Financial Supplement Second Quarter 2010 This report should be read in conjunction with AIG's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 filed with the Securities and Exchange Commission.
Financial Supplement Table of Contents Consolidated Consolidated Statement of Income (Loss)....1-2 Consolidated Statement of Segment Operations...3 4 Summary of Non-qualifying derivative hedging activities...5 Consolidated Balance Sheet... 6-7 Debt and Capital...8 U.S. Government Support...9 Capital Structure...10 Book Value per Common Share...11 General Insurance General Insurance Operating Statistics...12 AIG Commercial Insurance Operating Statistics...13 AIG Commercial Insurance Gross Premiums Written by Line of Business...14 Foreign General Insurance Operating Statistics...15 Foreign General Insurance Gross Premiums Written...16 General Insurance Notes...17 Domestic Life Insurance & Retirement Services Domestic Life Insurance & Retirement Services Operating Statistics...18 Domestic Life Insurance Operating Statistics...19 Domestic Life Insurance Sales and Deposits...20 Domestic Life Insurance Other Data...21 Domestic Life Insurance Deferred Policy Acquisition Costs, Sales Inducements and Value of Business Acquired...22 Domestic Life Insurance Notes...23 Domestic Retirement Services Operating Statistics...24 Domestic Retirement Services Product Statistics...25 Domestic Retirement Services Account Value Rollforward...26 Domestic Retirement Services Spread Information...27-28 Domestic Life Insurance & Retirement Services Deferred Policy Acquisition Costs, Sales Inducements and Value of Business Acquired...29 Domestic Retirement Services Group Retirement Products...30 Domestic Retirement Services Individual Variable Annuities Guaranteed Benefits...31-32 Domestic Retirement Services Notes...33 Foreign Life Insurance & Retirement Services Foreign Life Insurance & Retirement Services Operating Statistics...34 Asia Operating Statistics...35 Japan Operating Statistics...36 Foreign Life Insurance & Retirement Services Notes...37 Financial Services Financial Services Operating Results...38 Consumer Finance Operating Results...39 Consumer Finance Other Data...40 Financial Services Notes...41 American General Finance Real Estate Portfolio...42 Other Other...43 Other Notes...44 Parent Company Financial Statements... 45-48 Pre Tax Realized Gains (Losses) by Source by Business Segment...49 Investment Information Cash and Investments by Segment...50 AIGFP Balance Sheet...51 Other Invested Assets by Segment...52 Return on Average Partnership and Mutual Funds Assets by Segment...53 Comment on Reg G...54 American International Group, Inc. Investor Relations Teri L. Watson, Vice President (212)770-7074
Consolidated Statement of Income (Loss) (in millions, except per share data) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, % Inc. 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 (Dec.) Revenues: Premiums and other considerations $ 12,649 $ 14,074 (10.1) % $ 12,426 1.8 % $ 25,075 $ 29,118 (13.9) % Net investment income 5,386 6,858 (21.5) 5,545 (2.9) 10,931 8,332 31.2 Net realized capital losses: (1) Total other-than-temporary impairments on available for sale securities (847) (1,084) NM (317) NM (1,164) (4,702) NM Portion of other-than-temporary impairments on available for sale fixed maturity securities recognized in Accumulated other comprehensive loss 251 369 (32.0) (521) NM (270) 369 NM Net other-than-temporary impairments on available for sale securities recognized in net income (loss) (596) (715) NM (838) NM (1,434) (4,333) NM Other realized capital gains (22) (416) NM 397 NM 375 453 (17.2) Total net realized capital losses (618) (1,131) NM (441) NM (1,059) (3,880) NM Unrealized market valuation gains (losses) on AIGFP super senior credit default swap portfolio 161 636 (74.7) 119 35.3 280 184 52.2 Other income (1) 2,404 3,485 (31.0) 2,262 6.3 4,666 6,269 (25.6) Total revenues (1) 19,982 23,922 (16.5) 19,911 0.4 39,893 40,023 (0.3) Benefits, claims and expenses: Policyholder benefits and claims incurred 10,607 13,570 (21.8) 10,428 1.7 21,035 26,713 (21.3) Policy acquisition and other insurance expenses 3,968 4,484 (11.5) 3,861 2.8 7,829 8,646 (9.4) Interest expense 2,009 2,553 (21.3) 1,876 7.1 3,885 5,343 (27.3) Restructuring expenses and related asset impairment and other expenses 70 326 (78.5) 120 (41.7) 190 678 (72.0) Net loss (gain) on sale of divested businesses (2) (198) 566 NM 76 NM (122) 307 NM Other expenses 1,923 2,252 (14.6) 1,793 7.3 3,716 4,495 (17.3) Total benefits, claims and expenses 18,379 23,751 (22.6) 18,154 1.2 36,533 46,182 (20.9) Income (loss) from continuing operations before income tax expense (benefit) 1,603 171 837.4 1,757 (8.8) 3,360 (6,159) NM Income tax expense (benefit) 311 (415) NM (423) NM (112) (1,284) NM Income (loss) from continuing operations 1,292 586 120.5 2,180 (40.7) 3,472 (4,875) NM Income (loss) from discontinued operations, net of income tax expense (benefit) (3) (3,407) 1,259 NM 325 NM (3,082) 1,587 NM Net income (loss) (2,115) 1,845 NM 2,505 NM 390 (3,288) NM Less: Net Income (loss) from continuing operations attributable to noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York 508 - NM 519 (2.1) 1,027 - NM Other 20 (7) NM 119 (83.2) 139 (775) NM Total net income (loss) from continuing operations attributable to noncontrolling interests 528 (7) 638 NM 1,166 (775) NM Income (loss) from discontinued operations attributable to noncontrolling interests 13 30 (56.7) 10 30.0 23 18 27.8 Total net income (loss) attributable to noncontrolling interests 541 23 2,252.2 648 (16.5) 1,189 (757) Net income (loss) attributable to AIG $ (2,656) $ 1,822 NM $ 1,857 NM $ (799) $ (2,531) NM % Net income (loss) attributable to AIG common shareholders $ (538) $ 311 NM $ 377 NM $ (161) $ (3,826) NM % Income (loss) per common share attributable to AIG: Basic: Income (loss) from continuing operations $ 1.14 $ 0.47 142.3 $ 2.30 (50.5) % $ 3.44 $ (39.89) NM % Income (loss) from discontinued operations $ (5.10) $ 1.83 NM $ 0.47 142.4 $ (4.63) $ 11.60 NM Diluted: Income (loss) from continuing operations $ 1.14 $ 0.47 142.2 $ 2.30 (50.5) $ 3.44 $ (39.89) NM % Income (loss) from discontinued operations $ (5.10) $ 1.83 NM $ 0.47 142.4 $ (4.63) $ 11.60 NM Weighted average shares outstanding: Basic 135.8 135.3 135.7 135.7 135.3 Diluted 135.9 135.3 135.7 135.8 135.3 (See Accompanying Notes on Page 2) 1
Consolidated Statement of Income (Loss) Notes (1) Includes gains (losses) from hedging activities that did not qualify for hedge accounting, including the related foreign exchange gains and losses (Refer to page 5) and other-than-temporary impairment charges (Refer to page 49). (2) Includes the net gain (loss) on sales of divested businesses that did not qualify as discontinued operations. (3) Includes the results of operations for each of the following companies classified as discontinued operations. These companies were previously a component of the Foreign Life Insurance & Retirement Services reportable segment. AIG expects the sale of these businesses to close during the fourth quarter of 2010: As of March 7, 2010, AIG and ALICO Holdings LLC, a special purpose vehicle formed by AIG and the FRBNY (ALICO Holdings) entered into a definitive agreement with MetLife, Inc. (MetLife) for the sale of American Life Insurance Company (ALICO) by ALICO Holdings to MetLife and the sale of Delaware American Life Insurance Company by AIG to MetLife. On October 12, 2009, AIG entered into an agreement to sell its 97.57 percent share of Nan Shan Life Insurance Company, Ltd. (Nan Shan). A summary of income (loss) from discontinued operations is as follows: Three Months Six Months Ended June 30, Ended June 30, (in millions) 2010 2009 2010 2009 Revenues: Premiums and other considerations $ 3,973 $ 3,744 $ 8,139 $ 7,565 Net investment income 1,412 2,027 2,955 2,917 Net realized capital gains (losses) (145) 398 (189) (214) Other income (40) (1) (40) (1) Total revenues 5,200 6,168 10,865 10,267 Benefits, claims and expenses * 8,093 4,973 13,090 9,055 Interest expense allocation 41 47 82 102 Income (loss) from discontinued operations (2,934) 1,148 (2,307) 1,110 Loss on sale (294) - (401) - Income (loss) from discontinued operations, before income tax expense (benefit) (3,228) 1,148 (2,708) 1,110 Income tax expense (benefit) 179 (111) 374 (477) Income (loss) from discontinued operations, net of tax $ (3,407) $ 1,259 $ (3,082) $ 1,587 * Includes a goodwill impairment charge of $3.3 billion for the three and six months ended June 30, 2010 related to goodwill that had been allocated to ALICO as a consequence of ALICO's removal from the Japan and other operating segment. 2
Consolidated Statement of Segment Operations (in millions, except share data) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, % Inc. 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 (Dec.) General Insurance Net premiums written $ 7,792 $ 7,919 (1.6) % $ 7,644 1.9 % $ 15,436 $ 15,652 (1.4)% Net premiums earned 7,733 8,017 (3.5) 7,641 1.2 15,374 16,295 (5.7) Claims and claims adjustment expenses incurred 5,575 5,638 (1.1) 5,459 2.1 11,034 11,427 (3.4) Change in deferred acquisition costs (104) 15 NM (18) NM (122) 20 NM Other underwriting expenses 2,420 2,219 9.1 2,392 1.2 4,812 4,426 8.7 Underwriting profit (loss) (158) 145 NM (192) NM (350) 422 NM Net investment income 1,113 869 28.1 1,071 3.9 2,184 1,304 67.5 Operating income (loss) before net realized capital gains (losses) and bargain 955 1,014 (5.8) 879 8.6 1,834 1,726 6.3 purchase gain Net realized capital gains (losses) 58 (37) NM 137 (57.7) 195 (645) NM Bargain purchase gain (1) - - NM 406 NM 406 - NM Pre-tax income (loss) 1,013 977 3.7 1,422 (28.8) 2,435 1,081 125.3 Domestic Life Insurance & Retirement Services Premiums and other considerations 1,315 1,331 (1.2) 1,315-2,630 2,771 (5.1) Deposits and other considerations not included in revenues under GAAP 3,653 2,687 36.0 3,422 6.8 7,075 6,311 12.1 Premiums, deposits and other considerations 4,968 4,018 23.6 4,737 4.9 9,705 9,082 6.9 Net investment income 2,628 2,221 18.3 2,707 (2.9) 5,335 4,151 28.5 Operating income (loss) before net realized capital gains (losses) 1,054 254 NM 1,123 (6.1) 2,177 94 2,216.0 Net realized capital losses (966) (54) NM (796) NM (1,762) (1,721) NM Pre-tax income (loss) 88 200 (56.0) 327 (73.1) 415 (1,627) NM Foreign Life Insurance & Retirement Services (2) Premiums and other considerations 3,377 3,100 8.9 3,234 4.4 6,611 6,222 6.3 Deposits and other considerations not included in revenues under GAAP 1,186 1,011 17.3 1,158 2.4 2,344 1,904 23.1 Premiums, deposits and other considerations 4,563 4,111 11.0 4,392 3.9 8,955 8,126 10.2 Net investment income 1,239 2,428 (49.0) 1,067 16.1 2,306 3,306 (30.2) Operating income before net realized capital gains (losses) 820 553 48.3 782 4.9 1,602 1,275 25.6 Net realized capital gains (losses) 20 (330) NM (61) NM (41) (792) NM Pre-tax income (loss) 840 223 276.7 721 16.5 1,561 483 223.2 Financial Services Operating income (loss), excluding non-qualifying derivative hedging activities and net realized capital gains (losses) (3) 42 (103) NM (474) NM (432) (1,193) NM Non-qualifying derivative hedging activities - 4 NM - NM - 6 NM Net realized capital gains (losses) (11) 223 NM 35 NM 24 181 (86.7) Pre-tax income (loss) 31 124 (75.0) (439) NM (408) (1,006) NM Other before net realized capital gains (losses) (766) (1,765) NM (355) NM (1,121) (5,293) NM Other net realized capital gains 241 265 (9.1) 91 164.8 332 343 (3.2) Consolidation and elimination adjustments (4) 156 147 6.1 (10) (1,660.0) 146 (140) NM Income (loss) from continuing operations before income tax expense (benefit) 1,603 171 NM 1,757 (8.8) 3,360 (6,159) NM Income tax expense (benefit) (5) 311 (415) NM (423) NM (112) (1,284) NM Income (loss) from continuing operations 1,292 586 NM 2,180 (40.7) 3,472 (4,875) NM Income (loss) from discontinued operations, net of tax (3,407) 1,259 NM 325 NM (3,082) 1,587 NM Net income (loss) (2,115) 1,845 NM 2,505 NM 390 (3,288) NM Less: Net income (loss) from continuing operations attributable to noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York 508 - NM 519 (2.1) 1,027 - NM Other 20 (7) NM 119 (83.2) 139 (775) NM Total net income (loss) from continuing operations attributable to noncontrolling interests 528 (7) NM 638 (17.2) 1,166 (775) NM Income from discontinued operations attributable to noncontrolling interests 13 30 (56.7) 10 30.0 23 18 27.8 Total net income (loss) attributable to noncontrolling interests 541 23 NM 648 (16.5) 1,189 (757) NM Net income (loss) attributable to AIG (2,656) 1,822 NM 1,857 NM (799) (2,531) NM Income (loss) from discontinued operations attributable to AIG, net of tax (3,420) 1,229 NM 315 NM (3,105) 1,569 NM Net gain (loss) on sale of divested businesses, net of tax 93 (327) NM (76) NM 17 (155) NM Net realized capital losses, net of tax (564) (899) NM (287) NM (851) (3,282) NM Non-qualifying derivative hedging activities, excluding net realized gains (losses), net of tax (102) 676 NM (94) NM (196) 558 NM Bargain purchase gain - - NM 406 NM 406 - NM Adjusted net income (loss) attributable to AIG $ 1,337 $ 1,143 17.0 % $ 1,593 (16.1) % $ 2,930 $ (1,221) NM % Income (loss) per common share attributable to AIG - diluted : Income (loss) from continuing operations $ 1.14 $ 0.47 142.2 $ 2.30 (50.5) $ 3.44 $ (39.89) NM Income (loss) from discontinued operations (5.10) 1.83 NM 0.47 NM (4.63) 11.60 NM Adjusted net income (loss) $ 1.99 $ 1.71 16.4 $ 2.38 (16.4) $ 4.37 $ (8.99) NM Weighted average shares outstanding - diluted 135.9 135.3 135.7 135.8 135.3 Effective tax rates (6): Net income (loss) from continuing operations before noncontrolling interest 19.4% (242.7)% (24.0)% (3.3)% 20.9% Net income (loss) attributable to AIG 25.5% (205.4)% (52.7)% (13.4)% 23.7% Adjusted net income (loss) 15.9% (33.0)% (28.1)% (3.4)% 40.7% Return on equity attributable to AIG NM 14.1% 10.2% NM NM (See Accompanying Notes on Page 4) 3
Consolidated Statement of Segment Operations Notes (1) Represents a bargain purchase gain related to the purchase of additional voting shares of Fuji for $145 million. (See Note (4) on Page 17). (2) Following the classification of ALICO and Nan Shan as discontinued operations, AIG s remaining Foreign Life Insurance & Retirement Services operations are conducted through AIA, AIRCO, AIG Star Life Insurance Co. Ltd. and AIG Edison Life Insurance Company. (3) Includes unrealized market valuation gains and losses on Capital Markets super senior credit default swap portfolio and the pre-tax effect of changes in credit spreads on the valuation of Capital Markets assets and liabilities. Refer to page 38. (4) Includes income from certain AIG managed partnerships, private equity and real estate funds that are consolidated. Such income is offset in net income (loss) attributable to noncontrolling interests, which is not a component of operating income. (5) Includes a change in estimated U.S. tax liability with respect to the potential sale of subsidiaries, partially offset by an increase in the valuation allowance and reserve for uncertain tax positions. (6) The calculation of the effective tax rates is as follows: Three Months Ended June 30, 2010 Six Months Ended June 30, 2010 Income (loss) Income Tax Net Effective Income (loss) Income Tax Net Effective (dollars in millions) before tax Expense (benefit) Income (loss) Tax Rate * before tax Expense (benefit) Income (loss) Tax Rate * Income (Loss) from continuing operations $ 1,603 $ $ $ $ 311 1,292 19.4% 3,360 (112) $ 3,472-3.3% Noncontrolling interests 578 50 528 1,326 160 1,166 Income (loss) attributable to AIG 1,025 261 764 25.5% 2,034 (272) 2,306-13.4% Net realized capital losses (607) (43) (564) (1,026) (175) (851) Non-qualifying derivative hedging losses (157) (55) (102) (302) (106) (196) Gain on sale of divested businesses 198 105 93 122 105 17 Bargain purchase gain - - - 406-406 Adjusted net income (loss) $ 1,591 $ 254 $ 1,337 15.9% $ 2,834 $ (96) $ 2,930-3.4% * Effective tax rates are calculated based on Income (loss) from continuing operations and excludes discontinued operations. 4
Summary of Non-qualifying Derivative Hedging Activities (1) (in millions) Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, June 30, 2010 2009 2010 2010 2009 Effect on income (loss) from continuing operations before net realized capital gains (losses): Financial Services $ - $ 4 $ - $ - $ 6 Intercompany Eliminations: Continuing Operations (2) (401) 1,285 (338) (739) 935 Discontinued Operations (2) (26) 32 18 (8) 84 Foreign Exchange Rates on Economically Hedged Debt Exposures for Financial Services (3): 270 (280) 175 445 (166) Total pre-tax effect (157) 1,041 (145) (302) 859 Total after-tax effect (102) 676 (94) (196) 558 Effect on net realized capital gains (losses) (4): Financial Services 10 224 1 11 225 General Insurance 37 (41) (36) 1 (67) Domestic Life Insurance & Retirement Services (5) 370 (706) (388) (18) (171) Foreign Life Insurance & Retirement Services (8) 70 481 (10) 60 (194) Other 78 658 (217) (139) 1,537 Eliminations and Reclassifications (6) 130 (1,200) 231 361 (1,343) Total pre-tax effect 695 (584) (419) 276 (13) Total after-tax effect 452 (380) (272) 179 (8) Non-qualifying derivative hedging activities effect on total income: Total pre-tax effect 538 457 (564) (26) 846 Total after tax-effect 350 296 (366) (17) 550 Effect of non-qualifying derivative hedging activities included in discontinued operations (7)(8): Foreign Life Insurance & Retirement Services (179) (167) (40) (219) 115 Eliminations and Reclassifications - Discontinued Operations (42) (123) 6 (36) (80) Total pre-tax effect (221) (290) (34) (255) 35 Total after tax-effect $ (144) $ (188) $ (22) $ (166) $ 22 (1) This schedule summarizes the effect of derivative gains and losses on operating income that are effective economic hedges of investments and borrowings that did not qualify for hedge accounting. Since hedge accounting has not been applied to the periods presented, an offsetting gain or loss on the hedged exposure has not been recognized in operating income. The mismatch in the earnings recognition on the derivatives and the hedged exposures has resulted in volatility in the operating results that does not reflect properly the effectiveness of these hedging activities. (2) Represents the elimination of revenues reported in the Financial Services segment from intercompany hedging activities. (3) Represents the reclassification of revenues reported in the Financial Services segment arising from foreign exchange rate movements on economically hedged exposures. (4) In general, AIG Credit spreads widened for the three months ended June 30, 2010, generating gains on derivative liabilities. (5) The majority of the realized capital gain for the three months ended June 30, 2010 was driven by short positions on the equity market via exchange traded put options. (6) Represents the elimination of net realized capital gains (losses) from intercompany hedging activities and the reclassification of foreign exchange rates on economically hedged exposures. (7) Represents the impact on net realized capital gains (losses) for ALICO and Nan Shan. (8) Includes realized capital gains (losses) for ALICO and Nan Shan which are reported as discontinued operations. 5
Consolidated Balance Sheet (in millions) June 30, December 31, 2010 2009 Assets: Investments: Fixed maturity securities (1) $ 342,975 $ 396,794 Equity securities 16,292 17,840 Mortgage and other loans receivable, net of allowance 24,817 27,461 Finance receivables, net of allowance 17,862 20,327 Flight equipment primarily under operating leases, net of accumulated depreciation 40,973 44,091 Other invested assets 37,009 45,235 Securities purchased under agreements to resell, at fair value 965 2,154 Short-term investments 39,109 47,263 Total investments 520,002 601,165 Cash 2,840 4,400 Accrued investment income 4,223 5,152 Premiums and other receivables, net of allowance 18,329 16,549 Reinsurance assets, net of allowance 24,414 22,425 Current and deferred income taxes 3,999 4,108 Deferred policy acquisition costs 28,970 40,814 Real estate and other fixed assets, net of accumulated depreciation 3,608 4,142 Unrealized gain on swaps, options and forward transactions, at fair value 7,338 9,130 Goodwill 2,640 6,195 Other assets, including prepaid commitment asset 18,309 18,976 Separate account assets, at fair value 53,803 58,150 Assets held for sale (2) 162,056 56,379 Total assets $ 850,531 $ 847,585 Liabilities: Liability for unpaid claims and claims adjustment expense $ 85,604 $ 85,386 Unearned premiums 24,831 21,363 Future policy benefits for life and accident and health insurance contracts 92,949 116,001 Policyholder contract deposits 156,758 220,128 Other policyholder funds 13,975 13,252 Commissions, expenses and taxes payable 3,704 4,950 Insurance balances payable 4,015 4,393 Funds held by companies under reinsurance treaties 705 774 Securities sold under agreements to repurchase 4,056 3,505 Securities and spot commodities sold but not yet purchased, at fair value 226 1,030 Unrealized loss on swaps, options and forward transactions, at fair value 5,716 5,403 Trust deposits and deposits due to banks and other depositors 950 1,641 Other liabilities 21,745 22,503 Federal Reserve Bank of New York Commercial Paper Funding Facility - 4,739 Federal Reserve Bank of New York credit facility 26,457 23,435 Other long-term debt 108,286 113,298 Separate account liabilities 53,803 58,150 Liabilities held for sale (2) 142,104 48,599 Total liabilities 745,884 748,550 Commitments, contingencies and guarantees Redeemable noncontrolling interests in partially owned consolidated subsidiaries 1,923 959 AIG shareholders' equity: Preferred Stock, Series E 41,605 41,605 Preferred Stock, Series F 7,378 5,179 Preferred Stock, Series C 23,000 23,000 Common stock 354 354 Treasury stock, at cost (873) (874) Additional paid-in capital 6,297 6,358 Accumulated deficit (12,120) (11,491) Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken, net of tax (1,011) (1,810) Unrealized appreciation (depreciation) of all other investments, net of tax 11,177 7,145 Net derivative gains (losses) arising from cash flow hedging activities, net of tax (67) (128) Foreign currency translation adjustments, net of tax 780 1,630 Retirement plan liabilities adjustment, net of tax (1,050) (1,144) Total AIG shareholders' equity 75,470 69,824 Noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York 25,567 24,540 Other 1,687 3,712 Total noncontrolling interests 27,254 28,252 Total equity 102,724 98,076 Total liabilities and equity $ 850,531 $ 847,585 (See Accompanying Notes on Page 7) 6
Consolidated Balance Sheet Notes (1) Includes interests in Maiden Lane II and Maiden Lane III of $1.0 billion and $5.6 billion, respectively, as of June 30, 2010. (2) Assets and liabilities held for sale at June 30, 2010 and December 31, 2009 include the following businesses held for sale. ALICO at June 30, 2010; Nan Shan at June 30, 2010 and December 31, 2009; AIG Bank Polska at December 31, 2009. This sale was completed on June 8, 2010. AIG s investment advisory and third party asset management businesses at December 31, 2009. This sale was completed on March 26, 2010. June 30, December 31, (in millions) 2010 2009 Assets: Fixed maturity securities $ 111,591 $ 34,495 Deferred policy acquisition costs 13,670 3,322 Equity securities 6,339 2,947 Other invested assets 8,977 4,256 Short-term investments 8,909 3,501 Separate account assets 3,623 3,467 Mortgage and other loans receivable, net 6,324 3,997 Goodwill 9 25 Other assets 469 369 Total Assets of businesses held for sale 159,911 56,379 Flight equipment* 2,145 - Assets held for sale 162,056 56,379 Liabilities: Future policy benefits for life and accident and health insurance contracts $ 64,583 $ 38,023 Policyholder contract deposits 65,782 3,133 Separate account liabilities 3,623 3,467 Other liabilities 8,116 3,976 Total Liabilities of businesses held for sale $ 142,104 $ 48,599 * Represents 55 aircraft that are under agreements for sale by ILFC as of June 30, 2010. 7
Debt and Capital (dollars in millions) Debt and Hybrid Capital Interest Expense (a) June 30, Dec. 31, Inc. Three Months Ended Six Months Ended 2010 2009 (Dec.) June 30, 2010 June 30, 2009 June 30, 2010 June 30, 2009 Financial debt: FRBNY Credit Facility $ 26,457 $ 23,435 12.9 % $ 755 (b) $ 1,374 (b) $ 1,588 $ 2,904 AIG notes and bonds payable 9,384 10,419 (9.9) 124 128 248 257 AIG loans and mortgage payable 422 438 (3.7) - (1) 1 2 AIGLH notes and bonds payable 798 798-15 15 30 30 Liabilities connected to trust preferred stock 1,339 1,339-27 27 54 54 AIG loans to financial services subsidiaries 98 (1,213) NM - (c) - (c) - (b) - (b) AIG Funding loans to financial services subsidiaries- net (4,550) (3,505) NM - (c) - (c) - (b) - (b) Total 33,948 31,711 7.1 921 1,543 1,921 3,247 Operating debt: AIG Funding commercial paper - 1,997 NM - 29 3 67 MIP matched notes and bonds payable 12,344 13,371 (7.7) 96 106 194 219 Series AIGFP matched notes and bonds payable 3,980 3,913 1.7 76 75 152 151 AIGFP borrowings (d) 12,637 15,937 (20.7) - - - - ILFC borrowings 27,521 26,173 5.2 300 288 535 605 AGF borrowings 17,325 20,119 (13.9) 261 249 519 514 AIGCFG borrowings 43 216 (80.1) 4 20 19 53 Other Subsidiaries 452 295 53.2 4 4 9 12 Borrowings of consolidated investments 4,719 5,141 (8.2) 38 34 75 70 AIG loans to financial services subsidiaries (98) 1,213 NM - (c) - (c) - (b) - (b) AIG Funding loans to financial services subsidiaries- net 4,550 3,505 29.8 - (c) - (c) - (b) - (b) Total 83,473 91,880 (9.1) 779 805 1,506 1,691 Hybrid - debt securities: Junior subordinated debt 11,442 12,001 (f) (4.7) 224 217 441 428 Hybrid - mandatorily convertible units: Junior subordinated debt attributable to equity units 5,880 5,880 (e) (f) - 90 86 175 171 Total $ 134,743 $ 141,472 (4.8)% $ 2,014 $ 2,651 $ 4,043 $ 5,537 AIG capitalization: Total equity $ 102,724 $ 98,076 4.7 % Hybrid - debt securities 11,442 12,001 (f) (4.7) Hybrid - mandatorily convertible units 5,880 5,880 (e) (f) - Total consolidated equity and hybrid capital 120,046 115,957 3.5 Financial debt 33,948 31,711 7.1 Total capital $ 153,994 $ 147,668 4.3 % Ratios: Total equity / Total capital 66.7% 66.4% Hybrid - debt securities / Total capital 7.4% 8.1% Hybrid - mandatorily convertible units / Total capital 3.8% 4.0% Financial debt / Total capital 22.0% 21.5% (a) Includes $(36) million, $51 million, $76 million, and $92 million of interest expense in the three-month periods ended June 30, 2010 and 2009 and six-month periods ended June 30, 2010 and 2009, respectively, reported in Other Income (loss) and Policy acquisition and other insurance expenses on the Consolidated Statement of Income (Loss). (b) Includes $41 million, $47 million, $82 million, and $102 million of interest expense in the three-month periods ended June 30, 2010 and 2009 and six-month periods ended June 30, 2010 and 2009, respectively allocated to discontinued operations. (c) Amounts are eliminated in consolidation. (d) Borrowings are carried at fair value with fair value adjustments reported in Other income (loss) on the Consolidated Statement of Income (Loss). Contractual interest payments amounted to $189.9 million and $584.1 million for the six months ended June 30, 2010 and twelve months ended December 31, 2009, respectively. (e) The equity units consist of an ownership interest in AIG junior subordinated debentures and a stock purchase contract obligating the holder of an equity unit to purchase, and obligating AIG to sell, a variable number of shares of AIG common stock on three dates in 2011. (f) The equity units and junior subordinated debentures receive hybrid equity treatment from the major rating agencies under their current policies but are recorded as long-term borrowings on the consolidated balance sheet. 8
as of 3/31/2010 as of 6/30/2010 Understanding AIG s Obligations to the U.S. Government Support provided to AIG includes a Federal Reserve Bank of New York (FRBNY) Revolving Credit Facility, a U.S. Treasury Department direct equity investment in AIG through TARP, which includes a commitment to provide cash funding, and an FRBNY preferred equity interest in Alico and AIA special purpose vehicles (SPVs). At June 30, 2010, AIG owed the U.S. government an outstanding debt and equity balance of $101.2 billion. The balance outstanding on the FRBNY loans to the Maiden Lane II and Maiden Lane III SPVs, $14.7 billion and $16.3 billion, respectively, are not obligations of AIG and are not reflected on AIG s balance sheet. * AIG has not drawn the full amount of the government assistance available. The Total Undrawn is the remaining balance available to AIG on the Treasury Series F commitment and the FRBNY Revolving Credit Facility. DEBT to be repaid by AIG TOTAL UNDRAWN* ML II ML III $32.6 $34.8 Total Outstanding Assistance $134.2 billion $132.1 billion Does not include AIG s participation in the FRBNY Commercial Paper Funding Facility Outstanding debt and equity balance requiring repayment by AIG $101.6 billion $101.2 billion The difference between the government assistance outstanding and the balance requiring repayment is attributable to the outstanding on the Maiden Lane II and III loans. $27.4 $74.2 EQUITY to be repaid by AIG DEBT to be repaid by AIG TOTAL UNDRAWN* ML II ML III $31.0 $35.5 $26.5 $74.7 EQUITY to be repaid by AIG DEBT FRBNY Revolving Credit Facility ($33.728 billion available capacity at 6/30/10) The Federal Reserve Bank of New York (FRBNY) initially provided AIG with a revolving credit facility of $85 billion. That facility was reduced to $60 billion in November 2008 with proceeds from the Treasury s TARP share purchase, and to $35 billion in December 2009, when AIG closed two transactions with the FRBNY that reduced the debt AIG owed the FRBNY by $25 billion in exchange for the FRBNY s acquisition of preferred equity interests in the AIA and Alico SPVs (see below). As of June 30, 2010, the facility availability was reduced to $33.728 billion as a result of mandatory prepayments relating to asset sales. The outstanding balance includes accumulated interest and fees. Accumulated interest does not reduce the available balance of the revolving credit facility. $5.8 billion (interest) (undrawn) $21.6 billion (drawn) $6.0 billion $20.5 billion EQUITY U.S. Dept. of Treasury TARP Series D/E Shares ($40 billion authorized) Treasury purchased Series D cumulative preferred stock from AIG in November 2008. AIG used the proceeds to pay down the FRBNY Revolving Credit Facility. These shares were later exchanged for Series E noncumulative preferred shares. Unpaid dividends on the series D shares were added to the liquidation preference of the Series E shares. $41.6 billion $41.6 billion EQUITY U.S. Dept. of Treasury TARP Series F Shares ($29.835 billion authorized) Through the purchase of AIG s Series F noncumulative preferred shares, the Treasury has committed to provide AIG up to $29.835 billion to meet liquidity and capital needs in exchange for an increase in the aggregate liquidation preference of the Series F shares. EQUITY Preferred Interests in the AIA and Alico SPVs held by FRBNY ($25 billion authorized) In December 2009, AIG transferred to the FRBNY preferred equity interests in newly-formed special purpose vehicles (SPVs) in exchange for a $25 billion reduction of the balance outstanding and the maximum credit available under the FRBNY Credit Facility. The FRBNY holds a preferred interest in the AIA SPV for $16 billion and a preferred interest in the Alico SPV for $9 billion. Cash generated by the monetization of the Alico and AIA units will be used to repay the FRBNY. FRBNY Investment in AIG-related RMBS Maiden Lane II SPV ($22.5 billion authorized) In November 2008, FRBNY created this SPV to provide AIG liquidity by purchasing residential mortgage backed securities from AIG life insurance companies. FRBNY provided a loan to Maiden Lane II for the purchases. It also terminated a previously established securities lending arrangement with AIG. The actual amount funded was $19.5 billion. Loans to MLII are expected to be repaid with the proceeds from the interest and principal payments or from the liquidation of the assets in the facility. FRBNY Investment in AIG-related CDOs Maiden Lane III SPV ($30 billion authorized) In November 2008, FRBNY created this SPV to provide AIG liquidity by purchasing collateralized debt obligations (CDOs) from AIG Financial Products Corp. counterparties in connection with the termination of credit default swaps (CDSs) and surrender of the collateral by AIGFP. FRBNY provided a loan to the SPV for the purchases. The actual amount funded was $24.3 billion. Loans to MLIII are expected to be repaid with the proceeds from the interest and principal payments or from the liquidation of the assets in the facility. 9 $7.5 billion $25.1 billion $15.3 billion $17.3 billion $7.5 billion $25.6 billion $14.7 billion $16.3 billion
AMERICAN INTERNATIONAL GROUP, INC. CAPITAL STRUCTURE Note that all obligations within the same level rank pari passu (equally and without preference) unless otherwise noted. LEVEL RANK LEVEL NAME DESCRIPTION OF OBLIGATION ONE SECURED FRBNY Credit Facility o AIG Senior Debt Securities (including MIP and Series AIGFP ) TWO SENIOR UNSECURED o Guarantees by AIG of subsidiary indebtedness and payment obligations (1) o Series A-1 through A-8 junior subordinated debentures (aka hybrid securities ) THREE JUNIOR SUBORDINATED o Series B-1, B-2 and B-3 junior subordinated debentures (aka debt issued as part of Equity Units ) SENIOR PREFERRED STOCK FOUR o Series E Preferred Stock (2) Senior TARP Fixed Rate Non Cumulative Perpetual Preferred Stock o Series F Preferred Stock (3) JUNIOR PREFERRED STOCK FIVE Perpetual, Convertible, Participating Preferred Stock o Series C Preferred Stock SIX COMMON STOCK Common Stock, par value $2.50 per share (1) Note that the guarantees by AIG of the American General (i.e., AIG Life Holdings (US), Inc.) trust preferred securities (American General Capital II, American General Institutional Capital A and American General Institutional Capital B) only apply to payments actually made to the trust in respect of the underlying American General junior subordinated debentures, and AIG s guarantee of the debentures is subordinate to the guarantees by AIG of the American General (i.e., AIG Life Holdings (US), Inc.) senior debt; no payments may be made on this guarantee if American General is prohibited from making payments on the debentures. (2) On April 17, 2009, AIG entered into an exchange agreement with the Department of the Treasury pursuant to which, among other things, the Department of the Treasury exchanged 4,000,000 shares of the Series D Fixed Rate Cumulative Perpetual Preferred Stock, par value $5.00 per share (the Series D Preferred Stock), for 400,000 shares of AIG s Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share (the Series E Preferred Stock ). (3) On April 17, 2009, AIG entered into a purchase agreement with the Department of the Treasury pursuant to which, among other things, AIG issued and sold to the Department of the Treasury 300,000 shares of Series F Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share (the Series F Preferred Stock ), each share with a zero initial liquidation preference, and a warrant to purchase up to 150 shares of AIG s common stock, par value $2.50 per share. Pursuant to the purchase agreement, the Department of the Treasury has committed for five years to provide immediately available funds in an amount up to $29.835 billion so long as on the applicable drawdown date (i) AIG is not a debtor in a pending case under Title 11 of the United States Code and (ii) the AIG Credit Facility Trust, a trust established for the sole benefit of the United States Treasury, and the Department of the Treasury in the aggregate beneficially own more than 50 percent of the aggregate voting power of AIG s voting securities. The liquidation preference of each share of the AIG Series F Preferred Stock increases by the pro rata amount of any drawdown on the commitment. 10
Book Value per Common Share (dollars in millions, except per share amounts) (2 3) (2) Book Value Per Share, (1) Total AIG Shareholders' (3) (1 3) Excluding Unrealized Pro Forma Total AIG Equity, excluding Total Common Book Value Appreciation (Depreciation) Book Value Shareholders' Unrealized Appreciation Shares Per Share on Investments Per Share (a) Equity (Depreciation) on Investments Outstanding December 31, 2006 $ 781.77 $ 704.24 $ - $ 101,677 $ 91,594 130,059,810 December 31, 2007 757.45 722.86-95,801 91,426 126,479,203 December 31, 2008 391.94 425.05-52,710 57,162 134,483,454 December 31, 2009 516.94 477.44 40.75 69,824 64,489 135,070,907 March 31, 2010 (b) 558.81 506.62 45.55 75,407 68,363 134,944,484 June 30, 2010 558.56 483.32 45.63 75,470 65,304 135,116,300 (a) At June 30, 2010, pro forma book value per share is computed as follows: $75,470 + $5,880 - $41,605 - $7,543 Total AIG Shareholders' equity + Proceeds from the settlement of equity units - Series E preferred (including cumulative dividends on Series D preferred) - Series F draw down Total common shares outstanding + common shares issuable in settlement of equity units + common shares issued upon assumed conversion of Series C Preferred Stock 135,116,300 + 7,736,904 + 562,868,096 =$ 45.63 (b) Amounts at March 31, 2010 have been revised to reflect the Fuji bargain purchase gain. See Note (4) on Page 17 for further information. 11
General Insurance Operating Statistics (dollars in millions) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 % Chg Gross premiums written $ 9,553 $ 10,041 (4.9) % $ 11,508 (17.0) % $ 21,061 $ 21,366 (1.4) % Ceded premiums written 1,761 2,122 (17.0) 3,864 (54.4) 5,625 5,714 (1.6) Net premiums written 7,792 7,919 (1.6) 7,644 1.9 15,436 15,652 (1.4) Net premiums earned 7,733 8,017 (3.5) 7,641 1.2 15,374 16,295 (5.7) Paid losses 5,634 5,951 (5.3) 3,741 50.6 9,375 11,835 (20.8) Change in net loss reserves (604) 659 NM 1,207 NM 603 328 83.8 Less foreign exchange effect (545) 972 NM (511) NM (1,056) 736 NM Claims and claims adjustment expenses incurred (1) (2) 5,575 5,638 (1.1) 5,459 2.1 11,034 11,427 (3.4) Change in deferred acquisition costs (104) 15 NM (18) NM (122) 20 NM Other underwriting expenses 2,420 2,219 9.1 2,392 1.2 4,812 4,426 8.7 Underwriting profit (loss) (158) 145 NM (192) NM (350) 422 NM Net investment income Interest and dividends 850 851 (0.1) 845 0.6 1,695 1,792 (5.4) Partnership income 220 (100) NM 147 49.7 367 (498) NM Mutual funds (25) 118 NM (1) NM (26) 84 NM Other investment income (3) 142 56 153.6 108 31.5 250 94 166.0 Investment expense (74) (56) 32.1 (28) 164.3 (102) (168) (39.3) Total 1,113 869 28.1 1,071 3.9 2,184 1,304 67.5 Operating income before net realized capital gains (losses) and bargain purchase gain 955 1,014 (5.8) 879 8.6 1,834 1,726 6.3 Net realized capital gains (losses) 58 (37) NM 137 (57.7) 195 (645) NM Bargain purchase gain (4) - - NM 406 NM 406 - NM Pre-tax income (loss) $ 1,013 $ 977 3.7 % $ 1,422 (28.8) % $ 2,435 $ 1,081 125.3 % Net loss and loss expense reserve (at period end) $ 64,294 (1.0) % $ 63,622 $ 60,315 5.5 % Underwriting ratios: Loss ratio (2) 72.1 70.3 71.4 71.8 70.1 Expense ratio 29.9 27.9 31.1 30.5 27.3 Combined ratio 102.0 98.2 102.5 102.3 97.4 Combined ratio excluding significant current year catastrophe-related losses 98.3 98.2 96.2 97.3 97.4 Foreign exchange effect on worldwide growth: Net premiums written Growth in original currency (5) (3.0) % (3.5)% Foreign exchange effect 1.4 2.1 Growth as reported in U.S. $ (1.6) % (1.4)% (See Accompanying Notes on Page 17) 12
AIG Commercial Insurance Operating Statistics (dollars in millions) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 % Chg Net premiums written $ 4,738 $ 4,968 (4.6) % $ 3,787 25.1 % $ 8,525 $ 9,152 (6.9) % Net premiums earned 4,580 4,948 (7.4) 4,562 0.4 9,142 10,175 (10.2) Claims and claims adjustment expenses incurred (1) 3,763 3,950 (4.7) 3,474 8.3 7,237 8,044 (10.0) Change in deferred acquisition costs (64) (3) NM 129 NM 65 127 (48.8) Other underwriting expenses 1,179 992 18.9 1,070 10.2 2,249 2,016 11.6 Underwriting profit (loss) (298) 9 NM (111) NM (409) (12) NM Net investment income Interest and dividends 656 672 (2.4) 654 0.3 1,310 1,343 (2.5) Partnership income 199 (56) NM 142 40.1 341 (377) NM Mutual funds (31) 27 NM 1 NM (30) 15 NM Other investment income (3) 123 41 200.0 62 98.4 185 81 128.4 Investment expense (57) (39) 46.2 (15) 280.0 (72) (117) (38.5) Total 890 645 38.0 844 5.5 1,734 945 83.5 Operating income before net realized capital gains (losses) 592 654 (9.5) 733 (19.2) 1,325 933 42.0 Net realized capital gains (losses) (61) (82) NM (3) NM (64) (585) NM Pre-tax income (loss) $ 531 $ 572 (7.2)% $ 730 (27.3)% $ 1,261 $ 348 262.4 % Underwriting ratios: Loss ratio 82.2 79.8 76.2 79.2 79.1 Expense ratio 24.3 20.0 26.3 25.3 21.1 Combined ratio 106.5 99.8 102.5 104.5 100.2 Combined ratio excluding significant current year catastrophe-related losses 101.6 99.8 98.6 100.1 100.2 (See Accompanying Notes on Page 17) 13
AIG Commercial Insurance Six Months Ended June 30, 2010 Gross Premiums Written by Line of Business Management / Professional Liability 8.8% Commercial Umbrella / Excess 8.1% Aviation 1.7% Programs 5.4% Multinational P&C 5.9% A&H Products 6.4% Environmental 2.5% All Other * 13.0% Workers Compensation 12.0% Property 20.8% General Liability / Auto Liability 15.4% Gross Premiums Written $10.7 billion * All Other includes $609 million (5.7%) from the Private Client Group 14
Foreign General Insurance Operating Statistics (dollars in millions) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 % Chg Net premiums written $ 3,054 $ 2,951 3.5 % $ 3,857 (20.8) % $ 6,911 $ 6,500 6.3 % Net premiums earned 3,153 3,069 2.7 3,079 2.4 6,232 6,120 1.8 Claims and claims adjustment expenses incurred (1) (2) 1,812 1,688 7.3 1,985 (8.7) 3,797 3,383 12.2 Change in deferred acquisition costs (40) 18 NM (147) NM (187) (107) NM Other underwriting expenses 1,241 1,227 1.1 1,322 (6.1) 2,563 2,410 6.3 Underwriting profit (loss) 140 136 2.9 (81) NM 59 434 (86.4) Net investment income Interest and dividends 194 179 8.4 191 1.6 385 449 (14.3) Partnership income 21 (44) NM 5 320.0 26 (121) NM Mutual funds 6 91 (93.4) (2) NM 4 69 (94.2) Other investment income (3) 19 15 26.7 46 (58.7) 65 13 400.0 Investment expense (17) (17) - (13) 30.8 (30) (51) (41.2) Total 223 224 (0.4) 227 (1.8) 450 359 25.3 Operating (loss) income before net realized capital gains (losses) and bargain purchase gain 363 360 0.8 146 148.6 509 793 (35.8) Net realized capital gains (losses) 119 45 164.4 140 (15.0) 259 (60) NM Bargain purchase gain (4) - - NM 406 NM 406 - NM Pre-tax income (loss) (6) $ 482 $ 405 19.0 % $ 692 (30.3) % $ 1,174 $ 733 60.2 % Underwriting ratios: Loss ratio (2) 57.5 55.0 64.5 60.9 55.3 Expense ratio 38.1 40.6 38.2 38.1 37.6 Combined ratio 95.6 95.6 102.7 99.0 92.9 Combined ratio excluding significant current year catastrophe-related losses 93.5 95.6 92.8 93.2 92.9 Foreign exchange effect on Foreign General's growth: Net premiums written Growth in original currency (5) (0.3) % 1.3 % Foreign exchange effect 3.8 5.0 Growth as reported in U.S. $ 3.5 % 6.3 % (See Accompanying Notes on Page 17) 15
Foreign General Insurance Gross Premiums Written Six Months Ended June 30, 2010 Gross Premiums Written by Line of Business Gross Premiums Written by Region Accident & Health 19.3% Personal Lines 11.8% Other / Service Business 1.6% Aviation 2.8% Marine and Energy 22.5% U.K. / Ireland 35.1% Africa / Middle East / Mediterranean / South Asia 4.2% Asia / Australasia 8.6% Lloyd's 5.1% Property 7.1% Americas 5.8% Europe 27.1% Specialty Lines 16.5% Casualty 13.3% Far East 19.2% Gross Premiums Written $10.5 billion 16
General Insurance Notes (1) Includes significant current year catastrophe-related losses and net reinstatement premiums as follows: Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, June 30, (in millions) 2010 2009 2010 2010 2009 AIG Commercial Insurance $ 223 $ - $ 177 $ 400 $ - Foreign General Insurance 64 304 368 - Total $ 287 $ - $ 481 $ 768 $ - (2) Total General Insurance and Foreign General Insurance include changes in future policy benefits for certain accident and health insurance contracts. (3) Other investment income is comprised principally of real estate income, changes in market value associated with trading portfolios and income (loss) from equity method investments. (4) On March 31, 2010, AIG through a Chartis International subsidiary, purchased additional voting shares of Fuji for $145 million. The acquisition resulted in a bargain purchase gain of approximately $406 million. Since the sale closed on March 31, 2010 and final appraisals of Fuji s insurance contracts, loans, certain real estate and intangible assets were not complete, no gain was recognized during the first quarter of March 31, 2010. During the quarter ended June 30, 2010, AIG substantially completed the accounting for the acquisition and retrospectively adjusted the provisional amounts initially recorded. Consequently, AIG revised the results of operations for the three months ended March 31, 2010 and recognized a bargain purchase gain for the six months ended June 30, 2010 and three months ended March 31, 2010 and excluded that gain from the three months ended June 30, 2010. (5) Computed using a constant exchange rate for each period. (6) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using average exchange rates. 17
Domestic Life Insurance & Retirement Services Operating Statistics (dollars in millions) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, % Inc. 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 (Dec.) Premiums, deposits and other considerations (1) $ 4,968 $ 4,018 23.6 % $ 4,737 4.9 % $ 9,705 $ 9,082 6.9 % Revenues: Premiums and other considerations $ 658 $ 655 0.5 % $ 667 (1.3) % $ 1,325 $ 1,435 (7.7) % Fee Income 657 676 (2.8) 648 1.4 1,305 1,336 (2.3) Net investment income: Interest and dividends 2,408 2,168 11.1 2,476 (2.7) 4,884 4,461 9.5 Partnership income (loss) 213 56 280.4 235 (9.4) 448 (317) NM Other 44 26 69.2 38 15.8 82 69 18.8 Investment expenses (37) (29) NM (42) NM (79) (62) NM Total net investment income 2,628 2,221 18.3 2,707 (2.9) 5,335 4,151 28.5 Total revenues excluding net realized capital gains (losses) 3,943 3,552 11.0 4,022 (2.0) 7,965 6,922 15.1 Benefits and expenses: Policyholder benefits and claims incurred 2,297 2,194 4.7 2,203 4.3 4,500 4,840 (7.0) Policy acquisition and other insurance expenses 788 882 (10.7) 700 12.6 1,488 2,115 (29.6) Total benefits and expenses 3,085 3,076 0.3 2,903 6.3 5,988 6,955 (13.9) Operating income (loss) excluding net realized capital gains (losses), goodwill impairment and related amortization of acquisition costs VOBA and sales inducements 858 476 80.3 1,119 (23.3) 1,977 (33) NM Amortization (benefit) of deferred acquisition costs, VOBA and sales inducements related to net realized capital gains (losses) (196) 213 NM (4) NM (200) (136) NM Operating income before net realized capital gains (losses) and goodwill impairment 1,054 263 300.8 1,123 (6.1) 2,177 103 NM Net realized capital losses (966) (54) NM (796) NM (1,762) (1,721) NM Goodwill impairment - (9) NM - NM - (9) NM Pre-tax income (loss) $ 88 $ 200 (56.0) % $ 327 (73.1) % $ 415 $ (1,627) NM % Assets under management: Cash and investments $ 169,383 2.7 % $ 173,879 $ 155,793 11.6 % Separate account reserves 51,948 (9.7) 46,904 44,298 5.9 Group retirement mutual funds 8,249 (8.9) 7,511 7,090 5.9 Retail mutual funds 5,951 (7.2) 5,521 5,613 (1.6) Total assets under management $ 235,531 (0.7) % $ 233,815 $ 212,794 9.9 % (1) Divested operations included in all lines except Premiums, deposits and other considerations. 18
Domestic Life Insurance Operating Statistics (dollars in millions) Three Months Ended Six Months Ended June 30, June 30, % Inc. March 31, % Inc. June 30, June 30, % Inc. 2010 2009 (Dec.) 2010 (Dec.) 2010 2009 (Dec.) Premiums, deposits and other considerations (1) (2) $ 1,316 $ 1,382 (4.8) % $ 1,323 (0.5)% $ 2,639 $ 2,852 (7.5)% Revenues: Premiums and other considerations $ 658 $ 655 0.5 % $ 667 (1.3)% $ 1,325 $ 1,344 (1.4)% Fee income 370 404 (8.4) 373 (0.8) 743 806 (7.8) Net investment income NM Interest and dividends (3) 1,012 950 6.5 1,005 0.7 2,017 1,853 8.9 Partnership income (loss) 29 (18) NM 20 45.0 49 (139) NM Other 29 19 52.6 28 3.6 57 60 (5.0) Investment expenses (20) (16) NM (19) NM (39) (34) NM Total net investment income 1,050 935 12.3 1,034 1.5 2,084 1,740 19.8 Total revenues excluding net realized capital gains (losses) 2,078 1,994 4.2 2,074 0.2 4,152 3,890 6.7 Benefits and expenses: Policyholder benefits and claims incurred 1,305 1,203 8.5 1,320 (1.1) 2,625 2,498 5.1 Policy acquisition and other insurance expenses 393 441 (10.9) 389 1.0 782 896 (12.7) Total benefits and expenses 1,698 1,644 3.3 1,709 (0.6) 3,407 3,394 0.4 Operating income excluding net realized capital gains (losses) and related amortization of acquisition costs, VOBA and sales inducements and divested operations 380 350 8.6 365 4.1 745 496 50.2 Amortization (benefit) of deferred acquisition costs, VOBA and sales inducements related to net realized capital gains (losses) (4) 2 NM (2) NM (6) (23) NM Operating income before net realized capital gains (losses) and divested operations 384 348 10.3 367 4.6 751 519 44.7 Net realized capital gains (losses) (100) (78) NM (140) NM (240) (538) NM Divested operations - - NM - NM - (9) NM Pre-tax income (loss) $ 284 $ 270 5.2 % $ 227 25.1 % $ 511 $ (28) NM% Assets under management (2): Cash and investments $ 61,799 2.8 % $ 63,553 $ 55,645 14.2 % Separate account reserves 5,309 (3.5) 5,125 5,225 (1.9) Total assets under management $ 67,108 2.3 % $ 68,678 $ 60,870 12.8 % (See Accompanying Notes on Page 23) 19