UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 13, 2013
AMERICAN INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-8787 | 13-2592361 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
180 Maiden Lane
New York, New York 10038
(Address of principal executive offices)
Registrant’s telephone number, including area code: (212) 770-7000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 7 — Regulation FD
Item 7.01. Regulation FD Disclosure.
American International Group, Inc. (the “Company”) is furnishing the Investor Presentation, dated November 13, 2013, attached as Exhibit 99.1 to this Current Report on Form 8-K (the “Investor Presentation”), which the Company may use from time to time in presentations to investors and other stakeholders. The Investor Presentation will also be available on the Company’s website at www.aig.com.
Section 9 — Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| 99.1 | Investor Presentation dated November 13, 2013 (furnished and not filed for purposes of Item 7.01). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN INTERNATIONAL GROUP, INC. (Registrant) | ||||||||||
| Date: | November 13, 2013 | By: | /s/ James J. Killerlane III | |||||||
| Name: | James J. Killerlane III | |||||||||
| Title: | Associate General Counsel and Assistant Secretary | |||||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Investor Presentation dated November 13, 2013 (furnished and not filed for purposes of Item 7.01). | |
 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 |
 *
*
*
*
*
*
*
*
*
* |