Financial Supplement Third Quarter 2012 This report should be read in conjunction with AIG s Report on Form 10-Q for the quarter ended September 30, 2012 filed with the Securities and Exchange Commission. All financial information in this document is unaudited.
Financial Supplement Contact: Liz Werner Investor Relations (212) 770-7074 Table of Contents. Page(s) Cautionary Statement Regarding Forward-Looking Information... 1 Non-GAAP Financial Measures... 2 Consolidated Results Consolidated Statement of Operations.... 3 Consolidated Statement of Segment Operations... 4-6 Condensed Balance Sheets... 7-9 Debt and Capital... 10 AIG Property Casualty AIG Property Casualty Operating Statistics... 11 AIG Property Casualty - Operating Statistics by Business... 12-14 AIG Property Casualty - Operating Statistics (U.S. & International)...15-18 Worldwide Net Premiums Written by Line of Business & Region... 19 Net Premiums Written by Line of Business... 20 AIG Property Casualty Notes... 21 AIG Life and Retirement AIG Life and Retirement Operating Statistics... 22 Life Insurance (American General) Operating Statistics... 23 Life Insurance (American General) Sales, Deposits and In Force... 24 Life Insurance (American General) Other Data... 25 Retirement Services Operating Statistics... 26 Retirement Services Product Statistics... 27 Retirement Services Account Value Rollforward... 28 Retirement Services Spread Information... 29-30 Retirement Services Group Retirement Products (VALIC)... 31 Retirement Services Individual Variable Annuities (SunAmerica Retirement Markets) Guaranteed Benefits... 32-34 AIG Life and Retirement Notes... 35-36 Aircraft Leasing Aircraft Leasing Operating Statistics... 37 Other Other Operations... 38 Mortgage Guaranty Operating Statistics... 39 Parent Company Financial Statements... 40-42 Investment Information Other Invested Assets by Segment... 43 Net Realized Capital Gains (Losses)... 44 Return on Average Alternative Investments and Mutual Funds Assets by Segment... 45
Cautionary Statement Regarding Forward-Looking Information This 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 timing of the disposition of the remaining ownership position of the United States Department of the Treasury (Department of Treasury) in AIG; the monetization of AIG s interests in International Lease Finance Corporation (ILFC); 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, including its municipal bond portfolio; actions by credit rating agencies; judgments concerning casualty insurance underwriting and reserves; judgments concerning the recognition of deferred tax assets; judgments concerning deferred policy acquisition costs (DAC) recoverability; judgments concerning the recoverability of aircraft values in ILFC s fleet; and such other factors as are discussed in Part I, Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and in Part II, Item 1A. Risk Factors of AIG s Report on Form 10-Q for the quarter ended September 30, 2012; in Part II, Item 1A. Risk Factors of AIG s Report on Form 10-Q for the quarter ended June 30, 2012; and in Part I, Item 1A. Risk Factors and Part II, Item 7. MD&A of AIG s Annual Report on Form 10-K for the year ended December 31, 2011, as amended by Amendment No. 1 and Amendment No. 2 on Forms 10-K/A filed on February 27, 2012 and March 30, 2012, respectively, and Exhibit 99.2, MD&A of AIG s Current Report on Form 8-K filed on May 4, 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. 1
Non-GAAP Financial Measures Throughout this financial supplement, AIG presents its operations in the way it believes will be most meaningful, representative, and most transparent. That presentation includes the use of certain non-gaap financial measures. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within the relevant tables. AIG believes that After-tax operating income (loss) permits a better assessment and enhanced understanding of the operating performance of its businesses by highlighting the results from ongoing operations and the underlying profitability of its businesses. After-tax operating income (loss) excludes (income) loss from discontinued operations, net loss (gain) on sale of divested businesses, income from divested businesses, legacy FIN 48 items, changes in litigation reserves, deferred income tax valuation allowance charges and releases, amortization of the Federal Reserve Bank of New York (FRBNY) prepaid commitment fee asset, changes in fair value of AIG Life and Retirement fixed income securities designated to hedge living benefit liabilities, change in benefit reserves and deferred policy acquisition costs (DAC), value of business acquired (VOBA), and sales inducement assets (SIA) related to net realized capital (gains) losses, net realized capital (gains) losses and non-qualifying derivative hedging activities, excluding net realized capital (gains) losses. See page 6 for the reconciliation of Net income (loss) attributable to AIG to After-tax operating income (loss). Additionally, in some cases, revenues, net income, operating income and related rates of performance are shown exclusive of the effect of tax benefits not obtained for losses incurred, the recognition of other-than-temporary impairments, restructuring-related activities, partnership income, other enhancements to income, credit valuation adjustments, unrealized market valuation gains (losses), the effect of catastrophe-related losses and prior year development, change in discount, asbestos losses, returned or additional premiums related to prior year development, foreign exchange rates and aircraft impairments. In all such instances, AIG believes that excluding these items permits investors to better assess the operating performance of each of AIG s underlying businesses by highlighting the results from ongoing operations and the underlying profitability of its businesses. AIG believes that providing information in a non-gaap manner is more useful to investors and analysts and more meaningful than the GAAP presentation. When such measures are disclosed, reconciliations to the comparable GAAP measure are provided. Although the investment of premiums to generate investment income (or loss) and realized capital gains or losses is an integral part 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 declines 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. Life and retirement services production (premiums, deposits and other considerations and life insurance CPPE sales) is a non-gaap measure which includes life insurance premiums, deposits on annuity contracts and mutual funds. AIG uses this measure because it is a standard measure of performance used in the insurance industry and thus allows for meaningful comparisons with AIG s insurance competitors. In the second quarter of 2012, After tax operating income excluded certain litigation charges, primarily related to certain existing corporate litigation matters, and certain provisions for uncertain tax positions (under FIN 48) that are not reflective of AIG s ongoing operating results. During the first quarter of 2012, AIG revised its definition of After-tax operating income (loss) to exclude changes in the fair value of AIG Life and Retirement fixed income securities designated to hedge living benefit liabilities and increased benefit reserves related to net realized capital gains (losses). AIG believes that this revised measure of After-tax operating income (loss) permits a better assessment and enhanced understanding of the operating performance of its AIG Life and Retirement business by excluding from operating results the volatility associated with these hedging and capital gains taking activities. AIG believes this revised definition of After-tax operating income (loss) is a better measure of how AIG assesses the operating performance of AIG Life and Retirement s operations. 2
Consolidated Statement of Operations (in millions, except per share data) 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Revenues: Premiums $ 9,503 $ 9,619 $ 9,461 $ 9,781 $ 9,829 $ 28,583 $ 29,209 Policy fees 691 674 691 681 658 2,056 2,024 Net investment income 4,650 4,481 7,105 4,594 128 16,236 10,161 Net realized capital gains (losses): (1) Total other-than-temporary impairments on available for sale securities (34) (99) (168) (324) (493) (301) (892) Portion of other-than-temporary impairments on available for sale fixed maturity securities recognized in Other comprehensive income (loss) (36) (51) (285) 38 71 (372) 130 Net other-than-temporary impairments on available for sale securities recognized in net income (loss) (70) (150) (453) (286) (422) (673) (762) Other realized capital gains 717 547 203 1,030 1,029 1,467 709 Total net realized capital gains (losses) (page 44) 647 397 (250) 744 607 794 (53) Aircraft leasing revenue 1,147 1,123 1,156 1,089 1,129 3,426 3,419 Other income 1,010 829 280 530 368 2,119 2,078 Total revenues 17,648 17,123 18,443 17,419 12,719 53,214 46,838 Benefits, claims and expenses: Policyholder benefits and claims incurred 7,991 7,769 7,102 8,072 8,333 22,862 25,378 Interest credited to policyholder account balances 1,191 1,064 1,069 1,101 1,146 3,324 3,366 Amortization of deferred acquisition costs 1,522 1,472 1,347 1,393 1,540 4,341 4,093 Other acquisition and insurance expenses 2,214 2,264 2,258 2,294 2,067 6,736 6,164 Interest expense 988 954 953 914 970 2,895 3,055 Aircraft leasing expenses 720 646 625 612 2,057 1,991 3,264 Net loss (gain) on extinguishment of debt (2) - 11 21 (484) - 32 3,392 Other expenses 427 1,192 484 632 876 2,103 1,912 Total benefits, claims and expenses 15,053 15,372 13,859 14,534 16,989 44,284 50,624 Income (loss) from continuing operations before income tax expense (benefit) 2,595 1,751 4,584 2,885 (4,270) 8,930 (3,786) Income tax expense (benefit) 735 (593) 1,148 (18,577) (665) 1,290 (1,187) Income (loss) from continuing operations 1,860 2,344 3,436 21,462 (3,605) 7,640 (2,599) Income (loss) from discontinued operations, net of income tax expense (benefit) 1 (5) 13 140 (221) 9 2,327 Net income (loss) 1,861 2,339 3,449 21,602 (3,826) 7,649 (272) Less: Net income from continuing operations attributable to noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests - - 208 96 145 208 538 Other 5 7 33 27 19 45 28 Total net income from continuing operations attributable to noncontrolling interests 5 7 241 123 164 253 566 Net income from discontinued operations attributable to noncontrolling interests - - - - - - 19 Total net income attributable to noncontrolling interests 5 7 241 123 164 253 585 Net income (loss) attributable to AIG $ 1,856 $ 2,332 $ 3,208 $ 21,479 $ (3,990) $ 7,396 $ (857) Net income (loss) attributable to AIG common shareholders $ 1,856 $ 2,332 $ 3,208 $ 21,479 $ (3,990) $ 7,396 $ (1,669) Income (loss) per common share attributable to AIG common shareholders: Basic: Income (loss) from continuing operations $ 1.13 $ 1.33 $ 1.70 $ 11.24 $ (1.99) $ 4.21 $ (2.25) Income (loss) from discontinued operations $ - $ - $ 0.01 $ 0.07 $ (0.11) $ - $ 1.30 Diluted: Income (loss) from continuing operations $ 1.13 $ 1.33 $ 1.70 $ 11.24 $ (1.99) $ 4.21 $ (2.25) Income (loss) from discontinued operations $ - $ - $ 0.01 $ 0.07 $ (0.11) $ - $ 1.30 Weighted average shares outstanding: Basic 1,642.5 1,756.7 1,876.0 1,898.7 1,899.5 1,758.0 1,765.9 Diluted 1,642.5 1,756.7 1,876.0 1,898.8 1,899.5 1,758.0 1,765.9 Notes: (1) Includes gains (losses) from hedging activities that did not qualify for hedge accounting, including the related foreign exchange gains and losses and other-than-temporary impairment charges. (2) Includes a $3.3 billion charge in 1Q11, primarily consisting of the accelerated amortization of the prepaid commitment fee asset resulting from the termination of the FRBNY Credit Facility on January 14, 2011. In the fourth quarter of 2011, as a result of the exchange of specified series of its outstanding Junior Subordinated Debentures for senior notes pursuant to its offer to exchange, AIG recognized a $484 million gain. 3
Consolidated Statement of Segment Operations (in millions, except per share data) 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 AIG Property Casualty Net premiums written $ 8,712 $ 9,095 $ 8,820 $ 7,848 $ 8,659 $ 26,627 $ 26,992 Net premiums earned 8,752 8,820 8,688 8,962 9,043 26,260 26,727 Claims and claims adjustment expenses incurred 6,252 6,079 5,909 6,675 6,838 18,240 21,274 Underwriting expenses 2,941 2,958 2,959 2,923 2,737 8,858 7,947 Underwriting loss (441) (217) (180) (636) (532) (838) (2,494) Net investment income 1,227 1,153 1,223 1,003 1,024 3,603 3,345 Operating income 786 936 1,043 367 492 2,765 851 Net realized capital gains (losses) 161 23 (135) 454 60 49 153 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income 949 961 910 817 551 2,820 1,003 AIG Life and Retirement Premiums 575 622 605 639 591 1,802 1,874 Policy fees 691 674 691 681 658 2,056 2,024 Net investment income 2,597 2,521 2,885 2,372 2,295 8,003 7,510 Other income (1) - - - 209 - - - Total revenues 3,863 3,817 4,181 3,901 3,544 11,861 11,408 Benefits and expenses 3,037 2,884 2,870 2,989 3,073 8,791 9,043 Operating income 826 933 1,311 912 471 3,070 2,365 Changes in fair value of fixed income securities designated to hedge living benefit liabilities, net of interest expense (3) 70 (19) - - 48 - Change in benefit reserves and DAC, VOBA and SIA related to net realized capital gains (losses) (604) (552) 36 (132) (163) (1,120) (195) Net realized capital gains (losses) 670 326 (466) 97 38 530 (91) Pre-tax income 889 777 862 877 346 2,528 2,079 Aircraft Leasing Revenues 1,145 1,123 1,153 1,093 1,118 3,421 3,374 Expenses 1,106 1,035 1,034 974 2,435 3,175 4,488 Operating income (loss) 39 88 119 119 (1,317) 246 (1,114) Net realized capital gains (losses) 1 (2) 1 (2) (12) - (8) Pre-tax income (loss) 40 86 120 117 (1,329) 246 (1,122) Other operations, operating income (loss) 844 664 2,322 977 (4,242) 3,830 (1,991) Other operations pre-tax income (loss) before net realized capital gains (losses) 844 (55) 2,319 979 (4,244) 3,108 (5,694) Other operations, net realized capital gains (losses) 47 (61) 417 173 299 403 (161) Consolidation and elimination adjustments (174) 43 (44) (78) 107 (175) 109 Income (loss) from continuing operations before income tax expense (benefit) 2,595 1,751 4,584 2,885 (4,270) 8,930 (3,786) Income tax expense (benefit) (2) 735 (593) 1,148 (18,577) (665) 1,290 (1,187) Income (loss) from continuing operations 1,860 2,344 3,436 21,462 (3,605) 7,640 (2,599) Income (loss) from discontinued operations, net of tax 1 (5) 13 140 (221) 9 2,327 Net income (loss) 1,861 2,339 3,449 21,602 (3,826) 7,649 (272) Less: Net income from continuing operations attributable to noncontrolling interests: Noncontrolling nonvoting, callable, junior and senior preferred interests - - 208 96 145 208 538 Other 5 7 33 27 19 45 28 Total net income from continuing operations attributable to noncontrolling interests 5 7 241 123 164 253 566 Net income from discontinued operations attributable to noncontrolling interests - - - - - - 19 Total net income attributable to noncontrolling interests 5 7 241 123 164 253 585 Net income (loss) attributable to AIG $ 1,856 $ 2,332 $ 3,208 $ 21,479 $ (3,990) $ 7,396 $ (857) Income (loss) per common share attributable to AIG common shareholders - diluted: Income (loss) from continuing operations $ 1.13 $ 1.33 $ 1.70 $ 11.24 $ (1.99) $ 4.21 $ (2.25) Income (loss) from discontinued operations $ - $ - $ 0.01 $ 0.07 $ (0.11) $ - $ 1.30 Effective tax rates (page 6): Income (loss) from continuing operations 28.3% (33.8)% 25.0% N/M 15.6% 14.4% 31.3% See Accompanying Notes on Page 5 4
Consolidated Statement of Segment Operations Notes (1) Other income in 4Q11 represents revenue recorded pursuant to legal settlements. (2) Reflects deferred tax asset valuation allowance release of $0.2 billion, $1.3 billion, $0.3 billion and $19.4 billion in 3Q12, 2Q12, 1Q12 and 4Q11, respectively. Return on equity (ROE) computations: 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Annualized Net income (loss) attributable to AIG $ 7,424 $ 9,328 $ 12,832 $ 85,916 $ (15,960) $ 9,861 $ (1,143) Annualized After-tax operating income (loss) attributable to AIG $ 6,564 $ 7,432 $ 12,388 $ 6,356 $ (11,984) $ 8,795 $ 444 Average AIG Shareholders' equity $ 103,188 $ 104,080 $ 102,495 $ 91,225 $ 84,076 $ 102,841 $ 81,664 Less: Average AOCI 9,339 7,332 6,013 5,551 7,480 7,676 7,343 Average AIG Shareholders' equity, excluding AOCI $ 93,849 $ 96,748 $ 96,482 $ 85,674 $ 76,596 $ 95,165 $ 74,321 ROE (a) 7.2% 9.0% 12.5% N/M N/M 9.6% NM ROE excluding AOCI (b) 7.9% 9.6% 13.3% N/M N/M 10.4% NM ROE - After-tax operating income (c) 7.0% 7.7% 12.8% 7.4% N/M 9.2% 0.6% N/M - Not meaningful (a) Computed as Annualized Net income (loss) attributable to AIG divided by Average AIG Shareholders' equity. (b) Computed as Annualized Net income (loss) attributable to AIG divided by Average AIG Shareholders' equity, excluding AOCI. (c) Computed as Annualized After-tax operating income divided by Average AIG Shareholders' equity, excluding AOCI. Book Value per Common Share computations: (dollars in millions, except share amounts) (2 3) (2) Book Value Per Share, (1) Total AIG Shareholders' (3) (1 3) Excluding Accumulated Total AIG Equity, Excluding Total Common Book Value Other Comprehensive Shareholders' Accumulated Other Shares Per Share Income Equity Comprehensive Income Outstanding December 31, 2011 $ 53.53 $ 50.81 $ 101,538 $ 96,385 1,896,821,482 March 31, 2012 57.68 53.85 103,451 96,578 1,793,447,313 June 30, 2012 60.58 56.07 104,709 96,918 1,728,469,818 September 30, 2012 68.87 61.49 101,666 90,779 1,476,295,743 5
After-tax Operating Income (Loss) Attributable to AIG (in millions, except share data) 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net income (loss) attributable to AIG $ 1,856 $ 2,332 $ 3,208 $ 21,479 $ (3,990) $ 7,396 $ (857) Adjustments to arrive at After-tax operating income (loss) attributable to AIG (amounts net of tax): (Income) loss from discontinued operations (1) 5 (13) (140) 221 (9) (2,308) Net loss (gain) on sale of divested businesses - - 2 (1) 1 2 49 Income from divested businesses - - - - - - (16) Legacy FIN 48 items 12 331 - - - 343 - Changes in litigation reserves - 467 - - - 467 - Deferred income tax valuation allowance charge/(release) (229) (1,277) (289) (19,410) 1,162 (1,795) 1,103 Amortization of FRBNY prepaid commitment fee asset - - - - - - 2,358 Changes in fair value of AIG Life and Retirement fixed income securities designated to hedge living benefit liabilities 2 (45) 12 - - (31) - Change in benefit reserves and DAC, VOBA and SIA related to net realized capital (gains) losses 393 359 (23) 83 102 729 119 Net realized capital (gains) losses (387) (300) 199 (413) (430) (488) (40) Non-qualifying derivative hedging activities, excluding net realized capital (gains) losses (5) (14) 1 (9) (62) (18) (75) After-tax operating income (loss) attributable to AIG $ 1,641 $ 1,858 $ 3,097 $ 1,589 $ (2,996) $ 6,596 $ 333 After-tax operating income (loss) attributable to AIG per diluted share $ 1.00 $ 1.06 $ 1.65 $ 0.84 $ (1.58) $ 3.75 $ 0.19 Effective tax rates on After-tax operating income (loss) attributable to AIG 35.4% 26.3% 30.8% 24.2% 41.1% 30.8% N/M Return on equity - After-tax operating income (loss) (page 5) 7.0% 7.7% 12.8% 7.4% N/M 9.2% 0.6% The reconciliation of income attributable to AIG from continuing operations to After-tax operating income (loss) and calculation of the effective tax rates is presented below (gains are negative and losses are positive). Income (loss) Before Tax Income Tax (Expense) Benefit Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012 Net Income (loss) Noncontrolling Interests Net Income (loss) attributable to AIG Effective Tax Rate * Income (loss) Before Tax Income Tax (Expense) Benefit Net Income (loss) Noncontrolling Interests Net Income (loss) attributable to AIG Income (loss) from continuing operations $ 2,595 $ (735) $ 1,860 $ (5) $ 1,855 28.3% $ 8,930 $ (1,290) $ 7,640 $ (253) $ 7,387 14.4% Net gains on sale of divested business - - - - - 3 (1) 2-2 Legacy FIN 48 items - 12 12-12 - 343 343-343 Changes in litigation reserves - - - - - 719 (252) 467-467 Deferred income tax valuation allowance release - (229) (229) - (229) - (1,795) (1,795) - (1,795) Changes in fair value of AIG Life and Retirement fixed income securities designated to hedge living benefit liabilities 3 (1) 2-2 (48) 17 (31) - (31) Change in benefit reserves and DAC, VOBA and SIA related to net realized capital (gains) losses 604 (211) 393-393 1,120 (391) 729-729 Net realized capital (gains) losses (647) 260 (387) - (387) (794) 305 (489) 1 (488) Non-qualifying derivative hedging (gains) losses (8) 3 (5) - (5) (30) 12 (18) - (18) After-tax operating income (loss) $ 2,547 $ (901) $ 1,646 $ (5) $ 1,641 35.4% $ 9,900 $ (3,052) $ 6,848 $ (252) $ 6,596 30.8% * Effective tax rates are calculated based on Income (loss) from continuing operations before tax. Effective Tax Rate * 6
Condensed Consolidated Balance Sheets (in millions) September 30, 2012 June 30, 2012 March 31, 2012 December 31, 2011 September 30, 2011 Assets: Investments: Fixed maturity securities Bonds available for sale, at fair value $ 269,914 $ 263,014 $ 266,362 $ 263,981 $ 259,829 Bonds trading securities, at fair value 24,837 30,919 24,481 24,364 24,654 Equity securities Common and preferred stock available for sale, at fair value 3,021 2,947 3,026 3,624 3,209 Common and preferred stock trading, at fair value 98 103 123 125 148 Mortgage and other loans receivable, net of allowance 19,330 19,387 19,519 19,489 19,279 Flight equipment primarily under operating leases, net of accumulated depreciation 34,932 35,095 35,452 35,539 35,758 Other invested assets (page 43) 35,426 36,700 37,209 40,744 41,131 Short-term investments 22,557 24,365 20,789 22,572 29,098 Total investments 410,115 412,530 406,961 410,438 413,106 Cash 1,608 1,232 1,315 1,474 1,542 Premiums and other receivables, net of allowance 14,564 14,550 15,648 14,721 15,590 Reinsurance assets, net of allowance 27,066 27,539 28,257 27,211 30,411 Current and deferred income taxes 14,119 16,195 15,955 17,802 - Deferred policy acquisition costs 8,204 8,565 8,753 8,937 9,044 Other assets 18,307 20,507 21,489 20,389 21,264 Separate account assets, at fair value 56,740 54,265 56,025 51,388 48,112 Total assets $ 550,723 $ 555,383 $ 554,403 $ 552,360 $ 539,069 Liabilities: Liability for unpaid claims and claims adjustment expense $ 87,413 $ 87,871 $ 89,785 $ 91,145 $ 93,782 Unearned premiums 24,418 24,458 25,034 23,465 25,951 Future policy benefits for life and accident and health insurance contracts 35,831 34,935 34,493 34,317 33,600 Policyholder contract deposits 127,478 126,954 126,376 126,898 125,955 Other policyholder funds 6,303 6,231 6,561 6,691 6,655 Current and deferred income taxes - - - - 1,544 Other liabilities 36,219 41,131 35,568 32,287 34,991 Long-term debt (page 10) 73,748 73,897 76,096 75,253 77,389 Separate account liabilities 56,740 54,265 56,025 51,388 48,112 Total liabilities $ 448,150 $ 449,742 $ 449,938 $ 441,444 $ 447,979 Redeemable noncontrolling nonvoting, callable, junior preferred interests held by Department of Treasury - - - 8,427 9,303 Other redeemable noncontrolling interests 159 112 121 96 105 Total redeemable noncontrolling interests 159 112 121 8,523 9,408 AIG shareholders' equity: Common stock 4,766 4,766 4,766 4,766 4,764 Treasury stock, at cost (13,925) (5,926) (3,942) (942) (872) Additional paid-in capital 81,768 81,764 81,772 81,787 81,776 Accumulated earnings (deficit) 18,170 16,314 13,982 10,774 (10,705) Accumulated other comprehensive income (loss) 10,887 7,791 6,873 5,153 5,948 Total AIG shareholders' equity 101,666 104,709 103,451 101,538 80,911 Non-redeemable noncontrolling interests 748 820 893 855 771 Total equity 102,414 105,529 104,344 102,393 81,682 Total liabilities and equity $ 550,723 $ 555,383 $ 554,403 $ 552,360 $ 539,069 7
Condensed Consolidating Segment Balance Sheet September 30, 2012 (in millions) AIG AIG Life Other Consolidation Property Casualty and Retirement Aircraft Leasing UGC Operations (1) & Eliminations (2) AIG Inc. Assets: Investments: Fixed maturity securities Bonds available for sale, at fair value $ 102,474 $ 161,856 $ - $ 2,773 $ 2,811 $ - $ 269,914 Bonds trading securities, at fair value 1,755 2,577 - - 20,505-24,837 Equity securities Common and preferred stock available for sale, at fair value 2,874 140 1-6 - 3,021 Common and preferred stock trading, at fair value - - - - 98-98 Mortgage and other loans receivable, net of allowance 2,567 18,630 121 3 2,555 (4,546) 19,330 Flight equipment primarily under operating leases, net of accumulated depreciation - - 34,932 - - - 34,932 Other invested assets (3) (page 43) 13,113 12,906-1 8,900 506 35,426 Short-term investments 6,248 5,511 2,569 619 9,720 (2,110) 22,557 Total investments 129,031 201,620 37,623 3,396 44,595 (6,150) 410,115 Cash 960 299 79 71 200 (1) 1,608 Premiums and other receivables, net of allowance 11,971 1,326 325 37 2,171 (1,266) 14,564 Reinsurance assets, net of allowance 25,412 1,462 - (81) (6) 279 27,066 Current and deferred income taxes (4) 2,519 - - 117 18,545 (7,062) 14,119 Deferred policy acquisition costs 2,453 5,687-36 1 27 8,204 Other assets 5,964 4,135 1,549 83 87,696 (81,120) 18,307 Separate account assets, at fair value - 56,729 - - 11-56,740 Total assets $ 178,310 $ 271,258 $ 39,576 $ 3,659 $ 153,213 $ (95,293) $ 550,723 Liabilities: Liability for unpaid claims and claims adjustment expense $ 85,455 $ - $ - $ 275 $ 1,828 $ (145) $ 87,413 Unearned premiums 24,091 - - 297 30-24,418 Future policy benefits for life and accident and health insurance contracts 3,618 32,000 - - 237 (24) 35,831 Policyholder contract deposits - 127,578 - - 19 (119) 127,478 Other policyholder funds 3,827 2,468 - - 8-6,303 Other liabilities 11,527 12,490 7,454 580 16,090 (11,922) 36,219 Long-term debt (page 10) 134 1,052 (5) 24,209-52,517 (4,164) 73,748 Separate account liabilities - 56,729 - - 11-56,740 Total liabilities $ 128,652 $ 232,317 $ 31,663 $ 1,152 $ 70,740 $ (16,374) $ 448,150 Redeemable noncontrolling interests 51 - - - - 108 159 AIG shareholders' equity: Preferred stock - 1 - - (1) - - Common stock 109 99 1,054 4 19,344 (15,844) 4,766 Treasury stock, at cost - - - - (13,925) - (13,925) Additional paid-in capital 22,134 40,439 1,270 1,509 60,055 (43,639) 81,768 Accumulated earnings (deficit) 22,404 (9,792) 5,503 896 8,880 (9,721) 18,170 Accumulated other comprehensive income (loss) (4) 4,840 8,189 (14) 98 7,981 (10,207) 10,887 Total AIG shareholders' equity 49,487 38,936 7,813 2,507 82,334 (79,411) 101,666 Non-redeemable noncontrolling interests 120 5 100-139 384 748 Total equity 49,607 38,941 7,913 2,507 82,473 (79,027) 102,414 Total liabilities and equity $ 178,310 $ 271,258 $ 39,576 $ 3,659 $ 153,213 $ (95,293) $ 550,723 Notes: (1) Primarily represents AIG Parent (including the deferred tax asset valuation allowance), Global Capital Markets, Direct Investment book and SAFG, Inc. (a non-operating holding company). (2) Segment amounts are presented on an AIG stand-alone basis prior to intercompany eliminations. (3) Includes AIG's 14% interest in AIA with a carrying value of $0.4 billion reported in AIG Property Casualty and $5.7 billion reported in Other Operations. (4) At September 30, 2012, for U.S. tax return purposes, AIG Life and Retirement had approximately $15.8 billion of gross unrealized gains in its available for sale portfolio which, if realized, can be used to reduce a portion of gross capital loss carryforwards totaling $19.7 billion. (5) Consists primarily of intercompany debt which is eliminated in consolidation. 8
Condensed Consolidating Segment Balance Sheet December 31, 2011 (in millions) AIG AIG Life Other Consolidation Property Casualty and Retirement Aircraft Leasing UGC Operations (1) & Eliminations (2) AIG Inc. Assets: Investments: Fixed maturity securities Bonds available for sale, at fair value $ 103,831 $ 154,912 $ - $ 3,027 $ 2,211 $ - $ 263,981 Bonds trading securities, at fair value (3) 88 1,584 - - 22,692-24,364 Equity securities Common and preferred stock available for sale, at fair value 2,895 208 1-520 - 3,624 Common and preferred stock trading, at fair value - - - - 125-125 Mortgage and other loans receivable, net of allowance 2,598 21,201 90 3 6,026 (10,429) 19,489 Flight equipment primarily under operating leases, net of accumulated depreciation - - 35,539 - - - 35,539 Other invested assets (4) (page 43) 12,279 12,519-1 15,421 524 40,744 Short-term investments 4,660 3,301 1,910 1,010 11,691-22,572 Total investments 126,351 193,725 37,540 4,041 58,686 (9,905) 410,438 Cash 673 463 65 40 233-1,474 Premiums and other receivables, net of allowance 11,254 1,221 224 31 2,881 (890) 14,721 Reinsurance assets, net of allowance 25,538 1,511-151 11-27,211 Current and deferred income taxes (5) 4,305 2,289 (158) (55) 20,794 (9,373) 17,802 Deferred policy acquisition costs 2,375 6,502-24 1 35 8,937 Other assets 7,211 3,658 1,367 91 105,294 (97,232) 20,389 Separate account assets, at fair value - 51,383 - - 5-51,388 Total assets $ 177,707 $ 260,752 $ 39,038 $ 4,323 $ 187,905 $ (117,365) $ 552,360 Liabilities: Liability for unpaid claims and claims adjustment expense $ 88,211 $ - $ - $ 1,414 $ 1,691 $ (171) $ 91,145 Unearned premiums 23,236 - - 190 39-23,465 Future policy benefits for life and accident and health insurance contracts 3,474 30,607 - - 261 (25) 34,317 Policyholder contract deposits - 126,950 - - 26 (78) 126,898 Other policyholder funds 4,180 2,501 - - 10-6,691 Other liabilities 10,623 13,219 7,046 294 15,517 (14,412) 32,287 Long-term debt (page 10) 566 1,911 (6) 24,385-58,342 (9,951) 75,253 Separate account liabilities - 51,383 - - 5-51,388 Total liabilities $ 130,290 $ 226,571 $ 31,431 $ 1,898 $ 75,891 $ (24,637) $ 441,444 Redeemable noncontrolling nonvoting, callable, junior preferred interests held by Department of Treasury - - - - - 8,427 8,427 Other redeemable noncontrolling interests 29 - - - - 67 96 Total redeemable noncontrolling interests 29 - - - - 8,494 8,523 AIG shareholders' equity: Preferred stock - 1 - - 8,426 (8,427) - Common stock 108 99 1,053 4 19,345 (15,843) 4,766 Treasury stock, at cost - - - - (942) - (942) Additional paid-in capital 21,807 40,753 1,244 1,510 71,757 (55,284) 81,787 Accumulated earnings (deficit) 22,387 (11,398) 5,232 818 8,149 (14,414) 10,774 Accumulated other comprehensive income (loss) (5) 2,956 4,718 (22) 93 5,125 (7,717) 5,153 Total AIG shareholders' equity 47,258 34,173 7,507 2,425 111,860 (101,685) 101,538 Non-redeemable noncontrolling interests 130 8 100-154 463 855 Total equity 47,388 34,181 7,607 2,425 112,014 (101,222) 102,393 Total liabilities and equity $ 177,707 $ 260,752 $ 39,038 $ 4,323 $ 187,905 $ (117,365) $ 552,360 Notes: (1) Primarily represents AIG Parent (including the deferred tax asset valuation allowance), Global Capital Markets, Direct Investment book, SAFG, Inc. (a non-operating holding company), and the AIA SPV. (2) Segment amounts are presented on an AIG stand alone basis prior to intercompany eliminations. (3) Includes interest in Maiden Lane II LLC (ML II) of $1.3 billion reported in AIG Life and Retirement and interest in Maiden Lane III LLC (ML III) of $5.7 billion, reported in Other Operations. (4) Includes AIG's 33% interest in AIA with a total carrying value of $12.4 billion and reported in Other Operations. (5) For U.S. tax purposes, AIG Life and Retirement has approximately $11.0 billion of gross unrealized gains in its available for sale portfolio which, if realized, can be used to reduce a portion of gross capital loss carryforwards totaling $20.7 billion. (6) Consists primarily of intercompany debt which is eliminated in consolidation. 9
Debt and Capital Debt and Hybrid Capital Interest Expense Sept. 30, Dec. 31, Inc. Three Months Ended Nine Months Ended 2012 2011 (Dec.) Sept. 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011 Financial debt: AIG notes and bonds payable $ 14,040 $ 12,725 10.3 % $ 204 $ 152 $ 565 $ 456 AIG subordinated debt 250 - NM 1-1 - AIG loans and mortgage payable 232 234 (0.9) 1 1 2 2 SAFG, Inc. notes and bonds payable 298 298-5 5 16 16 Liabilities connected to trust preferred stock 1,339 1,339-27 26 80 80 Total 16,159 14,596 10.7 238 184 664 554 Operating debt: MIP notes payable 9,458 10,147 (6.8) 94 91 279 273 Series AIGFP matched notes and bonds payable 3,592 3,807 (5.6) 69 74 210 223 Other AIG borrowings supported by assets (1) 8,835 10,766 (17.9) - - - - ILFC borrowings 24,189 24,364 (0.7) 386 378 1,161 1,163 Other subsidiaries 330 393 (16.0) 5-11 10 Borrowings of consolidated investments 1,819 1,853 (1.8) 18 21 45 67 Total 48,223 51,330 (6.1) 572 564 1,706 1,736 Hybrid - debt securities: Junior subordinated debt (2) 9,366 9,327 0.4 178 222 525 663 Total $ 73,748 $ 75,253 (2.0)% $ 988 $ 970 $ 2,895 $ 3,055 (3) AIG capitalization: Total equity $ 102,414 $ 102,393 - % Hybrid - debt securities (2) 9,366 9,327 0.4 Total consolidated equity and hybrid capital 111,780 111,720 0.1 Financial debt 16,159 14,596 10.7 Total capital $ 127,939 $ 126,316 1.3 % Ratios: Total equity / Total capital 80.0% 81.1% Hybrid - debt securities / Total capital 7.3% 7.4% Financial debt / Total capital 12.6% 11.6% Notes: (1) Borrowings are carried at fair value with fair value adjustments reported in Other income on the Consolidated Statement of Operations. Contractual interest payments amounted to $279 million for the nine months ended September 30, 2012 and $401 million for the twelve months ended December 31, 2011. (2) The 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. (3) The nine months ended September 30, 2011 includes $72 million associated with the FRBNY Credit Facility which was repaid in full on January 14, 2011 following AIG's recapitalization, $32 million related to equity units and $(2) million related to discontinued operations. 10
AIG Property Casualty Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 8,712 $ 9,095 $ 8,820 $ 7,848 $ 8,659 $ 26,627 $ 26,992 Net premiums earned 8,752 8,820 8,688 8,962 9,043 26,260 26,727 Claims and claims adjustment expenses incurred (1) 6,252 6,079 5,909 6,675 6,838 18,240 21,274 Underwriting expenses 2,941 2,958 2,959 2,923 2,737 8,858 7,947 Underwriting loss (441) (217) (180) (636) (532) (838) (2,494) Net investment income (2) Interest and dividends 1,000 991 990 963 970 2,981 2,779 Alternative investments 87 110 130 (86) 55 327 457 Mutual funds 9 (15) 8 (4) (15) 2 35 Other investment income (3) 172 116 131 186 71 419 243 Investment expense (41) (49) (36) (56) (57) (126) (169) Total 1,227 1,153 1,223 1,003 1,024 3,603 3,345 Operating income before net realized capital gains (losses) and other income (loss) 786 936 1,043 367 492 2,765 851 Net realized capital gains (losses) 161 23 (135) 454 60 49 153 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income $ 949 $ 961 $ 910 $ 817 $ 551 $ 2,820 $ 1,003 Underwriting ratios: Loss ratio 71.4 68.9 68.0 74.5 75.6 69.5 79.6 Expense ratio 33.6 33.5 34.1 32.6 30.3 33.7 29.7 Combined ratio 105.0 102.4 102.1 107.1 105.9 103.2 109.3 Combined ratio excluding significant current year catastrophe-related losses 102.1 98.7 101.2 101.8 99.5 100.6 98.7 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 100.1 98.3 100.4 101.9 98.7 99.6 98.2 Foreign exchange effect on worldwide premium: Change in net premiums written Increase / (decrease) in original currency (4) 2.4 % (0.1) % (4.5) % 1.7 % (3.5) % (0.8)% 9.1 % Foreign exchange effect (1.8) (0.7) 0.8 1.9 4.2 (0.5) 3.2 Increase / (decrease) as reported in US $ 0.6 % (0.8) % (3.7) % 3.6 % 0.7 % (1.3)% 12.3 % Pre-tax catastrophe-related losses and prior year loss reserve development: Pre-tax catastrophe-related losses $ 261 $ 328 $ 80 $ 478 $ 605 $ 669 $ 2,818 Reinstatement premium related to catastrophes - - - (11) (31) - 22 Prior year loss reserve development (favorable) / unfavorable, net of reinsurance 211 117 53 22 80 381 188 Returned / (additional) premium on loss-sensitive business (66) 20 (6) (19) (25) (52) (153) Change in discount 6 (94) 20 (16) 7 (68) 50 Net loss and loss expense reserve (at period end) $ 66,136 $ 66,108 $ 67,313 $ 67,979 $ 69,033 $ 66,136 $ 69,033 See Accompanying Notes on Page 21 11
AIG Property Casualty Commercial Insurance Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 5,082 $ 5,564 $ 5,223 $ 4,422 $ 5,179 $ 15,869 $ 16,626 Net premiums earned 5,277 5,366 5,188 5,371 5,595 15,831 16,494 Claims and claims adjustment expenses incurred 4,186 3,962 3,846 4,508 4,638 11,994 14,342 Underwriting expenses 1,468 1,531 1,518 1,436 1,359 4,517 3,913 Underwriting loss (377) (127) (176) (573) (402) (680) (1,761) Net investment income (2) 698 721 741 837 807 2,160 2,411 Operating income $ 321 $ 594 $ 565 $ 264 $ 405 $ 1,480 $ 650 Underwriting ratios: Loss ratio 79.3 73.8 74.1 83.9 82.9 75.8 87.0 Expense ratio 27.8 28.5 29.3 26.7 24.3 28.5 23.7 Combined ratio 107.1 102.3 103.4 110.6 107.2 104.3 110.7 Combined ratio excluding significant current year catastrophe-related losses 102.6 97.0 102.0 102.5 99.0 100.5 97.6 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 99.5 96.7 101.1 103.8 98.5 99.0 97.6 Pre-tax catastrophe-related losses and prior year loss reserve development: Pre-tax catastrophe-related losses $ 239 $ 288 $ 76 $ 443 $ 483 $ 603 $ 2,138 Reinstatement premium related to catastrophes - - - (11) (31) - 22 Prior year loss reserve development (favorable) / unfavorable, net of reinsurance 212 103 54 (15) 47 369 115 Returned / (additional) premium on loss-sensitive business (66) 20 (6) (19) (25) (52) (153) Change in discount - (100) - (40) - (100) - Net loss and loss expense reserve (at period end) $ 56,481 $ 56,422 $ 57,530 $ 58,549 $ 59,079 $ 56,481 $ 59,079 See Accompanying Notes on Page 21 12
AIG Property Casualty Consumer Insurance Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 3,630 $ 3,528 $ 3,597 $ 3,427 $ 3,479 $ 10,755 $ 10,335 Net premiums earned 3,473 3,449 3,496 3,581 3,435 10,418 10,174 Claims and claims adjustment expenses incurred 2,025 2,043 2,030 2,128 2,173 6,098 6,772 Underwriting expenses 1,405 1,329 1,348 1,411 1,329 4,082 3,842 Underwriting profit (loss) 43 77 118 42 (67) 238 (440) Net investment income (2) 109 115 116 89 88 340 265 Operating income (loss) $ 152 $ 192 $ 234 $ 131 $ 21 $ 578 $ (175) Underwriting ratios: Loss ratio 58.3 59.2 58.1 59.4 63.3 58.5 66.6 Expense ratio 40.5 38.5 38.6 39.4 38.7 39.2 37.8 Combined ratio 98.8 97.7 96.7 98.8 102.0 97.7 104.4 Combined ratio excluding significant current year catastrophe-related losses 98.2 96.6 96.6 97.8 98.4 97.1 97.7 Combined ratio excluding significant current year catastrophe-related losses and prior year development 98.2 97.6 97.0 97.1 97.6 97.6 97.1 Pre-tax catastrophe-related losses and prior year loss reserve development: Pre-tax catastrophe-related losses $ 22 $ 40 $ 4 $ 35 $ 122 $ 66 $ 680 Prior year loss reserve development (favorable) / unfavorable, net of reinsurance (1) (36) (14) 28 28 (51) 56 Net loss and loss expense reserve (at period end) $ 5,485 $ 5,506 $ 5,542 $ 5,438 $ 5,937 $ 5,485 $ 5,937 See Accompanying Notes on Page 21 13
AIG Property Casualty Other Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ - $ 3 $ - $ (1) $ 1 $ 3 $ 31 Net premiums earned 2 5 4 10 13 11 59 Claims and claims adjustment expenses incurred 41 74 33 39 27 148 160 Underwriting expenses 68 98 93 76 49 259 192 Underwriting loss (107) (167) (122) (105) (63) (396) (293) Net investment income (2) 420 317 366 77 129 1,103 669 Operating income (loss), before net realized capital gains (losses) and other income (loss) 313 150 244 (28) 66 707 376 Net realized capital gains (losses) 161 23 (135) 454 60 49 153 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income $ 476 $ 175 $ 111 $ 422 $ 125 $ 762 $ 528 Pre-tax catastrophe-related losses and prior year loss reserve development: Prior year loss reserve development (favorable) / unfavorable, net of reinsurance $ - $ 50 $ 13 $ 9 $ 5 $ 63 $ 17 Change in discount 6 6 20 24 7 32 50 Net loss and loss expense reserve (at period end) $ 4,170 $ 4,180 $ 4,241 $ 3,992 $ 4,017 $ 4,170 $ 4,017 See Accompanying Notes on Page 21 14
AIG Property Casualty - U.S. Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 4,309 $ 4,707 $ 3,879 $ 3,828 $ 4,359 $ 12,895 $ 13,444 Net premiums earned 4,433 4,477 4,417 4,492 4,616 13,327 13,787 Claims and claims adjustment expenses incurred 3,721 3,582 3,626 3,770 4,110 10,929 12,153 Underwriting expenses 1,156 1,185 1,189 1,096 1,033 3,530 3,050 Underwriting loss (444) (290) (398) (374) (527) (1,132) (1,416) Net investment income Interest and dividends 753 731 739 695 703 2,223 1,983 Alternative investments 82 111 139 (87) 55 332 447 Mutual funds 8 (11) - - - (3) - Other investment income (3) 163 99 111 165 49 373 189 Investment expense (25) (31) (23) (44) (38) (79) (122) Total 981 899 966 729 769 2,846 2,497 Operating income before net realized capital gains (losses) and other income (loss) 537 609 568 355 242 1,714 1,081 Net realized capital gains (losses) 75 63 (164) 43 35 (26) 193 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income $ 614 $ 674 $ 406 $ 394 $ 276 $ 1,694 $ 1,273 Underwriting ratios: Loss ratio 83.9 80.0 82.1 83.9 89.0 82.0 88.1 Expense ratio 26.1 26.5 26.9 24.4 22.4 26.5 22.1 Combined ratio 110.0 106.5 109.0 108.3 111.4 108.5 110.2 Combined ratio excluding significant current year catastrophe-related losses 104.7 101.6 107.2 104.1 101.1 104.5 100.1 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 99.2 98.8 103.2 102.4 100.0 100.4 98.9 Pre-tax catastrophe-related losses and prior year loss reserve development: Pre-tax catastrophe-related losses $ 239 $ 221 $ 79 $ 191 $ 480 $ 539 $ 1,406 Reinstatement premium related to catastrophes - - - 1 (4) - (7) Prior year loss reserve development (favorable) / unfavorable, net of reinsurance 288 207 167 112 66 662 240 Returned / (additional) premium on loss-sensitive business (66) 20 (6) (19) (25) (52) (153) Change in discount 4 (96) 14 (22) 5 (78) 37 See Accompanying Notes on Page 21 15
AIG Property Casualty - U.S. Operating Statistics by Business Commercial Insurance 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 3,386 $ 3,883 $ 2,984 $ 3,113 $ 3,506 $ 10,253 $ 10,988 Net premiums earned 3,553 3,601 3,536 3,648 3,771 10,690 11,247 Claims and claims adjustment expenses incurred 3,114 2,998 3,048 3,172 3,478 9,160 10,366 Underwriting expenses 830 875 867 805 767 2,572 2,228 Underwriting loss (391) (272) (379) (329) (474) (1,042) (1,347) Net investment income 585 597 617 699 668 1,799 2,002 Operating income $ 194 $ 325 $ 238 $ 370 $ 194 $ 757 $ 655 Underwriting ratios: Loss ratio 87.6 83.3 86.2 87.0 92.2 85.7 92.2 Expense ratio 23.4 24.3 24.5 22.1 20.3 24.1 19.8 Combined ratio 111.0 107.6 110.7 109.1 112.5 109.8 112.0 Combined ratio excluding significant current year catastrophe-related losses 105.0 101.7 108.6 104.0 101.6 105.1 100.4 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 98.2 99.9 104.7 103.4 100.7 101.0 99.7 Consumer Insurance Net premiums written $ 923 $ 823 $ 895 $ 716 $ 852 $ 2,641 $ 2,425 Net premiums earned 880 875 880 835 832 2,635 2,480 Claims and claims adjustment expenses incurred 579 530 546 560 611 1,655 1,670 Underwriting expenses 301 276 287 259 244 864 753 Underwriting profit (loss) - 69 47 16 (23) 116 57 Net investment income 40 42 41 23 25 123 75 Operating income $ 40 $ 111 $ 88 $ 39 $ 2 $ 239 $ 132 Underwriting ratios: Other U.S Loss ratio 65.8 60.6 62.0 67.1 73.4 62.8 67.3 Expense ratio 34.2 31.5 32.6 31.0 29.3 32.8 30.4 Combined ratio 100.0 92.1 94.6 98.1 102.7 95.6 97.7 Combined ratio excluding significant current year catastrophe-related losses 97.3 90.8 94.2 96.5 94.9 94.1 93.9 Combined ratio excluding significant current year catastrophe-related losses and prior year development 97.5 89.4 94.1 93.5 94.1 93.7 93.1 Net premiums written $ - $ 1 $ - $ (1) $ 1 $ 1 $ 31 Net premiums earned - 1 1 9 13 2 60 Claims and claims adjustment expenses incurred 28 54 32 38 21 114 117 Underwriting expenses 25 34 35 32 22 94 69 Underwriting loss (53) (87) (66) (61) (30) (206) (126) Net investment income 356 260 308 7 76 924 420 Operating income (loss) before net realized capital gains (losses) and other income (loss) 303 173 242 (54) 46 718 294 Net realized capital gains (losses) 75 63 (164) 43 35 (26) 193 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income (loss) $ 380 $ 238 $ 80 $ (15) $ 80 $ 698 $ 486 Total AIG Property Casualty - U.S. Net premiums written $ 4,309 $ 4,707 $ 3,879 $ 3,828 $ 4,359 $ 12,895 $ 13,444 Net premiums earned 4,433 4,477 4,417 4,492 4,616 13,327 13,787 Claims and claims adjustment expenses incurred 3,721 3,582 3,626 3,770 4,110 10,929 12,153 Underwriting expenses 1,156 1,185 1,189 1,096 1,033 3,530 3,050 Underwriting loss (444) (290) (398) (374) (527) (1,132) (1,416) Net investment income 981 899 966 729 769 2,846 2,497 Operating income before net realized capital gains (losses) and other income (loss) 537 609 568 355 242 1,714 1,081 Net realized capital gains (losses) 75 63 (164) 43 35 (26) 193 Other income (loss) 2 2 2 (4) (1) 6 (1) Pre-tax income $ 614 $ 674 $ 406 $ 394 $ 276 $ 1,694 $ 1,273 See Accompanying Notes on Page 21 16
AIG Property Casualty - International Operating Statistics 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 4,403 $ 4,388 $ 4,941 $ 4,020 $ 4,300 $ 13,732 $ 13,548 Net premiums earned 4,319 4,343 4,271 4,470 4,427 12,933 12,940 Claims and claims adjustment expenses incurred (1) 2,531 2,497 2,283 2,905 2,728 7,311 9,121 Underwriting expenses 1,785 1,773 1,770 1,827 1,704 5,328 4,897 Underwriting profit (loss) 3 73 218 (262) (5) 294 (1,078) Net investment income Interest and dividends 247 260 251 268 267 758 796 Alternative investments 5 (1) (9) 1 - (5) 10 Mutual funds 1 (4) 8 (4) (15) 5 35 Other investment income (3) 9 17 20 21 22 46 54 Investment expense (16) (18) (13) (12) (19) (47) (47) Total 246 254 257 274 255 757 848 Operating income (loss), before net realized capital gains (losses) 249 327 475 12 250 1,051 (230) Net realized capital gains (losses) 86 (40) 29 411 25 75 (40) Pre-tax income (loss) $ 335 $ 287 $ 504 $ 423 $ 275 $ 1,126 $ (270) Underwriting ratios: Loss ratio 58.6 57.5 53.5 65.0 61.6 56.5 70.5 Expense ratio 41.3 40.8 41.4 40.9 38.5 41.2 37.8 Combined ratio 99.9 98.3 94.9 105.9 100.1 97.7 108.3 Combined ratio excluding significant current year catastrophe-related losses 99.4 95.8 94.8 99.6 97.7 96.7 97.2 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 101.1 97.9 97.4 101.5 97.3 98.9 97.5 Foreign exchange effect on International's premium: Change in net premiums written Increase / (decrease) in original currency (4) 6.0 % 5.8 % (3.2) % 7.8 % 2.1 % 2.5 % 18.6 % Foreign exchange effect (3.6) (1.6) 1.4 4.0 9.4 (1.1) 7.2 Increase / (decrease) as reported in US $ 2.4 % 4.2 % (1.8) % 11.8 % 11.5 % 1.4 % 25.8 % Pre-tax catastrophe-related losses and prior year loss reserve development: Pre-tax catastrophe-related losses $ 22 $ 107 $ 1 $ 287 $ 125 $ 130 $ 1,412 Reinstatement premium related to catastrophes - - - (12) (27) - 29 Prior year loss reserve development (favorable) / unfavorable, net of reinsurance (77) (90) (114) (90) 15 (281) (50) Change in discount 2 2 5 6 2 9 13 See Accompanying Notes on Page 21 17
AIG Property Casualty - International Operating Statistics by Business Commercial Insurance 3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011 Net premiums written $ 1,696 $ 1,681 $ 2,239 $ 1,309 $ 1,673 $ 5,616 $ 5,638 Net premiums earned 1,724 1,765 1,652 1,723 1,824 5,141 5,247 Claims and claims adjustment expenses incurred 1,072 964 798 1,336 1,160 2,834 3,976 Underwriting expenses 638 656 651 631 592 1,945 1,685 Underwriting profit (loss) 14 145 203 (244) 72 362 (414) Net investment income 113 124 124 138 139 361 409 Operating income (loss) $ 127 $ 269 $ 327 $ (106) $ 211 $ 723 $ (5) Underwriting ratios: Loss ratio 62.2 54.6 48.3 77.5 63.6 55.1 75.8 Expense ratio 37.0 37.2 39.4 36.6 32.5 37.8 32.1 Combined ratio 99.2 91.8 87.7 114.1 96.1 92.9 107.9 Combined ratio excluding significant current year catastrophe-related losses 97.8 87.4 87.6 99.5 93.3 90.9 91.7 Combined ratio excluding significant current year catastrophe-related losses, prior year development and change in discount 102.3 90.1 92.9 104.9 93.7 95.0 93.4 Consumer Insurance Net premiums written $ 2,707 $ 2,705 $ 2,702 $ 2,711 $ 2,627 $ 8,114 $ 7,910 Net premiums earned 2,593 2,574 2,616 2,746 2,603 7,783 7,694 Claims and claims adjustment expenses incurred 1,446 1,513 1,484 1,568 1,562 4,443 5,102 Underwriting expenses 1,104 1,053 1,061 1,152 1,085 3,218 3,089 Underwriting profit (loss) 43 8 71 26 (44) 122 (497) Net investment income 69 73 75 66 63 217 190 Operating income (loss) $ 112 $ 81 $ 146 $ 92 $ 19 $ 339 $ (307) Underwriting ratios: Loss ratio 55.8 58.8 56.7 57.1 60.0 57.1 66.3 Expense ratio 42.6 40.9 40.6 42.0 41.7 41.3 40.1 Combined ratio 98.4 99.7 97.3 99.1 101.7 98.4 106.4 Combined ratio excluding significant current year catastrophe-related losses 98.4 98.6 97.3 98.3 99.5 98.0 98.8 Combined ratio excluding significant current year catastrophe-related losses and prior year development 98.4 100.4 97.9 98.2 98.7 98.8 98.3 Other Int'l Net premiums written $ - $ 2 $ - $ - $ - $ 2 $ - Net premiums earned 2 4 3 1-9 (1) Claims and claims adjustment expenses incurred 13 20 1 1 6 34 43 Underwriting expenses 43 64 58 44 27 165 123 Underwriting loss (54) (80) (56) (44) (33) (190) (167) Net investment income 64 57 58 70 53 179 249 Operating income (loss) before net realized capital gains (losses) 10 (23) 2 26 20 (11) 82 Net realized capital gains (losses) 86 (40) 29 411 25 75 (40) Pre-tax income (loss) $ 96 $ (63) $ 31 $ 437 $ 45 $ 64 $ 42 Total AIG Property Casualty - Int'l Net premiums written $ 4,403 $ 4,388 $ 4,941 $ 4,020 $ 4,300 $ 13,732 $ 13,548 Net premiums earned 4,319 4,343 4,271 4,470 4,427 12,933 12,940 Claims and claims adjustment expenses incurred 2,531 2,497 2,283 2,905 2,728 7,311 9,121 Underwriting expenses 1,785 1,773 1,770 1,827 1,704 5,328 4,897 Underwriting profit (loss) 3 73 218 (262) (5) 294 (1,078) Net investment income 246 254 257 274 255 757 848 Operating income (loss) before net realized capital gains (losses) 249 327 475 12 250 1,051 (230) Net realized capital gains (losses) 86 (40) 29 411 25 75 (40) Pre-tax income (loss) $ 335 $ 287 $ 504 $ 423 $ 275 $ 1,126 $ (270) See Accompanying Notes on Page 21 18
AIG Property Casualty Worldwide Net Premiums Written (NPW) by Line of Business & Region 3Q11 Worldwide NPW by Line of Business = $8,659 Commercial 60% and Consumer 40% 3Q12 Worldwide NPW by Line of Business = $8,712 Commercial 58% and Consumer 42% 3Q11 Worldwide NPW by Region 3Q12 Worldwide NPW by Region 19
AIG Property Casualty U.S. and International Net Premiums Written (NPW) by Line of Business 3Q11 U.S. NPW by Line of Business = $4,359 3Q12 U.S. NPW by Line of Business = $4,309 3Q11 International NPW by Line of Business = $4,300 3Q12 International NPW by Line of Business = $4,403 20