AIG Files Third Quarter 2005 Report on Form 10-Q and Reports Third Quarter 2005 Net Income of $1.72 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 ended September September: see month. 30, 2005 with the Securities and Exchange Commission. Information from prior periods included in the Form 10-Q has been restated. Third quarter 2005 net income was $1.72 billion or $0.65 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $2.69 billion or $1.02 per diluted share in the third quarter of 2004. These results include after tax net catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). related losses of $1.57 billion or $0.60 per diluted share in third quarter 2005 compared to $512 million or $0.19 per diluted share last year. Net income for the first nine months of 2005 was $10.02 billion or $3.82 per diluted share, compared to $8.29 billion or $3.14 per diluted share in the first nine months of 2004. These results include after tax net catastrophe related losses per diluted share in 2005 and 2004 of $0.60 and $0.19, respectively.
THIRD QUARTER
(in millions, except per share amounts)
Per Diluted Share (a)
-----------------------
2005 2004 2005 2004
(Restated) Change (Restated) Change
----------------------------------------------------------------------
Net income $1,717 $2,685 (36.1)% $0.65 $1.02 (36.3)%
Realized capital
gains (losses),
net of tax 54 (45) - 0.02 (0.01) -
FAS 133 gains
(losses), excluding
realized capital
gains (losses),
net of tax (b) (134) 390 - (0.05) 0.14 -
Adjusted net
income (c) 1,797 2,340 (23.2)% 0.68 0.89 (23.6)%
Effect of catastrophe
related losses,
net of tax,
on income $1,569 $512 - $0.60 $0.19 -
Average shares
outstanding 2,624 2,638
----------------------------------------------------------------------
NINE MONTHS
(in millions, except per share amounts)
Per Diluted Share (a)
----------------------
2005 2004 2005 2004
(Restated) Change (Restated) Change
----------------------------------------------------------------------
Net income $10,023 $8,290 20.9% $3.82 $3.14 21.7%
Realized capital
gains (losses),
net of tax 132 (49) - 0.05 (0.01) -
FAS 133 gains
(losses), excluding
realized capital
gains (losses),
net of tax (b) 1,599 617 - 0.61 0.23 -
Cumulative effect of
an accounting change,
net of tax (d) - (144) - - (0.06) -
Adjusted net
income (c) 8,292 7,866 5.4% 3.16 2.98 6.0%
Effect of catastrophe
related losses,
net of tax,
on income $1,569 $512 - $0.60 $0.19 -
Average shares
outstanding 2,624 2,639
----------------------------------------------------------------------
(a) 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 and $8
million, net of tax, for the third quarter and nine months
2005, respectively, compared to $2 million and $8 million, net
of tax, for the third quarter and nine months 2004,
respectively.
(b) Includes the unrealized gain (loss) attributable to the effect
of hedging activities that do not qualify for hedge accounting
treatment under FAS 133, including the related foreign
exchange gains and losses.
(c) Excludes realized capital gains (losses) which includes
pricing net investment gains, cumulative effect of an
accounting change and FAS 133, net of tax.
(d) 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".
Commenting on third quarter results, AIG President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 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 "AIG has achieved profitable results even as we sustained $1.57 billion in after tax net catastrophe related losses during the third quarter, which is the most costly quarter for catastrophes ever recorded to date by the property-casualty industry. AIG's net income of $1.72 billion for the third quarter and $10.02 billion for the first nine months is a true reflection of the size, scope, diversity and financial strength of our business. At September 30, 2005, consolidated assets were $843.40 billion 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. was $89.28 billion. "I am very proud of AIG's employees throughout the world who have been assisting customers, colleagues and others who are in need in the aftermath of hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area , Rita and Wilma as well as the tragic earthquake in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. and Pakistan Pakistan (păk`ĭstăn', päkĭstän`), officially Islamic Republic of Pakistan, republic (2005 est. pop. 162,420,000), 310,403 sq mi (803,944 sq km), S Asia. last month. "AIG's ability and commitment to continue as the leader in the property-casualty business is unwavering. We are working to provide insurance coverage to those involved in the rebuilding and recovery efforts, and we have the capacity to do so. Although 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. capacity could be 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. in the near future, AIG has the capital and financial resources to respond to our customers' needs. "Catastrophes reduced AIG's General Insurance results domestically as well as in our foreign operations. Overall, General Insurance had a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the third quarter of $232 million before realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. (losses), compared to pretax 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. of $622 million last year. Excluding catastrophe losses, the General Insurance combined ratio in third quarter 2005 improved to 91.61 compared to 93.87 in third quarter 2004. Foreign General had a very strong quarter, with a combined ratio of 92.21, inclusive of inclusive of prep. Taking into consideration or account; including. 10.41 points for catastrophe related losses. General Insurance cash flow, although somewhat lower than last year, was still strong at $3.17 billion in the quarter and $9.38 billion for the first nine months of 2005. Fourth quarter 2005 after tax net losses arising from Hurricane Wilma Hurricane Wilma was the most intense hurricane ever recorded in the Atlantic basin. Exceeding the 21 storms of the 1933 season, Wilma was the twenty-second storm (including the subtropical storm discovered in reanalysis), thirteenth hurricane, sixth major hurricane, and fourth , including net reinstatement Reinstatement The restoration of an insurance policy after it has lapsed for nonpayment of premiums. premium costs, are estimated to be approximately $400 million. "Life Insurance & Retirement Services third quarter 2005 operating income before realized capital gains (losses) and including pricing net investment gains increased 12.9 percent. Our Foreign Life Insurance & Retirement Services businesses again produced excellent results. Japan and China had strong first year premium growth in the quarter. Domestically, term and universal life insurance had solid growth with good performance through the independent distribution channels. Although Domestic Retirement Services sales continue to be adversely affected by the interest rate environment and lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" equity markets, operating income in the group retirement and individual 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. businesses improved as a result of stronger investment income. "Third quarter 2005 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. operating income before the effect of FAS 133 declined 3.1 percent compared to third quarter 2004. Excluding the $62 million third quarter 2005 pretax catastrophe related losses in the domestic 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. , Financial Services operating income increased 6.9 percent before the effect of FAS 133. The global Consumer Finance business continued its strong receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed growth, with operating income increasing 25.0 percent excluding the catastrophe losses. Capital Markets operating income before the effect of FAS 133 increased 2.8 percent. Capital Markets experienced improved transaction flow in its credit, commodities and energy products with results reflecting a more favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. customer sentiment during the quarter than earlier in the year. ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) is continuing to experience strong demand and an overall strengthening of lease rates. These positive factors were offset by a $15 million charge related to receivables from restructured leases and increased borrowing costs. "Asset Management results in the third quarter 2005, before 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 and FAS 133, increased 26.2 percent compared to third quarter 2004, primarily the result of partnership income. "In addition to the progress we are making in our businesses, we have taken further steps to enhance our financial controls, disclosure and corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. processes. The AIG Board of Directors has adopted majority voting Majority voting Voting system under which corporate shareholders vote for each director separately. Related: Cumulative voting. majority voting and mandatory retirement A mandatory retirement age is the age at which persons who hold certain jobs or offices are required by statute to step down, or retire. Typically, mandatory retirement ages are justified by the argument that certain occupations are either too dangerous (military personnel) age guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. and Michael H. Sutton Michael H. Sutton is the former Chief Accountant of the U.S. Securities and Exchange Commission, and a Director of American International Group. , former Chief Accountant of 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. Securities and Exchange Commission, was elected a Director and is now serving on the Audit Committee of the Board. These recent actions are a continuation of our commitment to implement best practices in these areas." Additional supplementary financial data is available in the Investor Information section of www.aigcorporate.com. A conference call for the investment community will be held tomorrow, Tuesday Tuesday: see week. , November November: see month. 15, 2005 at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . 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, November 23, 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 September 30, 2005 and AIG's past and future filings with and reports to 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, Paris, Switzerland and Tokyo. Comment on Regulation G This press release, including the financial highlights, includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). figures in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Regulation G are included within the relevant tables or in the Third Quarter 2005 Supplementary Financial Data available in the Investor Information section of AIG's corporate website, www.aigcorporate.com. Throughout this press release, AIG presents its operations in the way it believes will be most meaningful and useful, as well as most transparent, to the investing public and others who use AIG's financial information in evaluating the performance of AIG. That presentation includes the use of certain non-GAAP measures. In addition to the GAAP presentations, in some cases, revenues, net income, operating income and related rates In differential calculus, related rates problems involve finding the rate at which a quantity is changing by relating that quantity to other quantities whose rates of change are known. The rate of change is usually with respect to time. of performance are shown exclusive of realized capital gains (losses), cumulative effect of an accounting change in 2004, the effect of FIN46R, the effect of FAS 133 and the effect of the catastrophe related losses. Although the investment of premiums to generate investment income (or loss) and realized capital gains or losses capital gains or losses n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. is an integral part of both life and general insurance operations, the determination to realize capital gains or losses is independent of the insurance 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. process. Moreover, under applicable GAAP accounting requirements, losses can be recorded as the result of other than temporary declines in value without actual realization. In sum, investment income and realized capital gains or losses for any particular period are not indicative of business performance for such period. AIG believes that a major part of the discipline of a successful general insurance company is to produce an underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. , and it evaluates the performance of and manages its operations on that basis. Providing only a GAAP presentation of net income and operating income makes it much more difficult for users of AIG's financial information to evaluate AIG's success or failure in its basic business, that of insurance underwriting, and may, in AIG's opinion, lead to incorrect or misleading assumptions and conclusions. The equity analysts who follow AIG exclude the realized capital transactions in their analyses for the same reason, and consistently request that AIG provide the non-GAAP information. Life and retirement services production (premiums, deposits and other considerations), gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. , net premiums written and combined ratios are presented in accordance with accounting principles prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). or permitted by insurance regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities because these are standard measures of performance used in the insurance industry and thus allow for more meaningful comparisons with AIG's insurance competitors.
American International Group, Inc.
Financial Highlights*
(in millions, except per share amounts)
Three Months Ended September 30,
2005 2004(a)
(Restated) Change
------------- ---------- -------
General Insurance Operations:
Net Premiums Written $10,307 $ 10,292 0.1 %
Net Premiums Earned 10,130 9,886 2.5
Underwriting Profit (Loss) (1,212) (121) -
Net Investment Income 980 743 31.9 %
Income before Realized Capital
Gains (Losses) (232) 622 -
Realized Capital Gains (Losses) 106 (13) -
Operating Income (Loss) $ (126)$ 609 -
----------------------------------------------------------------------
Loss Ratio 88.49 80.53
Expense Ratio 23.75 20.78
Combined Ratio 112.24 101.31
Combined Ratio
excluding Catastrophe
Related Losses 91.61 93.87
----------------------------------------------------------------------
Life Insurance & Retirement Services Operations:
GAAP Premiums $ 7,114 $ 7,351 (3.2)%
Net Investment Income 4,649 3,758 23.7
Pricing Net Investment Gains (b) 88 31 183.9
Income before Realized Capital
Gains (Losses) 2,335 2,068 12.9
Realized Capital Gains (Losses) (b) (210) (441) -
Operating Income 2,125 1,627 30.6
Financial Services Operations:
Operating Income excluding FAS 133 601 620 (3.1)
FAS 133(c) (369) 785 -
Operating Income 232 1,405 (83.5)
Asset Management Operating Income:
Operating Income excluding FIN46R
and FAS 133 448 355 26.2
FIN46R (d) 77 115 (33.0)
FAS 133 (c) 18 90 (80.0)
Operating Income 543 560 (3.0)
Other Realized Capital
Gains (Losses) 95 340 -
Other Income (Deductions) - net (392) (450) -
Income before Income Taxes, Minority
Interest and Cumulative Effect of
an Accounting Change 2,477 4,091 (39.5)
Income Taxes 706 1,264 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 1,771 2,827 (37.4)
Minority Interest, after-tax :
Income before Realized Capital
Gains (Losses) (48) (140) -
Realized Capital Gains (Losses) (6) (2) -
Income before Cumulative Effect of
an Accounting Change 1,717 2,685 (36.1)
Cumulative Effect of an Accounting
Change, net of tax (e) - - -
Net Income $ 1,717 $ 2,685 (36.1)%
Nine Months Ended September 30,
2005 2004(a)
(Restated) Change
------------- ---------- -------
General Insurance Operations:
Net Premiums Written $31,740 $ 30,534 3.9 %
Net Premiums Earned 30,502 28,356 7.6
Underwriting Profit (Loss) 77 953 (91.9)
Net Investment Income 3,067 2,361 29.9
Income before Realized Capital
Gains (Losses) 3,144 3,314 (5.1)
Realized Capital Gains (Losses) 337 176 -
Operating Income (Loss) $ 3,481 $ 3,490 (0.3)%
----------------------------------------------------------------------
Loss Ratio 76.60 76.01
Expense Ratio 22.53 20.61
Combined Ratio 99.13 96.62
Combined Ratio
excluding Catastrophe
Related Losses 92.28 94.02
----------------------------------------------------------------------
Life Insurance & Retirement Services Operations:
GAAP Premiums $21,968 $ 21,062 4.3 %
Net Investment Income 13,129 11,202 17.2
Pricing Net Investment Gains (b) 269 176 52.8
Income before Realized Capital
Gains (Losses) 7,057 6,152 14.7
Realized Capital Gains (Losses) (b) (358) (459) -
Operating Income 6,699 5,693 17.7
Financial Services Operations:
Operating Income excluding FAS 133 1,744 1,678 3.9
FAS 133(c) 1,691 699 141.9
Operating Income 3,435 2,377 44.5
Asset Management Operating Income:
Operating Income excluding FIN46R
and FAS 133 1,341 1,114 20.4
FIN46R (d) 189 147 28.6
FAS 133(c) 127 241 (47.3)
Operating Income 1,657 1,502 10.3
Other Realized Capital
Gains (Losses) (32) 19 -
Other Income (Deductions) - net (329) (495) -
Income before Income Taxes, Minority
Interest and Cumulative Effect of
an Accounting Change 14,911 12,586 18.5
Income Taxes 4,559 3,835 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 10,352 8,751 18.3
Minority Interest, after-tax :
Income before Realized Capital
Gains (Losses) (313) (309) -
Realized Capital Gains (Losses) (16) (8) -
Income before Cumulative Effect of
an Accounting Change 10,023 8,434 18.8
Cumulative Effect of an Accounting
Change, net of tax (e) - (144) -
Net Income $10,023 $ 8,290 20.9 %
Three Months Ended September 30,
2005 2004(a)
(Restated) Change
------------- ---------- -------
Net Income $ 1,717 $ 2,685 (36.1)%
Realized Capital Gains (Losses),
including Pricing Gains(Losses),
net of tax 54 (45) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains
(Losses), net of tax (134) 390 -
Cumulative Effect of an Accounting
Change, net of tax (e) - - -
Adjusted Net Income (f) 1,797 2,340 (23.2)%
Effect of Catastrophe Related
Losses, net of tax,
included in results $ 1,569 $ 512 -
Per Share - Diluted (g):
Net Income $ 0.65 $ 1.02 (36.3)%
Realized Capital Gains (Losses),
including Pricing Gains(Losses),
net of tax 0.02 (0.01) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains
(Losses), net of tax (0.05) 0.14 -
Cumulative Effect of an Accounting
Change, net of tax (e) - - -
Adjusted Net Income (f) 0.68 0.89 (23.6)%
Effect of Catastrophe Related
Losses, net of tax,
included in results $ 0.60 $ 0.19 -
Average Diluted Common
Shares Outstanding (g) 2,624 2,638
Nine Months Ended September 30,
2005 2004(a)
(Restated) Change
------------- ---------- -------
Net Income $10,023 $ 8,290 20.9 %
Realized Capital Gains (Losses),
including Pricing Gains (Losses),
net of tax 132 (49) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains
(Losses), net of tax 1,599 617 -
Cumulative Effect of an Accounting
Change, net of tax (e) - (144) -
Adjusted Net Income (f) 8,292 7,866 5.4 %
Effect of Catastrophe Related
Losses, net of tax,
included in results $ 1,569 $ 512 -
Per Share - Diluted (g):
Net Income $ 3.82 $ 3.14 21.7 %
Realized Capital Gains (Losses),
including Pricing Gains (Losses),
net of tax 0.05 (0.01) -
FAS 133 Gains (Losses), excluding
Realized Capital Gains
(Losses), net of tax 0.61 0.23 -
Cumulative Effect of an Accounting
Change, net of tax (e) - (0.06) -
Adjusted Net Income (f) 3.16 2.98 6.0 %
Effect of Catastrophe Related
Losses, net of tax,
included in results $ 0.60 $ 0.19 -
Average Diluted Common
Shares Outstanding (g) 2,624 2,639
* 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 the effect of
hedging activities that do not qualify 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".
(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) 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.
(g) 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 and $8 million, net
of tax, for the third quarter and nine months 2005, respectively,
compared to $2 million and $8 million, net of tax, for the third
quarter and nine months 2004, respectively.
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