AIG Reports First Quarter 2003 Net Income of $1.95 Billion vs. $1.98 Billion in the First Quarter of 2002; Income as Adjusted to Exclude Realized Capital Losses Rose 11.1 Percent to $2.37 Billion.Business Editors NEW YORK--(BUSINESS WIRE)--April 24, 2003 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 first quarter 2003 net income was $1.95 billion or $0.74 per share, compared to $1.98 billion or $0.75 per share in the first quarter of 2002. First quarter 2003 income as adjusted to exclude net realized capital gains (losses), increased 11.1 percent to $2.37 billion, compared to $2.13 billion in the first quarter of 2002. Per share income, as adjusted was $0.90, an increase of 11.1 percent over $0.81 in first quarter 2002. Following is a summary table of first quarter information (in millions, except per share amounts):
FIRST QUARTER
Per Share
2003 2002 Change 2003 2002 Change
---- ---- ------ ---- ---- ------
Net income,
as reported $1,953.5 $1,980.3 (1.4)% $ 0.74 $ 0.75 (1.3)%
Realized capital
gains (losses),
net of taxes (412.8) (150.4) - (0.16) (0.06) -
Income, as adjusted $2,366.3 $2,130.7 11.1% $ 0.90 $ 0.81 11.1%
Average shares
outstanding 2,628.1 2,641.0
In this press release, income and 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 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 for general and life insurance operations are shown exclusive of realized capital gains and losses. Premium income, in certain instances, and combined ratios are presented 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 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). 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 . A reconciliation to generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) is included in the Financial Highlights table of this press release. Highlights of the first quarter of 2003 include: - Record capital funds (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, 2003 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $62 billion, an increase of approximately $3 billion over December December: see month. 31, 2002. - Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. return on equity of 16.9 percent. Return on equity is net income, before realized capital gains (losses), expressed as a percentage of average shareholders' equity, exclusive of unrealized appreciation (depreciation) of investments, net of taxes. - Record 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 at March 31, 2003 of approximately $590 billion, an increase of approximately $29 billion over December 31, 2002. - Record General Insurance net premiums written of $8.24 billion, an increase of 30.1 percent over the first quarter of 2002. - Record General Insurance pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income, excluding realized capital losses, of $1.32 billion. - Record General Insurance cash flow of $3.24 billion. - General Insurance net loss and loss adjustment reserves totaling $31.52 billion as of March 31, 2003, an increase of $1.17 billion for the first quarter of 2003. - Record Life Insurance GAAP premium income of $5.66 billion, up 18.3 percent over the first quarter of 2002. Life Insurance premium income, deposits and other considerations of $13.01 billion, an increase of 1.5 percent over the first quarter of 2002 (see footnote Text that appears at the bottom of a page that adds explanation. It is often used to give credit to the source of information. When accumulated and printed at the end of a document, they are called "endnotes." 'a' on page 4 for definitions). Excluding guaranteed investment contracts Guaranteed investment contract (GIC) A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. , life insurance premium income, deposits and other considerations increased 18.8 percent. Income before income taxes and minority interest was $2.92 billion in the first quarter of 2003, compared to $2.96 billion in 2002. The following table outlines the results for the first quarter (in millions):
FIRST QUARTER
--------------
2003 2002 Change
---- ---- ------
General Insurance
operating income (1) $1,316.4 $1,055.1 24.8%
Life Insurance
operating income (2) 1,540.1 1,355.4 13.6
Financial Services
operating income 530.5 473.9 11.9
Retirement Savings
& Asset Management
operating income 282.8 299.7 (5.6)
Other Income
(Deductions)-net (114.4) 6.4 -
Adjusted income
before income taxes
and minority interest 3,555.4 3,190.5 11.4
Realized capital
gains (losses) (3) (631.5) (231.8) -
Income before income
taxes and
minority interest $2,923.9 $2,958.7 (1.2)%
(1) General insurance income before income taxes in first quarter 2003 was $1,143.9 million, including $172.5 million of realized capital losses, compared to $933.3 million in first quarter 2002, including realized capital losses of $121.8 million. (2) Life insurance income before income taxes in first quarter 2003 was $1,195.1 million, including $345.0 million of realized capital losses, compared to $1,326.6 million in first quarter 2002, including realized capital losses of $28.8 million. (3) Realized capital gains (losses) include both actual asset sales 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. provisions, which may be recovered on ultimate disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of depending on future market conditions. The following tables outline the impact of foreign exchange on property-casualty and life insurance premiums for the first quarter 2003:
General Insurance Net Premiums Written
-----------------
Worldwide Foreign
--------- -------
Premium Growth
in Original Currency 28.4% 25.0%
Foreign Exchange Impact 1.7 5.7
Premium Growth as
Reported in U.S. $ 30.1% 30.7%
Life Insurance Premium Income,
-------------- Deposits and Other
Considerations (a) GAAP Premiums
Worldwide Foreign Worldwide Foreign
--------- ------- --------- -------
Premium Growth
in Original Currency (0.3)% 5.3% 15.7% 13.8%
Foreign Exchange Impact 1.8 4.3 2.6 3.3
Premium Growth as
Reported in U.S. $ 1.5% 9.6% 18.3% 17.1%
(a) Premium income, deposits and other considerations represents total revenue flow exclusive of investment income. This differs from the revenue concept for GAAP, which recognizes only risk coverage as premium and excludes deposits and other considerations. Commenting on first quarter results, 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, "AIG had a good first quarter. General Insurance, 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. all had double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in operating income, excluding realized capital losses. Retirement Savings continues to be impacted by weak global equity markets. "Shareholders' equity at March 31, 2003 was a record $62 billion. Assets were a record high $590 billion and the annualized return on equity for the quarter was a strong 16.9 percent. "First quarter General Insurance operating income grew 24.8 percent to a record $1.32 billion, as a result of strong performance in both the Domestic Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Group and Foreign General operations. Net premiums written were a record $8.24 billion in the first quarter of 2003, up 30.1 percent over a year ago. The General Insurance combined ratio was 93.13 versus 95.76 in last year's first quarter, and the expense ratio was excellent, 18.98 compared to 20.52 a year ago. "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. , Domestic Brokerage Group net premiums written in the first quarter of 2003 increased 31.7 percent (approximately 37 percent adjusting for 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. or nonrenewed business) to a record $4.54 billion. The combined ratio was 94.80, compared to 97.65 in the first quarter of 2002. Although some competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. have been pricing commercial property and smaller commercial casualty lines more aggressively, AIG has maintained strong pricing discipline and is still implementing necessary rate increases for these lines, as well as for major corporate accounts and the specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. classes of business that are a core strength of AIG. The flight to quality continues, given the recent ratings downgrades of several insurers and reinsurers. We are working for tort tort, in law, the violation of some duty clearly set by law, not by a specific agreement between two parties, as in breach of contract. When such a duty is breached, the injured party has the right to institute suit for compensatory damages. reform at the federal, state and local levels, with a broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased coalition of businesses of every size that recognize the enormous costs to the entire U.S. economy of the explosion of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and liability claims. "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., the industry leader in providing equipment breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. insurance and related engineering and loss control services, had another good quarter as it increased unit growth domestically and continued to leverage AIG's global network to expand its presence in international markets. "Domestic Personal Lines had an excellent quarter. Net premiums written were $884.2 million, up 21.8 percent over the prior year. The combined ratio was 96.43 in the first quarter of 2003, compared to 101.08 a year ago. "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 had a good quarter with an excellent combined ratio. Its strong increase in new business was largely offset by a decline in renewal premiums, reflecting the continuing high level of refinancings. "Foreign General Insurance had outstanding results in the quarter. Net premiums written were a record $1.93 billion, an increase of 30.7 percent, or 25.0 percent in original currency, over the first quarter of 2002. The combined ratio was 88.90, compared to 91.95 in the first quarter of 2002. These excellent results demonstrate once again the strength of our global franchise and the exceptional quality of the Foreign General management team. Every major region of the worldwide network contributed to this performance, and we expect continued strong results in the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future. "The General Insurance paid loss ratio declined in the first quarter of 2003 to 58.10, from 72.93 a year ago. We added $1.17 billion to AIG's General Insurance net loss and loss adjustment reserves in the first quarter of 2003, bringing the total of those reserves to $31.52 billion at March 31, 2003. "Total General Insurance cash flow continues to be outstanding. New cash flow for investments from General Insurance operations in the first quarter of 2003 was a record of approximately $3.24 billion, compared to $1.39 billion in the first quarter of 2002. Net investment income from General Insurance grew 5.2 percent. Even though interest rates remain at historic lows, we are beginning to benefit from the substantial net increases in cash flow since the beginning of 2002. "Worldwide Life Insurance operating income was $1.54 billion, compared to $1.36 billion in the first quarter of 2002. Results were strong in most regions. Worldwide Life Insurance premium income, deposits and other considerations were $13.01 billion, an increase of 1.5 percent over the first quarter of 2002. Excluding worldwide guaranteed investment contracts, which vary from quarter to quarter depending on market conditions, premium income, deposits and other considerations increased 18.8 percent compared to the first quarter of 2002. Life insurance cash flow from both foreign and domestic operations continues to be outstanding. "Asia, the largest region of Foreign Life, had good results in terms of both operating income and premium growth. AIG Star Life Insurance Co., Ltd. has provided us with an additional distribution platform to serve the life insurance, accident and health and related needs of Japan, the world's second largest life insurance market. AIG Star Life has been receiving benefit in the form of operating income related to surrender charges Surrender Charge A fee levied on a life insurance policyholder upon cancellation of his or her life insurance policy. The fee is used to cover the costs of keeping the insurance policy on the insurance provider's books. on policies that lapsed LEGACY, LAPSED. A legacy is said to be lapsed or extinguished, when the legatee dies before the testator, or before the condition upon which the legacy is given has been performed, or before the time at which it is directed to vest in interest has arrived. Bac. Ab. Legacy, E; Com. Dig. after it obtained approval to lower policy crediting rates. As expected, most of these excess surrender charges occurred by the end of first quarter of 2003. We expect comparatively lower operating income from AIG Star Life beginning in the second quarter of this year. Going forward, growth at AIG Star Life will be based on new and renewal business, a growing agency force and productivity gains. However, we anticipate AIG Star Life earnings in 2004 will be comparable to its expected 2003 earnings. "Domestic Life operating income was $664.2 million in the first quarter 2003, compared to $632.2 million in first quarter 2002. Premium income, deposits and other considerations were $6.93 billion, compared to $7.27 billion in the first quarter of 2002. Excluding guaranteed investment contracts, life insurance premium income, deposits and other considerations increased 18.1 percent over first quarter of 2002. 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 had strong growth from the universal and term life products and structured settlements. American General Life and Accident Insurance Company (AGLA AGLA Arlington Gay and Lesbian Alliance (Virginia) ), the home services business, has continued to grow through the introduction of new products and an enhanced agency force. First year AGLA sales of life and accident and health products increased approximately 18 percent in the quarter. "The 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. business (reported in the Life Insurance segment), continued to experience strong demand for its guaranteed fixed return products. Premium income, deposits and other considerations increased 22.6 percent in the first quarter to $2.77 billion. AIG Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. Insurance Company, the largest provider of fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. through banks, also is expanding its distribution through broker-dealers and mutual funds. "We have lowered crediting rates in response to a lower interest rate environment and are giving greater emphasis to protection products such as accident and health coverages, which are less interest rate sensitive. "The outbreak outbreak see epidemic. of Severe Acute Respiratory Syndrome Severe Acute Respiratory Syndrome (SARS) Definition Severe acute respiratory syndrome (SARS) is the first emergent and highly transmissible viral disease to appear during the twenty-first century. (SARS) did not impact our business in the first quarter. Going forward, SARS may impede im·pede tr.v. im·ped·ed, im·ped·ing, im·pedes To retard or obstruct the progress of. See Synonyms at hinder1. [Latin imped agents from freely visiting prospects and will likely have some dampening effect on new sales in certain Asian markets in the second quarter. As a result, we have increased our direct marketing efforts including telephone marketing. There is growing demand for some of AIG's traditional policyholder Policyholder An individual who owns an insurance policy. protection and critical illness products. We expect the outbreak of SARS to have only a slight impact on profitability. "Financial Services operating income grew 11.9 percent to $530.5 million in the first quarter of 2003, compared to $473.9 million in the first quarter of 2002. "International Lease Finance Corporation (ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) ) reported operating income of $174.3 million in the first quarter of 2003, versus $173.1 million a year ago. We have cancelled or deferred delivery on some new aircraft, which we are able to do under the terms of our contracts with the manufacturers with no financial impact to AIG. At the end of the first quarter, all but one aircraft with leases that have expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. or that have been returned to us as a result of airline difficulties have been profitably redeployed. In a difficult commercial aviation environment, ILFC continues to perform well as a result of its geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge diversified diversified (di·verˑ·s customer base, its modern and efficient fleet and the industry's best management team. "AIG Financial Products Corp. (AIGFP) reported operating income of $195.9 million in the first quarter of 2003, compared to $176.2 million in the first quarter of 2002. AIGFP's growing earnings are largely derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from providing innovative solutions to the financial requirements of its clients worldwide. "American General Finance had a good quarter, with total originations and renewals increasing 15 percent over last year, as the company continued to expand its real estate loan portfolio. Credit quality remains solid, and in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite weak economic conditions, the net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. and delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. ratios improved. Our small but growing overseas consumer finance business is performing profitably. "Retirement Savings & Asset Management earned $282.8 million in the first quarter of 2003, compared to $299.7 million in the same period of 2002. The Group Retirement Savings business, led by AIG VALIC VALIC Financial Advisors, a member of American International Group, Inc. AIG, is an insurance corporation that specializes in tax-qualified retirement plans, supplemental tax-deferred and after-tax investments. VALIC's headquarters are in Houston, Texas. in the United States, is experiencing good growth, but results in the individual variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. and mutual fund businesses continue to be impacted by weak equity markets. Fees are also down in the broker-dealer Broker-Dealer A person or firm in the business of buying and selling securities operating as both a broker and dealer depending on the transaction. Notes: Technically, a broker is only an agent who executes orders on behalf of clients, whereas a dealer acts as a principal operations. However, the institutional asset management business of AIG Global Investment Group, Inc. performed well in the quarter. "AIG had pretax realized capital losses of $631.5 million in the first quarter of 2003, compared to $231.8 million realized capital losses in the first quarter of 2002. These realized capital losses reflect continued weakness in the equity markets and impairment loss provisions for both equity and fixed income holdings. The largest portion of these losses is derived from the inclusion of unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on investments previously written down to market through shareholders' equity. Upon the ultimate disposition of these holdings, a portion of these losses may be recovered depending on future market conditions. To put these numbers in perspective, first quarter realized capital losses represented 0.1 percent of AIG's total March 31, 2003 cash and invested assets of approximately $460 billion. "In the Other Income/Deductions-net category, AIG reported net losses of $114.4 million in the first quarter of 2003 compared to a net gain of $6.4 million a year earlier. This is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to AIG SunAmerica partnership investments, which experienced significantly less income returns in the first quarter of 2003 compared to that recorded a year ago. "As previously reported, beginning January January: see month. 1, 2003, AIG expensed stock options pursuant to FAS 123, Accounting for Stock-Based Compensation. AIG's incentive plans have always rewarded long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. performance that contributes to shareholder value, and the expensing of stock options has not been an economic issue for AIG. In 2003, we expect the expense to be less than $0.01 per share." AIG is the world's leading international insurance and financial services organization, with operations in approximately 130 countries and jurisdictions. AIG member 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 the United States, AIG companies are the largest underwriters of commercial and industrial insurance, and AIG American General is a top-ranked life insurer. AIG's global businesses also include financial services, retirement savings and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG'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. . A conference call for the investment community will be held today at 9:00 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 The call 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 Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 2, 2003. 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 contains forward-looking statements. Please refer to the AIG Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2002 and its 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.
Financial Highlights*
(in thousands, except per share amounts)
Three Months Ended March 31,
2003 2002 Change
----------- ----------- ------
General Insurance Operations:
Net Premiums Written $ 8,243,084 $ 6,334,283 30.1 %
Net Premiums Earned 7,286,763 5,506,528 32.3
Adjusted Underwriting Profit 532,539 309,701 72.0
Net Investment Income 783,874 745,366 5.2
Income before Realized Capital
Gains (Losses) 1,316,413 1,055,067 24.8
Realized Capital Gains (Losses) (172,507) (121,758) -
Operating Income $ 1,143,906 $ 933,309 22.6 %
-------------------------------------------------------------------
Loss Ratio 74.15 75.24
Expense Ratio 18.98 20.52
Combined Ratio 93.13 95.76
-------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 5,658,490 $ 4,783,447 18.3 %
Deposits and Other Considerations
not included in revenues under
GAAP 7,354,770 8,033,735 (8.5)
Premium Income, Deposits and Other
Considerations (a)(b) 13,013,260 12,817,182 1.5
Net Investment Income 3,240,401 2,902,586 11.6
Income before Realized Capital
Gains (Losses) 1,540,053 1,355,391 13.6
Realized Capital Gains (Losses) (344,959) (28,761) -
Operating Income 1,195,094 1,326,630 (9.9)
Financial Services Operating Income 530,461 473,914 11.9
Retirement Savings & Asset Management
Operating Income 282,798 299,678 (5.6)
Other Realized Capital Gains (Losses) (114,034) (81,320) -
Other Income (Deductions) - net (114,355) 6,492 -
Income before Income Taxes and
Minority Interest 2,923,870 2,958,703 (1.2)
Income Taxes 876,362 891,828 -
Income before Minority Interest 2,047,508 2,066,875 (0.9)
Minority Interest, after-tax -
Operating Income (91,928) (87,024) -
Minority Interest, after-tax -
Realized Capital Gains (Losses) (2,055) 449 -
Net Income, as reported 1,953,525 1,980,300 (1.4)
Realized Capital Gains (Losses), net
of taxes (412,846) (150,395) -
Income, as adjusted $ 2,366,371 $ 2,130,695 11.1 %
----------------------------------------------------------------------
Per Share - Diluted:
Net Income, as reported $ 0.74 $ 0.75 (1.3)%
Realized Capital Gains (Losses), net
of taxes (0.16) (0.06) -
Income, as adjusted $ 0.90 $ 0.81 11.1 %
----------------------------------------------------------------------
Average Diluted Common Shares
Outstanding 2,628,084 2,640,990
* Including reconciliation in accordance with Regulation G.
(a) Represents a non-GAAP measurement used by AIG to help manage its
life insurance operation, and may not be comparable to similarly
captioned measurements used by other life insurance companies.
(b) Premium income, deposits and other considerations represent
aggregate business activity during the respective periods.
American International Group, Inc.
Supplementary Data
(in thousands)
Three Months Ended March 31,
2003 2002 Change
----------- ----------- ------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 4,540,142 $ 3,446,162 31.7 %
Personal Lines 884,198 726,100 21.8
Mortgage Guaranty 121,188 122,222 (0.8)
Transatlantic Holdings 768,081 563,555 36.3
Foreign General (a)(b) 1,929,475 1,476,244 30.7
----------- -----------
Total 8,243,084 6,334,283 30.1
Operating Income Before Realized
Capital Gains (Losses) (c)
Domestic Brokerage Group 708,847 531,088 33.5
Personal Lines 69,300 23,136 199.5
Mortgage Guaranty 109,995 111,649 (1.5)
Transatlantic Holdings 79,400 72,048 10.2
Foreign General (a) 347,154 311,463 11.5
Intercompany Adjustments 1,717 5,683 -
----------- -----------
Total $ 1,316,413 $ 1,055,067 24.8 %
-------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 94.80 97.65
Personal Lines 96.43 101.08
Mortgage Guaranty 46.03 41.49
Transatlantic Holdings 97.36 98.19
Foreign General (a) 88.90 91.95
-------------------------------------------------------------------
Losses and Loss Expenses Paid $ 4,233,655 $ 4,016,317 5.4 %
Change in Loss and Loss Expense
Reserve 1,169,765 126,966 -
----------- -----------
Losses and Loss Expenses Incurred 5,403,420 4,143,283 30.4
Net Loss and Loss Expense Reserve 31,519,704 26,022,478 21.1
GAAP Underwriting Profit $ 532,539 $ 309,701 72.0 %
(a) Foreign general insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b) The growth in Foreign General net premiums written in original
currency was 25.0 percent for the first quarter 2003.
(c) Excludes realized capital gains (losses) which are not deemed to
be an integral part of AIG's General Insurance operations'
internal reporting groups.
Supplementary Data continued
Three Months Ended March 31,
2003 2002 Change
----------- ----------- ------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 430,747 $ 396,248 8.7 %
Individual Fixed Annuities 12,303 11,423 7.7
Guaranteed Investment
Contracts 3,673 773 -
Home Service 208,745 215,917 (3.3)
Group Life/Health 232,248 237,910 (2.4)
Pension and Investment
Products 434,430 218,816 98.5
----------- -----------
Total 1,322,146 1,081,087 22.3
Foreign
Life Insurance 3,267,881 2,793,514 17.0
Personal Accident 691,168 565,827 22.2
Group Products 349,504 316,075 10.6
Guaranteed Investment
Contracts 27,791 26,944 3.1
----------- -----------
Total 4,336,344 3,702,360 17.1
Total GAAP Premiums 5,658,490 4,783,447 18.3
Premium Income, Deposits and
Other Considerations (a)(b)
Domestic
Life Insurance 652,420 655,767 (0.5)
Individual Fixed Annuities 2,772,926 2,261,945 22.6
Guaranteed Investment
Contracts 2,469,478 3,492,026 (29.3)
Home Service 234,616 216,011 8.6
Group Life/Health 236,759 245,156 (3.4)
Pension and Investment
Products 567,476 400,745 41.6
----------- -----------
Total 6,933,675 7,271,650 (4.6)
Foreign
Life Insurance 3,676,266 3,087,666 19.1
Personal Accident 692,409 563,469 22.9
Group Products 569,823 487,111 17.0
Guaranteed Investment
Contracts 1,141,087 1,407,286 (18.9)
----------- -----------
Total (c) 6,079,585 5,545,532 9.6
Total Premium Income, Deposits
and Other Considerations $13,013,260 $12,817,182 1.5 %
(a) Represents a non-GAAP measurement used by AIG to help manage its
life insurance operation, and may not be comparable to similarly
captioned measurements used by other life insurance companies.
(b) Premium income, deposits and other considerations represent
aggregate business activity during the respective periods.
(c) The growth in foreign premium income, deposits and other
considerations in original currency was 5.3 percent in the
quarter.
Supplementary Data continued
Three Months Ended March 31,
2003 2002 Change
----------- ----------- ------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 316,403 $ 342,884 (7.7)%
Individual Fixed Annuities 854,612 731,967 16.8
Guaranteed Investment
Contracts 507,963 481,309 5.5
Home Service 168,577 168,758 (0.1)
Group Life/Health 27,931 25,684 8.7
Pension and Investment
Products 235,224 201,736 16.6
Intercompany Adjustments (63) (57) -
----------- -----------
Total 2,110,647 1,952,281 8.1
Foreign
Life Insurance 909,327 775,707 17.2
Personal Accident 36,528 33,057 10.5
Group Products 82,141 59,969 37.0
Guaranteed Investment
Contracts 104,844 84,329 24.3
Intercompany Adjustments (3,086) (2,757) -
----------- -----------
Total 1,129,754 950,305 18.9
Total Net Investment Income 3,240,401 2,902,586 11.6
Operating Income Before Realized
Capital Gains (Losses) (a)
Domestic
Life Insurance 189,699 164,200 15.5
Individual Fixed Annuities 201,635 167,268 20.5
Guaranteed Investment
Contracts 110,677 141,208 (21.6)
Home Service 100,218 95,390 5.1
Group Life/Health 28,482 26,554 7.3
Pension and Investment
Products 33,553 37,662 (10.9)
Intercompany Adjustments (63) (57) -
----------- -----------
Total 664,201 632,225 5.1
Foreign
Life Insurance 625,238 524,723 19.2
Personal Accident 197,492 153,586 28.6
Group Products 47,809 38,977 22.7
Guaranteed Investment
Contracts 8,399 8,637 (2.8)
Intercompany Adjustments (3,086) (2,757) -
----------- -----------
Total 875,852 723,166 21.1
Total Operating Income $ 1,540,053 $ 1,355,391 13.6 %
(a) AIG does not specifically identify realized capital gains (losses)
to products within Life Insurance operations.
Supplementary Data continued
Three Months Ended March 31,
2003 2002 Change
----------- ----------- ------
Financial Services:
Revenues
International Lease Finance Corp.$ 722,111 $ 640,842 12.7 %
AIG Financial Products Corp. 271,723 272,095 (0.1)
Consumer Finance 638,876 612,937 4.2
AIG Trading Group Inc. 52,907 43,221 22.4
Other 7,265 (2,604) -
----------- -----------
Total 1,692,882 1,566,491 8.1
Operating Income
International Lease Finance Corp. 174,271 173,088 0.7
AIG Financial Products Corp. 195,882 176,172 11.2
Consumer Finance 148,103 124,371 19.1
AIG Trading Group Inc. 15,359 10,115 51.8
Other (a) (3,154) (9,832) -
----------- -----------
Total 530,461 473,914 11.9
Retirement Savings & Asset Management (b):
Revenues
AIG VALIC (c) 544,182 534,495 1.8
AIG SunAmerica (d) 120,978 153,932 (21.4)
Other Asset Management and
Annuity Operations(e) 230,949 176,392 30.9
----------- -----------
Total 896,109 864,819 3.6
Operating Income (Loss)
AIG VALIC (c) 218,597 191,535 14.1
AIG SunAmerica (d) (1,313) 38,825 -
Other Asset Management and
Annuity Operations(e) 65,514 69,318 (5.5)
----------- -----------
Total 282,798 299,678 (5.6)
Variable Annuity Net Sales
Sales
AIG VALIC 1,239,072 1,284,136 (3.5)
AIG SunAmerica 765,538 704,838 8.6
Surrenders
AIG VALIC 554,082 628,516 (11.8)
AIG SunAmerica 560,336 505,048 10.9
Total
AIG VALIC 684,990 655,620 4.5
AIG SunAmerica 205,202 199,790 2.7
----------- -----------
Total Net Sales $ 890,192 $ 855,410 4.1 %
Effective Tax Rates:
Excluding Realized Capital Gains
(Losses) 30.86% 30.49%
Realized Capital Gains (Losses)
Alone 34.95% 34.94%
As Reported 29.97% 30.14%
(a) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b) At March 31, 2003 AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
approximately $41 billion.
(c) Reflects the sale of variable annuity products with fixed annuity
options.
(d) Includes variable annuity, mutual fund and broker-dealer
operations.
(e) Includes AIG Global Investment Group, John McStay Investment
Counsel, L. P. and certain overseas variable annuity operations.
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