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American International Group, Inc.
Financial Supplement
Revised Historical AIG Life and Retirement Segment Results
1Q 2011 – 4Q 2012
This report should be read in conjunction with AIG’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission. All financial information in this document is unaudited.
American International Group, Inc. Revised Historical Quarterly Financial Supplement
Contact: Liz Werner
Investor Relations
(212)770-7074
Table of Contents . ... Page(s)
AIG Life and Retirement Operating Segment Changes ........................................... 1
Reclassifications .......................................................................................................... 2
Schematic of Revised Segment Structure .................................................................. 3
Cautionary Statement Regarding Forward-Looking Information .......................... 4
Non-GAAP Financial Measures ................................................................................. 5
Consolidated Statement of Segment Operations ................................................... 6-7
AIG Life and Retirement
Operating Statistics ................................................................................................ 8-9
Retail
Total Retail Operating Statistics ..................................................................... 10-11
Life Insurance and A&H Operating Statistics ............................................ 12-13
Life Insurance and A&H Reserves .................................................................. 14
Fixed Annuities Operating Statistics ........................................................... 15-16
Fixed Annuities Spread Information and Reserves ..................................... 17-18
Retirement Income Solutions Operating Statistics ...................................... 19-20
Retirement Income Solutions Spread Information and Reserves ................ 21-22
Institutional
Total Institutional Operating Statistics .......................................................... 23-24
Group Retirement Operating Statistics ....................................................... 25-26
Group Retirement Spread Information and Reserves ................................ 27-28
Institutional Markets Operating Statistics................................................... 29-30
Institutional Markets Reserves ........................................................................ 31
Notes .......................................................................................................................... 32
This Historical Results Financial Supplement presents revised quarterly results in the format that AIG will use to present its 2013 First Quarter Financial Supplement,
which will include additional supplemental disclosures that are not included in this
Historical Results Financial Supplement. The revisions reflected in this Historical
Results Financial Supplement and described below had no effect on AIG Life and
Retirement operating income and pre-tax income or AIG’s consolidated pre-tax
income and net income:
AIG Life and Retirement Operating Segment Changes
In order to align financial reporting with changes made during 2013 to the manner in
which AIG’s chief operating decision makers review the businesses to assess
performance and make decisions about resources to be allocated, AIG Life and Retirement now presents its results in two operating segments – Retail and
Institutional. These changes are further described on page 1. Prior to the first quarter
of 2013, AIG Life and Retirement presented its results in the Life Insurance and Retirement Services operating segments. Prior periods have been revised to conform
to the current period presentation.
Reclassifications
AIG Life and Retirement and Consolidated results were also revised to reflect the reclassification of certain fee income and expenses, which increased total revenues
and total expenses by the same amounts. These changes are further described on page 2.
American International Group, Inc.
AIG Life and Retirement Operating Segment Changes
In 2012, AIG Life and Retirement announced several key organizational structure and management changes intended to better serve the organization’s distribution
partners and customers. Key aspects of the new structure are distinct product divisions, shared annuity and life operations platforms and a unified all-channel
distribution organization with access to all AIG Life and Retirement products.
During the first quarter of 2013, AIG Life and Retirement fully implemented reporting changes to reflect its new structure and now presents its results in the following
two operating segments:
Retail: product lines include life insurance and accident and health (A&H), fixed annuities, retirement income solutions including variable and indexed annuities,
brokerage services and retail mutual funds.
Institutional: product lines include group retirement, group benefits and institutional markets. The institutional markets product line consists of stable value wrap
products, structured settlement and terminal funding annuities, private placement variable life and annuities, guaranteed investment contracts, and corporate and
bank-owned life insurance.
Invested assets are maintained in segregated portfolios for each of the product lines comprising our Retail and Institutional operating segments. Our fundamental
investment strategy is to maintain primarily a diversified, high quality portfolio of fixed maturity securities and, as is practicable, to match established duration targets
based on characteristics of the underlying liabilities. Invested assets in excess of liabilities are allocated to product lines based on an internal capital model.
All prior periods presented have been revised to reflect the new structure.
Insurance operations are conducted through American General Life Insurance Company, The Variable Annuity Life Insurance Company, and The United States Life
Insurance Company in the City of New York.
Selected operating statistics are provided for life insurance and A&H, fixed annuities, retirement income solutions, group retirement, and institutional markets. Operating
statistics are not separately presented for brokerage services and retail mutual funds included in the Retail operating segment and group benefits included in the
Institutional operating segment.
1
American International Group, Inc.
Reclassifications
Consolidated results and AIG Life and Retirement results on an historical basis were revised to reflect the reclassification of certain items described below, which increased total revenues
and total expenses by the same amount and had no effect on AIG’s consolidated pre-tax income and net income or AIG Life and Retirement operating income and pre-tax income.
Advisory fee income, and the related commissions and advisory fee expenses of AIG’s Life and Retirement broker dealer business, are being presented on a gross basis within Other
income and Other expenses. Previously, these amounts were included on a net basis within Policy fees on AIG’s Consolidated Statement of Operations and AIG Life and Retirement
results. In addition, revenues and expenses related to certain payout annuities primarily with life contingent features have been reclassified in the Consolidated Statement of Operations to
conform to the first quarter 2013 presentation. The effect on AIG’s Consolidated Statement of Operations before and after the reclassifications follows.
Full Year 2012 Full Year 2011
As Previously Increase As Previously Increase
(in millions) Reported (Decrease) As Revised Reported (Decrease) As Revised
Statement of Operations:
Premiums $ 38,011 $ 36 $ 38,047 $ 38,990 $ 36 $ 39,026
Policy fees 2,791 (442) 2,349 2,705 (396) 2,309
Other income 3,582 1,284 4,866 2,661 1,208 3,869
Total revenues 44,384 878 45,262 44,356 848 45,204
Policyholder benefits and claims incurred 31,977 59 32,036 33,450 73 33,523
Interest credited to policyholder account balances 4,362 (22) 4,340 4,467 (35) 4,432
Other expenses 2,721 841 3,562 2,470 810 3,280
Total expenses $ 39,060 $ 878 $ 39,938 $ 40,387 $ 848 $ 41,235
2
The chart below shows the AIG Life and Retirement products under the previous operating segments and their mapping to the new operating segments.
New
Operating
Segments
BusinessesLife Insurance
and A&HFixed Annuities
Retirement Income
SolutionsGroup Retirement Institutional Markets
ProductsTerm Insurance
Universal Life
A&H Products
Fixed Annuity
Immediate Annuity
Variable Annuity
Indexed Annuity
Retail Mutual Funds
Brokerage Services
Fixed Annuity
Variable Annuity
Mutual Funds
Structured Settlements
Terminal Funding Annuity
GICs / COLI / BOLI
PPVUL and PPVA
Stable Value Wraps
Group Benefits
American General Western National
Sun America
Retirement Markets VALIC Other
Term Insurance
Universal Life
A&H Products
Fixed Annuity Variable Annuity Fixed Annuity
Variable Annuity
Mutual Funds
GICs
Retail Mutual Funds
Brokerage Services
Fixed Annuity
Immediate Annuity
Variable Annuity
Indexed AnnuityIndexed Annuity
Structured Settlements
Terminal Funding Annuity
PPVUL and PPVA
GICs/COLI/BOLI
Stable Value Wraps
Structured Settlements Structured Settlements
Group Benefits
Previous
Operating
Segments
Life Insurance
Definitions: Guaranteed Investment Contracts (GICs), Corporate-Owned Life Insurance (COLI), Bank-Owned Life Insurance (BOLI), Private Placement Variable Life and Annuities (PPVUL & PPVA).
Retirement Services
InstitutionalRetail
AIG Life and Retirement
Previous
Business
Line
Presentation
3
Cautionary Statement Regarding Forward-Looking Information
This Historical Results Financial Supplement may include, and officers and representatives of American International Group, Inc. (AIG) may from time to time make, 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 AIG’s 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 “believe,” “anticipate,” “expect,” “intend,” “plan,” “view,” “target” or
“estimate.” These projections, goals, assumptions and statements may address, among other things: the monetization of AIG’s interests in International Lease Finance Corporation (ILFC), including
whether AIG’s proposed sale of up to 90 percent of ILFC will be completed and if completed, the timing and final terms of such sale; AIG’s exposures to subprime mortgages, monoline insurers, the
residential and commercial real estate markets, state and municipal bond issuers and sovereign bond issuers; AIG’s exposure to European governments and European financial institutions; AIG’s
strategy for risk management; AIG’s generation of deployable capital; AIG’s return on equity and earnings per share long-term aspirational goals; AIG’s strategies to grow net investment income,
efficiently manage capital and reduce expenses; AIG’s strategies for customer retention, growth, product development, market position, financial results and reserves; and the revenues and combined
ratios of AIG’s subsidiaries.
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 conditions;
the occurrence of catastrophic events, both natural and man-made;
significant legal proceedings;
the timing and applicable requirements of any new regulatory framework to which AIG is subject as a savings and loan holding company, and if such a determination is made, as
a systemically important financial institution;
concentrations in AIG’s investment portfolios;
actions by credit rating agencies;
judgments concerning casualty insurance underwriting and insurance liabilities;
judgments concerning the recognition of deferred tax assets;
judgments concerning deferred policy acquisition costs (DAC) recoverability; and
such other factors as are discussed in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk
Factors in AIG’s Annual Report on Form 10-K for the year ended December 31, 2012.
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.
4
Non-GAAP Financial Measures
Throughout this financial supplement, we use the following operating performance measures because we believe they enhance understanding of the underlying profitability of continuing
operations and trends of AIG and our business segments. We believe they also allow for more meaningful comparison with our insurance competitors. When such measures are disclosed,
reconciliations to the most comparable GAAP measure are provided.
Operating income (loss) is derived by excluding the following items from net income (loss): legal settlements related to legacy crisis matters, changes in fair values of fixed maturity
securities designated to hedge living benefits liabilities, net realized capital (gains) losses, and changes in benefit reserves and DAC, VOBA, and SIA related to net realized capital (gains) losses. We
believe that Operating income (loss) is useful because excluding these volatile items permits investors to better assess the operating performance of the underlying business by highlighting the results
from ongoing operations.
Although the investment of premiums to generate investment income (or loss) and realized capital gains or losses are integral parts of both life and general insurance operations, the
determination to realize capital gains or losses is independent of the insurance underwriting process. Moreover, under applicable GAAP accounting requirements, losses can be recorded as the result
of other-than-temporary impairments in value without actual realization. In sum, investment income and realized capital gains or losses for any particular period are not indicative of underlying
business performance for such period.
AIG Life and Retirement premiums and deposits is a non-GAAP measure which includes life insurance premiums, deposits on annuity contracts and mutual funds. We use this measure
because it is a standard measure of performance used in the insurance industry and thus allows for meaningful comparisons with our insurance competitors.
Additionally, in some cases, revenues and rates of performance are shown exclusive of partnership income, other enhancements to income, and changes in foreign exchange rates. In all such
instances, we believe that excluding these items permits investors to better assess the operating performance of each of our underlying businesses by highlighting the results from ongoing operations
and the underlying profitability of our businesses.
5
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
AIG Property Casualty Net premiums written $ 8,820 $ 9,095 $ 8,712 $ 7,809 $ 34,436
Net premiums earned 8,688 8,820 8,752 8,613 34,873 Claims and claims adjustment expenses incurred 5,909 6,079 6,252 7,545 25,785
Acquisition expense 1,757 1,733 1,709 1,737 6,936
General operating expense 1,202 1,225 1,232 1,493 5,152
Underwriting loss (180) (217) (441) (2,162) (3,000)
Net investment income 1,223 1,153 1,227 1,217 4,820
Operating income (loss) 1,043 936 786 (945) 1,820
Net realized capital gains (losses) (135) 23 161 (51) (2)
Legal settlements - - - 17 17
Other income (loss) 2 2 2 (4) 2
Pre-tax income (loss) 910 961 949 (983) 1,837
AIG Life and Retirement
Premiums 614 632 584 634 2,464
Policy fees 584 567 580 618 2,349
Net investment income 2,885 2,521 2,597 2,715 10,718
Advisory fee and other income 304 312 319 358 1,293
Total revenues 4,387 4,032 4,080 4,325 16,824
Benefits and expenses 3,076 3,099 3,254 3,235 12,664
Operating income 1,311 933 826 1,090 4,160
Legal settlements - - - 154 154
Changes in fair value of fixed income securities designated to hedge living benefit liabilities,
net of interest expense (19) 70 (3) (11) 37
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) 36 (552) (604) (81) (1,201)
Net realized capital gains (losses) (466) 326 670 100 630
Pre-tax income 862 777 889 1,252 3,780
Other operations, operating income 2,328 682 854 260 4,124
Other operations pre-tax income (loss) before net realized capital gains (losses) 2,319 (55) 844 290 3,398
Other operations, net realized capital gains (losses) 417 (61) 47 98 501
Consolidation and elimination adjustments (42) 47 (171) (28) (194)
Income from continuing operations before income tax expense (benefit) 4,466 1,669 2,558 629 9,322
Income tax expense (benefit) * 1,081 (491) 734 246 1,570
Income from continuing operations 3,385 2,160 1,824 383 7,752
Income (loss) from discontinued operations, net of tax 64 179 37 (4,332) (4,052)
Net income (loss) 3,449 2,339 1,861 (3,949) 3,700
Less:
Net income from continuing operations attributable to noncontrolling interests:
Noncontrolling nonvoting, callable, junior and senior preferred interests 208 - - - 208
Other 33 7 5 9 54
Total net income from continuing operations attributable to noncontrolling interests 241 7 5 9 262
Total net income attributable to noncontrolling interests 241 7 5 9 262
Net income (loss) attributable to AIG $ 3,208 $ 2,332 $ 1,856 $ (3,958) $ 3,438
Effective tax rates:
Income from continuing operations 24.2% (29.4)% 28.7% 39.1% 16.8%
* Reflects deferred tax asset valuation allowance release of $0.3 billion, $1.3 billion, $0.2 billion and $0.1 billion in 1Q12, 2Q12, 3Q12 and 4Q12, respectively.
6
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
AIG Property Casualty
Net premiums written $ 9,166 $ 9,167 $ 8,659 $ 7,848 $ 34,840
Net premiums earned 8,651 9,033 9,043 8,962 35,689
Claims and claims adjustment expenses incurred 7,756 6,680 6,838 6,675 27,949
Acquisition expense 1,536 1,606 1,665 1,657 6,464 General operating expense 962 1,106 1,072 1,266 4,406
Underwriting loss (1,603) (359) (532) (636) (3,130)
Net investment income 1,179 1,142 1,024 1,003 4,348
Operating income (loss) (424) 783 492 367 1,218
Net realized capital gains 50 43 60 454 607
Other loss - - (1) (4) (5)
Pre-tax income (loss) (374) 826 551 817 1,820
AIG Life and Retirement
Premiums 629 669 601 650 2,549
Policy fees 582 578 560 589 2,309 Net investment income 2,754 2,461 2,295 2,372 9,882
Advisory fee and other income 305 321 302 489 1,417
Total revenues 4,270 4,029 3,758 4,100 16,157
Benefits and expenses 3,099 3,306 3,287 3,188 12,880
Operating income 1,171 723 471 912 3,277
Change in benefit reserves and DAC, VOBA and SIA related
to net realized capital gains (losses) 16 (48) (163) (132) (327)
Net realized capital gains (losses) (220) 91 38 97 6
Pre-tax income 967 766 346 877 2,956
Other operations, operating income (loss) 1,824 135 (4,235) 502 (1,774)
Other operations pre-tax income (loss) before net realized capital gains (losses) (1,562) 112 (4,244) 979 (4,715)
Other operations, net realized capital gains (losses) (435) (25) 299 173 12
Consolidation and elimination adjustments (24) 32 110 (75) 43
Income (loss) from continuing operations before income tax benefit (1,428) 1,711 (2,938) 2,771 116
Income tax benefit * (222) (301) (164) (18,737) (19,424)
Income (loss) from continuing operations (1,206) 2,012 (2,774) 21,508 19,540
Income (loss) from discontinued operations, net of tax 2,707 41 (1,052) 94 1,790
Net income (loss) 1,501 2,053 (3,826) 21,602 21,330
Less:
Net income from continuing operations attributable to noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests 252 141 145 96 634
Other (55) 64 19 26 54
Total net income from continuing operations attributable to noncontrolling interests 197 205 164 122 688
Net income from discontinued operations attributable to noncontrolling interests 7 12 - 1 20
Total net income attributable to noncontrolling interests 204 217 164 123 708
Net income (loss) attributable to AIG $ 1,297 $ 1,836 $ (3,990) $ 21,479 $ 20,622
Effective tax rates:
Income (loss) from continuing operations 15.5% (17.6)% 5.6% NM NM
* Reflects deferred tax asset valuation allowance release of $19.3 billion in 4Q11.
7
American International Group, Inc.
AIG Life and Retirement
Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 5,560 $ 5,434 $ 4,785 $ 5,215 $ 20,994
Revenues:
Premiums $ 614 $ 632 $ 584 $ 634 $ 2,464
Policy fees 584 567 580 618 2,349 Net investment income:
Interest and dividends (2) 2,631 2,361 2,342 2,316 9,650
Alternative investments 282 170 170 332 954 Call and tender income 12 20 72 42 146
Other (3) 19 41 84 99 243 Investment expenses (59) (71) (71) (74) (275)
Total net investment income 2,885 2,521 2,597 2,715 10,718
Advisory fee and other income 304 312 319 358 1,293
Total revenues excluding net realized capital gains (losses) 4,387 4,032 4,080 4,325 16,824
Benefits and expenses: Policyholder benefits and claims incurred (4) 1,087 1,093 1,124 1,288 4,592
Interest credited to policyholder account balances (5) 1,062 1,054 1,189 1,035 4,340
Amortization of deferred policy acquisition costs 205 229 202 176 812 Non deferrable commissions 117 121 108 117 463
General operating expenses (6) 408 397 423 387 1,615
Commissions and advisory fee expenses 197 205 208 232 842
Total benefits and expenses 3,076 3,099 3,254 3,235 12,664 Operating income 1,311 933 826 1,090 4,160
Adjustments to arrive at pre-tax income:
Legal settlements (7) - - - 154 154
Changes in fair value of securities designated to hedge living benefit liabilities, net of interest expense (19) 70 (3) (11) 37 Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) 36 (552) (604) (81) (1,201)
Net realized capital gains (losses) (466) 326 670 100 630
Pre-tax income $ 862 $ 777 $ 889 $ 1,252 $ 3,780
Investment yield:
Base (8) 5.50% 5.50% 5.38% 5.33% 5.43%
Alternative investments (9) 0.28% 0.07% 0.07% 0.44% 0.21% Other enhancements (10) 0.73% 0.14% 0.41% 0.32% 0.40%
Total 6.51% 5.71% 5.86% 6.09% 6.04%
Assets under management: General account $ 191,662 $ 196,195 $ 200,249 $ 203,736 $ 203,736
Separate accounts 56,019 54,260 56,729 57,326 57,326
Group retirement and retail mutual funds 17,292 17,299 18,501 18,972 18,972 Stable value wraps (11) - - - 10,353 10,353
Total assets under management $ 264,973 $ 267,754 $ 275,479 $ 290,387 $ 290,387
See Accompanying Notes on Page 32
8
American International Group, Inc.
AIG Life and Retirement
Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 6,358 $ 6,274 $ 5,878 $ 5,882 $ 24,392
Revenues:
Premiums $ 629 $ 669 $ 601 $ 650 $ 2,549 Policy fees 582 578 560 589 2,309
Net investment income:
Interest and dividends (2) 2,325 2,099 2,247 2,372 9,043
Alternative investments 413 309 89 31 842
Call and tender income 34 97 67 24 222
Other (3) 41 13 (46) 12 20 Investment expenses (59) (57) (62) (67) (245)
Total net investment income 2,754 2,461 2,295 2,372 9,882
Advisory fee and other income (12) 305 321 302 489 1,417
Total revenues excluding net realized capital gains (losses) 4,270 4,029 3,758 4,100 16,157 Benefits and expenses:
Policyholder benefits and claims incurred (4) 1,041 1,227 1,209 1,210 4,687
Interest credited to policyholder account balances (5) 1,089 1,107 1,137 1,099 4,432 Amortization of deferred policy acquisition costs 235 240 243 148 866
Non deferrable commissions 132 134 138 138 542
General operating expenses 400 381 356 405 1,542 Commissions and advisory fee expenses 202 217 204 188 811
Total benefits and expenses 3,099 3,306 3,287 3,188 12,880
Operating income 1,171 723 471 912 3,277
Adjustments to arrive at pre-tax income:
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) 16 (48) (163) (132) (327) Net realized capital gains (losses) (220) 91 38 97 6
Pre-tax income $ 967 $ 766 $ 346 $ 877 $ 2,956
Investment yield:
Base (8) 5.04% 5.41% 5.49% 5.44% 5.34%
Alternative investments (9) 0.62% 0.39% (0.11)% (0.24)% 0.17%
Other enhancements (10) 0.70% (0.16)% (0.17)% 0.13% 0.12%
Total 6.36% 5.64% 5.21% 5.33% 5.63%
Assets under management:
General account $ 181,795 $ 182,915 $ 188,236 $ 189,804 $ 189,804 Separate accounts 56,464 56,098 48,107 51,383 51,383
Group retirement and retail mutual funds 15,683 15,856 14,281 15,737 15,737
Total assets under management $ 253,942 $ 254,869 $ 250,624 $ 256,924 $ 256,924
See Accompanying Notes on Page 32
9
American International Group, Inc.
AIG Life and Retirement - Retail
Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 3,363 $ 3,329 $ 2,819 $ 3,001 $ 12,512
Revenues:
Premiums $ 390 $ 411 $ 373 $ 350 $ 1,524
Policy fees 463 453 458 495 1,869
Net investment income:
Interest and dividends (2) 1,571 1,406 1,401 1,367 5,745
Alternative investments 112 70 67 121 370
Call and tender income 9 4 46 28 87
Other (3) 13 21 54 84 172
Investment expenses (34) (41) (44) (43) (162)
Total net investment income 1,671 1,460 1,524 1,557 6,212
Advisory fee and other income 279 286 290 328 1,183
Total revenues excluding net realized capital gains (losses) 2,803 2,610 2,645 2,730 10,788
Benefits and expenses:
Policyholder benefits and claims incurred (4) 652 665 697 777 2,791
Interest credited to policyholder account balances (5) 651 651 643 609 2,554
Amortization of deferred policy acquisition costs 178 198 181 170 727
Non deferrable commissions 66 73 61 72 272
General operating expenses (6) 299 286 311 275 1,171
Commissions and advisory fee expenses 196 202 204 229 831
Total benefits and expenses 2,042 2,075 2,097 2,132 8,346
Operating income 761 535 548 598 2,442
Adjustments to arrive at pre-tax income:
Legal settlements (7) - - - 106 106
Changes in fair value of securities designated to hedge living benefit liabilities, net of interest expense (19) 70 (3) (11) 37
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) 127 (85) (119) 20 (57)
Net realized capital gains (losses) (385) (179) 105 (1) (460)
Pre-tax income $ 484 $ 341 $ 531 $ 712 $ 2,068
See Accompanying Notes on Page 32
10
American International Group, Inc.
AIG Life and Retirement - Retail
Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 4,332 $ 4,235 $ 3,587 $ 3,581 $ 15,735
Revenues:
Premiums $ 386 $ 403 $ 376 $ 381 $ 1,546
Policy fees 457 452 430 467 1,806
Net investment income:
Interest and dividends (2) 1,357 1,247 1,326 1,400 5,330
Alternative investments 164 130 42 12 348
Call and tender income 20 46 39 14 119
Other (3) 25 9 (30) 3 7
Investment expenses (35) (32) (37) (38) (142)
Total net investment income 1,531 1,400 1,340 1,391 5,662
Advisory fee and other income (12) 278 295 277 372 1,222
Total revenues excluding net realized capital gains (losses) 2,652 2,550 2,423 2,611 10,236
Benefits and expenses:
Policyholder benefits and claims incurred (4) 592 750 748 696 2,786
Interest credited to policyholder account balances (5) 650 677 700 668 2,695
Amortization of deferred policy acquisition costs 181 215 207 130 733
Non deferrable commissions 66 66 66 65 263
General operating expenses 301 274 266 282 1,123
Commissions and advisory fee expenses 197 213 199 183 792
Total benefits and expenses 1,987 2,195 2,186 2,024 8,392
Operating income 665 355 237 587 1,844
Adjustments to arrive at pre-tax income (loss):
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) 16 (41) (156) (124) (305)
Net realized capital gains (losses) (125) 66 (168) 70 (157)
Pre-tax income (loss) $ 556 $ 380 $ (87) $ 533 $ 1,382
See Accompanying Notes on Page 32
11
American International Group, Inc.
AIG Life and Retirement - Retail
Life Insurance and A&H Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 839 $ 857 $ 827 $ 858 $ 3,381
Revenues:
Premiums $ 363 $ 375 $ 354 $ 331 $ 1,423
Policy fees 332 323 316 353 1,324
Net investment income:
Interest and dividends (2) 528 477 489 476 1,970
Alternative investments 22 29 20 32 103
Call and tender income 4 6 10 3 23
Other (3) - 4 11 22 37
Investment expenses (15) (18) (14) (17) (64)
Total net investment income 539 498 516 516 2,069
Advisory fee and other income - - - 1 1
Total revenues excluding net realized capital gains (losses) 1,234 1,196 1,186 1,201 4,817
Benefits and expenses:
Policyholder benefits and claims incurred (4) 622 564 644 685 2,515
Interest credited to policyholder account balances (5) 122 125 118 120 485
Amortization of deferred policy acquisition costs 93 86 87 112 378
Non deferrable commissions 30 35 24 30 119
General operating expenses (6) 154 162 178 166 660
Total benefits and expenses 1,021 972 1,051 1,113 4,157
Operating income $ 213 $ 224 $ 135 $ 88 $ 660
See Accompanying Notes on Page 32
12
American International Group, Inc.
AIG Life and Retirement - Retail
Life Insurance and A&H Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 852 $ 871 $ 828 $ 867 $ 3,418
Revenues:
Premiums $ 366 $ 372 $ 356 $ 344 $ 1,438
Policy fees 333 323 309 343 1,308
Net investment income:
Interest and dividends (2) 467 433 445 473 1,818
Alternative investments 37 35 22 12 106
Call and tender income 4 21 10 - 35
Other (3) 15 5 (3) 6 23
Investment expenses (15) (13) (13) (14) (55)
Total net investment income 508 481 461 477 1,927
Advisory fee and other income (12) - - - 40 40
Total revenues excluding net realized capital gains (losses) 1,207 1,176 1,126 1,204 4,713
Benefits and expenses:
Policyholder benefits and claims incurred (4) 561 663 573 641 2,438
Interest credited to policyholder account balances (5) 122 132 123 128 505
Amortization of deferred policy acquisition costs 84 80 84 97 345
Non deferrable commissions 31 33 33 33 130
General operating expenses 173 148 138 154 613
Total benefits and expenses 971 1,056 951 1,053 4,031
Operating income $ 236 $ 120 $ 175 $ 151 $ 682
See Accompanying Notes on Page 32
13
American International Group, Inc.
AIG Life and Retirement - Retail
Life Insurance and A&H Reserves - Revised Historical 2012 and 2011 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Reserve rollforward:
Balance at beginning of period, gross $ 25,945 $ 26,075 $ 26,143 $ 26,338 $ 25,945
Premiums and deposits 839 857 827 858 3,381
Surrenders and withdrawals (216) (189) (177) (202) (784)
Death, and other contract benefits (130) (140) (135) (185) (590)
Subtotal 493 528 515 471 2,007
Cost of funds 122 125 118 120 485
Change in fair value of the underlying assets, net of fees (99) (177) (52) (197) (525)
Other reserve changes (386) (408) (386) (253) (1,433)
Balance at end of period 26,075 26,143 26,338 26,479 26,479
Reinsurance ceded (1,139) (1,130) (1,120) (1,137) (1,137)
Total insurance reserves $ 24,936 $ 25,013 $ 25,218 $ 25,342 $ 25,342
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Reserve rollforward:
Balance at beginning of period, gross $ 25,641 $ 25,734 $ 25,816 $ 25,819 $ 25,641
Premiums and deposits 852 871 828 867 3,418
Surrenders and withdrawals (182) (195) (175) (256) (808)
Death, and other contract benefits (94) (112) (111) (119) (436)
Subtotal 576 564 542 492 2,174
Cost of funds 122 132 123 128 505
Change in fair value of the underlying assets, net of fees (132) (164) (258) (111) (665)
Other reserve changes (473) (450) (404) (383) (1,710)
Balance at end of period 25,734 25,816 25,819 25,945 25,945
Reinsurance ceded (1,138) (1,139) (1,134) (1,151) (1,151)
Total insurance reserves $ 24,596 $ 24,677 $ 24,685 $ 24,794 $ 24,794
See Accompanying Notes on Page 32
14
American International Group, Inc.
AIG Life and Retirement - Retail
Fixed Annuities Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 613 $ 491 $ 192 $ 265 $ 1,561
Revenues:
Premiums $ 28 $ 36 $ 18 $ 19 $ 101
Policy fees 8 8 7 10 33
Net investment income:
Interest and dividends (2) 978 859 841 811 3,489
Alternative investments 77 34 34 66 211
Call and tender income 3 (2) 35 25 61
Other (3) 11 17 37 59 124
Investment expenses (17) (22) (29) (23) (91)
Total net investment income 1,052 886 918 938 3,794
Advisory fee and other income - - - 1 1
Total revenues excluding net realized capital gains (losses) 1,088 930 943 968 3,929
Benefits and expenses:
Policyholder benefits and claims incurred 65 74 58 58 255
Interest credited to policyholder account balances (5) 507 494 498 463 1,962
Amortization of deferred policy acquisition costs 89 77 85 44 295
Non deferrable commissions 8 4 7 6 25
General operating expenses 39 30 35 (1) 103
Total benefits and expenses 708 679 683 570 2,640 Operating income $ 380 $ 251 $ 260 $ 398 $ 1,289
See Accompanying Notes on Page 32
15
American International Group, Inc.
AIG Life and Retirement - Retail
Fixed Annuities Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 2,246 $ 2,131 $ 1,380 $ 1,161 $ 6,918
Revenues:
Premiums $ 20 $ 30 $ 19 $ 37 $ 106
Policy fees 7 11 6 8 32
Net investment income:
Interest and dividends (2) 838 763 830 867 3,298
Alternative investments 118 85 17 - 220
Call and tender income 16 23 24 14 77
Other (3) 9 3 (29) (4) (21)
Investment expenses (20) (17) (22) (20) (79)
Total net investment income 961 857 820 857 3,495
Advisory fee and other income (12) - - - 70 70
Total revenues excluding net realized capital gains (losses) 988 898 845 972 3,703
Benefits and expenses:
Policyholder benefits and claims incurred 52 73 59 79 263
Interest credited to policyholder account balances (5) 502 515 527 514 2,058
Amortization of deferred policy acquisition costs 77 100 84 46 307
Non deferrable commissions 9 8 5 8 30
General operating expenses 34 33 32 33 132
Total benefits and expenses 674 729 707 680 2,790
Operating income $ 314 $ 169 $ 138 $ 292 $ 913
See Accompanying Notes on Page 32
16
American International Group, Inc.
AIG Life and Retirement - Retail
Fixed Annuities Spread Information and Reserves - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Net investment spreads:
Base (8) 5.26% 5.31% 5.12% 5.12% 5.20%
Alternative investments (9) 0.25% 0.04% 0.04% 0.23% 0.15%
Other enhancements (10) 0.73% (0.03)% 0.39% 0.39% 0.37%
Total yield 6.24% 5.32% 5.55% 5.74% 5.72%
Cost of funds (a) 3.13% 3.13% 3.15% 3.14% 3.14%
Net spread rate, as reported 3.11% 2.19% 2.40% 2.60% 2.58%
Base net investment spread (b) 2.13% 2.18% 1.97% 1.98% 2.06%
Reserve rollforward:
Balance at beginning of period, gross $ 61,404 $ 61,027 $ 60,494 $ 59,821 $ 61,404
Premiums and deposits 613 491 192 265 1,561
Surrenders and withdrawals (967) (953) (847) (1,032) (3,799)
Death, and other contract benefits (635) (683) (621) (655) (2,594)
Subtotal (989) (1,145) (1,276) (1,422) (4,832)
Cost of funds (a) 466 458 460 452 1,836
Change in fair value of the underlying assets, net of fees 41 84 27 83 235
Other reserve changes (including loss recognition) 105 70 116 44 335
Balance at end of period 61,027 60,494 59,821 58,978 58,978
Reserves related to unrealized investment appreciation 369 407 442 456 456
Reinsurance ceded (389) (386) (372) (372) (372)
Total insurance reserves $ 61,007 $ 60,515 $ 59,891 $ 59,062 $ 59,062
(a) Excludes the amortization of sales inducement assets.
(b) Excludes impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
17
American International Group, Inc.
AIG Life and Retirement - Retail
Fixed Annuities Spread Information and Reserves - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Net investment spreads:
Base (8) 4.68% 5.14% 5.30% 5.24% 5.09%
Alternative investments (9) 0.51% 0.34% (0.11)% (0.20)% 0.14%
Other enhancements (10) 0.77% (0.32)% (0.34)% 0.05% 0.03%
Total yield 5.96% 5.16% 4.85% 5.09% 5.26%
Cost of funds (a) 3.32% 3.27% 3.31% 3.28% 3.30%
Net spread rate, as reported 2.64% 1.89% 1.54% 1.81% 1.96%
Base net investment spread (b) 1.36% 1.87% 1.99% 1.96% 1.79%
Reserve rollforward:
Balance at beginning of period, gross $ 58,283 $ 59,630 $ 60,707 $ 61,162 $ 58,283
Premiums and deposits 2,246 2,131 1,380 1,161 6,918
Surrenders and withdrawals (914) (996) (908) (966) (3,784)
Death, and other contract benefits (556) (620) (552) (538) (2,266)
Subtotal 776 515 (80) (343) 868
Cost of funds (a) 473 477 490 486 1,926
Change in fair value of the underlying assets, net of fees 79 73 52 51 255
Other reserve changes (including loss recognition) 19 12 (7) 48 72
Balance at end of period 59,630 60,707 61,162 61,404 61,404
Reserves related to unrealized investment appreciation - - 309 360 360
Reinsurance ceded (392) (390) (389) (388) (388)
Total insurance reserves $ 59,238 $ 60,317 $ 61,082 $ 61,376 $ 61,376
(a) Excludes the amortization of sales inducement assets.
(b) Excludes impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
18
American International Group, Inc.
AIG Life and Retirement - Retail
Retirement Income Solutions Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 1,162 $ 1,361 $ 1,060 $ 1,263 $ 4,846
Revenues:
Policy fees $ 118 $ 118 $ 129 $ 132 $ 497
Net investment income:
Interest and dividends (2) 66 69 72 79 286
Alternative investments 11 8 13 22 54
Call and tender income 2 - 1 - 3
Other (3) 1 - 5 3 9
Investment expenses (2) (1) (1) (3) (7)
Total net investment income 78 76 90 101 345
Advisory fee and other income 32 32 33 34 131
Total revenues excluding net realized capital gains (losses) 228 226 252 267 973 Benefits and expenses:
Policyholder benefits and claims incurred (13) (35) 27 (5) 34 21
Interest credited to policyholder account balances (5) 21 32 27 26 106
Amortization of deferred policy acquisition costs (4) 35 9 13 53
Non deferrable commissions 28 34 30 36 128
General operating expenses 50 46 45 48 189
Commissions and advisory fee expenses 2 2 2 1 7
Total benefits and expenses 62 176 108 158 504 Operating income $ 166 $ 50 $ 144 $ 109 $ 469
See Accompanying Notes on Page 32
19
American International Group, Inc.
AIG Life and Retirement - Retail
Retirement Income Solutions Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 824 $ 904 $ 857 $ 889 $ 3,474
Revenues:
Policy fees $ 112 $ 115 $ 111 $ 111 $ 449
Net investment income:
Interest and dividends (2) 51 51 52 60 214
Alternative investments 10 10 2 - 22
Call and tender income - 2 5 - 7
Other (3) - 1 1 1 3
Investment expenses - (2) (2) (4) (8)
Total net investment income 61 62 58 57 238
Advisory fee and other income (12) 31 32 30 36 129
Total revenues excluding net realized capital gains (losses) 204 209 199 204 816
Benefits and expenses:
Policyholder benefits and claims incurred (13) (23) 14 117 (24) 84
Interest credited to policyholder account balances (5) 26 29 50 26 131
Amortization of deferred policy acquisition costs 20 35 39 (13) 81
Non deferrable commissions 26 25 28 24 103
General operating expenses 47 50 42 46 185
Commissions and advisory fee expenses 1 2 2 1 6
Total benefits and expenses 97 155 278 60 590
Operating income (loss) $ 107 $ 54 $ (79) $ 144 $ 226
See Accompanying Notes on Page 32
20
American International Group, Inc.
AIG Life and Retirement - Retail
Retirement Income Solutions Spread Information and Reserves - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Net investment spreads:
Base (8) 5.03% 5.04% 5.09% 5.15% 5.08%
Alternative investments (9) 0.45% 0.03% 0.29% 0.67% 0.37%
Other enhancements (10) 0.56% 0.08% 0.50% 0.22% 0.33%
Total yield 6.04% 5.15% 5.88% 6.04% 5.78%
Cost of funds (a) 2.63% 2.51% 2.42% 2.24% 2.44%
Net spread rate, as reported 3.41% 2.64% 3.46% 3.80% 3.34%
Base net investment spread (b) 2.40% 2.53% 2.67% 2.91% 2.64%
Reserve rollforward:
Balance at beginning of period, gross $ 26,826 $ 29,031 $ 29,008 $ 30,428 $ 26,826
Premiums and deposits 1,162 1,361 1,060 1,263 4,846
Surrenders and withdrawals (809) (693) (716) (762) (2,980)
Death, and other contract benefits (128) (123) (119) (141) (511)
Subtotal 225 545 225 360 1,355
Change in fair value of the underlying assets, net of fees 1,967 (594) 1,168 246 2,787
Cost of funds (a) 24 26 26 26 102
Other reserve changes (11) - 1 11 1
Balance at end of period 29,031 29,008 30,428 31,071 31,071
Reinsurance ceded (7) (6) (5) (5) (5)
Total insurance reserves $ 29,024 $ 29,002 $ 30,423 $ 31,066 $ 31,066
(a) Excludes the amortization of sales inducement assets.
(b) Excludes impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
21
American International Group, Inc.
AIG Life and Retirement - Retail
Retirement Income Solutions Spread Information and Reserves - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Net investment spreads:
Base (8) 5.06% 5.41% 4.94% 4.84% 5.05%
Alternative investments (9) 1.02% 0.68% (0.67)% (0.30)% 0.12%
Other enhancements (10) 0.26% (0.12)% 0.45% 0.20% 0.20%
Total yield 6.34% 5.97% 4.72% 4.74% 5.37%
Cost of funds (a) 3.10% 2.84% 2.91% 2.70% 2.88%
Net spread rate, as reported 3.24% 3.13% 1.81% 2.04% 2.49%
Base net investment spread (b) 1.96% 2.57% 2.03% 2.14% 2.17%
Reserve rollforward:
Balance at beginning of period, gross $ 27,527 $ 28,272 $ 28,087 $ 25,604 $ 27,527
Premiums and deposits 824 904 857 889 3,474
Surrenders and withdrawals (878) (878) (738) (693) (3,187)
Death, and other contract benefits (118) (128) (131) (124) (501)
Subtotal (172) (102) (12) 72 (214)
Change in fair value of the underlying assets, net of fees 897 (92) (2,505) 1,131 (569)
Cost of funds (a) 23 23 24 25 95
Other reserve changes (3) (14) 10 (6) (13)
Balance at end of period 28,272 28,087 25,604 26,826 26,826
Reinsurance ceded (8) (7) (13) (12) (12)
Total insurance reserves $ 28,264 $ 28,080 $ 25,591 $ 26,814 $ 26,814
(a) Excludes the amortization of sales inducement assets.
(b) Excludes impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
22
American International Group, Inc.
AIG Life and Retirement - Institutional
Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 2,197 $ 2,105 $ 1,966 $ 2,214 $ 8,482
Revenues:
Premiums $ 224 $ 221 $ 211 $ 284 $ 940
Policy fees 121 114 122 123 480
Net investment income:
Interest and dividends (2) 1,060 955 941 949 3,905
Alternative investments 170 100 103 211 584
Call and tender income 3 16 26 14 59
Other (3) 6 20 30 15 71
Investment expenses (25) (30) (27) (31) (113)
Total net investment income 1,214 1,061 1,073 1,158 4,506
Advisory fee and other income 25 26 29 30 110
Total revenues excluding net realized capital gains (losses) 1,584 1,422 1,435 1,595 6,036
Benefits and expenses:
Policyholder benefits and claims incurred (4) 435 428 427 511 1,801
Interest credited to policyholder account balances (5) 411 403 546 426 1,786
Amortization of deferred policy acquisition costs 27 31 21 6 85
Non deferrable commissions 51 48 47 45 191
General operating expenses 109 111 112 112 444
Commissions and advisory fee expenses 1 3 4 3 11
Total benefits and expenses 1,034 1,024 1,157 1,103 4,318 Operating income 550 398 278 492 1,718
Adjustments to arrive at pre-tax income:
Legal settlements (7) - - - 48 48
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) (91) (467) (485) (101) (1,144)
Net realized capital gains (losses) (81) 505 565 101 1,090
Pre-tax income $ 378 $ 436 $ 358 $ 540 $ 1,712
See Accompanying Notes on Page 32
23
American International Group, Inc.
AIG Life and Retirement - Institutional
Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 2,026 $ 2,039 $ 2,291 $ 2,301 $ 8,657
Revenues:
Premiums $ 243 $ 266 $ 225 $ 269 $ 1,003
Policy fees 125 126 130 122 503
Net investment income:
Interest and dividends (2) 968 852 921 972 3,713
Alternative investments 249 179 47 19 494
Call and tender income 14 51 28 10 103
Other (3) 16 4 (16) 9 13
Investment expenses (24) (25) (25) (29) (103)
Total net investment income 1,223 1,061 955 981 4,220
Advisory fee and other income (12) 27 26 25 117 195
Total revenues excluding net realized capital gains (losses) 1,618 1,479 1,335 1,489 5,921
Benefits and expenses:
Policyholder benefits and claims incurred (4) 449 477 461 514 1,901
Interest credited to policyholder account balances (5) 439 430 437 431 1,737
Amortization of deferred policy acquisition costs 54 25 36 18 133
Non deferrable commissions 66 68 72 73 279
General operating expenses 99 107 90 123 419
Commissions and advisory fee expenses 5 4 5 5 19
Total benefits and expenses 1,112 1,111 1,101 1,164 4,488
Operating income 506 368 234 325 1,433
Adjustments to arrive at pre-tax income:
Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) - (7) (7) (8) (22)
Net realized capital gains (losses) (95) 25 206 27 163
Pre-tax income $ 411 $ 386 $ 433 $ 344 $ 1,574
See Accompanying Notes on Page 32
24
American International Group, Inc.
AIG Life and Retirement - Institutional
Group Retirement Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 1,844 $ 1,738 $ 1,623 $ 1,823 $ 7,028
Revenues:
Premiums $ 5 $ 5 $ 5 $ 4 $ 19
Policy fees 86 86 90 93 355
Net investment income:
Interest and dividends (2) 566 527 512 515 2,120
Alternative investments 67 38 37 77 219
Call and tender income 4 12 5 11 32
Other (3) 6 10 15 5 36
Investment expenses (10) (11) (13) (14) (48)
Total net investment income 633 576 556 594 2,359
Advisory fee and other income (12) 25 26 29 30 110
Total revenues excluding net realized capital gains (losses) 749 693 680 721 2,843
Benefits and expenses:
Policyholder benefits and claims incurred 16 15 12 12 55
Interest credited to policyholder account balances (5) 295 297 298 299 1,189
Amortization of deferred policy acquisition costs 22 25 15 4 66
Non deferrable commissions 18 17 16 17 68
General operating expenses 72 71 70 78 291
Commissions and advisory fee expenses 1 3 4 3 11
Total benefits and expenses 424 428 415 413 1,680 Operating income $ 325 $ 265 $ 265 $ 308 $ 1,163
See Accompanying Notes on Page 32
25
American International Group, Inc.
AIG Life and Retirement - Institutional
Group Retirement Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 1,702 $ 1,705 $ 1,982 $ 1,923 $ 7,312
Revenues:
Premiums $ 4 $ 3 $ 5 $ 4 $ 16
Policy fees 85 88 93 82 348
Net investment income:
Interest and dividends (2) 488 456 486 516 1,946
Alternative investments 111 76 8 11 206
Call and tender income 11 37 13 4 65
Other (3) 2 (1) (16) - (15)
Investment expenses (10) (11) (11) (11) (43)
Total net investment income 602 557 480 520 2,159
Advisory fee and other income (12) 27 26 25 76 154
Total revenues excluding net realized capital gains (losses) 718 674 603 682 2,677
Benefits and expenses:
Policyholder benefits and claims incurred 12 15 25 10 62
Interest credited to policyholder account balances (5) 303 304 312 309 1,228
Amortization of deferred policy acquisition costs 50 21 34 14 119
Non deferrable commissions 26 24 25 28 103
General operating expenses 55 59 57 70 241
Commissions and advisory fee expenses 5 4 5 5 19
Total benefits and expenses 451 427 458 436 1,772
Operating income $ 267 $ 247 $ 145 $ 246 $ 905
See Accompanying Notes on Page 32
26
American International Group, Inc.
AIG Life and Retirement - Institutional
Group Retirement Spread Information and Reserves - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Net investment spreads:
Base (8) 5.19% 5.23% 5.01% 4.95% 5.09%
Alternative investments (9) 0.34% 0.05% 0.08% 0.45% 0.23%
Other enhancements (10) 0.59% 0.24% 0.25% 0.19% 0.32%
Total yield 6.12% 5.52% 5.34% 5.59% 5.64%
Cost of funds (a) 3.28% 3.27% 3.26% 3.26% 3.27%
Net spread rate, as reported 2.84% 2.25% 2.08% 2.33% 2.37%
Base net investment spread (b) 1.91% 1.96% 1.75% 1.69% 1.82%
Reserve rollforward:
Balance at beginning of period $ 69,676 $ 73,829 $ 73,058 $ 75,321 $ 69,676
Premiums and deposits 1,844 1,738 1,623 1,823 7,028
Surrenders and withdrawals (1,515) (1,401) (1,478) (1,931) (6,325)
Death, and other contract benefits (102) (99) (93) (107) (401)
Subtotal 227 238 52 (215) 302
Change in fair value of the underlying assets, net of fees 3,614 (1,321) 1,899 641 4,833
Cost of funds (a) 295 297 298 299 1,189
Other reserve changes 17 15 14 16 62
Total insurance reserves $ 73,829 $ 73,058 $ 75,321 $ 76,062 $ 76,062
(a) Excludes the amortization of sales inducement assets.
(b) Excludes the impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
27
American International Group, Inc.
AIG Life and Retirement - Institutional
Group Retirement Spread Information and Reserves - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Net investment spreads:
Base (8) 4.68% 5.14% 5.22% 5.25% 5.07%
Alternative investments (9) 0.82% 0.47% (0.21)% (0.20)% 0.22%
Other enhancements (10) 0.64% 0.05% (0.24)% 0.07% 0.13%
Total yield 6.14% 5.66% 4.77% 5.12% 5.42%
Cost of funds (a) 3.54% 3.57% 3.61% 3.51% 3.56%
Net spread rate, as reported 2.60% 2.09% 1.16% 1.61% 1.86%
Base net investment spread (b) 1.14% 1.57% 1.61% 1.74% 1.51%
Reserve rollforward:
Balance at beginning of period $ 68,133 $ 70,332 $ 70,899 $ 66,421 $ 68,133
Premiums and deposits 1,702 1,705 1,982 1,923 7,312
Surrenders and withdrawals (1,503) (1,448) (1,448) (1,454) (5,853)
Death, and other contract benefits (83) (90) (86) (112) (371)
Subtotal 116 167 448 357 1,088
Change in fair value of the underlying assets, net of fees 1,766 76 (5,256) 2,573 (841)
Cost of funds (a) 303 304 312 309 1,228
Other reserve changes 14 20 18 16 68
Total insurance reserves $ 70,332 $ 70,899 $ 66,421 $ 69,676 $ 69,676
(a) Excludes the amortization of sales inducement assets.
(b) Excludes the impact of alternative investments and other enhancements.
See Accompanying Notes on Page 32
28
American International Group, Inc.
AIG Life and Retirement - Institutional
Institutional Markets Operating Statistics - Revised Historical 2012 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Premiums and deposits (1) $ 181 $ 194 $ 178 $ 221 $ 774
Revenues:
Premiums $ 98 $ 100 $ 96 $ 164 $ 458
Policy fees 29 23 26 24 102
Net investment income:
Interest and dividends (2) 470 409 410 415 1,704
Alternative investments 102 62 64 133 361
Call and tender income (1) 4 20 3 26
Other (3) - 9 15 8 32
Investment expenses (13) (17) (12) (15) (57)
Total net investment income 558 467 497 544 2,066
Total revenues excluding net realized capital gains (losses) 685 590 619 732 2,626 Benefits and expenses:
Policyholder benefits and claims incurred 337 339 336 420 1,432
Interest credited to policyholder account balances (5) 109 100 241 121 571
Amortization of deferred policy acquisition costs 1 2 2 (2) 3
Non deferrable commissions 11 10 11 7 39
General operating expenses 14 16 16 10 56
Total benefits and expenses 472 467 606 556 2,101
Operating income $ 213 $ 123 $ 13 $ 176 $ 525
See Accompanying Notes on Page 32
29
American International Group, Inc.
AIG Life and Retirement - Institutional
Institutional Markets Operating Statistics - Revised Historical 2011 Results
(dollars in millions)
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Premiums and deposits (1) $ 162 $ 163 $ 135 $ 199 $ 659
Revenues:
Premiums $ 101 $ 117 $ 72 $ 112 $ 402
Policy fees 29 26 26 28 109
Net investment income:
Interest and dividends (2) 441 361 399 418 1,619
Alternative investments 136 103 38 6 283
Call and tender income 3 12 15 6 36
Other (3) 12 4 - 9 25
Investment expenses (12) (12) (13) (16) (53)
Total net investment income 580 468 439 423 1,910
Advisory fee and other income (12) - - - 37 37
Total revenues excluding net realized capital gains (losses) 710 611 537 600 2,458
Benefits and expenses:
Policyholder benefits and claims incurred 335 346 323 361 1,365
Interest credited to policyholder account balances (5) 130 120 119 115 484
Amortization of deferred policy acquisition costs 2 2 1 2 7
Non deferrable commissions 11 9 11 9 40
General operating expenses 11 14 (2) 13 36
Total benefits and expenses 489 491 452 500 1,932
Operating income $ 221 $ 120 $ 85 $ 100 $ 526
See Accompanying Notes on Page 32
30
American International Group, Inc.
AIG Life and Retirement - Institutional
Institutional Markets Reserves- Revised Historical 2012 and 2011 Results
(dollars in millions)
Quarterly Full Year
1Q12 2Q12 3Q12 4Q12 2012
Reserve rollforward:
Balance at beginning of period, gross $ 31,378 $ 30,736 $ 31,275 $ 32,028 $ 31,378
Premiums and deposits 181 194 178 221 774
Surrenders and withdrawals (924) (52) (25) (127) (1,128)
Death, and other contract benefits (366) (325) (360) (333) (1,384)
Subtotal (1,109) (183) (207) (239) (1,738)
Change in fair value of the underlying assets, net of fees 300 153 213 210 876
Cost of funds 109 100 241 121 571
Other reserve changes (including loss recognition) 58 469 506 122 1,155
Balance at end of period 30,736 31,275 32,028 32,242 32,242
Reserves related to unrealized investment appreciation 1,895 1,958 2,364 2,359 2,359
Reinsurance ceded (15) (8) (11) (9) (9)
Total insurance reserves $ 32,616 $ 33,225 $ 34,381 $ 34,592 $ 34,592
Quarterly Full Year
1Q11 2Q11 3Q11 4Q11 2011
Reserve rollforward:
Balance at beginning of period, gross $ 32,752 $ 32,232 $ 31,407 $ 31,278 $ 32,752
Premiums and deposits 162 163 135 199 659
Surrenders and withdrawals (836) (1,070) (27) (82) (2,015)
Death, and other contract benefits (331) (328) (345) (331) (1,335)
Subtotal (1,005) (1,235) (237) (214) (2,691)
Change in fair value of the underlying assets, net of fees 314 244 (57) 121 622
Cost of funds 130 120 118 120 488
Other reserve changes (including loss recognition) 41 46 47 73 207
Balance at end of period 32,232 31,407 31,278 31,378 31,378
Reserves related to unrealized investment appreciation - - 1,298 1,938 1,938
Reinsurance ceded (15) (15) (15) (14) (14)
Total insurance reserves $ 32,217 $ 31,392 $ 32,561 $ 33,302 $ 33,302
See Accompanying Notes on Page 32
31
American International Group, Inc.
AIG Life and Retirement
Notes
(1) Premiums and deposits is a non-GAAP measure. Premiums and deposits consist of life insurance premiums, deposits on annuity contracts and mutual funds.
(2) Interest and dividends include gains (losses) related to AIG’s retained interest in Maiden Lane II LLC (ML II). Substantially all of the assets of ML II were sold by the
Federal Reserve Bank of New York (FRBNY) in the first quarter of 2012 and no additional income was recorded from ML II subsequent to that time. The gains included were
$246 million in both the three months ended March 31, 2012 and the twelve months ended December 31, 2012. The gains (losses) included in the three months ended March
31, 2011, June 30, 2011, September 30, 2011 and December 31, 2011, and the twelve months ended December 31, 2011, were $251 million $(176) million, $(43) million, $10
million and $42 million, respectively.
(3) Other investment income for the three months ended September 30, 2012 and March 31, 2012 includes $11 million and $5 million, respectively, of losses related to equity-
method investments in trusts that hold leased commercial aircraft. The three months ended December 31, 2011, September 30, 2011 and June 30, 2011, include $35 million,
$97 million and $31 million, respectively, of losses related to equity-method investments in trusts that hold leased commercial aircraft. The twelve months ended December
31, 2012 and 2011 include $16 million and $163 million, respectively, of losses related to equity-method investments in trusts that hold leased commercial aircraft.
(4) The three months ended December 31, 2012, September 30, 2012 and December 31, 2011, and the twelve months ended December 31, 2012 and 2011, include charges of $55
million, $2 million, $105 million, $57 million and $202 million, respectively, to increase IBNR related to multi-state examinations relating to the handling of unclaimed
property and the use of the Social Security Death Master File (SSDMF) to identify death claims that have not been submitted to AIG in the normal course of business.
(5) Interest credited to policyholder account balances includes amortization of sales inducement assets. The three months ended September 30, 2012 includes a charge to interest
credited expense of $110 million as a result of a comprehensive review of reserves of the GIC portfolio.
(6) The three months ended September 30, 2012 includes a charge of $20 million from the consolidation of AIG Life and Retirement’s life operations and administrative systems
and an $11 million regulatory assessment related to the handling of unclaimed property and the use of the SSDMF to identify death claims that have not been submitted to
AIG Life and Retirement in the normal course of business.
(7) Reflects litigation settlement income recorded in the three months ended December 31, 2012 from settlements with three financial institutions who participated in the creation,
offering and sale of RMBS as to which AIG and its subsidiaries suffered losses either for their own accounts or in connection with their participation in AIG’s securities
lending program.
(8) Includes the investment return other than alternative investment or yield enhancement activities. Quarterly results are annualized.
(9) Includes incremental effect to base yield of investments in hedge funds, private equity funds and affordable housing partnerships. Quarterly results are annualized.
(10) Includes incremental effect to base yield of gains on ML II and income from calls and prepayment fees. Quarterly results are annualized.
(11) Includes the notional value of stable value wraps novated with Global Capital Markets and rewritten as group annuity contracts at AIG Life and Retirement.
(12) Advisory fees and other income for the three months ended December 31, 2011 includes revenue of $202 million recorded pursuant to a net legal settlement.
(13) Policyholder benefits and claims incurred is negative in the three months ended March 31, 2012, September 30, 2012, March 31, 2011 and December 31, 2011 due to
reductions in SOP 03-01 reserves (primarily guaranteed minimum death benefits) resulting from positive equity markets.
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