- General Insurance adjusted pre-tax income (APTI) increased
4% compared to the prior year quarter reflecting continued
improvement and growth in Commercial Lines
- Life and Retirement APTI increased 20% compared to the prior
year quarter supported by diverse products and distribution
strength
- Strong net investment income driven by improved alternative
investment returns during the quarter
- Strong balance sheet and lower leverage; Board of Directors
declares dividends
FOURTH QUARTER NOTEWORTHY ITEMS
- General Insurance APTI increased 4% to $809 million compared to
the prior year quarter due to higher net investment income offset
by higher catastrophe losses, net of reinsurance (CATs). General
Insurance reported $545 million of CATs which included $178
million, or 3.0 combined ratio points, of COVID-19 CATs resulting
in a General Insurance combined ratio of 102.8 compared to 99.8 in
the prior year quarter.
- The General Insurance accident year combined ratio, as
adjusted*, of 92.9 improved for the tenth consecutive quarter with
a 2.9 point improvement from the prior year quarter.
- Life and Retirement APTI increased 20% to $1,027 million
compared to the prior year quarter driven by strong net investment
income and improved APTI in most operating segments. Return on
adjusted segment common equity – Life and Retirement* for the
fourth quarter was 16.4%, on an annualized basis.
- Net loss attributable to AIG common shareholders was $60
million, or $0.07 per common share, compared to net income of $922
million, or $1.03 per diluted common share, in the prior year
quarter.
- Adjusted after-tax income attributable to AIG common
shareholders* (AATI) was $827 million, or $0.94 per diluted common
share, compared to $923 million, or $1.03 per diluted common share,
in the prior year quarter.
- As of December 31, 2020, book value per common share was
$76.46, an increase of 3.5% compared to September 30, 2020.
Adjusted book value per common share* was $57.01, an increase of
0.4% compared to September 30, 2020.
- Return on Common Equity (ROCE) and Adjusted ROCE* were (0.4)%
and 6.7%, respectively, on an annualized basis, for the fourth
quarter of 2020.
- The Board of Directors declared a quarterly cash dividend of
$0.32 per share on AIG common stock and $365.625 per share on AIG
preferred stock.
* 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
financial results for the fourth quarter and full year ended
December 31, 2020.
For the full year of 2020, net loss attributable to AIG common
shareholders was $6.0 billion, or $6.88 per common share, compared
to net income of $3.3 billion, or $3.74 per diluted common share,
in the prior year. The loss was primarily driven by a $6.7 billion
after-tax loss from the sale and deconsolidation of Fortitude Group
Holdings LLC (Fortitude) on June 2, 2020. The sale, for which AIG
received $2.2 billion in consideration at closing, improved AIG’s
risk profile and reduced exposure to long-tail runoff liabilities
and related interest rate risk.
AATI was $2.2 billion, or $2.52 per diluted common share, for
the full year of 2020, compared to $4.1 billion, or $4.58 per
diluted common share, in the prior year. The decrease was primarily
due to lower APTI from General Insurance and higher adjusted
pre-tax loss (APTL) from Other Operations. The decrease in General
Insurance APTI was primarily due to higher CATs including $1.1
billion of COVID-19 CATs. The increase in Other Operations APTL was
primarily due to the sale of Fortitude in the second quarter of
2020, lower net investment income on available for sale fixed
maturity securities, the impact of consolidated investment entities
on consolidation and eliminations, and higher interest expense
related to debt issuances in the second quarter of 2020.
For the fourth quarter of 2020, net loss attributable to AIG
common shareholders was $60 million, or $0.07 per common share,
compared to net income of $922 million, or $1.03 per diluted common
share, in the prior year quarter. The loss was primarily due to
$1.2 billion of after-tax net realized capital losses, principally
from the non-economic impact of the non-performance risk adjustment
on the fair value of variable annuity embedded derivatives, net of
hedges, and from losses on other derivatives and hedges.
AATI was $827 million, or $0.94 per diluted common share, for
the fourth quarter of 2020 compared to $923 million, or $1.03 per
diluted common share, in the prior year quarter primarily due to
higher CATs, including COVID-19 CATs, as well as unfavorable prior
year loss reserve development, net of reinsurance, (PYD) partially
offset by improved alternative investment returns. The decrease
also reflects the sale of Fortitude in the second quarter of 2020,
which had APTI of $70 million in the fourth quarter of 2019.
Total consolidated net investment income for the fourth quarter
of 2020 was $4.0 billion compared to $3.6 billion in the prior year
quarter. Total net investment income, APTI basis*, of $3.2 billion
decreased 7%. Excluding the impact of Fortitude in the fourth
quarter of 2019, fourth quarter 2020 total net investment income,
APTI basis*, increased 9%, or $262 million, compared to the prior
year quarter primarily reflecting higher private equity and hedge
fund returns.
Brian Duperreault, AIG’s Chief Executive Officer, said: “AIG’s
fourth quarter and full year 2020 operating results demonstrate the
continued progress we are making to position AIG for long-term,
sustainable and profitable growth. We are effectively managing the
impacts of COVID-19 and natural catastrophes and remain well
capitalized in this environment of unprecedented uncertainty.
“The General Insurance business continues to improve, with a 1.9
point improvement in the accident year combined ratio, as adjusted,
compared to 2019 and 5.6 point improvement in the accident year
combined ratio, as adjusted, compared to 2018. Life and Retirement
delivered strong returns and remains well positioned to meet the
ever-growing needs for protection, retirement savings and lifetime
income solutions.
“As I transition into my role as Executive Chairman, I want to
thank our global colleagues who have shown unyielding resilience,
dedication and perseverance in their efforts to serve our clients,
distribution partners, communities and other stakeholders – even as
their own lives and work situations have been severely disrupted by
the COVID-19 crisis. This strength of human spirit is at the core
of AIG and visible in all that we do. I look forward to supporting
Peter Zaffino as he becomes the next Chief Executive Officer of AIG
and, along with our world-class team, continues AIG’s journey to
become a top performing company and leading insurance
franchise.”
Book value per common share was $76.46 as of December 31, 2020,
an increase of 3.5% compared to September 30, 2020. Adjusted book
value per common share was $57.01, an increase of 0.4% compared to
September 30, 2020 reflecting unrealized gains on the investment
portfolio. ROCE and Adjusted ROCE were (9.4)% and 4.4%,
respectively, for the twelve months ended December 31, 2020 and
(0.4)% and 6.7%, respectively, on an annualized basis for the
fourth quarter of 2020.
As of December 31, 2020, AIG Parent liquidity stood at
approximately $10.5 billion compared to $7.6 billion at December
31, 2019. In December 2020, AIG repaid $708 million aggregate
principal amount of its 6.400% Notes Due 2020. AIG’s total debt and
preferred stock leverage at December 31, 2020 was 28.4%. On
February 1, 2021, AIG repaid $1.5 billion aggregate principal
amount of its 3.300% Notes Due 2021.
Today, the Board of Directors declared a quarterly cash dividend
of $0.32 per share on AIG Common Stock (NYSE: AIG), par value $2.50
per share. The dividend is payable on March 30, 2021 to
stockholders of record at the close of business on March 16,
2021.
The Board of Directors also declared a quarterly cash dividend
of $365.625 per share on AIG Series A 5.85% Non-Cumulative
Perpetual Preferred Stock, with a liquidation preference of $25,000
per share, which are represented by depositary shares (NYSE: AIG
PRA), each representing a 1/1,000th interest in a share of
preferred stock. Holders of depositary shares will receive
$0.365625 per depositary share. The dividend is payable on March
15, 2021 to holders of record at the close of business on February
26, 2021.
FINANCIAL SUMMARY
Three Months Ended
December 31,
Twelve Months Ended
December 31,
($ in millions, except per common share
amounts)
2020
2019
2020
2019
Net income (loss) attributable to AIG
common shareholders
$
(60
)
$
922
$
(5,973
)
$
3,326
Net income (loss) per diluted share
attributable to AIG common shareholders (a)
$
(0.07
)
$
1.03
$
(6.88
)
$
3.74
Adjusted pre-tax income (loss)
$
1,116
$
1,211
$
3,003
$
5,470
General Insurance
809
778
1,901
3,533
Life and Retirement
1,027
858
3,531
3,553
Other Operations
(720
)
(425
)
(2,429
)
(1,616
)
Net investment income
$
3,957
$
3,587
$
13,631
$
14,619
Net investment income, APTI basis
3,226
3,462
12,321
14,390
Adjusted after-tax income attributable to
AIG common shareholders
$
827
$
923
$
2,201
$
4,078
Adjusted after-tax income per diluted
share attributable to AIG common shareholders
$
0.94
$
1.03
$
2.52
$
4.58
Weighted average common shares outstanding
- diluted (a)
868.4
896.4
869.3
889.5
Return on common equity
(0.4
)%
5.7
%
(9.4
)%
5.3
%
Adjusted return on common equity
6.7
%
7.3
%
4.4
%
8.3
%
Book value per common share
$
76.46
$
74.93
$
76.46
$
74.93
Adjusted book value per common share
$
57.01
$
58.89
$
57.01
$
58.89
Common shares outstanding
861.6
870.0
861.6
870.0
(a) For periods reporting a loss, basic
average common shares outstanding are used to calculate net income
(loss) per diluted share attributable to AIG common shareholders.
Diluted shares represent basic shares for the three- and
twelve-month periods ended December 31, 2020 because we reported a
net loss attributable to AIG common shareholders from continuing
operations in those periods.
All comparisons are against the fourth quarter of 2019, unless
otherwise indicated. Refer to the AIG Fourth Quarter 2020 Financial
Supplement, which is posted on AIG's website in the Investors
section, for further information.
GENERAL INSURANCE
Three Months Ended December
31,
($ in millions)
2020
2019
Change
Gross premiums written
$
7,135
$
7,306
(2
)%
Net premiums written
$
5,565
$
5,830
(5
)%
North America
2,361
2,639
(11
)
North America Commercial Lines
1,992
1,815
10
North America Personal Insurance
369
824
(55
)
International
3,204
3,191
-
International Commercial Lines
1,662
1,554
7
International Personal Insurance
1,542
1,637
(6
)
Underwriting income (loss)
$
(171
)
$
12
NM
%
North America
(389
)
(96
)
(305
)
North America Commercial Lines
(285
)
(188
)
(52
)
North America Personal Insurance
(104
)
92
NM
International
218
108
102
International Commercial Lines
138
52
165
International Personal Insurance
80
56
43
Net investment income, APTI basis
$
980
$
766
28
%
Adjusted pre-tax income
$
809
$
778
4
%
Return on adjusted segment common
equity
7.5
%
7.2
%
0.3
pts
Underwriting ratios:
North America Combined Ratio (CR)
114.9
103.2
11.7
pts
North America Commercial Lines CR
112.4
108.8
3.6
North America Personal Insurance CR
133.2
88.6
44.6
International CR
93.6
96.9
(3.3
)
International Commercial Lines CR
92.1
96.9
(4.8
)
International Personal Insurance CR
95.0
96.8
(1.8
)
General Insurance (GI) CR
102.8
99.8
3.0
GI Loss ratio
70.2
65.6
4.6
pts
Less: impact on loss ratio
Catastrophe losses and reinstatement
premiums
(9.0
)
(6.5
)
(2.5
)
Prior year development
(0.9
)
2.2
(3.1
)
Adjustments for ceded premium under
reinsurance
contracts and other
-
0.3
(0.3
)
GI Accident year loss ratio, as
adjusted
60.3
61.6
(1.3
)
GI Expense ratio
32.6
34.2
(1.6
)
GI Accident year combined ratio, as
adjusted (AYCR)
92.9
95.8
(2.9
)
Accident year
combined ratio, as adjusted (AYCR):
North America AYCR
94.7
96.1
(1.4
)pts
North America Commercial Lines AYCR
93.6
97.6
(4.0
)
North America Personal Insurance AYCR
102.6
92.2
10.4
International AYCR
91.7
95.6
(3.9
)
International Commercial Lines AYCR
89.2
94.1
(4.9
)
International Personal Insurance AYCR
94.1
97.0
(2.9
)
General Insurance
- Net premiums written in the fourth quarter of 2020 decreased by
5% to $5.6 billion principally due to a 55% decrease in North
America Personal Insurance as a result of cessions pursuant to a
series of quota share reinsurance agreements placed in the second
quarter of 2020 related to AIG’s Private Client Group as well as
the adverse impact of COVID-19 on the Travel business. North
America Commercial Lines and International Commercial Lines net
premiums written grew 10% and 7%, respectively, from the prior year
quarter reflecting strong rate momentum and improving retention
across most lines.
- Fourth quarter APTI was $809 million compared to APTI of $778
million in the prior year quarter and was comprised of an
underwriting loss of $171 million compared to underwriting income
of $12 million in the prior year quarter, and net investment income
of $980 million, up 28% from the prior year quarter. The
underwriting loss included $545 million of CATs reflecting $367
million of non-COVID-19 CATs primarily related to Hurricanes Sally,
Zeta, Laura and Delta and $178 million of COVID-19 CATs, primarily
related to Travel, Contingency and Validus Reinsurance, Ltd.,
compared to $411 million of CATs in the prior year quarter. In
addition, the underwriting loss also included unfavorable PYD of
$45 million, and included $52 million of favorable amortization
from the Adverse Development Cover (ADC) compared to favorable PYD
of $153 million in the prior year quarter which reflected $58
million of favorable amortization from the ADC and favorable PYD
related to California wildfire subrogation recoverables.
- The General Insurance combined ratio was 102.8, a 3.0 point
increase from 99.8 in the prior year quarter, and included 9.0
points of CATs and reinstatement premiums, of which 3.0 points
related to COVID-19 CATs, and 0.9 points of unfavorable PYD. The
General Insurance accident year combined ratio, as adjusted, was
92.9, an improvement of 2.9 points from the prior year quarter and
was comprised of a 60.3 accident year loss ratio, as adjusted* and
an expense ratio of 32.6.
- Commercial Lines continued to show strong improvement due to
improved business mix along with rate increases. The accident year
combined ratio, as adjusted, for North America Commercial Lines
improved 4.0 points to 93.6 and for International Commercial Lines
improved 4.9 points to 89.2.
- The North America Personal Insurance accident year combined
ratio, as adjusted, increased 10.4 points to 102.6 in the prior
year quarter, due to the adverse impact of COVID-19 on the Travel
business and change in business mix driven by a series of quota
share reinsurance agreements as described above. The International
Personal Insurance accident year combined ratio, as adjusted, was
94.1, a 2.9 point improvement reflecting lower claims frequency and
change in business mix.
- The General Insurance expense ratio improved 1.6 points to 32.6
and was comprised of an acquisition ratio of 19.8 and general
operating expense (GOE) ratio of 12.8. General Insurance GOE
decreased by 6% to $768 million compared to the prior year quarter
reflecting continued expense discipline.
LIFE AND RETIREMENT
Three Months Ended
December 31,
($ in millions)
2020
2019
Change
Adjusted pre-tax income
$
1,027
$
858
20
%
Individual Retirement
552
500
10
Group Retirement
318
209
52
Life Insurance
30
67
(55
)
Institutional Markets
127
82
55
Premiums and deposits
$
7,400
$
7,125
4
%
Individual Retirement
2,758
3,156
(13
)
Group Retirement
2,199
2,312
(5
)
Life Insurance
1,156
1,106
5
Institutional Markets
1,287
551
134
Premiums & fees
$
1,714
$
1,749
(2
)%
Individual Retirement
265
248
7
Group Retirement
124
114
9
Life Insurance
861
837
3
Institutional Markets
464
550
(16
)
Net flows
$
(1,031
)
$
(1,764
)
42
%
Individual Retirement
(878
)
(955
)
8
Group Retirement
(153
)
(809
)
81
Net investment income, APTI basis
$
2,384
$
2,135
12
%
Return on adjusted segment common
equity
16.4
%
14.6
%
1.8
pts
Life and Retirement
- Life and Retirement reported APTI of $1,027 million for the
fourth quarter of 2020 compared to $858 million in the prior year
quarter due to increased APTI in Individual and Group Retirement
and Institutional Markets. The increase in APTI primarily reflects
higher net investment income, driven by private equity returns
which are reported on a one quarter lag and higher call and tender
income due to favorable impacts from lower interest rates and
tighter spreads, as well as lower GOE. The favorable impacts of
these factors on APTI was partially offset by base spread
compression and, in Life Insurance, COVID-19 mortality claims.
- Premiums were $950 million, a decrease of 4% compared to $994
million in the prior year quarter. Premiums and deposits increased
4%, or $275 million, from the prior year quarter to $7.4 billion
due to Institutional Markets activity, partially offset by lower
Fixed and Index Annuities and Group Retirement deposits. Sales have
improved from the first half of 2020, reflecting the continued
recovery from broad industry sales disruptions caused by COVID-19
and the low interest rate environment.
- Net outflows were $1.0 billion, but improved significantly from
the prior year quarter, driven by lower Group Retirement surrenders
and two large group acquisitions in the fourth quarter of 2020,
partially offset by lower Fixed and Index Annuity sales as a result
of continued market impacts due to COVID-19 and the lower interest
rate environment.
- On October 26, 2020, AIG announced its intention to separate
its Life and Retirement business from AIG. No decisions have yet
been made regarding the structure of the initial disposition of up
to a 19.9% interest in the Life and Retirement business. In
addition, any separation transaction will be subject to the
satisfaction of various conditions and approvals, including
approval by the Board of Directors, receipt of insurance and other
required regulatory approvals, and satisfaction of any applicable
requirements of the Securities and Exchange Commission. No
assurance can be given regarding the form that a separation
transaction may take or the specific terms or timing thereof, or
that a separation will in fact occur.
OTHER OPERATIONS
Three Months Ended
December 31,
($ in millions)
2020
2019
Change
Corporate and Other
$
(519
)
$
(301
)
(72
)%
Asset Management
91
10
NM
Adjusted pre-tax loss before consolidation
and eliminations
(428
)
(291
)
(47
)
Consolidation and eliminations
(292
)
(134
)
(118
)
Adjusted pre-tax loss
$
(720
)
$
(425
)
(69
)%
Other Operations
- Fourth quarter APTL was $720 million, including $292 million of
reductions from consolidation and eliminations, compared to APTL of
$425 million, including $134 million of reductions from
consolidation and eliminations, in the prior year quarter. The
increase in APTL in consolidation and eliminations reflects the
impact of consolidated investment entities.
- Before consolidation and eliminations, the increase in APTL was
primarily due to lower net investment income associated with
available for sale securities; the sale of Fortitude in the second
quarter of 2020, which had APTI of $70 million in the fourth
quarter of 2019; and increased interest expense related to debt
issuance in the second quarter of 2020.
CONFERENCE CALL
AIG will host a conference call tomorrow, Wednesday, February
17, 2021 at 8:30 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.
Certain statements in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. In addition, the
conference call (including the financial results presentation
material) 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”. 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, such as the COVID-19 crisis,
and macroeconomic events, 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 downturn, volatility in financial and
capital markets, prolonged economic recovery 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, other pandemics, civil unrest and the
effects of climate change;
- AIG’s ability to successfully dispose of, monetize and/or
acquire businesses or assets or successfully integrate acquired
businesses, including any separation of the Life and Retirement
business from AIG and the impact any separation may have on AIG,
its businesses, employees, contracts and customers;
- AIG’s ability to effectively execute on AIG 200
transformational programs designed to achieve underwriting
excellence, modernization of AIG’s operating infrastructure,
enhanced user and customer experiences and unification of AIG;
- 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;
- availability and affordability of reinsurance;
- the effectiveness of our risk management policies and
procedures, including with respect to our business continuity and
disaster recovery plans;
- nonperformance or defaults by counterparties, including
Fortitude Reinsurance Company Ltd. (Fortitude Re);
- changes in judgments concerning potential cost-saving
opportunities;
- concentrations in AIG’s investment portfolios;
- changes to the valuation of AIG’s investments;
- changes to our sources of or access to liquidity;
- actions by rating agencies with respect to our credit and
financial strength ratings;
- changes in judgments or assumptions concerning insurance
underwriting and insurance liabilities;
- 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;
- changes in judgments concerning the recognition of deferred tax
assets and the impairment of goodwill; and
- such other factors discussed in: – Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) and Part I, Item 1A. Risk Factors
in AIG’s Annual Report on Form 10-K for the year ended December 31,
2020 (which will be filed with the Securities and Exchange
Commission); – Part I, Item 2. MD&A and Part II, Item 1A. Risk
Factors of the Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2020; – Part I, Item 2. MD&A and
Part II, Item 1A. Risk Factors of the Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2020; – Part I, Item 2.
MD&A of the Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2020; and – Part I, Item 1A. Risk Factors in
AIG’s Annual Report on Form 10-K for the year ended December 31,
2019.
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 Fourth 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) adjusted for the cumulative
unrealized gains and losses related to Fortitude Re’s Funds
Withheld Assets and Deferred Tax Assets (DTA) (Adjusted Book Value
per Common Share) is used to show the amount of AIG’s net worth
on a per-common share basis after eliminating 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. In addition, AIG
adjusts for the cumulative unrealized gains and losses related to
Fortitude Re’s Funds Withheld Assets since these fair value
movements are economically transferred to Fortitude Re. 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. Adjusted Book Value per Common
Share is derived by dividing Total AIG common shareholders’ equity,
excluding AOCI adjusted for the cumulative unrealized gains and
losses related to Fortitude Re’s Funds Withheld Assets, 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), Other Intangible Assets, AOCI adjusted for the cumulative
unrealized gains and losses related to Fortitude Re’s Funds
Withheld Assets, and Deferred Tax Assets (DTA) (Adjusted Tangible
Book Value per Common Share) is used to provide more accurate
measure of the realizable value of shareholder on a per-common
share basis. Adjusted Tangible Book Value per Common Share is
derived by dividing Total AIG common shareholders’ equity,
excluding intangible assets, AOCI adjusted for the cumulative
unrealized gains and losses related to Fortitude Re’s Funds
Withheld Assets, and DTA (Adjusted Tangible Common Shareholders’
Equity), by total common shares outstanding.
AIG Return on Common Equity – Adjusted After-tax Income
Excluding AOCI adjusted for the cumulative unrealized gains and
losses related to Fortitude Re’s Funds Withheld Assets 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. In addition, AIG adjusts
for the cumulative unrealized gains and losses related to Fortitude
Re’s Funds Withheld Assets since these fair value movements are
economically transferred to Fortitude Re. 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 – Adjusted After-tax Income,
Excluding Goodwill, VOBA, VODA and Other Intangible assets, AOCI
adjusted for the cumulative unrealized gains and losses related to
Fortitude Re’s Funds Withheld Assets, and DTA (Adjusted Return on
Tangible Common Equity) is used to provide the rate of return
on adjusted 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 derive tangible common shareholders’ equity
and AIG further excludes AOCI adjusted for the cumulative
unrealized gains and losses related to Fortitude Re’s Funds
Withheld Assets, and DTA for 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.
General Insurance and Life and Retirement Adjusted Segment
Common Equity is based on segment equity adjusted for the
attribution of debt and preferred stock (Segment Common Equity) and
is consistent with AIG’s Adjusted Common Shareholders’ Equity
definition.
General Insurance and Life and Retirement Return on Adjusted
Segment Common Equity – Adjusted After-tax Income (Return on
Adjusted Segment Common Equity) is used to show the rate of
return on Adjusted Segment Common Equity. Return on Adjusted
Segment Common Equity is derived by dividing actual or annualized
Adjusted After-tax Income by Average Adjusted Segment Common
Equity.
Adjusted After-tax Income Attributable to General Insurance
and Life and Retirement is derived by subtracting attributed
interest expense, income tax expense and attributed dividends on
preferred stock from APTI. Attributed debt and the related interest
expense and dividends on preferred stock are calculated based on
AIG’s internal allocation 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 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;
- net investment income on Fortitude Re funds withheld assets
post deconsolidation of Fortitude Re;
- following deconsolidation of Fortitude Re, net realized capital
gains and losses on Fortitude Re funds withheld assets held by AIG
in support of Fortitude Re’s reinsurance obligations to AIG
(Fortitude Re funds withheld assets);
- 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 acquiring or
divesting 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) and
other charges from noncontrolling interests.
See page 15 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)
Catastrophe losses (CATs) and
reinstatement premiums = [Loss and loss adjustment expenses
incurred – (CATs)] ÷ [NPE +/(-) CYRIPs] – Loss ratio
g)
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]
h)
Accident year combined ratio, as
adjusted = AYLR + Expense 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 December
31,
2020
2019
Noncontrolling
Noncontrolling
Pre-tax
Tax Effect
Interests(d)
After-tax
Pre-tax
Tax Effect
Interests(d)
After-tax
Pre-tax income (loss)/net income
(loss), including noncontrolling
interests
$
(558
)
$
(542
)
$
-
$
(16
)
$
1,036
$
216
$
-
$
869
Noncontrolling interests
-
-
(37
)
(37
)
-
-
60
60
Pre-tax income (loss)/net income (loss)
attributable to AIG
(558
)
(542
)
(37
)
(53
)
1,036
216
60
929
Dividends on preferred stock
7
7
Net income (loss) attributable to AIG
common shareholders
(60
)
922
Adjustments:
Changes in uncertain tax positions and
other tax adjustments(a)
-
336
-
(336
)
-
(7
)
-
7
Deferred income tax valuation allowance
releases(b)
-
157
-
(157
)
-
3
-
(3
)
Changes in fair value of securities used
to hedge
guaranteed living benefits
(17
)
(4
)
-
(13
)
(11
)
(2
)
-
(9
)
Changes in benefit reserves and DAC, VOBA
and
SIA related to net realized capital gains
(losses)
(217
)
(46
)
-
(171
)
(95
)
(20
)
-
(75
)
Changes in the fair value of equity
securities
(216
)
(45
)
-
(171
)
(152
)
(32
)
-
(120
)
(Gain) loss on extinguishment of debt
(3
)
(1
)
-
(2
)
19
4
-
15
Net investment income on Fortitude Re
funds withheld assets
(479
)
(101
)
-
(378
)
-
-
-
-
Net realized capital (gains) losses on
Fortitude Re funds withheld assets
(335
)
(71
)
-
(264
)
-
-
-
-
Net realized capital (gains) losses on
Fortitude Re funds withheld
embedded derivative
1,152
242
-
910
-
-
-
-
Net realized capital losses(c)
1,472
331
-
1,141
313
55
-
258
Income from discontinued operations
-
-
-
-
-
-
-
(49
)
(Income) loss from divested businesses
(127
)
(106
)
-
(21
)
71
8
-
63
Non-operating litigation reserves and
settlements
(16
)
(3
)
-
(13
)
(8
)
(1
)
-
(7
)
Favorable prior year development and
related
amortization changes ceded under
retroactive reinsurance agreements
(150
)
(31
)
-
(119
)
(56
)
(11
)
-
(45
)
Net loss reserve discount charge
475
100
-
375
35
7
-
28
Integration and transaction costs
associated with acquiring or
divesting businesses
5
1
-
4
8
2
-
6
Restructuring and other costs
111
23
-
88
44
9
-
35
Non-recurring costs related to regulatory
or accounting changes
19
4
-
15
7
1
-
6
Noncontrolling interests primarily related
to net realized capital
gains (losses) of Fortitude Holdings'
standalone results(d)
-
-
(1
)
(1
)
-
-
(109
)
(109
)
Adjusted pre-tax income/Adjusted
after-tax income attributable
to AIG common shareholders
$
1,116
$
244
$
(38
)
$
827
$
1,211
$
232
$
(49
)
$
923
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share data)
Reconciliations of Adjusted Pre-tax and
After-tax Income (continued)
Twelve Months Ended December
31,
2020
2019
Noncontrolling
Noncontrolling
Pre-tax
Tax Effect
Interests(d)
After-tax
Pre-tax
Tax Effect
Interests(d)
After-tax
Pre-tax income (loss)/net income
(loss), including noncontrolling interests
$
(7,293
)
$
(1,460
)
$
-
$
(5,829
)
$
5,287
$
1,166
$
-
$
4,169
Noncontrolling interests
-
-
(115
)
(115
)
-
-
(821
)
(821
)
Pre-tax income (loss)/net income (loss)
attributable to AIG
(7,293
)
(1,460
)
(115
)
(5,944
)
5,287
1,166
(821
)
3,348
Dividends on preferred stock
29
22
Net income (loss) attributable to AIG
common shareholders
(5,973
)
3,326
Adjustments:
Changes in uncertain tax positions and
other tax adjustments(a)
-
132
-
(132
)
-
(30
)
-
30
Deferred income tax valuation allowance
releases(b)
-
65
-
(65
)
-
43
-
(43
)
Changes in fair value of securities used
to hedge
guaranteed living benefits
(41
)
(9
)
-
(32
)
(194
)
(40
)
-
(154
)
Changes in benefit reserves and DAC, VOBA
and
SIA related to net realized capital gains
(losses)
(12
)
(3
)
-
(9
)
(56
)
(12
)
-
(44
)
Changes in the fair value of equity
securities
(200
)
(42
)
-
(158
)
(158
)
(33
)
-
(125
)
Loss on extinguishment of debt
12
2
-
10
32
7
-
25
Net investment income on Fortitude Re
funds withheld assets(e)
(1,053
)
(221
)
-
(832
)
-
-
-
-
Net realized capital (gains) losses on
Fortitude Re funds withheld assets(e)
(463
)
(98
)
-
(365
)
-
-
-
-
Net realized capital (gains) losses on
Fortitude Re funds withheld
embedded derivative(e)
2,645
555
-
2,090
-
-
-
-
Net realized capital (gains) losses(c)
97
22
-
75
(456
)
(99
)
-
(357
)
Income from discontinued operations
-
-
-
(4
)
-
-
-
(48
)
Loss from divested businesses
8,525
1,610
-
6,915
75
9
-
66
Non-operating litigation reserves and
settlements
(21
)
(4
)
-
(17
)
(2
)
-
-
(2
)
Favorable prior year development and
related
amortization changes ceded under
retroactive reinsurance agreements
(221
)
(46
)
-
(175
)
(267
)
(56
)
-
(211
)
Net loss reserve discount charge
516
109
-
407
955
201
-
754
Integration and transaction costs
associated with acquiring or
divesting businesses
12
3
-
9
24
5
-
19
Restructuring and other costs
435
91
-
344
218
46
-
172
Non-recurring costs related to regulatory
or accounting changes
65
14
-
51
12
2
-
10
Noncontrolling interests primarily related
to net realized capital
gains (losses) of Fortitude Holdings'
standalone results(d)
-
-
62
62
-
-
660
660
Adjusted pre-tax income/Adjusted
after-tax income attributable
to AIG common shareholders
$
3,003
$
720
$
(53
)
$
2,201
$
5,470
$
1,209
$
(161
)
$
4,078
(a) Includes the tax audit resolution
related to the IRS audit settlement for tax years 1991-2006 and the
write-down of net operating loss deferred tax assets in certain
foreign jurisdictions, which is offset by valuation allowance
release.
(b) Twelve months ended December 31, 2020
includes valuation allowance established against a portion of
foreign tax credit carryforwards of AIG’s U.S. federal consolidated
income tax group, as well as net valuation allowance release in
certain foreign jurisdictions for the three- and twelve-months
ended December 31, 2020.
(c) 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 and net
realized gains and losses on Fortitude Re funds withheld
assets.
(d) Prior to June 2, 2020, noncontrolling
interests was 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 was allocated 19.9 percent of Fortitude
Holdings’ standalone financial results through the June 2, 2020
closing date of the Majority Interest Fortitude Sale. Fortitude
Holdings’ results were mostly eliminated in AIG’s consolidated
income from continuing operations given that its results arose from
intercompany transactions. Noncontrolling interests was calculated
based on the standalone financial results of Fortitude Holdings.
The most significant component of Fortitude Holdings’ standalone
results was the change in fair value of the embedded derivatives
which changes with movements in interest rates and credit spreads,
and which was 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. Subsequent to the Majority Interest
Fortitude Sale, AIG owns 3.5 percent of Fortitude Holdings and no
longer consolidates Fortitude Holdings in its financial statements
as of such date. The minority interest in Fortitude Holdings is
carried at cost within AIG’s Other invested assets, which was $100
million as of December 31, 2020.
(e) Represents activity subsequent to the
deconsolidation of Fortitude Re on June 2, 2020.
Summary of Key Financial
Metrics
Three Months Ended December
31,
Twelve Months Ended December
31,
Income (loss) per
common share:
2020
2019
% Inc. (Dec.)
2020
2019
% Inc. (Dec.)
Basic
Income (loss) from continuing
operations
$
(0.07
)
$
0.99
NM
%
$
(6.88
)
$
3.74
NM
%
Income from discontinued operations
-
0.06
NM
-
0.05
NM
Net income (loss) attributable to AIG
common shareholders
$
(0.07
)
$
1.05
NM
$
(6.88
)
$
3.79
NM
Diluted
Income (loss) from continuing
operations
$
(0.07
)
$
0.97
NM
$
(6.88
)
$
3.69
NM
Income from discontinued operations
-
0.06
NM
-
0.05
NM
Net income (loss) attributable to AIG
common shareholders
$
(0.07
)
$
1.03
NM
$
(6.88
)
$
3.74
NM
Adjusted after-tax income attributable
to AIG common
shareholders per diluted share
(a)
$
0.94
$
1.03
(8.7)
%
$
2.52
$
4.58
(45.0)
%
Weighted average shares
outstanding:
Basic
868.4
878.2
869.3
876.8
Diluted (a)
868.4
896.4
869.3
889.5
(a) For the three- and twelve-month
periods ended December 31, 2020, because we reported net losses
attributable to AIG common shareholders, all common stock
equivalents are anti-dilutive and are therefore excluded from the
calculation of diluted shares and diluted per share amounts.
However, because we reported adjusted after-tax income attributable
to AIG common shareholders, the calculation of adjusted after-tax
income per diluted share attributable to AIG common shareholders
includes 8,309,281 and 5,401,957 dilutive shares for the three- and
twelve-month periods ended December 31, 2020, respectively.
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share data)
Reconciliation of Book Value per Common
Share
As of period
end:
December 31, 2020
September 30, 2020
December 31, 2019
Total AIG shareholders' equity
$
66,362
$
64,108
$
65,675
Less: Preferred equity
485
485
485
Total AIG common shareholders' equity
(a)
65,877
63,623
65,190
Less: Accumulated other comprehensive
income (AOCI)
13,511
10,978
4,982
Add: Cumulative unrealized gains and
losses related to Fortitude Re’s Funds
Withheld Assets
4,657
4,392
-
Less: Deferred tax assets (DTA)*
7,907
8,123
8,977
Total adjusted AIG common shareholders'
equity (b)
$
49,116
$
48,914
$
51,231
Less: Intangible assets:
Goodwill
4,074
4,026
4,038
Value of business acquired
126
122
317
Value of distribution channel acquired
497
507
536
Other intangibles
319
322
333
Total intangible assets
5,016
4,977
5,224
Total adjusted tangible common
shareholders' equity (c)
$
44,100
$
43,937
$
46,007
Total common shares outstanding
(d)
861.6
861.4
870.0
December 31,
September 30
% Inc.
December 31,
% Inc.
As of period
end:
2020
2020
(Dec.)
2019
(Dec.)
Book value per common share (a÷d)
$
76.46
$
73.86
3.5
%
$
74.93
2.0
%
Adjusted book value per common share
(b÷d)
57.01
56.78
0.4
58.89
(3.2)
Adjusted tangible book value per common
share (c÷d)
51.18
51.01
0.3
52.88
(3.2)
Reconciliation of Return On Common
Equity
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2020
2019
2020
2019
Actual or Annualized net income
attributable to AIG common shareholders (e)
$
(240
)
$
3,688
$
(5,973
)
$
3,326
Actual or Annualized adjusted after-tax
income attributable to AIG common shareholders (f)
$
3,308
$
3,692
$
2,201
$
4,078
Average AIG common shareholders' equity
(g)
$
64,750
$
65,154
$
63,225
$
62,205
Less: Average AOCI
12,245
5,299
7,529
3,261
Add: Average cumulative unrealized gains
and losses related to Fortitude Re’s Funds Withheld Assets
4,525
-
2,653
-
Less: Average DTA*
8,015
9,185
8,437
9,605
Average adjusted common shareholders'
equity (h)
49,015
50,670
49,912
49,339
Less: Average intangible assets
4,997
5,258
5,060
5,351
Average adjusted tangible common
shareholders' equity (i)
$
44,018
$
45,412
$
44,852
$
43,988
ROCE (e÷g)
(0.4
)
%
5.7
%
(9.4
)
%
5.3
%
Adjusted return on common equity (f÷h)
6.7
%
7.3
%
4.4
%
8.3
%
Adjusted return on tangible common equity
(f÷i)
7.5
%
8.1
%
4.9
%
9.3
%
* 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.
Reconciliation of Net Investment
Income
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net investment income per Consolidated
Statements of Operations
$
3,957
$
3,587
$
13,631
$
14,619
Changes in fair value of securities used
to hedge guaranteed living benefits
(14
)
(16
)
(56
)
(229
)
Changes in the fair value of equity
securities
(216
)
(152
)
(200
)
(158
)
Net investment income on Fortitude Re
funds withheld assets
(479
)
-
(1,053
)
-
Net realized capital gains (losses)
related to economic hedges and other
(22
)
43
(1
)
158
Total Net investment income - APTI
Basis
$
3,226
$
3,462
$
12,321
$
14,390
Less: Impact of Fortitude Re prior to
deconsolidation
-
(498
)
(499
)
(1,900
)
Total Net investment income - APTI
Basis, excluding the impact of Fortitude
Re for all periods, including periods
prior to deconsolidation
$
3,226
$
2,964
$
11,822
$
12,490
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share amounts)
Reconciliations of Accident Year
Combined Ratio, as Adjusted
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
2018
Total General
Insurance
Combined ratio
102.8
99.8
104.3
99.6
111.4
Catastrophe losses and reinstatement
premiums
(9.0
)
(6.5
)
(10.3
)
(4.8
)
(10.5
)
Prior year development
(0.9
)
2.2
0.1
1.1
(1.5
)
Adjustments for ceded premium under
reinsurance contracts and other
-
0.3
-
0.1
0.3
Accident year combined ratio, as
adjusted
92.9
95.8
94.1
96.0
99.7
North
America
Combined ratio
114.9
103.2
Catastrophe losses and reinstatement
premiums
(18.0
)
(10.4
)
Prior year development
(2.2
)
2.6
Adjustments for ceded premium under
reinsurance contracts and other
-
0.7
Accident year combined ratio, as
adjusted
94.7
96.1
North America -
Commercial Lines
Combined ratio
112.4
108.8
Catastrophe losses and reinstatement
premiums
(17.4
)
(8.7
)
Prior year development
(1.4
)
(3.2
)
Adjustments for ceded premium under
reinsurance contracts and other
-
0.7
Accident year combined ratio, as
adjusted
93.6
97.6
North America -
Personal Insurance
Combined ratio
133.2
88.6
Catastrophe losses and reinstatement
premiums
(22.6
)
(14.8
)
Prior year development
(8.0
)
17.8
Adjustment for ceded premium under
reinsurance contract
-
0.6
Accident year combined ratio, as
adjusted
102.6
92.2
International
Combined ratio
93.6
96.9
Catastrophe losses and reinstatement
premiums
(2.1
)
(3.2
)
Prior year development
0.2
1.9
Adjustment for ceded premium under
reinsurance contract
-
-
Accident year combined ratio, as
adjusted
91.7
95.6
International -
Commercial Lines
Combined ratio
92.1
96.9
Catastrophe losses and reinstatement
premiums
(4.0
)
(3.0
)
Prior year development
1.1
0.2
Adjustment for ceded premium under
reinsurance contract
-
-
Accident year combined ratio, as
adjusted
89.2
94.1
International -
Personal Insurance
Combined ratio
95.0
96.8
Catastrophe losses and reinstatement
premiums
-
(3.3
)
Prior year development
(0.9
)
3.5
Accident year combined ratio, as
adjusted
94.1
97.0
American International Group,
Inc.
Selected Financial Data and
Non-GAAP Reconciliation (continued)
($ in millions, except per
common share amounts)
Reconciliation of General Insurance
Return on Adjusted Segment Common Equity
Three Months Ended
December 31,
2020
2019
Adjusted pre-tax income
$
809
$
778
Interest expense on attributed financial
debt
144
149
Adjusted pre-tax income including
attributed interest expense
665
629
Income tax expense
182
165
Adjusted after-tax income
483
464
Dividends declared on preferred stock
3
3
Adjusted after-tax income attributable
to common shareholders
$
480
$
461
Ending adjusted segment common
equity
$
25,540
$
25,623
Average adjusted segment common
equity
$
25,582
$
25,697
Return on adjusted segment common
equity
7.5
%
7.2
%
Reconciliation of Life and Retirement
Return on Adjusted Segment Common Equity
Three Months Ended
December 31,
2020
2019
Adjusted pre-tax income
$
1,027
$
858
Interest expense on attributed financial
debt
67
66
Adjusted pre-tax income including
attributed interest expense
960
792
Income tax expense
186
159
Adjusted after-tax income
774
633
Dividends declared on preferred stock
2
2
Adjusted after-tax income attributable
to common shareholders
$
772
$
631
Ending adjusted segment common
equity
$
18,436
$
17,494
Average adjusted segment common
equity
$
18,786
$
17,344
Return on adjusted segment common
equity
16.4
%
14.6
%
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
December 31,
2020
2019
Individual
Retirement:
Premiums
$
37
$
39
Deposits
2,720
3,121
Other
1
(4
)
Total premiums and deposits
$
2,758
$
3,156
Group
Retirement:
Premiums
$
5
$
2
Deposits
2,194
2,310
Other
-
-
Total premiums and deposits
$
2,199
$
2,312
Life
Insurance:
Premiums
$
491
$
450
Deposits
430
438
Other
235
218
Total premiums and deposits
$
1,156
$
1,106
Institutional
Markets:
Premiums
$
417
$
503
Deposits
864
42
Other
6
6
Total premiums and deposits
$
1,287
$
551
Total Life and
Retirement:
Premiums
$
950
$
994
Deposits
6,208
5,911
Other
242
220
Total premiums and deposits
$
7,400
$
7,125
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210216005997/en/
Sabra Purtill (Investors): sabra.purtill@aig.com Shelley Singh
(Investors): shelley.singh@aig.com Claire Talcott (Media):
claire.talcott@aig.com
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