The Evolution

of Providing

Quality Employee

Benefits

James Galli Chief Marketing Officer

Voluntary BenefitsJune 12, 2004

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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