FOR IMMEDIATE RELEASE

Press Release

Contacts:
Liz Werner (Investors): 212-770-7074; elizabeth.werner@aig.com
Daniel O’Donnell (Media): 212-770-3141; daniel.odonnell@aig.com
Claire Talcott (Media): 212-458-6343; claire.talcott@aig.com

AIG
175 Water Street
New York, NY 10038
www.aig.com

AIG REPORTS FOURTH QUARTER 2018 RESULTS
•
•
•

•

•
•
•

Net loss of $622 million, or $0.70 per share, for the fourth quarter of 2018, comparedto net loss of $6.7 billion, or $7.33 per share, in the prior-year quarter.
Adjusted after-tax loss of $559 million, or $0.63 per share, for the fourth quarter of
2018, compared to adjusted after-tax income of $526 million, or $0.57 per diluted
share, in the prior-year quarter.
Total net investment income of $2.8 billion in the fourth quarter of 2018, compared to$3.5 billion in the prior-year-quarter was significantly impacted by market
performance. Full year 2018 net investment income of $12.5 billion compared to $14.2
billion in the prior year.
Net pre-tax catastrophe losses in the fourth quarter of 2018 of $798 million ($630
million after-tax or $0.71 per share, at the statutory tax rate of 21%) consistent with thepreviously disclosed range. Full year 2018 net pre-tax catastrophe losses of $2.9
billion compared to $4.2 billion in the prior year.
Net unfavorable prior year loss reserve development of $365 million in the fourth
quarter of 2018. For the full year 2018, net unfavorable prior year loss reserve
development of $362 million compared to $978 million for the prior year.
Share and warrant repurchases of $750 million for the fourth quarter of 2018 and $1.8
billion for full year 2018.
AIG Board of Directors increased the share repurchase authorization to $2.0 billion,
including approximately $512 million that remained under the previous authorization.

NEW YORK, February 13, 2019 - American International Group, Inc. (NYSE: AIG) today
reported a net loss of $622 million, or $0.70 per share, for the fourth quarter of 2018, compared
to a net loss of $6.7 billion, or $7.33 per share, in the prior-year quarter. Adjusted after-tax loss
was $559 million, or $0.63 per share, for the fourth quarter of 2018, compared to adjusted
after-tax income of $526 million, or $0.57 per diluted share, in the prior-year quarter.
Brian Duperreault, AIG’s President and Chief Executive Officer, said: “Throughout 2018,significant foundational work was undertaken to remediate AIG’s core underwriting
capabilities. While many issues and challenges were uncovered, we moved quickly to reducerisk and volatility, as well as implement strategies that we believe will accelerate our progressin 2019. The world class talent that joined AIG throughout 2018 was a highlight, and our teamis not taking short cuts in building a top performing enterprise nor are we settling for easy
fixes. Our work continues to restore AIG as the leading insurance company in the world and I
remain confident we are on the right path to achieve long-term, sustainable and profitable
growth.
1

FOR IMMEDIATE RELEASE“Our fourth quarter 2018 results showed positive improvements in General Insurance,
reflecting actions we took throughout the year to re-position and strengthen the business, andLife and Retirement remains a stable source of earnings with attractive returns. Results were
negatively impacted by performance in both equity and credit markets, catastrophe losses thatcame within our previously disclosed guidance, as well as modest net unfavorable prior year
loss reserve development driven largely by underwriting decisions from 2016 and prior years.
We continue to expect to achieve an underwriting profit entering 2019 in General Insurance
and to reach double digit returns for consolidated AIG in three years.”

FOURTH QUARTER FINANCIAL SUMMARY*

Three Months Ended
December 31,($ in millions, except per share amounts)
Net loss
Net loss per diluted share (a)Adjusted after-tax income (loss)
Adjusted after-tax income (loss) per diluted share (a)

$
$
$
$

Return on equity
Adjusted return on equity
Adjusted return on attributed equity - CoreBook value per common share
Book value per common share, excluding accumulated other comprehensive income
Adjusted book value per common share

2018
(622)
(0.70)(559)(0.63)

$
$
$
$

2017
(6,660)(7.33)
526
0.57(4.3) %
(4.6) %
(4.3) %
$

65.04
66.67
54.95

(38.7) %
4.2 %
2.6 %
$

72.49
66.41
54.74

*Refer to the Comments on Regulation G and the tables that follow for a discussion of non-GAAP financial measures and thereconciliations of the non-GAAP financial measures to GAAP measures.
(a) For periods reporting a loss, basic average common shares outstanding are used to calculate net income (loss) per diluted share.

FOURTH QUARTER 2018 HIGHLIGHTS
All comparisons are against the fourth quarter of 2017, unless otherwise indicated.

Net Investment Income Impacted by Alternative Returns and Equity Market Declines – Fourth
quarter net investment income from our insurance companies, including the Legacy insurance
portfolios, decreased 18.1% from the prior-year quarter to $2.8 billion. The fourth quarter was
impacted by net losses on alternative investments as well as investments in equity securities
resulting from elevated volatility in the credit markets and unfavorable performance in theequity markets. For the full year, net investment income from our insurance companies,
including the Legacy insurance portfolios, totaled $12.7 billion.
General Insurance – The fourth quarter of 2018 combined ratio of 115.0 was impacted by 11.3
points related to catastrophe losses net of reinstatement premiums and 5.3 points of net
unfavorable loss reserve development. The accident year combined ratio, as adjusted, was 98.8
comprised of a 63.9 loss ratio, as adjusted, down 130 basis points from the prior-year quarter,
and an expense ratio of 34.9, down 10 basis points over the prior-year quarter. Pre-tax
2

FOR IMMEDIATE RELEASE

catastrophe losses, net of reinsurance, included $826 million for General Insurance, primarily
related to Hurricane Michael and the California Wildfires and a $28 million decrease in theloss estimates for Typhoon Jebi reported in the Legacy segment. Net prior year loss reserve
development was unfavorable by $363 million for the quarter. North America and International
Commercial Lines had unfavorable prior year loss reserve development of $326 million and$74 million, respectively, for the quarter driven largely by Financial Lines. International
Personal Insurance recorded favorable prior year loss development of $37 million primarily
from Japan.
Fourth quarter expense ratio of 34.9 primarily reflected improvement in the General operating
expense (GOE) ratio as a result of expense reduction actions taken in the second half of theyear, partially offset by an increase in the North America acquisition ratio due to changes in
portfolio mix.
Life and Retirement Earnings – Fourth quarter adjusted pre-tax income of $623 million
reflected the impact of declining equity markets and widening credit spreads in all businesses,
against a backdrop of attractive new business margins, and solid growth in premiums anddeposits in Individual Retirement, Group Retirement and Life Insurance as well as several
opportunistic Institutional Markets transactions. GOE increased primarily due to new businessacquisition, international expansion, and investments in core businesses. The fourth quarter of2018 Adjusted Return on Equity was 9.8%.
Legacy Results – Fourth quarter adjusted pre-tax loss of $150 million, compared to adjusted
pre-tax income of $411 million in the prior-year quarter, reflect lower net investment income
and losses from fair value option assets, as well as a $105 million pre-tax charge resulting fromloss recognition testing on certain Accident & Health cancer and disability blocks. AIG
completed the sale of 19.9% of AIG’s ownership interest in Fortitude Holdings, the parent of
Fortitude Re (formerly DSA Re), to The Carlyle Group L.P.
Liquidity and Capital – As of December 31, 2018, AIG Parent liquidity stood at approximately$3.8 billion. In the fourth quarter, AIG Parent received approximately $350 million of
distributions from the insurance subsidiaries in the form of cash and fixed maturity securities,
including tax sharing payments. In the fourth quarter, AIG repurchased 18.0 million shares ofcommon stock for $745 million and warrants for $5 million. AIG’s Board of Directors has
approved an increase in our share repurchase authorization to $2.0 billion, including
approximately $512 million that was remaining under the previous authorization.
Book Value per Common Share – As of December 31, 2018, book value per common share
was $65.04 compared to $72.49 at December 31, 2017. Book value per common shareexcluding accumulated other comprehensive income and deferred tax assets (Adjusted bookvalue per common share) was $54.95, up slightly from prior-year end.

3FOR IMMEDIATE RELEASE

GENERAL INSURANCE

Three Months Ended December 31,($ in millions)
Total General Insurance
Gross premiums written
Net premiums written
Underwriting loss
Adjusted pre-tax income (loss)
Underwriting ratios:
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Adjustments for ceded premium under reinsurance
contracts and otherAccident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted

4

2018
$
$
$
$

2017

Change7,699 $
6,424 $
(1,071) $(722) $

7,278
5,892
(846)
13

6 %
9
(27)
NM

80.1

78.3

1.8 pts(11.3)(5.3)(11.7)
(1.4)

0.4
(3.9)

0.4
63.9
34.9
115.0
98.8

65.2
35.0
113.3
100.2

0.4
(1.3)
(0.1)
1.7
(1.4)

FOR IMMEDIATE RELEASE

General Insurance - North America

Three Months Ended December 31,($ in millions)North America
Net premiums written
Commercial Lines
Personal Insurance

2018

2017

Change

$

2,944
2,161
783

$

2,583
1,808
775

Underwriting income (loss)
Commercial Lines
Personal Insurance$(871) $
(541)
(330)

(316)
16
(332)

(176)
NM
1

Adjusted pre-tax income (loss)$(575) $

412

NM

94.6

83.0

11.6 pts(19.6)(10.0)(24.5)
3.3

4.9(13.3)

0.9
65.9
30.7
125.3
96.6

61.8
28.5
111.5
90.3

0.9
4.1
2.2
13.8
6.3

93.6

73.9

19.7 pts(9.8)(13.3)(12.0)
4.9

2.2(18.2)

1.2
71.7
27.3
120.9
99.0

66.8
25.3
99.2
92.1

1.2
4.9
2.0
21.7
6.9

98.0

108.0

(10.0) pts(49.8)
48.2
41.6
139.6
89.8

(58.6)
(1.1)
48.3
37.5
145.5
85.8

8.8
1.1
(0.1)
4.1
(5.9)
4.0

Underwriting ratios:
North America
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Adjustments for ceded premium under reinsurance
contracts and otherAccident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
North America Commercial Lines
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Adjustments for ceded premium under reinsurance
contracts and otherAccident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
North America Personal Insurance
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Accident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted

5

14 %
20
1

FOR IMMEDIATE RELEASEAll comparisons are against the fourth quarter of 2017, unless otherwise indicated. Refer to the AIG Fourth
Quarter 2018 Financial Supplement, which is posted on AIG's website in the Investors section, for further
information.

General Insurance North America – Commentary

6•

Adjusted pre-tax loss of $575 million compared to adjusted pre-tax income of $412
million in the prior-year quarter.

•

Net investment income of $296 million for the quarter compared to $728 million in theprior-year quarter. The decline in net investment income was largely the result of net
losses on alternative and equity investments in the current quarter.

•

Net premiums written increased by 14.0%, largely due to the acquisitions of Validus
and Glatfelter, and lower ceded premiums due to changes in the 2018 reinsurance
programs. This was slightly offset by some underlying reduction in the North America
Commercial Lines business due to ongoing underwriting actions to improve
performance.

•

The North America combined ratio of 125.3 included 19.6 points of catastrophe losses
net of reinstatement premiums and 10.0 points of net unfavorable prior year loss
reserve development. The accident year combined ratio, as adjusted, was 96.6 for thequarter comprised of a 65.9 loss ratio, as adjusted, and a 30.7 expense ratio. The pretax underwriting loss of $871 million includes $689 million of catastrophe losses, netof reinsurance, of which $414 million related to North America Personal Insurance and$275 million related to Commercial Lines. Net unfavorable prior year loss reserve
development of $326 million was primarily related to Financial Lines in Commercial
Lines.

•The increase in the expense ratio reflected a higher acquisition expense ratio driven bychanges in portfolio mix, especially in Personal Insurance, and a decrease in GOE
resulting from actions taken in the second half of 2018 to control expenses.

FOR IMMEDIATE RELEASE

General Insurance - International
Three Months Ended December 31,($ in millions)International
Net premiums written
Commercial Lines
Personal Insurance

2018

2017

Change

$

3,480
1,561
1,919

$

3,309
1,422
1,887

5 %
10
2

Underwriting income (loss)
Commercial Lines
Personal Insurance$(200) $
(251)
51

(530)
(603)
73

62
58
(30)

Adjusted pre-tax loss$(147) $

(399)

63

66.8

74.7

(7.9) pts

(3.7)
(1.0)
62.1
38.6
105.4
100.7

(2.2)
(4.8)
67.7
39.8
114.5
107.5

(1.5)
3.8
(5.6)
(1.2)
(9.1)
(6.8)

80.5

98.0

(17.5) pts

(7.2)
(4.1)
69.2
33.1
113.6
102.3

(2.7)
(11.4)
83.9
37.7
135.7
121.6

(4.5)
7.3
(14.7)(4.6)(22.1)(19.3)

53.4

54.6(1.2) pts

(0.2)
2.0
55.2
43.9
97.3
99.1

(1.8)
0.8
53.6
41.7
96.3
95.3

1.6
1.2
1.6
2.2
1.0
3.8

Underwriting ratios:
International
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Accident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
International Commercial Lines
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Accident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
International Personal Insurance
Loss ratio
Impact on loss ratio:
Catastrophe losses and reinstatement premiums
Prior year development
Accident year loss ratio, as adjusted
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted

All comparisons are against the fourth quarter of 2017, unless otherwise indicated. Refer to the AIG Fourth
Quarter 2018 Financial Supplement, which is posted on AIG's website in the Investors section, for further
information.

7

FOR IMMEDIATE RELEASE

General Insurance International – Commentary•

Adjusted pre-tax loss of $147 million compared to adjusted pre-tax loss of $399 million in
the prior-year quarter.

•

Net investment income of $53 million for the quarter compared to $131 million in theprior-year quarter. The decline in net investment income was largely the result of net
losses on equity investments in the current quarter.

•

Net premiums written increased 5.2% on a reported and 7.6% on a constant dollar
basis. The increase in net premiums written was due to the inclusion of the Talbot
acquisition and increased accident & health business in Asia Pacific.

•

The International combined ratio of 105.4 included 3.7 points of catastrophe losses netof reinstatement premiums and 1.0 points of net unfavorable loss reserve development.
The accident year combined ratio, as adjusted, of 100.7 was comprised of a 62.1 loss
ratio, as adjusted, and a 38.6 expense ratio. The catastrophe losses and net unfavorable
loss reserve development was largely a result of the Commercial portfolio. The pre-tax
underwriting loss of $200 million included $137 million of catastrophe losses, net ofreinsurance, severe losses of $79 million, net of reinsurance, and net unfavorable prioryear loss reserve development of $37 million.

•

The expense ratio decrease was driven by a reduction in GOE given actions in thesecond half of the year, partially offset by higher acquisition expense ratio primarily
due to increased costs in Japan and changes to the portfolio mix.

LIFE AND RETIREMENT

Three Months Ended December 31,($ in millions)Life and Retirement
Premiums & Fees
Net Investment Income
Adjusted Revenue
Benefits, losses and expenses
Adjusted pre-tax income
Premiums and deposits
Individual Retirement
Premiums & Fees
Net Investment Income
Adjusted Revenue
Benefits, losses and expenses
Adjusted pre-tax income
Premiums and deposits
Net flows

8

2018

2017

Change

$

1,917
1,921
4,065
3,442
623
8,166

$

2,123
2,003
4,382
3,600
782
7,965

(10) %
(4)
(7)
(4)
(20)
3

$

209 $
912
1,276
949
327
4,225
(510)

210
1,030
1,415
941
474
3,106
(422)

- %
(11)
(10)
1
(31)
36
(21)

FOR IMMEDIATE RELEASE

Three Months Ended December 31,($ in millions)Group Retirement
Premiums & Fees
Net Investment Income
Adjusted Revenue
Benefits, losses and expenses
Adjusted pre-tax income
Premiums and deposits
Net flows
Life Insurance
Premiums & Fees
Net Investment Income
Adjusted Revenue
Benefits, losses and expenses
Adjusted pre-tax income
Premiums and deposits
Institutional Markets
Premiums & Fees
Net Investment Income
Adjusted Revenue
Benefits, losses and expenses
Adjusted pre-tax income
Premiums and deposits

2018

2017

Change

$

111 $
517
682
523
159
2,106
(628)

120
550
732
486
246
1,848
(453)

(8) %
(6)
(7)
8
(35)
14
(39)

$

741 $
287
1,045
958
87
987

732
263
1,013
1,011
2
963

1 %
9
3
(5)
NM
2

$

856 $
205
1,062
1,012
50
848

1,061
160
1,222
1,162
60
2,048

(19) %
28
(13)
(13)
(17)
(59)

All comparisons are against the fourth quarter of 2017, unless otherwise indicated. Refer to the AIG Fourth
Quarter 2018 Financial Supplement, which is posted on AIG's website in the Investors section, for further
information.

Life and Retirement – Commentary

9•

In Individual Retirement, adjusted pre-tax income reflected lower net investment
income due to lower base spreads and yield enhancements and lower fee income driven
by unfavorable credit and equity market performance. Net flows excluding Retail
Mutual Funds were positive and reflected strong sales.

•

In Group Retirement, adjusted pre-tax income reflected lower fee income, lower basespread and yield enhancements driven by unfavorable credit and equity market
performance and continued investments made in the business. Group Retirement net
flows reflected higher sales offset by higher surrenders due to the loss of large planaccounts, as well as higher individual surrenders.

•

In Life Insurance, adjusted pre-tax income reflected higher net investment income due
to business growth and higher alternative investments returns. Mortality was favorable
to pricing expectations.

FOR IMMEDIATE RELEASE•In Institutional Markets, adjusted pre-tax income reflected investments in technology
and infrastructure and reserve refinements, partially offset by growth in the portfolio
which drove higher net investment income.

CONFERENCE CALL
AIG will host a conference call tomorrow, Thursday, February 14, 2019 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 theInvestors 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 conference call presentation material), the earnings release andthe financial supplement may include, and officers and representatives of AIG may from time totime 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, anticipated sales, monetization and/or acquisitions of businesses orassets, 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, fromthe 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 thespecific projections, goals, assumptions and statements include:
•
•
•
•
10

changes in market and industry conditions;the occurrence of catastrophic events, both natural and man-made;AIG’s ability to successfully reorganize its businesses and execute on its initiatives toimprove its underwriting capabilities and reinsurance programs, as well as improve
profitability, without negatively impacting client relationships or its competitive position;
AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets, or
successfully integrate acquired businesses;

FOR IMMEDIATE RELEASE

•
•
•
•
•
•
•
•
•
•
•
•
•

actions by credit rating agencies;changes in judgments concerning insurance underwriting and insurance liabilities;changes in judgments concerning potential cost saving opportunities;
the impact of potential information technology, cybersecurity or data security breaches,
including as a result of cyber-attacks or security vulnerabilities;
disruptions in the availability of AIG’s electronic data systems or those of third parties;
the effectiveness of AIG’s strategies to recruit and retain key personnel and its ability to
implement effective succession plans;
negative impacts on customers, business partners and other stakeholders;
AIG’s ability to successfully manage Legacy portfolios;
concentrations in AIG’s investment portfolios;
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 goodwill
impairment; andsuch other factors discussed in Part I, Item 2. Management's Discussion and Analysis ofFinancial Condition and Results of Operations (MD&A) in AIG’s Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2018, Part I, Item 2. MD&A andPart II, Item 1A. Risk Factors in AIG’s Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2018, Part I, Item 2. MD&A in AIG’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2018 and Part II, Item 7. MD&A and Part I, Item
1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year ended December
31, 2017 and Part II, Item7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual
Report on Form 10-K for the year ended December 31, 2018 (which will be filed with
the SEC).

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 fromtime to time, whether as a result of new information, future events or otherwise.
###

COMMENT ON REGULATION G
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 andrepresentative 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 may not be comparable to similarly-named measures reported byother companies. The reconciliations of such measures to the most comparable GAAP measures inaccordance with Regulation G are included within the relevant tables or in the Fourth Quarter 2018
Financial Supplement available in the Investor Information section of AIG’s website,www.aig.com.
11

FOR IMMEDIATE RELEASE

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-share basis. AIG believes these measures are useful to investors because theyeliminate items that can fluctuate significantly from period to period, including changes in fairvalue of AIG’s available for sale securities portfolio, foreign currency translation adjustments andU.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 islargely 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 commonshare metrics. Book value per common share, excluding AOCI, is derived by dividing Total AIG
Shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted Book Valueper Common Share is derived by dividing Total AIG shareholders’ equity, excluding AOCI andDTA (Adjusted Shareholders’ Equity), by total common shares outstanding.
AIG Return on Equity – Adjusted After-tax Income Excluding AOCI and DTA (Adjusted
Return on Equity) is used to show the rate of return on shareholders’ equity. AIG believes thismeasure is useful to investors because it eliminates items that can fluctuate significantly fromperiod 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 forsale 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 Equity. Adjusted Return on Equity is derived by dividing actual or annualized
adjusted after-tax income attributable to AIG by average Adjusted Shareholders’ Equity.
Core and Life and Retirement Adjusted Attributed Equity is an attribution of total AIG
Adjusted Shareholders’ Equity to these segments based on AIG’s internal capital model, which
incorporates the segments’ respective risk profiles. Adjusted attributed equity represents AIG’s best
estimates based on current facts and circumstances and will change over time.
Core and Life and Retirement Return on Equity – Adjusted After-tax Income (Adjusted
Return on Attributed Equity) is used to show the rate of return on Adjusted Attributed Equity.
Adjusted Return on Attributed Equity is derived by dividing actual or annualized Adjusted Aftertax Income by Average Adjusted Attributed Equity.
Adjusted After-tax Income Attributable to Core and Life and Retirement is derived bysubtracting attributed interest expense and income tax expense from adjusted pre-tax income.
Attributed debt and the related interest expense is calculated based on AIG’s internal capital model.
Tax expense or benefit is calculated based on an internal attribution methodology that considers
12

FOR IMMEDIATE RELEASE

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 theunderstanding of the underlying profitability of continuing operations and trends of AIG’s businesssegments. AIG believes they also allow for more meaningful comparisons with AIG’s insurancecompetitors. 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 enhancetransparency to the underlying economics of transactions; and measures that AIG believes to becommon to the industry. APTI is a GAAP measure for AIG’s segments. Excluded items include
the following:• changes in fair value of securities used tohedge guaranteed living benefits;• pension expense related to a one-timelump sum payment to former employees;• changes in benefit reserves and deferred
policy acquisition costs (DAC), value ofbusiness acquired (VOBA), and sales
inducement assets (SIA) related to net
realized capital gains and losses;• income and loss from divested businesses;• 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 nonqualifying (economic) hedging or for asset
replication. Earned income on sucheconomic 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 accountbalances);• income or loss from discontinued
operations;13• non-operating litigation reserves andsettlements;• restructuring and other costs related toinitiatives 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 relatedchanges in amortization of the deferredgain;• net loss reserve discount benefit (charge);and• integration and transaction costs
associated with acquired businesses.

FOR IMMEDIATE RELEASE

Adjusted After-tax Income attributable to AIG (AATI) is derived by excluding the tax effected
APTI adjustments described above 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; andnet tax charge related to the enactment of the Tax Cuts and Jobs Act (Tax Act).

See page 16 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, theexpense 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), andthe 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, andthus 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 andcombined ratios, as adjusted, exclude catastrophe losses and related reinstatement premiums,
prior year development, net of premium adjustments, and the impact of reserve discounting.
Natural and man-made catastrophe losses are generally weather or seismic events having a net
impact on AIG in excess of $10 million each and also include certain man-made events, suchas terrorism and civil disorders that exceed the $10 million threshold. AIG believes that
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 ofmanagement’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 ÷ NPEc) General operating expense ratio = General operating expenses ÷ NPEd) Expense ratio = Acquisition ratio + General operating expense ratioe) Combined ratio = Loss ratio + Expense ratiof) Accident year loss ratio, as adjusted (AYLR) = [Loss and loss adjustment expenses
incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related tocatastrophes (CYRIPs) +/(-) RIPs related to prior year catastrophes (PYRIPs) +14

FOR IMMEDIATE RELEASE(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 ratioh) Catastrophe losses (CATs) and reinstatement premiums = [Loss and loss adjustment
expenses incurred – (CATs)] ÷ [NPE +/(-) CYRIPs] – Loss ratioi) 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. Building on 100 years of experience, today AIG
member companies provide a wide range of property casualty insurance, life insurance, retirement products, and other financial services
to customers in more than 80 countries and jurisdictions. These diverse offerings include products and services that help businesses andindividuals 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 havebeen 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, andcoverage is subject to 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.

15

American International Group, Inc.
Selected Financial Data and Non-GAAP Reconciliation($ in millions, except per share data)

Reconciliations of Adjusted Pre-tax and After-tax Income (Loss)

Pre-tax income/net income (loss), including noncontrolling interests
Noncontrolling interest
Pre-tax income/net income (loss) attributable to AIG
Adjustments:
Changes in uncertain tax positions and other tax adjustments
Deferred income tax valuation allowance (releases) charges
Impact of Tax Act
Changes in fair value of securities used to hedge
guaranteed living benefits
Changes in benefit reserves and DAC, VOBA andSIA related to net realized capital gains (losses)
Unfavorable (favorable) prior year development and related
amortization changes ceded under retroactive reinsurance agreements(Gain) loss on extinguishment of debt
Net realized capital (gains) losses*
Noncontrolling interest on net realized capital (gains) losses
Loss from discontinued operations
Income from divested businesses
Non-operating litigation reserves and settlements
Net loss reserve discount (benefit) charge
Pension expense related to a one-time lump sum payment
to former employees
Integration and transaction costs associated with acquired businesses
Restructuring and other costs
Adjusted pre-tax income (loss)/Adjusted after-tax income (loss)

Pre-tax income/net income (loss), including noncontrolling interests
Noncontrolling interest
Pre-tax income/net income (loss) attributable to AIG
Adjustments:
Changes in uncertain tax positions and other tax adjustments
Deferred income tax valuation allowance charges
Impact of Tax Act
Changes in fair value of securities used to hedge
guaranteed living benefits
Changes in benefit reserves and DAC, VOBA andSIA related to net realized capital gains (losses)
Unfavorable (favorable) prior year development and related
amortization changes ceded under retroactive reinsurance agreements(Gain) loss on extinguishment of debt
Net realized capital losses*
Noncontrolling interest on net realized capital losses(Income) loss from discontinued operations
Income from divested businesses
Non-operating litigation reserves and settlements
Net loss reserve discount (benefit) charge
Pension expense related to a one-time lump sum payment
to former employees
Integration and transaction costs associated with acquired businesses
Restructuring and other costs
Adjusted pre-tax income/Adjusted after-tax income

Three Months Ended December 31,
2018
2017
Pre-tax
Tax Effect After-tax
Pre-tax
Tax Effect$(695) $
(137) $
(608) $
875 $
7,544
(14)
(695)
(137)
(622)
875
7,544

$

$

$

After-tax$ (6,673)
13(6,660)

-

5
21
-

(5)
(21)
-

-

(461)
(66)
(6,687)

461
66
6,687

27

5

22

(29)

(10)

(19)

40

7

33

(108)

(38)

(70)

68
(3)
(195)
(3)
(11)
(66)

14
(1)
(56)
(3)
(15)

54
(2)
(139)
48
2
(3)
(8)
(51)

45
(1)
274
(241)
(43)
(96)

15
(1)
105
(82)
(15)
(36)

30
169
1
3
(159)
(28)
(60)

33
136
(669) $

729(124) $

26
107
(559)

10
154
840

4
55
327

6
99
526

Pre-tax
257
257

$

$

Twelve Months Ended December 31,
2018
2017
Tax Effect After-tax
Pre-tax
Tax Effect$154 $15 $ 1,466 $
7,526
(21)
154
(6)
1,466
7,526

$

After-tax$ (6,063)(21)(6,084)

-

(48)
(21)
-

48
21
-

-

(488)
(43)
(6,687)

488
43
6,687

154

32

122

(146)

(51)

(95)

(6)

(3)

(3)

(303)

(106)

(197)

675
7
193
(38)
19
(371)

142
1
41
(8)
4
(79)

533
6
152
46
42
(30)
15
(292)

303
(5)
1,380
(68)
(129)
187

106
(2)
506
(41)
(45)
65

197
(3)
874
7
(4)
(27)
(84)
122

124
395
1,409

26
83
324

98
312
1,064

60
413
3,158

21
145
906

39
268
2,231

$

$

$

$

$

* 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.

16

American International Group, Inc.
Selected Financial Data and Non-GAAP Reconciliation (continued)($ in millions, except per share data)

Summary of Key Financial Metrics

Income (loss) per common share:
Basic
Income (loss) from continuing operations
Loss from discontinued operations
Net loss attributable to AIG
DilutedIncome (loss) from continuing operations
Loss from discontinued operations
Net loss attributable to AIG
Adjusted after-tax income (loss) attributable to AIG per diluted share

Three Months Ended December 31,% Inc.
2018
2017(Dec.)

Twelve Months Ended December 31,% Inc.
2018
2017(Dec.)$$$$$(0.70)(0.70)$(0.70)(0.70)(0.63)$$$$(7.33)(7.33)

90.5 %
NM
90.5$(7.33)(7.33)
0.57

90.5
NM
90.5
NM %

$

Weighted average shares outstanding:
Basic
Diluted (a)(b)

887.5
887.5

908.1
908.1

Return on equity (c)Adjusted return on equity (d)(4.3) %
(4.6) %

(38.7) %4.2 %As of period end:
Total AIG shareholders' equity
Accumulated other comprehensive income (AOCI)
Total AIG shareholders' equity, excluding AOCI
Deferred tax assets (e)Total adjusted AIG shareholders' equity

As of period end:
Book value per common share (f)Book value per common share, excluding AOCI (g)Adjusted book value per common share (h)Total common shares outstanding$

December 31,
2018
$
65.04
$
66.67
$
54.95

$
$

$

0.04
(0.05)(0.01)
1.17$$$

September 30, 2018$
58,586(536)
59,122$

9,953
49,169September 30,
2018 % Inc. (Dec.)$
66.23(1.8) %
$
66.83
(0.2)
$
55.58
(1.1)
884.6

(6.54)(6.54)

NM %
NM
99.8

(6.54)(6.54)
2.34

NM
NM
99.8
(50.0) %

930.6
930.6

0.0 %
2.1 %

10,15347,621

866.6

$

898.4
910.1

December 31, 2018
56,361(1,413)
57,774$$0.04(0.05)(0.01)(8.4) %
4.1 %$December 31, 2017
65,171
5,465
59,706
10,492
49,214$

December 31,
2017 % Inc. (Dec.)$
72.49(10.3) %
$
66.41
0.4
$
54.74
0.4
899.0

Financial highlights - notes(a) For the three-month period ended December 31, 2018 because we reported a loss attributable to AIG common shareholders from continuing operations and an adjusted after-tax
loss, and for the three- and twelve-month periods ended December 31, 2017, because we reported losses attributable to AIG common shareholders from continuing operations, allcommon stock equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts. The shares excluded from thesecalculations were 2,732,679 shares, 20,155,385 shares and 22,412,682 shares, respectively.
(b) Diluted shares in the diluted EPS calculation represent basic shares for the three-month period ended December 31, 2018 and three- and twelve-month periods ended December
31, 2017 due to the net losses in those periods.
(c) Computed as Annualized net income (loss) attributable to AIG divided by average AIG shareholders' equity. Equity includes AOCI and DTA.
(d) Computed as Annualized Adjusted after-tax income attributable to AIG divided by Adjusted Shareholders' Equity.
(e) 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.
(f) Represents total AIG shareholders' equity divided by Total common shares outstanding.
(g) Represents total AIG shareholders' equity, excluding AOCI, divided by Total common shares outstanding.
(h) Represents Adjusted Shareholders' Equity, divided by Total common shares outstanding.

17

American International Group, Inc.
Selected Financial Data and Non-GAAP Reconciliation($ in millions, except per share amounts)
Reconciliations of Life and Retirement Adjusted Return on Equity
Three Months Ended
December 31,
2018
2017

Twelve Months Ended
December 31,
2018
2017

Adjusted pre-tax income
Interest expense on attributed financial debt
Adjusted pre-tax income including attributed interest expenses
Income tax expense
Adjusted after-tax income

$

623
31
592
116
476

$

782
6
776
252
524

$

3,190
107
3,083
610
2,473

$

3,831
23
3,808
1,242
2,566

Ending adjusted attributed equity
Average adjusted attributed equity
Adjusted return on attributed equity$$

19,695
19,475
9.8 %$$20,304
20,64410.2 %$$

19,695
19,66412.6 %$$

20,304
20,68712.4 %

Reconciliations of Core Adjusted Return on Equity
Three Months Ended
December 31,
2018
2017
Adjusted pre-tax income (loss)
Interest expense (benefit) on attributed financial debt
Adjusted pre-tax income (loss) including attributed interest expenses
Income tax expense (benefit)
Adjusted after-tax income (loss)

$

(519)
(519)
(93)
(426)

$

429
(31)
460
198
262

Ending adjusted attributed equity
Average adjusted attributed equity
Adjusted return on attributed equity$$

38,73539,547(4.3) %$$

39,93140,841
2.6 %Net Premiums Written - Change in Constant Dollar
Three Months Ended
December 31, 2018

General Insurance - International
Foreign exchange effect on worldwide premiums:
Change in net premiums written
Increase (decrease) in original currency
Foreign exchange effect
Increase (decrease) as reported in U.S. dollars

7.6 %
(2.4)
5.2 %

Reconciliation of Insurance Company Net Investment Income

Net investment income per Consolidated Statement of Operations
Changes in fair value of securities used to hedge guaranteed living benefits
Net realized capital gains related to non-qualifying hedges
Total Insurance Company Net investment income

18

$

$

Three Months Ended
December 31,
2018
2017
2,754
$
3,464
1
(29)
58
2,813
$
3,435

Twelve Months Ended
December 31,
2018
2017
$
12,476$
14,179
128
(146)
124
$
12,728$14,033

American International Group, Inc.
Selected Financial Data and Non-GAAP Reconciliation (continued)($ in millions, except per share amounts)
Reconciliations of Premiums and Deposits
Three Months Ended
December 31,
2018
2017
Individual Retirement:
Premiums
Deposits
Other
Total premiums and deposits
Group Retirement:
Premiums
Deposits
Other
Total premiums and depositsLife Insurance:
Premiums
Deposits
Other
Total premiums and deposits
Institutional Markets:
Premiums
Deposits
Other
Total premiums and deposits
Total Life and Retirement:
Premiums
Deposits
Other
Total premiums and deposits

19

$

$
$

$
$

$
$

$
$

$

15
4,213
(3)
4,225

$

4
2,102
2,106

$

378
417
192
987

$

816
25
7
848

$

1,213
6,757
196
8,166

$

$

$

$

$

$

10
3,096
3,106
6
1,842
1,848
362
398
203
963
1,019
1,022
7
2,048
1,397
6,358
210
7,965