Please stand by. We're about to begin. Good day and welcome to AIG's Third 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 and good morning, everyone. Before we get started this morning, I'd like to remind you that today's presentation may contain certain forward-looking statements, which are based on management's current expectations and are subject to uncertainty and changes in circumstance. 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 quarter 2015 Form 10-Q, and our 2014 Form 10-K under management's discussion and analysis of financial condition 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 reconciliation of such measures to the most comparable GAAP figures is included in our financial supplement, which is available on our website, www.aig.com. With that I'd like to turn our call over to our CEO, Peter Hancock. Peter?

Thanks, Liz. Good morning, everybody. Thank you very much for joining us. Last night we announced significant actions to further transform AIG into a more streamlined organization, positioned to serve our clients with ever greater agility. I look forward to providing more details on our strategy and progress. But before I do I'd like to comment on the recent letter we received from Carl Icahn. The letter outlines a plan that includes separation of Life and P&C. Management and the board have carefully reviewed such a separation on many occasions including in the recent past and have concluded it did not make financial sense. We of course will meet with him to further share our conclusions and give him an opportunity to elaborate on his views. The views expressed suggest that AIG should be split into three businesses. That those businesses would no longer be subject to non-bank SIFI regulation. The assumed outcome is the ability to increase capital return to shareholders, and the elimination of what are perceived to be excessive costs associated with non-bank SIFI regulation. We see tremendous benefit from combining Life and P&C activities, while we are continuing our efforts to reduce costs and complexities. As additional context AIG has been aggressively reshaping the company and has sold over 30 businesses for over $90 billion. There are no sacred cows. And we consider all avenues to improve shareholder returns. Having said that there are a number of issues associated with a separation of our Life and Property Casualty businesses. And this morning I'll touch on four key considerations. Number one, our non-bank SIFI status has not limited our ability to return capital. And since the beginning of 2012 we have returned over $26 billion to shareholders by repurchasing 35% of our outstanding shares. Number two, rating…

Thank you, Peter, and good morning, everyone. This morning I'll speak to our quarterly financial results, the details of our restructuring charge and expense initiatives, and our capital management activity. Turning to slide 4. You can see that our third quarter operating earnings per share was $0.52, down $0.67 per share from the same period in 2014. As shown on slide 5, market volatility impacts on investment returns primarily drove the comparison, a sharply lower hedge fund performance, PICC mark-to-market losses, and a decline in the fair value of asset backed securities largely resulted in a reduction of about $0.64 per share compared to the third quarter last year. As a reminder we report hedge fund returns on a one-month lag and private equity returns on a one-quarter lag. In the quarter in addition to our restructuring charge there were three noteworthy adjustments to GAAP net income that contributed to the GAAP net loss of $231 million, compared to after-tax operating income of just shy of $700 million. These adjustments include net after-tax realized capital losses of about $260 million, principally related to other than temporary impairments on energy and emerging market investments, a FIN 48 tax provision of a little over $200 million associated with legacy cross-border financing transactions, and a $225 million after-tax loss on extinguishment of debt, as we executed on economically attractive debt repurchases. Our reported operating tax rate for the quarter was just shy of 20%, driven by a lower level of income and tax audit settlements during the quarter. The 9-month tax rate of 32% is in line with our expectations for the full year. Turning to slide 7. Total company general operating expenses were $2.7 billion in the third quarter and $8.4 billion year to date, down just over 10% for the quarter…

Operator, can we open up our lines for Q&A please?

And we'll pause for just a moment to allow everyone an opportunity to signal for questions. And we'll take our first question from Tom Gallagher with Credit Suisse. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Good morning. Peter, just following up on your commentary about the Icahn proposal and a three-way breakup. You commented on the Life Insurance and Property Casualty, but not United Guaranty. Can you give us an update on your thoughts there? Whether that's a business that you would consider divesting?

Well, Tom, thank you for the question. So UGC is a business which was for sale for virtually nothing back in the crisis days. And since then we've invested in it, modernized it, and taken it from number five to number one in its industry, and it's performing very well today. We've kept it as a very modular unit, so it gives us strategic flexibility. But today it is a core business making a significant contribution to the company. But over time we are always flexible if the right opportunity to monetize assets was to come along. But today it's core, contributing, and we enjoy certain operational synergies with it. It originates whole loans for our investment portfolio and gives us I think a source of attractive returns in the mortgage market. So we don't announce or pre-announce any strategic actions. And so no further comment on the topic. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Got you. And then just a follow-up related to that business I guess for David. In terms of your capital framework are you currently holding a significant capital buffer related to the ownership of United Guaranty? Can you comment as to how that overall works into your capital position?

Yes. Tom, the capital that we hold for that business is much more manageable by AIG, given our broad balance sheet, our ability to fund the capital need through internal reinsurance. And likewise we did a recent cap bond that was also a very capital efficient transaction for us. So I wouldn't characterize it as a buffer. We're holding adequate capital, and we have adequate capital flexibility with respect to that business. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Okay. Thanks.

And I think the important capital constraint on this is the PMIERs capital constraint. So that's really the right lens to view the capital adequacy for UGC's current book of business and future growth prospects. Thomas George Gallagher - Credit Suisse Securities (USA) LLC (Broker): Okay. Thanks.

And we'll take our next question from John Nadel with Piper Jaffray. John M. Nadel - Piper Jaffray & Co (Broker): Thank you. Good morning, everybody.

You have reached the maximum time permitted for recording your message.

Operator? Operator, do we have a problem with the line?

It looks like – I do not know. Let me try my....

...time permitted for recording...

We'll go ahead to our next question with Jay Cohen with Bank of America Merrill Lynch.

Okay. Thank you.

Thanks. Just two questions. First for John. John, at the beginning of the year I seem to recall you thinking that you would have a pretty decent improvement in the underlying loss ratio in the Commercial business, and you really haven't seen that. I'm wondering why? Has it been pricing? Has it been loss activity? What's the reasons behind the lack of improvement? John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: Sure, Jay. As you know over the course of the last several years we've had meaningful improvement in our accident year loss ratio. I think since the beginning of 2011 about 8.5 points of accident year loss ratio improvement. So we've done well over time. But it has flattened out this year. And I think really driven by two different things. One is higher than expected short-tail losses. I commented briefly on the severe losses in the quarter. And then we saw generally higher severity than we had expected in Transportation, Commercial Auto, in Environmental, and in Healthcare. So as you saw we took action in the quarter, put remediation plans in place from the underwriting point of view, moved some segments of those lines into run-off as well. But took the opportunity to strengthen current accident year reserve. So as I said I do expect some modest improvement, not what we had expected earlier in the year, given what has happened in those markets, those segments. But we do expect a bit of loss ratio improvement in the fourth quarter and again next year. Costs will in this market become increasingly important as well. So that remains an important lever for us as we go forward.

Great. Thank you. And, I guess, next one for...

Jay, I would – this is David. I would just add – and, John, you may want to comment, we – with respect to the current accident year loss pick catch-up, so there was some of that in the quarter as well. You may want to talk... John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: Yeah. I commented that on my earlier remarks. But in Healthcare and in Commercial Auto, when we strengthen the loss picks in the quarter it goes back to 1:1 (31:31). So it has got an outsized impact on the current quarter reported results.

Yeah. I was looking at the 9 months. Probably better to look at that I imagine. John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: Right.

Other question for Peter. Peter, you mentioned that being designated as SIFI has not held you back from repurchasing shares. At the same time I would suspect that that designation has caused AIG to hold excess capital, simply because you don't understand what the actual rules are going to be, as they haven't been fully announced yet. Is that the case? Are you holding some excess capital than you normally would have because of the SIFI designation?

The answer is definitively no. I think that the right way to look at this if you – we are among about 30 SIFIs, banks and non-banks. And we anticipated this designation before we exited the government's cradle. And therefore executed massive deleveraging and divestitures of precisely the activities which the SIFI regulations were designed to eliminate. So whether it's ILFC, whether it's American General Finance, or other activities, our Consumer finance businesses, which required short-term funding. So we don't have run risk in terms of short-term obli's(32:56). We eliminated the derivatives book. So unlike other SIFIs that are today in a deleveraging and divestiture mode, we got that done by the end of 2011. So it's simply not the binding constraint. The rating agencies are the critical binding constraint that governs our buyback pace. And the longer they get comfortable with the stability of our operating model and our ability to execute on it, the more and more they will give us capacity to use capital more efficiently than we have in the past. But it's definitively not either current or anticipated SIFI capital rules.

Great. Thanks for the answer.

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

Yeah. Thank you very much. So, Peter, can we talk a little bit about head count and understanding the roles that the people, who are technically positioned at the holdco, have relative to what their functions would be allocated to the subs. I mean, and not to say that we're trying to take those positions down, but rather understanding the nature of the hiring of people who are holdco personnel.

So very few people are actually employed in the holdco per se. So I think that just sort of read more into your question perhaps, how do we view shared services? We have a number of very sizeable shared service centers, which perform a range of services from operations, technology, claims, and other activities, and finance that are in low-cost locations both in the United States and overseas. And we've been moving roughly 2,000 jobs to those low-cost centers per year. And so this is a very substantial shift in the head count mix and the cost per unit of head count. You had an increase in the total head count during this transition period, because you have to mirror the jobs. You can't just flip the switch overnight. And so you have a doubling up of a number of these jobs. The pace of that migration, which started about 3.5 years ago, has gone from about 1,600 migrations in 2014 to about 2,000 this year. So it's a very substantial shift in the way the company has provided services to create scale and rationalization of a very diffused operational environment, and has improved controls and provides the platform for future automation of what were very manual processes that were decentralized and had a lot of redundancy. So I don't know whether that helps answer your question, but that's sort of the basic head count story.

It's a good answer. And if we think 3 years out, how does the head count look at AIG compared to where it looks today?

I think that there will be fewer people, because a lot of those jobs will eventually be replaced by automation. We also, beyond the head count numbers that you see, have a very substantial number of contractors. And that number will also decline. So between contractors and head count in total we'd expect that number to be substantially lower. And our technology would be a bigger part of the spend and the scalable infrastructure that gives us, will lower our unit costs substantially.

Well thank you and good luck.

And we'll take our next question from Michael Nannizzi with Goldman Sachs. Michael Nannizzi - Goldman Sachs & Co.: Thanks. First for John, if I could. Can you quantify the true-ups on the current accident year? So maybe give us a current accident quarter loss ratio in Commercial. John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: If I understand your question, I think it was about a 2-point impact, the loss pick impact in the quarter relating to Healthcare, Auto, and Environmental as well. Michael Nannizzi - Goldman Sachs & Co.: Great. And then you talked about NSM in the release as well. How much of an impact did that have on the expense ratio in Commercial? John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: Modest. But I think – are you talking about acquisition or geo? Michael Nannizzi - Goldman Sachs & Co.: Yeah. That acquisition is the one that bumped up, and I think you'd mentioned that in the release. John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: Yes. So a combination of growth in programs at a higher acquisition rate and then writing less Casualty business in the U.S., much of which is net of commission, drove the increase in acquisition cost. Michael Nannizzi - Goldman Sachs & Co.: And so is the NSM piece – is that going to be a permanent increase in the acquisition expense? Or does that somehow – is there something one-time-ish, because of the acquisition timing that caused that? John Q. Doyle - Executive Vice President; Chief Executive Officer-Commercial Insurance: No, there was nothing one-time-ish about it. We've had a long history of being a leader in the program business in the United States. It's consistent with our strategy on how we…

And we'll take our next question from John Nadel with Piper Jaffray. John M. Nadel - Piper Jaffray & Co (Broker): Thank you so much. And I apologize for that earlier. Thanks for taking my question. I wanted to start on DIB and GCM. Given the volatility this quarter – and I know a couple of quarters ago you collapsed DIB and GCM into a single-line item. But I was hoping that you could give us a sense for what its actual contribution was in the quarter? I know you articulated what the shortfall was versus your expectation. And then can you also update us on where the NAV of DIB and GCM was at the end of the quarter? Thank you.

We're – Gary (sic) [John], thanks. It's David. We haven't updated the NAV disclosure at this time. You might – we also did not – during the quarter did not free up any additional capital from it. So it wouldn't be materially different than it was in prior disclosure. So I would just point you to that. John M. Nadel - Piper Jaffray & Co (Broker): And in the actual quarter, David. What was the – was it a negative contribution?

Yeah. Hold on one second. (44:58 – 45:06) Yeah. It was just call it breakeven for the quarter. John M. Nadel - Piper Jaffray & Co (Broker): Okay. And then just a quick follow-up on the $500 million to $600 million expense save run rate by the end of 2017. Is that a – should we be thinking about 100% of that being a bottom line impact? Or is there some level of reinvestment that we should be expecting against that number?

It'll – that'll be a net number obviously. There could be some additional reinvestments that we do along the way. But the way to think about the $500 million to $600 million, again along the themes that Peter talked about earlier about driving efficiency, about half of the savings will come from an efficiency play as well as the business rationalization. And there could be some – Peter, you want to add?

Yeah. No. I think that we made the decision to talk about the 3% to 5% or $1 billion to $1.5 billion expense number target as a net number. So it's inclusive of substantial and growing investment in technology and growth initiatives. So the number that was cited earlier, the $300 million to $500 million, ebbed into the $500 million, $600 million is related to the specific actions in our announced restructuring charge. So it's really a component of the broader net target. John M. Nadel - Piper Jaffray & Co (Broker): Okay. Understood. Thank you. And then one last one. And that's just on the Fed and SIFI and capital standards and how you're being governed today. I mean for a number of years – and Bob [Benmosche] used to talk about the embracement of the Fed and their involvement in effectively everything you guys do. I'm just trying to understand what is it at this point? Do they give tacit approval of your capital actions? And if they do, Peter, what is it based off of? What's the – what are the primary couple of metrics that we can look at, at least today, that give us a sense for what the Fed is looking at?

Well as I mentioned earlier the Fed and any anticipated rules that they may come up with from a capital perspective have absolutely no bearing on our capital returns. The one area where I'd say that they are watching very carefully is to make sure that our internal governance process is up to the highest possible standards. So that when we do decide to take capital actions that that is not management shooting from the hip, it's management documenting why they decided to do what they do, getting the board fully onboard with that decision, and documenting their board's approval. So it's our own true north of what we think makes sense. And as I mentioned in the earlier question the binding constraint today is the attitude of the rating agencies. And so where we have incurred additional compliance costs as a result of the Fed's involvement, it's around improving governance and operational risk as opposed to capital. As I mentioned earlier we de-levered the company and simplified the risk profile so much. John M. Nadel - Piper Jaffray & Co (Broker): Yeah.

In order to exit early from the government's assistance program, that it just simply, not an issue for us. It's a huge issue for others, and that's why this issue gets so much public discussion. They haven't de-levered their balance sheets yet. John M. Nadel - Piper Jaffray & Co (Broker): Okay. And then lastly I know – just following up on the rating agency as sort of the primary governor. Obviously one quarter doesn't necessarily change things too dramatically. But do you think the rating agencies buy into a bunch of the adjustments that you guys are citing here when it comes to thinking about interest coverage?

I think that interest coverage has been an issue in the past. I think that we've done a lot to change the debt profile by replacing high coupon debt with fresh low coupon debt. But most importantly replacing short term debt with very long term debt. So today we have very little exposure to refinancing risk at all. And the other thing is that we make less and less of a distinction between financial and operating leverage. Some of our key competitors have perhaps better interest coverage ratio, but a whole lot more leverage in their operating companies than we do. So I think that there's no single ratio that the rating agencies fixate on. It's a broader set of issues that they look at in terms of our risk management governance and our commitment to using the right kind of criteria for prioritizing business in terms of looking at risk adjusted returns as opposed to simply volume. So the value versus volume is starting to take root in the culture of the company in a way that I think is being noticed by the rating agencies. But the biggest issue with the rating agencies is seeing a longer track record of stability in the group structure. We had to massively overcapitalize the company in the immediate emergence from the Fed assistance, as a result of the fact that there was no track record of the group as it stood. We had sold so many companies in the immediate aftermath that they wanted to see some stability. And so that's why it's very important that we maintain a steady process of simplification, as opposed to any radical abruptness, which is simply attract more capital against the uncertainties. John M. Nadel - Piper Jaffray & Co (Broker): Thank you so much. That's really helpful. And your point on operating versus financial debt is definitely not lost on me. Thank you.

And we'll take our next question from Gary Ransom with Dowling & Partners. Gary Kent Ransom - Dowling & Partners Securities LLC: Good morning. I had a question on UGC. You mentioned PMIERs as being the constraint on capital. But the IAIS has come out with new capital or possible per capital requirements on the HLA that seem to be higher than PMIERs. And I understand that this is not done yet. It still would need to be adopted. But does that higher capital constraint potentially make you think differently about UGC, its capital requirements, and what its long-term future is at AIG?

No, it's interesting. On the one hand what you say is correct. But the other hand they present value reserves. And so it actually becomes a more benign regime than the PMIERs. So PMIERs is the binding constraint, because it does not present value reserves. Gary Kent Ransom - Dowling & Partners Securities LLC: Okay. Thank you. And just a question on Fuji also. I think the way we thought about Fuji and the expenses reduction has been in essence a cliff reduction when the merger actually happens. Are you telling us now that that's more a gradual improvement? And there's still a cliff somewhere out there? Or how would we expect to see that ultimately?

I'll let Kevin take that. Kevin T. Hogan - Executive Vice President; Chief Executive Officer-Consumer Insurance: Yeah. Thanks, Gary. The answer is yes. We have previously characterized the benefits emergence as essentially a cliff after the legal merger date. But we did recognize that our responsibility is to try to extract benefits as early as possible. And we consistently review how it is that we can benefit from the investments that we're making. And we have identified that we can take steps now to begin to extract benefits earlier than what we had previously anticipated. After the legal merger, of course, there will be further benefits, because we will be able to wind down duplication of systems and product ranges. But, in the meantime, we are able to make progress on combining certain marketing activities and management activities. Gary Kent Ransom - Dowling & Partners Securities LLC: Okay. Thank you. And just if I could sneak in one more. On the restructuring charge, is this reaching down into Commercial, Property Casualty people? I mean, is this kind of higher level services that are being affected or is this somehow reorganizing what's going on in the trenches, so to speak?

So as I mentioned earlier, this is really targeting senior leaders, the top 1,400 of the firm. No area of the firm is left untouched. But it's certainly not just simply a pro rata. It's a thoughtful and selective, very targeted approach, which has been worked on for over 9 months with great attention to how the future mix of business will require leaders. I'd like to add that these are leaders that have contributed hugely to the transition of the company. And we just – with a more focused, narrower strategy going forward, we just need fewer generals on the field. And so these are quite talented and highly paid individuals. We just simply need fewer cooks in the kitchen. Gary Kent Ransom - Dowling & Partners Securities LLC: All right. Thank you very much for the answers.

And we'll take our next question from Brian Meredith with UBS.

Yes. Thank you. David or Peter, I wonder if you could quantify what the covariance benefit is that the rating agencies give you from the diversification? Or give us some perspective so we can kind of think about it?

Hang on one second. (55:45 – 55:50) I think it's the S&P – the explicit diversification benefits, I don't know that we have disclosed publicly, but it is quite substantial. It's north of $5 billion in diversification benefits.

Wow. Okay.

Classified that way.

Great. Thanks. And then the second question is, Peter, if I look at your corporate expenses, call it around $1 billion a year, and I think you've kind of referred – you said there's not a lot of people at the holding company. What is that corporate expense? I know some of it's the incentive comp program. So I guess that directly relates down to the subsidiaries. How much of it is truly corporate versus stuff that kind of could be pushed down?

David, why don't you take that?

I'm sorry. Could you clarify that question again?

Yeah. Yeah. So if I look at – when you disclose a corporate expense number.

Yes.

Right? Not including interest. Right? And if I look at that, I know you've run some incentive comp adjustments within that number. I'm just curious what of that is actually true corporate kind of expenses, regulatory, whatever versus stuff that's really related to the operating units?

That is primarily a corporate-related, governance-related activity. There's some amount of regulatory in there, obviously. And there's a portion of finance in there. But we do push down quite a bit of expenses. The IT expenses are on a consumption basis. So it is a mixture. It's not one or the other.

Got you, guys.

I think that – yes. I think philosophically we want to move to a consumption-based transfer pricing mechanism throughout the company. But we are still in a hybrid of historical legacy approaches of allocated cost and historical cost approaches. So it's a transition to a much more market-driven approach internally to provide appropriate incentives to outsource where it makes sense and insource where it makes sense. But I think that's hopefully helpful for you to see where we are.

Yeah. And so I guess you're saying that corporate expense line, there is some that could theoretically, when you do go to a consumption-based approach, that would be pushed down to the operating segments?

On a consumption basis but it is also subject to the same expense reduction initiatives that we've outlined.

Right.

And some of what we did this quarter will in fact be evident in that line.

Great.

And generally speaking we've tried very hard to make sure that our frontline businesses are focused on growing marginal profitability and not confusing marginal with fully loaded, where fixed costs are just arbitrarily allocated. So we've tried to keep fixed cost in more centralized pools, where we have accountable executives to reduce those fixed costs to lower the break-even point for businesses that are subscale but need to grow. We don't want to confuse the strategic signals as to whether it's a unit cost problem or whether there's a lack of scale problem. And that's one of the reasons why we don't just do arbitrary allocation. So that's our approach.

Great. Thank you very much.

Operator, I think we're at the top of the hour. So I'd like to thank everyone for joining us this morning. And we will certainly get back to anyone who still has questions and was remaining in the queue. Thank you.

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