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## To Our Shareholders, 

At AIG, the crisis is over. We are well on our way to achieving a complete turnaround, a feat that many believed, even a year ago, was impossible. 

Thanks to the hard work of our employees and our partners in the U.S. government, 2011 was the year that we refocused on becoming the world’s most valuable insurance company. For the second year in a row we posted a full- year profi t and demonstrated sustain- able earnings. Even stripping out gains from the release of our deferred tax asset valuation allowance, AIG earned more than $1.2 billion in 2011. Today, we have the largest shareholders’ equity of any insurance company in the world. 

2011 started with a bang. In partnership with the U.S. govern- ment, we recapitalized the company, which included repaying the Federal Reserve Bank of New York in full and exchanging various forms of govern- ment support into AIG common shares. 

Throughout the year, we continued to shrink our obligations — all told we paid the U.S. government a total of approximately $45 billion in 2011 to, among other things, repay the U.S. Treasury’s liquidation preference in one special purpose vehicle (SPV) connected to our restructuring and significantly reduce the balance in another. Not bad for a company that some believed would sink quietly into U.S. business history. 

Today, AIG is no longer in debt to the U.S. government; rather, the U.S. Treasury is our majority shareholder — and in May we sold 100 million of com- mon shares in a public offering while, at the same time, facilitating the U.S. Treasury to profitably sell 200 million of its AIG shares. We remain committed to creating shareholder value so that the U.S. Treasury can continue to profitably sell off its AIG shares. 

Our businesses are on the right track. Across the board, customer loyalty is high, sales are strong, and retention rates are robust. We reorga- nized Chartis, our property and casualty division, and its new global structure better aligns consumer and commercial capabilities with the needs of custom- ers. SunAmerica Financial Group, our U.S. life and retirement business, is an industry leader helping custom- ers meet the increasing challenges of financial and retirement security. United Guaranty, our mortgage insurance busi- ness, became the marketplace leader in U.S. mortgage insurance in 2011 and modifi ed mortgages to help keep about 40,000 families in their homes. And International Lease Finance Corpora- tion, our aircraft lessor, continued to enhance its funding flexibility and executed strategies, particularly with the acquisition of AeroTurbine, that will help maximize the value of its fl eet. 

W e  r m a i n  h g h l y  f o c u s e d  o n  a d - hering to the highest standards of risk management and corporate governance, and we are preparing for the enhanced regulatory framework in the U.S. More people across AIG are directly accountable for key risk and business decisions and performance than in the past. We manage risks better and apply performance metrics that enable us to see more clearly and address evolving market conditions. 

For 2012, we will continue to focus on these basics. Our over-arching aspirational goals by the end of 2015 are to achieve a return on equity above 10 percent and annual earnings per share growth in the mid-teens. To help achieve these goals, in 2012, we will continue to profitably grow our core global insurance businesses, focus on achieving higher risk-adjusted invest- 

ment returns by redeploying investment assets, manage our capital better, and reduce costs. Recently, we began execut- ing on our Board of Directors’ authori- zation to repurchase up to $1 billion of AIG common stock. 

Let me conclude with a few words about our employees. Ever since I joined AIG I have emphasized that our people set this company apart. Time and again I have been struck by their unrelenting focus on keeping our promises, which is what an insurance company is all about. 

O u r  p e o p l  r e s p o n d e  p r o f e s i o n - ally and personally in a year unprec- edented for its number and scope of natural disasters. Whether it was the earthquake and subsequent tsunami in Japan, the floods in Thailand, the floods in Australia, the earthquake in New Zealand, or the tornadoes and hurricanes in the United States — we responded powerfully to the needs of our customers, our agents, our colleagues, and their families. In 2011, we paid some $27.5 billion in claims, and our employees and AIG donated more than $3.4 million to help with relief efforts in Japan and New Zealand. Sadly, we lost one employee in the Japan disaster and our hearts go out to all the victims of these terrible events. 

A t  A I G ,  w e i l  c o n t i u e  t o  d e l i v r on our promises — and as a company whose progress refl ects a certain stub- bornness on the part of its employees and partners. We are here because we just don’t give up. We thank you for your confi dence in us as we continue to drive AIG forward. Sincerely, 

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