AIG Reports Second Quarter 2004 Net Income of $2.86 Billion -$1.09 Per Share-, an Increase of 25.7 Percent Over 2003; Net Income Excluding Realized Capital Gains and Losses Increased 19.2 Percent to $3.00 Billion -$1.14 Per Share-.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Inc. (AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group ) today reported that its second quarter 2004 net income rose 25.7 percent to a record $2.86 billion or $1.09 per share, compared to $2.28 billion or $0.87 per share in the second quarter of 2003. Second quarter 2004 net income excluding realized capital gains (losses), increased 19.2 percent to a record $3.00 billion or $1.14 per share, compared to $2.52 billion or $0.96 per share in the same period of 2003. Net income for the first six months of 2004 rose 30.4 percent to $5.52 billion or $2.10 per share, compared to $4.23 billion or $1.61 per share in the first six months of 2003. For the first six months of 2004 net income excluding realized capital gains (losses) and the cumulative effect of an accounting change, increased 19.5 percent to $5.84 billion or $2.22 per share, compared to $4.89 billion or $1.86 per share in the same period of 2003. Income before income taxes and minority interest for the second quarter of 2004 was a record $4.39 billion, a 27.9 percent increase over $3.43 billion in the second quarter of 2003. Income before income taxes, minority interest and the cumulative effect of an accounting change for the first six months of 2004 was $8.68 billion, a 36.6 percent increase over $6.35 billion in the same period of 2003. These results include realized capital losses of $209.0 million and $204.1 million in the second quarter and six months of 2004, respectively, compared to realized capital losses of $356.9 million and $988.4 million in the second quarter and six months of 2003, respectively. Following is a summary table of second quarter and six months information (in millions, except per share amounts):
SECOND QUARTER
Per Share
---------
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Net income $2,862.3 $2,276.9 25.7% $1.09 $0.87 25.3%
Realized capital gains
(losses), net of tax (141.4) (243.4) - (0.05) (0.09) -
Net income, excluding
realized capital gains
(losses), net of tax $3,003.7 $2,520.3 19.2% $1.14 $0.96 18.8%
Average shares
outstanding 2,630.9 2,627.4
SIX MONTHS
Per Share
---------
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Net income $5,517.9 $4,230.4 30.4% $2.10 $1.61 30.4%
Realized capital gains
(losses), net of tax (141.9) (656.3) - (0.05) (0.25) -
Cumulative effect of an
accounting change, net
of tax* (181.4) - - (0.07) - -
Net income, excluding
realized capital gains
(losses) and
cumulative effect of
an accounting change,
net of tax $5,841.2 $4,886.7 19.5% $2.22 $1.86 19.4%
Average shares
outstanding 2,631.6 2,627.8
* Represents the cumulative effect of an accounting change, net of
tax, related to SOP 03-1 "Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and
for Separate Accounts".
Highlights of the second quarter 2004 include:
2004 2003 Change
---- ---- ------
Consolidated
------------
Net Income, excluding realized
capital gains (losses) $3.00 billion $2.52 billion 19.2%
Shareholders' Equity
At June 30 and December 31 $73.6 billion $71.3 billion 3.2%
Retained Earnings
At June 30 and December 31 $66.1 billion $61.0 billion 8.4%
Return on Equity (a)
At June 30 and December 31 17.4% 17.2%
Consolidated Assets
At June 30 and December 31 $736 billion $678 billion 8.6%
Revenues (b) $23.81 billion $19.89 billion 19.7%
Insurance Cash Flow (c) $14.75 billion $8.71 billion 69.3%
General Insurance
-----------------
Net Premiums Written $10.38 billion $8.84 billion 17.4%
Operating Income
(ex. realized capital gains
(losses)) $1.59 billion $1.30 billion 22.8%
Net Investment Income $892.7 million $731.5 million 22.0%
Loss and Loss Adjustment Reserves
At June 30 and December 31 $40.78 billion $36.65 billion 11.3%
Combined Ratio 92.35 92.27
Cash Flow $3.17 billion $2.67 billion 18.7%
Life Insurance & Retirement Services (d)
------------------------------------
GAAP Premiums $6.84 billion $5.62 billion 21.6%
Premiums, Deposits and Other
Considerations $16.28 billion $11.62 billion 40.2%
Operating Income
(ex. realized capital gains
(losses)) $2.17 billion $1.84 billion 18.2%
Financial Services
------------------
Operating Income $609.2 million $622.9 million (2.2)%
Asset Management (d)
----------------
Operating Income $276.5 million $195.6 million 41.4%
(a) See reconciliation to GAAP ROE in the supplementary earnings data.
(b) Represents the sum of General Insurance net premiums earned, GAAP
Life Insurance & Retirement Services premiums, net investment
income, Financial Services commissions, transactions and other
fees, Asset Management commissions and other fees and fee income
and net investment income with respect to Guaranteed Investment
Contracts (GICs), and realized capital gains (losses).
(c) In addition to General Insurance cash flow, includes Life
Insurance & Retirement Services cash flow for investment, which
generates the investment income necessary to meet policyholder
obligations and to provide a profit margin to shareholders, as
well as net cash flow from GICs.
(d) 2003 is restated to conform to 2004 presentation.
---------------------------
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 overall, with especially strong results from Worldwide General Insurance operations and Foreign Life & Retirement Services. Second quarter net income was a record $2.86 billion, up 25.7 percent over the second quarter of 2003. Excluding realized capital gains and losses, net income increased 19.2 percent to $3.00 billion. 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, 2004 was $73.6 billion, and assets increased to a record $736 billion. GENERAL INSURANCE ----------------- "General Insurance results were very strong both in the U.S. and worldwide. General Insurance 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. excluding realized capital gains (losses) in the second quarter of 2004 increased 22.8 percent over a year ago to a record $1.59 billion. Net premiums written were a record $10.38 billion, up 17.4 percent over a year ago. The General Insurance combined ratio was 92.35 compared to 92.27 a year ago. "Worldwide General Insurance net investment income was $892.7 million, an increase of 22.0 percent benefiting from strong cash flow resulting from good growth in our business, higher interest rates, dividend income and good private equity results. General Insurance cash flow totaled $3.17 billion and $6.71 billion in the second quarter and six months of 2004, respectively, compared to $2.67 billion and $5.91 billion a year earlier. "At June 30, 2004, General Insurance net loss and loss adjustment reserves totaled $40.78 billion, an increase of $2.03 billion and $4.13 billion for the second quarter and six months, respectively. "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 a very good quarter. Net premiums written in the second quarter of 2004 increased 14.8 percent over a year ago to a record $5.81 billion. The combined ratio was 95.00 compared to 94.43 in the second quarter of 2003. The Domestic Brokerage Group is benefiting from the flight to quality - since a Triple A balance sheet is important for many classes of long tail business - a strong profit center focus and vast and growing distribution channels. "We have maintained a disciplined approach to pricing and risk selection. Where pricing, terms and conditions or loss experience did not meet our standards, we chose to non-renew approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $275 million in premiums in the Domestic Brokerage Group as well as nearly $50 million in our Foreign General operations in the second quarter. While the market generally has taken a rational approach to pricing, a few foreign and domestic companies have under-priced certain more difficult classes of long tail lines of business. These companies often lack the specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. knowledge, underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. skills and claim management expertise that these lines require. Such pricing practices unsettle the market and add to long term volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the . "Reforming the U.S. tort tort, in law, the violation of some duty clearly set by law, not by a specific agreement between two parties, as in breach of contract. When such a duty is breached, the injured party has the right to institute suit for compensatory damages. system is more than an insurance industry issue. It is critical to the economy and the country. Necessary class action reforms had significant support in Congress, and it is unfortunate that debate over the number of non-germane amendments attached to the bill led to what we hope is a temporary setback setback In architecture, a steplike recession in the profile of a high-rise building. Usually dictated by building codes to allow sunlight to reach streets and lower floors, the building must take another step back from the street for every specified added height interval. . Efforts are underway to reconcile these differences, and the bill could be reintroduced at a later date. We will continue to work for its passage. "The Domestic Personal Lines business had good premium growth and solid underwriting performance in the second quarter. Operating income was $91.7 million in the second quarter compared to $28.8 million a year ago. Net premiums written were $1.08 billion, up 20.4 percent over a year ago. The combined ratio was 95.68. "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. had outstanding underwriting results. Losses have declined as a result of HSB's leading engineering, inspection and loss mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy capabilities. The recent integration of AIG Consultants into HSB enhances our cross-sell opportunities and our capabilities for providing engineering and loss control services to a global client base. "United Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Corporation had a good quarter. Premiums grew and refinancings declined as interest rates rose. UGC's delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. ratio, always well below the industry average, was up modestly over a year ago, but has been declining over the past two quarters consistent with the improving job market. UGC's foreign operations, which we have been nurturing, are profitable, and we are planning to enter several new markets around the world. "Transatlantic Holdings, Inc. had good growth and underwriting results. Net premiums written increased 15.5 percent to $927.2 million led by significant growth in international business. Operating income was up 15.7 percent to $111.6 million. The combined ratio was 95.69 compared to 96.30 in the second quarter of 2003. "Foreign General Insurance had excellent results from all regions of the world. Net premiums written were $2.42 billion, an increase of 23.8 percent over the second quarter of 2003. The combined ratio continues to be outstanding at 86.24, compared to 86.53 a year ago. "In Japan, the improving economy has contributed to our growth, especially in the growing commercial lines business and personal accident operations. The U. K., European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and Australasian Aus·tral·a·sia 1. The islands of the southern Pacific Ocean, including Australia, New Zealand, and New Guinea. 2. Broadly, all of Oceania. Aus regions had excellent results. 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. has had another good quarter, too. "In China, our landmark A structure that has significant historical, architectural, or cultural meaning and that has been given legal protection from alteration and destruction. Although landmark preservation laws vary by city and state, they have the same basic purpose: to keep landmarks as close venture with PICC PICC Peripherally-inserted central catheter Critical care An IV catheter inserted in the superior vena cava for long-term infusion of bolus or continuous delivery of therapeutics or TPN–drugs, fluids, nutrients, chemotherapy. Cf Catheter. Property and Casualty Company Limited to develop the market for accident and health products is up and running. Also, we expect, by the end of 2004, to extend our general insurance operations to more cities in China China is a geographical area encompassing multiple territories, under two states. You may be looking for:
LIFE INSURANCE & RETIREMENT SERVICES ------------------------------------ "Worldwide Life Insurance & Retirement Services had excellent top and bottom line growth. Operating income before realized capital gains (losses) was a record $2.17 billion, an increase of 18.2 percent, compared to $1.84 billion in the second quarter of 2003. Worldwide Life Insurance & Retirement Services GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). premiums were $6.84 billion, an increase of 21.6 percent over the second quarter of 2003. Premiums, deposits and other considerations totaled $16.28 billion, up 40.2 percent compared to the second quarter of 2003. Cash flow continues to be outstanding. "AIG's extensive Foreign Life Insurance & Retirement Services operations had excellent results. Operating income excluding realized capital gains (losses) was $1.22 billion in the second quarter compared to $990.2 million a year ago. GAAP premiums were $5.28 billion, up 24.0 percent. Premiums, deposits and other considerations were $8.99 billion, compared to $5.74 billion in the second quarter of 2003. Japan and 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. , our two largest regions, had strong growth. "In Japan, AIG 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 is being integrated successfully into our life operations. AIG Star is growing first year premiums as a result of new product introductions and an expanded agency force, and is benefiting from more successful conservation of in-force business. The 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. business in Japan is growing rapidly through product innovation and packaging skills and the confidence engendered by the financial strength of AIG companies. In addition, our deep and diverse distribution, which includes bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. , worksite marketing, direct marketing and strong agency organizations, provides us with a powerful platform for growth. "In China, our life insurance business continues to grow very rapidly. Total first year premiums were up 43.4 percent in the second quarter over the prior year. By comparison, the overall industry has experienced modest growth, with some companies showing decreases in first year premiums. The skill and training of our agency force, financial strength and excellent management are the primary contributors to our success. "In India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , the new government has proposed to Parliament legislation that would allow foreign companies to increase their ownership in life as well as general insurance companies to 49 percent from the current 26 percent. Passage of this legislation would present a significant opportunity for us to enhance our presence in this attractive market, where our life and general insurance joint ventures have had rapid growth throughout the country. "Domestic Life Insurance & Retirement Services operating income excluding realized capital gains (losses) totaled $953.5 million in the second quarter of 2004, an increase of 12.4 percent compared to $848.1 million in the second quarter of 2003. GAAP premiums were $1.56 billion, up 14.2 percent. Premiums, deposits and other considerations were $7.29 billion, a 24.1 percent increase compared to $5.87 billion in the second quarter of 2003. "AIG's domestic life operations had strong universal and term life sales and good performance from the independent distribution segment. Structured settlements also had strong growth. The group business domestically fell below our growth standards. We chose not to renew several accounts where pricing was unacceptable and we are reviewing our growth strategies for this business. At AGLA AGLA Arlington Gay and Lesbian Alliance (Virginia) , the home services business, a number of the initiatives we have taken in recent months to accelerate growth, such as introducing new products, hiring new agents and retraining re·train tr. & intr.v. re·trained, re·train·ing, re·trains To train or undergo training again. re·train existing agents, will take some time before the results are evident. However, the business is solidly profitable with strong cash flow. "Domestic Retirement Services had a solid quarter. The businesses most 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 the equity markets performed well, with the strongest sales growth 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. segment. 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. , the group retirement services business, which has approximately half of client assets in equities, also benefited from improved equity market performance. AIG VALIC has had a successful start cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. individual variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. , fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. and mutual funds. AIG Annuity, 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, had very good performance with increased deposits, stable spreads and growth in operating income, even as consumers shifted assets to equity-based products. FINANCIAL SERVICES ------------------ "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. had operating income of $609.2 million in the second quarter of 2004, a decline of 2.2 percent compared to $622.9 million a year ago. "International Lease Finance Corporation reported operating income of $182.6 million in the quarter, compared to $183.6 million in the second quarter of 2003. Excluding the impact of the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. of approximately $2 billion in aircraft in late 2003 and early 2004, these results would have increased approximately 5 percent from second quarter 2003. ILFC ILFC International Lease Finance Corporation ILFC International Lunar Finance Commission (TV show: Space: 1999) sold five aircraft during the second quarter, and lease rates continue to rise. The turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in the global aviation business is increasingly evident. "Capital Markets operating income was $233.6 million, down 15.6 percent compared to a very strong second quarter of 2003. This transaction-oriented business continues to be very profitable. We have a diverse product portfolio, which we continue to expand, and we see opportunity in each of the major regions around the world where we do business. The consolidation of AIG Trading into AIG Financial Products Corp. is delivering expected synergies as clients are recognizing the benefits of working with a platform that can readily deliver multi-disciplined opportunities. "Consumer Finance had excellent results in both domestic and foreign operations. Operating income increased 15.3 percent to $192.3 million. In the United States, credit quality continues to be strong and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed grew substantially. Foreign 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. performed very well and we see new opportunities in several additional international markets. ASSET MANAGEMENT ---------------- "Asset Management operating income increased 41.4 percent in the second quarter of 2004 to $276.5 million. Improved equity markets and a strong and diverse global product portfolio contributed to these results as well as a $1 billion increase in 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. , bringing the total to over $49 billion. In July July: see month. , we received approval to prepare for the establishment of a joint venture fund management company in China. "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. (GIC GIC See: Guaranteed Investment Contract GIC See guaranteed investment contract (GIC). ) operating income totaled $178.0 million in the second quarter of 2004, compared to $139.2 million a year ago. GICs 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, which we write when interest rate spreads are attractive. Market conditions in the second quarter were very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. . "In the Other Income/Deductions - net category, AIG reported a loss of $51.1 million in the second quarter of 2004, compared to a loss of $164.7 million a year earlier. The improvement is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increased income related to SunAmerica partnership investments." AIG is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. . In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and AIG American 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 a top-ranked life insurer. AIG's global businesses also include financial services, retirement services and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement services businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , as well as the stock exchanges in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , Paris, Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. and Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. . A conference call for the investment community will be held today at 9:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The call will be broadcast live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at: www.aigwebcast.com The call will be archived at the same URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. through Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , July 30, 2004. Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements. Please refer to the AIG Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2004 and its past and future filings and reports filed with the Securities and Exchange Commission for a description of the business environment in which AIG operates and the important factors that may affect its business. AIG is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Comment on Regulation G This press release, including the financial highlights and supplementary earnings data, includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Regulation G are included herein. Throughout this press release, AIG presents its operations in the way it believes will be most meaningful and useful, as well as most transparent (1) Refers to a change in hardware or software that, after installation, causes no noticeable change in operation. Also known as "feature transparency." Contrast with "seamless integration," which means that an additional component to the system can be added without incurring any , to the investing public and others who use AIG's financial information in evaluating the performance of AIG. That presentation includes the use of certain non-GAAP measures. In addition to the GAAP presentations of net income and operating income, AIG shows both net income and operating income exclusive of realized capital gains (losses). Although the investment of premiums to generate investment income (or loss) and realized capital gains or losses capital gains or losses n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. is an integral part of both life and general insurance operations, the determination to realize capital gains or losses is independent of the insurance underwriting process. Moreover, under applicable GAAP accounting requirements, losses can be created as the result of other than temporary declines in value without actual realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. . In sum, investment income and realized capital gains or losses for any particular period are not indicative indicative: see mood. of quarterly business performance. AIG believes that a major part of the discipline of a successful general insurance company is to produce an underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. , and it evaluates the performance of and manages its operations on that basis. Providing only a GAAP presentation of net income and operating income makes it much more difficult for users of AIG's financial information to evaluate AIG's success or failure in its basic business, that of insurance underwriting, and may, in AIG's opinion, lead to incorrect Incorrect means to not be correct and may also refer to:
AIG presents life and retirement services 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,
2004 2003 Change
--------- --------- -------
General Insurance Operations:
Net Premiums Written $10,380,387 $ 8,844,050 17.4 %
Net Premiums Earned 9,485,835 7,754,344 22.3
Underwriting Profit 698,024 563,847 23.8
Net Investment Income 892,664 731,467 22.0
Income before Realized Capital
Gains (Losses) 1,590,688 1,295,314 22.8
Realized Capital Gains (Losses) (8,722) (83,470) -
Operating Income $ 1,581,966 $ 1,211,844 30.5 %
----------------------------------------------------------------------
Loss Ratio 72.80 73.83
Expense Ratio 19.55 18.44
Combined Ratio 92.35 92.27
----------------------------------------------------------------------
Life Insurance & Retirement Services Operations (a):
GAAP Premiums $ 6,835,360 $ 5,621,100 21.6 %
Net Investment Income 3,829,171 3,418,259 12.0
Income before Realized Capital
Gains (Losses) 2,172,783 1,838,257 18.2
Realized Capital Gains (Losses) (129,712) (194,737) -
Operating Income 2,043,071 1,643,520 24.3
Financial Services Operating Income 609,174 622,910 (2.2)
Asset Management Operating Income (a) 276,464 195,557 41.4
Other Realized Capital
Gains (Losses) (a) (70,569) (78,708) -
Other Income (Deductions) - net (51,148) (164,670) -
Income before Income Taxes, Minority
Interest and Cumulative Effect of
an Accounting Change 4,388,958 3,430,453 27.9
Income Taxes 1,400,432 1,059,754 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 2,988,526 2,370,699 26.1
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (124,863) (97,826) -
Realized Capital Gains (Losses) (1,375) 4,012 -
Income before Cumulative Effect of
an Accounting Change 2,862,288 2,276,885 25.7
Cumulative Effect of an Accounting
Change, net of tax (b) 0 0 -
Net Income 2,862,288 2,276,885 25.7
Realized Capital Gains (Losses),
net of tax (141,366) (243,407) -
Cumulative Effect of an Accounting
Change, net of tax (b) 0 0 -
Net Income, excluding Realized Capital
Gains (Losses) and Cumulative
Effect of an Accounting Change,
net of tax $ 3,003,654 $ 2,520,292 19.2 %
Six Months Ended June 30,
2004 2003 Change
--------- --------- -------
General Insurance Operations:
Net Premiums Written $20,593,331 $17,087,134 20.5 %
Net Premiums Earned 18,725,264 15,041,107 24.5
Underwriting Profit 1,341,575 1,096,386 22.4
Net Investment Income 1,749,480 1,515,341 15.5
Income before Realized Capital
Gains (Losses) 3,091,055 2,611,727 18.4
Realized Capital Gains (Losses) 58,290 (255,977) -
Operating Income $ 3,149,345 $ 2,355,750 33.7 %
----------------------------------------------------------------------
Loss Ratio 73.25 73.99
Expense Ratio 19.53 18.70
Combined Ratio 92.78 92.69
----------------------------------------------------------------------
Life Insurance & Retirement Services Operations (a):
GAAP Premiums $13,734,971 $11,405,858 20.4 %
Net Investment Income 7,770,528 6,600,502 17.7
Income before Realized Capital
Gains (Losses) 4,216,358 3,486,717 20.9
Realized Capital Gains (Losses) (81,037) (532,909) -
Operating Income 4,135,321 2,953,808 40.0
Financial Services Operating Income 1,132,211 1,153,371 (1.8)
Asset Management Operating Income (a) 515,639 369,948 39.4
Other Realized Capital
Gains (Losses) (a) (181,335) (199,529) -
Other Income (Deductions) - net (70,891) (279,025) -
Income before Income Taxes, Minority
Interest and Cumulative Effect of
an Accounting Change 8,680,290 6,354,323 36.6
Income Taxes 2,756,598 1,936,116 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 5,923,692 4,418,207 34.1
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (219,221) (189,754) -
Realized Capital Gains (Losses) (5,142) 1,957 -
Income before Cumulative Effect of
an Accounting Change 5,699,329 4,230,410 34.7
Cumulative Effect of an Accounting
Change, net of tax (b) (181,431) 0 -
Net Income 5,517,898 4,230,410 30.4
Realized Capital Gains (Losses),
net of tax (141,910) (656,253) -
Cumulative Effect of an Accounting
Change, net of tax (b) (181,431) 0 -
Net Income, excluding Realized Capital
Gains (Losses) and Cumulative
Effect of an Accounting Change,
net of tax $ 5,841,239 $ 4,886,663 19.5 %
Three Months Ended June 30,
2004 2003 Change
--------- --------- -------
Per Share - Diluted:
Net Income $ 1.09 $ 0.87 25.3 %
Realized Capital Gains (Losses),
net of tax (0.05) (0.09) -
Cumulative Effect of an Accounting
Change, net of tax (b) 0.00 0.00 -
Net Income, excluding Realized Capital
Gains (Losses) and Cumulative
Effect of an Accounting Change,
net of tax $ 1.14 $ 0.96 18.8 %
Average Diluted Common
Shares Outstanding 2,630,887 2,627,407
Six Months Ended June 30,
2004 2003 Change
--------- --------- -------
Per Share - Diluted:
Net Income $ 2.10 $ 1.61 30.4 %
Realized Capital Gains (Losses),
net of tax (0.05) (0.25) -
Cumulative Effect of an Accounting
Change, net of tax (b) (0.07) 0.00 -
Net Income, excluding Realized Capital
Gains (Losses) and Cumulative
Effect of an Accounting Change,
net of tax $ 2.22 $ 1.86 19.4 %
Average Diluted Common
Shares Outstanding 2,631,597 2,627,789
* Including reconciliation in accordance with Regulation G.
(a)2003 is restated to conform to 2004 presentation.
(b)Represents the cumulative effect of an accounting change,
net of tax, related to SOP 03-1 "Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts".
American International Group, Inc.
Operating Income
(in thousands)
Three Months Ended June 30,
2004 2003 Change
--------- --------- -------
General Insurance:
Domestic Brokerage Group $ 818,890 $ 678,656 20.7 %
Personal Lines 91,675 28,752 218.8
Mortgage Guaranty 101,768 108,582 (6.3)
Transatlantic Holdings 111,593 96,426 15.7
Foreign General (a) 466,643 381,181 22.4
Intercompany Adjustments 119 1,717 -
Realized Capital Gains
(Losses) (8,722) (83,470) -
Life Insurance & Retirement Services (b):
Domestic
Life Insurance 237,123 210,601 12.6
Home Service 103,845 101,949 1.9
Group Life/Health 19,201 29,490 (34.9)
Payout Annuities (c) 34,153 29,609 15.3
Retirement Services
Group Retirement
Products 253,967 226,644 12.1
Individual Fixed
Annuities 217,981 189,962 14.7
Individual Variable
Annuities 40,620 10,166 299.6
Individual Annuities -
Runoff (d) 46,649 49,736 (6.2)
Intercompany Adjustments (87) (64) -
Realized Capital Gains
(Losses) (186,867) (183,928) -
Foreign
Life Insurance 797,876 719,334 10.9
Personal Accident & Health 289,610 199,645 45.1
Group Products 70,170 47,016 49.2
Retirement Services
Individual Fixed
Annuities 65,359 25,247 158.9
Individual Variable
Annuities 584 2,007 (70.9)
Intercompany Adjustments (4,268) (3,085) -
Realized Capital Gains
(Losses) 57,155 (10,809) -
Financial Services:
Aircraft Finance 182,553 183,614 (0.6)
Capital Markets 233,602 276,780 (15.6)
Consumer Finance 192,326 166,858 15.3
Other (e) 693 (4,342) -
Asset Management (b)(f):
Guaranteed Investment Contracts
Domestic 166,824 127,646 30.7
Foreign 11,132 11,553 (3.6)
Institutional Asset
Management (g) 81,469 44,238 84.2
Brokerage Services and
Mutual Funds 17,039 12,120 40.6
Other Realized Capital
Gains (Losses) (b) (70,569) (78,708) -
Other Income (Deductions) - net (51,148) (164,670) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 4,388,958 3,430,453 27.9
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change $4,597,961 $ 3,787,368 21.4 %
Six Months Ended June 30,
2004 2003 Change
--------- --------- -------
General Insurance:
Domestic Brokerage Group $1,619,542 $ 1,387,503 16.7 %
Personal Lines 177,466 98,052 81.0
Mortgage Guaranty 201,520 218,577 (7.8)
Transatlantic Holdings 221,131 175,826 25.8
Foreign General (a) 871,159 728,335 19.6
Intercompany Adjustments 237 3,434 -
Realized Capital Gains
(Losses) 58,290 (255,977) -
Life Insurance & Retirement Services (b):
Domestic
Life Insurance 440,537 390,242 12.9
Home Service 208,096 202,167 2.9
Group Life/Health 44,782 57,972 (22.8)
Payout Annuities (c) 70,680 60,677 16.5
Retirement Services
Group Retirement
Products 534,255 445,241 20.0
Individual Fixed
Annuities 450,922 332,385 35.7
Individual Variable
Annuities 80,135 13,108 511.3
Individual Annuities -
Runoff (d) 96,238 105,306 (8.6)
Intercompany Adjustments (175) (127) -
Realized Capital Gains
(Losses) (152,610) (203,034) -
Foreign
Life Insurance 1,501,790 1,345,327 11.6
Personal Accident & Health 551,035 397,137 38.8
Group Products 136,303 94,825 43.7
Retirement Services
Individual Fixed
Annuities 107,416 49,066 118.9
Individual Variable
Annuities 2,879 (438) -
Intercompany Adjustments (8,535) (6,171) -
Realized Capital Gains
(Losses) 71,573 (329,875) -
Financial Services:
Aircraft Finance 342,595 357,885 (4.3)
Capital Markets 416,106 488,021 (14.7)
Consumer Finance 375,494 314,961 19.2
Other (e) (1,984) (7,496) -
Asset Management (b)(f):
Guaranteed Investment Contracts
Domestic 314,497 238,323 32.0
Foreign 20,487 19,679 4.1
Institutional Asset
Management (g) 143,449 87,896 63.2
Brokerage Services and
Mutual Funds 37,206 24,050 54.7
Other Realized Capital
Gains (Losses) (b) (181,335) (199,529) -
Other Income (Deductions) - net (70,891) (279,025) -
Income before Income Taxes,
Minority Interest and Cumulative
Effect of an Accounting Change 8,680,290 6,354,323 36.6
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change $8,884,372 $ 7,342,738 21.0 %
(a)Foreign General insurance excludes the foreign operations
of Transatlantic Holdings, Inc.
(b)2003 is restated to conform to 2004 presentation.
(c)Includes Structured Settlements, Single Premium Immediate Annuities
and Terminal Funding Annuities.
(d)Represents runoff annuity business sold through merger related
discontinued distribution relationships.
(e)Includes Other Financial Services Companies and Intercompany
Reclassifications.
(f)At June 30, 2004, AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
over $49 billion.
(g)Includes AIG Global Investment Group and certain smaller
asset management operations.
American International Group, Inc.
Supplementary Earnings Data*
(in thousands)
Three Months Ended June 30,
2004 2003 Change
--------- --------- -------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 5,810,145 $ 5,063,200 14.8 %
Personal Lines 1,084,209 900,414 20.4
Mortgage Guaranty 136,135 120,299 13.2
Transatlantic Holdings 927,197 802,850 15.5
Foreign General (a) 2,422,701 1,957,287 23.8
---------- ---------- ------
Total 10,380,387 8,844,050 17.4
Operating Income
Domestic Brokerage Group 818,890 678,656 20.7
Personal Lines 91,675 28,752 218.8
Mortgage Guaranty 101,768 108,582 (6.3)
Transatlantic Holdings 111,593 96,426 15.7
Foreign General (a) 466,643 381,181 22.4
Intercompany Adjustments 119 1,717 -
---------- ---------- ------
Total before Realized
Capital Gains (Losses) 1,590,688 1,295,314 22.8
Realized Capital Gains(Losses) (8,722) (83,470) -
Operating Income $ 1,581,966 $ 1,211,844 30.5 %
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 95.00 94.43
Personal Lines 95.68 100.07
Mortgage Guaranty 48.84 35.80
Transatlantic Holdings 95.69 96.30
Foreign General (a) 86.24 86.53
Total 92.35 92.27
----------------------------------------------------------------------
Losses and Loss
Expenses Paid (b) $ 4,879,985 $ 4,156,667 17.4 %
Change in Loss and
Loss Expense Reserve 2,026,060 1,568,196 29.2
---------- ---------- ------
Losses and Loss Expenses
Incurred 6,906,045 5,724,863 20.6
Underwriting Profit $ 698,024 $ 563,847 23.8 %
----------------------------------------------------------------------
Foreign Exchange Impact on
Growth of Net Premiums Written
Worldwide
Growth in Original Currency 15.4 %
Foreign Exchange Impact 2.0
Growth as Reported in U.S.$ 17.4
Foreign General (a)
Growth in Original Currency 15.7
Foreign Exchange Impact 8.1
Growth as Reported in U.S.$ 23.8 %
Six Months Ended June 30,
2004 2003 Change
--------- --------- -------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 11,360,564 $ 9,603,342 18.3 %
Personal Lines 2,196,963 1,784,612 23.1
Mortgage Guaranty 289,809 241,487 20.0
Transatlantic Holdings 1,834,667 1,570,931 16.8
Foreign General (a) 4,911,328 3,886,762 26.4
---------- ---------- ------
Total 20,593,331 17,087,134 20.5
Operating Income
Domestic Brokerage Group 1,619,542 1,387,503 16.7
Personal Lines 177,466 98,052 81.0
Mortgage Guaranty 201,520 218,577 (7.8)
Transatlantic Holdings 221,131 175,826 25.8
Foreign General (a) 871,159 728,335 19.6
Intercompany Adjustments 237 3,434 -
---------- ---------- ------
Total before Realized
Capital Gains (Losses) 3,091,055 2,611,727 18.4
Realized Capital Gains(Losses) 58,290 (255,977) -
Operating Income $ 3,149,345 $ 2,355,750 33.7 %
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 95.36 94.61
Personal Lines 95.56 98.28
Mortgage Guaranty 49.29 41.07
Transatlantic Holdings 95.75 96.85
Foreign General (a) 86.62 87.63
Total 92.78 92.69
----------------------------------------------------------------------
Losses and Loss
Expenses Paid (b) $ 9,583,053 $ 8,390,322 14.2 %
Change in Loss and
Loss Expense Reserve 4,132,789 2,737,961 50.9
---------- ---------- ------
Losses and Loss Expenses
Incurred 13,715,842 11,128,283 23.3
Net Loss and Loss Expense
Reserve 40,779,877 33,087,900 23.2
Underwriting Profit $ 1,341,575 $ 1,096,386 22.4 %
----------------------------------------------------------------------
Foreign Exchange Impact on
Growth of Net Premiums Written
Worldwide
Growth in Original Currency 17.8 %
Foreign Exchange Impact 2.7
Growth as Reported in U.S.$ 20.5
Foreign General (a)
Growth in Original Currency 16.1
Foreign Exchange Impact 10.3
Growth as Reported in U.S.$ 26.4 %
* Including reconciliation in accordance with Regulation G.
(a)Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b)The paid loss ratios for the six months ended June 30, 2004 and
2003 were 51.18 and 55.79, respectively. The paid loss ratios
for the three months ended June 30, 2004 and 2003 were 51.44
and 53.61, respectively. Additionally, 2004 paid losses were
impacted by the inclusion of GE personal lines business.
Three Months Ended June 30,
2004 2003(a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
GAAP Premiums
Domestic
Life Insurance $ 475,794 $ 410,178 16.0 %
Home Service 204,078 209,217 (2.5)
Group Life/Health 287,408 279,636 2.8
Payout Annuities (b) 379,807 296,723 28.0
Retirement Services
Group Retirement Products 78,013 59,711 30.7
Individual Fixed Annuities 14,975 13,163 13.8
Individual Variable
Annuities 99,133 79,692 24.4
Individual Annuities -
Runoff (c) 19,629 17,117 14.7
---------- ---------- ------
Total 1,558,837 1,365,437 14.2
Foreign
Life Insurance 3,724,332 3,148,962 18.3
Personal Accident & Health 1,057,867 748,019 41.4
Group Products 386,783 283,525 36.4
Retirement Services
Individual Fixed Annuities 91,253 70,176 30.0
Individual Variable
Annuities 16,288 4,981 227.0
---------- ---------- ------
Total 5,276,523 4,255,663 24.0
Total GAAP Premiums 6,835,360 5,621,100 21.6
----------------------------------------------------------------------
Premiums, Deposits and Other
Considerations (d)
Domestic
Life Insurance 720,666 661,283 9.0
Home Service 244,048 249,943 (2.4)
Group Life/Health 282,292 271,076 4.1
Payout Annuities 542,863 320,260 69.5
Retirement Services
Group Retirement Products 1,372,230 1,260,760 8.8
Individual Fixed Annuities 2,860,277 2,214,885 29.1
Individual Variable
Annuities 1,197,950 803,994 49.0
Individual Annuities -
Runoff 69,031 92,339 (25.2)
---------- ---------- ------
Total 7,289,357 5,874,540 24.1
Foreign
Life Insurance 4,583,073 3,628,142 26.3
Personal Accident & Health 1,091,948 748,795 45.8
Group Products 662,538 513,004 29.1
Retirement Services
Individual Fixed Annuities 2,215,201 501,971 341.3
Individual Variable
Annuities 437,973 349,175 25.4
---------- ---------- ------
Total 8,990,733 5,741,087 56.6
Total Premiums, Deposits and
Other Considerations $ 16,280,090 $ 11,615,627 40.2 %
Six Months Ended June 30,
2004 2003 (a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
GAAP Premiums
Domestic
Life Insurance $ 905,783 $ 837,781 8.1 %
Home Service 410,064 417,962 (1.9)
Group Life/Health 554,879 511,884 8.4
Payout Annuities (b) 753,920 717,377 5.1
Retirement Services
Group Retirement Products 154,438 113,161 36.5
Individual Fixed Annuities 27,542 19,935 38.2
Individual Variable
Annuities 199,325 152,992 30.3
Individual Annuities -
Runoff (c) 39,600 39,568 0.1
---------- ---------- ------
Total 3,045,551 2,810,660 8.4
Foreign
Life Insurance 7,594,028 6,384,087 19.0
Personal Accident & Health 2,087,289 1,439,187 45.0
Group Products 802,954 633,029 26.8
Retirement Services
Individual Fixed Annuities 176,474 130,995 34.7
Individual Variable
Annuities 28,675 7,900 263.0
---------- ---------- ------
Total 10,689,420 8,595,198 24.4
Total GAAP Premiums 13,734,971 11,405,858 20.4
----------------------------------------------------------------------
Premiums, Deposits and Other
Considerations (d)
Domestic
Life Insurance 1,375,524 1,300,488 5.8
Home Service 489,805 484,559 1.1
Group Life/Health 542,427 507,835 6.8
Payout Annuities 1,119,525 871,976 28.4
Retirement Services
Group Retirement Products 2,691,521 2,499,832 7.7
Individual Fixed Annuities 5,618,144 4,917,455 14.2
Individual Variable
Annuities 2,340,612 1,569,532 49.1
Individual Annuities -
Runoff 137,277 191,670 (28.4)
---------- ---------- ------
Total 14,314,835 12,343,347 16.0
Foreign
Life Insurance 9,322,332 7,295,380 27.8
Personal Accident & Health 2,121,697 1,441,204 47.2
Group Products 1,414,208 1,082,827 30.6
Retirement Services
Individual Fixed Annuities 5,364,105 750,186 615.0
Individual Variable
Annuities 812,142 580,137 40.0
---------- ---------- ------
Total 19,034,484 11,149,734 70.7
Total Premiums, Deposits and
Other Considerations $ 33,349,319 $ 23,493,081 42.0 %
(a)Restated to conform to 2004 presentation.
(b)Includes Structured Settlements, Single Premium Immediate
Annuities and Terminal Funding Annuities.
(c)Represents runoff annuity business sold through merger
related discontinued distribution relationships.
(d)Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a
non-GAAP basis.
Three Months Ended June 30,
2004 2003(a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Net Investment Income
Domestic
Life Insurance $ 351,598 $ 333,937 5.3 %
Home Service 176,596 170,738 3.4
Group Life/Health 30,090 28,892 4.1
Payout Annuities 201,600 151,373 33.2
Retirement Services
Group Retirement Products 524,683 507,944 3.3
Individual Fixed Annuities 736,968 625,287 17.9
Individual Variable
Annuities 66,395 54,523 21.8
Individual Annuities -
Runoff 267,937 360,534 (25.7)
Intercompany Adjustments (87) (64) -
---------- ---------- ------
Total 2,355,780 2,233,164 5.5
Foreign
Life Insurance 1,088,058 981,442 10.9
Personal Accident & Health 45,031 39,883 12.9
Group Products 96,124 86,963 10.5
Retirement Services
Individual Fixed Annuities 236,914 79,289 198.8
Individual Variable
Annuities 11,532 603 -
Intercompany Adjustments (4,268) (3,085) -
---------- ---------- ------
Total 1,473,391 1,185,095 24.3
Total Net Investment Income $ 3,829,171 $ 3,418,259 12.0 %
Six Months Ended June 30,
2004 2003 (a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Net Investment Income
Domestic
Life Insurance $ 731,847 $ 617,899 18.4 %
Home Service 351,336 339,315 3.5
Group Life/Health 61,250 56,823 7.8
Payout Annuities 400,331 319,994 25.1
Retirement Services
Group Retirement Products 1,066,531 998,676 6.8
Individual Fixed Annuities 1,494,697 1,193,899 25.2
Individual Variable
Annuities 121,775 108,283 12.5
Individual Annuities -
Runoff 544,517 691,818 (21.3)
Intercompany Adjustments (175) (127) -
---------- ---------- ------
Total 4,772,109 4,326,580 10.3
Foreign
Life Insurance 2,181,796 1,883,897 15.8
Personal Accident & Health 86,815 76,411 13.6
Group Products 202,792 169,104 19.9
Retirement Services
Individual Fixed Annuities 445,399 149,606 197.7
Individual Variable
Annuities 90,152 1,075 -
Intercompany Adjustments (8,535) (6,171) -
Total 2,998,419 2,273,922 31.9
---------- ---------- ------
Total Net Investment Income $ 7,770,528 $ 6,600,502 17.7 %
(a)Restated to conform to 2004 presentation.
Three Months Ended June 30,
2004 2003(a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Operating Income
Domestic
Life Insurance $ 237,123 $ 210,601 12.6 %
Home Service 103,845 101,949 1.9
Group Life/Health 19,201 29,490 (34.9)
Payout Annuities 34,153 29,609 15.3
Retirement Services
Group Retirement Products 253,967 226,644 12.1
Individual Fixed Annuities 217,981 189,962 14.7
Individual Variable
Annuities 40,620 10,166 299.6
Individual Annuities -
Runoff 46,649 49,736 (6.2)
Intercompany Adjustments (87) (64) -
---------- ---------- ------
Total Domestic before
Realized Capital
Gains (Losses) 953,452 848,093 12.4
Realized Capital
Gains (Losses) (186,867) (183,928) -
---------- ---------- ------
Domestic Operating Income 766,585 664,165 15.4
Foreign
Life Insurance 797,876 719,334 10.9
Personal Accident & Health 289,610 199,645 45.1
Group Products 70,170 47,016 49.2
Retirement Services
Individual Fixed Annuities 65,359 25,247 158.9
Individual Variable
Annuities 584 2,007 (70.9)
Intercompany Adjustments (4,268) (3,085) -
---------- ---------- ------
Total Foreign before
Realized Capital
Gains (Losses) 1,219,331 990,164 23.1
Realized Capital
Gains (Losses) 57,155 (10,809) -
---------- ---------- ------
Foreign Operating Income 1,276,486 979,355 30.3
Worldwide Life Insurance &
Retirement Services before
Realized Capital Gains
(Losses) 2,172,783 1,838,257 18.2
Realized Capital
Gains (Losses) (129,712) (194,737) -
---------- ---------- ------
Worldwide Operating Income $ 2,043,071 $ 1,643,520 24.3 %
Six Months Ended June 30,
2004 2003 (a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Operating Income
Domestic
Life Insurance $ 440,537 $ 390,242 12.9 %
Home Service 208,096 202,167 2.9
Group Life/Health 44,782 57,972 (22.8)
Payout Annuities 70,680 60,677 16.5
Retirement Services
Group Retirement Products 534,255 445,241 20.0
Individual Fixed Annuities 450,922 332,385 35.7
Individual Variable
Annuities 80,135 13,108 511.3
Individual Annuities -
Runoff 96,238 105,306 (8.6)
Intercompany Adjustments (175) (127) -
---------- ---------- ------
Total Domestic before
Realized Capital
Gains (Losses) 1,925,470 1,606,971 19.8
Realized Capital
Gains (Losses) (152,610) (203,034) -
---------- ---------- ------
Domestic Operating Income 1,772,860 1,403,937 26.3
Foreign
Life Insurance 1,501,790 1,345,327 11.6
Personal Accident & Health 551,035 397,137 38.8
Group Products 136,303 94,825 43.7
Retirement Services
Individual Fixed Annuities 107,416 49,066 118.9
Individual Variable
Annuities 2,879 (438) -
Intercompany Adjustments (8,535) (6,171) -
---------- ---------- ------
Total Foreign before
Realized Capital
Gains (Losses) 2,290,888 1,879,746 21.9
Realized Capital
Gains (Losses) 71,573 (329,875) -
---------- ---------- ------
Foreign Operating Income 2,362,461 1,549,871 52.4
Worldwide Life Insurance &
Retirement Services before
Realized Capital Gains
(Losses) 4,216,358 3,486,717 20.9
Realized Capital
Gains (Losses) (81,037) (532,909) -
---------- ---------- ------
Worldwide Operating Income $ 4,135,321 $ 2,953,808 40.0 %
(a)Restated to conform to 2004 presentation.
Three Months Ended June 30,
2004 2003(a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (b):
Individual/Retail $ 119,190 $ 91,880 29.7 %
Institutional
Markets 7,210 6,530 10.4
---------- ---------- ------
Total Periodic Sales 126,400 98,410 28.4
Unscheduled & Single
Deposits 122,280 88,740 37.8
Home Service
Product Sales
Life/Accident &
Health (b) 32,570 28,550 14.1
Fixed Annuity 27,725 34,100 (18.7)
Group Retirement Products
Deposits (c) 1,548,158 1,370,153 13.0
Net Flows
Group Retirement Products (c) 738,416 769,982 (4.1)
Individual Fixed Annuities 2,260,965 1,831,731 23.4
Individual Variable Annuities 569,972 289,944 96.6
Individual Annuities - Runoff (292,826) (287,165) -
---------- ---------- ------
Total $ 3,276,527 $ 2,604,492 25.8 %
Surrender Rates
Group Retirement Products (c) 6.4% 5.5%
Individual Fixed Annuities 5.8% 4.8%
Individual Variable Annuities 10.2% 10.2%
Six Months Ended June 30,
2004 2003 (a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (b):
Individual/Retail $ 234,540 $ 170,670 37.4 %
Institutional
Markets 20,260 36,740 (44.9)
---------- ---------- ------
Total Periodic Sales 254,800 207,410 22.8
Unscheduled & Single
Deposits 220,480 169,340 30.2
Life Insurance Reserves 19,877,895 18,563,143 7.1
Home Service
Product Sales
Life/Accident &
Health (b) 58,696 54,550 7.6
Fixed Annuity 55,698 59,000 (5.6)
Total Insurance Reserves 7,129,504 6,974,000 2.2
Group Life/Health
Annualized Earned Premium 1,246,000 1,188,485 4.8
Payout Annuities
Insurance Reserves 10,357,570 8,976,556 15.4
Group Retirement Products
Deposits (c) 3,155,595 2,729,261 15.6
Net Flows
Group Retirement Products (c) 793,621 1,553,537 (48.9)
Individual Fixed Annuities 4,485,170 4,165,462 7.7
Individual Variable Annuities 1,080,900 495,146 118.3
Individual Annuities - Runoff (603,875) (583,300) -
---------- ---------- ------
Total $ 5,755,816 $ 5,630,845 2.2 %
Surrender Rates
Group Retirement Products (c) 9.3%(d) 5.5%
Individual Fixed Annuities 5.6% 5.0%
Individual Variable Annuities 10.3% 11.0%
General and Separate Account
Reserves
Group Retirement
Products(c) $ 52,656,708 $ 46,253,287 13.8 %
Individual Fixed Annuities 47,112,896 36,709,085 28.3
Individual Variable
Annuities 25,107,281 20,973,516 19.7
Individual Annuities - Runoff 21,334,856 22,071,651 (3.3)
---------- ---------- ------
Total $146,211,741 $126,007,539 16.0 %
(a)Restated to conform to 2004 presentation.
(b)Life Insurance sales represent premiums from new sales that are
expected to be collected over a one year period.
(c)Includes group retirement annuities and group mutual funds.
(d)Excluding the loss of a single account declined to be written at
an inadequate profit level in first quarter 2004, the surrender
rate was 6.9 percent.
Three Months Ended June 30,
2004 2003(a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Foreign - Other Data
First Year Premiums
Life Insurance
Japan $ 176,403 $ 141,342 24.8 %
China 31,543 18,466 70.8
Asia excluding Japan
and China 366,304 334,342 9.6
All Other Regions 67,250 48,761 37.9
---------- ---------- ------
Total 641,500 542,911 18.2
Personal Accident & Health
Japan 185,327 112,119 65.3
China 7,182 8,544 (15.9)
Asia excluding Japan
and China 56,184 45,708 22.9
All Other Regions 26,077 23,783 9.6
---------- ---------- ------
Total 274,770 190,154 44.5
Group Products
Japan 3,930 5,058 (22.3)
Asia excluding Japan
and China 14,072 12,833 9.7
All Other Regions 173,057 175,002 (1.1)
---------- ---------- ------
Total 191,059 192,893 (1.0)
Total First Year Premiums
Japan 365,660 258,519 41.4
China 38,725 27,010 43.4
Asia excluding Japan
and China 436,560 392,883 11.1
All Other Regions 266,384 247,546 7.6
---------- ---------- ------
Total $ 1,107,329 $ 925,958 19.6 %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 16.7 %
Foreign Exchange Impact 4.9
Growth as Reported in U.S.$ 21.6
Foreign
Growth in Original Currency 17.5
Foreign Exchange Impact 6.5
Growth as Reported in U.S.$ 24.0
Premiums, Deposits and Other
Considerations (b)
Worldwide
Growth in Original Currency 36.7
Foreign Exchange Impact 3.5
Growth as Reported in U.S.$ 40.2
Foreign
Growth in Original Currency 49.7
Foreign Exchange Impact 6.9
Growth as Reported in U.S.$ 56.6 %
Six Months Ended June 30,
2004 2003 (a) Change
--------- --------- -------
Life Insurance & Retirement Services
Operations:
Foreign - Other Data
First Year Premiums
Life Insurance
Japan $ 345,984 $ 279,492 23.8 %
China 55,915 33,527 66.8
Asia excluding Japan
and China 803,513 893,738 (10.1)
All Other Regions 122,957 91,219 34.8
---------- ---------- ------
Total 1,328,369 1,297,976 2.3
Personal Accident & Health
Japan 355,395 201,066 76.8
China 14,752 14,246 3.6
Asia excluding Japan
and China 117,136 96,321 21.6
All Other Regions 53,205 45,448 17.1
---------- ---------- ------
Total 540,488 357,081 51.4
Group Products
Japan 12,518 12,036 4.0
Asia excluding Japan
and China 27,956 23,835 17.3
All Other Regions 336,125 301,980 11.3
---------- ---------- ------
Total 376,599 337,851 11.5
Total First Year Premiums
Japan 713,897 492,594 44.9
China 70,667 47,773 47.9
Asia excluding Japan
and China 948,605 1,013,894 (6.4)
All Other Regions 512,287 438,647 16.8
---------- ---------- ------
Total 2,245,456 1,992,908 12.7
Retirement Services Reserves
Individual Fixed Annuities 23,595,473 6,449,620 265.8
Individual Variable
Annuities $ 3,053,330 $ 992,564 207.6 %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 15.3 %
Foreign Exchange Impact 5.1
Growth as Reported in U.S.$ 20.4
Foreign
Growth in Original Currency 17.6
Foreign Exchange Impact 6.8
Growth as Reported in U.S.$ 24.4
Premiums, Deposits and Other
Considerations (b)
Worldwide
Growth in Original Currency 38.3
Foreign Exchange Impact 3.7
Growth as Reported in U.S.$ 42.0
Foreign
Growth in Original Currency 63.1
Foreign Exchange Impact 7.6
Growth as Reported in U.S.$ 70.7 %
(a)Restated to conform to 2004 presentation.
(b)Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a
non-GAAP basis.
Three Months Ended June 30,
2004 2003 Change
--------- --------- -------
Financial Services:
Revenues
Aircraft Finance $ 810,295 $ 764,747 6.0 %
Capital Markets 402,063 483,465 (16.8)
Consumer Finance 722,617 653,929 10.5
Other (a) 9,313 14,808 (37.1)
---------- ---------- ------
Total 1,944,288 1,916,949 1.4
Operating Income
Aircraft Finance 182,553 183,614 (0.6)
Capital Markets 233,602 276,780 (15.6)
Consumer Finance 192,326 166,858 15.3
Other (a) 693 (4,342) -
---------- ---------- ------
Total 609,174 622,910 (2.2)
----------------------------------------------------------------------
Asset Management (b)(c):
Revenues
Guaranteed Investment Contracts
Domestic 594,645 512,489 16.0
Foreign 87,280 99,392 (12.2)
Institutional Asset
Management (d) 285,874 144,630 97.7
Brokerage Services and
Mutual Funds 62,632 49,361 26.9
---------- ---------- ------
Total 1,030,431 805,872 27.9
Operating Income
Guaranteed Investment Contracts
Domestic 166,824 127,646 30.7
Foreign 11,132 11,553 (3.6)
Institutional Asset
Management (d) 81,469 44,238 84.2
Brokerage Services and
Mutual Funds 17,039 12,120 40.6
---------- ---------- ------
Total 276,464 195,557 41.4
----------------------------------------------------------------------
Guaranteed Investment Contracts
Deposits
Domestic 4,239,088 1,285,964 229.6
Foreign 1,427,987 1,376,092 3.8
---------- ---------- ------
Total $ 5,667,075 $ 2,662,056 112.9 %
Effective Tax Rates:
Net Income 31.91% 30.89%
Realized Capital
Gains (Losses) 33.02% 30.68%
Six Months Ended June 30,
2004 2003 Change
--------- --------- -------
Financial Services:
Revenues
Aircraft Finance $ 1,562,433 $ 1,486,858 5.1 %
Capital Markets 734,597 808,095 (9.1)
Consumer Finance 1,415,658 1,292,805 9.5
Other (a) 17,189 22,073 (22.1)
---------- ---------- ------
Total 3,729,877 3,609,831 3.3
Operating Income
Aircraft Finance 342,595 357,885 (4.3)
Capital Markets 416,106 488,021 (14.7)
Consumer Finance 375,494 314,961 19.2
Other (a) (1,984) (7,496) -
---------- ---------- ------
Total 1,132,211 1,153,371 (1.8)
----------------------------------------------------------------------
Asset Management (b)(c):
Revenues
Guaranteed Investment Contracts
Domestic 1,145,177 1,024,125 11.8
Foreign 196,529 212,791 (7.6)
Institutional Asset
Management (d) 474,770 299,916 58.3
Brokerage Services and
Mutual Funds 123,311 97,039 27.1
---------- ---------- ------
Total 1,939,787 1,633,871 18.7
Operating Income
Guaranteed Investment Contracts
Domestic 314,497 238,323 32.0
Foreign 20,487 19,679 4.1
Institutional Asset
Management (d) 143,449 87,896 63.2
Brokerage Services and
Mutual Funds 37,206 24,050 54.7
---------- ---------- ------
Total 515,639 369,948 39.4
----------------------------------------------------------------------
Guaranteed Investment Contracts
Deposits
Domestic 6,806,192 3,755,442 81.2
Foreign 2,119,827 2,450,111 (13.5)
---------- ---------- ------
Total 8,926,019 6,205,553 43.8
Reserves
Domestic 43,734,217 35,734,042 22.4
Foreign 7,126,860 7,932,069 (10.2)
---------- ---------- ------
Total $ 50,861,077 $ 43,666,111 16.5 %
Effective Tax Rates:
Net Income 31.76% 30.47%
Realized Capital
Gains (Losses) 32.98% 33.41%
(a)Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b)2003 is restated to conform to 2004 presentation.
(c)At June 30, 2004, AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
over $49 billion.
(d)Includes AIG Global Investment Group and certain smaller
asset management operations.
Additional Reconciliation in Accordance with Regulation G
Six Months Twelve Months
Ended Ended
June 30, December 31,
2004 2003
---------- -----------
Return on Equity Reconciliation
Return on Equity, GAAP basis 14.9 % 14.1 %
Percent Related to Reconciliation 2.5 3.1
---------- -----------
Return on Equity, as presented (a) 17.4 % 17.2 %
(a)Return on Equity, as presented is net income, before
realized capital gains (losses) and cumulative effect of an
accounting change, expressed as a percentage of average
shareholders' equity, exclusive of unrealized appreciation
(depreciation) of investments, net of tax.
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