BW20021024000286 20021024T122201Z UTC
( BW)(AMERICAN-INTL-GROUP)(BB99) 3rd Quarter Results
Business Editors
UK REGULATORY NEWS
NEW YORK--(BUSINESS WIRE)--Oct. 24, 2002--
AIG Reports Third Quarter 2002 Net Income of
$1.84 Billion vs. $326.8 Million in 2001
American International Group, Inc. (AIG) today reported that its
net income for the third quarter of 2002 was $1.84 billion, compared
to $326.8 million in the third quarter of 2001. For the first nine
months of 2002, net income totaled $5.62 billion, an increase of 60.8
percent compared to $3.50 billion in the same period of 2001.
Income as adjusted-excluding net realized capital gains (losses)
in both years and in 2001 the cumulative effect of accounting changes
and acquisition, restructuring and related charges-increased 54.6
percent to $2.23 billion in the third quarter and 22.3 percent to
$6.58 billion for the first nine months of 2002.
Following is a summary table of third quarter and nine months
information (in millions, except per share amounts):
-0-
*T
THIRD QUARTER NINE MONTHS
2002 2001 Change 2002 2001 Change
Net income,
as reported $1,841.2 $ 326.8 463.5% $5,622.7 $3,496.9 60.8%
Income,
as adjusted(a) $2,233.8 $1,444.5 54.6% $6,577.9 $5,378.7 22.3%
Income,
as adjusted
excluding
WTC losses(b) $2,233.8 $1,977.5 13.0% $6,577.9 $5,911.7 11.3%
PER SHARE RESULTS:
Net income,
as reported $ 0.70 $ 0.12 483.3% $ 2.13 $ 1.32 61.4%
Income,
as adjusted(a) $ 0.85 $ 0.55 54.5% $ 2.50 $ 2.03 23.2%
Income,
as adjusted
excluding
WTC losses(b) $ 0.85 $ 0.75 13.3% $ 2.50 $ 2.23 12.1%
Average shares
outstanding 2,634.0 2,651.3 2,635.3 2,652.5
(a) Adjusted to exclude realized capital gains (losses) in both
years and the cumulative effect of accounting changes and acquisition,
restructuring and related charges in 2001, net of taxes.
(b) Adjusted to exclude realized capital gains (losses) in both
years and the cumulative effect of accounting changes, acquisition,
restructuring and related charges and World Trade Center (WTC) losses
in 2001, net of taxes.
Note: Catastrophe losses, 21st Century loss adjustment expense
reserves to resolve SB1899 Northridge earthquake claims and the write
off of capitalized costs associated with a software development
project by 21st Century amounted to $120 million pretax in the third
quarter 2002.
Highlights of the third quarter 2002 include:
- Record income as adjusted (excluding realized capital gains
(losses)) of $2.23 billion, an increase of 54.6 percent over reported
third quarter 2001 income as adjusted (excluding realized capital
gains (losses) and acquisition-related charges) and an increase of
13.0 percent over third quarter 2001 income as adjusted (excluding
realized capital gains (losses), World Trade Center losses and
acquisition-related charges).
- Return on equity of 16.4 percent on an annualized basis.
- Record consolidated assets at September 30, 2002 of
approximately $547 billion, an increase of $23 billion over June 30,
2002.
- Record shareholders' equity at September 30, 2002 of
approximately $58.7 billion, an increase of $3.7 billion over June 30,
2002.
- Third quarter realized capital losses, primarily in the domestic
fixed income portfolio, of $595.6 million.
- Record quarter General Insurance net premiums written of $7.08
billion, an increase of 42.2 percent over third quarter 2001.
- General Insurance pretax operating income before realized
capital gains (losses) of $1.05 billion.
- Third quarter 2002 pretax catastrophe losses of $40 million.
- 21st Century Insurance Group third quarter loss adjustment
expense pretax provision of $43 million to resolve SB1899 Northridge
earthquake claims and a $37 million pretax charge to write off
capitalized costs associated with a software development project.
- Record General Insurance cash flow of $4.76 billion during the
first nine months of 2002.
- General Insurance net loss and loss adjustment reserves totaling
$27.04 billion as of September 30, 2002, an increase of $641.1 million
and $1.15 billion in the third quarter and nine months of 2002,
respectively. Reserves previously established for the September 11,
2001 terrorist attacks continue to be adequate.
- Life Insurance premium income, deposits and other considerations
totaling $11.94 billion, an increase of 16.5 percent over third
quarter 2001.
- Life Insurance pretax operating income before realized capital
gains (losses) of $1.52 billion.
- Financial Services operating income of $552.5 million, an
increase of 13.3 percent over third quarter 2001.
- Retirement Savings & Asset Management operating income of $228.2
million, a decrease of 7.8 percent from third quarter 2001.
Income before income taxes, minority interest, and the cumulative
effect of accounting changes was $2.73 billion in the third quarter of
2002 and $8.45 billion for the first nine months of 2002. The
following table outlines the results for the third quarter and nine
months (in millions):
THIRD QUARTER NINE MONTHS
2002 2001 Change 2002 2001 Change
General
Insurance(a) $1,051.7 $ 970.5 8.4% $3,203.0 $2,889.1 10.9%
Life Insurance(a) 1,516.7 1,296.1 17.0 4,400.5 3,738.4 17.7
Financial Services 552.5 487.5 13.3 1,568.4 1,404.0 11.7
Retirement Savings
& Asset
Management 228.2 247.5 (7.8) 808.1 800.4 1.0
Other Income
(Deductions)-net (25.2) (8.3) - (68.4) 55.7 -
Income before
income taxes,
minority interest,
realized capital
losses, acquisition,
restructuring and
related charges
and WTC losses 3,323.9 2,993.3 11.0 9,911.6 8,887.6 11.5
Realized capital
gains (losses) (595.6) (113.8) - (1,456.9) (549.2) -
WTC losses 0.0 (900.0)(b)- 0.0 (900.0)(b) -
Acquisition,
restructuring and
related charges 0.0 (1,362.8) - 0.0 (2,016.5) -
Income before
income taxes
and minority
interest $2,728.3 $ 616.7 342.4% $8,454.7 $5,421.9 55.9%
(a) Excluding WTC losses in 2001.
(b) Includes 100 percent of Transatlantic WTC losses.
The following table outlines the impact of foreign exchange on
property-casualty and life insurance premiums for the third quarter
2002:
Worldwide Foreign Worldwide Foreign
General General Life Life
Insurance Insurance Insurance Insurance
Premium Growth in
Original Currency 42.1% 19.6% 14.5%(a) 14.0%(a)
Foreign Exchange Impact 0.1 (0.3) 2.0 4.1
Premium Growth as
Reported in U.S.$ 42.2% 19.3% 16.5% 18.1%
(a) Premium income, deposits and other considerations. (See
supplementary data information.)
Commenting on third quarter performance, AIG Chairman M.R.
Greenberg said, "AIG had a good quarter. Worldwide General Insurance
had record net premiums written of $7.08 billion, up 42.2 percent over
the third quarter of 2001. This substantial growth is the result of
new business successes as well as rate increases. The combined ratio
in the third quarter of 2002 was 94.54. Market conditions continue to
be firm around the world, and rates are still rising, following years
of inadequate pricing and increasing loss costs. There are no signs
that the market will soften in the foreseeable future. If anything,
rates in many classes of business will continue to rise for some time.
Reinsurance markets remain very constrained. While the industry has
had a modest influx of new capital, the new capacity is not
significant enough to impact market conditions in the current
environment. In Europe, the August floods had a sharp impact on
European insurers, on top of the losses they suffered from their large
exposures to falling equity markets. As a consequence, the
property-casualty insurance market remains tight, and the flight to
quality, which is benefiting AIG, has become more pronounced.
"In the United States, Domestic Brokerage Group net premiums
written in the third quarter of 2002 grew 59.5 percent to a record
$3.90 billion. The combined ratio was 96.47. Rate increases in the
United States generally exceed those in other parts of the world
because inadequate domestic pricing over the past decade has been
exacerbated by rising liability claim costs resulting from the
epidemic of lawsuits filed by the plaintiffs' bar. All areas of our
business are benefiting in the current market environment. Areas of
growth include National Union, which launched three new directors and
officers insurance products during the quarter; Lexington Insurance
Company, the largest U.S. excess and surplus lines provider, which had
particularly strong results in its property, healthcare and casualty
businesses; and AIG Environmental, which increased the capacity it
provides to the pollution and environmental risk market.
"HSB Group, Inc., the industry leader in providing equipment
breakdown insurance and related engineering and loss control services,
continues to grow and is profiting from strong synergies with AIG's
Domestic Brokerage and Foreign General Groups.
"In the Domestic Personal Lines business, net premiums written
grew 36.5 percent to a record $835.5 million. However, the combined
ratio was 105.22, compared to 99.58 in the third quarter of 2001, as a
result of an increase in loss adjustment expense reserves of $43
million at 21st Century Insurance Group, for homeowners' claims from
the 1994 Northridge earthquake. Legal challenges to the California law
that took the unprecedented step of reopening these claims were
unsuccessful, and in July of 2002, 21st Century commenced an
additional review of these claims. 21st Century will also continue to
seek other avenues and opportunities to challenge the
constitutionality of SB1899 or to narrow its scope. Excluding this
charge, the Domestic Personal Lines combined ratio was 99.41. In
addition, 21st Century recorded a charge of $37 million to write down
certain software development costs for a policy processing system that
failed to meet all performance expectations. 21st Century is pursuing
solutions with the current software vendor.
"United Guaranty Corporation, a leading provider of mortgage
guaranty insurance, had net premiums written of $133.0 million,
compared to $124.6 million in the third quarter of 2001. The credit
quality of United Guaranty's portfolio continues to be very strong.
"Transatlantic Holdings, Inc. had net premiums written of $687.2
million in the third quarter of 2002, up 32.2 percent over the prior
year. The combined ratio was 98.03.
"Foreign General Insurance, the most extensive worldwide property-
casualty insurance network in the industry, had another excellent
quarter. Premiums were a record $1.53 billion, an increase of 19.3
percent. The combined ratio was 88.74. Every region contributed to
this growth, and results were particularly strong in the United
Kingdom, Continental Europe and Asia. These regions are benefiting
from rate increases as well as new business, which we are generating
through innovative product offerings, superior service and the
accelerating flight to quality.
"General Insurance net investment income declined to $661.0
million in the third quarter of 2002 from $724.3 million in the third
quarter of 2001, primarily the result of reduced distributions from
our private equity portfolio due to lower IPO activity in the weak
equity markets prevailing in the quarter, coupled with the
reinvestment of maturing fixed income securities at significantly
lower interest rates. However, worldwide net new cash flow from
insurance operations and the reinvestment of investment income
amounted to a record $4.76 billion in the first nine months of 2002.
These new funds are being invested primarily in fixed income
securities and will generate additional investment income in future
periods.
"AIG had excellent performance from both its domestic and foreign
Life Insurance operations. AIG's worldwide Life Insurance operating
income was $1.52 billion, an increase of 30.2 percent over reported
results in the third quarter of 2001 and up 17.0 percent over third
quarter 2001 results excluding World Trade Center and related losses.
Life Insurance premium income, deposits and other considerations were
$11.94 billion, up 16.5 percent.
"In Asia, we achieved significant growth in Japan, Korea and
Thailand. In China, our wholly owned life insurance operations in
Beijing are off to a very good start. The Suzhou branch shortly will
be fully operational, and we expect to receive formal approval to open
life insurance operations in Dongguen and Jiangmen very soon. In all,
including our existing Chinese life operations, we already have
approximately 14,000 life insurance agents in that country.
"In the United States, American General's integration plans are on
or ahead of target. New initiatives are showing meaningful results,
and cross selling efforts are succeeding. The performance of the home
services business improved as a result of new agent recruitment, new
products, cross selling and higher rates of persistency. AIG's profit
center management discipline and focus are taking hold and we are
pleased with American General's results.
"Financial Services operating income was $552.5 million, compared
to $487.5 million in the third quarter of 2001. International Lease
Finance Corporation (ILFC) reported operating income of $207.3 million
in the third quarter of 2002, versus $187.0 million a year ago.
Despite the slowdown in commercial aviation, there continues to be
strong market demand for ILFC's modern and efficient fleet. Virtually
all planes coming off-lease in 2002 have been placed with other
airlines, and all deliveries of new aircraft for the balance of 2002
and scheduled for delivery in 2003 also have been successfully leased.
Approximately 85 percent of ILFC's fleet is leased outside of the
United States, primarily in Asia and Europe, which limits our exposure
to the severe conditions in the domestic commercial aviation market.
"AIG Financial Products Corp. (AIGFP) reported operating income of
$185.0 million, compared to $170.4 million in the third quarter of
2001. AIGFP, which provides risk management solutions to corporate and
institutional clients, hedges its positions and therefore its results
are not dependent on the direction of interest rates, currencies or
the equity markets. AIG Trading Group had another solid quarter.
"American General Finance continues to perform strongly and its
credit quality remains solid. The results of our international
consumer finance operations were satisfactory with the exception of
Argentina, where political and economic conditions remain adverse, and
Hong Kong, which is experiencing a significant slowdown in economic
activity.
"Retirement Savings & Asset Management operating income declined
to $228.2 million, from $247.5 million in the third quarter of 2001.
Weak equity markets continue to have a negative impact on AIG
SunAmerica's variable annuity business. AIG VALIC, the group
retirement business, had a satisfactory quarter. Beginning in the
first quarter 2003, AIG VALIC will provide investment advisory
services to group retirement plan participants. As a leader in the
retirement savings market, AIG VALIC is well positioned to benefit
from strong customer demand for quality investment advice provided by
an independent third-party. At September 30, 2002 AIG's third party
assets under management, including retail mutual funds and
institutional accounts, totaled approximately $40 billion.
"AIG, which is one of the largest participants in the fixed-income
securities market, reported $595.6 million in realized capital losses
in the quarter. As a percentage of our portfolio and our total equity
capital, however, this is not significant. While not immune to equity
and credit market conditions, AIG is in a very strong position. We
have a conservative investment portfolio, primarily comprised of high
quality, fixed-income securities and a relatively small percentage of
equities. SunAmerica's private equity and venture capital portfolio,
reported in the Other Income (Deductions) line, showed lower returns
due to the conditions described earlier with respect to General
Insurance investment income.
"In August, we announced that AIG will expense the fair value of
all stock options granted beginning January 1, 2003 in accordance with
SFAS No. 123, Accounting for Stock-Based Compensation. As previously
disclosed, the impact in 2003 of adopting SFAS No. 123 is estimated at
less than $0.01 per share."
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, November
1, 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
June 30, 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.
American International Group, Inc.
Financial Highlights
(in thousands, except per share amounts)
Three Months Ended September 30,
2002 2001(a) Change
General Insurance Operations
As Reported:
Net Premiums Written $ 7,084,793 $ 4,983,284 42.2 %
Net Premiums Earned 6,195,796 4,845,179 27.9
Adjusted Underwriting Profit(Loss) 390,661 (522,837) -
Net Investment Income 661,002 724,349 (8.7)
Income before Realized
Capital Gains (Losses) 1,051,663 201,512 421.9
Realized Capital Gains (Losses) (210,297) (89,419) -
Operating Income $ 841,366 $ 112,093 650.6 %
Loss Ratio 74.38 89.37
Expense Ratio 20.16 22.15
Combined Ratio 94.54 111.52
General Insurance Operations
Excluding World Trade Center Losses:
Net Premiums Written $ 7,084,793 $ 4,983,284 42.2 %
Net Premiums Earned 6,195,796 4,845,179 27.9
Adjusted Underwriting Profit 390,661 246,163 58.7
Net Investment Income 661,002 724,349 (8.7)
Income before Realized
Capital Gains (Losses) 1,051,663 970,512 8.4
Realized Capital Gains (Losses) (210,297) (89,419) -
Operating Income $ 841,366 $ 881,093 (4.5)%
Loss Ratio 74.38 73.50
Expense Ratio 20.16 22.15
Combined Ratio 94.54 95.65
Nine Months Ended September 30,
2002 2001(a) Change
General Insurance Operations
As Reported:
Net Premiums Written $ 20,201,733 $ 14,903,184 35.6 %
Net Premiums Earned 17,561,487 14,308,992 22.7
Adjusted Underwriting Profit(Loss) 1,116,596 (27,127) -
Net Investment Income 2,086,415 2,147,189 (2.8)
Income before Realized
Capital Gains (Losses) 3,203,011 2,120,062 51.1
Realized Capital Gains (Losses) (492,157) (147,120) -
Operating Income $ 2,710,854 $ 1,972,942 37.4 %
Loss Ratio 74.54 79.82
Expense Ratio 20.23 21.24
Combined Ratio 94.77 101.06
General Insurance Operations
Excluding World Trade Center Losses:
Net Premiums Written $ 20,201,733 $ 14,903,184 35.6 %
Net Premiums Earned 17,561,487 14,308,992 22.7
Adjusted Underwriting Profit 1,116,596 741,873 50.5
Net Investment Income 2,086,415 2,147,189 (2.8)
Income before Realized
Capital Gains (Losses) 3,203,011 2,889,062 10.9
Realized Capital Gains (Losses) (492,157) (147,120) -
Operating Income $ 2,710,854 $ 2,741,942 (1.1)%
Loss Ratio 74.54 74.44
Expense Ratio 20.23 21.24
Combined Ratio 94.77 95.68
(a) Restated to conform to the presentation with respect to 2002.
Three Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations
As Reported:
Premium Income, Deposits and
Other Considerations (b) $ 11,943,387 $ 10,255,686 16.5 %
Net Investment Income 3,179,455 2,776,527 14.5
Income before Realized
Capital Gains (Losses) 1,516,745 1,165,116 30.2
Realized Capital Gains (Losses) (261,798) 16,668 -
Operating Income $ 1,254,947 $ 1,181,784 6.2 %
Life Insurance Operations
Excluding World Trade Center Losses:
Premium Income, Deposits and
Other Considerations (b) $ 11,943,387 $ 10,255,686 16.5 %
Net Investment Income 3,179,455 2,776,527 14.5
Income before Realized
Capital Gains (Losses) 1,516,745 1,296,116 17.0
Realized Capital Gains (Losses) (261,798) 16,668 -
Operating Income $ 1,254,947 $ 1,312,784 (4.4)%
Nine Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations
As Reported:
Premium Income, Deposits and
Other Considerations (b) $ 38,042,951 $ 33,459,621 13.7 %
Net Investment Income 9,128,779 8,206,630 11.2
Income before Realized
Capital Gains (Losses) 4,400,510 3,607,418 22.0
Realized Capital Gains (Losses) (601,209) (4,233) -
Operating Income $ 3,799,301 $ 3,603,185 5.4 %
Life Insurance Operations
Excluding World Trade Center Losses:
Premium Income, Deposits and
Other Considerations (b) $ 38,042,951 $ 33,459,621 13.7 %
Net Investment Income 9,128,779 8,206,630 11.2
Income before Realized
Capital Gains (Losses) 4,400,510 3,738,418 17.7
Realized Capital Gains (Losses) (601,209) (4,233) -
Operating Income $ 3,799,301 $ 3,734,185 1.7 %
(a) Restated to conform to the presentation with respect to 2002.
(b) GAAP premium income was $5,087,819 and $15,030,830 for the
third quarter and nine months 2002, respectively, compared to
$4,807,384 and $13,971,425 for the third quarter and nine
months 2001, respectively.
Three Months Ended September 30,
2002 2001(a) Change
Financial Services Operating Income $ 552,493 $ 487,500 13.3 %
Retirement Savings & Asset
Management Operating Income 228,223 247,458 (7.8)
Other Realized Capital Gains (Losses) (123,461) (41,010) -
Other Income (Deductions) - net (25,207) (8,294) -
Acquisition, Restructuring and
Related Charges 0 (1,362,783) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 2,728,361 616,748 342.4
Income Taxes 817,443 163,388 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 1,910,918 453,360 321.5
Minority Interest, after tax -
Operating Income (67,529) (43,843) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (2,194) (1,517) -
Income before Cumulative Effect
of Accounting Changes 1,841,195 408,000 351.3
Cumulative Effect of Accounting
Changes, net of tax (b) 0 (81,250) -
Net Income, as reported 1,841,195 326,750 463.5
Income, as adjusted (c) 2,233,841 1,444,467 54.6
Income, as adjusted excluding
WTC losses (c) $ 2,233,841 $ 1,977,467 13.0 %
Per Share - Diluted:
Net Income, as reported $ 0.70 $ 0.12 483.3 %
Income, as adjusted (c) 0.85 0.55 54.5
Income, as adjusted excluding
WTC losses (c) $ 0.85 $ 0.75 13.3 %
Average Diluted Common
Shares Outstanding 2,634,040 2,651,303
Nine Months Ended September 30,
2002 2001(a) Change
Financial Services Operating Income $ 1,568,421 $ 1,404,013 11.7 %
Retirement Savings & Asset
Management Operating Income 808,116 800,437 1.0
Other Realized Capital Gains (Losses) (363,500) (397,848) -
Other Income (Deductions) - net (68,423) 55,724 -
Acquisition, Restructuring and
Related Charges 0 (2,016,529) -
Income before Income Taxes, Minority
Interest and Cumulative Effect
of Accounting Changes 8,454,769 5,421,924 55.9
Income Taxes 2,581,087 1,535,129 -
Income before Minority Interest
and Cumulative Effect of
Accounting Changes 5,873,682 3,886,795 51.1
Minority Interest, after tax -
Operating Income (246,208) (250,580) -
Minority Interest, after tax -
Realized Capital Gains (Losses) (4,784) (3,064) -
Income before Cumulative Effect
of Accounting Changes 5,622,690 3,633,151 54.8
Cumulative Effect of Accounting
Changes, net of tax (b) 0 (136,203) -
Net Income, as reported 5,622,690 3,496,948 60.8
Income, as adjusted (c) 6,577,925 5,378,721 22.3
Income, as adjusted excluding
WTC losses (c) $ 6,577,925 $ 5,911,721 11.3 %
Per Share - Diluted:
Net Income, as reported $ 2.13 $ 1.32 61.4 %
Income, as adjusted (c) 2.50 2.03 23.2
Income, as adjusted excluding
WTC losses (c) $ 2.50 $ 2.23 12.1 %
Average Diluted Common
Shares Outstanding 2,635,342 2,652,501
(a) Restated to conform to the presentation with respect to 2002.
(b) 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".
(c) 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 September 30,
2002 2001(a) Change
General Insurance Operations
As Reported:
Net Premiums Written
Domestic Brokerage Group $ 3,898,774 $ 2,443,849 59.5 %
Personal Lines 835,541 612,011 36.5
Mortgage Guaranty 132,994 124,634 6.7
Transatlantic Holdings 687,207 520,017 32.2
Foreign General (b)(c) 1,530,277 1,282,773 19.3
Total 7,084,793 4,983,284 42.2
Operating Income (Loss)(d)
Domestic Brokerage Group (e) 543,992 (13,365) -
Personal Lines (f) 15,142 29,004 (47.8)
Mortgage Guaranty 95,294 108,406 (12.1)
Transatlantic Holdings 74,877 (139,210) -
Foreign General (b) 316,676 210,850 50.2
Intercompany Adjustments 5,682 5,827 -
Total $ 1,051,663 $ 201,512 421.9 %
Combined Ratio:
Domestic Brokerage Group 96.47 121.00
Personal Lines (f) 105.22 99.58
Mortgage Guaranty 48.30 33.15
Transatlantic Holdings 98.03 141.12
Foreign General (b) 88.74 95.34
Losses and Loss Expenses Paid $ 3,967,224 $ 3,639,005 9.0 %
Change in Loss and
Loss Expense Reserve (g) 641,078 691,217 (7.3)
Losses and Loss Expenses Incurred 4,608,302 4,330,222 6.4
Net Loss and Loss Expense Reserve 27,041,562 25,754,602 5.0
GAAP Underwriting Profit (Loss) $ 390,661 $ (522,837) - %
General Insurance Operations
Excluding World Trade Center Losses:
Operating Income (d)
Domestic Brokerage Group (e) $ 543,992 $ 530,635 2.5 %
Personal Lines (f) 15,142 29,004 (47.8)
Mortgage Guaranty 95,294 108,406 (12.1)
Transatlantic Holdings 74,877 60,790 23.2
Foreign General (b) 316,676 235,850 34.3
Intercompany Adjustments 5,682 5,827 -
Total $ 1,051,663 $ 970,512 8.4 %
Combined Ratio:
Domestic Brokerage Group 96.47 98.21
Personal Lines (f) 105.22 99.58
Mortgage Guaranty 48.30 33.15
Transatlantic Holdings 98.03 99.39
Foreign General (b) 88.74 93.35
GAAP Underwriting Profit $ 390,661 $ 246,163 58.7 %
Nine Months Ended September 30,
2002 2001(a) Change
General Insurance Operations
As Reported:
Net Premiums Written
Domestic Brokerage Group $ 11,029,583 $ 7,430,548 48.4 %
Personal Lines 2,368,755 1,858,499 27.5
Mortgage Guaranty 381,347 363,597 4.9
Transatlantic Holdings 1,842,788 1,426,595 29.2
Foreign General (b)(c) 4,579,260 3,823,945 19.8
Total 20,201,733 14,903,184 35.6
Operating Income (Loss) (d)
Domestic Brokerage Group (e) 1,586,730 977,743 62.3
Personal Lines (f) 101,129 48,176 109.9
Mortgage Guaranty 331,718 321,165 3.3
Transatlantic Holdings 220,509 (33,018) -
Foreign General (b) 945,878 788,511 20.0
Intercompany Adjustments 17,047 17,485 -
Total $ 3,203,011 $ 2,120,062 51.1 %
Combined Ratio:
Domestic Brokerage Group 97.10 105.96
Personal Lines (f) 102.04 102.49
Mortgage Guaranty 39.93 33.11
Transatlantic Holdings 98.13 115.48
Foreign General (b) 89.55 91.82
Losses and Loss Expenses Paid $ 11,944,895 $ 10,617,853 12.5 %
Change in Loss and
Loss Expense Reserve (g) 1,146,050 803,006 42.7
Losses and Loss Expenses Incurred 13,090,945 11,420,859 14.6
Net Loss and Loss Expense Reserve 27,041,562 25,754,602 5.0
GAAP Underwriting Profit (Loss) $ 1,116,596 $ (27,127) - %
General Insurance Operations
Excluding World Trade Center Losses:
Operating Income (d)
Domestic Brokerage Group (e) $ 1,586,730 $ 1,521,743 4.3 %
Personal Lines (f) 101,129 48,176 109.9
Mortgage Guaranty 331,718 321,165 3.3
Transatlantic Holdings 220,509 166,982 32.1
Foreign General (b) 945,878 813,511 16.3
Intercompany Adjustments 17,047 17,485 -
Total $ 3,203,011 $ 2,889,062 10.9 %
Combined Ratio:
Domestic Brokerage Group 97.10 98.31
Personal Lines (f) 102.04 102.49
Mortgage Guaranty 39.93 33.11
Transatlantic Holdings 98.13 100.63
Foreign General (b) 89.55 91.13
GAAP Underwriting Profit $ 1,116,596 $ 741,873 50.5 %
(a) Restated 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 19.6 percent and 25.3 percent for the third
quarter and nine 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 third quarter
2002, as previously discussed.
(f) Includes 21st Century Insurance Group provision of $43 million
for Northridge earthquake loss adjustment expense in the third
quarter 2002.
(g) Change in reserve for 2001 includes the provision for World
Trade Center and related losses.
Three Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (b) $ 989,292 $ 982,607 0.7 %
Fixed Annuities, Pension
and Investment Products 5,046,543 4,271,910 18.1
Accident & Health (c) 0 0 -
Total 6,035,835 5,254,517 14.9
Foreign
Life 4,812,430 3,972,762 21.1
Personal Accident 653,473 557,484 17.2
Group Life/Medical 243,847 244,852 (0.4)
Fixed Annuity/Pension 197,802 226,071 (12.5)
Total (d) 5,907,552 5,001,169 18.1
Net Investment Income
Domestic
Life 542,925 513,744 5.7
Fixed Annuities, Pension
and Investment Products 1,583,342 1,365,767 15.9
Accident & Health (c) 0 0 -
Intercompany Adjustments (64) (57) -
Total 2,126,203 1,879,454 13.1
Foreign
Life 934,729 784,610 19.1
Personal Accident 37,690 32,924 14.5
Group Life/Medical 12,171 11,783 3.3
Fixed Annuity/Pension 71,747 70,513 1.8
Intercompany Adjustments (3,085) (2,757) -
Total $ 1,053,252 $ 897,073 17.4 %
Nine Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations:
Premium Income, Deposits and Other Considerations
Domestic
Life (b) $ 3,198,290 $ 3,309,033 (3.3)%
Fixed Annuities, Pension
and Investment Products 17,299,098 15,224,499 13.6
Accident & Health (c) 0 156,818 -
Total 20,497,388 18,690,350 9.7
Foreign
Life 14,277,415 11,925,379 19.7
Personal Accident 1,828,031 1,547,058 18.2
Group Life/Medical 778,239 712,810 9.2
Fixed Annuity/Pension 661,878 584,024 13.3
Total (d) 17,545,563 14,769,271 18.8
Net Investment Income
Domestic
Life 1,610,913 1,557,531 3.4
Fixed Annuities, Pension
and Investment Products 4,540,850 4,037,686 12.5
Accident & Health (c) 0 4,655 -
Intercompany Adjustments (177) (157) -
Total 6,151,586 5,599,715 9.9
Foreign
Life 2,639,144 2,288,508 15.3
Personal Accident 104,153 97,067 7.3
Group Life/Medical 34,623 34,318 0.9
Fixed Annuity/Pension 207,873 194,637 6.8
Intercompany Adjustments (8,600) (7,615) -
Total $ 2,977,193 $ 2,606,915 14.2 %
(a) Restated to conform to the presentation with respect to 2002.
(b) Excluding single premium product sales, principally private
placement life sales, and corporate life market sales, life
premiums increased by 6.4 percent in the third quarter of
2002.
(c) Accident & Health is now reported in Domestic Brokerage Group.
(d) The growth in foreign premium income, deposits and other
considerations in original currency was 14.0 percent in the
third quarter and 20.6 percent for the nine months.
Three Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations
As Reported:
Operating Income (b)
Domestic
Life $ 327,685 $ 182,818 79.2 %
Fixed Annuities, Pension
and Investment Products 364,391 318,651 14.4
Accident & Health (c) 0 0 -
Intercompany Adjustments (64) (57) -
Total 692,012 501,412 38.0
Foreign
Life 614,543 491,024 25.2
Personal Accident 169,250 143,087 18.3
Group Life/Medical 32,739 22,784 43.7
Fixed Annuity/Pension 11,286 9,566 18.0
Intercompany Adjustments (3,085) (2,757) -
Total 824,733 663,704 24.3
Total Operating Income 1,516,745 1,165,116 30.2
Total Operating Income excluding
Home Services Business $ 1,424,498 $ 1,073,906 32.6 %
Life Insurance Operations
Excluding World Trade Center Losses:
Operating Income (b)
Domestic
Life $ 327,685 $ 282,818 15.9 %
Fixed Annuities, Pension
and Investment Products 364,391 349,651 4.2
Accident & Health (c) 0 0 -
Intercompany Adjustments (64) (57) -
Total 692,012 632,412 9.4
Foreign
Life 614,543 491,024 25.2
Personal Accident 169,250 143,087 18.3
Group Life/Medical 32,739 22,784 43.7
Fixed Annuity/Pension 11,286 9,566 18.0
Intercompany Adjustments (3,085) (2,757) -
Total 824,733 663,704 24.3
Total Operating Income 1,516,745 1,296,116 17.0
Total Operating Income excluding
Home Services Business $ 1,424,498 $ 1,204,906 18.2 %
Nine Months Ended September 30,
2002 2001(a) Change
Life Insurance Operations
As Reported:
Operating Income (b)
Domestic
Life $ 915,795 $ 707,867 29.4 %
Fixed Annuities, Pension
and Investment Products 1,084,207 950,207 14.1
Accident & Health (c) 0 4,392 -
Intercompany Adjustments (177) (157) -
Total 1,999,825 1,662,309 20.3
Foreign
Life 1,804,061 1,434,405 25.8
Personal Accident 482,659 418,088 15.4
Group Life/Medical 91,873 75,797 21.2
Fixed Annuity/Pension 30,692 24,434 25.6
Intercompany Adjustments (8,600) (7,615) -
Total 2,400,685 1,945,109 23.4
Total Operating Income 4,400,510 3,607,418 22.0
Total Operating Income excluding
Home Services Business $ 4,115,039 $ 3,326,510 23.7 %
Life Insurance Operations
Excluding World Trade Center Losses:
Operating Income (b)
Domestic
Life $ 915,795 $ 807,867 13.4 %
Fixed Annuities, Pension
and Investment Products 1,084,207 981,207 10.5
Accident & Health (c) 0 4,392 -
Intercompany Adjustments (177) (157) -
Total 1,999,825 1,793,309 11.5
Foreign
Life 1,804,061 1,434,405 25.8
Personal Accident 482,659 418,088 15.4
Group Life/Medical 91,873 75,797 21.2
Fixed Annuity/Pension 30,692 24,434 25.6
Intercompany Adjustments (8,600) (7,615) -
Total 2,400,685 1,945,109 23.4
Total Operating Income 4,400,510 3,738,418 17.7
Total Operating Income
excluding Home Services
Business $ 4,115,039 $ 3,457,510 19.0 %
(a) Restated to conform to the presentation with respect to 2002.
(b) Operating income excludes realized capital gains (losses).
(c) Accident & Health is now reported in Domestic Brokerage Group.
Three Months Ended September 30,
2002 2001(a) Change
Financial Services:
Revenues
International Lease
Finance Corp. $ 728,876 $ 658,744 10.6 %
AIG Financial Products Corp. 319,307 283,135 12.8
Consumer Finance 611,583 652,853 (6.3)
AIG Trading Group Inc. 63,227 49,084 28.8
Other (2,846) (11,492) -
Total 1,720,147 1,632,324 5.4
Operating Income
International Lease
Finance Corp. 207,260 186,996 10.8
AIG Financial Products Corp. 185,003 170,411 8.6
Consumer Finance 144,008 146,418 (1.6)
AIG Trading Group Inc. 19,527 7,111 174.6
Other (b) (3,305) (23,436) -
Total 552,493 487,500 13.3
Retirement Savings & Asset Management:
Revenues
AIG VALIC (c) 539,247 526,077 2.5
AIG SunAmerica (d) 148,268 151,576 (2.2)
Other Asset Management and
Annuity Operations (e) 214,009 232,619 (8.0)
Total 901,524 910,272 (1.0)
Operating Income
AIG VALIC (c) 161,004 157,049 2.5
AIG SunAmerica (d) 7,026 37,444 (81.2)
Other Asset Management and
Annuity Operations (e) 60,193 52,965 13.6
Total 228,223 247,458 (7.8)
Variable Annuity Net Sales
Sales
AIG VALIC 1,239,257 1,116,261 11.0
AIG SunAmerica (f) 700,865 1,288,379 (45.6)
Surrenders
AIG VALIC 639,277 565,084 13.1
AIG SunAmerica (f) 638,535 480,252 33.0
Total
AIG VALIC 599,980 551,177 8.9
AIG SunAmerica (f) 62,330 808,127 (92.3)
Total Net Sales $ 662,310 $ 1,359,304 (51.3)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 30.76% 27.66%
Realized Capital
Gains (Losses) Alone 34.44% 34.01%
As Reported 29.96% 26.49%
Nine Months Ended September 30,
2002 2001(a) Change
Financial Services:
Revenues
International Lease
Finance Corp. $ 2,095,458 $ 1,936,937 8.2 %
AIG Financial Products Corp. 857,442 802,402 6.9
Consumer Finance 1,838,072 1,903,143 (3.4)
AIG Trading Group Inc. 177,415 107,835 64.5
Other (7,709) (22,244) -
Total 4,960,678 4,728,073 4.9
Operating Income
International Lease
Finance Corp. 588,022 530,952 10.7
AIG Financial Products Corp. 541,464 524,493 3.2
Consumer Finance 409,290 379,133 8.0
AIG Trading Group Inc. 50,621 21,016 140.9
Other (b) (20,976) (51,581) -
Total 1,568,421 1,404,013 11.7
Retirement Savings & Asset Management:
Revenues
AIG VALIC (c) 1,606,118 1,588,614 1.1
AIG SunAmerica (d) 453,914 497,111 (8.7)
Other Asset Management and
Annuity Operations (e) 577,771 629,761 (8.3)
Total 2,637,803 2,715,486 (2.9)
Operating Income
AIG VALIC (c) 571,611 490,713 16.5
AIG SunAmerica (d) 57,239 159,802 (64.2)
Other Asset Management and
Annuity Operations (e) 179,266 149,922 19.6
Total 808,116 800,437 1.0
Variable Annuity Net Sales
Sales
AIG VALIC 3,760,980 3,447,818 9.1
AIG SunAmerica (f) 2,203,954 3,047,797 (27.7)
Surrenders
AIG VALIC 1,922,801 1,810,454 6.2
AIG SunAmerica (f) 1,696,910 1,459,038 16.3
Total
AIG VALIC 1,838,179 1,637,364 12.3
AIG SunAmerica (f) 507,044 1,588,759 (68.1)
Total Net Sales $ 2,345,223 $ 3,226,123 (27.3)%
Effective Tax Rates:
Excluding Realized Capital
Gains (Losses) 31.15% 28.92%
Realized Capital
Gains (Losses) Alone 34.76% 34.87%
As Reported 30.53% 28.31%
(a) Restated to conform to the presentation with respect to 2002.
(b) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(c) AIG VALIC's revenues and operating income reflect the sale of
variable annuity products with fixed annuity options.
(d) Includes variable annuity, mutual fund and broker-dealer
operations.
(e) Includes AIG Global Investment Group, AIG Capital Partners,
John McStay Investment Counsel and certain overseas variable
annuity operations.
(f) Excluding certain discontinued short-term fixed rate products
sold in the third quarter 2001, variable annuity sales were
down 3 percent, or 36 percent net of related surrenders, in
the third quarter 2002, and down 11 percent, or 36 percent
net of related surrenders, for the nine months.
*T
Short Name: American Intnl Group
Category Code: QRT
Sequence Number: 00001045
Time of Receipt (offset from UTC): 20021024T041406+0100
--30--kam/in*
CONTACT: American International Group (AIG)
Investment Community: Charlene M. Hamrah, 212/770-7074
News Media: Joe Norton, 212/770-3144
KEYWORD: NEW YORK UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: INSURANCE EARNINGS
SOURCE: American Intnl Group
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