The Evolution of Providing Quality Employee Benefits James Galli Chief Marketing Officer Voluntary Benefits June 12, 2004.

The Evolution

of Providing

Quality Employee

Benefits

James Galli Chief Marketing Officer

Voluntary BenefitsJune 12, 2004

22

Agenda

Today’s Business Challenges

Evolution of the Benefit Selection Process

Employer and Employee Benefit Needs

Voluntary Benefits Value Proposition

AIG - Company Highlights

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Business Challenges

Diminished profits and soaring expenses Increased global competition Increased utilization of outsourcing Pervasive productivity issues Double-digit increases in health care costs Attracting and retaining top talent

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Early to Mid 20th Century

Industrial economy/unionization Employer paid health/welfare: Employer as

purchaser Standardized benefits/communication Employee entitlement/loyalty Healthcare costs manageable Emergence of Voluntary Benefit Carriers

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Late 20th Century

Service economy Employees as “commodity” Demographic shifts Rising costs/shifting by employer Benefit choices more complex Standardized employer communication Employee perception of value declines Emergence of voluntary benefits in small groups

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21st Century and Beyond

Employer & employee cost sharing Continued demographic shift/aging population &

over-utilization of healthcare system Healthcare costs skyrocket Traditional employer paid ancillary become

voluntary Voluntary Benefits in middle-market Employer “facilitator” rather than purchaser

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The Paradigm Shift

The Employer as Purchaser

The Employer as Facilitator

1950 2020Perception of Control

The role employers play in the benefits process:

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The Role of Facilitator

Screen carriers and benefits Benefit choices Delivery options Ease of implementation Cost Service

Facilitate communication process Provide “mechanism”

Payroll deduction Administration Service

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The Employee, now the Purchaser

New role in benefits process

Have increased need for protection

Need enhanced education and communication

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Employee Needs: The Total Solution

Access

Choice

Convenience

Affordability

Portability

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Employer Needs

Choice - portfolio of quality products

Facilitation - depth and breadth of communication, full-service enrollment

Service - ease of administration, ongoing support

Value - fair price, complimentary services

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AIG American GeneralVoluntary Benefits Value Proposition

“We provide our customers with innovative benefits solutions, effective communication and enrollment programs, and turnkey administrative services - from one of the most highly rated and trusted names in the industry”

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Voluntary Benefits Value Proposition

A consultative approach to employer benefits Full-service enrollment and communication

programs Customer-focused service and administration Innovative benefits solutions featuring:

Competitive, affordable products that meet customer needs

Unique program features that enhance value to the customer

AIG American General

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Voluntary Benefits Facilitate Fulfillment of Employees’ Long-Term Needs

Guarantee of income protection

Protection against loss of life

Protection from uncovered medical expenses

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Kenya • Nigeria • South Africa • Uganda • Zimbabwe • Australia • New Zealand • Papua New Guinea • Azerbaijam • Bulgaria • Czech Republic • Estonia • Finland • Hungary • Kazakhstan • Latvia • Lithuania • Poland • Romania • Russia • Slovakia • Ukraine • Uzbekistan • China • Austria • Belgium • Denmark • France • Germany • Greece • Italy • Liechtenstein • Luxembourg • Norway • Portugal • Netherlands • Spain • Sweden • Switzerland • Japan • South Korea • Argentina • Aruba • Bolivia • Brazil • Chile • Columbia • Ecuador • El Salvador • Guatemala • Honduras • Jamaica • Mexico • Panama • Paraguay • Peru • Puerto Rico • Trinidad, W.I. • Uruguay • Venezuela • Curacao • Canada • United States • Bangladesh

130 Countries

$81 Billion in Revenue*

Total Assets $724 Billion**

Shareholders’ Equity $77 Billion**

American International Group, Inc. (AIG)

* Year-ended 12/31/03** As of 3/31/04

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AIG: A Snapshot

World’s leading international insurance and financial services organization - depth and breadth of resources and solutions to serve clients’ needs

Highest financial ratings - unsurpassed financial strength provides the foundation for reliability, consistency and responsibility

#3 in Forbes 2003 “Global 2000” ranking of the world’s largest public corporations (based on a composite ranking of sales, profits, assets and market value)

#10 on the 2003 Fortune 500 list of the largest U.S. corporations, based on revenue

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AIG: A Snapshot

World’s largest writer of life insurance - unparalleled experience servicing commercial, institutional and individual customers

50 million customers - Eighty-five year legacy spent fostering long-term relationships

Broad product portfolio - innovative and comprehensive array of products to meet policyholders’ in all stages of their lives

One of only 8 AAA-rated companies

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Source: Moody’s

Aaa-rated U.S. Corporations (Credit Ratings)

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AIG

Our Strength + Our Focus + Our Commitment = Your Future