AIG Reports Third Quarter 2019 Results
November 1, 2019
Net income attributable to AIG common shareholders was $648 million, or $0.72 per diluted common share, for the third
quarter of 2019, compared to a net loss attributable to AIG common shareholders of $1.3 billion, or $1.41 per commonshare, in the prior-year quarter.
Adjusted after-tax income attributable to AIG common shareholders* was $505 million, or $0.56 per diluted common share,
for the third quarter of 2019, compared to an adjusted after-tax loss attributable to AIG common shareholders of $301
million, or $0.34 per common share, in the prior-year quarter.
General Insurance posted a combined ratio of 103.7 and an accident year combined ratio, as adjusted*, of 95.9, improved
compared to 124.4 and 99.4, respectively, in the prior-year quarter, driven by lower catastrophe losses, continued
underwriting actions, reinsurance and expense discipline.
Life and Retirement reported adjusted pre-tax income of $646 million compared to $713 million in the prior-year quarter,
which included a charge for the annual actuarial assumption update in each quarter.
Total consolidated net investment income was $3.4 billion in the third quarter of 2019, essentially flat to the prior-year
quarter, reflecting higher interest and dividends and other investment income partially offset by lower alternative investment
returns.
Net pre-tax catastrophe losses of $511 million ($404 million after-tax or $0.45 per diluted share) compared to $1.6 billion($1.3 billion after-tax or $1.45 per share) in the prior-year quarter.
Net favorable prior year loss reserve development, net of reinsurance, of $4 million compared to net unfavorable prior year
loss reserve development, net of reinsurance, of $170 million in the prior-year quarter.
Annual actuarial assumption update charge of $173 million compared to $103 million in the prior-year quarter.
NEW YORK--(BUSINESS WIRE)--Nov. 1, 2019-- American International Group, Inc. (NYSE: AIG) today reported net income attributable to AIG
common shareholders of $648 million, or $0.72 per diluted common share, for the third quarter of 2019, compared to a net loss attributable to AIG
common shareholders of $1.3 billion, or $1.41 per common share, in the prior-year quarter. The improvement was primarily due to pre-tax net realized
capital gains of $929 million compared to pre-tax net realized capital losses of $511 million in the prior-year quarter and a reduction in pre-tax net
catastrophe losses of $1.1 billion compared to the prior-year quarter. Adjusted after-tax income attributable to AIG common shareholders was $505
million, or $0.56 per diluted common share, for the third quarter of 2019, compared to an adjusted after-tax loss attributable to AIG commonshareholders of $301 million, or $0.34 per common share, in the prior-year quarter. The improvement was primarily due to lower catastrophe losses
compared to the prior-year quarter.
Brian Duperreault, AIG’s President and Chief Executive Officer, said: “Our results this quarter reflect the significant, ongoing work across the company
to lay a foundation for long-term, sustainable and profitable growth. Results are in line with our expectations, particularly in General Insurance, which
demonstrated a significant improvement over the prior-year quarter driven by our focus on underwriting excellence, expense discipline and enhanced
reinsurance strategy. Life and Retirement continued to produce solid results despite ongoing headwinds from the sustained low interest rateenvironment. This business remains on track to deliver double-digit returns for the full year.
“As we approach 2020, we remain confident we will deliver underwriting profitability for the full year 2019 and deliver double-digit ROCE by the end of
2021. We still have much work ahead of us, but we are well on our way to positioning AIG as a leading global insurance company,” Mr. Duperreault
added.
THIRD QUARTER FINANCIAL SUMMARY*
Three Months Ended
September 30,($ in millions, except per common share amounts)

2019

2018

Net income (loss) attributable to AIG common shareholders$ 648$ (1,259 )Net income (loss) per diluted share attributable to AIG common shareholders (a)$ 0.72$ (1.41)

Weighted average common shares outstanding - diluted (a)

895.8

895.2

Adjusted pre-tax income (loss):
General Insurance$ 507$ (825

Life and Retirement

646

713

Other Operations(500

Legacy

93

84

Total

$ 746

$ (416)

Adjusted after-tax income (loss) attributable to AIG common shareholders$ 505$ (301)

Adjusted after-tax income (loss) per diluted share attributable to AIG common shareholders (a)$ 0.56$ (0.34

)

)

(388

)

)

Return on common equity

4.0

%

(8.4

)%

Adjusted return on common equity*

4.1

%

(2.4

)%

Adjusted return on attributed common equity - Core*

4.4

%

(3.6

)%

Common shares outstanding

869.9

884.6

Book value per common share$ 74.85$ 66.23

Book value per common share, excluding accumulated other comprehensive income*

68.40

66.83

Adjusted book value per common share*

57.60

55.58

(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-month period ended September 30, 2018
due to the net losses in that period.
All comparisons are against the third quarter of 2018, unless otherwise indicated. Refer to the AIG Third Quarter 2019 Financial Supplement, which isposted on AIG's website in the Investors section, for further information.
THIRD QUARTER 2019 HIGHLIGHTS
General Insurance – Third quarter adjusted pre-tax income of $507 million was comprised of net investment income of $756 million and anunderwriting loss of $249 million. The underwriting loss was driven by net pre-tax catastrophe losses of $497 million, including $254 million for
Typhoon Faxai and $135 million for Hurricane Dorian, and resulted in a combined ratio of 103.7 inclusive of 7.5 points of catastrophe losses net ofreinstatement premiums. Net favorable prior year loss reserve development totaled $3 million. The accident year combined ratio, as adjusted, was95.9, comprised of a 61.5 accident year loss ratio, as adjusted*, an improvement of 210 basis points from the prior-year quarter, and an expense ratioof 34.4, an improvement of 140 basis points from the prior-year quarter. The decrease in accident year loss ratio, as adjusted, was due to the favorable
impact from our underwriting actions, changes in business mix, strong results from Glatfelter, improved loss performance across a number of lines,
and changes in reinsurance. The reduction in the third quarter expense ratio primarily reflected improvement in the General operating expense (GOE)ratio as a result of continued expense discipline.

Life and Retirement – Third quarter adjusted pre-tax income of $646 million included the impact of the annual actuarial assumption update, which wasa charge of $143 million in the third quarter of 2019 compared to $98 million in the prior-year quarter and elevated mortality in Life Insurance. Net flows
while negative, improved resulting from higher Fixed and Index Annuities new business, as well as lower Group Retirement surrenders andwithdrawals. Life and Retirement’s Adjusted return on common equity (Adjusted ROCE)* for the third quarter of 2019 was 10.1% or approximately
12.5% excluding the impact of the annual actuarial assumption update.
Net Investment Income – Third quarter net investment income increased 0.4% to $3.4 billion with an 8% increase in interest, dividends and otherinvestment income, slightly offset by lower alternative investment income, which declined to $115 million compared to $329 million in the prior-year
quarter. Annualized yield for alternative investment income was 5% and 13% for the third quarter and nine months ended September 30, 2019,respectively, slightly below AIG’s 8% annualized assumption for the quarter but higher for the nine months ended September 30, 2019.
Other Operations – Third quarter adjusted pre-tax loss of $500 million increased from $388 million in the prior-year quarter primarily due to increased
corporate GOE and higher interest expense in part due to consolidated non-recourse debt and Global Real Estate investments.
Legacy Results – Third quarter adjusted pre-tax income of $93 million increased 11% primarily due to lower catastrophe losses in Legacy General
Insurance of $14 million compared to $57 million in the prior-year quarter, partially offset by lower Legacy Life and Retirement earnings due to lower
net investment income and the charge for the annual actuarial assumption update of $30 million compared to $5 million in the prior-year quarter.
Book Value per Common Share – As of September 30, 2019, book value per common share was $74.85 compared to $65.04 at December 31, 2018
principally due to an increase in accumulated other comprehensive income (AOCI) as a result of the impact of lower interest rates on the fair value of
fixed maturities. Book value per common share excluding AOCI and DTA (Adjusted book value per common share) increased 5% to $57.60 comparedto the prior-year end due to growth in retained earnings from $2.4 billion of net income attributable to AIG in the nine months ended September 30,
2019.
Return on Common Equity (ROCE) – ROCE for the third quarter and the nine months ended September 30, 2019 was 4.0% and 5.2%, respectively,
an improvement from (8.4)% and 1.3%, in the prior-year quarter and the nine months ended September 30, 2018, respectively, due to higher net
income attributable to AIG common shareholders. Adjusted ROCE for the third quarter and nine months ended September 30, 2019 was 4.1% and8.6%, respectively, an improvement from (2.4)% and 4.3%, in the prior-year quarter and prior-year nine-month period, respectively, due to higher
adjusted after-tax income attributable to AIG common shareholders.
Liquidity and Capital – As of September 30, 2019, AIG Parent liquidity stood at approximately $7.2 billion. In the third quarter, AIG Parent received
approximately $1.6 billion of distributions from the insurance subsidiaries in the form of cash, fixed maturity securities and loan repayments including
tax sharing payments.
GENERAL INSURANCE
Three Months Ended September 30,($ in millions)

2019

2018

ChangeGross premiums written$ 8,583$ 8,668(1)%

Net premiums written$ 6,648$ 6,835(3)

Underwriting loss

$ (249) $ (1,726 ) 86

Adjusted pre-tax income (loss)$ 507$ (825

69.3

88.6

Total General Insurance) NM

Underwriting ratios:
Loss ratio(19.3 ) pts

Less: impact on loss ratio
Catastrophe losses and reinstatement premiums(7.5

Prior year development-

Adjustments for ceded premium under reinsurance

)

(22.0

) 14.5

(2.7

) 2.7

contracts and other(0.3

Accident year loss ratio, as adjusted

)

(0.3

) 0.0

61.5

63.6

(2.1

)

Expense ratio

34.4

35.8

(1.4

)

Combined ratio

103.7

124.4

(20.7 )

Accident year combined ratio, as adjusted

95.9

99.4

(3.5

)

General Insurance - North America
Three Months Ended September 30,($ in millions)

2019

2018

Change$ 3,404$ 3,164

8

Commercial Lines

2,502

2,229

12

Personal Insurance

902

935

(4

Underwriting loss

$ (185) $ (987) 81

Commercial Lines

(123

)

(609

) 80

Personal Insurance

(62

)

(378

) 84

$ 435

$ (160

) NM

76.7

98.8

North America
Net premiums written

Adjusted pre-tax income (loss)%)

Underwriting ratios:
North America
Loss ratio(22.1 ) pts

Less: impact on loss ratio
Catastrophe losses and reinstatement premiums(7.1

Prior year development

0.5

)

(23.7

) 16.6

(4.8

) 5.3

(0.5

) (0.1

Adjustments for ceded premium under reinsurance
contracts and other

(0.6

)

)

Accident year loss ratio, as adjusted

69.5

69.8

(0.3

)

Expense ratio

29.0

31.1

(2.1

)

Combined ratio

105.7

129.9

(24.2 )

Accident year combined ratio, as adjusted

98.5

100.9

(2.4

80.9

98.5

(17.6 ) pts)

North America Commercial Lines
Loss ratio
Less: impact on loss ratio
Catastrophe losses and reinstatement premiums(6.4

Prior year development

1.6

)

(21.6

) 15.2

(0.6

) 2.2

(0.7

) (0.1)

Adjustments for ceded premium under reinsurance
contracts and other

(0.8

)

Accident year loss ratio, as adjusted

75.3

75.6

(0.3

)

Expense ratio

24.1

26.6

(2.5

)

Combined ratio

105.0

125.1

(20.1 )

Accident year combined ratio, as adjusted

99.4

102.2

(2.8

64.2

99.8

(35.6 ) pts)

North America Personal Insurance
Loss ratio
Less: impact on loss ratio
Catastrophe losses and reinstatement premiums

(9.0

)

(29.7

) 20.7

Prior year development

(3.0

)

(16.9

) 13.9contract

(0.1

)

-

(0.1

)

Accident year loss ratio, as adjusted

52.1

53.2

(1.1

)

Expense ratio

43.4

43.3

0.1

Combined ratio

107.6

143.1

(35.5 )

Adjustments for ceded premium under reinsurance

Accident year combined ratio, as adjusted

95.5

96.5

(1.0

)

General Insurance North America – Commentary

Net premiums written increased by 8% to $3.4 billion, largely due to the acquisition of Glatfelter and growth within the
Validus business, partially offset by the continued impact of pricing and underwriting actions, and higher ceded premiums
due to changes in 2019 reinsurance programs.
Pre-tax underwriting loss of $185 million included $230 million of catastrophe losses, net of reinsurance, of which $156
million were in North America Commercial Lines and $74 million in North America Personal Insurance. Net favorable prioryear loss reserve development of $17 million was comprised of net favorable prior year loss reserve development of $42
million in North America Commercial Lines partially offset by net unfavorable prior year loss reserve development in North
America Personal Insurance of $25 million.
The North America combined ratio of 105.7 included 7.1 points of catastrophe losses net of reinstatement premiums and(0.5) points of net favorable prior year loss reserve development. The accident year combined ratio, as adjusted, was 98.5,
comprised of a 69.5 accident year loss ratio, as adjusted, and a 29.0 expense ratio. The 0.3 points improvement in theaccident year loss ratio, as adjusted, was primarily driven by an improving business mix as a result of underwriting actions
and the Glatfelter acquisition, improved performance in Property and changes in 2019 reinsurance programs, partially
offset by higher losses for Crop and Specialty.
The 2.1 points decrease in the expense ratio was largely driven by 2.5 points reduction in GOE ratio resulting fromcontinued expense discipline, partially offset by a 0.4 points increase in the acquisition ratio due to changes in businessmix.
General Insurance - International
Three Months Ended September 30,($ in millions)

2019

2018

Change$ 3,244$ 3,671(12)%

Commercial Lines

1,528

1,810

(16

)

Personal Insurance

1,716

1,861

(8

)

) $ (739

) 91

)

(423

) 85

International
Net premiums written

Underwriting income (loss)$ (64Commercial Lines(65

Personal Insurance

1

(316

) NM

$ 72

$ (665) NM

Adjusted pre-tax income (loss)

Underwriting ratios:
International

Loss ratio

62.3

79.7

(17.4 ) pts

Less: impact on loss ratio
Catastrophe losses and reinstatement premiums

(8.0

)

(20.5

) 12.5

Prior year development

(0.4

)

(1.0

) 0.6

Accident year loss ratio, as adjusted

53.9

58.2

(4.3

)

Expense ratio

39.5

39.9

(0.4

)

Combined ratio

101.8

119.6

(17.8 )

Accident year combined ratio, as adjusted

93.4

98.1

(4.7

67.9

87.6

(19.7 ) pts)

International Commercial Lines
Loss ratio
Less: impact on loss ratio
Catastrophe losses and reinstatement premiums

(8.0

)

(20.6

) 12.6

Prior year development

(2.1

)

(3.6

) 1.5

Accident year loss ratio, as adjusted

57.8

63.4

(5.6

Expense ratio

36.2

35.6

0.6

Combined ratio

104.1

123.2

(19.1 )

Accident year combined ratio, as adjusted

94.0

99.0

(5.0

57.4

72.4

(15.0 ) pts))

International Personal Insurance
Loss ratio
Less: impact on loss ratio
Catastrophe losses and reinstatement premiums(8.0

Prior year development

)

(20.5

) 12.5

1.1

1.5

(0.4

)

Accident year loss ratio, as adjusted

50.5

53.4

(2.9

)

Expense ratio

42.5

43.8

(1.3

)

Combined ratio

99.9

116.2

(16.3 )

Accident year combined ratio, as adjusted

93.0

97.2

(4.2

)

General Insurance International – Commentary

Net premiums written decreased 12% on a reported basis due to the continued impact of pricing and underwriting actions,change in reinsurance and the impact of foreign exchange. Net premiums written decreased 11% on a constant dollar
basis.
Pre-tax underwriting loss of $64 million included $267 million of catastrophe losses, net of reinsurance, of which $124
million related to International Commercial Lines and $143 million related to International Personal Insurance. Net
unfavorable prior year loss reserve development was $14 million, with $34 million of net unfavorable prior year loss reserve
development in International Commercial Lines, partially offset by $20 million of net favorable prior year loss reserve
development in International Personal Insurance.
The International combined ratio was 101.8, down from 119.6 in the prior-year quarter due to lower catastrophe losses.
The accident year combined ratio, as adjusted, of 93.4 was comprised of a 53.9 accident year loss ratio, as adjusted, anda 39.5 expense ratio, and was down 4.7 points from the prior-year quarter due to 4.3 points decrease in the accident year
loss ratio, as adjusted. The lower accident year loss ratio, as adjusted, was primarily driven by a change in business mix
and improved Commercial Property and Japan Personal Auto results.
The expense ratio decreased 0.4 points primarily due to a reduction in the GOE ratio, as a result of continued expense
discipline, partially offset by a 0.3 points increase in the acquisition ratio mainly due to changes in business mix.
LIFE AND RETIREMENT
Three Months Ended September 30,($ in millions)

2019

2018

Change$943

62

Life and Retirement
Premiums & Fees

$ 1,529

Net Investment Income

2,078

1,960

6

Adjusted Revenue

3,833

3,146

22

Benefits, losses and expenses

3,187

2,433

31

Adjusted pre-tax income

646

713

(9

Premiums and deposits

7,461

6,779

10

213

14

%

)

Individual Retirement
Premiums & Fees

$ 242

$

Net Investment Income

1,021

956

7

Adjusted Revenue

1,416

1,335

6

Benefits, losses and expenses

1,029

942

9

%

Adjusted pre-tax income

387

393

(2

Premiums and deposits

3,692

3,616

2

Net flows

(330

(545

) 39

)

)

Three Months Ended September 30,($ in millions)

2019

2018

Change$124(6Group Retirement
Premiums & Fees

$ 116

) %

Net Investment Income

544

531

2

Adjusted Revenue

726

718

1

Benefits, losses and expenses

523

476

10

Adjusted pre-tax income

203

242

(16

)

Premiums and deposits

1,924

2,116

(9

)

Net flows

(788

(986

) 20

520

43

)

Life Insurance
Premiums & Fees

$ 742

$

Net Investment Income

289

275

5

Adjusted Revenue

1,037

809

28

Benefits, losses and expenses

1,044

793

32

Adjusted pre-tax income (loss)

(7

16

NM

Premiums and deposits

1,012

978

3

86

399

)

%

Institutional Markets
Premiums & Fees

$ 429

$

Net Investment Income

224

198

13

Adjusted Revenue

654

284

130

%

Benefits, losses and expenses

591

222

166

Adjusted pre-tax income

63

62

2

Premiums and deposits

833

69

NM

Life and Retirement – CommentaryLife and Retirement reported adjusted pre-tax income of $646 million compared to $713 million in the prior-year quarter.
The current quarter included a $143 million charge for the annual actuarial assumption update compared to a $98 million
charge for the annual actuarial assumption update in the prior-year quarter. Excluding the impacts from the annual
actuarial assumption update from both periods, adjusted pre-tax income declined 3% due to elevated mortality and lower
alternative investment returns when compared to the prior-year quarter.
Individual Retirement reported adjusted pre-tax income of $387 million compared to $393 million in the prior-year quarter.
The current quarter included a charge for the annual actuarial assumption update of $63 million compared to a $52 million
charge for the annual actuarial assumption update in the prior-year quarter. Adjusted pre-tax income improved, excluding
the actuarial assumption update, as a result of higher base portfolio income which was largely the result of increased
sales, partially offset by lower returns on alternative investments compared to the prior-year quarter. Total net flows
excluding Retail Mutual Funds were positive driven by strong Index Annuities sales.
Group Retirement reported adjusted pre-tax income of $203 million compared to $242 million in the prior-year quarter. The
current quarter reflected a charge for the annual actuarial assumption update of $17 million compared to net favorable
adjustments of $17 million for the annual actuarial assumption update in the prior-year quarter. Adjusted pre-tax income
declined, excluding the annual actuarial assumption update, due to lower returns on alternative investments and additional
investments made in the operating platform compared to the prior-year quarter, partially offset by higher income on
securities for which the fair value option was elected. Net flows remain negative but favorable to the prior-year quarter
primarily due to lower surrenders.
Life Insurance reported adjusted pre-tax loss of $7 million compared to adjusted pre-tax income of $16 million in theprior-year quarter reflected elevated mortality, partially offset by higher base income driven by growth in invested assets.
The current year and prior year quarters included a $63 million charge for the annual actuarial assumption update.
Mortality trends remain within pricing expectations.
Institutional Markets adjusted pre-tax income increased slightly due to higher net investment income on a growing asset
base resulting from growth in Pension Risk Transfer and Guaranteed Investment Contracts (GICs).
* 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.
CONFERENCE CALL
AIG will host a conference call today, Friday, November 1, 2019 at 9:00 a.m. ET to review these results. The call is open to the public and can beaccessed via a live listen-only webcast in the Investors section of www.aig.com. A replay will be available after the call at the same location.
Additional supplementary financial data is available in the Investors section at www.aig.com.
The conference call (including the conference call presentation material), the earnings release and the financial supplement may include, and officers
and representatives of AIG may from time to time make and discuss, projections, goals, assumptions and statements that may constitute “forwardlooking 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 regulatorychanges, anticipated sales, 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 theseprojections, goals, assumptions and statements. Factors that could cause AIG’s actual results to differ, possibly materially, from those in the specificprojections, goals, assumptions and statements include: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 our initiatives to improve our 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;changes in judgments concerning potential cost saving opportunities;
actions by credit rating agencies;changes in judgments concerning insurance underwriting and insurance liabilities;
the impact of potential information technology, cybersecurity or data security breaches, including as a result of cyberattacks or security vulnerabilities;
disruptions in the availability of AIG’s electronic data systems or those of third parties;
the effectiveness of our strategies to recruit and retain key personnel and our ability to implement effective succession
plans;
the requirements, which may change from time to time, of the global regulatory framework to which AIG is subject;negative impacts on customers, business partners and other stakeholders;
AIG’s ability to successfully manage Legacy portfolios;
significant legal, regulatory or governmental proceedings;
concentrations in AIG’s investment portfolios;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 of Financial Condition and Resultsof Operations (MD&A) in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019 (which
will be filed with the Securities and Exchange Commission), Part I, Item 2. MD&A in AIG’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2019, Part I, Item 2. MD&A in AIG’s Quarterly Report on Form 10-Q for thequarterly period ended March 31, 2019, 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, 2018.
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 othercompanies. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within therelevant tables attached to this news release or in the Third Quarter 2019 Financial Supplement available in the Investors section of AIG’s website,www.aig.com.
Book Value per Common Share, Excluding Accumulated Other Comprehensive Income (AOCI) and Book Value per Common Share,
Excluding AOCI and Deferred Tax Assets (DTA) (Adjusted Book Value per Common Share) are used to show the amount of AIG’s net worth on a
per-common share basis. AIG believes these measures are useful to investors because they eliminate items that can fluctuate significantly from period
to period, including changes in fair value of AIG’s available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attributedeferred tax assets. These measures also eliminate the asymmetrical impact resulting from changes in fair value of AIG’s available for sale securities
portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. AIG excludes deferred tax assets representing U.S. tax
attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are
estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the
DTA utilized is included in these book value per common share metrics. Book value per common share, excluding AOCI, is derived by dividing Total
AIG common shareholders’ equity, excluding AOCI, by total common shares outstanding. Adjusted Book Value per Common Share is derived by
dividing Total AIG common shareholders’ equity, excluding AOCI and DTA ( Adjusted Common Shareholders’ Equity ), by total common shares
outstanding.
AIG Return on Common Equity – Adjusted After-tax Income Excluding AOCI and DTA (Adjusted Return on Common Equity) is used to show
the rate of return on common shareholders’ equity. AIG believes this measure is useful to investors because it eliminates items that can fluctuatesignificantly from period to period, including changes in fair value of AIG’s available for sale securities portfolio, foreign currency translation
adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of
AIG’s available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. AIG excludes deferred
tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized.
Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax
credits are utilized, the portion of the DTA utilized is included in Adjusted Return on Common Equity. Adjusted Return on Common Equity is derived by
dividing actual or annualized adjusted after-tax income attributable to AIG common shareholders by average Adjusted Common Shareholders’ Equity.
Core and Life and Retirement Adjusted Attributed Common Equity is an attribution of total AIG Adjusted Common Shareholders’ Equity to thesesegments based on AIG’s internal capital model, which incorporates the segments’ respective risk profiles. Adjusted attributed common equity
represents AIG’s best estimates based on current facts and circumstances and will change over time.

Core and Life and Retirement Return on Common Equity – Adjusted After-tax Income (Adjusted Return on Attributed Common Equity) isused to show the rate of return on Adjusted Attributed Common Equity. Adjusted Return on Attributed Common Equity is derived by dividing actual or
annualized Adjusted After-tax Income by Average Adjusted Attributed Common Equity.
Adjusted After-tax Income Attributable to Core and Life and Retirement is derived by subtracting attributed interest expense, income tax expense
and attributed dividends on preferred stock from adjusted pre-tax income. Attributed debt and the related interest expense and dividends on preferredstock are calculated based on AIG’s internal capital model. Tax expense or benefit is calculated based on an internal attribution methodology thatconsiders among other things the taxing jurisdiction in which the segments conduct business, as well as the deductibility of expenses in thosejurisdictions.
Adjusted Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP
purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes).
Adjusted revenues is a GAAP measure for AIG’s operating segments.
AIG uses the following operating performance measures because AIG believes they enhance the understanding of the underlying profitability ofcontinuing operations and trends of AIG’s business segments. 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. Thisdefinition 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 ofbusiness acquired (VOBA), and sales inducement assets (SIA) related to net realized
capital gains and losses;changes in the fair value of equity securities;
loss (gain) on extinguishment of debt;
all net realized capital gains and losses except earned income (periodic settlements
and changes in settlement accruals) on derivative instruments used for non-qualifying(economic) hedging or for asset replication. Earned income on such economic hedges
is reclassified from net realized capital gains and losses to specific APTI line items
based on the economic risk being hedged (e.g. net investment income and interest
credited to policyholder account balances);income or loss from discontinued operations;net loss reserve discount benefit (charge);

pension expense related to a one-time lumpsum payment to former employees;
income and loss from divested businesses;
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 prioryear reserve development for which AIG has
ceded the risk under retroactive reinsurance
agreements and related changes inamortization of the deferred gain;
integration and transaction costs associatedwith acquired businesses;
losses from the impairment of goodwill; andnon-recurring external costs associated with
the implementation of non-ordinary course
legal or regulatory changes or changes toaccounting principles.

Adjusted After-tax Income attributable to AIG common shareholders (AATI) is derived by excluding the tax effected APTI adjustments describedabove, 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; andnet tax charge related to the enactment of the Tax Cuts and Jobs Act (Tax Act);and by excluding the net realized capital gains (losses) from noncontrolling interests.
See page 17 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 measuresof underwriting performance. These ratios are relative measurements that describe, for every $100 of net premiums earned, the amount of losses andloss adjustment expenses (which for General Insurance excludes net loss reserve discount), and the amount of other underwriting expenses thatwould 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 aneffect 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 andman-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, such as terrorism and civil disorders that exceed the $10 million threshold. AIG believes that as adjusted ratios aremeaningful measures of AIG’s underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which areoutside 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:

1. Loss ratio = Loss and loss adjustment expenses incurred ÷ Net premiums earned (NPE)
2. Acquisition ratio = Total acquisition expenses ÷ NPE
3. General operating expense ratio = General operating expenses ÷ NPE
4. Expense ratio = Acquisition ratio + General operating expense ratio
5. Combined ratio = Loss ratio + Expense ratio
6. 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 underreinsurance contracts related to prior accident years]
7. Accident year combined ratio, as adjusted = AYLR + Expense ratio
8. Catastrophe losses (CATs) and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE+/(-) CYRIPs] – Loss ratio
9. 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 andlife‑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 solutions, and other financial services to customers in morethan 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 ofAmerican 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 propertycasualty 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 September 30,
2019

2018
Noncontrolling

Noncontrolling

Pre-tax

Tax
EffectInterests(b)After-tax

Pre-tax

Tax
EffectInterests

After-tax

Pre-tax income (loss)/net income(loss), including noncontrolling $ 1,260
interests

$ 287

$

$ 973

$ (1,527)$ (307)$$ (1,259)--

Noncontrolling interests

-

-

(317)

(317)

-

-

-

-

Pre-tax income (loss)/net income(loss) attributable to AIG

1,260

287

(317)

656

(1,527)(307)-(1,259)Dividends on preferred stock8-

Net income (loss) attributable to
AIG common shareholders

648(1,259)Adjustments:
Changes in uncertain tax positions
and other tax adjustments

-

(8)

-

8

-

(54)

-

54

Deferred income tax valuation
allowance (releases) charges

-

9

-

(9)

-

(5)

-

5

(12)

(2)

-

(10)

14

3

-

11

SIA related to net realized capitalgains (losses)

65

13

-

52

(76)

(16)

-

(60)

Changes in the fair value of equity
securities

51

11

-

40

-

-

-

-

amortization changes ceded underretroactive reinsurance
agreements

(59)

(13)

-

(46)

605

128

-

477

Loss on extinguishment of debt

-

-

-

-

1

-

-

1

Net realized capital (gains) losses(a)

(881)

(176)

-

(705)

524

127

-

397

Loss from discontinued operations

-

-

-

-

-

-

-

39

(Income) loss from divested
businesses

9

2

-

7

(2)

(1)

-

(1)

Non-operating litigation reserves
and settlements

5

1

-

4

5

2

-

3

Net loss reserve discount (benefit)
charge

235

50

-

185

(86)

(18)

-

(68)

Integration and transaction costs
associated with acquired
businesses

3

-

-

3

91

19

-

72

Changes in fair value of securities
used to hedge
guaranteed living benefits
Changes in benefit reserves andDAC, VOBA andUnfavorable (favorable) prior year
development and related

Restructuring and other costs

67

14

-

53

35

6

-

29

Professional fees related toregulatory or accounting changes

3

1

-

2

-

-

-

-

gains (losses) of Fortitude Holdings'
standalone results(b)

-

-

273

273

-

-

(1)

(1)

Adjusted pre-tax income(loss)/Adjusted after-tax income(loss)
attributable to AIG commonshareholders

$ 746

$ 189

(44)

$ 505

$ (416)$ (116)(1)$ (301)

Noncontrolling interests primarily
related to net realized capital$$

Nine Months Ended September 30,
2019

2018
Noncontrolling

Noncontrolling

Pre-tax

Tax
EffectInterests(b)After-tax

Pre-tax

Tax
EffectInterests

After-tax$ 4,251$ 950$$ 3,300

$ 952

$ 291

$

-

$ 621

Noncontrolling interests

-

-

(881)

(881)

-

-

(5)

(5)

Pre-tax income/net income
attributable to AIG

4,251

950

(881)

2,419

952

291

(5)

616

Pre-tax income/net income,including noncontrollinginterests-

Dividends on preferred stock

15-

Net income attributable to AIG
common shareholders

2,404

616

Adjustments:
Changes in uncertain tax positions
and other tax adjustments

-

(23)

-

23

-

(53)

-

53

Deferred income tax valuation
allowance (releases) charges

-

40

-

(40)

-

(42)

-

42

(183)

(38)

-

(145)

127

27

-

100

Changes in fair value of securities
used to hedge
guaranteed living benefits
Changes in benefit reserves andDAC, VOBA andSIA related to net realized capitalgains (losses)

39

8

-

31

(46)

(10)

-

(36)

Changes in the fair value of equity
securities

(6)

(1)

-

(5)

-

-

-

-

amortization changes ceded underretroactive reinsurance
agreements

(211)

(45)

-

(166)

607

128

-

479

Loss on extinguishment of debt

13

3

-

10

10

2

-

8

Net realized capital (gains) losses(a)

(758)

(153)

-

(605)

388

97

-

291

Loss from discontinued operations

-

-

-

1

-

-

-

40

(Income) loss from divested
businesses

4

1

-

3

(35)

(8)

-

(27)

Non-operating litigation reserves
and settlements

6

1

-

5

30

7

-

23

Net loss reserve discount (benefit)
charge

920

194

-

726

(305)

(64)

-

(241)

Integration and transaction costs
associated with acquired
businesses

16

3

-

13

91

19

-

72

Restructuring and other costs

174

37

-

137

259

54

-

205

Professional fees related toregulatory or accounting changes

5

1

-

4

-

-

-

-

-

-

769

769

-

-

(2)

(2)

(112)

$ 3,165$ 2,078

$ 448

(7)

$ 1,623

Unfavorable (favorable) prior year
development and related

Noncontrolling interests primarily
related to net realized capitalgains (losses) of Fortitude Holdings'
standalone results(b)Adjusted pre-tax
income/Adjusted after-tax income$ 4,270
attributable to AIG
common shareholders

$ 978

$

$

(a) 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.
(b) Noncontrolling interests is primarily due to the 19.9 percent investment in Fortitude Group Holdings, LLC (Fortitude Holdings) by an affiliate of The
Carlyle Group L.P. (Carlyle), which occurred in the fourth quarter of 2018. Carlyle is allocated 19.9 percent of Fortitude Holdings’ standalone financial
results. Fortitude Holdings’ results are mostly eliminated in AIG’s consolidated income from continuing operations given that its results arise fromintercompany transactions. Noncontrolling interests is calculated based on the standalone financial results of Fortitude Holdings. The most significant
component of Fortitude Holdings’ standalone results concerns gains related to the change in fair value of embedded derivatives, which moved
materially in the quarter due to lower rates and tightening credit spreads, and which are recorded in net realized capital gains and losses of Fortitude

Holdings. In accordance with AIG's adjusted after-tax income definition, realized capital gains and losses are excluded from noncontrolling interests.

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

Summary of Key Financial Metrics

Three Months Ended September 30, Nine Months Ended September 30,% Inc.
20192018$ 0.74$ (1.37% Inc.

(Dec.)

2019

2018(Dec.))

NM %$ 2.74$ 0.72280.6 %

(0.04

)

NM

-

$ (1.41)

NM$ 2.74$ 0.68302.9$ (1.37)

NM$ 2.71$ 0.71

281.7

(0.04

)

NM

-

$ (1.41)

NM$ 2.71$ 0.67304.5$ 0.56$ (0.34)

NM %$ 3.57$ 1.77101.7 %

Basic

877.0

895.2

876.3

902.1

Diluted (a)(b)

895.8

895.2

887.2

916.8

Income (loss) per common share:
Basic
Income (loss) from continuing operations
Loss from discontinued operations-

Net income (loss) attributable to AIG common shareholders $ 0.74

(0.04 )NM

DilutedIncome (loss) from continuing operations
Loss from discontinued operations$ 0.72-

Net income (loss) attributable to AIG common shareholders $ 0.72

(0.04 )

NM

Adjusted after-tax income (loss) attributable to AIG commonshareholders per diluted share

Weighted average shares outstanding:Return on common equity (c)

4.0

%

(8.4

)%

5.2

%

1.3

%

Adjusted return on common equity (d)

4.1

%

(2.4

)%

8.6

%

4.3

%

As of period end:

September 30, 2019 June 30, 2019 December 31, 2018 September 30, 2018

Total AIG shareholders' equity$

65,603$64,539$56,361$58,586Preferred equity

485

485

-

-

Total AIG common shareholders' equity

65,11864,05456,36158,586

Accumulated other comprehensive income (AOCI)

5,615

4,991

(1,413

Total AIG common shareholders' equity, excluding AOCI

59,50359,063

57,774

59,122

Deferred tax assets (e)

9,393

9,577

10,153

9,953

Total adjusted AIG common shareholders' equity$

50,110$49,486$)(536

47,621$)

49,169September 30,

June 30,% Inc.

December 31,% Inc.

September 30,% Inc.

As of period end:

2019

2019

(Dec.)

2018(Dec.)

2018(Dec.)

Book value per common share (f)

$

74.85

$ 73.63

1.7

% $

65.04

15.1

% $

66.23

13.0

Book value per common share, excluding
AOCI (g)$68.40$ 67.90

0.7

$

66.67

2.6

$

66.83

2.3

Adjusted book value per common share (h) $57.60$ 56.89

1.2

$

54.95

4.8

$

55.58

3.6

Total common shares outstanding

869.9

869.9

866.6

%

884.6

Financial highlights - notes(a) For the three-month period ended September 30, 2018, because we reported net losses and adjusted after-tax losses, all common stock
equivalents are anti-dilutive and are therefore excluded from the calculation of diluted shares and diluted per share amounts. The shares excluded
from these calculations were 13,538,168 shares.
(b) Diluted shares in the diluted EPS calculation represent basic shares for the three-month period ended September 30, 2018 due to the net losses inthat period.
(c) Computed as Annualized net income (loss) attributable to AIG common shareholders divided by average AIG common shareholders' equity. Equity
includes AOCI and DTA.

(d) Computed as Annualized Adjusted after-tax income attributable to AIG common shareholders divided by Adjusted Common 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 common shareholders' equity divided by Total common shares outstanding.
(g) Represents total AIG common shareholders' equity, excluding AOCI, divided by Total common shares outstanding.
(h) Represents Adjusted Common Shareholders' Equity, divided by Total common shares outstanding.
American International Group, Inc.
Selected Financial Data and Non-GAAP Reconciliation($ in millions, except per common share amounts)

Reconciliations of Life and Retirement Adjusted Return on Common Equity

Three Months Ended
September 30,
2019

2018

$ 646

$ 713

Interest expense on attributed financial debt

45

30

Adjusted pre-tax income including attributed interest expense

601

683

Income tax expense

117

134

Adjusted after-tax income

484

549

Dividends declared on preferred stock3-

Adjusted after-tax income attributable to common shareholders

481

549

Ending adjusted attributed common equity$ 19,235$ 19,254

Average adjusted attributed common equity$ 19,028$ 19,613

Adjusted return on attributed common equity

10.1

Adjusted pre-tax income

%

11.2

%

Annual actuarial assumption update, net of tax$ (115Adjusted return on attributed common equity, excluding annual actuarial assumption update, net of tax

12.5

)

$ (79
%

)

12.8

%

Reconciliations of Core Adjusted Return on Common Equity

Three Months Ended
September 30,
2019

2018

$ 653

$ (500Interest expense on attributed financial debt--

Adjusted pre-tax income (loss) including attributed interest expense

653

(500

)

Income tax expense (benefit)

170

(134

)

Adjusted after-tax income (loss)

483

(366

)

Dividends declared on preferred stock

8-

Adjusted after-tax income (loss) attributable to common shareholders

475

(366

Ending adjusted attributed common equity$ 43,335$ 40,358

Average adjusted attributed common equity$ 43,015$ 41,097

Adjusted return on attributed common equity

4.4

Adjusted pre-tax income (loss)

Net Premiums Written - Change in Constant Dollar

Three Months Ended
General Insurance - International

September 30, 2019

Foreign exchange effect on worldwide premiums:
Change in net premiums written
Increase (decrease) in original currency(10.6)

%

%

(3.6

)

)

)%

Foreign exchange effect(1.0)

Increase (decrease) as reported in U.S. dollars(11.6)%

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
September 30,
2019

2018

Individual Retirement:
Premiums$

38

Deposits

3,656

Other

(2

Total premiums and deposits

$

9
3,609

)

(2

$

3,692

$

3,616

$

5

$

9

Group Retirement:
Premiums
Deposits

1,919

2,107

Other

-

-

Total premiums and deposits

$

1,924

$

2,116

$

394

$

379

Life Insurance:
Premiums
Deposits

404

410

Other

214

189

)

Total premiums and deposits

$

1,012

$

978

$

389

$

46

Institutional Markets:
Premiums
Deposits

437

17

Other

7

6

Total premiums and deposits

$

833

$

69

$

826

$

443

Total Life and Retirement:
Premiums
Deposits

6,416

6,143

Other

219

193

Total premiums and deposits

$

7,461

$

6,779

View source version on businesswire.com: https://www.businesswire.com/news/home/20191101005229/en/
Source: American International Group, Inc.
Sabra Purtill (Investors): 212-770-7074; sabra.purtill@aig.com
Daniel O’Donnell (Media): 212-770-3141; daniel.odonnell@aig.com
Claire Talcott (Media): 212-458-6343; claire.talcott@aig.com