Good day, and welcome to AIG's Fourth Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Liz Werner. Please go ahead, ma'am.

Thank you. Before we get started this morning, I'd like to remind you that today's representation may contain forward-looking statements, which are based on management's current expectations and 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, second, and third Form 10-Q, and 2016's 10-K to be released under Management's Discussion and Analysis of Financial Conditions and Results of Operations, and 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 reconciliations of such measures to the most comparable GAAP measures are included in the slides for today's presentation and in our financial supplement, both of which are available in our website. The format for today's call will follow prior quarters. There'll be one question and one follow-up during our Q&A period. We will extend the Q&A period today, so that we can answer as many of your questions as possible. This morning, you'll get to hear from our leadership team, and in particular, will lead with our CEO, Peter Hancock; Sid Sankaran, our CFO; Rob Schimek, CEO of Commercial; and Kevin Hogan, CEO of Consumer. And with that, I would like to turn the call over to Peter.

Thank you, Liz, and good morning, everyone. Today, I will review our 2016 accomplishments and provide an updated outlook for 2017. But first, I'll speak to our recent announcement of an adverse development cover with Berkshire Hathaway and our Q4 reserve strengthening. Let me begin by providing some historical perspective on the adverse development cover. We've evaluated ADCs from time to time and followed our 2015 reserve addition. We felt it was a strategic imperative to radically reduce reserve risk and improve earnings sustainability. At that time, Doug, Rob and Sid were new to their roles, and I'd asked them to carefully evaluate our business in force, new business underwriting and sources of alternative capital. As we've stated, reinsurance is a key component of our strategy, and one outcome of their work was the agreement with Berkshire, which reinsures the vast majority of our U.S. Casualty reserves, and more importantly, exposures going back more than 40 years. While adverse development covers are not new to the industry, an agreement of this scope and scale is redefining. Berkshire is a knowledgeable partner with investment expertise and balance sheet strength, which are well-matched with AIG's claims capabilities. The economics and the reduction in risk associated with this agreement will provide benefits for many years to come and pivot us towards the future AIG, with lower risk of impairments to book value, higher-quality earnings, and ultimately, a lower cost of capital. In the fourth quarter, we also announced a $5.6 billion prior-year reserve addition, as we reacted to emerging severity trends across lines and accident years. We chose to make more prudent reserve assumptions, which Sid will speak to. The trends we witnessed and reacted to this quarter were broad, and we believe are materially impacting the overall U.S. Casualty market, which we…

Thank you, Peter, and good morning, everyone. This morning, I'll provide further details on our adverse development cover, the fourth quarter reserve strengthening, our quarterly financial results, and our outlook for 2017. As we discussed with you at our Investor Day, our objective has been to be vigilant about managing reserve risk. As Peter mentioned, in Q2 of 2016, we initiated a process to evaluate an adverse development cover, utilizing a third-party reinsurance broker and evaluating multiple markets and structures. Slide 6 illustrates how we have transformed our reserve risk profile as a result of the ADC. Under the agreement, AIG will pay the first $25 billion of liabilities, and then split the next $25 billion of payments 80/20 up to a $50 billion limit. At the end of 2016, we held $16 billion of nominal reserves above the $25 billion attachment point, including the 4Q reserve addition. 80% of these reserves, or $12.8 billion, are ceded. The difference between the $12.8 billion of ceded reserves and the consideration paid, including interest, will result in an estimated $2.6 billion pre-tax deferred gain before discount in Q1 2017. This gain will be amortized over the estimated reinsurance recovery period. In terms of our GAAP results, we are required to recognize 100% of any future favorable or adverse reserve development on the covered liabilities in our GAAP net income. The deferred gain on the ADC will be then adjusted for 80% of the impact, as well as the amortization of this gain. Only 20% of any future potential reserve development will impact our operating income. Turning to page 7, you'll see that the agreement covers U.S. Casualty and Financial Lines, which accounts for 80% of the adverse development we have realized over the past two years. Excluded from the cover is our…

Thank you, Sid, and good morning, everyone. Beginning on slide 19, the fourth quarter marked the culmination of a truly transformational year for Commercial, with the completion of an extraordinary amount of change as part of the strategy we outlined at the beginning of 2016. Today, I'll discuss three topics: the actions we've taken to significantly reduce future volatility, progress of our strategy to improve underwriting performance, and the outlook for Commercial's business modules. The adverse development cover is a comprehensive transaction that was one of several strategic reinsurance agreements we entered into over the past year. A key part of the agreement is that we retain full claims authority to honor our commitments with consistency of decision-making and service that our clients expect of AIG. As Sid mentioned, during 2016, we also increased current accident year loss estimates by approximately $700 million in response to the emerging trends reflected in our prior-year reserve strengthenings, bringing total loss picks for the 2016 accident year to a more conservative level that includes a margin of error, reflecting the long-tail nature of the U.S. Casualty business. Looking toward the future, we're confident that the steps we took in 2016 to prioritize value-creation and utilize more rigorous data and pricing tools will significantly enhance the quality of our portfolio. Turning to slide 20, the top line shows Commercial's adjusted accident year loss ratio, including the effect of prior-year development for each accident year. The bottom line shows the adjusted accident year loss ratio at the end of 2015 before reflecting the results of the 2016 reserve studies. You can see that our fourth quarter 2016 reserve strengthening positions us at a 2015 starting point that is 6.1 points higher than we reported this time last year. On that basis, we achieved 4.1 points…

Thank you, Rob, and good morning, everyone. Consumer produced strong results for the quarter and for the year. For the year, we expanded normalized ROE by 190 basis points to 10.3%. We expect to maintain or exceed this level of normalized ROE in 2017. During 2016, we took actions in each of our modules and key geographic areas to create value. In addition, I am delighted to report that in Japan, the intensive preparation for our legal entity merger is progressing well. Early this week, we announced adoption of FSA-approved premerger status as of April 1 of this year and our target merger date of January 1, 2018. This is a major milestone in our transformation effort. Slide 26 summarizes our progress in 2016. In Individual Retirement, we were proactive in taking pricing and product feature actions to navigate the low interest rate environment. We focused on value over volume and were not dependent on any one product line. Due to our broad product portfolio and deep distribution relationships, we achieved top five sales rankings across annuity lines, fixed index and variable, a position we believe is unique in the industry. Individual retirements earnings for the year were strong with PTOI increasing by over 25%. For our Group Retirement business, VALIC, our investments to transform the plan sponsor and participant experience began to pay off. We significantly improved our results in winning new group plans and in retaining existing plans. Our net flows improved substantially, and we achieved the highest level of premiums and deposits since AIG's acquisition of VALIC. Our Life Insurance business continued to make progress, executing our plan to enhance ROE. During the year, we completed the introduction of our new state-of-the-art administrative platform and new digital capabilities, revamped our product suite, and substantially exited our U.S.…

Thank you. Operator, we'd like to open it up to Q&A. And as a brief reminder, we will extend beyond the hour to get to the questions. But please ask one question and one follow-up, and don't hesitate to get back in the queue, so we can handle as many of your questions as possible.

Thank you. And we'll take our first question from Ryan Tunis with JPMorgan (sic) [Credit Suisse]. Ryan J. Tunis - Credit Suisse Securities (USA) LLC: Tunis of Credit Suisse. I had one question, and John Nadel had a follow-up. But I guess just trying to understand why the 60% is untenable in 2017, if 93% of the charges on premium that you already plan to improve or remediate, why is it that we can't just push a little bit harder on that premium in 2017 and get to the 60%, if that was always an important part of getting there? Thanks.

Hey, Ryan. It's Rob Schimek. So, I'll point a couple of things. First of all, I want to point you to page 20 and just remind you that the 66.7% that you're seeing on that page includes 3.9 points of higher accident year loss ratio that we've booked particularly relating to the long-tail line. So, as I said in my comments and Sid had said in his comments, there is a margin for error that we booked into the long-tail Commercial lines that we had not previously recorded. The second observation I'd make for you is that, and as shown on slide 21, the nature of our business is a very interconnected nature when we think about it from a perspective of our client. So, I've shown you a table at the bottom of page 21 that shows that 90% of our major account clients are clients that have revenues of over $500 million. They're long-term clients, 18-year relationships, but that our relationships cross across not just one line of business, but multiple lines of business with varying degrees of profitability. And our main objective is to protect the valued client relationships and make sure that we can think of them holistically, not as an individual product, but instead, as an individual client. And then, I guess, the third point I'd make for you is don't lose track of the fact that in our improvement that we've committed to, we did not make any expectation for you on expense ratio other than we would be able to maintain it flat. And in 2016, you can see that we did improve the overall Commercial expense ratio by almost 1 point. So, the 66.7% you are seeing is loss ratio only. If you thought about it in the context of combined ratio,…

So, I think that the 90 basis points that you see on page 17 is just a mechanical effect of the impact on gas equity. But from a point of view, how we steer the ship and how the board thinks about value creation, we look at the much bigger reduction in required economic capital that comes from the ADC. So, the ADC reduces the reserve uncertainty so much more than the book equity reflects, but there's actually a bigger than 90% improvement in the return on economic equity. But that will take time to come through, because we need to work closely with our regulators before we dividend up from the subsidiaries. So, there's no doubt in my mind that this transaction and the net of the ADC and the reserve charge is accretive to value, but I think that the timing of how it comes through GAAP ROE is another matter. It takes a little bit longer. So, we've obviously got a component of it that reflects the reduced investment income. That's another piece that needs to be understood. But I think that taken as a whole, between the two actions of the prior development and the ADC, it's significantly accretive to value. And I think if you work your way through the capital framework that we use, in the new module of disclosures you'll see with much greater transparency how we manage the difference between economic capital and statutory capital, the so-called difference in the frictional capital. You can see how this will work its way through, especially as you try and forecast ROE in 2018, by which many of these timing mismatches will sort of come out in the wash.

And we will take our next question from Kai Pan. Kai Pan - Morgan Stanley & Co. LLC: Thank you. Good morning. First question on the reserve charge. I just wonder how much the increase of accident year loss, which you'll take is coming from this so-called emerging trend in third quarter and fourth quarter versus – so you're adding another layers for margin of safety, because you mentioned the trend actually impacting overall U.S. cash in the market, but we haven't seen large reserve charges at the industry level. Just wondering, if this is AIG-specific issue or is it more industry concern?

Well, Kai, it's Sid. I'll open, and then I'll hand it over to Rob. First of all, I would say, we don't explicitly break it out that way. And it differs dramatically by line of business when you look at U.S. Casualty. I will say, the general effect of our reserve strengthening is to, as I said in my remarks, more heavily weight the trend towards recent accident years. And in lines like commercial auto, where you're seeing dramatically higher trend for the industry, we would be strengthening both reserves and loss picks to reflect that new data. Rob, maybe you want to comment a little bit about how you think about the overall portfolio and loss picks, in general?

Kai, let me suggest to you this way of thinking about it. I want to make sure I get this point across for everyone anyway. Success for the management of our Commercial portfolio begins with getting the proper segment selection. We've got to get the right mix of business here, and the mix of business is going to drive our view of overall profitability for the Commercial portfolio. We've identified the U.S. Excess and Surplus Lines Property business, as well as the U.S. Casualty business as the segments of our portfolio that are the most challenged. And we were absolutely correct in that assessment. 86% of our fourth quarter reserve charge was attributable back to US Casualty. Today, U.S. Casualty is 21% of the Commercial portfolio, and we feel confident about the remaining 79% of the portfolio which is running at an adjusted accident year loss ratio of 60.2%. So, to give you a better sense of sort of the situation we face is I want to take you back to 2004, where effectively we were a Commercial Casualty portfolio that wrote some other business. And what I mean by that is we wrote $15 billion of U.S. Casualty business, representing 58% of our total portfolio. In 2016, we wrote $3.3 billion of net written premiums, representing just 21% of our Commercial portfolio. And by the way, in 2017, we anticipate writing about $2.5 billion of net written premium in Commercial Casualty. So I think we've accomplished four really important things. I'll bring us back to that margin question here in a moment, but four important things in 2016. First, we reduced the U.S. Casualty book by 39% in a single year compared to our annual decline of about 8% per year from 2004 through 2015. Second, we achieved more…

I'll give you an initial answer and then I'll hand it over to Sid. The adverse development cover, as I said earlier, dramatically reduces the amount of economic capital at risk. The timing of regulatory capital relief is not immediate, and so while we continue to reaffirm our confidence around the $25 billion, we want to work very closely with both regulators and rating agencies on any further capital actions and make sure that we have a demonstrable track record of repeatable earnings before we would consider adding to that in 2018. So I think that we still feel very confident about the free cash flow of the company and the ability to free up capital through divestitures on the legacy side as well as improved operating earnings. But the most important thing to remember is the net of the adverse development cover and the prior development is accretive to capital, both on an economic capital basis today and what we think ultimately will be true of statutory capital come 2018. So I think that we feel very good about the long-term capital position of the company.

And, Kai, I'd just add what gives us confidence in our 2017 projections as we highlighted at Investor Day and you heard in many of my remarks today. When you sum up the accomplishments we've had in terms of non-core and legacy asset sales, life reinsurance transactions, our asset allocation shift, and then, of course, operating subsidiary dividends and tax-sharing payments, the aggregate of those have us squarely on track with regards to funding our capital return.

Thank you. And we'll take our next question from Jay Gelb with Barclays.

Thank you. The biggest topic on the mind of investors that I've received is what will A.M. Best's reaction be to the 4Q set of announcements. The A.M. Best's rating for AIG is currently on – at A with a negative outlook. What's your sense on timing in terms of when we'll hear from A.M. Best in terms of whether they affirm at A or downgrade to A minus?

I will take that. I've tried to be very clear for several years that our concern about claims-paying ability is paramount to the trust that our clients have in us and that the rating agencies, including A.M. Best, are important arbiters of that. We have revealed to you and them a lot of new information in the space over the last few days. And so we expect it to take some time to digest this and see the balancing ins and outs in terms of radical reduction in reserve risk while amendment to current profitability levels to see how that nets out in terms of impact on rating. But we've made it very clear to all the rating agencies that with the extremely strong holding company liquidity position, we put the financial strength of the subsidiaries at the top of the hierarchy of goals in the immediate term to maintain utter confidence in our claims paying ability. So I'm very hopeful that we'll achieve a good outcome with all the rating agencies, including A.M. Best. But they should probably comment on timing as opposed to us.

I appreciate that. My follow-up question is regarding Street estimates for 2017, 2018. Street's at $5.34 for 2017 and $6.45 for 2018. I appreciate your perspective on core ROE, but my own perspective is that Street estimates are just way too high for the next two years. Do you have any perspective on that? I mean, can we help level set this a little?

I don't want to comment on Street estimates. They are often based on different methodologies. What I do think is that we've given the Street a lot more granularity of modular information to do a bottom-up analysis of earnings quality and review those estimates in the light of all the new information we've disclosed. So I think probably best to defer that after the Street had a chance to digest the significant additional information that they've received.

We'll take our next question from Randy Binner with FBR Capital Markets. Randy Binner - FBR Capital Markets & Co.: Good morning. Thanks. I had a question about the $10.2 billion consideration to National Indemnity. How is that funded and what is the timing for funding that consideration to National Indemnity?

I'm not sure that we'd want to comment on that, but it's funded by divestitures of general account assets. We have a very liquid general account asset base, and it's just part of our normal course of asset liability management; this is something which is accomplished. But I think that the important thing from point of view of – toward earnings estimates is that we have given you, I think, a clear indication of how much forgone net investment income will occur in 2017 as a result of the sale of those assets and transfer of those funds. So, Sid, if you want to comment on that, that's fine.

Yeah. The only other thing I'd add is we expect to finish that financing very shortly. So that's all I'd add, Peter. Randy Binner - FBR Capital Markets & Co.: So the assets go and the investment income goes with it. And then the – I guess the follow-up I have just on this topic is on page six, description of the arrangement with NICO. The $12.8 billion ceded, is that actually ceded now or is that kind of continually ceded when losses come through?

Now – Sorry, Randy. Do you want to clarify your question there just to make sure we understand? Randy Binner - FBR Capital Markets & Co.: So the $12.8 of ceded nominal reserves. I just wanted to make sure I'm understanding this correct, that you're your ceding those assets and liabilities now and that's where we should think about the consideration – part of the consideration coming from.

Yeah. I'll just point you back to my prepared remarks, Randy. Remember, I noted that we have $41 billion of nominal reserves at year end, so that's where you get the ceded amount. You take the $41 billion, you subtract the $25 billion which is $16 billion, and then you apply the 80% to get the ceded reserve number. Obviously, as you know from our filing of the contract, that obviously ultimately gets paid out via Berkshire Hathaway on a paid basis. So – but, yes, they are ceded immediately.

And we'll take our next question from Josh Shanker with Deutsche Bank.

Yeah. Good morning, everyone. I'm wondering if you can help walk us through the line items that changed the disclosure. At the end of last year you said that you closed out 2015 with a 66.2% loss ratio accident year, and that's been revised down to 64.7%. I'm wondering, on an apples to apples basis, what the 2016 numbers are? And can you define the difference between the exit run rate loss ratio you're closing out 2016 with versus the reported number?

Rob, why don't you go through that?

Yes. So, Josh, let me begin. Just following on page 20, think about the green line; that's what you're asking me about, and we're going to focus on the line that says 2015, 64.7%. When you saw that line item in 2015, it was 66.2%. The primary adjustments that have been made to that line item are, first, as you know we sold UGC; we had a reinsurance agreement that now works with UGC, and that benefits the Commercial business moving forward. But in order to not make me look good on a year-over-year basis, we pushed that back to all periods, so that you'll see – so we've actually adjusted down what was the 2015 loss ratio reflecting the benefit of UGC into 2015. We've shown that on page 20, in footnote number two, and you can actually see that the benefit is 0.4 points in 2016 – in 2015. It was actually, and just for comparison purposes, it's 0.8 points in 2016. So apples to apples basis, we get a 0.8 point benefit in 2016, and we didn't want 0.8 point benefit to compare against the old 66.2%, so we brought the old 66.2% down by 0.4 points which is what the effect would've been in the prior year. The second big item is that, as you know, we exited some businesses in 2016. I announced those exits in February that included primarily our buffer trucking business and our pollution legal liability business in the United States and Canada. Those businesses were exited in 2016 and they've nailed and transferred over to Legacy. Many people worry that I would actually flatter my current loss ratio by simply moving things over to Legacy. In the spirit of very transparent presentation here to you, we've actually also restated 2015 to remove the losses that were in 2015 associated with those same lines that have been exited. So, actually, I get no benefit in the comparison year-over-year 2016 versus 2015 for the fact that I exited businesses that have now been transferred over to Legacy into Charlie Shamieh's team. So overall, the 66.4% pulls out the losses associated with businesses that I exited in 2016 that we didn't want to leave in 2015 so that I would look flatter. And then the second thing it pulls out is the benefit of UGC which should be shown on an apples to apples basis. I think those two things actually show you that overall, we're trying to make sure that I don't flatter myself at all in the year-over-year comparison because net-net, even though the exits should have benefited me in 2016 in the comparison, we basically pulled it out of both periods. Does that make sense?

Year-over-year, does that mean it benefits you on an absolute number but not on a year-over-year comparison?

Exactly, Josh. So we did the right thing, and we don't worry about trying to look good on a year-over-year basis by flattering ourselves by leaving the old loss ratio high and bringing the current loss ratio down. Sid can comment further.

Yeah, Josh. I think in page 33 of the financial supplement, we've actually split out, specifically, the UGC impact, so that there's very clear transparency.

I did see that. Thank you. And then on the difference between an exit run rate and an accident year closeout number. Are we going to close out 2017 at a 65% but, say, the exit run rate is a 62%? And I guess the answer would be, well, what are we in 2016, the difference between the exit run rate and the closeout number?

Yeah. So, Josh, what I'm saying to you there is that the fourth quarter we believe will be at 62%. Obviously, for the full year 2016 we were at a 66%, 67%, so you can imagine that I'm not going to be able to bring Q1 down to the 62%. And in order to have it full year of 62%, it's going to be the average of the four quarters. So we're just recognizing that the fourth quarter we expect to be at 62%, and that we expect that move to 62% to occur throughout the course of 2017.

And we'll take our next question from Thomas Gallagher with Evercore ISI.

Good morning. Rob, just following-up on that conversation. So if the exit run rate on the Commercial loss ratio is really around 67% and the goal is to get to 62%, that's five points of improvement from an exit rate standpoint. I think, from what you were guiding previously, the 2016 to 2017 delta was more like two points. How are you going to get that extra three points? Can you reconcile that?

Yeah. So, Tom, the first thing I want to point people to is that when I committed we would deliver in 2016 in general, there were a lot of doubters about it. They said actually you won't be able to deliver 4 points, you're starting flat-footed. We delivered 4.1 points of improvement in the loss ratio and, for good measure, another nine-tenths of a point in the expense ratio for five points of underwriting improvement. Coming into 2017, we've got a lot of momentum. So the Swiss Reinsurance deal is already in place; that will benefit 2017. We made a lot of changes from an underwriting perspective in 2016 which have not yet been recognized as earned premium until 2017. In one of the research reports that I read from last night, there was a good comment about that. If you look at our reduction in net written premium, you can actually see that we significantly reduced our net written premium in the remediate and in the improved parts of our portfolio, but that doesn't yet reflect in earned premium until largely 2017. So I've got a lot of momentum moving from 2016 into 2017 from those two items and the remainder of the actions that we've got planned for the year, we feel confident we'll deliver the 62% loss ratio. I think overall, what people would've doubted we could've achieved with a 6 point improvement in the loss ratio between 2015 and 2017, I'd say I want you to have confidence; we've already delivered 4 points of it, and we believe we're geared up to deliver well over 4 points of it again in 2017 from the actions we've already taken. So I think we'll over deliver on a relative basis, apples to apples basis.

Okay. And then if I could shift to capital return, the caveat of subject to future profit improvement in terms of getting to your $25 billion two-year plan. Can you comment on – can you provide some perspective on what this means? Are we talking about no significant adverse development in P&C? Would that constitute as future profit improvement? Or are we talking about you actually need to show accident year loss ratio improvement in P&C to be able to achieve your capital return plan? Anyway, that's my question there.

I think it's fair to say that if you look at the underwriting actions that Rob's team has executed in 2016, it's a radical reshaping of the mix of business that makes projections more challenging, and I'm quite empathetic to all of you but also to the rating agencies as they try and project our 2017, 2018, 2019 earnings. But I am confident that once they analyze the additional disclosures we've met – if we meet the expectations that we have just laid out then that will more than satisfy all stakeholders that we have a very solid earnings base, very solid liquidity position, very solid capital ratios both at a subsidiary level and at a holding company level that more than supports the current rating. But we don't want to jump the gun on that, and we think it's really important to pace ourselves and bring all stakeholders along on that journey of underlying – understanding the underlying earnings power of this company as we've reshaped the earnings mix.

We'll take our next question from Elyse Greenspan with Wells Fargo.

Hi. Good morning. I just have a follow-up question kind of on getting to that 62% target in 2017. As we think about a higher kind of inflation level, just overall for the industry, can you just kind of express confidence that the picks that you're now using for 2017 kind of play out that scenario, and that if inflation levels do increase that you can get to this 62% level by the end of the year?

Elyse, I will just say, again, that if you think about the 4 points of increased loss picks we recorded in 2016 – I'm referring to the 3.9 points of increase – if you take that to the lines that are likely to have the inflation you're referring to, it will be the long tail U.S. Casualty risks in particular. Those lines, actually, we've increased the loss pick. If you sort of drill down through modularity, it's 3.9 points to total Commercial, it's 5.7 points to Liabilities and Financial lines, but it's 11 points if you drill all the way down to U.S Casualty. So the U.S. Casualty increase in loss picks of 11 points higher is intending to reflect the lessons learned from 2015 and prior, the reserve studies, and any of the expectations we would have regarding inflation. And that's really the message that we're trying to deliver. To the point that I was just talking about achieving the improvement between 2016 and 2017, I pointed out two really important items: you've got the Swiss Re deal that's already in place, and you've got the underwriting improvements that we already took last year. But I'll just make one last observation: because we so significantly increased the loss picks in U.S. Casualty, to the extent that in our mix of business we further reduce our concentration in U.S. Casualty, the benefit that we get between 2016 loss reserves or 2016 loss pick and 2017, because of a lower level of concentration of these very high loss pick businesses, we benefit even more significantly. Those are the three primary drivers that get you from the 66.7% to the 62% that you see on page 20 of our presentation.

Thank you. And then in terms of the capital return plan. The contract with Berkshire was retroactive, so you guys did – you guys are transferring over some reserves that were already sitting on your balance sheet in excess of $7 billion. How do you think about the amount of capital freed up there and how does that – it seems like today you've reaffirmed the $25 billion plan, but could something like that potentially be additive to the $25 billion?

Yeah. Elyse, it's Sid here. I'll point you to my earlier remarks. We've estimated that we've improved our overall capital position by approximately $2 billion when you combine the ADC netting with our reserve strengthening this quarter, but we anticipate that capital will be deployed over time as I said. So, again, it just reaffirms that we have strong confidence in our capital liquidity positions, as Peter mentioned, as we execute on our target.

And we'll take our next question from Paul Newsome with Sandler O'Neill. Jon Paul Newsome - Sandler O'Neill & Partners LP: Thank you. Focusing in on the Commercial business. It looks like, and I'm looking at page 20 like most people are, that something happened from a business perspective in probably around 2013 that got you off on your projections as well as with your business. Could you talk about sort of what was happening there from a business perspective and how that's different today? Who was in charge back then? That kind of thing.

So there's been a fair amount of change, frankly, in terms of who was in charge of the businesses that have reflected this and, as you can imagine, given the long-standing client relationships and long-standing presence in lines of business that were affected, you have a lot of inertia. So I think that, as Rob mentioned earlier on, we had a $15 billion Casualty book which was at the beginning of the period, and then that's now down prospectively in 2017 to about $2.5 billion. So that reduction didn't happen overnight. And so during this period of time, we were shrinking a book of business which, frankly, looks a lot better with high interest rates where you can live with a higher combined ratio if you've got decent net investment income. And in that 2013 period, if you remember, you've got two things: continued quantitative easing and, therefore, very low interest rates, making that a much less attractive business; and a recovery in the economy, so you start to have a lot more miles driven and a lot more economic activity and, therefore, an uptick in frequency and severity of losses. So you've got a sort of cyclical element hurting you on the loss cost trends, and a continued challenge on the net investment income. So I think there's an inflection point there which confirmed our initial instincts that the reduction in the Casualty lines was the right strategy, but the sense of urgency around that picked up as the continued low interest rate environment persisted in the subsequent years and as the loss cost trends accelerated even more with higher jury awards and so on in the most recent accident year. So I think that we've made a lot of change in terms of individuals and process, but we've also tried to learn what is external to AIG that we need to adapt to, lower interest rates and higher cost trends, and what is internal in terms of lessons learned in terms of improved linkage between claims, underwriting, and actuarial and getting the right alignment of those functions. And so we believe that the team that we have today is the right one to continue to reshape the mix of business around our most profitable clients. And I think that's probably the most important change in mindset, is to really start to analyze client profitability not just business line profitability, and that is something we have much better tools, better governance, and better understanding of today. Jon Paul Newsome - Sandler O'Neill & Partners LP: So I just want to make sure I understand the answer properly. It sounds like what you're saying is that you correctly identified the claims inflation, inflection, and other issues at that time but simply did not shrink the book fast enough to – as you would've liked in hindsight. Is that right?

I think that in hindsight it's something which I'd say you need more time to look back on this the right way. What we've done is retained over 92% of our best clients. If we had tried to shrink it faster, that number might've been a whole lot lower and that might've cost us a lot more in terms of profitable Financial lines and other lines of business. So we were shrinking the Commercial business at an annualized rate of about – I mean, the Casualty business at about an 11% annualized rate, and then we accelerated that to over 30% in the last 12 months. I don't think if we'd done it that aggressively back then we would've done it as elegantly, and I do think that we've got much better tools, much better governance around managing those client relationships. And of course, if you remember back then, the recent history of AIG's challenges in the financial crisis were still fresh in people's minds, so I think abrupt changes in our underwriting appetite would've had more disruption then than it does today.

We will take our next question from Jimmy Bhullar with JPMorgan.

Hi. Good morning. So first, just a comment, you did change disclosure, and I think it makes it very difficult to compare results. So I hope, especially when you're not really boasting the updated results in advance, so if you are changing disclosure in the future, I think you should actually at least provide the historical numbers a few days or a week or two weeks in advance, and it obviously would reduce confusion a lot. In terms of my question, I'm just trying to understand your comments on the Berkshire Hathaway contract which seemed pretty positive on it reducing your cost of equity. Obviously, it does reduce volatility in GAAP results but that's only because you're paying $10 billion upfront for about $20 billion of coverage, and you're doing it several years in advance of any contribution from Berkshire Hathaway, so – also you're still on the hook for the deal. So if you can quantify how much the deal is releasing in terms of – or if it is releasing any GAAP or stat capital – whether you'll see any impact from this on your tax asset? And also what the duration is of the claims payment period on this book?

So I think that the most important thing to see is that as of today's reserve number, you've got about $9 billion of additional risk capacity that is for Berkshire's account, which has an economic risk reduction to us, that will make sure that any subsequent adverse development is shared 80-20 between us and them, so there's substantial risk transfer to them. That is quite beyond any kind of accounting impact; in fact, if anything, the accounting is quite adverse compared to the economics because of the deferred nature of the recognizing of the gain on the ADC versus the immediate recognition of any subsequent PYD on the book. So I think that this is anything but an accounting-driven exercise. This, as we always do, prioritizes improvement in intrinsic value and reduction in economic risk. And you've rightly point out that there is, of course, a tail risk as there is in all of our businesses, and I think that we need to evaluate that carefully, and we have the benefit of our own judgment as well as those of third parties to estimate the full range of outcomes for future claims. But I think that we feel that this is a very substantial reduction in the reserve risk which should give people more confidence around the book value of the firm and the earnings trajectory. But I don't know. Sid, do you want to elaborate on the...

Yeah. First of all, we're sympathetic, that this is obviously a complex transaction, and Liz and the team will be available to walk you guys through this in more detail. But on an economic basis, the way you need to think about this is think of us, Jimmy, as transferring the assets. We receive a reinsurance recoverable that has a very sizable present value, we release capital up until the limit, and that are the economics of the transaction. Separate from that, of course, when I talk about netting this and freeing up capital, you have the prior year development and you have the tax affect of that prior year development, of course. So those are the ins and outs of both the reserve and the economics of the transaction. So don't think of the $10 billion without thinking of the reinsurance recoverable, and on a nominal basis, that $10 billion is granted and there's ceded nominal reserves of $12.8 billion plus the capital freedom. That's how you need to...

No. I understand, and I actually think that the transaction is relatively simple in terms of how it works. I'm just trying to see if you can quantify some of these numbers. But what's the claim duration of the book? Do you have a sense? Or what's your best estimate of that?

Yeah. We're not going to provide an overall duration in terms of the detailed cash flows, but my rough approximation I would give you is about 10 years. And so you have some cash flows that are going to be several years out and then some that are going to be way out in the tail, of course. So that's how we think about it when we do the PV; but rough math, I would use 10 years.

We'll take our next question from Gary Ransom with Dowling & Partners. Gary Kent Ransom - Dowling & Partners Securities LLC: Yes. Good morning. I had a question on reserves. At the Investor Day, Peter, you expressed some animosity toward the idea of a reserve cookie jar, and now we're talking about a margin of error. And I would just observe that one actuary's margin of error is another actuary's cookie jar, am I to understand that adding this margin of error is a change in your reserve philosophy?

I would say that when you have an ADC of the scale and scope that we have which we did not have on Investor Day, we have downsized the strategic significance of reserve risk by 80%, and so the subjectivity that is inevitable in any kind of reserve estimation, that would lead you to sort of judge where you are on that spectrum of conservatism, just has a dramatically lower effect both on historical reserves. And then given the dramatic reduction in new business written that Rob has explained, over 30% year-on-year, it just is not a big issue going forward. And so I'd rather just leave it at that. I don't know whether, Sid, you'd like to elaborate.

Yeah. First comment I'd make, Gary, is we've obviously commented before on some of that terminology, and we have the highest standards around our financial reporting process and our reserving process, so I'd leave that for you. Number one. Secondly, the way that I would describe – ask you to think about this in totality is first, we understand some of the frustrations people have had around historical reserve strengthening; and secondly, we have not been happy with our historical reserve risk outcomes either. And the way to think about this is the combination of the adverse development cover, our reserve strengthening, the adjustment to our loss picks, and the dramatic shift in the underwriting that Rob referred to in terms of business mix, the total of that does more than change the reserve risk profile and eliminate that historical trend than anything from a risk perspective could, and that was how we thought about this when we think about reserve risk. Gary Kent Ransom - Dowling & Partners Securities LLC: Just one other thing on the timing of the recognition of these adverse trends in the third and fourth quarter. Are we also to think that you did not see anything along those lines in, say, late 2015 or early 2016?

So I would point out that we have – while we have been considering an adverse development cover for some time and we initiated our exploration of this at the beginning of the year, it was only once we concluded our reserve studies after Christmas that it became clear to us that this was a transaction that made excellent economic sense. So we do have a back-ended reserving process, and so it was really after Christmas that it became very clear that that was the right thing to do. And I think we made a lot of changes that I think positively improved our ability to identify trends in the re-segmentation of our reserving. We went to a smaller number of more coherent modular reserving segments that gave us a higher signal-to-noise ratio that gave us more confidence in our decisions.

Yeah. Gary, it's Sid. I'd only add a couple of points. First, in the areas where we did see adverse actual versus expected trends as we talked about it at Investor Day, which was particularly programs, we think we acted rapidly and transparently and you saw us, obviously, strengthen reserves and programs when we saw those actual versus expected trends. For some of the lines that we discussed, we obviously saw trends accelerate into the fourth quarter, and some of those on very green lines. So like I said, in particular, Excess Casualty in 2015 is a green line, and you need a full year of seasoning. We are comfortable with the amount of work we did, as Peter alluded to, in the segmentation of our analysis, the granularity and the effort we put in, particularly given the work we initiated around in ADC in the second quarter and continuing through the year, that we've done a more thorough analysis of the reserve portfolio at this point in time. And we are very comfortable with where we are.

We'll take our next question from Amit Kumar with Macquarie. Amit Kumar - Macquarie Capital (USA), Inc.: Thanks, and good morning. Just, I guess, two quick follow-ups to prior questions. Number one, going back to the ratings agency discussion, and I'm still not clear. All else being equal, would a change by A.M. Best alter your plans to return to $25 billion or will it not?

I think that, first and foremost, I'd say that we have every hope and expectation there will not be a change and we will do everything we can to prevent a change. We see that as a critical element to our strategy. Secondly, they would make their change based on, I'm sure, a multitude of criteria that would maybe include capital planning but also the geography of that capital. Where is it? It's between the holding company and the operating subsidiaries. And it's the rating of the operating subsidiaries that we care about most because that's what affects our claims paying ability to our clients, and that's the stakeholder base that we care about most. So I think that we would look at all actions, including amendments to the capital, to make sure that that rating is defended, but we have a lot of capital flexibility, as we've pointed out, that would allow us to continue to serve all of our stakeholders in a way that's balanced and sustainable. Amit Kumar - Macquarie Capital (USA), Inc.: Okay. The second and final question is, Peter, this goes back probably to 2015 when there was a lot of discussion around too big to succeed, etcetera and at that time we had a – SIFI lends to this discussion. It's 2017, if you think about the tone and the content of conference calls, we rarely talk about the Consumer Insurance business, if at all. I was wondering how does the Board of Directors and you feel about revisiting the separation of business entity discussion, keeping the SIFI discussion apart. It seems we talk about the same issues in every call, and many other pieces of the business are not getting their sort of fair share of discussion or airtime. So how do you feel about revisiting the discussion to separate P&C from other pieces? Thanks.

I think that we've been very clear that there are strong tax reasons but also very strong diversification reasons why the current mix of business makes all the sense in the world. And this quarter, above all quarters, would remind people of the value and diversification as we look back at 2016's excellent results from the Consumer business, and the fact that the Personal insurance has had a major swing to profitability. So I think that my hope is that our dialogue with you becomes much more balanced as we reduce the uncertainties, and in particular around reserving that has plagued the discussion and allows the sort of skew to be so heavily focused around the U.S. Casualty business and to be a more balanced discussion about what I think is a mix of business across Consumer and Commercial that is focused on most profitable segments, geographies, and client segments that create sustainable earnings. So I think that we are in a process of reshaping this company. We have done a lot to make it less complex, and so in direction we are all in favor of resculpting this company and making it smaller or more focused. We did not think a three-way split to avoid SIFI regulation was the optimal way to unlock value for shareholders. So I think we feel very strongly that that was the right decision, but we continue to resculpt this company to be more focused, easier to manage, and easier to explain. And I do think this ADC cover is a pivotal moment in taking one of the biggest question marks around the evaluation and the risk profile of the company off the table, so we can focus on the operating earnings engine of the core portfolio and how that's emerging as a leading franchise.

We'll take our next and final question from Larry Greenberg with Janney.

Thank you. Peter, I think in the past you've given an ROE target for the operating segments and then a total company. And I know here you've given a 9.5% for the core operating. Maybe I missed it, but is there an ROE target? I know you gave what your freed up capital expectation is from Legacy. But is there an ROE target for Legacy?

No. The target for Legacy is all around the release of capital. So they're trying to release capital and shrink as effectively as possible with a view to how much they impair book value and enhance intrinsic value. So their gating factor is the speed of which they can release capital at a price that is accretive to intrinsic, and I'm delighted to point out how much they've done this last year to do that and most recently in the last quarter. Life settlements was a major illiquid asset in the Legacy book which was sold at a level that was accretive to intrinsic value in our view, and they will continue to do that. But I think that holding them accountable to ROE is the wrong metric because it really doesn't get what's really going on here which is shrinking that so that we can redeploy that capital in our core businesses to grow them and return any excess to shareholders. So that's the way we measure it. And if you think about the hierarchy of goals as I talked about at Investor Day, it helps you sort of map it into that to see how it all drives growth of intrinsic.

Thanks. And then just a follow-up for Rob, and I'm looking at page 21. The first category, the grow category, saw a 10-point deterioration in the accident year loss ratio. And I'm just wondering if you could give us a little bit of color on that degree of deterioration.

So, Larry, the first thing is that while we present this in a way to try to keep it simple, I want you to really understand that Peter marches this team to the tune of intrinsic value. So we are here trying to look even beyond the loss ratio and even beyond the expense ratio, but we're looking at risk-adjusted profitability in the context of the way we really run the day-to-day decisions inside of the Commercial business. So while this is a simplistic presentation of what happens to loss ratio, I'd say within the attractive parts of the business, what I want you to know is that we're making trade-offs every day, recognizing that while the loss ratio might look attractive, the ROE or the intrinsic value might not. So a classic example of that would be one of the primary drivers behind why our grow part of this portfolio on slide 21 declined in size; it's largely attributable to Property business. And while the loss ratio without natural catastrophes, so the adjusted accident year loss ratio for a property may look attractive, when we add on the acquisition costs and we add on the average annual loss expectation and then we think about the capital consumption, so I have to do all of the rest of this math behind the scenes, but we believe that we're making trade-offs that are even more sophisticated than what you see here on the simple view on page 21. And so I absolutely believe that we've made the right decisions in every element of these product sets that are shown on this page and, to the extent that we shrunk or that the accident year loss ratio deteriorated, recognized that tends to be sort of attributable to shifts in business and generally with things where we're making behind the scenes decisions on intrinsic value.

And that concludes today's question-and-answer session. Mr. Peter Hancock, at this time I will return the conference back to you for any additional or closing remarks.

Well, I would like to thank everybody for their patience and good questions. We've had a lot of information to digest, and we take the feedback that we wish we have gotten this to you earlier to digest quicker. But I think that I'd like to end this with a comment about the team, the management team. If you look back at the last 12 months, I think you'll see that this team has been extremely active in reshaping this company and making it a more focused and more sustainable source of earnings as well as serving our clients better, and I couldn't be prouder of how the team has worked together under a great deal of pressure to deliver these results. And so I have a great deal of confidence in their ability to deliver the 2017 prospective results that we've discussed today as well. And I think that the additional disclosure that we have given you gives you a better sense of the multi-dimensional nature of their roles as they optimize our mix of business of both geographic, by product, by customer segment, and I think that as I speak to our shareholders that may be listening, I think that the leadership team that we have assembled is really very, very well-suited to completing this task. So I want to give them a shout out for the accomplishments they've made. So thank you very much for your attention today, and I look forward to following-up with you individually in the weeks to come.

And this concludes today's call. Thank you for your participation. You may now disconnect.