AIG Reports Second Quarter 2003 Net Income Rose 26.4 Percent to $2.28 Billion; Announces Additional 25.0 Percent Increase in Quarterly Common Stock Dividend.Business Editors NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY--(BUSINESS WIRE)--July 24, 2003 American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Inc. (AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group ) today reported that its net income for the second quarter of 2003 increased 26.4 percent to $2.28 billion, compared to $1.80 billion in the second quarter of 2002. For the first six months of 2003, net income totaled $4.23 billion, an increase of 11.9 percent compared to $3.78 billion in the same period of 2002. Following is a summary table of second quarter and six months information (in millions, except per share amounts):
SECOND QUARTER
Per Share
---------
2003 2002 Change 2003 2002 Change
-------- -------- ------ ----- ----- ------
Net income $2,276.9 $1,801.2 26.4% $0.87 $0.68 27.9%
Realized capital losses,
net of tax $243.4 $412.2 - $0.09 $0.16 -
Net income, excluding
realized capital
losses, net of tax $2,520.3 $2,213.4 13.9% $0.96 $0.84 14.3%
Average shares
outstanding 2,627.4 2,639.9
SIX MONTHS
Per Share
---------
2003 2002 Change 2003 2002 Change
-------- -------- ------ ----- ----- ------
Net income $4,230.4 $3,781.5 11.9% $1.61 $1.43 12.6%
Realized capital losses,
net of tax $656.3 $562.6 - $0.25 $0.22 -
Net income, excluding
realized capital
losses, net of tax $4,886.7 $4,344.1 12.5% $1.86 $1.65 12.7%
Average shares
outstanding 2,627.8 2,638.6
Highlights of the second quarter of 2003 include: -- Record capital funds (shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. ) at June June: see month. 30, 2003 exceeding $68 billion, an increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $6 billion over March 31, 2003. -- Record consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: assets at June 30, 2003 of approximately $620 billion, an increase of approximately $28 billion over March 31, 2003. -- Record General Insurance net premiums written of $8.84 billion, an increase of 30.4 percent over the second quarter of 2002. -- Record General Insurance pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income 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 $1.21 billion, including $83.5 million of realized capital losses. -- General Insurance combined ratio of 92.27 for the second quarter of 2003. -- Record General Insurance cash flow of $5.91 billion in the first six months of 2003. -- General Insurance net loss and loss adjustment reserves totaling $33.09 billion as of June 30, 2003, an increase of $1.57 billion and $2.74 billion for the second quarter and six months, respectively. -- Life Insurance GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). premiums of $5.47 billion, up 6.1 percent over the second quarter of 2002. -- Record Life Insurance pretax operating income of $1.56 billion, including $171.1 million of realized capital losses. Income before income taxes and minority interest in the second quarter of 2003 increased 23.9 percent. Following is a summary table of second quarter and six months information (in millions):
SECOND QUARTER SIX MONTHS
2003 2002 Change 2003 2002 Change
---- ---- ------ ---- ---- ------
Income before income
taxes and minority
interest $3,430.4 $2,767.7 23.9% $6,354.3 $5,726.4 11.0%
Pretax realized
capital losses $356.9 $629.5 - $988.4 $861.3 -
The following table outlines the impact of foreign exchange on
property-casualty net premiums written and life insurance GAAP
premiums for the second quarter 2003:
Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
--------- --------- --------- ---------
Premium Growth in Original
Currency 28.3% 17.2% 3.6% 3.4%
Foreign Exchange Impact 2.1 7.3 2.5 3.3
Premium Growth as Reported in
U.S. $ 30.4% 24.5% 6.1% 6.7%
Commenting on second quarter results, AIG Chairman M. R. Greenberg Green·berg , Joseph Harold Born 1915. American linguist. His influential works include Languages of Africa (1966) and Language Universals (1966). Noun 1. said, "AIG had a very good quarter. General Insurance, Life Insurance and Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. all had record results. Retirement Savings & Asset Management had improved performance as equity markets made gains. "In June, we announced an agreement to buy from General Electric its life insurance operations in Japan and auto and home insurance business in the U. S. These acquisitions will enhance our position in attractive markets and businesses where AIG has proven capabilities. "Over the second quarter, assets and shareholders' equity both rose to record levels. At June 30, 2003, assets approximated $620 billion and shareholders' equity exceeded $68 billion. "General Insurance operating income in the second quarter of 2003 increased 29.4 percent over a year ago to $1.21 billion including realized capital losses of $83.5 million. We had excellent results in both the Domestic Brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. Group and Foreign General operations. Net premiums written were a record $8.84 billion, up 30.4 percent over a year ago. The General Insurance combined ratio was a strong 92.27 versus 94.09 a year ago. The General Insurance expense ratio further improved to 18.44 from 20.03 a year ago. "In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Domestic Brokerage Group net premiums written in the second quarter of 2003 increased 37.4 percent over a year ago to a record $5.06 billion. The combined ratio was 94.43 compared to 97.25 in the second quarter of 2002. "Property-casualty rates in the Domestic Brokerage Group continued to rise in the quarter. Rate increases ranged from 30 to 40 percent in most casualty lines, more in certain lines such as directors and officers insurance and excess casualty coverages. Property rates, which had increased significantly over the last few years, were up modestly in the second quarter. During the quarter we introduced new products including comprehensive protection for directors and officers, new coverages against cyber (1) From "cybernetics," it is a prefix attached to everyday words to add a computer, electronic or online connotation. The term is similar to "virtual," but the latter is used more frequently. See virtual. security threats and new aviation coverages. "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. (HSB) is achieving excellent results and is working closely with Domestic Brokerage Group and Foreign General operations identifying new opportunities. HSB is the industry leader in providing equipment breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. insurance and related engineering and loss control services. "Domestic Personal Lines had very good current results in the second quarter. Net premiums written were $900.4 million, up 11.6 percent over the prior year. Rates have continued to firm. The combined ratio was 100.07 or 95.84 excluding 4.23 points associated with 21st Century Insurance Group's $37 million increase in 1994 Northridge earthquake The Northridge earthquake occurred on January 17, 1994 at 4:31 AM Pacific Standard Time in the city of Los Angeles, California. The earthquake had a "strong" moment magnitude of 6. loss reserves for claims reopened by California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). Senate Bill 1899, as previously reported by 21st Century. The combined ratio was 99.67 in the second quarter of 2002. The pending acquisition of GE's U. S. based automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of insurance units will complement AIG's existing domestic personal automobile insurance business. "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, AIG's mortgage guaranty insurance operation, achieved an excellent combined ratio of 35.80. Reflecting the continuing high level of refinancings, new business was offset by a decline in renewal premiums. "Foreign General Insurance had excellent results from its unrivalled worldwide franchise. Net premiums in the second quarter increased 24.5 percent over the second quarter of 2002, to a record $1.96 billion. The combined ratio was an outstanding 86.53 compared to 88.39, a year ago. 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 the U.K. had double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" premium growth. The Japan and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations continue to benefit from the flight to quality. Economic weakness in many parts of the world has not deterred our growth as a result of our unsurpassed ability to provide strong financial security, a wide range of innovative products and responsive service. "At Transatlantic Holdings, Inc., a majority-owned AIG subsidiary, net premiums written in the second quarter of 2003 rose 35.6 percent to $802.9 million. The combined ratio improved to 96.30 from 98.22. Transatlantic is the largest broker-market 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. organization in the United States and a leader in the 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 field. "General Insurance cash flow continues to be very strong. New cash flow for investments from General Insurance operations in the first six months of 2003 was a record $5.91 billion, compared to $2.79 billion in the first six months of 2002. Net cash flow has increased $13.34 billion since the beginning of 2002. Net investment income rose 7.6 percent to $731.5 million in the second quarter of 2003 and 6.3 percent to $1.52 billion for the first six months of 2003. The growth in investment income is a direct reflection of the strong growth in net cash flow and improving results in partnership income. "We added $1.57 billion and $2.74 billion to AIG's General Insurance net loss and loss adjustment reserves for the quarter and six months, respectively, bringing the total of those reserves to $33.09 billion at June 30, 2003. "Worldwide Life Insurance operating income in the second quarter of 2003 was $1.56 billion, including $171.1 million of realized capital losses, compared to $1.22 billion, including $310.7 million of realized capital losses, a year ago. GAAP premiums were $5.47 billion, an increase of 6.1 percent over the second quarter of 2002. Total life production, which includes premiums, deposits and other considerations, was $11.58 billion, a decline of 12.8 percent, compared to second quarter 2002. 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. are 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. business and in the second quarter we reduced our issuances, especially in the domestic market. Worldwide life production, excluding worldwide guaranteed investment contracts and domestic individual fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. , increased 6.4 percent in the second quarter of 2003, compared to the second quarter 2002. Life insurance cash flow from both foreign and domestic operations continues to be outstanding. "Asia, the largest region of Foreign Life, had good operating income and premium growth. While the outbreak outbreak see epidemic. of SARS in Asia had a short term impact on first year life insurance policy sales in April and May, conditions have improved dramatically since then. 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. , Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , Southern China and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. are virtually back to normal. Conditions in 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 and Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). also are much improved. The SARS epidemic epidemic, outbreak of disease that affects a much greater number of people than is usual for the locality or that spreads to regions where it is ordinarily not present. has heightened the awareness of the importance of protection policies, and we have been introducing a series of new products to serve this need. In China, second quarter production, comprised of premiums, deposits and other considerations, rose 28 percent. In the past six months, new business increased 30 percent in China and more than 10 percent in Hong Kong. "In Japan, the world's second largest life insurance market after the United States, we had good results. ALICO ALICO American Life Insurance Company , our largest life operation in Japan, had strong performance in terms of premium growth and operating income. When we complete 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. Life in Japan, AIG will have the leading foreign life insurance presence in the marketplace and a strong distribution platform for serving the life, 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. , and accident and health insurance needs of this important market. Additionally, our Korean Korean, language of uncertain ancestry. It is thought by some scholars to be akin to Japanese, by others to be a member of the Altaic subfamily of the Ural-Altaic family of languages (see Uralic and Altaic languages), and by still others to be unrelated to any known operation performed well this quarter. "Domestic Life also had good results. 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, which was the most profitable life 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 in 2002, had good growth through new products and cross selling initiatives. Domestic Life operating income including realized capital losses in the second quarter of 2003 was $594.3 million. AIG American General's transition to a profit center structure has enabled it to respond quickly to new opportunities, such as the recently launched voluntary benefits unit, which will sell payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. life and accident and health products. "The individual fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. business, which is reported in the Life Insurance segment, performed well. We have been lowering annuity crediting rates, so the net interest margin in this business has remained steady or improved even as interest rates remain low. In markets where we were not able to reduce rates and maintain adequate margins we deliberately de·lib·er·ate adj. 1. Done with or marked by full consciousness of the nature and effects; intentional: mistook the oversight for a deliberate insult. 2. curtailed sales in the second quarter. That trend is reversing itself in the third quarter and business is off to a very strong start. "Financial Services had excellent results, achieving solid profits derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from a diversified diversified (di·verˑ·s range of businesses and products. Operating income grew 14.9 percent to $622.9 million in the second quarter of 2003, compared to $542.0 million in the second quarter of 2002. "International Lease Finance Corporation (ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) ) reported operating income of $183.6 million in the second quarter of 2003, versus $207.7 million a year ago. Despite the challenging environment, demand for ILFC's modern and efficient fleet continues to be strong. All new and used aircraft deliveries in 2003 have been placed, and 78 percent of 2004 new aircraft deliveries have been leased. While some of the new lease rates for aircraft that have been redeployed are lower, this is largely offset by very low interest rates, which reduce ILFC's financing costs. Air travel in Asia, a major market for ILFC, has increased substantially now that the risk of SARS has dramatically abated Abated, an ancient technical term applied in masonry and metal work to those portions which are sunk beneath the surface, as in inscriptions where the ground is sunk round the letters so as to leave the letters or ornament in relief. From 1911 Encyclopædia Britannica . Approximately 88 percent of ILFC's fleet is leased outside of the United States. "AIG Financial Products Corp. (AIGFP) reported operating income of $254.2 million in the second quarter of 2003, an increase of 41.0 percent over the second quarter of 2002. AIGFP's interest rate, currency and credit derivative Credit Derivative Privately held negotiable bilateral contracts that allow users to manage their exposure to credit risk. Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private segments contributed to the strong growth. AIGFP serves customer needs and is not dependent on taking positions on the direction of interest rates and other markets. AIG Trading Group Inc. also had good results, with operating income of $22.6 million compared to $21.0 million in the second quarter of 2002. To take better advantage of the synergies between businesses in the capital markets, we intend to combine AIGFP and AIG Trading into one reporting unit. "Both U.S. and foreign consumer finance businesses had good results in the quarter. Operating income increased 18.4 percent in the second quarter of 2003 to $166.9 million. American General Finance had a good quarter as credit quality continues to be strong. AIG's 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. posted good growth. "Retirement Savings & Asset Management operating income increased 7.7 percent over a year ago to $301.7 million. The Group Retirement Savings business, led by AIG VALIC VALIC Financial Advisors, a member of American International Group, Inc. AIG, is an insurance corporation that specializes in tax-qualified retirement plans, supplemental tax-deferred and after-tax investments. VALIC's headquarters are in Houston, Texas. in the United States, earned $226.6 million in the second quarter of 2003, compared to $219.1 million a year ago. Operating income in the individual variable annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. and mutual fund businesses was $6.6 million in the second quarter of 2003, compared to $11.4 million in second quarter of 2002 and a loss of $1.3 million in the first quarter of 2003. Our institutional asset management operation continues to attract new business. At June 30, 2003, AIG's third party assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , including institutional accounts and retail mutual funds, totaled over $43 billion. "AIG had pretax realized capital losses of $356.9 million in the second quarter of 2003, compared to $629.5 million in the second quarter of 2002. The largest portion of these losses continues to be derived from the inclusion of unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on investments previously written down to market through shareholders' equity. Upon the ultimate disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of these holdings, a portion of these losses may be recovered depending on future market conditions. "In the Other Income/Deductions-net category, AIG reported net deductions of $164.7 million in the second quarter of 2003, compared to net deductions of $49.7 million a year earlier. Principal components of this category are administrative, interest and pension expenses. "In light of the substantial increase in AIG's shareholders' equity in the second quarter of 2003 and the recent congressional action decreasing the tax rate on corporate dividends paid to shareholders, AIG's Board of Directors has increased its previously declared dividend declared dividend A dividend authorized by a firm's board of directors. At the time a dividend is declared, the firm creates a liability for the dividend's payment. of 5.2 cents per common share to be paid in September September: see month. 2003 to 6.5 cents per common share. This is an increase of 25.0 percent over the previously declared dividend and a 38.3 percent increase over the 4.7 cents per common share paid in June 2003."
# # # #
AIG is the world's leading international insurance and financial services organization, with operations in approximately 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and AIG American General is a top-ranked life insurer. AIG's global businesses also include financial services, retirement savings and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement savings businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized 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. EDT. The call will be broadcast live on the Internet at:
www.aigwebcast.com
The call will be archived at the same URL through Friday, August 1,
2003.
Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements. Please refer to the AIG Quarterly Report on Form 10-Q/A for the quarter ended March 31, 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 Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. process. Moreover, under applicable GAAP accounting requirements, losses can be 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 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. .
American International Group, Inc.
Financial Highlights*
(in thousands, except per share amounts)
Three Months Ended June 30,
2003 2002 Change
------------ ------------- -------
General Insurance Operations:
Net Premiums Written $ 8,844,050 $ 6,782,657 30.4 %
Net Premiums Earned 7,754,344 5,859,163 32.3
Underwriting Profit 563,847 416,234 35.5
Net Investment Income 731,467 680,047 7.6
Income before Realized Capital
Gains (Losses) 1,295,314 1,096,281 18.2
Realized Capital Gains
(Losses) (83,470) (160,102) -
Operating Income $ 1,211,844 $ 936,179 29.4 %
----------------------------------------------------------------------
Loss Ratio 73.83 74.06
Expense Ratio 18.44 20.03
Combined Ratio 92.27 94.09
----------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 5,474,838 $ 5,159,564 6.1 %
Net Investment Income 3,454,709 3,046,738 13.4
Income before Realized Capital
Gains (Losses) 1,732,134 1,528,374 13.3
Realized Capital Gains
(Losses) (171,113) (310,650) -
Operating Income 1,561,021 1,217,724 28.2
Financial Services Operating
Income 622,910 542,014 14.9
Retirement Savings & Asset
Management Operating Income 301,680 280,215 7.7
Other Realized Capital Gains
(Losses) (102,332) (158,719) -
Other Income (Deductions) - net (164,670) (49,708) -
Income before Income Taxes and
Minority Interest 3,430,453 2,767,705 23.9
Income Taxes 1,059,754 871,816 -
Income before Minority Interest 2,370,699 1,895,889 25.0
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (97,826) (91,655) -
Minority Interest, after-tax -
Realized Capital Gains
(Losses) 4,012 (3,039) -
Net Income 2,276,885 1,801,195 26.4
Realized Capital Gains (Losses),
net of tax (243,407) (412,194) -
Net Income, excluding Realized
Capital Gains (Losses),
net of tax $ 2,520,292 $ 2,213,389 13.9 %
----------------------------------------------------------------------
Per Share - Diluted:
Net Income $ 0.87 $ 0.68 27.9 %
Realized Capital Gains (Losses),
net of tax (0.09) (0.16) -
Net Income, excluding Realized
Capital Gains (Losses),
net of tax $ 0.96 $ 0.84 14.3 %
----------------------------------------------------------------------
Average Diluted Common
Shares Outstanding 2,627,407 2,639,921
Six Months Ended June 30,
2003 2002 Change
------------ ------------- -------
General Insurance Operations:
Net Premiums Written $ 17,087,134 $ 13,116,940 30.3 %
Net Premiums Earned 15,041,107 11,365,691 32.3
Underwriting Profit 1,096,386 725,935 51.0
Net Investment Income 1,515,341 1,425,413 6.3
Income before Realized Capital
Gains (Losses) 2,611,727 2,151,348 21.4
Realized Capital Gains
(Losses) (255,977) (281,860) -
Operating Income $ 2,355,750 $ 1,869,488 26.0 %
----------------------------------------------------------------------
Loss Ratio 73.99 74.63
Expense Ratio 18.70 20.27
Combined Ratio 92.69 94.90
----------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 11,133,328 $ 9,943,011 12.0 %
Net Investment Income 6,695,110 5,949,324 12.5
Income before Realized Capital
Gains (Losses) 3,272,187 2,883,765 13.5
Realized Capital Gains
(Losses) (516,072) (339,411) -
Operating Income 2,756,115 2,544,354 8.3
Financial Services Operating
Income 1,153,371 1,015,928 13.5
Retirement Savings & Asset
Management Operating Income 584,478 579,893 0.8
Other Realized Capital Gains
(Losses) (216,366) (240,039) -
Other Income (Deductions) - net (279,025) (43,216) -
Income before Income Taxes and
Minority Interest 6,354,323 5,726,408 11.0
Income Taxes 1,936,116 1,763,644 -
Income before Minority Interest 4,418,207 3,962,764 11.5
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (189,754) (178,679) -
Minority Interest, after-tax -
Realized Capital Gains
(Losses) 1,957 (2,590) -
Net Income 4,230,410 3,781,495 11.9
Realized Capital Gains (Losses),
net of tax (656,253) (562,589) -
Net Income, excluding Realized
Capital Gains (Losses),
net of tax $ 4,886,663 $ 4,344,084 12.5 %
----------------------------------------------------------------------
Per Share - Diluted:
Net Income $ 1.61 $ 1.43 12.6 %
Realized Capital Gains (Losses),
net of tax (0.25) (0.22) -
Net Income, excluding Realized
Capital Gains (Losses),
net of tax $ 1.86 $ 1.65 12.7 %
----------------------------------------------------------------------
Average Diluted Common
Shares Outstanding 2,627,789 2,638,607
* Including reconciliation in accordance with Regulation G.
American International Group, Inc.
Pretax Operating Income
(in thousands)
Three Months Ended June 30,
2003 2002 Change
----------- ----------- -------
General Insurance:
Domestic Brokerage Group $ 678,656 $ 511,650 32.6 %
Personal Lines 28,752 62,851 (54.3)
Mortgage Guaranty 108,582 124,775 (13.0)
Transatlantic Holdings 96,426 73,584 31.0
Foreign General (a) 381,181 317,739 20.0
Intercompany Adjustments 1,717 5,682 -
Realized Capital Gains
(Losses) (83,470) (160,102) -
Life Insurance:
Domestic
Life Insurance 218,732 204,827 6.8
Individual Fixed Annuities 226,149 166,395 35.9
Guaranteed Investment
Contracts 127,646 159,519 (20.0)
Home Service 101,949 97,834 4.2
Group Life/Health 29,490 24,305 21.3
Pension and Investment
Products 50,737 22,764 122.9
Intercompany Adjustments (64) (56) -
Realized Capital
Gains (Losses) (160,304) (330,974) -
Foreign
Life Insurance 719,199 648,623 10.9
Personal Accident 199,645 159,823 24.9
Group Products 47,016 37,236 26.3
Guaranteed Investment Contracts 14,720 9,862 49.3
Intercompany Adjustments (3,085) (2,758) -
Realized Capital
Gains (Losses) (10,809) 20,324 -
Financial Services:
International Lease
Finance Corp. 183,614 207,674 (11.6)
AIG Financial Products Corp. 254,213 180,289 41.0
Consumer Finance 166,858 140,911 18.4
AIG Trading Group Inc. 22,567 20,979 7.6
Other (b) (4,342) (7,839) -
Retirement Savings & Asset Management (c):
AIG VALIC (d) 226,644 219,072 3.5
AIG SunAmerica (e) 6,576 11,388 (42.3)
Other Asset Management and
Annuity Operations (f) 68,460 49,755 37.6
Other Realized Capital
Gains (Losses) (102,332) (158,719) -
Other Income (Deductions) - net (164,670) (49,708) -
Income before Income Taxes and
Minority Interest 3,430,453 2,767,705 23.9
Income before Income Taxes,
Minority Interest and Realized
Capital Gains (Losses) $ 3,787,368 $ 3,397,176 11.5 %
Six Months Ended June 30,
2003 2002 Change
----------- ----------- -------
General Insurance:
Domestic Brokerage Group $ 1,387,503 $ 1,042,738 33.1 %
Personal Lines 98,052 85,987 14.0
Mortgage Guaranty 218,577 236,424 (7.5)
Transatlantic Holdings 175,826 145,632 20.7
Foreign General (a) 728,335 629,202 15.8
Intercompany Adjustments 3,434 11,365 -
Realized Capital Gains
(Losses) (255,977) (281,860) -
Life Insurance:
Domestic
Life Insurance 408,431 369,027 10.7
Individual Fixed Annuities 427,784 333,663 28.2
Guaranteed Investment
Contracts 238,323 300,727 (20.8)
Home Service 202,167 193,224 4.6
Group Life/Health 57,972 50,859 14.0
Pension and Investment
Products 84,290 60,426 39.5
Intercompany Adjustments (127) (113) -
Realized Capital
Gains (Losses) (186,197) (349,309) -
Foreign
Life Insurance 1,344,437 1,173,346 14.6
Personal Accident 397,137 313,409 26.7
Group Products 94,825 76,213 24.4
Guaranteed Investment
Contracts 23,119 18,499 25.0
Intercompany Adjustments (6,171) (5,515) -
Realized Capital
Gains (Losses) (329,875) 9,898 -
Financial Services:
International Lease
Finance Corp. 357,885 380,762 (6.0)
AIG Financial Products Corp. 450,095 356,461 26.3
Consumer Finance 314,961 265,282 18.7
AIG Trading Group Inc. 37,926 31,094 22.0
Other (b) (7,496) (17,671) -
Retirement Savings & Asset Management (c):
AIG VALIC (d) 445,241 410,607 8.4
AIG SunAmerica (e) 5,263 50,213 (89.5)
Other Asset Management and
Annuity Operations (f) 133,974 119,073 12.5
Other Realized Capital
Gains (Losses) (216,366) (240,039) -
Other Income (Deductions) - net (279,025) (43,216) -
Income before Income Taxes and
Minority Interest 6,354,323 5,726,408 11.0
Income before Income Taxes,
Minority Interest and Realized
Capital Gains (Losses) $ 7,342,738 $ 6,587,718 11.5 %
(a) Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(c) At June 30,2003 AIG's third party assets under management,
including mutual funds and institutional accounts, totaled over
$43 billion.
(d) Reflects the sale of variable annuity products with fixed annuity
options.
(e) Includes variable annuity, mutual fund and broker-dealer
operations.
(f) Includes AIG Global Investment Group, John McStay Investment
Counsel, L.P. and certain overseas variable annuity operations.
American International Group, Inc.
Supplementary Earnings Data
(in thousands)
Three Months Ended June 30,
2003 2002 Change
---------- ------------ -------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 5,063,200 $ 3,684,647 37.4 %
Personal Lines 900,414 807,114 11.6
Mortgage Guaranty 120,299 126,131 (4.6)
Transatlantic Holdings 802,850 592,026 35.6
Foreign General (a)(b) 1,957,287 1,572,739 24.5
--------- ---------
Total 8,844,050 6,782,657 30.4
Operating Income
Domestic Brokerage Group 678,656 511,650 32.6
Personal Lines 28,752 62,851 (54.3)
Mortgage Guaranty 108,582 124,775 (13.0)
Transatlantic Holdings 96,426 73,584 31.0
Foreign General (a) 381,181 317,739 20.0
Intercompany Adjustments 1,717 5,682 -
--------- ---------
Total before Realized
Capital Gains (Losses) 1,295,314 1,096,281 18.2
Realized Capital
Gains(Losses) (83,470) (160,102) -
Operating Income $ 1,211,844 $ 936,179 29.4 %
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 94.43 97.25
Personal Lines 100.07 99.67
Mortgage Guaranty 35.80 29.76
Transatlantic Holdings 96.30 98.22
Foreign General (a) 86.53 88.39
Total 92.27 94.09
----------------------------------------------------------------------
Losses and Loss Expenses Paid $ 4,156,667 $ 3,961,354 4.9 %
Change in Loss and
Loss Expense Reserve 1,568,196 378,006 -
--------- ---------
Losses and Loss Expenses
Incurred 5,724,863 4,339,360 31.9
Underwriting Profit $ 563,847 $ 416,234 35.5 %
Six Months Ended June 30,
2003 2002 Change
---------- ------------ -------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 9,603,342 $ 7,130,809 34.7 %
Personal Lines 1,784,612 1,533,214 16.4
Mortgage Guaranty 241,487 248,353 (2.8)
Transatlantic Holdings 1,570,931 1,155,581 35.9
Foreign General (a)(b) 3,886,762 3,048,983 27.5
--------- ---------
Total 17,087,134 13,116,940 30.3
Operating Income
Domestic Brokerage Group 1,387,503 1,042,738 33.1
Personal Lines 98,052 85,987 14.0
Mortgage Guaranty 218,577 236,424 (7.5)
Transatlantic Holdings 175,826 145,632 20.7
Foreign General (a) 728,335 629,202 15.8
Intercompany Adjustments 3,434 11,365 -
--------- ---------
Total before Realized
Capital Gains (Losses) 2,611,727 2,151,348 21.4
Realized Capital
Gains(Losses) (255,977) (281,860) -
Operating Income $ 2,355,750 $ 1,869,488 26.0 %
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 94.61 97.44
Personal Lines 98.28 100.36
Mortgage Guaranty 41.07 35.58
Transatlantic Holdings 96.85 98.19
Foreign General (a) 87.63 90.06
Total 92.69 94.90
----------------------------------------------------------------------
Losses and Loss Expenses Paid $ 8,390,322 $ 7,977,671 5.2 %
Change in Loss and
Loss Expense Reserve 2,737,961 504,972 -
--------- ---------
Losses and Loss Expenses
Incurred 11,128,283 8,482,643 31.2
Net Loss and Loss Expense
Reserve 33,087,900 26,400,484 25.3
Underwriting Profit $ 1,096,386 $ 725,935 51.0 %
(a) Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b) The growth in Foreign General net premiums written in original
currency was 17.2 percent and 21.0 percent for the second quarter
and six months 2003, respectively.
Three Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 414,132 $ 421,967 (1.9) %
Individual Fixed Annuities 12,542 11,228 11.7
Guaranteed Investment
Contracts 57 15,414 (99.6)
Home Service 209,217 214,709 (2.6)
Group Life/Health 279,636 240,238 16.4
Pension and Investment
Products 310,507 274,704 13.0
--------- ---------
Total 1,226,091 1,178,260 4.1
Foreign
Life Insurance 3,190,582 3,085,227 3.4
Personal Accident 748,019 602,015 24.3
Group Products 283,525 273,009 3.9
Guaranteed Investment
Contracts 26,621 21,053 26.4
--------- ---------
Total 4,248,747 3,981,304 6.7
Total GAAP Premiums 5,474,838 5,159,564 6.1
Premiums, Deposits and Other
Considerations (a)(b)
Domestic
Life Insurance 674,530 644,338 4.7
Individual Fixed Annuities 2,284,369 3,058,654 (25.3)
Guaranteed Investment
Contracts 1,285,964 2,569,171 (49.9)
Home Service 249,943 213,735 16.9
Group Life/Health 271,076 233,991 15.8
Pension and Investment
Products 329,868 470,014 (29.8)
--------- ---------
Total 5,095,750 7,189,903 (29.1)
Foreign
Life Insurance 3,632,112 3,422,470 6.1
Personal Accident 748,795 611,089 22.5
Group Products 513,004 434,835 18.0
Guaranteed Investment
Contracts 1,590,003 1,624,085 (2.1)
--------- ---------
Total (c) 6,483,914 6,092,479 6.4
Total Premiums, Deposits
and Other Considerations $ 11,579,664 $13,282,382 (12.8) %
Six Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 844,879 $ 818,215 3.3 %
Individual Fixed Annuities 24,845 22,651 9.7
Guaranteed Investment
Contracts 3,730 16,187 (77.0)
Home Service 417,962 430,626 (2.9)
Group Life/Health 511,884 478,148 7.1
Pension and Investment
Products 744,937 493,520 50.9
--------- ---------
Total 2,548,237 2,259,347 12.8
Foreign
Life Insurance 6,458,463 5,878,741 9.9
Personal Accident 1,439,187 1,167,842 23.2
Group Products 633,029 589,084 7.5
Guaranteed Investment
Contracts 54,412 47,997 13.4
--------- ---------
Total 8,585,091 7,683,664 11.7
Total GAAP Premiums 11,133,328 9,943,011 12.0
Premiums, Deposits and Other
Considerations (a)(b)
Domestic
Life Insurance 1,326,950 1,300,105 2.1
Individual Fixed Annuities 5,057,295 5,320,599 (4.9)
Guaranteed Investment
Contracts 3,755,442 6,061,197 (38.0)
Home Service 484,559 429,746 12.8
Group Life/Health 507,835 479,147 6.0
Pension and Investment
Products 897,344 870,759 3.1
--------- ---------
Total 12,029,425 14,461,553 (16.8)
Foreign
Life Insurance 7,308,378 6,510,136 12.3
Personal Accident 1,441,204 1,174,558 22.7
Group Products 1,082,827 921,946 17.5
Guaranteed Investment
Contracts 2,731,090 3,031,371 (9.9)
--------- ---------
Total (c) 12,563,499 11,638,011 8.0
Total Premiums, Deposits
and Other Considerations $ 24,592,924 $26,099,564 (5.8) %
(a) Represents a non-GAAP measurement used by AIG to help manage its
life insurance operation, and may not be comparable to similarly
captioned measurements used by other life insurance companies.
(b) Premiums, deposits and other considerations represent
aggregate business activity during the respective periods.
(c) The growth in foreign premiums, deposits and other considerations
in original currency was 2.0 percent in the second quarter and
3.6 percent for the six months.
Three Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 364,149 $ 361,691 0.7 %
Individual Fixed Annuities 943,865 832,766 13.3
Guaranteed Investment
Contracts 512,432 502,898 1.9
Home Service 170,738 166,993 2.2
Group Life/Health 28,892 26,978 7.1
Pension and Investment
Products 217,640 181,832 19.7
Intercompany Adjustments (64) (56) -
--------- ---------
Total 2,237,652 2,073,102 7.9
Foreign
Life Insurance 1,000,773 801,544 24.9
Personal Accident 39,883 33,406 19.4
Group Products 86,963 62,025 40.2
Guaranteed Investment
Contracts 92,523 79,419 16.5
Intercompany Adjustments (3,085) (2,758) -
--------- ---------
Total 1,217,057 973,636 25.0
Total Net Investment Income 3,454,709 3,046,738 13.4
Operating Income
Domestic
Life Insurance 218,732 204,827 6.8
Individual Fixed Annuities 226,149 166,395 35.9
Guaranteed Investment
Contracts 127,646 159,519 (20.0)
Home Service 101,949 97,834 4.2
Group Life/Health 29,490 24,305 21.3
Pension and Investment
Products 50,737 22,764 122.9
Intercompany Adjustments (64) (56) -
--------- ---------
Total Domestic before
Realized Capital
Gains (Losses) 754,639 675,588 11.7
Realized Capital
Gains (Losses) (160,304) (330,974) -
--------- ---------
Domestic Operating Income 594,335 344,614 72.5
Foreign
Life Insurance 719,199 648,623 10.9
Personal Accident 199,645 159,823 24.9
Group Products 47,016 37,236 26.3
Guaranteed Investment
Contracts 14,720 9,862 49.3
Intercompany Adjustments (3,085) (2,758) -
--------- ---------
Total Foreign before
Realized Capital
Gains (Losses) 977,495 852,786 14.6
Realized Capital
Gains (Losses) (10,809) 20,324 -
--------- ---------
Foreign Operating Income 966,686 873,110 10.7
Worldwide Life before Realized
Capital Gains (Losses) 1,732,134 1,528,374 13.3
Realized Capital
Gains (Losses) (171,113) (310,650) -
--------- ---------
Worldwide Operating Income $ 1,561,021 $ 1,217,724 28.2 %
Six Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 680,552 $ 704,575 (3.4) %
Individual Fixed Annuities 1,798,477 1,564,733 14.9
Guaranteed Investment
Contracts 1,020,395 984,207 3.7
Home Service 339,315 335,751 1.1
Group Life/Health 56,823 52,662 7.9
Pension and Investment
Products 452,864 383,568 18.1
Intercompany Adjustments (127) (113) -
--------- ---------
Total 4,348,299 4,025,383 8.0
Foreign
Life Insurance 1,910,100 1,577,251 21.1
Personal Accident 76,411 66,463 15.0
Group Products 169,104 121,994 38.6
Guaranteed Investment
Contracts 197,367 163,748 20.5
Intercompany Adjustments (6,171) (5,515) -
--------- ---------
Total 2,346,811 1,923,941 22.0
Total Net Investment Income 6,695,110 5,949,324 12.5
Operating Income
Domestic
Life Insurance 408,431 369,027 10.7
Individual Fixed Annuities 427,784 333,663 28.2
Guaranteed Investment
Contracts 238,323 300,727 (20.8)
Home Service 202,167 193,224 4.6
Group Life/Health 57,972 50,859 14.0
Pension and Investment
Products 84,290 60,426 39.5
Intercompany Adjustments (127) (113) -
--------- ---------
Total Domestic before
Realized Capital
Gains (Losses) 1,418,840 1,307,813 8.5
Realized Capital
Gains (Losses) (186,197) (349,309) -
--------- ---------
Domestic Operating Income 1,232,643 958,504 28.6
Foreign
Life Insurance 1,344,437 1,173,346 14.6
Personal Accident 397,137 313,409 26.7
Group Products 94,825 76,213 24.4
Guaranteed Investment
Contracts 23,119 18,499 25.0
Intercompany Adjustments (6,171) (5,515) -
--------- ---------
Total Foreign before
Realized Capital
Gains (Losses) 1,853,347 1,575,952 17.6
Realized Capital
Gains (Losses) (329,875) 9,898 -
--------- ---------
Foreign Operating Income 1,523,472 1,585,850 (3.9)
Worldwide Life before Realized
Capital Gains (Losses) 3,272,187 2,883,765 13.5
Realized Capital
Gains (Losses) (516,072) (339,411) -
--------- ---------
Worldwide Operating Income $ 2,756,115 $ 2,544,354 8.3 %
Three Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Financial Services:
Revenues
International Lease
Finance Corp. $ 764,747 $ 725,740 5.4 %
AIG Financial Products Corp. 404,100 266,040 51.9
Consumer Finance 653,929 613,552 6.6
AIG Trading Group Inc. 79,365 70,967 11.8
Other 14,808 (2,259) -
--------- ---------
Total 1,916,949 1,674,040 14.5
Operating Income
International Lease
Finance Corp. 183,614 207,674 (11.6)
AIG Financial Products Corp. 254,213 180,289 41.0
Consumer Finance 166,858 140,911 18.4
AIG Trading Group Inc. 22,567 20,979 7.6
Other (a) (4,342) (7,839) -
--------- ---------
Total 622,910 542,014 14.9
Retirement Savings & Asset Management(b):
Revenues
AIG VALIC (c) 567,655 532,376 6.6
AIG SunAmerica (d) 129,053 151,714 (14.9)
Other Asset Management and
Annuity Operations (e) 218,976 187,370 16.9
--------- ---------
Total 915,684 871,460 5.1
Operating Income
AIG VALIC (c) 226,644 219,072 3.5
AIG SunAmerica (d) 6,576 11,388 (42.3)
Other Asset Management and
Annuity Operations (e) 68,460 49,755 37.6
--------- ---------
Total 301,680 280,215 7.7
Variable Annuity Net Sales
Sales
AIG VALIC 1,260,760 1,237,587 1.9
AIG SunAmerica 803,994 798,251 0.7
Surrenders
AIG VALIC 579,577 655,008 (11.5)
AIG SunAmerica 514,050 553,327 (7.1)
Net Sales
AIG VALIC 681,183 582,579 16.9
AIG SunAmerica 289,944 244,924 18.4
--------- ---------
Total Net Sales $ 971,127 $ 827,503 17.4 %
Effective Tax Rates:
Net Income 30.89% 31.50%
Realized Capital
Gains (Losses) 30.68% 35.00%
Six Months Ended June 30,
2003 2002 Change
---------- ------------ -------
Financial Services:
Revenues
International Lease
Finance Corp. $ 1,486,858 $ 1,366,582 8.8 %
AIG Financial Products Corp. 675,823 538,135 25.6
Consumer Finance 1,292,805 1,226,489 5.4
AIG Trading Group Inc. 132,272 114,188 15.8
Other 22,073 (4,863) -
--------- ---------
Total 3,609,831 3,240,531 11.4
Operating Income
International Lease
Finance Corp. 357,885 380,762 (6.0)
AIG Financial Products Corp. 450,095 356,461 26.3
Consumer Finance 314,961 265,282 18.7
AIG Trading Group Inc. 37,926 31,094 22.0
Other (a) (7,496) (17,671) -
--------- ---------
Total 1,153,371 1,015,928 13.5
Retirement Savings & Asset Management(b):
Revenues
AIG VALIC (c) 1,111,837 1,066,871 4.2
AIG SunAmerica (d) 250,031 305,646 (18.2)
Other Asset Management and
Annuity Operations (e) 449,925 363,762 23.7
--------- ---------
Total 1,811,793 1,736,279 4.3
Operating Income
AIG VALIC (c) 445,241 410,607 8.4
AIG SunAmerica (d) 5,263 50,213 (89.5)
Other Asset Management and
Annuity Operations (e) 133,974 119,073 12.5
--------- ---------
Total 584,478 579,893 0.8
Variable Annuity Net Sales
Sales
AIG VALIC 2,499,832 2,521,723 (0.9)
AIG SunAmerica 1,569,532 1,503,089 4.4
Surrenders
AIG VALIC 1,133,659 1,283,524 (11.7)
AIG SunAmerica 1,074,386 1,058,375 1.5
Net Sales
AIG VALIC 1,366,173 1,238,199 10.3
AIG SunAmerica 495,146 444,714 11.3
--------- ---------
Total Net Sales $ 1,861,319 $ 1,682,913 10.6 %
Effective Tax Rates:
Net Income 30.47% 30.80%
Realized Capital
Gains (Losses) 33.41% 34.98%
(a) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b) At June 30, 2003 AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
over $43 billion.
(c) Reflects the sale of variable annuity products with fixed
annuity options.
(d) Includes variable annuity, mutual fund and broker-dealer
operations.
(e) Includes AIG Global Investment Group, John McStay Investment
Counsel, L.P. and certain overseas variable annuity operations.
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