To Our Shareholders, Robert H. Benmosche GLYPH<0>resident and Chief Executive Offi cer 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.  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- 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.  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, Robert H. Benmosche February 29, 2012