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): March 3, 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 Investor Presentation, dated March 3, 2014, 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 March 3, 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: March 3, 2014 |
By: | /s/ James J. Killerlane III | ||||
| Name: James J. Killerlane III | ||||||
| Title: Associate General Counsel and Assistant Secretary | ||||||
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Investor Presentation dated March 3, 2014 (furnished and not filed for purposes of Item 7.01). | |
 American
International
Group,
Inc.
Investor
Presentation
March 3, 2014
Exhibit 99.1 |
 2
Cautionary
Statement
Regarding
Forward-Looking
Information
This
document
and
the
remarks
made
within
this
presentation
may
include,
and
officers
and
representatives
of
American
International
Group,
Inc.
(AIG)
may
from
time
to
time
make,
projections,
goals,
assumptions
and
statements
that
may
constitute
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
These
projections,
goals,
assumptions
and
statements
are
not
historical
facts
but
instead
represent
only
AIG’s
belief
regarding
future
events,
many
of
which,
by
their
nature,
are
inherently
uncertain
and
outside
AIG’s
control.
These
projections,
goals,
assumptions
and
statements
include
statements
preceded
by,
followed
by
or
including
words
such
as
“believe,”
“anticipate,”
“expect,”
“intend,”
“plan,”
“view,”
“target”
or
“estimate”.
It
is
possible
that
AIG’s
actual
results
and
financial
condition
will
differ,
possibly
materially,
from
the
results
and
financial
condition
indicated
in
these
projections,
goals,
assumptions
and
statements.
Factors
that
could
cause
AIG’s
actual
results
to
differ,
possibly
materially,
from
those
in
the
specific
projections,
goals,
assumptions
and
statements
include:
changes
in
market
conditions;
the
occurrence
of
catastrophic
events,
both
natural
and
man-made;
significant
legal
proceedings;
the
timing
and
applicable
requirements
of
any
new
regulatory
framework
to
which
AIG
is
subject
as
a
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
1A.
Risk
Factors
and
Part
II,
Item
7.
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
in
AIG’s
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2013.
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
section
of
AIG's
corporate
website,
www.aig.com,
as
well
as
in
the
appendix
of
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
Full year 2013 NPW growth of 3.8%, excluding FX,
compared to full year 2012
Optimizing Casualty lines business
Execute on technical
underwriting, improved claims
management, and analytics
2013 Accident year loss ratio, as adjusted,
improvement of 5.4 pts since beginning of 2011
Capitalize on global footprint; presence in over 90 countries
HSBC agreement / PICC joint venture
12.9% of 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
Profitability enhanced through ongoing spread
management actions
Expand distribution network and increase penetration of multiple
products through each distribution partner
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; 59% of net premiums
earned in 4Q13 were from business written after 2008
Actively manage legacy book
Delinquency ratio of 5.9% at 4Q13, lowest since 4Q07
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
*
*
*
25% increase in quarterly dividend to
$0.125/sh. in Feb. 2014
2013 non-DIB debt calls and tenders of $5.3
billion (face amount)
$597 million of shares repurchased in 2013;
$1.4 billion aggregate share repurchase
authorization
Since May 2011, deployed approximately
$19 billion through share repurchases,
dividends and liability management
*
Robust Statutory Capital
*
2013 RBC ratios
(1)
:
–
AIG PC U.S.: 416% (ACL)
–
AIG L&R: 568% (CAL)
2013
total
adjusted
statutory
capital
(1)
:
–
AIG PC U.S.: $22.0 billion
–
AIG L&R: $22.6 billion
Growth in BVPS
December 31, 2013 BVPS (ex. AOCI) of
$64.28 –
up 11% from 12/31/12
*
*
Strong Liquidity
& Cash Flows
*
*
2013 distributions from insurance
subsidiaries of $8.9 billion
Additional tax sharing payments to
AIG Parent
$13.1 billion of total AIG Parent liquidity
Monetization of
Deferred Tax Assets
Net DTA of $21.2 billion at Dec. 31, 2013
Note:
Data
as
of
December
31,
2013
unless
otherwise
noted.
1)
The
inclusion
of
RBC
measures
and
total
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.
Total
adjusted
statutory
capital
and
RBC
ratio
for
AIG
Life
and
Retirement
excludes
holding
company,
AGC
Life
Insurance
Company.
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.
Mortgage
Guaranty
$2.3 bn
AIG Shareholders’
Equity -
$100.5 bn at December 31, 2013 |
 AIG
Property Casualty *
*
*
*
*
*
*
*
* |
 6
42,000 employees who serve clients worldwide
51% of premiums written outside of U.S. and Canada in 2013
Average claims paid each business day of over $100 million in 2013
#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 insurer in Japan
and China
(2)
Asia Pacific
2013 NPW: $9.7 bn
28% of total NPW
AIG Property Casualty –
A Truly Global Franchise
AIG Property Casualty is a diversified global P&C market leader with 2013 NPW of
over $34 billion. 1)
EMEA region consists of Europe, Middle East and Africa.
2)
As measured by full year 2012 net premiums written.
Americas
2013 NPW: $17.9 bn
52% of total NPW
EMEA
(1)
2013 NPW: $6.8 bn
20% of total NPW |
 7
AIG Property Casualty –
Financial Highlights
Full Year
($ in billions)
2011
2012
2013
Net premiums written
$34.8
$34.4
$34.4
Net investment income
4.3
4.8
5.3
Pre-tax operating income
$1.1
$1.8
$4.8
Accident year loss ratio, as adjusted
68.7
65.2
63.8
Expense ratio
30.4
34.6
34.6
Accident year combined ratio, as adjusted
99.1
99.8
98.4
Cash & invested assets
(1)
$126.3
$130.8
$123.1
Shareholders’
equity
47.3
48.9
46.3
Shareholders’
equity, excluding AOCI
$44.3
$43.7
$43.1
Note:
Revision
to
Prior
Periods
–
In
fourth
quarter
2013,
to
reduce
investment
concentration,
AIG
transferred
the
holdings
of
the
investments
in
life
settlements
from
AIG
Property
Casualty
operations
to
AIG’s
Other
Operations.
All
prior
periods
have
been
revised
to
conform
to
the
current
period
presentation.
1)Includes
intercompany
invested
assets
that
are
eliminated
in
consolidation. |
 8
AIG
Property
Casualty
–
Business
Overview
A
broad
product
platform.
Global –
Unique ability to serve multinational clients
Innovative –
Often first to market in new products and services, such as CyberEdge
Capital
Strength
–
U.S.
total
adjusted
statutory
capital
(1)
of
$22.0
billion
at
year-end
2013
Commercial
Insurance
Full
Year
2013
NPW
–
$20.8
bn
Consumer
Insurance
Full
Year
2013
NPW
–
$13.6
bn
1)
The inclusion of total 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. |
 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
Enhance
underwriters’
analytical
capabilities
Balance between
art and science
intertwined with
finer segmentation
Global Claims
Initiative leading to
claims cost savings
and enhanced client
service
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 services
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.
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
Motordata Research Consortium
2013 Insurer of the Year -
Best Automotive
Claims
Management
Service
(2
nd
Consecutive
Year)
Nanfang Daily
2013
Most
Trustworthy
Financial
Brand
(2
nd
Consecutive Year)
Global Finance
2013 Best in Insurance 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 Global Insurance
Company Overall
Celent Model Insurer Award
2011 -
2013
Australia and New Zealand
Institute of Insurance & Finance
(ANZIIF)
2013
Innovation
of
the
Year
–
CyberEdge
U.S. Captive Review
Innovation in Fronting Award -
2013
The Tempkin Group
Customer Experience Excellence
Award -
2013
AIG Clients as a Percentage of Each Category
99%
As of
11/1/13
91%
As of
11/1/13
40%
As of
6/1/13 |
 11
AIG Property Casualty –
Product Diversification
Commercial Insurance
Consumer Insurance
Casualty
General Liability
Commercial Auto
Workers’
Compensation
Excess Casualty
Crisis Management
Property
Global Property including high
deductible
Industrial, Energy and Commercial
Property
Specialty
Aerospace
Environmental
Political Risk
Trade Credit
Marine
Surety
Financial Lines
D&O, E&O
Cyber Security
Fidelity
Employment Practices
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 are those within Central Europe, Middle East, Africa, Latin
America and Asia Pacific, excluding Japan
The largest foreign property and casualty insurer in China
(1)
Strategic investments in PICC for P&C and Life & Retirement products
10 year Bancassurance agreement with HSBC in Turkey
1) As measured by full year 2012 net premiums written.
|
 13
AIG Property Casualty –
Investment Composition & Ratings
1)
Includes intercompany invested assets that are eliminated in consolidation.
Total Cash & Invested Assets -
$123.1 billion
(1)
Bond
Portfolio
-
$99.0
billion
(1)
-
by
Agency
Credit
Rating
(As of December 31, 2013) |
 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 2013 RBC ratio
(1)
at 568% (CAL) supports sales growth
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
Total
adjusted
statutory
capital
(1)
of
$22.6
billion
at
year-end
2013
1)
The
inclusion
of
RBC
measures
and
total
adjusted
statutory
capital
is
intended
solely
for
the
information
of
investors
and
is
not
intended
for
the
purpose
of
ranking
any
insurance
company
or
for
use
in
connection
with
any
marketing,
advertising
or
promotional
activities.
CAL
is
defined
as
Company
Action
Level.
Total
adjusted
statutory
capital
and
RBC
ratio
excludes
holding
company,
AGC
Life
Insurance
Company. |
 16
AIG
Life
and
Retirement
–
Financial
Highlights
Full Year
($ in billions)
2011
2012
2013
Premiums and deposits
$24.4
$21.0
$28.8
Net investment income
9.9
10.7
10.9
Pre-tax operating income
3.3
4.2
5.1
Cash & invested assets
(1)
194.2
205.3
196.9
Assets under management
256.9
290.4
318.0
Shareholders’
equity
34.2
40.0
38.7
Shareholders’
equity, excluding AOCI
29.5
31.6
34.9
Net flows
2.9
(1.3)
4.6
1)
Includes intercompany invested assets that are eliminated in consolidation.
|
 17
AIG
Life
and
Retirement
–
Diversified
Business
Mix
Full Year 2013
Premiums
and
Deposits
-
$28.8
billion
Retail: 69%
Institutional: 31%
Full Year 2013
Pre-tax
Operating
Income
-
$5.1
billion
Retail: 62%
Institutional: 38% |
 18
AIG
Life
and
Retirement
–
Assets
Under
Management
Assets
Under
Management
–
$318.0
billion
at
December
31,
2013
Year-over-year
growth
in
AUM
reflects
strong
retail
investment
product
net
flows,
higher
separate
account
balances
and
greater
institutional
assets. |
 19
AIG
Life
and
Retirement
–
Leading
Market
Positions
* Based on LIMRA rankings for respective periods.
Rank*
Metric
9M’13
FY’12
2
6
Total Annuity Sales
1
2
Fixed-Rate Deferred Annuity Sales
4
5
Structured Settlement Annuity Sales
5
7
Variable Annuity Sales
8
6
Term Life Sales
9
18
Universal Life Sales
2
2
K-12 403(b) Assets
3
3
Total 403(b) Assets
Market Positions
Excellence in Service, Marketing and Technology
Market Tools
2013 Achievement in
Customer Excellence
(ACE award for 7
th
Consecutive Year)
DALBAR
2013 Annuity Service
Excellence Award
(7
th
Consecutive Year)
2013 #1 Ranking for
Annuity Client Quarterly
Statements
(13
th
Consecutive Year)
PlanSponsor Magazine
Earned 17 Best-in-Class
Awards for Participant and
Plan Sponsor Services in
2013
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 |
 20
AIG
Life
and
Retirement
–
Broad
Multichannel
Distribution
Network
Affiliated: 33%
Non-affiliated: 67%
B-Ds
34%
Banks
19%
IMOs
10%
2013 Sales by Channel
Diversified Distribution Network
AIG Financial Network
Advisor Group
VALIC Financial Advisors
AIG Direct
Banks
Advisor Group
3%
AIG Financial Network
3%
AIG Direct & Other
1%
VALIC FAs
26%
Broker-Dealers
Independent Marketing Organizations
Benefit Brokers
3%
Benefit Brokers |
 21
AIG
Life
and
Retirement
–
Variable
Annuities
Changing competitive environment offers a unique opportunity.
Commentary
From 2009 through 2012, industry consolidation accelerated as certain variable
annuity carriers exited the market. In 2013, four of the top six carriers
have increased their sales while two carriers have scaled back.
Certain competitors scaled back on their product offerings in 2013, exemplified by
their decreased market share for nine months 2013. AIG L&R has
significantly grown its market share thereby improving its industry ranking from #15 in 2009 to #4 for nine months 2013.
AIG L&R believes there is significant remaining growth opportunity in VA due to
its market share of only 8.4%. AIG L&R is further positioned for growth
because of its manageable risk profile, characterized by only $23.8 billion in total individual VA contracts with
Guaranteed Minimum Withdrawal Benefits at December 31, 2013, 71%
of which contain benefits with strong de-risking features such as VIX indexing
of rider fees, volatility control funds and required minimum allocations to
fixed accounts. 1)
Source:
Morningstar
VA
Sales
report.
VA
non-captive
industry
sales
data
excludes
captive
agent
&
direct
response
distribution
and
a
pro
rata
elimination
of
internal
sales.
Rankings
use
most
current
data
from
Morningstar,
Inc.
and
can
reflect
updated
numbers
from
prior
periods.
Variable
Annuity
“Non-Captive”
Industry
Sales
(1)
($
millions)
Nine 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
15,469
22.1%
1
19,724
21.0%
3
17,494
17.0%
2
14,654
16.3%
3
10,002
12.4%
Lincoln Financial Group
2
10,678
15.3%
4
10,419
11.1%
4
9,323
9.0%
4
8,948
9.9%
4
7,928
9.8%
Prudential Financial
3
7,642
10.9%
2
17,853
19.0%
2
18,199
17.6%
1
19,845
22.1%
1
14,635
18.1%
AIG L&R
4
5,901
8.4%
6
4,561
4.9%
9
3,212
3.1%
11
2,072
2.3%
15
891
1.1%
AEGON/Transamerica
5
5,714
8.2%
5
4,832
5.1%
6
4,901
4.7%
6
3,462
3.8%
10
3,000
3.7%
MetLife
6
5,277
7.6%
3
11,818
12.6%
1
21,715
21.0%
3
12,890
14.3%
2
10,535
13.1%
TOTAL
69,879
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
-
$196.9
billion
(1)
Bond
Portfolio
-
$157.2
billion
(1)
-
by
Agency
Credit
Rating
(As of December 31, 2013) |
 AIG
Life and Retirement – Net Investment Spread Management
Base Yields
(1)
Cost of Funds
(2)
Base Net Investment Spreads
(1)
1)
Includes
the
investment
return
on
surplus
other
than
alternative
investment
or
yield
enhancement
activities.
2)
Excludes
the
amortization
of
sales
inducement
assets.
At
December
31,
2013,
a
total
of
73%
of
fixed
annuity
and
universal
life
account
values
are
at
contractual
minimum
guaranteed
crediting
rates
vs.
63%
at
December
31, 2012.
23 |
 Mortgage Guaranty
(United Guaranty Corporation)
*
*
*
*
*
*
*
*
*
* |
 25
United
Guaranty
–
Financial
Highlights
Full Year
($ in millions)
2011
2012
2013
Net premiums written
$801
$858
$1,048
Net investment income
132
146
132
Pre-tax operating income (loss)
($97)
$9
$205
Combined ratio
128.9
119.2
90.9
Cash & invested assets
(1)
$4,081
$4,222
$3,934
Shareholders’
equity
2,425
2,311
2,282
Shareholders’
equity, excluding AOCI
$2,332
$2,193
$2,268
1)
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. Full year 2013 NIW increased 33% to $49.9 billion from the
prior-year period. Growth accomplished while maintaining consistently
high quality risk in force. Domestic first-lien NIW of $49.4 billion for full year 2013 was a record.
Vintage
Year
(2)
Average
FICO Score
LTV Ratio
2010
760
90
2011
757
91
2012
758
91
2013
753
91
($ in billions)
1)
Represents principal amount of loans insured.
2)
Domestic First-lien only.
New Insurance Written
(1) |
 27
United Guaranty –
Shrinking Legacy In-Force
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)
–
$36.4
billion
As of December 31, 2013 (by vintage year)
New
business
generated
after
2008
represents
69%
of
primary
domestic
RIF
at
December
31,
2013,
the
highest
among
peers
active
before
2009
(1)
.
Due
to
proactive
management
of
delinquent
book
through
UGC’s
Letter
Campaign,
at
December
31,
2013,
the
portion
of
defaults
that
have
missed
12
or
more
payments
declined
to
43%
from
49%
at
the
end
of
2011,
the
lowest
among
peers
active
before
2009
(1)
. |
 28
United Guaranty –
Financial Strength
Capitalization and Risk
Source: Statutory filing data.
1)
Risk-to-capital
estimates
for
all
companies,
including
United
Guaranty,
are
preliminary
estimates
for
December
31,
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 Dec. 31, 2013
Default
Rate (%)
Post 2008
RIF (%)
Risk-to-
Capital
(1)
United Guaranty
5.9
69
17.9
Genworth
8.2
45
19.3
MGIC
10.8
42
15.8
Radian
7.3
60
19.4
Essent
0.1
100
16.6
At September 30, 2013
Asset Composition
Cash & Bonds to Total Admitted Assets
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
subsidiaries,
United
Guaranty
Residential
Insurance
Company
(UGRIC)
and
United
Guaranty
Mortgage
Indemnity
Company,
maintain
S&P
ratings
of
A-
and
Moody's
ratings
of
Baa1,
all
with
stable
outlooks
(3)
.
UGC
operating
earnings
reflect
increasing
contribution
from
new
business.
At
September
30,
2013
UGRIC
has
over
$2.9
billion
of
assets
with
89%
in
cash
and
unaffiliated
investments. |
 Capital Strength
*
*
*
*
*
*
*
*
*
* |
 Capital Position and Ratings
Book Value Per Share
1)
Includes
AIG
Notes,
Bonds,
Loans
and
Mortgages
Payable,
and
AIGLH
Notes
and
Bonds
Payable
and
junior
subordinated
debt.
2)
All
ratings
have
stable
outlooks,
except
for
the
S&P
rating
for
AIG-Senior
Debt,
which
is
negative,
as
of
the
date
of
this
presentation.
3)
Ratings
only
reflect
those
of
the
core
insurance
companies.
($ in billions, except per share data)
Leverage Ratios:
Dec. 31,
2012
Dec. 31,
2013
Financial Debt + Hybrids /
Capitalization
20.5%
17.3%
Financial Debt / Capitalization
12.9%
12.8%
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)
Capital Structure
30 |
 31
Financial
Flexibility
–
A
Source
of
Strength
AIG
Parent
Cash,
Short-Term
Investments
&
Unencumbered
Securities
Insurance
Company
Distributions
($ in millions)
($ in billions)
AIG
Property
Casualty
distributions
in
2013
included
$1.8
billion
from
legal
entity
restructurings
and
an
intercompany
reinsurance
optimization.
AIG
Life
and
Retirement
distributions
in
2013
included
approximately
$800
million
from
legal
settlement
proceeds received.
At
December
31,
2013,
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.
AIG
Parent
also
maintains
available
capacity
of
$4.4
billion
under
its
syndicated
credit
facility
plus
its
contingent
liquidity
facility. |
 Other Sources of Value
*
*
*
*
*
*
*
*
*
* |
 33
Direct Investment Book
(1)
Global Capital Markets
(1)
Assets
$23.3
$7.7
Liabilities
$20.0
$3.1
Net Asset Value
$3.3
$4.6
Legacy
Matched AIG Hedging &
Assets & Liabilities
Market Derivatives
(2)
Legacy
AIGFP Stable
Value Go Forward
CDS Portfolio
Wraps
Hedging Platform
Third-Party
Derivatives
Notional ($ bn)
--
$72
Multi-
Sector
Corporate
Arbitrage
$8
$36
$3
$12
Weighted
Average Life
(Years)
--
7.3
5.7
2.2
4.7
7.0
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 3Q 2012,
notional value of
$10 billion has
been novated to
AIG Life and
Retirement
Further novations
are expected to
occur over time
“Clearing house”
for
operating company
hedging and risk
management needs
Direct Investment Book and Global Capital Markets
Note: As of December 31, 2013.
1)
The
DIB
consists
of
a
portfolio
of
assets
and
liabilities
held
directly
by
AIG
Parent
in
the
Matched
Investment
Program
(MIP)
and
certain
non-derivative
assets
and
liabilities
of
AIGFP.
The
DIB
and
GCM
are
included
in
Other
Operations
in
AIG’s
Consolidated
Balance
Sheet.
2)
The
overall
hedging
activity
for
the
assets
and
liabilities
of
the
DIB
is
executed
by
GCM.
The
value
of
hedges
related
to
the
non-derivative
assets
and
liabilities
of
AIGFP
in
the
DIB
is
included
within
the
assets,
liabilities
and
operating
results
of
GCM
and
is
not
included
within
the
DIB
assets,
liabilities
or
operating
results.
($ in billions) |
 34
Direct Investment Book Long-Term Debt
($ in billions)
$8.0
$6.4
$5.5
$4.3
$0.4
$3.2
$2.2
$2.2
$2.2
$2.2
$0.2
$5.5
$4.9
$4.3
$4.0
$3.7
$3.1
$1.2
$1.1
$0.9
$0.7
$0.5
$0.4
$17.9
$14.6
$12.9
$11.1
$6.9
$3.7
0%
19%
28%
38%
62%
80%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$0
$5
$10
$15
$20
$25
as of 12/31/2013
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
(1)
1)
In
January
2014,
AIG
reduced
DIB
debt
by
$2.2
billion
using
cash
and
short
term
investments
allocated
to
the
DIB.
Table
above
does
not
reflect
such
repurchases. |
 35
Deferred Tax Asset Overview
AIG
continues
to
have
substantial
deferred
tax
assets
that
are
available
to
offset
future
tax
obligations.
1)
Foreign
tax
credits
triggered
in
years
2013
have
increased
the
amount
of
carryover.
2)
Change
during
the
period
is
primarily
attributable
to
available
for
sale
investment
securities.
As of 12/31/12
As of 12/31/13
($ 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 |
 Appendix
*
*
*
*
*
*
*
*
* |
 37
Glossary
of
Non-GAAP
Financial
Measures
AIG
After-tax
operating
income
(loss)
attributable
to
AIG:
is
derived
by
excluding
the
following
items
from
net
income
(loss)
attributable
to
AIG:
income
(loss)
from
discontinued
operations,
net
loss
(gain)
on
sale
of
divested
businesses
and
properties,
income
from
divested
businesses,
legacy
tax
adjustments
primarily
related
to
certain
changes
in
uncertain
tax
positions
and
other
tax
adjustments,
legal
reserves
(settlements)
related
to
‘‘legacy
crisis
matters,’’
deferred
income
tax
valuation
allowance
(releases)
charges,
changes
in
fair
value
of
AIG
Life
and
Retirement
fixed
maturity
securities
designated
to
hedge
living
benefit
liabilities
(net
of
interest
expense),
changes
in
benefit
reserves
and
deferred
policy
acquisition
costs
(DAC),
value
of
business
acquired
(VOBA),
and
sales
inducement
assets
(SIA)
related
to
net
realized
capital
(gains)
losses,
AIG
Property
Casualty
other
(income)
expense
—
net,
(gain)
loss
on
extinguishment
of
debt,
net
realized
capital
(gains)
losses,
non-qualifying
derivative
hedging
activities,
excluding
net
realized
capital
(gains)
losses,
and
bargain
purchase
gain.
‘‘Legacy
crisis
matters’’
include
favorable
and
unfavorable
settlements
related
to
events
leading
up
to
and
resulting
from
our
September
2008
liquidity
crisis
and
legal
fees
incurred
by
AIG
as
the
plaintiff
in
connection
with
such
legal
matters.
Book
Value
Per
Common
Share
Excluding
AOCI:
is
derived
by
dividing
Total
AIG
shareholders’
equity,
excluding
AOCI,
by
Total
common
shares
outstanding.
AIG Property Casualty
Pre-tax
operating
income
(loss):
includes
both
underwriting
income
(loss)
and
net
investment
income,
but
excludes
net
realized
capital
(gains)
losses,
other
(income)
expense
—
net,
legal
settlements
related
to
legacy
crisis
matters
described
above,
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.
Accident
year
loss
and
combined
ratios,
as
adjusted:
both
the
accident
year
loss
and
combined
ratios,
as
adjusted,
exclude
catastrophe
losses
and
related
reinstatement
premiums,
prior
year
development,
net
of
premium
adjustments,
and
the
impact
of
reserve
discounting.
Catastrophe
losses
are
generally
weather
or
seismic
events
having
a
net
impact
on
AIG
Property
Casualty
in
excess
of
$10
million
each.
AIG Life and Retirement
Pre-tax
operating
income
(loss):
is
derived
by
excluding
the
following
items
from
pre-tax
income
(loss):
legal
settlements
related
to
legacy
crisis
matters
described
above,
changes
in
fair
values
of
fixed
maturity
securities
designated
to
hedge
living
benefit
liabilities
(net
of
interest
expense),
net
realized
capital
(gains)
losses,
and
changes
in
benefit
reserves
and
DAC,
VOBA,
and
SIA
related
to
net
realized
capital
(gains)
losses.
Premiums
and
deposits:
includes
direct
and
assumed
amounts
received
on
traditional
life
insurance
policies,
group
benefit
policies
and
deposits
on
life-
contingent
payout
annuities,
as
well
as
deposits
received
on
universal
life,
investment-type
annuity
contracts,
guaranteed
investment
contracts
and
mutual
funds.
Mortgage Guaranty (United Guaranty Corporation)
Pre-tax
operating
income
(loss):
is
derived
by
excluding
net
realized
capital
(gains)
losses
from
pre-tax
income
(loss). |
 38
AIG Consolidated Financial Highlights
Full Year
($ in millions, except per share amounts)
2011
2012
2013
Revenues
$65,105
$71,021
$68,678
Net income attributable to AIG
20,622
3,438
9,085
Diluted earnings per common share
$11.01
$2.04
$6.13
ROE, Ex. AOCI
(2)
26.6%
3.7%
10.1%
After-tax operating income attributable to AIG
$2,086
$6,635
$6,762
After-tax operating income attributable to AIG per common share
$1.16
$3.93
$4.56
ROE –
After-tax operating income
(3)
2.7%
7.2%
7.5%
Book value per common share
$53.53
$66.38
$68.62
Book value per common share -
Ex. AOCI
$50.11
$57.87
$64.28
1)
Includes
deferred
tax
asset
valuation
allowance
release
of
$18.3
billion
in
2011.
2)
Computed
as
Net
income
(loss)
attributable
to
AIG
divided
by
Average
AIG
Shareholders'
equity,
excluding
AOCI.
3)
Computed
as
After-tax
operating
income
divided
by
Average
AIG
Shareholders'
equity,
excluding
AOCI.
(1) |
 39
Non-GAAP
Reconciliation
–
Pre-tax
Operating
Income
1)
Includes results of ILFC.
(1)
(1)
Income (loss) from continuing operations, before tax
$
2,023
$
3,780
$
15
$
3,504 $
9,322
Adjustments to arrive at pre-tax operating income:
Net (income) loss from divested businesses
-
-
-
2
2
Legal reserves (settlements), net of related expenses
(17)
(154)
-
715
544
Changes in fair value of securities designated to hedge
living benefit liabilities, net of interest expense
-
(37)
-
-
(37)
Change in benefit reserves and DAC, VOBA and SIA
related to net realized capital gains (losses)
-
1,201
-
-
1,201
AIG Property Casualty other (income) expense, net
(2)
-
-
2
-
Loss on extinguishment of debt
-
-
-
9
9
Net realized capital (gains) losses
(211)
(630)
(6)
(82)
(929)
Non-qualifying derivative hedging (gains) losses
-
-
-
(30)
(30)
Pre-tax operating income
$
1,793
$
4,160
$
9
$
4,120
$
10,082
Income (loss) from continuing operations, before tax
$
5,133
$
6,505
$
213
$
(2,483)
$
9,368
Adjustments to arrive at pre-tax operating income:
Net (income) loss from divested businesses
-
-
-
177
177
Legal reserves (settlements), net of related expenses
(13)
(1,020)
-
325
(708)
Changes in fair value of securities designated to hedge
living benefit liabilities, net of interest expense
-
161
-
-
161
Change in benefit reserves and DAC, VOBA and SIA
related to net realized capital gains (losses)
-
1,486
-
98
1,584
AIG Property Casualty other (income) expense, net
72
-
-
-
72
Loss on extinguishment of debt
-
-
-
651
651
Net realized capital (gains) loss
(380)
(2,037)
(8)
681
(1,744)
Pre-tax operating income (loss)
$
4,812
$
5,095
$
205
$
(551)
$
9,561
Full Year 2012
($ 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
Full Year 2013
Other
Operations |
 40
Non-GAAP
Reconciliation
–
Full
Year
Pre-tax
Operating
Income |
 41
2012
2013
Net income attributable to AIG
$ 3,438
$ 9,085
Adjustments to arrive at After-tax operating income attributable to AIG:
(Income) loss from discontinued operations
(1)
(84) Net (income) loss
from divested businesses
4,039
117 Uncertain tax
positions and other tax adjustments
543
791 Legal reserves
(settlements) related to legacy crisis matters
353
(460) Deferred income tax
valuation allowance releases
(1,911)
(3,237) Changes in fair value of AIG Life and
Retirement fixed maturity securities designated to hedge living
benefit liabilities, net of interest expense
(24)
105 Changes in
benefit reserves and DAC, VOBA and SIA related to net realized
capital gains
781
1,132 AIG Property Casualty other
(income) expense – net
-
47 Loss on
extinguishment of debt
21
423 Net realized
capital (gains) losses
(586)
(1,157) Non-qualifying derivative hedging
gains, excluding net realized capital gains
(18)
-
After-tax operating income attributable to AIG
$ 6,635
$ 6,762
Full Year
2013
Change in net premiums written
Increase in original currency
3.8%
Foreign exchange effect
(3.9%)
Decrease as reported in US $
(0.1%)
After-tax Operating Income Attributable to AIG
($ in millions)
Full Year
Foreign exchange effect on net premiums written:
Non-GAAP Reconciliation
1)
Includes results of ILFC.
(1) |
 42
Non-GAAP Reconciliation –
BVPS ex. AOCI, Premiums &
Deposits, Accident Year Combined Ratio, As Adjusted
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
$
2011
2012
2013
Premiums and deposits
24,392
$
20,994
$
28,809
$
Deposits
(21,302)
(17,898)
(25,542)
Other
(541)
(632)
(671)
Premiums
2,549
$
2,464
$
2,596
$
2011
2012
2013
Loss ratio
78.3
73.9
66.7
Catastrophe losses and
reinstatement premiums (9.2)
(7.5)
(2.3)
Prior year development net
of premium adjustments (0.3)
(1.4)
(1.5)
Net reserve discount benefit
(charge) (0.1)
0.2
0.9
Accident year loss
ratio, as adjusted 68.7
65.2
63.8
Acquisition ratio
18.1
19.9
19.7
General operating expense
ratio 12.3
14.7
14.9
Expense ratio
30.4
34.6
34.6
Combined ratio
108.7
108.5
101.3
Catastrophe losses and reinstatement
premiums (9.2)
(7.5)
(2.3)
Prior year development net
of premium adjustments (0.3)
(1.4)
(1.5)
Net reserve discount benefit
(charge) (0.1)
0.2
0.9
Accident year combined
ratio, as adjusted 99.1
99.8
98.4
December 31,
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 |
 *
*
*
*
*
*
*
*
* |