AIG REPORTS RECORD 1991 NET INCOME OF $1.55 BILLION
AIG REPORTS RECORD 1991 NET INCOME OF $1.55 BILLION NEW YORK, Feb. 27 /PRNewswire/ -- American International Group, Inc.
(NYSE: AIG) today reported that its net income for 1991 increased 7.7 percent to $1.55 billion from $1.44 billion in 1990. For the fourth quarter of 1991, net income totalled $399.8 million, an increase of 4.7 percent compared to $381.9 million in the same period of 1990.
Following is a comparative table of fourth quarter and full year information (in millions, except per share amounts): AMERICAN INTERNATIONAL GROUP, INC. Periods ended: Fourth Quarter Year 1991 1990 1991 1990 Net income, as reported $ 399.8 $ 381.9 $1,553.0 $1,442.3 Realized capital gains, net of taxes 10.3 4.0 60.7 59.5 "Fresh start" tax benefit(A) 7.0 20.5 28.0 47.7 Income, as adjusted $382.5 $357.4 $1,464.3 $1,335.1 Average shares outstanding 212.3 212.2 212.2 207.0 Per share results: Net income, as reported $1.87 $1.79 $7.28 $6.92 Realized capital gains, net of taxes 0.05 0.02 0.29 0.29 "Fresh start" tax benefit 0.03 0.10 0.13 0.23 Income, as adjusted $ 1.79 $ 1.67 $ 6.86 $ 6.40 (A) -- Fourth quarter 1990 includes an initial extra benefit of approximately $12.0 million relating to anticipated salvage recoveries as provided by the Consolidated Omnibus Budget Reconciliation Act of 1990. Income before income taxes for 1991 amounted to $2.02 billion, an increase of 11.6 percent over the $1.81 billion reported in 1990. For the fourth quarter of 1991, income before income taxes amounted to $518.9 million, an increase of 11.1 percent over the $467.2 million reported in the fourth quarter of 1990. Included in these results were pre-tax realized capital gains of $98.4 million and $22.0 million for the year and fourth quarter of 1991, respectively, compared to $99.4 million and $6.0 million for the same periods in 1990. Revenues for 1991 totalled $16.88 billion, an increase of 7.5 percent over $15.70 billion in 1990. Fourth quarter revenues rose 3.4 percent to $4.50 billion from $4.35 billion in the year-earlier quarter. At Dec. 31, 1991, AIG's consolidated assets and capital funds approximated $69 billion and $11.5 billion, respectively. Commenting on the year's and fourth quarter's results, AIG Chairman M.R. Greenberg said, "AIG's 1991 earnings set a record, as each of our principal businesses -- General Insurance, Life Insurance and Financial Services -- reported higher operating income. Our balance sheet and cash flow are both strong, and AIG holds the highest ratings from the principal rating services. "We achieved these results despite the continued competitive pricing environment in the domestic property-casualty industry, the recession in the United States and Europe, and a number of factors unusual in terms of magnitude that negatively impacted the comparison of fourth quarter 1991 with 1990. These factors included a high level of catastrophe losses ($47 million in the 1991 fourth quarter versus zero in 1990 and $68 million for the year compared to $33 million in 1990), restructuring costs of $14.5 million (discussed below), and a one-time 1990 salvage fresh start tax benefit of $12.0 million. Excluding the impact of these items, income, as adjusted, in the fourth quarter of 1991 exceeds that of the similar period in 1990 by 18.4 percent and for the full year by 11.9 percent. "During the fourth quarter we continued to reduce our writings in classes of business that have failed to yield a reasonable level of profit. Such reductions in net premiums written totalled approximately $330 million in 1991, following a similar reduction of approximately $200 million in 1990. We have also restructured The New Hampshire Insurance Company to focus exclusively on small and medium-sized commercial business, a strategy that has resulted in some staff reductions and branch office closings. The costs of these actions, as well as selective staff reductions and organizational changes elsewhere in AIG, totalled approximately $14.5 million and were treated as normal operating expenses. "In addition, it is worth mentioning a number of other highlights that distinguish AIG: -- Once again, approximately half of AIG's consolidated pre-tax profit was earned outside the United States, attesting to the unique geographic diversification of our earnings stream. -- AIG's foreign Life Insurance business produced over $500 million of operating income in 1991. -- AIG's shareholders' equity of $11.5 billion is the largest of any U.S.-based insurance organization. -- The market values of our bond portfolio and our real estate holdings exceed their balance sheet carrying values by a considerable margin, approximately $800 million and $1.5 billion, respectively. -- AIG maintained its consistently strong reserve position. We added $287 million to our General Insurance reserves for losses and loss adjustment expenses in the fourth quarter, and $1.14 billion for the year, bringing the total of such reserves to $15.8 billion at year-end. The significance of these reserves is further enhanced by the fact that AIG does not discount its loss reserves other than for very minor amounts. "Our 1991 results underscore the characteristics that separate AIG from our competitors in the insurance industry. These include the consistency and diversification of our earnings stream through up and down cycles, the strength of our balance sheet, the value of our overseas network and our focus on profitability. While no one can predict precisely when the domestic property-casualty cycle will turn, when it does AIG will be strongly positioned to benefit." General Insurance General Insurance pre-tax operating income for 1991 was $1.16 billion, compared to $1.13 billion last year. For the fourth quarter of 1991, pre-tax operating income was $296.5 million, compared to $296.1 million in the fourth quarter of 1990. Worldwide General Insurance net premiums written for 1991 amounted to $9.15 billion, compared to last year's $9.27 billion. In the fourth quarter of 1991, General Insurance net premiums written were $2.12 billion, compared to $2.27 billion in the fourth quarter 1990. The General Insurance combined ratio was 100.42 for 1991 compared to 99.57 in 1990. For the fourth quarters of 1991 and 1990, the combined ratios were 101.96 and 100.86, respectively. General Insurance net investment income rose 9.8 percent to $1.16 billion in 1991 and 9.7 percent to $308.7 million in the fourth quarter. Life Insurance AIG's worldwide Life Insurance operations reported pre-tax operating income of $538.6 million in 1991, compared to $469.2 million in 1990, an increase of 14.8 percent. For the fourth quarter, Life Insurance pre-tax operating income was $149.3 million, an increase of 17.9 percent over $126.6 million last year. For the year 1991, Life Insurance premium income increased 16.7 percent to $4.06 billion from $3.48 billion in 1990. Fourth quarter premium income amounted to $1.16 billion, an increase of 12.1 percent, as compared to $1.03 billion in the fourth quarter 1990. Life Insurance net investment income rose 16.6 percent to $1.14 billion for the year 1991, compared to $977.3 million for the same period last year. Net investment income in the fourth quarter rose 14.3 percent to $304.7 million from $266.5 million in 1990. Financial Services Financial Services operating income increased 67.7 percent in the year 1991, reaching $222.2 million, compared to $132.5 million last year. During the fourth quarter, Financial Services pre-tax operating income rose 24.5 percent to $53.6 million from $43.0 million in 1990. All three principal components of this group, International Lease Finance Corporation, acquired in August 1990, AIG Financial Products Corp. and AIG Trading Corporation, contributed to these strong results. Other Operations Agency and service fee operating income increased 26.0 percent in 1991 to $46.2 million from $36.7 million last year. For the fourth quarter, agency and service fee operating income amounted to $11.4 million, an increase of 19.8 percent from $9.5 million in 1990. AIG's equity in the net income of Transatlantic Holdings, Inc., a reinsurance holding company in which AIG owns a minority interest, amounted to $28.8 million for 1991, compared to $24.1 million last year. Equity in net income of Transatlantic Holdings for the fourth quarter was $7.6 million compared to $6.6 million in 1990. AIG is the leading U.S.-based international insurance organization and the nation's largest underwriter of commercial and industrial coverages. Its member companies write property, casualty, marine, life and financial services insurance in approximately 130 countries and jurisdictions, and are engaged in a range of financial services businesses. American International Group, Inc.'s common stock is listed on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo. AMERICAN INTERNATIONAL GROUP, INC. Financial Highlights (In thousands, except per share amounts) Twelve months ended Dec. 31 1991 1990 Pct. Change General insurance operations: Net premiums written $9,146,394 $9,267,201 (1.3) Net premiums earned 9,104,632 9,149,414 (0.5) Adjusted underwriting profit (loss) (4,809) 75,184 -- Net investment income 1,163,461 1,059,161 9.8 Operating income $1,158,652 $1,134,345 2.1 Loss ratio (pct) 78.93 78.17 Expense ratio (pct) 21.49 21.40 Combined ratio (pct) 100.42 99.57 Life insurance operations: Premium income $4,059,354 $3,477,598 16.7 Net investment income 1,139,793 977,343 16.6 Operating income 538,620 469,209 14.8 Financial services operating inc. 222,156 132,505 67.7 Agency & service fee operating inc. 46,202 36,663 26.0 Equity in income of minority-owned reinsurance operations 28,806 24,050 19.8 Other income (deductions) - net (63,898) (72,593) -- Foreign exchange gains (losses) (6,313) (12,040) -- Inc. bef. realized capital gains 1,924,225 1,712,139 12.4 Realized capital gains 98,350 99,395 (1.1) Income before income taxes 2,022,575 1,811,534 11.6 Net income $1,553,009 $1,442,294 7.7 Per common share (A) $7.28 $6.92 5.2 Average common shares outstg. (B) 212,248 206,979 Three months ended Dec. 31 1991 1990 Pct. Change General insurance operations: Net premiums written $2,119,296 $2,268,336 (6.6) Net premiums earned 2,370,483 2,413,582 (1.8) Adjusted underwriting profit (loss) (12,168) 14,728 -- Net investment income 308,704 281,332 9.7 Operating income $ 296,536 $ 296,060 0.2 Loss ratio (pct) 78.98 78.34 Expense ratio (pct) 22.98 22.52 Combined ratio (pct) 101.96 100.86 Life insurance operations: Premium income $1,157,539 $1,032,802 12.1 Net investment income 304,672 266,515 14.3 Operating income 149,287 126,636 17.9 Financial services operating inc. 53,553 43,025 24.5 Agency & service fee operating inc. 11,372 9,493 19.8 Equity in income of minority-owned reinsurance operations 7,626 6,606 15.4 Other income (deductions) - net (21,806) (16,996) -- Foreign exchange gains (losses) 333 (3,576) -- Inc. bef. realized capital gains 496,901 461,248 7.7 Realized capital gains 21,964 5,956 -- Income before income taxes 518,865 467,204 11.1 Net income $ 399,794 $ 381,948 4.7 Per common share (A) $1.87 $1.79 4.5 Average common shares outstg. (B) 212,266 212,167 (A) -- After deduction in 1991 and 1990 of preferred stock dividends of $1.7 million and $2.5 million for the fourth quarter and $7.3 million and $9.7 million for the year, respectively. (B) -- 1990 includes the effect of the 7.6 million shares issued in conjunction with the Aug. 31, 1990, acquisition of International Lease Finance Corporation. -0- 2/27/92 /CONTACT: Michael Forman, 212-770-3144, or (investors) Charlene M. Hamrah, 212-770-7074, both of American International Group/ (AIG) CO: American International Group, Inc. ST: New York IN: INS SU: ERN
TS-GK -- NY003 -- 3113 02/27/92 09:15 EST
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|Date:||Feb 27, 1992|
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