American International Group, Inc. Fourth Quarter 2013 Results - PowerPoint PPT Presentation

American International Group, Inc. Fourth Quarter 2013 Results Conference Call Presentation February 14, 2014

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. 2

Fourth Quarter 2013 Key Themes Highlights: Noteworthy Items  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)  Capital Management, Issued $1.0 billion of 4.125% senior notes due 2024; repurchased and redeemed debt totaling $1.1 billion with an Liquidity & Other 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  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 AIG Property Casualty  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  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  Mortgage Guaranty 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  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% AIG Life and Retirement 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. 3

Financial Highlights Fourth Quarter Inc. ($ in millions, except per share amounts) 2012 2013 (Dec.) Revenues $17,169 $17,346 1% (3,958) 1,978 Net income (loss) attributable to AIG 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% $0.20 $1.15 After-tax operating income attributable to AIG per common share 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% 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. 4

After-tax Operating Income 4Q13 results reflect strong growth in insurance operating earnings. 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 - (1) 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 1) 4Q13 included a severance charge of $265 million and real estate gains of $170 million. 5 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.

Deferred Tax Asset Overview AIG continues to have substantial deferred tax assets that are available to offset future tax obligations. As of 12/31/12 As of 12/31/13 Gross Deferred Gross Deferred ($ in billions) Type Attributes Tax Asset Attributes Tax Asset Utilization/Expiration  Utilize against AIG PC, ILFC, UGC, AIG Parent and 35% of AIG Non- Net Operating Loss L&R income $35.8 Life & $39.5 $13.8 $12.5 Carryforwards Life  2028–2031 Expiration  Utilize against capital gains from Capital Loss Life $16.6 $5.8 $1.4 $0.5 AIG L&R Carryforwards  2014 Expiration Valuation ($5.1) ($0.5) Allowance  Utilize against 65% of AIG L&R income Foreign $5.3 (1) General $4.7 Tax Credits  2016–2023 Expiration Subtotal – U.S. Tax 19.2 17.8 Attributes Other 3.4 (2) Deferred Tax (2.5) Assets/(Liabilities) Net Deferred Tax $21.2 $16.7 Assets 1) Foreign tax credits triggered in years 2013 have increased the amount of carryover. 6 2) Change during the period is primarily attributable to available for sale investment securities.