AIG's Third Quarter 2001 Core Income Rose 14.1 Percent To $1.92 Billion.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 25, 2001 American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Inc. (AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group ) today reported that its core income increased 14.1 percent to $1.92 billion in the third quarter and 13.9 percent to $5.69 billion for the first nine months of 2001. These results are in line with guidance furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. during AIG's October October: see month. 9 investor conference call. Following is a summary table of third quarter and nine months information (in millions, except per share amounts).
THIRD QUARTER NINE MONTHS
2001 2000(a) Change 2001(a) 2000(a) Change
Core income(b) $1,915.5 $1,678.2 14.1 % $5,687.4 $4,991.5 13.9 %
Net income,
as reported $ 326.8 $1,704.4 (80.8)% $3,496.9 $4,836.9 (27.7)%
PER SHARE RESULTS:
Core income(b) $ 0.72 $ 0.63 13.4 % $ 2.14 $ 1.89 13.2 %
Net income,
as reported $ 0.12 $ 0.65 (81.5)% $ 1.32 $ 1.84 (28.3)%
Average shares
outstanding 2,651.3 2,633.5 2,652.5 2,636.6
(a)Restated to include American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of General Corporation acquired August 29, 2001. (b) Adjusted to exclude the cumulative effect of accounting changes, realized capital gains (losses), acquisition, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related charges, World Trade Center (WTC WTC World Trade Center, see there ) and related losses and the American General home services business, which is being managed as a closed block, net of tax. Revenues in the third quarter of 2001 increased 12.9 percent to $15.73 billion from $13.93 billion in the year-earlier quarter. For the first nine months, revenues totaled $46.0 billion, an increase of 10.2 percent over $41.74 billion in 2000. At September September: see month. 30, 2001, AIG's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: assets and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. are approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $467 billion and $50.8 billion, respectively. The following table outlines the results for the third quarter and nine months (in millions, except ratios):
THIRD QUARTER NINE MONTHS
2001 2000 Change 2001 2000 Change
Core income before
income taxes $2,898.0 $2,549.4 13.7 % $8,542.6 $7,545.7 13.2 %
Acquisition related
charges $1,362.8 0.0 2,016.5 315.4
WTC and related
losses
(AIG's share is
$820 million) 900.0(a) 0.0 900.0(a) 0.0
Home Services
business 95.3 103.3 345.0 316.7
Income before income
taxes, minority
interest, cumulative
effect, realized
capital gains
(losses) $ 730.5 $2,652.7 (72.5)% $5,971.1 $7,547.0 (20.9)%
General Insurance
Combined ratio:
As reported 111.52 96.25 101.06 95.98
Excluding WTC
and related losses 95.65 96.25 95.68 95.98
(a) Includes 100 percent of Transatlantic WTC losses. The following table outlines the impact of foreign exchange rates on property-casualty and life insurance premiums for the third quarter 2001.
Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
Premium Growth in
Original Currency 19.3% 15.3% 9.4%(b) 10.7%(b)
Foreign Exchange
Impact (3.2) (9.6) (4.7) (9.1)
Premium Growth as
Reported in U.S. $ 16.1% 5.7% 4.7% 1.6%
(b)Premium income and other considerations. (See supplementary data information.) AIG Chairman M. R. Greenberg Green·berg , Joseph Harold Born 1915. American linguist. His influential works include Languages of Africa (1966) and Language Universals (1966). Noun 1. said, "The September 11 terrorist attacks were a tragic and wanton Grossly careless or negligent; reckless; malicious. The term wanton implies a reckless disregard for the consequences of one's behavior. A wanton act is one done in heedless disregard for the life, limbs, health, safety, reputation, or property rights of loss of life and destruction of property. AIG lost two of its employees in the World Trade Center, and 24 family members of AIG people perished. Many well-respected insurance industry colleagues and friends also lost their lives, as well as the heroes in uniform who rushed to the scene to offer their help without regard to their own personal safety. While this human tragedy is irreparable ir·rep·a·ra·ble adj. Impossible to repair, rectify, or amend: irreparable harm; irreparable damages. [Middle English, from Old French, from Latin , Americans and freedom loving people around the world are united against terrorism terrorism, the threat or use of violence, often against the civilian population, to achieve political or social ends, to intimidate opponents, or to publicize grievances. . There is no question of our ability to overcome this evil. "In the face of this tragedy, I have never been more proud of our people. The men and women of AIG effectively safeguarded their colleagues and met the most pressing demands of our customers. I am deeply appreciative of their efforts. Because of them, we are moving forward as an even stronger and more united organization and well-equipped to meet the challenges ahead. "AIG's net pretax losses pretax loss A loss reported before tax benefits are considered. from the September 11 terrorist attacks (including our share of majority-owned Transatlantic Holding's losses) are $820 million. While it is impossible for any company to forecast these losses with precision, this is our best estimate. In addition, we have a high level of confidence in the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. that we have in place in connection with these coverages. Approximately 30% is with AAA-rated, 40% with AA-rated and 29% with A-rated companies. Clearly, AIG's strong financial condition is not impacted by these losses. "AIG's core earnings were on target in the third quarter. We achieved solid growth and profitability in our major businesses, including property-casualty, life insurance and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . "In the third quarter, we consolidated American General into AIG. One-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges in connection with this acquisition total $1.36 billion and include direct acquisition costs such as investment banking, legal and accounting fees, as well as restructuring and acquisition related costs that will enhance the effectiveness and efficiency of our combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
"Net income in the third quarter also was impacted by an accounting change. As a result of EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation 99-20, we recorded a $125 million ($81.3 million after tax) decrease in the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain collateralized debt obligations Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, . "Our worldwide property-casualty business had strong premium growth in the third quarter, even as overseas growth was adversely impacted by the stronger U.S. dollar. Our Domestic Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Group again achieved record net premiums written of $2.74 billion. Worldwide general insurance net premiums written in the third quarter of 2001 amounted to $4.98 billion, 16.1 percent ahead of the $4.29 billion in 2000. "Property-casualty pricing has been rising both in the U.S. and in our Foreign Insurance operations. Growing demand and the flight to quality across a wide section of our business is contributing to substantial premium growth in our Domestic Brokerage Group as well as in a number of foreign countries. "Transatlantic Holdings, Inc., whose results are reported through both AIG's Domestic and Foreign General insurance segments, increased premiums in the third quarter but its underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results were impacted by losses from the September 11 terrorist attacks, approximately $200 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern , of which AIG's share is $120 million. "The terrorist attacks have had a significant impact on our industry. The demand for property-casualty insurance has soared as the risk of terrorism has become a widespread and grave grave, space excavated in the earth or rock for the burial of a corpse. When a grave is marked by a protective or memorial structure it is often referred to as a tomb. See burial; funeral customs. concern. Industry capacity to meet this demand is constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. , and there has been a flight to quality as businesses and consumers seek to purchase insurance from the strongest, most stable and capable companies. "AIG has been moving rapidly to meet the urgent demand for coverages that are essential to business and the overall economy. For example, when airlines around the world had their terrorism coverages cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. , AIG companies quickly assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. insurance industry coverage of $850 million in excess of $150 million per airline. We are also working with the Administration and Congress to provide other terrorism coverages. These initiatives demonstrate the strength of AIG and our ability to respond quickly and effectively to industry problems. "HSB (Hue Saturation Brightness) A color space that is similar to the way an artist mixes colors by adding black and white to pure pigments. The pigments are the hues (H), measured in a circle from 0 to 359 degrees (0=red, 60=yellow, 120=green, 180=cyan, 240=blue, Group, Inc., a leading provider, through its Hartford Hartford, city (1990 pop. 139,739), state capital, Hartford co., central Conn., on the west bank of the Connecticut River; settled as Newtown 1635–36 on the site of a Dutch trading post (1633; abandoned 1654), inc. 1784. Steam Boiler boiler, device for generating steam. It consists of two principal parts: the furnace, which provides heat, usually by burning a fuel, and the boiler proper, a device in which the heat changes water into steam. unit, of specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. insurance products, engineering and management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects services, continues to achieve outstanding results. In the third quarter, HSB had solid premium growth with excellent underwriting results. "Our Personal Lines business is also making good progress. In the third quarter we continued to implement the rate increases required to achieve acceptable rates of return. In those markets and lines where we are unable to reprice appropriately, we are reducing or eliminating our market presence. "United Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Corporation, our mortgage guaranty insurance subsidiary is a market leader. Once again in the third quarter it achieved excellent profitability. The reduction in interest rates has increased mortgage refinancing Refinancing An extension and/or increase in amount of existing debt. activity, which has contributed to strong top line growth. "In the third quarter, worldwide life insurance premiums and other considerations amounted to $10.46 billion, including Foreign Life Insurance premiums in U. S. dollars of $5.21 billion (see supplementary data information). Since the September 11 terrorist attacks, our worldwide life insurance business has been experiencing a boost in demand. "The acquisition of American General substantially enhances our presence in the domestic life insurance business and broadens our distribution through multiple channels. While the home services network is being managed as a closed block, it continues to be significantly profitable and generate strong cash flow. As we reported earlier, AIG has consolidated its domestic life business into American General following the closing of the transaction. "The demand for fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. grew rapidly in the third quarter and should continue to do so, as some consumers seek less volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. alternatives to equity markets. American General is the largest distributor of fixed annuities through the bank distribution channel. American General has focused on tax-qualified programs through its wholly-owned subsidiary, VALIC VALIC Variable Annuity Life Insurance Company , while SunAmerica has developed retirement savings programs in the nonqualified arena with a variety of products. "The integration of American General into AIG continues on target. We expect to achieve the $400 million of annual pretax savings that we previously estimated. In addition to cost savings, we are confident that this acquisition will result in significant revenue enhancements revenue enhancement An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits. as a result of new products and cross marketing initiatives. As one example, we already have sold over 6,000 cancer insurance policies through the home services channel since the completion of the transaction on August 29. In the near term, we expect to introduce additional products through this channel. "The combination of AIG, SunAmerica and American General provides us with a very comprehensive product line and the ability to be the first to introduce and market new products when market conditions and opportunities shift between different products and asset classes. "Our Foreign Life operations in the third quarter continued to benefit from a flight to quality in markets with lingering lin·ger v. lin·gered, lin·ger·ing, lin·gers v.intr. 1. To be slow in leaving, especially out of reluctance; tarry. See Synonyms at stay1. 2. economic concerns, such as Japan. Premiums and profits at ALICO ALICO American Life Insurance Company had good growth during the quarter and our new AIG Star Life Insurance Co., Ltd. in Japan performed very well. Also, sales of variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. in Japan increased in the third quarter. "AIG's Financial Services Group had excellent results for the quarter. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 20.8 percent. Our aircraft leasing business, International Lease Finance Corporation (ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) ), continues to be very profitable. Because ILFC has the youngest and most efficient fleet in the industry, its aircraft remain in high demand from its airline clients. "AIG Financial Products Corp. had good results in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in economic activity. The Consumer Finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. of AIG are performing satisfactorily and are benefiting from the addition of American General's domestic consumer finance operation, which had strong third quarter growth. AIG Trading continues to show improvement following the restructuring that we implemented earlier this year. "Going forward, the U.S. and global economy face serious challenges that are exacerbated by the uncertainties posed pose 1 v. posed, pos·ing, pos·es v.intr. 1. To assume or hold a particular position or posture, as in sitting for a portrait. 2. To affect a particular mental attitude. by the terrorist threat. In this environment, business, governments and individuals are seeking the strongest and most capable financial partners. AIG is well positioned, probably as well as, or better than we ever have been in our 83-year history. We have over $50 billion of shareholders equity, at the top of our industry. We have an unrivalled global network, a comprehensive product portfolio and an outstanding team of people who are dedicated to being the first in the market with the best solutions for their customers' most pressing financial requirements. We are firmly committed to putting these fundamental AIG strengths to work on behalf of our shareholders." GENERAL INSURANCE General insurance pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. before realized capital gains (losses) for the third quarter of 2001 excluding World Trade Center and related losses, rose 11.8 percent to $970.5 million, compared to $868.3 million last year. Including these losses, general insurance operating income was $201.5 million. For the first nine months of 2001, general insurance pretax income before realized capital gains (losses) and World Trade Center and related losses rose 9.8 percent to $2.89 billion, compared to $2.63 billion in 2000. Including these losses, operating income was $2.12 billion for the first nine months of 2001. Worldwide general insurance net premiums written in the third quarter of 2001 amounted to $4.98 billion, 16.1 percent ahead of the $4.29 billion in 2000. For the first nine months of 2001, general insurance net premiums written were $14.90 billion, an increase of 14.4 percent, compared to $13.02 billion last year. General insurance net investment income rose 7.2 percent to $724.3 million in the third quarter and 7.4 percent to $2.15 billion in the first nine months of 2001. LIFE INSURANCE AIG's core worldwide life insurance operations had third quarter 2001 pretax income before realized capital gains (losses) of $1.36 billion, up 17.0 percent, compared to $1.16 billion in 2000. For the first nine months of 2001, core life insurance pretax income before realized capital gains (losses) was $3.91 billion, up 15.8 percent, compared to $3.38 billion last year. Core worldwide life insurance results exclude World Trade Center and related losses and American General's home service business. Including World Trade Center and related losses and American General's home service business, AIG's worldwide life insurance operations reported pretax income in the third quarter of 2001 of $1.32 billion, compared to $1.26 billion last year, and $4.13 billion and $3.70 billion in the nine months of 2001 and 2000, respectively. Life insurance premium income and other considerations of $10.46 billion was 4.7 percent above third quarter 2000 premium income and other considerations of $9.99 billion. For the first nine months, premium income and other considerations amounted to $33.67 billion, a gain of 15.0 percent, compared to $29.28 billion in 2000. Life insurance net investment income rose 10.2 percent to $2.94 billion in the third quarter of 2001, compared to $2.66 billion for the same period last year. For the first nine months, net investment income amounted to $8.69 billion, an increase of 11.3 percent, compared to $7.81 billion in 2000. FINANCIAL SERVICES Financial services pretax operating income during the third quarter of 2001 increased 20.8 percent to $490.1 million, compared to $405.8 million in 2000. For the first nine months of 2001, financial services operating income was $1.41 billion, a 19.5 percent increase, compared to $1.18 billion in 2000. ASSET MANAGEMENT Asset management pretax operating income for the third quarter of 2001 amounted to $246.6 million, compared to $281.6 million in 2000. For the first nine months of 2001, pretax operating income was $816.6 million, compared to $831.6 million last year. AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of commercial and industrial insurance in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG's global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. American International Group, Inc.'s common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , as well as the stock exchanges in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Paris, Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. and Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. . Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain forward-looking statements. Please refer to AIG's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June June: see month. 30, 2001, as supplemented by the Current Report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. dated October 9, 2001 which restates AIG's financial statements to reflect the acquisition of American General Corporation, and its past and future filings and reports filed with the United States Securities and Exchange Commission, for a description of the business environment in which AIG operates and the important factors that may affect its business. AIG is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
American International Group, Inc.
Financial Highlights
(in thousands, except per share amounts)
Nine Months Ended September 30,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written $ 14,903,184 $ 13,023,420 14.4 %
Net Premiums Earned 14,308,992 12,621,333 13.4
Adjusted Underwriting Profit(Loss) (27,127) 632,118 -
Adjusted Underwriting Profit
excluding WTC Losses 741,873 632,118 17.4
Net Investment Income 2,147,189 1,998,477 7.4
Income before Realized
Capital Gains (Losses) 2,120,062 2,630,595 (19.4)
Income before Realized
Capital Gains (Losses)
excluding WTC Losses 2,889,062 2,630,595 9.8
Realized Capital Gains (Losses) (147,120) 42,321 -
Operating Income (includes
WTC Losses) $ 1,972,942 $ 2,672,916 (26.2)%
Loss Ratio 79.82 74.95
Expense Ratio 21.24 21.03
Combined Ratio 101.06 95.98
Combined Ratio excluding
WTC Losses 95.68 95.98
Life Insurance Operations:
Premium Income and Other
Considerations (b) $ 33,671,407 $ 29,277,073 15.0 %
Net Investment Income 8,687,450 7,806,627 11.3
Income before Realized
Capital Losses 4,127,773 3,695,580 11.7
Income before Realized
Capital Losses excluding
WTC Losses 4,258,773 3,695,580 15.2
Realized Capital Losses (4,233) (123,378) -
Operating Income (includes
WTC Losses) 4,123,540 3,572,202 15.4
Financial Services Operating Income 1,410,575 1,180,057 19.5
Asset Management Operating Income 816,591 831,602 (1.8)
Other Realized Capital Losses (397,848) (139,654) -
Other Income (Deductions) - net (487,347) (475,396) -
Acquisition, Restructuring and
Related Charges (2,016,529) (315,421) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 5,421,924 7,326,306 (26.0)
Income Taxes 1,535,129 2,183,708 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 3,886,795 5,142,598 (24.4)
Minority Interest, after tax -
Operating Income (250,580) (295,623) -
Minority Interest, after tax -
Capital Gains (3,064) (10,091) -
Income before Cumulative Effect
of Accounting Changes 3,633,151 4,836,884 (24.9)
Cumulative Effect of Accounting
Changes, net of tax (c) (136,203) 0 -
Net Income, as reported 3,496,948 4,836,884 (27.7)
Income, as adjusted excluding
Acquisition, Restructuring
and Related Charges (d) 5,378,721 5,197,395 3.5
Core Income (e) $ 5,687,439 $ 4,991,500 13.9 %
Per Share - Diluted:
Net Income, as reported $ 1.32 $ 1.84 (28.3)%
Income, as adjusted excluding
Acquisition, Restructuring
and Related Charges (d) 2.03 1.97 3.0
Core Income (e) $ 2.14 $ 1.89 13.2 %
Average Diluted Common
Shares Outstanding 2,652,501 2,636,592
Three Months Ended September 30,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written $ 4,983,284 $ 4,293,706 16.1 %
Net Premiums Earned 4,845,179 4,112,496 17.8
Adjusted Underwriting Profit(Loss) (522,837) 192,732 -
Adjusted Underwriting Profit
excluding WTC Losses 246,163 192,732 27.7
Net Investment Income 724,349 675,566 7.2
Income before Realized
Capital Gains (Losses) 201,512 868,298 (76.8)
Income before Realized
Capital Gains (Losses)
excluding WTC Losses 970,512 868,298 11.8
Realized Capital Gains (Losses) (89,419) 33,283 -
Operating Income (includes
WTC Losses) $ 112,093 $ 901,581 (87.6)%
Loss Ratio 89.37 74.56
Expense Ratio 22.15 21.69
Combined Ratio 111.52 96.25
Combined Ratio excluding
WTC Losses 95.65 96.25
Life Insurance Operations:
Premium Income and Other
Considerations (b) $ 10,461,224 $ 9,986,941 4.7 %
Net Investment Income 2,935,516 2,664,586 10.2
Income before Realized
Capital Gains (Losses) 1,320,269 1,262,752 4.6
Income before Realized
Capital Gains (Losses)
excluding WTC Losses 1,451,269 1,262,752 14.9
Realized Capital Gains (Losses) 16,668 (65,187) -
Operating Income (includes
WTC Losses) 1,336,937 1,197,565 11.6
Financial Services Operating Income 490,080 405,825 20.8
Asset Management Operating Income 246,607 281,582 (12.4)
Other Realized Capital Losses (41,010) (24,284) -
Other Income (Deductions) - net (165,176) (165,791) -
Acquisition, Restructuring and
Related Charges (1,362,783) 0 -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 616,748 2,596,478 (76.2)
Income Taxes 163,388 784,510 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 453,360 1,811,968 (75.0)
Minority Interest, after tax -
Operating Income (43,843) (104,624) -
Minority Interest, after tax -
Capital Gains (1,517) (2,940) -
Income before Cumulative Effect
of Accounting Changes 408,000 1,704,404 (76.1)
Cumulative Effect of Accounting
Changes, net of tax (c) (81,250) 0 -
Net Income, as reported 326,750 1,704,404 (80.8)
Income, as adjusted excluding
Acquisition, Restructuring
and Related Charges (d) 1,444,467 1,745,320 (17.2)
Core Income (e) $ 1,915,535 $ 1,678,165 14.1 %
Per Share - Diluted:
Net Income, as reported $ 0.12 $ 0.65 (81.5)%
Income, as adjusted excluding
Acquisition, Restructuring
and Related Charges (d) 0.55 0.66 (16.7)
Core Income (e) $ 0.72 $ 0.63 13.4 %
Average Diluted Common
Shares Outstanding 2,651,303 2,633,474
(a)Restated to include American General Corporation acquired August 29, 2001. (b)GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). premium income was $4,872,986 and $14,065,998 for the third quarter and nine months 2001, respectively, compared to $4,139,851 and $12,632,804 for the third quarter and nine months 2000, respectively. (c)Represents the cumulative effect of an accounting change, net of tax, related to FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 133 "Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. Activities" and EITF 99-20 "Recognition of Interest Income and Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. on Purchased and Retained Beneficial Interests in Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. Financial Assets Financial assets Claims on real assets. ". (d)Adjusted to exclude the cumulative effect of accounting changes and realized capital gains (losses), net of taxes. (e)Adjusted to exclude the cumulative effect of accounting changes, realized capital gains (losses), acquisition, restructuring and related charges, World Trade Center and related losses and the American General home services business, which is being managed as a closed block, net of tax.
American International Group, Inc.
Supplementary Data
(in thousands)
Nine Months Ended September 30,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written
Brokerage Division $ 8,212,119 $ 6,409,443 28.1 %
Personal Lines 1,858,499 1,867,798 (0.5)
Mortgage Guaranty 363,597 335,327 8.4
Total Domestic General 10,434,215 8,612,568 21.2
Foreign General (b) 4,468,969 4,410,852 1.3
Total 14,903,184 13,023,420 14.4
Operating Income (c)(d)
Brokerage Division 1,658,086 1,498,732 10.6
Personal Lines 48,176 82,290 (41.5)
Mortgage Guaranty 321,165 273,640 17.4
Intercompany Adjustments 17,485 63,588 -
Total Domestic General 2,044,912 1,918,250 6.6
Foreign General 844,150 712,345 18.5
Total $ 2,889,062 $ 2,630,595 9.8 %
Combined Ratio:(d)
Brokerage Division 98.48 99.58
Personal Lines 102.49 99.18
Mortgage Guaranty 33.11 39.52
Total Domestic General 96.86 97.08
Foreign General 92.68 93.83
Losses and Loss Expenses Paid $ 10,617,853 $ 9,449,483 12.4 %
Change in Loss and LAE Reserve 803,006 10,247 -
Losses and Loss Expenses Incurred 11,420,859 9,459,730 20.7
Net Loss and LAE Reserve 25,754,602 24,609,919 4.7
GAAP Underwriting Profit (d) 741,873 632,118 17.4
Life Insurance Operations:
Premium Income and Other Considerations
Domestic
Life (e) 3,342,453 3,212,838 4.0
Annuities, Pension and
Investment Products (f) 15,347,897 11,066,198 38.7
Total 18,690,350 14,279,036 30.9
Foreign (g)
Life (e) 10,982,583 9,379,505 17.1
Annuities, Pension and
Investment Products (f) 3,998,474 5,618,532 (28.8)
Total 14,981,057 14,998,037 (0.1)
Net Investment Income
Domestic 6,025,656 5,476,890 10.0
Foreign 2,661,794 2,329,737 14.3
Total 8,687,450 7,806,627 11.3
Operating Income (c)(d)
Domestic
Other than Home Services 1,929,374 1,733,402 11.3
Home Services 345,050 316,762 8.9
Foreign 1,984,349 1,645,416 20.6
Total 4,258,773 3,695,580 15.2
Financial Services:
Revenues
International Lease
Finance Corp. 1,936,937 1,786,132 8.4
AIG Financial Products Corp. 802,402 711,250 12.8
Consumer Finance Group 1,903,143 1,717,914 10.8
AIG Trading Group Inc. 107,835 190,199 (43.3)
Other (22,244) (95,443) -
Total 4,728,073 4,310,052 9.7
Operating Income
International Lease
Finance Corp. 530,952 476,406 11.4
AIG Financial Products Corp. 524,493 432,793 21.2
Consumer Finance Group 385,695 294,225 31.1
AIG Trading Group Inc. 21,016 40,577 (48.2)
Other (h) (51,581) (63,944) -
Total $ 1,410,575 $ 1,180,057 19.5 %
Effective Tax Rates:
Excluding Capital Gains (Losses) 28.92% 29.96%
Capital Gains (Losses) Alone 34.87% 35.02%
As Reported 28.31% 29.81%
Three Months Ended September 30,
2001 2000(a) Change
General Insurance Operations:
Net Premiums Written
Brokerage Division $ 2,744,380 $ 2,120,030 29.5 %
Personal Lines 612,011 634,876 (3.6)
Mortgage Guaranty 124,634 116,999 6.5
Total Domestic General 3,481,025 2,871,905 21.2
Foreign General (b) 1,502,259 1,421,801 5.7
Total 4,983,284 4,293,706 16.1
Operating Income (c)(d)
Brokerage Division 574,128 524,347 9.5
Personal Lines 29,004 17,581 65.0
Mortgage Guaranty 108,406 93,718 15.7
Intercompany Adjustments 5,827 22,372 -
Total Domestic General 717,365 658,018 9.0
Foreign General 253,147 210,280 20.4
Total $ 970,512 $ 868,298 11.8 %
Combined Ratio: (d)
Brokerage Division 98.49 98.55
Personal Lines 99.58 101.30
Mortgage Guaranty 33.15 40.82
Total Domestic General 96.35 96.68
Foreign General 94.03 95.77
Losses and Loss Expenses Paid $ 3,639,005 $ 3,125,031 16.4 %
Change in Loss and LAE Reserve 691,217 (58,939) -
Losses and Loss Expenses Incurred 4,330,222 3,066,092 41.2
Net Loss and LAE Reserve 25,754,602 24,609,919 4.7
GAAP Underwriting Profit (d) 246,163 192,732 27.7
Life Insurance Operations:
Premium Income and Other Considerations
Domestic
Life (e) 969,713 1,039,941 (6.8)
Annuities, Pension and
Investment Products (f) 4,284,804 3,820,370 12.2
Total 5,254,517 4,860,311 8.1
Foreign (g)
Life (e) 3,762,437 3,050,219 23.3
Annuities, Pension and
Investment Products (f) 1,444,270 2,076,411 (30.4)
Total 5,206,707 5,126,630 1.6
Net Investment Income
Domestic 2,008,576 1,866,923 7.6
Foreign 926,940 797,663 16.2
Total 2,935,516 2,664,586 10.2
Operating Income (c)(d)
Domestic
Other than Home Services 667,384 595,580 12.1
Home Services 95,280 103,315 (7.8)
Foreign 688,605 563,857 22.1
Total 1,451,269 1,262,752 14.9
Financial Services:
Revenues
International Lease
Finance Corp. 658,744 629,342 4.7
AIG Financial Products Corp. 283,135 260,324 8.8
Consumer Finance Group 652,853 595,548 9.6
AIG Trading Group Inc. 49,084 55,369 (11.4)
Other (11,492) (32,494) -
Total 1,632,324 1,508,089 8.2
Operating Income
International Lease
Finance Corp. 186,996 166,474 12.3
AIG Financial Products Corp. 170,411 154,218 10.5
Consumer Finance Group 148,998 101,299 47.1
AIG Trading Group Inc. 7,111 5,351 32.9
Other (h) (23,436) (21,517) -
Total $ 490,080 $ 405,825 20.8 %
Effective Tax Rates:
Excluding Capital Gains (Losses) 27.66% 30.26%
Capital Gains (Losses) Alone 34.01% 32.41%
As Reported 26.49% 30.21%
(a)Restated to include American General Corporation acquired August 29, 2001. (b)The growth in foreign net premiums written in original currency was 15.3 percent and 10.4 percent for the third quarter and nine months of 2001, respectively. (c)Operating income excludes realized capital gains (losses). (d)Excludes World Trade Center and related losses. (e)Includes traditional life, interest sensitive and variable life products. (f)Quarterly fluctuations in the sale of investment products do not represent a trend for the year. (g)The growth in foreign life premiums in original currency was 34.7 percent in the quarter and 26.7 percent for the nine months. Foreign annuities, pension and investment products in original currency declined 24.6 percent for the quarter and 22.2 percent for the nine months, impacted by a decline in sales of tax-driven Guaranteed Income Bonds in the U.K. (h)Includes Other Financial Services Companies and Intercompany Reclassifications. |
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