BW20020726002221 20020726T192455Z UTC
( BW)(AMERICAN-INTERNATIONAL-GRP)(BB99) Interim Results
Business Editors
UK REGULATORY NEWS
NEW YORK--(BUSINESS WIRE)--July 26, 2002--
AIG Reports Second Quarter 2002 Net
Income Rose 37.0 Percent to $1.80 Billion
American International Group, Inc. (AIG) today reported that its
net income for the second quarter of 2002 increased 37.0 percent to
$1.80 billion, compared to $1.31 billion in the second quarter of
2001.
For the first six months of 2002, net income totaled $3.78
billion, an increase of 19.3 percent compared to $3.17 billion in the
same period of 2001.
Second quarter 2002 adjusted income, excluding net realized
capital gains (losses) and the cumulative effect of accounting changes
and acquisition, restructuring and related charges in 2001, increased
9.8 percent to $2.21 billion, and 10.4 percent to $4.34 billion for
the first six months of 2002.
Following is a summary table of second quarter and six months
information (in millions, except per share amounts):
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*T
SECOND QUARTER SIX MONTHS
2002 2001 Change 2002 2001 Change
Net income,
as reported $1,801.2 $1,314.9 37.0% $3,781.5 $3,170.2 19.3%
Income,
as adjusted(a) $2,213.4 $2,016.2 9.8% $4,344.1 $3,934.3 10.4%
PER SHARE RESULTS:
Net income,
as reported $ 0.68 $ 0.50 36.0% $ 1.43 $ 1.20 19.2%
Income,
as adjusted(a) $ 0.84 $ 0.76 10.5% $ 1.65 $ 1.48 11.5%
Average shares
outstanding 2,639.9 2,650.9 2,638.6 2,650.8
*T
(a)Adjusted to exclude realized capital gains (losses) and the
cumulative effect of accounting changes and acquisition, restructuring
and related charges in 2001, net of taxes.
Highlights of the second quarter and six months of 2002 include:
-- Record second quarter General Insurance net premiums written
of $6.78 billion, an increase of 34.2 percent (35.2 percent in
original currency), and 32.2 percent to $13.12 billion for the
first six months of 2002.
-- Second quarter General Insurance pretax operating income
before realized capital gains (losses) of $1.10 billion and
$2.15 billion for the first six months of 2002.
-- Record Life Insurance premium income, deposits and other
considerations totaling $13.28 billion in the second quarter
of 2002 and $26.10 billion in the first six months of 2002.
-- Record second quarter Life Insurance pretax operating income
before realized capital gains (losses) of $1.53 billion and
$2.88 billion in the first six months of 2002.
-- A second quarter increase of 11.4 percent in Financial
Services operating income to $542.0 million and an increase of
10.8 percent to $1.02 billion in the first six months of 2002.
-- A 1.1 percent decrease in second quarter Retirement Savings &
Asset Management operating income to $280.2 million and a 4.9
percent increase to $579.9 million for the first six months of
2002.
At June 30, 2002, AIG's consolidated assets and shareholders'
equity approximated $523 billion and $55 billion, respectively. The
return on equity was approximately 16 percent on an annualized basis.
In the quarter and six months respectively, $378 million and $505
million were added to AIG's General Insurance net loss and loss
adjustment reserves, bringing the total of those reserves to $26.4
billion at June 30, 2002. Reserves for the September 11 terrorist
attacks continue to be adequate.
Second quarter 2002 income before income taxes, minority interest,
realized capital gains (losses) and the cumulative effect of
accounting changes and acquisition, restructuring and related charges
in 2001 increased 12.9 percent to $3.40 billion and 11.8 percent to
$6.59 billion for the first six months of 2002.
The following table outlines the impact of foreign exchange on
property-casualty and life insurance premiums for the second quarter
2002:
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Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
Premium Growth in
Original Currency 35.2% 27.2% 10.9%(a) 22.0%(a)
Foreign Exchange Impact (1.0) (4.5) (1.1) (2.5)
Premium Growth as
Reported in U.S. $ 34.2% 22.7% 9.8% 19.5%
*T
(a) Premium income, deposits and other considerations. (See
supplementary data information.)
Commenting on second quarter performance, AIG Chairman M.R.
Greenberg said, "AIG had a solid quarter. Our core insurance and
financial services businesses achieved satisfactory results that were
partially offset by lower investment income. Even with lower net
investment income attributable primarily to market and credit
conditions, we achieved strong results from our General Insurance
operations. Our Life Insurance and Financial Services businesses also
advanced over the second quarter of 2001. Retirement Savings & Asset
Management was impacted by weak equity markets. Also this quarter, we
incurred net realized capital losses of $629 million, including $356
million in WorldCom securities.
"AIG's diversified mix of business provides balance to our
earnings stream even in a difficult environment. For example, while
lower interest rates and declining equity markets have reduced
investment and asset management income, these trends are offset by
strong performance in areas such as property-casualty and life
insurance. In the current environment we are redoubling our efforts
monitoring asset quality and are, whenever necessary, sacrificing
yield for quality. AIG has a very strong investment portfolio, whose
largest asset class is a diversified mix of highly rated taxable and
tax- exempt fixed income securities. Equities represent a relatively
minor percentage of our total investment portfolio.
"In General Insurance, worldwide net premiums written in the
quarter increased 34.2 percent to $6.78 billion. The combined ratio
was 94.09 compared to 95.52 in the second quarter of 2001. Rates are
going up after a decade of price declines and policy form inflation.
Many companies have been weakened by this period of extremely
competitive pricing. The losses following September 11 further ensure
a continuing firming of the market for the foreseeable future. The
trend toward firmer pricing is most evident in the U.S. where soft
market conditions had been most pronounced and protracted. However, it
is also apparent in markets around the world.
"In the United States, the Domestic Brokerage Group had record net
premiums written of $3.68 billion, up 42.8 percent, with a combined
ratio of 97.25. Virtually all sectors and lines of business are
contributing to this growth and performance. National Union is leading
the market for directors and officers insurance. Rates are rising in
this difficult class of business in the current environment. Surplus
lines writer, Lexington, had strong growth and continues to realize
significant rate increases. While we are writing significant amounts
of terrorism coverage, the U.S. economy requires a terrorism
insurance backstop that cannot be provided by the private sector
alone. Both houses of Congress have passed a terrorism insurance bill.
A conference committee will address this issue, most likely after the
summer recess.
"The Domestic Personal Lines business continues to implement
necessary auto insurance rate increases in many states. Net premiums
written grew 31.9 percent to $807.1 million and the combined ratio was
99.67. Our new Private Client Group is making very good progress.
"United Guaranty Corporation had another excellent quarter. Net
premiums written were $126.1 million, up 4.7 percent over the second
quarter of 2001. Underwriting results continue to be excellent.
Although the U.S. housing market remains very strong, we are paying
careful attention to credit trends in light of the overall condition
of the U.S. economy.
"Transatlantic Holdings, Inc. had strong premium growth of 28.5
percent to $592.0 million and a combined ratio of 98.22. Both domestic
and international operations contributed to the growth in premiums.
Reinsurance pricing continues to improve, and policy terms and
conditions are firming, consistent with trends in the primary market.
"AIG's Foreign General Insurance operations, the industry's most
extensive worldwide property-casualty insurance network, had strong
growth with excellent underwriting results. Premiums increased 22.7
percent to $1.57 billion, reflecting strong growth in all major
regions. The combined ratio was 88.39. Our two largest regions, the
Far East and the United Kingdom, had excellent underwriting results.
The United Kingdom, Continental Europe, Southeast Asia and Latin
America had strong premium growth. We are continuing to expand into
new markets including India and Egypt.
"General Insurance net investment income declined 3.8 percent in
the quarter to $680.0 million. Interest and dividend income constitute
a sizable majority of net investment income. Interest income was
adversely affected by lower interest rates as the proceeds from
maturing fixed income securities are reinvested. The primary reason
for the decline in net investment income, however, was lower earnings
from our private equity portfolio. There has been a paucity of IPO
activity in this market. Year-to-date 2002 net cash flow from general
insurance operations was a record $1.3 billion. Combined with net cash
flow from investment operations, total General Insurance cash flow
amounted to $2.4 billion. Income from this record cash flow will be
realized in subsequent quarters.
"AIG's worldwide Life Insurance business had strong operating
income of $1.53 billion. Life Insurance premium income, deposits and
other considerations grew 9.8 percent, or 10.9 percent on an original
currency basis. Both our domestic and foreign operations contributed
to this growth.
"In Asia, we had excellent growth and profitability. Both ALICO
and AIG Star Life in Japan generated substantial new business. A
significant part of the income earned by AIG Star Life (formerly
Chiyoda) since its purchase by AIG has been related to surrender
charges earned on policies that lapsed subsequent to AIG's
acquisition. This one-time factor was anticipated when AIG took
control of AIG Star Life and lowered policy crediting rates. This
segment of AIG Star Life's income will decline in subsequent periods
and the majority of AIG Star Life's future income is expected to be
related to its core business operations. We believe earnings from core
business will increase going forward because we have retained a larger
than anticipated number of former Chiyoda agents, utilized new
training procedures and introduced new products. Together with ALICO,
AIG Star Life provides us with a formidable platform in Japan. Korea
also had very strong premium growth.
"We are making important inroads into new markets. In China we
became the first foreign insurance organization to be licensed in
Beijing, and earlier this month we received formal authorization to
open a wholly-owned life insurance operation in Suzhou. We are also
the first foreign company to receive a license in this important
commercial and industrial center of China. We now have a total of
eight life insurance operations in major markets in China. To take
advantage of the enormous growth opportunities in that country, we
have reorganized the management structure within China and have named
a country manager and a senior life insurance executive. We also are
developing new distribution channels throughout Southeast Asia and
extending our presence in India and Vietnam.
"The domestic life business also performed well in the second
quarter. The integration of American General is on track from both an
operational and expense control standpoint. The home services business
achieved positive growth through the introduction of new products and
higher persistency rates. Throughout American General, cross-marketing
initiatives are being well received in the marketplace. These include
structured settlements, medical stop loss and accident and health
products. AIG Annuity, whose results are reported in the life
insurance segment, is the leading provider of fixed-rate annuities
through banks. AIG Annuity achieved record sales as the market for
fixed annuities remains very favorable.
"Financial Services operating income was $542.0 million, up 11.4
percent over the second quarter of 2001. International Lease Finance
Corporation (ILFC), our market-leading commercial aircraft leasing
company, earned $207.7 million versus $183.5 million in the second
quarter of 2001, an outstanding performance in a challenging market
for commercial aviation. ILFC's fleet of modern, highly efficient jet
aircraft remains attractive to cost conscious airlines in this
environment. AIG Financial Products Corp. earned $180.3 million
compared to $188.8 in the second quarter of 2001 and their transaction
pipeline is good. The consumer finance business performed well in the
quarter, earning $140.9 million compared to $126.4 million in the
second quarter of 2001. American General Finance, the third largest
U.S. consumer finance company, had a very good quarter. Our
international consumer finance operations had good results from around
the world with the exception of Argentina, where our modest operation
continues to be impacted by local economic problems. AIG Trading Group
Inc. continues to gain ground.
"Retirement Savings & Asset Management operating income declined
to $280.2 million from $283.2 million. AIG VALIC, our group retirement
product business, had a good quarter. AIG VALIC is successfully
cross-marketing AIG SunAmerica and AIG Annuity products. The business
segments most directly correlated to U.S. equity markets, such as
SunAmerica's variable annuity business, had declining sales in the
quarter. Our institutional investment management business includes
private equity, listed equity and fixed income products sold to public
and corporate pension funds, foundations, endowments and high net
worth individuals.
"The category 'Other Income (Deductions) - net' on the summary
income statement was a loss of $49.7 million compared to a profit of
$5.0 million in the second quarter of 2001, primarily the result of
weaker performance of SunAmerica Inc. investments in partnerships and
private equities.
"AIG discloses the impact of its stock option compensation costs
in the footnotes to its annual financial statements. For the year
2001, we reported that these costs would have reduced net income by
$0.05 per share. AIG would not have any concern about a formal
accounting policy that would mandate the expensing of stock options.
"AIG fully consolidates the great majority of special purpose
vehicles (SPV's) which it utilizes in connection with certain products
provided by AIG Financial Products Corp., certain guaranteed
investment contract programs (GIC's) written by the life insurance
subsidiaries and certain invested assets and asset management
activities. SPV's that are not consolidated are essentially
traditional investment vehicles, such as investments in collateralized
debt obligations, wherein many investors have an equity interest in
the vehicle. AIG recognizes its equity interest in the consolidated
financial statements."
GENERAL INSURANCE
-- General Insurance pretax income before realized capital gains
(losses) for the second quarter of 2002 was $1.10 billion, an
increase of 15.9 percent compared to $946.2 million last year.
-- For the first six months of 2002, General Insurance pretax
income before realized capital gains (losses) was $2.15
billion, an increase of 12.1 percent compared to $1.92 billion
in 2001.
-- General Insurance net premiums written in the second quarter
of 2002 amounted to $6.78 billion, 34.2 percent ahead of the
$5.06 billion reported last year.
-- In the first six months, General Insurance net premiums
written were $13.12 billion, an increase of 32.2 percent,
compared to $9.92 billion last year.
-- General Insurance net investment income decreased 3.8 percent
to $680.0 million in second quarter 2002 and increased 0.2
percent to $1.43 billion for the first six months of 2002.
LIFE INSURANCE
-- AIG's worldwide Life Insurance operations reported second
quarter 2002 pretax income before realized capital gains
(losses) of $1.53 billion, an increase of 18.7 percent,
compared to $1.29 billion last year.
-- For the first six months of 2002, worldwide Life Insurance
pretax income before realized capital gains (losses) increased
18.1 percent to $2.88 billion, compared to $2.44 billion last
year.
-- Life Insurance premium income, deposits and other
considerations increased 9.8 percent in the second quarter of
2002 to $13.28 billion from $12.09 billion in 2001.
-- The first six months Life Insurance premium income, deposits
and other considerations amounted to $26.10 billion, a gain of
12.5 percent compared to $23.20 billion in 2001.
-- Life Insurance net investment income rose 11.1 percent to
$3.05 billion for the second quarter of 2002, compared to
$2.74 billion for the same period last year.
-- In the first six months, Life Insurance net investment income
amounted to $5.95 billion, an increase of 9.6 percent,
compared to $5.43 billion in 2001.
FINANCIAL SERVICES
-- Financial Services pretax operating income rose 11.4 percent
to $542.0 million in the second quarter of 2002, compared to
$486.6 million in the same period last year.
-- For the first six months, Financial Services pretax operating
income increased 10.8 percent to $1.02 billion, compared to
$916.5 million in 2001.
RETIREMENT SAVINGS & ASSET MANAGEMENT
-- Retirement Savings & Asset Management pretax operating income
in the second quarter of 2002 amounted to $280.2 million, a
decrease of 1.1 percent, compared to $283.2 million in 2001.
-- For the first six months, Retirement Savings & Asset
Management pretax operating income increased 4.9 percent to
$579.9 million, compared to $553.0 million in 2001.
-- At June 30, 2002, AIG's third party assets under management,
including retail mutual funds and institutional accounts,
totaled approximately $40 billion.
AIG is the world's leading U.S.-based international insurance and
financial services organization, the largest underwriter of commercial
and industrial insurance in the United States, and among the
top-ranked U.S. life insurers. Its member companies write a wide range
of general insurance and life insurance products for commercial,
institutional and individual customers through a variety of
distribution channels in approximately 130 countries and jurisdictions
throughout the world. AIG's global businesses also include financial
services, retirement savings and asset management. AIG's financial
services businesses include aircraft leasing, financial products,
trading and market making, and consumer finance. AIG has one of the
largest retirement savings businesses in the United States and is a
leader in asset management for the individual and institutional
markets, with specialized investment management capabilities in
equities, fixed income, alternative investments and real estate. AIG's
common stock is listed on the New York Stock Exchange, as well as the
stock exchanges in London, Paris, Switzerland and Tokyo.
A conference call for the investment community will be held today
at 9:15 a.m. EDT. The call will be broadcast live on the Internet at:
www.aigwebcast.com
The call will be archived at the same URL through Friday, August
2, 2002.
Caution concerning forward-looking statements
This press release may contain forward-looking statements. Please
refer to AIG's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002 for a description of the business environment in which
AIG operates and the important factors that may affect its business.
AIG is not under any obligation to (and expressly disclaims any such
obligation to) update or alter its forward- looking statements whether
as a result of new information, future events or otherwise.
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*T
American International Group, Inc.
Financial Highlights
(in thousands, except per share amounts)
Three Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written $ 6,782,657 $ 5,055,147 34.2 %
Net Premiums Earned 5,859,163 4,742,080 23.6
Adjusted Underwriting Profit 416,234 239,306 73.9
Net Investment Income 680,047 706,927 (3.8)
Income before Realized
Capital Gains (Losses) 1,096,281 946,233 15.9
Realized Capital Gains (Losses) (160,102) (36,838) -
Operating Income $ 936,179 $ 909,395 2.9 %
Loss Ratio 74.06 74.21
Expense Ratio 20.03 21.31
Combined Ratio 94.09 95.52
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 13,282,382 $ 12,093,740 9.8 %
Net Investment Income 3,046,738 2,741,592 11.1
Income before Realized
Capital Gains (Losses) 1,528,374 1,287,988 18.7
Realized Capital Gains (Losses) (310,650) (3,079) -
Operating Income 1,217,724 1,284,909 (5.2)
Financial Services Operating Income 542,014 486,578 11.4
Retirement Savings & Asset
Management Operating Income 280,215 283,221 (1.1)
Other Realized Capital Gains (Losses) (158,719) (309,672) -
Other Income (Deductions) - net (49,708) 4,959 -
Acquisition, Restructuring and
Related Charges 0 (653,746) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 2,767,705 2,005,644 38.0
Income Taxes 871,816 545,986 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 1,895,889 1,459,658 29.9
Minority Interest, after tax -
Operating Income (91,655) (95,615) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (3,039) (392) -
Income before Cumulative Effect
of Accounting Changes 1,801,195 1,363,651 32.1
Cumulative Effect of Accounting
Changes, net of tax (c) 0 (48,707) -
Net Income, as reported 1,801,195 1,314,944 37.0
Income, as adjusted (d) $ 2,213,389 $ 2,016,196 9.8 %
Per Share - Diluted:
Net Income, as reported $ 0.68 $ 0.50 36.0 %
Income, as adjusted (d) $ 0.84 $ 0.76 10.5 %
Average Diluted Common
Shares Outstanding 2,639,921 2,650,910
Six Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written $ 13,116,940 $ 9,919,900 32.2 %
Net Premiums Earned 11,365,691 9,463,813 20.1
Adjusted Underwriting Profit 725,935 495,710 46.4
Net Investment Income 1,425,413 1,422,840 0.2
Income before Realized
Capital Gains (Losses) 2,151,348 1,918,550 12.1
Realized Capital Gains (Losses) (281,860) (57,701) -
Operating Income $ 1,869,488 $ 1,860,849 0.5 %
Loss Ratio 74.63 74.92
Expense Ratio 20.27 20.79
Combined Ratio 94.90 95.71
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations (b) $ 26,099,564 $ 23,203,935 12.5 %
Net Investment Income 5,949,324 5,430,103 9.6
Income before Realized
Capital Gains (Losses) 2,883,765 2,442,302 18.1
Realized Capital Gains (Losses) (339,411) (20,901) -
Operating Income 2,544,354 2,421,401 5.1
Financial Services Operating Income 1,015,928 916,513 10.8
Retirement Savings & Asset
Management Operating Income 579,893 552,979 4.9
Other Realized Capital Gains (Losses) (240,039) (356,838) -
Other Income (Deductions) - net (43,216) 64,018 -
Acquisition, Restructuring and
Related Charges 0 (653,746) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 5,726,408 4,805,176 19.2
Income Taxes 1,763,644 1,371,741 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 3,962,764 3,433,435 15.4
Minority Interest, after tax -
Operating Income (178,679) (206,737) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (2,590) (1,547) -
Income before Cumulative Effect
of Accounting Changes 3,781,495 3,225,151 17.3
Cumulative Effect of Accounting
Changes, net of tax (c) 0 (54,953) -
Net Income, as reported 3,781,495 3,170,198 19.3
Income, as adjusted (d) $ 4,344,084 $ 3,934,254 10.4 %
Per Share - Diluted:
Net Income, as reported $ 1.43 $ 1.20 19.2 %
Income, as adjusted (d) $ 1.65 $ 1.48 11.5 %
Average Diluted Common
Shares Outstanding 2,638,607 2,650,833
(a)Restated to include American General Corporation acquired August
29, 2001 and to conform to the presentation with respect to 2002.
(b)GAAP premium income was $5,159,564 and $9,943,011 for the second
quarter and six months 2002, respectively, compared to $4,794,610
and $9,164,041 for the second quarter and six months 2001,
respectively.
(c)Represents the cumulative effect of accounting changes, net of tax,
related to FASB 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".
(d)Adjusted to exclude realized capital gains (losses), the cumulative
effect of accounting changes and acquisition, restructuring and
related charges, net of taxes.
American International Group, Inc.
Supplementary Data
(in thousands)
Three Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 3,684,647 $ 2,580,045 42.8 %
Personal Lines 807,114 611,986 31.9
Mortgage Guaranty 126,131 120,444 4.7
Transatlantic Holdings 592,026 460,899 28.5
Foreign General (b)(c) 1,572,739 1,281,773 22.7
Total 6,782,657 5,055,147 34.2
Operating Income (d)
Domestic Brokerage Group (e) 511,650 500,064 2.3
Personal Lines 62,851 6,711 -
Mortgage Guaranty 124,775 110,715 12.7
Transatlantic Holdings 73,584 46,319 58.9
Foreign General (b) 317,739 276,596 14.9
Intercompany Adjustments 5,682 5,828 -
Total $ 1,096,281 $ 946,233 15.9 %
Combined Ratio:
Domestic Brokerage Group 97.25 98.14
Personal Lines 99.67 104.30
Mortgage Guaranty 29.76 30.35
Transatlantic Holdings 98.22 102.94
Foreign General (b) 88.39 88.82
Losses and Loss Expenses Paid $ 3,961,354 $ 3,470,008 14.2 %
Change in Loss and
Loss Expense Reserve 378,006 49,009 -
Losses and Loss Expenses Incurred 4,339,360 3,519,017 23.3
Net Loss and Loss Expense Reserve 26,400,484 25,063,385 5.3
GAAP Underwriting Profit 416,234 239,306 73.9
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (f) 1,092,064 1,261,344 (13.4)
Fixed Annuities, Pension
and Investment Products 6,097,839 5,654,320 7.8
Accident & Health (g) 0 79,323 -
Total 7,189,903 6,994,987 2.8
Foreign
Life 5,011,451 4,179,426 19.9
Personal Accident 611,089 510,210 19.8
Group Life/Medical 245,596 220,806 11.2
Fixed Annuity/Pension 224,343 188,311 19.1
Total (h) 6,092,479 5,098,753 19.5
Net Investment Income
Domestic
Life 540,662 519,109 4.2
Fixed Annuities, Pension
and Investment Products 1,532,496 1,363,933 12.4
Accident & Health (g) 0 2,425 -
Intercompany Adjustments (56) (50) -
Total 2,073,102 1,885,417 10.0
Foreign
Life 859,952 751,144 14.5
Personal Accident 33,406 31,485 6.1
Group Life/Medical 11,979 11,160 7.3
Fixed Annuity/Pension 71,057 64,815 9.6
Intercompany Adjustments (2,758) (2,429) -
Total 973,636 856,175 13.7
Operating Income (d)
Domestic
Life 311,966 274,963 13.5
Fixed Annuities, Pension
and Investment Products 363,678 324,249 12.2
Accident & Health (g) 0 684 -
Intercompany Adjustments (56) (50) -
Total 675,588 599,846 12.6
Foreign
Life 655,590 519,857 26.1
Personal Accident 159,823 136,365 17.2
Group Life/Medical 29,032 29,198 (0.6)
Fixed Annuity/Pension 11,099 5,151 -
Intercompany Adjustments (2,758) (2,429) -
Total 852,786 688,142 23.9
Total Operating Income 1,528,374 1,287,988 18.7
Total Operating Income excluding
Home Services Business 1,430,540 1,193,080 19.9
Financial Services:
Revenues
International Lease
Finance Corp. 725,740 656,588 10.5
AIG Financial Products Corp. 266,040 271,576 (2.0)
Consumer Finance 613,552 634,725 (3.3)
AIG Trading Group Inc. 70,967 19,859 257.4
Other (2,259) (1,968) -
Total 1,674,040 1,580,780 5.9
Operating Income
International Lease
Finance Corp. 207,674 183,466 13.2
AIG Financial Products Corp. 180,289 188,838 (4.5)
Consumer Finance 140,911 126,391 11.5
AIG Trading Group Inc. 20,979 7,388 184.0
Other (i) (7,839) (19,505) -
Total 542,014 486,578 11.4
Retirement Savings & Asset Management:
Revenues
VALIC (j) 532,376 535,741 (0.6)
SunAmerica (k) 151,714 172,686 (12.1)
Other Asset Management and
Annuity Operations (l) 187,370 228,374 (18.0)
Total 871,460 936,801 (7.0)
Operating Income
VALIC (j) 219,072 170,418 28.5
SunAmerica (k) 11,388 59,913 (81.0)
Other Asset Management and
Annuity Operations (l) 49,755 52,890 (5.9)
Total 280,215 283,221 (1.1)
Variable Annuity Net Sales
Sales
VALIC 1,237,587 1,155,715 7.1
SunAmerica 798,251 876,657 (8.9)
Surrenders
VALIC 655,008 554,554 18.1
SunAmerica 553,327 467,373 18.4
Total
VALIC 582,579 601,161 (3.1)
SunAmerica 244,924 409,284 (40.2)
Total Net Sales $ 827,503 $ 1,010,445 (18.1)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 32.15% 28.38%
Realized Capital
Gains (Losses) Alone 35.00% 35.00%
As Reported 31.50% 27.22%
Six Months Ended June 30,
2002 2001(a) Change
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 7,130,809 $ 4,986,699 43.0 %
Personal Lines 1,533,214 1,246,488 23.0
Mortgage Guaranty 248,353 238,963 3.9
Transatlantic Holdings 1,155,581 906,578 27.5
Foreign General (b)(c) 3,048,983 2,541,172 20.0
Total 13,116,940 9,919,900 32.2
Operating Income (d)
Domestic Brokerage Group (e) 1,042,738 991,108 5.2
Personal Lines 85,987 19,172 -
Mortgage Guaranty 236,424 212,759 11.1
Transatlantic Holdings 145,632 106,192 37.1
Foreign General (b) 629,202 577,661 8.9
Intercompany Adjustments 11,365 11,658 -
Total $ 2,151,348 $ 1,918,550 12.1 %
Combined Ratio:
Domestic Brokerage Group 97.44 98.39
Personal Lines 100.36 103.88
Mortgage Guaranty 35.58 33.16
Transatlantic Holdings 98.19 101.32
Foreign General (b) 90.06 89.95
Losses and Loss Expenses Paid $ 7,977,671 $ 6,978,848 14.3 %
Change in Loss and
Loss Expense Reserve 504,972 111,789 -
Losses and Loss Expenses Incurred 8,482,643 7,090,637 19.6
Net Loss and Loss Expense Reserve 26,400,484 25,063,385 5.3
GAAP Underwriting Profit 725,935 495,710 46.4
Life Insurance Operations:
Premium Income, Deposits and
Other Considerations
Domestic
Life (f) 2,208,998 2,326,426 (5.0)
Fixed Annuities, Pension
and Investment Products 12,252,555 10,952,589 11.9
Accident & Health (g) 0 156,818 -
Total 14,461,553 13,435,833 7.6
Foreign
Life 9,464,985 7,952,617 19.0
Personal Accident 1,174,558 989,574 18.7
Group Life/Medical 534,392 467,958 14.2
Fixed Annuity/Pension 464,076 357,953 29.6
Total (h) 11,638,011 9,768,102 19.1
Net Investment Income
Domestic
Life 1,067,988 1,043,787 2.3
Fixed Annuities, Pension
and Investment Products 2,957,508 2,671,919 10.7
Accident & Health (g) 0 4,655 -
Intercompany Adjustments (113) (100) -
Total 4,025,383 3,720,261 8.2
Foreign
Life 1,704,415 1,503,898 13.3
Personal Accident 66,463 64,143 3.6
Group Life/Medical 22,452 22,535 (0.4)
Fixed Annuity/Pension 136,126 124,124 9.7
Intercompany Adjustments (5,515) (4,858) -
Total 1,923,941 1,709,842 12.5
Operating Income (d)
Domestic
Life 588,110 525,049 12.0
Fixed Annuities, Pension
and Investment Products 719,816 631,556 14.0
Accident & Health (g) 0 4,392 -
Intercompany Adjustments (113) (100) -
Total 1,307,813 1,160,897 12.7
Foreign
Life 1,189,518 943,381 26.1
Personal Accident 313,409 275,001 14.0
Group Life/Medical 59,134 53,013 11.5
Fixed Annuity/Pension 19,406 14,868 30.5
Intercompany Adjustments (5,515) (4,858) -
Total 1,575,952 1,281,405 23.0
Total Operating Income 2,883,765 2,442,302 18.1
Total Operating Income excluding
Home Services Business 2,690,541 2,252,604 19.4
Financial Services:
Revenues
International Lease
Finance Corp. 1,366,582 1,278,193 6.9
AIG Financial Products Corp. 538,135 519,267 3.6
Consumer Finance 1,226,489 1,250,290 (1.9)
AIG Trading Group Inc. 114,188 58,751 94.4
Other (4,863) (10,752) -
Total 3,240,531 3,095,749 4.7
Operating Income
International Lease
Finance Corp. 380,762 343,956 10.7
AIG Financial Products Corp. 356,461 354,082 0.7
Consumer Finance 265,282 232,715 14.0
AIG Trading Group Inc. 31,094 13,905 123.6
Other (i) (17,671) (28,145) -
Total 1,015,928 916,513 10.8
Retirement Savings & Asset Management:
Revenues
VALIC (j) 1,066,871 1,062,537 0.4
SunAmerica (k) 305,646 345,535 (11.5)
Other Asset Management and
Annuity Operations (l) 363,762 397,142 (8.4)
Total 1,736,279 1,805,214 (3.8)
Operating Income
VALIC (j) 410,607 333,664 23.1
SunAmerica (k) 50,213 122,358 (59.0)
Other Asset Management and
Annuity Operations (l) 119,073 96,957 22.8
Total 579,893 552,979 4.9
Variable Annuity Net Sales
Sales
VALIC 2,521,723 2,331,557 8.2
SunAmerica 1,503,089 1,759,418 (14.6)
Surrenders
VALIC 1,283,524 1,245,370 3.1
SunAmerica 1,058,375 978,786 8.1
Total
VALIC 1,238,199 1,086,187 14.0
SunAmerica 444,714 780,632 (43.0)
Total Net Sales $ 1,682,913 $ 1,866,819 (9.9)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 31.35% 29.09%
Realized Capital
Gains (Losses) Alone 34.98% 35.10%
As Reported 30.80% 28.55%
(a)Restated to include American General Corporation acquired August
29, 2001 and to conform to the presentation with respect to 2002.
(b)Foreign general insurance excludes the foreign operations of
Transatlantic Holdings, Inc.
(c)The growth in Foreign General net premiums written in original
currency was 27.2 percent and 28.2 percent for the second quarter
and six months 2002, respectively.
(d)Operating income excludes realized capital gains (losses).
(e)Operating income in Domestic Brokerage Group was adversely
impacted by lower net investment income in the second
quarter 2002, as previously discussed.
(f)Excluding single premium product sales, principally private
placement life sales, life premiums increased by 12.3% in the
second quarter of 2002.
(g)Accident & Health is now reported in Domestic Brokerage Group.
(h)The growth in foreign premium income, deposits and other
considerations in original currency was 22.0 percent in the second
quarter and 23.9 percent for the six months.
(i)Includes Other Financial Services Companies and Intercompany
Reclassifications.
(j)VALIC's revenues and operating income reflect the sale of variable
annuity products with fixed annuity options.
(k)Includes variable annuity, mutual fund and broker-dealer
operations.
(l)Includes AIG Global Investment Group, AIG Private Bank, John McStay
Investment Counsel and certain overseas variable annuity
operations.
*T
Short Name: American Intnl Group
Category Code: IR
Sequence Number: 00000527
Time of Receipt (offset from UTC): 20020726T194349+0100
--30--kam/in*
CONTACT: American International Group, Inc.
Investment Community:
Charlene M. Hamrah, 212/770-7074
News Media:
Joe Norton, 212/770-3144
KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: BANKING INSURANCE CONFERENCE CALLS EARNINGS
SOURCE: American Intnl Group
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