The Evolution of Providing Quality Employee Benefits

1. The Evolutionof ProvidingQuality EmployeeBenefits James Galli Chief Marketing Officer Voluntary Benefits June 12, 2004

2. Agenda • Today’s Business Challenges • Evolution of the Benefit Selection Process • Employer and Employee Benefit Needs • Voluntary Benefits Value Proposition • AIG - Company Highlights

3. 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

4. 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

5. 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

6. 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

7. The Paradigm Shift The Employer as Purchaser The Employer as Facilitator The role employers play in the benefits process: 1950 2020 Perception of Control

8. 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

9. The Employee, now the Purchaser • New role in benefits process • Have increased need for protection • Need enhanced education and communication

10. Employee Needs: The Total Solution • Access • Choice • Convenience • Affordability • Portability

11. 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

12. 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”

13. Voluntary Benefits Value Proposition AIG American General • 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

14. Voluntary Benefits Facilitate Fulfillment of Employees’ Long-Term Needs • Guarantee of income protection • Protection against loss of life • Protection from uncovered medical expenses

15. American International Group, Inc. (AIG) 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** * Year-ended 12/31/03 ** As of 3/31/04

16. 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

17. 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

18. Aaa-rated U.S. Corporations (Credit Ratings) Source: Moody’s

19. AIG Our Strength + Our Focus + Our Commitment = Your Future