Elizabeth A. Werner - Vice President, Investor Relations Peter D. Hancock - President and Chief Executive Officer Siddhartha Sankaran - Chief Risk Officer & Executive Vice President Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc. Kevin T. Hogan - Executive Vice President; Chief Executive Officer, Consumer

Kai Pan - Morgan Stanley & Co. LLC Thomas Gallagher - Evercore ISI Jay Gelb - Barclays Capital, Inc. Jay Arman Cohen - Bank of America Merrill Lynch Michael Nannizzi - Goldman Sachs & Co. Ryan J. Tunis - Credit Suisse Securities (USA) LLC (Broker) Brian Robert Meredith - UBS Securities LLC Meyer Shields - Keefe, Bruyette & Woods, Inc. Josh Stirling - Sanford C. Bernstein & Co. LLC Elyse B. Greenspan - Wells Fargo Securities LLC Jamminder Singh Bhullar - JPMorgan Securities LLC Amit Kumar - Macquarie Capital (USA), Inc. Larry Greenberg - Janney Montgomery Scott LLC Adam Klauber - William Blair & Co. LLC

Good day, and welcome to AIG's Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time I'd like to turn the conference over to Liz Werner. Head of Investor Relations. Please go ahead, ma'am.

Thank you, Lauren. Before we get started this morning, I'd like to remind you that today's presentation may contain forward-looking statements which are based on management's current expectations. They are subject to uncertainty and changes in circumstances. Any forward-looking statements are not guarantees of future performance or events. Actual performance and events may differ possibly materially from such forward-looking statements. Factors that could cause this, include the factors described in our first and second quarter Form 10-Q and our 2015 Form 10-K under management's discussion and analysis of financial conditions and results of operations under risk factors. 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. Today's presentation may contain non-GAAP financial measures. The reconciliation of such measures to the most comparable GAAP figures is included in the slides for today's presentation and in our financial supplement, both of which are available on our website. Nothing in today's presentation or in any oral statements made in connection with this presentation, is intended to constitute nor shall it deem to constitute any offer of any securities for sale or the solicitation of an offer to purchase any securities in any jurisdiction. As in past calls, we will take one question per analyst and caller and we will ask you to get back in the queue so that we can handle as many questions as possible. You will be muted after you ask your question. So please do get back in the queue and as always please reach out to us at the end of the call if in fact, we don't get to every question this morning. With that, I would like to turn it over to our speakers today. We have our CEO, Peter Hancock; our CFO, Sid Sankaran; and many others in the room, including our Head of Commercial, Rob Schimek; and the Head of Consumer, Kevin Hogan. With that, Peter, I'll turn it to you.

Thank you, Liz, and good morning, everyone. This morning I will speak briefly to our performance this quarter as well as our outlook and ongoing transformation. AIG's second quarter results showed strong improvement towards all the goals the board and I announced in January. We've executed more quickly and smoothly than expected and our confidence in reaching our 2017 financial targets is high as our earnings become more sustainable. In the second quarter, we continued to execute and delivered strong operating earnings of $0.98 per share, including a $0.17 charge from the worker's compensation discount, which Sid will discuss. Adjusted commercial insurance underwriting improved again this quarter, which Rob will speak to. Consumer's expense discipline also resulted in increased profitability, particularly in Personal Insurance and Kevin will address this in his remarks. Across AIG we are simplifying the company, accelerating our decision-making and adhering to a consistent management philosophy. We're executing on our objectives of managing our core operating portfolios to increase return on equity and managing our legacy portfolio for capital return. As we had previously announced, Charlie Shamieh is leading a team focused on our legacy portfolio and is actively moving forward. Our managerial discipline across AIG is based on a guiding principle of building economic value, which is consistently applied throughout the company. We frequently discuss our focus on value over volume when speaking to commercial underwriting and the value of new business for consumer businesses. The flexibility we have earned by focusing on expense discipline and growth in segments with sustainable value has allowed us to maintain positive operating leverage, while we have reduced our top line aggressively. Normalized ROE was 8.8% for both the quarter and the first six months of this year. Our operating improvements and return of capital will continue to positively impact…

Operator, can we open up now for Q&A?

Thank you. Our first question comes from Kai Pan with Morgan Stanley.

Hi, Kai? Hello? Kai?

Your line is open. Kai Pan - Morgan Stanley & Co. LLC: Yes. Can you hear me?

Yes. Kai Pan - Morgan Stanley & Co. LLC: Good morning. Thank you. So first, my question is on the 62.4% core loss ratio in commercial lines. I just wonder how much more will each of the buckets, reinsurers as well as underwriting actions, contribute to future reduction in that loss ratio? Can you talk more about how do you deal with these multi accounts and which you need to take some actions? Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: Okay. Kai, it's Rob Schimek. So first of all let me just refer you back to page 15 of our presentation, and let me make a quick observation for you. In total, through the first six months of the year, our premiums have declined by approximately $1.9 billion, and what you can see is that, because the left-hand side of this chart, Product Set 1 and Product Set 2A, have stayed – they've increased proportionally, but dollar amount wise it's very close to flat on a first six months of 2016 versus first six months of 2015 basis. So what you can see is that almost all of our decline in premium volumes has come from Product Set 2B and Product Set 3, which is the improve and remediate buckets of our business. The weighted average loss ratio of the business that is no longer being written out of Product Set 2B and Product Set 3 was approximately 90%. So you're talking about literally having not written business that ran at a loss ratio of 90% last year and now the business we're still writing in Product Set 2B and Product Set 3 have a weighted average loss ratio of about 72%. So I give you that to say that we've truly reduced the amount of writings in those lines of business and what you can see is we did that without significantly disrupting the business we wanted to grow and maintain in Product Set 1 and Product Set 2B. I would generally say to you we continue to be focused on remediating and improving that right-hand side of the page, and our real objective would be how much more can we improve that without disrupting the business we want to grow and the business we want to maintain. The last observation that I'll make for you here is that our primary emphasis is on maintaining our multi-line client relationships and the percentages that you see here on page 15 are probably generally speaking in line with what you might expect us to continue to work toward for the full year 2016. Kai Pan - Morgan Stanley & Co. LLC: Thank you.

Next question?

Our next question comes from Tom Gallagher with Evercore ISI.

Good morning. Another question for Rob. So if I look at the year-over-year improvement on Commercial P&C, it looks like you actually had more coming from international instead of North American Commercial. Now I've been thinking that the story of pruning the underperforming casualty plus the impact of reinsurance should be concentrated on the North American side. I'm not sure if I have that right, but that's been my assumption up until now. And if that's so, does that suggest that international is running ahead of plan and North America is more in line? Or can you shed some light on that? Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: So Tom, thanks for your question. I would first say that yes. This is very much a story about business mix,. And what you can see is that the business in North America was what – was our primary target when it came to reinsurance. And so when we did our reinsurance agreements that I described in the first quarter, those reinsurance agreements really focused around North American casualty business. We continue to see, broadly speaking, our international business as attractive and are continuing to try to grow in most lines, in particular, in our multi-line multinational business. With that said, we see opportunities on a kind of selective basis to remediate, even faster, some of the business that was in product set 3 and the business that was in product set 2 in North America, partly because the market's been just pretty aggressive. And if the market's aggressive and we have an opportunity without disrupting the broader relationships to remediate to improve faster in North America, we're happy to do it. I think surely property in the U.S. is a very important part of the story. As I mentioned in my opening comments, property rates are down in the U.S. in the excess and surplus lines property business and so we have, in fact, reduced the amount of writings that we're doing in the E&S property space and we will continue to be very thoughtful about the property business we do write. We're focused on our highly engineered lines, in middle-market, in large limit where we have a sustainable, competitive advantage and where we think our engineering capabilities can help reduce the likelihood of a loss in the first place for our clients.

Our next question comes from Jay Gelb with Barclays.

Thank you. The implied decline in commercial property casualty insurance in 2016 is around 15%. I realize introducing new reinsurance arrangements has a pretty big influence on that. Do you envision positive growth in 2017? Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: Jay, thanks for the question. I think the market will dictate a lot for us because we really want to take advantage of where we see opportunities. In some cases, what I can tell you for sure is, we do expect for 2017 to show opportunities for growth in lines of business that we've been targeting. So we do expect that we'll continue to see growth in multinational, in our highly engineered property lines of business, in financial lines for us, more broadly, but a lot of this will be dictated by where we see opportunity to further shape the portfolio, whether that's in the U.S. or internationally based off of market conditions. But in general, I think that you should expect that 2017 premiums, overall, will not significantly grow from the level we close out at, at the end of 2016.

Our next question comes from Jay Cohen with Bank of America Merrill Lynch.

Yes. Thank you. You guys talked about the changes in the Florida worker's comp market, obviously, addressing that with your reserves. I got to tell you we haven't heard much of anything from other companies and I'm wondering, do you believe you are acting more quickly than others in this regard? Siddhartha Sankaran - Chief Risk Officer & Executive Vice President: Thanks, Jay. It's Sid. Yeah, in this case, look, we believe we reacted to new information. There were court rulings in the second quarter and they were, obviously, unexpected and we do see this as an industry event. So it's an important set of rulings and we responded quickly as we told you we would around reserving.

Our next question comes from Michael Nannizzi with Goldman Sachs. Michael Nannizzi - Goldman Sachs & Co.: Thanks. Just for Rob, just thinking about the shift here, I mean, you're clearly shifting away from casualty on a net basis towards property. How should we be thinking about Cat load and severe losses from here? I mean, you mentioned some reinsurance in international commercial, but it looked like severe losses were a little bit lighter in the U.S. in the second quarter and, really, the first half of the year. So just want to get an understanding of whether or not you've taken any actions on the reinsurance side as far as property is concerned. Thanks. Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: So Mike, thanks for the question. I can't resist to take a quick moment to say – to put a plug in for our casualty team. We've got the best casualty team in this business and we will absolutely pursue opportunities to raise casualty business where we think we can get the proper pricing and where we think we can deliver value for our clients. With respect to property, let me make three key observations for you. The first thing I want to say is that over the past few years you'll see that we've been very actively managing our P&L to make sure that we manage the amount of exposure that we have to catastrophes. We've done that by reducing some of our risks, for example, in the Gulf Coast here in the United States, and being willing to take exposures around the world where we think that along the efficient frontier there's probably better opportunity between the risk reward trade-off for pricing and risk. The second thing that I would observe for you is that we've really done a lot of work to build our engineering capabilities in property, as you know. And the growth that you see in property is coming very much through our middle market and our large-limit, highly engineered property space where we really think we have a competitive advantage and where we think we have the ability to change our loss ratio in a positive way. And the third point that I would make is that absolutely, we believe that reinsurance provides an opportunity for us here. As I mentioned in my comments we did take advantage in the second quarter of the opportunity to use reinsurance in a strategic manner to reduce the level of volatility associated with severe losses coming from the property book. We entered into that agreement at the end of the second quarter. So we think that we'll see much more of the benefit from that moving forward in the rest of 2016 and into 2017.

Our next question comes from Ryan Tunis with Credit Suisse. Ryan J. Tunis - Credit Suisse Securities (USA) LLC (Broker): Hey. Thanks. Good morning. Another one for Rob. I guess, just looking at the components of the reduction in GOE, it looks like one driver has been loss adjustment expense. And I guess coincidently, that's also been a pretty good tailwind for the improvement in the accident year loss ratio in Commercial. I'm just trying to get a feel for, I guess, how much of the four points to six points of the four this year and six next year in accident year loss ratio improvement was supposed to come from that versus kind of the way I think we had been thinking about it, which was mix shift, risk selection and reinsurance. Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: Ryan, thanks for your question. The first thing I would say to you is I know that you should walk away understanding that about three-tenths of a point of the improvement in our adjusted accident year loss ratio comes from loss adjustment expenses. When you look at page nine of the financial supplement and you're trying to make sure that you can sort of reconcile that thought, just remember that any of the GOE that we put into loss adjustment expenses is effectively deferred and amortized in like a DAC type of concept. And so therefore, you need to be thinking about what is the effect in the adjusted loss ratio on an amortized basis. And so three-tenths of a point is the right answer for you.

Our next question comes from Brian Meredith with UBS.

Yeah, thanks. Rob, back to you again. I was wondering, could you give us a sense of what the year-over-year benefit to the underlying loss ratios were in commercial from reinsurance, ceded reinsurance, and also the combined ratio? Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: Let's see. Let me give you this as maybe a way to observe this for you. One, just remember that, I said this in my opening comments, if our total premium decline was 20% in the quarter after foreign exchange, about half of that came from reinsurance and our exit end-market headwind. So you could dissect that piece a little bit further and let me help you. I commented already that rates, so the market headwind for rates was about 1%. I commented that, that would then leave you with 9% of the decline associated with reinsurance and exits. If you thought about the exits, about $500 million worth of business is what we've exited, which is pretty small. It's about 2.5% of the $20 billion of premium that we wrote last year. So you might think of the benefit from exits as being something like, let's call it two to three points. And so if you – if you said hey, he explained 10% through reinsurance exits and market headwinds, I think it's pretty fair to say that you've probably got about six points of your reduction in premium coming from reinsurance. And so that's the effect that it had on the reinsurance. And then as you want to know what effect it had on the loss ratio just remember most of that happened in Product Set 2B and Product Set 3, but Product Set 2B. So you can see the loss ratio on the dispersion chart that we show on page 15.

Our next question comes from Meyer Shields with KBW. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Thanks. Good morning. Following the quarter's rate increases in Casualty and Specialty, can you talk about where your rates sort of compare to overall market rates? Kevin T. Hogan - Executive Vice President; Chief Executive Officer, Consumer: I think our rates are consistent with market rates. Meyer Shields - Keefe, Bruyette & Woods, Inc.: ... market rates before these increases? Kevin T. Hogan - Executive Vice President; Chief Executive Officer, Consumer: We compete in a highly competitive market every day. I would tell you that when we lose business, more often than not we're losing business to a competitor who quoted a lower rate.

Our next question comes from Josh Stirling with Sanford Bernstein. Josh Stirling - Sanford C. Bernstein & Co. LLC: Hi. Good morning. Thank you for taking the call, and, Craig, congratulations on obviously making a ton of progress in the quarter. So Peter, I was hoping to have just a bit of a strategic question for you. So earlier in sort of this journey there was a lot of debate and concern as to whether perhaps AIG was sort of too big to succeed. Your modularity approach seemed like a logical way of pivoting the conversation and making it a more manageable series of businesses. I'm wondering if you can talk about, now that you've got six months on sort of in the real world of like, your guys' day jobs, what that has actually translated into; systems, people, staffing, new ways of underwriting. And then walk us through a little bit how you think that informs how we should think about that informing the future, how far modularity goes and perhaps just a bit of an update on your sort of broader sort of divestiture strategy? Thank you.

So I think that, as the last 20 minutes has illustrated, the focus on the sub-segmentation of the commercial business, as illustrated in the dispersion chart is just one example of modularity in action. That chart has 80 individual dots. Each of those dots is a module, and our ability to grow some and shrink others is indicative of what we're doing throughout the organization as we segment our business by product, by geography, by customer segment, by distribution channel and make differentiated managerial decisions to allocate capital where we're being properly rewarded, where we have long term competitive advantage and pulling back and even exiting where we don't. And the information technology to be able to do that in ever more precise ways and the ability to not be overly swayed by the past but have better predictive analytics about the future, about loss trends and customer demand is what we're talking about. We clearly recognize the need to illustrate that through more transparency and I hope you find what we're doing to show modularity in action within the Commercial book helpful in anticipating where else we're applying the same managerial discipline. And as we've promised in January, we'll be talking about modular results at the sort of high level of nine sub-segments of AIG by the end of this year with full capital allocation and ROEs of those segments. But that is really still at a very high altitude compared to what in our day jobs, to use your language, we're doing, to make AIG and reshape it into our clients' most valued insurer, which is to focus it where we have the greatest relevance to our target client segments.

Our next question comes from Elyse Greenspan with Wells Fargo.

Hi. Yes. Good morning. If we go back to slide 15 and kind of the product sets that you've laid out, I was just wondering if you can kind of talk to, if there were any kind of favorable or unfavorable impacts within any of the product sets that might impact sequential loss ratios as we think about the balance of 2016?

Well, Elyse, I guess the best way for me to think about that is what you're really seeing here on page 15 is simply change in mix. I want to highlight for you that we've only just begun to earn in what is this change of mix that you're seeing on page 15. So the future impact is that this net written premium earns in much more in Q3 and in Q4, so this mix of business you should feel coming through the loss ratio as we go through the year in even greater way. As it relates to loss picks et cetera, I can only tell you that every quarter we review the loss picks with the actuaries and for sure we had increased the loss picks in places where we believed that the market headwinds indicate that the loss experience has been greater then we initially expected at the beginning of the year.

Our next question comes from Jimmy Bhullar with JPMorgan.

Hi. Good morning. I just had a question on expenses, just on the sustainability of the expense ratio, you mentioned the ratio could increase because of lower premiums. I'm wondering if you expect expenses to continue to decline over the next year-and-a-half? And then related to that, just wondering what your ultimate expectation is for restructuring costs. I think expected restructuring costs have been going up. In your most recent Q it was $1 billion, at the end of the previous quarter, it was $900 million; at the end of the year it was $700 million. So what's your expectation of how much the restructuring costs that you're passing below the line will end up being ultimately? Robert S. Schimek - Executive Vice President; Chief Executive Officer, Commercial, American International Group, Inc.: Jimmy, it's Rob Schimek. I'm going to just answer the first part of that and let Sid have the second half. As it relates again to the expense ratio just go back to what I said in my opening comments. In my opening comments I made it clear expenses have come down and we expect them to continue to come down in the remainder of 2016 and into 2017 consistent with the actions that Peter outlined and what our strategic actions were that were described in January. With that said, the lower level of earned premiums, earns in over the course of the remainder of 2016 and 2017 and because of that, you'll see a slight upward movement in the expense ratio but again the most important point, we would expect to reduce our loss ratio by four points this year and we do not expect to give that up in the combined ratio by having an offsetting increase in the expense ratio. We expect to be able to hold our ground on the expense ratio. Siddhartha Sankaran - Chief Risk Officer & Executive Vice President: Hey, Jimmy, it's Sid. On the second question, we obviously don't project out our forecast future restructuring costs but you should expect as we take management actions you could see additional restructuring costs and you'll see that updated each quarter in our disclosure.

Yes, I just want to make another point here about expense control and how we're looking at it. A lot of people when they talk about expenses quickly jump to ratios or certain sub-segments of expenses like the corporate section or whatever. We feel that the only way to make sure we have sustainable expense discipline is to look holistically at the entire fixed cost base of the company regardless of how it's classified in LAE or in corporate or whatever and keep that number coming down in a sustainable way. And that will then feed all of the ratios that we care about over time but importantly ROE and give us a sustainable ROE above our cost of capital.

Our next question comes from Amit Kumar with Macquarie. Amit Kumar - Macquarie Capital (USA), Inc.: Thanks, and good morning. Just very quickly going back to the discussion on commercial, AOI ex-cat LR of 62.4% now, that was roughly 400 basis point improvement over 2015. Your prior goal was 400 basis points by Q4, 2016 and 600 by Q4, 2017. Do you think it would be fair that there could be a possibility that you could hit your targets sooner than anticipated if you continue on this trajectory?

Amit, as I mentioned in my opening comments, there is volatility in the results associated in particular with unexpected losses we can get at any time in property or any of our other shorter tail lines. We stand by our initial expectation that we've communicated with no change.

Our next question comes from Larry Greenberg with Janney.

Good morning and thank you. I'm not sure if this is for Sid or Kevin but I think you guys do your actuarial review for Life in the third quarter and I just am wondering if you could give us any visibility on that. And how sensitive your profit assumptions are to investment returns and the sensitivity of those embedded returns to the alternative portfolio? So just wondering if there's any thoughts on that? Siddhartha Sankaran - Chief Risk Officer & Executive Vice President: Hey, Larry. It's Sid here. Yeah, we do, do our actuarial assumption review in the third quarter. It's too early to tell. The one area, which we've highlighted for you, is in the legacy structured settlements where we've done some historical gains harvesting, but the work is still not complete. So we look to the third quarter call where we'll update you a little bit further on that

Our next question comes from Adam Klauber with William Blair. Adam Klauber - William Blair & Co. LLC: Thanks. As far as share buyback capital return, you're definitely reducing P&C, but particularly property, which is capital-intensive. And then I think you mentioned that you're looking at ways to reinsure redundant Life reserves. Longer term does that open the door for greater than expected share buyback or greater than forecast share buyback? Siddhartha Sankaran - Chief Risk Officer & Executive Vice President: Hey, Adam. It's Sid. Why don't I try and tackle some of the items you mentioned a little more holistically, if it's helpful there. We regularly review our forecasts and we remain confident in our commitments on capital return. As I look at where we are today and a little more color on the funding walk that we previously shared with you. First legacy asset monetizations have been ahead of where we initially projected. So we feel positive about that. And then secondly, I think going forward I would expect us to exceed the $5 billion to $7 billion funding target from dispositions given where we are today at this particular point in time. That said, given how closely we monitor this there are always some period to period changes in our funding projections. So on dividends and tax sharing payments we remain roughly in line with our projections and they'll have some variability with market conditions and statutory capital. Our leverage remains in line, so it remains a very healthy under 20%. Hedge fund redemptions are on schedule and there the proceeds are market-dependent, of course. And then finally with respect to both Life reinsurance and UGC, on UGC, there's an S-1 out there so I'm limited in what I can say other than I believe we're on track towards our separation. And on Life reinsurance, we continue to make progress and we'll comment further once we have something that we believe is disclosable. So the punchline to that is, still on track and we're looking forward greatly, to updating you further next quarter.

As we get to the top of the hour, I'd just like to end with some closing comments. I'm very pleased with this quarter. I'm very proud of the hard work of all of the employees that have made such a great job of the improvements that we have evidenced in this quarter and shown progress in achieving our longer-term goals. But I want to remind everybody, both our employees, our shareholders, our customers, that we're very much on a journey here. We're in the second quarter of an eight quarter journey to return the company to a level of profitability, which we feel is compelling. And we want to do so while investing in talent and technology so that we – for the long term, so that we remain relevant to our clients as the world around us changes rapidly. And so this is a measured progress. I'm pleased with the results. I'm pleased with the progress, but we still have a long way to go and I think we got to stay very, very focused on execution and I'm just thrilled at the hard work of our employees, all of them, for their focus on executing this very important plan. Thank you very much, everybody.

This concludes today's conference. Thank you for your participation. You may now disconnect.