American International Group, Inc.
Restated Financial Supplement
This report should be read in conjunction with AIG's Annual Report on Form 10-K for the year
ended December 31, 2005 and Form 10-K/A for the year ended December 31, 2004 filed with
the Securities and Exchange Commission.
American International Group, Inc.
Restated Financial Supplement
Table of Contents
Consolidated
Consolidated Statement of Income ...................................................................................................... 1 - 4
Consolidated Statement of Segment Operations.................................................................................. 5 - 9
Condensed Consolidated Balance Sheet ..................................................................................................10
General Insurance
General Insurance Operating Statistics ............................................................................................ 11 - 14
Domestic Brokerage Group Insurance Operating Statistics............................................................. 15 - 18
Personal Lines Insurance Operating Statistics ................................................................................. 19 - 22
Mortgage Guaranty (UGC) Insurance Operating Statistics ............................................................. 23 - 26
Transatlantic Holdings, Inc. Insurance Operating Statistics ............................................................ 27 - 30
Foreign General Insurance Operating Statistics............................................................................... 31 - 34
Life Insurance & Retirement Services
Life Insurance & Retirement Services Operating Statistics............................................................. 35 - 38
Domestic Life Insurance & Retirement Services Operating Statistics............................................. 39 - 42
Domestic Life Insurance & Retirement Services Product Statistics ................................................ 43 - 46
Domestic Life Insurance & Retirement Services Other Data .......................................................... 47 - 53
Foreign Life Insurance & Retirement Services Operating Statistics................................................ 54 - 57
Foreign Life Insurance & Retirement Services Product Statistics ................................................... 58 - 61
Foreign Life Insurance & Retirement Services Other Data ............................................................. 62 - 65
Financial Services
Financial Services Operating Statistics............................................................................................ 66 - 69
Asset Management
Asset Management Operating Statistics...........................................................................................70 – 73
Asset Management Other Data ........................................................................................................74 – 77
Other Income (Deductions) - net
Other Income (Deductions) - net .............................................................................................................78
Comment on Regulation G...........................................................................................................79
Notice – Restatement. American International Group, Inc. (AIG) has restated its financial statements
for the years ended December 31, 2004, 2003 and 2002, along with 2001 and 2000 for purposes of
preparation of the Selected Consolidated Financial Data for 2001 and 2000, and quarterly financial
information for 2004 and 2003 and the first three quarters of 2005. AIG, however, did not amend its
quarterly report on Form 10-Q for the quarter ended September 30, 2005 because the adjustments
were not material to those financial statements.
American International Group, Inc.
Investor Relations
Charlene M. Hamrah, Vice President and Director
(212)770-6293
American International Group, Inc.
Consolidated Statement of Income
(in millions, except per share data)
2005
%
Chg
2004
(Restated)
Years Ended December 31,
2003
%
2002
(Restated)
Chg
(Restated)
%
Chg
%
Chg
2001
(Restated)
%
Chg
2000
(Restated)
Revenues:
Premiums and other considerations
Net investment income
Realized capital gains (losses)
Other revenues (1)
$
5.4 % $
20.0
NM
29.2
66,625
18,465
44
12,532
21.6 % $
19.1
NM
31.2
54,802
15,508
(442)
9,553
23.7 % $
14.1
NM
(3.9)
44,289
13,593
(1,653)
9,942
15.8 % $
4.5
NM
3.5
38,261
13,002
(910)
9,605
108,905
11.5
97,666
23.0
79,421
20.0
66,171
10.4
59,958
5.7
56,700
Incurred policy losses and benefits
Insurance acquisition and other operating expenses
Acquisition, restructuring and related charges
63,711
29,981
-
9.2
22.6
NM
58,360
24,461
-
26.8
13.9
NM
46,034
21,480
-
15.1
17.0
NM
40,005
18,358
-
17.7
1.8
NM
33,984
18,040
2,017
11.0
7.3
NM
30,627
16,819
315
Total benefits and expenses
93,692
13.1
82,821
22.7
67,514
15.7
58,363
8.0
54,041
13.1
47,761
15,213
2.5
14,845
24.7
11,907
52.5
7,808
32.0
5,917
(33.8)
8,939
2,569
1,689
4,258
NM
NM
NM
2,593
1,814
4,407
NM
NM
NM
2,741
815
3,556
NM
NM
NM
1,808
111
1,919
NM
NM
NM
1,591
3
1,594
NM
NM
NM
1,550
1,150
2,700
10,955
5.0
10,438
25.0
8,351
41.8
5,889
36.2
4,323
(30.7)
6,239
Total revenues
70,209
22,165
341
16,190
12.4 % $
2.2
NM
(5.6)
34,047
12,719
(240)
10,174
Benefits and expenses:
Income before income taxes, minority interest and
cumulative effect of accounting changes (2)
Income taxes (benefits):
Current
Deferred
Total income tax
Income before minority interest and
cumulative effect of accounting changes
Minority interest
(478)
Income before cumulative effect of
accounting changes
Cumulative effect of accounting changes, net of tax (3)
NM
10,477
4.9
-
NM
(455)
9,983
(144)
NM
23.3
NM
(252)
8,099
9
NM
41.4
NM
(160)
5,729
-
NM
35.7
NM
(101)
4,222
(136)
NM
(30.1)
(195)
6,044
NM
-
Net income
$
10,477
6.5 % $
9,839
21.3 % $
8,108
41.5 % $
5,729
40.2 % $
4,086
(32.4) % $
6,044
Earnings per common share:
Basic
Diluted (4)
$
$
4.03
3.99
6.9 % $
7.0 % $
3.77
3.73
21.6 % $
21.5 % $
3.10
3.07
40.9 % $
41.5 % $
2.20
2.17
41.0 % $
40.9 % $
1.56
1.54
(32.8) % $
(32.8) % $
2.32
2.29
Average outstanding shares:
Basic
Diluted (4)
2,597
2,627
2,606
2,637
2,610
2,637
2,612
2,643
2,621
2,659
2,607
2,638
Note: (1) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 "Accounting for Derivative Instruments and Hedging Activities", including the related foreign exchange
gains and losses.
(2) Includes catastrophe losses of $3.280 billion in 2005, $1.155 billion in 2004, $83 million in 2003, $61 million in 2002, $998 million (includes $900 million in World Trade Center losses) in 2001 and $44 million
in 2000.
(3) Represents the cumulative effect of accounting changes, net of tax, related to SOP 03-1 "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate
Accounts" in 2004; FIN46R "Consolidation of Variable Interest Entities" in 2003; FAS 133, "Accounting for Derivative Instruments and Hedging Activities" and EITF 99-20 "Recognition of Interest Income and
Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets" in 2001.
(4) Assumes conversion of contingently convertible bonds due to the adoption of EITF Issue No. 04-8 "Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings
per share."
1
American International Group, Inc.
Consolidated Statement of Income
(in millions, except per share data)
First
Second
Third
Quarter
Quarter
Quarter
2005
2005
2005
(Restated) (Restated) (Restated)
Fourth
Quarter
2005
Full
Year
2005
Revenues:
Premiums and other considerations
$
17,680
Net investment income
$
5,332
Realized capital gains (losses)
$
5,227
137
Other revenues (1)
17,536
(125)
17,243
$
17,750
$
70,209
5,654
5,952
22,165
77
252
341
4,053
5,265
3,434
3,438
16,190
27,202
27,903
26,408
27,392
108,905
14,873
14,283
16,501
18,054
63,711
6,680
6,919
7,360
9,022
29,981
21,553
21,202
23,861
27,076
93,692
5,649
6,701
2,547
316
15,213
Current
968
1,015
372
214
2,569
Deferred
738
1,068
376
(493)
1,689
1,706
2,083
748
(279)
4,258
3,943
4,618
1,799
595
10,955
Total revenues
Benefits and expenses:
Incurred policy losses and benefits
Insurance acquisition and other operating expenses
Total benefits and expenses
Income before income taxes and minority interest (2)
Income taxes (benefits):
Total income tax
Income before minority interest
Minority interest
Net income
(144)
(129)
(54)
(151)
(478)
$
3,799
$
4,489
$
1,745
444
10,477
Basic
$
1.46
$
1.73
$
0.67
$
0.17
$
4.03
Diluted (3)
$
1.45
$
1.71
$
0.66
$
0.17
$
3.99
Earnings per common share:
Average outstanding shares:
Basic
2,597
2,596
2,597
2,597
2,597
Diluted (3)
2,624
2,623
2,624
2,626
2,627
Note: (1) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 "Accounting for
Derivative Instruments and Hedging Activities", including the related foreign exchange gains and losses.
(2) Includes catastrophe losses of $2.439 billion, $841 million and $3.280 billion for third quarter, fourth quarter and full year 2005,
respectively.
(3) Assumes conversion of contingently convertible bonds due to the adoption of EITF Issue No. 04-8 "Accounting Issues Related to
Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per share."
2
American International Group, Inc.
Consolidated Statement of Income
(in millions, except per share data)
First
Second
Third
Fourth
Full
Quarter
Quarter
Quarter
Quarter
Year
2004
2004
2004
2004
2004
(Restated) (Restated) (Restated) (Restated) (Restated)
Revenues:
Premiums and other considerations
$
Net investment income
15,979
$
4,600
Realized capital gains (losses)
Total revenues
$
4,541
(86)
Other revenues (1)
16,175
17,281
$
4,509
89
17,190
$
4,815
(78)
66,625
18,465
119
44
2,729
3,284
3,602
2,917
12,532
23,222
24,089
25,314
25,041
97,666
13,590
13,480
15,217
16,073
58,360
5,790
5,960
6,041
6,670
24,461
19,380
19,440
21,258
22,743
82,821
3,842
4,649
4,056
2,298
14,845
1,345
1,092
201
Benefits and expenses:
Incurred policy losses and benefits
Insurance acquisition and other operating expenses
Total benefits and expenses
Income before income taxes, minority interest and
cumulative effect of an accounting change (2)
Income taxes (benefits):
Current
Deferred
(215)
Total income tax
(45)
2,593
372
1,064
593
1,814
1,130
1,464
1,265
548
4,407
2,712
3,185
2,791
1,750
10,438
Income before minority interest and
cumulative effect of an accounting change
Minority interest
(70)
(105)
(142)
(138)
(455)
Income before cumulative effect of an
accounting change
2,642
3,080
2,649
1,612
-
-
-
9,983
Cumulative effect of an accounting
change, net of tax (3)
Net income
(144)
(144)
$
2,498
$
3,080
$
2,649
$
1,612
$
9,839
Basic
$
0.95
$
1.19
$
1.01
$
0.62
$
3.77
Diluted (4)
$
0.94
$
1.17
$
1.00
$
0.62
$
3.73
Earnings per common share:
Average outstanding shares:
Basic
2,610
2,608
2,606
2,601
2,606
Diluted (4)
2,642
2,640
2,638
2,632
2,637
Note: (1) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 "Accounting
for Derivative Instruments and Hedging Activities", including the related foreign exchange gains and losses.
(2) Includes catastrophe losses of $814 million, $341 million and $1.155 billion for third quarter, fourth quarter and
full year 2004, respectively.
(3) 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 Seperate Accounts".
(4) Assumes conversion of contingently convertible bonds due to the adoption of EITF Issue No. 04-8 "Accounting Issues
Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per share."
3
American International Group, Inc.
Consolidated Statement of Income
(in millions, except per share data)
First
Second
Third
Fourth
Full
Quarter
Quarter
Quarter
Quarter
Year
2003
2003
2003
2003
2003
(Restated) (Restated) (Restated) (Restated) (Restated)
Revenues:
Premiums and other considerations
$
Net investment income
12,851
$
3,516
Realized capital gains (losses)
Total revenues
$
3,929
142
Other revenues (1)
13,177
13,832
$
3,909
(198)
14,942
$
4,154
(294)
54,802
15,508
(92)
(442)
1,880
2,346
2,790
2,537
9,553
18,389
19,254
20,237
21,541
79,421
10,906
11,190
11,593
12,345
46,034
5,018
5,220
5,388
5,854
21,480
15,924
16,410
16,981
18,199
67,514
2,465
2,844
3,256
3,342
11,907
622
721
576
822
2,741
Benefits and expenses:
Incurred policy losses and benefits
Insurance acquisition and other operating expenses
Total benefits and expenses
Income before income taxes, minority interest and
cumulative effect of an accounting change (2)
Income taxes (benefits):
Current
Deferred
90
110
402
213
815
712
831
978
1,035
3,556
1,753
2,013
2,278
2,307
8,351
Total income tax
Income before minority interest and
cumulative effect of an accounting change
Minority interest
(61)
(63)
(66)
(62)
(252)
Income before cumulative effect of an
accounting change
1,692
1,950
2,212
2,245
8,099
-
-
-
9
9
Cumulative effect of an accounting
change, net of tax (3)
Net income
$
1,692
$
1,950
$
2,212
$
2,254
$
8,108
Basic
$
0.65
$
0.75
$
0.84
$
0.86
$
3.10
Diluted (4)
$
0.64
$
0.75
$
0.83
$
0.85
$
3.07
Earnings per common share:
Average outstanding shares:
Basic
2,610
2,610
2,610
2,609
2,610
Diluted (4)
2,637
2,637
2,637
2,636
2,637
Note: (1) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 "Accounting
for Derivative Instruments and Hedging Activities", including the related foreign exchange gains and losses.
(2) Includes catastrophe losses of $83 million for third quarter and full year 2003.
(3) Represents the cumulative effect of an accounting change, net of tax, related to FIN46R "Consolidation of Variable
Interest Entities".
(4) Assumes conversion of contingently convertible bonds due to the adoption of EITF Issue No. 04-8 "Accounting Issues
Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per share."
4
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
General insurance
Net premiums written (1)
Net premiums earned (1)
Losses and loss expenses incurred (1) (2) (3) (4)
Underwriting expenses (1)
Underwriting profit (loss) (1) (2) (3) (4) (5)
Net investment income
Income before realized capital gains (losses) (1)(2)(3)(4)
Realized capital gains (losses)
Operating income (1) (2) (3) (4)
$
Life insurance & retirement services
GAAP premiums
Deposits and other considerations not included in
revenues under GAAP
Premiums, deposits and other considerations
Net investment income
Pricing net investment gains (6)
Income before realized capital gains (losses) (7) (8)
Realized capital gains (losses) (6)
Operating income (7) (8)
2005
%
Chg
2004
%
(Restated) Chg
41,872
40,809
33,091
9,768
(2,050)
4,031
1,981
334
2,315
3.1 % $
5.9
9.0
15.9
NM
26.1
(32.8)
46.5
(27.1)
Years Ended December 31,
2003
%
2002
%
(Restated) Chg
(Restated) Chg
16.0 % $
23.1
32.7
30.5
NM
24.6
(35.1)
NM
(29.4)
40,623
38,537
30,357
8,427
(247)
3,196
2,949
228
3,177
35,031
31,306
22,872
6,459
1,975
2,566
4,541
(39)
4,502
31.1 % $
32.7
16.6
27.5
NM
9.2
NM
NM
NM
26,718
23,595
19,612
5,065
(1,082)
2,350
1,268
(345)
923
2001
%
(Restated) Chg
35.0 % $
26.4
32.5
9.3
NM
(7.9)
(28.5)
NM
(41.8)
19,793
18,661
14,804
4,634
(777)
2,551
1,774
(189)
1,585
2000
(Restated)
12.5 % $
14.2
14.5
17.2
NM
(5.4)
(17.8)
NM
(25.6)
17,588
16,345
12,931
3,954
(540)
2,697
2,157
(26)
2,131
29,400
4.7
28,088
19.5
23,496
13.5
20,694
5.6
19,600
10.7
17,702
37,048
66,448
18,134
344
9,406
(562)
8,844
(4.4)
(0.6)
18.8
52.9
16.1
NM
11.6
38,756
66,844
15,269
225
8,105
(182)
7,923
30.9
25.9
18.0
44.2
20.6
NM
16.4
29,617
53,113
12,942
156
6,723
84
6,807
33.1
23.7
15.1
77.3
19.2
NM
31.4
22,256
42,950
11,243
88
5,641
(460)
5,181
6.7
6.2
7.6
NM
11.3
NM
11.8
20,850
40,450
10,451
35
5,068
(435)
4,633
27.1
18.6
4.3
(27.1)
8.8
NM
(0.2)
16,399
34,101
10,022
48
4,656
(15)
4,641
Financial services
Operating income excluding FAS 133
FAS 133 (9)
Operating income (10)
2,296
1,980
4,276
(1.4)
NM
96.1
2,329
(149)
2,180
8.5
NM
84.4
2,146
(964)
1,182
13.8
NM
(44.4)
1,885
240
2,125
11.3
NM
20.1
1,694
75
1,769
5.1
NM
(36.3)
1,612
1,165
2,777
Asset management
Operating income excluding FIN46R and FAS 133
FIN46R
FAS 133 (9)
Operating income (11)
1,843
261
149
2,253
14.0
NM
NM
6.0
1,617
195
313
2,125
48.9
NM
NM
61.5
1,086
230
1,316
10.0
NM
NM
17.0
987
138
1,125
(0.6)
NM
NM
10.4
993
26
1,019
7.1
NM
NM
9.7
927
2
929
225
(2,700)
-
NM
NM
NM
NM
NM
NM
(643)
(1,257)
-
NM
NM
NM
NM
NM
NM
(321)
(751)
(2,017)
NM
NM
NM
(247)
(977)
(315)
Other realized capital gains (losses)
Other income (deductions) - net (12)
Acquisition, restructuring and related charges
Income before income taxes, minority interest and
cumulative effect of accounting changes
Income taxes
Income before minority interest and cumulative
effect of accounting changes
Minority interest, after tax:
Income before realized capital gains (losses)
Realized capital gains (losses)
Income before cumulative effect of accounting changes
Cumulative effect of accounting changes, net of tax (13)
Net income
(227)
(333)
-
15,213
2.5
14,845
24.7
11,907
52.5
7,808
32.0
5,917
(33.8)
8,939
4,258
NM
4,407
NM
3,556
NM
1,919
NM
1,594
NM
2,700
10,955
5.0
10,438
25.0
8,351
41.8
5,889
36.2
4,323
(30.7)
6,239
(465)
(13)
NM
NM
(440)
(15)
NM
NM
10,477
10,477
4.9
NM
6.5
9,983
(144)
9,839
23.3
NM
21.3
8,099
9
8,108
201
NM
1,530
8,746
NM
NM
NM
(8.7)
Effect of settlement charge, net of tax (16) (17)
1,147
NM
53
NM
-
Effect of General Insurance reserve charge, net of tax (2)(3)(4)
1,186
NM
553
NM
-
Effect of catastrophe related losses, net of tax
2,109
NM
729
NM
7.0
(8.5)
3.73
3.64
21.5
4.9
3.99
3.33
85
(252)
-
Realized capital gains (losses), net of tax (14)
FAS 133 gains (losses), excluding realized capital
gains (losses), net of tax
Cumulative effect of accounting changes, net of tax (13)
Acquisition, restructuring and related charges, net of tax
Adjusted net income (15)
Per share - diluted (18):
Net income
Adjusted net income (15)
(936)
(610)
-
315
(144)
9,583
NM
NM
(150)
(10)
NM
NM
(99)
(2)
NM
NM
41.4
NM
41.5
5,729
5,729
35.7
NM
40.2
4,222
(136)
4,086
(30.1)
NM
(32.4)
(342)
NM
(1,003)
NM
(631)
NM
(92)
NM
NM
NM
4.9
(697)
9
9,138
NM
NM
NM
36.1
20
6,712
NM
NM
NM
5.7
(115)
(136)
(1,385)
6,353
NM
NM
NM
13.8
759
(207)
5,584
NM
-
NM
-
NM
NM
1,339
NM
-
NM
-
53
NM
36
NM
581
NM
29
3.07
3.47
41.5
36.6
2.17
2.54
40.9
6.3
1.54
2.39
(32.8)
12.7
2.29
2.12
-
0.44
NM
0.02
NM
-
NM
-
NM
-
NM
Effect of General Insurance reserve charge, net of tax (2)(3)(4)
0.45
NM
0.21
NM
-
NM
0.51
NM
-
NM
0.80
NM % $
0.27
NM % $
NM % $
0.01
NM % $
$
6,044
6,044
NM
Effect of settlement charge, net of tax (16) (17)
Effect of catastrophe related losses, net of tax
(184)
(11)
0.02
0.22
NM % $
-
0.01
Average outstanding shares - diluted (18)
2,627
2,637
2,637
2,643
2,659
2,638
Effective tax rate:
Net income
Adjusted net income (15)
28.0%
26.8%
29.7%
29.2%
29.9%
29.9%
24.6%
27.1%
26.9%
29.3%
30.2%
30.6%
(See Accompanying Notes on Page 9)
5
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
First
Second
Third
Quarter
Quarter
Quarter
2005
2005
2005
(Restated) (Restated) (Restated)
General insurance
Net premiums written (1)
Net premiums earned (1)
Losses and loss expenses incurred (1) (2)
Underwriting expenses (1)
Underwriting profit (loss) (1) (2) (5)
Net investment income
Income (loss) before realized capital gains (losses) (1) (2)
Realized capital gains (losses)
Operating income (loss) (1) (2)
$
Life insurance & retirement services
GAAP premiums
Deposits and other considerations not included in
revenues under GAAP
Premiums, deposits and other considerations
Net investment income
Pricing net investment gains (6)
Income before realized capital gains (losses) (7)
Realized capital gains (losses) (6)
Operating income (7)
10,790
10,140
7,279
2,298
563
1,015
1,578
64
1,642
$
10,644
10,232
7,116
2,404
712
1,060
1,772
113
1,885
$
10,312
10,134
8,967
2,362
(1,195)
987
(208)
71
(137)
Fourth
Quarter
2005
$
10,126
10,303
9,729
2,704
(2,130)
969
(1,161)
86
(1,075)
Full
Year
2005
$
41,872
40,809
33,091
9,768
(2,050)
4,031
1,981
334
2,315
7,540
7,304
7,109
7,447
29,400
10,894
18,434
4,317
81
2,344
(163)
2,181
9,827
17,131
4,167
100
2,378
(54)
2,324
8,313
15,422
4,667
88
2,352
(176)
2,176
8,014
15,461
4,983
75
2,332
(169)
2,163
37,048
66,448
18,134
344
9,406
(562)
8,844
562
483
1,045
582
1,632
2,214
Asset management
Operating income excluding FIN46R and FAS 133
FIN46R
FAS 133 (9)
Operating income (11)
453
75
62
590
Other realized capital gains (losses)
Other income (deductions) - net (12)
155
36
Financial services
Operating income excluding FAS 133
FAS 133 (9)
Operating income (10)
599
(375)
224
553
240
793
2,296
1,980
4,276
440
37
47
524
473
77
18
568
477
72
22
571
1,843
261
149
2,253
(284)
38
94
(378)
Income before income taxes and minority interest
5,649
6,701
2,547
Income taxes (benefits)
1,706
2,083
748
Income before minority interest
3,943
4,618
1,799
Minority interest, after tax:
Income before realized capital gains (losses)
Realized capital gains (losses)
(138)
(6)
Net income
(127)
(2)
3,799
Realized capital gains (losses), net of tax (14)
FAS 133 gains (losses), excluding realized capital
gains (losses), net of tax
Adjusted net income (15)
(48)
(6)
4,489
61
(56)
511
3,227
1,266
3,279
Effect of settlement charge, net of tax (16)
-
-
Effect of General Insurance reserve charge, net of tax (2)
-
Effect of catastrophe related losses, net of tax
-
260
(2,396)
225
(2,700)
316
15,213
(279)
4,258
595
10,955
(152)
1
(465)
(13)
1,745
444
10,477
14
182
201
(133)
1,864
(114)
376
1,530
8,746
-
1,147
1,147
-
-
1,186
1,186
-
1,569
540
2,109
1.45
1.23
1.71
1.25
0.66
0.71
0.17
0.14
3.99
3.33
Effect of settlement charge, net of tax (16)
-
-
-
0.44
0.44
Effect of General Insurance reserve charge, net of tax (2)
-
-
-
0.45
0.45
Per share - diluted (18):
Net income
Adjusted net income (15)
Effect of catastrophe related losses, net of tax
$
-
$
-
$
0.60
Average outstanding shares - diluted (18)
2,624
2,623
2,624
Effective tax rate:
Net income
Adjusted net income (15)
30.2%
29.0%
31.1%
30.2%
29.4%
29.5%
(See Accompanying Notes on Page 9)
6
$
0.20
2,626
-
$
0.80
2,627
28.0%
26.8%
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
First
Quarter
2004
(Restated)
General insurance
Net premiums written
Net premiums earned
Losses and loss expenses incurred (1) (3)
Underwriting expenses
Underwriting profit (loss) (1) (3) (5)
Net investment income
Income (loss) before realized capital gains (losses) (1) (3)
Realized capital gains (losses)
Operating income (loss) (1) (3)
$
Life insurance & retirement services
GAAP premiums
Deposits and other considerations not included in
revenues under GAAP
Premiums, deposits and other considerations
Net investment income
Pricing net investment gains (6)
Income before realized capital gains (losses) (7)
Realized capital gains (losses) (6)
Operating income (7)
10,038
9,088
6,701
1,954
433
821
1,254
188
1,442
Second
Quarter
2004
(Restated)
$
10,211
9,354
6,854
1,908
592
874
1,466
6
1,472
Third
Quarter
2004
(Restated)
$
10,296
9,930
8,008
2,065
(143)
748
605
(12)
593
Fourth
Quarter
2004
(Restated)
$
10,078
10,165
8,794
2,500
(1,129)
753
(376)
46
(330)
Full
Year
2004
(Restated)
$
40,623
38,537
30,357
8,427
(247)
3,196
2,949
228
3,177
6,891
6,821
7,351
7,025
28,088
10,169
17,060
3,779
78
2,012
(263)
1,749
9,442
16,263
3,667
67
2,079
240
2,319
9,879
17,230
3,761
31
2,068
(449)
1,619
9,266
16,291
4,062
49
1,946
290
2,236
38,756
66,844
15,269
225
8,105
(182)
7,923
Financial services
Operating income excluding FAS 133
FAS 133 (9)
Operating income (loss)
481
103
584
580
(265)
315
Asset management
Operating income excluding FIN46R and FAS 133
FIN46R
FAS 133 (9)
Operating income
368
4
64
436
414
28
87
529
(89)
(280)
(224)
238
618
753
1,371
650
(740)
(90)
2,329
(149)
2,180
355
115
90
560
480
48
72
600
1,617
195
313
2,125
352
(439)
(266)
148
Other realized capital gains (losses)
Other income (deductions) - net (12)
Income before income taxes, minority interest and
cumulative effect of an accounting change
3,842
4,649
4,056
2,298
14,845
Income taxes
1,130
1,464
1,265
548
4,407
Income before minority interest and cumulative
effect of an accounting change
2,712
3,185
2,791
1,750
10,438
Minority interest, after tax:
Income before realized capital gains (losses)
Realized capital gains (losses)
(66)
(4)
Income before cumulative effect of an accounting change
Cumulative effect of an accounting change, net of tax (13)
Net income
Realized capital gains (losses), net of tax (14)
FAS 133 gains (losses), excluding realized capital
gains (losses), net of tax
Cumulative effect of an accounting change, net of tax (13)
Adjusted net income (15)
(104)
(1)
2,642
(144)
2,498
3,080
3,080
(23)
28
21
(144)
2,644
158
2,894
(140)
(2)
(227)
(333)
(130)
(8)
2,649
2,649
(440)
(15)
1,612
1,612
(43)
9,983
(144)
9,839
123
376
2,316
85
(240)
1,729
315
(144)
9,583
Effect of settlement charge, net of tax (17)
-
-
-
53
53
Effect of General Insurance reserve charge, net of tax (3)
-
-
-
553
553
Effect of catastrophe related losses, net of tax
-
-
512
217
729
0.94
1.00
1.17
1.10
1.00
0.88
0.62
0.66
3.73
3.64
Per share - diluted (18):
Net income
Adjusted net income (15)
Effect of settlement charge, net of tax (17)
-
-
-
0.02
0.02
Effect of General Insurance reserve charge, net of tax (3)
-
-
-
0.21
0.21
Effect of catastrophe related losses, net of tax
$
-
$
-
$
0.19
$
0.08
$
0.27
Average outstanding shares - diluted (18)
2,642
2,640
2,638
2,632
2,637
Effective tax rate:
Net income
Adjusted net income (15)
29.4%
30.4%
31.5%
30.6%
31.2%
29.3%
23.8%
25.7%
29.7%
29.2%
(See Accompanying Notes on Page 9)
7
American International Group, Inc.
Consolidated Statement of Segment Operations
(in millions, except per share data)
First
Quarter
2003
(Restated)
General insurance
Net premiums written
Net premiums earned
Losses and loss expenses incurred (1)
Underwriting expenses
Underwriting profit (1) (5)
Net investment income
Income before realized capital gains (losses) (1)
Realized capital gains (losses)
Operating income (1)
$
Life insurance & retirement services
GAAP premiums
Deposits and other considerations not included in
revenues under GAAP
Premiums, deposits and other considerations
Net investment income
Pricing net investment gains (6)
Income before realized capital gains (losses)
Realized capital gains (losses) (6)
Operating income
8,121
7,063
5,194
1,445
424
549
973
(13)
960
Second
Quarter
2003
(Restated)
$
8,631
7,554
5,591
1,493
470
695
1,165
7
1,172
Third
Quarter
2003
(Restated)
$
8,891
8,253
6,118
1,651
484
727
1,211
(45)
1,166
Fourth
Quarter
2003
(Restated)
$
9,388
8,436
5,969
1,870
597
595
1,192
12
1,204
Full
Year
2003
(Restated)
$
35,031
31,306
22,872
6,459
1,975
2,566
4,541
(39)
4,502
5,788
5,623
5,579
6,506
23,496
6,092
11,880
2,967
51
1,483
292
1,775
5,994
11,617
3,234
52
1,708
(238)
1,470
7,908
13,487
3,182
53
1,649
(52)
1,597
9,623
16,129
3,559
1,883
82
1,965
29,617
53,113
12,942
156
6,723
84
6,807
Financial services
Operating income excluding FAS 133
FAS 133 (9)
Operating income (loss)
454
(574)
(120)
546
(206)
340
538
57
595
608
(241)
367
2,146
(964)
1,182
Asset management
Operating income excluding FAS 133
FAS 133 (9)
Operating income
203
47
250
217
54
271
280
60
340
386
69
455
1,086
230
1,316
(188)
(212)
(19)
(390)
(250)
(192)
(186)
(463)
(643)
(1,257)
Other realized capital gains (losses)
Other income (deductions) - net
Income before income taxes, minority interest and
cumulative effect of an accounting change
Income taxes
Income before minority interest and cumulative
effect of an accounting change
2,465
2,844
3,256
3,342
11,907
712
831
978
1,035
3,556
1,753
2,013
2,278
2,307
8,351
Minority interest, after tax:
Income before realized capital gains (losses)
Realized capital gains (losses)
(59)
(2)
Income before cumulative effect of an accounting change
Cumulative effect of an accounting change, net of tax (13)
Net income
Realized capital gains (losses), net of tax (14)
FAS 133 gains (losses), excluding realized capital
gains (losses), net of tax
Cumulative effect of an accounting change, net of tax (13)
Adjusted net income (15)
Effect of catastrophe related losses, net of tax
(62)
(4)
(64)
2
(252)
-
1,692
1,692
1,950
1,950
2,212
2,212
96
(131)
(223)
(84)
(342)
(352)
1,948
(188)
2,269
89
2,346
(246)
9
2,575
(697)
9
9,138
-
-
53
-
53
0.64
0.74
0.75
0.86
0.83
0.89
0.85
0.98
3.07
3.47
Effect of catastrophe related losses, net of tax
Per share - diluted (18):
Net income
Adjusted net income (15)
(67)
4
$
-
$
-
$
0.02
2,245
9
2,254
$
-
8,099
9
8,108
$
0.02
Average outstanding shares - diluted (18)
2,637
2,637
2,637
2,636
2,637
Effective tax rate:
Net income
Adjusted net income (15)
28.9%
29.8%
29.2%
29.7%
30.0%
29.3%
31.0%
30.7%
29.9%
29.9%
(See Accompanying Notes on Page 9)
8
American International Group, Inc.
Consolidated Statement of Segment Operations
Notes
(1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of $258 million,
$5 million and $263 million for the third quarter, fourth quarter and full year 2005, respectively. Loss expenses incurred includes
catastrophe losses of $1.848 billion, $770 million and $2.618 billion for the third quarter, fourth quarter and full year 2005,
respectively; $736 million, $318 million and $1.054 billion for the third quarter, fourth quarter and full year 2004, respectively;
$83 million for the third quarter and full year 2003, respectively; and $61 million, $867 million (includes $769 million
World Trade Center and related losses) and $44 million for full years 2002, 2001 and 2000, respectively.
Underwriting expenses includes catastrophe related losses of $7 million for both the third quarter and full year 2005.
(2) Fourth quarter and full year 2005 includes an after-tax charge of $1.186 billion related to an increase of $1.824 billion to
net reserve for losses and loss expenses.
(3) Fourth quarter and full year 2004 includes an after-tax charge of $553 million related to an increase of $850 million to
net loss reserves reflecting a change in estimates for asbestos and environmental exposures.
(4) Includes 2002 after-tax charge of $1.3 billion related to a General Insurance net loss reserve charge of $2.1 billion,
relating to accident years 1997 through 2001.
(5) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral
of policy acquisition costs that are necessary to present the financial statements in accordance with GAAP.
(6) For purposes of this presentation, pricing net investment gains are segregated out of total realized gains (losses).
They represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life
products in some foreign countries.
(7) Includes catastrophe related losses of $12 million for both the third quarter and full year 2005 and $5 million for both
the third quarter and full year 2004.
(8) Includes $100 million of World Trade Center and related losses in 2001.
(9) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 "Accounting
for Derivative Instruments and Hedging Activities", including the related foreign exchange gains and losses.
(10) Includes catastrophe related losses of $62 million in both the third quarter and full year 2005.
(11) Includes catastrophe related losses of $6 million in both the third quarter and full year 2005.
(12) Includes catastrophe related losses of $246 million, $66 million and $312 million in third quarter, fourth quarter and full year 2005,
respectively; and $74 million, $22 million and $96 million for the third quarter, fourth quarter and full year 2004, respectively.
(13) Represents the cumulative effect of accounting changes, net of tax, related to SOP 03-1 "Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" in 2004;
FIN46R "Consolidation of Variable Interest Entities" in 2003; FAS 133, "Accounting for Derivative Instruments and
Hedging Activities" and EITF 99-20 "Recognition of Interest Income and Impairment on Purchased and Retained
Beneficial Interests in Securitized Financial Assets" in 2001.
(14) Includes a gain of $145 million, a loss of $218 million, a loss of $92 million, a loss of $50 million and a loss of $215 million,
net of tax for the first quarter, second quarter, third quarter, fourth quarter and full year 2005, respectively; a loss of
$121 million, a gain of $195 million, a loss of $102 million, a gain of $149 million and a gain of $121 million, net of tax for
the first quarter, second quarter, third quarter, fourth quarter and full year 2004, respectively; a loss of $8 million, a loss
of $42 million, a gain of $30 million, a loss of $79 million and a loss of $99 million, net of tax for first quarter, second
quarter, third quarter, fourth quarter and full year 2003, respectively; and a loss of $58 million, a gain of $177 million and
a gain of $7 million, net of tax for the full years 2002, 2001 and 2000, respectively, attributable to FAS 133.
(15) Adjusted net income excludes realized capital gains (losses) which includes pricing net investment gains,
cumulative effect of accounting changes, acquisition, restructuring and related charges, and FAS 133 "Accounting for
Derivative Instruments and Hedging Activities", net of tax.
(16) Fourth quarter and full year 2005 includes an after-tax charge related to a settlement with the SEC, DOJ, NYAG
and the New York State Department of Insurance in connection with the accounting, financial reporting and insurance
brokerage practices of AIG and its subsidiaries, as well as claims relating to the underpayment of certain workers
compensation premium taxes and other assessments.
(17) Fourth quarter and full year 2004 includes the after-tax charge related to a settlement with the SEC, DOJ, ant the U.S. Attorney
for the Southern District of Indiana with respect to issues arising from certain transactions with Brightpoint, Inc. the PNC
Financial Services Group, Inc. and related matters.
(18) Assumes conversion of contingently convertible bonds due to the adoption of EITF Issue No. 04-8 "Accounting Issues
Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share" of
$3 million, $2 million, $3 million, $3 million and $11 million, net of tax for the first quarter, second quarter, third quarter,
fourth quarter and full year 2005, respectively, $3 million, $3 million, $2 million, $3 million and $11 million, net of tax for the
first quarter, second quarter, third quarter, fourth quarter and full year 2004, respectively; $3 million, $2 million, $3 million,
$3 million and $11 million, net of tax for the first quarter, second quarter, third quarter, fourth quarter and full year 2003,
respectively; and $10 million and $2 million, net of tax for the full years 2002 and 2001, respectively.
9
American International Group, Inc.
Condensed Consolidated Balance Sheet
(dollars in millions)
2004
2005
2003
(Restated)
Assets:
Total investments, financial services assets and cash
Investment income due and accrued
Premiums and insurance balances receivable, net of allowance
Reinsurance assets
Deferred policy acquisition costs
Other assets
All other assets
Total assets
Liabilities:
Reserve for losses and loss expenses
Reserve for unearned premiums
Future policy benefits for life and accident and health insurance contracts
Policyholders' contract deposits
Funds held by companies under reinsurance treaties
Income taxes payable:
Current
Deferred
Financial services securities sold under agreements to repurchase, at contract value
Financial services unrealized loss on swaps, options and forward transactions
Notes, bonds, loans and mortgages payable
Other liabilities
All other liabilities
Total liabilities
2001
(Restated)
2000
(Restated)
(Restated)
$
680,942 $
5,727
15,333
24,978
33,248
12,329
80,813
640,290
5,556
15,622
19,613
29,817
16,125
74,122
$
520,140
4,593
13,829
20,645
25,994
14,823
75,578
$
428,158
4,002
12,041
22,782
21,922
12,968
59,725
$
358,748
3,526
10,613
20,585
19,110
13,421
64,611
$
300,152
3,415
8,014
17,368
16,618
14,125
63,017
$
853,370 $
801,145
$
675,602
$
561,598
$
490,614
$
422,709
$
77,169 $
24,243
108,807
227,027
4,174
61,878
23,400
104,740
216,474
3,404
$
51,871
21,235
92,915
171,828
3,043
$
46,674
16,556
72,281
141,998
2,211
$
41,206
13,232
64,843
119,377
1,582
$
37,935
12,058
51,395
99,467
395
6,607
11,047
12,740
78,439
23,273
193,341
6,588
23,581
15,985
66,798
25,055
173,370
766,867 $
721,273
$
Preferred shareholders' equity in subsidiary companies
Total shareholders' equity
Total liabilities, preferred shareholders' equity in subsidiary companies
and shareholders' equity
2002
(Restated)
$
$
606,180
3,410
10,351
11,521
47,048
19,713
129,400
$
501,163
1,746
11,478
10,310
35,929
16,874
121,974
$
438,551
2,130
11,092
8,921
26,990
12,598
111,075
$
374,056
186
199
192
2,132
2,182
3,414
86,317
79,673
69,230
58,303
49,881
45,239
853,370 $
10
281
4,237
17,893
13,240
57,392
22,701
149,544
801,145
$
675,602
$
561,598
$
490,614
$
422,709
American International Group, Inc.
General Insurance Operating Statistics
(dollars in millions)
2005
Gross premiums written
Ceded premiums written
Net premiums written (1)
Net premiums earned (1)
Paid losses
Change in net loss reserves
Less foreign exchange effect
Losses and loss expenses incurred (1)(2)(3)(4)
Statutory underwriting expenses (1) (5)
Underwriting profit (loss) (1)(2)(3)(4)(5)(6)
Net investment income (7)
Operating income before realized
capital gains (losses) (1)(2)(3)(4)(5)(7)
Realized capital gains (losses) (7)
Operating income (1)(2)(3)(4)(5)(7)
$
1,981
334
2,315
Net loss and loss expense reserve
$
57,476
Underwriting ratios:
Loss ratio (1) (2) (3) (4)
Expense ratio (1)(5)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, asbestos and environmental
charge and loss reserve charge
$
52,725
10,853
41,872
40,809
22,241
10,222
(628)
33,091
9,883
(2,050)
4,031
%
2004
Chg
(Restated)
1.3 % $
52,046
(5.0)
11,423
3.1
40,623
5.9
38,537
12.0
19,855
(7.3)
11,026
NM
524
9.0
30,357
13.0
8,744
NM
(247)
26.1
3,196
Years Ended December 31,
%
2003
%
2002
Chg
(Restated) Chg
(Restated)
10.9 % $ 46,938 28.0 % $
36,678
(4.1)
11,907 19.5
9,960
16.0
35,031 31.1
26,718
23.1
31,306 32.7
23,595
17.1
16,962
3.0
16,465
69.9
6,490 94.2
3,342
(9.7)
580
NM
195
32.7
22,872 16.6
19,612
27.2
6,875 18.0
5,826
NM
1,975
NM
(1,082)
24.6
2,566
9.2
2,350
(32.8)
46.5
(27.1) % $
2,949
228
3,177
(35.1)
NM
(29.4) % $
$
47,254
$
4,541
(39)
4,502
36,228
NM
NM
NM % $
$
1,268
(345)
923
29,347
%
2001
Chg
(Restated)
29.4 % $ 28,341
16.5
8,548
35.0
19,793
26.4
18,661
14.3
14,401
NM
321
NM
(82)
32.5
14,804
21.3
4,804
NM
(777)
(7.9)
2,551
(28.5)
NM
(41.8) % $
$
1,774
(189)
1,585
26,005
%
2000
Chg
(Restated)
16.1 % $
24,410
25.3
6,822
12.5
17,588
14.2
16,345
11.9
12,870
NM
(183)
NM
(244)
14.5
12,931
14.7
4,190
NM
(540)
(5.4)
2,697
(17.8)
NM
(25.6) % $
$
2,157
(26)
2,131
25,684
81.09
23.60
104.69
78.78
21.52
100.30
73.06
19.62
92.68
83.12
21.81
104.93
79.33
24.27
103.60
79.11
23.82
102.93
97.63
97.56
92.41
104.67
98.95
102.66
93.19
95.35
92.41
95.77
98.95
102.66
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of $263 million for the twelve months ended December 31, 2005. Losses
and loss expenses incurred includes catastrophe losses of $2.618 billion, $1.054 billion, $83 million, $61 million, $867 million (including $769 million in World Trade Center and
related losses) and $44 million for the twelve months ended December 31, 2005, 2004, 2003, 2002, 2001 and 2000, respectively. Statutory underwriting expenses includes catastrophe
related losses of $7 million for the twelve months ended December 31, 2005.
(2) Includes $1.824 billion reserve charge increase for the twelve months ended December 31, 2005. Includes a charge of $850 million attributable to the change in estimate for asbestos
and environmental exposures for the twelve months ended December 31, 2004. Losses and loss expenses also includes a $232 million charge reflecting a change in estimate for salvage
and subrogation recoveries for the twelve months ended December 31, 2004. Losses and loss expenses incurred includes loss reserve charge of $2.1 billion in the aggregate
for the twelve months ended December 31, 2002.
(3) Includes additional losses incurred of $197 million for the twelve months ended December 31, 2005, resulting from increased labor and material costs related to the
2004 Florida hurricanes.
(4) Losses and loss expenses incurred includes 21st Century's provision of $43 million for SB1899 Northridge earthquake claims for the twelve months ended December 31, 2002.
(5) Includes $291 million of Domestic Brokerage Group expenses related to changes in estimates for uncollectible reinsurance and other premium balances, and $100 million of
accrued expenses in connection with certain workers compensation insurance policies written between 1985 and 1996, for the twelve months ended December 31, 2005. These
expenses increased the expense and combined ratios by 0.93.
(6) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that are necessary to
present the financial statements in accordance with GAAP.
(7) Total may not equal the sum of the individual group totals due to consolidating eliminations.
11
American International Group, Inc.
General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Gross premiums written
$
Ceded premiums written
Net premiums written (1)
Net premiums earned (1)
Paid losses
Change in net loss reserves
Less foreign exchange effect
Losses and loss expenses incurred (1) (2) (3)
Statutory underwriting expenses (1) (4)
Underwriting profit (loss) (1) (2) (3) (4) (5)
Net investment income (6)
Interest and dividends
Partnership income
Other investment income (7)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1) (2) (3) (4) (6)
Realized capital gains (losses) (6)
Operating income (loss) (1) (2) (3) (4) (6) $
14,325
3,535
10,790
10,140
5,227
2,080
28
7,279
2,345
563
Net loss and loss expense reserve
Underwriting ratios:
Loss ratio (1) (2) (3)
Expense ratio (1) (4)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding
catastrophe losses and reserve charge
$
Second
Quarter
2005
(Restated)
$
13,374
2,730
10,644
10,232
5,537
1,230
(349)
7,116
2,376
712
Third
Quarter
2005
(Restated)
$
13,283
2,971
10,312
10,134
5,439
3,495
(33)
8,967
2,432
(1,195)
784
248
73
(90)
1,015
810
267
128
(145)
1,060
870
181
35
(99)
987
1,578
64
1,642
$
1,772
113
1,885
$
(208)
71
(137)
49,334
$
50,564
$
54,059
Fourth
Quarter
2005
$
Full
Year
2005
11,743 $
1,617
10,126
10,303
6,038
3,417
(274)
9,729
2,730
(2,130)
52,725
10,853
41,872
40,809
22,241
10,222
(628)
33,091
9,883
(2,050)
924
88
113
(156)
969
3,388
784
349
(490)
4,031
$
(1,161)
86
(1,075) $
$
57,476
$
1,981
334
2,315
57,476
71.79
21.73
93.52
69.55
22.33
91.88
88.48
23.58
112.06
94.43
26.96
121.39
81.09
23.60
104.69
93.52
91.88
91.44
113.86
97.63
93.52
91.88
91.44
96.16
93.19
Foreign exchange impact on growth of worldwide net premiums written:
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
1.2 %
(0.7)
0.5 %
2.6 %
0.5
3.1 %
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of
$258 million, $5 million and $263 million for the third quarter, fourth quarter and full year 2005, respectively.
Losses and loss expenses incurred includes catastrophe losses of $1.848 billion, $770 million and $2.618 billion
for the third quarter, fourth quarter and full year 2005, respectively. Statutory underwriting expenses includes
catastrophe related losses of $7 million for both the third quarter and full year 2005.
(2) Includes $1.824 billion reserve charge increase for both the fourth quarter and full year 2005.
(3) Includes additional Domestic Brokerage Group losses incurred of $118 million, $39 million, $40 million and
$197 million for the first quarter, third quarter, fourth quarter and full year 2005, respectively, resulting from
increased labor and material costs related to the 2004 Florida hurricanes.
(4) Includes $291 million of Domestic Brokerage Group expenses related to changes in estimates for uncollectible
reinsurance and other premium balances for both the fourth quarter and full year 2005, and $100 million of
accrued expenses in connection with certain workers compensation insurance policies written between 1985
and 1996 for both the second quarter and full year 2005. These expenses increased the expense and combined
ratios by 0.95, 2.87 and 0.93 for the second quarter, fourth quarter and full year 2005, respectively.
(5) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements in accordance
with GAAP.
(6) Total may not equal the sum of the individual group totals due to consolidating eliminations.
(7) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
12
American International Group, Inc.
General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Gross premiums written
Ceded premiums written
Net premiums written
Net premiums earned
Paid losses
Change in net loss reserves
Less foreign exchange effect
Losses and loss expenses incurred (1) (2)
Statutory underwriting expenses
Underwriting profit (loss) (1) (2) (3)
Net investment income (4)
Interest and dividends
Partnership income
Other investment income (5)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1) (2) (4)
Realized capital gains (losses) (4)
Operating income (loss) (1) (2) (4)
Net loss and loss expense reserve
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, and asbestos and
environmental charge
$
13,727
3,689
10,038
9,088
4,645
2,278
222
6,701
2,142
433
Second
Quarter
2004
(Restated)
$
606
214
110
(109)
821
$
1,254
188
1,442
$
38,506
13,344
3,133
10,211
9,354
4,851
1,893
(110)
6,854
2,070
592
Third
Quarter
2004
(Restated)
$
644
256
73
(99)
874
$
1,466
6
1,472
$
$
40,399
$
12,888
2,592
10,296
9,930
4,932
3,055
(21)
8,008
2,159
(143)
Fourth
Quarter
2004
(Restated)
12,087
2,009
10,078
10,165
5,427
3,800
433
8,794
2,373
(1,129)
$ 52,046
11,423
40,623
38,537
19,855
11,026
524
30,357
8,744
(247)
674
130
43
(99)
748
727
108
79
(161)
753
2,651
708
305
(468)
3,196
605
(12)
593
(376)
46
(330)
2,949
228
3,177
43,454
$
Full
Year
2004
(Restated)
$
$
$
47,254
$ 47,254
73.73
21.35
95.08
73.29
20.26
93.55
80.64
20.97
101.61
86.52
23.54
110.06
78.78
21.52
100.30
95.08
93.55
94.20
106.93
97.56
95.08
93.55
94.20
98.57
95.35
Foreign exchange impact on growth of worldwide net premiums written:
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
6.0 %
1.3
7.3 %
13.8 %
2.2
16.0 %
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $736 million, $318 million and $1.054
billion for the third quarter, fourth quarter and full year 2004, respectively.
(2) Includes a charge of $850 million attributable to the change in estimate for asbestos and environmental
exposures for both the fourth quarter and full year 2004. Losses and loss expenses also includes a
$232 million increase reflecting a change in estimate for salvage and subrogation recoveries for both the
fourth quarter and full year 2004.
(3) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily
for changes in the deferral of policy acquisition that are necessary to present the financial statements in
accordance with GAAP.
(4) Total may not equal the sum of the individual group totals due to consolidating eliminations.
(5) Other investment income is comprised principally of real estate income, changes in market value
associated with trading portfolios and income from securities lending.
13
American International Group, Inc.
General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Gross premiums written
Ceded premiums written
$
12,000
3,879
Second
Quarter
2003
(Restated)
$
11,669
3,038
Third
Quarter
2003
(Restated)
$
11,396
2,505
Fourth
Quarter
2003
(Restated)
$
11,873
2,485
Full
Year
2003
(Restated)
$
46,938
11,907
Net premiums written
8,121
8,631
8,891
9,388
35,031
Net premiums earned
7,063
7,554
8,253
8,436
31,306
4,068
1,267
141
4,308
1,486
203
3,854
2,144
(120)
4,732
1,593
356
16,962
6,490
580
Losses and loss expenses incurred (1)
5,194
5,591
6,118
5,969
22,872
Statutory underwriting expenses
1,651
1,656
1,744
1,824
6,875
Underwriting profit (1) (2)
424
470
484
597
1,975
Net investment income (3)
Operating income before realized
capital gains (losses) (1) (3)
549
695
727
595
2,566
973
1,165
1,211
1,192
4,541
Realized capital gains (losses) (3)
(13)
Paid losses
Change in net loss reserves
Less foreign exchange effect
7
(45)
12
(39)
Operating income (1) (3)
$
960
$
1,172
$
1,166
$
1,204
$
4,502
Net loss and loss expense reserve
$
30,614
$
32,100
$
34,244
$
36,228
$
36,228
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
73.54
20.33
93.87
74.00
19.18
93.18
74.14
19.63
93.77
70.75
19.42
90.17
73.06
19.62
92.68
93.87
93.18
92.77
90.17
92.41
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $83 million for both the third quarter
and full year 2003.
(2) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition that are necessary to present the financial statements in
accordance with GAAP.
(3) Total may not equal the sum of the individual group totals due to consolidating eliminations.
14
American International Group, Inc.
Domestic Brokerage Group Insurance Operating Statistics
(dollars in millions)
2005
Net premiums written (1) (2)
$ 23,128
%
Chg
2.8 % $
2004
(Restated)
22,506
%
Chg
15.0 % $
Years ended December 31,
2003
%
2002
(Restated) Chg
(Restated)
19,563
36.6 % $
14,326
%
Chg
50.5 % $
2001
(Restated)
9,519
%
Chg
2000
(Restated)
21.7 % $
7,820
Net premiums earned (1)
22,602
6.5
21,215
27.0
16,704
36.9
12,200
39.8
8,728
26.7
6,889
Losses and loss expenses incurred (1) (3) (4)
21,328
13.4
18,808
37.2
13,711
16.1
11,809
53.4
7,699
19.2
6,459
4,501
15.2
3,907
32.1
2,957
17.5
2,516
30.8
1,924
33.4
1,442
(3,250)
NM
(1,340)
NM
387
NM
(1,627)
NM
2,403
22.3
1,965
37.1
1,433
2.6
1,397
(14.8)
1,640
(847)
NM
625
(65.7)
1,820
NM
(230)
NM
716
(12.6)
819
201
32.2
152
NM
NM
(186)
NM
(182)
NM
30
NM % $
777
NM % $
(416)
NM % $
Statutory underwriting expenses (5)
Underwriting profit (loss) (1)(3)(4)(5)(6)
Net investment income
Operating income (loss) before realized
capital gains (losses) (1)(3)(4)(5)
Realized capital gains (losses)
Operating income (loss) (1)(3)(4)(5)
Underwriting ratios:
Loss ratio (1) (3) (4)
Expense ratio (1) (2) (5)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, asbestos and environmental
charge and loss reserve charge
$
(646)
(56.2) % $
(46)
1,774
(924)
534
NM
0.2
(37.1) % $
(817)
1,636
849
94.37
19.46
113.83
88.66
17.36
106.02
82.08
15.12
97.20
96.80
17.56
114.36
88.21
20.21
108.42
93.76
18.44
112.20
105.54
103.27
96.91
114.20
101.91
111.93
96.12
99.97
96.91
97.80
101.91
111.93
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of $122 million for the twelve months ended December 31, 2005.
Losses and loss expenses incurred includes catastrophe losses of $1.747 billion, $582 million, $48 million, $20 million, $568 million (including $544 million in World Trade
Center and related losses) and $19 million for the twelve months ended December 31, 2005, 2004, 2003, 2002, 2001 and 2000, respectively.
(2) Includes an increase of approximately $300 million for the twelve months ended December 31, 2005, resulting from a portfolio transfer of Richmond unearned premium
reserves from Foreign General.
(3) Includes $2.140 billion reserve charge increase for the twelve months ended December 31, 2005. Losses and loss expenses incurred includes a charge of $700 million
attributable to the change in estimate for asbestos and environmental exposures for the twelve months ended December 31, 2004. Losses and loss expenses
incurred includes loss reserve charge of $2.0 billion in the aggregate for the twelve months ended December 31, 2002.
(4) Includes additional losses incurred of $197 million for the twelve months ended December 31, 2005, resulting from increased labor and material costs related to the 2004
Florida hurricanes.
(5) Includes $291 million of expenses related to changes in estimates for uncollectible reinsurance and other premium balances, and $100 million of accrued expenses
in connection with certain workers compensation insurance policies written between 1985 and 1996 for the twelve months ended December 31, 2005. These expenses
increased the expense and combined ratios by 1.69.
(6) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that are
necessary to present the financial statements in accordance with GAAP.
15
American International Group, Inc.
Domestic Brokerage Group Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Net premiums written (1) (2)
$
5,720
Second
Quarter
2005
(Restated)
$
5,846
Third
Quarter
2005
(Restated)
$
5,505
Fourth
Quarter
2005
$
6,057
Full
Year
2005
$
23,128
Net premiums earned (1)
5,573
5,587
5,613
5,829
22,602
Losses and loss expenses incurred (1) (3) (4)
4,462
4,338
5,580
6,948
21,328
Statutory underwriting expenses (5)
1,055
1,059
1,034
1,353
4,501
Underwriting profit (loss) (1) (3) (4) (5) (6)
(3)
151
(952)
(2,446)
(3,250)
471
201
54
(67)
481
93
120
(139)
523
131
13
(78)
580
75
89
(144)
2,055
500
276
(428)
659
555
589
600
2,403
656
706
(363)
57
99
80
Net investment income
Interest and dividends
Partnership income
Other investment income (7)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1) (3) (4) (5)
Realized capital gains (losses)
Operating income (loss) (1) (3) (4) (5)
$
713
$
805
$
(283)
(1,846)
(847)
(35)
$
(1,881)
201
$
(646)
Underwriting ratios:
Loss ratio (1) (3) (4)
Expense ratio (1) (2) (5)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding
catastrophe losses and reserve charge
80.09
18.43
98.52
77.62
18.13
95.75
99.43
18.79
118.22
119.20
22.33
141.53
94.37
19.46
113.83
98.52
95.75
93.91
133.00
105.54
98.52
95.75
93.91
96.29
96.12
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of
$122 million for both the third quarter and full year 2005. Losses and loss expenses incurred includes catastrophe
losses of $1.250 billion, $497 million and $1.747 billion for the third quarter, fourth quarter and full year 2005,
respectively.
(2) Includes an increase of approximately $300 million for both the fourth quarter and full year 2005, resulting from
a portfolio transfer of Richmond unearned premium reserves from Foreign General.
(3) Includes $2.140 billion reserve charge increase for both the fourth quarter and full year 2005.
(4) Includes additional losses incurred of $118 million, $39 million, $40 million and $197 million for the first quarter,
third quarter, fourth quarter and full year 2005, respectively, resulting from increased labor and material costs
related to the 2004 Florida hurricanes.
(5) Includes $291 million of expenses related to changes in estimates for uncollectible reinsurance and other premium
balances for both the fourth quarter and full year 2005, and $100 million of accrued expenses in connection
with certain workers compensation insurance policies written between 1985 and 1996 for both the second quarter
and full year 2005. These expenses increased the expense and combined ratios by 1.73, 4.80 and 1.69 for the
second quarter, fourth quarter and full year 2005, respectively.
(6) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements in accordance
with GAAP.
(7) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
16
American International Group, Inc.
Domestic Brokerage Group Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Net premiums written
$
5,355
Second
Quarter
2004
(Restated)
$
5,648
Third
Quarter
2004
(Restated)
$
5,749
Fourth
Quarter
2004
(Restated)
$
5,754
Full
Year
2004
(Restated)
$
22,506
Net premiums earned
4,930
5,056
5,557
5,672
21,215
Losses and loss expenses incurred (1) (2)
4,058
4,229
4,923
5,598
18,808
Statutory underwriting expenses
1,003
882
933
1,089
3,907
(45)
49
(228)
(1,116)
(1,340)
335
176
79
(89)
361
185
55
(75)
379
147
55
(87)
420
75
78
(129)
1,495
583
267
(380)
501
526
494
444
1,965
Operating income (loss) before realized
capital gains (losses) (1) (2)
456
575
266
(672)
625
Realized capital gains (losses)
100
63
152
Underwriting profit (loss) (1) (2) (3)
Net investment income
Interest and dividends
Partnership income
Other investment income (4)
Investment expense
Total
Operating income (loss) (1) (2)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, and asbestos and
environmental charge
$
556
(5)
$
570
(6)
$
260
$
(609)
$
777
82.28
18.74
101.02
83.66
15.61
99.27
88.59
16.21
104.80
98.73
18.94
117.67
88.66
17.36
106.02
101.02
99.27
97.50
114.55
103.27
101.02
99.27
97.50
102.21
99.97
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $406 million, $176 million and $582 million for
the third quarter, fourth quarter and full year 2004, respectively.
(2) Includes a charge of $700 million attributable to the change in estimate for asbestos and environmental exposures
for both the fourth quarter and full year 2004.
(3) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements in accordance
with GAAP.
(4) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
17
American International Group, Inc.
Domestic Brokerage Group Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Net premiums written
$
4,380
Second
Quarter
2003
(Restated)
$
4,840
Third
Quarter
2003
(Restated)
$
5,007
Fourth
Quarter
2003
(Restated)
$
5,336
Full
Year
2003
(Restated)
$
19,563
Net premiums earned
3,773
4,007
4,512
4,412
16,704
Losses and loss expenses incurred (1)
3,001
3,273
3,671
3,766
13,711
Statutory underwriting expenses
707
701
765
784
2,957
Underwriting profit (loss) (1) (2)
168
155
138
(74)
Net investment income
255
421
425
332
1,433
Operating income before realized
capital gains (losses) (1)
423
576
563
258
1,820
Realized capital gains (losses)
(35)
70
(64)
(17)
Operating income (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
388
$
646
$
499
$
241
387
(46)
$
1,774
79.57
16.13
95.70
81.64
14.50
96.14
81.39
15.29
96.68
85.32
14.68
100.00
82.08
15.12
97.20
95.70
96.14
95.63
100.00
96.91
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $48 million for both the third quarter
and full year 2003.
(2) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily
for changes in the deferral of policy acquisition costs that are necessary to present the
financial statements in accordance with GAAP.
18
American International Group, Inc.
Personal Lines Insurance Operating Statistics
(dollars in millions)
2005
Net premiums written (1) (2)
$
%
Chg
2004
(Restated)
Years Ended December 31,
2003
%
2002
(Restated) Chg
(Restated)
%
Chg
%
Chg
2001
(Restated)
%
Chg
(0.8) % $
2000
(Restated)
4,653
6.9 % $
4,354
16.7 % $
3,732
16.3 % $
3,208
27.9 % $
2,508
2,529
Net premiums earned (1)
4,634
8.0
4,291
16.7
3,678
25.1
2,939
16.1
2,532
4.6
2,420
Losses and loss expenses incurred (1) (3) (4)
3,566
11.1
3,211
15.1
2,789
11.7
2,497
7.9
2,315
10.0
2,104
Statutory underwriting expenses (1) (5)
1,106
17.2
944
31.3
719
11.0
648
39.4
465
(1.5)
472
Underwriting profit (loss) (1) (3) (4) (5) (6)
(19)
NM
160
(12.6)
183
NM
(136)
NM
(247)
NM
(152)
Net investment income
217
16.7
186
22.4
152
(9.0)
167
24.6
134
16.5
115
Operating income (loss) before realized
capital gains (losses) (1) (3) (4) (5)
198
(42.8)
346
3.3
335
NM
31
NM
(113)
NM
(37)
NM
11
(45.0)
20
NM
(10)
NM
(6)
NM
(15)
NM % $
(52)
Realized capital gains (losses)
Operating income (loss)(1) (3) (4) (5)
Underwriting ratios:
Loss ratio (1) (3) (4)
Expense ratio (1) (5)
Combined ratio
Combined ratio excluding
catastrophe losses
(3)
$
195
(45.4) % $
357
0.6 % $
355
NM % $
21
NM % $
(119)
76.94
23.76
100.70
74.84
21.67
96.51
75.84
19.25
95.09
84.96
20.21
105.17
91.44
18.52
109.96
86.93
18.64
105.57
98.25
95.94
94.95
105.17
107.98
105.57
Note: (1) Net premiums written and net premiums earned include castrophe related net reinstatement premium cost of $2 million for the twelve months ended December 31, 2005.
Losses and loss expenses incurred includes catastrophe losses of $105 million, $25 million, $5 million and $50 million for the twelve months ended December 31, 2005,
2004, 2003 and 2001, respectively. Statutory underwriting expenses includes catastrophe related losses of $7 million for the twelve months ended December 31, 2005.
(2) Includes net premiums written from the domestic insurance operations of GE acquired in August 2003 of $359 million and $159 million for the twelve months
ended December 31, 2004 and 2003, respectively.
(3) Losses and loss expenses incurred includes 21st Century's provision of $43 million for SB1899 Northridge earthquake claims for the twelve months ended
December 31, 2002.
(4) Includes adverse loss development and a change in estimate of $55 million for twelve months ended December 31, 2005.
(5) Includes an additional $20 million of legal and transition costs associated with exiting the assigned risk business for twelve months ended December 31, 2005.
(6) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that
are necessary to present the financial statements in accordance with GAAP.
19
American International Group, Inc.
Personal Lines Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Net premiums written (1)
$
Net premiums earned (1)
1,186
Second
Quarter
2005
(Restated)
$
1,173
Third
Quarter
2005
(Restated)
$
1,191
Fourth
Quarter
2005
$
1,103
Full
Year
2005
$
4,653
1,120
1,157
1,182
1,175
4,634
Losses and loss expenses incurred (1) (2)
819
843
940
964
3,566
Statutory underwriting expenses (1) (3)
260
270
282
294
1,106
Underwriting profit (loss) (1) (2) (3) (4)
58
50
(35)
(92)
(19)
53
1
(2)
55
(1)
55
1
(2)
57
1
(1)
220
3
(6)
52
54
54
57
217
110
104
19
(35)
198
(1)
1
Net investment income
Interest and dividends
Partnership income
Other investment income (5)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1) (2) (3)
Realized capital gains (losses)
Operating income (loss) (1) (2) (3)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio (1) (3)
Combined ratio
Combined ratio excluding
catastrophe losses
(1)
$
109
(2)
$
102
$
18
$
(34)
(3)
$
195
73.10
21.97
95.07
72.93
22.99
95.92
79.51
23.68
103.19
81.97
26.58
108.55
76.94
23.76
100.70
95.07
95.92
97.38
104.72
98.25
Note: (1) Net premiums written and net premiums earned include castrophe related net reinstatement premium cost of
$2 million for both the third quarter and full year 2005. Losses and loss expenses incurred includes catastrophe
losses of $60 million, $45 million and $105 million for the third quarter, fourth quarter and full year 2005,
respectively. Statutory underwriting expenses includes catastrophe related losses of $7 million for both the
third quarter and full year 2005.
(2) Includes adverse loss development and a change in estimate of $55 million in the fourth quarter and full year 2005.
(3) Includes an additional $20 million of legal and transition costs associated with exiting the assigned risk business
for the fourth quarter and full year 2005.
(4) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
(5) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
20
American International Group, Inc.
Personal Lines Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Net premiums written
$
Net premiums earned
1,119
Second
Quarter
2004
(Restated)
$
1,091
Third
Quarter
2004
(Restated)
$
1,098
Fourth
Quarter
2004
(Restated)
$
1,046
Full
Year
2004
(Restated)
$
4,354
1,042
1,064
1,088
1,097
4,291
Losses and loss expenses incurred (1)
779
792
826
814
3,211
Statutory underwriting expenses
228
228
238
250
944
50
54
28
28
160
44
1
(2)
46
1
(2)
49
1
(1)
51
(2)
190
3
(7)
43
45
49
49
186
93
99
77
77
346
3
-
-
8
11
Underwriting profit (1)(2)
Net investment income
Interest and dividends
Partnership income
Other investment income (3)
Investment expense
Total
Operating income before realized
capital gains (losses) (1)
Realized capital gains (losses)
Operating income (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
96
$
99
$
77
$
85
$
357
74.79
20.33
95.12
74.45
20.92
95.37
75.85
21.74
97.59
74.27
23.82
98.09
74.84
21.67
96.51
95.12
95.37
95.32
98.09
95.94
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $25 million for both the third quarter and
full year 2004.
(2) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
(3) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
21
American International Group, Inc.
Personal Lines Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Net premiums written
$
891
Second
Quarter
2003
(Restated)
$
907
Third
Quarter
2003
(Restated)
$
925
Fourth
Quarter
2003
(Restated)
$
1,009
Full
Year
2003
(Restated)
$
3,732
Net premiums earned
852
881
930
1,015
3,678
Losses and loss expenses incurred (1)
642
693
705
749
2,789
Statutory underwriting expenses
179
174
158
208
719
Underwriting profit (1) (2)
47
15
60
61
183
Net investment income
37
36
36
43
152
Operating income before realized
capital gains (losses) (1)
84
51
96
104
335
Realized capital gains (losses)
11
8
(1)
2
20
Operating income (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
95
$
59
$
95
$
106
$
355
75.31
20.04
95.35
78.72
19.24
97.96
75.78
17.03
92.81
73.83
20.62
94.45
75.84
19.25
95.09
95.35
97.96
92.27
94.45
94.95
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $5 million for both the third quarter and
full year 2003.
(2) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
22
American International Group, Inc.
Mortgage Guaranty (UGC) Insurance Operating Statistics
(dollars in millions)
2005
Net premiums written
$
628
%
Chg
3.5 % $
2004
(Restated)
607
Years Ended December 31,
2003
%
2002
(Restated) Chg
(Restated)
%
Chg
14.3 % $
531
4.5 % $
%
Chg
2001
(Restated)
%
Chg
2000
(Restated)
508
2.8 % $
494
9.1 % $
453
Net premiums earned
533
(1.1)
539
8.7
496
(1.2)
502
2.7
489
8.2
452
Losses and loss expenses incurred (1) (2)
139
(2.1)
142
29.1
110
(6.8)
118
13.5
104
85.7
56
Statutory underwriting expenses
145
(11.0)
163
15.6
141
5.2
134
8.1
124
6.0
117
Underwriting profit (1) (2) (3)
241
(13.3)
278
5.3
264
6.9
247
(7.1)
266
(6.0)
283
Net investment income
123
2.5
120
(15.5)
142
2.2
139
31.1
106
14.0
93
Operating income before realized
capital gains (losses) (1) (2)
364
(8.5)
398
(2.0)
406
5.2
386
3.8
372
(1.1)
376
NM
1
(97.8)
45
NM
15
(62.5)
40
NM
(10)
12.6 % $
366
Realized capital gains (losses)
Operating income (1) (2)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding
catastrophe losses and
reserve charge
(1)
$
363
(9.0) % $
399
(11.5) % $
451
12.5 % $
401
(2.7) % $
412
26.01
23.07
49.08
26.39
26.92
53.31
22.13
26.54
48.67
23.43
26.46
49.89
21.19
25.00
46.19
12.38
25.78
38.16
47.17
53.31
48.67
49.89
46.19
38.16
52.61
53.31
48.67
49.89
46.19
38.16
Note: (1) Includes catastrophe losses of $10 million for the twelve months ended December 31, 2005.
(2) Includes $29 million reserve charge decrease for the twelve months ended December 31, 2005.
(3) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that are
necessary to present the financial statements in accordance with GAAP.
23
American International Group, Inc.
Mortgage Guaranty (UGC) Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Net premiums written
$
Net premiums earned
165
Second
Quarter
2005
(Restated)
$
145
Third
Quarter
2005
(Restated)
$
149
Fourth
Quarter
2005
$
169
Full
Year
2005
$
628
140
143
114
136
533
Losses and loss expenses incurred (1) (2)
35
25
36
43
139
Statutory underwriting expenses
36
35
35
39
145
Underwriting profit (1) (2) (3)
75
79
40
47
241
28
-
31
1
(1)
32
-
32
-
123
1
(1)
28
31
32
32
123
103
110
72
79
364
Net investment income
Interest and dividends
Partnership income
Other investment income (4)
Investment expense
Total
Operating income before realized
capital gains (losses) (1) (2)
Realized capital gains (losses)
Operating income (1) (2)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding
catastrophe losses and
reserve charge
1
$
104
(1)
$
109
$
72
(1)
$
78
(1)
$
363
25.03
21.70
46.73
17.38
24.54
41.92
31.22
23.35
54.57
31.68
22.90
54.58
26.01
23.07
49.08
46.73
41.92
45.64
54.58
47.17
46.73
41.92
45.64
75.87
52.61
Note: (1) Includes catastrophe losses of $10 million for both the third quarter and full year 2005.
(2) Includes $29 million reserve charge decrease for both the fourth quarter and full year 2005.
(3) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
(4) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
24
American International Group, Inc.
Mortgage Guaranty (UGC) Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Net premiums written
$
Net premiums earned
154
Second
Quarter
2004
(Restated)
$
136
Third
Quarter
2004
(Restated)
$
163
Fourth
Quarter
2004
(Restated)
$
154
Full
Year
2004
(Restated)
$
607
134
129
135
141
539
Losses and loss expenses incurred
37
11
44
50
142
Statutory underwriting expenses
37
39
42
45
163
Underwriting profit (1)
68
88
60
62
278
27
2
-
30
1
(1)
32
(2)
-
31
-
120
1
(1)
29
30
30
31
120
Operating income before realized
capital gains (losses)
97
118
90
93
398
Realized capital gains (losses)
(1)
1
3
1
Net investment income
Interest and dividends
Partnership income
Other investment income (2)
Investment expense
Total
Operating income
Underwriting ratios:
Loss ratio
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
96
(2)
$
116
$
91
$
96
$
399
27.87
24.42
52.29
7.98
28.15
36.13
32.57
25.71
58.28
36.07
29.59
65.66
26.39
26.92
53.31
52.29
36.13
58.28
65.66
53.31
Note: (1) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
(2) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
25
American International Group, Inc.
Mortgage Guaranty (UGC) Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Net premiums written
$
Net premiums earned
121
Second
Quarter
2003
(Restated)
$
120
Third
Quarter
2003
(Restated)
$
149
Fourth
Quarter
2003
(Restated)
$
141
Full
Year
2003
(Restated)
$
531
124
116
125
131
496
Losses and loss expenses incurred
32
9
42
27
110
Statutory underwriting expenses
34
35
35
37
141
Underwriting profit (1)
57
71
70
66
264
Net investment income
43
38
30
31
142
100
109
100
97
406
11
2
-
32
45
Operating income before realized
capital gains (losses)
Realized capital gains (losses)
Operating income
Underwriting ratios:
Loss ratio
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
111
$
111
$
100
$
129
$
451
25.76
28.36
54.12
7.42
28.38
35.80
33.75
23.83
57.58
20.65
26.26
46.91
22.13
26.54
48.67
54.12
35.80
57.58
46.91
48.67
Note: (1) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes
in the deferral of policy acquisition costs that are necessary to present the financial statements in
accordance with GAAP.
26
American International Group, Inc.
Transatlantic Holdings, Inc. Insurance Operating Statistics
(dollars in millions)
2005
Net premiums written (1)
$
%
Chg
2004
%
Chg
Years Ended December 31,
%
2003
Chg
2002
%
Chg
2001
%
Chg
3,466
(7.5) % $
3,749
12.2 % $
3,341
33.6 % $
2,500
31.2 % $
1,906
Net premiums earned (1)
3,385
(7.5)
3,661
15.5
3,171
33.8
2,370
32.4
1,790
9.7
1,632
Losses and loss expenses incurred (1) (2)
2,877
4.4
2,755
23.4
2,233
24.3
1,796
15.0
1,562
30.5
1,197
Statutory underwriting expenses
14.9 % $
2000
1,659
942
(4.2)
983
13.0
870
31.2
663
25.8
527
19.8
440
(420)
NM
(47)
NM
109
NM
(57)
NM
(274)
NM
1
Net investment income
343
11.7
307
13.3
271
7.5
252
5.0
240
2.6
234
Operating income (loss) before realized
capital gains (losses) (1) (2)
(77)
NM
260
(31.6)
380
94.9
195
NM
(34)
NM
235
38
72.7
22
NM
10
NM
NM
(1)
NM
33
Underwriting profit (loss) (1) (2) (3)
Realized capital gains (losses)
Operating income (loss) (1) (2)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio (1)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses and loss reserve charge
$
(39)
NM % $
282
(27.7) % $
390
NM % $
(6)
189
NM % $
(35)
NM % $
268
84.99
27.18
112.17
75.24
26.22
101.46
70.43
26.03
96.46
75.81
26.50
102.31
87.22
27.65
114.87
73.36
26.51
99.87
97.21
95.59
96.35
102.31
102.86
99.87
97.21
95.59
96.35
98.09
102.86
99.87
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of $45 million for the twelve months ended December 31, 2005.
Losses and loss expenses incurred includes catastrophe losses of $463 million, $215 million, $4 million and $215 million (includes $200 million of World Trade Center
and related losses) for the twelve months ended December 31, 2005, 2004, 2003 and 2001, respectively.
(2) Losses and loss expenses incurred includes loss reserve charge of $100 million in the aggregate for the twelve months ended December 31, 2002.
(3) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that are
necessary to present the financial statements in accordance with GAAP.
27
American International Group, Inc.
Transatlantic Holdings, Inc. Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
Net premiums written (1)
$
885
Second
Quarter
2005
$
884
Third
Quarter
2005
$
858
Fourth
Quarter
2005
$
839
Full
Year
2005
$
3,466
Net premiums earned (1)
888
862
844
791
3,385
Losses and loss expenses incurred (1)
646
611
975
645
2,877
Statutory underwriting expenses
222
239
249
232
942
Underwriting profit (loss) (1) (2)
20
13
(375)
(78)
(420)
78
5
5
(3)
79
7
(2)
81
5
3
(2)
84
2
3
(2)
322
12
18
(9)
85
84
87
87
343
105
97
(288)
9
(77)
9
2
13
14
38
Net investment income
Interest and dividends
Partnership income
Other investment income (3)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1)
Realized capital gains (losses)
Operating income (loss) (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio (1)
Combined ratio
Combined ratio excluding
catastrophe losses
$
114
$
99
$
(275)
$
23
$
(39)
72.73
25.09
97.82
70.99
27.03
98.02
115.42
28.94
144.36
81.53
27.76
109.29
84.99
27.18
112.17
97.82
98.02
97.70
95.04
97.21
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of
$40 million, $5 million and $45 million for the third quarter, fourth quarter and full year 2005, respectively.
Losses and loss expenses incurred includes catastrophe losses of $355 million, $108 million and $463 million
for the third quarter, fourth quarter and full year 2005, respectively.
(2) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition costs that are necessary to present the financial statements in
accordance with GAAP.
(3) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
28
American International Group, Inc.
Transatlantic Holdings, Inc. Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
Net premiums written
$
907
Second
Quarter
2004
$
928
Third
Quarter
2004
$
987
Fourth
Quarter
2004
$
927
Full
Year
2004
$
3,749
Net premiums earned
893
896
940
932
3,661
Losses and loss expenses incurred (1)
622
617
810
706
2,755
Statutory underwriting expenses
237
248
266
232
983
Underwriting profit (loss) (1)(2)
37
39
(122)
(1)
(47)
68
3
4
(3)
71
2
2
(2)
73
1
3
(2)
77
8
4
(2)
289
14
13
(9)
72
73
75
87
307
109
112
(47)
86
260
8
2
4
8
22
Net investment income
Interest and dividends
Partnership income
Other investment income (3)
Investment expense
Total
Operating income (loss) before realized
capital gains (losses) (1)
Realized capital gains (losses)
Operating income (loss) (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
117
$
114
$
(43)
$
94
$
282
69.67
26.15
95.82
68.92
26.77
95.69
86.12
26.89
113.01
75.67
25.02
100.69
75.24
26.22
101.46
95.82
95.69
95.47
95.32
95.59
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $165 million, $50 million and $215 million
for the third quarter, fourth quarter and full year 2004, respectively.
(2) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily
for changes in the deferral of policy acquisition costs that are necessary to present the financial
statements in accordance with GAAP.
(3) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
29
American International Group, Inc.
Transatlantic Holdings, Inc. Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
Net premiums written
$
768
Second
Quarter
2003
$
803
Third
Quarter
2003
$
901
Fourth
Quarter
2003
$
869
Full
Year
2003
$
3,341
Net premiums earned
692
763
864
852
3,171
Losses and loss expenses incurred (1)
477
545
603
608
2,233
Statutory underwriting expenses
218
200
238
214
870
Underwriting profit (1) (2)
15
28
32
34
109
Net investment income
65
68
69
69
271
Operating income before realized
capital gains (losses) (1)
80
96
101
103
380
1
-
6
3
10
Realized capital gains (losses)
Operating income (1)
Underwriting ratios:
Loss ratio (1)
Expense ratio
Combined ratio
Combined ratio excluding
catastrophe losses
$
81
$
96
$
107
$
106
$
390
68.91
28.45
97.36
71.48
24.82
96.30
69.76
26.40
96.16
71.39
24.64
96.03
70.43
26.03
96.46
97.36
96.30
95.76
96.03
96.35
Note: (1) Losses and loss expenses incurred includes catastrophe losses of $4 million for both the third quarter and
full year 2003.
(2) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily
for changes in the deferral of policy acquisition costs that are necessary to present the financial
statements in accordance with GAAP.
30
American International Group, Inc.
Foreign General Insurance Operating Statistics
(dollars in millions)
9,997
9,655
5,181
3,189
1,398
944
Years Ended December 31,
%
2004
%
2003
%
2002
Chg
(Restated) Chg
(Restated) Chg
(Restated)
6.3 % $
9,407
19.6 % $
7,864
27.3 % $
6,176
9.3
8,831
21.7
7,257
30.0
5,584
(4.8)
5,441
35.0
4,029
18.8
3,392
16.1
2,747
25.5
2,188
17.3
1,865
99.1
702
(32.0)
1,032
NM
491
52.8
618
10.2
561
50.8
372
%
2001
%
2000
Chg
(Restated) Chg
(Restated)
15.1 % $
5,366
4.7 % $
5,127
9.0
5,122
3.4
4,952
8.6
3,124
0.3
3,115
5.7
1,764
2.6
1,719
22.1
402
NM
145
(8.8)
408
(24.9)
543
2,342
85
2,427
77.4
NM
80.6 % $
6.5
NM
(7.8) % $
2005
Net premiums written (1) (2)
Net premiums earned (1) (3)
Losses and loss expenses incurred (1) (4)
Statutory underwriting expenses (5)
Underwriting profit (1) (3) (4) (5) (6)
Net investment income
Operating income before realized
capital gains (losses) (1) (4)
Realized capital gains (losses)
Operating income (1) (4)
Underwriting ratios:
Loss ratio (1) (3) (4)
Expense ratio (1) (2) (5)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, reserve charge and
asbestos and environmental charge
$
$
1,320
24
1,344
(17.1)
NM
(14.0) % $
1,593
(31)
1,562
84.6
NM
NM % $
863
(142)
721
810
(28)
782
17.7
NM
25.3 % $
688
(64)
624
53.66
31.90
85.56
61.61
29.20
90.81
55.52
27.82
83.34
60.74
30.19
90.93
60.99
32.89
93.88
62.90
33.54
96.44
81.75
88.18
82.97
90.20
93.22
95.93
84.69
86.48
82.97
90.20
93.22
95.93
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of $94 million for the twelve months ended December 31, 2005.
Losses and loss expenses incurred includes catastrophe losses of $293 million, $232 million, $26 million, $41 million, $34 million (including $25 million in World Trade
Center and related losses) and $25 million for the twelve months ended December 31, 2005, 2004, 2003, 2002, 2001 and 2000, respectively.
(2) Includes a decrease of approximately $300 million for the twelve months ended December 31, 2005, resulting from a portfolio transfer of Richmond unearned premium
reserves to the Domestic Brokerage Group.
(3) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using average exchange rates.
(4) Includes $287 million reserve charge decrease for the twelve months ended December 31, 2005. Losses and loss expenses incurred includes a charge of $150 million
attributable to the change in estimate for asbestos and environmental exposures for the twelve months ended December 31, 2004.
(5) Includes the results of wholly owned AIU agencies.
(6) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the deferral of policy acquisition costs that are necessary
to present the financial statements in accordance with GAAP.
31
American International Group, Inc.
Foreign General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Net premiums written (1) (2)
$
Second
Quarter
2005
(Restated)
2,834
$
2,596
Third
Quarter
2005
(Restated)
$
2,609
Fourth
Quarter
2005
$
1,958
Full
Year
2005
$
9,997
Net premiums earned (1) (3)
2,419
2,483
2,381
2,372
9,655
Losses and loss expenses incurred (1) (4)
1,317
1,299
1,436
1,129
5,181
Statutory underwriting expenses (5)
772
773
832
812
3,189
Underwriting profit (1) (3) (4) (5) (6)
413
419
127
439
1,398
154
42
12
(18)
164
174
1
(2)
179
45
17
(17)
171
11
20
(9)
668
272
50
(46)
190
337
224
193
944
603
756
351
632
2,342
15
(25)
102
85
Net investment income
Interest and dividends
Partnership income
Other investment income (7)
Investment expense
Total
Operating income before realized
capital gains (losses) (1) (4)
Realized capital gains (losses)
Operating income (1) (4)
Underwriting ratios:
Loss ratio (1) (3) (4)
Expense ratio (2) (5)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding
losses, reserve charge and
asbestos and environmental charge
(7)
$
596
$
771
$
326
$
734
$
2,427
54.43
27.25
81.68
52.31
29.75
82.06
60.31
31.91
92.22
47.62
41.49
89.11
53.66
31.90
85.56
81.68
82.06
81.83
84.05
81.75
81.68
82.06
81.83
96.15
84.69
Foreign exchange impact on growth of Foreign General net premiums written:
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
9.1 %
4.1 %
13.2 %
4.1 %
3.7 %
7.8 %
11.5 %
2.0 %
13.5 %
(8.6) %
(2.3) %
(10.9) %
4.3 %
2.0 %
6.3 %
Note: (1) Net premiums written and net premiums earned include catastrophe related net reinstatement premium cost of
$94 million for both the third quarter and full year 2005. Losses and loss expenses incurred includes catastrophe
losses of $173 million, $120 million and $293 million for the third quarter, fourth quarter and full year 2005,
respectively.
(2) Includes a decrease of approximately $300 million for both the fourth quarter and full year 2005, resulting from a
portfolio transfer of Richmond unearned premium reserves to the Domestic Brokerage Group.
(3) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using
average exchange rates.
(4) Includes $287 million reserve charge decrease for both the fourth quarter and full year 2005.
(5) Includes the results of wholly owned AIU agencies.
(6) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for changes in the
deferral of policy acquisition costs that are necessary to present the financial statements in accordance
with GAAP.
(7) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
32
American International Group, Inc.
Foreign General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Net premiums written
$
2,503
Second
Quarter
2004
(Restated)
$
2,408
Third
Quarter
2004
(Restated)
$
2,299
Fourth
Quarter
2004
(Restated)
$
2,197
Full
Year
2004
(Restated)
$
9,407
Net premiums earned (1)
2,089
2,209
2,210
2,323
8,831
Losses and loss expenses incurred (2) (3)
1,205
1,205
1,405
1,626
5,441
Statutory underwriting expenses (4)
637
673
680
757
2,747
Underwriting profit (loss) (1) (2) (3) (4) (5)
323
362
119
(102)
702
132
34
25
(15)
136
69
14
(19)
141
(18)
(14)
(9)
148
25
(3)
(28)
557
110
22
(71)
176
200
100
142
618
499
562
219
40
1,320
72
1
(17)
(32)
Net investment income
Interest and dividends
Partnership income
Other investment income (6)
Investment expense
Total
Operating income before realized
capital gains (losses) (2) (3)
Realized capital gains (losses)
Operating income (2) (3)
Underwriting ratios:
Loss ratio (1) (2) (3)
Expense ratio (4)
Combined ratio
Combined ratio excluding
catastrophe losses
Combined ratio excluding catastrophe
losses, and asbestos and
environmental charge
$
571
$
563
$
202
$
8
24
$
1,344
57.67
25.45
83.12
54.59
27.93
82.52
63.59
29.64
93.23
69.93
34.38
104.31
61.61
29.20
90.81
83.12
82.52
86.88
100.36
88.18
83.12
82.52
86.88
93.90
86.48
Foreign exchange impact on growth of Foreign General net premiums written:
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
14.8 %
12.8 %
27.6 %
14.6 %
8.2 %
22.8 %
13.7 %
6.7 %
20.4 %
3.8 %
4.3 %
8.1 %
Note: (1) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using
average exchange rates.
(2) Losses and loss expenses incurred includes catastrophe losses of $140 million, $92 million and $232 million
for the third quarter, fourth quarter and full year 2004, respectively.
(3) Losses and loss expenses incurred includes charge of $150 million attributable to the change in estimate for
asbestos and environmental exposures for both the fourth quarter and full year 2004.
(4) Includes the results of wholly owned AIU agencies.
(5) Underwriting profit (loss), a GAAP measure, is statutory underwriting profit (loss) adjusted primarily
for changes in the deferral of policy acquisition costs that are necessary to present the financial
statements in accordance with GAAP.
(6) Other investment income is comprised principally of real estate income, changes in market value associated
with trading portfolios and income from securities lending.
33
11.6 %
8.0 %
19.6 %
American International Group, Inc.
Foreign General Insurance Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Net premiums written
$
Second
Quarter
2003
(Restated)
1,961
$
1,961
Third
Quarter
2003
(Restated)
$
1,909
Fourth
Quarter
2003
(Restated)
$
2,033
Full
Year
2003
(Restated)
$
7,864
Net premiums earned (1)
1,622
1,787
1,822
2,026
7,257
Losses and loss expenses incurred (2)
1,042
1,071
1,097
819
4,029
Statutory underwriting expenses (3)
513
546
548
581
2,188
Underwriting profit (1) (2) (3) (4)
137
201
184
510
1,032
Net investment income
147
130
166
118
561
Operating income before realized
capital gains (losses) (2)
284
331
350
628
1,593
11
(44)
11
Realized capital gains (losses)
Operating income (2)
Underwriting ratios:
Loss ratio (1) (2)
Expense ratio (3)
Combined ratio
Combined ratio excluding
catastrophe losses
$
295
$
287
$
361
(9)
$
619
(31)
$
1,562
64.22
26.16
90.38
59.94
27.82
87.76
60.22
28.74
88.96
40.41
28.57
68.98
55.52
27.82
83.34
90.38
87.76
87.51
68.98
82.97
Note: (1) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using
average exchange rates.
(2) Losses and loss expenses incurred includes catastrophe losses of $26 million for both the third quarter
and full year 2003.
(3) Includes the results of wholly owned AIU agencies.
(4) Underwriting profit, a GAAP measure, is statutory underwriting profit (loss) adjusted primarily for
changes in the deferral of policy acquisition costs that are necessary to present the financial statements
in accordance with GAAP.
34
American International Group, Inc.
Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
2005
Premiums, deposits and other
considerations (1)
$
66,448
%
Chg
2004
(Restated)
(0.6) % $
Years Ended December 31,
2003
%
2002
(Restated)
Chg
(Restated)
%
Chg
66,844
25.9
% $
53,113
23.7
% $
%
Chg
42,950
6.2
2001
(Restated)
% $
%
Chg
40,450
18.6
2000
(Restated)
% $
34,101
Revenues:
GAAP premiums (2)
29,400
4.7
28,088
19.5
23,496
13.5
20,694
5.6
19,600
10.7
17,702
Net investment income
18,134
18.8
15,269
18.0
12,942
15.1
11,243
7.6
10,451
4.3
10,022
344
52.9
225
44.2
156
77.3
88
NM
35
47,878
9.9
43,582
19.1
36,594
14.3
32,025
6.4
30,086
8.3
27,772
13,963
16,657
7,852
38,472
3.3
15.0
5.1
8.4
13,522
14,481
7,474
35,477
19.4
22.3
11.4
18.8
11,321
11,841
6,709
29,871
9.0
18.3
12.0
13.2
10,383
10,010
5,991
26,384
(0.3)
14.2
2.6
5.5
10,415
8,765
5,838
25,018
27.9
(8.2)
7.7
8.2
8,143
9,553
5,420
23,116
9,406
16.1
8,105
20.6
6,723
19.2
5,641
11.3
5,068
8.8
4,656
NM
84
NM
Pricing net investment gains (3)
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (4)(5)(6)(7)
Operating income including pricing
net investment gains and excluding
realized capital gains (losses) (4)(5)(6)(7)
Realized capital gains (losses) (3)(8)
(562)
Operating income (4)(5)(6)(7)
$
8,844
Life insurance in-force (9)
$
1,852,833
NM
11.6
(182)
(460)
NM
(435)
% $
7,923
16.4
% $
6,807
31.4
% $
5,181
11.8
% $
4,633
(0.3) % $
1,858,094
17.4
% $
1,583,031
21.9
% $
1,298,592
5.7
% $
1,228,501
(27.1)
NM
(15)
(0.2) % $
26.4
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a non-GAAP basis.
(2) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal funding pension business, which is offset by a similar increase in benefit reserves
for the twelve months ended December 31, 2004.
(3) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses). They represent certain amounts of realized capital gains where gains are
an inherent element in pricing certain life products in some foreign countries.
(4) Includes $100 million of World Trade Center and related losses for the twelve months ended December 31, 2001.
(5) Includes $12 million and $5 million of catastrophe losses for the twelve months ended December 31, 2005 and 2004, respectively.
(6) Includes a $178 million charge related to a workers' compensation quota share reinsurance agreement with Superior National Insurance Company for the twelve months ended December 31, 2004.
In addition, as part of the business review of Group life/health, approximately $68 million was incurred for reserve strengthening and allowances for receivables.
(7) Incurred higher policyholder benefits of $137 million for the twelve months ended December 31, 2005 related to contributions to the participating policyholder fund in Singapore related to
settlement of a long disputed tax issue.
(8) Includes loss of $437 million, loss of $140 million, gain of $78 million, loss of $91 million, loss of $219 million and gain of $151 million for the twelve months ended December 31, 2005, 2004,
2003, 2002, 2001 and 2000, respectively, relating to the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 and the application of FAS 52.
(9) 2003 includes the acquisition of AIG Edison Life in August 2003 and 2001 includes the acquisition of AIG Star Life Insurance Co., Ltd. in April 2001.
35
48
% $
4,641
971,892
American International Group, Inc.
Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Premiums, deposits and other
considerations (1)
$
18,434
Second
Quarter
2005
(Restated)
$
17,131
Third
Quarter
2005
(Restated)
$
15,422
Fourth
Quarter
2005
$
Full
Year
2005
15,461
$
66,448
$
29,400
Revenues:
GAAP premiums
Net investment income:
Interest and dividends
Partnership income:
Partnership excluding synfuels
Synfuels (2)
Total partnership income
Other (3)
Intercompany adjustments
Total net investment income
Pricing net investment gains (4)
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
7,540
7,304
7,109
7,447
3,931
4,184
4,119
4,323
16,557
166
(36)
130
264
(8)
4,317
37
(43)
(6)
(3)
(8)
4,167
157
(36)
121
437
(10)
4,667
56
(28)
28
642
(10)
4,983
416
(143)
273
1,340
(36)
18,134
81
100
88
75
344
11,938
11,571
11,864
12,505
47,878
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (5) (6)
3,395
4,199
2,000
9,594
3,485
3,682
2,026
9,193
3,494
4,040
1,978
9,512
3,589
4,736
1,848
10,173
13,963
16,657
7,852
38,472
Operating income including pricing
net investment gains and excluding
realized capital gains (losses) (5) (6)
2,344
2,378
2,352
2,332
9,406
Realized capital gains (losses) (4) (7)
Operating income (5) (6)
(163)
$
Foreign exchange impact on worldwide growth:
GAAP premiums
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
Premiums, deposits and other considerations (1)
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
2,181
(54)
$
2,324
(176)
$
2,176
(169)
$
2,163
(562)
$
8,844
6.0 %
3.4
9.4
3.9 %
3.2
7.1
(5.0) %
1.7
(3.3)
6.3 %
(0.3)
6.0
2.7 %
2.0
4.7
5.9
2.1
8.0 %
3.3
2.0
5.3 %
(11.5)
1.0
(10.5) %
(4.6)
(0.5)
(5.1) %
(1.8)
1.2
(0.6) %
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a
non-GAAP basis.
(2) Investment in certain limited liability companies that invest in synthetic fuel production facilities as a means of generating
income tax credits.
(3) Relates principally to trading and investment activity for certain variable life and annuity accounts in accordance with
SOP 03-1. These amounts are offset by a similar change in increase in future policy benefits.
(4) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses).
They represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life in some
foreign countries.
(5) Incurred higher policyholder benefits of $137 million for both the fourth quarter and full year 2005 related to contributions
to the participating policyholder fund in Singapore related to settlement of a long disputed tax issue.
(6) Includes $12 million of catastrophe related losses for both the third quarter and full year 2005.
(7) Includes loss of $35 million, $132 million, $185 million, $85 million and $437 million for the first quarter, second quarter,
third quarter, fourth quarter and full year 2005, respectively, relating to the effect of hedging activities that do not qualify
for hedge accounting treatment under FAS 133 and the application of FAS 52.
36
American International Group, Inc.
Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Premiums, deposits and other
considerations (1)
$
17,060
Second
Quarter
2004
(Restated)
$
16,263
Third
Quarter
2004
(Restated)
$
17,230
Fourth
Quarter
2004
(Restated)
$
16,291
Full
Year
2004
(Restated)
$
66,844
Revenues:
GAAP premiums (2)
Net investment income:
Interest and dividends
Partnership income:
Partnership excluding synfuels
Synfuels (3)
Total partnership income
Other (4)
Intercompany adjustment
Total net investment income
Pricing net investment gains (5)
6,891
6,821
7,351
7,025
28,088
3,562
3,664
3,761
3,837
14,824
91
(30)
61
160
(4)
3,779
27
(37)
(10)
18
(5)
3,667
69
(33)
36
(32)
(4)
3,761
126
(21)
105
125
(5)
4,062
313
(121)
192
271
(18)
15,269
78
67
31
49
225
10,748
10,555
11,143
11,136
43,582
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (6) (7)
3,279
3,610
1,847
8,736
3,325
3,301
1,850
8,476
3,253
3,956
1,866
9,075
3,665
3,614
1,911
9,190
13,522
14,481
7,474
35,477
Operating income including pricing
net investment gains and excluding
realized capital gains (losses) (6) (7)
2,012
2,079
2,068
1,946
8,105
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
Realized capital gains (losses) (5) (8)
Operating income (6) (7)
(263)
$
Foreign exchange impact on worldwide growth:
GAAP premiums
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
Premiums, deposits and other considerations (1)
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
1,749
240
$
2,319
(449)
$
1,619
290
$
2,236
(182)
$
7,923
13.8 %
5.3
19.1
16.4 %
4.9
21.3
28.5 %
3.3
31.8
6.5 %
1.5
8.0
16.0 %
3.5
19.5
37.6
6.0
43.6 %
36.6
3.4
40.0 %
25.9
1.8
27.7 %
1.0
1.0 %
23.5
2.4
25.9 %
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented
on a non-GAAP basis.
(2) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal funding
pension business, which is offset by a similar increase in benefit reserves, in both the third quarter and full year 2004.
(3) Investment in certain limited liability companies that invest in synthetic fuel production facilities as a means of generating
income tax credits.
(4) Relates principally to trading and investment activity for certain variable life and annuity accounts in accordance with
SOP 03-1. These amounts are offset by a similar change in increase in future policy benefits.
(5) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses).
They represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life products
in some foreign countries.
(6) Includes $5 million of catastrophe related losses in both the third quarter and full year 2004.
(7) Includes a $178 million charge related to a workers' compensation quota share reinsurance agreement with Superior
National Insurance Company in the fourth quarter and full year 2004. In addition, as part of the business
review of Group life/health, approximately $68 million was incurred for reserve strengthening and allowances
for receivables in 2004.
(8) Includes loss of $382 million, gain of $365 million, loss of $421 million, gain of $298 million and loss of $140 million,
for the first quarter, second quarter, third quarter, fourth quarter and full year 2004, respectively, relating to the effect
of hedging activities that do not qualify for hedge accounting treatment under FAS 133 and the application of FAS 52.
37
American International Group, Inc.
Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Premiums, deposits and other
considerations (1)
$
11,880
Second
Quarter
2003
(Restated)
$
11,617
Third
Quarter
2003
(Restated)
$
13,487
Fourth
Quarter
2003
(Restated)
$
16,129
Full
Year
2003
(Restated)
$
53,113
Revenues:
GAAP premiums
5,788
5,623
5,579
6,506
23,496
Net investment income
2,967
3,234
3,182
3,559
12,942
51
52
53
-
156
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
8,806
8,909
8,814
10,065
36,594
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses
2,623
3,089
1,611
7,323
2,802
2,797
1,602
7,201
2,820
2,655
1,690
7,165
3,076
3,300
1,806
8,182
11,321
11,841
6,709
29,871
Operating income including pricing
net investment gains and excluding
realized capital gains (losses)
1,483
1,708
1,649
1,883
6,723
82
84
Pricing net investment gains (2)
Realized capital gains (losses) (2) (3)
Operating income
292
$
1,775
(238)
$
1,470
(52)
$
1,597
$
1,965
$
6,807
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(2) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains
(losses). They represent certain amounts of realized capital gains where gains are an inherent element in pricing
certain life products in some foreign countries.
(3) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133
and the application of FAS 52.
38
American International Group, Inc.
Domestic Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
Years Ended December 31,
Premiums, deposits and other
considerations (1)
$
2005
%
Chg
23,736
(12.0) % $
2004
(Restated)
26,978
%
Chg
2003
(Restated)
(0.1) % $
27,002
%
Chg
10.7 % $
2002
(Restated)
24,401
%
Chg
2.8 % $
2001
(Restated)
23,738
%
Chg
18.2 % $
2000
(Restated)
20,084
Revenues:
GAAP premiums
6,384
3.5
6,171
9.7
5,623
8.6
5,180
(7.6)
5,605
(0.4)
5,628
Net investment income
9,959
5.6
9,435
7.9
8,742
12.8
7,751
3.7
7,477
2.3
7,312
Total revenues excluding
realized capital gains (losses)
16,343
4.7
15,606
8.6
14,365
11.1
12,931
(1.2)
13,082
1.1
12,940
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (2) (3)
3,861
5,614
2,967
12,442
(4.8)
3.5
9.0
2.0
4,057
5,423
2,722
12,202
12.5
5.5
4.3
7.5
3,606
5,139
2,609
11,354
6.4
10.8
6.4
8.4
3,388
4,638
2,451
10,477
4.2
(6.8)
7.4
(0.3)
3,251
4,978
2,283
10,512
(6.3)
14.5
(4.8)
2.9
3,471
4,349
2,397
10,217
3,901
14.6
3,404
13.1
3,011
22.7
2,454
(4.5)
2,570
(5.6)
2,723
Operating income before realized
capital gains (losses) (2) (3)
Realized capital gains (losses) (4)
(302)
NM
(329)
NM
(246)
NM
(506)
NM
(363)
NM
(233)
Operating income (2) (3)
$
3,599
17.0 % $
3,075
11.2 % $
2,765
41.9 % $
1,948
(11.7) % $
2,207
(11.4) % $
2,490
Life insurance in-force
$
825,151
6.9 % $
772,251
19.6 % $
645,606
11.8 % $
577,686
11.7 % $
517,067
8.3 % $
477,576
Note: (1) Premiums, deposits and other considerations represent aggregate business activity presented on a non-GAAP basis.
(2) Includes a $178 million charge related to a workers' compensation quota share reinsurance agreement with Superior National Insurance Company for the twelve
months ended December 31, 2004. In addition, as part of the business review of Group life/health, approximately $68 million was incurred for reserve strengthening
and allowances for receivables in 2004.
(3) Includes $12 million and $5 million of catastrophe related losses for the twelve months ended December 31, 2005 and 2004, respectively.
(4) Includes gain of $63 million, loss of $6 million, gain of $19 million, loss of $83 million and loss of $1 million for the twelve months ended December 31, 2005, 2004,
2003, 2002 and 2001, respectively, relating to the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 and the application
of FAS 52.
39
American International Group, Inc.
Domestic Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Premiums, deposits and other
considerations (1)
$
6,718
Second
Quarter
2005
(Restated)
$
5,916
Third
Quarter
2005
(Restated)
$
5,547
Fourth
Quarter
2005
$
5,555
Full
Year
2005
$
23,736
Revenues:
GAAP premiums
1,604
1,561
1,606
1,613
6,384
2,345
2,458
2,372
2,568
9,743
154
(36)
118
2,463
25
(43)
(18)
2,440
132
(36)
96
2,468
48
(28)
20
2,588
359
(143)
216
9,959
Total revenues excluding
realized capital gains (losses)
4,067
4,001
4,074
4,201
16,343
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (3)
925
1,428
726
3,079
963
1,352
748
3,063
1,006
1,408
740
3,154
967
1,426
753
3,146
3,861
5,614
2,967
12,442
988
938
920
1,055
3,901
(78)
(114)
Net investment income:
Interest and dividends
Partnership income:
Partnership excluding synfuels
Synfuels (2)
Total partnership income
Total net investment income
Operating income before realized
capital gains (losses)
Realized capital gains (losses) (4)
Operating income (3)
(7)
$
981
$
860
$
806
(103)
$
952
(302)
$
3,599
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(2) Investment in certain limited liability companies that invest in synthetic fuel production facilities as a means of
generating income tax credits.
(3) Includes $12 million of catastrophe related losses for the third quarter 2005.
(4) Includes gain of $168 million, loss of $82 million, loss of $36 million, gain of $13 million and gain of $63 million
for the first quarter, second quarter, third quarter, fourth quarter and full year 2005, respectively, relating to the
effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 and the application
of FAS 52.
(5) Includes the effect of the non-renewal of a single large group life case of $36 billion for both the third quarter and
full year 2005.
40
American International Group, Inc.
Domestic Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Premiums, deposits and other
considerations (1)
$
7,027
Second
Quarter
2004
(Restated)
$
7,291
Third
Quarter
2004
(Restated)
$
6,598
Fourth
Quarter
2004
(Restated)
$
6,062
Full
Year
2004
(Restated)
$
26,978
Revenues:
GAAP premiums
1,489
1,561
1,591
1,530
6,171
2,296
2,292
2,318
2,357
9,263
88
(30)
58
2,354
25
(37)
(12)
2,280
61
(33)
28
2,346
119
(21)
98
2,455
293
(121)
172
9,435
Total revenues excluding
realized capital gains (losses)
3,843
3,841
3,937
3,985
15,606
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (3) (4)
955
1,327
632
2,914
993
1,333
647
2,973
929
1,449
692
3,070
1,180
1,314
751
3,245
4,057
5,423
2,722
12,202
Operating income before realized
capital gains (losses) (3) (4)
929
868
867
740
3,404
Realized capital gains (losses) (5)
(15)
(69)
(77)
(168)
Net investment income:
Interest and dividends
Partnership income:
Partnership excluding synfuels
Synfuels (2)
Total partnership income
Total net investment income
Operating income (3) (4)
$
914
$
799
$
790
$
572
(329)
$
3,075
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective
periods presented on a non-GAAP basis.
(2) Investment in certain limited liability companies that invest in synthetic fuel production facilities as a
means of generating income tax credits.
(3) Includes a $178 million charge related to a workers' compensation quota share reinsurance agreement
with Superior National Insurance Company in the fourth quarter and full year 2004. In addition, as part
of the business review of Group life/health, approximately $68 million was incurred for reserve
strengthening and allowances for receivables in 2004.
(4) Includes $5 million of catastrophe related losses for the third quarter and full year 2004.
(5) Includes loss of $67 million, gain of $142 million, loss of $20 million, loss of $61 million and loss of
$6 million for the first quarter, second quarter, third quarter, fourth quarter and full year 2004, respectively,
relating to the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133
and the application of FAS 52.
41
American International Group, Inc.
Domestic Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Premiums, deposits and other
considerations (1)
$
6,471
Second
Quarter
2003
(Restated)
$
5,876
Third
Quarter
2003
(Restated)
$
7,399
Fourth
Quarter
2003
(Restated)
$
7,256
Full
Year
2003
(Restated)
$
27,002
Revenues:
GAAP premiums
1,446
1,368
1,419
1,390
5,623
Net investment income
2,047
2,176
2,171
2,348
8,742
Total revenues excluding
realized capital gains (losses)
3,493
3,544
3,590
3,738
14,365
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses
904
1,248
646
2,798
932
1,258
568
2,758
1,042
1,198
648
2,888
728
1,435
747
2,910
3,606
5,139
2,609
11,354
Operating income before realized
capital gains (losses)
695
786
702
828
3,011
Realized capital gains (losses) (2)
144
(267)
(51)
(72)
Operating income
$
839
$
519
$
651
$
756
(246)
$
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the
respective periods presented on a non-GAAP basis.
(2) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under
FAS 133 and the application of FAS 52.
42
2,765
American International Group, Inc.
Domestic Life Insurance & Retirement Services Product Statistics
(dollars in millions)
GAAP premiums:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
$
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
2005
%
Chg
2,108
801
1,012
1,473
5,394
11.7 % $
(1.4)
(10.3)
(0.7)
1.5
351
100
467
72
990
2004
(Restated)
12.1
69.5
14.7
(10.0)
15.3
1,888
812
1,128
1,484
5,312
313
59
407
80
859
Years Ended December 31,
2003
%
2002
(Restated) Chg
(Restated)
%
Chg
7.8 % $
(2.6)
7.8
16.7
8.3
25.2
11.3
23.0
(7.0)
19.3
1,751
834
1,046
1,272
4,903
250
53
331
86
720
8.7 % $
(2.3)
8.2
21.8
9.5
2.9
51.4
(0.6)
(7.5)
2.3
1,611
854
967
1,044
4,476
%
Chg
4.1 % $
(2.5)
4.5
(3.8)
0.9
2001
(Restated)
%
Chg
2000
(Restated)
1,548
876
925
1,085
4,434
(16.0) % $
(8.1)
(4.5)
78.7
1.4
1,842
953
969
607
4,371
243
35
333
93
704
(9.7)
(91.4)
(10.7)
(25.0)
(39.9)
269
405
373
124
1,171
(28.3)
22.0
(7.4)
(15.6)
(6.8)
375
332
403
147
1,257
Total GAAP premiums
6,384
3.5
6,171
9.7
5,623
8.6
5,180
(7.6)
5,605
(0.4)
5,628
Premiums, deposits and other
considerations (3):
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
3,208
956
1,012
2,172
7,348
12.9
(0.9)
(9.5)
0.0
3.5
2,842
965
1,118
2,172
7,097
5.3
(2.0)
5.5
24.0
9.3
2,700
985
1,060
1,751
6,496
14.5
14.4
8.6
27.3
16.6
2,358
861
976
1,376
5,571
(16.4)
(1.9)
4.9
9.1
(5.4)
2,819
878
930
1,261
5,888
12.1
(7.9)
(4.0)
28.9
8.7
2,515
953
969
978
5,415
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
5,532
7,337
3,319
200
16,388
(0.4)
(26.2)
(19.6)
(20.9)
(17.6)
5,555
9,947
4,126
253
19,881
3.6
(12.6)
20.9
(27.7)
(3.0)
5,360
11,384
3,412
350
20,506
6.3
28.9
13.9
(82.1)
8.9
5,042
8,834
2,995
1,959
18,830
7.9
58.9
(20.2)
(49.4)
5.5
4,672
5,559
3,751
3,868
17,850
3.5
27.0
3.7
78.9
21.7
4,513
4,376
3,618
2,162
14,669
Total premiums, deposits
and other considerations
23,736
(12.0)
26,978
(0.1)
27,002
10.7
24,401
2.8
23,738
18.2
20,084
1,411
605
142
912
3,070
9.6
(0.5)
15.4
13.9
8.9
1,287
608
123
801
2,819
9.2
(1.3)
1.7
14.6
7.8
1,179
616
121
699
2,615
23.1
4.6
12.0
13.7
15.2
958
589
108
615
2,270
(17.6)
(8.0)
2.9
14.7
(7.1)
1,162
640
105
536
2,443
2.7
(4.2)
(1.9)
5.3
1.1
1,132
668
107
509
2,416
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
2,233
3,393
217
1,046
6,889
1.5
9.5
(9.2)
(2.8)
4.1
2,201
3,100
239
1,076
6,616
7.1
20.8
0.0
(15.0)
8.0
2,055
2,567
239
1,266
6,127
8.7
28.3
37.4
(10.6)
11.8
1,890
2,001
174
1,416
5,481
2.7
23.9
16.0
(0.8)
8.9
1,841
1,615
150
1,428
5,034
(0.7)
20.2
(5.1)
(7.3)
2.8
1,854
1,344
158
1,540
4,896
Total net investment income
9,959
5.6
9,435
7.9
8,742
12.8
7,751
3.7
7,477
2.3
7,312
Operating income before realized
capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
782
284
64
162
1,292
7.7
(7.8)
NM
22.7
27.3
726
308
(151)
132
1,015
26.7
(5.8)
NM
13.8
(9.8)
573
327
109
116
1,125
43.6
13.9
7.9
16.0
26.8
399
287
101
100
887
(16.5)
(20.5)
17.4
(4.8)
(13.9)
478
361
86
105
1,030
(17.0)
2.6
24.6
2.9
(6.3)
576
352
69
102
1,099
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
1,122
1,078
185
224
2,609
2.2
16.3
(4.1)
31.0
9.2
1,098
927
193
171
2,389
21.7
30.9
NM
(18.2)
26.7
902
708
67
209
1,886
22.7
50.6
NM
(37.4)
20.4
735
470
28
334
1,567
16.7
44.6
(78.8)
(26.3)
1.8
630
325
132
453
1,540
(9.0)
21.7
(39.7)
1.6
(5.2)
692
267
219
446
1,624
Total operating income before
realized capital gains (losses) (4)(5)(6)
3,901
14.6
3,404
13.1
3,011
22.7
2,454
(4.5)
2,570
(5.6)
2,723
Net investment income:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
Realized capital gains (losses)
Domestic operating income (4)(5)(6)
Note: (1)
(2)
(3)
(4)
(5)
(6)
(302)
$
3,599
NM
17.0
(329)
%$
3,075
NM
11.2
(246)
%$
2,765
NM
41.9
(506)
%$
1,948
NM
(11.7) % $
(363)
2,207
NM
(11.4) % $
Includes structured settlements, single premium immediate annuities and terminal funding annuities.
Primarily represents runoff annuity business sold through discontinued distribution relationships.
Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a non-GAAP basis.
Includes $100 million of World Trade Center and related losses for the twelve months ended December 31, 2001.
Includes $12 million and $5 million of catastrophe related losses for the twelve months ended December 31, 2005 and 2004, respectively.
Includes $178 million charge related to a workers' compensation quota share reinsurance agreement with Superior National Insurance Company for the twelve months
ended December 31, 2004. In addition, in 2004, as part of the business review of the Group life/health, approximately $68 million was incurred for reserve strengthening
and allowances for receivables.
43
(233)
2,490
American International Group, Inc.
Domestic Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
GAAP premiums:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
$
Second
Quarter
2005
(Restated)
Third
Quarter
2005
(Restated)
Fourth
Quarter
2005
Full
Year
2005
514 $
203
251
397
1,365
520 $
202
248
346
1,316
522 $
201
256
375
1,354
552 $
195
257
355
1,359
84
20
112
23
239
86
27
114
18
245
91
25
119
17
252
90
28
122
14
254
351
100
467
72
990
Total GAAP premiums
1,604
1,561
1,606
1,613
6,384
Premiums, deposits and other
considerations (3):
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
847
237
251
572
1,907
755
247
248
503
1,753
798
232
256
550
1,836
808
240
257
547
1,852
3,208
956
1,012
2,172
7,348
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
1,408
2,463
891
49
4,811
1,369
1,951
785
58
4,163
1,384
1,498
781
48
3,711
1,371
1,425
862
45
3,703
5,532
7,337
3,319
200
16,388
Total premiums, deposits
and other considerations
6,718
5,916
5,547
5,555
23,736
386
147
32
210
775
339
157
36
239
771
329
147
36
230
742
357
154
38
233
782
1,411
605
142
912
3,070
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
549
827
58
254
1,688
547
819
53
250
1,669
569
863
54
240
1,726
568
884
52
302
1,806
2,233
3,393
217
1,046
6,889
Total net investment income
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
Net investment income:
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
2,108
801
1,012
1,473
5,394
2,463
2,440
2,468
2,588
9,959
Operating income before realized
capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
227
73
22
38
360
180
80
20
60
340
193
63
18
20
294
182
68
4
44
298
782
284
64
162
1,292
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
281
260
42
45
628
269
233
45
51
598
284
270
41
31
626
288
315
57
97
757
1,122
1,078
185
224
2,609
Total operating income before
realized capital gains (losses) (4)
988
938
920
1,055
3,901
(78)
(114)
Realized capital gains (losses)
Domestic operating income (4)
(7)
$
981 $
860 $
806 $
(103)
952 $
Note: (1) Includes structured settlements, single premium immediate annuities and terminal funding annuities.
(2) Primarily represents runoff annuity business sold through discontinued distribution relationships.
(3) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(4) Includes $12 million of catastrophe related losses for both the third quarter and full year 2005.
44
(302)
3,599
American International Group, Inc.
Domestic Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
GAAP premiums:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
$
Second
Quarter
2004
(Restated)
Third
Quarter
2004
(Restated)
Fourth
Quarter
2004
(Restated)
Full
Year
2004
(Restated)
432 $
206
268
374
1,280
478 $
204
287
380
1,349
503 $
202
303
372
1,380
475 $
200
270
358
1,303
76
13
100
20
209
78
15
99
20
212
77
15
100
19
211
82
16
108
21
227
313
59
407
80
859
Total GAAP premiums
1,489
1,561
1,591
1,530
6,171
Premiums, deposits and other
considerations (3):
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
657
246
260
576
1,739
722
244
282
544
1,792
763
240
306
518
1,827
700
235
270
534
1,739
2,842
965
1,118
2,172
7,097
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
1,319
2,758
1,143
68
5,288
1,372
2,860
1,198
69
5,499
1,450
2,348
916
57
4,771
1,414
1,981
869
59
4,323
5,555
9,947
4,126
253
19,881
Total premiums, deposits
and other considerations
7,027
7,291
6,598
6,062
26,978
341
152
31
199
723
304
148
30
201
683
320
151
32
200
703
322
157
30
201
710
1,287
608
123
801
2,819
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
542
758
55
276
1,631
525
737
67
268
1,597
550
772
58
263
1,643
584
833
59
269
1,745
2,201
3,100
239
1,076
6,616
Total net investment income
2,354
2,280
2,346
2,455
9,435
Operating income before realized
capital gains (losses):
Life insurance
Home service
Group life/health (4)
Payout annuities (1)
Subtotal life insurance
164
81
26
36
307
190
77
10
32
309
190
65
1
33
289
182
85
(188)
31
110
726
308
(151)
132
1,015
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
280
233
59
50
622
254
218
41
46
559
272
212
52
42
578
292
264
41
33
630
1,098
927
193
171
2,389
Total operating income before
realized capital gains (losses) (4) (5)
929
868
867
740
3,404
(168)
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
Net investment income:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
Realized capital gains (losses)
Domestic operating income (4) (5)
Note:
$
(15)
(69)
(77)
914 $
799 $
790 $
572 $
1,888
812
1,128
1,484
5,312
(329)
3,075
(1) Includes structured settlements, single premium immediate annuities and terminal funding annuities.
(2) Primarily represents runoff annuity business sold through discontinued distribution relationships.
(3) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(4) Includes a $178 million charge related to a workers' compensation quota share reinsurance agreement with Superior
National Insurance Company in the fourth quarter and full year 2004. In addition, as part of the business review
of Group life/health, approximately $68 million was incurred for reserve strengthening and allowances for receivables
in 2004.
(5) Includes $5 million of catastrophe related losses for both the third quarter and full year 2004.
45
American International Group, Inc.
Domestic Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
GAAP premiums:
Life insurance
Home service
Group life/health
Payout annuities (1)
Subtotal life insurance
$
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
429 $
209
232
420
1,290
412 $
209
280
297
1,198
478 $
207
253
291
1,229
432 $
209
281
264
1,186
54
7
73
22
156
59
13
80
18
170
67
15
87
21
190
70
18
91
25
204
250
53
331
86
720
Total GAAP premiums
1,446
1,368
1,419
1,390
5,623
Premiums, deposits and other
considerations (3):
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
641
235
237
552
1,665
663
250
271
320
1,504
702
247
264
414
1,627
694
253
288
465
1,700
2,700
985
1,060
1,751
6,496
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
1,239
2,703
765
99
4,806
1,261
2,215
804
92
4,372
1,505
3,267
916
84
5,772
1,355
3,199
927
75
5,556
5,360
11,384
3,412
350
20,506
Total premiums, deposits
and other considerations
6,471
5,876
7,399
7,256
27,002
253
153
28
168
602
297
151
29
152
629
293
147
30
191
661
336
165
34
188
723
1,179
616
121
699
2,615
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
491
569
54
331
1,445
507
625
54
361
1,547
524
643
64
279
1,510
533
730
67
295
1,625
2,055
2,567
239
1,266
6,127
Total net investment income
2,047
2,176
2,171
2,348
8,742
Operating income before realized
capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
133
85
28
30
276
172
82
30
25
309
109
72
19
32
232
159
88
32
29
308
573
327
109
116
1,125
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
219
142
3
55
419
226
191
10
50
477
230
159
24
57
470
227
216
30
47
520
902
708
67
209
1,886
Total operating income before
realized capital gains (losses)
695
786
702
828
3,011
144
(267)
Group retirement products
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff (2)
Subtotal retirement services
Net investment income:
Life insurance
Home service
Group life/health
Payout annuities
Subtotal life insurance
Realized capital gains (losses)
Domestic operating income
$
839 $
519 $
(51)
(72)
651 $
756 $
Note: (1) Includes structured settlements, single premium immediate annuities and terminal funding annuities.
(2) Primarily represents runoff annuity business sold through discontinued distribution relationships.
(3) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
46
1,751
834
1,046
1,272
4,903
(246)
2,765
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
2005
Life insurance
Periodic premium sales (1):
Individual/retail
Institutional markets
Total periodic sales
$
Unscheduled and single deposits
Life insurance reserves
Home service
Life/Accident & Health sales (1)
Fixed annuity sales
Group life/health
Annualized earned premium
Payout annuities
Insurance reserves
Group retirement products
Deposits (2)
Surrender rates (4)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
$
%
Chg
14.8 % $
(87.9)
8.2
481
33
514
499
36.7
365
21,755
7.3
20,269
107
104
Total insurance reserves
Net flows (3)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
Subtotal
Individual annuities - runoff
Total
552
4
556
Years Ended December 31,
2004
%
2003
(Restated)
Chg
(Restated)
(3.6)
(1.0)
111
105
36.3 % $
(55.4)
20.4
(2.1)
4.7
(0.9)
(13.2)
%
Chg
2002
(Restated)
353
74
427
20.5 % $
45.1
24.1
293
51
344
373
(8.4)
407
19,350
8.8
17,785
112
121
13.1
NM
99
-
7,278
1.5
7,173
1.7
7,055
2.3
6,898
1,100
(13.1)
1,266
2.3
1,237
11.3
1,111
12,712
13.9
11,161
17.4
9,509
17.3
8,104
6,436
(1.0)
6,502
9.9
5,918
6.2
5,574
628
1,759
(336)
2,051
(2,508)
(457)
(63.2)
(71.5)
NM
(77.3)
NM
NM % $
9.8%
8.0%
12.0%
1,706
6,169
1,145
9,020
(2,084)
6,936
8.8%
5.9%
10.4%
(38.1)
(28.9)
23.5
(27.0)
NM
(33.3) % $
2,756
8,679
927
12,362
(1,967)
10,395
4.2
31.8
NM
29.0
NM
23.6 % $
6.4%
5.5%
10.7%
Note: (1) Life insurance sales represent premiums from new sales that are expected to be collected over a one year period.
(2) Includes group retirement annuities and group mutual funds.
(3) Net flows are defined as deposits received, less benefits, surrenders, withdrawals and death benefits.
(4) Surrender rates are based upon all benefits, surrenders and withdrawals except for death benefits.
47
2,644
6,586
354
9,584
(1,176)
8,408
6.5%
6.3%
11.6%
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2005
(Restated)
Life insurance
Periodic premium sales (1):
Individual/retail
Institutional markets
Total periodic sales
$
Unscheduled and single deposits
127
2
129
Second
Quarter
2005
(Restated)
$
126
126
Third
Quarter
2005
(Restated)
$
148
2
150
Fourth
Quarter
2005
$
151
151
Full
Year
2005
$
552
4
556
222
132
59
86
499
20,700
21,012
21,483
21,755
21,755
25
22
30
35
25
20
27
27
107
104
7,186
7,209
7,248
7,278
7,278
1,111
1,095
1,103
1,100
1,100
11,577
11,895
12,321
12,712
12,712
Group retirement products
Deposits (2)
1,631
1,608
1,599
1,598
6,436
Net flows (3)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
Subtotal
Individual annuities - runoff
Total
279
1,385
72
1,736
(566)
1,170
Life insurance reserves
Home service
Life/Accident & Health sales (1)
Fixed annuity sales
Total insurance reserves
Group life/health
Annualized earned premium
Payout annuities
Insurance reserves
Surrender rates (4)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
$
299
448
(126)
621
(684)
(63)
$
9.3%
6.2%
10.8%
8.9%
8.3%
12.1%
$
(58)
13
(155)
(200)
(607)
(807)
11.0%
8.5%
12.2%
$
108
(87)
(127)
(106)
(651)
(757)
9.8%
9.0%
12.7%
$
628
1,759
(336)
2,051
(2,508)
(457)
9.8%
8.0%
12.0%
Note: (1) Life insurance sales represent premiums from new sales that are expected to be collected over a one year period.
(2) Includes group retirement annuities and group mutual funds.
(3) Net flows are defined as deposits received, less benefits, surrenders, withdrawals and death benefits.
(4) Surrender rates are based upon all benefits, surrenders and withdrawals except for death benefits.
48
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2004
(Restated)
Life insurance
Periodic premium sales (1):
Individual/retail
Institutional markets
Total periodic sales
$
Unscheduled and single deposits
115
13
128
Second
Quarter
2004
(Restated)
$
119
7
126
Third
Quarter
2004
(Restated)
$
118
5
123
Fourth
Quarter
2004
(Restated)
$
129
8
137
Full
Year
2004
(Restated)
$
481
33
514
98
122
82
63
365
19,725
19,889
19,960
20,269
20,269
26
28
32
28
25
27
28
22
111
105
7,100
7,129
7,146
7,173
7,173
Group life/health
Annualized earned premium
1,292
1,246
1,260
1,266
1,266
Payout annuities
Insurance reserves
9,968
10,378
10,765
11,161
11,161
Group retirement products
Deposits (2)
1,607
1,548
1,775
1,572
6,502
Net flows (3)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
Subtotal
Individual annuities - runoff
Total
(92)
1,939
429
2,276
(517)
1,759
598
1,922
496
3,016
(497)
2,519
738
1,359
157
2,254
(542)
1,712
462
949
63
1,474
(528)
946
1,706
6,169
1,145
9,020
(2,084)
6,936
Life insurance reserves
Home service
Life/Accident & Health sales (1)
Fixed annuity sales
Total insurance reserves
Surrender rates (4)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
$
$
12.9%
5.5%
10.1%
7.0%
5.8%
10.0%
$
7.6%
5.9%
10.5%
$
7.7%
6.4%
10.9%
$
8.8%
5.9%
10.4%
Note: (1) Life insurance sales represent premiums from new sales that are expected to be collected over a one year period.
(2) Includes group retirement annuities and group mutual funds.
(3) Net flows are defined as deposits received, less benefits, surrenders, withdrawals and death benefits.
(4) Surrender rates are based upon all benefits, surrenders and withdrawals except for death benefits.
49
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2003
(Restated)
Life insurance
Periodic premium sales (1):
Individual/retail
Institutional markets
Total periodic sales
$
Unscheduled and single deposits
79
30
109
Second
Quarter
2003
(Restated)
$
92
7
99
Third
Quarter
2003
(Restated)
$
86
21
107
Fourth
Quarter
2003
(Restated)
$
96
16
112
Full
Year
2003
(Restated)
$
353
74
427
81
89
123
80
373
18,072
18,571
18,918
19,350
19,350
26
25
29
34
29
31
28
31
112
121
6,933
6,974
7,012
7,055
7,055
Group life/health
Annualized earned premium
1,162
1,188
1,235
1,237
1,237
Payout annuities
Insurance reserves
8,612
8,990
9,232
9,509
9,509
Group retirement products
Deposits (2)
1,359
1,370
1,628
1,561
5,918
Net flows (3)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
Subtotal
Individual annuities - runoff
Total
647
2,112
146
2,905
(505)
2,400
640
1,580
222
2,442
(497)
1,945
813
2,580
303
3,696
(474)
3,222
656
2,407
256
3,319
(491)
2,828
2,756
8,679
927
12,362
(1,967)
10,395
Life insurance reserves
Home service
Life/Accident & Health sales (1)
Fixed annuity sales
Total insurance reserves
Surrender rates (4)
Group retirement products (2)
Individual fixed annuities
Individual variable annuities
$
$
6.2%
5.3%
11.4%
6.1%
5.0%
9.9%
$
6.5%
5.1%
10.0%
$
6.9%
5.9%
10.3%
$
6.4%
5.5%
10.7%
Note: (1) Life insurance sales represent premiums from new sales that are expected to be collected over a one year period.
(2) Includes group retirement annuities and group mutual funds.
(3) Net flows are defined as deposits received, less benefits, surrenders, withdrawals and death benefits.
(4) Surrender rates are based upon all benefits, surrenders and withdrawals except for death benefits.
50
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2005
(Restated)
Spread information
Group Retirement Products
Base investment income
Partnerships
Other enhancements
Total net investment income
$
$
505 $
25
19
549 $
Second
Quarter
2005
(Restated)
512 $
35
547 $
Third
Quarter
2005
(Restated)
513 $
49
7
569 $
Fourth
Quarter
2005
507 $
15
46
568 $
Full
Year
2005
2,037
89
107
2,233
Base Yield
Partnerships (1)
Other enhancements (2)
Total
6.25%
0.16%
0.23%
6.64%
6.29%
-0.20%
0.43%
6.52%
6.20%
0.37%
0.10%
6.67%
6.22%
-0.06%
0.54%
6.70%
6.24%
0.07%
0.32%
6.63%
Cost of funds
3.69%
3.73%
3.80%
3.77%
3.75%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
2.95%
2.80%
2.87%
2.93%
2.89%
2.56%
2.57%
2.40%
2.45%
2.50%
Individual Fixed Annuities
Base investment income
Partnerships
Other enhancements
Total net investment income
$
$
766 $
49
12
827 $
789 $
(1)
31
819 $
796 $
66
1
863 $
811 $
21
52
884 $
3,162
135
96
3,393
Base Yield
Partnerships (1)
Other enhancements (2)
Total
5.89%
0.23%
0.09%
6.21%
5.89%
-0.14%
0.23%
5.98%
5.85%
0.33%
0.01%
6.19%
5.89%
-0.02%
0.38%
6.25%
5.88%
0.10%
0.18%
6.16%
Cost of funds
3.55%
3.56%
3.56%
3.55%
3.55%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
2.66%
2.41%
2.63%
2.70%
2.60%
2.34%
2.33%
2.29%
2.34%
2.32%
Individual Variable Annuities
Base investment income
Other enhancements
Total net investment income
$
$
52 $
6
58 $
52 $
1
53 $
53 $
1
54 $
50 $
2
52 $
207
10
217
Base Yield
Other enhancements (2)
Total
5.36%
0.58%
5.94%
5.48%
0.09%
5.57%
5.51%
0.15%
5.66%
5.47%
0.19%
5.66%
5.46%
0.25%
5.71%
Cost of funds
3.08%
3.09%
3.11%
3.11%
3.10%
Net spread rate, as reported
Net spread rate excluding other
enhancements
2.86%
2.48%
2.55%
2.55%
2.61%
2.28%
2.39%
2.40%
2.36%
2.36%
56,079 $
52,474
26,433
20,270
155,256 $
57,144 $
53,455
26,843
19,822
157,264 $
58,414 $
54,028
27,686
19,488
159,616 $
59,312 $
54,470
28,267
19,072
161,121 $
General and separate account reserves
Group retirement products (3)
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff
Total
$
$
59,312
54,470
28,267
19,072
161,121
Note: (1) Includes incremental impact to base yield of investments in hedge funds and private equity funds.
(2) Includes incremental impact to base yield of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
(3) Includes group retirement annuities and group mutual funds.
51
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2004
(Restated)
Spread information
Group Retirement Products
Base investment income
Partnerships
Other enhancements
Total net investment income
$
492 $
29
21
542 $
495 $
2
28
525 $
Third
Quarter
2004
(Restated)
503 $
21
26
550 $
Fourth
Quarter
2004
(Restated)
505 $
43
36
584 $
Full
Year
2004
(Restated)
1,995
95
111
2,201
Base Yield
Partnerships (1)
Other enhancements (2)
Total
6.41%
0.23%
0.27%
6.91%
6.37%
-0.11%
0.35%
6.61%
6.32%
0.13%
0.34%
6.79%
6.23%
0.39%
0.44%
7.06%
6.33%
0.16%
0.35%
6.84%
Cost of funds
3.84%
3.82%
3.85%
3.82%
3.83%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
3.07%
2.79%
2.94%
3.24%
3.01%
2.57%
2.55%
2.47%
2.41%
2.50%
Individual Fixed Annuities
Base investment income
Partnerships
Other enhancements
Total net investment income
$
$
682 $
43
33
758 $
701 $
13
23
737 $
727 $
27
18
772 $
743 $
64
26
833 $
2,853
147
100
3,100
Base Yield
Partnerships (1)
Other enhancements (2)
Total
6.14%
0.23%
0.30%
6.67%
6.06%
-0.04%
0.20%
6.22%
5.98%
0.07%
0.15%
6.20%
5.90%
0.36%
0.20%
6.46%
6.01%
0.16%
0.21%
6.38%
Cost of funds
3.80%
3.75%
3.73%
3.67%
3.73%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
2.87%
2.47%
2.47%
2.79%
2.65%
2.34%
2.31%
2.25%
2.23%
2.28%
Individual Variable Annuities
Base investment income
Other enhancements
Total net investment income
$
$
53 $
2
55 $
60 $
7
67 $
58 $
58 $
55 $
4
59 $
226
13
239
Base Yield
Other enhancements (2)
Total
5.16%
0.20%
5.36%
5.71%
0.68%
6.39%
5.59%
-0.02%
5.57%
5.48%
0.38%
5.86%
5.49%
0.30%
5.79%
Cost of funds
3.15%
3.18%
3.20%
3.18%
3.18%
Net spread rate, as reported
Net spread rate excluding other
enhancements
2.21%
3.21%
2.37%
2.69%
2.62%
2.01%
2.53%
2.39%
2.31%
2.32%
51,642 $
44,746
24,562
21,640
142,590 $
52,657 $
47,113
25,107
21,335
146,212 $
53,134 $
49,056
24,981
20,904
148,075 $
56,118 $
50,547
26,846
20,812
154,323 $
General and separate account reserves
Group retirement products (3)
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff
Total
Note:
$
Second
Quarter
2004
(Restated)
$
$
56,118
50,547
26,846
20,812
154,323
(1) Includes incremental impact to base yield of investments in hedge funds and private equity funds.
(2) Includes incremental impact to base yield of gains on calls, dollar roll income, prepayment fees and trading gains
(losses).
(3) Includes group retirement annuities and group mutual funds.
52
American International Group, Inc.
Domestic Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2003
(Restated)
Spread information
Group Retirement Products
Base investment income
Partnerships
Other enhancements
Total net investment income
$
$
462 $
29
491 $
Second
Quarter
2003
(Restated)
465 $
22
20
507 $
Third
Quarter
2003
(Restated)
477 $
24
23
524 $
Fourth
Quarter
2003
(Restated)
481 $
13
39
533 $
Full
Year
2003
(Restated)
1,885
59
111
2,055
Base Yield
Partnerships (1)
Other enhancements (2)
Total
6.58%
0.42%
7.00%
6.46%
0.17%
0.29%
6.92%
6.46%
0.18%
0.30%
6.94%
6.37%
0.03%
0.51%
6.91%
6.46%
0.09%
0.38%
6.93%
Cost of funds
4.16%
4.19%
4.21%
4.17%
4.18%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
2.83%
2.72%
2.74%
2.73%
2.75%
2.42%
2.27%
2.25%
2.20%
2.28%
Individual Fixed Annuities
Base investment income
Partnerships
Other enhancements
Total net investment income
$
$
559 $
10
569 $
577 $
37
11
625 $
610 $
14
19
643 $
654 $
32
44
730 $
2,400
83
84
2,567
Base Yield
Partnerships (1)
Other enhancements (2)
Total
6.58%
0.11%
6.69%
6.43%
0.24%
0.13%
6.80%
6.38%
-0.01%
0.19%
6.56%
6.26%
0.14%
0.42%
6.82%
6.40%
0.09%
0.22%
6.71%
Cost of funds
4.52%
4.32%
4.10%
3.97%
4.21%
Net spread rate, as reported
Net spread rate excluding partnerships
and other enhancements
2.18%
2.48%
2.47%
2.86%
2.51%
2.06%
2.11%
2.28%
2.29%
2.19%
Individual Variable Annuities
Base investment income
Other enhancements
Total net investment income
$
$
54 $
54 $
54 $
54 $
62 $
2
64 $
61 $
6
67 $
231
8
239
Base Yield
Other enhancements (2)
Total
5.32%
5.32%
5.28%
5.28%
5.77%
0.19%
5.96%
5.69%
0.54%
6.23%
5.52%
0.19%
5.71%
Cost of funds
3.36%
3.28%
3.24%
3.21%
3.27%
Net spread rate, as reported
Net spread rate excluding other
enhancements
1.96%
2.00%
2.72%
3.02%
2.43%
1.96%
2.00%
2.53%
2.48%
2.25%
43,040 $
34,657
18,896
21,938
118,531 $
46,253 $
36,709
20,974
22,072
126,008 $
47,935 $
39,723
21,700
21,876
131,234 $
50,965 $
42,345
23,642
21,858
138,810 $
General and separate account reserves
Group retirement products (3)
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff
Total
$
$
50,965
42,345
23,642
21,858
138,810
Note: (1) Includes incremental impact to base yield of investments in hedge funds and private equity funds.
(2) Includes incremental impact to base yield of gains on calls, dollar roll income, prepayment fees and trading gains
(losses).
(3) Includes group retirement annuities and group mutual funds.
53
American International Group, Inc.
Foreign Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
2005
%
Chg
Premiums, deposits and other
considerations (1)
$
2004
(Restated)
Years Ended December 31,
2003
%
2002
(Restated)
Chg
(Restated)
%
Chg
%
Chg
2001
(Restated)
%
Chg
2000
(Restated)
42,712
7.1 % $
39,866
52.7 % $
26,111
40.8 % $
18,549
11.0 % $
16,712
19.2 % $
14,017
23,016
5.0
21,917
22.6
17,873
15.2
15,514
10.9
13,995
15.9
12,074
8,175
40.1
5,834
38.9
4,200
20.3
3,492
17.4
2,974
9.7
2,710
344
52.9
225
44.2
156
77.3
88
NM
35
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
31,535
12.7
27,976
25.9
22,229
16.4
19,094
12.3
17,004
14.6
14,832
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses (4)
10,102
11,043
4,885
26,030
6.7
21.9
2.8
11.8
9,465
9,058
4,752
23,275
22.7
35.2
15.9
25.7
7,715
6,702
4,100
18,517
10.3
24.8
15.8
16.4
6,995
5,372
3,540
15,907
(2.4)
41.9
(0.4)
9.7
7,164
3,787
3,555
14,506
53.3
(27.2)
17.6
12.5
4,672
5,204
3,023
12,899
Operating income including pricing
net investment gains and excluding
realized capital gains (losses) (4)
5,505
17.1
4,701
26.6
3,712
16.5
3,187
27.6
2,498
29.2
1,933
NM
147
330
NM
46
NM
NM
218
Revenues:
GAAP premiums (2)
Net investment income
Pricing net investment gains (3)
Realized capital gains (losses) (3) (5)
(260)
Operating income (4)
$
5,245
Life insurance in-force
$ 1,027,682
8.2 % $
4,848
(5.4) % $ 1,085,843
(55.5)
19.9 % $
4,042
15.8 % $ 937,425
25.0 % $
3,233
30.0 % $ 720,906
33.3 % $
(72)
2,426
1.3 % $ 711,434
(27.1)
12.8 % $
48
2,151
43.9 % $ 494,316
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a non-GAAP basis.
(2) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal funding pension business, which is offset by a similar increase in
benefit reserves, in the twelve months ended December 31, 2004.
(3) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses). They represent certain amounts of realized capital
gains where gains are an inherent element in pricing certain life products in some foreign countries.
(4) Incurred higher policyholder benefits of $137 million for the twelve months ended December 31, 2005 related to contributions to the participating policyholder fund in
Singapore related to settlement of a long disputed tax issue.
(5) Includes loss of $500 million, loss of $134 million, gain of $59 million, loss of $8 million, loss of $218 million and gain of $151 million for the twelve months ended
December 31, 2005, 2004, 2003, 2002, 2001 and 2000, respectively, relating to the effect of hedging activities that do not qualify for hedge accounting treatment under
FAS 133 and the application of FAS 52.
54
American International Group, Inc.
Foreign Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Premiums, deposits and other
considerations (1)
$
11,716
Second
Quarter
2005
(Restated)
$
11,215
Third
Quarter
2005
(Restated)
$
9,875
Fourth
Quarter
2005
$
9,906
Full
Year
2005
$
42,712
Revenues:
GAAP premiums
5,936
5,743
5,503
5,834
Net investment income:
Interest and dividends
Partnership income
Other (2)
Intercompany adjustments
Total net investment income
1,586
12
264
(8)
1,854
1,726
12
(3)
(8)
1,727
1,747
25
437
(10)
2,199
1,755
8
642
(10)
2,395
Pricing net investment gains (3)
23,016
6,814
57
1,340
(36)
8,175
81
100
88
75
344
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
7,871
7,570
7,790
8,304
31,535
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
2,470
2,771
1,274
2,522
2,330
1,278
2,488
2,632
1,238
2,622
3,310
1,095
10,102
11,043
4,885
Total benefits and expenses (4)
6,515
6,130
6,358
7,027
26,030
1,356
1,440
1,432
1,277
5,505
Operating income including pricing
net investment gains and excluding
realized capital gains (losses) (4)
Realized capital gains (losses) (3) (5)
Operating income (4)
(156)
$
1,200
24
$
1,464
(62)
$
1,370
(66)
$
1,211
(260)
$
5,245
Foreign exchange impact on foreign growth:
GAAP premiums
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
5.6 %
4.3
9.9
5.1 %
4.1
9.2
(6.7) %
2.2
(4.5)
6.6 %
(0.4)
6.2
2.5 %
2.5
5.0
21.4
3.6
25.0 %
(8.8)
1.7
(7.1) %
(2.4)
(0.8)
(3.2) %
5.1
2.0
7.1 %
Premiums, deposits and other considerations (1)
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
13.1
3.7
16.8 %
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(2) Relates principally to trading and investment activity for certain variable life and annuity accounts in accordance with
SOP 03-1. These amounts are offset by a similar change in increase in future policy benefits.
(3) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains
(losses). They represent certain amounts of realized capital gains where gains are an inherent element in pricing
certain life products in some foreign countries.
(4) Incurred higher policyholder benefits of $137 million for both the fourth quarter and full year 2005 related to
contributions to participating policyholder fund in Singapore related to settlement of a long disputed tax issue.
(5) Includes loss of $203 million, $50 million, $149 million, $98 million and $500 million for the first quarter,
second quarter, third quarter, fourth quarter and full year 2005, respectively, relating to the effect of hedging activities
that do not qualify for hedge accounting treatment under FAS 133 and the application of FAS 52.
55
American International Group, Inc.
Foreign Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Premiums, deposits and other
considerations (1)
$
10,033
Second
Quarter
2004
(Restated)
$
8,972
Third
Quarter
2004
(Restated)
$
10,632
Fourth
Quarter
2004
(Restated)
$
10,229
Full
Year
2004
(Restated)
$
39,866
Revenues:
GAAP premiums (2)
5,402
5,260
5,760
5,495
Net investment income:
Interest and dividends
Partnership income
Other (3)
Intercompany adjustments
Total net investment income
1,266
3
160
(4)
1,425
1,372
2
18
(5)
1,387
1,443
8
(32)
(4)
1,415
1,480
7
125
(5)
1,607
Pricing net investment gains (4)
21,917
5,561
20
271
(18)
5,834
78
67
31
49
225
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
6,905
6,714
7,206
7,151
27,976
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses
2,324
2,283
1,215
5,822
2,332
1,968
1,203
5,503
2,324
2,507
1,174
6,005
2,485
2,300
1,160
5,945
9,465
9,058
4,752
23,275
Operating income including pricing
net investment gains and excluding
realized capital gains (losses)
1,083
1,211
1,201
1,206
4,701
458
147
Realized capital gains (losses) (4) (5)
Operating income
(248)
$
835
309
$
1,520
(372)
$
829
$
1,664
$
4,848
Foreign exchange impact on foreign growth:
GAAP premiums (2)
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
17.4 %
7.0
24.4
17.1 %
6.5
23.6
34.1 %
4.3
38.4
5.5 %
1.9
7.4
17.8 %
4.8
22.6
49.3
7.0
56.3 %
70.6
4.0
74.6 %
13.5
1.8
15.3 %
47.9
4.8
52.7 %
Premiums, deposits and other considerations (1)
Growth in original currency
Foreign exchange impact
Growth as reported in U.S. $
72.4
13.1
85.5 %
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(2) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal
funding pension business, which is offset by a similar increase in benefit reserves, for the third quarter
and full year 2004.
(3) Relates principally to trading and investment activity for certain variable life and annuity accounts in accordance
with SOP 03-1. These amounts are offset by a similar change in increase in future policy benefits.
(4) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains
(losses). They represent certain amounts of realized capital gains where gains are an inherent element in
pricing certain life products in some foreign countries.
(5) Includes loss of $315 million, gain of $223 million, loss of $401 million, gain of $359 million and loss of
$134 million for the first quarter, second quarter, third quarter, fourth quarter and full year 2004, respectively,
relating to the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133
and the application of FAS 52.
56
American International Group, Inc.
Foreign Life Insurance & Retirement Services Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Premiums, deposits and other
considerations (1)
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
$
5,409
$
5,741
$
6,088
$
8,873
$
26,111
$
4,342
$
4,255
$
4,160
$
5,116
$
17,873
Revenues:
GAAP premiums
Net investment income
920
1,058
1,011
1,211
4,200
51
52
53
-
156
Total revenues including
pricing net investment
gains and excluding realized
capital gains (losses)
5,313
5,365
5,224
6,327
22,229
Benefits and expenses:
Death and other benefits
Increase in future policy benefits
Acquisition and insurance expenses
Total benefits and expenses
1,719
1,841
965
4,525
1,870
1,539
1,034
4,443
1,778
1,457
1,042
4,277
2,348
1,865
1,059
5,272
7,715
6,702
4,100
18,517
Operating income including pricing
net investment gains and excluding
realized capital gains (losses)
788
922
947
1,055
3,712
Realized capital gains (losses) (2) (3)
148
29
154
330
Pricing net investment gains (2)
Operating income
$
936
$
951
(1)
$
946
$
1,209
$
4,042
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods
presented on a non-GAAP basis.
(2) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains
(losses). They represent certain amounts of realized capital gains where gains are an inherent element in pricing
certain life products in some foreign countries.
(3) Includes the effect of hedging activities that do not qualify for hedge accounting treatment under FAS 133 and
the application of FAS 52.
57
American International Group, Inc.
Foreign Life Insurance & Retirement Services Product Statistics
(dollars in millions)
2005
GAAP premiums:
Life insurance
Personal accident & health
Group products (1)
Subtotal life insurance
$
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
15,631
5,002
1,925
22,558
361
97
458
%
Chg
4.6 % $
16.3
(13.1)
5.1
(8.6)
42.6
(1.1)
2004
(Restated)
14,938
4,301
2,215
21,454
Years Ended December 31,
2003
%
2002
(Restated)
Chg
(Restated)
%
Chg
13.1 % $
37.6
74.8
21.9
13,204
3,126
1,267
17,597
12.8 % $
25.5
15.8
15.1
11,708
2,491
1,094
15,293
395
68
463
54.9
NM
67.8
255
21
276
18.1
NM
24.9
216
5
221
%
Chg
12.3 % $
13.4
4.2
11.9
(33.1)
NM
(32.0)
2001
(Restated)
10,424
2,196
1,050
13,670
%
Chg
13.9 % $
14.1
23.5
14.6
2000
(Restated)
9,151
1,924
850
11,925
323
2
325
NM
NM
NM
148
1
149
Total GAAP premiums
23,016
5.0
21,917
22.6
17,873
15.2
15,514
10.9
13,995
15.9
12,074
Premiums, deposits and other
considerations (2):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
21,331
5,050
3,120
29,501
14.6
16.7
(6.0)
12.4
18,609
4,328
3,319
26,256
21.2
39.0
62.1
28.0
15,354
3,114
2,047
20,515
15.0
24.7
29.6
17.7
13,350
2,497
1,579
17,426
10.5
14.9
(4.9)
9.5
12,082
2,173
1,660
15,915
18.8
13.0
31.1
19.1
10,173
1,923
1,266
13,362
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
10,833
2,378
13,211
(9.6)
46.0
(2.9)
11,981
1,629
13,610
NM
33.5
NM
4,376
1,220
5,596
NM
NM
NM
867
256
1,123
37.2
55.2
40.9
632
165
797
3.8
NM
21.7
609
46
655
Total premiums, deposits
and other considerations
42,712
7.1
39,866
52.7
26,111
40.8
18,549
11.0
16,712
19.2
14,017
4,844
255
613
5,712
19.2
42.5
42.2
22.2
4,065
179
431
4,675
21.1
11.2
32.2
21.6
3,356
161
326
3,843
16.8
15.0
30.9
17.8
2,874
140
249
3,263
16.2
9.4
9.7
15.4
2,473
128
227
2,828
8.7
(0.8)
1.8
7.6
2,276
129
223
2,628
1,728
771
2,499
67.1
NM
NM
1,034
143
1,177
NM
NM
NM
368
4
372
53.3
NM
54.4
240
1
241
53.8
NM
54.5
156
156
71.4
NM
71.4
91
91
(10)
NM
Net investment income:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
(36)
NM
(18)
NM
(15)
NM
(12)
NM
8,175
40.1
5,834
38.9
4,200
20.3
3,492
17.4
2,974
Pricing net investment gains (3)
344
52.9
225
44.2
156
77.3
88
NM
35
3,129
1,322
331
4,782
10.5
14.1
31.9
12.7
2,832
1,159
251
4,242
17.8
35.4
32.1
23.0
2,404
856
190
3,450
12.2
24.2
9.2
14.8
2,142
689
174
3,005
29.0
20.7
35.9
27.3
1,661
571
128
2,360
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
369
46
415
54.4
NM
64.7
239
13
252
99.2
NM
NM
120
1
121
27.7
(91.7)
14.2
94
12
106
(21.0)
NM
(6.2)
119
(6)
113
NM
NM
NM
1
(1)
-
Intercompany adjustments
(36)
NM
(18)
NM
(15)
NM
(12)
NM
(10)
NM
(9)
Operating income excluding pricing net
investment gains and realized
capital gains (losses):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Total operating income including
pricing net investments gains
and excluding realized capital
gains (losses)
5,505
Realized capital gains (losses) (3)
Foreign operating income
(260)
$
5,245
17.1
4,701
NM
147
8.2 % $
4,848
26.6
(55.5)
19.9 % $
3,712
16.5
3,187
27.6
330
NM
46
NM
4,042
25.0 % $
3,233
33.3 % $
2,498
(72)
2,426
9.7
(9)
Total net investment income
(27.1)
30.1
8.8
39.1
24.6
29.2
NM
12.8 % $
Note: (1) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal funding pension business, which is offset by a similar increase in benefit
reserves, in the twelve months ended December 31, 2004.
(2) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a non-GAAP basis.
(3) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses). They represent certain amounts of realized capital gains where
gains are an inherent element in pricing certain life products in some foreign countries.
58
2,710
48
1,277
525
92
1,894
1,933
218
2,151
American International Group, Inc.
Foreign Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
GAAP premiums:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
$
Second
Quarter
2005
(Restated)
Third
Quarter
2005
(Restated)
Fourth
Quarter
2005
Full
Year
2005
4,089 $
1,221
517
5,827
3,904 $
1,267
461
5,632
3,671 $
1,258
469
5,398
3,967 $
1,256
478
5,701
84
25
109
92
19
111
80
25
105
105
28
133
361
97
458
Total GAAP premiums
5,936
5,743
5,503
5,834
23,016
Premiums, deposits and other
considerations (1):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
5,698
1,224
923
7,845
5,417
1,282
714
7,413
4,844
1,274
763
6,881
5,372
1,270
720
7,362
21,331
5,050
3,120
29,501
3,422
449
3,871
3,259
543
3,802
2,406
588
2,994
1,746
798
2,544
10,833
2,378
13,211
11,716
11,215
9,875
9,906
42,712
1,164
54
131
1,349
1,149
56
136
1,341
1,270
66
158
1,494
1,261
79
188
1,528
4,844
255
613
5,712
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Total premiums, deposits
and other considerations
Net investment income:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
377
136
513
(8)
377
17
394
(8)
486
229
715
(10)
488
389
877
(10)
15,631
5,002
1,925
22,558
1,728
771
2,499
(36)
Total net investment income
1,854
1,727
2,199
2,395
8,175
Pricing net investment gains (2)
81
100
88
75
344
799
334
66
1,199
841
329
89
1,259
836
327
81
1,244
653
332
95
1,080
3,129
1,322
331
4,782
Operating income excluding pricing net
investment gains and realized
capital gains (losses):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
77
7
84
(8)
Total operating income including
pricing net investments gains
and excluding realized capital
gains (losses)
1,356
Realized capital gains (losses) (2)
Foreign operating income
(156)
$
1,200 $
81
8
89
(8)
1,440
99
11
110
(10)
1,432
112
20
132
(10)
1,277
24
(62)
(66)
1,464 $
1,370 $
1,211 $
369
46
415
(36)
5,505
(260)
5,245
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on
a non-GAAP basis.
(2) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses). They
represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life products in some
foreign countries.
59
American International Group, Inc.
Foreign Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
GAAP premiums:
Life insurance
Personal accident & health
Group products (1)
Subtotal life insurance
$
Second
Quarter
2004
(Restated)
Third
Quarter
2004
(Restated)
Fourth
Quarter
2004
(Restated)
Full
Year
2004
(Restated)
3,861 $
1,029
415
5,305
3,709 $
1,058
385
5,152
3,526 $
1,084
1,028
5,638
3,842 $
1,130
387
5,359
85
12
97
91
17
108
106
16
122
113
23
136
395
68
463
Total GAAP premiums
5,402
5,260
5,760
5,495
21,917
Premiums, deposits and other
considerations (2):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
4,730
1,029
751
6,510
4,567
1,092
660
6,319
4,313
1,083
1,292
6,688
4,999
1,124
616
6,739
18,609
4,328
3,319
26,256
3,149
374
3,523
2,215
438
2,653
3,528
416
3,944
3,089
401
3,490
11,981
1,629
13,610
10,033
8,972
10,632
10,229
39,866
1,005
42
105
1,152
1,012
45
96
1,153
1,024
46
107
1,177
1,024
46
123
1,193
4,065
179
431
4,675
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Total premiums, deposits
and other considerations
Net investment income:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
199
78
277
(4)
227
12
239
(5)
254
(12)
242
(4)
354
65
419
(5)
14,938
4,301
2,215
21,454
1,034
143
1,177
(18)
Total net investment income
1,425
1,387
1,415
1,607
5,834
Pricing net investment gains (3)
78
67
31
49
225
647
263
64
974
730
293
70
1,093
736
301
62
1,099
719
302
55
1,076
2,832
1,159
251
4,242
Operating income excluding pricing net
investment gains and realized
capital gains (losses):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
33
2
35
(4)
Total operating income including
pricing net investments gains
and excluding realized capital
gains (losses)
1,083
Realized capital gains (losses) (3)
Foreign operating income
1,211
(248)
$
55
1
56
(5)
835 $
309
1,520 $
72
3
75
(4)
1,201
(372)
829 $
79
7
86
(5)
1,206
458
1,664 $
239
13
252
(18)
4,701
147
4,848
Note: (1) Includes approximately $640 million of a single premium from a reinsurance transaction involving terminal funding pension
business, which is offset by a similar increase in benefit reserves, in the third quarter and full year 2004.
(2) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented on a
non-GAAP basis.
(3) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses). They
represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life products in some
foreign countries.
60
American International Group, Inc.
Foreign Life Insurance & Retirement Services Product Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
GAAP premiums:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
$
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
3,237 $
691
350
4,278
3,149 $
748
283
4,180
3,052 $
747
312
4,111
3,766 $
940
322
5,028
61
3
64
70
5
75
43
6
49
81
7
88
255
21
276
Total GAAP premiums
4,342
4,255
4,160
5,116
17,873
Premiums, deposits and other
considerations (1):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
3,667
693
570
4,930
3,628
749
513
4,890
3,639
745
464
4,848
4,420
927
500
5,847
15,354
3,114
2,047
20,515
248
231
479
502
349
851
916
324
1,240
2,710
316
3,026
4,376
1,220
5,596
5,409
5,741
6,088
8,873
26,111
754
36
76
866
859
39
85
983
822
42
75
939
921
44
90
1,055
3,356
161
326
3,843
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Total premiums, deposits
and other considerations
Net investment income:
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
57
57
(3)
77
1
78
(3)
76
76
(4)
158
3
161
(5)
13,204
3,126
1,267
17,597
368
4
372
(15)
Total net investment income
920
1,058
1,011
1,211
4,200
Pricing net investment gains (2)
51
52
53
-
156
494
196
42
732
587
198
45
830
612
210
51
873
711
252
52
1,015
2,404
856
190
3,450
Operating income excluding pricing net
investment gains and realized
capital gains (losses):
Life insurance
Personal accident & health
Group products
Subtotal life insurance
Individual fixed annuities
Individual variable annuities
Subtotal retirement services
Intercompany adjustments
11
(3)
8
(3)
Total operating income including
pricing net investments gains
and excluding realized capital
gains (losses)
788
Realized capital gains (losses) (2)
Foreign operating income
148
$
936 $
40
3
43
(3)
922
29
951 $
25
25
(4)
947
(1)
946 $
44
1
45
(5)
1,055
154
1,209 $
120
1
121
(15)
3,712
330
4,042
Note: (1) Premiums, deposits and other considerations represent aggregate business activity during the respective periods presented
on a non-GAAP basis.
(2) For purposes of this presentation, pricing net investment gains are segregated out of total realized capital gains (losses).
They represent certain amounts of realized capital gains where gains are an inherent element in pricing certain life products
in some foreign countries.
61
American International Group, Inc.
Foreign Life Insurance & Retirement Services Other Data
(dollars in millions)
2005
%
Chg
Years ended December 31,
2004
%
2003
(Restated) Chg
(Restated)
%
Chg
2002
(Restated)
First year premiums (1)
Life insurance
Japan
China
Asia excluding Japan and China (2)
All other regions
Total
$
986
123
1,966
202
3,277
38.1 % $
7.0
16.6
4.1
21.0
714
115
1,686
194
2,709
18.4 % $
36.9
(5.1)
2.6
2.1
Personal accident & health
Japan
China
Asia excluding Japan and China
All other regions
Total
759
32
302
109
1,202
7.1
6.7
22.8
5.8
10.5
709
30
246
103
1,088
51.8
(3.2)
21.2
17.0
37.9
467
31
203
88
789
55.1
40.9
18.0
35.4
40.9
301
22
172
65
560
Group products
Japan
Asia excluding Japan and China
All other regions
Total
13
126
661
800
20
79
607
706
(35.5)
64.6
17.6
18.7
31
48
516
595
34.8
11.6
62.8
55.4
23
43
317
383
Total first year premiums
Japan
China
Asia excluding Japan and China
All other regions
Total
1,758
155
2,394
972
5,279
21.8
6.9
19.0
7.5
17.2
1,443
145
2,011
904
4,503
31.1
26.1
(0.8)
14.0
11.5
1,101
115
2,028
793
4,037
34.6
43.8
14.4
46.6
25.7
818
80
1,772
541
3,211
11,329
68
416
1,398
13,211
(6.2)
257.9
(41.4)
73.7
(2.9)
12,076
19
710
805
13,610
147.7
NM
246.3
56.0
143.2
4,875
205
516
5,596
NM
NM
76.7
NM % $
831
292
1,123
92,393
5,804
7,855
6.1
13.3
3.5
87,085
5,123
7,587
17.4
25.1
25.4
74,166
4,094
6,051
40,260
5,979
28.0
48.6
31,442
4,024
69.9
129.5
18,504
1,753
(35.0)
59.5
8.9
13.3
603
84
1,777
189
2,653
22.1 % $
44.8
14.1
18.9
17.0
494
58
1,557
159
2,268
Total annuity production
Japan
China
Asia excluding Japan and China
All other regions
Total
Life insurance reserves
Life insurance
Personal accident & health
Group products
Retirement services reserves
Individual fixed annuities
Individual variable annuities
Policy and contract claims reserves
Personal accident & health
Group medical
$
413
94
(5.7)
13.3 % $
438
83
30.0
5.1 % $
337
79
Note: (1) Represents premium recorded within the first policy year from new sales and generally includes 10 percent of single
premium receipts for Life Insurance products and an equivalent amount for limited pay, short duration products.
(2) The majority of the increase is attributable to significant new sales generated by limited pay, short duration endowments
written in Nan Shan for the twelve months ended December 31, 2005.
62
American International Group, Inc.
Foreign Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2005
(Restated)
Second
Quarter
2005
(Restated)
Third
Quarter
2005
(Restated)
Fourth
Quarter
2005
Full
Year
2005
First year premiums (1)
Life insurance
Japan
China
Asia excluding Japan and China
All other regions
Total
$
230
24
617
46
917
$
290
33
515
50
888
$
246
31
387
51
715
$
220
35
447
55
757
$
986
123
1,966
202
3,277
Personal accident & health
Japan
China
Asia excluding Japan and China
All other regions
Total
182
6
66
27
281
187
9
73
28
297
195
9
80
27
311
195
8
83
27
313
759
32
302
109
1,202
Group products
Japan
Asia excluding Japan and China
All other regions
Total
3
36
228
267
4
34
109
147
3
32
166
201
3
24
158
185
13
126
661
800
Total first year premiums
Japan
China
Asia excluding Japan and China
All other regions
Total
415
30
719
301
1,465
481
42
622
187
1,332
444
40
499
244
1,227
418
43
554
240
1,255
1,758
155
2,394
972
5,279
3,524
34
30
283
3,871
3,385
24
88
305
3,802
2,412
8
144
430
2,994
2,008
2
154
380
2,544
11,329
68
416
1,398
13,211
91,152
5,444
8,029
91,252
5,579
7,786
92,027
5,737
7,978
92,393
5,804
7,855
92,393
5,804
7,855
34,796
4,486
37,466
4,761
39,540
5,368
40,260
5,979
40,260
5,979
Total annuity production
Japan
China
Asia excluding Japan and China
All other regions
Total
Life insurance reserves
Life insurance
Personal accident & health
Group products
Retirement services reserves
Individual fixed annuities
Individual variable annuities
Policy and contract claims reserves
Personal accident & health
Group medical
$
408
88
$
414
89
$
414
91
$
413
94
$
Note: (1) Represents premium recorded within the first policy year from new sales and generally includes 10 percent
of single premium receipts for Life Insurance products and an equivalent amount for limited pay, short
duration products.
63
413
94
American International Group, Inc.
Foreign Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2004
(Restated)
Second
Quarter
2004
(Restated)
Third
Quarter
2004
(Restated)
Fourth
Quarter
2004
(Restated)
Full
Year
2004
(Restated)
First year premiums (1)
Life insurance
Japan
China
Asia excluding Japan and China
All other regions
Total
$
170
24
441
46
681
$
176
32
372
51
631
$
167
26
357
47
597
$
201
33
516
50
800
$
714
115
1,686
194
2,709
Personal accident & health
Japan
China
Asia excluding Japan and China
All other regions
Total
170
7
62
26
265
186
7
57
25
275
178
8
61
26
273
175
8
66
26
275
709
30
246
103
1,088
Group products
Japan
Asia excluding Japan and China
All other regions
Total
9
13
163
185
4
14
173
191
4
32
149
185
3
20
122
145
20
79
607
706
Total first year premiums
Japan
China
Asia excluding Japan and China
All other regions
Total
349
31
516
235
1,131
366
39
443
249
1,097
349
34
450
222
1,055
379
41
602
198
1,220
1,443
145
2,011
904
4,503
3,258
124
141
3,523
2,357
71
225
2,653
3,577
157
210
3,944
2,884
19
358
229
3,490
12,076
19
710
805
13,610
77,869
4,326
6,353
78,882
4,414
6,329
81,191
4,631
7,165
87,085
5,123
7,587
87,085
5,123
7,587
21,687
2,653
23,577
3,053
27,101
3,385
31,442
4,024
31,442
4,024
Total annuity production
Japan
China
Asia excluding Japan and China
All other regions
Total
Life insurance reserves
Life insurance
Personal accident & health
Group products
Retirement services reserves
Individual fixed annuities
Individual variable annuities
Policy and contract claims reserves
Personal accident & health
Group medical
$
350
80
$
362
86
$
378
83
$
438
83
$
Note: (1) Represents premium recorded within the first policy year from new sales and generally includes 10 percent
of single premium receipts for Life Insurance products and an equivalent amount for limited pay, short
duration products.
64
438
83
American International Group, Inc.
Foreign Life Insurance & Retirement Services Other Data
(dollars in millions)
First
Quarter
2003
(Restated)
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
First year premiums (1)
Life insurance
Japan
China
Asia excluding Japan and China
All other regions
Total
$
138
15
563
40
756
$
142
18
337
46
543
$
145
21
385
48
599
$
178
30
492
55
755
$
603
84
1,777
189
2,653
Personal accident & health
Japan
China
Asia excluding Japan and China
All other regions
Total
89
6
50
21
166
112
8
50
20
190
115
9
49
22
195
151
8
54
25
238
467
31
203
88
789
Group products
Japan
Asia excluding Japan and China
All other regions
Total
7
12
126
145
5
12
176
193
6
14
105
125
13
10
109
132
31
48
516
595
Total first year premiums
Japan
China
Asia excluding Japan and China
All other regions
Total
234
21
625
187
1,067
259
26
399
242
926
266
30
448
175
919
342
38
556
189
1,125
1,101
115
2,028
793
4,037
403
76
479
633
218
851
1,136
104
1,240
2,703
205
118
3,026
4,875
205
516
5,596
59,281
3,135
4,066
61,796
3,235
4,383
62,522
3,450
4,516
74,166
4,094
6,051
74,166
4,094
6,051
6,074
729
6,431
993
7,314
1,363
18,504
1,753
18,504
1,753
Total annuity production
Japan
China
Asia excluding Japan and China
All other regions
Total
Life insurance reserves
Life insurance
Personal accident & health
Group products
Retirement services reserves
Individual fixed annuities
Individual variable annuities
Policy and contract claims reserves
Personal accident & health
Group medical
$
285
69
$
294
72
$
293
74
$
337
79
$
Note: (1) Represents premium recorded within the first policy year from new sales and generally includes 10 percent
of single premium receipts for Life Insurance products and an equivalent amount for limited pay, short
duration products.
65
337
79
American International Group, Inc.
Financial Services Operating Statistics
(dollars in millions)
2005
%
Chg
2004
(Restated)
%
Chg
Years Ended December 31,
2003
%
2002
(Restated) Chg
(Restated)
%
Chg
2001
(Restated)
%
Chg
2000
(Restated)
Revenues:
Aircraft Finance
$
3,578
14.1 % $
3,136
8.2 % $
2,897
7.4 % $
2,698
6.9 % $
2,524
6.5 % $
2,370
Capital Markets (1)
1,246
(11.0)
1,400
(12.9)
1,608
18.5
1,357
19.3
1,137
(7.6)
1,230
Consumer Finance
3,613
21.3
2,978
12.7
2,642
6.8
2,473
(3.4)
2,560
10.1
2,325
108
45.9
74
68.2
44
NM
7,255
9.9
6,602
5.4
6,265
6.5
5,884
NM
220
NM
56
NM
1,165
Other
74
Total revenues before FAS 133
FAS 133 (2):
AIGFP
Total revenues
(28.2)
8,511
11.7
2,014
NM
103
7,617
(122)
(4.6)
5.0
NM
(1,013)
(41)
$
10,525
40.4 % $
7,495
20.1 % $
6,242
(8.5) % $
6,822
7.9 % $
6,321
(10.3) % $
7,049
$
713
6.6 % $
669
7.4 % $
623
(6.2) % $
664
(3.9) % $
691
13.5 % $
609
Operating income:
Aircraft Finance
Capital Markets (1)
647
(17.5)
784
(5.0)
825
23.1
670
28.1
523
(15.9)
622
Consumer Finance (3)
901
11.5
808
29.7
623
22.9
507
8.1
469
21.2
387
35
(48.5)
68
(9.3)
75
70.5
44
NM
11
NM
2,296
(1.4)
2,329
2,146
13.8
1,885
11.3
1,694
5.1
1,612
(34)
2,014
NM
NM
(27)
(122)
NM
NM
49
(1,013)
NM
NM
20
220
NM
NM
19
56
NM
NM
1,165
1,980
NM
(149)
NM
(964)
NM
240
NM
75
NM
1,165
4,276
96.1 % $
(36.3) % $
2,777
Other
Operating income before FAS 133 (3)
FAS 133 (2):
ILFC
AIGFP
Total FAS 133
Total operating income (3)
$
2,180
8.5
84.4 % $
1,182
(44.4) % $
2,125
20.1 % $
1,769
Note: (1) Certain transactions entered into by AIGFP generate tax credits and benefits which are included in income taxes on the consolidated statement of income. The amount of tax
credits and benefits for the twelve months ended December 31, 2005, 2004, 2003, 2002, 2001 and 2000 are $67 million, $107 million, $123 million, $96 million, $116 million
and $22 million, respectively.
(2) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses.
(3) Includes $62 million of catastrophe related losses for the twelve months ended December 31, 2005.
66
(6)
American International Group, Inc.
Financial Services Operating Statistics
(dollars in millions)
First
Quarter
2005
(Restated)
Second
Quarter
2005
(Restated)
Third
Quarter
2005
(Restated)
Fourth
Quarter
2005
Full
Year
2005
Revenues:
Aircraft Finance
$
827
$
891
$
943
$
917
$
3,578
Capital Markets (1)
288
279
388
291
1,246
Consumer Finance
833
891
940
949
3,613
20
21
20
13
74
1,968
2,082
2,291
2,170
8,511
468
1,696
215
2,014
Other
Total revenues before FAS 133
FAS 133 (2):
AIGFP
Total revenues
(365)
$
2,436
$
3,778
$
1,926
$
2,385
$
10,525
$
172
$
188
$
175
$
178
$
713
Operating income:
Aircraft Finance
Capital Markets (1)
152
140
215
140
647
Consumer Finance (3)
231
248
198
224
901
7
6
11
11
35
562
582
599
553
2,296
15
468
(64)
1,696
(10)
(365)
25
215
(34)
2,014
483
1,632
(375)
240
1,980
Other
Operating income before FAS 133 (3)
FAS 133 (2):
ILFC
AIGFP
Total FAS 133
Total operating income (3)
$
1,045
$
2,214
$
224
$
793
$
4,276
Note: (1) Certain transactions entered into by AIGFP generate tax credits and benefits which are included in income taxes
on the consolidated statement of income. The amount of tax credits and benefits for the first quarter, second
quarter, third quarter, fourth quarter and full year of 2005 are $19 million, $21 million, $23 million, $4 million
and $67 million, respectively.
(2) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
(3) Includes $62 million of catastrophe related losses for both the third quarter and full year 2005.
67
American International Group, Inc.
Financial Services Operating Statistics
(dollars in millions)
First
Quarter
2004
(Restated)
Second
Quarter
2004
(Restated)
Third
Quarter
2004
(Restated)
Fourth
Quarter
2004
(Restated)
Full
Year
2004
(Restated)
Revenues:
Aircraft Finance
$
734
$
778
$
808
$
816
$
3,136
Capital Markets (1)
278
365
386
371
1,400
Consumer Finance
693
723
762
800
2,978
26
27
26
24
103
1,731
1,893
1,982
2,011
7,617
Other
Total revenues before FAS 133
FAS 133 (2):
AIGFP
Total revenues
83
(234)
773
(744)
(122)
$
1,814
$
1,659
$
2,755
$
1,267
$
7,495
$
152
$
162
$
183
$
172
$
669
Operating income:
Aircraft Finance
Capital Markets (1)
131
197
209
247
784
Consumer Finance
183
202
208
215
808
15
19
18
16
68
481
580
618
650
2,329
20
83
(31)
(234)
(20)
773
4
(744)
(27)
(122)
103
(265)
753
(740)
(149)
Other
Operating income before FAS 133
FAS 133 (2):
ILFC
AIGFP
Total FAS 133
Total operating income (loss)
$
584
$
315
$
1,371
$
(90) $
2,180
Note: (1) Certain transactions entered into by AIGFP generate tax credits and benefits which are included in
income taxes on the consolidated statement of income. The amount of tax credits and benefits for the
first quarter, second quarter, third quarter, fourth quarter and full year 2004 are $35 million, $29 million,
$24 million, $19 million and $107 million, respectively.
(2) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
68
American International Group, Inc.
Financial Services Operating Statistics
(dollars in millions)
First
Quarter
2003
(Restated)
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
Revenues:
Aircraft Finance
$
701
$
723
$
747
$
726
$
2,897
Capital Markets (1)
265
431
382
530
1,608
Consumer Finance
639
654
665
684
2,642
27
35
22
24
108
1,632
1,843
1,816
1,964
7,255
Other
Total revenues before FAS 133
FAS 133 (2):
AIGFP
Total revenues
(600)
(198)
53
(268)
(1,013)
$
1,032
$
1,645
$
1,869
$
1,696
$
6,242
$
163
$
152
$
163
$
145
$
623
Operating income:
Aircraft Finance
Capital Markets (1)
131
226
187
281
825
Consumer Finance
142
154
162
165
623
18
14
26
17
75
454
546
538
608
2,146
26
(600)
(8)
(198)
4
53
27
(268)
49
(1,013)
(574)
(206)
57
(241)
(964)
Other
Operating income before FAS 133
FAS 133 (2):
ILFC
AIGFP
Total FAS 133
Total operating income (loss)
$
(120) $
340
$
595
$
367
$
1,182
Note: (1) Certain transactions entered into by AIGFP generate tax credits and benefits which are included in
income taxes on the consolidated statement of income. The amount of tax credits and benefits for the
first quarter, second quarter, third quarter, fourth quarter and full year 2003 are $29 million, $35 million,
$41 million, $18 million and $123 million, respectively.
(2) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under
FAS 133, including the related foreign exchange gains and losses.
69
American International Group, Inc.
Asset Management Operating Statistics
(dollars in millions)
2005
Years Ended December 31,
2004
%
2003
(Restated)
Chg
(Restated)
%
Chg
%
Chg
2002
(Restated)
Revenues:
Guaranteed investment contracts
Domestic
Foreign
$
2,903
644
6.4 % $
38.8
2,728
464
23.4 % $
13.7
1,195
13.9
1,049
56.3
671
20.5
557
Brokerage service and mutual funds
257
3.2
249
20.9
206
(9.3)
227
Other
326
45.5
224
44.5
155
4.0
149
Institutional asset management (1)
Total
2,211
408
3.9 % $
0.7
2,129
405
$
5,325
13.0 % $
4,714
29.1 % $
3,651
5.3 % $
3,467
$
975
61
0.3 % $
41.9
972
43
58.3 % $
4.9
614
41
(0.5) % $
28.1
617
32
425
32.8
320
41.0
227
52.3
149
66
(5.7)
70
16.7
60
25.0
48
316
49.1
212
47.2
144
2.1
141
1,843
14.0
1,617
48.9
1,086
10.0
987
FIN46R (3):
Institutional asset management
261
NM
195
NM
-
NM
-
FAS 133 (4):
Guaranteed investment contracts
149
NM
313
NM
230
NM
138
Operating income (2):
Guaranteed investment contracts
Domestic
Foreign
Institutional asset management (1)
Brokerage service and mutual funds
Other
Total excluding FIN46R and
FAS 133
Total including FIN46R and
FAS 133
$
2,253
6.0 % $
2,125
61.5 % $
1,316
17.0 % $
Note: (1) Includes AIG Global Investment Group and certain smaller asset management operations.
(2) Includes $6 million of catastrophe related losses for the twelve months ended December 31, 2005.
(3) Includes the results of certain AIG managed private equity and real estate funds that are consolidated effective
December 31, 2003 pursuant to FIN46R, "Consolidation of Variable Interest Entities".
(4) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133, including the
related foreign exchange gains and losses.
70
1,125
American Internatinal Group, Inc.
Asset Management Operating Statistics (1)
(dollars in millions)
First
Quarter
2005
(Restated)
Second
Quarter
2005
(Restated)
Third
Quarter
2005
(Restated)
Fourth
Quarter
2005
Full
Year
2005
Revenues:
Guaranteed investment contracts
Domestic
Foreign
$
Institutional asset management (2)
724
172
$
758
145
$
737
171
$
684
156
$
2,903
644
319
178
279
419
1,195
Brokerage service and mutual funds
63
62
67
65
257
Other
99
76
101
50
326
Total
$
1,377
$
1,219
$
1,355
$
1,374
$
5,325
$
242
15
$
264
15
$
258
18
$
211
13
$
975
61
Operating income (3):
Guaranteed investment contracts
Domestic
Foreign
Institutional asset management (2)
86
71
78
190
425
Brokerage service and mutual funds
13
17
20
16
66
Other
97
73
99
47
316
453
440
473
477
1,843
FIN46R (4):
Institutional asset management
75
37
77
72
261
FAS 133 (5):
Guaranteed investment contracts
62
47
18
22
149
Total excluding FIN46R and
FAS 133
Total including FIN46R and
FAS 133
$
590
$
524
$
568
$
571
$
2,253
Note: (1) At December 31, 2005 AIG's third party assets under management including mutual funds and institutional
accounts totaled over $62 billion.
(2) Includes AIG Global Investment Group and certain smaller asset management operations.
(3) Includes $6 million of catastrophe related losses in both the third quarter and full year 2005.
(4) Includes the results of certain AIG managed private equity and real estate funds that are consolidated effective
December 31, 2003 pursuant to FIN46R, "Consolidation of Variable Interest Entities".
(5) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
71
American International Group, Inc.
Asset Management Operating Statistics (1)
(dollars in millions)
First
Quarter
2004
(Restated)
Second
Quarter
2004
(Restated)
Third
Quarter
2004
(Restated)
Fourth
Quarter
2004
(Restated)
Full
Year
2004
(Restated)
Revenues:
Guaranteed investment contracts
Domestic
Foreign
$
Institutional asset management (2)
628
109
$
693
87
$
658
98
$
749
170
$
2,728
464
187
294
248
320
1,049
Brokerage service and mutual funds
61
62
62
64
249
Other
65
68
45
46
224
Total
$
1,050
$
1,204
$
1,111
$
1,349
$
4,714
$
222
9
$
261
11
$
202
11
$
287
12
$
972
43
Operating income:
Guaranteed investment contracts
Domestic
Foreign
Institutional asset management (2)
55
59
83
123
320
Brokerage service and mutual funds
20
17
17
16
70
Other
62
66
42
42
212
368
414
355
480
1,617
4
28
115
48
195
64
87
90
72
313
Total excluding FIN46R and
FAS 133
FIN46R (3):
Institutional asset management
FAS 133 (4):
Guaranteed investment contracts
Total including FIN46R and
FAS 133
$
436
$
529
$
560
$
600
$
2,125
Note: (1) At December 31, 2004 AIG's third party assets under management including mutual funds and institutional
accounts totaled over $51 billion.
(2) Includes AIG Global Investment Group and certain smaller asset management operations.
(3) Includes the results of certain AIG managed private equity and real estate funds that are consolidated
effective December 31, 2003 pursuant to FIN46R, "Consolidation of Variable Interest Entities".
(4) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
72
American International Group, Inc.
Asset Management Operating Statistics (1)
(dollars in millions)
First
Quarter
2003
(Restated)
Second
Quarter
2003
(Restated)
Third
Quarter
2003
(Restated)
Fourth
Quarter
2003
(Restated)
Full
Year
2003
(Restated)
Revenues:
Guaranteed investment contracts
Domestic
Foreign
$
Institutional asset management (2)
534
113
$
526
100
$
548
101
$
603
94
$
2,211
408
151
142
157
221
671
Brokerage service and mutual funds
48
49
51
58
206
Other
18
19
45
73
155
Total
$
864
$
836
$
902
$
1,049
$
3,651
$
129
8
$
138
12
$
152
12
$
195
9
$
614
41
Operating income:
Guaranteed investment contracts
Domestic
Foreign
Institutional asset management (2)
38
38
53
98
227
Brokerage service and mutual funds
12
12
20
16
60
Other
16
17
43
68
144
203
217
280
386
1,086
47
54
60
69
230
Total excluding FAS 133
FAS 133 (3):
Guaranteed investment contracts
Total including FAS 133
$
250
$
271
$
340
$
455
$
1,316
Note: (1) At December 31, 2003 AIG's third party assets under management including mutual funds and institutional
accounts totaled over $44 billion.
(2) Includes AIG Global Investment Group and certain smaller asset management operations.
(3) Includes the effect of hedging activities that do not qualifiy for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses.
73
American International Group, Inc.
Asset Management Other Data
(dollars in millions)
2005
Guaranteed investment contracts:
Deposits
Domestic
Foreign
$
2,255
8,370
%
Chg
Years Ended December 31,
2004
%
2003
(Restated)
Chg
(Restated)
(79.0) % $
57.6
10,722
5,312
10.9 % $
46.3
9,665
3,631
%
Chg
2002
(Restated)
6.5 % $
(34.1)
9,078
5,508
Total
10,625
(33.7)
16,034
20.6
13,296
(8.8)
14,586
Reserves
Domestic
Foreign
38,629
10,153
(13.3)
9.9
44,558
9,239
14.7
20.5
38,845
7,668
14.8
(6.9)
33,850
8,239
Total
48,782
53,797
15.7 %
46,513
10.5 % $
42,089
Domestic Spread Information
Base investment income
Partnerships
Other enhancements
Total net investment income
2,211
565
127
$
Base Yield
Partnerships (1)
Other enhancements (2)
Total
Spread Data Without Hedge Accounting (3)
Cost of funds (3)
Net spread rate, as reported (3)
Net spread rate excluding
partnerships and other enhancements (3)
Spread Data Assuming Hedge Accounting (4)
Cost of funds with effect of
economic hedges (4)
Net spread rate with effect of
economic hedges (4)
Net economic spread rate excluding
partnerships and other enhancements (4)
2,903
(9.3) %
0.0
42.0
7.6
6.4 % $
2,212
398
118
9.6
NM
71.0
2,019
123
69
2,728
23.4 % $
2,211
5.31%
0.80%
0.30%
5.33%
0.53%
0.28%
5.68%
-0.05%
0.19%
6.41%
6.14%
5.82%
4.20%
3.33%
3.73%
2.21%
2.81%
2.09%
1.11%
2.01%
1.94%
4.49%
4.07%
4.38%
1.93%
2.07%
1.44%
0.82%
1.27%
1.29%
Note: (1) Includes incremental impact to base yield of investments in hedge funds, private equity funds and affordable multi-housing
partnerships.
(2) Includes incremental impact to base yields of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
(3) Represents cost of funds without FAS 133 accounting for economic hedges where the effects of derivative transactions are
recorded in realized capital gains (losses).
(4) Represents cost of funds on an economic basis including the effects of derivative transactions not accounted for under FAS 133.
74
American International Group, Inc.
Asset Management Other Data
(dollars in millions)
First
Quarter
2005
(Restated)
Guaranteed investment contracts:
Deposits
Domestic
Foreign
$
2,250
2,310
Second
Quarter
2005
(Restated)
$
1
1,465
Third
Quarter
2005
(Restated)
$
4
1,823
Fourth
Quarter
2005
$
2,772
Full
Year
2005
$
2,255
8,370
Total
4,560
1,466
1,827
2,772
10,625
Reserves
Domestic
Foreign
45,241
10,593
42,427
9,144
40,424
9,262
38,629
10,153
38,629
10,153
Total
55,834
51,571
49,686
48,782
48,782
564
137
23
568
159
31
550
160
27
529
109
46
2,211
565
127
Domestic Spread Information
Base investment income
Partnerships
Other enhancements
Total net investment income
Base Yield
Partnerships (1)
Other enhancements (2)
Total
Spread Data Without Hedge Accounting (3)
Cost of funds (3)
Net spread rate, as reported (3)
Net spread rate excluding
partnerships and other enhancements (3)
Spread Data Assuming Hedge Accounting (4)
Cost of funds with effect of
economic hedges (4)
Net spread rate with effect of
economic hedges (4)
Net economic spread rate excluding
partnerships and other enhancements (4)
$
724
$
758
$
737
$
684
$
2,903
5.22%
0.78%
0.22%
5.27%
0.94%
0.28%
5.34%
0.97%
0.25%
5.41%
0.49%
0.48%
5.31%
0.80%
0.30%
6.22%
6.49%
6.56%
6.38%
6.41%
3.82%
4.07%
4.33%
4.63%
4.20%
2.40%
2.42%
2.24%
1.74%
2.21%
1.40%
1.19%
1.02%
0.78%
1.11%
4.32%
4.41%
4.50%
4.73%
4.49%
1.89%
2.08%
2.06%
1.64%
1.93%
0.89%
0.85%
0.85%
0.69%
0.82%
Note: (1) Includes incremental impact to base yield of investments in hedge funds, private equity funds and affordable multi-housing
partnerships.
(2) Includes incremental impact to base yields of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
(3) Represents cost of funds without FAS 133 accounting for economic hedges where the effects of derivative transactions
are recorded in realized capital gains (losses).
(4) Represents cost of funds on an economic basis including the effects of derivative transactions not accounted for under
FAS 133.
75
American International Group, Inc.
Asset Management Other Data
(dollars in millions)
First
Quarter
2004
(Restated)
Guaranteed investment contracts:
Deposits
Domestic
Foreign
$
2,567
692
Second
Quarter
2004
(Restated)
$
4,239
1,428
Third
Quarter
2004
(Restated)
$
1,964
1,876
Fourth
Quarter
2004
(Restated)
$
1,952
1,316
Full
Year
2004
(Restated)
$
10,722
5,312
Total
3,259
5,667
3,840
3,268
16,034
Reserves
Domestic
Foreign
40,787
7,449
43,603
7,127
44,263
8,069
44,558
9,239
44,558
9,239
Total
48,236
50,730
52,332
53,797
53,797
532
77
19
552
99
42
565
73
20
563
149
37
2,212
398
118
Domestic Spread Information
Base investment income
Partnerships
Other enhancements
Total net investment income
Base Yield
Partnerships (1)
Other enhancements (2)
Total
Spread Data Without Hedge Accounting (3)
Cost of funds (3)
Net spread rate, as reported (3)
Net spread rate excluding
partnerships and other enhancements (3)
Spread Data Assuming Hedge Accounting (4)
Cost of funds with effect of
economic hedges (4)
Net spread rate with effect of
economic hedges (4)
Net economic spread rate excluding
partnerships and other enhancements (4)
$
628
$
693
$
658
$
749
$
2,728
5.53%
0.39%
0.19%
5.38%
0.53%
0.42%
5.25%
0.27%
0.18%
5.19%
0.89%
0.35%
5.33%
0.53%
0.28%
6.11%
6.33%
5.70%
6.43%
6.14%
3.36%
3.20%
3.26%
3.51%
3.33%
2.75%
3.13%
2.44%
2.92%
2.81%
2.17%
2.17%
1.99%
1.69%
2.01%
4.02%
4.03%
4.08%
4.17%
4.07%
2.09%
2.30%
1.63%
2.26%
2.07%
1.51%
1.34%
1.17%
1.03%
1.27%
Note: (1) Includes incremental impact to base yield of investments in hedge funds, private equity funds and affordable multi-housing
partnerships.
(2) Includes incremental impact to base yields of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
(3) Represents cost of funds without FAS 133 accounting for economic hedges where the effects of derivative transactions
are recorded in realized capital gains (losses).
(4) Represents cost of funds on an economic basis including the effects of derivative transactions not accounted for under
FAS 133.
76
American International Group, Inc.
Asset Management Other Data
(dollars in millions)
First
Quarter
2003
(Restated)
Guaranteed investment contracts:
Deposits
Domestic
Foreign
$
2,470
1,074
Second
Quarter
2003
(Restated)
$
1,286
1,376
Third
Quarter
2003
(Restated)
$
2,690
461
Fourth
Quarter
2003
(Restated)
$
3,219
720
Full
Year
2003
(Restated)
$
9,665
3,631
Total
3,544
2,662
3,151
3,939
13,296
Reserves
Domestic
Foreign
35,283
7,756
35,664
7,932
37,565
7,164
38,845
7,668
38,845
7,668
Total
43,039
43,596
44,729
46,513
46,513
500
22
12
494
14
18
514
33
1
511
54
38
2,019
123
69
Domestic Spread Information
Base investment income
Partnerships
Other enhancements
Total net investment income
Base Yield
Partnerships (1)
Other enhancements (2)
Total
Spread Data Without Hedge Accounting (3)
Cost of funds (3)
Net spread rate, as reported (3)
Net spread rate excluding
partnerships and other enhancements (3)
Spread Data Assuming Hedge Accounting (4)
Cost of funds with effect of
economic hedges (4)
Net spread rate with effect of
economic hedges (4)
Net economic spread rate excluding
partnerships and other enhancements (4)
$
534
$
526
$
548
$
603
$
2,211
5.86%
-0.11%
0.09%
5.70%
-0.24%
0.21%
5.73%
-0.03%
0.04%
5.46%
0.16%
0.40%
5.68%
-0.05%
0.19%
5.84%
5.67%
5.74%
6.02%
5.82%
4.07%
3.81%
3.57%
3.52%
3.73%
1.78%
1.86%
2.17%
2.50%
2.09%
1.79%
1.89%
2.16%
1.94%
1.94%
4.63%
4.43%
4.23%
4.25%
4.38%
1.21%
1.24%
1.51%
1.77%
1.44%
1.23%
1.27%
1.50%
1.21%
1.29%
Note: (1) Includes incremental impact to base yield of investments in hedge funds, private equity funds and affordable multi-housing
partnerships.
(2) Includes incremental impact to base yields of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
(3) Represents cost of funds without FAS 133 accounting for economic hedges where the effects of derivative transactions
are recorded in realized capital gains (losses).
(4) Represents cost of funds on an economic basis including the effects of derivative transactions not accounted for under
FAS 133.
77
American International Group, Inc.
Other Income (Deductions) - net
(dollars in millions)
2005
Equity (loss) in unconsolidated subsidiaries
Compensation expense with respect to the SICO Plans
Interest expense, including distributions on the liabilities
connected to trust preferred stock
Unallocated corporate expenses and related
FAS 133 adjustment
Regulatory settlement costs
Other
Total other income (deductions) - net
$
$
2004
(Restated)
(124) $
(205)
Total other income (deductions) - net
$
(435)
(299)
322
(16)
-
(2,700) $
(333) $
Second
Quarter
2005
(Restated)
60 $
(7)
(116)
(78)
240
(63)
$
Total other income (deductions) - net
$
36 $
50 $
(14)
$
$
51 $
(14)
(104)
(115)
420
-
(280) $
First
Quarter
2003
(Restated)
Equity (loss) in unconsolidated subsidiaries
Compensation expense with respect to the SICO Plans
Interest expense, including distributions on the liabilities
connected to trust preferred stock
Unallocated corporate expenses and related
FAS 133 adjustment
Total other income (deductions) - net
38 $
Second
Quarter
2004
(Restated)
(108)
(73)
(135)
$
36 $
(60)
(120)
(102)
268
16
First
Quarter
2004
(Restated)
Equity (loss) in unconsolidated subsidiaries
Compensation expense with respect to the SICO Plans
Interest expense, including distributions on the liabilities
connected to trust preferred stock
Unallocated corporate expenses and related
FAS 133 adjustment
Regulatory settlement costs
157 $
(62)
(509)
(412)
340
(1,644)
(146)
First
Quarter
2005
(Restated)
Equity (loss) in unconsolidated subsidiaries
Compensation expense with respect to the SICO Plans
Interest expense, including distributions on the liabilities
connected to trust preferred stock
Unallocated corporate expenses and related
FAS 133 adjustment
Regulatory settlement costs
Other
Years ended December 31,
2003
2002
(Restated)
(Restated)
238 $
Second
Quarter
2003
(Restated)
180 $
(280)
(434)
(384)
(339)
(1,257) $
Third
Quarter
2005
(Restated)
(205) $
(63)
180 $
168
2001
(Restated)
1 $
(51)
(586)
165
(280)
-
(543)
(143)
-
(610) $
(751) $
(977)
Fourth
Quarter
2005
(15) $
(75)
Full
Year
2005
(124)
(205)
(150)
(118)
(321)
(1,644)
(73)
(509)
(412)
340
(1,644)
(146)
(378) $
(2,396) $
(2,700)
(17) $
(14)
(109)
(35)
(264)
(439) $
Third
Quarter
2003
(Restated)
Fourth
Quarter
2004
(Restated)
73 $
(20)
(114)
(76)
301
(16)
148 $
Fourth
Quarter
2003
(Restated)
Full
Year
2004
(Restated)
157
(62)
(435)
(299)
322
(16)
(333)
Full
Year
2003
(Restated)
46 $
(69)
16 $
(69)
68 $
(68)
50 $
(74)
180
(280)
(97)
(76)
(16)
(212) $
(117)
(84)
(136)
(390) $
(111)
(101)
20
(192) $
(109)
(123)
(207)
(463) $
(434)
(384)
(339)
(1,257)
78
5
(296)
(443)
(168)
(347)
-
(123)
(114)
153
(26)
Third
Quarter
2004
(Restated)
2000
(Restated)
Comment on Regulation G
This financial supplement includes certain non-GAAP financial measures. The
reconciliations of such measures to the most comparable GAAP figures in accordance
with Regulation G are included within the relevant tables.
Throughout this financial supplement, AIG presents its operations in the way it
believes will be most meaningful and useful, as well as most transparent, 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, in some cases revenues, net income, operating income and
related rates of performance are shown exclusive of realized capital gains (losses),
cumulative effect of accounting changes in 2004, 2003 and 2001, the effect of FIN46R,
the effect of FAS 133, the 2005 General Insurance reserve charge, the 2004 asbestos and
environmental charge, the 2002 loss reserve charge, and the effect of the catastrophe
related losses and settlement charges.
Although the investment of premiums to generate investment income (or loss) and
realized capital gains or losses 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. In sum, investment income and realized capital gains or losses
for any particular period are not indicative of business performance for such period.
AIG believes that a major part of the discipline of a successful general insurance
company is to produce an underwriting profit, 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 a less meaningful presentation of AIG’s
operations. The equity analysts who follow AIG exclude the realized capital transactions
in their analyses for the same reason, and consistently request that AIG provide the nonGAAP information.
Life and retirement services production (premiums, deposits and other
considerations), gross premiums written, net premiums written and combined ratios are
presented in accordance with accounting principles prescribed or permitted by insurance
regulatory authorities because these are standard measures of performance used in the
insurance industry and thus allow for more meaningful comparisons with AIG’s
insurance competitors.
79