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Consumer Insurance Investor DayPersonal Insurance | JapanMay 15, 2017
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Cautionary Statement Regarding Forward Looking InformationThis document and the remarks made within this presentation 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 meaningof the Private Securities Litigation Reform Act of 1995. These projections, goals, assumptions and statements are not historical facts but insteadrepresent only AIG’s belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control. Theseprojections, goals, assumptions and statements include statements preceded by, followed by or including words such as “will,” “believe,” “anticipate,”“expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal,” or “estimate.” These projections, goals, assumptions and statements mayaddress, among other things, AIG’s: exposures to subprime mortgages, monoline insurers, the residential and commercial real estate markets, stateand municipal bond issuers, sovereign bond issuers, the energy sector and currency exchange rates; exposure to European governments andEuropean financial institutions; strategy for risk management; actual and anticipated sales of businesses or asset divestitures or monetizations;restructuring of business operations, including anticipated restructuring charges and annual cost savings; generation of deployable capital; strategies toincrease return on equity and earnings per common share; strategies to grow net investment income, efficiently manage capital, grow book value percommon share, and reduce expenses; anticipated organizational and business changes; strategies for customer retention, growth, productdevelopment, market position, financial results and reserves; segments’ revenues and combined ratios; and Chief Executive Officer succession andmanagement retention plans. It is possible that AIG’s actual results and financial condition will differ, possibly materially, from the results and financialcondition 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; negative impacts on customers,business partners and other stakeholders; the occurrence of catastrophic events, both natural and man-made; significant legal proceedings; the timingand applicable requirements of any new regulatory framework to which AIG is subject as a nonbank systemically important financial institution and as aglobal systemically important insurer; concentrations in AIG’s investment portfolios; actions by credit rating agencies; judgments concerning casualtyinsurance underwriting and insurance liabilities; AIG’s ability to successfully manage Legacy portfolios; AIG’s ability to successfully reduce costs andexpenses and make business and organizational changes without negatively impacting client relationships or AIG’s competitive position; AIG’s ability tosuccessfully dispose of, or monetize, businesses or assets; judgments concerning the recognition of deferred tax assets; judgments concerningestimated restructuring charges and estimated cost savings; and such other factors discussed in Part I, Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations (MD&A) and Part II, Item 1A. Risk Factors in AIG’s Quarterly Report on Form 10-Q for the quarterlyperiod ended March 31, 2017 and Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in AIG’s Annual Report on Form 10-K for the year endedDecember 31, 2016.
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. This document and theremarks made orally may also contain certain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAPmeasures in accordance with Regulation G is included in the First Quarter 2017 Financial Supplement available in the Investor Information section ofAIG's corporate website, www.aig.com, as well as in the Appendix to this presentation.
Note: Amounts presented may not foot due to rounding.
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Consumer Investor Day Agenda
Time Content Management
9:00 – 9:30 Registration and Breakfast
9:30 – 9:40 Overview & Outlook Kevin Hogan, Executive Vice President &Chief Executive Officer of Consumer
9:40 – 10:15 Personal Insurance Gaurav Garg, Chief Executive Officer of Personal Insurance
10:15 – 10:40 Japan Robert Noddin, Chief Executive Officer of Japan
10:40 – 11:00 Q&A
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Overview & OutlookKevin HoganExecutive Vice President &Chief Executive Officer of Consumer
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Consumer: Strong Operating Performance, Capital Efficiency and Unique Growth Opportunities
Important contributor to AIG’s results
Achieving efficiency goals and returning excess of cost of capital
Industry leader in target markets
Solid foundation for growth
Experienced executive team and deep talent pool
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Consumer: An Important Contributor to AIG’s ResultsModular reporting enhances transparency
$11,704
$5,758
$3,818
$2,769
$4,018
$8,098
$13,270
AIG Operating Revenue[1] By Business (in millions, FY2016)
ByProduct
43%Commercial Insurance
Liability and Financial Lines 27%
Property and Special Risks 16%
49%Consumer Insurance
24% Personal Insurance
12% Individual Retirement
8% Life Insurance
5% Group Retirement
8%Other Operations
AIG Operating Revenue[1] By Geography (in millions, FY2016)
USEurope By
Geography
Europe$5,430 (11%)
United States$33,938 (69%)
Japan$3,566 (7%)
Rest of World$6,501 (13%)
1. Represents Operating Revenues excluding revenues from our Legacy Portfolio operations of $5.3 billion. Operating Revenues are net of internal reinsurance and do not include deposits. Operating Revenues for Commercial Insurance and Personal Insurance represent net premiums earned and net investment income, and Operating Revenues for Institutional Markets, Retirement and Life Insurance include premiums, policy fees, net investment income and advisory fees
Note: ROE = normalized return on attributed equity
10.3% ROE
10.8% ROE
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Consumer: Achieving Efficiency Goals and Returning Excess of Cost of Capital
Normalized Return On Attributed Equity
1Q16 1Q17FY15 FY16
Pre-tax Operating Income ($M)
1Q16 1Q17FY15 FY16
10.4% 10.9%
8.4%
10.3%
704
1,048
2,929
3,849
General Operating Expenses ($M)
1Q16 1Q17FY15 FY16
Accident Year Combined Ratio, As Adjusted1
8873,8803,409
95.3 95.6798
Loss Ratio Expense Ratio
1Q16 1Q17
41.9 40.6
53.4 55.0
FY15 FY16
101.1 96.2
54.0 54.1
47.1 42.1
1. Accident year combined ratio, as adjusted, for Personal Insurance Module 7
Consumer: Industry Leaders in Target Markets
Individual RetirementPremiums & Deposits: $16.1B
PTOI: $2.3BNormalized ROE: 11.6%
Group RetirementPremiums & Deposits: $7.6B
PTOI: $0.9BNormalized ROE: 11.6%
Life InsurancePremiums & Deposits: $3.5B
PTOI: $(0.04)BNormalized ROE: 1.7%
Personal InsuranceNPW: $11.5BPTOI: $0.7B
Normalized ROE: 10.2%
2016 Premiums & Deposits, NPW, PTOI and ROE
Illustration Purposes only: Based on relative capital consumption at YE’16.
Disciplined focus on value creation at the individual business level
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Consumer: 1Q 2017 Highlights
Individual Retirement
Group Retirement
Life Insurance
Normalized ROE 12.5%, PTOI strong with solid fees and spreads Top tier ranking across Fixed, Index and Variable Annuity product lines in challenging
environment – DOL uncertainty affecting industry volumes Innovative product risk design; hedging program continues to perform in line with
expectations
Normalized ROE 10.4%, strong PTOI driven by higher investment income and equity returns
Deposits increasing / higher group acquisition due to system and service strategies Net flows impacted by one large surrender related to healthcare client consolidation
Normalized ROE 4.1%, PTOI increasing with favorable underwriting experience and policy fee growth
Top tier Term ranking and overall sales growth Significant operational systems and service environment enhancements continue
on pace
Solid foundation for future growth
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Personal Insurance
Japan
Normalized ROE 11.8%, PTOI slightly higher than prior year due to reduced expenses and higher net investment income
Overall Combined Ratio in the quarter in line with prior year despite a severe loss in 1Q 2017 versus no severe losses in the quarter last year
Investments in technology and service continue while expanding new business and partnerships
Normalized ROE 18.3%, strong PTOI driven by zero CAT activity and ongoing business improvements and efficiencies
Achieved pre-merger status April 3rd adopting new organizational structure and co-locating teams under single management
Completed sale of Fuji Life to FWD Group effective April 30th preserving distribution relationships
Consumer: 1Q 2017 HighlightsSolid foundation for future growth
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Personal InsuranceGaurav GargChief Executive Officer of Personal Insurance
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Personal Insurance: Key Messages
Attractive portfolio mix following strategic actions
Medium-term target run-rate of 92-94 combined ratio and mid-double digit ROE
Poised for growth after 2018
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$11,704
Operating Revenues2
$5,758
$3,818
$2,769$4,018
$8,098
$13,270
1. Property Casualty entities represents the aggregate net premium written of Commercial Insurance (Property and Special Risks, Liability and Financial Lines) and Personal Insurance2. Represents Operating Revenues excluding revenues from our Legacy Portfolio operations of $5.3 billion. Operating Revenues do not include deposits. Operating Revenues for Commercial
Insurance and Personal Insurance represent net premiums earned and net investment income, and Operating Revenues for Institutional Markets, Retirement and Life Insurance include premiums, policy fees, net investment income and advisory fees
Personal Insurance: Important Contributor to Consumer Business and Property Casualty Entities1
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FY 2016 Mix of Business(dollars in millions)
Personal Insurance: Attractive Business with Unique Portfolio Mix
Short tail with stable cash flows
Low reserve volatility
Relatively low exposure to
capital markets
Less prone to insurance
market cycles
Auto: 26%Personal Accident (PA): 35%
Travel: 8%
Warranty & Service: 10%High Net Worth: 14%
Individual Group
2016 Net Premiums Written
Primary Markets:Japan, Asia
Primary Markets:U.S.,
Multinational
Primary Markets:Japan, Multinational
Property: 7%
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Normalized Return On Attributed Equity
1Q16 1Q17FY15 FY16
Pre-tax Operating Income ($M)
1Q16 1Q17FY15 FY16
11.9% 11.8%
-3.3%
10.2% 210 212
68
686
1Q16 1Q17FY15 FY16 1Q16 1Q17FY15 FY16
General Operating Expenses ($M) Accident Year Combined Ratio, as Adjusted443
4022,084
1,805 95.3 95.6101.1 96.247.1 42.1
54.0 54.1
41.9
53.4
40.6
55.0
Accident Year Loss Ratio Expense Ratio
Personal Insurance: Performance Turnaround Driven by Efficiency
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35%
40%
45%
50%
55%
60%
Personal Insurance: Stable Accident Year Loss Ratio and Improving Expense Ratio
Accident Year Loss Ratio, As Adjusted,1and Expense Ratio (Rolling 4 Quarters)2
1. Accident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted, reflect the loss ratio excluding catastrophe losses and prior year development2. Four-quarter rolling Accident Year Loss Ratio and Expense Ratio: based upon 2015 and 2016 metrics as published in Q4’ 2016 financial supplements and Q1’ 2015 – Q3’ 2016
revised historical segment results; and 2013 and 2014 metrics as published in Q4’ 2014 financial supplements and Q1’ 2013 – Q3’ 2014 revised historical segment results 16
PI Accident Year Combined Ratio, As Adjusted1
53.9 54.0 54.1 55.0
45.6 47.1 42.1 40.6
2014 2015 2016 1Q17
95.699.5 101.1 96.2
12.4 11.6 11.5 2.7
AY CR,as adjusted
NPW, $bn
Accident Year Loss Ratio, As Adjusted
Expense RatioAccident Year Loss Ratio, As Adjusted
Expense Ratio
92-94
Medium Term Target
Personal Insurance: Advanced Risk Analytics to Maximize Profitability
Geospatial Segmentation
Advanced Pricing
Risk Quality Score
Leveraging data and machine learning to refine pricing
More granular data to better understand customer riskEquipping underwriters with more relevant expected profitability information
Risk Accumulation ManagementBalancing risk, profitability, and growth by managing against
accumulation thresholds at various levels
Highest quality
Lowestquality
17Note: Graphics for illustration purposes only
Personal Insurance: Focusing Geographic Footprint to Optimize Earnings
# of Countries Selling Personal
Insurance
Individual
Group
2010A 2016A 2017E
71 32 15
81 56 35
Target Footprint
Country and product exits represent less than 10%
of total 2015 NPW
Guiding Principles
Sustainable Profit Pools Scalability AIG
Capabilities
Meaningful or Niche Market
Position
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Target Footprint`
1. Network partner countries based upon existing client needs. Depending upon client’s particular geographic footprint, additional countries can be added, further leveraging the AIG’s Commercial network partners
Global Strength
Worldwide preferred providers
Providers
650,000+Languages
40+Languages spoken by service teams
Network Partner Countries1
55+In addition to target
footprint
Multinational Network Partner Countries
Target Footprint
Personal Insurance: Extensive Global Network Supports Multinational Model
Service Centers
8Wholly owned assistance service
centers across the world
Wholly Owned Service Centers
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Personal Accident
90+ countries covered through core footprint and AIG partner network
#1 Foreign-owned Personal Accident provider in Japan
Warranty and Service Programs
Serving 5 of top 10 electronic product manufacturers
Service capabilities in over 60 countries
Largest US warranty and service provider for consumer electronics and appliances
60+
Winner of 4 travel awards for innovation, talent, and overall travel business1
Over 25 commercial airline partners globally
25+
4x
Around the clock servicing: 24/7/365
52,000+ Medical cases
Medical Evacuations
1,600+400+Security cases
Travel Assistance 2016
Travel
1. 2016 Travvy Awards – Most Innovative Travel Executive (Gold), Rising Star Award (Gold), Best Travel Insurance Provider (Silver); 2016 American Society of Travel Agents - Travel Insurance Company of the Year
Personal Insurance: Diverse Client Base of Multinational Corporations, SMEs, Associations and Individuals
$0.9B2016 NPW
$4.0B2016 NPW
$1.1B2016 NPW
Diverse product set including accident, health, and living benefits supported by global assistance network
Provider in mature and emerging
markets
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Personal Insurance: Focused on Target Markets and Customer Segments
Global Auto and Property
Leader for U.S. domiciled excess and surplus
Targeted segments and distribution by country
Mass market presence in Japan, Asia Insurer for Ultra High Net Worth Individuals
Over 200 mega yachts insured
Insure 52% of ARTNews top 200 U.S. collectors
Insure ~ 40% of US billionaires
High Net Worth
* D2C* Telematics
* Mass Market
US Market leader
Unique multinational programs
Auto & Property
$3.8B2016 NPW
$1.6B2016 NPW
Strategic partnerships
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0%
4%
8%
12%
16%
$0
$400
$800
$1,200
$1,600
2012 2013 2014 2015 2016
Net Premiums WrittenYear Over Year Growth Rate
Personal Insurance: Investing in Growth – High Net Worth
1. Gross premium written retention ratio
Catastrophic Risks
Real-time TrackingCatastrophic risks services
Key Metrics
Smart Build Art Collection Management
Every Day Risks
90%
95%
100%
1Q15 3Q15 1Q16 3Q16 1Q17
US Net Premium Written up over 45% since 2012
US Retention Ratio Remains Strong1
($M)
https://www.youtube.com/watch?list=PLk2UZM7TIvsiaSLldz9NusA0oy-7FgdgL&v=puUjvmRXf3c&feature=player_embedded
https://www.youtube.com/watch?feature=player_embedded&v=23_REoaztks
https://www.youtube.com/watch?v=tkaewAaSHnY
Yacht Loss Prevention
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Internal User Community
Underwriter Case Manager
Claims Adjuster
Call CenterRepresentative
PolicyholdersBrokers
External User Community
Enhancing the experience for all users…
Personal Insurance: Investing in Growth – Select Technology Investments in Key Businesses
Straight-through ProcessingBroker self-service quote, bind & issue
Data Pre-fillMinimizing data entry, maximizing accuracy
Flexible ArchitectureEase of integration with 3rd party providers
A more efficient and accurate platform
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Israel“Safe Drive”
Apps in select focus markets to give drivers feedback and help improve driving habits
Examining key driving behaviors and providing tips for improvement over time
Providing renewal discounts for safe drivers
Safe Driving Global Travel Assistance
Travel GuardTravel Assistance
Singapore
Hong Kong
Personal Insurance: Investing in Growth – Mobile Capabilities
One Touch ‘Help’ Button connects travelers directly to emergency travel assistance
Country reports provide key information on political conditions, security issues, travel logistics, etc.
Medical Translations Tool translates terms and phrases into multiple languages and Security Awareness Training Videos provide guidance and tools for travel preparation
Ireland
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Personal Insurance: Investing in Growth – New Market Initiatives and Partnerships
US/Canada:Investing in Private Client Group, Accident & Health, Travel, and Warranty businesses, multi line partnership with Canadian conglomerate
UK / Europe: Azur (High Net Worth), Travel, Extended Warranty Service Programs
Israel: Customer relationship management platform, telematics
China: T-Mall & Alipay (Alibaba companies), WeChat, Digital Travel
Singapore: Uber and Digital Nation strategy
Korea: End-to-end digital
Australia - MGA partnership
Thailand & Malaysia:Distribution expansion
Japan:AIG General Insurance
India: Tata AIG JV, Reinsurancestrategy
South Africa:
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JapanRobert Noddin Chief Executive Officer of Japan
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Japan: Key Messages
Significant loss ratio reduction since Fuji Fire acquisition
Earnings emergence from reduced marketing costs
Future margin improvement driven by efficiency
Medium-term target run-rate of 92-94 combined ratioand mid-double digit ROE
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Japan: Delivering Results While Preparing for Merger
Normalized Return On Attributed Equity
1Q16 1Q17FY15 FY16
Pre-tax Operating Income ($M)
1Q16 1Q17FY15 FY16
1.6%
18.3%
-5.2%
10.8%
54
115
3
256
1Q16 1Q17FY15 FY16
General Operating Expenses ($M) Accident Year Combined Ratio, As Adjusted
202187778
827
1Q16 1Q17FY15 FY16
98.892.5
101.194.3
45.339.5
55.8 54.8
42.3
56.5
36.0
56.5
Loss Ratio Expense Ratio
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Japan: Largest Foreign P&C Insurer in Japan with Rich HistoryBusiness simplification drives organizational focus
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1946
AIU Insurance
CommencesBusiness
2013
AIG JapanHoldings
Established
2011
Acquire 100% stakein Fuji Fire
Reducesoperations inless strategic lines / channels
Provides a source of funding for continued investment
2016April 1
AHA CeasesNew Business
Transitions lower return business while preserving distribution synergies
2017April 30
Fuji LifeSold to FWD
Creates P&C flagship under unified AIG brand
2018January 1
AIU – Fuji FireMerger into AIG General Insurance
Japan: Business Improvement Since Acquisition of Fuji Fire and Marine
Loss Ratios
Historical GOE Components
Loss Ratios (Rolling 12mth)
30%
35%
40%
45%
50%
55%
60%
65%
1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16
Auto A&H Commercial
Enhanced portfolio management analytics and underwriting discipline
Improved pricing / producer segmentation
Substantial reduction efforts through efficiency initiatives:− Total reduction in recurring GOE of
~$120m since 2012− Reduced marketing costs impact 2016
and 2017
Future profitability driven by completion of the merger
− Expected additional run rate savings in recurring GOE of ~$80m1, starting in 2019
− Cessation of one-time project spend
− Offset by expected increase in amortization of project spend
Continued management actions enhance profitability
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Loss ratio improvement since 2012:Auto ~11 pts, A&H ~6 pts, Commercial ~10 pts
2012 2013 2014 2015 2016 2017
Amortization One Time Project SpendRecurring GOE Direct MarketingTotal GoE
1. Based on 2016 baseline
Japan: Distinctive Market Position Versus Top 3 Japanese P&C Insurers
Segment Mix
Top SME provider
Market leader in Traveland Student sub-segmentin Individual
Focus on multinational in CAP/MAP
Overweight in profitable Personal Accident line
Industry leading loss ratiosin Personal Accident, Auto and Fire
Product Mix
Note: All figures based on J-GAAP basis Direct Premium Written for the year ended Mar. 2016 CALI=Compulsory Automobile Liability Insurance
Source: The Statistics of Japan Non-Life Insurance Business, 2015
Note: All figures based on Direct Premium Written. AIG figures for the year ended Nov. 2016.CAP / MAP = Corporate Account Practice / Major Account Practice
Source: AIG internal analysis, external partner estimates. 31
Market AIGCAP/MAP11%
SME34%
Individual55%
Individual66%
SME16%
CAP/MAP18%
Market AIG
Accident33%
Auto32%
Fire16%
Other14%
CALI5%
10% Accident
Auto45%Fire
14%
Other20%
CALI11%
Independent Agent Full-time, professional agents
CareerAgent
Employee sales agents.Serve as a feeder channel for independent agent channel
PartnerNon-professional agents.(i.e. Realtors, Auto Dealers, Mechanics, etc.)
LifeAlliance
Alliances with Life Insurers to sellGeneral Insurance products
Case &Others
In-house agencies thatpurchase insurance for groupcompanies. AIG group agency (AIG Fuji Insurance Service).Travel agencies and banks
GlobalBroker
Primarily Commercialbusiness through large international brokers
DirectMarketing
Call center and internet sales(AHA ceased new business in April 2016)
Independent Agency
45%
Partner 23%
Career 9%
DM 13%
Independent Agent47%
CareerAgent
9%
Partner16%
Life Alliance
3%
Case & Others
11%
Global Broker
1%Direct
Marketing13%
Japan: Distribution Aligned with Target Segments and Consultative Business Approach
Source: AIU / FFM / AHA JGAAP GPW for the period from December 2015 to November 2016.
Professional Agents56%
% of GPW
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Total Agencies 30,000
Registered Sales Reps1 150,000
1. Number of AIU and FFM sales agents who are taking training for the merged entity
Market
3.8 million SMEs: 99.7% of all companies, 70% of workforce1
Hojinkai (HJK)2 network (tax associations) represent over 1 million members
Big 3 P&C insurers focus on large corporations through their “Keiretsu” relationships
Unmet insurance needs
Japan: Market Leader in SME with Unique Opportunities for Expansion
1. The Small and Medium Enterprise Agency, Ministry of Economy, Trade and Industry2. National Federation of Corporate Taxpayers Association (NFCTA known as Hojinkai) and the Tax Payment Associations (TPA known as Nouzei-kyokai)
45+ years Hojinkai relationship Only P&C insurer endorsed by HJK Nationwide Professional Agency network Proven ability to meet needs of
sub-segments (#1 in Construction) ~$600 million in GPW from HJK
Value Proposition
Increase penetration of HJK members (~11% today)
Capitalize on recently unlocked Fuji Fire distribution footprint
Deliver integrated solutions for additional sub-segments
Opportunities for Margin Expansion
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Japan: SME Sub-Segment Strategy Producing Results
Holistic assessment of segment needs and focused product development
Comprehensive distribution training program enabling relationship driven, consultative approach
Professional and specialized claim handling
Financial protection in the event of employee illness, accident or death
Protection of employer and public’s liabilities
Help in settlement of disputes with employees
Medical recovery support including stress management and mental illness
Construction focus illustrates approach with transferability to other sub-segments
Construction Sub-Segment Needs Focus Strategy
Market leader with 150,000 construction companies insured
NPW $450M annually with Combined Ratio of 90%
Opportunity to leverage experience to grow target SME segments
Results
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Japan: Recognized By Customers for Service Excellence
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Highest Customer Satisfaction Among Auto Insurers
Highest Customer Satisfaction with the Auto Insurance Purchase Experience
J.D. Power 2016 Japan Auto Insurance Satisfaction Study based on responses from 3,867 auto insurance policy holders. J.D. Power 2016 Japan Auto Insurance Shopping Study based on 3,721 total responses measuring the opinions
of consumers shopping for a new auto insurance policy. japan.jdpower.com.
Amongst Insurers with agency distribution
Japan: Active Care – Moving from Reactive to ProactiveRedesigning the “insurance” experience from the customer's perspective
Innovative use of drones to detect potential property damage of roofs and providing consulting prior to damages occurring
Support
Restore
Customer education program on risk prevention in every day life: bike helmets, road safety, anti-bulling
Cyberdyne collaboration continues AIG’s industry-disrupting approach of embracing innovative technologies to help our clients
Industry leading response times and customer-centric adjusting for Kumamoto earthquake enhancing customer loyalty and competitiveness
Effective use of drones for adjusting roof damages
Prevent
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Japan: Branding Active Care in Japan
Note: viewing statistics as of April 26, 2017YouTube: www.youtube.com/watch?v=nVzzhq5whWE
#TackleTheRisk
79million views
85 million+ views globally since launch
National TV coverage and media exposure
4million views
2million views
Rugby World Cup to be held in Tokyo in 2019
Tokyo Olympics in 2020
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Consumer: Strong Operating Performance, Capital Efficiency and Unique Growth Opportunities
Important contributor to AIG’s results
Achieving efficiency goals and returning excess of cost of capital
Industry leader in target markets
Solid foundation for growth
Experienced executive team and deep talent pool
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Q&A and Closing Remarks
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Appendix
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Speaker Biographies
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Speakers’ BiographiesKevin Hogan is AIG Executive Vice President and CEO Consumer, and senior officer for Japan. In his Consumer capacity heoversees the Individual Retirement, Group Retirement, Life, and Personal Insurance modules, providing a broad range ofannuities, mutual funds, life, auto, personal accident, personal property, and service programs including extended warranty,assistance and travel insurance products. In his Japan capacity, he oversees all AIG businesses, including Commercial andConsumer, and the Individual, SME and Multinational segments. Mr. Hogan started his career in 1984 at AIG in New York, andsubsequently held management positions in Property Casualty in Chicago, Tokyo, Hong Kong, Singapore, and China and Life& Retirement in China, Taiwan and New York. From 2009 until rejoining AIG in 2013, he was CEO Global Life for the ZurichInsurance Group. He serves on the Board of Directors of the American Council of Life Insurers, the Japan Society, St. John'sUniversity School of Risk Management and the Chatham Day School. Mr. Hogan is a graduate of Dartmouth College.
Gaurav Garg is AIG Senior Vice President and CEO Personal Insurance, and corporate officer of AIG. He is responsible foroverseeing AIG’s Global Personal Insurance businesses, comprising high net worth-Private Client Group, personal auto andproperty, personal accident, travel and assistance services and extended warranty and service programs. Mr. Garg first joinedAIG in 2000 and held various management and leadership positions across AIG’s Personal Lines insurance business. He alsoserved as the Chief Executive Officer and Managing Director of Tata AIG from 2007 to 2012. Prior to rejoining AIG in April2015, he was a Senior Partner and President at Mercer in New York and sat on the Executive Committee, serving as Presidentfor Mercer’s Growth Markets Region. Mr. Garg is the Vice Chairman of the Board of Directors for Blue Marble Micro Insuranceand the Chairman of the Insurance Subcommittee at the U.S.-India Business Council. He holds a Master’s Degree in BusinessAdministration and has completed the Advanced Management Program from Wharton, University of Pennsylvania.
Robert (Bob) Noddin is CEO of Japan, and President & Chief Executive Officer of AIG Japan Holdings KK. He is responsiblefor overseeing all aspects of AIG’s Japan business, which includes independent operating companies AIU, American HomeAssurance and Fuji Fire & Marine Insurance, as well as other subsidiary companies in Japan that provide a range of services.He is also responsible for overseeing AIG’s operations in Korea. During his more than 30-year career at AIG, he has held anumber of senior positions in the U.S., Japan, Hong Kong, the Philippines, and Thailand including COO of AIG JapanHoldings, CEO of AIU Japan, and Global Head of Operations and Systems for the AIG Property & Casualty business. Mr.Noddin currently serves as the Chair of the Foreign Non-Life Insurance Association of Japan (FNLIA), Chairman of the Boardof Directors of the American School in Japan (ASIJ), and a Statutory Auditor and Board of Overseer for Temple UniversityJapan. He holds a B.A., cum laude, in Business Administration from Gettysburg College in Pennsylvania and an Asian Studiesdegree from Kansai University of Foreign Studies in Osaka, Japan.
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Glossary of Non-GAAP Financial Measures and Non-GAAP Reconciliations
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Glossary of Non-GAAP Financial MeasuresThroughout this presentation, we present our financial condition and results of operations in the way we believe will be most meaningful and representative of our business results. Some of the measurements we use are “non-GAAP financial measures” under Securities and Exchange Commission rules and regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The non-GAAP financial measures we present may not be comparable to similarly-named measures reported by other companies. The reconciliations of such measures to the most comparable GAAP measures in accordance with Regulation G are included within the relevant tables or in the First Quarter 2017 Financial Supplement available in the Investor Information section of AIG’s website, www.aig.com.We use certain of our operating performance measures, as discussed beginning in the next paragraph below, to define our forward-looking financial targets. Our financial targets are provided based on management’s estimates. The most directly comparable GAAP financial targets would be heavily dependent upon results that are beyond management’s control and the outcome of these items could be significantly different than management’s estimates. Therefore, we do not provide quantitative reconciliations for these financial targets as we cannot predict with accuracy future actual events (e.g., catastrophe losses) and impacts from changes in macro economic market conditions, including the interest rate environment (e.g. estimate for DIB & GCM returns, fair value changes on PICC Investments, net reserve discount change and returns on alternative investments).
AIG Return on Equity – After-tax Operating Income Excluding AOCI and DTA (Adjusted Return on Equity) is used to show the rate of return on shareholders’ equity. We believe this measure is useful to investors because it eliminates items that can fluctuate significantly from period to period, including changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. We exclude deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted Return on Equity. Adjusted Return on Equity is derived by dividing actual or annualized after-tax operating income attributable to AIG by average Adjusted Shareholders’ Equity. AIG Normalized Return on Equity further adjusts Adjusted Return on Equity for the effects of certain volatile or market related items. We believe this measure is useful to investors
because it presents the trends in our consolidated return on equity without the impact of certain items that can experience volatility in our short-term results. Normalized Return on Equity is derived by excluding the following tax adjusted effects from Adjusted Return on Equity: the difference between actual and expected (i) catastrophe losses, (ii) alternative investment returns, and (iii) Direct Investment book (DIB) and Global Capital Markets (GCM) returns; fair value changes on PICC investments; update of actuarial assumptions; Life insurance incurred but not reported (IBNR) death claim charge; and prior year loss reserve development. Operating Revenues exclude Net realized capital gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair
value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes). Operating revenues is a GAAP measure for our operating segments.
We use the following operating performance measures because we believe they enhance the understanding of the underlying profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP measure are provided on a consolidated basis. Pre-tax Operating Income (PTOI) is derived by excluding the following items from income from continuing operations before income tax. This definition is consistent across our
modules (including geography). These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. PTOI is a GAAP measure for our operating segments.
Glossary of Non-GAAP
• changes in fair value of securities used to hedge guaranteed living benefits;• changes 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 and losses;
• loss (gain) on extinguishment of debt;• net realized capital gains and losses;• non-qualifying derivative hedging activities, excluding net realized capital gains and
losses;• income or loss from discontinued operations;• net loss reserve discount benefit (charge);
• pension expense related to a one-time lump sum payment to former employees;
• income and loss from divested businesses;• non-operating litigation reserves and settlements;• reserve development related to non-operating run-off insurance business;• restructuring and other costs related to initiatives designed to reduce
operating expenses, improve efficiency and simplify our organization; and• the portion of favorable or unfavorable prior year reserve development for
which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.
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Glossary of Non-GAAP Financial Measures
After-tax Operating Income Attributable to AIG (ATOI) is derived by excluding the tax effected PTOI adjustments described above and the following tax items from net income attributable to AIG:
– deferred income tax valuation allowance releases and charges; and– uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or operating performance.
Ratios: We, along with most property and casualty insurance companies, use the loss ratio, the expense ratio and the combined ratio as measures of underwriting performance. These ratios are relative measurements that describe, for every $100 of net premiums earned, the amount of losses and loss adjustment expenses (which for Commercial Insurance excludes net loss reserve discount), and the amount of other underwriting expenses that would be incurred. A combined ratio of less than 100 indicates underwriting income and a combined ratio of over 100 indicates an underwriting loss. Our ratios are calculated using the relevant segment information calculated under GAAP, and thus may not be comparable to similar ratios calculated for regulatory reporting purposes. The underwriting environment varies across countries and products, as does the degree of litigation activity, all of which affect such ratios. In addition, investment returns, local taxes, cost of capital, regulation, product type and competition can have an effect on pricing and consequently on profitability as reflected in underwriting income and associated ratios. Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement
premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each. Catastrophes also include certain man-made events, such as terrorism and civil disorders that meet the $10 million threshold. We believe the as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which are outside of management’s control. We also exclude prior year development to provide transparency related to current accident year results. Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life-contingent payout annuities,
as well as deposits received on universal life, investment-type annuity contracts and mutual funds.Results from discontinued operations are excluded from all of these measures.
Glossary of Non-GAAP
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Non-GAAP ReconciliationsPre-tax and After-tax Operating Income - Consolidated
Total RevenuesPre-Tax Operating
Income (Loss)(in millions) FY’16 1Q16 1Q17Revenues and Pre-tax income (loss) from continuing operations $ 52,367 $ (214) $ 1,727Adjustments to arrive at Pre-tax operating income (loss)
Changes in fair value of securities used to hedge guaranteed living benefits (120) (133) (11)Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses) -- (40) (53)Loss (gain) on extinguishment of debt - 83 (1)Net realized capital (gains) losses 1,944 1,106 115(Income) loss from divested businesses - 2 100Non-operating litigation reserves and settlements (44) (31) (6)Unfavorable (favorable) prior year development and related amortization changes ceded
under retroactive reinsurance agreements -- (7) 14Net loss reserve discount benefit (charge) -- (9) (25)Restructuring and other costs - 188 181Other 44 - -Pre-tax operating revenues and operating income (loss) $ 54,191 $ 945 $ 2,041
Net income (loss) attributable to AIG $ (183) $ 1,185Adjustments to arrive at After-tax operating income (loss)
(amounts net of tax, at a rate of 35%, except where noted):Uncertain tax positions and other tax adjustments (a) 205 (50)Deferred income tax valuation allowance (releases) charges (a) (37) (13)Changes in fair value of securities used to hedge guaranteed living benefits (86) (7)Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses) (26) (34)Loss (gain) on extinguishment of debt 54 (1)Net realized capital (gains) losses (b) 701 73(Income) loss from discontinued operations (a) 47 -(Income) loss from divested businesses (c) 1 106Non-operating litigation reserves and settlements (20) (4)Unfavorable (favorable) prior year development and related amortization changes ceded
under retroactive reinsurance agreements (5) 10Net loss reserve discount benefit (charge) (8) (16)Restructuring and other costs 122 118
After-tax operating income (loss) $ 765 $ 1,367
(a) Includes impact of tax only adjustments.(b) The tax effect includes the impact of non-U.S. tax rates lower than 35% applied to foreign exchange (gains) or losses attributable to those jurisdictions where foreign earnings are considered to be indefinitely reinvested.(c) The tax effect included the impact of non-U.S. tax rates lower than 35% applied to (income) or losses on dispositions by foreign affiliates whose tax bases in divested subsidiaries differed from U.S. GAAP carrying values.
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Non-GAAP ReconciliationsPTOI, ATOI and Normalized ATOI*
Consumer Insurance - Group Retirement(in millions)
FY’16 1Q17
Pre-tax operating income (loss) $ 931 $ 243Interest expense on attributed financial debt 20 -Operating income (loss) before taxes: 911 243Income tax expense (benefit) 250 75
After-tax operating income (a) $ 661 $ 168Adjustments to arrive at normalized after-taxoperating income (loss):
(Better) worse than expected alternative returns 26 (11)Updated of actuarial assumptions 30 -
Normalized after-tax operating income (b) $ 717 $ 157
Ending attributed equity 5,984 6,035Average attributed equity (c) 6,166 6,010Adjusted return on attributed equity (a÷c) 10.7 % 11.2 %Normalized return on attributed equity (b÷c) 11.6 % 10.4 %
Consumer Insurance - Individual Retirement(in millions)
FY’16 1Q17
Pre-tax operating income $ 2,269 $ 539Interest expense on attributed financial debt 37 -Operating income (loss) before taxes: 2,232 539Income tax expense (benefit) 743 176
After-tax operating income (a) $ 1,489 $ 363Adjustments to arrive at normalized after-taxoperating income (loss):
(Better) worse than expected alternative returns 56 (20)Update of actuarial assumptions (240) -
Normalized after-tax operating income (b) $ 1,305 $ 343
Ending attributed equity 10,913 11,006Average attributed equity (c) 11,287 10,960Adjusted return on attributed equity (a÷c) 13.2 % 13.2 %Normalized return on attributed equity (b÷c) 11.6 % 12.5 %
* Normalizing adjustments are tax effected using a 35% tax rate and computed based on average attributed equity for the respective periods.
Consumer Insurance - Life Insurance(in millions)
FY’16 1Q17Pre-tax operating income (loss) $ (37) $ 54
Interest expense on attributed financial debt 31 6Operating income (loss) before taxes: (68) 48Income tax expense (benefit) (40) 18
After-tax operating income (loss) (a) $ (28) $ 30Adjustments to arrive at normalized after-taxoperating income (loss):
(Better) worse than expected alternative returns 13 (4)Updated of actuarial assumptions 60 -
Normalized after-tax operating income (b) $ 45 $ 26
Ending attributed equity 2,529 2,544Average Attributed equity (c) 2,654 2,537Adjusted return on attributed equity (a÷c) (1.1) % 4.7 %Normalized return on attributed equity (b÷c) 1.7 % 4.1 %
Consumer Insurance - Personal Insurance(in millions)
FY’15 FY’16 1Q17Pre-tax operating income (loss) $ 68 $ 686 $ 212
Interest expense on attributed financial debt 109 94 23Operating income (loss) before taxes: (41) 592 189Income tax expense (benefit) 2 207 59
After-tax operating income (loss) (a) $ (43) $ 385 $ 130Adjustments to arrive at normalized after-taxoperating income (loss):
Catastrophe losses above (below) expectations (65) (50) (28)(Better) worse than expected alternative returns 21 38 (18)Fair value changes on PICC investments - 2 -Unfavorable (favorable) prior year loss reserve development (11) (88) 1
Normalized after-tax operating income (b) $ (98) $ 287 $ 85
Ending attributed equity 2,847 2,742 3,011Average attributed equity (c) 2,927 2,821 2,877Adjusted return on attributed equity (a÷c) (1.5) % 13.6 % 18.1 %Normalized return on attributed equity (b÷c) (3.3) % 10.2 % 11.8 %
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Non-GAAP ReconciliationsPTOI, ATOI and Normalized ATOI*Total Consumer Insurance(in millions)
FY’15 FY’16 1Q16 1Q17Pre-tax operating income (loss) $ 2,929 $ 3,849 $ 704 $ 1,048
Interest expense on attributed financial debt 236 182 56 29Operating income (loss) before taxes: 2,693 3,667 648 1,019Income tax expense (benefit) 790 1,160 181 328
After-tax operating income (loss) (a) $ 1,903 $ 2,507 $ 467 $ 691Adjustments to arrive at normalized after-taxoperating income (loss):
(Better) worse than expected alternative returns 184 133 187 (53)Update of actuarial assumptions (15) (150) - -Catastrophe losses above (below) expectations (65) (50) (20) (28)Fair value changes on PICC investments - 2 1 -Unfavorable (favorable) prior year loss reserve development (11) (88) (31) 1
Normalized after-tax operating income (b) $ 1,996 $ 2,354 $ 604 $ 611Ending attributed equity 23,319 22,168 23,100 22,596Average attributed equity (c) 23,844 22,928 23,210 22,384Adjusted return on attributed equity (a÷c) 8.0 % 10.9 % 8.0 % 12.3 %Normalized return on attributed equity (b÷c) 8.4 % 10.3 % 10.4 % 10.9 %
* Normalizing adjustments are tax effected using a 35% tax rate and computed based on average attributed equity for the respective periods.
Results of Operations - Japan(in millions)
FY’15 FY’16 1Q16 1Q17Pre-tax operating income (loss) $ 3 $ 256 $ 54 $ 115
Interest expense on attributed financial debt 84 70 19 15Operating income (loss) before taxes: (81) 186 35 100Income tax expense (benefit) (13) 90 12 29
After-tax operating income (loss) (a) $ (68) $ 96 $ 23 $ 71Adjustments to arrive at normalized after-taxoperating income (loss):
Catastrophe losses above (below) expectations 10 12 (5) (8)(Better) worse than expected alternative returns 8 34 2 (11)Unfavorable (favorable) prior year loss reserve development 1 (33) (16) (8)
Normalized after-tax operating income (b) $ (49) $ 109 $ 4 $ 44
Ending attributed equity 998 941 1,054 979Average attributed equity (c) 950 1,010 1,026 960Adjusted return on attributed equity (a÷c) (7.2) % 9.5 % 9.0 % 29.6 %Normalized return on attributed equity (b÷c) (5.2) % 10.8 % 1.6 % 18.3 %
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Non-GAAP ReconciliationsAccident Year Loss Ratio, as adjusted, and Accident Year Combined Ratio, as adjusted
Consumer Personal Insurance
FY’14 FY’15 FY’16 1Q16 1Q17
Loss ratio 54.3 55.2 54.3 52.7 56.0
Catastrophe losses and reinstatement premiums (1.0) (1.3) (1.4) (1.1) (1.0)
Prior year development net of premium adjustments 0.6 0.1 1.2 1.8 -
Accident year loss ratio, as adjusted 53.9 54.0 54.1 53.4 55.0
Combined ratio 99.9 102.3 96.4 94.6 96.6
Catastrophe losses and reinstatement premiums (1.0) (1.3) (1.4) (1.1) (1.0)
Prior year development net of premium adjustments 0.6 0.1 1.2 1.8 -
Accident year combined ratio, as adjusted 99.5 101.1 96.2 95.3 95.6
Japan
FY’15 FY’16 1Q16 1Q17
Loss ratio 57.1 55.1 53.8 55.0
Catastrophe losses and reinstatement premiums (1.3) (1.8) (0.3) -
Prior year development net of premium adjustments - 1.5 3.0 1.5
Accident year loss ratio, as adjusted 55.8 54.8 56.5 56.5
Combined ratio 102.4 94.6 96.1 91.0
Catastrophe losses and reinstatement premiums (1.3) (1.8) (0.3) -
Prior year development net of premium adjustments - 1.5 3.0 1.5
Accident year combined ratio, as adjusted 101.1 94.3 98.8 92.5
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Non-GAAP ReconciliationsAccident Year Loss, as adjusted
Personal Insurance1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
Loss ratio 55.3 57.0 57.0 57.8 59.2 53.5 53.0 51.2
Catastrophe losses and reinstatement premiums (0.2) (0.3) (1.4) (0.6) (2.7) (0.6) (0.7) (0.3)
Prior year development net of premium adjustments 1.3 1.7 1.0 1.0 0.5 0.5 0.4 1.2
Accident year loss ratio, as adjusted 56.4 58.4 56.6 58.2 57.0 53.4 52.7 52.1
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Loss ratio 58.8 53.1 53.4 55.4 52.7 55.6 56.3 52.7
Catastrophe losses and reinstatement premiums (2.2) (0.6) (2.1) (0.3) (1.1) (2.1) (0.9) (1.6)Prior year development net of premium adjustments (0.2) 0.6 1.7 (1.5) 1.8 1.4 1.1 0.6
Accident year loss ratio, as adjusted 56.4 53.1 53.0 53.6 53.4 54.9 56.5 51.7
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Non-GAAP ReconciliationsPremiums
(in millions)Consumer Insurance: FY’16Premiums and deposits $ 27,151 Deposits (24,860)Other (693)Premiums $ 1,598 Consumer Insurance - Individual Retirement:Premiums and deposits $ 16,062 Deposits (15,898)Other (1)Premiums $ 163 Consumer Insurance - Individual Retirement (Fixed Annuities):Premiums and deposits $ 3,982 Deposits (3,820)Other 7 Premiums $ 169 Consumer Insurance - Individual Retirement (Variable Annuities):Premiums and deposits $ 4,507 Deposits (4,507)Other (7)Premiums $ (7)Consumer Insurance - Individual Retirement (Index Annuities):Premiums and deposits $ 2,687 Deposits (2,687)Other -Premiums $ -Consumer Insurance - Individual Retirement (Retail Mutual Funds):Premiums and deposits $ 4,886 Deposits (4,886)Other -Premiums $ -Consumer Insurance - Group Retirement:Premiums and deposits $ 7,570 Deposits (7,543)Other -Premiums $ 27 Consumer Insurance - Life Insurance:Premiums and deposits $ 3,519 Deposits (1,419)Other (693)Premiums $ 1,407
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Consumer Insurance Investor DayPersonal Insurance | JapanMay 15, 2017
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