AIG Reports Second Quarter 2002 Net Income Rose 37.0 Percent to $1.80 Billion.Business Editors NEW YORK--(BUSINESS WIRE)--July 25, 2002 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 second quarter of 2002 increased 37.0 percent to $1.80 billion, compared to $1.31 billion in the second quarter of 2001. For the first six months of 2002, net income totaled $3.78 billion, an increase of 19.3 percent compared to $3.17 billion in the same period of 2001. Second quarter 2002 adjusted income, excluding net realized capital gains (losses) and the cumulative effect of accounting changes and acquisition, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related charges in 2001, increased 9.8 percent to $2.21 billion, and 10.4 percent to $4.34 billion for the first six months of 2002. Following is a summary table of second quarter and six months information (in millions, except per share amounts):
SECOND QUARTER SIX MONTHS
2002 2001 Change 2002 2001 Change
Net income,
as reported $1,801.2 $1,314.9 37.0% $3,781.5 $3,170.2 19.3%
Income,
as adjusted(a) $2,213.4 $2,016.2 9.8% $4,344.1 $3,934.3 10.4%
PER SHARE RESULTS:
Net income,
as reported $ 0.68 $ 0.50 36.0% $ 1.43 $ 1.20 19.2%
Income,
as adjusted(a) $ 0.84 $ 0.76 10.5% $ 1.65 $ 1.48 11.5%
Average shares
outstanding 2,639.9 2,650.9 2,638.6 2,650.8
(a)Adjusted to exclude realized capital gains (losses) and the cumulative effect of accounting changes and acquisition, restructuring and related charges in 2001, net of taxes. Highlights of the second quarter and six months of 2002 include: -- Retirement Savings & Asset Management pretax operating income in the second quarter of 2002 amounted to $280.2 million, a decrease of 1.1 percent, compared to $283.2 million in 2001. -- For the first six months, Retirement Savings & Asset Management pretax operating income increased 4.9 percent to $579.9 million, compared to $553.0 million in 2001. -- At June 30, 2002, AIG's third party assets under management, including retail mutual funds and institutional accounts, totaled approximately $40 billion. At June June: see month. 30, 2002, AIG's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: assets and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. approximated $523 billion and $55 billion, respectively. The return on equity was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 16 percent on an 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. basis. In the quarter and six months respectively, $378 million and $505 million were added to AIG's General Insurance net loss and loss adjustment reserves, bringing the total of those reserves to $26.4 billion at June 30, 2002. Reserves for the September September: see month. 11 terrorist attacks continue to be adequate. Second quarter 2002 income before income taxes, minority interest, realized capital gains (losses) and the cumulative effect of accounting changes and acquisition, restructuring and related charges in 2001 increased 12.9 percent to $3.40 billion and 11.8 percent to $6.59 billion for the first six months of 2002. The following table outlines the impact of foreign exchange on property-casualty and life insurance premiums for the second quarter 2002:
Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
Premium Growth in
Original Currency 35.2% 27.2% 10.9%(a) 22.0%(a)
Foreign Exchange Impact (1.0) (4.5) (1.1) (2.5)
Premium Growth as
Reported in U.S. $ 34.2% 22.7% 9.8% 19.5%
(a) Premium income, deposits and other considerations. (See supplementary data information.) Commenting on second quarter 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 a solid quarter. Our core 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. businesses achieved satisfactory results that were partially offset by lower investment income. Even with lower net investment income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk primarily to market and credit conditions, we achieved strong results from our General Insurance operations. Our Life Insurance and Financial Services businesses also advanced over the second quarter of 2001. Retirement Savings & Asset Management was impacted by weak equity markets. Also this quarter, we incurred net realized capital losses of $629 million, including $356 million in WorldCom The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. securities. "AIG's diversified diversified (di·verˑ·s mix of business provides balance to our earnings stream even in a difficult environment. For example, while lower interest rates and declining equity markets have reduced investment and asset management income, these trends are offset by strong performance in areas such as property-casualty and life insurance. In the current environment we are redoubling our efforts monitoring asset quality and are, whenever necessary, sacrificing yield for quality. AIG has a very strong investment portfolio, whose largest asset class is a diversified mix of highly rated taxable and tax- tax- pref. Variant of taxo-. exempt fixed income securities. Equities represent a relatively minor percentage of our total investment portfolio. "In General Insurance, worldwide net premiums written in the quarter increased 34.2 percent to $6.78 billion. The combined ratio was 94.09 compared to 95.52 in the second quarter of 2001. Rates are going up after a decade of price declines and policy form inflation. Many companies have been weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. by this period of extremely competitive
pricing. The losses following September 11 further ensure a continuing
firming of the market for 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 trend toward firmer pricing is most evident in the U.S. where soft market conditions had been most pronounced and protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. . However, it is also apparent in markets around the world. "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 record net premiums written of $3.68 billion, up 42.8 percent, with a combined ratio of 97.25. Virtually all sectors and lines of business are contributing to this growth and performance. National Union is leading the market for directors and officers insurance. Rates are rising in this difficult class of business in the current environment. Surplus lines writer, 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. , had strong growth and continues to realize significant rate increases. While we are writing significant amounts 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, the U.S. economy requires a terrorism insurance Terrorism insurance is insurance purchased by property owners to cover their potential losses and liabilities that might occur due to terrorist activities. It is considered to be a difficult product for insurance companies, as the odds of terrorist attacks are very backstop that cannot be provided by the private sector alone. Both houses of Congress have passed a terrorism insurance bill. A conference committee will address this issue, most likely after the summer recess. "The Domestic Personal Lines business continues to implement necessary auto insurance rate increases in many states. Net premiums written grew 31.9 percent to $807.1 million and the combined ratio was 99.67. Our new Private Client Group is making very good progress. "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 another excellent quarter. Net premiums written were $126.1 million, up 4.7 percent over the second quarter of 2001. Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results continue to be excellent. Although the U.S. housing market remains very strong, we are paying careful attention to credit trends in light of the overall condition of the U.S. economy. "Transatlantic Holdings, Inc. had strong premium growth of 28.5 percent to $592.0 million and a combined ratio of 98.22. Both domestic and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. contributed to the growth in premiums. Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. pricing continues to improve, and policy terms and conditions are firming, consistent with trends in the primary market. "AIG's Foreign General Insurance operations, the industry's most extensive worldwide property-casualty insurance network, had strong growth with excellent underwriting results. Premiums increased 22.7 percent to $1.57 billion, reflecting strong growth in all major regions. The combined ratio was 88.39. Our two largest regions, the Far East and the United Kingdom, had excellent underwriting results. The United Kingdom, 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. , Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. and 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. had strong premium growth. We are continuing to expand into new markets including India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. and Egypt Egypt (ē`jĭpt), Arab. Misr, biblical Mizraim, officially Arab Republic of Egypt, republic (2005 est. pop. 77,506,000), 386,659 sq mi (1,001,449 sq km), NE Africa and SW Asia. . "General Insurance net investment income declined 3.8 percent in the quarter to $680.0 million. Interest and dividend income constitute a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz a·ble·ness n. majority of net investment income. Interest income
was adversely affected by lower interest rates as the proceeds from
maturing fixed income securities are reinvested. The primary reason for
the decline in net investment income, however, was lower earnings from
our private equity portfolio. There has been a paucity pau·ci·ty n. 1. Smallness of number; fewness. 2. Scarcity; dearth: a paucity of natural resources. of IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. activity in this market. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2002 net cash flow from general insurance operations was a record $1.3 billion. Combined with net cash flow from investment operations, total General Insurance cash flow amounted to $2.4 billion. Income from this record cash flow will be realized in subsequent quarters. "AIG's worldwide Life Insurance business had strong operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $1.53 billion. Life Insurance premium income, deposits and other considerations grew 9.8 percent, or 10.9 percent on an original currency basis. Both our domestic and foreign operations contributed to this growth. "In Asia, we had excellent growth and profitability. Both ALICO ALICO American Life Insurance Company and AIG Star Life in Japan generated substantial new business. A significant part of the income earned by AIG Star Life (formerly Chiyoda) since its purchase by AIG has been 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. earned 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. subsequent to AIG's acquisition. This one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. factor was anticipated when AIG took control of AIG Star Life and lowered policy crediting rates. This segment of AIG Star Life's income will decline in subsequent periods and the majority of AIG Star Life's future income is expected to be related to its core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . We believe earnings from core business will increase going forward because we have retained a larger than anticipated number of former Chiyoda agents, utilized new training procedures and introduced new products. Together with ALICO, AIG Star Life provides us with a formidable platform in Japan. 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 very strong premium growth. "We are making important inroads inroads Noun, pl make inroads into to start affecting or reducing: my gambling has made great inroads into my savings inroads npl to make inroads into [+ into new markets. In China we became the first foreign insurance organization to be licensed in Beijing Beijing (bā-jĭng) or Peking (pē-kĭng, pā–), city (1994 est. urban pop. 6,093,300; 1994 est. total pop. 7,240,700), capital of the People's Republic of China. It is in central Hebei prov. , and earlier this month we received formal authorization The right or permission to use a system resource; the process of granting access. See access control. to open a wholly-owned life insurance operation in Suzhou Suzhou, Soochow (both: s  `jō`), or Wuxian (w . We are also the first
foreign company to receive a license in this important commercial and
industrial center of China. We now have a total of eight life insurance
operations in major markets in China. To take advantage of the enormous
growth opportunities in that country, we have reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. the management structure within China and have named a country manager and a senior life insurance executive. We also are developing new distribution channels throughout Southeast Asia and extending our presence in India and 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 . "The domestic life business also performed well in the second quarter. The integration of 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 is on track from both an operational and expense control standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the . The home services business achieved positive growth through the introduction of new products and higher persistency rates. Throughout American General, cross-marketing initiatives are being well received in the marketplace. These include structured settlements, medical stop loss and accident and health products. 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. , whose results are reported in the life insurance segment, is the leading provider of fixed-rate annuities through banks. AIG Annuity achieved record sales as the market for fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. remains very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. . "Financial Services operating income was $542.0 million, up 11.4 percent over the second quarter of 2001. International Lease Finance Corporation (ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) ), our market-leading commercial aircraft leasing company, earned $207.7 million versus $183.5 million in the second quarter of 2001, an outstanding performance in a challenging market for commercial aviation. ILFC's fleet of modern, highly efficient jet aircraft remains attractive to cost conscious airlines in this environment. AIG Financial Products Corp. earned $180.3 million compared to $188.8 in the second quarter of 2001 and their transaction pipeline is good. The consumer finance business performed well in the quarter, earning $140.9 million compared to $126.4 million in the second quarter of 2001. American General Finance, the third largest U.S. consumer finance company, had a very good quarter. Our 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 good results from around the world with the exception of Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , where our modest operation continues to be impacted by local economic problems. AIG Trading Group Inc. continues to gain ground. "Retirement Savings & Asset Management operating income declined to $280.2 million from $283.2 million. 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. , our group retirement product business, had a good quarter. AIG VALIC is successfully cross-marketing AIG SunAmerica and AIG Annuity products. The business segments most directly correlated cor·re·late v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates v.tr. 1. To put or bring into causal, complementary, parallel, or reciprocal relation. 2. to U.S. equity markets, such as SunAmerica's 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. business, had declining sales in the quarter. Our institutional investment management business includes private equity, listed equity and fixed income products sold to public and corporate pension funds, foundations, endowments and high net worth individuals. "The category 'Other Income (Deductions) - net' on the summary income statement was a loss of $49.7 million compared to a profit of $5.0 million in the second quarter of 2001, primarily the result of weaker performance of SunAmerica Inc. investments in partnerships and private equities. "AIG discloses the impact of its stock option compensation costs in the footnotes to its annual financial statements. For the year 2001, we reported that these costs would have reduced net income by $0.05 per share. AIG would not have any concern about a formal accounting policy that would mandate A judicial command, order, or precept, written or oral, from a court; a direction that a court has the authority to give and an individual is bound to obey. A mandate might be issued upon the decision of an appeal, which directs that a particular action be taken, or upon a the expensing of stock options. "AIG fully consolidates the great majority of special purpose vehicles (SPV's) which it utilizes in connection with certain products provided by AIG Financial Products Corp., certain guaranteed investment contract 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. programs (GIC's) written by the life insurance subsidiaries and certain invested assets and asset management activities. SPV's that are not consolidated are essentially traditional investment vehicles, such as investments in collateralized debt obligations Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, , wherein where·in adv. In what way; how: Wherein have we sinned? conj. 1. In which location; where: the country wherein those people live. 2. many investors have an equity interest in the vehicle. AIG recognizes its equity interest in the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge ." GENERAL INSURANCE -- Retirement Savings & Asset Management pretax operating income in the second quarter of 2002 amounted to $280.2 million, a decrease of 1.1 percent, compared to $283.2 million in 2001. -- For the first six months, Retirement Savings & Asset Management pretax operating income increased 4.9 percent to $579.9 million, compared to $553.0 million in 2001. -- At June 30, 2002, AIG's third party assets under management, including retail mutual funds and institutional accounts, totaled approximately $40 billion. LIFE INSURANCE -- Retirement Savings & Asset Management pretax operating income in the second quarter of 2002 amounted to $280.2 million, a decrease of 1.1 percent, compared to $283.2 million in 2001. -- For the first six months, Retirement Savings & Asset Management pretax operating income increased 4.9 percent to $579.9 million, compared to $553.0 million in 2001. -- At June 30, 2002, AIG's third party assets under management, including retail mutual funds and institutional accounts, totaled approximately $40 billion. FINANCIAL SERVICES -- Retirement Savings & Asset Management pretax operating income in the second quarter of 2002 amounted to $280.2 million, a decrease of 1.1 percent, compared to $283.2 million in 2001. -- For the first six months, Retirement Savings & Asset Management pretax operating income increased 4.9 percent to $579.9 million, compared to $553.0 million in 2001. -- At June 30, 2002, AIG's third party assets under management, including retail mutual funds and institutional accounts, totaled approximately $40 billion. RETIREMENT SAVINGS & ASSET MANAGEMENT -- Retirement Savings & Asset Management pretax operating income in the second quarter of 2002 amounted to $280.2 million, a decrease of 1.1 percent, compared to $283.2 million in 2001. -- For the first six months, Retirement Savings & Asset Management pretax operating income increased 4.9 percent to $579.9 million, compared to $553.0 million in 2001. -- At June 30, 2002, AIG's third party assets under management, including retail mutual funds and institutional accounts, totaled approximately $40 billion. AIG is the world's leading U.S.-based international insurance and financial services organization, the largest underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. of commercial and industrial insurance in the United States, and among the top-ranked U.S. life insurers. Its member companies write a wide range of general insurance and life insurance products for commercial, institutional and individual customers through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. 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, and consumer finance. AIG has one of the largest retirement savings businesses in the United States 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 9:15 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 , August 2, 2002. Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain forward-looking statements. Please refer to AIG's Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2002 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 June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written $ 6,782,657 $ 5,055,147 34.2 %
Net Premiums Earned 5,859,163 4,742,080 23.6
Adjusted Underwriting Profit 416,234 239,306 73.9
Net Investment Income 680,047 706,927 (3.8)
Income before Realized
Capital Gains (Losses) 1,096,281 946,233 15.9
Realized Capital Gains (Losses) (160,102) (36,838) -
Operating Income $ 936,179 $ 909,395 2.9 %
Loss Ratio 74.06 74.21
Expense Ratio 20.03 21.31
Combined Ratio 94.09 95.52
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 13,282,382 $ 12,093,740 9.8 %
Net Investment Income 3,046,738 2,741,592 11.1
Income before Realized
Capital Gains (Losses) 1,528,374 1,287,988 18.7
Realized Capital Gains (Losses) (310,650) (3,079) -
Operating Income 1,217,724 1,284,909 (5.2)
Financial Services Operating Income 542,014 486,578 11.4
Retirement Savings & Asset
Management Operating Income 280,215 283,221 (1.1)
Other Realized Capital Gains (Losses) (158,719) (309,672) -
Other Income (Deductions) - net (49,708) 4,959 -
Acquisition, Restructuring and
Related Charges 0 (653,746) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 2,767,705 2,005,644 38.0
Income Taxes 871,816 545,986 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 1,895,889 1,459,658 29.9
Minority Interest, after tax -
Operating Income (91,655) (95,615) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (3,039) (392) -
Income before Cumulative Effect
of Accounting Changes 1,801,195 1,363,651 32.1
Cumulative Effect of Accounting
Changes, net of tax (c) 0 (48,707) -
Net Income, as reported 1,801,195 1,314,944 37.0
Income, as adjusted (d) $ 2,213,389 $ 2,016,196 9.8 %
Per Share - Diluted:
Net Income, as reported $ 0.68 $ 0.50 36.0 %
Income, as adjusted (d) $ 0.84 $ 0.76 10.5 %
Average Diluted Common
Shares Outstanding 2,639,921 2,650,910
Six Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written $ 13,116,940 $ 9,919,900 32.2 %
Net Premiums Earned 11,365,691 9,463,813 20.1
Adjusted Underwriting Profit 725,935 495,710 46.4
Net Investment Income 1,425,413 1,422,840 0.2
Income before Realized
Capital Gains (Losses) 2,151,348 1,918,550 12.1
Realized Capital Gains (Losses) (281,860) (57,701) -
Operating Income $ 1,869,488 $ 1,860,849 0.5 %
Loss Ratio 74.63 74.92
Expense Ratio 20.27 20.79
Combined Ratio 94.90 95.71
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 26,099,564 $ 23,203,935 12.5 %
Net Investment Income 5,949,324 5,430,103 9.6
Income before Realized
Capital Gains (Losses) 2,883,765 2,442,302 18.1
Realized Capital Gains (Losses) (339,411) (20,901) -
Operating Income 2,544,354 2,421,401 5.1
Financial Services Operating Income 1,015,928 916,513 10.8
Retirement Savings & Asset
Management Operating Income 579,893 552,979 4.9
Other Realized Capital Gains (Losses) (240,039) (356,838) -
Other Income (Deductions) - net (43,216) 64,018 -
Acquisition, Restructuring and
Related Charges 0 (653,746) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 5,726,408 4,805,176 19.2
Income Taxes 1,763,644 1,371,741 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 3,962,764 3,433,435 15.4
Minority Interest, after tax -
Operating Income (178,679) (206,737) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (2,590) (1,547) -
Income before Cumulative Effect
of Accounting Changes 3,781,495 3,225,151 17.3
Cumulative Effect of Accounting
Changes, net of tax (c) 0 (54,953) -
Net Income, as reported 3,781,495 3,170,198 19.3
Income, as adjusted (d) $ 4,344,084 $ 3,934,254 10.4 %
Per Share - Diluted:
Net Income, as reported $ 1.43 $ 1.20 19.2 %
Income, as adjusted (d) $ 1.65 $ 1.48 11.5 %
Average Diluted Common
Shares Outstanding 2,638,607 2,650,833
(a)Restated to include American General Corporation acquired August
29, 2001 and to conform to the presentation with respect to 2002.
(b)GAAP premium income was $5,159,564 and $9,943,011 for the second
quarter and six months 2002, respectively, compared to $4,794,610
and $9,164,041 for the second quarter and six months 2001,
respectively.
(c)Represents the cumulative effect of accounting changes, net of tax,
related to FASB 133 "Accounting for Derivative Instruments and
Hedging Activities" and EITF 99-20 "Recognition of Interest Income
and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets".
(d)Adjusted to exclude realized capital gains (losses), the cumulative
effect of accounting changes and acquisition, restructuring and
related charges, net of taxes.
American International Group, Inc.
Supplementary Data
(in thousands)
Three Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 3,684,647 $ 2,580,045 42.8 %
Personal Lines 807,114 611,986 31.9
Mortgage Guaranty 126,131 120,444 4.7
Transatlantic Holdings 592,026 460,899 28.5
Foreign General (b)(c) 1,572,739 1,281,773 22.7
Total 6,782,657 5,055,147 34.2
Operating Income (d)
Domestic Brokerage Group (e) 511,650 500,064 2.3
Personal Lines 62,851 6,711 -
Mortgage Guaranty 124,775 110,715 12.7
Transatlantic Holdings 73,584 46,319 58.9
Foreign General (b) 317,739 276,596 14.9
Intercompany Adjustments 5,682 5,828 -
Total $ 1,096,281 $ 946,233 15.9 %
Combined Ratio:
Domestic Brokerage Group 97.25 98.14
Personal Lines 99.67 104.30
Mortgage Guaranty 29.76 30.35
Transatlantic Holdings 98.22 102.94
Foreign General (b) 88.39 88.82
Losses and Loss Expenses Paid $ 3,961,354 $ 3,470,008 14.2 %
Change in Loss and
Loss Expense Reserve 378,006 49,009 -
Losses and Loss Expenses Incurred 4,339,360 3,519,017 23.3
Net Loss and Loss Expense Reserve 26,400,484 25,063,385 5.3
GAAP Underwriting Profit 416,234 239,306 73.9
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (f) 1,092,064 1,261,344 (13.4)
Fixed Annuities, Pension
and Investment Products 6,097,839 5,654,320 7.8
Accident & Health (g) 0 79,323 -
Total 7,189,903 6,994,987 2.8
Foreign
Life 5,011,451 4,179,426 19.9
Personal Accident 611,089 510,210 19.8
Group Life/Medical 245,596 220,806 11.2
Fixed Annuity/Pension 224,343 188,311 19.1
Total (h) 6,092,479 5,098,753 19.5
Net Investment Income
Domestic
Life 540,662 519,109 4.2
Fixed Annuities, Pension
and Investment Products 1,532,496 1,363,933 12.4
Accident & Health (g) 0 2,425 -
Intercompany Adjustments (56) (50) -
Total 2,073,102 1,885,417 10.0
Foreign
Life 859,952 751,144 14.5
Personal Accident 33,406 31,485 6.1
Group Life/Medical 11,979 11,160 7.3
Fixed Annuity/Pension 71,057 64,815 9.6
Intercompany Adjustments (2,758) (2,429) -
Total 973,636 856,175 13.7
Operating Income (d)
Domestic
Life 311,966 274,963 13.5
Fixed Annuities, Pension
and Investment Products 363,678 324,249 12.2
Accident & Health (g) 0 684 -
Intercompany Adjustments (56) (50) -
Total 675,588 599,846 12.6
Foreign
Life 655,590 519,857 26.1
Personal Accident 159,823 136,365 17.2
Group Life/Medical 29,032 29,198 (0.6)
Fixed Annuity/Pension 11,099 5,151 -
Intercompany Adjustments (2,758) (2,429) -
Total 852,786 688,142 23.9
Total Operating Income 1,528,374 1,287,988 18.7
Total Operating Income excluding
Home Services Business 1,430,540 1,193,080 19.9
Financial Services:
Revenues
International Lease
Finance Corp. 725,740 656,588 10.5
AIG Financial Products Corp. 266,040 271,576 (2.0)
Consumer Finance 613,552 634,725 (3.3)
AIG Trading Group Inc. 70,967 19,859 257.4
Other (2,259) (1,968) -
Total 1,674,040 1,580,780 5.9
Operating Income
International Lease
Finance Corp. 207,674 183,466 13.2
AIG Financial Products Corp. 180,289 188,838 (4.5)
Consumer Finance 140,911 126,391 11.5
AIG Trading Group Inc. 20,979 7,388 184.0
Other (i) (7,839) (19,505) -
Total 542,014 486,578 11.4
Retirement Savings & Asset Management:
Revenues
VALIC (j) 532,376 535,741 (0.6)
SunAmerica (k) 151,714 172,686 (12.1)
Other Asset Management and
Annuity Operations (l) 187,370 228,374 (18.0)
Total 871,460 936,801 (7.0)
Operating Income
VALIC (j) 219,072 170,418 28.5
SunAmerica (k) 11,388 59,913 (81.0)
Other Asset Management and
Annuity Operations (l) 49,755 52,890 (5.9)
Total 280,215 283,221 (1.1)
Variable Annuity Net Sales
Sales
VALIC 1,237,587 1,155,715 7.1
SunAmerica 798,251 876,657 (8.9)
Surrenders
VALIC 655,008 554,554 18.1
SunAmerica 553,327 467,373 18.4
Total
VALIC 582,579 601,161 (3.1)
SunAmerica 244,924 409,284 (40.2)
Total Net Sales $ 827,503 $ 1,010,445 (18.1)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 32.15% 28.38%
Realized Capital
Gains (Losses) Alone 35.00% 35.00%
As Reported 31.50% 27.22%
Six Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 7,130,809 $ 4,986,699 43.0 %
Personal Lines 1,533,214 1,246,488 23.0
Mortgage Guaranty 248,353 238,963 3.9
Transatlantic Holdings 1,155,581 906,578 27.5
Foreign General (b)(c) 3,048,983 2,541,172 20.0
Total 13,116,940 9,919,900 32.2
Operating Income (d)
Domestic Brokerage Group (e) 1,042,738 991,108 5.2
Personal Lines 85,987 19,172 -
Mortgage Guaranty 236,424 212,759 11.1
Transatlantic Holdings 145,632 106,192 37.1
Foreign General (b) 629,202 577,661 8.9
Intercompany Adjustments 11,365 11,658 -
Total $ 2,151,348 $ 1,918,550 12.1 %
Combined Ratio:
Domestic Brokerage Group 97.44 98.39
Personal Lines 100.36 103.88
Mortgage Guaranty 35.58 33.16
Transatlantic Holdings 98.19 101.32
Foreign General (b) 90.06 89.95
Losses and Loss Expenses Paid $ 7,977,671 $ 6,978,848 14.3 %
Change in Loss and
Loss Expense Reserve 504,972 111,789 -
Losses and Loss Expenses Incurred 8,482,643 7,090,637 19.6
Net Loss and Loss Expense Reserve 26,400,484 25,063,385 5.3
GAAP Underwriting Profit 725,935 495,710 46.4
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations
Domestic
Life (f) 2,208,998 2,326,426 (5.0)
Fixed Annuities, Pension
and Investment Products 12,252,555 10,952,589 11.9
Accident & Health (g) 0 156,818 -
Total 14,461,553 13,435,833 7.6
Foreign
Life 9,464,985 7,952,617 19.0
Personal Accident 1,174,558 989,574 18.7
Group Life/Medical 534,392 467,958 14.2
Fixed Annuity/Pension 464,076 357,953 29.6
Total (h) 11,638,011 9,768,102 19.1
Net Investment Income
Domestic
Life 1,067,988 1,043,787 2.3
Fixed Annuities, Pension
and Investment Products 2,957,508 2,671,919 10.7
Accident & Health (g) 0 4,655 -
Intercompany Adjustments (113) (100) -
Total 4,025,383 3,720,261 8.2
Foreign
Life 1,704,415 1,503,898 13.3
Personal Accident 66,463 64,143 3.6
Group Life/Medical 22,452 22,535 (0.4)
Fixed Annuity/Pension 136,126 124,124 9.7
Intercompany Adjustments (5,515) (4,858) -
Total 1,923,941 1,709,842 12.5
Operating Income (d)
Domestic
Life 588,110 525,049 12.0
Fixed Annuities, Pension
and Investment Products 719,816 631,556 14.0
Accident & Health (g) 0 4,392 -
Intercompany Adjustments (113) (100) -
Total 1,307,813 1,160,897 12.7
Foreign
Life 1,189,518 943,381 26.1
Personal Accident 313,409 275,001 14.0
Group Life/Medical 59,134 53,013 11.5
Fixed Annuity/Pension 19,406 14,868 30.5
Intercompany Adjustments (5,515) (4,858) -
Total 1,575,952 1,281,405 23.0
Total Operating Income 2,883,765 2,442,302 18.1
Total Operating Income excluding
Home Services Business 2,690,541 2,252,604 19.4
Financial Services:
Revenues
International Lease
Finance Corp. 1,366,582 1,278,193 6.9
AIG Financial Products Corp. 538,135 519,267 3.6
Consumer Finance 1,226,489 1,250,290 (1.9)
AIG Trading Group Inc. 114,188 58,751 94.4
Other (4,863) (10,752) -
Total 3,240,531 3,095,749 4.7
Operating Income
International Lease
Finance Corp. 380,762 343,956 10.7
AIG Financial Products Corp. 356,461 354,082 0.7
Consumer Finance 265,282 232,715 14.0
AIG Trading Group Inc. 31,094 13,905 123.6
Other (i) (17,671) (28,145) -
Total 1,015,928 916,513 10.8
Retirement Savings & Asset Management:
Revenues
VALIC (j) 1,066,871 1,062,537 0.4
SunAmerica (k) 305,646 345,535 (11.5)
Other Asset Management and
Annuity Operations (l) 363,762 397,142 (8.4)
Total 1,736,279 1,805,214 (3.8)
Operating Income
VALIC (j) 410,607 333,664 23.1
SunAmerica (k) 50,213 122,358 (59.0)
Other Asset Management and
Annuity Operations (l) 119,073 96,957 22.8
Total 579,893 552,979 4.9
Variable Annuity Net Sales
Sales
VALIC 2,521,723 2,331,557 8.2
SunAmerica 1,503,089 1,759,418 (14.6)
Surrenders
VALIC 1,283,524 1,245,370 3.1
SunAmerica 1,058,375 978,786 8.1
Total
VALIC 1,238,199 1,086,187 14.0
SunAmerica 444,714 780,632 (43.0)
Total Net Sales $ 1,682,913 $ 1,866,819 (9.9)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 31.35% 29.09%
Realized Capital
Gains (Losses) Alone 34.98% 35.10%
As Reported 30.80% 28.55%
(a)Restated to include American General Corporation acquired August
29, 2001 and to conform to the presentation with respect to 2002.
(b)Foreign general insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(c)The growth in Foreign General net premiums written in original
currency was 27.2 percent and 28.2 percent for the second quarter
and six months 2002, respectively.
(d)Operating income excludes realized capital gains (losses).
(e)Operating income in Domestic Brokerage Group was adversely
impacted by lower net investment income in the second
quarter 2002, as previously discussed.
(f)Excluding single premium product sales, principally private
placement life sales, life premiums increased by 12.3% in the
second quarter of 2002.
(g)Accident & Health is now reported in Domestic Brokerage Group.
(h)The growth in foreign premium income, deposits and other
considerations in original currency was 22.0 percent in the second
quarter and 23.9 percent for the six months.
(i)Includes Other Financial Services Companies and Intercompany
Reclassifications.
(j)VALIC's revenues and operating income reflect the sale of variable
annuity products with fixed annuity options.
(k)Includes variable annuity, mutual fund and broker-dealer
operations.
(l)Includes AIG Global Investment Group, AIG Private Bank, John McStay
Investment Counsel and certain overseas variable annuity
operations.
|
|
|||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion