General Meeting 7

October 30, 2012

Meeting Agenda
Market Update Introduction to Bonds Stock Pitch Breakout Session Announcements

Market Update
Economics Markets Portfolio Career

TSD Important Numbers

GDP

HPI

Econ Numbers Continued

Consumer Sentiment

Markets
Closed until tomorrow

Portfolio
ABT BAC BUD IBM(2) KMI

Careers
BAML UBS

Bonds

Types of Debt Financing

Private Placement Syndicated Loan Public Debt

Capital Structure
Senior Secured Debt1st Lien Debt Secured Debt2nd Lien Priority of Payment in Bankruptcy Anticipated Yield Increases

Subordinated Debt
Hybrids

Preferred Equity
Equity Common Equity

Application Of Losses

Risk Increases

Historical Annual Performance

12 mo. Stock Price Chart

5 yr. Stock Price Chart

Rumors: SVU is an LBO Target

Accelerated Plan

Typical Parts of A Modern Bond

Transaction Overview

Transaction Overview

Stock Pitch; October 30, 2012

Order of Operations

Company Overview Market Overview Valuation Risks Technicals Investment Thesis

Company Overview

in Billions (USD)

Current Price: 35.00 P/E: 3.9 PEG ratio: 0.5 Book Value: 0.5
Revenue History
Dec-09 50 0 Dec-10 Dec-11 Revenue Jun-12

100

Operating Earnings Per Sahre

AIG Operating earnings per share

6 Full Year 2011 4 2 0 Full Year 2012 Full Year 2013 Full Year 2014

Chartis Insurance P&C Business

UnitedGuaranty Mortgage Guaranty

SunAmerica Life Insurance

Government Ownership

Value of government equity stake stood at 65% at start of 2012

AIG

has bought back 13 billion worth of stock Government has already made a 12.4 billion dollar profit in AIG28.50 price

Current government equity stake at 16%

Valued

at 9.6 billion AIG expected to buy back all of this with sale of AIA stake (6 billion valuation) and ILFC assets (78 billion valuation)

Very Healthy Balance Sheet

TAKEAWAY: Most insurance companies trade at book valueAIG trading at 0.5 Book Value Strong LiquidityNot going to face capital requirement calls

Valuation Discounted Cash Flow

Fair Value of 42 based on DCF Discount of 20% based on Conservative estimates

Valuation - Comparables

Technicals

Risks

Catastrophes (CAT losses)

Japan earthquake 2011 However, AIG hedged around the world for CAT lossesReinsurance
Dodd/Frank bill However, AIG is no longer a bankless regulation Eurozone crisis US fiscal cliff Potential Slowdowns in emerging markets (China) However, AIG has a broad asset mixDiversity

Regulations

World economic uncertainty

Investment Thesis

Purchase at current prices below 35 (Buy and Hold) Little Financial Exposure in our USIT portfolio Short-term catalysts (6 months to 1yr)
Continued Asset Sales (ILFC IPO, AIA stake sale) US government complete exit of AIG Dividends starting in 2013

Long-term catalysts (1-3 yrs)

Rising interest rates Strong exposure to emerging markets (LatAm, Asia) Strengthening global insurance premiums

TRUE VALUE

Thanks for your time

Questions?

Appendix Financial Products Exposure

Pitch Schedule
Date 11-Sep 18-Sep 25-Sep 2-Oct 9-Oct 16-Oct 23-Oct 30-Oct 6-Nov 13-Nov 20-Nov 27-Nov 4-Dec Name SCG Directors John C Olympics John T John C Billy Stephen Ryan Angela Finance Panel Thanksgiving Ali John T

Clip of the week

http://www.youtube.com/watch?v=MgOq9pB kY0I&feature=g-yt http://www.youtube.com/watch?v=wlvQW7tI 4aE&feature=g-yt

Announcements
Dont forget to vote next Tuesday! Kickoff for McCombs Case Competition is tomorrow