AIG Reports Third Quarter 2004 Net Income of $2.51 Billion -$0.95 Per Share- and Net Income Excluding Realized Capital Gains and Losses of $2.54 Billion -$0.97 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 -- Both Include Net Catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). Losses of $512.2 Million ($0.19 Per Share) 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 third quarter 2004 net income of $2.51 billion or $0.95 per share, compared to $2.34 billion or $0.89 per share in the third quarter of 2003. Third quarter 2004 net income excluding realized capital gains (losses), was $2.54 billion or $0.97 per share, compared to $2.58 billion or $0.98 per share in the same period of 2003. Third quarter 2004 after tax net catastrophe losses from hurricanes and typhoons were $512.2 million or $0.19 per share, compared to after tax net catastrophe losses of $46.2 million or $0.02 per share in the third quarter of 2003. Third quarter 2004 net income excluding realized capital gains (losses) and catastrophe losses increased 16.5 percent to $3.06 billion or $1.16 per share, compared to $2.62 billion or $1.00 per share in the same period of 2003.
THIRD QUARTER
(in millions, except per share amounts)
Per Share
---------
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Net income $2,512.5 $2,336.5 7.5% $0.95 $0.89 6.7%
Realized capital gains
(losses), net of tax (31.6) (241.6) - (0.02) (0.09) -
Net income, excluding
realized capital gains
(losses), net of tax 2,544.1 2,578.1 (1.3) 0.97 0.98 (1.0)
Catastrophe losses, net
of tax (512.2) (46.2) - (0.19) (0.02) -
Net income, excluding
realized capital gains
(losses) and
catastrophe losses,
net of tax $3,056.3 $2,624.3 16.5% $1.16 $1.00 16.0%
Average shares
outstanding 2,628.3 2,627.6
Net income for the first nine months of 2004 rose 22.3 percent to $8.03 billion or $3.05 per share, compared to $6.57 billion or $2.50 per share in the first nine months of 2003. For the first nine months of 2004, net income excluding realized capital gains (losses) and the cumulative effect of an accounting change increased 12.3 percent to $8.39 billion or $3.19 per share, compared to $7.46 billion or $2.84 per share in the same period of 2003. After tax net catastrophe losses for the first nine months of 2004 were $512.2 million or $0.19 per share, compared to $46.2 million or $0.02 per share in the same period of 2003. For the first nine months of 2004, net income excluding realized capital gains (losses), the cumulative effect of an accounting change and catastrophe losses increased 18.5 percent to $8.90 billion or $3.38 per share, compared to $7.51 billion or $2.86 per share in the same period of 2003.
NINE MONTHS
(in millions, except per share amounts)
Per Share
---------
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Net income $8,030.4 $6,566.9 22.3% $3.05 $2.50 22.0%
Realized capital gains
(losses), net of tax (173.5) (897.8) - (0.07) (0.34) -
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 8,385.3 7,464.7 12.3 3.19 2.84 12.3
Catastrophe losses, net
of tax (512.2) (46.2) - (0.19) (0.02) -
Net income, excluding
realized capital gains
(losses), cumulative
effect of an
accounting change and
catastrophe losses,
net of tax $8,897.5 $7,510.9 18.5% $3.38 $2.86 18.2%
Average shares
outstanding 2,630.0 2,627.7
* 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".
Income before income taxes and minority interest for the third quarter of 2004 was $3.96 billion, a 13.0 percent increase over $3.50 billion in the third quarter of 2003. Income before income taxes, minority interest and cumulative effect of an accounting change for the first nine months of 2004 was $12.64 billion, a 28.2 percent increase over $9.86 billion in the same period of 2003. The following chart provides a summary of the realized capital gains (losses) and catastrophe losses included in these results:
THIRD QUARTER
(in millions)
2004 2003 Change
---- ---- ------
Income before income taxes,
minority interest and cumulative
effect of an accounting change $3,957.4 $3,503.5 13.0%
Realized capital gains (losses) (44.4) (359.3) -
Catastrophe Losses:
Domestic Brokerage Group 405.8 47.5 -
Personal Lines 24.7 5.0 -
Transatlantic Holdings, Inc. (a) 165.0 3.5 -
Foreign General 140.3 16.5 -
Life (Home Service) (b) 4.7 - -
Minority owned companies - AIG
share:
Allied World Assurance
Holdings, Ltd 39.4 - -
IPC Holdings, Ltd. 24.4 - -
Fuji Fire & Marine Insurance
Company Limited 10.0 - -
-----------------------------
Total Catastrophe Losses (814.3) (72.5) -
Income before income taxes,
minority interest, cumulative
effect of an accounting change,
realized capital gains (losses)
and catastrophe losses $4,816.1 $3,935.3 22.4%
NINE MONTHS
(in millions)
2004 2003 Change
---- ---- ------
Income before income taxes,
minority interest and cumulative
effect of an accounting change $12,637.7 $9,857.8 28.2%
Realized capital gains (losses) (248.5) (1,347.8) -
Catastrophe Losses:
Domestic Brokerage Group 405.8 47.5 -
Personal Lines 24.7 5.0 -
Transatlantic Holdings, Inc. (a) 165.0 3.5 -
Foreign General 140.3 16.5 -
Life (Home Service) (b) 4.7 - -
Minority owned companies - AIG
share:
Allied World Assurance
Holdings, Ltd 39.4 - -
IPC Holdings, Ltd. 24.4 - -
Fuji Fire & Marine Insurance
Company Limited 10.0 - -
----------------------------
Total Catastrophe Losses (814.3) (72.5) -
Income before income taxes,
minority interest, cumulative
effect of an accounting change,
realized capital gains (losses)
and catastrophe losses $13,700.5 $11,278.1 21.5%
(a) AIG's share is $99.0 million in 2004 and $2.1 million in 2003.
(b) Relates to minor property-casualty subsidiaries currently in
runoff.
Highlights of the third quarter 2004 include:
2004 2003 Change
---- ---- ------
Consolidated
------------
Net Income, excluding
realized capital gains
(losses) $2.54 billion $2.58 billion (1.3%)
Net Income, excluding
realized capital gains
(losses) and
catastrophe losses $3.06 billion $2.62 billion 16.5%
Shareholders' Equity
At September 30 and
December 31 $78.9 billion $71.3 billion 10.7%
Retained Earnings
At September 30 and
December 31 $68.4 billion $61.0 billion 12.1%
Return on Equity (a)
At September 30 and
December 31
As presented 16.4% 17.2%
Excluding
catastrophe losses 17.1% 17.3%
Consolidated Assets
At September 30 and
December 31 $776 billion $678 billion 14.5%
Revenues (b) $25.41 billion $20.31 billion 25.1%
Insurance Cash Flow (c) $14.93 billion $12.46 billion 19.8%
General Insurance
-----------------
Net Premiums Written $10.73 billion $8.97 billion 19.7%
Operating Income
(excluding realized
capital gains
(losses)) $894.3 million $1.32 billion (32.0%)
Operating Income
(excluding realized
capital gains
(losses) and
catastrophe losses) $1.63 billion $1.39 billion 17.5%
Net Investment Income $869.0 million $741.9 million 17.1%
Loss and Loss Adjustment
Reserves At
September 30 and
December 31 $43.82 billion $36.65 billion 19.6%
Combined Ratio 99.89 93.05
Catastrophe Loss Ratio 7.13 0.88
Combined Ratio,
excluding catastrophe
losses 92.76 92.17
Cash Flow $3.64 billion $3.58 billion 1.7%
Life Insurance & Retirement
Services (d)
--------
GAAP Premiums $7.37 billion $5.58 billion 32.1%
Premiums, Deposits and
Other Considerations $17.25 billion $13.49 billion 27.9%
Operating Income
(excluding realized
capital gains
(losses)) $2.19 billion $1.83 billion 19.9%
Financial Services
------------------
Operating Income $655.5 million $608.3 million 7.8%
Asset Management (d)(e)
----------------
Operating Income $353.1 million $208.1 million 69.6%
(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.
(e) Includes the results of certain AIG managed private equity and
real estate funds consolidated effective December 31, 2003 pursuant to
FIN46R, "Consolidation of Variable Interest Entities". For the third
quarter and nine months 2004, operating income includes $116 million
and $147 million, respectively, of third-party limited partner
earnings offset in Minority Interest Expense.
Commenting on AIG's 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 third quarter net income of $2.51 billion, up 7.5 percent, even after accounting for the unprecedented succession succession: see ecology. of storms, which included four hurricanes and three typhoons. Excluding realized capital gains (losses) and catastrophe losses, net income in the third quarter of 2004 increased 16.5 percent over a year ago. For the first nine months of 2004, net income was a record $8.03 billion, up 22.3 percent. Excluding realized capital gains (losses), cumulative effect of an accounting change and catastrophe losses, net income for the first nine months increased 18.5 percent. "This storm season was the most costly in history, and it resulted in a tragic loss of life. AIG's third quarter 2004 after tax catastrophe losses of $512.2 million compare to average annual after tax catastrophe losses over the prior 15 years of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $50 million. The importance of AIG's claims handling expertise, strong financial position and diverse business mix is evident in this quarter's results. "For many years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time insurance industry has sought the ability to set up catastrophe reserves specifically to provide for serious events, such as those in the third quarter. The U.S. Congress and Treasury have not supported these efforts. However, I would hope that, following the impact of these destructive storms, more attention will be paid to this matter.
GENERAL INSURANCE
-----------------
"General Insurance had a strong quarter in the U.S. and around the world. 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 third quarter of 2004 was $894.3 million compared to $1.32 billion a year ago. Excluding catastrophe losses and realized capital gains (losses), General Insurance operating income increased 17.5 percent. Net premiums written were a record $10.73 billion, up 19.7 percent over a year ago. The General Insurance combined ratio was 99.89, or 92.76 excluding catastrophe losses, compared to 93.05, or 92.17 excluding catastrophe losses, a year ago. "Worldwide General Insurance net investment income was $869.0 million, an increase of 17.1 percent. Strong cash flow in our business resulted in increased interest and dividend income. We also had good realizations from our private equity investments compared to the prior year. General Insurance cash flow totaled $3.64 billion and $10.35 billion in the third quarter and nine months of 2004, respectively, compared to $3.58 billion and $9.49 billion a year earlier. "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. is a process of careful risk by risk selection as well as pricing discipline. We will maintain this approach in order to assure that AIG receives adequate returns for the risks we accept. While industry pricing has eroded e·rode v. e·rod·ed, e·rod·ing, e·rodes v.tr. 1. To wear (something) away by or as if by abrasion: Waves eroded the shore. 2. To eat into; corrode. more than it should have in some classes of business, we are still able to identify profitable opportunities and build attractive new business as a result of our broad product line and extensive distribution reach. "At September September: see month. 30, 2004, General Insurance net loss and loss adjustment reserves totaled $43.82 billion, an increase of $3.04 billion ($2.30 billion excluding catastrophe losses) and $7.17 billion ($6.44 billion excluding catastrophe losses) for the third quarter and nine 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 excellent premium growth of 20.6 percent in the third quarter. We continue to benefit from a flight to quality in a number of key lines of business. Net premiums written were a record $6.19 billion. The combined ratio was 101.76, or 94.95 excluding catastrophe losses, compared to 94.78, or 93.74 excluding catastrophe losses, in the third quarter of 2003. "The Domestic Personal Lines business had good premium growth. Third quarter underwriting performance was solid, even with the impact of catastrophes. Third quarter operating income was $72.7 million, or $97.4 million excluding catastrophe losses, compared to $74.9 million, or $79.9 million excluding catastrophe losses, a year ago. Net premiums written were $1.09 billion, up 18.7 percent over a year ago. The combined ratio was 97.69, or 95.41 excluding catastrophe losses, compared to 97.20, or 96.66 excluding catastrophe losses, a year ago. "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 and continues to expand its global client base. The third quarter 2004 combined ratio was 74.42 including catastrophe losses. "United Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Corporation (UGC See user-generated content. ) had another good quarter. Premiums grew and refinancings continued to decline 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 remains well below the industry average. UGC is moving forward with plans to enter new international markets. "The results of Transatlantic Holdings, Inc. were impacted by the high level of catastrophes in the quarter. The third quarter combined ratio was 113.01, or 95.47 excluding catastrophe losses, compared to 96.16, or 95.76 excluding catastrophe losses, a year ago. Net premiums written grew 9.6 percent, to $987.4 million. "AIG's Foreign General Insurance operations had excellent results even though they were adversely impacted by the Asia typhoons and hurricanes in the Caribbean. Premiums in the third quarter were up 23.4 percent to $2.30 billion. The combined ratio was 92.95, or 86.61 excluding catastrophe losses, compared to 88.31, or 87.39 excluding catastrophe losses, a year ago. "The Far East region had excellent growth. In Japan, corporate and personal accident business expanded. Commercial lines in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). continue to exhibit strong growth, as did our personal lines operations
in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Additionally, our joint venture 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. has expanded its commercial lines leadership among the private sector
companies.
LIFE INSURANCE & RETIREMENT SERVICES
------------------------------------
"Worldwide Life Insurance & Retirement Services had outstanding results. Operating income before realized capital gains (losses) was a record $2.19 billion, an increase of 19.9 percent, compared to $1.83 billion in the third quarter of 2003. Worldwide Life Insurance & Retirement Services GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). premiums were $7.37 billion, an increase of 32.1 percent over the third quarter of 2003. Premiums, deposits and other considerations totaled $17.25 billion, up 27.9 percent compared to the third quarter of 2003. Cash flow continues to be outstanding. "AIG's Foreign Life Insurance & Retirement Services operations had outstanding results. Operating income excluding realized capital gains (losses) was a record $1.23 billion in the third quarter compared to $992.6 million a year ago. GAAP premiums were $5.78 billion, up 38.8 percent. Excluding a 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. transaction involving the group products segment's terminal funding business, third quarter 2004 GAAP premiums increased approximately 23 percent. Premiums, deposits and other considerations were $10.65 billion, compared to $6.09 billion in the third quarter of 2003. "In Japan, we have an agreement and have obtained regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals that will enable the Sumitomo Life Insurance Company Sumitomo Life Insurance Company (住友生命保険相互会社 to market insurance products underwritten by ALICO ALICO American Life Insurance Company . Sumitomo will initially market ALICO's cancer insurance coverage through the Sumitomo sales channel of approximately 40,000 sales representatives. ALICO and Sumitomo have also agreed to consider expanding the relationship to include other insurance products in the future. "Our life insurance businesses in Japan - ALICO, AIG Star Life, and 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 - all had good results in the quarter, benefiting from their financial strength, diversified diversified (di·verˑ·s product portfolio and broad distribution. Total first year premiums increased 31.3 percent. "In China, our life operations also had a good quarter. Life insurance first year premiums were up 23.4 percent, significantly in excess of the industry average. The timing of sales contests can affect the quarter-over-quarter and sequential One after the other in some consecutive order such as by name or number. sales results. Additionally, personal accident sales reflect the repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing of certain key products to improve profit margins. "AIG's Domestic Life Insurance & Retirement Services businesses are on target for the quarter. Domestic Life Insurance & Retirement Services operating income excluding realized capital gains (losses) totaled $962.1 million in the third quarter of 2004, an increase of 15.0 percent compared to $836.4 million in the third quarter of 2003. GAAP premiums were $1.59 billion, up 12.2 percent. Premiums, deposits and other considerations were $6.60 billion compared to $7.40 billion in the third quarter of 2003 with a significant part of the decrease related to lower 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. sales that resulted from our disciplined response to inadequate competitor pricing. "Life Insurance results from term, universal and structured settlement products were particularly strong. Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). at the home services business, AGLA AGLA Arlington Gay and Lesbian Alliance (Virginia) , is proceeding under a new president who has significant experience in this business. He is implementing structural changes and developing new strategies. We believe this is a potentially valuable distribution channel that will be able to make a meaningful contribution to our overall growth. "Domestic retirement services had a good quarter as all three main businesses - group retirement products and individual fixed and variable annuities Variable annuities Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio. - reported solid growth in operating income due to improvements in U.S. equity markets and increased fixed annuity balances over the past year.
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 $655.5 million in the third quarter of 2004, compared to $608.3 million a year ago. "International Lease Finance Corporation reported operating income of $204.3 million in the quarter, compared to $190.5 million in the third 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 12.8 percent from third quarter 2003. Lease rates have firmed considerably, as a result of strong demand spurred by a rapidly recovering global commercial aviation market, especially in Asia. Sales have begun to pick up, and we expect them to be even stronger in future periods. "Capital Markets operating income was $247.7 million, up modestly from the second quarter of 2004 and third quarter of 2003. We have a diverse product portfolio. The consolidation of AIG Trading Group into AIG Financial Products Corp. continues to meet its strategic objective of providing clients a full range of solutions. "Consumer Finance again had excellent results in both domestic and foreign operations. Operating income increased 17.5 percent to $203.9 million. In the United States, credit quality remains 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 significantly. 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 as the operations in Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, continued its strong growth and the 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. credit card business benefited from the strengthening local economy.
ASSET MANAGEMENT
----------------
"Asset Management operating income was $353.1 million in the third quarter of 2004 compared to $208.1 million last year. Third quarter 2004 institutional asset management results include $116 million in third party limited partner earnings from certain AIG managed private equity and real estate funds, now required to be 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: according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. FIN fin, organ of locomotion characteristic of fish and consisting of thin tissue supported by cartilaginous or bony rays. In some fish, e.g., the eel, a single fin extends from the back, around the tail, and along the ventral surface. 46R. 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. grew $1 billion to over $50 billion. 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. (GICs) will continue to be sold on an opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. basis. "In the Other Income/Deductions -net category, AIG reported a loss of $93.1 million in the third quarter of 2004 ($19.4 million loss excluding the catastrophe losses of minority owned companies), compared to a loss of $97.7 million a year earlier. The underlying improvement continues to be 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." Please see the attached statement with respect to the New York State Attorney General's investigation of certain brokerage practices. 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 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. , 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 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 , October October: see month. 29, 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 June June: see month. 30, 2004 and AIG's 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) and catastrophe 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 net income and operating income excluding catastrophe losses because those losses are deemed to be significant for the third quarter and nine months 2004. AIG believes that this separate presentation is both meaningful and useful for users of AIG's financial information. 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 September 30,
2004 2003 Change
------------- ------------- -------
General Insurance Operations:
Net Premiums Written $ 10,729,852 $ 8,965,455 19.7 %
Net Premiums Earned 10,323,613 8,289,994 24.5
Underwriting Profit 25,314 573,192 (95.6)
Net Investment Income 868,991 741,897 17.1
Income before Realized Capital
Gains (Losses) 894,305 1,315,089 (32.0)
Realized Capital Gains (Losses) (39,436) (74,748) -
Operating Income 854,869 1,240,341 (31.1)
Operating Income, excluding
Realized Capital Gains
(Losses) and
Catastrophe Losses $ 1,630,105 $ 1,387,589 17.5 %
----------------------------------------------------------------------
Loss Ratio 80.02 73.65
Expense Ratio 19.87 19.40
Combined Ratio 99.89 93.05
Combined Ratio,
excluding
Catastrophe Losses 92.76 92.17
----------------------------------------------------------------------
Life Insurance & Retirement
Services Operations (a):
GAAP Premiums $ 7,366,479 $ 5,578,209 32.1 %
Net Investment Income 3,871,547 3,344,908 15.7
Income before Realized Capital
Gains (Losses) 2,192,044 1,828,923 19.9
Realized Capital Gains (Losses) (25,286) (123,609) -
Operating Income 2,166,758 1,705,314 27.1
Financial Services Operating
Income 655,526 608,346 7.8
Asset Management
Operating Income (a)(b) 353,058 208,148 69.6
Other Realized Capital
Gains (Losses) (a) 20,321 (160,988) -
Other Income (Deductions) - net (93,147) (97,674) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of
an Accounting Change 3,957,385 3,503,487 13.0
Income Taxes 1,279,811 1,068,372 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 2,677,574 2,435,115 10.0
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (162,627) (94,074) -
Realized Capital Gains (Losses) (2,479) (4,550) -
Income before Cumulative Effect
of an Accounting Change 2,512,468 2,336,491 7.5
Cumulative Effect of an
Accounting Change, net of
tax (c) 0 0 -
Net Income 2,512,468 2,336,491 7.5
Realized Capital Gains (Losses),
net of tax (31,612) (241,582) -
Cumulative Effect of an
Accounting Change, net of
tax (c) 0 0 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax 2,544,080 2,578,073 (1.3)
Catastrophe Losses, net of tax (512,206) (46,215) -
Net Income, excluding Realized
Capital Gains (Losses),
Cumulative Effect of an
Accounting Change and
Catastrophe Losses, net of tax $ 3,056,286 $ 2,624,288 16.5 %
Nine Months Ended September 30,
2004 2003 Change
------------- ------------- -------
General Insurance Operations:
Net Premiums Written $ 31,323,183 $ 26,052,589 20.2 %
Net Premiums Earned 29,048,877 23,331,101 24.5
Underwriting Profit 1,366,889 1,669,578 (18.1)
Net Investment Income 2,618,471 2,257,238 16.0
Income before Realized Capital
Gains (Losses) 3,985,360 3,926,816 1.5
Realized Capital Gains (Losses) 18,854 (330,725) -
Operating Income 4,004,214 3,596,091 11.3
Operating Income, excluding
Realized Capital Gains
(Losses) and
Catastrophe Losses $ 4,721,160 $ 3,999,316 18.0 %
----------------------------------------------------------------------
Loss Ratio 75.65 73.87
Expense Ratio 19.65 18.94
Combined Ratio 95.30 92.81
Combined Ratio,
excluding Catastrophe
Losses 92.77 92.50
----------------------------------------------------------------------
Life Insurance & Retirement
Services Operations (a):
GAAP Premiums $ 21,101,450 $ 16,984,067 24.2 %
Net Investment Income 11,642,075 9,945,410 17.1
Income before Realized Capital
Gains (Losses) 6,408,402 5,315,640 20.6
Realized Capital Gains (Losses) (106,323) (656,518) -
Operating Income 6,302,079 4,659,122 35.3
Financial Services Operating
Income 1,787,737 1,761,717 1.5
Asset Management
Operating Income (a)(b) 868,697 578,096 50.3
Other Realized Capital
Gains (Losses) (a) (161,014) (360,517) -
Other Income (Deductions) - net (164,038) (376,699) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 12,637,675 9,857,810 28.2
Income Taxes 4,036,409 3,004,488 -
Income before Minority Interest
and Cumulative Effect of
an Accounting Change 8,601,266 6,853,322 25.5
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (381,848) (283,828) -
Realized Capital Gains (Losses) (7,621) (2,593) -
Income before Cumulative Effect
of an Accounting Change 8,211,797 6,566,901 25.0
Cumulative Effect of an
Accounting Change, net of
tax (c) (181,431) 0 -
Net Income 8,030,366 6,566,901 22.3
Realized Capital Gains (Losses),
net of tax (173,522) (897,835) -
Cumulative Effect of an
Accounting Change, net of
tax (c) (181,431) 0 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax 8,385,319 7,464,736 12.3
Catastrophe Losses, net of tax (512,206) (46,215) -
Net Income, excluding Realized
Capital Gains (Losses),
Cumulative Effect of an
Accounting Change and
Catastrophe Losses, net of tax $ 8,897,525 $ 7,510,951 18.5 %
Three Months Ended September 30,
2004 2003 Change
------------- ------------- -------
Per Share - Diluted:
Net Income $ 0.95 $ 0.89 6.7 %
Realized Capital Gains (Losses),
net of tax (0.02) (0.09) -
Cumulative Effect of an
Accounting Change, net of tax (c) 0.00 0.00 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax 0.97 0.98 (1.0)
Catastrophe Losses, net of tax (0.19) (0.02) -
Net Income, excluding Realized
Capital Gains (Losses),
Cumulative Effect of an
Accounting Change and
Catastrophe Losses, net of tax $ 1.16 $ 1.00 16.0 %
Average Diluted Common
Shares Outstanding 2,628,330 2,627,557
Nine Months Ended September 30,
2004 2003 Change
------------- ------------- -------
Per Share - Diluted:
Net Income $ 3.05 $ 2.50 22.0 %
Realized Capital Gains (Losses),
net of tax (0.07) (0.34) -
Cumulative Effect of an
Accounting Change, net of
tax (c) (0.07) 0.00 -
Net Income, excluding Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change, net of tax 3.19 2.84 12.3
Catastrophe Losses, net of tax (0.19) (0.02) -
Net Income, excluding Realized
Capital Gains (Losses),
Cumulative Effect of an
Accounting Change and
Catastrophe Losses, net of tax $ 3.38 $ 2.86 18.2 %
Average Diluted Common
Shares Outstanding 2,630,030 2,627,740
* Including reconciliation in accordance with Regulation G.
(a) 2003 is restated to conform to 2004 presentation.
(b) Includes the results of certain AIG managed private equity and
real estate funds consolidated effective December 31, 2003
pursuant to FIN46R, "Consolidation of Variable Interest Entities".
For the third quarter and nine months 2004, operating income
includes $116 million and $147 million, respectively, of
third-party limited partner earnings offset in Minority Interest
Expense.
(c) 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 September 30,
2004 2003 Change
------------- ------------- -------
General Insurance:
Domestic Brokerage Group $ 524,953 $ 630,050 (16.7)%
Personal Lines 72,668 74,861 (2.9)
Mortgage Guaranty 94,706 100,590 (5.8)
Transatlantic Holdings (47,116) 100,683 -
Foreign General (a) 248,976 407,187 (38.9)
Intercompany Adjustments 118 1,718 -
Realized Capital Gains
(Losses) (39,436) (74,748) -
Life Insurance & Retirement
Services (b):
Domestic
Life Insurance 231,060 205,437 12.5
Home Service 92,068 96,455 (4.5)
Group Life/Health 26,636 29,938 (11.0)
Payout Annuities (c) 34,937 34,873 0.2
Retirement Services
Group Retirement
Products 271,563 230,250 17.9
Individual Fixed
Annuities 211,904 159,393 32.9
Individual Variable
Annuities 52,074 23,435 122.2
Individual Annuities -
Runoff (d) 41,953 56,679 (26.0)
Intercompany Adjustments (102) (88) -
Realized Capital Gains
(Losses) (17,804) (123,908) -
Foreign
Life Insurance 796,396 700,729 13.7
Personal Accident & Health 299,977 211,212 42.0
Group Products 61,892 54,729 13.1
Retirement Services
Individual Fixed
Annuities 73,109 30,122 142.7
Individual Variable
Annuities 3,500 26 -
Intercompany Adjustments (4,923) (4,267) -
Realized Capital Gains
(Losses) (7,482) 299 -
Financial Services:
Aircraft Finance 204,282 190,472 7.3
Capital Markets 247,729 240,642 2.9
Consumer Finance 203,914 173,592 17.5
Other (e) (399) 3,640 -
Asset Management (b):
Guaranteed Investment
Contracts
Domestic 131,787 122,256 7.8
Foreign 10,634 12,412 (14.3)
Institutional Asset
Management (f)(g) 194,477 53,793 261.5
Brokerage Services and
Mutual Funds 16,160 19,687 (17.9)
Other Realized Capital
Gains (Losses) (b) 20,321 (160,988) -
Other Income (Deductions) - net (93,147) (97,674) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 3,957,385 3,503,487 13.0
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change $ 4,001,786 $ 3,862,832 3.6 %
Nine Months Ended September 30,
2004 2003 Change
------------- ------------- -------
General Insurance:
Domestic Brokerage Group $ 2,144,495 $ 2,017,553 6.3 %
Personal Lines 250,134 172,913 44.7
Mortgage Guaranty 296,226 319,167 (7.2)
Transatlantic Holdings 174,015 276,509 (37.1)
Foreign General (a) 1,120,135 1,135,522 (1.4)
Intercompany Adjustments 355 5,152 -
Realized Capital Gains
(Losses) 18,854 (330,725) -
Life Insurance & Retirement
Services (b):
Domestic
Life Insurance 671,597 595,679 12.7
Home Service 300,164 298,622 0.5
Group Life/Health 71,418 87,910 (18.8)
Payout Annuities (c) 105,617 95,550 10.5
Retirement Services
Group Retirement
Products 805,818 675,491 19.3
Individual Fixed
Annuities 662,826 491,778 34.8
Individual Variable
Annuities 132,209 36,543 261.8
Individual Annuities -
Runoff (d) 138,191 161,985 (14.7)
Intercompany Adjustments (277) (215) -
Realized Capital Gains
(Losses) (170,414) (326,942) -
Foreign
Life Insurance 2,298,186 2,046,056 12.3
Personal Accident & Health 851,012 608,349 39.9
Group Products 198,195 149,554 32.5
Retirement Services
Individual Fixed
Annuities 180,525 79,188 128.0
Individual Variable
Annuities 6,379 (412) -
Intercompany Adjustments (13,458) (10,438) -
Realized Capital Gains
(Losses) 64,091 (329,576) -
Financial Services:
Aircraft Finance 546,877 548,357 (0.3)
Capital Markets 663,835 728,663 (8.9)
Consumer Finance 579,408 488,553 18.6
Other (e) (2,383) (3,856) -
Asset Management (b):
Guaranteed Investment
Contracts
Domestic 446,284 360,579 23.8
Foreign 31,121 32,091 (3.0)
Institutional Asset
Management (f)(g) 337,926 141,689 138.5
Brokerage Services and
Mutual Funds 53,366 43,737 22.0
Other Realized Capital
Gains (Losses) (b) (161,014) (360,517) -
Other Income (Deductions) - net (164,038) (376,699) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect
of an Accounting Change 12,637,675 9,857,810 28.2
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect
of an Accounting Change $ 12,886,158 $ 11,205,570 15.0 %
(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) Includes AIG Global Investment Group and certain smaller asset
management operations.
(g) Includes the results of certain AIG managed private equity and
real estate funds consolidated effective December 31, 2003
pursuant to FIN46R, "Consolidation of Variable Interest Entities".
For the third quarter and nine months 2004, operating income
includes $116 million and $147 million, respectively, of
third-party limited partner earnings offset in Minority Interest
Expense.
American International Group, Inc.
Operating Income Excluding Catastrophe Losses
(in thousands)
Three Months Ended September 30,
2004 2003 Change
------------- ------------- -------
General Insurance:
Domestic Brokerage Group $ 930,753 $ 677,550 37.4 %
Personal Lines 97,368 79,861 21.9
Mortgage Guaranty 94,706 100,590 (5.8)
Transatlantic Holdings 117,884 104,183 13.2
Foreign General (a) 389,276 423,687 (8.1)
Intercompany Adjustments 118 1,718 -
Realized Capital Gains (Losses) (39,436) (74,748) -
Life Insurance & Retirement
Services (b):
Domestic
Life Insurance 231,060 205,437 12.5
Home Service 96,757 96,455 0.3
Group Life/Health 26,636 29,938 (11.0)
Payout Annuities (c) 34,937 34,873 0.2
Retirement Services
Group Retirement
Products 271,563 230,250 17.9
Individual Fixed
Annuities 211,904 159,393 32.9
Individual Variable
Annuities 52,074 23,435 122.2
Individual Annuities -
Runoff (d) 41,953 56,679 (26.0)
Intercompany Adjustments (102) (88) -
Realized Capital Gains
(Losses) (17,804) (123,908) -
Foreign
Life Insurance 796,396 700,729 13.7
Personal Accident & Health 299,977 211,212 42.0
Group Products 61,892 54,729 13.1
Retirement Services
Individual Fixed
Annuities 73,109 30,122 142.7
Individual Variable
Annuities 3,500 26 -
Intercompany Adjustments (4,923) (4,267) -
Realized Capital Gains
(Losses) (7,482) 299 -
Financial Services:
Aircraft Finance 204,282 190,472 7.3
Capital Markets 247,729 240,642 2.9
Consumer Finance 203,914 173,592 17.5
Other (e) (399) 3,640 -
Asset Management (b):
Guaranteed Investment Contracts
Domestic 131,787 122,256 7.8
Foreign 10,634 12,412 (14.3)
Institutional Asset
Management (f)(g) 194,477 53,793 261.5
Brokerage Services and
Mutual Funds 16,160 19,687 (17.9)
Other Realized Capital
Gains (Losses) (b) 20,321 (160,988) -
Other Income (Deductions) - net (19,359) (97,674) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 4,771,662 3,575,987 33.4
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change $ 4,816,063 $ 3,935,332 22.4 %
Nine Months Ended September 30,
2004 2003 Change
------------- ------------- -------
General Insurance:
Domestic Brokerage Group $ 2,550,295 $ 2,065,053 23.5 %
Personal Lines 274,834 177,913 54.5
Mortgage Guaranty 296,226 319,167 (7.2)
Transatlantic Holdings 339,015 280,009 21.1
Foreign General (a) 1,260,435 1,152,022 9.4
Intercompany Adjustments 355 5,152 -
Realized Capital Gains (Losses) 18,854 (330,725) -
Life Insurance & Retirement
Services (b):
Domestic
Life Insurance 671,597 595,679 12.7
Home Service 304,853 298,622 2.1
Group Life/Health 71,418 87,910 (18.8)
Payout Annuities (c) 105,617 95,550 10.5
Retirement Services
Group Retirement
Products 805,818 675,491 19.3
Individual Fixed
Annuities 662,826 491,778 34.8
Individual Variable
Annuities 132,209 36,543 261.8
Individual Annuities -
Runoff (d) 138,191 161,985 (14.7)
Intercompany Adjustments (277) (215) -
Realized Capital Gains
(Losses) (170,414) (326,942) -
Foreign
Life Insurance 2,298,186 2,046,056 12.3
Personal Accident & Health 851,012 608,349 39.9
Group Products 198,195 149,554 32.5
Retirement Services
Individual Fixed
Annuities 180,525 79,188 128.0
Individual Variable
Annuities 6,379 (412) -
Intercompany Adjustments (13,458) (10,438) -
Realized Capital Gains
(Losses) 64,091 (329,576) -
Financial Services:
Aircraft Finance 546,877 548,357 (0.3)
Capital Markets 663,835 728,663 (8.9)
Consumer Finance 579,408 488,553 18.6
Other (e) (2,383) (3,856) -
Asset Management (b):
Guaranteed Investment Contracts
Domestic 446,284 360,579 23.8
Foreign 31,121 32,091 (3.0)
Institutional Asset
Management (f)(g) 337,926 141,689 138.5
Brokerage Services and
Mutual Funds 53,366 43,737 22.0
Other Realized Capital
Gains (Losses) (b) (161,014) (360,517) -
Other Income (Deductions) - net (90,250) (376,699) -
Income before Income Taxes,
Minority Interest and
Cumulative Effect of an
Accounting Change 13,451,952 9,930,310 35.5
Income before Income Taxes,
Minority Interest, Realized
Capital Gains (Losses) and
Cumulative Effect of an
Accounting Change $ 13,700,435 $ 11,278,070 21.5 %
(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) Includes AIG Global Investment Group and certain smaller asset
management operations.
(g) Includes the results of certain AIG managed private equity and
real estate funds consolidated effective December 31, 2003
pursuant to FIN46R, "Consolidation of Variable Interest Entities".
For the third quarter and nine months 2004, operating income
includes $116 million and $147 million, respectively, of
third-party limited partner earnings offset in Minority Interest
Expense.
American International Group, Inc.
Supplementary Earnings Data*
(in thousands)
Three Months Ended September 30,
2004 2003 Change
------------ ------------- ------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 6,185,893 $ 5,130,155 20.6 %
Personal Lines 1,091,397 919,174 18.7
Mortgage Guaranty 162,838 148,525 9.6
Transatlantic Holdings 987,385 901,255 9.6
Foreign General (a) 2,302,339 1,866,346 23.4
------------ -------------
Total 10,729,852 8,965,455 19.7
Operating Income (Loss)
Domestic Brokerage Group(b) 524,953 630,050 (16.7)
Personal Lines(b) 72,668 74,861 (2.9)
Mortgage Guaranty 94,706 100,590 (5.8)
Transatlantic Holdings(b) (47,116) 100,683 -
Foreign General (a)(b)(c) 248,976 407,187 (38.9)
Intercompany Adjustments 118 1,718 -
------------ -------------
Total before Realized
Capital Gains (Losses) 894,305 1,315,089 (32.0)
Realized Capital Gains(Losses) (39,436) (74,748) -
Operating Income $ 854,869 $ 1,240,341 (31.1)%
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 101.76 94.78
Personal Lines 97.69 97.20
Mortgage Guaranty 56.02 57.58
Transatlantic Holdings 113.01 96.16
Foreign General (a) 92.95 88.31
Total 99.89 93.05
----------------------------------------------------------------------
Operating Income Excluding
Catastrophe Losses:
Domestic Brokerage Group(b) $ 930,753 $ 677,550 37.4 %
Personal Lines(b) 97,368 79,861 21.9
Mortgage Guaranty 94,706 100,590 (5.8)
Transatlantic Holdings(b) 117,884 104,183 13.2
Foreign General (a)(b)(c) 389,276 423,687 (8.1)
Intercompany Adjustments 118 1,718 -
------------ -------------
Total before Realized
Capital Gains (Losses) and
Catastrophe Losses $ 1,630,105 $ 1,387,589 17.5 %
----------------------------------------------------------------------
Combined Ratio Excluding
Catastrophe Losses:
Domestic Brokerage Group 94.95 93.74
Personal Lines 95.41 96.66
Mortgage Guaranty 56.02 57.58
Transatlantic Holdings 95.47 95.76
Foreign General (a) 86.61 87.39
Total 92.76 92.17
Nine Months Ended September 30,
2004 2003 Change
------------ ------------- ------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $17,546,457 $ 14,733,497 19.1 %
Personal Lines 3,288,360 2,703,786 21.6
Mortgage Guaranty 452,647 390,012 16.1
Transatlantic Holdings 2,822,052 2,472,186 14.2
Foreign General (a) 7,213,667 5,753,108 25.4
------------ -------------
Total 31,323,183 26,052,589 20.2
Operating Income (Loss)
Domestic Brokerage Group(b) 2,144,495 2,017,553 6.3
Personal Lines(b) 250,134 172,913 44.7
Mortgage Guaranty 296,226 319,167 (7.2)
Transatlantic Holdings(b) 174,015 276,509 (37.1)
Foreign General (a)(b)(c) 1,120,135 1,135,522 (1.4)
Intercompany Adjustments 355 5,152 -
------------ -------------
Total before Realized
Capital Gains (Losses) 3,985,360 3,926,816 1.5
Realized Capital Gains(Losses) 18,854 (330,725) -
Operating Income $ 4,004,214 $ 3,596,091 11.3 %
----------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 97.71 94.66
Personal Lines 96.28 97.90
Mortgage Guaranty 51.56 46.57
Transatlantic Holdings 101.70 96.59
Foreign General (a) 88.72 87.81
Total 95.30 92.81
----------------------------------------------------------------------
Operating Income Excluding
Catastrophe Losses:
Domestic Brokerage Group(b) $ 2,550,295 $ 2,065,053 23.5 %
Personal Lines(b) 274,834 177,913 54.5
Mortgage Guaranty 296,226 319,167 (7.2)
Transatlantic Holdings(b) 339,015 280,009 21.1
Foreign General (a)(b)(c) 1,260,435 1,152,022 9.4
Intercompany Adjustments 355 5,152 -
------------ -------------
Total before Realized
Capital Gains (Losses) and
Catastrophe Losses $ 4,721,160 $ 3,999,316 18.0 %
----------------------------------------------------------------------
Combined Ratio Excluding
Catastrophe Losses:
Domestic Brokerage Group 95.22 94.29
Personal Lines 95.50 97.71
Mortgage Guaranty 51.56 46.57
Transatlantic Holdings 95.66 96.44
Foreign General (a) 86.56 87.49
Total 92.77 92.50
* Including reconciliation in accordance with Regulation G.
(a)Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(b)Pretax catastrophe losses for the third quarter and nine months
2004 by segment were: Domestic Brokerage Group $405.8 million,
Personal Lines $24.7 million, Transatlantic Holdings $165.0 million
and Foreign General $140.3 million. Pretax catastrophe losses for
the third quarter and nine months 2003 by segment were: Domestic
Brokerage Group $47.5 million, Personal Lines $5.0 million,
Transatlantic Holdings $3.5 million and Foreign General $16.5
million.
(c)Operating income reflects lower net investment income due to timing
of private equity and partnership distributions. Excluding
catastrophe losses, third quarter and nine months 2004 underwriting
profit rose 23.4% and 27.4%, respectively, compared to the same
periods in 2003.
Three Months Ended September 30,
2004 2003 Change
------------ ------------- ------
General Insurance Operations:
Losses and Loss Expenses
Paid (a) $ 5,221,897 $ 4,492,735 16.2 %
Change in Loss and
Loss Expense Reserve(b) 3,038,962 1,612,699 88.4
------------ -------------
Losses and Loss Expenses Incurred 8,260,859 6,105,434 35.3
Underwriting Profit 25,314 573,192 (95.6)
Underwriting Profit Excluding
Catastrophe Losses $ 761,114 $ 645,692 17.9 %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth
of Net Premiums Written
Worldwide
Growth in Original Currency 18.0 %
Foreign Exchange Impact 1.7
Growth as Reported in U.S.$ 19.7
Foreign General (c)
Growth in Original Currency 16.8
Foreign Exchange Impact 6.6
Growth as Reported in U.S.$ 23.4 %
Nine Months Ended September 30,
2004 2003 Change
------------ ------------- ------
General Insurance Operations:
Losses and Loss Expenses
Paid (a) $14,804,950 $ 12,883,057 14.9 %
Change in Loss and
Loss Expense Reserve(b) 7,171,751 4,350,660 64.8
------------ -------------
Losses and Loss Expenses
Incurred 21,976,701 17,233,717 27.5
Net Loss and Loss Expense
Reserve 43,818,839 35,091,537 24.9
Underwriting Profit 1,366,889 1,669,578 (18.1)
Underwriting Profit Excluding
Catastrophe Losses $ 2,102,689 $ 1,742,078 20.7 %
----------------------------------------------------------------------
Foreign Exchange Impact on Growth
of Net Premiums Written
Worldwide
Growth in Original Currency 17.9 %
Foreign Exchange Impact 2.3
Growth as Reported in U.S.$ 20.2
Foreign General (c)
Growth in Original Currency 16.3
Foreign Exchange Impact 9.1
Growth as Reported in U.S.$ 25.4 %
(a)The paid loss ratios for the three months ended September 30, 2004
and 2003 were 50.58 and 54.20, respectively. The paid loss ratios
for the nine months ended September 30, 2004 and 2003 were 50.96
and 55.22, respectively. Additionally, 2004 paid losses were
impacted by the inclusion of GE personal lines business, which
was acquired at the end of August 2003.
(b)Excluding catastrophe losses the change in loss and loss expense
reserve for the third quarter and nine months 2004 is $2.30 billion
and $6.44 billion, respectively.
(c)Foreign General insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
Three Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
GAAP Premiums
Domestic
Life Insurance $ 501,196 $ 476,331 5.2 %
Home Service 201,802 207,198 (2.6)
Group Life/Health 303,630 252,557 20.2
Payout Annuities (b) 372,099 291,040 27.9
Retirement Services
Group Retirement Products 76,680 66,773 14.8
Individual Fixed Annuities 15,130 15,286 (1.0)
Individual Variable
Annuities 100,748 86,632 16.3
Individual Annuities -
Runoff (c) 18,970 21,644 (12.4)
------------ -------------
Total 1,590,255 1,417,461 12.2
Foreign
Life Insurance 3,540,875 3,052,480 16.0
Personal Accident & Health 1,084,220 746,818 45.2
Group Products (d) 1,028,667 311,770 229.9
Retirement Services
Individual Fixed Annuities 105,866 43,025 146.1
Individual Variable
Annuities 16,596 6,655 149.4
------------ -------------
Total 5,776,224 4,160,748 38.8
Total GAAP Premiums 7,366,479 5,578,209 32.1
----------------------------------------------------------------------
Premiums, Deposits and Other
Considerations (e)
Domestic
Life Insurance 761,474 700,791 8.7
Home Service 240,171 247,189 (2.8)
Group Life/Health 305,625 264,286 15.6
Payout Annuities 517,938 413,658 25.2
Retirement Services
Group Retirement Products 1,450,316 1,504,783 (3.6)
Individual Fixed Annuities 2,347,659 3,267,439 (28.1)
Individual Variable
Annuities 916,373 915,906 0.1
Individual Annuities -
Runoff 56,771 83,559 (32.1)
------------ -------------
Total 6,596,327 7,397,611 (10.8)
Foreign
Life Insurance 4,331,513 3,639,050 19.0
Personal Accident & Health 1,082,720 745,084 45.3
Group Products (d) 1,292,898 464,445 178.4
Retirement Services
Individual Fixed Annuities 3,527,922 915,536 285.3
Individual Variable
Annuities 415,775 323,803 28.4
------------ -------------
Total 10,650,828 6,087,918 75.0
Total Premiums, Deposits and
Other Considerations $17,247,155 $ 13,485,529 27.9 %
Nine Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
GAAP Premiums
Domestic
Life Insurance $ 1,406,979 $ 1,314,112 7.1 %
Home Service 611,866 625,160 (2.1)
Group Life/Health 858,509 764,441 12.3
Payout Annuities (b) 1,126,019 1,008,417 11.7
Retirement Services
Group Retirement Products 231,118 179,934 28.4
Individual Fixed Annuities 42,672 35,221 21.2
Individual Variable
Annuities 300,073 239,624 25.2
Individual Annuities -
Runoff (c) 58,570 61,212 (4.3)
------------ -------------
Total 4,635,806 4,228,121 9.6
Foreign
Life Insurance 11,134,903 9,436,567 18.0
Personal Accident & Health 3,171,509 2,186,005 45.1
Group Products (d) 1,831,621 944,799 93.9
Retirement Services
Individual Fixed Annuities 282,340 174,020 62.2
Individual Variable
Annuities 45,271 14,555 211.0
------------ -------------
Total 16,465,644 12,755,946 29.1
Total GAAP Premiums 21,101,450 16,984,067 24.2
----------------------------------------------------------------------
Premiums, Deposits and Other
Considerations (e)
Domestic
Life Insurance 2,136,998 2,001,279 6.8
Home Service 729,976 731,748 (0.2)
Group Life/Health 848,052 772,121 9.8
Payout Annuities 1,637,463 1,285,634 27.4
Retirement Services
Group Retirement Products 4,141,837 4,004,615 3.4
Individual Fixed Annuities 7,965,803 8,184,894 (2.7)
Individual Variable
Annuities 3,256,985 2,485,438 31.0
Individual Annuities -
Runoff 194,048 275,229 (29.5)
------------ -------------
Total 20,911,162 19,740,958 5.9
Foreign
Life Insurance 13,653,845 10,934,430 24.9
Personal Accident & Health 3,204,417 2,186,288 46.6
Group Products (d) 2,707,106 1,547,272 75.0
Retirement Services
Individual Fixed Annuities 8,892,027 1,665,722 433.8
Individual Variable
Annuities 1,227,917 903,940 35.8
------------ -------------
Total 29,685,312 17,237,652 72.2
Total Premiums, Deposits and
Other Considerations $50,596,474 $ 36,978,610 36.8 %
(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)Third quarter and nine months 2004 include approximately $640
million of premium from a reinsurance transaction involving
terminal funding business. This single premium amount is offset
by a similar amount of benefits incurred.
(e)Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a
non-GAAP basis.
Three Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Net Investment Income
Domestic
Life Insurance $ 361,935 $ 348,041 4.0 %
Home Service 177,106 171,406 3.3
Group Life/Health 31,360 30,417 3.1
Payout Annuities 199,539 190,532 4.7
Retirement Services
Group Retirement Products 550,772 523,289 5.3
Individual Fixed Annuities 772,046 643,176 20.0
Individual Variable
Annuities 57,856 63,982 (9.6)
Individual Annuities -
Runoff 262,547 279,697 (6.1)
Intercompany Adjustments (102) (88) -
------------ -------------
Total 2,413,059 2,250,452 7.2
Foreign
Life Insurance 1,066,520 895,565 19.1
Personal Accident & Health 46,406 42,067 10.3
Group Products 108,329 79,434 36.4
Retirement Services
Individual Fixed Annuities 254,831 81,304 213.4
Individual Variable
Annuities (12,675) 353 -
Intercompany Adjustments (4,923) (4,267) -
------------ -------------
Total 1,458,488 1,094,456 33.3
Total Net Investment Income $ 3,871,547 $ 3,344,908 15.7 %
Nine Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Net Investment Income
Domestic
Life Insurance $ 1,093,782 $ 965,940 13.2 %
Home Service 528,442 510,721 3.5
Group Life/Health 92,610 87,240 6.2
Payout Annuities 599,870 510,526 17.5
Retirement Services
Group Retirement Products 1,617,303 1,521,965 6.3
Individual Fixed Annuities 2,266,743 1,837,075 23.4
Individual Variable
Annuities 179,631 172,265 4.3
Individual Annuities -
Runoff 807,064 971,515 (16.9)
Intercompany Adjustments (277) (215) -
------------ -------------
Total 7,185,168 6,577,032 9.2
Foreign
Life Insurance 3,248,316 2,779,462 16.9
Personal Accident & Health 133,221 118,478 12.4
Group Products 311,121 248,538 25.2
Retirement Services
Individual Fixed Annuities 700,230 230,910 203.2
Individual Variable
Annuities 77,477 1,428 -
Intercompany Adjustments (13,458) (10,438) -
------------ -------------
Total 4,456,907 3,368,378 32.3
Total Net Investment Income $11,642,075 $ 9,945,410 17.1 %
(a)Restated to conform to 2004 presentation.
Three Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Operating Income
Domestic
Life Insurance $ 231,060 $ 205,437 12.5 %
Home Service (b) 92,068 96,455 (4.5)
Group Life/Health 26,636 29,938 (11.0)
Payout Annuities 34,937 34,873 0.2
Retirement Services
Group Retirement Products 271,563 230,250 17.9
Individual Fixed Annuities 211,904 159,393 32.9
Individual Variable
Annuities 52,074 23,435 122.2
Individual Annuities -
Runoff 41,953 56,679 (26.0)
Intercompany Adjustments (102) (88) -
------------ -------------
Total Domestic before
Realized Capital
Gains (Losses) 962,093 836,372 15.0
Realized Capital
Gains (Losses) (17,804) (123,908) -
------------ -------------
Domestic Operating Income 944,289 712,464 32.5
Foreign
Life Insurance 796,396 700,729 13.7
Personal Accident & Health 299,977 211,212 42.0
Group Products 61,892 54,729 13.1
Retirement Services
Individual Fixed Annuities 73,109 30,122 142.7
Individual Variable
Annuities 3,500 26 -
Intercompany Adjustments (4,923) (4,267) -
------------ -------------
Total Foreign before
Realized Capital
Gains (Losses) 1,229,951 992,551 23.9
Realized Capital
Gains (Losses) (7,482) 299 -
------------ -------------
Foreign Operating Income 1,222,469 992,850 23.1
Worldwide Life Insurance &
Retirement Services
before Realized
Capital Gains (Losses) 2,192,044 1,828,923 19.9
Realized Capital
Gains (Losses) (25,286) (123,609) -
------------ -------------
Worldwide Operating Income $ 2,166,758 $ 1,705,314 27.1 %
Nine Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Operating Income
Domestic
Life Insurance $ 671,597 $ 595,679 12.7 %
Home Service (b) 300,164 298,622 0.5
Group Life/Health 71,418 87,910 (18.8)
Payout Annuities 105,617 95,550 10.5
Retirement Services
Group Retirement Products 805,818 675,491 19.3
Individual Fixed Annuities 662,826 491,778 34.8
Individual Variable
Annuities 132,209 36,543 261.8
Individual Annuities -
Runoff 138,191 161,985 (14.7)
Intercompany Adjustments (277) (215) -
------------ -------------
Total Domestic before
Realized Capital
Gains (Losses) 2,887,563 2,443,343 18.2
Realized Capital
Gains (Losses) (170,414) (326,942) -
------------ -------------
Domestic Operating Income 2,717,149 2,116,401 28.4
Foreign
Life Insurance 2,298,186 2,046,056 12.3
Personal Accident & Health 851,012 608,349 39.9
Group Products 198,195 149,554 32.5
Retirement Services
Individual Fixed Annuities 180,525 79,188 128.0
Individual Variable
Annuities 6,379 (412) -
Intercompany Adjustments (13,458) (10,438) -
------------ -------------
Total Foreign before
Realized Capital
Gains (Losses) 3,520,839 2,872,297 22.6
Realized Capital
Gains (Losses) 64,091 (329,576) -
------------ -------------
Foreign Operating Income 3,584,930 2,542,721 41.0
Worldwide Life Insurance &
Retirement Services
before Realized
Capital Gains (Losses) 6,408,402 5,315,640 20.6
Realized Capital
Gains (Losses) (106,323) (656,518) -
------------ -------------
Worldwide Operating Income $ 6,302,079 $ 4,659,122 35.3 %
(a)Restated to conform to 2004 presentation.
(b)Third quarter and nine months 2004 include $4.7 million of
catastrophe losses relating to minor property-casualty subsidiaries
currently in run-off.
Three Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (b):
Individual/Retail $ 118,113 $ 86,470 36.6 %
Institutional Markets 4,681 21,400 (78.1)
------------ -------------
Total Periodic Sales 122,794 107,870 13.8
Unscheduled & Single
Deposits 81,461 122,660 (33.6)
Home Service
Product Sales
Life/Accident &
Health (b) 25,240 28,899 (12.7)
Fixed Annuity 26,779 31,433 (14.8)
Group Retirement Products
Deposits (c) 1,774,610 1,627,976 9.0
Net Flows
Group Retirement Products (c) 884,424 955,084 (7.4)
Individual Fixed Annuities 1,699,809 2,838,099 (40.1)
Individual Variable Annuities 260,921 361,988 (27.9)
Individual Annuities - Runoff (343,110) (228,792) -
------------ -------------
Total $ 2,502,044 $ 3,926,379 (36.3)%
Surrender Rates
Group Retirement Products (c) 6.9% 5.8%
Individual Fixed Annuities 5.9% 5.0%
Individual Variable Annuities 10.7% 10.3%
Nine Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Domestic - Other Data
Life Insurance
Periodic Premium Sales (b):
Individual/Retail $ 352,653 $ 257,140 37.1 %
Institutional Markets 24,941 58,140 (57.1)
------------ -------------
Total Periodic Sales 377,594 315,280 19.8
Unscheduled & Single
Deposits 301,941 292,000 3.4
Life Insurance Reserves 19,947,986 18,910,064 5.5
Home Service
Product Sales
Life/Accident &
Health (b) 83,936 83,449 0.6
Fixed Annuity 82,477 90,433 (8.8)
Total Insurance Reserves 7,145,737 7,011,640 1.9
Group Life/Health
Annualized Earned Premium 1,259,600 1,235,143 2.0
Payout Annuities
Insurance Reserves 10,741,500 9,215,714 16.6
Group Retirement Products
Deposits (c) 4,930,205 4,357,237 13.1
Net Flows
Group Retirement Products (c) 1,678,045 2,508,621 (33.1)
Individual Fixed Annuities 6,184,979 7,003,561 (11.7)
Individual Variable Annuities 1,341,821 857,134 56.5
Individual Annuities - Runoff (946,985) (812,092) -
------------ -------------
Total $ 8,257,860 $ 9,557,224 (13.6)%
Surrender Rates
Group Retirement Products (c) 8.5%(d) 5.6%
Individual Fixed Annuities 5.7% 5.0%
Individual Variable Annuities 10.4% 10.8%
General and Separate Account
Reserves
Group Retirement Products(c)$ 53,133,975 $ 47,935,048 10.8 %
Individual Fixed Annuities 49,056,345 39,723,444 23.5
Individual Variable
Annuities 24,981,443 21,699,887 15.1
Individual Annuities -
Runoff 20,903,810 21,876,106 (4.4)
Total $148,075,573 $131,234,485 12.8 %
(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 September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Foreign - Other Data
First Year Premiums
Life Insurance
Japan $ 167,233 $ 145,305 15.1 %
China 25,976 21,057 23.4
Asia excluding Japan
and China 361,420 381,759 (5.3)
All Other Regions 51,953 51,589 0.7
------------ -------------
Total 606,582 599,710 1.1
Personal Accident & Health
Japan 178,254 114,371 55.9
China 7,814 8,651 (9.7)
Asia excluding Japan
and China 60,159 47,163 27.6
All Other Regions 26,299 23,861 10.2
------------ -------------
Total 272,526 194,046 40.4
Group Products
Japan 4,096 6,478 (36.8)
Asia excluding Japan
and China 32,065 13,452 138.4
All Other Regions 148,829 105,147 41.5
------------ -------------
Total 184,990 125,077 47.9
Total First Year Premiums
Japan 349,583 266,154 31.3
China 33,790 29,708 13.7
Asia excluding Japan
and China 453,644 442,374 2.5
All Other Regions 227,081 180,597 25.7
------------ -------------
Total $ 1,064,098 $ 918,833 15.8 %
----------------------------------------------------------------------
Foreign Exchange Impact on
Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 28.8 %
Foreign Exchange Impact 3.3
Growth as Reported in U.S.$ 32.1
Foreign
Growth in Original Currency 34.5
Foreign Exchange Impact 4.3
Growth as Reported in U.S.$ 38.8
Premiums, Deposits and Other
Considerations (b)
Worldwide
Growth in Original Currency 26.1
Foreign Exchange Impact 1.8
Growth as Reported in U.S.$ 27.9
Foreign
Growth in Original Currency 70.9
Foreign Exchange Impact 4.1
Growth as Reported in U.S.$ 75.0 %
Nine Months Ended September 30,
2004 2003 (a) Change
------------ ------------- ------
Life Insurance & Retirement
Services Operations:
Foreign - Other Data
First Year Premiums
Life Insurance
Japan $ 513,217 $ 424,797 20.8 %
China 81,891 54,584 50.0
Asia excluding Japan
and China 1,164,933 1,275,497 (8.7)
All Other Regions 174,910 142,808 22.5
------------ -------------
Total 1,934,951 1,897,686 2.0
Personal Accident & Health
Japan 533,649 315,437 69.2
China 22,566 22,897 (1.4)
Asia excluding Japan
and China 177,295 143,484 23.6
All Other Regions 79,504 69,309 14.7
------------ -------------
Total 813,014 551,127 47.5
Group Products
Japan 16,614 18,514 (10.3)
Asia excluding Japan
and China 60,021 37,287 61.0
All Other Regions 484,954 407,127 19.1
------------ -------------
Total 561,589 462,928 21.3
Total First Year Premiums
Japan 1,063,480 758,748 40.2
China 104,457 77,481 34.8
Asia excluding Japan
and China 1,402,249 1,456,268 (3.7)
All Other Regions 739,368 619,244 19.4
------------ -------------
Total 3,309,554 2,911,741 13.7
Retirement Services Reserves
Individual Fixed Annuities 27,120,037 7,332,977 269.8
Individual Variable Annuities $ 3,385,188 $ 1,363,115 148.3 %
----------------------------------------------------------------------
Foreign Exchange Impact on
Growth of:
GAAP Premiums
Worldwide
Growth in Original Currency 19.7 %
Foreign Exchange Impact 4.5
Growth as Reported in U.S.$ 24.2
Foreign
Growth in Original Currency 23.1
Foreign Exchange Impact 6.0
Growth as Reported in U.S.$ 29.1
Premiums, Deposits and Other
Considerations (b)
Worldwide
Growth in Original Currency 33.9
Foreign Exchange Impact 2.9
Growth as Reported in U.S.$ 36.8
Foreign
Growth in Original Currency 65.9
Foreign Exchange Impact 6.3
Growth as Reported in U.S.$ 72.2 %
(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 September 30,
2004 2003 Change
------------ ------------- ------
Financial Services:
Revenues
Aircraft Finance $ 841,270 $ 785,034 7.2 %
Capital Markets 426,424 434,229 (1.8)
Consumer Finance 762,091 664,677 14.7
Other (a) 8,277 1,940 326.6
------------ -------------
Total 2,038,062 1,885,880 8.1
Operating Income
Aircraft Finance 204,282 190,472 7.3
Capital Markets 247,729 240,642 2.9
Consumer Finance 203,914 173,592 17.5
Other (a) (399) 3,640 -
------------ -------------
Total 655,526 608,346 7.8
----------------------------------------------------------------------
Asset Management (b)(c):
Revenues
Guaranteed Investment Contracts
Domestic 584,549 515,795 13.3
Foreign 97,862 101,119 (3.2)
Institutional Asset
Management (d) 242,741 156,399 55.2
Brokerage Services and
Mutual Funds 61,957 51,242 20.9
------------ -------------
Total 987,109 824,555 19.7
Operating Income
Guaranteed Investment Contracts
Domestic 131,787 122,256 7.8
Foreign 10,634 12,412 (14.3)
Institutional Asset
Management (d)(e) 194,477 53,793 261.5
Brokerage Services and
Mutual Funds 16,160 19,687 (17.9)
------------ -------------
Total (e) 353,058 208,148 69.6
----------------------------------------------------------------------
Guaranteed Investment Contracts
Deposits
Domestic 1,964,352 2,690,357 (27.0)
Foreign 1,875,512 461,054 306.8
------------ -------------
Total $ 3,839,864 $ 3,151,411 21.8 %
Effective Tax Rates:
Net Income 32.34% 30.49%
Realized Capital
Gains (Losses) 34.39% 34.04%
Nine Months Ended September 30,
2004 2003 Change
------------ ------------- ------
Financial Services:
Revenues
Aircraft Finance $ 2,403,703 $ 2,271,892 5.8 %
Capital Markets 1,161,021 1,242,324 (6.5)
Consumer Finance 2,177,749 1,957,482 11.3
Other (a) 25,466 24,013 6.1
------------ -------------
Total 5,767,939 5,495,711 5.0
Operating Income
Aircraft Finance 546,877 548,357 (0.3)
Capital Markets 663,835 728,663 (8.9)
Consumer Finance 579,408 488,553 18.6
Other (a) (2,383) (3,856) -
------------ -------------
Total 1,787,737 1,761,717 1.5
----------------------------------------------------------------------
Asset Management (b)(c):
Revenues
Guaranteed Investment Contracts
Domestic 1,729,726 1,539,920 12.3
Foreign 294,391 313,910 (6.2)
Institutional Asset
Management (d) 717,511 456,315 57.2
Brokerage Services and
Mutual Funds 185,268 148,281 24.9
------------ -------------
Total 2,926,896 2,458,426 19.1
Operating Income
Guaranteed Investment Contracts
Domestic 446,284 360,579 23.8
Foreign 31,121 32,091 (3.0)
Institutional Asset
Management (d)(e) 337,926 141,689 138.5
Brokerage Services and
Mutual Funds 53,366 43,737 22.0
------------ -------------
Total (e) 868,697 578,096 50.3
----------------------------------------------------------------------
Guaranteed Investment Contracts
Deposits
Domestic 8,770,544 6,445,799 36.1
Foreign 3,995,339 2,911,165 37.2
------------ -------------
Total 12,765,883 9,356,964 36.4
Reserves
Domestic 44,484,847 37,613,846 18.3
Foreign 8,069,313 7,163,674 12.6
------------ -------------
Total $52,554,160 $ 44,777,520 17.4 %
Effective Tax Rates:
Net Income 31.94% 30.48%
Realized Capital
Gains (Losses) 33.23% 33.58%
(a)Includes other financial services companies and intercompany
reclassifications.
(b)2003 is restated to conform to 2004 presentation.
(c)At September 30, 2004, AIG's third party assets under management,
including mutual funds and institutional accounts, totaled
over $50 billion.
(d)Includes AIG Global Investment Group and certain smaller
asset management operations.
(e)Includes the results of certain AIG managed private equity and
real estate funds consolidated effective December 31, 2003 pursuant
to FIN46R, "Consolidation of Variable Interest Entities". For the
third quarter and nine months 2004, operating income includes $116
million and $147 million, respectively, of third-party limited
partner earnings offset in Minority Interest Expense.
Additional Reconciliation in Accordance with Regulation G
Nine Months Twelve Months
Ended Ended
September 30, December 31,
2004 2003
------------- ---------------
Return on Equity Reconciliation
Return on Equity, GAAP basis 14.3 % 14.1 %
Percent Related to Reconciliation 2.1 3.1
------------- ---------------
Return on Equity, as presented(a) 16.4 17.2
Catastrophe Losses 0.7 0.1
------------- ---------------
Return on Equity, as presented
excluding Catastrophe Losses 17.1 % 17.3 %
(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.
New York State Attorney General The New York State Attorney General is the chief legal officer of the State of New York. The office has been in existence in some form since 1626, under the Dutch colonial government of New York. Investigation As previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , on October 14, 2004, the New York State Attorney General brought a lawsuit lawsuit: see procedure; tort. challenging certain insurance brokerage practices related to contingent commissions Contingent commissions is a term used in the American insurance industry for any kind of broker's commission which is contingent upon some event occurring (instead of a commission paid on the sale itself). In the UK this form of payment is known as Overriders. . Neither AIG nor any of its subsidiaries is a defendant in that action, although the lawsuit names several insurance companies, including AIG subsidiaries, as participants in the challenged practices, and two employees of an AIG subsidiary have pleaded guilty in connection with the Attorney General's investigation. AIG expects there will be additional investigations, and that various parties, including insureds and shareholders, will assert claims against AIG or its subsidiaries. AIG is actively investigating these matters, but the extent, timing and outcome of any related claims are uncertain. AIG cannot at this time estimate its potential costs related to these matters and accordingly, no reserve is being established in AIG's financial statements at this time. In the opinion of AIG management, AIG's ultimate liability for these matters is not likely to have a material adverse effect on AIG's consolidated financial condition, although it is possible that the effect would be material to AIG's consolidated results of operations for an individual reporting period. |
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