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): February 13, 2014
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.) |
175 Water Street
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 Conference Call Presentation, attached as Exhibit 99.1 to this Current Report on Form 8-K (the “Conference Call Presentation”), which the Company will use on its earnings conference call scheduled for 8:00 a.m. ET on February 14, 2014. The Conference Call 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 | Conference Call Presentation dated February 14, 2014 (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: February 13, 2014 |
By: | /s/ James J. Killerlane III | ||||
| Name: Title: |
James J. Killerlane III Associate General Counsel and Assistant Secretary | |||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Conference Call Presentation dated February 14, 2014 (furnished and not filed for purposes of Item 7.01). | |
 American International Group, Inc.
Fourth Quarter 2013 Results
Conference Call Presentation
February 14, 2014
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 quarterly period ended September 30, 2013, Part II, Item 1A. Risk Factors in AIG’s Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2013, Part I, Item 1A. Risk Factors and Part
II, Item 7. MD&A in AIG’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2012 and Part I, Item 1A. Risk Factors and Part II, Item 7. MD&A in AIG’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2013 (which will be filed with the Securities and
Exchange Commission). 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 Fourth 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
Fourth Quarter 2013 Key Themes
Highlights:
Noteworthy Items
Capital Management,
Liquidity & Other
In February 2014, $1 billion increase in share repurchase authorization; 25%
increase in quarterly dividend to $0.125/sh. $4.1 billion of insurance
company cash dividends ($8.7 billion in cash dividends and loan repayments in 2013)
Issued
$1.0
billion
of
4.125%
senior
notes
due
2024;
repurchased
and
redeemed
debt
totaling
$1.1
billion
with an
average coupon rate of approximately 7.5%
Agreement to sell ILFC to AerCap Holdings N.V. for total consideration of
approximately $5.4 billion* Severance charge of $265 million
AIG Property Casualty
Accident year loss ratio, as adjusted, increased 3.1 points to 66.4 from 4Q12
largely due to severe losses of $277 million Continued positive rate change
in 4Q13, with Global Commercial rates up 2.6% (+5.0% in North America) Net
premiums written grew 6% across all lines from 4Q12, excluding foreign exchange, timing of recognition of ceded
premiums written on excess of loss reinsurance agreements and premium
adjustments A low level of catastrophe losses of $208 million
Net
prior
year
adverse
development
of
$266
million,
largely
from
pre-2004
environmental
and
pollution
products
Net favorable change in discount of $325 million to reflect expected yields and
future payout patterns Mortgage Guaranty
New
insurance
written
(NIW)
of
$10.9
billion
in
4Q13.
Record
NIW
of
$49.4
billion
in
domestic
1
st
lien
for
full-year
2013
59% of net premiums earned in 4Q13 were from new business written after 2008
Delinquency ratio declined 50 bps from 3Q13 to 5.9%, the lowest since 4Q07
AIG Life and Retirement
Premiums and deposits of $8.0 billion driven by strong sales of investment
products, including near record sales of variable annuities
Significant
increases
in
net
flows
and
account
balances
resulted
in
higher
fee
income
and
contributed
to
the
10%
increase in AUM from the year-ago period
Continued
initiatives
to
enhance
profitability,
including
spread
management
actions
Net investment income increase driven by higher returns on alternative investments
and yield enhancements * Based on AerCap’s pre-announcement closing
price per share of $24.93 on December 13, 2013. |
 4
Fourth Quarter
($ in millions, except per share amounts)
2012
2013
Inc.
(Dec.)
Revenues
$17,169
$17,346
1%
Net income (loss) attributable to AIG
(3,958)
1,978
NM
Diluted earnings per common share
($2.68)
$1.34
NM
ROE, Ex. AOCI
(1)
NM
8.5%
After-tax operating income attributable to AIG
$290
$1,704
488%
After-tax operating income attributable to AIG per common share
$0.20
$1.15
475%
ROE –
After-tax
operating
income
(2)
1.3%
7.3%
Book value per common share
$66.38
$68.62
3%
Book value
per
common
share
-
Ex.
AOCI
$57.87
$64.28
11%
Financial Highlights
1)
Computed as Annualized Net income (loss) attributable to AIG divided by Average
AIG Shareholders' equity, excluding AOCI. 2)
Computed as Annualized After-tax operating income divided by Average AIG
Shareholders' equity, excluding AOCI. |
 5
After-tax Operating Income
Fourth Quarter
($ in millions, except per share amounts)
2012
2013
Insurance operations:
AIG Property Casualty
($944)
$1,090
AIG Life and Retirement
1,090
1,406
Mortgage Guaranty
(45)
48
Total Insurance Operations
101
2,544
Other operations:
Direct Investment book
509
418
Global Capital Markets
300
194
Interest expense
(408)
(328)
Corporate expenses
(337)
(213)
Change in fair value of AIA (including realized gain)
240
-
Other
(20)
(92)
Pre-tax operating income
385
2,523
Income tax expense
(87)
(815)
Other noncontrolling interest
(8)
(4)
After-tax operating income attributable to AIG
$290
$1,704
After-tax operating income per diluted common share
$0.20
$1.15
4Q13 results reflect strong growth in insurance operating earnings.
(1)
1) 4Q13 included a severance charge of $265 million and real estate gains of $170 million. Note: In 4Q13, life settlement
investments and associated income (loss) was transferred from AIG Property Casualty to AIG’s Other operations.
Prior periods were reclassified to conform to the current period presentation.
|
 6
Deferred Tax Asset Overview
AIG continues to have substantial deferred tax assets that are available to offset
future tax obligations. 1)
Foreign tax credits triggered in years 2013 have increased the amount of
carryover. 2)
Change during the period is primarily attributable to available for sale
investment securities. As of 12/31/12
As of 12/31/13
($ in billions)
Type
Gross
Attributes
Deferred
Tax Asset
Gross
Attributes
Deferred
Tax Asset
Utilization/Expiration
Net Operating Loss
Carryforwards
Non-Life
& Life
$39.5
$13.8
$35.8
$12.5
Utilize against AIG PC, ILFC, UGC,
AIG Parent and 35% of AIG L&R
income
2028–2031 Expiration
Capital Loss
Carryforwards
Valuation Allowance
Life
$16.6
$5.8
($5.1)
$1.4
$0.5
($0.5)
Utilize against capital gains from AIG
L&R
2014 Expiration
Foreign
Tax Credits
General
$4.7
$5.3
(1)
Utilize against 65% of AIG L&R
income
2016–2023 Expiration
Subtotal –
U.S. Tax
Attributes
19.2
17.8
Other
Deferred Tax
Assets/(Liabilities)
(2.5)
3.4
(2)
Net Deferred Tax
Assets
$16.7
$21.2 |
 7
Strong Capital Position
Book Value Per Share
Capital Structure
$66.38
($ in billions, except per share data)
$124.1
Leverage Ratios:
Dec. 31,
2012
Dec. 31,
2013
Financial Debt + Hybrids /
Capitalization
20.5%
17.3%
Financial Debt / Capitalization
12.9%
12.8%
$68.62
$122.3
Risk Based Capital Ratios
(2)
Year-end
AIG U.S.
Property Casualty
AIG
Life and Retirement
2012
443% (ACL)
532% (CAL)
2013
416% (ACL)
540% (CAL)
1)
Includes AIG notes, bonds, loans and mortgages payable, and AIGLH notes and bonds payable and junior
subordinated debt. 2)
The inclusion of RBC measures is intended solely for the information of investors and is not
intended for the purpose of ranking any insurance company or for use in connection with any
marketing, advertising or promotional activities. ACL is defined as Authorized Control Level and CAL is defined as Company
Action Level. RBC ratio for AIG Life and Retirement excludes holding company, AGC Life Insurance
Company. Amounts for 2013 are estimated. |
 8
Financial Flexibility –
A Source of Strength
Parent Cash, Short-Term Investments &
Unencumbered Securities
Insurance Company Distributions
($ in millions)
($ in billions)
AIG Property Casualty distributions in 2013 included $1.8 billion resulting from
legal entity restructurings and intercompany reinsurance optimization,
including $1.5 billion in 4Q13. AIG Life and Retirement distributions in 2013
included approximately $800 million of legal settlement proceeds received.
UGC remitted a $90 million dividend to AIG Parent in 4Q13, its first dividend since
2010. AIG Parent cash, short-term investments and unencumbered fixed
maturity securities of $13.1 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
December 31, 2013.
AIG Parent also maintains available capacity of $4.4 billion under its syndicated
credit facility plus its contingent liquidity facility. $12.7
$1,337
$1,933
FY 2013 -
$8,893
$4,274
$13.1
*
* Includes $222 million of non-cash distributions.
$792
$716
$2,862
$545
$1,217
$1,322
$0
$1,000
$2,000
$3,000
$4,000
$5,000
1Q13
2Q13
3Q13
4Q13
AIG Property Casualty
AIG Life and Retirement
UGC
$9.8
$10.2
$3.0
$3.0
Dec. 31,
2012
Sept. 30,
2013
Dec. 31,
2013
Unencumbered
Fixed Maturity
Securities
Cash & Short-term
Investments
$1,349
$90
$12.6 |
 9
AIG Property Casualty –
Financial Results
Global Combined Ratios
Calendar Year
Accident Year,
as adjusted
(1)
1)
Both
the
accident
year
combined
ratio,
as
adjusted,
and
accident
year
loss
ratio,
as
adjusted,
exclude
catastrophe
losses
and
related
reinstatement
premiums, prior year development, net of premium adjustments, and the impact of
reserve discounting. ($ in millions)
4Q12
4Q13
Net premiums written
$7,809
$8,028
Net premiums earned
8,613
8,621
Underwriting loss
(2,161)
(330)
Net investment income
1,217
1,420
Pre-tax operating income (loss)
($944)
$1,090
Net premiums written, excluding foreign exchange, the timing of recognition of
ceded premiums written on excess of loss reinsurance agreements
and
premium
adjustments,
grew
6%
from
4Q12
reflecting
growth
of
new
business,
rate
increases
and
changes in reinsurance
structure. Net premiums written on an as-reported basis grew 3% from
4Q12. The accident year loss ratio, as adjusted, increased 3.1 points from
4Q12, largely due to an increase in severe losses of $214 million. Net
investment income growth was primarily driven by hedge fund performance and income from fair value option securities.
Operating results demonstrate continued execution of strategic initiatives.
125.1
100.8
103.8
102.0 |
 10
Commercial Insurance –
Underwriting Results
Calendar Year
Accident Year,
as adjusted
(1)
130.3
Combined Ratios
95.8
Accident
Year
Loss
Ratio,
as
adjusted
(1)
Net Premiums Written
($ in millions)
$4,410
$4,841
107.7
97.1
1) Both the accident year combined ratio, as adjusted, and accident year loss ratio, as adjusted,
exclude catastrophe losses and related reinstatement premiums, prior year development, net of
premium adjustments, and the impact of reserve discounting. Commercial Insurance NPW, excluding foreign exchange, the
timing of recognition of ceded premiums written on excess of loss
reinsurance agreements and premium adjustments, grew 7%
from 4Q12. This increase reflected growth of new
business, rate increases and changes in our reinsurance
structure. Net premiums written on an as-reported basis
grew 10% from 4Q12. Commercial Insurance rates increased 2.6% (+5.0% for North
America), led by Casualty at +5.0% and Financial Lines at
+3.3%. The accident year loss ratio, as adjusted, in 2013 reflected
volatility in the quarterly results due to the impact of
severe losses which ranged from a low of 0.7 points in
2Q13 to 4.9 points in 4Q13. The 4Q13 combined ratio was negatively impacted by 6.1 pts
due to a change in our discounting of workers’
compensation reserves. See page 13.
|
 11
Consumer Insurance –
Underwriting Results
Combined Ratios
Accident
Year
Loss
Ratio,
as
adjusted
(1)
Calendar Year
Accident Year,
as adjusted
(1)
111.2
101.3
Net Premiums Written
($ in millions)
$3,189
Consumer Insurance NPW, excluding foreign exchange and
timing of recognition of ceded premiums written on excess of
loss reinsurance agreements, grew 4% from 4Q12. On an as-
reported basis NPW declined 6%.
NPW growth was driven by increased Personal Lines
premiums in EMEA and the U.S. as well as growth in Life
premiums in Japan.
The accident year loss ratio, as adjusted, increased in 4Q13
primarily due to higher A&H losses and severe loss activity in
Private Client Group.
103.3
103.6
1)
Both
the
accident
year
combined
ratio,
as
adjusted,
and
accident
year
loss
ratio,
as
adjusted,
exclude
catastrophe
losses
and
related
reinstatement
premiums, prior year development, net of premium adjustments, and the impact of
reserve discounting. $1,647
$1,532
$1,748
$1,657
$0
$1,000
$2,000
$3,000
$4,000
4Q12
4Q13
Accident & Health
Personal Lines
67.9
60.4
58.0
60.7
26.9
25.2
26.9
25.2
16.4
17.7
16.4
17.7
0
20
40
60
80
100
120
4Q12
4Q13
4Q12
4Q13
Loss Ratio
Acquisition Ratio
GOE Ratio
58.4
59.1
57.7
58.0
58.8
60.2
58.5
60.7
40
45
50
55
60
65
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
$3,395 |
 12
AIG Property Casualty –
Investments
1)
Includes income/loss from fair value option securities, investment real estate and
mutual funds, net of investment expenses. 2)
Includes intercompany invested assets that are eliminated in consolidation.
Total Portfolio Composition
Bond
Portfolio
-
$99.0
billion
-
by
Agency
Credit
Rating
Total
Cash
&
Invested
Assets
as
of
December
31,
2013
-
$123.1
billion
(2)
Net investment income:
($ in millions)
2012
2013
Inc./(Dec.)
2012
2013
Inc./(Dec.)
Interest and dividends
1,036
$
1,041
$
0%
4,215
$
4,124
$
(2%)
Alternative investments
157
303
93%
484
870
80%
Other, net
(1)
24
76
217%
81
273
237%
Net investment income
1,217
$
1,420
$
17%
4,780
$
5,267
$
10%
Yield
3.77%
4.59%
0.82%
3.79%
4.17%
0.38%
Fourth Quarter
Full Year |
 13
AIG Property Casualty –
Prior Year Development
Unfavorable
prior
year
development
in
the
Other
run-off
lines
in
4Q13
consisted
primarily
of
charges
associated
with
pre-2004 environmental
business, reflecting changes in case reserves due to new developments such as the
discovery of additional contamination in certain sites, legislative changes,
court rulings, expansion of plaintiff damages and increased cost of remediation technologies.
In 4Q13 we received permission from our Pennsylvania regulator to apply a
consistent discount rate (U.S. Treasury rate plus liquidity premium) to our
workers’ compensation reserves in our Pennsylvania-domiciled
companies and to use payout patterns specific to our primary and excess
workers’ compensation portfolios. Total discount benefit in the quarter
was $325 million, including a charge of
$322
million
in
Commercial
Insurance
from
a
lower
discount
rate
on
primary
workers’
compensation
reserves,
and
a
benefit
of
$647
million
in
Other
primarily
from
the
use
of
payout
patterns
specific
to
excess
workers’
compensation
reserves.
($ in millions)
1Q13
2Q13
3Q13
4Q13
2012
2013
Product:
Casualty
23
$
89
$
114
$
68
$
700
$
294
$
Financial lines
(9)
3
(9)
(12)
(250)
(26)
Specialty
(46)
8
46
41
68
50
Property
(29)
156
(46)
(45)
(228)
37
Total Commercial
(61)
257
105
54
290
355
A&H
(8)
(5)
(9)
(7)
(18)
(30)
Personal lines
(34)
(48)
(21)
(22)
(2)
(125)
Total Consumer
(42)
(53)
(30)
(30)
(20)
(155)
Other -
run-off
61
20
(2)
248
229
327
Prior year loss reserve development (favorable)
unfavorable, net of reinsurance
(42)
224
73
272
499
527
Additional premium related to prior year development
(10)
(70)
(6)
(89)
Net prior year development (favorable) unfavorable
(52)
$
154
$
70
$
266
$
445
$
438
$
Net reserve discount benefit (charge)
(5)
$
(5)
$
(6)
$
325
$
63
$
309
$
Quarterly
Full Year
(54)
(3) |
 Mortgage Guaranty –
Growing Profitability
New business increasingly drives trend of improving operating results.
1)
Domestic First-lien only.
Primary
Delinquency
Trend
(1)
($ in millions)
4Q12
4Q13
Net premiums written
$236
$255
Net premiums earned
190
203
Underwriting income (loss)
(82)
15
Net investment income
37
33
Pre-tax operating income (loss)
($45)
$48
Net premiums earned from business
written after 2008
44%
59%
Loss ratio
118.4
63.1
New Insurance Written
($ in billions)
$7.2
$11.6
$10.9
$0
$2
$4
$6
$8
$10
$12
$14
4Q11
4Q12
4Q13
63
57
53
50
48
8.8%
7.9%
7.1%
6.4%
5.9%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
40
45
50
55
60
65
70
4Q12
1Q13
2Q13
3Q13
4Q13
14
DQ Ratio (%)
DQ Count (000's)
4.0% |
 15
AIG Life and Retirement –
Financial Results
Increase in pre-tax operating income of 29% driven by
effective spread management, higher net investment income
and fee income growth.
Ongoing strategy of actively managing profitability through
crediting rate actions on existing spread business and
disciplined new business pricing continued to enhance
results.
Net investment income benefited from higher returns on
alternative investments, increased gains on calls and
tenders, and appreciation of hybrid securities.
Assets Under Management
Strong sales and growth in pre-tax operating income.
($ in millions)
4Q12
4Q13
Premiums and deposits
$5,215
$8,042
Premiums
634
606
Policy fees
618
652
Net investment income
2,715
2,873
Advisory fee and other income
358
454
Total revenues
(1)
4,325
4,585
Benefits and expenses
3,235
3,179
Pre-tax operating income
$1,090
$1,406
1)
Excluding net realized capital gains (losses).
Assets under management increased 10% from the year-
ago period to $318 billion at December 31, 2013. Growth
was driven by strong retail investment product net flows,
higher separate account balances and greater institutional
assets. These sources of AUM growth more than offset the
impact of rising rates on our invested asset portfolio.
Net inflows were $4.6 billion in 2013 compared to net
outflows of $1.3 billion in 2012. The significant increase was
driven by the strength of variable annuity and retail mutual
fund sales and continued improvement in fixed annuities
flows.
Life
Insurance
and A&H
11%
Fixed
Annuities
22%
Retirement
Income
Solutions
13%
Retail
Mutual
Funds
4%
Group
Retirement
29%
Institutional
Markets
20%
Group
Benefits
1% |
 16
AIG Life and Retirement –
Retail & Institutional Results
Retail
Pre-Tax
Operating
Income
(1)
Institutional
Pre-Tax
Operating
Income
(2)
$598
$820
($ in millions)
$492
$586
($ in millions)
1)
Breakdown excludes operating income for Brokerage Services and Retail Mutual Funds
which are included in the Retail operating segment total. 2)
Breakdown excludes operating income for Group Benefits which is included in the
Institutional operating segment total. $88
$213
$398
$413
$109
$186
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
4Q12
4Q13
Life Insurance and A&H
Fixed Annuities
Ret. Inc. Solutions
$308
$392
$176
$191
$0
$100
$200
$300
$400
$500
$600
$700
4Q12
4Q13
Group Retirement
Institutional Markets
Retail pre-tax operating income increased 37% from 4Q12, driven by
ongoing active spread management, higher net investment income,
growth in fee income, and favorable mortality experience. Retirement
Income Solutions benefited from increased assets under management
and strong equity market performance. Fixed Annuities experienced
improved spreads in the quarter; further, the prior-year period included a
$76 million gain from DAC unlocking. Life Insurance and A&H
benefited from better than expected mortality experience, and the prior-year
period was impacted by charges for DAC unlocking and loss recognition.
Institutional pre-tax operating income increased 19% from 4Q12,
driven by active spread management, higher fee income on group separate
account balances, and higher returns on alternative investments. Group
Retirement earnings also benefited from a $35 million positive DAC
unlocking in the quarter.
|
 17
AIG
Life
and
Retirement
–
Investments
Total Portfolio Composition
Bond
Portfolio
-
$157.2
billion
-
by
Agency
Credit
Rating
Total
Cash
&
Invested
Assets
as
of
December
31,
2013
-
$196.9
billion
(4)
Net investment income:
($ in millions)
2012
2013
Inc./(Dec.)
2012
2013
Inc./(Dec.)
Interest and dividends
2,316
$
2,291
$
(1%)
9,650
$
9,173
$
(5%)
Alternative investments
332
505
52%
954
1,567
64%
Call and tender income
42
57
36%
146
196
34%
Other, net
(1)
25
20
(20%)
(32)
(82)
156%
Net investment income
2,715
$
2,873
$
6%
10,718
$
10,854
$
1%
Base Yield
(2)
5.33%
5.29%
(0.04%)
5.43%
5.30%
(0.13%)
Total Yield
(3)
6.09%
6.27%
0.18%
6.04%
5.97%
(0.07%)
Fourth Quarter
Full Year
States, municipalities,
and political
subdivisions
2%
U.S. Governments
1%
Non
-U.S. governments
2%
Corporate debt
54%
RMBS
12%
CMBS
4%
CDO/ABS
5%
Other invested assets
7%
Loans
10%
Cash and short-term
investments
3%
AAA
11%
AA
10%
A
23%
BBB
42%
BB
4%
B
2%
<B
8%
1) Includes income/loss from mutual funds, real estate, equity method investments and
mark-to-market gains and losses, net of investment expenses. 2) Includes the investment
return other than alternative investment or yield enhancement activities. Quarterly results are annualized.
3) Represents the base yields and the incremental effect on base yield on investments in hedge funds,
private equity funds, affordable housing partnerships, gains on Maiden Lane II (in 2012) and
income from calls and prepayment fees. Quarterly results are annualized. 4) Includes
intercompany invested assets that are eliminated in consolidation. |
 18
Base Yields
(1)
Base Net Investment Spreads
(1)
Cost of Funds
(2)
AIG
Life
and
Retirement
–
Base
Yields
and
Spreads
Base net investment spreads expanded for both Fixed Annuities and Group Retirement
from the year-ago period benefiting from higher base investment yields
and active crediting rate management throughout the year. Overall portfolio
base yield declined slightly from the year-ago period, due to the impact of reinvestment at lower rates than book yield and the
sale of invested assets to generate taxable gains and monetize capital loss
carryforwards. 5.33%
5.30%
5.35%
5.26%
5.29%
5.12%
5.10%
5.25%
5.17%
5.24%
4.95%
4.85%
5.14%
5.08%
5.10%
4.70%
4.90%
5.10%
5.30%
5.50%
4Q12
1Q13
2Q13
3Q13
4Q13
3.14%
2.91%
2.89%
2.93%
2.91%
3.26%
3.10%
3.06%
3.08%
3.05%
2.60%
2.80%
3.00%
3.20%
3.40%
4Q12
1Q13
2Q13
3Q13
4Q13
1.98%
2.19%
2.36%
2.24%
2.33%
1.69%
1.75%
2.08%
2.00%
2.05%
1.00%
1.50%
2.00%
2.50%
3.00%
4Q12
1Q13
2Q13
3Q13
4Q13
Total Base Yield
Fixed Annuities
Group Retirement
1) Includes the investment return on surplus other than alternative investment or yield enhancement
activities. 2) Excludes the amortization of sales inducement assets.
|
 19
Q&A |
 20
Appendix |
 21
Non-GAAP Reconciliation –
Pre-tax Operating Income (Loss)
(1)
1)
Includes results of ILFC.
(1)
Income (loss) from continuing operations, before tax
$
(923) 1,252
(47)
(6,321)
(6,039)
Adjustments to arrive at pre-tax operating income:
Net (income) loss from divested businesses
-
-
-
6,668
6,668
Legal reserves (settlements), net of related expenses
(17)
(154)
-
(29)
(200)
Changes in fair value of securities designated to hedge
living benefit liabilities, net of interest expense
-
11
-
-
11
Change in benefit reserves and DAC, VOBA and SIA
related to net realized capital gains (losses)
-
81
-
-
81
Other loss
4
-
-
(4)
-
Net realized capital (gains) losses
(8)
(100)
2
(30)
(136)
Pre-tax operating income (loss)
$
(944) 1,090
(45)
284
385
Income (loss) from continuing operations, before tax
$
1,188 1,975
51
(1,064)
2,150
Adjustments to arrive at pre-tax operating income:
Net (income) loss from divested businesses
-
-
-
190
190
Legal reserves (settlements), net of related expenses
(10)
(553)
-
(52)
(615)
Changes in fair value of securities designated to hedge
living benefit liabilities, net of interest expense
-
33
-
-
33
Change in benefit reserves and DAC, VOBA and SIA
related to net realized capital gains (losses)
-
4
-
98
102
AIG Property Casualty other income (expense), net
79
(7)
72
Loss on extinguishment of debt
-
-
-
192
192
Net realized capital (gains) loss
(167)
(53)
(3)
622
399
Pre-tax operating income (loss)
1,090
1,406
48
(21)
2,523
4Q12
Other
Operations
4Q13
($ in millions)
AIG
Property Casualty
($ in millions)
AIG
Property Casualty
AIG
Life and Retirement
AIG
Life and Retirement
Mortgage
Guaranty
Other
Operations
Total
Total
Mortgage
Guaranty
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ |
 22
Non-GAAP Reconciliation –
After-tax Operating Income
(1)
1)
Includes results of ILFC.
2012
2013
Net income (loss) attributable to AIG
(3,958)
1,978
Adjustments to arrive at After-tax operating income attributable to AIG:
(Income) loss from discontinued operations
8
(11)
Net (income) loss from divested businesses
4,323
97
Uncertain tax positions and other tax adjustments
200
65
Legal reserves (settlements) related to legacy crisis matters
(129)
(399)
Deferred income tax valuation allowance releases
(116)
(540)
Changes
in
fair
value
of
AIG
Life
and
Retirement
fixed
maturity
securities
designated to hedge living benefit liabilities, net of interest expense
7
22
Changes in benefit reserves and DAC, VOBA and SIA related to net
realized capital gains
52
67
AIG Property Casualty other income (expense), net
-
47
Loss on extinguishment of debt
-
125
Net realized capital (gains) losses
(97)
253
After-tax operating income attributable to AIG
290
1,704
After-tax Operating Income Attributable to AIG
($ in millions)
Fourth Quarter |
 23
2012
2013
Annualized Net income attributable to AIG
NM
7,912
$
Annualized After-tax operating income attributable to AIG
1,160
$
6,816
Average AIG Shareholders' equity
99,834
99,632
Less: Average AOCI
12,394
6,435
Average AIG Shareholders' equity, excluding average AOCI
87,440
$
93,197
$
ROE
NM
7.9%
ROE excluding AOCI
NM
8.5%
ROE - After-tax operating income
1.3%
7.3%
Return On Equity
Fourth Quarter
Non-GAAP Reconciliation –
Return On Equity
1)
Includes net deferred tax asset.
2)
Computed as Annualized Net income (loss) attributable to AIG divided by Average
AIG Shareholders' equity. 3)
Computed as Annualized Net income (loss) attributable to AIG divided by Average
AIG Shareholders' equity, excluding AOCI. 4)
Computed as Annualized After-tax operating income divided by Average AIG
Shareholders' equity, excluding AOCI. (2)
(3)
(4)
(1)
(1) |
 24
Non-GAAP Reconciliation –
BVPS ex. AOCI and Premiums
& Deposits
2012
2013
Total AIG shareholders’ equity
98,002
$
100,470
$
Less: AOCI
12,574
6,360
Total AIG shareholders’ equity, excluding AOCI
85,428
$
94,110
$
Total common shares outstanding
1,476,321,935
1,464,063,323
Book value per common share
66.38
$
68.62
$
Book value per common share, excluding AOCI
57.87
$
64.28
$
2012
2013
Premiums and deposits
5,215
$
8,042
$
Deposits
(4,384)
(7,238)
Other
(197)
(198)
Premiums
634
$
606
$
December 31,
AIG Life and Retirement Premiums and Deposits
($ in millions)
Book Value Per Common Share - Ex. AOCI
($ in millions, except per share data)
Fourth Quarter |
 25
Non-GAAP Reconciliation –
Accident Year Combined Ratio,
As Adjusted
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
Commercial Insurance
Loss ratio
72.3
70.7
78.0
100.9
64.9
72.6
71.8
77.9
Catastrophe losses and reinstatement premiums
(1.5)
(5.4)
(4.5)
(32.8)
(0.6)
(6.0)
(3.5)
(3.6)
Prior year development net of premium adjustments
(0.5)
0.1
(2.7)
(1.7)
1.1
(4.4)
(2.1)
(0.9)
Net reserve discount benefit (charge)
-
1.9
-
-
-
-
-
(6.1)
Accident year loss ratio, as adjusted
70.3
67.3
70.8
66.4
65.4
62.2
66.2
67.3
Acquisition ratio
18.0
17.2
15.6
15.5
16.3
16.3
15.8
16.1
General operating expense ratio
11.3
11.4
12.4
13.9
11.0
12.8
12.6
13.7
Expense ratio
29.3
28.6
28.0
29.4
27.3
29.1
28.4
29.8
Combined ratio
101.6
99.3
106.0
130.3
92.2
101.7
100.2
107.7
Catastrophe losses and reinstatement premiums
(1.5)
(5.4)
(4.5)
(32.8)
(0.6)
(6.0)
(3.5)
(3.6)
Prior year development net of premium adjustments
(0.5)
0.1
(2.7)
(1.7)
1.1
(4.4)
(2.1)
(0.9)
Net reserve discount benefit (charge)
-
1.9
-
-
-
-
-
(6.1)
Accident year combined ratio, as adjusted
99.6
95.9
98.8
95.8
92.7
91.3
94.6
97.1
Consumer Insurance
Loss ratio
58.1
59.2
58.3
67.9
57.8
58.9
58.8
60.4
Catastrophe losses and reinstatement premiums
(0.1)
(1.1)
(0.6)
(8.9)
(0.3)
(0.3)
(1.2)
(0.6)
Prior year development net of premium adjustments
0.4
1.0
-
(1.0)
1.3
1.6
0.9
0.9
Accident year loss ratio, as adjusted
58.4
59.1
57.7
58.0
58.8
60.2
58.5
60.7
Acquisition ratio
23.7
23.5
25.7
26.9
24.9
25.9
26.1
25.2
General operating expense ratio
14.9
15.0
14.8
16.4
15.7
15.3
15.0
17.7
Expense ratio
38.6
38.5
40.5
43.3
40.6
41.2
41.1
42.9
Combined ratio
96.7
97.7
98.8
111.2
98.4
100.1
99.9
103.3
Catastrophe losses and reinstatement premiums
(0.1)
(1.1)
(0.6)
(8.9)
(0.3)
(0.3)
(1.2)
(0.6)
Prior year development net of premium adjustments
0.4
1.0
-
(1.0)
1.3
1.6
0.9
0.9
Net reserve discount benefit (charge)
-
-
-
-
-
-
-
- Accident year combined ratio, as adjusted
97.0
97.6
98.2
101.3
99.4
101.4
99.6
103.6
Total AIG Property Casualty
Loss ratio
68.0
68.9
71.4
87.6
63.3
68.0
67.3
68.2
Catastrophe losses and reinstatement premiums
(0.9)
(3.7)
(2.9)
(22.9)
(0.5)
(3.7)
(2.7)
(2.4)
Prior year development net of premium adjustments
(0.6)
(1.5)
(2.0)
(1.4)
0.4
(2.3)
(0.8)
(3.1)
Net reserve discount benefit (charge)
(0.2)
1.1
-
-
-
(0.1)
(0.1)
3.7
Accident year loss ratio, as adjusted
66.3
64.8
66.5
63.3
63.2
61.9
63.7
66.4
Acquisition ratio
20.2
19.6
19.5
20.2
19.7
20.0
19.7
19.5
General operating expense ratio
13.7
13.9
14.1
17.3
14.3
14.6
14.6
16.1
Expense ratio
33.9
33.5
33.6
37.5
34.0
34.6
34.3
35.6
Combined ratio
101.9
102.4
105.0
125.1
97.3
102.6
101.6
103.8
Catastrophe losses and reinstatement premiums
(0.9)
(3.7)
(2.9)
(22.9)
(0.5)
(3.7)
(2.7)
(2.4)
Prior year development net of premium adjustments
(0.6)
(1.5)
(2.0)
(1.4)
0.4
(2.3)
(0.8)
(3.1)
Net reserve discount benefit (charge)
(0.2)
1.1
-
-
-
(0.1)
(0.1)
3.7
Accident year combined ratio, as adjusted
100.2
98.3
100.1
100.8
97.2
96.5
98.0
102.0
AIG Property Casualty
Accident year combined ratio, as adjusted
Quarterly |
 26 |