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