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AIG REPORTS SECOND QUARTER 1992 NET INCOME OF $425.6 MILLION

 AIG REPORTS SECOND QUARTER 1992 NET INCOME OF $425.6 MILLION
 NEW YORK, July 30 /PRNewswire/ -- American International Group,


Inc. (NYSE: AIG) today reported that its net income for the second quarter of 1992 increased 6.1 percent to $425.6 million from $401.0 million in the second quarter of 1991. For the first six months of 1992, net income totalled $839.5 million, an increase of 8.1 percent as compared to $776.4 million in the same period of 1991.
 Following is a comparative table of second quarter and six month information (in millions, except per share amounts):
 Second quarter Six months
 1992 1991 1992 1991
 Net income, as reported $425.6 $401.0 $839.5 $776.4
 Realized capital
 gains, net of taxes 17.1 20.0 34.0 35.8
 "Fresh start" 7.0 7.0 14.0 14.0
 Income, as adjusted $401.5 $374.0 $791.5 $ 726.6
 Average shares outstanding 211.6 212.3 211.9 212.2
 PER SHARE RESULTS:
 Net income, as reported $ 2.01 $ 1.88 $ 3.95 $ 3.64
 Realized capital
 gains, net of taxes 0.08 0.09 0.16 0.16
 "Fresh start" 0.04 0.04 0.07 0.07
 Income, as adjusted $ 1.89 $ 1.75 $ 3.72 $ 3.41
 Income before income taxes for the second quarter amounted to $561.2 million, an increase of 7.8 percent over the $520.5 million reported in 1991. For the first six months of 1992, income before income taxes increased 9.1 percent to $1.11 billion from $1.02 billion reported last year. Included in these results were pre-tax realized capital gains of $26.5 million and $54.6 million for the second quarter and six months of 1992, respectively, compared to $31.0 million and $54.6 million for the same periods in 1991.
 Second quarter revenues rose 10.0 percent to $4.5 billion from $4.1 billion in the year-earlier quarter. For the first six months of 1992, revenues totalled $8.9 billion, an increase of 8.5 percent over $8.2 billion in 1991.
 At June 30, 1992, AIG's consolidated assets and shareholders' equity reached all-time highs, approximating $77 billion and $12.1 billion, respectively.
 Commenting on the quarter's results, AIG Chairman M.R. Greenberg said, "The second quarter was a reasonably good one for AIG overall. Our broadly diversified business base and strong overseas general and life insurance franchises again provided a counterbalance to the U.S. property-casualty pricing environment, which continues to be very competitive in most lines of business other than the specialty classes. In addition, the quarter was marked by a relatively high level of catastrophe losses in the United States, as well as major foreign losses. Catastrophe losses for the quarter were approximately $22 million, compared to $2 million in last year's second quarter. While catastrophe losses are a staple of our business, occurring every quarter, this has been an unusually heavy period for such losses. Once again, approximately half of our pretax income was generated outside the United States, something which distinguishes AIG from all other major U.S. insurance organizations.
 "Domestically, we maintained our disciplined approach to the marketplace, continuing to non-renew business in classes where it is not possible to achieve acceptable underwriting results. This strategy, combined with our focus on specialty classes where AIG has always had a significant presence, will continue. In workers' compensation, a very troubled line of business, our book is overwhelmingly not 'guaranteed cost business' and a significant portion of this business has shifted to deductible programs. The impact of this shift, combined with changes at the New Hampshire Insurance Company and other business not renewed, reduced net premiums written by $330 million in the first six months of 1992, compared to 1991.
 "Our transition of the New Hampshire Insurance Company from agency to brokerage distribution, which we announced during the quarter, will continue throughout the year, as we integrate the New Hampshire into our domestic brokerage system. This strategy will produce an expense ratio and book of business for the New Hampshire more in line with those of the domestic brokerage group, and will enable the New Hampshire to assume the same degree of control over its underwriting as exercised by other AIG companies. We are expensing on a current basis all transition costs associated with this repositioning of the New Hampshire.
 "United Guaranty Corporation, our mortgage guaranty insurance subsidiary, had another outstanding quarter with record operating profits.
 "Our foreign property-casualty business produced quite acceptable results, particularly in Asia. In Europe, despite a high level of losses, results in our basic business improved. The combined ratio for our foreign general insurance business was approximately 95.
 "AIG's life insurance business, largely located overseas, had another excellent quarter with record operating income. Asia, which represents the largest component of our life business, continued to post strong growth in premiums and operating income. Our domestic life business had improved results in the quarter.
 "Each principal company in AIG's Financial Services Group had outstanding performance. AIG Financial Products Corp.'s results were particularly strong, as the company's highly creative management team concluded a number of significant derivative transactions. AIG Trading Corporation had record earnings and continues to expand and gain momentum. International Lease Finance Corporation, the premier aircraft leasing company in the world, performed extremely well. All aircraft delivered and scheduled for delivery in 1992 are leased, as are almost all of scheduled 1993 deliveries. Its young fleet and diversified international customer base position it particularly well in the current environment.
 "AIG's cash flow and balance sheet remain strong, and our $206 million addition to general insurance loss and loss adjustment reserves during the quarter brings the total of such reserves to $16.3 billion at June 30. AIG has the highest ratings from the principal ratings services.
 "With respect to negotiations to conclude a North American Free Trade Agreement (NAFTA) among the United States, Canada and Mexico, AIG has been active in the discussions concerning financial services. We have a longstanding interest in Mexico and hope the overall negotiations will soon be concluded successfully. Such an outcome would be most beneficial for all three countries and for the hemisphere generally.
 "We have adjusted our strategy and plans to the industry environment as it exists. We remain disciplined and focused, aided by our global network and diversified business portfolio. Underwriting results for the industry continue to be abysmal, although the stage is set for a turn in the market. Any one of a number of events could trigger this turn. It has become increasingly clear that the industry cannot continue on its present course for very much longer, and we are well positioned for the turn when it does come."
 GENERAL INSURANCE
 General insurance pretax operating income for the second quarter of 1992 was $291.6 million, compared to $300.9 million last year. Excluding the effects of catastrophe losses, second quarter operating income was 3.6 percent above 1991. For the first six months of 1992, pretax operating income was $599.8 million, compared to $608.8 million in 1991.
 Worldwide general insurance net premiums written for the quarter amounted to $2.36 billion, compared to $2.38 billion in 1991. For the first six months of 1992, general insurance net premiums written were $4.63 billion, compared to $4.62 billion last year.
 The general insurance combined ratio was 100.77 in the second quarter of 1992 compared to 98.97 in 1991. Excluding catastrophe losses the combined ratio was 99.80 versus 98.88 last year. For the six months of 1992 and 1991, the combined ratios were 100.43 and 99.30, respectively.
 General insurance net investment income rose 8.0 percent to $306.8 million in the second quarter and 8.6 percent to $615.7 million in the six months of 1992.
 LIFE INSURANCE
 AIG's worldwide life insurance operations reported second quarter 1992 pretax operating income of $153.7 million, an increase of 15.9 percent, compared to $132.7 million in 1991. For the first six months of 1992, life insurance pretax operating income increased 16.0 percent to $295.2 million, compared to $254.5 million last year.
 Life insurance premium income increased 20.1 percent in the second quarter to $1.19 billion from $992.5 million in 1991. For the first six months, premium income amounted to $2.26 billion, an increase of 18.1 percent, compared to $1.91 billion in 1991.
 Life insurance net investment income rose 14.0 percent to $314.9 million for the second quarter of 1992, compared to $276.3 million for the same period last year. For the first six months net investment income amounted to $623.3 million, an increase of 13.9 percent compared to $547.3 million in 1991.
 FINANCIAL SERVICES
 Financial services pretax operating income increased 65.6 percent to $83.1 million in the second quarter of 1992, compared to $50.2 million in the same period last year. All three principal components of this group had improved results over the prior year's quarter. For the six months of 1992, financial services operating income rose 49.7 percent to $145.5 million compared to $97.2 million in 1991.
 OTHER OPERATIONS
 Agency and service fee pretax operating income for the second quarter was $11.9 million, 1.8 percent above last year. For the first six months, agency and service fee operating income increased 17.6 percent to $26.5 million from $22.6 million in 1991.
 AIG's equity in the net income of Transatlantic Holdings, Inc., a reinsurance holding company in which AIG owns a minority interest, amounted to $8.0 million compared to $6.8 million in the second quarter last year. Equity in income of Transatlantic Holdings for the first six months of 1992 was $16.2 million, compared to $13.5 million in 1991.
 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)
 Periods ended Six months Percent Three months Percent
 June 30 1992 1991 Change 1992 1991 Change
 General Insurance Operations:
 Net premiums
 written $ 4,627,420 $ 4,618,818 0.2 $ 2,361,634 $ 2,379,014 (0.7)
 Net premiums
 earned 4,582,668 4,485,114 2.2 2,277,475 2,211,306 3.0
 Adjusted
 underwriting
 profit
 (loss) (15,860) 41,831 -- (15,163) 16,959 --
 Net investment
 income 615,698 566,961 8.6 306,761 283,929 8.0
 Operating
 income $599,838 $608,792 (1.5) $291,598 $300,888 (3.1)
 Loss Ratio 80.37 78.21 80.68 78.41
 Expense
 Ratio 20.06 21.09 20.09 20.56
 Combined
 Ratio 100.43 99.30 100.77 98.97
 Life
 Insurance
 Operations:
 Premium
 Income $2,258,408 $1,912,924 18.1 $1,192,360 $992,495 20.1
 Net Investment
 Income 623,276 547,298 13.9 314,928 276,270 14.0
 Operating
 Income 295,195 254,549 16.0 153,694 132,666 15.9
 Financial
 Services
 Operating
 Income 145,460 97,152 49.7 83,055 50,169 65.6
 Agency
 and
 Service
 Fee
 Operating
 Income 26,527 22,557 17.6 11,908 11,691 1.8
 Equity in
 Income of
 Minority-Owned
 Reinsurance
 Opers. 16,165 13,515 19.6 8,010 6,806 17.7
 Other Income
 (Deductions)
 - net (31,915) (28,079) -- (14,159) (13,189) --
 Foreign
 Exchange
 Gains
 (Losses) 3,799 (6,421) -- 577 487 18.5
 Income
 before
 Realized
 Capital
 Gains 1,055,069 962,065 9.7 534,683 489,518 9.2
 Realized
 Capital
 Gains 54,552 54,612 (0.1) 26,531 30,975 (14.3)
 Income
 before
 Income
 Taxes 1,109,621 1,016,677 9.1 561,214 520,493 7.8
 Net
 Income 839,482 776,419 8.1 425,630 401,015 6.1
 Per Common
 Share(A) $ 3.95 $ 3.64 8.5 $ 2.01 $ 1.88 6.9
 Average
 Common
 Shares
 outstdg. 211,917 212,219 211,632 212,262
 (A) After deduction in 1992 and 1991 of preferred stock dividends of $0.9 million and $2.0 million for the second quarter and $2.3 million and $3.8 million for the six months, respectively.
 -0- 7/30/92
 /CONTACT: Joe Norton, 212-770-3144, or (investors) Charlene M. Hamrah, 212-770-7074, both of American International Group/ CO: American International Group ST: New York IN: INS SU: ERN


TS -- NY010 -- 4969 07/30/92 09:38 EDT
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Date:Jul 30, 1992
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