AIG Files First Quarter 2005 Quarterly Report on Form 10-Q and Reports First Quarter 2005 Net Income of $3.68 Billion.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 ) announced today that it has filed its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the period ending March 31, 2005 with the Securities and Exchange Commission. Additionally, AIG filed a Form 10-Q/A restating first quarter results for the years 2004 and 2003. First quarter 2005 net income was $3.68 billion or $1.40 per share, compared to $2.56 billion or $0.97 per share in the first quarter of 2004. First quarter 2005 adjusted net income, as defined below, was $3.19 billion or $1.21 per share, compared to $2.66 billion or $1.01 per share in the first quarter of 2004. 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. at March 31, 2005 was $82.68 billion compared to $80.61 billion at December December: see month. 31, 2004. Consolidated assets increased to $828.26 billion compared to $798.66 billion at December 31, 2004.
FIRST QUARTER
(in millions, except per share amounts)
Per Share*
----------
2005 2004 Change 2005 2004 Change
(Restated) (Restated)
Net income $3,684 $2,556 44.1% $1.40 $0.97 44.3%
Realized capital
gains (losses),
net of tax** 47 83 - 0.02 0.03 -
Cumulative
effect of an
accounting
change, net of
tax*** - (144) - - (0.06) -
FAS 133 gains
(losses),
excluding
realized
capital gains
(losses), net
of tax 450 (39) - 0.17 (0.01) -
Adjusted net
income**** $3,187 $2,656 20.0% $1.21 $1.01 19.8%
Average shares
outstanding 2,624 2,642
* Assumes conversion of contingently convertible bonds due to the
adoption of EITF Issue No. 04-8 "Accounting Issues Related to
Certain Features of Contingently Convertible Debt and the Effect
on Diluted Earnings per Share" of $3 million, net of tax, for
both first quarter 2005 and 2004.
** Includes a $58 million gain and a $52 million loss, net of tax,
attributable to FAS 133 "Accounting for Derivative Instruments
and Hedging Activities", in the first quarters of 2005 and 2004,
respectively.
*** Represents the cumulative effect of an accounting change, net of
tax, related to SOP 03-1 "Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts
and for Separate Accounts".
**** Excludes realized capital gains (losses) which includes pricing
net investment gains, cumulative effect of an accounting change
and FAS 133, net of tax.
Commenting on these results, AIG President and Chief Executive Officer Martin J. Sullivan Martin J. Sullivan (born 1955 in Essex, England), is President and Chief Executive Officer of American International Group, Inc. Educated at the Sydney Russell School in Dagenham, Essex, in January 2007, he donated £50,000 to the school saying: said, "This was a good quarter for AIG, with all four of our business segments contributing to the growth in net income. These results are a testament to the strength and diversity of our global franchise. "In our General Insurance operations, the combined ratio was an excellent 93.41. Net premiums written increased at a rate of 7.6 percent, reflecting our efforts to maintain pricing discipline and careful risk selection in a moderating rate environment. The Domestic Brokerage Group and Foreign General had strong growth in 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. and recorded combined ratios of 98.33 and 81.66, respectively. DBG's results included $118 million of additional losses incurred resulting from increased labor and material costs related to the 2004 Florida hurricanes The List of Florida hurricanes encompasses 470 tropical or subtropical cyclones that affected the state of Florida. More storms hit Florida than any other U.S. state, and since 1851 only eighteen hurricane seasons passed without a storm impacting the state. . The outstanding cash flow from prior years generated excellent returns in net investment income. General insurance cash flow remained robust at $3.54 billion in the first quarter. "Operating income from Life Insurance & Retirement Services rose 24.5 percent in the quarter, reflecting strong growth and profitability in our overseas operations. Japan and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. had excellent results, with first year premiums growing 19.3 and 39.3 percent, respectively. Domestic Life Insurance results reflect the effectiveness of AIG 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's product and distribution strategies, as term life, universal life and structured settlement sales outpaced the industry. However, our home service and group life and health businesses continue to perform below our expectations. In addition, the Domestic Retirement Services business was affected by challenging market conditions. The first quarter sales environment for individual variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. was affected by the weak domestic equity market performance, while the flattening
The flattening, ellipticity, or oblateness of an oblate spheroid is the "squashing" of the spheroid's pole, down towards its equator. yield curve and competitive fixed income alternatives affected fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. sales. The regulatory investigations and resulting negative publicity have also caused some producers to be more cautious placing business with our Domestic Life Insurance & Retirement Services operations. "In 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. , the improved global aviation market and firming lease rates resulted in a 19.4 percent increase in operating income, excluding the effect of FAS 133, at ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) . Capital Markets operating income, excluding the effect of FAS 133, increased 15.4 percent with good results from commodity-index, foreign exchange and interest rate linked products. Consumer Finance had excellent results both domestically and internationally with operating income up 26.2 percent. "Asset Management operating income, excluding the effect of FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46R, increased by 29.2 percent in the first quarter as a result of its strong global product portfolio. Third party assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. increased to over $55 billion from approximately $53 billion at year end 2004. "Looking forward, although commercial property-casualty rates have softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. both 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. and internationally, terms and conditions have remained largely unchanged. We continue to see growth opportunities in General Insurance while maintaining 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. discipline. Although market conditions in certain of our Domestic Life & Retirement Services businesses continue to be challenging, overall our global Life Insurance & Retirement Services business segment is positioned for growth in many of our markets, with an array of products distributed through multiple channels. In Financial Services, we expect that our growing Consumer Finance business in the U.S. and around the world will continue to perform well. The aircraft leasing business is experiencing continued strong demand for its modern, fuel efficient fleet from Asian, Middle Eastern and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. airlines. Capital Markets will continue to be affected by the change in credit ratings, as well as the reduced future earnings from certain transactions unwound un·wound v. Past tense and past participle of unwind. unwound unwind as a result of a tax law change in the United Kingdom, and will be subject to continuing volatility as a result of FAS 133 accounting. Asset Management has growth strategies for several asset classes and regions throughout the world. Overall, our business will benefit from our continued strong focus on product innovation to meet customer needs, underwriting discipline, prudent expense management and the experience and dedication of our employees around the world." Additional supplementary financial data is available in the Quarterly Financials page of the Investor Information section of www.aigcorporate.com. A conference call for the investment community will be held tomorrow, Wednesday Wednesday: see week. , June June: see month. 29, 2005 at 8:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The call will be broadcast live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.aigwebcast.com. A replay will be archived at the same URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. through Wednesday, July July: see month. 13, 2005. This press release contains 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. . Please refer to the AIG Quarterly Report on Form 10-Q for the period ended March 31, 2005 and AIG's past and future filings and reports filed with the 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 obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. American International Group, Inc. (AIG), world leaders For a list of heads of state, see . World leaders is a MMORPG. The game involves creating a state, joining an alliance and going into war. It is mostly played by players from Israel, China, USA, Britain, Brazil and Saudi-Arabia. in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. . In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed in the U.S. 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. and ArcaEx ArcaEx See Archipelago. , 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 and Tokyo.
American International Group, Inc.
Financial Highlights*
(in millions, except per share amounts)
Three Months Ended March 31,
2005 2004(a)
(Restated) Change
----------- ----------- ----------
General Insurance Operations:
Net Premiums Written $ 10,793 $ 10,035 7.6 %
Net Premiums Earned 10,138 9,093 11.5
Underwriting Profit 572 459 24.6
Net Investment Income 1,033 797 29.6
Income before Realized Capital
Gains (Losses) 1,605 1,256 27.8
Realized Capital Gains (Losses) 92 185 -
Operating Income $ 1,697 $ 1,441 17.8 %
--------------------------------------------------------------------
Loss Ratio 71.73 73.77
Expense Ratio 21.68 21.07
Combined Ratio 93.41 94.84
--------------------------------------------------------------------
Life Insurance & Retirement Services
Operations:
GAAP Premiums $ 7,544 $ 6,889 9.5 %
Net Investment Income 4,259 3,778 12.7
Pricing Net Investment Gains (b) 81 78 3.8
Income before Realized Capital
Gains (Losses) 2,287 2,007 14.0
Realized Capital Gains
(Losses) (b) (64) (222) -
Operating Income 2,223 1,785 24.5
Financial Services Operations:
Operating Income excluding FAS
133 579 488 18.6
FAS 133 (c) 464 57 -
Operating Income 1,043 545 91.4
Asset Management
Operating Income (d) 526 353 49.0
Other Realized Capital
Gains (Losses) (21) 74 -
Other Income (Deductions) - net (25) (259) -
Income before Income Taxes, Minority
Interest and Cumulative Effect of
an Accounting Change 5,443 3,939 38.2
Income Taxes 1,613 1,169 -
Income before Minority Interest and
Cumulative Effect of an Accounting
Change 3,830 2,770 38.3
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (138) (66) -
Realized Capital Gains (Losses) (8) (4) -
Income before Cumulative Effect of
an Accounting Change 3,684 2,700 36.4
Cumulative Effect of an Accounting
Change, net of tax (e) - (144) -
Net Income $ 3,684 $ 2,556 44.1 %
Three Months Ended March 31,
2005 2004(a)
(Restated) Change
----------- ----------- ----------
Net Income $ 3,684 $ 2,556 44.1 %
Realized Capital Gains (Losses),
net of tax (f) 47 83 -
Cumulative Effect of an Accounting
Change, net of tax (e) - (144) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains (Losses),
net of tax 450 (39) -
Adjusted Net Income (g) $ 3,187 $ 2,656 20.0 %
Per Share - Diluted (h):
Net Income $ 1.40 $ 0.97 44.3 %
Realized Capital Gains (Losses),
net of tax (f) 0.02 0.03 -
Cumulative Effect of an Accounting
Change, net of tax (e) - (0.06) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains (Losses),
net of tax 0.17 (0.01) -
Adjusted Net Income (g) $ 1.21 $ 1.01 19.8 %
Average Diluted Common
Shares Outstanding (h) 2,624 2,642
* Including reconciliation in accordance with Regulation G.
(a) Certain accounts have been reclassified in 2004 to conform to the
2005 presentation.
(b) For purposes of this presentation, pricing net investment gains
are segregated out of total realized capital gains (losses). They
represent certain amounts of realized capital gains where gains
are an inherent element in pricing certain life products in some
foreign countries.
(c) Includes the unrealized gain (loss) attributable to economic
hedges not qualifying for hedge accounting treatment under FAS 133
"Accounting for Derivative Instruments and Hedging Activities",
including the related foreign exchange gains and losses.
(d) Includes the results of certain AIG managed private equity and
real estate funds that are consolidated effective December 31,
2003 pursuant to FIN46R, "Consolidation of Variable Interest
Entities". For the first quarter of 2005 and 2004, operating
income includes $75 million and $4 million, respectively, of
third-party limited partner earnings offset in Minority Interest
Expense. Excluding the effects of FIN46R, operating income
increased 29.2% for the three months ended March 31, 2005.
(e) Represents the cumulative effect of an accounting change, net of
tax, related to SOP 03-1 "Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and
for Separate Accounts".
(f) Includes a $58 million gain and a $52 million loss, net of tax,
attributable to FAS 133 "Accounting for Derivative Instruments and
Hedging Activities", in the first quarter of 2005 and 2004,
respectively.
(g) Adjusted net income excludes realized capital gains (losses) which
includes pricing net investment gains, cumulative effect of an
accounting change and FAS 133 "Accounting for Derivative
Instruments and Hedging Activities", net of tax.
(h) Assumes conversion of contingently convertible bonds due to the
adoption of EITF Issue No. 04-8 "Accounting Issues Related to
Certain Features of Contingently Convertible Debt and the Effect
on Diluted Earnings per Share" of $3 million, net of tax, for both
first quarter 2005 and 2004.
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