AIG REPORTS THIRD QUARTER 1993 NET INCOME OF $451 MILLION
NEW YORK, Oct. 28 /PRNewswire/ -- American International Group, Inc. (AIG) today reported that its net income for the third quarter of 1993 increased 33.1 percent to $451.1 million, compared to $338.9 million in the third quarter of 1992. For the first nine months of
1993, net income totalled $1.43 billion, an increase of 19.2 percent compared to $1.20 billion in the same period of 1992.
Following is a comparative table of third quarter and nine months information (in millions, except per share amounts). THIRD QUARTER NINE MONTHS 1993 1992 1993 1992 Net income, as reported $451.1 $338.9 $1,428.6 $1,198.1 Income, as adjusted(a) $434.7 $321.8 $1,351.0 $1,115.2
PER SHARE RESULTS:(b)
Net income, as reported $ 1.42 $ 1.06 $ 4.50 $ 3.76 Income, as adjusted(a) $ 1.37 $ 1.01 $ 4.25 $ 3.50 Average shares outstanding 317.4 317.3 317.4 317.7 (a)Adjusted to exclude cumulative effect of accounting changes recognized January 1, 1992 and 1993 and realized capital gains, net of taxes. (b)Adjusted for the stock split in the form of a 50 percent common stock dividend paid July 30, 1993. Income before income taxes for the third quarter of 1993 amounted to $620.2 million, an increase of 41.5 percent over the $438.4 million reported in 1992. For the first nine months of 1993, income before income taxes and the cumulative effect of accounting changes increased 23.8 percent to $1.91 billion from $1.54 billion reported last year. Included in these results were pretax realized capital gains of $25.4 million and $87.8 million for the third quarter and nine months of 1993, respectively, compared to $26.8 million and $81.4 million for the same periods in 1992. Catastrophe losses during the third quarter and nine months of 1993 amounted to $47.3 million and $62.5 million, respectively. This compares to $153.3 million and $175.5 million of catastrophe losses reported last year. Excluding the effect of catastrophes and capital gains, income before income taxes and the cumulative effect of accounting changes in the third quarter and nine months of 1993 was 13.7 percent and 15.1 percent above the same periods in 1992. Revenues in the third quarter of 1993 rose 10.4 percent to $5.12 billion from $4.64 billion in the year-earlier quarter. For the first nine months, revenues totalled $14.78 billion, an increase of 9.2 percent over $13.53 billion in 1992. At September 30, 1993, AIG's consolidated assets and shareholders' equity reached all time highs, approximating $97 billion and $14.3 billion, respectively. Commenting on the third quarter and nine months results, AIG Chairman M.R. Greenberg said, "AIG had a good quarter in all of our principal business segments. General insurance operating income rose sharply, although the comparison with last year's third quarter is impacted by the major catastrophes of 1992. This quarter's results were also adversely affected by catastrophe losses, mainly the Midwest floods, the earthquake in Guam and typhoons in Japan. Excluding the catastrophes in both years, general insurance pretax operating income was up 13.5 percent. For the nine months, AIG's general insurance operations achieved a new record in pretax operating income of approximately $1 billion. "In response to the high level of catastrophe losses in recent quarters, AIG has taken steps to reduce catastrophe exposures throughout our business and further tighten our underwriting standards. Significant additional capacity has entered the property catastrophe reinsurance market since last year, including approximately $4 billion of new capacity in Bermuda. This new capacity should assist in year-end catastrophe renewals. Even with this additional
capacity, prices for catastrophe reinsurance should remain stable.
"Price levels in many of AIG's overseas general insurance markets have continued to firm in line with trends that appeared earlier in the year.
In the United States, property rates have strengthened, as have rates in
specialty casualty classes. We believe the overall trend line is positive on pricing, although certain markets are responding more slowly than others. "Our life insurance business again had a strong quarter, with steady growth in premiums and operating income in our overseas life operations, and excellent progress in our growing domestic life business. We have completed our first year of operations in China, and results to date have exceeded our expectations. Our Shanghai life insurance agency force now numbers approximately 300 agents, and sales of our life insurance, personal accident and general insurance products in China have met with strong market acceptance. In Latin America, growth and profitability are improving in most classes of business, and AIG benefits from the strong position we have built up in this region over many years. "In financial services, pretax operating income was comparable to last year. All of our principal businesses are performing strongly and are well positioned in their markets. International Lease Finance Corporation (ILFC) had an excellent quarter, managing its business extremely well in a difficult environment. As the world's airlines continue to replace older and obsolete equipment, ILFC should see significant growth opportunities. AIG Trading
Corporation has continued to expand its capability to serve a growing client
base in today's volatile currency, metals and energy markets. The company reported record earnings for the third quarter and nine months. "The new management team at AIG Financial Products Corp. (AIGFP) is in place and we believe our recent changes there have strengthened the company for the long term. Most members of the core group central to the AIGFP operation for many years remain at the company, appropriate management and financial controls are firmly in place, and the business is going forward strongly. As reported last quarter, AIG had established reserves against the impairment in value of certain AIGFP investments. In the third quarter, AIG recorded an additional pretax charge of $90 million against such investments. Based on the latest information available, we believe no further significant charges will be necessary in future periods. "AIG's tax rate in the quarter reflects a one-time catch-up charge of approximately $10 million related to the first six months of 1993 due to the increase in the corporate Federal income tax rate from 34 percent to 35 percent, effective last January 1st. "The national debate over the Clinton Administration's health care proposal will continue for some time. While the final outcome is far from clear, there is obviously wide support for the goal of ensuring cost-effective and comprehensive health care for all Americans. Of particular concern to AIG is the proposed integration or administration of the medical portion of workers' compensation with the health care plan.
Workers' compensation is a workplace disability management system with very different goals, priorities and treatment standards than health
care. As such, it would be counterproductive to separate the three interrelated components of workers' compensation - medical cost, wage replacement and disability management. "Another critical national issue is the North American Free Trade Agreement, which faces an up-or-down
Congressional vote within the next few weeks. I can think of few measures more vital to America's future economic strength and global competitiveness than ratification of NAFTA. The economic arguments are strongly in its favor, in spite of misinformation that is being spread by NAFTA's critics, and the negative implications of a defeat of NAFTA would extend far beyond our shores.
"AIG's cash flow continues strong, well ahead of last year. Overall, our global business has performed well in the current environment. We benefit from the diversity and stability of a worldwide earnings base that is unmatched in the industry, and from a disciplined strategy that has long been fundamental to AIG's management approach."
General insurance pretax income before realized capital gains for the third quarter of 1993 was $310.3 million, compared to $161.8 million last year. Excluding catastrophe losses in both periods, pretax income was up 13.5 percent in the quarter. For the first nine months of 1993, general insurance pretax income before realized capital gains was $994.5 million, compared to $761.7 million in 1992. Worldwide general insurance net premiums written in the third quarter of 1993 amounted to $2.60 billion, 10.9 percent ahead of the $2.35 billion in 1992. For the first nine months of 1993, general insurance net premiums written were $7.68 billion, an increase of 10.2 percent, compared to $6.97 billion last year. The general insurance combined ratio was 100.87 in the third quarter of 1993, compared to 106.43 in 1992.
Excluding catastrophe losses, the combined ratio in the third quarter was 98.94, compared to 99.75 last year. For the nine months of 1993 and 1992, the combined ratios were 100.01 and 102.44, respectively.
During the quarter, AIG added $233.1 million to general insurance loss and loss adjustment reserves, bringing the total reserve additions for the first nine months to $619.1 million. General insurance net investment income rose 7.1 percent to $333.3 million in the third quarter and 7.0 percent to $992.4 million in the nine months of 1993.
AIG's worldwide life insurance operations reported third quarter 1993 pretax income before realized capital gains of $180.3 million, an increase of 15.6 percent, compared to $156.0 million in 1992. For the first nine months of 1993, life insurance pretax income before realized capital gains increased 16.3 percent to $524.5 million, compared to $451.2 million last year. Life insurance premium income rose 18.0 percent in the third quarter to $1.45 billion from $1.23 billion in 1992. For the first nine months, premium income amounted to $4.15 billion, a gain of 18.9 percent, compared to $3.49 billion in 1992. Life insurance net investment income rose 12.2 percent to $377.0 million for the third quarter of 1993, compared to $336.1 million for the same period last year. For the first nine months, net investment income amounted to $1.09 billion, an increase of 14.0 percent, compared to $959.4 million in 1992.
Financial services pretax operating income of $98.7 million in the third quarter of 1993 was approximately equal to last year's $99.6 million. For the nine months of 1993, financial services operating income rose 16.1 percent to $284.5 million, compared to $245.1 million in 1992.
Agency and service fee pretax operating income for the third quarter was $15.7 million, 17.9 percent above last year. For the first nine months, agency and service fee operating income increased 20.4 percent to $47.9 million from $39.8 million in 1992. AIG's equity in income of minority-owned reinsurance operations amounted to $10.7 million compared to $3.0 million in the third quarter last year, which was adversely impacted by catastrophes. Equity in income of minority- owned reinsurance operations for the first nine months of 1993 was $49.5 million, including $20.7 million related to the cumulative effect of accounting changes, compared to $19.2 million in 1992. 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) Three Months Ended September 30, 1993 1992 Change General Insurance Operations: Net Premiums Written $ 2,602,081 $ 2,345,675 10.9 % Net Premiums Earned 2,453,712 2,295,370 6.9 Adjusted Underwriting Profit (Loss) (23,033) (149,526) - Net Investment Income 333,330 311,339 7.1 Income before Realized Capital Gains 310,297 161,813 91.8 Realized Capital Gains 12,810 19,664 - Operating Income $ 323,107 $ 181,477 78.0 % Loss Ratio 79.24 85.78 Expense Ratio 21.63 20.65 Combined Ratio 100.87 106.43 Life Insurance Operations: Premium Income $ 1,450,518 $ 1,229,648 18.0 % Net Investment Income 377,021 336,086 12.2 Income before Realized Capital Gains 180,339 155,974 15.6 Realized Capital Gains 11,498 5,650 - Operating Income 191,837 161,624 18.7 Financial Services Operating Income 98,691 99,611 (0.9) Agency and Service Fee Operating Income 15,672 13,296 17.9 Equity in Income of Minority- Owned Reinsurance Operations 10,698 3,038 - Other Income (Deductions) - net (17,318) (21,368) - Foreign Exchange Gains (Losses) (3,536) (781) - Other Realized Capital Gains (Losses) 1,086 1,508 - Income before Income Taxes and and Cumulative Effect of Accounting Changes 620,237 438,405 41.5 Income Taxes 169,176 99,531 - Income before Cumulative Effect of Accounting Changes 451,061 338,874 33.1 Cumulative Effect of Accounting Changes (a): AIG - - - Minority-Owned Reinsurance Operations - - - Net Income $ 451,061 $ 338,874 33.1 % Per Share (b) (c): Income before Cumulative Effect of Accounting Changes $1.42 $1.06 34.0 % Cumulative Effect of Accounting Changes: AIG - - - Minority-Owned Reinsurance Operations - - - Net Income $1.42 $1.06 34.0 % Average Common Shares Outstanding (c) 317,438 317,289 Nine Months Ended September 30, 1993 1992 Change General Insurance Operations: Net Premiums Written $ 7,681,131 $ 6,973,095 10.2 % Net Premiums Earned 7,057,748 6,878,038 2.6 Adjusted Underwriting Profit (Loss) 2,156 (165,386) - Net Investment Income 992,353 927,037 7.0 Income before Realized Capital Gains 994,509 761,651 30.6 Realized Capital Gains 53,646 59,563 - Operating Income $ 1,048,155 $ 821,214 27.6 % Loss Ratio 79.61 82.18 Expense Ratio 20.40 20.26 Combined Ratio 100.01 102.44 Life Insurance Operations: Premium Income $ 4,146,739 $ 3,488,056 18.9 % Net Investment Income 1,093,884 959,362 14.0 Income before Realized Capital Gains 524,520 451,169 16.3 Realized Capital Gains 39,099 31,709 - Operating Income 563,619 482,878 16.7 Financial Services Operating Income 284,496 245,071 16.1 Agency and Service Fee Operating Income 47,945 39,823 20.4 Equity in Income of Minority- Owned Reinsurance Operations 28,784 19,203 49.9 Other Income (Deductions) - net (52,104) (57,797) - Foreign Exchange Gains (Losses) (5,158) 3,018 - Other Realized Capital Gains (Losses) (4,990) (9,898) - Income before Income Taxes and and Cumulative Effect of Accounting Changes 1,910,747 1,543,512 23.8 Income Taxes 502,826 377,352 - Income before Cumulative Effect of Accounting Changes 1,407,921 1,166,160 20.7 Cumulative Effect of Accounting Changes (a): AIG - 31,941 - Minority-Owned Reinsurance Operations 20,695 - - Net Income $ 1,428,616 $ 1,198,101 19.2 % Per Share (b) (c): Income before Cumulative Effect of Accounting Changes $4.43 $3.66 21.0 % Cumulative Effect of Accounting Changes: AIG - 0.10 - Minority-Owned Reinsurance Operations 0.07 - - Net Income $4.50 $3.76 19.7 % Average Common Shares Outstanding (c) 317,419 317,707 (a) Represents a net benefit for the cumulative effect of the adoption of accounting pronouncements related to postretirement benefits (FASB 106) and income taxes (FASB 109) by minority-owned reinsurance operations in 1993 and by AIG in 1992. (b) After deduction in 1993 and 1992 of preferred stock dividends of $0 and $1.1 million for the third quarter and $1.0 million and $3.5 million for the nine months, respectively. (c) Adjusted for the stock split in the form of a 50 percent common stock dividend paid July 30, 1993. -0- 10/28/93 /CONTACT: Charlene M. Hamrah (Investment Community), 212-770-7074, or Joe Norton (News Media), 212-770-3144/ (AIG)
CO: American International Group, Inc. ST: New York IN: INS SU: ERN
DH-xx -- NY014 -- 7739 10/28/93 09:14 EDT
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|Date:||Oct 28, 1993|
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