.3 billion (1) Bond Portfolio - $156.6 billion (1) - by Agency Credit Rating (As of September 30, 2013) |
![]() 23 AIG Life and Retirement – Net Investment Spread Management Base Yields (1) Cost of Funds (2) Base Net Investment Spreads (1) 1) Includes the investment return on surplus other than alternative investment and yield enhancement activities. 2) Excludes the amortization of sales inducement assets. At September 30, 2013, a total of 75% of fixed annuity and universal life account values are at contractual minimum guaranteed crediting rates vs. 61% at December 31, 2012. |
![]() Mortgage Guaranty (United Guaranty Corporation) * * * * * * * * * * * |
![]() 25 United Guaranty – Financial Highlights Full Year Nine Months 2013 ($ in millions) 2010 2011 2012 Net premiums written $756 $801 $858 $793 Net investment income 149 132 146 99 Pre-tax operating income (loss) (1) $353 $(97) $9 $157 Combined ratio 79.1 128.9 119.2 90.4 Cash & invested assets (2) $4,486 $4,081 $4,222 $3,889 Shareholders’ equity 2,238 2,425 2,311 2,376 Shareholders’ equity, excluding AOCI $2,186 $2,332 $2,193 $2,344 1) Pre-tax operating income (loss) is derived by excluding net realized capital (gains) losses from pre-tax income (loss). 2) Includes intercompany invested assets that are eliminated in consolidation. |
![]() 26 United Guaranty – A Market Leader Risk based pricing driving profitable new business. UGC’s risk-based pricing plan, Performance Premium, utilizes over a dozen variables to evaluate loan risk and price the mortgage insurance policy. New insurance written (NIW) increased 34% in 3Q13 compared with 3Q12. Nine months 2013 NIW increased 51% to $39.1 billion compared with nine months 2012. Growth accomplished while maintaining consistently high quality risk in force. Vintage Year (1) Average FICO Score LTV Ratio 2010 760 90 2011 757 91 2012 758 91 Nine Months 2013 754 92 New Insurance Written ($ in billions) 1) Domestic First-lien only. |
![]() 27 United Guaranty – Shrinking Legacy In-Force New business generated after 2008 represents 62% of primary domestic RIF at September 30, 2013, the highest among peers active before 2009 (1) . Due to proactive management of delinquent book through UGC’s Letter Campaign, at September 30, 2013, the portion of defaults that have missed 12 or more payments declined to 44% from 49% at the end of 2011, the lowest among peers active before 2009 (1) . Note: Data presented above is for Domestic First Lien operations. 1) Peers include Mortgage Guaranty Insurance Company (MGIC), Radian Guaranty, Incorporated and Genworth Mortgage Insurance Company. Primary Delinquency Rate Primary Risk-in-force (RIF) – $35.5 billion As of September 30, 2013 (by vintage year) 2004 & Prior 8% 2005 6% 2006 6% 2007 12% 2008 6% 2009 3% 2010 3% 2011 9% 2012 23% 2013 24% |
![]() 28 United Guaranty – Financial Strength UGC has the lowest default rate and highest portion of RIF from loans originated after 2008 among peers active before 2009 (2) . UGC’s primary statutory insurance subsidiary, United Guaranty Residential Insurance Company (UGRIC), maintains an S&P rating of BBB+ and Moody's rating of Baa1 with stable outlooks (3) . UGC operating earnings reflect increasing contribution from new business. At September 30, 2013 UGRIC has over $2.9 billion of assets with 90% in cash and unaffiliated investments. Capitalization and Risk Source: Statutory filing data. 1) Risk-to-capital estimates for all companies, including United Guaranty, are preliminary estimates for September 30, 2013. 2) Peers’ risk to capital ratios are those of their respective flagship insurance companies. Essent was not active before 2009. 3) As of the date of this presentation. At June 30, 2013 At Sept. 30, 2013 Default Rate (%) Post 2008 RIF (%) Risk-to- Capital (1) United Guaranty 6.4 62 18.6 Genworth 8.7 41 23.2 MGIC 11.5 39 20.0 Radian 7.8 57 19.8 Essent 0.1 100 18.0 Asset Composition |
![]() Capital Strength * * * * * * * * * * |
![]() 30 Capital Position and Ratings Book Value Per Share Capital Structure $66.38 1) Includes AIG Notes, Bonds, Loans and Mortgages Payable, and AIGLH Notes and Bonds Payable and junior subordinated debt. 2) All ratings have stable outlooks, except for the S&P rating for AIG-Senior Debt, which is negative, as of the date of this presentation. 3) Ratings only reflect those of the core insurance companies. ($ in billions, except per share data) $124.1 Leverage Ratios: Dec. 31, 2012 Sept. 30, 2013 Financial Debt + Hybrids / Capitalization 20.5% 17.6% Financial Debt / Capitalization 12.9% 12.6% $67.10 $120.7 $53.53 S&P Moody’s Fitch AM Best AIG – Senior Debt A- Baa1 BBB NR AIG PC (3) – FSR A+ A1 A A AIG L&R (3) – FSR A+ A2 A+ A Credit Ratings (2) |
![]() 31 Financial Flexibility – A Source of Strength AIG Parent Cash, Short-Term Investments & Unencumbered Securities Insurance Company Distributions ($ in millions) ($ in billions) AIG Parent cash, short-term investments and unencumbered fixed maturity securities of $12.7 billion includes $5.9 billion allocated toward future maturities of liabilities and contingent liquidity stress needs of the Direct Investment book and Global Capital Markets as of September 30, 2013. AIG Parent also maintains available capacity of $4.1 billion under its syndicated credit facility and contingent liquidity facility as of September 30, 2013. |
![]() Other Sources of Value * * * * * * * * * * |
![]() 33 Direct Investment Book (1) Global Capital Markets (1) Assets $23.7 $8.0 Liabilities $20.8 $3.4 Net Asset Value $2.9 $4.6 Legacy Matched Assets & Liabilities Market Derivatives (2) Legacy AIGFP Stable Value CDS Portfolio Wraps Hedging Platform Third-Party Derivatives Notional ($ bn) -- $80 Multi- Sector Corporate Arbitrage $8 $28 $3 $12 Weighted Average Life (Years) -- 6.9 5.8 2.5 4.8 8.3 Strategy Assets managed to ensure liabilities can be met as they come due, even under stress scenarios Primarily hedges of DIB assets and liabilities Bulk of risk related to interest rates, foreign exchange and equities has been hedged Remaining credit risk viewed as attractive risk- reward Since 4Q 2012, notional value of $10 billion has been novated to AIG Life and Retirement Further novations are expected to occur over time “Clearing house” for operating company hedging and risk management needs Direct Investment Book and Global Capital Markets Note: Data as of September 30, 2013. 1) The DIB consists of a portfolio of assets and liabilities held directly by AIG Parent in the Matched Investment Program (MIP) and certain subsidiaries not related to AIG’s core insurance operations (including certain non-derivative assets and liabilities of AIGFP). The DIB and GCM are included in Other Operations in AIG’s Consolidated Balance Sheet. 2) The overall hedging activity for the assets and liabilities of the DIB is executed by GCM. The value of hedges related to the non-derivative assets and liabilities of AIGFP in the DIB is included within the assets and liabilities and operating results of GCM and is not included within the DIB operating results, assets or liabilities. ($ in billions) AIG Hedging & Go Forward |
![]() 34 Direct Investment Book Long-Term Debt ($ in billions) $8.2 $8.2 $6.7 $5.6 $4.4 $0.4 $3.5 $3.5 $3.5 $3.5 $3.5 $3.5 $0.2 $5.8 $5.7 $5.1 $4.5 $4.2 $3.9 $3.3 $1.2 $1.1 $1.1 $0.8 $0.6 $0.5 $0.3 $18.7 $18.5 $16.3 $14.5 $12.7 $8.3 $3.8 0% 1% 13% 23% 32% 55% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% $0 $5 $10 $15 $20 $25 as of 9/30/2013 2013 2014 2015 2016 2017 2018 MIP notes payable Series AIGFP matched notes and bonds payable GIAs, at fair value Notes and bonds payable, at fair value % Maturing |
![]() 35 Deferred Tax Asset Overview AIG has substantial tax attribute carryforwards that are available under U.S. tax law to offset future U.S. federal income tax obligations. Amounts are presented on a U.S. GAAP basis. As of 12/31/11 As of 12/31/12 ($ in billions) Type Gross Attributes Deferred Tax Asset Gross Attributes Deferred Tax Asset Utilization/Limitations Net Operating Loss Carryforward Non-Life & Life $45.2 $15.8 $39.5 $13.8 Use against AIG P&C, ILFC, UGC, AIG L&R and AIG Parent income Limited use (35%) against AIG L&R taxable income; remainder applied to FTC’s 2025–2031 Expiration Capital Loss Carryforward Valuation Allowance Life $20.8 $7.3 ($7.2) $16.6 $5.8 ($5.1) Can only apply against capital gains from AIG L&R 2013–2014 Expiration Foreign Tax Credits General $4.2 $4.7 Limited to tax on lower of taxable income or foreign source income 2015–2022 Expiration Other Deferred Tax Liabilities ($1.8) ($2.5) Net Deferred Tax Assets $18.3 $16.7 |
![]() Appendix * * * * * * * * * * |
![]() 37 AIG Consolidated Financial Highlights 1) Computed as Annualized After-tax operating income divided by Average AIG Shareholders' equity, excluding AOCI. Nine Months ($ in millions, except per share amounts) 2012 2013 Inc. (Dec.) Revenues $50,440 $48,029 (5%) Net income attributable to AIG 7,396 7,107 (4%) After-tax operating income attributable to AIG $6,345 $5,058 (20%) Diluted earnings per common share: Income from continuing operations $4.05 $4.74 17% Income from discontinued operations $0.16 $0.06 (63%) Net income attributable to AIG $4.21 $4.80 14% After-tax operating income attributable to AIG $3.61 $3.41 (6%) Book value per common share $68.87 $67.10 (3%) Book value per common share - Ex. AOCI $60.59 $62.68 3% ROE – After-tax operating income (1) 9.0% 7.6% |
![]() 38 Non-GAAP Reconciliation – Pre-tax Operating Income |
![]() 39 Non-GAAP Reconciliation – Full Year & Nine Months Pre-tax Operating Income Nine Months 2010 2011 2012 2013 Income from continuing operations, before tax $ (93) $ 1,820 $ 1,837 $ 3,801 Adjustments to arrive at pre-tax operating income: Net realized capital (gains) losses 38 (607) 2 (73) Bargain purchase gain (332) - - - Gain on sale of properties (669) - - - Legal settlements - - (17) (3) Other (income) loss - 5 (2) (7) Pre-tax operating income $ (1,056) $ 1,218 $ 1,820 $ 3,718 Nine Months 2010 2011 2012 2013 Income from continuing operations, before tax $ 2,701 $ 2,956 $ 3,780 $ 4,530 Adjustments to arrive at pre-tax operating income: Legal settlements - - (154) (467) Changes in fair value of securities designated to hedge living benefit liabilities, net of interest expense - - (37) 128 Change in benefit reserves and DAC, VOBA and SIA related to net realized capital (gains) losses 104 327 1,201 1,482 Net realized capital (gains) losses 1,251 (6) (630) (1,984) Pre-tax operating income $ 4,056 $ 3,277 $ 4,160 $ 3,689 Nine Months 2010 2011 2012 2013 Income from continuing operations, before tax $ 397 $ (77) $ 15 $ 162 Adjustments to arrive at pre-tax operating income: Net realized capital (gains) losses (44) (20) (6) (5) Pre-tax operating income $ 353 $ (97) $ 9 $ 157 United Guaranty ($ in millions) Full Year AIG Property Casualty ($ in millions) Full Year AIG Life and Retirement ($ in millions) Full Year |
![]() 40 Nine Months ($ in millions) 2012 2013 Net income attributable to AIG $7,396 $7,107 Income from discontinued operations, net of income tax expense (280) (84) Net losses on sale of divested businesses 2 31 Uncertain tax positions and other tax adjustments 343 726 Legal reserves (settlements) related to legacy crisis matters 482 (61) Deferred income tax valuation allowance releases (1,795) (2,697) Changes in fair values of AIG Life and Retirement fixed maturity securities designated to hedge living benefit liabilities, net of interest expense (31) 83 Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains 729 1,065 Loss on extinguishment of debt 6 298 Net realized capital gains (489) (1,410) Non-qualifying derivative hedging gains, excluding net realized capital gains (18) - After-tax operating income attributable to AIG $6,345 $5,058 Non-GAAP Reconciliation – After-tax operating income |
![]() 41 Non-GAAP Reconciliation – BVPS ex. AOCI, Premiums & Deposits, Accident Year Combined Ratio, As Adjusted 2011 2012 2012 2013 Total AIG shareholders’ equity 101,538 $ 98,002 $ 101,666 $ 98,793 $ Less: AOCI (6,481) (12,574) (12,215) (6,509) Total AIG shareholders’ equity, excluding AOCI 95,057 $ 85,428 $ 89,451 $ 92,284 $ Total common shares outstanding 1,896,821,482 1,476,321,935 1,476,295,743 1,472,343,722 Book value per common share 53.53 $ 66.38 $ 68.87 $ 67.10 $ Book value per common share, excluding AOCI 50.11 $ 57.87 $ 60.59 $ 62.68 $ Nine Months 2010 2011 2012 2013 Premiums and deposits 19,505 $ 24,392 $ 20,994 $ 20,767 $ Deposits (16,405) (21,338) (17,934) (18,304) Other (580) (541) (632) (473) Premiums 2,520 $ 2,513 $ 2,428 $ 1,990 $ Nine Months 2010 2011 2012 2013 Loss ratio 85.7 78.3 73.9 66.2 Catastrophe losses and reinstatement premiums (3.3) (9.2) (7.5) (2.3) Prior year development net of premium adjustments (14.9) (0.3) (1.4) (0.9) Change in discount 1.7 (0.1) 0.2 (0.1) Accident year loss ratio, as adjusted 69.2 68.7 65.2 62.9 Acquisition ratio 18.3 18.1 19.9 19.8 General operating expense ratio 12.8 12.4 14.8 14.5 Expense ratio 31.1 30.5 34.7 34.3 Combined ratio 116.8 108.8 108.6 100.5 Catastrophe losses and reinstatement premiums (3.3) (9.2) (7.5) (2.3) Prior year development net of premium adjustments (14.9) (0.3) (1.4) (0.9) Change in discount 1.7 (0.1) 0.2 (0.1) Accident year combined ratio, as adjusted 100.3 99.2 99.9 97.2 December 31, September 30, AIG Property Casualty Accident Year Combined Ratio, As Adjusted AIG Life and Retirement Premiums and Deposits ($ in millions) Book Value Per Common Share - Ex. AOCI ($ in millions, except per share data) Full Year Full Year |
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