Adjusted after-tax lack of $559 million, or $zero.63 per share, for the fourth quarter of 2018, in comparison with adjusted after-tax earnings of $526 million, or $zero.57 per diluted share, within the prior-year quarter.
Whole internet funding earnings of $2.eight billion within the fourth quarter of 2018, in comparison with $three.5 billion within the prior-year-quarter was considerably impacted by market efficiency. Full yr 2018 internet funding earnings of $12.5 billion in comparison with $14.2 billion within the prior yr.
Internet pre-tax disaster losses within the fourth quarter of 2018 of $798 million ($630 million after-tax or $zero.71 per share, on the statutory tax fee of 21%) in line with the beforehand disclosed vary. Full yr 2018 internet pre-tax disaster losses of $2.9 billion in comparison with $four.2 billion within the prior yr.
Internet unfavorable prior yr loss reserve growth of $365 million within the fourth quarter of 2018. For the complete yr 2018, internet unfavorable prior yr loss reserve growth of $362 million in comparison with $978 million for the prior yr.
Share and warrant repurchases of $750 million for the fourth quarter of 2018 and $1.eight billion for full yr 2018.
AIG Board of Administrators elevated the share repurchase authorization to $2.zero billion, together with roughly $512 million that remained below the earlier authorization.
NEW YORK--(BUSINESS WIRE)-- American Worldwide Group, Inc. (NYSE: AIG) right this moment reported a internet lack of $622 million, or $zero.70 per share, for the fourth quarter of 2018, in comparison with a internet lack of $6.7 billion, or $7.33 per share, within the prior-year quarter. Adjusted after-tax loss was $559 million, or $zero.63 per share, for the fourth quarter of 2018, in comparison with adjusted after-tax earnings of $526 million, or $zero.57 per diluted share, within the prior-year quarter.
Brian Duperreault, AIG’s President and Chief Government Officer, mentioned: “All through 2018, vital foundational work was undertaken to remediate AIG’s core underwriting capabilities. Whereas many points and challenges have been uncovered, we moved rapidly to scale back danger and volatility, in addition to implement methods that we consider will speed up our progress in 2019.
The world class expertise that joined AIG all through 2018 was a spotlight, and our staff is just not taking brief cuts in constructing a high performing enterprise nor are we settling for simple fixes. Our work continues to revive AIG because the main insurance coverage firm on the planet and I stay assured we're on the proper path to realize long-term, sustainable and worthwhile development.
“Our fourth quarter 2018 outcomes confirmed constructive enhancements in Common Insurance coverage, reflecting actions we took all year long to re-position and strengthen the enterprise, and Life and Retirement stays a secure supply of earnings with engaging returns. Outcomes have been negatively impacted by efficiency in each fairness and credit score markets, disaster losses that got here inside our beforehand disclosed steering, in addition to modest internet unfavorable prior yr loss reserve growth pushed largely by underwriting choices from 2016 and prior years. We proceed to count on to realize an underwriting revenue coming into 2019 in Common Insurance coverage and to achieve double digit returns for consolidated AIG in three years.”
FOURTH QUARTER FINANCIAL SUMMARY*
Three Months Ended
December 31,
($ in hundreds of thousands, besides per share quantities)
2018
2017
Internet loss
$
(622
)
$
(6,660
)
Internet loss per diluted share (a)
$
(zero.70
)
$
(7.33
)
Adjusted after-tax earnings (loss)
$
(559
)
$
526
Adjusted after-tax earnings (loss) per diluted share (a)
$
(zero.63
)
$
zero.57
Return on fairness
(four.three
)%
(38.7
)%
Adjusted return on fairness
(four.6
)%
four.2
%
Adjusted return on attributed fairness - Core
(four.three
)%
2.6
%
E book worth per widespread share
$
65.04
$
72.49
E book worth per widespread share, excluding collected different complete earnings
66.67
66.41
Adjusted e book worth per widespread share
54.95
54.74
*Check with the Feedback on Regulation G and the tables that comply with for a dialogue of non-GAAP monetary measures and the reconciliations of the non-GAAP monetary measures to GAAP measures.
(a)
For intervals reporting a loss, fundamental common widespread shares excellent are used to calculate internet earnings (loss) per diluted share.
FOURTH QUARTER 2018 HIGHLIGHTS
All comparisons are towards the fourth quarter of 2017, except in any other case indicated.
Internet Funding Revenue Impacted by Different Returns and Fairness Market Declines – Fourth quarter internet funding earnings from our insurance coverage corporations, together with the Legacy insurance coverage portfolios, decreased 18.1% from the prior-year quarter to $2.eight billion. The fourth quarter was impacted by internet losses on different investments in addition to investments in fairness securities ensuing from elevated volatility within the credit score markets and unfavorable efficiency within the fairness markets. For the complete yr, internet funding earnings from our insurance coverage corporations, together with the Legacy insurance coverage portfolios, totaled $12.7 billion.
Common Insurance coverage – The fourth quarter of 2018 mixed ratio of 115.zero was impacted by 11.three factors associated to disaster losses internet of reinstatement premiums and 5.three factors of internet unfavorable loss reserve growth. The accident yr mixed ratio, as adjusted, was 98.eight comprised of a 63.9 loss ratio, as adjusted, down 130 foundation factors from the prior-year quarter, and an expense ratio of 34.9, down 10 foundation factors over the prior-year quarter. Pre-tax disaster losses, internet of reinsurance, included $826 million for Common Insurance coverage, primarily associated to Hurricane Michael and the California Wildfires and a $28 million lower within the loss estimates for Hurricane Jebi reported within the Legacy section. Internet prior yr loss reserve growth was unfavorable by $363 million for the quarter. North America and Worldwide Industrial Strains had unfavorable prior yr loss reserve growth of $326 million and $74 million, respectively, for the quarter pushed largely by Monetary Strains. Worldwide Private Insurance coverage recorded favorable prior yr loss growth of $37 million primarily from Japan.
Fourth quarter expense ratio of 34.9 primarily mirrored enchancment within the Common working expense (GOE) ratio because of expense discount actions taken within the second half of the yr, partially offset by a rise within the North America acquisition ratio attributable to modifications in portfolio combine.
Life and Retirement Earnings – Fourth quarter adjusted pre-tax earnings of $623 million mirrored the impression of declining fairness markets and widening credit score spreads in all companies, towards a backdrop of engaging new enterprise margins, and strong development in premiums and deposits in Particular person Retirement, Group Retirement and Life Insurance coverage in addition to a number of opportunistic Institutional Markets transactions. GOE elevated primarily attributable to new enterprise acquisition, worldwide growth, and investments in core companies. The fourth quarter of 2018 Adjusted Return on Fairness was 9.eight%.
Legacy Outcomes – Fourth quarter adjusted pre-tax lack of $150 million, in comparison with adjusted pre-tax earnings of $411 million within the prior-year quarter, mirror decrease internet funding earnings and losses from truthful worth possibility property, in addition to a $105 million pre-tax cost ensuing from loss recognition testing on sure Accident & Well being most cancers and incapacity blocks. AIG accomplished the sale of 19.9% of AIG’s possession curiosity in Fortitude Holdings, the father or mother of Fortitude Re (previously DSA Re), to The Carlyle Group L.P.
Liquidity and Capital – As of December 31, 2018, AIG Mother or father liquidity stood at roughly $three.eight billion. Within the fourth quarter, AIG Mother or father acquired roughly $350 million of distributions from the insurance coverage subsidiaries within the type of money and glued maturity securities, together with tax sharing funds. Within the fourth quarter, AIG repurchased 18.zero million shares of widespread inventory for $745 million and warrants for $5 million. AIG’s Board of Administrators has authorised a rise in our share repurchase authorization to $2.zero billion, together with roughly $512 million that was remaining below the earlier authorization.
E book Worth per Widespread Share – As of December 31, 2018, e book worth per widespread share was $65.04 in comparison with $72.49 at December 31, 2017. E book worth per widespread share excluding collected different complete earnings and deferred tax property (Adjusted e book worth per widespread share) was $54.95, up barely from prior-year finish.
GENERAL INSURANCE
Three Months Ended December 31,
($ in hundreds of thousands)
2018
2017
Change
Whole Common Insurance coverage
Gross premiums written
$
7,699
$
7,278
6
%
Internet premiums written
$
6,424
$
5,892
9
Underwriting loss
$
(1,071)
$
(846)
(27)
Adjusted pre-tax earnings (loss)
$
(722)
$
13
NM
Underwriting ratios:
Loss ratio
80.1
78.three
1.eight
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(11.three)
(11.7)
zero.four
Prior yr growth
(5.three)
(1.four)
(three.9)
Changes for ceded premium below reinsurance
contracts and different
zero.four
-
zero.four
Accident yr loss ratio, as adjusted
63.9
65.2
(1.three)
Expense ratio
34.9
35.zero
(zero.1)
Mixed ratio
115.zero
113.three
1.7
Accident yr mixed ratio, as adjusted
98.eight
100.2
(1.four)
Common Insurance coverage - North America
Three Months Ended December 31,
($ in hundreds of thousands)
2018
2017
Change
North America
Internet premiums written
$
2,944
$
2,583
14
%
Industrial Strains
2,161
1,808
20
Private Insurance coverage
783
775
1
Underwriting earnings (loss)
$
(871)
$
(316)
(176)
Industrial Strains
(541)
16
NM
Private Insurance coverage
(330)
(332)
1
Adjusted pre-tax earnings (loss)
$
(575)
$
412
NM
Underwriting ratios:
North America
Loss ratio
94.6
83.zero
11.6
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(19.6)
(24.5)
four.9
Prior yr growth
(10.zero)
three.three
(13.three)
Changes for ceded premium below reinsurance
contracts and different
zero.9
-
zero.9
Accident yr loss ratio, as adjusted
65.9
61.eight
four.1
Expense ratio
30.7
28.5
2.2
Mixed ratio
125.three
111.5
13.eight
Accident yr mixed ratio, as adjusted
96.6
90.three
6.three
North America Industrial Strains
Loss ratio
93.6
73.9
19.7
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(9.eight)
(12.zero)
2.2
Prior yr growth
(13.three)
four.9
(18.2)
Changes for ceded premium below reinsurance
contracts and different
1.2
-
1.2
Accident yr loss ratio, as adjusted
71.7
66.eight
four.9
Expense ratio
27.three
25.three
2.zero
Mixed ratio
120.9
99.2
21.7
Accident yr mixed ratio, as adjusted
99.zero
92.1
6.9
North America Private Insurance coverage
Loss ratio
98.zero
108.zero
(10.zero)
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(49.eight)
(58.6)
eight.eight
Prior yr growth
-
(1.1)
1.1
Accident yr loss ratio, as adjusted
48.2
48.three
(zero.1)
Expense ratio
41.6
37.5
four.1
Mixed ratio
139.6
145.5
(5.9)
Accident yr mixed ratio, as adjusted
89.eight
85.eight
four.zero
All comparisons are towards the fourth quarter of 2017, except in any other case indicated. Check with the AIG Fourth Quarter 2018 Monetary Complement, which is posted on AIG's web site within the Traders part, for additional data.
Common Insurance coverage North America – Commentary
Adjusted pre-tax lack of $575 million in comparison with adjusted pre-tax earnings of $412 million within the prior-year quarter.
Internet funding earnings of $296 million for the quarter in comparison with $728 million within the prior-year quarter. The decline in internet funding earnings was largely the results of internet losses on different and fairness investments within the present quarter.
Internet premiums written elevated by 14.zero%, largely because of the acquisitions of Validus and Glatfelter, and decrease ceded premiums attributable to modifications within the 2018 reinsurance applications. This was barely offset by some underlying discount within the North America Industrial Strains enterprise attributable to ongoing underwriting actions to enhance efficiency.
The North America mixed ratio of 125.three included 19.6 factors of disaster losses internet of reinstatement premiums and 10.zero factors of internet unfavorable prior yr loss reserve growth. The accident yr mixed ratio, as adjusted, was 96.6 for the quarter comprised of a 65.9 loss ratio, as adjusted, and a 30.7 expense ratio. The pre-tax underwriting lack of $871 million contains $689 million of disaster losses, internet of reinsurance, of which $414 million associated to North America Private Insurance coverage and $275 million associated to Industrial Strains. Internet unfavorable prior yr loss reserve growth of $326 million was primarily associated to Monetary Strains in Industrial Strains.
The rise within the expense ratio mirrored a better acquisition expense ratio pushed by modifications in portfolio combine, particularly in Private Insurance coverage, and a lower in GOE ensuing from actions taken within the second half of 2018 to regulate bills.
Common Insurance coverage - Worldwide
Three Months Ended December 31,
($ in hundreds of thousands)
2018
2017
Change
Worldwide
Internet premiums written
$
three,480
$
three,309
5
%
Industrial Strains
1,561
1,422
10
Private Insurance coverage
1,919
1,887
2
Underwriting earnings (loss)
$
(200)
$
(530)
62
Industrial Strains
(251)
(603)
58
Private Insurance coverage
51
73
(30)
Adjusted pre-tax loss
$
(147)
$
(399)
63
Underwriting ratios:
Worldwide
Loss ratio
66.eight
74.7
(7.9)
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(three.7)
(2.2)
(1.5)
Prior yr growth
(1.zero)
(four.eight)
three.eight
Accident yr loss ratio, as adjusted
62.1
67.7
(5.6)
Expense ratio
38.6
39.eight
(1.2)
Mixed ratio
105.four
114.5
(9.1)
Accident yr mixed ratio, as adjusted
100.7
107.5
(6.eight)
Worldwide Industrial Strains
Loss ratio
80.5
98.zero
(17.5)
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(7.2)
(2.7)
(four.5)
Prior yr growth
(four.1)
(11.four)
7.three
Accident yr loss ratio, as adjusted
69.2
83.9
(14.7)
Expense ratio
33.1
37.7
(four.6)
Mixed ratio
113.6
135.7
(22.1)
Accident yr mixed ratio, as adjusted
102.three
121.6
(19.three)
Worldwide Private Insurance coverage
Loss ratio
53.four
54.6
(1.2)
pts
Affect on loss ratio:
Disaster losses and reinstatement premiums
(zero.2)
(1.eight)
1.6
Prior yr growth
2.zero
zero.eight
1.2
Accident yr loss ratio, as adjusted
55.2
53.6
1.6
Expense ratio
43.9
41.7
2.2
Mixed ratio
97.three
96.three
1.zero
Accident yr mixed ratio, as adjusted
99.1
95.three
three.eight
All comparisons are towards the fourth quarter of 2017, except in any other case indicated. Check with the AIG Fourth Quarter 2018 Monetary Complement, which is posted on AIG's web site within the Traders part, for additional data.
Common Insurance coverage Worldwide – Commentary
Adjusted pre-tax lack of $147 million in comparison with adjusted pre-tax lack of $399 million within the prior-year quarter.
Internet funding earnings of $53 million for the quarter in comparison with $131 million within the prior-year quarter. The decline in internet funding earnings was largely the results of internet losses on fairness investments within the present quarter.
Internet premiums written elevated 5.2% on a reported and seven.6% on a relentless greenback foundation. The rise in internet premiums written was because of the inclusion of the Talbot acquisition and elevated accident & well being enterprise in Asia Pacific.
The Worldwide mixed ratio of 105.four included three.7 factors of disaster losses internet of reinstatement premiums and 1.zero factors of internet unfavorable loss reserve growth. The accident yr mixed ratio, as adjusted, of 100.7 was comprised of a 62.1 loss ratio, as adjusted, and a 38.6 expense ratio. The disaster losses and internet unfavorable loss reserve growth was largely a results of the Industrial portfolio. The pre-tax underwriting lack of $200 million included $137 million of disaster losses, internet of reinsurance, extreme losses of $79 million, internet of reinsurance, and internet unfavorable prior yr loss reserve growth of $37 million.
The expense ratio lower was pushed by a discount in GOE given actions within the second half of the yr, partially offset by larger acquisition expense ratio primarily attributable to elevated prices in Japan and modifications to the portfolio combine.
LIFE AND RETIREMENT
Three Months Ended December 31,
($ in hundreds of thousands)
2018
2017
Change
Life and Retirement
Premiums & Charges
$
1,917
$
2,123
(10)
%
Internet Funding Revenue
1,921
2,003
(four)
Adjusted Income
four,065
four,382
(7)
Advantages, losses and bills
three,442
three,600
(four)
Adjusted pre-tax earnings
623
782
(20)
Premiums and deposits
eight,166
7,965
three
Particular person Retirement
Premiums & Charges
$
209
$
210
-
%
Internet Funding Revenue
912
1,zero30
(11)
Adjusted Income
1,276
1,415
(10)
Advantages, losses and bills
949
941
1
Adjusted pre-tax earnings
327
474
(31)
Premiums and deposits
four,225
three,106
36
Internet flows
(510)
(422)
(21)
Three Months Ended December 31,
($ in hundreds of thousands)
2018
2017
Change
Group Retirement
Premiums & Charges
$
111
$
120
(eight)
%
Internet Funding Revenue
517
550
(6)
Adjusted Income
682
732
(7)
Advantages, losses and bills
523
486
eight
Adjusted pre-tax earnings
159
246
(35)
Premiums and deposits
2,106
1,848
14
Internet flows
(628)
(453)
(39)
Life Insurance coverage
Premiums & Charges
$
741
$
732
1
%
Internet Funding Revenue
287
263
9
Adjusted Income
1,zero45
1,zero13
three
Advantages, losses and bills
958
1,011
(5)
Adjusted pre-tax earnings
87
2
NM
Premiums and deposits
987
963
2
Institutional Markets
Premiums & Charges
$
856
$
1,061
(19)
%
Internet Funding Revenue
205
160
28
Adjusted Income
1,zero62
1,222
(13)
Advantages, losses and bills
1,zero12
1,162
(13)
Adjusted pre-tax earnings
50
60
(17)
Premiums and deposits
848
2,048
(59)
All comparisons are towards the fourth quarter of 2017, except in any other case indicated. Check with the AIG Fourth Quarter 2018 Monetary Complement, which is posted on AIG's web site within the Traders part, for additional data.
Life and Retirement – Commentary
In Particular person Retirement, adjusted pre-tax earnings mirrored decrease internet funding earnings attributable to decrease base spreads and yield enhancements and decrease charge earnings pushed by unfavorable credit score and fairness market efficiency. Internet flows excluding Retail Mutual Funds have been constructive and mirrored sturdy gross sales.
In Group Retirement, adjusted pre-tax earnings mirrored decrease charge earnings, decrease base unfold and yield enhancements pushed by unfavorable credit score and fairness market efficiency and continued investments made within the enterprise. Group Retirement internet flows mirrored larger gross sales offset by larger surrenders because of the lack of massive plan accounts, in addition to larger particular person surrenders.
In Life Insurance coverage, adjusted pre-tax earnings mirrored larger internet funding earnings attributable to enterprise development and better different investments returns. Mortality was favorable to pricing expectations.
In Institutional Markets, adjusted pre-tax earnings mirrored investments in expertise and infrastructure and reserve refinements, partially offset by development within the portfolio which drove larger internet funding earnings.
CONFERENCE CALL
AIG will host a convention name tomorrow, Thursday, February 14, 2019 at eight:00 a.m. ET to assessment these outcomes. The decision is open to the general public and may be accessed through a stay listen-only webcast within the Traders part of www.aig.com. A replay will probably be accessible after the decision on the similar location.
Extra supplementary monetary knowledge is accessible within the Traders part at www.aig.com.
The convention name (together with the convention name presentation materials), the earnings launch and the monetary complement could embrace, and officers and representatives of AIG could occasionally make and talk about, projections, targets, assumptions and statements that will represent “forward-looking statements” throughout the which means of the Personal Securities Litigation Reform Act of 1995. These projections, targets, assumptions and statements are usually not historic details however as an alternative symbolize solely a perception concerning future occasions, lots of which, by their nature, are inherently unsure and out of doors AIG’s management. These projections, targets, assumptions and statements embrace statements preceded by, adopted by or together with phrases resembling “will,” “consider,” “anticipate,” “count on,” “intend,” “plan,” “targeted on reaching,” “view,” “goal,” “objective” or “estimate.” These projections, targets, assumptions and statements could relate to future actions, potential providers or merchandise, future efficiency or outcomes of present and anticipated providers or merchandise, gross sales efforts, bills, the end result of contingencies resembling authorized proceedings, anticipated organizational, enterprise or regulatory modifications, anticipated gross sales, monetization and/or acquisitions of companies or property, or profitable integration of acquired companies, administration succession and retention plans, publicity to danger, traits in operations and monetary outcomes.
It's attainable that AIG’s precise outcomes and monetary situation will differ, probably materially, from the outcomes and monetary situation indicated in these projections, targets, assumptions and statements.
Elements that would trigger AIG’s precise outcomes to vary, probably materially, from these within the particular projections, targets, assumptions and statements embrace:
modifications in market and business circumstances;
the incidence of catastrophic occasions, each pure and man-made;
AIG’s capability to efficiently reorganize its companies and execute on its initiatives to enhance its underwriting capabilities and reinsurance applications, in addition to enhance profitability, with out negatively impacting consumer relationships or its aggressive place;
AIG’s capability to efficiently get rid of, monetize and/or purchase companies or property, or efficiently combine acquired companies;
actions by credit standing companies;
modifications in judgments regarding insurance coverage underwriting and insurance coverage liabilities;
modifications in judgments regarding potential value saving alternatives;
the impression of potential data expertise, cybersecurity or knowledge safety breaches, together with because of cyber-attacks or safety vulnerabilities;
disruptions within the availability of AIG’s digital knowledge methods or these of third events;
the effectiveness of AIG’s methods to recruit and retain key personnel and its capability to implement efficient succession plans;
unfavourable impacts on clients, enterprise companions and different stakeholders;
AIG’s capability to efficiently handle Legacy portfolios;
concentrations in AIG’s funding portfolios;
the necessities, which can change occasionally, of the worldwide regulatory framework to which AIG is topic;
vital authorized, regulatory or governmental proceedings;
modifications in judgments regarding the recognition of deferred tax property and goodwill impairment; and
such different components mentioned in Half I, Merchandise 2. Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (MD&A) in AIG’s Quarterly Report on Type 10-Q for the quarterly interval ended September 30, 2018, Half I, Merchandise 2. MD&A and Half II, Merchandise 1A. Threat Elements in AIG’s Quarterly Report on Type 10-Q for the quarterly interval ended June 30, 2018, Half I, Merchandise 2. MD&A in AIG’s Quarterly Report on Type 10-Q for the quarterly interval ended March 31, 2018 and Half II, Merchandise 7. MD&A and Half I, Merchandise 1A. Threat Elements in AIG’s Annual Report on Type 10-Okay for the yr ended December 31, 2017 and Half II, Item7. MD&A and Half I, Merchandise 1A. Threat Elements in AIG’s Annual Report on Type 10-Okay for the yr ended December 31, 2018 (which will probably be filed with the SEC).
AIG is just not below any obligation (and expressly disclaims any obligation) to replace or alter any projections, targets, assumptions or different statements, whether or not written or oral, that could be made occasionally, whether or not because of new data, future occasions or in any other case.
COMMENT ON REGULATION G
All through this press launch, together with the monetary highlights, AIG presents its monetary situation and outcomes of operations in the best way it believes will probably be most significant and consultant of its enterprise outcomes. Among the measurements AIG makes use of are “non-GAAP monetary measures” below Securities and Trade Fee guidelines and rules. GAAP is the acronym for “typically accepted accounting rules” in america. The non-GAAP monetary measures AIG presents is probably not akin to similarly-named measures reported by different corporations. The reconciliations of such measures to essentially the most comparable GAAP measures in accordance with Regulation G are included throughout the related tables or within the Fourth Quarter 2018 Monetary Complement accessible within the Investor Info part of AIG’s web site, www.aig.com.
E book Worth per Widespread Share, Excluding Collected Different Complete Revenue (AOCI) and E book Worth per Widespread Share, Excluding AOCI and Deferred Tax Belongings (DTA) (Adjusted E book Worth per Widespread Share) are used to point out the quantity of AIG’s internet price on a per-share foundation. AIG believes these measures are helpful to traders as a result of they remove gadgets that may fluctuate considerably from interval to interval, together with modifications in truthful worth of AIG’s accessible on the market securities portfolio, international forex translation changes and U.S. tax attribute deferred tax property. These measures additionally remove the asymmetrical impression ensuing from modifications in truthful worth of AIG’s accessible on the market securities portfolio whereby there may be largely no offsetting impression for sure associated insurance coverage liabilities. AIG excludes deferred tax property representing U.S. tax attributes associated to internet working loss carryforwards and international tax credit as they haven't but been utilized. Quantities for interim intervals are estimates based mostly on projections of full-year attribute utilization. As internet working loss carryforwards and international tax credit are utilized, the portion of the DTA utilized is included in these e book worth per widespread share metrics. E book worth per widespread share, excluding AOCI, is derived by dividing Whole AIG Shareholders’ fairness, excluding AOCI, by whole widespread shares excellent. Adjusted E book Worth per Widespread Share is derived by dividing Whole AIG shareholders’ fairness, excluding AOCI and DTA (Adjusted Shareholders’ Fairness), by whole widespread shares excellent.
AIG Return on Fairness – Adjusted After-tax Revenue Excluding AOCI and DTA (Adjusted Return on Fairness) is used to point out the speed of return on shareholders’ fairness. AIG believes this measure is helpful to traders as a result of it eliminates gadgets that may fluctuate considerably from interval to interval, together with modifications in truthful worth of AIG’s accessible on the market securities portfolio, international forex translation changes and U.S. tax attribute deferred tax property. This measure additionally eliminates the asymmetrical impression ensuing from modifications in truthful worth of AIG’s accessible on the market securities portfolio whereby there may be largely no offsetting impression for sure associated insurance coverage liabilities. AIG excludes deferred tax property representing U.S. tax attributes associated to internet working loss carryforwards and international tax credit as they haven't but been utilized. Quantities for interim intervals are estimates based mostly on projections of full-year attribute utilization. As internet working loss carryforwards and international tax credit are utilized, the portion of the DTA utilized is included in Adjusted Return on Fairness. Adjusted Return on Fairness is derived by dividing precise or annualized adjusted after-tax earnings attributable to AIG by common Adjusted Shareholders’ Fairness.
Core and Life and Retirement Adjusted Attributed Fairness is an attribution of whole AIG Adjusted Shareholders’ Fairness to those segments based mostly on AIG’s inner capital mannequin, which includes the segments’ respective danger profiles. Adjusted attributed fairness represents AIG’s greatest estimates based mostly on present details and circumstances and can change over time.
Core and Life and Retirement Return on Fairness – Adjusted After-tax Revenue (Adjusted Return on Attributed Fairness) is used to point out the speed of return on Adjusted Attributed Fairness. Adjusted Return on Attributed Fairness is derived by dividing precise or annualized Adjusted After-tax Revenue by Common Adjusted Attributed Fairness.
Adjusted After-tax Revenue Attributable to Core and Life and Retirement is derived by subtracting attributed curiosity expense and earnings tax expense from adjusted pre-tax earnings. Attributed debt and the associated curiosity expense is calculated based mostly on AIG’s inner capital mannequin. Tax expense or profit is calculated based mostly on an inner attribution methodology that considers amongst different issues the taxing jurisdiction through which the segments conduct enterprise, in addition to the deductibility of bills in these jurisdictions.
Adjusted Revenues exclude Internet realized capital features (losses), earnings from non-operating litigation settlements (included in Different earnings for GAAP functions) and modifications in truthful worth of securities used to hedge assured dwelling advantages (included in Internet funding earnings for GAAP functions). Adjusted revenues is a GAAP measure for AIG’s working segments.
AIG makes use of the next working efficiency measures as a result of AIG believes they improve the understanding of the underlying profitability of constant operations and traits of AIG’s enterprise segments. AIG believes additionally they permit for extra significant comparisons with AIG’s insurance coverage rivals. When AIG makes use of these measures, reconciliations to essentially the most comparable GAAP measure are offered on a consolidated foundation.
Adjusted Pre-tax Revenue (APTI) is derived by excluding the gadgets set forth under from earnings from persevering with operations earlier than earnings tax. This definition is constant throughout AIG’s segments. This stuff typically fall into a number of of the next broad classes: legacy issues having no relevance to AIG’s present companies or working efficiency; changes to boost transparency to the underlying economics of transactions; and measures that AIG believes to be widespread to the business. APTI is a GAAP measure for AIG’s segments. Excluded gadgets embrace the next:
modifications in truthful worth of securities used to hedge assured dwelling advantages;
modifications in profit reserves and deferred coverage acquisition prices (DAC), worth of enterprise acquired (VOBA),
and gross sales inducement property (SIA) associated to internet realized capital features and losses;
loss (achieve) on extinguishment of debt;
all internet realized capital features and losses besides earned earnings (periodic settlements and modifications in settlement
accruals) on spinoff devices used for non-qualifying (financial) hedging or for asset replication.
Earned earnings on such financial hedges is reclassified from internet realized capital features and losses to
particular APTI line gadgets based mostly on the financial danger being hedged (e.g. internet funding earnings and curiosity credited to policyholder account balances);
earnings or loss from discontinued operations;
pension expense associated to a one-time lump sum cost to former staff;
earnings and loss from divested companies;
non-operating litigation reserves and settlements;
restructuring and different prices associated to initiatives designed to scale back working bills, enhance effectivity and
simplify AIG’s group;
the portion of favorable or unfavorable prior yr reserve growth for which AIG has ceded the danger below
retroactive reinsurance agreements and associated modifications in amortization of the deferred achieve;
internet loss reserve low cost profit (cost); and
integration and transaction prices related to acquired companies.
Adjusted After-tax Revenue attributable to AIG (AATI) is derived by excluding the tax effected APTI changes described above and the next tax gadgets from internet earnings attributable to AIG:
deferred earnings tax valuation allowance releases and fees;
modifications in unsure tax positions and different tax gadgets associated to legacy issues having no relevance to AIG’s present companies or working efficiency; and
internet tax cost associated to the enactment of the Tax Cuts and Jobs Act (Tax Act).
See web page 16 for the reconciliation of Internet earnings attributable to AIG to Adjusted After-tax Revenue Attributable to AIG.
Ratios: AIG, together with most property and casualty insurance coverage corporations, makes use of the loss ratio, the expense ratio and the mixed ratio as measures of underwriting efficiency. These ratios are relative measurements that describe, for each $100 of internet premiums earned, the quantity of losses and loss adjustment bills (which for Common Insurance coverage excludes internet loss reserve low cost), and the quantity of different underwriting bills that may be incurred. A mixed ratio of lower than 100 signifies underwriting earnings and a mixed ratio of over 100 signifies an underwriting loss. AIG’s ratios are calculated utilizing the related section data calculated below GAAP, and thus is probably not akin to comparable ratios calculated for regulatory reporting functions. The underwriting setting varies throughout international locations and merchandise, as does the diploma of litigation exercise, all of which have an effect on such ratios. As well as, funding returns, native taxes, value of capital, regulation, product kind and competitors can affect pricing and consequently on profitability as mirrored in underwriting earnings and related ratios.
Accident yr loss and mixed ratios, as adjusted: each the accident yr loss and mixed ratios, as adjusted, exclude disaster losses and associated reinstatement premiums, prior yr growth, internet of premium changes, and the impression of reserve discounting. Pure and man-made disaster losses are typically climate or seismic occasions having a internet impression on AIG in extra of $10 million every and in addition embrace sure man-made occasions, resembling terrorism and civil problems that exceed the $10 million threshold. AIG believes that adjusted ratios are significant measures of AIG’s underwriting outcomes on an ongoing foundation as they exclude catastrophes and the impression of reserve discounting that are exterior of administration’s management. AIG additionally excludes prior yr growth to offer transparency associated to present accident yr outcomes.
Underwriting ratios are computed as follows:
a) Loss ratio = Loss and loss adjustment bills incurred ÷ Internet premiums earned (NPE)
b) Acquisition ratio = Whole acquisition bills ÷ NPE
c) Common working expense ratio = Common working bills ÷ NPE
d) Expense ratio = Acquisition ratio + Common working expense ratio
e) Mixed ratio = Loss ratio + Expense ratio
f) Accident yr loss ratio, as adjusted (AYLR) = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) Reinstatement premiums related to catastrophes (CYRIPs) +/(-) RIPs related to prior year catastrophes (PYRIPs) + (Additional) returned premium related to PYD on loss sensitive business ((AP)RP) + Adjustment for ceded premiums under reinsurance contracts related to prior accident years]
g) Accident yr mixed ratio, as adjusted = AYLR + Expense ratio
h) Disaster losses (CATs) and reinstatement premiums = [Loss and loss adjustment expenses incurred – (CATs)] ÷ [NPE +/(-) CYRIPs] – Loss ratio
i) Prior yr growth internet of (extra) return premium associated to PYD on loss delicate enterprise = [Loss and loss adjustment expenses incurred – CATs – PYD] ÷ [NPE +/(-) CYRIPs +/(-) PYRIPs + (AP)RP] – Loss ratio – CAT ratio
Premiums and deposits: contains direct and assumed quantities acquired and earned on conventional life insurance coverage insurance policies, group profit insurance policies and life-contingent payout annuities, in addition to deposits acquired on common life, investment-type annuity contracts, Federal Residence Mortgage Financial institution (FHLB) funding agreements and mutual funds.
Outcomes from discontinued operations are excluded from all of those measures.
American Worldwide Group, Inc. (AIG) is a number one international insurance coverage group. Constructing on 100 years of expertise, right this moment AIG member corporations present a variety of property casualty insurance coverage, life insurance coverage, retirement merchandise, and different monetary providers to clients in additional than 80 international locations and jurisdictions. These numerous choices embrace services that assist companies and people defend their property, handle dangers and supply for retirement safety. AIG widespread inventory is listed on the New York Inventory Trade.
Extra details about AIG may be discovered at www.aig.com | YouTube: www.youtube.com/aig | Twitter: @AIGinsurance www.twitter.com/AIGinsurance | LinkedIn: www.linkedin.com/firm/aig. These references with extra details about AIG have been offered as a comfort, and the data contained on such web sites is just not integrated by reference into this press launch.
AIG is the advertising identify for the worldwide property-casualty, life and retirement, and basic insurance coverage operations of American Worldwide Group, Inc. For added data, please go to our web site at www.aig.com. All services are written or offered by subsidiaries or associates of American Worldwide Group, Inc. Services or products is probably not accessible in all international locations, and protection is topic to precise coverage language. Non-insurance services could also be offered by impartial third events. Sure property-casualty coverages could also be offered by a surplus strains insurer. Surplus strains insurers don't typically take part in state warranty funds, and insureds are due to this fact not protected by such funds.
American Worldwide Group, Inc.
Chosen Monetary Knowledge and Non-GAAP Reconciliation
($ in hundreds of thousands, besides per share knowledge)
Reconciliations of Adjusted Pre-tax and After-tax Revenue (Loss)
Three Months Ended December 31,
2018
2017
Pre-tax
Tax Impact
After-tax
Pre-tax
Tax Impact
After-tax
Pre-tax earnings/internet earnings (loss), together with noncontrolling pursuits
$
(695)
$
(137)
$
(608)
$
875
$
7,544
$
(6,673)
Noncontrolling curiosity
-
-
(14)
-
-
13
Pre-tax earnings/internet earnings (loss) attributable to AIG
(695)
(137)
(622)
875
7,544
(6,660)
Changes:
Adjustments in unsure tax positions and different tax changes
-
5
(5)
-
(461)
461
Deferred earnings tax valuation allowance (releases) fees
-
21
(21)
-
(66)
66
Affect of Tax Act
-
-
-
-
(6,687)
6,687
Adjustments in truthful worth of securities used to hedge
assured dwelling advantages
27
5
22
(29)
(10)
(19)
Adjustments in profit reserves and DAC, VOBA and
SIA associated to internet realized capital features (losses)
40
7
33
(108)
(38)
(70)
Unfavorable (favorable) prior yr growth and associated
amortization modifications ceded below retroactive reinsurance agreements
68
14
54
45
15
30
(Achieve) loss on extinguishment of debt
(three)
(1)
(2)
(1)
(1)
-
Internet realized capital (features) losses*
(195)
(56)
(139)
274
105
169
Noncontrolling curiosity on internet realized capital (features) losses
-
-
48
-
-
1
Loss from discontinued operations
-
-
2
-
-
three
Revenue from divested companies
(three)
-
(three)
(241)
(82)
(159)
Non-operating litigation reserves and settlements
(11)
(three)
(eight)
(43)
(15)
(28)
Internet loss reserve low cost (profit) cost
(66)
(15)
(51)
(96)
(36)
(60)
Pension expense associated to a one-time lump sum cost
to former staff
-
-
-
10
four
6
Integration and transaction prices related to acquired companies
33
7
26
-
-
-
Restructuring and different prices
136
29
107
154
55
99
Adjusted pre-tax earnings (loss)/Adjusted after-tax earnings (loss)
$
(669)
$
(124)
$
(559)
$
840
$
327
$
526
Twelve Months Ended December 31,
2018
2017
Pre-tax
Tax Impact
After-tax
Pre-tax
Tax Impact
After-tax
Pre-tax earnings/internet earnings (loss), together with noncontrolling pursuits
$
257
$
154
$
15
$
1,466
$
7,526
$
(6,063)
Noncontrolling curiosity
-
-
(21)
-
-
(21)
Pre-tax earnings/internet earnings (loss) attributable to AIG
257
154
(6)
1,466
7,526
(6,084)
Changes:
Adjustments in unsure tax positions and different tax changes
-
(48)
48
-
(488)
488
Deferred earnings tax valuation allowance fees
-
(21)
21
-
(43)
43
Affect of Tax Act
-
-
-
-
(6,687)
6,687
Adjustments in truthful worth of securities used to hedge
assured dwelling advantages
154
32
122
(146)
(51)
(95)
Adjustments in profit reserves and DAC, VOBA and
SIA associated to internet realized capital features (losses)
(6)
(three)
(three)
(303)
(106)
(197)
Unfavorable (favorable) prior yr growth and associated
amortization modifications ceded below retroactive reinsurance agreements
675
142
533
303
106
197
(Achieve) loss on extinguishment of debt
7
1
6
(5)
(2)
(three)
Internet realized capital losses*
193
41
152
1,380
506
874
Noncontrolling curiosity on internet realized capital losses
-
-
46
-
-
7
(Revenue) loss from discontinued operations
-
-
42
-
-
(four)
Revenue from divested companies
(38)
(eight)
(30)
(68)
(41)
(27)
Non-operating litigation reserves and settlements
19
four
15
(129)
(45)
(84)
Internet loss reserve low cost (profit) cost
(371)
(79)
(292)
187
65
122
Pension expense associated to a one-time lump sum cost
to former staff
-
-
-
60
21
39
Integration and transaction prices related to acquired companies
124
26
98
-
-
-
Restructuring and different prices
395
83
312
413
145
268
Adjusted pre-tax earnings/Adjusted after-tax earnings
$
1,409
$
324
$
1,064
$
three,158
$
906
$
2,231
* Contains all internet realized capital features and losses besides earned earnings (periodic settlements and modifications in settlement accruals) on spinoff devices used for non-qualifying (financial) hedging or for asset replication.
American Worldwide Group, Inc.
Chosen Monetary Knowledge and Non-GAAP Reconciliation (continued)
($ in hundreds of thousands, besides per share knowledge)
Abstract of Key Monetary Metrics
Three Months Ended December 31,
Twelve Months Ended December 31,
% Inc.
% Inc.
2018
2017
(Dec.)
2018
2017
(Dec.)
Revenue (loss) per widespread share:
Fundamental
Revenue (loss) from persevering with operations
$
(zero.70
)
$
(7.33
)
90.5
%
$
zero.04
$
(6.54
)
NM%
Loss from discontinued operations
-
-
NM
(zero.05
)
-
NM
Internet loss attributable to AIG
$
(zero.70
)
$
(7.33
)
90.5
$
(zero.01
)
$
(6.54
)
99.eight
Diluted
Revenue (loss) from persevering with operations
$
(zero.70
)
$
(7.33
)
90.5
$
zero.04
$
(6.54
)
NM
Loss from discontinued operations
-
-
NM
(zero.05
)
-
NM
Internet loss attributable to AIG
$
(zero.70
)
$
(7.33
)
90.5
$
(zero.01
)
$
(6.54
)
99.eight
Adjusted after-tax earnings (loss) attributable to AIG per diluted share
$
(zero.63
)
$
zero.57
NM%
$
1.17
$
2.34
(50.zero
)%
Weighted common shares excellent:
Fundamental
887.5
908.1
898.four
930.6
Diluted (a)(b)
887.5
908.1
910.1
930.6
Return on fairness (c)
(four.three
)%
(38.7
)%
zero.zero
%
(eight.four
)%
Adjusted return on fairness (d)
(four.6
)%
four.2
%
2.1
%
four.1
%
As of interval finish:
December 31, 2018
September 30, 2018
December 31, 2017
Whole AIG shareholders' fairness
$
56,361
$
58,586
$
65,171
Collected different complete earnings (AOCI)
(1,413)
(536)
5,465
Whole AIG shareholders' fairness, excluding AOCI
57,774
59,122
59,706
Deferred tax property (e)
10,153
9,953
10,492
Whole adjusted AIG shareholders' fairness
$
47,621
$
49,169
$
49,214
December 31,
September 30,
December 31,
As of interval finish:
2018
2018
% Inc. (Dec.)
2017
% Inc. (Dec.)
E book worth per widespread share (f)
$
65.04
$
66.23
(1.eight
)%
$
72.49
(10.three
)%
E book worth per widespread share, excluding AOCI (g)
$
66.67
$
66.83
(zero.2
)
$
66.41
zero.four
Adjusted e book worth per widespread share (h)
$
54.95
$
55.58
(1.1
)
$
54.74
zero.four
Whole widespread shares excellent
866.6
884.6
899.zero
Monetary highlights - notes
(a)
For the three-month interval ended December 31, 2018 as a result of we reported a loss attributable to AIG widespread shareholders from persevering with operations and an adjusted after-tax loss, and for the three- and twelve-month intervals ended December 31, 2017, as a result of we reported losses attributable to AIG widespread shareholders from persevering with operations, all widespread inventory equivalents are anti-dilutive and are due to this fact excluded from the calculation of diluted shares and diluted per share quantities. The shares excluded from these calculations have been 2,732,679 shares, 20,155,385 shares and 22,412,682 shares, respectively.
(b)
Diluted shares within the diluted EPS calculation symbolize fundamental shares for the three-month interval ended December 31, 2018 and three- and twelve-month intervals ended December 31, 2017 because of the internet losses in these intervals.
(c)
Computed as Annualized internet earnings (loss) attributable to AIG divided by common AIG shareholders' fairness. Fairness contains AOCI and DTA.
(d)
Computed as Annualized Adjusted after-tax earnings attributable to AIG divided by Adjusted Shareholders' Fairness.
(e)
Represents deferred tax property solely associated to U.S. internet working loss and international tax credit score carryforwards on a U.S. GAAP foundation and excludes different stability sheet deferred tax property and liabilities.
(f)
Represents whole AIG shareholders' fairness divided by Whole widespread shares excellent.
(g)
Represents whole AIG shareholders' fairness, excluding AOCI, divided by Whole widespread shares excellent.
(h)
Represents Adjusted Shareholders' Fairness, divided by Whole widespread shares excellent.
American Worldwide Group, Inc.
Chosen Monetary Knowledge and Non-GAAP Reconciliation
($ in hundreds of thousands, besides per share quantities)
Reconciliations of Life and Retirement Adjusted Return on Fairness
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2018
2017
2018
2017
Adjusted pre-tax earnings
$
623
$
782
$
three,190
$
three,831
Curiosity expense on attributed monetary debt
31
6
107
23
Adjusted pre-tax earnings together with attributed curiosity bills
592
776
three,zero83
three,808
Revenue tax expense
116
252
610
1,242
Adjusted after-tax earnings
476
524
2,473
2,566
Ending adjusted attributed fairness
$
19,695
$
20,304
$
19,695
$
20,304
Common adjusted attributed fairness
$
19,475
$
20,644
$
19,664
$
20,687
Adjusted return on attributed fairness
9.eight
%
10.2
%
12.6
%
12.four
%
Reconciliations of Core Adjusted Return on Fairness
Three Months Ended
December 31,
2018
2017
Adjusted pre-tax earnings (loss)
$
(519)
$
429
Curiosity expense (profit) on attributed monetary debt
-
(31)
Adjusted pre-tax earnings (loss) together with attributed curiosity bills
(519)
460
Revenue tax expense (profit)
(93)
198
Adjusted after-tax earnings (loss)
(426)
262
Ending adjusted attributed fairness
$
38,735
$
39,931
Common adjusted attributed fairness
$
39,547
$
40,841
Adjusted return on attributed fairness
(four.three)
%
2.6
%
Internet Premiums Written - Change in Fixed Greenback
Three Months Ended
Common Insurance coverage - Worldwide
December 31, 2018
International alternate impact on worldwide premiums:
Change in internet premiums written
Enhance (lower) in authentic forex
7.6
%
International alternate impact
(2.four
)
Enhance (lower) as reported in U.S.
5.2
%
Reconciliation of Insurance coverage Firm Internet Funding Revenue
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2018
2017
2018
2017
Internet funding earnings per Consolidated Assertion of Operations
$
2,754
$
three,464
$
12,476
$
14,179
Adjustments in truthful worth of securities used to hedge assured dwelling advantages
1
(29)
128
(146)
Internet realized capital features associated to non-qualifying hedges
58
-
124
-
Whole Insurance coverage Firm Internet funding earnings
$
2,813
$
three,435
$
12,728
$
14,zero33
American Worldwide Group, Inc.
Chosen Monetary Knowledge and Non-GAAP Reconciliation (continued)
($ in hundreds of thousands, besides per share quantities)
Reconciliations of Premiums and Deposits
Three Months Ended
December 31,
2018
2017
Particular person Retirement:
Premiums
$
15
$
10
Deposits
four,213
three,zero96
Different
(three)
-
Whole premiums and deposits
$
four,225
$
three,106
Group Retirement:
Premiums
$
four
$
6
Deposits
2,102
1,842
Different
-
-
Whole premiums and deposits
$
2,106
$
1,848
Life Insurance coverage:
Premiums
$
378
$
362
Deposits
417
398
Different
192
203
Whole premiums and deposits
$
987
$
963
Institutional Markets:
Premiums
$
816
$
1,zero19
Deposits
25
1,zero22
Different
7
7
Whole premiums and deposits
$
848
$
2,048
Whole Life and Retirement:
Premiums
$
1,213
$
1,397
Deposits
6,757
6,358
Different
196
210
Whole premiums and deposits
$
eight,166
$
7,965
View supply model on businesswire.com: https://www.businesswire.com/information/house/20190213005793/en/
Liz Werner (Traders): 212-770-7074; [email protected]
Daniel O’Donnell (Media): 212-770-3141; [email protected]
Claire Talcott (Media): 212-458-6343; [email protected]
Supply: American Worldwide Group, Inc.
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