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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 1998.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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AMERICAN BANKERS INSURANCE GROUP, INC.
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(Name of Registrant as Specified in its Charter)
AMERICAN INTERNATIONAL GROUP, INC.
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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On February 10, 1998, American International Group, Inc. issued the
following Press Release:
[AIG LOGO] AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street New York, New York 10270
NEWS
For information, please contact:
Charlene M. Hamrah (Investment Community)
(212) 770-7074
Joe Norton (News Media)
(212) 770-3144
AIG REPORTS 1997 NET INCOME ROSE 15.0 PERCENT
TO RECORD $3.33 BILLION
NEW YORK, NY, February 10, 1998 - American International Group, Inc. (AIG) today
reported that its net income for 1997 increased 15.0 percent to $3.33 billion
from $2.90 billion in 1996. For the fourth quarter of 1997, net income totaled
$884.6 million, an increase of 14.8 percent, compared to $770.2 million in the
same period of 1996.
Following is a summary table of fourth quarter and full year
information (in millions, except per share amounts).
FOURTH QUARTER TWELVE MONTHS
1997 1996 Change 1997 1996 Change
---- ---- ------ ---- ---- ------
Net income, as reported $884.6 $770.2 14.8% $3,332.3 $2,897.3 15.0%
Income, as adjusted* $870.8 $759.9 14.6% $3,257.6 $2,841.9 14.6%
PER SHARE RESULTS:**
BASIC:
Net income, as reported $ 1.27 $ 1.09 16.5% $ 4.75 $ 4.10 15.9%
Income, as adjusted* $ 1.24 $ 1.08 14.8% $ 4.64 $ 4.02 15.4%
Average shares outstanding 700.2 704.2 701.9 706.6
DILUTED:
Net income, as reported $1.26 $1.08 16.7% $4.73 $4.08 15.9%
Income, as adjusted* $1.23 $1.07 15.0% $4.62 $4.00 15.5%
Average shares outstanding 703.3 707.0 705.0 709.3
*Adjusted to exclude realized capital gains, net of taxes.
**Share information reflects the three-for-two split in the form of a 50 percent
common stock dividend, paid July 25, 1997 and the adoption of the Statement of
Financial Accounting Standards No. 128 "Earnings per Share".
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Income before income taxes in 1997 increased 17.1 percent to $4.70
billion from $4.01 billion reported last year. For the fourth quarter of 1997,
income before income taxes amounted to $1.25 billion, an increase of 16.7
percent over the $1.07 billion reported in 1996. Included in these results were
pretax realized capital gains of $118.5 million and $19.5 million for the year
and fourth quarter of 1997, respectively, compared to gains of $88.0 million and
$15.8 million for the same periods in 1996.
Revenues for 1997 rose 9.5 percent to $30.60 billion from $27.94
billion in 1996. Fourth quarter revenues totaled $7.95 billion, an increase of
8.1 percent over $7.36 billion in the year earlier quarter.
Foreign exchange rates continued to affect the translation of foreign
currency net premiums written into U.S. dollars, as shown in the following
table, which compares fourth quarter 1997 to fourth quarter 1996:
WORLDWIDE FOREIGN WORLDWIDE
GENERAL GENERAL LIFE
INSURANCE INSURANCE INSURANCE
--------- --------- ---------
Premium Growth in Original Currency 7.3% 10.6% 17.0%
Foreign Exchange Impact (2.2) (6.6) (11.9)
Premium Growth as Reported in U.S. $ 5.1% 4.0% 5.1%
In the first quarter of 1998, the volatility in Asian currencies has
decreased and exchange rates versus the U.S. dollar have shown signs of
stabilization. If this trend continues, the impact of foreign exchange upon
AIG's financial statements should diminish as the year progresses.
At December 31, 1997, AIG's consolidated assets approximated $165
billion, an increase of 11 percent, compared to $148 billion at the prior
year-end. In 1997, shareholders' equity increased to approximately $24 billion,
a 9 percent increase over the $22 billion reported at December 31, 1996. AIG
continued its program to repurchase shares of its common stock in the open
market, purchasing 2.3 million shares in the fourth quarter for approximately
$231.9 million. For the twelve months ended December 31, we have repurchased
approximately 5.7 million shares for approximately $502.0 million.
Commenting on AIG's fourth quarter and full year results, Chairman M.R.
Greenberg said, "It was a good quarter and year for AIG. For 1997, our net
income, revenues, assets and shareholders' equity all rose to record levels.
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"In general insurance, worldwide net premiums written before the impact
of foreign exchange gained 7.3 percent for the fourth quarter and 7.7 percent
for the year. AIG's underwriting profit for 1997 totaled a record $490.2
million. For the fourth quarter, our combined ratio was 96.46, compared to 97.20
in 1996, while for the full year our combined ratio improved to 96.20, compared
to 96.47 last year.
"The domestic property-casualty business, as I have noted in previous
quarters, remains very competitive, with no signs currently that this situation
will change soon. There continues to be excess capital in the industry, due in
large measure to the rise in the carrying value of the industry's bond and stock
investments which is directly reflected in surplus. In this environment, AIG's
domestic companies continued to emphasize the many specialty products and
classes in which we are leaders. Domestic net premiums written rose 5.7 percent
in the fourth quarter and 8.0 percent for the full year. Our domestic personal
lines business had a very strong year, and United Guaranty Corporation, our
mortgage guaranty insurance subsidiary, also had excellent results, with
operating income rising 21.1 percent to a record $178.2 million.
"AIG's foreign general insurance business had a good year, as net
premiums written before the impact of foreign exchange gained 10.6 percent in
the quarter and 7.2 percent for the full year 1997. Underwriting results were
very strong. In Japan, we commenced the direct marketing of differentiated rate
auto insurance, the first company to be given a license to conduct this
business, and early results are very encouraging. Overall, we had a very good
year in Japan, performing well ahead of the industry. Elsewhere, the United
Kingdom, Continental Europe and Central Europe did well, as did Latin America.
"We added $131 million and $764 million to our general insurance net
loss and loss adjustment reserves for the quarter and full year, respectively,
bringing the total of such reserves to $21.2 billion at year-end 1997.
"General insurance net investment income increased 9.2 percent in the
quarter and 9.6 percent for the year. Cash flow from operations continued to be
strong.
"Our life business continues to have excellent operating results,
although foreign premiums when converted to U.S. dollars are adversely impacted
by foreign exchange. However, since losses and expenses are also incurred in
local currency, the bottom line impact has been relatively small. In addition,
in Asia where currency turmoil has existed, sharply rising interest rates have
had a beneficial impact on operating income. Japan was very strong, with
double-digit premium growth in spite of the recessionary economy. Life
operations are also growing strongly in other regions, including the U.K.,
Central Europe, Latin America and the Middle East. In the United States, life
operations had an excellent quarter and year.
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"Financial services reported strong operating performance for the
fourth quarter and full year. International Lease Finance Corporation, AIG
Financial Products Corp. and AIG Trading Group Inc. all had excellent results
with record earnings for the full year in each case. Fourth quarter operating
income rose sharply to $213.9 million, and full year operating income for
financial services amounted to $701.3 million, compared to $523.9 million last
year, a 33.9 percent increase.
"Our consumer finance group made good progress in 1997, and shortly
before year-end, announced that it had reached an agreement to purchase a
majority ownership in publicly-traded Bangkok Investment Public Company Ltd. of
Thailand. This represents our entry into the consumer finance business in
Thailand.
"In third party asset management, the fourth quarter saw the first
closing of the AIG Asian Infrastructure Fund II L.P., with $1.53 billion in
commitments from U.S. and international institutional investors. Despite the
unsettled financial conditions currently in the Asian region, the substantial
commitments made by AIG and other institutional investors to this new Fund
underscore our confidence in the long term growth prospects for Asia.
"Shortly after year-end, AIG announced that we had purchased all of the
outstanding securities of SELIC Holdings, Ltd. that we did not already own from
the company's other institutional and private shareholders. SELIC's principal
subsidiary, Starr Excess Liability Insurance Company, Ltd., provides high limits
of excess general liability and excess directors and officers insurance."
GENERAL INSURANCE
General insurance pretax income before realized capital gains for 1997
was $2.34 billion, 9.5 percent above the $2.14 billion reported last year. For
the fourth quarter of 1997, general insurance pretax income before realized
capital gains was $605.8 million, an increase of 9.0 percent compared to $555.6
million in 1996.
Worldwide general insurance net premiums written for 1997 amounted to
$13.41 billion, 5.6 percent ahead of the $12.69 billion in 1996. In the fourth
quarter, general insurance net premiums written were $3.12 billion, an increase
of 5.1 percent, compared to $2.97 billion last year.
General insurance net investment income rose 9.6 percent to $1.85
billion in 1997 and 9.2 percent to $487.2 million in the fourth quarter.
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LIFE INSURANCE
AIG's worldwide life insurance operations reported pretax income before
realized capital gains of $1.55 billion in 1997, an increase of 20.3 percent,
compared to $1.29 billion in 1996. For the fourth quarter, life insurance pretax
income before realized capital gains increased 17.6 percent to $415.8 million,
compared to $353.5 million last year.
For the year 1997 life insurance premium income rose 10.6 percent to
$9.93 billion from $8.98 billion in 1996. Fourth quarter premium income amounted
to $2.60 billion, a gain of 5.1 percent, compared to $2.47 billion in 1996.
Life insurance net investment income rose 8.2 percent to $2.90 billion
for the year 1997, compared to $2.68 billion last year. For the fourth quarter,
net investment income amounted to $748.9 million, an increase of 18.9 percent,
compared to $629.6 million in the same period last year.
FINANCIAL SERVICES
Financial services pretax operating income amounted to $701.3 million
for 1997, compared to $523.9 million last year, an increase of 33.9 percent. For
the fourth quarter, financial services operating income increased 43.4 percent
to $213.9 million, compared to $149.1 million in 1996.
OTHER OPERATIONS
AIG's equity in income of minority-owned insurance operations amounted
to $113.6 million for 1997, compared to $99.4 million in 1996. Equity in income
of minority-owned insurance operations for the fourth quarter was $29.0 million,
compared to $25.0 million in 1996.
# # # #
AIG is the leading U.S.-based international insurance organization and among the
largest underwriters of commercial and industrial insurance in the United
States. Its member companies write property, casualty, marine, life and
financial services insurance in approximately 130 countries and jurisdictions,
and are engaged in a range of financial services businesses. American
International Group, Inc.'s common stock is listed on the New York Stock
Exchange, as well as the stock exchanges in London, Paris, Switzerland and
Tokyo.
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AMERICAN INTERNATIONAL GROUP, INC.
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
1997 1996 CHANGE 1997 1996 CHANGE
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GENERAL INSURANCE OPERATIONS:
NET PREMIUMS WRITTEN $ 13,407,529 $ 12,691,679 5.6% $3,120,763 $ 2,969,119 5.1 %
NET PREMIUMS EARNED 12,421,040 11,854,815 4.8 3,123,684 3,090,910 1.1
ADJUSTED UNDERWRITING PROFIT 490,168 449,784 9.0 118,594 109,319 8.5
NET INVESTMENT INCOME 1,853,523 1,690,798 9.6 487,248 446,323 9.2
INCOME BEFORE REALIZED CAPITAL GAINS 2,343,691 2,140,582 9.5 605,842 555,642 9.0
REALIZED CAPITAL GAINS 128,175 64,985 -- 21,388 14,288 --
OPERATING INCOME $ 2,471,866 $ 2,205,567 12.1 % $ 627,230 $ 569,930 10.1 %
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LOSS RATIO 75.33 75.89 74.08 75.41
EXPENSE RATIO 20.87 20.58 22.38 21.79
COMBINED RATIO 96.20 96.47 96.46 97.20
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LIFE INSURANCE OPERATIONS:
PREMIUM INCOME $ 9,925,639 $ 8,978,246 10.6 % $2,596,406 $ 2,469,781 5.1%
NET INVESTMENT INCOME 2,896,469 2,675,881 8.2 748,876 629,585 18.9
INCOME BEFORE REALIZED CAPITAL GAINS 1,550,297 1,288,960 20.3 415,797 353,505 17.6
REALIZED CAPITAL GAINS 21,186 34,798 -- 8,397 12,198 --
OPERATING INCOME 1,571,483 1,323,758 18.7 424,194 365,703 16.0
FINANCIAL SERVICES OPERATING INCOME 701,337 523,906 33.9 213,903 149,145 43.4
EQUITY IN INCOME OF MINORITY-OWNED
INSURANCE OPERATIONS 113,636 99,359 14.4 29,043 25,037 16.0
OTHER REALIZED CAPITAL LOSSES (30,846) (11,792) -- (10,244) (10,720) --
MINORITY INTEREST (a) (31,926) (43,226) -- (6,433) (9,937) --
OTHER INCOME (DEDUCTIONS) - NET (95,160) (82,320) -- (27,323) (19,633) --
FOREIGN EXCHANGE LOSSES (1,492) (2,030) -- (2,717) (153) --
INCOME BEFORE INCOME TAXES 4,698,898 4,013,222 17.1 1,247,653 1,069,372 16.7
INCOME TAXES 1,366,563 1,115,965 -- 363,066 299,138 --
NET INCOME 3,332,335 2,897,257 15.0 884,587 770,234 14.8
PER COMMON SHARE (b) - BASIC 4.75 4.10 15.9 1.27 1.09 16.5
- DILUTED $ 4.73 $ 4.08 15.9 % $ 1.26 $ 1.08 16.7 %
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AVERAGE COMMON SHARES OUTSTANDING (b)
- BASIC 701,930 706,568 700,213 704,202
- DILUTED 704,984 709,316 703,348 707,001
(a) REPRESENTS MINORITY SHAREHOLDERS' EQUITY IN INCOME OF CERTAIN CONSOLIDATED SUBSIDIARIES.
(b) SHARE INFORMATION REFLECTS THE THREE-FOR-TWO SPLIT IN THE FORM OF A 50 PERCENT COMMON STOCK DIVIDEND, PAID
JULY 25, 1997 AND THE ADOPTION OF THE STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128 "EARNINGS PER SHARE".
