- Net income attributable to AIG common shareholders was $1.7
billion, or $1.98 per diluted common share, for the first quarter
of 2020, compared to $654 million, or $0.75 per diluted common
share, in the prior year quarter, primarily driven by $3.5 billion
of pre-tax net realized capital gains, compared to $446 million of
pre-tax net realized capital losses in the prior year quarter.
- Adjusted after-tax income attributable to AIG common
shareholders* was $99 million, or $0.11 per diluted common share,
for the first quarter of 2020, compared to $1.4 billion, or $1.58
per diluted common share, in the prior year quarter.
- General Insurance posted a combined ratio of 101.5 compared to
97.4 in the prior year quarter. The accident year combined ratio,
as adjusted*, was 95.5, compared to 96.1 in the prior year quarter,
reflecting a better portfolio mix due to disciplined underwriting
and continued expense management.
- General Insurance had $419 million of pre-tax catastrophe
losses (CATs), net of reinsurance, in the first quarter. This
included $272 million of estimated COVID-19 losses related to
Travel, Contingency, Commercial Property, Trade Credit, Workers’
Compensation and Validus Re. The remainder of the CATs were
primarily weather-related.
- Life and Retirement reported adjusted pre-tax income of $574
million, primarily due to declines in equity markets and widening
spreads in credit markets triggered by the ongoing COVID-19
crisis.
- Total consolidated net investment income was $2.5 billion
compared to $3.9 billion in the prior year quarter. Net investment
income on an adjusted pre-tax income basis decreased approximately
$1.0 billion to $2.7 billion, reflecting lower alternative
investment returns and losses on fair value option (FVO)
securities.
- Book value per common share was $69.30 at March 31, 2020, a
decrease of 8% compared to December 31, 2019. Book value per common
share, excluding accumulated other comprehensive income (AOCI) and
deferred tax assets (DTA) (Adjusted book value per common share)*
was $60.55, an increase of 3% compared to December 31, 2019.
- Return on Common Equity (ROCE) and Return on Common Equity,
excluding AOCI and DTA (Adjusted ROCE)* were 11.2% and 0.8%,
respectively, for the three months ended March 31, 2020.
* Refers to financial measure not calculated in accordance with
generally accepted accounting principles (non-GAAP); definitions of
non-GAAP measures and reconciliations to their closest GAAP
measures can be found in this news release under the heading
Comment on Regulation G and Non-GAAP Financial Measures.
American International Group, Inc. (NYSE: AIG) today reported
net income attributable to AIG common shareholders of $1.7 billion,
or $1.98 per diluted common share, for the first quarter of 2020,
compared to $654 million, or $0.75 per diluted common share, in the
prior year quarter. The improvement was primarily due to $3.5
billion of pre-tax net realized capital gains largely related to
mark-to-market gains from variable annuity and interest rate hedges
and the impact of our non-economic non-performance risk adjustment,
per GAAP, on the fair value of our liabilities compared to $446
million of pre-tax net realized capital losses in the prior year
quarter.
Adjusted after-tax income attributable to AIG common
shareholders was $99 million, or $0.11 per diluted common share,
for the first quarter of 2020, compared to $1.4 billion, or $1.58
per diluted common share, in the prior year quarter. The decrease
was primarily due to lower net investment income driven by declines
in equity markets and losses on FVO bonds from widening spreads in
credit markets, and the impact of COVID-19.
Brian Duperreault, AIG’s Chief Executive Officer, said: “In the
face of COVID-19, an unprecedented global catastrophe, our
colleagues have shown great resilience and remain focused on what
we do best, which is helping our clients manage risk, especially in
difficult times.
“It has been heartbreaking to watch this humanitarian crisis
unfold over the last few months. At the same time, the courage,
compassion and empathy that have emerged, particularly from first
responders, health care providers and others on the front lines,
has been heartwarming. AIG is committed to assisting with relief
efforts across the globe and will be making an inaugural $5 million
contribution to our recently reinstated AIG Foundation for this
purpose.
“AIG was in a strong financial position before this crisis began
and remains in a strong financial position today. While we believe
COVID-19 will be the single largest CAT loss the industry has ever
seen, the significant body of work our team has undertaken since
late 2017 has served us well as we navigate through this evolving
situation. AIG is well-positioned to emerge as a global insurer of
choice with significant financial flexibility.
“In the first quarter of 2020, our core businesses delivered
strong results building on the momentum we had coming into the
year. In General Insurance, the adjusted accident year combined
ratio continued to improve, and Life and Retirement delivered solid
results despite unfavorable capital markets and continued low
interest rates.
“The COVID-19 crisis has created significant uncertainty, and it
will take time to understand its broader ramifications. In light of
this, AIG is withdrawing previously issued guidance, including that
relating to Adjusted Return on Common Equity. However, we do expect
to see continued improvement in General Insurance, particularly in
the adjusted combined ratio, and, in Life and Retirement, we do not
believe that the impact of COVID-19 will result in a material
reduction of our long-term return profile.
“While the new normal COVID-19 will create for each of us is
still unknown, I am confident that AIG will continue to move
forward on its journey to become a top performing company and
leading insurance franchise.”
FINANCIAL SUMMARY
Three Months Ended
March 31,
($ in millions, except per common share
amounts)
2020
2019
Net income attributable to AIG common
shareholders
$
1,742
$
654
Net income per diluted share attributable
to AIG common shareholders
$
1.98
$
0.75
Weighted average common shares outstanding
- diluted
878.9
877.5
Adjusted pre-tax income (loss):
General Insurance
$
501
$
1,268
Life and Retirement
574
924
Other Operations
(535
)
(457
)
Legacy
(368
)
112
Total
$
172
$
1,847
Adjusted after-tax income attributable to
AIG common shareholders
$
99
$
1,388
Adjusted after-tax income per diluted
share attributable to AIG common shareholders
$
0.11
$
1.58
Return on common equity
11.2
%
4.5
%
Return on tangible common equity*
12.2
%
4.9
%
Adjusted return on common equity
0.8
%
11.6
%
Adjusted return on tangible common
equity*
0.9
%
13.1
%
Adjusted return on attributed common
equity - Core*
3.4
%
13.4
%
Common shares outstanding
861.3
869.7
Book value per common share
$
69.30
$
69.33
Tangible book value per common share*
63.33
63.10
Book value per common share, excluding
accumulated other comprehensive income*
70.45
66.89
Adjusted book value per common share
60.55
55.47
Adjusted tangible book value per common
share*
54.58
49.24
General Insurance Combined ratio
101.5
97.4
General Insurance Accident year combined
ratio, as adjusted
95.5
96.1
Adjusted return on attributed common
equity - Life and Retirement*
8.4
%
15.0
%
All comparisons are against the first quarter of 2019, unless
otherwise indicated. Refer to the AIG First Quarter 2020 Financial
Supplement, which is posted on AIG's website in the Investors
section, for further information.
FIRST QUARTER 2020 HIGHLIGHTS
General Insurance – First quarter adjusted pre-tax income of
$501 million was comprised of an underwriting loss of $87 million
and net investment income of $588 million. The underwriting loss
included the impact of $272 million of estimated COVID-19 related
losses, without which General Insurance would have reported an
underwriting profit. Favorable net prior year loss reserve
development, net of reinsurance, totaled $60 million, and was
primarily due to $53 million of amortization from the Adverse
Development Cover (ADC). CATs, net of reinsurance, totaled $419
million, including $272 million related to COVID-19. AIG is
continually reassessing its exposures in light of unfolding
developments in the U.S. and globally and evaluating coverage under
its reinsurance arrangements.
The General Insurance combined ratio was 101.5, including 6.9
points of CATs, of which 4.5 points related to COVID-19 losses. The
accident year combined ratio, as adjusted, was 95.5, comprised of a
60.8 accident year loss ratio, as adjusted*, an improvement of 1.0
point from the prior year quarter, and an expense ratio of 34.7.
The improvement in accident year loss ratio, as adjusted, reflected
the underwriting and reinsurance actions taken to improve business
mix and loss performance, and improved rate adequacy. General
Insurance also reduced general operating expenses (GOE) by 8% to
$776 million.
Life and Retirement – First quarter adjusted pre-tax income was
$574 million compared to $924 million in the prior year quarter.
The decrease reflected unfavorable impacts from equity markets
which primarily resulted in higher Variable Annuity reserves and
accelerated deferred acquisition cost (DAC) and sales inducement
(SI) amortization. In addition, widening credit spreads resulted in
a decrease in net investment income from lower returns on FVO bonds
and the Retirement businesses continued to see spread compression
given the low interest rate environment. Net flows were unfavorable
compared to the prior year quarter primarily due to lower Fixed
Annuity sales and higher Retail Mutual Fund surrenders, partially
offset by higher Variable Annuity sales and lower surrenders in
Group Retirement. Life and Retirement’s Adjusted ROCE for the first
quarter of 2020 was 8.4%.
Net Investment Income – First quarter net investment income was
$2.5 billion compared to $3.9 billion in the prior year quarter.
Net investment income on an adjusted pre-tax income basis decreased
approximately $1.0 billion to $2.7 billion. The decrease reflected
lower alternative investment income compared to the prior year
quarter and other investment losses in the first quarter of 2020
compared to other investment income in the prior year quarter,
primarily driven by FVO securities.
AIG significantly expanded its disclosures in the financial
supplement to provide greater detail on its investment portfolio,
including information on its separate General Insurance, Life and
Retirement and Legacy portfolios. As a global multi-line insurer,
AIG's consolidated portfolio does not readily compare to property
and casualty or life insurance peers. The detail should enable
additional analysis of the separate portfolios to similar
peers.
Other Operations – First quarter adjusted pre-tax loss was $535
million, including $84 million of reductions from consolidation,
eliminations and other adjustments, compared to $457 million in the
prior year quarter. Before consolidation, eliminations and other
adjustments, the increase in the pre-tax loss was primarily due to
higher GOE of $66 million from higher compensation, including the
issuance of a $500 grant to each employee globally, which equates
to $30 million in the aggregate, to help with unanticipated costs
due to COVID-19. In addition, the loss included higher technology
costs, partially offset by higher net investment income associated
with consolidated investment entities. At the end of March, AIG
decided to place Blackboard U.S. Holdings, Inc. (Blackboard), AIG’s
technology-driven subsidiary, into run-off. As a result of this
decision, AIG recognized a pre-tax loss of $210 million, primarily
consisting of asset impairment charges; this charge did not impact
adjusted pre-tax income.
Legacy Results – First quarter adjusted pre-tax loss was $368
million compared to adjusted pre-tax income of $112 million in the
prior year quarter, reflecting losses, principally mark-to-market,
on FVO investment portfolios compared to gains in the prior year
quarter, as well as lower Legacy Life and Retirement net investment
income from alternative investments.
Included in the Legacy results is Fortitude Reinsurance Company
Ltd (Fortitude Re). AIG agreed in November 2019 to sell a
controlling financial interest in Fortitude Group Holdings, LLC,
the holding company for Fortitude Re. The sale is expected to close
in mid-2020, subject to required regulatory approvals and other
customary closing conditions.
Book Value per Common Share – As of March 31, 2020, book value
per common share was $69.30 compared to $74.93 at December 31,
2019, largely driven by net unrealized mark-to-market losses on
available for sale fixed maturities due to the impact of wider
credit spreads as of March 31, 2020. Adjusted book value per common
share, which excludes AOCI and DTA, increased slightly to $60.55
compared to the prior year end as a result of $1.7 billion of net
income attributable to AIG for the quarter.
Tangible book value per common share was $63.33 compared to
$68.93 at December 31, 2019. Adjusted tangible book value per
common share, which is Adjusted book value per common share
excluding Goodwill, Value of Business Acquired (VOBA), Value of
Distribution Channel Acquired (VODA) and Other Intangible Assets
was $54.58 compared to $52.88 at December 31, 2019.
Liquidity and Capital – As of March 31, 2020, AIG Parent
liquidity stood at approximately $7.5 billion. In March, AIG
borrowed, and it currently has outstanding, $1.3 billion under its
$4.5 billion committed revolving syndicated credit facility. Also,
in March, AIG redeemed $350 million aggregate principal amount of
its 4.35% Callable Notes Due 2045.
AIG repurchased approximately 12 million shares of AIG Common
Stock during the first quarter for an aggregate purchase price of
$500 million under an accelerated share repurchase agreement
entered into in February. As of March 31, 2020, $1.5 billion
remained under AIG’s share repurchase authorization.
Income Taxes – The first quarter effective tax rate on pre-tax
income was 35.3% primarily as a result of a $274 million valuation
allowance. The effective tax rate on adjusted pre-tax income was
48.8% and differs from the statutory tax rate of 21% primarily due
to excess tax charges related to share based compensation payments
recorded through the income statement, tax charges associated with
the effect of foreign operations, state and local income taxes, and
non-deductible transfer pricing charges, partially offset by tax
benefits associated with tax exempt income. The effect of foreign
operations was primarily related to income in foreign operations
taxed at statutory tax rates higher than 21%, other foreign taxes,
and foreign income subject to U.S. taxation.
GENERAL INSURANCE
Three Months Ended March
31,
($ in millions)
2020
2019
Change
Total General Insurance
Gross premiums written
$
10,086
$
10,195
(1
)
%
Net premiums written
$
5,921
$
6,033
(2
)
Underwriting income (loss)
$
(87
)
$
179
NM
Adjusted pre-tax income
$
501
$
1,268
(60
)
Underwriting ratios:
Loss ratio
66.8
63.1
3.7
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(6.9
)
(2.7
)
(4.2
)
Prior year development
0.9
1.0
(0.1
)
Adjustments for ceded premium under
reinsurance contracts and other
-
0.4
(0.4
)
Accident year loss ratio, as adjusted
60.8
61.8
(1.0
)
Expense ratio
34.7
34.3
0.4
Combined ratio
101.5
97.4
4.1
Accident year combined ratio, as
adjusted
95.5
96.1
(0.6
)
General Insurance - North America
Three Months Ended March
31,
($ in millions)
2020
2019
Change
North America
Net premiums written
$
2,770
$
2,578
7
%
Commercial Lines
2,225
1,998
11
Personal Insurance
545
580
(6
)
Underwriting income (loss)
$
(86
)
$
(11
)
NM
Commercial Lines
(1
)
54
NM
Personal Insurance
(85
)
(65
)
(31
)
Adjusted pre-tax income
$
409
$
934
(56
)
Underwriting
ratios:
North America
Loss ratio
72.2
69.4
2.8
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(7.0
)
(5.1
)
(1.9
)
Prior year development
0.2
1.8
(1.6
)
Adjustments for ceded premium under
reinsurance contracts and other
-
1.0
(1.0
)
Accident year loss ratio, as adjusted
65.4
67.1
(1.7
)
Expense ratio
30.8
30.9
(0.1
)
Combined ratio
103.0
100.3
2.7
Accident year combined ratio, as
adjusted
96.2
98.0
(1.8
)
North America Commercial Lines
Loss ratio
72.7
70.7
2.0
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(6.7
)
(5.1
)
(1.6
)
Prior year development
2.2
2.8
(0.6
)
Adjustments for ceded premium under
reinsurance contracts and other
-
1.0
(1.0
)
Accident year loss ratio, as adjusted
68.2
69.4
(1.2
)
Expense ratio
27.3
27.0
0.3
Combined ratio
100.0
97.7
2.3
Accident year combined ratio, as
adjusted
95.5
96.4
(0.9
)
North America Personal
Insurance
Loss ratio
70.8
65.4
5.4
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(7.9
)
(5.0
)
(2.9
)
Prior year development
(5.1
)
(1.2
)
(3.9
)
Adjustments for ceded premium under
reinsurance contract
-
0.9
(0.9
)
Accident year loss ratio, as adjusted
57.8
60.1
(2.3
)
Expense ratio
40.2
42.9
(2.7
)
Combined ratio
111.0
108.3
2.7
Accident year combined ratio, as
adjusted
98.0
103.0
(5.0
)
General Insurance North America – Commentary
- Net premiums written increased by 7% to $2.8 billion primarily
due to growth in the assumed reinsurance business, Retail and
Wholesale Property, as well as strong Commercial Lines rate
increases, partially offset by underwriting actions taken through
2019.
- Pre-tax underwriting loss of $86 million included $205 million
of CATs, net of reinsurance, of which $123 million related to
COVID-19. Favorable net prior year loss reserve development was $13
million, with favorable net prior year loss reserve development of
$53 million for North America Commercial Lines partially offset by
unfavorable net prior year loss reserve development of $40 million
for North America Personal Insurance. North America Commercial
Lines favorable net prior loss reserve development included $53
million of amortization from the ADC compared to $58 million in the
prior year quarter.
- The North America combined ratio of 103.0 included 7.0 points
of CATs and reinstatement premiums of which 4.2 points related to
COVID-19 and 0.2 points related to favorable net prior year loss
reserve development. The accident year combined ratio, as adjusted,
was 96.2, comprised of a 65.4 accident year loss ratio, as
adjusted, and a 30.8 expense ratio. The 1.7 points improvement in
the accident year loss ratio, as adjusted, was driven by change in
business mix and strong rate increases, as well as benefits from
underwriting actions taken in 2019.
- The expense ratio improved slightly as the decline in GOE,
driven by ongoing expense discipline, was greater than the decline
in net premiums earned.
General Insurance - International
Three Months Ended March
31,
($ in millions)
2020
2019
Change
International
Net premiums written
$
3,151
$
3,455
(9
)
%
Commercial Lines
1,577
1,780
(11
)
Personal Insurance
1,574
1,675
(6
)
Underwriting income (loss)
$
(1
)
$
190
NM
Commercial Lines
(41
)
68
NM
Personal Insurance
40
122
(67
)
Adjusted pre-tax income
$
92
$
334
(72
)
Underwriting
ratios:
International
Loss ratio
61.7
57.4
4.3
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(6.7
)
(0.5
)
(6.2
)
Prior year development
1.4
0.4
1.0
Accident year loss ratio, as adjusted
56.4
57.3
(0.9
)
Expense ratio
38.3
37.2
1.1
Combined ratio
100.0
94.6
5.4
Accident year combined ratio, as
adjusted
94.7
94.5
0.2
International Commercial Lines
Loss ratio
67.0
63.0
4.0
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(11.3
)
(1.0
)
(10.3
)
Prior year development
2.5
(2.4
)
4.9
Accident year loss ratio, as adjusted
58.2
59.6
(1.4
)
Expense ratio
35.6
33.0
2.6
Combined ratio
102.6
96.0
6.6
Accident year combined ratio, as
adjusted
93.8
92.6
1.2
International Personal
Insurance
Loss ratio
56.9
52.4
4.5
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(2.7
)
-
(2.7
)
Prior year development
0.6
2.8
(2.2
)
Accident year loss ratio, as adjusted
54.8
55.2
(0.4
)
Expense ratio
40.7
41.1
(0.4
)
Combined ratio
97.6
93.5
4.1
Accident year combined ratio, as
adjusted
95.5
96.3
(0.8
)
General Insurance International – Commentary
- Net premiums written decreased 9% on a reported basis and 8% on
a constant dollar basis, driven by lower production primarily due
to underwriting actions taken through 2019, as well as lower
premiums from run-off business, partially offset by premium rate
increases.
- A pre-tax underwriting loss of $1 million included $214 million
of CATs, net of reinsurance, of which $149 million related to
COVID-19. Favorable net prior year loss reserve development was $47
million, with $37 million of favorable net prior year loss reserve
development in International Commercial Lines and $10 million in
International Personal Insurance.
- The International combined ratio of 100.0 included 6.7 points
of CATs and reinstatement premiums of which 4.7 points related to
COVID-19 and 1.4 points related to favorable net prior year loss
reserve development. The accident year combined ratio, as adjusted,
of 94.7 was comprised of a 56.4 accident year loss ratio, as
adjusted, and a 38.3 expense ratio. The 0.9 points improvement in
the accident year loss ratio, as adjusted, reflected premium rate
increases, benefits from underwriting actions and better risk
selection.
- The expense ratio increased 1.1 points as the decline in
expenses was less than the decline in net premiums earned.
LIFE AND RETIREMENT
Three Months Ended March
31,
($ in millions)
2020
2019
Change
Life and Retirement
Premiums & fees
$
1,949
$
1,936
1
%
Net investment income
2,003
2,042
(2
)
Adjusted revenues
4,172
4,204
(1
)
Benefits, losses and expenses
3,598
3,280
10
Adjusted pre-tax income
574
924
(38
)
Premiums and deposits
6,903
8,356
(17
)
Individual Retirement
Premiums & fees
$
248
$
204
22
%
Net investment income
975
999
(2
)
Adjusted revenues
1,370
1,351
1
Benefits, losses and expenses
1,064
843
26
Adjusted pre-tax income
306
508
(40
)
Premiums and deposits
3,116
4,186
(26
)
Net flows
(1,594
)
133
NM
Group Retirement
Premiums & fees
$
115
$
104
11
%
Net investment income
517
541
(4
)
Adjusted revenues
694
709
(2
)
Benefits, losses and expenses
551
477
16
Adjusted pre-tax income
143
232
(38
)
Premiums and deposits
1,855
2,063
(10
)
Net flows
(587
)
(875
)
33
Life Insurance
Premiums & fees
$
789
$
768
3
%
Net investment income
291
291
-
Adjusted revenues
1,091
1,073
2
Benefits, losses and expenses
1,036
957
8
Adjusted pre-tax income
55
116
(53
)
Premiums and deposits
1,015
995
2
Institutional Markets
Premiums & fees
$
797
$
860
(7
)
%
Net investment income
220
211
4
Adjusted revenues
1,017
1,071
(5
)
Benefits, losses and expenses
947
1,003
(6
)
Adjusted pre-tax income
70
68
3
Premiums and deposits
917
1,112
(18
)
Life and Retirement – Commentary
- Life and Retirement reported a decrease in adjusted pre-tax
income to $574 million compared to $924 million in the prior year
quarter, driven by lower equity market levels and wider credit
spreads compared to the prior year quarter.
- Premiums were $1.2 billion in the first quarter of 2020,
essentially flat compared to the prior year quarter. Premiums and
deposits decreased to $6.9 billion compared to $8.4 billion in the
prior year quarter primarily due to lower Fixed Annuities deposits
in the first quarter of 2020 driven by lower interest rates,
compared to strong deposit volumes in the prior year quarter. Net
flows continued to be negative.
- Individual Retirement reported adjusted pre-tax income of $306
million compared to $508 million in the prior year quarter.
Adjusted pre-tax income decreased as a result of unfavorable
impacts from equity markets driving higher Variable Annuity DAC/SI
amortization and higher reserves, along with widening credit
spreads driving lower income on FVO securities compared to the
prior year quarter. Total net flows excluding Retail Mutual Funds
were slightly negative in the quarter and unfavorable compared to
the prior year period, driven by lower Fixed Annuity sales
resulting from the lower interest rate environment, partially
offset by favorable Variable Annuity sales.
- Group Retirement reported adjusted pre-tax income of $143
million compared to $232 million in the prior year quarter. The
decrease in adjusted pre-tax income was driven by the unfavorable
impacts from equity markets resulting in higher DAC amortization
and higher reserves, and widening credit spreads resulting in lower
income on FVO securities. Net flows remained negative, although
favorable compared to the prior year quarter, primarily due to
lower surrenders partially offset by lower deposits.
- Life Insurance reported adjusted pre-tax income of $55 million
compared to adjusted pre-tax income of $116 million in the prior
year quarter due to higher mortality and insurance reserves, and
prior year favorable reserve and reinsurance refinements. Mortality
was better than pricing assumptions; however, the first quarter of
2020 included an incurred but not reported (IBNR) reserve
strengthening related to potential death notice delays due to
COVID-19.
- Institutional Markets adjusted pre-tax income of $70 million
increased from $68 million in the prior year quarter due to higher
net investment income on a growing asset base and slightly
favorable alternative investment returns compared to the prior year
quarter.
CONFERENCE CALL
AIG will host a conference call tomorrow, Tuesday, May 5, 2020
at 8:00 a.m. ET to review these results. The call is open to the
public and can be accessed via a live listen-only webcast in the
Investors section of www.aig.com. A replay will be available after
the call at the same location.
Additional supplementary financial data is available in the
Investors section at www.aig.com.
The conference call (including the financial results
presentation material), the earnings release and the financial
supplement may include, and officers and representatives of AIG may
from time to time make and discuss, 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 a belief regarding
future events, many of which, by their nature, are inherently
uncertain and outside AIG’s control. These projections, goals,
assumptions and statements include statements preceded by, followed
by or including words such as “will,” “believe,” “anticipate,”
“expect,” “intend,” “plan,” “focused on achieving,” “view,”
“target,” “goal” or “estimate.” These projections, goals,
assumptions and statements may relate to future actions,
prospective services or products, future performance or results of
current and anticipated services or products, sales efforts,
expenses, the outcome of contingencies such as legal proceedings,
anticipated organizational, business or regulatory changes, the
effect of catastrophes and macroeconomic events, such as COVID-19,
anticipated dispositions, monetization and/or acquisitions of
businesses or assets, or successful integration of acquired
businesses, management succession and retention plans, exposure to
risk, trends in operations and financial results.
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:
- the adverse impact of COVID-19, including with respect to AIG’s
business, financial condition and results of operations;
- changes in market and industry conditions, including the
significant global economic slowdown, general market declines and
disruptions to AIG’s operations driven by COVID-19 and responses
thereto, including new or changed governmental policy and
regulatory actions;
- the occurrence of catastrophic events, both natural and
man-made, including COVID-19, pandemics and the effects of climate
change;
- AIG’s ability to effectively execute on AIG 200 operational
programs designed to achieve underwriting excellence, modernization
of AIG’s operating infrastructure, enhanced user and customer
experiences and unification of AIG;
- AIG’s ability to consummate the sale of its controlling
interest in Fortitude Holdings and its ability to successfully
manage Legacy Portfolios;
- changes in judgments concerning potential cost saving
opportunities;
- actions by credit rating agencies;
- changes in judgments concerning insurance underwriting and
insurance liabilities;
- the impact of potential information technology, cybersecurity
or data security breaches, including as a result of cyber-attacks
or security vulnerabilities, the likelihood of which may increase
due to extended remote business operations as a result of
COVID-19;
- disruptions in the availability of AIG’s electronic data
systems or those of third parties;
- the effectiveness of strategies to recruit and retain key
personnel and to implement effective succession plans;
- the requirements, which may change from time to time, of the
global regulatory framework to which AIG is subject;
- significant legal, regulatory or governmental proceedings;
- concentrations in AIG’s investment portfolios;
- changes to the valuation of AIG’s investments;
- AIG’s ability to successfully dispose of, monetize and/or
acquire businesses or assets or successfully integrate acquired
businesses;
- changes in judgments concerning the recognition of deferred tax
assets and the impairment of goodwill;
- the effectiveness of our risk management policies and
procedures, including with respect to our business continuity and
disaster recovery plans; and
- such other factors discussed in Part I, Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) and Part II, Item 1A. Risk Factors in AIG’s
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2020 (which will be filed with the Securities and Exchange
Commission), 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 year ended
December 31, 2019.
COVID-19 is adversely affecting, and is expected to continue to
adversely affect, our business, financial condition and results of
operations, its ultimate impact of which will depend on future
developments that are uncertain and cannot be predicted, including
the scope and duration of the crisis and actions taken by
governmental and regulatory authorities in response thereto. Even
after the crisis subsides, it is possible that the U.S. and other
major economies will experience a prolonged recession, in which
event our businesses, results of operations and financial condition
could be materially and adversely affected. Statements about the
effects of COVID-19 on our business, financial condition and
results of operations may constitute forward-looking statements and
are subject to the risk that the actual impacts may differ,
possibly materially, from what is reflected in those
forward-looking statements due to factors and future developments
that are uncertain, unpredictable and in many cases beyond our
control, including the scope and duration of the COVID-19 and
actions taken by governmental and regulatory authorities in
response to mitigate its impact.
AIG is not under any obligation (and expressly disclaims any
obligation) to update or alter any projections, goals, assumptions
or other statements, whether written or oral, that may be made from
time to time, whether as a result of new information, future events
or otherwise.
COMMENT ON REGULATION G AND NON-GAAP FINANCIAL
MEASURES
Throughout this press release, including the financial
highlights, AIG presents its financial condition and results of
operations in the way it believes will be most meaningful and
representative of its business results. Some of the measurements
AIG uses are “non-GAAP financial measures” under Securities and
Exchange Commission rules and regulations. GAAP is the acronym for
“generally accepted accounting principles” in the United States.
The non-GAAP financial measures AIG presents are listed below and
may not be comparable to similarly-named measures reported by other
companies. The reconciliations of such measures to the most
comparable GAAP measures in accordance with Regulation G are
included within the relevant tables attached to this news release
or in the First Quarter 2020 Financial Supplement available in the
Investors section of AIG’s website, www.aig.com.
Book Value per Common Share, Excluding Accumulated Other
Comprehensive Income (AOCI), and Book Value per Common Share,
Excluding AOCI and Deferred Tax Assets (DTA) (Adjusted Book Value
per Common Share) are used to show the amount of AIG’s net
worth on a per-common share basis. AIG believes these measures are
useful to investors because they eliminate items that can fluctuate
significantly from period to period, including changes in fair
value of AIG’s available for sale securities portfolio, foreign
currency translation adjustments and U.S. tax attribute deferred
tax assets. These measures also eliminate the asymmetrical impact
resulting from changes in fair value of AIG’s available for sale
securities portfolio wherein there is largely no offsetting impact
for certain related insurance liabilities. AIG excludes deferred
tax assets representing U.S. tax attributes related to net
operating loss carryforwards and foreign tax credits as they have
not yet been utilized. Amounts for interim periods are estimates
based on projections of full-year attribute utilization. As net
operating loss carryforwards and foreign tax credits are utilized,
the portion of the DTA utilized is included in these book value per
common share metrics. Book value per common share, excluding AOCI,
is derived by dividing Total AIG common shareholders’ equity,
excluding AOCI, by total common shares outstanding. Adjusted Book
Value per Common Share is derived by dividing Total AIG common
shareholders’ equity, excluding AOCI and DTA (Adjusted Common
Shareholders’ Equity), by total common shares outstanding.
Book Value per Common Share, Excluding Goodwill, Value of
Business Acquired (VOBA), Value of Distribution Channel Acquired
(VODA) and Other Intangible Assets (Tangible Book Value per Common
Share) and Tangible Book Value per Common Share, Excluding AOCI and
Deferred Tax Assets (DTA) (Adjusted Tangible Book Value per Common
Share) are used to provide more accurate measure of the
realizable value of shareholder on a per-common share basis.
Tangible Book Value per Common Share is derived by dividing Total
AIG common shareholders’ equity, excluding Goodwill, VOBA, VODA and
Other intangible assets, by total common shares outstanding
(Tangible Book Value per Common Share). Adjusted Tangible Book
Value per Common Share is derived by dividing Total AIG common
shareholders’ equity, excluding intangible assets, AOCI and DTA
(Adjusted Tangible Common Shareholders’ Equity), by total
common shares outstanding.
AIG Return on Common Equity – Adjusted After-tax Income
Excluding AOCI and DTA (Adjusted Return on Common Equity) is
used to show the rate of return on common shareholders’ equity. AIG
believes this measure is useful to investors because it eliminates
items that can fluctuate significantly from period to period,
including changes in fair value of AIG’s available for sale
securities portfolio, foreign currency translation adjustments and
U.S. tax attribute deferred tax assets. This measure also
eliminates the asymmetrical impact resulting from changes in fair
value of AIG’s available for sale securities portfolio wherein
there is largely no offsetting impact for certain related insurance
liabilities. AIG excludes deferred tax assets representing U.S. tax
attributes related to net operating loss carryforwards and foreign
tax credits as they have not yet been utilized. Amounts for interim
periods are estimates based on projections of full-year attribute
utilization. As net operating loss carryforwards and foreign tax
credits are utilized, the portion of the DTA utilized is included
in Adjusted Return on Common Equity. Adjusted Return on Common
Equity is derived by dividing actual or annualized adjusted
after-tax income attributable to AIG common shareholders by average
Adjusted Common Shareholders’ Equity.
AIG Return on Common Equity, Excluding Goodwill, Value of
Business Acquired (VOBA), Value of Distribution Channel Acquired
(VODA) and Other Intangible assets (Return on Tangible Common
Equity) and Return on Tangible Common Equity – Adjusted After-tax
Income, Excluding Goodwill, Value of Business Acquired (VOBA),
Value of Distribution Channel Acquired (VODA) and Other Intangible
assets, AOCI and DTA (Adjusted Return on Tangible Common
Equity) is used to provide the rate of return on tangible
common shareholder’s equity, which is a more accurate measure of
realizable shareholder value. AIG excludes Goodwill, VOBA, VODA and
Other intangible assets from AIG common shareholders’ equity to
drive tangible common shareholders’ equity (AIG Tangible Common
Shareholders’ Equity). Return on Tangible Common Equity is derived
by dividing actual or annualized after-tax income attributable to
AIG common shareholders by average Tangible Common Shareholders’
Equity. AIG further excludes AOCI and DTA in Adjusted Tangible
Common Equity. Adjusted Return on Tangible Common Equity is derived
by dividing actual or annualized adjusted after-tax income
attributable to AIG common shareholders by average Adjusted
Tangible Common Shareholders’ Equity.
Core and Life and Retirement Adjusted Attributed Common
Equity is an attribution of total AIG Adjusted Common
Shareholders’ Equity to these segments based on AIG’s internal
capital model, which incorporates the segments’ respective risk
profiles. Adjusted attributed common equity represents AIG’s best
estimates based on current facts and circumstances and will change
over time.
Core and Life and Retirement Return on Common Equity –
Adjusted After-tax Income (Adjusted Return on Attributed Common
Equity) is used to show the rate of return on Adjusted
Attributed Common Equity. Adjusted Return on Attributed Common
Equity is derived by dividing actual or annualized Adjusted
After-tax Income by Average Adjusted Attributed Common Equity.
Adjusted After-tax Income Attributable to Core and Life and
Retirement is derived by subtracting attributed interest
expense, income tax expense and attributed dividends on preferred
stock from adjusted pre-tax income. Attributed debt and the related
interest expense and dividends on preferred stock are calculated
based on AIG’s internal capital model. Tax expense or benefit is
calculated based on an internal attribution methodology that
considers among other things the taxing jurisdiction in which the
segments conduct business, as well as the deductibility of expenses
in those jurisdictions.
Adjusted Revenues exclude Net realized capital gains
(losses), income from non-operating litigation settlements
(included in Other income for GAAP purposes) and changes in fair
value of securities used to hedge guaranteed living benefits
(included in Net investment income for GAAP purposes). Adjusted
revenues is a GAAP measure for AIG’s operating segments.
AIG uses the following operating performance measures because
AIG believes they enhance the understanding of the underlying
profitability of continuing operations and trends of AIG’s business
segments. AIG believes they also allow for more meaningful
comparisons with AIG’s insurance competitors. When AIG uses these
measures, reconciliations to the most comparable GAAP measure are
provided on a consolidated basis.
Adjusted Pre-tax Income (APTI) is derived by excluding
the items set forth below from income from continuing operations
before income tax. This definition is consistent across AIG’s
segments. These items generally fall into one or more of the
following broad categories: legacy matters having no relevance to
AIG’s current businesses or operating performance; adjustments to
enhance transparency to the underlying economics of transactions;
and measures that AIG believes to be common to the industry. APTI
is a GAAP measure for AIG’s segments. Excluded items include the
following:
- changes in fair value of
securities used to hedge guaranteed living benefits;
- 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 and losses;
- changes in the fair value of
equity securities;
- loss (gain) on extinguishment of
debt;
- all net realized capital gains
and losses except earned income (periodic settlements and changes
in settlement accruals) on derivative instruments used for
non-qualifying (economic) hedging or for asset replication. Earned
income on such economic hedges is reclassified from net realized
capital gains and losses to specific APTI line items based on the
economic risk being hedged (e.g. net investment income and interest
credited to policyholder account balances);
- income or loss from discontinued
operations;
- net loss reserve discount
benefit (charge);
- pension expense related to a
one-time lump sum payment to former employees;
- income and loss from divested
businesses;
- non-operating litigation
reserves and settlements;
- restructuring and other costs
related to initiatives designed to reduce operating expenses,
improve efficiency and simplify AIG’s organization;
- the portion of favorable or
unfavorable prior year reserve development for which AIG has ceded
the risk under retroactive reinsurance agreements and related
changes in amortization of the deferred gain;
- integration and transaction
costs associated with acquired businesses;
- losses from the impairment of
goodwill; and
- non-recurring costs associated
with the implementation of non-ordinary course legal or regulatory
changes or changes to accounting principles.
Adjusted After-tax Income attributable to AIG common
shareholders (AATI) is derived by excluding the tax effected
APTI adjustments described above, dividends on preferred stock, and
the following tax items from net income attributable to AIG:
- deferred income tax valuation allowance releases and
charges;
- changes in uncertain tax positions and other tax items related
to legacy matters having no relevance to AIG’s current businesses
or operating performance; and
- net tax charge related to the enactment of the Tax Cuts and
Jobs Act (Tax Act); and by excluding the net realized capital gains
(losses) from noncontrolling interests.
See page 21 for the reconciliation of Net income attributable to
AIG to Adjusted After-tax Income Attributable to AIG.
Ratios: AIG, along with most property and casualty
insurance companies, uses the loss ratio, the expense ratio and the
combined ratio as measures of underwriting performance. These
ratios are relative measurements that describe, for every $100 of
net premiums earned, the amount of losses and loss adjustment
expenses (which for General Insurance excludes net loss reserve
discount), and the amount of other underwriting expenses that would
be incurred. A combined ratio of less than 100 indicates
underwriting income and a combined ratio of over 100 indicates an
underwriting loss. AIG’s ratios are calculated using the relevant
segment information calculated under GAAP, and thus may not be
comparable to similar ratios calculated for regulatory reporting
purposes. The underwriting environment varies across countries and
products, as does the degree of litigation activity, all of which
affect such ratios. In addition, investment returns, local taxes,
cost of capital, regulation, product type and competition can have
an effect on pricing and consequently on profitability as reflected
in underwriting income and associated ratios.
Accident year loss and combined ratios, as adjusted: both
the accident year loss and combined ratios, as adjusted, exclude
catastrophe losses and related reinstatement premiums, prior year
development, net of premium adjustments, and the impact of reserve
discounting. Natural catastrophe losses are generally weather or
seismic events having a net impact on AIG in excess of $10 million
each and man-made catastrophe losses, such as terrorism and civil
disorders that exceed the $10 million threshold. AIG believes that
as adjusted ratios are meaningful measures of AIG’s underwriting
results on an ongoing basis as they exclude catastrophes and the
impact of reserve discounting which are outside of management’s
control. AIG also excludes prior year development to provide
transparency related to current accident year results.
Underwriting ratios
are computed as follows:
a)
Loss ratio = Loss and loss
adjustment expenses incurred ÷ Net premiums earned (NPE)
b)
Acquisition ratio = Total
acquisition expenses ÷ NPE
c)
General operating expense ratio =
General operating expenses ÷ NPE
d)
Expense ratio = Acquisition ratio
+ General operating expense ratio
e)
Combined ratio = Loss ratio +
Expense ratio
f)
Accident year loss ratio, as
adjusted (AYLR) = [Loss and loss adjustment expenses incurred –
CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to
catastrophes (CYRIPs) +/(-) RIPs related to prior year catastrophes
(PYRIPs) + (Additional) returned premium related to PYD on loss
sensitive business ((AP)RP) + Adjustment for ceded premiums under
reinsurance contracts related to prior accident years]
g)
Accident year combined ratio, as
adjusted = AYLR + Expense ratio
h)
Catastrophe losses (CATs) and
reinstatement premiums = [Loss and loss adjustment expenses
incurred – (CATs)] ÷ [NPE +/(-) CYRIPs] – Loss ratio
i)
Prior year development net of
(additional) return premium related to PYD on loss sensitive
business = [Loss and loss adjustment expenses incurred – CATs –
PYD] ÷ [NPE +/(-) CYRIPs +/(-) PYRIPs + (AP)RP] – Loss ratio – CAT
ratio
Premiums and deposits: includes direct and assumed
amounts received and earned on traditional life insurance policies,
group benefit policies and life‑contingent payout annuities, as
well as deposits received on universal life, investment‑type
annuity contracts, Federal Home Loan Bank (FHLB) funding agreements
and mutual funds.
Results from discontinued operations are excluded from all of
these measures.
American International Group, Inc. (AIG) is a leading global
insurance organization. AIG member companies provide a wide range
of property casualty insurance, life insurance, retirement
solutions, and other financial services to customers in more than
80 countries and jurisdictions. These diverse offerings include
products and services that help businesses and individuals protect
their assets, manage risks and provide for retirement security. AIG
common stock is listed on the New York Stock Exchange.
Additional information about AIG can be found at www.aig.com |
YouTube: www.youtube.com/aig | Twitter: @AIGinsurance
www.twitter.com/AIGinsurance | LinkedIn:
www.linkedin.com/company/aig. These references with additional
information about AIG have been provided as a convenience, and the
information contained on such websites is not incorporated by
reference into this press release.
AIG is the marketing name for the worldwide property-casualty,
life and retirement, and general insurance operations of American
International Group, Inc. For additional information, please visit
our website at www.aig.com. All products and services are written
or provided by subsidiaries or affiliates of American International
Group, Inc. Products or services may not be available in all
countries and jurisdictions, and coverage is subject to
underwriting requirements and actual policy language. Non-insurance
products and services may be provided by independent third parties.
Certain property-casualty coverages may be provided by a surplus
lines insurer. Surplus lines insurers do not generally participate
in state guaranty funds, and insureds are therefore not protected
by such funds.
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation
($ in millions, except per
common share data)
Reconciliations of Adjusted Pre-tax and
After-tax Income
Three Months Ended March
31,
2020
2019
Noncontrolling
Noncontrolling
Pre-tax
Tax Effect
Interests(c)
After-tax
Pre-tax
Tax Effect
Interests(c)
After-tax
Pre-tax income/net income, including
noncontrolling interests
$
2,558
$
904
$
-
$
1,654
$
1,154
$
217
$
-
$
937
Noncontrolling interests
-
-
95
95
-
-
(283
)
(283
)
Pre-tax income/net income attributable
to AIG
2,558
904
95
1,749
1,154
217
(283
)
654
Dividends on preferred stock
7
-
Net income attributable to AIG common
shareholders
1,742
654
Adjustments:
Changes in uncertain tax positions and
other tax adjustments
-
(5
)
-
5
-
12
-
(12
)
Deferred income tax valuation allowance
(releases) charges(a)
-
(283
)
-
283
-
38
-
(38
)
Changes in fair value of securities used
to hedge guaranteed living benefits
7
2
-
5
(96
)
(20
)
-
(76
)
Changes in benefit reserves and DAC, VOBA
and SIA related to net realized capital gains (losses)
538
113
-
425
(99
)
(21
)
-
(78
)
Changes in the fair value of equity
securities
191
40
-
151
(79
)
(17
)
-
(62
)
Favorable prior year development and
related amortization changes ceded under retroactive reinsurance
agreements
(8
)
(2
)
-
(6
)
(27
)
(5
)
-
(22
)
(Gain) loss on extinguishment of debt
17
4
-
13
(2
)
(1
)
-
(1
)
Net realized capital (gains) losses(b)
(3,502
)
(767
)
-
(2,735
)
474
109
-
365
(Income) loss from divested businesses
216
45
-
171
(6
)
(1
)
-
(5
)
Non-operating litigation reserves and
settlements
(6
)
(1
)
-
(5
)
1
1
-
-
Net loss reserve discount charge
56
12
-
44
473
99
-
374
Integration and transaction costs
associated with acquired businesses
2
-
-
2
7
2
-
5
Restructuring and other costs
90
19
-
71
47
10
-
37
Professional fees related to regulatory or
accounting changes
13
3
-
10
-
-
-
-
Noncontrolling interests primarily related
to net realized capital gains (losses) of Fortitude Holdings'
standalone results(c)
-
-
(77
)
(77
)
-
-
247
247
Adjusted pre-tax income/Adjusted
after-tax income attributable to AIG common shareholders
$
172
$
84
$
18
$
99
$
1,847
$
423
$
(36
)
$
1,388
(a) First quarter 2020 includes valuation
allowance established against a portion of foreign tax credit and
separate return limitation year net operating loss carryforwards of
AIG’s U.S. federal consolidated income tax group.
(b) Includes all net realized capital
gains and losses except earned income (periodic settlements and
changes in settlement accruals) on derivative instruments used for
non-qualifying (economic) hedging or for asset replication.
(c) Noncontrolling interests is primarily
due to the 19.9 percent investment in Fortitude Group Holdings, LLC
(Fortitude Holdings) by an affiliate of The Carlyle Group L.P.
(Carlyle), which occurred in the fourth quarter of 2018. Carlyle is
allocated 19.9 percent of Fortitude Holdings’ standalone financial
results. Fortitude Holdings’ results are mostly eliminated in AIG’s
consolidated income from continuing operations given that its
results arise from intercompany transactions. Noncontrolling
interests is calculated based on the standalone financial results
of Fortitude Holdings. The most significant component of Fortitude
Holdings’ standalone results is the change in fair value of the
embedded derivatives which changes with movements in interest rates
and credit spreads, and which is recorded in net realized capital
gains and losses of Fortitude Holdings. In accordance with AIG's
adjusted after-tax income definition, realized capital gains and
losses are excluded from noncontrolling interests.
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share data)
Summary of Key Financial
Metrics
Three Months Ended March
31,
Earnings per
common share:
2020
2019
% Inc. (Dec.)
Basic
Income from continuing operations
$
1.99
$
0.75
165.3
%
Income from discontinued operations
-
-
NM
Net income attributable to AIG common
shareholders
$
1.99
$
0.75
165.3
Diluted
Income from continuing operations
$
1.98
$
0.75
164.0
Income from discontinued operations
-
-
NM
Net income attributable to AIG common
shareholders
$
1.98
$
0.75
164.0
Adjusted after-tax income attributable
to AIG common shareholders per diluted share
$
0.11
$
1.58
(93.0
)
%
Weighted average shares
outstanding:
Basic
874.2
875.4
Diluted
878.9
877.5
As of period
end:
March 31, 2020
December 31, 2019
March 31, 2019
Total AIG shareholders' equity
$
60,173
$
65,675
$
60,787
Less: Preferred equity
485
485
485
Total AIG common shareholders' equity
(a)
59,688
65,190
60,302
Less: Accumulated other comprehensive
income (AOCI)
(994
)
4,982
2,128
Total AIG common shareholders' equity,
excluding AOCI (b)
60,682
60,208
58,174
Less: Deferred tax assets (DTA)*
8,535
8,977
9,926
Total adjusted AIG common shareholders'
equity (c)
$
52,147
$
51,231
$
48,248
Less: Intangible assets:
Goodwill
3,989
4,038
4,103
Value of business acquired
297
317
421
Value of distribution channel acquired
526
536
564
Other intangibles
329
333
340
Total intangible assets
5,141
5,224
5,428
Total AIG common shareholders' equity less
intangible assets (d)
54,547
59,966
54,874
Total adjusted tangible common
shareholders' equity (e)
$
47,006
$
46,007
$
42,820
Total common shares outstanding
(f)
861.3
870.0
869.7
March 31,
December 31,
% Inc.
March 31,
% Inc.
As of period
end:
2020
2019
(Dec.)
2019
(Dec.)
Book value per common share (a÷f)
$
69.30
$
74.93
(7.5
)
%
$
69.33
-
%
Book value per common share, excluding
AOCI (b÷f)
70.45
69.20
1.8
66.89
5.3
Adjusted book value per common share
(c÷f)
60.55
58.89
2.8
55.47
9.2
Tangible book value per common share
(d÷f)
63.33
68.93
(8.1
)
63.10
0.4
Adjusted tangible book value per common
share (e÷f)
54.58
52.88
3.2
49.24
10.8
Three Months Ended
March 31, 2020
March 31, 2019
Actual or Annualized net income
attributable to AIG common shareholders (g)
$
6,968
$
2,616
Actual or Annualized adjusted after-tax
income attributable to AIG common shareholders (h)
$
396
$
5,552
Average AIG common shareholders' equity
(i)
$
62,439
$
58,332
Less: Average intangible assets
5,183
5,439
Average AIG tangible common shareholders'
equity (j)
$
57,256
$
52,893
Average AIG common shareholders'
equity
$
62,439
$
58,332
Less: Average AOCI
1,994
358
Less: Average DTA*
8,756
10,040
Average adjusted common shareholders'
equity (k)
51,689
47,934
Less: Average intangible assets
5,183
5,439
Average adjusted tangible common
shareholders' equity (m)
$
46,506
$
42,495
ROCE (g÷i)
11.2
%
4.5
%
Adjusted return on common equity (h÷k)
0.8
%
11.6
%
Return on tangible common equity (g÷j)
12.2
%
4.9
%
Adjusted return on tangible common equity
(h÷m)
0.9
%
13.1
%
* Represents deferred tax assets only
related to U.S. net operating loss and foreign tax credit
carryforwards on a U.S. GAAP basis and excludes other balance sheet
deferred tax assets and liabilities.
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation
($ in millions, except per
common share amounts)
Reconciliations of Life and Retirement
Adjusted Return on Common Equity
Three Months Ended
March 31,
2020
2019
Adjusted pre-tax income
$
574
$
924
Interest expense on attributed financial
debt
61
37
Adjusted pre-tax income including
attributed interest expense
513
887
Income tax expense
99
176
Adjusted after-tax income
414
711
Dividends declared on preferred stock
3
-
Adjusted after-tax income attributable
to common shareholders
411
711
Ending adjusted attributed common
equity
$
19,661
$
18,280
Average adjusted attributed common
equity
$
19,587
$
18,988
Adjusted return on attributed common
equity
8.4
%
15.0
%
Reconciliations of Core Adjusted Return
on Common Equity
Three Months Ended
March 31,
2020
2019
Adjusted pre-tax income
$
540
$
1,735
Interest expense on attributed financial
debt
-
-
Adjusted pre-tax income including
attributed interest expense
540
1,735
Income tax expense
162
400
Adjusted after-tax income
378
1,335
Dividends declared on preferred stock
7
-
Adjusted after-tax income attributable
to common shareholders
371
1,335
Ending adjusted attributed common
equity
$
44,305
$
40,798
Average adjusted attributed common
equity
$
44,259
$
39,767
Adjusted return on attributed common
equity
3.4
%
13.4
%
Net Premiums Written - Change in
Constant Dollar
Three Months
Ended
General Insurance
- International
March 31, 2020
Foreign exchange effect on worldwide
premiums:
Change in net premiums written
Increase (decrease) in original
currency
(8.3
)
%
Foreign exchange effect
(0.5
)
Increase (decrease) as reported in U.S.
dollars
(8.8
)
%
Reconciliation of Net Investment
Income
Three Months Ended
March 31,
2020
2019
Net investment income per Consolidated
Statements of Operations
$
2,508
$
3,879
Changes in fair value of securities used
to hedge guaranteed living benefits
(13
)
(105
)
Changes in the fair value of equity
securities
191
(79
)
Net realized capital gains related to
economic hedges and other
13
23
Total Net investment income - APTI
Basis
$
2,699
$
3,718
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share amounts)
Reconciliations of Premiums and
Deposits
Three Months Ended
March 31,
2020
2019
Individual
Retirement:
Premiums
$
41
$
11
Deposits
3,078
4,175
Other
(3
)
-
Total premiums and deposits
$
3,116
$
4,186
Group
Retirement:
Premiums
$
6
$
4
Deposits
1,849
2,059
Other
-
-
Total premiums and deposits
$
1,855
$
2,063
Life
Insurance:
Premiums
$
419
$
395
Deposits
402
406
Other
194
194
Total premiums and deposits
$
1,015
$
995
Institutional
Markets:
Premiums
$
757
$
819
Deposits
152
286
Other
8
7
Total premiums and deposits
$
917
$
1,112
Total Life and
Retirement:
Premiums
$
1,223
$
1,229
Deposits
5,481
6,926
Other
199
201
Total premiums and deposits
$
6,903
$
8,356
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200504005730/en/
Sabra Purtill (Investors): sabra.purtill@aig.com Shelley Singh
(Investors): shelley.singh@aig.com Daniel O’Donnell (Media):
daniel.odonnell@aig.com Claire Talcott (Media):
claire.talcott@aig.com
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