American International Group, Inc. (NYSE:AIG) 2013 Annual Meeting of Shareholders Conference Transcript May 15, 2013 11:00 AM ET
Steve Miller - Chairman
Robert Benmosche - President and CEO
Jeff Welikson - Secretary
Michael Barbera - Inspector, Elections
Bob Benmosche - Independent Director
Don Cornwell - Independent Director
John Fitzpatrick - Independent Director
William Jurgensen - Independent Director
Chris Lynch - Independent Director
Arthur Martinez - Independent Director
George Miles - Independent Director
Henry Miller - Independent Director
Suzanne Nora Johnson - Independent Director
Ron Rittenmeyer - Independent Director
Doug Steenland - Independent Director
Theresa Stone - Independent Director
Morris Offit - Retired Independent Director
Well, good morning everyone. My name is Steve Miller. I’m extremely proud to say I’m Chairman of the Board of AIG. I’m here to welcome you all through the Annual Meeting of Shareholders for the year 2013.
Joining me here on the dais is Robert Benmosche, AIG’s President and Chief Executive Officer. This meeting is also being webcast and we, of course, welcome all those listening from beyond the headquarters here at 180 Maiden Lane.
We’re first going to conduct the meetings of official business then Bob will tell you more about the important developments of AIG over the past year and what he sees for AIG going forward. Following that, we will welcome questions and comments from the shareholders in attendance.
So I hereby call to order 2013 Annual Meeting of Shareholders of American International Group Incorporated. You’ve been provided with the procedures we are going to follow and I ask everyone to adhere to those procedures.
First, I’d like to introduce the 13 nominees, including Bob and me for the AIG Board of Directors. Now, 11 of those are currently serving as Directors of AIG and two of the nominees are standing for election to our board for the first time today.
Nominees are seated in the front row. And I’d like them to stand as I read their names. Bob Benmosche; Don Cornwell; John Fitzpatrick; William Jurgensen, a new nominee; Chris Lynch; Arthur Martinez; George Miles; Henry Miller; Suzanne Nora Johnson; Ron Rittenmeyer; Doug Steenland; and Theresa Stone, also a new nominee.
I would also like to recognize at this time, Morris Offit. Morris is retiring from the board. I want to thank Morris for his significant contributions to AIG over the years. And on the same note, I want to thank all of our Directors and our two new director nominees for agreeing to stand for election and being willing to serve. So thank you Morris and thank you all of you.
A certified list of shareholders is available for inspection. Copies of the AIG Annual Report, including the Form 10-K for the year 2012, the proxy statement and the Form 10-Q for the first quarter of 2013 are also available for you, if you need them. I now call upon AIG's Secretary, Jeff Welikson, to present the affidavit of notice of this meeting and other formalities. Jeff.
Thank you. I now submit the affidavit of Broadridge Financial Solutions certifying that each shareholder of record at the close of business as of March 20, 2013 was sent either a notice of availability of proxy materials mailed on April 4, 2013 or a package containing AIG’s 2012 Annual Report, notice of this meeting, a proxy statement, a proxy card and a return envelope, mailed commencing on April 4, 2013.
I would like to remind everybody that the remarks made today may contain forward-looking statements concerning future performance, events, plans or objectives. These forward-looking statements are not guarantees of future performance or events.
Actual results and events may differ possibly materially from those anticipated in any such forward-looking statements. Factors that could cause such differences include the factors described under management's discussion and analysis in both our 2013 first quarter 10-Q and our 2012 10-K, as well as under risk factors in the 2012 10-K. AIG is not under any obligation and expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
The information provided today may include non-GAAP financial measures. The reconciliations of such measures to the comparable GAAP figures are included in our Annual Report to shareholders in our 2012 and first quarter 2013 financial supplements, which are available on our website.
Michael Barbera has been sworn in as our independent Inspector of Elections. He advises that a quorum is present. Mr. Chairman.
Thank you, Jeff. Proceeding to the official business of today's meeting, I will present the list of board sponsored proposals under consideration today as presented in the proxy statement and after that list has been presented, if any shareholder wants to comment on or ask a question about any of these proposals, the microphone can be brought to you and I will recognize it.
The first proposal is the election to the AIG Board of the 13 nominees I introduced at the start of the meeting to serve as Directors until the next annual election and until their successors are elected and qualified.
The second proposal is the approval of the American International Group Incorporated 2013 Omnibus Incentive Plan.
The third proposal on the ballot is a non-binding shareholder resolution to approve executive compensation.
The fourth proposal is a non-binding vote on the frequency of future executive compensation advisory votes.
And the fifth proposal is the ratification of the selection of PricewaterhouseCoopers LLP as AIG’s independent registered public accounting firm for 2013.
Now are there any questions or comments on any of these five Board sponsored proposals? If so, please raise your hand and we could be recognize for microphone and there will be time later on for consideration of the shareholder proposals set forth in the proxy statement and for general questions.
Questions and comments at this point should be limited to the proposal just presented and I remind you of the procedures that we are going to follow for Q&A and ask that you work with us to adhere to them.
So any questions on the five Board sponsored proposals? I don't see any, Jeff.
Okay. I will now entertain a motion to act upon a shareholder proposal relating to restricting service on other Boards by the Directors of AIG. Is Kenneth Steiner or his representative here to present the proposal?
While as the proponent is not appear to be present, I move the shareholder proposal relating to restricting service on other Boards by Directors of AIG as set forth on page 90 of the proxy statement.
As set forth in that proxy statement, your Board of Directors believes that this proposal is not necessary nor in the best interest of AIG and its shareholders. AIG’s corporate governance guidelines already regulate service on other Boards by the Directors of AIG.
Are there any questions or comments on this proposal? I don’t see any. We will now proceed to vote on the sixth proposals that have been properly presented to the meeting. The polls are now open. If anyone wants to vote now as opposed to having filed your vote earlier, please raise your hand and a ballot will be brought to you.
Has everyone voted, who wishes to, if so, I declare the polls closed, and ask that the ballots be delivered to the Inspector of Elections.
Okay. I just want to say a few words while we are waiting for the ballots to be continued, about our remarkable achievements in the year 2012. In that year AIG accomplished what few possible only, a few years prior and that is not only the complete repayment of the $182 billion of financial support extended to us by U.S. government, the American tax payers, not only that we pay it all back but we also added a $22 billion profit to our government. This extraordinary feat closed the door on government assistance to AIG and marked the beginning of a new chapter at this absolutely extraordinary company.
I would like to take a moment on behalf of the Board to command the leadership of the company both Bob Benmosche and the senior leadership group seated over here, as well as the nearly 63,000 employees who work hard to make this moment possible.
Now that AIG is an independent company once again, we as a Board feel tremendous sense of responsibility to continue to guide this company forward. We are working to create a stronger, leaner company focusing our efforts on business results, ensuring the proper risk controls are in place and attracting and retaining the best people.
As always, we remain committed to acting in the best interest of our leadership, our employees, our customers, our communities and most of all, of course, to you our shareholders.
2012 was a year of historical accomplishment. None of which would have been possible without the dedication and hard work of our employees, and the support of our long-term shareholders, customers and partners. Thank you for your commitment to this great company.
We look forward to continuing to work hard to help AIG reach its full potential as we begin the next chapter of the AIG story.
Turning back to the official business of the meeting, I now have the report of the Inspector of Elections. He certifies that each of the director nominees standing for election has been elected by a majority of the votes cast, that all of the Board sponsored proposals were adopted, and that the shareholder proposal number six was not adopted. Later today we will issue a press release detailing these results.
So with the official business of the meeting now concluded, I’m going to turn the floor over to, Bob, for his remarks and we will follow them with questions-and-answers for both of us.
I remind you the procedures we’re going to follow for our Q&A and ask that you work with us to adhere to them. Please raise your hand, wait to be recognized and for a microphone to be brought to you, and then director your questions to me or Bob. Please wait for a microphone as this meeting is being webcast.
So, with that, Bob.
Thank you, Steve. And welcome everyone and it’s great to have another shareholder meeting where we continue to show great progress. And as I thought about what to say today, I just thought about what did we say last year and it seems May of 2012 is a long, long time ago. Really wasn't, it was one year ago. And if we think back what we said at that shareholder meeting is that the crisis of AIG is over with the re-IPO of the company in May of 2011, and the management team is now going to stay very focused on fixing the foundation for AIG.
Doing the fundamental things we need to make this a great company, because our goal is to be a great company which then leads to being a great stock for our shareholders, but we have to have a great foundation to do that.
And at that point in time in May of last year, the U.S. Treasury owns 61% of AIG and people talked about maybe it would take a decade before that would actually be sold off, and by the end of the year we had it all sold off and as Steve pointed out, I thank the board for all their support for the management team as we went through the year and accomplished as you see a great result.
In addition to that, as we go through the year, we were focused not only on rebuilding the foundation but the only with non-core assets of the company. A major activity was the final sale of the remaining shares we owned in AIA that has been completed. We also announced the sale of ILFC, our aircraft leasing company, to the Chinese consortium that is proceeding and we’re still going through the approval process and our anticipation is that while we were not able to close in May, which was the original expectation because we have not finished all of the approvals that we need, we've extended until the middle of June.
At that time, we believe we’ll have all the requisite approvals and will be able to close that transaction which is the last major non-core asset that has to be sold from AIG. And from here on in, we said we’re going to rebuild this company and rebuilding is the key.
And so if you look at all the work that’s been done over the last six quarters. You can see that all the fundamentals are starting to improve. So if you look at our property-casualty business in the first quarter, you’ve seen almost eight to nine quarters of consistent improvement in our accident year loss ratios, you continue to see our expense ratio staying high because we’re going to continue to invest in that business and do the right kinds of things.
Life and Retirement is going through a major reorganization and we’ve seen that take hold as we look at our ability to distribute those products differently and have more focus on manufacturing the products that we make.
And in United Guaranty, again a great success as we rebuild that business, whereas now shown a profit in the first quarter, as the housing market is turn but it shows the benefit in the way we’ve written new business over the last three years for UGC.
So overall, AIG is in great shape. The first quarter is just an indication of what it is. We've come past some difficult times. Last year, we had Sandy in the fourth quarter and keep in mind that for us to lose $2 billion while that is a lot of money, it's important for our shareholders to understand it's the size of AIG. It's who we are and how important we are to 98% of the Fortune 500 because those are our customers and they rely on us to give them the protection they need.
And so therefore, we've gotten enormous compliments from our clients about how well this organization responded to this catastrophe. So you can feel optimistic that we will continue to work towards the future. We have aspirational goals and we continue to be committed to those aspirational goals as we move into 2015.
On that note, what I would like to do is now open it up for questions. If any of you have any questions for myself or our management team or for the board, please raise your hand, wait for the microphone and we will be glad to take your questions.
Yeah, in the back.
Hi. My name is Cesar Balbin. Many of you know me very well as a shareholder. I came to these meetings in 2001, 2005 and 2006 and exposed the racketeering activities of this company. My first speech mainly 2001, many of you were left that on and others in disbelief, not just to what I said but at the loss of composure and lack of willingness by Greenberg to discuss what I brought up.
Greenberg just verbally attacked me and said, he was unwilling to meet with me or have others meet with me to discuss this issue. He took no interest, making many believe he was well aware of this. I then promised that I would stop until this company was brought to its knees.
AIG’s racketeering and its propensity to life is so bold and so obvious and still alive they can only be triumph by the arrogance of displays who were lying over practically anything. By way of example and you just commented on this, AIG’s latest TV commercial is heartwarming, even waving our American flag while appealing to our sense of patriotism during difficult times.
You just claim that AIG paid back all money over to you, starting with a profit of $22 billion, that commercial is a fraud. It meant to deceit the taxpayer, comfort shareholders and pacify regulators. AIG and even the seventh grader know well that there is no $22 billion profit.
AIG fails to tell the viewer that the loan had significant costs, which are not mentioned, the cost of raising the money for one, which in turn the U.S. government borrowed from others. The cost incurred in the Treasury Department and other branches of government involved in the procurement management renegotiation (inaudible) and final settlement, as well as many other costs. The truth is that U.S. tax payor loss billings because of this loan. This is just an example that shows that AAG will continue to lie about anything.
It is something that AIG does everyday several times a day and something they have studied well. AIG is well aware that lying about the most obvious makes the listeners minds go into a state of suspension of disbelief. In other words, you would never believe that someone would lie about something so evident and obvious.
A result, you never think to challenge unless you began to realize that AIG lies about a lot of things. Like I said in my first speech in ’01, racketeering activities are still alive which includes a systematic denial of most insurance claims and the falsification, misrepresentation of facts and financial records meant to deceive shareholders, government agencies and the public at large.
It is interesting that AIG never claims fraud as it rights policies or collects high price premiums. It is even more interesting that AIG hardly ever proves a fraud that it charges against some insureds, but merely makes a claim in court where they know the odds about lowering, tiring, causing further financial hardship for the insured to look for some into a tiny if any settlement to defend against those actions.
By way of the racketeering activities, I can tell you that I have personally in my home hosted a former member of the New York State Attorney General Office who were investigating AIG and Greenberg confided in me that he had left his job because he was afraid for his life and he was hiding out for several years. This is AAG. Today, he works for another company that is ensuring with AIG and he laughs and tells me that he knows that they will never be paid.
But as you mentioned, many Fortune 500 Companies need these policies and many individuals need these policies and believe in AIG and trust they are honest. I think in this case, he told me clearly he knows they’ll never be paid. But they are required policies by their investors.
Can I -- I’ve listened to you now for almost five minutes. I appreciate your comments. Do you want to ask a question that you would like an answer to because I would like you to come to closure if you would? Let me have the microphone one more minute.
I’d like to sit down like I proposed back in 2001 with responsible people that are interested in attempting to do something about these activities and these actions, starting with this fraudulent TV commercial.
I hate to disappoint you. I’m actually going to show the commercial in just a minute. So, I will have somebody call you from legal department. If you feel, there is some real actions and issues that we have here, my advice would be you should get representation with attorney, meet with our attorneys and we will begin to examine the claims that you're making and we will find that we get to the right resolution.
We are a company that takes great pride in how we deal with people and we have great pride in our reputation, and we are a company that if you look at our attitudes survey, 84% of the 63,000 people say not neutral, but positive that we are an ethical company and we behave ethically. So if you have some specific concerns, we will make sure somebody will meet with you and we will go through that to make sure if there's anything wrong, we will fix it because I think you said enough. Thank you. I appreciate it.
Are there any other questions? Well, and again I apologize. Wait, I'm sorry, there you go.
My name is Leonard Lanzone. I asked this question last year and a year before. You have in your financial statements Note 10 about 10 pages of legal issues. The question I asked last year and the year before is what AIG spends for outside Legal Counsel. Citibank, which is of course a large international financial organization, obviously a different business. But at their Annual Meeting disclose that they spend about $600 million in the past couple of years for outside legal counsel. Neither organization makes dangerous products physically and I can understand why there's lots built for outside legal counsel. But would you explain to me, why you don't disclose that figure? Is it -- you don't want your competitors to know it's so high or so low? Thank you
It's neither. I think there is a question of how much information we can provide to public. We go through and give you the overall expenses of the organization. And we've decided not to refine that and get into a lot more detail because if we do it on one category, we should do it in all categories. So we have decided that the level disclosure we have is fine and we are going to continue to deliver that as I said to you last year. So we are not going to give you any further disclosure, when it to comes to the exact legal amounts. Any other questions? There you go in the back.
My name is Kenneth Manou. I worked for AIG from 1970 to 1985, and I have been the shareholder since 1973 and I have never sold any of my shares and have no intentions of doing so. My question concerns AIA. I asked you a few years ago, Mr. Benmosche. When it looked like AIA was going to be purchased by the Prudential of the U.K., what about the property casualty non-life business and you told me AIU would continue to handle and manage that. Is that still the case, now that AIA is completely on its own or did that portfolio go with the life portfolio in the buildings?
It did not go with the portfolio. It stayed here with AIG. We are reclassifying some of the brands within AIG but the non-life business, the Foreign Gen business in particular that you might be referring to is intact here and is still part of AIG as a core business for us going forward. Somebody has to give you the microphone, I can’t hear you?
Will you review the AIU name again?
AIU is use in Japan and so where the brand make sense, we’ll continue to do that. Our brands like Lexington is a very important brand in the property-casualty space. VALIC is a very important brand in the life and retirement space. We’re going to continue to use those brands where they make sense and we’re going to use AIG as a brand where it makes sense.
We’re finding now that in many countries people prefer the AIG brand because of -- in spite of the crisis people are now saying that this is a company that’s so strong that we could pay back the money that we paid back and still be here as one of the largest insurance companies in the world. So each of the markets have an opportunities think about what brands and now they want go to market. We’re relying on how the market response to the brands not necessarily doing it corporately. Are there any other questions?
Then I’d like to close if I may and again I don't want to annoy one of our shareholders but we are proud of what we've accomplished .We actually have delivered real money to the United States government. The treasury only deals in real money. And its Fedwire’s actually accomplish that. So we have paid back $205 billion. Could we please play our ad one more time for everybody?
So I look forward to our meeting next year. The meeting is adjourned. Thank you all very much.
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