AIG Reports Record 2003 Net Income of $9.27 Billion, an Increase of 68.0 Percent over 2002.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 11, 2004 Net Income Excluding Realized Capital Losses and Cumulative Effect of an Accounting Change Increased 43.6 Percent to Record $10.22 Billion 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 net income for the full year 2003 increased 68.0 percent to a record $9.27 billion, compared to $5.52 billion in 2002. Net income excluding realized capital gains (losses) and cumulative effect of an accounting change increased 43.6 percent to a record $10.22 billion in the full year 2003. Net income in the fourth quarter of 2003 totaled a record $2.71 billion compared to a loss of $103.8 million in the same period of 2002. Fourth quarter 2003 net income excluding realized capital gains (losses) and cumulative effect of an accounting change was a record $2.75 billion compared to $537.5 million in the same period of 2002. Results for fourth quarter and full year 2002 include the $1.8 billion net, after tax general insurance reserve charge. Income before income taxes, minority interest, cumulative effect of an accounting change and pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern realized capital gains (losses) for the twelve months of 2003 increased 45.0 percent to $15.34 billion. Income before income taxes, minority interest, cumulative effect of an accounting change and pretax realized capital gains (losses) for the fourth quarter of 2003 was $4.14 billion, compared to $671.6 million in the fourth quarter of 2002. Following is a summary table of the twelve months and fourth quarter information (in millions, except per share amounts):
TWELVE MONTHS
Per Share
---------
2003 2002* Change 2003 2002 Change
---- ----- ------ ---- ---- ------
Net income $9,274.2 $5,518.9 68.0% $3.53 $2.10 68.1%
Realized capital
losses, net of tax** 950.9 1,596.5 - 0.36 0.60 -
Cumulative effect of an
accounting change, net
of tax*** (8.8) - - - - -
Net income, excluding
realized capital
losses and cumulative
effect of an
accounting change,
net of tax $10,216.3 $7,115.4 43.6% $3.89 $2.70 44.1%
Average shares
outstanding 2,628.1 2,634.0
FOURTH QUARTER
Per Share
---------
2003 2002* Change 2003 2002 Change
---- ----- ------ ---- ---- ------
Net income (loss) $2,707.3 $(103.8) - $1.03 $(0.03) -
Realized capital
losses, net of tax** 53.1 641.3 - 0.02 0.23 -
Cumulative effect of an
accounting change, net
of tax*** (8.8) - - - - -
Net income, excluding
realized capital
losses and cumulative
effect of an
accounting change, net
of tax $2,751.6 $537.5 411.9% $1.05 $0.20 425.0%
Average shares
outstanding 2,627.2 2,632.5
*Includes $1.8 billion net, after tax general insurance reserve
charge.
**Includes $76 million in losses, net of tax, from holdings in
Parmalat in 2003.
***Represents the cumulative effect of an accounting change, net of
tax, related to FIN46 "Consolidation of Variable Interest
Entities".
Record 2003 results include:
2003 2002* Change
---- ----- ------
Consolidated
------------
Adjusted Net Income (a)
Full Year $10.22 billion $7.12 billion 43.6%
Fourth Quarter $2.75 billion $537.5 million 411.9%
Capital Funds
At December 31 $71 billion $59 billion 20.6%
Retained Earnings
At December 31 $61 billion $52 billion 16.6%
Return on Equity (b) 17.2% 13.4%
Consolidated Assets
At December 31 $683 billion $561 billion 21.7%
Revenues (c)
Full Year $81.30 billion $67.48 billion 20.5%
Fourth Quarter $22.18 billion $17.53 billion 26.5%
Insurance Cash Flow (d)
Full Year $46.90 billion $38.40 billion 22.1%
Fourth Quarter $14.55 billion $8.80 billion 65.3%
General Insurance
-----------------
Cash Flow
Full Year $13.63 billion $7.52 billion 81.3%
Fourth Quarter $4.14 billion $2.23 billion 85.7%
Net Premiums Written
Full Year $35.21 billion $27.41 billion 28.4%
Fourth Quarter $9.16 billion $7.21 billion 27.0%
Pretax Operating Income
(Loss) (including realized
capital gains (losses))
Full Year $5.07 billion $667.2 million 659.8%
Fourth Quarter $1.47 billion $(2.04) billion -
Combined Ratio
Full Year 92.43 105.95
Fourth Quarter 91.39 135.21
Life Insurance
--------------
GAAP Premiums
Full Year $22.88 billion $20.32 billion 12.6%
Fourth Quarter $6.32 billion $5.29 billion 19.4%
Premiums, Deposits and Other
Considerations (excluding
GICs)
Full Year $38.71 billion $33.81 billion 14.5%
Fourth Quarter $10.81 billion $8.42 billion 28.4%
Pretax Operating Income
(including realized capital
losses)
Full Year $6.00 billion $4.93 billion 21.8%
Fourth Quarter $1.80 billion $1.13 billion 59.4%
Financial Services
------------------
Pretax Operating Income
Full Year $2.46 billion $2.19 billion 12.6%
Fourth Quarter $702.5 million $620.3 million 13.2%
Retirement Services & Asset
Management
---------------------------
Pretax Operating Income
Full Year $1.27 billion $1.02 billion 25.1%
Fourth Quarter $354.3 million $207.8 million 70.5%
* Consolidated results include $1.8 billion net, after tax general
insurance reserve charge. General Insurance results include $2.8
billion pretax general insurance reserve charge.
(a) Excludes realized capital gains (losses) and cumulative effect of
an accounting change, net of tax.
(b) See reconciliation to GAAP ROE in the supplementary earnings data.
(c) Represents the sum of general net premiums earned, GAAP life
premiums, net investment income, financial services commissions,
transactions and other fees, retirement services & asset
management commissions and other fees, and realized capital gains
(losses).
(d) In addition to General Insurance cash flow, includes Life
Insurance and Retirement Services cash flow for investment, which
generates the investment income necessary to meet policyholder
obligations and to provide a profit margin to shareholders.
Commenting on full-year and fourth quarter 2003 performance, 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 record results in 2003, with $10.22 billion in net income, excluding realized capital losses and the cumulative effect of an accounting change. "In addition to record net income of $9.27 billion, AIG had record results in 2003 in all four of our core businesses -- General Insurance, Life Insurance, 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. and Retirement Services & Asset Management -- and in most other key measures including 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. , return on equity, revenues, assets and cash flow. In the fourth quarter of 2003, AIG had net income of $2.71 billion, another record, which gives AIG strong momentum for 2004 and beyond. "In addition to achieving these financial results, AIG in 2003 made important investments that will further AIG's continued growth and success, including the acquisition of GE Edison Edison, township (1990 pop. 88,680), Middlesex co., NE N.J., inc. 1870 as Raritan Township, renamed 1954. Edison's varied manufactures include light trucks, chemicals, metal products, electrical and electronic equipment, machinery, and instruments. in Japan, and our investment in, and agreement to market accident and health products with, the People's Insurance Company of China People's Insurance Company of China Holdings Company (中国人保控股公司) is a state-owned company in the People's Republic of China. (PICC PICC Peripherally-inserted central catheter Critical care An IV catheter inserted in the superior vena cava for long-term infusion of bolus or continuous delivery of therapeutics or TPN–drugs, fluids, nutrients, chemotherapy. Cf Catheter. ).
GENERAL INSURANCE
-----------------
"AIG's General Insurance business had an excellent year and quarter. Net premiums written were a record $9.16 billion in the fourth quarter of 2003, up 27.0 percent over a year ago. Our top ratings and financial strength have never been more valuable to customers and set us apart from the competition in the U.S. and around the world. Corporate leaders recognize that buying 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. casualty and liability lines, known as 'long tail' lines, from other than the most financially strong carriers is taking a credit risk they can ill afford in today's environment. "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. , the Domestic Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Group had very strong growth in 2003. In the fourth quarter, net premiums written were a record $5.33 billion, up 27.3 percent over the same period in 2002. The fourth quarter combined ratio was an excellent 93.53, and the expense ratio was 15.05, far superior to the industry average. The Domestic Brokerage Group has the most extensive array of product offerings in the industry, and it has been successfully expanding its distribution. These initiatives include targeting regional brokers and small- and mid-cap Mid-cap Short for "Middle Cap," mid cap refers to stocks with a market capitalization of between $2 billion to $10 billion. Notes: As the name implies, a mid-cap is in the middle of the pack. A mid-cap isn't too big, but at the same time has a relatively decent market cap. companies. We are the market of choice and the number one provider for all of the major insurance brokers, which attest To solemnly declare verbally or in writing that a particular document or testimony about an event is a true and accurate representation of the facts; to bear witness to. To formally certify by a signature that the signer has been present at the execution of a particular writing so as to our market knowledge, 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. skill, ability to create new products to meet customer needs, expert claims management and outstanding service. "The success of the Domestic Brokerage Group over the year and fourth quarter of 2003 was very 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 . Lexington Lexington. 1 City (1990 pop. 225,366), seat of Fayette co., N central Ky., in the heart of the bluegrass region; inc. 1832, made coextensive with Fayette co. 1974. , our excess and surplus lines company, had outstanding results. We are one of the leading providers of 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. coverage to the aviation industry and other sectors of the economy, and achieved good results from this business over the year and quarter. "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. achieved record net premiums written in 2003, and has successfully leveraged its engineering and product innovation skills throughout the AIG global network to expand distribution and cross selling and develop new products. "The Domestic Personal Lines businesses achieved significant premium growth and a strong improvement in profitably in the fourth quarter and full year of 2003. Net premiums written increased 23.2 percent, to $1.00 billion, in the fourth quarter, and the combined ratio was 96.03. The direct marketing, agency auto, assigned risk A danger or hazard of loss or injury that an insurer will not normally accept for coverage under a policy issued by the insurer, but that the insurance company is required by state law to offer protection against by participating in a pool of insurers who are also compelled to provide , 21st Century and Private Client businesses all contributed to the 58.5 percent increase in 2003 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. . "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 (UGC See user-generated content. ) also did well in the year and quarter. Despite a more challenging mortgage market, UGC earned $87.4 million in pretax operating income in the fourth quarter of 2003 and continued to have a significantly lower 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. ratio than the mortgage guaranty insurance industry overall. In terms of premiums, new business offset the impact of continued refinancing Refinancing An extension and/or increase in amount of existing debt. activities. "Transatlantic Holdings Inc. had an excellent year and quarter. In the fourth quarter of 2003, net premiums written increased 32.2 percent, to $868.9 million. The combined ratio was 96.03. "In 2004, we would expect General Insurance in the United States to have another solid year. While there is more competition for certain 'short tail' lines, the market for 'long tail' and specialty lines, where AIG has significant competitive strengths, should continue to be strong. "Foreign General Insurance had excellent 2003 and fourth quarter performance throughout the world. In the fourth quarter of 2003, net premiums written were $1.82 billion, an increase of 27.1 percent over the same period last year. Growth in Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. and the United Kingdom was very strong, in large part because many local insurers have been beset be·set tr.v. be·set, be·set·ting, be·sets 1. To attack from all sides. 2. To trouble persistently; harass. See Synonyms at attack. 3. by capital adequacy problems and could not meet their clients' needs. The Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. division also performed well in the fourth quarter and throughout 2003. "Asia had strong performance in 2003, including the fourth quarter, and is making significant investments for the future. In October October: see month. , AIG entered into an agreement with the People's Insurance Company of China (PICC), the largest non-life In the physical sciences, non-life is an umbrella term set to distinguish or characterize those inanimate chemical precursors found in the primeval soup of the early years of planetary evolution from which life, theoretically, evolved or came into existence. insurance company in China. Under this agreement, AIG companies will market accident and health products through PICC's 4,300 branch offices throughout the country. In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with this cooperative cooperative Organization owned by and operated for the benefit of those using its services. Cooperatives have been successful in such fields as the processing and marketing of farm products and the purchasing of other kinds of equipment and raw materials, and in the relationship, AIG has made a 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. investment in PICC, purchasing 9.9 percent of the company's share capital. "In Japan, both AIU AIU American Intercontinental University AIU Allegheny Intermediate Unit (Homestead, PA) AIU Atlantic International University AIU Association of Indian Universities AIU Association Internationale des Universités and American Home For the American mortgage lender, see . The American Home is a center of intercultural exchange located in Vladimir, Russia. The home is designed to model a typical American suburban home and its main focus is the ESL school that provides lessons for Russian students. , which is the leading direct marketer of general insurance products in the country, had solid results for the year and fourth quarter. Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. also had a good year with record gross premiums. "Foreign General pricing was excellent throughout 2003, and we do not foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. any material change in 2004. "Reflecting strong cash flow and improved market conditions, General Insurance net investment income in the fourth quarter of 2003 was $764.4 million, an increase of 13.5 percent compared to $673.2 million a year ago. For the full year 2003, General Insurance net investment income was $3.02 billion, an increase of 9.5 percent compared to $2.76 billion in 2002. "At year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2003, General Insurance net loss and loss adjustment reserves totaled $36.65 billion, an increase of $5.91 billion and $1.56 billion for the full year and the fourth quarter, respectively.
LIFE INSURANCE
--------------
"Both the foreign and domestic Life Insurance operations had record 2003 results and a strong fourth quarter. Worldwide Life Insurance pretax operating income was $1.80 billion in the fourth quarter of 2003, including $50.1 million in realized capital losses, compared to $1.13 billion a year ago, which included $451.8 million in realized capital losses. Excluding realized capital losses, pretax operating income increased 17.0 percent in fourth quarter 2003. "Worldwide Life Insurance GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). premiums were $6.32 billion, an increase of 19.4 percent over the fourth quarter of 2002. Premiums, deposits and other considerations 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. and related products (GICs) rose 28.4 percent in the fourth quarter. Premiums, deposits and other considerations for the GIC GIC See: Guaranteed Investment Contract GIC See guaranteed investment contract (GIC). business increased 84.8 percent in the fourth quarter of 2003. We write GICs on an opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. basis when market conditions are favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , as they were in the domestic market in the fourth quarter. "AIG's Foreign Life Insurance operations had excellent results in the fourth quarter and full year of 2003, led by Japan, the largest life insurance market in the world outside of the U.S., and AIG's largest Foreign Life Insurance operation. "In its first full quarter as an AIG company, AIG Edison Life Insurance Company had good results. Integrating AIG Edison Life with ALICO ALICO American Life Insurance Company Japan and AIG Star Life will provide further efficiencies to the business in 2004 and beyond. We also have been putting into place additional business retention programs for AIG Star Life and AIG Edison Life, and new product and distribution initiatives for all three operations. AIG's financial strength, creative product development skills, new business initiatives such as annuities sold through the bank channel, and an improving economic climate give us tremendous optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. for the Life Insurance business in Japan. "The other Asian Life Insurance operations, including Korea and Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , also had a good year and fourth quarter. In China, we are growing rapidly. The number of active agents increased significantly to about 19,000 and total first year premiums increased 43.4 percent during 2003. Throughout Asia, growth was achieved through new product introductions and expanded distribution. In two of the region's most attractive emerging markets, Vietnam Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos and 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. , we opened new offices and increased the agency forces. "Domestic Life Insurance pretax operating income in the fourth quarter of 2003 was $717.2 million, including realized capital losses of $97.5 million, compared to $276.0 million, including realized capital losses of $412.5 million, in the fourth 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 a very good year overall, achieving strong growth from the universal life and term life products and from its affluent and brokerage market segments. AGLA AGLA Arlington Gay and Lesbian Alliance (Virginia) , the home services business, made progress in 2003, launching new products and laying a solid foundation for future growth. The multiple distribution channels of AIG American General are a distinctive source of strength that will fuel growth going forward. "Fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. , which are sold primarily through banks by 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, had record sales and pretax operating income in 2003, and an excellent fourth quarter. AIG Annuity added several new banks and financial institutions to its distribution network and moved quickly to reduce crediting rates on its products when interest rates declined during the year.
FINANCIAL SERVICES
------------------
"Financial Services had record pretax operating income in 2003. In the fourth quarter, pretax operating income was $702.5 million, compared to $620.3 million in the fourth quarter of 2002. ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) has been outperforming its 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. in a difficult aviation environment, reflecting its strong management and the geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of its fleet of modern and efficient aircraft. As a result of a lag effect between changes in market conditions and their impact on results, the improvement in the airline industry has yet to be reflected in ILFC's financial performance. "Capital Markets, created by the integration of AIG Trading into AIG Financial Products Corp., had outstanding results. The consolidation of these operations is moving along as expected, taking out duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. expenses and providing numerous synergies. In the consumer finance business, American General Finance had a terrific year and quarter, with excellent credit quality. The international 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. had sharp gains in every major market.
RETIREMENT SERVICES & ASSET MANAGEMENT
--------------------------------------
"Retirement Services & Asset Management had record 2003 pretax operating income of $1.27 billion and record fourth quarter 2003 pretax operating income of $354.3 million, as financial markets and the U.S. economy made gains. 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. had an outstanding fourth quarter, and 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. , 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 , mutual fund and institutional asset management businesses also recorded strong gains in the fourth quarter. Third party institutional and retail mutual fund assets Fund assets The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. under management increased to more than $46 billion in 2003. "AIG had pretax net realized capital losses of $85.3 million in the fourth quarter of 2003 including $117 million of losses from holdings in Parmalat Parmalat SpA (ISE: IT0003826473), is an Italian dairy and food corporation. Having become the leading global company in the production of UHT (Ultra High Temperature) milk, the company nearly disappeared altogether following accusations of financial wrongdoing against founder , compared to pretax net realized capital losses of $984.1 million in the fourth quarter of 2002.
OUTLOOK
-------
"Moving forward, the outlook for AIG is very positive. We will build on the momentum of 2003's excellent earnings and the good operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. before us. With its strong balance sheet, AIG's financial security has never been more important to customers around the world. In an increasingly uncertain world, AIG's product innovation and claims expertise have never been more valuable for managing and controlling customers' risks. Under improving global economic conditions, AIG's global network has never been better situated to profit from developing opportunities throughout the world. AIG is poised to achieve continued strong growth." AIG is the world's leading international insurance and financial services organization, with operations in approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 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 services 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 services businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with 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. 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. 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 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 , February February: see month. 20, 2004. 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2003 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. Comment on Regulation G This press release, including the financial highlights and supplementary earnings data, includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable 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 herein. Throughout this press release, AIG presents its operations in the way it believes will be most meaningful and useful, as well as most transparent (1) Refers to a change in hardware or software that, after installation, causes no noticeable change in operation. Also known as "feature transparency." Contrast with "seamless integration," which means that an additional component to the system can be added without incurring any , 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 of net income and operating income, AIG shows both net income and operating income exclusive of realized capital gains (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 process. Moreover, under applicable GAAP accounting requirements, losses can be created as the result of other than temporary declines in value without actual realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. . In sum, investment income and realized capital gains or losses for any particular period are not indicative indicative: see mood. of quarterly business performance. 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 Incorrect means to not be correct and may also refer to:
AIG presents life production (premiums, deposits and other considerations), net premiums written and combined ratios 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 thousands, except per share amounts)
Three Months Ended December 31,
2003 2002 (a) Change
------------ ---------- --------
General Insurance Operations:
Net Premiums Written $ 9,159,196 $ 7,212,509 27.0 %
Net Premiums Earned 8,403,206 6,708,030 25.3
Underwriting Profit (Loss) 551,195 (2,350,630) -
Net Investment Income 764,363 673,188 13.5
Income (Loss) before Realized
Capital Gains (Losses) 1,315,558 (1,677,442) -
Realized Capital Gains (Losses) 158,264 (366,169) -
Operating Income (Loss) $ 1,473,822 $(2,043,611) - %
----------------------------------------------------------------------
Loss Ratio 71.83 115.13
Expense Ratio 19.56 20.08
Combined Ratio 91.39 135.21
----------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 6,316,517 $ 5,289,547 19.4 %
Net Investment Income 3,582,310 3,145,267 13.9
Income before Realized Capital
Gains (Losses) 1,850,868 1,581,763 17.0
Realized Capital Gains (Losses) (50,075) (451,761) -
Operating Income 1,800,793 1,130,002 59.4
Financial Services Operating Income 702,452 620,299 13.2
Retirement Services & Asset
Management Operating Income 354,278 207,816 70.5
Other Realized Capital Gains
(Losses) (193,535) (166,167) -
Other Income (Deductions) - net (87,312) (60,788) -
Income (Loss) before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 4,050,498 (312,449) -
Income Taxes (Benefits) 1,259,459 (253,118) -
Income (Loss) before Minority
Interest and Cumulative Effect
of an Accounting Change 2,791,039 (59,331) -
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (94,666) (38,787) -
Realized Capital Gains (Losses) 2,153 (5,688) -
Income (Loss) before Cumulative
Effect of an Accounting Change 2,698,526 (103,806) -
Cumulative Effect of an Accounting
Change, net of tax (b) 8,778 0 -
Net Income (Loss) 2,707,304 (103,806) -
Realized Capital Gains (Losses),
net of tax (53,088) (641,351) -
Cumulative Effect of an Accounting
Change, net of tax (b) 8,778 0 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change,
net of tax (c) $ 2,751,614 $ 537,545 411.9 %
Twelve Months Ended December 31,
2003 2002 (a) Change
------------ ---------- --------
General Insurance Operations:
Net Premiums Written $ 35,211,785 $27,414,242 28.4 %
Net Premiums Earned 31,734,307 24,269,517 30.8
Underwriting Profit (Loss) 2,220,773 (1,234,034) -
Net Investment Income 3,021,601 2,759,603 9.5
Income before Realized Capital
Gains (Losses) 5,242,374 1,525,569 243.6
Realized Capital Gains (Losses) (172,461) (858,326) -
Operating Income $ 5,069,913 $ 667,243 659.8 %
----------------------------------------------------------------------
Loss Ratio 73.33 85.76
Expense Ratio 19.10 20.19
Combined Ratio 92.43 105.95
----------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 22,879,379 $20,320,377 12.6 %
Net Investment Income 13,639,427 12,274,046 11.1
Income before Realized Capital
Gains (Losses) 6,827,669 5,982,273 14.1
Realized Capital Gains (Losses) (825,893) (1,052,970) -
Operating Income 6,001,776 4,929,303 21.8
Financial Services Operating Income 2,464,169 2,188,720 12.6
Retirement Services & Asset
Management Operating Income 1,271,213 1,015,932 25.1
Other Realized Capital Gains
(Losses) (434,752) (529,667) -
Other Income (Deductions) - net (464,011) (129,211) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 13,908,308 8,142,320 70.8
Income Taxes 4,263,947 2,327,969 -
Income before Minority Interest
and Cumulative Effect of an
Accounting Change 9,644,361 5,814,351 65.9
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (378,494) (284,995) -
Realized Capital Gains (Losses) (440) (10,472) -
Income before Cumulative Effect
of an Accounting Change 9,265,427 5,518,884 67.9
Cumulative Effect of an Accounting
Change, net of tax (b) 8,778 0 -
Net Income 9,274,205 5,518,884 68.0
Realized Capital Gains (Losses),
net of tax (950,923) (1,596,586) -
Cumulative Effect of an Accounting
Change, net of tax (b) 8,778 0 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change,
net of tax(c) $ 10,216,350 $ 7,115,470 43.6 %
Three Months Ended December 31,
2003 2002 (a) Change
------------ ---------- --------
Per Share - Diluted:
Net Income (Loss) $ 1.03 $ (0.03) - %
Realized Capital Gains (Losses),
net of tax (0.02) (0.23) -
Cumulative Effect of an Accounting
Change, net of tax (b) 0.00 0.00 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax $ 1.05 $ 0.20 425.0 %
Average Diluted Common
Shares Outstanding 2,627,223 2,632,531
Twelve Months Ended December 31,
2003 2002 (a) Change
------------ ---------- --------
Per Share - Diluted:
Net Income $ 3.53 $ 2.10 68.1 %
Realized Capital Gains (Losses),
net of tax (0.36) (0.60) -
Cumulative Effect of an Accounting
Change, net of tax (b) 0.00 0.00 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax $ 3.89 $ 2.70 44.1 %
Average Diluted Common
Shares Outstanding 2,628,066 2,633,979
* Including reconciliation in accordance with Regulation G.
(a)Fourth quarter and full year 2002 include $2.8 billion
pretax and $1.8 billion net, after tax general insurance
reserve charge.
(b)Represents the cumulative effect of an accounting change,
net of tax, related to FIN46 "Consolidation of Variable
Interest Entities".
(c)Also referred to as Adjusted Net Income.
American International Group, Inc.
Pretax Operating Income
(in thousands)
Three Months Ended December 31,
2003 2002 Change
---------- ----------- --------
General Insurance (a):
Domestic Brokerage Group $ 710,534 $(2,026,920) - %
Personal Lines 79,582 50,209 58.5
Mortgage Guaranty 87,380 85,715 1.9
Transatlantic Holdings 103,082 (26,142) -
Foreign General (b) 333,262 234,013 42.4
Intercompany Adjustments 1,718 5,683 -
Realized Capital Gains (Losses) 158,264 (366,169) -
Life Insurance:
Domestic
Life Insurance (c) 211,889 189,262 12.0
Individual Fixed
Annuities 215,378 149,680 43.9
Individual Fixed Annuities -
Runoff (d) 37,988 46,821 (18.9)
Home Service 101,504 96,592 5.1
Group Life/Health 32,047 24,206 32.4
Pension and
Investment
Products 63,796 27,501 132.0
Intercompany
Adjustments (87) (63) -
Guaranteed Investment
Contracts 152,187 154,527 (1.5)
Realized Capital
Gains (Losses) (97,491) (412,519) -
Foreign
Life Insurance 731,676 631,502 15.9
Personal Accident 243,553 198,553 22.7
Group Products 52,577 56,318 (6.6)
Intercompany
Adjustments (4,267) (3,086) -
Guaranteed Investment
Contracts 12,627 9,950 26.9
Realized Capital
Gains (Losses) 47,416 (39,242) -
Financial Services:
Aircraft Finance 179,599 213,077 (15.7)
Capital Markets 357,231 277,691 28.6
Consumer Finance 160,311 139,950 14.5
Other 5,311 (10,419) -
Retirement Services & Asset Management:
AIG VALIC (e) 226,227 158,409 42.8
AIG SunAmerica (f) 15,746 (25,210) -
Other Asset Management and
Annuity Operations (g) 112,305 74,617 50.5
Other Realized Capital Gains (Losses) (193,535) (166,167) -
Other Income (Deductions) - net (87,312) (60,788) -
Income (Loss) before Income Taxes,
Minority Interest and
Cumulative Effect of
an Accounting Change 4,050,498 (312,449) -
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses)
and Cumulative Effect of
an Accounting Change $ 4,135,844 $ 671,648 515.8 %
Twelve Months Ended December 31,
2003 2002 Change
---------- ----------- --------
General Insurance (a):
Domestic Brokerage Group $ 2,728,087 $ (440,190) - %
Personal Lines 252,495 151,338 66.8
Mortgage Guaranty 406,547 417,433 (2.6)
Transatlantic Holdings 379,591 194,367 95.3
Foreign General (b) 1,468,784 1,179,891 24.5
Intercompany Adjustments 6,870 22,730 -
Realized Capital Gains (Losses) (172,461) (858,326) -
Life Insurance:
Domestic
Life Insurance (c) 807,568 718,816 12.3
Individual Fixed
Annuities 739,670 536,802 37.8
Individual Fixed Annuities -
Runoff (d) 147,422 192,752 (23.5)
Home Service 400,126 382,063 4.7
Group Life/Health 119,957 100,955 18.8
Pension and
Investment
Products 210,475 117,719 78.8
Intercompany
Adjustments (302) (240) -
Guaranteed Investment
Contracts 539,034 639,484 (15.7)
Realized Capital
Gains (Losses) (543,733) (983,971) -
Foreign
Life Insurance 2,773,406 2,411,048 15.0
Personal Accident 851,902 681,212 25.1
Group Products 202,131 174,670 15.7
Intercompany
Adjustments (14,705) (11,686) -
Guaranteed Investment
Contracts 50,985 38,678 31.8
Realized Capital
Gains (Losses) (282,160) (68,999) -
Financial Services:
Aircraft Finance 727,956 801,099 (9.1)
Capital Markets 1,085,894 869,776 24.8
Consumer Finance 648,864 549,240 18.1
Other 1,455 (31,395) -
Retirement Services & Asset Management:
AIG VALIC (e) 901,718 730,020 23.5
AIG SunAmerica (f) 38,666 32,029 20.7
Other Asset Management and
Annuity Operations(g) 330,829 253,883 30.3
Other Realized Capital Gains (Losses) (434,752) (529,667) -
Other Income (Deductions) - net (464,011) (129,211) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of
an Accounting Change 13,908,308 8,142,320 70.8
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses)
and Cumulative Effect of
an Accounting Change $15,341,414 $10,583,283 45.0 %
(a)Includes the impact of the fourth quarter and full year 2002
insurance reserve charge of $2.7 billion for Domestic Brokerage
Group and $100 million for Transatlantic Holdings, Inc.
(b)Foreign General insurance excludes the foreign operations
of Transatlantic Holdings, Inc.
(c)Includes Universal Life, Term Life, Whole Life and Variable
Universal Life type products.
(d)Represents runoff annuity business largely sold through
discontinued distribution channels.
(e)Reflects the sale of variable annuity products with fixed
annuity options.
(f)Includes variable annuity (separate account only), mutual fund
and broker-dealer operations.
(g)Includes AIG Global Investment Group and certain foreign
fixed and variable annuity operations.
American International Group, Inc.
Supplementary Earnings Data*
(in thousands)
Three Months Ended December 31,
2003 2002 Change
------------ ----------- --------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 5,327,656 $ 4,184,642 27.3 %
Personal Lines 1,002,322 813,368 23.2
Mortgage Guaranty 141,546 126,404 12.0
Transatlantic Holdings 868,891 657,371 32.2
Foreign General (a) 1,818,781 1,430,724 27.1
------------ -----------
Total 9,159,196 7,212,509 27.0
Operating Income (Loss) (b)
Domestic Brokerage Group 710,534 (2,026,920) -
Personal Lines 79,582 50,209 58.5
Mortgage Guaranty 87,380 85,715 1.9
Transatlantic Holdings 103,082 (26,142) -
Foreign General (a) 333,262 234,013 42.4
Intercompany Adjustments 1,718 5,683 -
------------ -----------
Total before Realized
Capital Gains (Losses) 1,315,558 (1,677,442) -
Realized Capital Gains (Losses) 158,264 (366,169) -
Operating Income (Loss) $ 1,473,822 $(2,043,611) - %
----------------------------------------------------------------------
Combined Ratio (b):
Domestic Brokerage Group 93.53 167.60
Personal Lines 96.03 99.38
Mortgage Guaranty 54.57 55.80
Transatlantic Holdings 96.03 114.01
Foreign General (a) 86.91 92.03
Total 91.39 135.21
----------------------------------------------------------------------
Losses and Loss Expenses Paid $ 4,480,244 $ 4,414,479 1.5 %
Change in Loss and
Loss Expense Reserve (b) 1,555,551 3,308,377 (53.0)
------------ -----------
Losses and Loss
Expenses Incurred (b) 6,035,795 7,722,856 (21.8)
Underwriting Profit (Loss) $ 551,195 $(2,350,630) - %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth
of Net Premiums Written
Worldwide
Growth in Original Currency 24.3 %
Foreign Exchange Impact 2.7
Growth as Reported in U.S.$ 27.0
Foreign
Growth in Original Currency 15.9
Foreign Exchange Impact 11.2
Growth as Reported in U.S.$ 27.1 %
Twelve Months Ended December 31,
2003 2002 Change
------------ ----------- --------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 20,061,153 $15,214,225 31.9 %
Personal Lines 3,706,108 3,182,123 16.5
Mortgage Guaranty 531,558 507,751 4.7
Transatlantic Holdings 3,341,077 2,500,159 33.6
Foreign General (a) 7,571,889 6,009,984 26.0
----------- -----------
Total 35,211,785 27,414,242 28.4
Operating Income (Loss) (b)
Domestic Brokerage Group 2,728,087 (440,190) -
Personal Lines 252,495 151,338 66.8
Mortgage Guaranty 406,547 417,433 (2.6)
Transatlantic Holdings 379,591 194,367 95.3
Foreign General (a) 1,468,784 1,179,891 24.5
Intercompany Adjustments 6,870 22,730 -
------------ -----------
Total before Realized
Capital Gains (Losses) 5,242,374 1,525,569 243.6
Realized Capital Gains (Losses) (172,461) (858,326) -
Operating Income (Loss) $ 5,069,913 $ 667,243 659.8 %
----------------------------------------------------------------------
Combined Ratio (b):
Domestic Brokerage Group 94.38 116.96
Personal Lines 97.38 101.26
Mortgage Guaranty 48.67 43.92
Transatlantic Holdings 96.46 102.31
Foreign General (a) 87.49 90.12
Total 92.43 105.95
----------------------------------------------------------------------
Losses and Loss Expenses Paid $ 17,363,301 $16,359,374 6.1 %
Change in Loss and
Loss Expense Reserve (b) 5,906,211 4,454,427 32.6
------------ -----------
Losses and Loss
Expenses Incurred (b) 23,269,512 20,813,801 11.8
Net Loss and Loss
Expense Reserve (c) 36,647,088 30,349,939 20.7
Underwriting Profit (Loss) $ 2,220,773 $(1,234,034) - %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth
of Net Premiums Written
Worldwide
Growth in Original Currency 26.5 %
Foreign Exchange Impact 1.9
Growth as Reported in U.S.$ 28.4
Foreign
Growth in Original Currency 18.8
Foreign Exchange Impact 7.2
Growth as Reported in U.S.$ 26.0 %
* Including reconciliation in accordance with Regulation G.
(a)Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b)Includes the impact of the fourth quarter and full year 2002
insurance reserve charge of $2.7 billion for Domestic Brokerage
Group and $100 million for Transatlantic Holdings, Inc.
(c)Includes $391 million of beginning reserves related to GE
personal lines business acquired in the third quarter 2003.
Three Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 433,842 $ 406,369 6.8 %
Individual Fixed Annuities 19,135 7,013 172.9
Individual Fixed Annuities -
Runoff (a) 2,371 1,126 110.6
Home Service 209,052 212,767 (1.7)
Group Life/Health 281,751 237,958 18.4
Pension and Investment
Products 276,749 224,003 23.5
Other 7,391 15,110 (51.1)
------------ -----------
Total 1,230,291 1,104,346 11.4
Foreign
Life Insurance 3,797,944 3,246,402 17.0
Personal Accident 940,244 667,899 40.8
Group Products 322,110 244,809 31.6
Other 25,928 26,091 (0.6)
------------ -----------
Total 5,086,226 4,185,201 21.5
Total GAAP Premiums 6,316,517 5,289,547 19.4
----------------------------------------------------------------------
Premiums, Deposits and Other
Considerations (b)
Domestic
Life Insurance 692,696 570,323 21.5
Individual Fixed Annuities 3,205,447 2,287,327 40.1
Individual Fixed Annuities -
Runoff (a) 35,179 44,473 (20.9)
Home Service 253,655 229,192 10.7
Group Life/Health 288,133 235,397 22.4
Pension and Investment
Products 484,464 397,108 22.0
------------ -----------
Total excluding GICs 4,959,574 3,763,820 31.8
Guaranteed Investment
Contracts 3,231,985 1,174,615 175.2
------------ -----------
Total 8,191,559 4,938,435 65.9
Foreign
Life Insurance 4,424,000 3,617,184 22.3
Personal Accident 927,082 669,056 38.6
Group Products 499,801 368,356 35.7
------------ -----------
Total excluding GICs 5,850,883 4,654,596 25.7
Guaranteed Investment
Contracts 834,300 1,025,564 (18.6)
------------ -----------
Total 6,685,183 5,680,160 17.7
Total Premiums, Deposits and
Other Considerations
excluding GICs 10,810,457 8,418,416 28.4
Total Premiums, Deposits and
Other Considerations $ 14,876,742 $10,618,595 40.1 %
Twelve Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 1,747,954 $ 1,604,087 9.0 %
Individual Fixed Annuities 59,149 34,648 70.7
Individual Fixed Annuities -
Runoff (a) 4,194 7,220 (41.9)
Home Service 834,212 854,330 (2.4)
Group Life/Health 1,046,192 966,958 8.2
Pension and Investment
Products 1,327,989 1,105,151 20.2
Other 21,464 49,492 (56.6)
------------ -----------
Total 5,041,154 4,621,886 9.1
Foreign
Life Insurance 13,334,629 12,000,138 11.1
Personal Accident 3,126,249 2,490,967 25.5
Group Products 1,266,909 1,094,481 15.8
Other 110,438 112,905 (2.2)
------------ -----------
Total 17,838,225 15,698,491 13.6
Total GAAP Premiums 22,879,379 20,320,377 12.6
Premiums, Deposits and Other
Considerations (b)
Domestic
Life Insurance 2,693,975 2,352,103 14.5
Individual Fixed Annuities 11,411,847 9,058,625 26.0
Individual Fixed Annuities -
Runoff (a) 202,983 1,268,792 (84.0)
Home Service 985,403 861,333 14.4
Group Life/Health 1,060,254 975,618 8.7
Pension and Investment
Products 1,814,413 1,782,381 1.8
------------ -----------
Total excluding GICs 18,168,875 16,298,852 11.5
Guaranteed Investment
Contracts 9,719,388 9,136,971 6.4
------------ -----------
Total 27,888,263 25,435,823 9.6
Foreign
Life Insurance 15,378,087 13,439,519 14.4
Personal Accident 3,113,370 2,497,087 24.7
Group Products 2,047,073 1,579,390 29.6
------------ -----------
Total excluding GICs 20,538,530 17,515,996 17.3
Guaranteed Investment
Contracts 4,123,858 5,709,727 (27.8)
------------ -----------
Total 24,662,388 23,225,723 6.2
Total Premiums, Deposits and
Other Considerations
excluding GICs 38,707,405 33,814,848 14.5
Total Premiums, Deposits and
Other Considerations $ 52,550,651 $48,661,546 8.0 %
(a)Represents runoff annuity business largely sold through
discontinued distribution channels.
(b)Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a
non-GAAP basis.
Three Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 392,446 $ 330,042 18.9 %
Individual Fixed Annuities 825,689 665,336 24.1
Individual Fixed Annuities -
Runoff (a) 160,924 171,287 (6.1)
Home Service 179,079 175,333 2.1
Group Life/Health 34,279 27,344 25.4
Pension and Investment
Products 265,736 233,003 14.0
Intercompany Adjustments (87) (63) -
------------ -----------
Total excluding GICs 1,858,066 1,602,282 16.0
Guaranteed Investment
Contracts 575,652 571,304 0.8
------------ -----------
Total 2,433,718 2,173,586 12.0
Foreign
Life Insurance 932,763 752,340 24.0
Personal Accident 44,166 36,906 19.7
Group Products 89,463 82,079 9.0
Intercompany Adjustments (4,267) (3,086) -
------------ -----------
Total excluding GICs 1,062,125 868,239 22.3
Guaranteed Investment
Contracts 86,467 103,442 (16.4)
------------ -----------
Total 1,148,592 971,681 18.2
Total Net Investment Income
excluding GICs 2,920,191 2,470,521 18.2
Total Net Investment Income 3,582,310 3,145,267 13.9
----------------------------------------------------------------------
Operating Income
Domestic
Life Insurance 211,889 189,262 12.0
Individual Fixed Annuities 215,378 149,680 43.9
Individual Fixed Annuities -
Runoff (a) 37,988 46,821 (18.9)
Home Service 101,504 96,592 5.1
Group Life/Health 32,047 24,206 32.4
Pension and Investment
Products 63,796 27,501 132.0
Intercompany Adjustments (87) (63) -
------------ -----------
Total excluding GICs 662,515 533,999 24.1
Guaranteed Investment
Contracts 152,187 154,527 (1.5)
------------ -----------
Total Domestic before
Realized Capital
Gains (Losses) 814,702 688,526 18.3
Realized Capital
Gains (Losses) (97,491) (412,519) -
------------ -----------
Domestic Operating Income 717,211 276,007 159.9
Foreign
Life Insurance 731,676 631,502 15.9
Personal Accident 243,553 198,553 22.7
Group Products 52,577 56,318 (6.6)
Intercompany Adjustments (4,267) (3,086) -
------------ -----------
Total excluding GICs 1,023,539 883,287 15.9
Guaranteed Investment
Contracts 12,627 9,950 26.9
------------ -----------
Total Foreign before
Realized Capital
Gains (Losses) 1,036,166 893,237 16.0
Realized Capital
Gains (Losses) 47,416 (39,242) -
------------ -----------
Foreign Operating Income 1,083,582 853,995 26.9
Worldwide Life before Realized
Capital Gains (Losses)
excluding GICs 1,686,054 1,417,286 19.0
Worldwide Life before Realized
Capital Gains (Losses) 1,850,868 1,581,763 17.0
Realized Capital
Gains (Losses) (50,075) (451,761) -
------------ -----------
Worldwide Operating Income $ 1,800,793 $ 1,130,002 59.4 %
Twelve Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 1,358,386 $ 1,275,391 6.5 %
Individual Fixed Annuities 2,982,125 2,515,974 18.5
Individual Fixed Annuities -
Runoff (a) 689,178 712,874 (3.3)
Home Service 689,800 683,553 0.9
Group Life/Health 121,519 107,826 12.7
Pension and Investment
Products 982,211 836,035 17.5
Intercompany Adjustments (302) (240) -
------------ -----------
Total excluding GICs 6,822,917 6,131,413 11.3
Guaranteed Investment
Contracts 2,203,488 2,193,759 0.4
------------ -----------
Total 9,026,405 8,325,172 8.4
Foreign
Life Insurance 3,753,062 3,206,137 17.1
Personal Accident 162,644 141,059 15.3
Group Products 338,001 254,470 32.8
Intercompany Adjustments (14,705) (11,686) -
------------ -----------
Total excluding GICs 4,239,002 3,589,980 18.1
Guaranteed Investment
Contracts 374,020 358,894 4.2
------------ -----------
Total 4,613,022 3,948,874 16.8
Total Net Investment Income
excluding GICs 11,061,919 9,721,393 13.8
Total Net Investment Income 13,639,427 12,274,046 11.1
----------------------------------------------------------------------
Operating Income
Domestic
Life Insurance 807,568 718,816 12.3
Individual Fixed Annuities 739,670 536,802 37.8
Individual Fixed Annuities -
Runoff (a) 147,422 192,752 (23.5)
Home Service 400,126 382,063 4.7
Group Life/Health 119,957 100,955 18.8
Pension and Investment
Products 210,475 117,719 78.8
Intercompany Adjustments (302) (240) -
------------ -----------
Total excluding GICs 2,424,916 2,048,867 18.4
Guaranteed Investment
Contracts 539,034 639,484 (15.7)
------------ -----------
Total Domestic before
Realized Capital
Gains (Losses) 2,963,950 2,688,351 10.3
Realized Capital
Gains (Losses) (543,733) (983,971) -
------------ -----------
Domestic Operating Income 2,420,217 1,704,380 42.0
Foreign
Life Insurance 2,773,406 2,411,048 15.0
Personal Accident 851,902 681,212 25.1
Group Products 202,131 174,670 15.7
Intercompany Adjustments (14,705) (11,686) -
------------ -----------
Total excluding GICs 3,812,734 3,255,244 17.1
Guaranteed Investment
Contracts 50,985 38,678 31.8
------------ -----------
Total Foreign before
Realized Capital
Gains (Losses) 3,863,719 3,293,922 17.3
Realized Capital
Gains (Losses) (282,160) (68,999) -
------------ -----------
Foreign Operating Income 3,581,559 3,224,923 11.1
Worldwide Life before Realized
Capital Gains (Losses)
excluding GICs 6,237,650 5,304,111 17.6
Worldwide Life before Realized
Capital Gains (Losses) 6,827,669 5,982,273 14.1
Realized Capital
Gains (Losses) (825,893) (1,052,970) -
------------ -----------
Worldwide Operating Income $ 6,001,776 $ 4,929,303 21.8 %
(a)Represents runoff annuity business largely sold through
discontinued distribution channels.
Three Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (a):
Individual/Retail $ 95,287 $ 78,800 20.9 %
Institutional Markets 16,123 6,340 154.3
------------ -----------
Total Periodic Sales 111,410 85,140 30.9
Unscheduled & Single
Deposits 80,340 141,010 (43.0)
Home Service
Product Sales
Life/A&H (a) 28,361 26,790 5.9
Fixed Annuity 30,769 - -
----------------------------------------------------------------------
Foreign - First Year Premiums
Life Insurance
Japan 174,839 152,290 14.8
China 29,548 20,624 43.3
Asia excluding Japan
and China 487,369 461,759 5.5
All Other Regions 58,760 46,107 27.4
------------ -----------
Total 750,516 680,780 10.2
Personal Accident
Japan 151,341 84,973 78.1
China 8,383 6,307 32.9
Asia excluding Japan
and China 52,289 45,548 14.8
All Other Regions 26,313 20,620 27.6
------------ -----------
Total 238,326 157,448 51.4
Group Products
Japan 12,553 6,808 84.4
Asia excluding Japan
and China 10,450 9,588 9.0
All Other Regions 108,903 76,611 42.2
------------ -----------
Total 131,906 93,007 41.8
Investment Contracts
Japan 2,859 4,178 (31.6)
All Other Regions 1,462 3,977 (63.2)
------------ -----------
Total 4,321 8,155 (47.0)
Total First Year Premiums
Japan 341,592 248,249 37.6
China 37,931 26,931 40.8
Asia excluding Japan
and China 550,108 516,895 6.4
All Other Regions 195,438 147,315 32.7
------------ -----------
Total $ 1,125,069 $ 939,390 19.8 %
Twelve Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Life Insurance Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (a):
Individual/Retail $ 352,427 $ 292,410 20.5 %
Institutional Markets 74,263 51,350 44.6
------------ -----------
Total Periodic Sales 426,690 343,760 24.1
Unscheduled & Single
Deposits 372,340 407,110 (8.5)
Life Insurance Reserves 19,340,791 17,777,563 8.8
Individual Fixed Annuities
Annuity Reserves 58,457,145 48,837,928 19.7
Home Service
Product Sales
Life/A&H (a) 111,810 99,410 12.5
Fixed Annuity 121,202 - -
Total Insurance Reserves 7,054,836 6,898,000 2.3
Group Products
Annualized Earned Premium 1,236,874 1,110,980 11.3
Pension & Investment Contracts
Insurance Reserves 17,047,763 15,330,374 11.2
Guaranteed Investment Contracts
GIC Reserves 40,801,728 35,838,537 13.8
----------------------------------------------------------------------
Foreign - First Year Premiums
Life Insurance
Japan 586,623 472,919 24.0
China 84,132 58,199 44.6
Asia excluding Japan
and China 1,762,866 1,548,584 13.8
All Other Regions 197,837 157,915 25.3
------------ -----------
Total 2,631,458 2,237,617 17.6
Personal Accident
Japan 466,778 300,739 55.2
China 31,280 22,266 40.5
Asia excluding Japan
and China 195,773 167,446 16.9
All Other Regions 95,622 69,417 37.8
------------ -----------
Total 789,453 559,868 41.0
Group Products
Japan 31,067 23,272 33.5
Asia excluding Japan
and China 47,737 42,895 11.3
All Other Regions 516,030 316,864 62.9
------------ -----------
Total 594,834 383,031 55.3
Investment Contracts
Japan 15,872 21,152 (25.0)
All Other Regions 5,193 9,434 (45.0)
------------ -----------
Total 21,065 30,586 (31.1)
Total First Year Premiums
Japan 1,100,340 818,082 34.5
China 115,412 80,465 43.4
Asia excluding Japan
and China 2,006,376 1,758,925 14.1
All Other Regions 814,682 553,630 47.2
------------ -----------
Total $ 4,036,810 $ 3,211,102 25.7 %
(a)Life Insurance sales represent premiums from new sales that are
expected to be collected over a one year period.
Three Months Ended
December 31,
2003
------------------
Life Insurance Operations:
Foreign Exchange Impact on Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 14.8 %
Foreign Exchange Impact 4.6
Growth as Reported in U.S.$ 19.4
Foreign
Growth in Original Currency 15.7
Foreign Exchange Impact 5.8
Growth as Reported in U.S.$ 21.5
Premiums, Deposits and Other Considerations
excluding GICs (a)
Worldwide
Growth in Original Currency 25.4
Foreign Exchange Impact 3.0
Growth as Reported in U.S.$ 28.4
Foreign
Growth in Original Currency 20.3
Foreign Exchange Impact 5.4
Growth as Reported in U.S.$ 25.7
Guaranteed Investment Contracts
Worldwide
Growth in Original Currency 82.4
Foreign Exchange Impact 2.4
Growth as Reported in U.S.$ 84.8
Foreign
Growth in Original Currency (23.7)
Foreign Exchange Impact 5.1
Growth as Reported in U.S.$ (18.6)%
Twelve Months Ended
December 31,
2003
-------------------
Life Insurance Operations:
Foreign Exchange Impact on Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 10.0 %
Foreign Exchange Impact 2.6
Growth as Reported in U.S.$ 12.6
Foreign
Growth in Original Currency 10.4
Foreign Exchange Impact 3.2
Growth as Reported in U.S.$ 13.6
Premiums, Deposits and Other Considerations
excluding GICs (a)
Worldwide
Growth in Original Currency 13.0
Foreign Exchange Impact 1.5
Growth as Reported in U.S.$ 14.5
Foreign
Growth in Original Currency 14.4
Foreign Exchange Impact 2.9
Growth as Reported in U.S.$ 17.3
Guaranteed Investment Contracts
Worldwide
Growth in Original Currency (9.3)
Foreign Exchange Impact 2.5
Growth as Reported in U.S.$ (6.8)
Foreign
Growth in Original Currency (34.3)
Foreign Exchange Impact 6.5
Growth as Reported in U.S.$ (27.8)%
(a)Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a
non-GAAP basis.
Three Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Financial Services:
Revenues
Aircraft Finance $ 770,591 $ 749,519 2.8 %
Capital Markets 602,988 509,568 18.3
Consumer Finance 684,592 634,501 7.9
Other 11,643 (39,382) -
------------ -----------
Total 2,069,814 1,854,206 11.6
Operating Income
Aircraft Finance 179,599 213,077 (15.7)
Capital Markets 357,231 277,691 28.6
Consumer Finance 160,311 139,950 14.5
Other (a) 5,311 (10,419) -
------------ -----------
Total 702,452 620,299 13.2
----------------------------------------------------------------------
Retirement Services & Asset Management (b):
Revenues
AIG VALIC (c) 603,344 527,031 14.5
AIG SunAmerica (d) 148,795 108,692 36.9
Other Asset Management and
Annuity Operations (e) 375,859 211,323 77.9
------------ -----------
Total 1,127,998 847,046 33.2
Operating Income
AIG VALIC (c) 226,227 158,409 42.8
AIG SunAmerica (d) 15,746 (25,210) -
Other Asset Management and
Annuity Operations (e) 112,305 74,617 50.5
------------ -----------
Total 354,278 207,816 70.5
Variable Annuity Net Flows (f)
Deposits
AIG VALIC 1,355,189 1,280,745 5.8
AIG SunAmerica 926,735 791,626 17.1
------------ -----------
Total Deposits 2,281,924 2,072,371 10.1
Net Flows (f)
AIG VALIC 701,582 787,344 (10.9)
AIG SunAmerica 322,172 63,098 410.6
------------ -----------
Total Net Flows $ 1,023,754 $ 850,442 20.4 %
Surrender Rates
AIG VALIC 5.6% 5.0%
AIG SunAmerica 10.7% 13.3%
Foreign Fixed and Variable
Annuity Deposits $ 2,908,255 $ 187,611 - %
Effective Tax Rates:
Net Income 31.09% -
Realized Capital
Gains (Losses) 35.28% -
Twelve Months Ended December 31,
2003 2002 Change
------------ ----------- --------
Financial Services:
Revenues
Aircraft Finance $ 3,042,483 $ 2,844,977 6.9 %
Capital Markets 1,845,312 1,544,425 19.5
Consumer Finance 2,642,074 2,472,573 6.9
Other 35,656 (47,091) -
------------ -----------
Total 7,565,525 6,814,884 11.0
Operating Income
Aircraft Finance 727,956 801,099 (9.1)
Capital Markets 1,085,894 869,776 24.8
Consumer Finance 648,864 549,240 18.1
Other (a) 1,455 (31,395) -
------------ -----------
Total 2,464,169 2,188,720 12.6
----------------------------------------------------------------------
Retirement Services & Asset Management (b):
Revenues
AIG VALIC (c) 2,305,243 2,133,149 8.1
AIG SunAmerica (d) 536,700 562,606 (4.6)
Other Asset Management and
Annuity Operations (e) 1,053,979 789,094 33.6
------------ -----------
Total 3,895,922 3,484,849 11.8
Operating Income
AIG VALIC (c) 901,718 730,020 23.5
AIG SunAmerica (d) 38,666 32,029 20.7
Other Asset Management and
Annuity Operations (e) 330,829 253,883 30.3
------------ -----------
Total 1,271,213 1,015,932 25.1
Variable Annuity Net Flows (f)
Deposits
AIG VALIC 5,359,804 5,041,725 6.3
AIG SunAmerica 3,412,173 2,995,580 13.9
------------ -----------
Total Deposits 8,771,977 8,037,305 9.1
Net Flows (f)
AIG VALIC 2,931,572 2,625,523 11.7
AIG SunAmerica 1,179,306 570,142 106.8
------------ -----------
Total Net Flows $ 4,110,878 $ 3,195,665 28.6 %
Surrender Rates
AIG VALIC 5.6% 6.0%
AIG SunAmerica 10.7% 10.9%
Foreign Fixed and Variable
Annuity Deposits $ 5,079,867 $ 830,876 511.4 %
Effective Tax Rates:
Net Income 30.66% 28.59%
Realized Capital
Gains (Losses) 33.68% 35.02%
(a)Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b)At December 31, 2003, AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
over $46 billion.
(c)Reflects the sale of variable annuity products with fixed
annuity options.
(d)Includes variable annuity (separate account only), mutual fund
and broker-dealer operations.
(e)Includes AIG Global Investment Group and certain foreign
fixed and variable annuity operations.
(f)Net Flows are deposits net of surrenders.
Additional Reconciliation in Accordance with Regulation G
Twelve Months Twelve Months
Ended Ended
December 31, December 31,
2003 2002
------------ --------------
Return on Equity Reconciliation
Return on Equity, GAAP basis 14.1 % 9.9 %
Percent Related to Reconciliation 3.1 3.5
Return on Equity, as presented(a) 17.2 % 13.4 %
(a)Return on Equity, as presented 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 tax.
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