AIG Reports First Quarter 2019 Results

• General Insurance achieved a combined ratio of 97.4 and an accident
  year combined ratio, as adjusted, of 96.1, driven by improvements to
  underwriting fundamentals, reinsurance actions and continued expense
  discipline.
• Life and Retirement posted a double-digit adjusted return on common
  equity (ROCE), reflecting a broad platform and supported by favorable
  market performance.
• Total consolidated net investment income was $3.9 billion in the first
  quarter of 2019, compared to $3.3 billion in the prior-year quarter,
  reflecting favorable market performance.
• Net income was $654 million, or $0.75 per diluted share, for the first
  quarter of 2019, compared to net income of $938 million, or $1.01 per
  diluted share, in the prior-year quarter.
• Adjusted after-tax income was $1.4 billion, or $1.58 per diluted
  share, for the first quarter of 2019, compared to adjusted after-tax
  income of $963 million, or $1.04 per diluted share, in the prior-year
  quarter.

NEW YORK–(BUSINESS WIRE)–American International Group, Inc. (NYSE: AIG) today reported net income
of $654 million, or $0.75 per diluted share, for the first quarter of
2019, compared to net income of $938 million, or $1.01 per diluted
share, in the prior-year quarter. Adjusted after-tax income was $1.4
billion, or $1.58 per diluted share, for the first quarter of 2019,
compared to adjusted after-tax income of $963 million, or $1.04 per
diluted share, in the prior-year quarter.

Brian Duperreault, AIG’s President and Chief Executive Officer, said:
“Our first quarter results represented strong performance, particularly
in General Insurance, reflecting significant foundational work
throughout 2018 to position AIG for sustainable, profitable
growth. General Insurance achieved an underwriting profit driven by
underwriting and expense discipline, improved business mix and
reinsurance actions. We achieved an underwriting profit on a calendar
year and accident year basis in the first quarter and we expect that to
continue for the full year. Life and Retirement delivered solid
performance, benefiting from diversification of product and distribution
channels. We expect Life and Retirement to continue to deliver a low-
to-mid teens adjusted ROCE, and we expect to reach a double-digit
adjusted ROCE for consolidated AIG within three years.”

FIRST QUARTER FINANCIAL SUMMARY*

FIRST QUARTER 2019 HIGHLIGHTS

All comparisons are against the first quarter of 2018, unless otherwise
indicated.

General Insurance – First quarter adjusted pre-tax income of $1.3
billion included underwriting income of $179 million and net investment
income of $1.1 billion. The combined ratio of 97.4 was impacted by 2.7
points related to catastrophe losses net of reinstatement premiums and
(1.0) points of net favorable loss reserve development. The accident
year combined ratio, as adjusted, was 96.1, comprised of a 61.8 accident
year loss ratio, as adjusted, down 130 basis points from the prior-year
quarter, and an expense ratio of 34.3, down 230 basis points over the
prior-year quarter. The decrease in accident year loss ratio, as
adjusted, reflected the change in business mix, the acquisitions of
Validus and Glatfelter, and reduced volatility as a result of our
reinsurance strategy. The first quarter expense ratio of 34.3 primarily
reflected improvement in the General operating expense (GOE) ratio as a
result of expense reduction actions taken in the second half of 2018.

Life and Retirement Earnings – First quarter adjusted pre-tax
income of $924 million reflected the favorable impact of equity market
performance and tightening credit spreads which favorably impacted net
investment income returns and Deferred Acquisition Costs (DAC)
amortization, attractive new business margins, and solid growth in
premiums and deposits in Individual Retirement and Group Retirement
excluding FHLB funding agreements in the prior-year quarter, and in Life
Insurance as well as a Pension Risk Transfer transaction in
Institutional Markets. Although overall net outflows persisted,
Individual Retirement net flows turned positive for the first time since
the third quarter of 2016. The first quarter of 2019 Adjusted ROCE was
15.0%.

Net Investment Income – First quarter net investment income from
our insurance companies, including the Legacy insurance portfolios,
increased 11.1% from the prior-year quarter to $3.7 billion. The first
quarter reflected favorable performance in the equity markets and
narrowing of spreads in the credit markets, rebounding from a volatile
fourth quarter 2018. Beginning the first quarter of 2019, on a
prospective basis, within Legacy and Other Operations, investment income
from our non-insurance subsidiaries, which had previously been included
in Other income was included in net investment income. This reporting is
consistent with General Insurance and Life and Retirement net investment
income and had no effect on Adjusted after tax income. Amounts included
in net investment income, as a result of this reclassification were $116
million. Additionally, and on a prospective basis, we also excluded
changes in the fair value of equity securities from net investment
income (and adjusted pre-tax income) which was $79 million.

Legacy Results – First quarter adjusted pre-tax income of $112
million declined from $145 million in the prior-year quarter due to
lower Legacy General Insurance net investment income and premiums, and
lower Legacy Investment earnings reflecting the continued decrease in
the invested assets of the Legacy Investments portfolio. The prior-year
quarter was negatively impacted by a refinement in reserves related to
payout annuities within Legacy Life and Retirement.

Liquidity and Capital – As of March 31, 2019, AIG Parent
liquidity stood at approximately $5.2 billion. In the first quarter, AIG
Parent received approximately $1.2 billion of distributions from the
insurance subsidiaries in the form of cash, fixed maturity securities
and loan repayments including tax sharing payments. In February 2019,
AIG Parent made a capital contribution of $300 million to its General
Insurance companies.

In March 2019, AIG issued 20,000 shares of Series A 5.85% Non-Cumulative
Preferred Stock, with a par value of $5.00 per share and a liquidation
preference of $25,000 per share, for net proceeds of approximately $485
million. Also, in March 2019, AIG issued $600 million aggregate
principal amount of 4.250% Notes due in 2029.

Book Value per Common Share – As of March 31, 2019, book value
per common share was $69.33 compared to $65.04 at December 31, 2018.
Book value per common share excluding accumulated other comprehensive
income and deferred tax assets (Adjusted book value per common share)
was $55.47, up slightly from prior-year end.

GENERAL INSURANCE

General Insurance – North America

All comparisons are against the first quarter of 2018, unless otherwise
indicated. Refer to the AIG First Quarter 2019 Financial Supplement,
which is posted on AIG’s website in the Investors section, for further
information.

General Insurance North America – Commentary

• Adjusted pre-tax income of $934 million compared to adjusted pre-tax
  income of $320 million in the prior-year quarter.
• Net premiums written increased by 26.4% to $2.6 billion, largely due
  to the inclusion of the Validus ($1.1 billion) and Glatfelter ($76
  million) acquisitions, partially offset by higher ceded premiums due
  to changes in the 2019 reinsurance programs and more disciplined risk
  appetite.
• The North America combined ratio of 100.3 included 5.1 points of
  catastrophe losses net of reinstatement premiums and (1.8) points of
  net favorable prior year loss reserve development. The accident year
  combined ratio, as adjusted, was 98.0 for the quarter comprised of a
  67.1 accident year loss ratio, as adjusted, and a 30.9 expense ratio.
  The lower accident year loss ratio, as adjusted was primarily driven
  by the change in business mix including the Validus and Glatfelter
  acquisitions. The pre-tax underwriting loss of $11 million includes
  $158 million of catastrophe losses, net of reinsurance, of which $120
  million related to North America Commercial Lines and $38 million
  related to Personal Insurance. Net favorable prior year loss reserve
  development of $60 million was primarily related to the amortization
  of the adverse development cover deferred gain.
• The decrease in the expense ratio reflected a decrease in the GOE
  ratio resulting from actions taken in the second half of 2018 to
  reduce expenses.
• Net investment income of $945 million compared to $648 million in the
  prior-year quarter. The increase in net investment income was
  primarily driven by strong alternative investment returns and higher
  average invested assets due to the acquisition of Validus.

General Insurance – International

All comparisons are against the first quarter of 2018, unless otherwise
indicated. Refer to the AIG First Quarter 2019 Financial Supplement,
which is posted on AIG’s website in the Investors section, for further
information.

General Insurance International – Commentary

• Adjusted pre-tax income of $334 million compared to adjusted pre-tax
  income of $190 million in the prior-year quarter.
• Net premiums written decreased 16.4% on a reported basis and 13.2% on
  a constant dollar basis. The decrease in net premiums written was due
  to the Japan merger impact of $300 million in the prior-year quarter,
  higher ceded premiums due to changes in the 2019 reinsurance program
  and lower accident & health business in Asia Pacific, partially offset
  by the Validus acquisition ($171 million).
• The International combined ratio was 94.6. The accident year combined
  ratio, as adjusted, of 94.5 was comprised of a 57.3 accident year loss
  ratio, as adjusted, and a 37.2 expense ratio. Pre-tax underwriting
  income of $190 million included $17 million of catastrophe losses, net
  of reinsurance, and net favorable prior year loss reserve development
  of $12 million.
• The expense ratio decrease was driven by a reduction in the GOE ratio
  due to the Japan merger impact in the prior-year quarter and as a
  result of actions taken in the second half of 2018 to reduce expenses.
• Net investment income of $144 million for the quarter compared to $113
  million in the prior-year quarter. The increase in net investment
  income was largely the result of higher average invested assets and
  favorable returns.

LIFE AND RETIREMENT

All comparisons are against the first quarter of 2018, unless otherwise
indicated. Refer to the AIG First Quarter 2019 Financial Supplement,
which is posted on AIG’s website in the Investors section, for further
information.

Life and Retirement – Commentary

• In Individual Retirement, adjusted pre-tax income reflected higher
  equity market performance and tightening credit spreads which
  favorably impacted net investment income and amortization of DAC. This
  was partially offset by lower alternative investment returns and lower
  fee income and advisory fees primarily driven by lower average
  Variable Annuity assets under administration. Net flows were positive
  and reflected stronger Fixed and Index Annuity sales.
• Group Retirement adjusted pre-tax income declined primarily due to
  lower net investment income driven by a one-time bond claim payment
  recovery in the prior-year quarter and lower alternative investment
  returns. Premiums and deposits excluding FHLB funding agreements in
  the prior-year quarter grew 11% for the quarter with higher group
  acquisitions, in-plan annuity contributions and individual product
  sales. Group Retirement net flows were negative primarily due to
  higher surrenders.
• In Life Insurance, adjusted pre-tax income reflected favorable
  mortality, continued decrease of group benefits GOE and commissions,
  and positive reserve and reinsurance refinements which impacted ceded
  premium, commissions and GOE. Total premiums and deposits increased
  for the quarter driven by strong sales growth in our UK individual
  protection line as well as the addition of group protection sales with
  the acquisition of Ellipse
• In Institutional Markets, adjusted pre-tax income increased due to
  higher net investment income on a growing asset base, partially offset
  by lower alternative investment returns. Premiums and deposits reflect
  a large pension risk transfer transaction executed during the quarter.

CONFERENCE CALL

AIG will host a conference call tomorrow, Tuesday, May 7, 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 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 “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 or assets, or successful integration of
acquired businesses, management succession and retention plans, exposure
to risk, trends in operations and financial results.

It is possible that AIG’s actual results and financial condition will
differ, possibly materially, from the results and financial condition
indicated in these projections, goals, assumptions and statements.

Factors that could cause AIG’s actual results to differ, possibly
materially, from those in the specific projections, goals, assumptions
and statements include:

• 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;
• 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 our strategies to recruit and retain key
  personnel and our 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; and
• such other factors discussed in Part I, Item 2. Management’s
  Discussion and Analysis of Financial Condition and Results of
  Operations (MD&A) in AIG’s Quarterly Report on Form 10-Q for the
  quarterly period ended March 31, 2019 (which will be filed with the
  Securities and Exchange Commission), 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

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.

Contacts

Liz Werner (Investors): 212-770-7074; [email protected]
Daniel
O’Donnell (Media): 212-770-3141; [email protected]
Claire
Talcott (Media): 212-458-6343; [email protected]

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