Our 2017 performance showed once again AIG’s resilience, along with the value of our strategy to build a more balanced, diversified business:

• In General Insurance, 2017 marked a year of stabilizing results from which we fully expect to deliver improvement. Our businesses have been restructured to play to our strengths, best serve our clients and distribution partners, and empower our underwriters towards clear accountability.
• Life and Retirement continues to deliver solid results and benefit from diversification. We saw strong growth in Life Insurance and Institutional Markets sales, and we maintained steady Group Retirement and Index Annuity sales for the year.
• Our balance sheet and free cash flow remained strong, with year-end parent liquidity at $7.3 billion. For the full year, dividends, return of capital and loan repayments, and tax sharing payments from our subsidiaries exceeded $6 billion.

Looking ahead, our strategy is clear – we will continue to position AIG as a growing, profitable leader in the insurance industry, known for being a top-performing underwriter, with the best talent, armed with the best tools and technology, and working across a global footprint.

Delivering on this strategy will be influenced heavily by the strength of our culture, and our nearly 50,000 employees globally. Since returning to AIG, I’ve been continually impressed by the talent of our team, their commitment to the company and their desire to be the best. I have also observed how collegiality and collaboration have taken hold in our culture, in addition to operating with the highest levels of integrity.

Our employees’ remarkable response to 2017’s historically severe natural catastrophes is a prime example of who we are. AIG employees prioritized the needs of their clients and distribution partners, whether they were also located in the affected areas or stepping in to help colleagues from other locations. Restoring lives is what we do. The way we did it – with compassion and in many cases, heroism – made an enormous difference.

In 2017, we updated our organizational structure to more logically reflect how business is marketed and underwritten. Our three businesses are now General Insurance, led by Peter Zaffino; Life and Retirement, led by Kevin Hogan; and Blackboard Insurance, our technology-based subsidiary, led by Seraina Macia.

This structure provides the greatest competitive advantage by giving each business a framework for growth and investment as well as accountability for performance. It also restores the strength and vitality of our international operations by driving more decision-making to our field operations, closer to our clients and distributions partners, so our employees have the ability to respond quickly to local market needs.

A significant part of our work in 2017 was empowering this organizational structure by strengthening our leadership and underwriting talent. I’m very pleased this included several additions to our Executive Leadership Team (ELT), from both within and outside AIG. These additions include:

Peter Zaffino, formerly Chairman of Risk & Insurance Services at Marsh & McLennan Companies, CEO of Marsh and CEO of Guy Carpenter, brings deep insurance knowledge and expertise to our General Insurance business. He has a proven track record of delivering top financial and operational business performance over the past ten years of his career, and his execution-based skill set will play a fundamental role in driving our strategies to create long-term value at AIG.

The fact that a number of industry leaders have joined or rejoined the General Insurance team at AIG under Peter speaks to our future. They include: Chris Townsend, CEO of International General Insurance; Tom Bolt, Chief Underwriting Officer; Charles Fry, Chief Reinsurance, Operations & Business Transformation Officer; Bill Rabl, CEO of AIG Risk Management; Bill Curcio, Chairman of AIG Risk Management; and Ken Riegler, President, Field & Underwriting Management.

Claudine Macartney, who has been with AIG for more than 20 years, joined our ELT as Chief Human Resources Officer. She plays a vital role as we continue to strengthen and develop our current employee base and attract new talent, as well as take a fresh look at our compensation programs to align with industry best practices and promote a pay for performance culture.

"Blackboard’s name represents a clean slate and place where our people from all walks of life can collaborate to find a better way. We push ourselves out of our comfort zones to achieve insurance innovations that really move the needle."

Seraina Macia,CEO, Blackboard Insurance

Seraina Macia rejoined AIG with our acquisition of Hamilton USA, having served as its CEO. She continues to accelerate AIG’s application of emerging technology and data science to transform underwriting and claims as the CEO of the renamed Blackboard Insurance.

Lucy Fato joined as General Counsel with responsibility for overseeing the Global Legal, Compliance and Regulatory department. Peter and I worked with Lucy at Marsh & McLennan Companies, and we have seen firsthand the valuable insights she brings to strategic business discussions and complex legal and regulatory matters.

Tom Leonardi joined as Head of Government Affairs, Public Policy and Communications. A lifelong insurance industry expert, former Insurance Commissioner for the State of Connecticut, and business leader, Tom is building clear lines of communication with regulators that oversee AIG at the state, federal and international levels, which will play an ever more important role in enabling our future growth.

In addition to these leaders named in 2017, Naohiro Mouri, who previously oversaw AIG’s Asia Pacific Audit operations, assumed the role of Chief Auditor and became a member of the ELT in March 2018.

Mouri-san’s extensive experience and international perspective will be a valuable addition to the team, while enabling Donna DeMaio, our previous Chief Auditor, to take on the critical role of Global Chief Operating Officer for the General Insurance business.

As our leaders and their teams work to make this company the best it has ever been, we have started to speak differently about our financial performance. Our objective is to better manage growth, profitability and risk. Improvement in our bottom line – namely, combined ratio, book value and return on equity – signals that we are striving to create long-term value. These measures will guide our decisions around investment and growth, and I am confident the changes we are undertaking provide positive momentum for the company, its employees and its performance. Financial targets are critical to the management of the company, but we no longer provide them because they need to be balanced against our goal of building a strong, sustainable business for the long-term.

We also remain focused on expense discipline. While we have significantly reduced general operating and other expenses over the last couple of years, we still have work to do to become a top quartile performer in our industry. We continue to focus on prudent expense management, balanced with the necessary investment in people and technology, to produce our desired long-term productivity gains.

"AIG’s recently announced acquisition of Validus and formation of DSA Re demonstrate our strategic approach to managing capital. Our strong balance sheet and cash flow give us flexibility to pursue organic and inorganic growth opportunities that continue to build long-term value."

Sid Sankaran, Chief Financial Officer

Our capital management strategy is directed by our goal of long-term, profitable growth. It is ultimately my responsibility to create value for you, our shareholders, and I take this responsibility very seriously.

While we still have a buyback authorization in place, we have already repurchased half the company’s market capitalization over the past three years. I continue to believe that buying back shares is a capital management tool, not a business strategy. My priority remains deploying capital strategically for organic and inorganic growth to increase the franchise value of our company.

A notable development in 2017 was the Financial Stability Oversight Council’s determination that AIG is no longer considered a nonbank systemically important financial institution (SIFI).

This decision reflects the progress made since 2008 to de-risk the company. Our SIFI designation has changed, but our focus on building a profitable, balanced business while managing risk prudently remains constant. We will continue to work with our regulators in the U.S. and globally to ensure a stronger AIG continues to serve our clients well.

We are focused on delivering value for our shareholders in 2018 across each of our businesses.

General Insurance

"The General Insurance strategy for profitable growth involves focus on risk selection; underwriting quality and consistency in a culture of empowerment and accountability; advancement of our analytical capabilities; integration among underwriting, claims and actuarial; efficient capital deployment to grow profitable parts of the business and reinsurance optimization."

Peter Zaffino, CEO, General Insurance

2017 represents a starting point from which we expect to grow profitably over time. Peter is working with our leaders across this business to fundamentally improve risk selection and build a higher-quality book, deploy capital towards the best opportunities for profitable growth and improve our operational processes.

In fact, we named 2018 the "Year of the Underwriter." As part of our focus on delivering best-in-class underwriting, we continue to expand our bench of talent while positioning them to perform through the right incentives, access to more robust data and analysis tools, and a structure that empowers them to make decisions based on their expertise and professional judgment.

We aim to reduce the inherent volatility in this business by taking a longer-term, strategic approach to reinsurance, where we will take smaller net lines in Property and Casualty, and actively managing gross exposures across our portfolio.

We are also looking at how we can better leverage our existing global footprint, a key differentiator, to profitably grow the business.

We have started to achieve rate improvement in underperforming lines, and we are factoring loss cost trends by line of business and attachment point into our pricing strategy in 2018.

We are working diligently toward the goal of sustainable underwriting profitability, and I am pleased that our fourth quarter results showed progress with regards to better assessing risk and diversifying our business.

Life and Retirement

"We are positioning our industry-leading Life and Retirement businesses to serve growing market needs with investments in modern administrative platforms, digital capabilities, client-centric offerings and data analytics while optimizing capital allocations and delivering solid earnings through disciplined pricing, expense management and diversification of risks."

Kevin Hogan, CEO, Life and Retirement

Our Life and Retirement business remains focused on making the necessary investments to ensure that we have a competitive and sustainable platform, for today and the future.

We continue to invest in our market-leading Life and Retirement businesses in the U.S., while also selectively seeking potential acquisitions abroad in attractive markets.

We also continue to formalize our data strategy, organizing ourselves to maximize our use of data available within Life and Retirement and across AIG. This will help support further innovation and efficiency across the value chain - from product development, pricing and marketing to acquisition, operations and service delivery.

Finally, Kevin and his team are doing this all while investing important time and focus on enhancing our culture of customer-centricity, accountability and leadership.

Blackboard Insurance

Seraina and her team continue to develop Blackboard Insurance as a provider of solutions for the commercial insurance industry using digital technology, data analytics and automation. The platform is slated for launch in late 2018 as a start-up backed by the resources of AIG.

I remain very excited about the potential for Blackboard Insurance. We are reimagining the entire commercial insurance experience to help clients and brokers move faster and with more insight to focus on what’s important – to reinvest in growth.

Before I close, I want to note several developments early in the first quarter of 2018 that are indicative of our path forward to profitable growth.

In January, we announced our agreement to acquire Validus Holdings, Ltd., which will bring to AIG a leading reinsurance platform, an insurance-linked securities asset manager, a meaningful presence at Lloyd’s and complementary capabilities in the U.S. crop and excess and surplus (E&S) markets. We will continue to look for strategic acquisition opportunities like this that strengthen our depth of talent and the value proposition we offer.

In February, we formed a Bermuda-domiciled legal entity named DSA Reinsurance Company, Ltd. to reinsure our Legacy Life and Non-life run-off lines. This was another important step in the execution of our Legacy strategy. By combining the majority of our run-off lines into a single, strong, efficient legal entity, we will derive operational efficiencies while continuing to honor our policyholder commitments and client relationships.

As I’ve said previously, 2017 represented the starting point from which we expect to build. We now have the right people, structure and underwriting actions in place to make 2018 a year of execution. As we look towards our centennial in 2019, it is a unique opportunity and honor to be restoring AIG as one of the greatest companies in the world.

We have faced a number of challenges in the past: wars, financial calamities, industry-changing regulatory reform and natural disasters. Operating as we do in a volatile world, our employees have proven time and time again that they can respond to the most complex issues and succeed, for which I am truly grateful.

Let me conclude by thanking all of you — our shareholders — for entrusting us with your capital. We take our responsibilities very seriously and are committed to delivering you a stronger, growing, and more profitable business.