AIG overtakes MetLife as biggest life insurer.

American International Group Inc. has emerged as the largest U.S. life insurance company based on admitted assets--overtaking the former leader, MetLife. But, AIG's claim on the top spot may be short lived when MetLife closes on a pending $11.5 billion acquisition later this year.

As of year-end 2004, AIG Life Group's admitted assets were approximately $327 billion, up about 17.5% from year-end 2003, while the admitted assets of Metropolitan Life & Affiliated Cos. at year-end 2004 were almost $308 billion, up an estimated 8% from year-end 2003, according to preliminary 2004 financial data of U.S. operations only as compiled by A.M. Best Co.

Both companies have had five-year growth in admitted assets at about 31% for their U.S. life operations, according to A.M. Best data.

Annuities are the "single biggest factor" driving AIG's life operations to the top, said Jack Gibson, a managing principal of the North American Life Practice for Towers Perrin. "They have a huge growth in their annuities and most notably, in Sun America," he said, referring to AIG's 1998 acquisition.

MetLife's statutory earnings have generally improved on a historical basis, with particular improvement seen in the most recent year marked by strengthening in its group annuities business and no statutory losses sustained in any of its business lines, Marc Steinberg, an A.M. Best financial analyst said.

Although these results are based solely on U.S. operations, Gibson said that AIG has done a better job, "probably than any other company," in creating a global brand.

However, a major acquisition will have MetLife reigning at No. 1 again, and with a stronger international distribution organization.

MetLife is buying Citigroup Inc.'s Travelers Life & Annuity unit and nearly all of Citigroup's international insurance businesses. Related to the sale, Citigroup and MetLife entered 10-year agreements under which MetLife would expand its distribution by making products available through some Citigroup distribution channels.

According to A.M. Best, if the merger was taken into account, pro forma MetLife-Travelers consolidated admitted assets, at year-end 2004, would have been $394.78 billion.

With the acquisition of Travelers Life & Annuity, on a pro forma basis, MetLife's admitted assets should grow by an estimated $80 billion to $90 billion which should help it regain the No. 1 ranking in admitted assets once the acquisition of Travelers is completed for year-end 2005, Steinberg said.