AIG Reports Fourth Quarter 2017 Results
“The fourth quarter was another important step forward in positioning
AIG for the future. Since I joined the company in May, we’ve added to
our talent base, assessed and initiated underwriting actions, and
established a new operating structure. 2017 represents a starting point
from which we expect to build and 2018 will be a year of execution. Our
actions to diversify our business and pursue profitable growth were
further reflected in our January announcement of the acquisition of
Validus,” said
“Our fourth quarter and full year 2017 results were significantly
impacted by catastrophe losses. Despite full year record catastrophe
losses of
FOURTH QUARTER AND FULL YEAR 2017 HIGHLIGHTS
General Insurance Results – Fourth quarter adjusted pre-tax
income of
Life and Retirement Results – Fourth quarter adjusted pre-tax
income of
Legacy – Fourth quarter adjusted pre-tax income of
AIG recently formed a
Since its establishment, Legacy has returned
Capital and Liquidity – In the fourth quarter of 2017, AIG Parent
received approximately
FOURTH QUARTER FINANCIAL SUMMARY* |
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Three Months Ended |
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($ in millions, except per share amounts) | 2017 | 2016 | |||||||
Net income (loss) | $ | (6,660 | ) |
$ |
(3,041 |
) |
|||
Net income (loss) per diluted share (a) | $ | (7.33 | ) |
$ |
(2.96 |
) |
|||
Adjusted after-tax income (loss) |
$ |
526 |
$ |
(2,787 |
) |
||||
Adjusted after-tax income (loss) per diluted share (a) |
$ |
0.57 |
$ |
(2.72 |
) |
||||
Return on equity | (38.7 | )% | (14.7 | )% | |||||
Adjusted return on equity | 4.2 | % | (18.2 | )% | |||||
Adjusted return on attributed equity - Core | 2.6 | % | (22.9 | )% | |||||
Book value per common share | $ |
72.49 |
$ |
76.66 |
|||||
Book value per common share, excluding accumulated other comprehensive income | $ |
66.41 |
$ |
73.41 |
|||||
*Refer to the Comments on Regulation G and the tables that follow
for a discussion of non-GAAP financial measures and the |
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(a) For periods reporting a loss, basic average common shares outstanding are used to calculate net income (loss) per diluted share. | |||||||||
All comparisons are against the fourth quarter of 2016, unless otherwise indicated. Refer to the AIG Fourth Quarter 2017 Financial Supplement, which is posted on AIG's website in the Investor Information section, for further information.
GENERAL INSURANCE |
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Three Months Ended December 31, | ||||||||||
($ in millions) | 2017 | 2016 | Change | |||||||
Total General Insurance | ||||||||||
Net premiums written | $ | 5,892 | $ | 6,512 | (10) | % | ||||
Underwriting income (loss) | $ | (846) | $ | (5,852) | 86 | |||||
Adjusted pre-tax income (loss) | $ | 13 | $ | (4,847) | NM | |||||
Underwriting ratios: | ||||||||||
Loss ratio | 78.3 | 146.7 | (68.4) | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (11.7) | (5.4) | (6.3) | |||||||
Prior year development | (1.4) | (73.8) | 72.4 | |||||||
Accident year loss ratio, as adjusted | 65.2 | 67.5 | (2.3) | |||||||
Expense ratio | 35.0 | 35.8 | (0.8) | |||||||
Combined ratio | 113.3 | 182.5 | (69.2) | |||||||
Accident year combined ratio, as adjusted | 100.2 | 103.3 | (3.1) | |||||||
General Insurance - North America |
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Three Months Ended December 31, | ||||||||||
($ in millions) |
2017 | 2016 | Change | |||||||
North America | ||||||||||
Net premiums written | $ | 2,583 | $ | 3,008 | (14) | % | ||||
Commercial Lines | 1,808 | 2,236 | (19) | |||||||
Personal Insurance | 775 | 772 | - | |||||||
Underwriting income (loss) | $ | (316) | $ | (5,288) | 94 | |||||
Commercial Lines | 16 | (5,294) | NM | |||||||
Personal Insurance | (332) | 6 | NM | |||||||
Adjusted pre-tax income (loss) | $ | 412 | $ | (4,406) | NM | |||||
Underwriting ratios: |
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North America | ||||||||||
Loss ratio | 83.0 | 237.6 | (154.6) | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (24.5) | (7.6) | (16.9) | |||||||
Prior year development | 3.3 | (152.8) | 156.1 | |||||||
Accident year loss ratio, as adjusted | 61.8 | 77.2 | (15.4) | |||||||
Expense ratio | 28.5 | 27.5 | 1.0 | |||||||
Combined ratio | 111.5 | 265.1 | (153.6) | |||||||
Accident year combined ratio, as adjusted | 90.3 | 104.7 | (14.4) | |||||||
North America Commercial Lines | ||||||||||
Loss ratio | 73.9 | 294.8 | (220.9) | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (12.0) | (8.2) | (3.8) | |||||||
Prior year development | 4.9 | (202.3) | 207.2 | |||||||
Accident year loss ratio, as adjusted | 66.8 | 84.3 | (17.5) | |||||||
Expense ratio | 25.3 | 23.9 | 1.4 | |||||||
Combined ratio | 99.2 | 318.7 | (219.5) | |||||||
Accident year combined ratio, as adjusted | 92.1 | 108.2 | (16.1) | |||||||
North America Personal Insurance | ||||||||||
Loss ratio | 108.0 | 60.5 | 47.5 | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (58.6) | (5.5) | (53.1) | |||||||
Prior year development | (1.1) | - | (1.1) | |||||||
Accident year loss ratio, as adjusted | 48.3 | 55.0 | (6.7) | |||||||
Expense ratio | 37.5 | 38.7 | (1.2) | |||||||
Combined ratio | 145.5 | 99.2 | 46.3 | |||||||
Accident year combined ratio, as adjusted | 85.8 | 93.7 | (7.9) | |||||||
-
Net premiums written decreased by 14%, primarily due to continued
execution of our strategic portfolio actions in
North America Commercial Lines Casualty and Property lines of business. -
The reduction in the
North America loss ratio was driven by the fourth quarter 2016 reserve additions. The 15.4 point improvement in the accident year loss ratio, as adjusted primarily reflects the impact of adjustments to the loss estimates that were made in the fourth quarter of 2016, as well as pricing and underwriting actions, and recoveries from reinsurance on severe losses. -
Adjusted pre-tax income of
$412 million included$682 million of catastrophe-related losses, which were primarily related to theCalifornia wildfires and largely impactedPersonal Insurance . Favorable loss reserve development of$97 million was primarily due to improvement in North America Commercial Lines.
General Insurance - International |
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Three Months Ended December 31, | ||||||||||
($ in millions) | 2017 | 2016 | Change | |||||||
International | ||||||||||
Net premiums written | $ | 3,309 | $ | 3,504 | (6) | % | ||||
Commercial Lines | 1,422 | 1,466 | (3) | |||||||
Personal Insurance | 1,887 | 2,038 | (7) | |||||||
Underwriting income (loss) | $ | (530) | $ | (564) | 6 | |||||
Commercial Lines | (603) | (647) | 7 | |||||||
Personal Insurance | 73 | 83 | (12) | |||||||
Adjusted pre-tax loss | $ | (399) | $ | (441) | 10 | |||||
Underwriting ratios: |
||||||||||
International | ||||||||||
Loss ratio | 74.7 | 71.9 | 2.8 | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (2.2) | (3.5) | 1.3 | |||||||
Prior year development | (4.8) | (8.9) | 4.1 | |||||||
Accident year loss ratio, as adjusted | 67.7 | 59.5 | 8.2 | |||||||
Expense ratio | 39.8 | 42.5 | (2.7) | |||||||
Combined ratio | 114.5 | 114.4 | 0.1 | |||||||
Accident year combined ratio, as adjusted | 107.5 | 102.0 | 5.5 | |||||||
International Commercial Lines | ||||||||||
Loss ratio | 98.0 | 97.9 | 0.1 | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (2.7) | (7.7) | 5.0 | |||||||
Prior year development | (11.4) | (20.0) | 8.6 | |||||||
Accident year loss ratio, as adjusted | 83.9 | 70.2 | 13.7 | |||||||
Expense ratio | 37.7 | 38.2 | (0.5) | |||||||
Combined ratio | 135.7 | 136.1 | (0.4) | |||||||
Accident year combined ratio, as adjusted | 121.6 | 108.4 | 13.2 | |||||||
Three Months Ended December 31, | ||||||||||
($ in millions) | 2017 | 2016 | Change | |||||||
International Personal Insurance | ||||||||||
Loss ratio | 54.6 | 49.8 | 4.8 | pts | ||||||
Impact on loss ratio: | ||||||||||
Catastrophe losses and reinstatement premiums | (1.8) | (0.1) | (1.7) | |||||||
Prior year development | 0.8 | 0.7 | 0.1 | |||||||
Accident year loss ratio, as adjusted | 53.6 | 50.4 | 3.2 | |||||||
Expense ratio | 41.7 | 46.3 | (4.6) | |||||||
Combined ratio | 96.3 | 96.1 | 0.2 | |||||||
Accident year combined ratio, as adjusted | 95.3 | 96.7 | (1.4) | |||||||
-
Net premiums written decreased 6% on a reported basis primarily driven
by divestitures and risk selection strategy in
Europe in International Commercial Lines and strategic country exits forPersonal Insurance . -
The loss ratio increased 2.8 points to 74.7 in the fourth quarter of
2017. The accident year loss ratio, as adjusted increased 8.2 points
to 67.7 primarily due to continued remediation efforts of
International Commercial Lines in
Europe . -
Adjusted pre-tax loss of
$399 million was largely due to the strengthening of reserves and loss estimates in International Commercial Lines.
LIFE AND RETIREMENT |
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Three Months Ended December 31, | ||||||||||
($ in millions) | 2017 | 2016 | Change | |||||||
Life and Retirement | ||||||||||
Premiums & Fees | $ | 2,123 | $ | 1,186 | 79 | % | ||||
Net Investment Income | 2,003 | 1,983 | 1 | |||||||
Adjusted Revenue | 4,382 | 3,388 | 29 | |||||||
Benefits, losses and expenses | 3,600 | 2,522 | 43 | |||||||
Adjusted pre-tax income | 782 | 866 | (10) | |||||||
Individual Retirement | ||||||||||
Premiums & Fees | $ | 210 | $ | 215 | (2) | % | ||||
Net Investment Income | 1,030 | 1,010 | 2 | |||||||
Adjusted Revenue | 1,415 | 1,376 | 3 | |||||||
Benefits, losses and expenses | 941 | 834 | 13 | |||||||
Adjusted pre-tax income | 474 | 542 | (13) | |||||||
Net flows | (422) | (321) | (31) | |||||||
Group Retirement | ||||||||||
Premiums & Fees | $ | 120 | $ | 104 | 15 | % | ||||
Net Investment Income | 550 | 558 | (1) | |||||||
Adjusted Revenue | 732 | 716 | 2 | |||||||
Benefits, losses and expenses | 486 | 455 | 7 | |||||||
Adjusted pre-tax income | 246 | 261 | (6) | |||||||
Net flows | (453) | (533) | 15 | |||||||
Three Months Ended December 31, | ||||||||||
($ in millions) | 2017 | 2016 | Change | |||||||
Life Insurance | ||||||||||
Premiums & Fees | $ | 732 | $ | 679 | 8 | % | ||||
Net Investment Income | 263 | 263 | - | |||||||
Adjusted Revenue | 1,013 | 956 | 6 | |||||||
Benefits, losses and expenses | 1,011 | 966 | 5 | |||||||
Adjusted pre-tax income (loss) | 2 | (10) | NM | |||||||
Institutional Markets | ||||||||||
Premiums & Fees | $ | 1,061 | $ | 188 | 464 | % | ||||
Net Investment Income | 160 | 152 | 5 | |||||||
Adjusted Revenue | 1,222 | 340 | 259 | |||||||
Benefits, losses and expenses | 1,162 | 267 | 335 | |||||||
Adjusted pre-tax income | 60 | 73 | (18) | |||||||
- In Individual Retirement, premiums and policy fees remained constant and were partially offset by an increase in reserve adjustments. Spreads continued to see compression from lower reinvestment rates. Base net investment spreads benefited from unexpected accretion income for Fixed Annuities and growth in Index Annuities. Overall net flows continued to be negative reflecting the regulatory uncertainties and disruption in the industry, partially offset by inflows to Index Annuities.
- In Group Retirement, higher reserve adjustments for Index and Variable Annuities and lower alternative investment income from lower average assets were partially offset by higher fee income and base net investment spread. Spreads continued to see compression from the current investment environment. Base net investment spread benefitted from unexpected accretion income and a cumulative update to cost of funds. Group Retirement negative net flows improved slightly due to lower individual surrenders.
- In Life Insurance, strong growth in premiums, and premiums and deposits, in universal life and term life and were partially offset by elevated mortality.
- In Institutional Markets, strong growth in pension risk transfer contributed to higher assets under management and an increase in net investment spread.
CONFERENCE CALL
AIG will host a conference call tomorrow,
Additional supplementary financial data is available in the Investor Relations section at www.aig.com.
The conference call (including the conference call presentation material), the earnings release and the financial supplement may include, and officers and representatives of 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 “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal” or “estimate.” These projections, goals, assumptions and statements may address, among other things, AIG’s:
- exposures to subprime mortgages, monoline insurers, the residential and commercial real estate markets, state and municipal bond issuers, sovereign bond issuers, the energy sector and currency exchange rates;
- exposure to European governments and European financial institutions;
- strategy for risk management;
-
actual and anticipated sales, monetizations and/or acquisitions of
businesses or assets, including AIG’s ability to successfully
consummate the purchase of
Validus Holdings, Ltd. ; - restructuring of business operations, including anticipated restructuring charges and annual cost savings;
- generation of deployable capital;
- strategies to increase return on equity and earnings per share;
- strategies to grow net investment income, efficiently manage capital, grow book value per common share, and reduce expenses;
- anticipated organizational, business and regulatory changes;
- strategies for customer retention, growth, product development, market position, financial results and reserves;
- management of the impact that innovation and technology changes may have on customer preferences, the frequency or severity of losses and/or the way AIG distributes and underwrites its products;
- segments’ revenues and combined ratios; and
- management succession and retention plans.
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;
- negative impacts on customers, business partners and other stakeholders;
- the occurrence of catastrophic events, both natural and man-made;
- significant legal, regulatory or governmental proceedings;
- the timing and applicable requirements of any regulatory framework to which AIG is subject, including 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;
- AIG’s ability to successfully manage Legacy portfolios;
- AIG’s ability to successfully reduce costs and expenses and make business and organizational changes without negatively impacting client relationships or its competitive position;
-
AIG’s ability to successfully dispose of, monetize and/or acquire
businesses or assets including AIG’s ability to successfully
consummate the purchase of
Validus Holdings, Ltd. ; - judgments concerning the recognition of deferred tax assets;
- judgments concerning estimated restructuring charges and estimated cost savings; 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 Reports on Form 10-Q for the
quarterly periods ended
September 30, 2017 ,June 30, 2017 andMarch 31, 2017 , Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year endedDecember 31, 2016 and Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year endedDecember 31, 2017 (which will be filed with theSEC ).
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.
COMMENT ON REGULATION G
Throughout this press release, including the financial highlights, AIG
presents its financial condition and results of operations in the way it
believes will be most meaningful and representative of its business
results. Some of the measurements AIG uses are “non-GAAP financial
measures” under
Book Value per Common Share, Excluding Accumulated Other Comprehensive Income (AOCI) and Book Value per Common Share, Excluding AOCI and Deferred Tax Assets (DTA) (Adjusted Book Value per Common Share) are used to show the amount of AIG’s net worth on a per-share basis. AIG believes these measures are useful to investors because they eliminate items that can fluctuate significantly from period to period, including changes in fair value of AIG’s available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. These measures also eliminate the asymmetrical impact resulting from changes in fair value of AIG’s available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. AIG excludes deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in these book value per common share metrics. Book value per common share, excluding AOCI, is derived by dividing Total AIG Shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted Book Value per Common Share is derived by dividing Total AIG shareholders’ equity, excluding AOCI and DTA (Adjusted Shareholders’ Equity), by total common shares outstanding.
AIG Return on Equity – Adjusted After-tax Income Excluding AOCI and DTA (Adjusted Return on Equity) is used to show the rate of return on shareholders’ equity. AIG believes this measure is useful to investors because it eliminates items that can fluctuate significantly from period to period, including changes in fair value of AIG’s available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of AIG’s available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. AIG excludes deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted Return on Equity. Adjusted Return on Equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG by average Adjusted Shareholders’ Equity.
Core Adjusted Attributed Equity is an attribution of total AIG Adjusted Shareholders’ Equity to these segments based on AIG’s internal capital model, which incorporates the segments’ respective risk profiles. Adjusted attributed equity represents AIG’s best estimates based on current facts and circumstances and will change over time.
Core Return on Equity – Adjusted After-tax Income (Adjusted Return on Attributed Equity) is used to show the rate of return on Adjusted Attributed Equity. Adjusted Return on Attributed Equity is derived by dividing actual or annualized Adjusted After-tax Income by Average Adjusted Attributed Equity.
Adjusted After-tax Income Attributable to Core is derived by subtracting attributed interest expense and income tax expense from adjusted pre-tax income. Attributed debt and the related interest expense is calculated based on AIG’s internal capital model. Tax expense or benefit is calculated based on an internal attribution methodology that considers among other things the taxing jurisdiction in which the segments conduct business, as well as the deductibility of expenses in those jurisdictions.
Adjusted Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes). Adjusted revenues is a GAAP measure for AIG’s operating segments.
AIG uses the following operating performance measures because AIG believes they enhance the understanding of the underlying profitability of continuing operations and trends of AIG’s business segments. AIG believes they also allow for more meaningful comparisons with AIG’s insurance competitors. When AIG uses these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis.
Adjusted Pre-tax Income (APTI) is derived by excluding the following items from income from continuing operations before income tax. This definition is consistent across AIG’s segments. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to AIG’s current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that AIG believes to be common to the industry. APTI is a GAAP measure for AIG’s operating segments.
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Adjusted After-tax Income Attributable to AIG (AATI) is derived by excluding the tax effected APTI adjustments described above and the following tax items from net income attributable to AIG:
- deferred income tax valuation allowance releases and charges;
- changes in uncertain tax positions and other tax items related to legacy matters having no relevance to AIG’s current businesses or operating performance; and
- net tax charge related to the enactment of the Tax Cuts and Jobs Act (Tax Act).
See page 12 for the reconciliation of Net income attributable to AIG to Adjusted After-tax Income Attributable to AIG.
Ratios: AIG, along with most property and casualty insurance
companies, uses the loss ratio, the expense ratio and the combined ratio
as measures of underwriting performance. These ratios are relative
measurements that describe, for every
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. Natural
and man-made catastrophe losses are generally weather or seismic events
having a net impact on AIG in excess of $10 million each and also
include certain man-made events, such as terrorism and civil disorders
that meet the
Underwriting ratios are computed as follows: |
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a) | Loss ratio = Loss and loss adjustment expenses incurred ÷ Net premiums earned (NPE) | |||||
b) | Acquisition ratio = Total acquisition expenses ÷ NPE | |||||
c) | General operating expense ratio = General operating expenses ÷ NPE | |||||
d) | Expense ratio = Acquisition ratio + General operating expense ratio | |||||
e) | Combined ratio = Loss ratio + Expense ratio | |||||
f) | Accident year loss ratio, as adjusted (AYLR) = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums (RIPs) related to catastrophes +/(-) RIPs related to prior year catastrophes + (Additional) returned premium related to PYD on loss sensitive business + Adjustment for ceded premiums under reinsurance contracts related to prior accident years] | |||||
g) | Accident year combined ratio = AYLR + Expense ratio | |||||
h) | Catastrophe losses (CATs) and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE +/(-) RIPs related to catastrophes] – Loss ratio | |||||
i) | Prior year development net of (additional) return premium related to PYD on loss sensitive business = [Loss and loss adjustment expenses incurred – Prior year loss reserve development unfavorable (favorable) (PYD), net of reinsurance] ÷ [NPE +/(-) RIPs related to prior year catastrophes + (Additional) returned premium related to PYD on loss sensitive business] – Loss ratio | |||||
Results from discontinued operations are excluded from all of these measures.
Additional information about AIG can be found at www.aig.com
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AIG is the marketing name for the worldwide property-casualty, life and
retirement, and general insurance operations of
American International Group, Inc. | |||||||||||||||||||
Selected Financial Data and Non-GAAP Reconciliation | |||||||||||||||||||
($ in millions, except per share data) | |||||||||||||||||||
Reconciliations of Adjusted Pre-tax and After-tax Income (Loss) | |||||||||||||||||||
Three Months Ended December 31, | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Pre-tax | Tax Effect | After-tax | Pre-tax | Tax Effect | After-tax | ||||||||||||||
Pre-tax income (loss)/net income (loss), including noncontrolling interests | $ | 875 | $ | 7,544 | $ | (6,673) | $ | (3,455) | $ | (985) | $ | (2,485) | |||||||
Noncontrolling interest | - | - | 13 | - | - | (556) | |||||||||||||
Pre-tax income (loss)/net income (loss) attributable to AIG | 875 | 7,544 | (6,660) | (3,455) | (985) | (3,041) | |||||||||||||
Adjustments: | |||||||||||||||||||
Changes in uncertain tax positions and other tax adjustments | - | (461) | 461 | - | 247 | (247) | |||||||||||||
Deferred income tax valuation allowance charges | - | (66) | 66 | - | (87) | 87 | |||||||||||||
Impact of Tax Act | - | (6,687) | 6,687 | - | - | - | |||||||||||||
Changes in fair value of securities used to hedge | |||||||||||||||||||
guaranteed living benefits | (29) | (10) | (19) | 150 | 53 | 97 | |||||||||||||
Changes in benefit reserves and DAC, VOBA and | |||||||||||||||||||
SIA related to net realized capital gains (losses) | (108) | (38) | (70) | (286) | (100) | (186) | |||||||||||||
Unfavorable (favorable) prior year development and related | |||||||||||||||||||
amortization changes ceded under retroactive reinsurance agreements | 45 | 15 | 30 | (27) | (10) | (17) | |||||||||||||
(Gain) loss on extinguishment of debt | (1) | (1) | - | (2) | - | (2) | |||||||||||||
Net realized capital losses | 274 | 105 | 169 | 1,115 | 344 | 771 | |||||||||||||
Noncontrolling interest on net realized capital losses | - | - | 1 | - | - | (21) | |||||||||||||
Loss from discontinued operations | - | - | 3 | - | - | 36 | |||||||||||||
Income from divested businesses | (241) | (82) | (159) | (194) | (186) | (8) | |||||||||||||
Non-operating litigation reserves and settlements | (43) | (15) | (28) | 2 | 1 | 1 | |||||||||||||
Net loss reserve discount (benefit) charge | (96) | (36) | (60) | (750) | (263) | (487) | |||||||||||||
Pension expense related to a one-time lump sum payment | |||||||||||||||||||
to former employees | 10 | 4 | 6 | 147 | 51 | 96 | |||||||||||||
Restructuring and other costs | 154 | 55 | 99 | 206 | 72 | 134 | |||||||||||||
Adjusted pre-tax income (loss)/Adjusted after-tax income (loss) | $ | 840 | $ | 327 | $ | 526 | $ | (3,094) | $ | (863) | $ | (2,787) | |||||||
Twelve Months Ended December 31, | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Pre-tax | Tax Effect | After-tax | Pre-tax | Tax Effect | After-tax | ||||||||||||||
Pre-tax income (loss)/net income (loss), including noncontrolling interests | $ | 1,466 | $ | 7,526 | $ | (6,063) | $ | (74) | $ | 185 | $ | (288) | |||||||
Noncontrolling interest | - | - | (21) | - | - | (561) | |||||||||||||
Pre-tax income (loss)/net income (loss) attributable to AIG | 1,466 | 7,526 | (6,084) | (74) | 185 | (849) | |||||||||||||
Adjustments: | |||||||||||||||||||
Changes in uncertain tax positions and other tax adjustments | - | (488) | 488 | - | 63 | (63) | |||||||||||||
Deferred income tax valuation allowance charges | - | (43) | 43 | - | (83) | 83 | |||||||||||||
Impact of Tax Act | - | (6,687) | 6,687 | - | - | - | |||||||||||||
Changes in fair value of securities used to hedge | |||||||||||||||||||
guaranteed living benefits | (146) | (51) | (95) | (120) | (42) | (78) | |||||||||||||
Changes in benefit reserves and DAC, VOBA and | |||||||||||||||||||
SIA related to net realized capital gains (losses) | (303) | (106) | (197) | (195) | (68) | (127) | |||||||||||||
Unfavorable (favorable) prior year development and related | |||||||||||||||||||
amortization changes ceded under retroactive reinsurance agreements | 303 | 106 | 197 | (42) | (15) | (27) | |||||||||||||
(Gain) loss on extinguishment of debt | (5) | (2) | (3) | 74 | 26 | 48 | |||||||||||||
Net realized capital losses | 1,380 | 506 | 874 | 1,944 | 561 | 1,383 | |||||||||||||
Noncontrolling interest on net realized capital losses | - | - | 7 | - | - | (61) | |||||||||||||
(Income) loss from discontinued operations | - | - | (4) | - | - | 90 | |||||||||||||
Income from divested businesses | (68) | (41) | (27) | (545) | (309) | (236) | |||||||||||||
Non-operating litigation reserves and settlements | (129) | (45) | (84) | (41) | (14) | (27) | |||||||||||||
Net loss reserve discount (benefit) charge | 187 | 65 | 122 | (427) | (150) | (277) | |||||||||||||
Pension expense related to a one-time lump sum payment | |||||||||||||||||||
to former employees | 60 | 21 | 39 | 147 | 51 | 96 | |||||||||||||
Restructuring and other costs | 413 | 145 | 268 | 694 | 243 | 451 | |||||||||||||
Adjusted pre-tax income/Adjusted after-tax income | $ | 3,158 | $ | 906 | $ | 2,231 | $ | 1,415 | $ | 448 | $ | 406 | |||||||
American International Group, Inc. | |||||||||||||||||||
Selected Financial Data and Non-GAAP Reconciliation (continued) | |||||||||||||||||||
($ in millions, except per share data) | |||||||||||||||||||
Summary of Key Financial Metrics | |||||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||
% Inc. | % Inc. | ||||||||||||||||||
2017 | 2016 | (Dec.) | 2017 | 2016 | (Dec.) | ||||||||||||||
Income (loss) per common share: |
|||||||||||||||||||
Basic | |||||||||||||||||||
loss from continuing operations | $ | (7.33) | $ | (2.93) | (150.2) | % | $ | (6.54) | $ | (0.70) | NM | % | |||||||
Loss from discontinued operations | - | (0.03) | NM | - | (0.08) | NM | |||||||||||||
Net loss attributable to AIG | $ | (7.33) | $ | (2.96) | (147.6) | $ | (6.54) | $ | (0.78) | NM | |||||||||
Diluted | |||||||||||||||||||
loss from continuing operations | $ | (7.33) | $ | (2.93) | (150.2) | $ | (6.54) | $ | (0.70) | NM | |||||||||
Loss from discontinued operations | - | (0.03) | NM | - | (0.08) | NM | |||||||||||||
Net loss attributable to AIG | $ | (7.33) | $ | (2.96) | (147.6) | $ | (6.54) | $ | (0.78) | NM | |||||||||
Adjusted after-tax income (loss) attributable to AIG per diluted share (a) | $ | 0.57 | $ | (2.72) | NM | % | $ | 2.34 | $ | 0.36 | NM | % | |||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic | 908.1 | 1,023.9 | 930.6 | 1,091.1 | |||||||||||||||
Diluted (a)(b) | 908.1 | 1,023.9 | 930.6 | 1,091.1 | |||||||||||||||
Return on equity (c) | (38.7) | % | (14.7) | % | (8.4) | % | (1.0) | % | |||||||||||
Adjusted return on equity (d) | 4.2 | % | (18.2) | % | 4.1 | % | 0.6 | % | |||||||||||
As of period end: |
December 31, 2017 | December 31, 2016 | |||||
Total AIG shareholders' equity | $ | 65,171 | $ | 76,300 | |||
Accumulated other comprehensive income (AOCI) | 5,465 | 3,230 | |||||
Total AIG shareholders' equity, excluding AOCI | 59,706 | 73,070 | |||||
Deferred tax assets | 10,492 | 14,770 | |||||
Total adjusted AIG shareholders' equity | $ | 49,214 | $ | 58,300 | |||
As of period end: |
December 31, 2017 | December 31, 2016 | % Inc. (Dec.) | |||||||
Book value per common share (e) | $ | 72.49 | $ | 76.66 | (5.4) | % | ||||
Book value per common share, excluding AOCI (f) | $ | 66.41 | $ | 73.41 | (9.5) | |||||
Adjusted book value per common share (g) | $ | 54.74 | $ | 58.57 | (6.5) | |||||
Total common shares outstanding | 899.0 | 995.3 | ||||||||
Financial highlights - notes | |
(a) For the quarters ended December 31, 2017 and 2016, because we reported net losses and for the quarter ended December 31, 2016, because we reported an adjusted after-tax loss, all common stock equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts, and for the twelve months ended December 31, 2017 and 2016, because we reported net losses, all common stock equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts. We reported an adjusted after-tax income for the three months ended December 31, 2017, and years ended December 31, 2017 and 2016; therefore, we reported earnings per share on diluted basis. For the three months ended December 31, 2017 and years ended December 31, 2017 and 2016, the weighted average outstanding shares - diluted includes 20,155,385, 22,412,682 and 30,326,772 dilutive shares, respectively. | |
(b) Diluted shares in the diluted EPS calculation represent basic shares for the three months ended December 31, 2017 and 2016 and twelve months ended December 31, 2017 and 2016 due to the net loss in that period. | |
(c) Computed as Annualized net income (loss) attributable to AIG divided by average AIG shareholders' equity. Equity includes AOCI and DTA. | |
(d) Computed as Annualized Adjusted after-tax Income attributable to AIG divided by Adjusted Shareholders' Equity. | |
(e) Represents total AIG shareholders' equity divided by Total common shares outstanding. | |
(f) Represents total AIG shareholders' equity, excluding AOCI, divided by Total common shares outstanding. | |
(g) Represents Adjusted Shareholders' Equity, divided by Total common shares outstanding. | |
American International Group, Inc. | ||||||||
Selected Financial Data and Non-GAAP Reconciliation | ||||||||
($ in millions, except per share amounts) | ||||||||
Reconciliations of Core Adjusted Return on Equity | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
Adjusted pre-tax income (loss) | $ | 429 | $ | (4,195) | ||||
Interest expense (benefit) on attributed financial debt | (31) | (45) | ||||||
Adjusted pre-tax income (loss) including attributed interest expenses | 460 | (4,150) | ||||||
Income tax expense (benefit) | 198 | (1,265) | ||||||
Adjusted after-tax income (loss) | 262 | (2,885) | ||||||
Ending adjusted attributed equity | $ | 39,931 | $ | 47,651 | ||||
Average adjusted attributed equity | $ | 40,841 | $ | 50,302 | ||||
Adjusted return on attributed equity | 2.6 | % | (22.9) | % | ||||
Reconciliations of Accident Year Loss Ratio, as Adjusted and Combined Ratio, as Adjusted | |||||
Twelve Months Ended | |||||
December 31, | |||||
2017 | 2016 | ||||
Total General Insurance |
|||||
Loss ratio | 83.2 | 84.8 | |||
Catastrophe losses and reinstatement premiums | (16.1) | (4.4) | |||
Prior year development | (4.0) | (18.5) | |||
Adjustment for ceded premium under reinsurance contract | (0.1) | - | |||
Accident year loss ratio, as adjusted | 63.0 | 61.9 | |||
Combined ratio | 117.3 | 118.9 | |||
Catastrophe losses and reinstatement premiums | (16.1) | (4.4) | |||
Prior year development | (4.0) | (18.5) | |||
Adjustment for ceded premium under reinsurance contract | (0.1) | - | |||
Accident year combined ratio, as adjusted | 97.1 | 96.0 | |||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180208006390/en/
Source:
American International Group, Inc.
Investors:
Liz Werner,
212-770-7074
elizabeth.werner@aig.com
or
Fernando
Melon, 212-770-4630
fernando.melon@aig.com
or
Media:
Daniel
O’Donnell, 212-770-3141
daniel.odonnell@aig.com
or
Matt
Gallagher, 212-458-3247
matthew.gallagher2@aig.com