10-KPeriod: FY2014

AMERICAN INTERNATIONAL GROUP, INC. Annual Report, Year Ended Dec 31, 2014

Filed February 20, 2015For Securities:AIG

Summary

American International Group, Inc. (AIG) reported its 2014 fiscal year results, highlighting a strategic shift towards an integrated "One AIG" operational structure with two primary segments: Commercial Insurance and Consumer Insurance. The company saw its President and CEO transition with Peter D. Hancock taking the helm. Financial performance indicated mixed results across segments, with Commercial Insurance experiencing improved underwriting results partially offset by reduced net investment income, while Consumer Insurance faced challenges from lower net investment income but saw growth in key retirement products. AIG continued its focus on capital management, reducing debt significantly in 2014 and increasing its share repurchase authorization. The company also completed the sale of its aircraft leasing subsidiary, ILFC, to AerCap, receiving substantial cash and equity in the latter. Despite ongoing industry trends like low interest rates and competitive pressures, AIG remains committed to improving its cost structure, enhancing its technology infrastructure, and driving sustainable profitability by focusing on customer value and strategic growth initiatives.

Financial Highlights

38 data points
Beta

Revenue

$64.41B

Net Income

$7.53B

11.7% Net Margin

EPS (Diluted)

$5.20

Total Assets

$515.58B

Cash & Equivalents

$1.76B

Free Cash Flow

$5.01B

Financial Statements
Beta
Revenue$64.41B
SG&A Expenses$13.14B
Operating Income$7.58B
Interest Expense$1.72B
Net Income$7.53B
EPS (Basic)$5.27
EPS (Diluted)$5.20
Shares Outstanding (Basic)1.43B
Shares Outstanding (Diluted)1.45B

Key Highlights

  • 1Transition in leadership with Peter D. Hancock assuming the role of President and CEO.
  • 2Reorganization into two primary segments: Commercial Insurance and Consumer Insurance.
  • 3Reduction of debt by $16.1 billion in 2014, including $7.5 billion related to DIB redemptions.
  • 4Completed the sale of International Lease Finance Corporation (ILFC) for approximately $7.6 billion, receiving cash and AerCap shares.
  • 5Increased share repurchase authorization by an additional $2.5 billion, repurchasing approximately $4.9 billion of AIG Common Stock in 2014.
  • 6Continued to pay quarterly cash dividends of $0.125 per share on AIG Common Stock.
  • 7The company reported a net income attributable to AIG of $7.5 billion ($5.20 per diluted share) for 2014.

Frequently Asked Questions

AIG's primary strategic focus in 2014 was on completing its reorganization into a new operating structure with two reportable segments, Commercial Insurance and Consumer Insurance, to better align financial reporting with business operations and improve overall performance. The company also concentrated on enhancing customer value, improving its cost structure, modernizing its technology infrastructure, and increasing intrinsic value and sustainable profitability.

The sale of ILFC to AerCap on May 14, 2014, provided AIG with net cash proceeds of approximately $2.4 billion and 97.6 million AerCap common shares. This transaction reduced AIG's debt and contributed to its capital management strategy. AIG retained a 46% ownership interest in AerCap, which is accounted for using the equity method.

For the year ended December 31, 2014, AIG reported net income attributable to AIG of $7.5 billion ($5.20 per diluted share), compared to $9.1 billion ($6.13 per diluted share) in 2013. After-tax operating income attributable to AIG was $6.6 billion ($4.58 per diluted share) in 2014, virtually flat compared to $6.7 billion ($4.49 per diluted share) in 2013. Total revenues decreased by 6% to $64.4 billion in 2014 from $68.9 billion in 2013, primarily due to lower aircraft leasing revenue and other income.

AIG focused on capital management by reducing its debt by $16.1 billion, including $7.5 billion from DIB redemptions and repurchases. The company also paid dividends and repurchased approximately $4.9 billion of its common stock. AIG maintained financial flexibility at the parent company level through dividends and loan repayments from its insurance subsidiaries and by utilizing its syndicated credit facility.