UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 11, 2004
AMERICAN INTERNATIONAL GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8787 13-2592361
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
70 Pine Street
New York, New York 10270
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 770-7000
------------------------------------------
(Former name or Former Address, if Changed Since Last Report)
Item 12. Results of Operations and Financial Condition.
On February 11, 2004, American International Group, Inc. issued a press
release announcing its results for the quarter and year ended December 31,
2003. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
AMERICAN INTERNATIONAL GROUP, INC.
(Registrant)
Date: February 11, 2004 By /s/ KATHLEEN E. SHANNON
------------------------------------
Name: Kathleen E. Shannon
Title: Senior Vice President
and Secretary
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of American International
Group, Inc. dated February 11, 2004.
EXHIBIT 99.1
NEWS [AIG LOGO] AMERICAN INTERNATIONAL GROUP, INC.
70 PINE STREET NEW YORK, NY 10270
Contact: Charlene Hamrah (Investment Community)
(212)770-7074
Joe Norton (News Media)
(212)770-3144
AIG REPORTS RECORD 2003 NET INCOME OF $9.27 BILLION,
AN INCREASE OF 68.0 PERCENT OVER 2002;
NET INCOME EXCLUDING REALIZED CAPITAL LOSSES AND
CUMULATIVE EFFECT OF AN ACCOUNTING CHANGE INCREASED
43.6 PERCENT TO RECORD $10.22 BILLION
NEW YORK, NY, February 11, 2004 - American International Group, Inc. (AIG)
today reported that its net income for the full year 2003 increased 68.0 percent
to a record $9.27 billion, compared to $5.52 billion in 2002. Net income
excluding realized capital gains (losses) and cumulative effect of an accounting
change increased 43.6 percent to a record $10.22 billion in the full year 2003.
Net income in the fourth quarter of 2003 totaled a record $2.71 billion
compared to a loss of $103.8 million in the same period of 2002. Fourth quarter
2003 net income excluding realized capital gains (losses) and cumulative effect
of an accounting change was a record $2.75 billion compared to $537.5 million in
the same period of 2002. Results for fourth quarter and full year 2002 include
the $1.8 billion net, after tax general insurance reserve charge.
Income before income taxes, minority interest, cumulative effect of an
accounting change and pretax realized capital gains (losses) for the twelve
months of 2003 increased 45.0 percent to $15.34 billion. Income before income
taxes, minority interest, cumulative effect of an accounting change and pretax
realized capital gains (losses) for the fourth quarter of 2003 was $4.14
billion, compared to $671.6 million in the fourth quarter of 2002.
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Following is a summary table of the twelve months and fourth quarter
information (in millions, except per share amounts):
TWELVE MONTHS
PER
SHARE
---------------------------------
2003 2002* Change 2003 2002 Change
--------- --------- ------ --------- --------- ------
Net income $ 9,274.2 $ 5,518.9 68.0% $ 3.53 $ 2.10 68.1%
Realized capital losses,
net of tax** 950.9 1,596.5 -- 0.36 0.60 --
Cumulative effect of an
accounting change, net
of tax*** (8.8) -- -- -- -- --
Net income, excluding
realized capital losses
and cumulative effect of
an accounting change,
net of tax $10,216.3 $ 7,115.4 43.6% $ 3.89 $ 2.70 44.1%
Average shares outstanding 2,628.1 2,634.0
FOURTH QUARTER
PER
SHARE
-------------------------------
2003 2002* Change 2003 2002 Change
-------- -------- ------ -------- -------- ------
Net income (loss) $2,707.3 $ (103.8) -- $ 1.03 $ (0.03) --
Realized capital losses,
net of tax** 53.1 641.3 -- 0.02 0.23 --
Cumulative effect of an
accounting change, net of tax*** (8.8) -- -- -- -- --
Net income, excluding
realized capital losses and
cumulative effect of an
accounting change, net
of tax $2,751.6 $ 537.5 411.9% $ 1.05 $ 0.20 425.0%
Average shares outstanding 2,627.2 2,632.5
* Includes $1.8 billion net, after tax general insurance reserve charge.
** Includes $76 million in losses, net of tax, from holdings in Parmalat in
2003.
*** Represents the cumulative effect of an accounting change, net of tax,
related to FIN46 "Consolidation of Variable Interest Entities".
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RECORD 2003 RESULTS INCLUDE:
2003 2002* Change
---- ----- ------
CONSOLIDATED
Adjusted Net Income (a)
Full Year $10.22 BILLION $7.12 billion 43.6%
Fourth Quarter $2.75 BILLION $537.5 million 411.9%
Capital Funds
At December 31 $71 BILLION $59 billion 20.6%
Retained Earnings
At December 31 $61 BILLION $52 billion 16.6%
Return on Equity (b) 17.2% 13.4%
Consolidated Assets
At December 31 $683 BILLION $561 billion 21.7%
Revenues (c)
Full Year $81.30 BILLION $67.48 billion 20.5%
Fourth Quarter $22.18 BILLION $17.53 billion 26.5%
Insurance Cash Flow (d)
Full Year $46.90 BILLION $38.40 billion 22.1%
Fourth Quarter $14.55 BILLION $8.80 billion 65.3%
GENERAL INSURANCE
Cash Flow
Full Year $13.63 BILLION $7.52 billion 81.3%
Fourth Quarter $4.14 BILLION $2.23 billion 85.7%
Net Premiums Written
Full Year $35.21 BILLION $27.41 billion 28.4%
Fourth Quarter $9.16 BILLION $7.21 billion 27.0%
Pretax Operating Income (Loss)
(including realized capital gains (losses))
Full Year $5.07 BILLION $667.2 million 659.8%
Fourth Quarter $1.47 BILLION $(2.04) billion --
Combined Ratio
Full Year 92.43 105.95
Fourth Quarter 91.39 135.21
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2003 2002* Change
---- ----- ------
LIFE INSURANCE
GAAP Premiums
Full Year $22.88 BILLION $20.32 billion 12.6%
Fourth Quarter $6.32 BILLION $5.29 billion 19.4%
Premiums, Deposits and Other
Considerations (excluding GICs)
Full Year $38.71 BILLION $33.81 billion 14.5%
Fourth Quarter $10.81 BILLION $8.42 billion 28.4%
Pretax Operating Income
(including realized capital losses)
Full Year $6.00 BILLION $4.93 billion 21.8%
Fourth Quarter $1.80 BILLION $1.13 billion 59.4%
FINANCIAL SERVICES
Pretax Operating Income
Full Year $2.46 BILLION $2.19 billion 12.6%
Fourth Quarter $702.5 MILLION $620.3 million 13.2%
RETIREMENT SERVICES & ASSET MANAGEMENT
Pretax Operating Income
Full Year $1.27 BILLION $1.02 billion 25.1%
Fourth Quarter $354.3 MILLION $207.8 million 70.5%
* Consolidated results include $1.8 billion net, after tax general insurance
reserve charge. General Insurance results include $2.8 billion pretax
general insurance reserve charge.
(a) Excludes realized capital gains (losses) and cumulative effect of an
accounting change, net of tax.
(b) See reconciliation to GAAP ROE in the supplementary earnings data.
(c) Represents the sum of general net premiums earned, GAAP life premiums, net
investment income, financial services commissions, transactions and other
fees, retirement services & asset management commissions and other fees,
and realized capital gains (losses).
(d) In addition to General Insurance cash flow, includes Life Insurance and
Retirement Services cash flow for investment, which generates the
investment income necessary to meet policyholder obligations and to
provide a profit margin to shareholders.
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Commenting on full-year and fourth quarter 2003 performance, AIG Chairman
M. R. Greenberg said, "AIG had record results in 2003, with $10.22 billion in
net income, excluding realized capital losses and the cumulative effect of an
accounting change.
"In addition to record net income of $9.27 billion, AIG had record results
in 2003 in all four of our core businesses -- General Insurance, Life Insurance,
Financial Services and Retirement Services & Asset Management -- and in most
other key measures including shareholders' equity, return on equity, revenues,
assets and cash flow. In the fourth quarter of 2003, AIG had net income of $2.71
billion, another record, which gives AIG strong momentum for 2004 and beyond.
"In addition to achieving these financial results, AIG in 2003 made
important investments that will further AIG's continued growth and success,
including the acquisition of GE Edison in Japan, and our investment in, and
agreement to market accident and health products with, the People's Insurance
Company of China (PICC).
GENERAL INSURANCE
"AIG's General Insurance business had an excellent year and quarter. Net
premiums written were a record $9.16 billion in the fourth quarter of 2003, up
27.0 percent over a year ago. Our top ratings and financial strength have never
been more valuable to customers and set us apart from the competition in the
U.S. and around the world. Corporate leaders recognize that buying specialty
casualty and liability lines, known as `long tail' lines, from other than the
most financially strong carriers is taking a credit risk they can ill afford in
today's environment.
"In the United States, the DOMESTIC BROKERAGE GROUP had very strong growth
in 2003. In the fourth quarter, net premiums written were a record $5.33
billion, up 27.3 percent over the same period in 2002. The fourth quarter
combined ratio was an excellent 93.53, and the expense ratio was 15.05, far
superior to the industry average. The Domestic Brokerage Group has the most
extensive array of product offerings in the industry, and it has been
successfully expanding its distribution. These initiatives include targeting
regional brokers and small- and mid-cap companies. We are the market of choice
and the number one provider for all of the major insurance brokers, which attest
to our market knowledge, underwriting skill, ability to create new products to
meet customer needs, expert claims management and outstanding service.
"The success of the Domestic Brokerage Group over the year and fourth
quarter of 2003 was very broad-based. Lexington, our excess and surplus lines
company, had outstanding results. We are one of the leading providers of
terrorism coverage to the aviation industry and other sectors of the economy,
and achieved good results from this business over the year and quarter.
"HSB Group Inc. achieved record net premiums written in 2003, and has
successfully leveraged its engineering and product innovation skills throughout
the AIG global network to expand distribution and cross selling and develop new
products.
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"The Domestic Personal Lines businesses achieved significant premium
growth and a strong improvement in profitably in the fourth quarter and full
year of 2003. Net premiums written increased 23.2 percent, to $1.00 billion, in
the fourth quarter, and the combined ratio was 96.03. The direct marketing,
agency auto, assigned risk, 21st Century and Private Client businesses all
contributed to the 58.5 percent increase in 2003 pretax operating income.
"United Guaranty Corporation (UGC) also did well in the year and quarter.
Despite a more challenging mortgage market, UGC earned $87.4 million in pretax
operating income in the fourth quarter of 2003 and continued to have a
significantly lower delinquency ratio than the mortgage guaranty insurance
industry overall. In terms of premiums, new business offset the impact of
continued refinancing activities.
"Transatlantic Holdings Inc. had an excellent year and quarter. In the
fourth quarter of 2003, net premiums written increased 32.2 percent, to $868.9
million. The combined ratio was 96.03.
"In 2004, we would expect General Insurance in the United States to have
another solid year. While there is more competition for certain `short tail'
lines, the market for `long tail' and specialty lines, where AIG has significant
competitive strengths, should continue to be strong.
"FOREIGN GENERAL INSURANCE had excellent 2003 and fourth quarter
performance throughout the world. In the fourth quarter of 2003, net premiums
written were $1.82 billion, an increase of 27.1 percent over the same period
last year. Growth in Continental Europe and the United Kingdom was very strong,
in large part because many local insurers have been beset by capital adequacy
problems and could not meet their clients' needs. The Latin America division
also performed well in the fourth quarter and throughout 2003.
"Asia had strong performance in 2003, including the fourth quarter, and is
making significant investments for the future. In October, AIG entered into an
agreement with the People's Insurance Company of China (PICC), the largest
non-life insurance company in China. Under this agreement, AIG companies will
market accident and health products through PICC's 4,300 branch offices
throughout the country. In conjunction with this cooperative relationship, AIG
has made a long-term investment in PICC, purchasing 9.9 percent of the company's
share capital.
"In Japan, both AIU and American Home, which is the leading direct
marketer of general insurance products in the country, had solid results for the
year and fourth quarter. Korea also had a good year with record gross premiums.
"Foreign General pricing was excellent throughout 2003, and we do not
foresee any material change in 2004.
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"Reflecting strong cash flow and improved market conditions, General
Insurance net investment income in the fourth quarter of 2003 was $764.4
million, an increase of 13.5 percent compared to $673.2 million a year ago. For
the full year 2003, General Insurance net investment income was $3.02 billion,
an increase of 9.5 percent compared to $2.76 billion in 2002.
"At year-end 2003, General Insurance net loss and loss adjustment reserves
totaled $36.65 billion, an increase of $5.91 billion and $1.56 billion for the
full year and the fourth quarter, respectively.
LIFE INSURANCE
"Both the foreign and domestic Life Insurance operations had record 2003
results and a strong fourth quarter. Worldwide Life Insurance pretax operating
income was $1.80 billion in the fourth quarter of 2003, including $50.1 million
in realized capital losses, compared to $1.13 billion a year ago, which included
$451.8 million in realized capital losses. Excluding realized capital losses,
pretax operating income increased 17.0 percent in fourth quarter 2003.
"Worldwide Life Insurance GAAP premiums were $6.32 billion, an increase of
19.4 percent over the fourth quarter of 2002. Premiums, deposits and other
considerations excluding Guaranteed Investment Contracts and related products
(GICs) rose 28.4 percent in the fourth quarter. Premiums, deposits and other
considerations for the GIC business increased 84.8 percent in the fourth quarter
of 2003. We write GICs on an opportunistic basis when market conditions are
favorable, as they were in the domestic market in the fourth quarter.
"AIG's FOREIGN LIFE INSURANCE operations had excellent results in the
fourth quarter and full year of 2003, led by Japan, the largest life insurance
market in the world outside of the U.S., and AIG's largest Foreign Life
Insurance operation.
"In its first full quarter as an AIG company, AIG Edison Life Insurance
Company had good results. Integrating AIG Edison Life with ALICO Japan and AIG
Star Life will provide further efficiencies to the business in 2004 and beyond.
We also have been putting into place additional business retention programs for
AIG Star Life and AIG Edison Life, and new product and distribution initiatives
for all three operations. AIG's financial strength, creative product development
skills, new business initiatives such as annuities sold through the bank
channel, and an improving economic climate give us tremendous optimism for the
Life Insurance business in Japan.
"The other Asian Life Insurance operations, including Korea and Taiwan,
also had a good year and fourth quarter. In China, we are growing rapidly. The
number of active agents increased significantly to about 19,000 and total first
year premiums increased 43.4 percent during 2003. Throughout Asia, growth was
achieved through new product introductions and expanded distribution. In two of
the region's most attractive emerging markets, Vietnam and India, we opened new
offices and increased the agency forces.
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"DOMESTIC LIFE INSURANCE pretax operating income in the fourth quarter of
2003 was $717.2 million, including realized capital losses of $97.5 million,
compared to $276.0 million, including realized capital losses of $412.5 million,
in the fourth quarter of 2002.
"AIG American General had a very good year overall, achieving strong
growth from the universal life and term life products and from its affluent and
brokerage market segments. AGLA, the home services business, made progress in
2003, launching new products and laying a solid foundation for future growth.
The multiple distribution channels of AIG American General are a distinctive
source of strength that will fuel growth going forward.
"Fixed annuities, which are sold primarily through banks by AIG Annuity
Insurance Company, had record sales and pretax operating income in 2003, and an
excellent fourth quarter. AIG Annuity added several new banks and financial
institutions to its distribution network and moved quickly to reduce crediting
rates on its products when interest rates declined during the year.
FINANCIAL SERVICES
"FINANCIAL SERVICES had record pretax operating income in 2003. In the
fourth quarter, pretax operating income was $702.5 million, compared to $620.3
million in the fourth quarter of 2002. ILFC has been outperforming its
competitors in a difficult aviation environment, reflecting its strong
management and the geographic diversification of its fleet of modern and
efficient aircraft. As a result of a lag effect between changes in market
conditions and their impact on results, the improvement in the airline industry
has yet to be reflected in ILFC's financial performance.
"Capital Markets, created by the integration of AIG Trading into AIG
Financial Products Corp., had outstanding results. The consolidation of these
operations is moving along as expected, taking out duplicative expenses and
providing numerous synergies. In the consumer finance business, American General
Finance had a terrific year and quarter, with excellent credit quality. The
international consumer finance operations had sharp gains in every major market.
RETIREMENT SERVICES & ASSET MANAGEMENT
"RETIREMENT SERVICES & ASSET MANAGEMENT had record 2003 pretax operating
income of $1.27 billion and record fourth quarter 2003 pretax operating income
of $354.3 million, as financial markets and the U.S. economy made gains. AIG
VALIC had an outstanding fourth quarter, and the individual variable annuity,
broker-dealer, mutual fund and institutional asset management businesses also
recorded strong gains in the fourth quarter. Third party institutional and
retail mutual fund assets under management increased to more than
$46 billion in 2003.
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"AIG had pretax net realized capital losses of $85.3 million in the fourth
quarter of 2003 including $117 million of losses from holdings in Parmalat,
compared to pretax net realized capital losses of $984.1 million in the fourth
quarter of 2002.
OUTLOOK
"Moving forward, the outlook for AIG is very positive. We will build on
the momentum of 2003's excellent earnings and the good operating environment
before us. With its strong balance sheet, AIG's financial security has never
been more important to customers around the world. In an increasingly uncertain
world, AIG's product innovation and claims expertise have never been more
valuable for managing and controlling customers' risks. Under improving global
economic conditions, AIG's global network has never been better situated to
profit from developing opportunities throughout the world. AIG is poised to
achieve continued strong growth."
# # # #
AIG is the world's leading international insurance and financial services
organization, with operations in approximately 130 countries and jurisdictions.
AIG member companies serve commercial, institutional and individual customers
through the most extensive worldwide property-casualty and life insurance
networks of any insurer. In the United States, AIG companies are the largest
underwriters of commercial and industrial insurance and AIG American General is
a top-ranked life insurer. AIG's global businesses also include financial
services, retirement services and asset management. AIG's financial services
businesses include aircraft leasing, financial products, trading and market
making. AIG's growing global consumer finance business is led in the United
States by American General Finance. AIG also has one of the largest U.S.
retirement services businesses through AIG SunAmerica and AIG VALIC, 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 9:00
a.m. EST. The call will be broadcast live on the Internet at:
www.aigwebcast.com
The call will be archived at the same URL through Friday, February 20,
2004.
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CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Please refer to
the AIG Quarterly Report on Form 10-Q for the quarter ended September 30, 2003
and its past and future filings and reports filed with the Securities and
Exchange Commission 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.
COMMENT ON REGULATION G
This press release, including the financial highlights and supplementary
earnings data, includes certain non-GAAP financial measures. The reconciliations
of such measures to the most comparable GAAP figures in accordance with
Regulation G are included herein.
Throughout this press release, 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 of net income and operating
income, AIG shows both net income and operating income exclusive of realized
capital gains (losses).
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 quarterly business performance.
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 incorrect or misleading assumptions and conclusions. The equity analysts who
follow AIG exclude the realized capital gains and losses in their analyses for
the same reason, and consistently request that AIG provide the non-GAAP
information.
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AIG presents life production (premiums, deposits and other
considerations), net premiums written and combined ratios 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.
AMERICAN INTERNATIONAL GROUP, INC.
FINANCIAL HIGHLIGHTS*
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 (a) CHANGE 2003 2002 (a) CHANGE
---- -------- ------ ---- -------- ------
GENERAL INSURANCE OPERATIONS:
Net Premiums Written $35,211,785 $27,414,242 28.4% $ 9,159,196 $ 7,212,509 27.0%
Net Premiums Earned 31,734,307 24,269,517 30.8 8,403,206 6,708,030 25.3
Underwriting Profit (Loss) 2,220,773 (1,234,034) - 551,195 (2,350,630) -
Net Investment Income 3,021,601 2,759,603 9.5 764,363 673,188 13.5
Income (Loss) before Realized
Capital Gains (Losses) 5,242,374 1,525,569 243.6 1,315,558 (1,677,442) -
Realized Capital Gains (Losses) (172,461) (858,326) - 158,264 (366,169) -
OPERATING INCOME (LOSS) $ 5,069,913 $ 667,243 659.8% $ 1,473,822 $(2,043,611) -%
----------- ----------- ----- ----------- ----------- -----
Loss Ratio 73.33 85.76 71.83 115.13
Expense Ratio 19.10 20.19 19.56 20.08
Combined Ratio 92.43 105.95 91.39 135.21
----------- ----------- ----- ----------- ----------- -----
LIFE INSURANCE OPERATIONS:
GAAP Premiums $22,879,379 $20,320,377 12.6% $ 6,316,517 $ 5,289,547 19.4%
Net Investment Income 13,639,427 12,274,046 11.1 3,582,310 3,145,267 13.9
Income before Realized Capital
Gains (Losses) 6,827,669 5,982,273 14.1 1,850,868 1,581,763 17.0
Realized Capital Gains (Losses) (825,893) (1,052,970) - (50,075) (451,761) -
OPERATING INCOME 6,001,776 4,929,303 21.8 1,800,793 1,130,002 59.4
FINANCIAL SERVICES OPERATING INCOME 2,464,169 2,188,720 12.6 702,452 620,299 13.2
RETIREMENT SERVICES & ASSET MANAGEMENT
OPERATING INCOME 1,271,213 1,015,932 25.1 354,278 207,816 70.5
Other Realized Capital Gains (Losses) (434,752) (529,667) - (193,535) (166,167) -
Other Income (Deductions) - net (464,011) (129,211) - (87,312) (60,788) -
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTEREST AND CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE 13,908,308 8,142,320 70.8 4,050,498 (312,449) -
Income Taxes (Benefits) 4,263,947 2,327,969 - 1,259,459 (253,118) -
INCOME (LOSS) BEFORE MINORITY
INTEREST AND CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE 9,644,361 5,814,351 65.9 2,791,039 (59,331) -
Minority Interest, after-tax -
Income before Realized Capital
Gains (Losses) (378,494) (284,995) - (94,666) (38,787) -
Realized Capital Gains (Losses) (440) (10,472) - 2,153 (5,688) -
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF AN ACCOUNTING CHANGE 9,265,427 5,518,884 67.9 2,698,526 (103,806) -
Cumulative Effect of an Accounting
Change, net of tax (b) 8,778 0 - 8,778 0 -
NET INCOME (LOSS) 9,274,205 5,518,884 68.0 2,707,304 (103,806) -
REALIZED CAPITAL GAINS (LOSSES),
NET OF TAX (950,923) (1,596,586) - (53,088) (641,351) -
CUMULATIVE EFFECT OF AN ACCOUNTING
CHANGE, NET OF TAX (b) 8,778 0 - 8,778 0 -
NET INCOME, EXCLUDING REALIZED
CAPITAL GAINS (LOSSES) AND
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE, NET OF TAX (c) $10,216,350 $ 7,115,470 43.6% $ 2,751,614 $ 537,545 411.9%
AMERICAN INTERNATIONAL GROUP, INC.
FINANCIAL HIGHLIGHTS*
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 (a) CHANGE 2003 2002 (a) CHANGE
---- -------- ------ ---- -------- ------
PER SHARE - DILUTED:
NET INCOME (LOSS) $ 3.53 $ 2.10 68.1% $ 1.03 $ (0.03) -%
REALIZED CAPITAL GAINS (LOSSES),
NET OF TAX (0.36) (0.60) - (0.02) (0.23) -
CUMULATIVE EFFECT OF AN ACCOUNTING
CHANGE, NET OF TAX (b) 0.00 0.00 - 0.00 0.00 -
NET INCOME, EXCLUDING REALIZED
CAPITAL GAINS (LOSSES) AND
CUMULATIVE EFFECT OF AN
ACCOUNTING CHANGE, NET OF TAX $ 3.89 $ 2.70 44.1% $ 1.05 $ 0.20 425.0%
AVERAGE DILUTED COMMON
SHARES OUTSTANDING 2,628,066 2,633,979 2,627,223 2,632,531
* Including reconciliation in accordance with Regulation G.
(a) Fourth quarter and full year 2002 include $2.8 billion pretax and $1.8
billion net, after tax general insurance reserve charge.
(b) Represents the cumulative effect of an accounting change, net of tax,
related to FIN46 "Consolidation of Variable Interest Entities".
(c) Also referred to as Adjusted Net Income.
AMERICAN INTERNATIONAL GROUP, INC.
PRETAX OPERATING INCOME
(IN THOUSANDS)
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
---- ---- ------ ---- ---- ------
GENERAL INSURANCE (a):
Domestic Brokerage Group $ 2,728,087 $ (440,190) -% $ 710,534 $(2,026,920) -%
Personal Lines 252,495 151,338 66.8 79,582 50,209 58.5
Mortgage Guaranty 406,547 417,433 (2.6) 87,380 85,715 1.9
Transatlantic Holdings 379,591 194,367 95.3 103,082 (26,142) -
Foreign General (b) 1,468,784 1,179,891 24.5 333,262 234,013 42.4
Intercompany Adjustments 6,870 22,730 - 1,718 5,683 -
Realized Capital Gains (Losses) (172,461) (858,326) - 158,264 (366,169) -
LIFE INSURANCE:
Domestic
Life Insurance (c) 807,568 718,816 12.3 211,889 189,262 12.0
Individual Fixed Annuities 739,670 536,802 37.8 215,378 149,680 43.9
Individual Fixed Annuities - Runoff (d) 147,422 192,752 (23.5) 37,988 46,821 (18.9)
Home Service 400,126 382,063 4.7 101,504 96,592 5.1
Group Life/Health 119,957 100,955 18.8 32,047 24,206 32.4
Pension and Investment Products 210,475 117,719 78.8 63,796 27,501 132.0
Intercompany Adjustments (302) (240) - (87) (63) -
Guaranteed Investment Contracts 539,034 639,484 (15.7) 152,187 154,527 (1.5)
Realized Capital Gains (Losses) (543,733) (983,971) - (97,491) (412,519) -
Foreign
Life Insurance 2,773,406 2,411,048 15.0 731,676 631,502 15.9
Personal Accident 851,902 681,212 25.1 243,553 198,553 22.7
Group Products 202,131 174,670 15.7 52,577 56,318 (6.6)
Intercompany Adjustments (14,705) (11,686) - (4,267) (3,086) -
Guaranteed Investment Contracts 50,985 38,678 31.8 12,627 9,950 26.9
Realized Capital Gains (Losses) (282,160) (68,999) - 47,416 (39,242) -
FINANCIAL SERVICES:
Aircraft Finance 727,956 801,099 (9.1) 179,599 213,077 (15.7)
Capital Markets 1,085,894 869,776 24.8 357,231 277,691 28.6
Consumer Finance 648,864 549,240 18.1 160,311 139,950 14.5
Other 1,455 (31,395) - 5,311 (10,419) -
RETIREMENT SERVICES & ASSET MANAGEMENT:
AIG VALIC (e) 901,718 730,020 23.5 226,227 158,409 42.8
AIG SunAmerica (f) 38,666 32,029 20.7 15,746 (25,210) -
Other Asset Management and
Annuity Operations (g) 330,829 253,883 30.3 112,305 74,617 50.5
Other Realized Capital Gains (Losses) (434,752) (529,667) - (193,535) (166,167) -
Other Income (Deductions) - net (464,011) (129,211) - (87,312) (60,788) -
INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTEREST AND CUMULATIVE
EFFECT OF AN ACCOUNTING CHANGE 13,908,308 8,142,320 70.8 4,050,498 (312,449) -
INCOME BEFORE INCOME TAXES, MINORITY
INTEREST, REALIZED CAPITAL GAINS
(LOSSES) AND CUMULATIVE EFFECT OF
AN ACCOUNTING CHANGE $15,341,414 $10,583,283 45.0% $4,135,844 $ 671,648 515.8%
(a) Includes the impact of the fourth quarter and full year 2002 insurance
reserve charge of $2.7 billion for Domestic Brokerage Group and $100
million for Transatlantic Holdings, Inc.
(b) Foreign General insurance excludes the foreign operations of Transatlantic
Holdings, Inc.
(c) Includes Universal Life, Term Life, Whole Life and Variable Universal Life
type products.
(d) Represents runoff annuity business largely sold through discontinued
distribution channels.
(e) Reflects the sale of variable annuity products with fixed annuity options.
(f) Includes variable annuity (separate account only), mutual fund and
broker-dealer operations.
(g) Includes AIG Global Investment Group and certain foreign fixed and
variable annuity operations.
AMERICAN INTERNATIONAL GROUP, INC.
SUPPLEMENTARY EARNINGS DATA*
(IN THOUSANDS)
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
---- ---- ------ ---- ---- ------
GENERAL INSURANCE OPERATIONS:
NET PREMIUMS WRITTEN
Domestic Brokerage Group $20,061,153 $15,214,225 31.9% $5,327,656 $ 4,184,642 27.3%
Personal Lines 3,706,108 3,182,123 16.5 1,002,322 813,368 23.2
Mortgage Guaranty 531,558 507,751 4.7 141,546 126,404 12.0
Transatlantic Holdings 3,341,077 2,500,159 33.6 868,891 657,371 32.2
Foreign General (a) 7,571,889 6,009,984 26.0 1,818,781 1,430,724 27.1
----------- ----------- ---------- ------------
TOTAL 35,211,785 27,414,242 28.4 9,159,196 7,212,509 27.0
OPERATING INCOME (LOSS) (b)
Domestic Brokerage Group 2,728,087 (440,190) - 710,534 (2,026,920) -
Personal Lines 252,495 151,338 66.8 79,582 50,209 58.5
Mortgage Guaranty 406,547 417,433 (2.6) 87,380 85,715 1.9
Transatlantic Holdings 379,591 194,367 95.3 103,082 (26,142) -
Foreign General (a) 1,468,784 1,179,891 24.5 333,262 234,013 42.4
Intercompany Adjustments 6,870 22,730 - 1,718 5,683 -
----------- ----------- ---------- ------------
TOTAL BEFORE REALIZED CAPITAL
GAINS (LOSSES) 5,242,374 1,525,569 243.6 1,315,558 (1,677,442) -
Realized Capital Gains (Losses) (172,461) (858,326) - 158,264 (366,169) -
OPERATING INCOME (LOSS) $ 5,069,913 $ 667,243 659.8% $1,473,822 $(2,043,611) -%
----------- ----------- ----- ---------- ------------ -----
COMBINED RATIO (b):
Domestic Brokerage Group 94.38 116.96 93.53 167.60
Personal Lines 97.38 101.26 96.03 99.38
Mortgage Guaranty 48.67 43.92 54.57 55.80
Transatlantic Holdings 96.46 102.31 96.03 114.01
Foreign General (a) 87.49 90.12 86.91 92.03
TOTAL 92.43 105.95 91.39 135.21
----------- ----------- ----- ---------- ------------ -----
Losses and Loss Expenses Paid $17,363,301 $16,359,374 6.1% $4,480,244 $ 4,414,479 1.5%
Change in Loss and
Loss Expense Reserve (b) 5,906,211 4,454,427 32.6 1,555,551 3,308,377 (53.0)
----------- ----------- ---------- ------------
Losses and Loss Expenses Incurred (b) 23,269,512 20,813,801 11.8 6,035,795 7,722,856 (21.8)
Net Loss and Loss Expense Reserve (c) 36,647,088 30,349,939 20.7
UNDERWRITING PROFIT (LOSS) $ 2,220,773 $(1,234,034) -% $ 551,195 $(2,350,630) -%
----------- ----------- ----- ---------- ------------ -----
FOREIGN EXCHANGE IMPACT ON GROWTH OF NET PREMIUMS WRITTEN
WORLDWIDE
Growth in Original Currency 26.5% 24.3%
Foreign Exchange Impact 1.9 2.7
Growth as Reported in U.S.$ 28.4 27.0
FOREIGN
Growth in Original Currency 18.8 15.9
Foreign Exchange Impact 7.2 11.2
Growth as Reported in U.S.$ 26.0% 27.1%
* Including reconciliation in accordance with Regulation G.
(a) Foreign General insurance excludes the foreign operations of Transatlantic
Holdings, Inc.
(b) Includes the impact of the fourth quarter and full year 2002 insurance
reserve charge of $2.7 billion for Domestic Brokerage Group and $100
million for Transatlantic Holdings, Inc.
(c) Includes $391 million of beginning reserves related to GE personal lines
business acquired in the third quarter 2003.
SUPPLEMENTARY EARNINGS DATA - PAGE 2
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
----------- ----------- ------ ----------- ----------- ------
LIFE INSURANCE OPERATIONS:
GAAP PREMIUMS
DOMESTIC
Life Insurance $ 1,747,954 $ 1,604,087 9.0% $ 433,842 $ 406,369 6.8%
Individual Fixed Annuities 59,149 34,648 70.7 19,135 7,013 172.9
Individual Fixed Annuities - Runoff (a) 4,194 7,220 (41.9) 2,371 1,126 110.6
Home Service 834,212 854,330 (2.4) 209,052 212,767 (1.7)
Group Life/Health 1,046,192 966,958 8.2 281,751 237,958 18.4
Pension and Investment Products 1,327,989 1,105,151 20.2 276,749 224,003 23.5
Other 21,464 49,492 (56.6) 7,391 15,110 (51.1)
----------- ----------- ----------- -----------
TOTAL 5,041,154 4,621,886 9.1 1,230,291 1,104,346 11.4
FOREIGN
Life Insurance 13,334,629 12,000,138 11.1 3,797,944 3,246,402 17.0
Personal Accident 3,126,249 2,490,967 25.5 940,244 667,899 40.8
Group Products 1,266,909 1,094,481 15.8 322,110 244,809 31.6
Other 110,438 112,905 (2.2) 25,928 26,091 (0.6)
----------- ----------- ----------- -----------
TOTAL 17,838,225 15,698,491 13.6 5,086,226 4,185,201 21.5
TOTAL GAAP PREMIUMS 22,879,379 20,320,377 12.6 6,316,517 5,289,547 19.4
- ------------------------------------------------------------------------------------------------------------------------------------
PREMIUMS, DEPOSITS AND OTHER
CONSIDERATIONS (b)
DOMESTIC
Life Insurance 2,693,975 2,352,103 14.5 692,696 570,323 21.5
Individual Fixed Annuities 11,411,847 9,058,625 26.0 3,205,447 2,287,327 40.1
Individual Fixed Annuities - Runoff (a) 202,983 1,268,792 (84.0) 35,179 44,473 (20.9)
Home Service 985,403 861,333 14.4 253,655 229,192 10.7
Group Life/Health 1,060,254 975,618 8.7 288,133 235,397 22.4
Pension and Investment Products 1,814,413 1,782,381 1.8 484,464 397,108 22.0
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 18,168,875 16,298,852 11.5 4,959,574 3,763,820 31.8
Guaranteed Investment Contracts 9,719,388 9,136,971 6.4 3,231,985 1,174,615 175.2
----------- ----------- ----------- -----------
TOTAL 27,888,263 25,435,823 9.6 8,191,559 4,938,435 65.9
FOREIGN
Life Insurance 15,378,087 13,439,519 14.4 4,424,000 3,617,184 22.3
Personal Accident 3,113,370 2,497,087 24.7 927,082 669,056 38.6
Group Products 2,047,073 1,579,390 29.6 499,801 368,356 35.7
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 20,538,530 17,515,996 17.3 5,850,883 4,654,596 25.7
Guaranteed Investment Contracts 4,123,858 5,709,727 (27.8) 834,300 1,025,564 (18.6)
----------- ----------- ----------- -----------
TOTAL 24,662,388 23,225,723 6.2 6,685,183 5,680,160 17.7
TOTAL PREMIUMS, DEPOSITS AND OTHER
CONSIDERATIONS EXCLUDING GICS 38,707,405 33,814,848 14.5 10,810,457 8,418,416 28.4
TOTAL PREMIUMS, DEPOSITS AND OTHER
CONSIDERATIONS $52,550,651 $48,661,546 8.0% $14,876,742 $10,618,595 40.1%
(a) Represents runoff annuity business largely sold through discontinued
distribution channels.
(b) Premiums, deposits and other considerations represent aggregate
business activity during the respective periods presented on a non-GAAP
basis.
SUPPLEMENTARY EARNINGS DATA - PAGE 3
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
----------- ----------- ------ ----------- ----------- ------
LIFE INSURANCE OPERATIONS:
NET INVESTMENT INCOME
DOMESTIC
Life Insurance $ 1,358,386 $ 1,275,391 6.5% $ 392,446 $ 330,042 18.9%
Individual Fixed Annuities 2,982,125 2,515,974 18.5 825,689 665,336 24.1
Individual Fixed Annuities - Runoff (a) 689,178 712,874 (3.3) 160,924 171,287 (6.1)
Home Service 689,800 683,553 0.9 179,079 175,333 2.1
Group Life/Health 121,519 107,826 12.7 34,279 27,344 25.4
Pension and Investment Products 982,211 836,035 17.5 265,736 233,003 14.0
Intercompany Adjustments (302) (240) -- (87) (63) --
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 6,822,917 6,131,413 11.3 1,858,066 1,602,282 16.0
Guaranteed Investment Contracts 2,203,488 2,193,759 0.4 575,652 571,304 0.8
----------- ----------- ----------- -----------
TOTAL 9,026,405 8,325,172 8.4 2,433,718 2,173,586 12.0
FOREIGN
Life Insurance 3,753,062 3,206,137 17.1 932,763 752,340 24.0
Personal Accident 162,644 141,059 15.3 44,166 36,906 19.7
Group Products 338,001 254,470 32.8 89,463 82,079 9.0
Intercompany Adjustments (14,705) (11,686) -- (4,267) (3,086) --
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 4,239,002 3,589,980 18.1 1,062,125 868,239 22.3
Guaranteed Investment Contracts 374,020 358,894 4.2 86,467 103,442 (16.4)
----------- ----------- ----------- -----------
TOTAL 4,613,022 3,948,874 16.8 1,148,592 971,681 18.2
TOTAL NET INVESTMENT INCOME
EXCLUDING GICS 11,061,919 9,721,393 13.8 2,920,191 2,470,521 18.2
TOTAL NET INVESTMENT INCOME 13,639,427 12,274,046 11.1 3,582,310 3,145,267 13.9
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME
DOMESTIC
Life Insurance 807,568 718,816 12.3 211,889 189,262 12.0
Individual Fixed Annuities 739,670 536,802 37.8 215,378 149,680 43.9
Individual Fixed Annuities - Runoff (a) 147,422 192,752 (23.5) 37,988 46,821 (18.9)
Home Service 400,126 382,063 4.7 101,504 96,592 5.1
Group Life/Health 119,957 100,955 18.8 32,047 24,206 32.4
Pension and Investment Products 210,475 117,719 78.8 63,796 27,501 132.0
Intercompany Adjustments (302) (240) -- (87) (63) --
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 2,424,916 2,048,867 18.4 662,515 533,999 24.1
Guaranteed Investment Contracts 539,034 639,484 (15.7) 152,187 154,527 (1.5)
----------- ----------- ----------- -----------
TOTAL DOMESTIC BEFORE REALIZED
CAPITAL GAINS (LOSSES) 2,963,950 2,688,351 10.3 814,702 688,526 18.3
Realized Capital Gains (Losses) (543,733) (983,971) -- (97,491) (412,519) --
----------- ----------- ----------- -----------
DOMESTIC OPERATING INCOME 2,420,217 1,704,380 42.0 717,211 276,007 159.9
FOREIGN
Life Insurance 2,773,406 2,411,048 15.0 731,676 631,502 15.9
Personal Accident 851,902 681,212 25.1 243,553 198,553 22.7
Group Products 202,131 174,670 15.7 52,577 56,318 (6.6)
Intercompany Adjustments (14,705) (11,686) -- (4,267) (3,086) --
----------- ----------- ----------- -----------
TOTAL EXCLUDING GICS 3,812,734 3,255,244 17.1 1,023,539 883,287 15.9
Guaranteed Investment Contracts 50,985 38,678 31.8 12,627 9,950 26.9
----------- ----------- ----------- -----------
TOTAL FOREIGN BEFORE REALIZED
CAPITAL GAINS (LOSSES) 3,863,719 3,293,922 17.3 1,036,166 893,237 16.0
Realized Capital Gains (Losses) (282,160) (68,999) -- 47,416 (39,242) --
----------- ----------- ----------- -----------
FOREIGN OPERATING INCOME 3,581,559 3,224,923 11.1 1,083,582 853,995 26.9
WORLDWIDE LIFE BEFORE REALIZED CAPITAL
GAINS (LOSSES) EXCLUDING GICS 6,237,650 5,304,111 17.6 1,686,054 1,417,286 19.0
WORLDWIDE LIFE BEFORE REALIZED CAPITAL
GAINS (LOSSES) 6,827,669 5,982,273 14.1 1,850,868 1,581,763 17.0
Realized Capital Gains (Losses) (825,893) (1,052,970) -- (50,075) (451,761) --
----------- ----------- ----------- -----------
WORLDWIDE OPERATING INCOME $ 6,001,776 $ 4,929,303 21.8% $ 1,800,793 $ 1,130,002 59.4%
(a) Represents runoff annuity business largely sold through discontinued
distribution channels.
SUPPLEMENTARY EARNINGS DATA - PAGE 4
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
----------- ----------- ------ ----------- ----------- ------
LIFE INSURANCE OPERATIONS:
DOMESTIC - OTHER DATA
LIFE INSURANCE
Periodic Premium Sales (a):
Individual/Retail $ 352,427 $ 292,410 20.5% $ 95,287 $ 78,800 20.9%
Institutional Markets 74,263 51,350 44.6 16,123 6,340 154.3
----------- ----------- ----------- -----------
Total Periodic Sales 426,690 343,760 24.1 111,410 85,140 30.9
Unscheduled & Single Deposits 372,340 407,110 (8.5) 80,340 141,010 (43.0)
Life Insurance Reserves 19,340,791 17,777,563 8.8
INDIVIDUAL FIXED ANNUITIES
Annuity Reserves 58,457,145 48,837,928 19.7
HOME SERVICE
Product Sales
Life/A&H (a) 111,810 99,410 12.5 28,361 26,790 5.9
Fixed Annuity 121,202 -- -- 30,769 -- --
Total Insurance Reserves 7,054,836 6,898,000 2.3
GROUP PRODUCTS
Annualized Earned Premium 1,236,874 1,110,980 11.3
PENSION & INVESTMENT CONTRACTS
Insurance Reserves 17,047,763 15,330,374 11.2
GUARANTEED INVESTMENT CONTRACTS
GIC Reserves 40,801,728 35,838,537 13.8
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN - FIRST YEAR PREMIUMS
LIFE INSURANCE
Japan 586,623 472,919 24.0 174,839 152,290 14.8
China 84,132 58,199 44.6 29,548 20,624 43.3
Asia excluding Japan and China 1,762,866 1,548,584 13.8 487,369 461,759 5.5
All Other Regions 197,837 157,915 25.3 58,760 46,107 27.4
----------- ----------- ----------- -----------
TOTAL 2,631,458 2,237,617 17.6 750,516 680,780 10.2
PERSONAL ACCIDENT
Japan 466,778 300,739 55.2 151,341 84,973 78.1
China 31,280 22,266 40.5 8,383 6,307 32.9
Asia excluding Japan and China 195,773 167,446 16.9 52,289 45,548 14.8
All Other Regions 95,622 69,417 37.8 26,313 20,620 27.6
----------- ----------- ----------- -----------
TOTAL 789,453 559,868 41.0 238,326 157,448 51.4
GROUP PRODUCTS
Japan 31,067 23,272 33.5 12,553 6,808 84.4
Asia excluding Japan and China 47,737 42,895 11.3 10,450 9,588 9.0
All Other Regions 516,030 316,864 62.9 108,903 76,611 42.2
----------- ----------- ----------- -----------
TOTAL 594,834 383,031 55.3 131,906 93,007 41.8
INVESTMENT CONTRACTS
Japan 15,872 21,152 (25.0) 2,859 4,178 (31.6)
All Other Regions 5,193 9,434 (45.0) 1,462 3,977 (63.2)
----------- ----------- ----------- -----------
TOTAL 21,065 30,586 (31.1) 4,321 8,155 (47.0)
TOTAL FIRST YEAR PREMIUMS
Japan 1,100,340 818,082 34.5 341,592 248,249 37.6
China 115,412 80,465 43.4 37,931 26,931 40.8
Asia excluding Japan and China 2,006,376 1,758,925 14.1 550,108 516,895 6.4
All Other Regions 814,682 553,630 47.2 195,438 147,315 32.7
----------- ----------- ----------- -----------
TOTAL $ 4,036,810 $ 3,211,102 25.7% $ 1,125,069 $ 939,390 19.8%
(a) Life Insurance sales represent premiums from new sales that are expected to
be collected over a one year period.
SUPPLEMENTARY EARNINGS DATA - PAGE 5
TWELVE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2003
------------------- ------------------
LIFE INSURANCE OPERATIONS:
FOREIGN EXCHANGE IMPACT ON GROWTH OF:
GAAP PREMIUMS
WORLDWIDE
Growth in Original Currency 10.0% 14.8%
Foreign Exchange Impact 2.6 4.6
Growth as Reported in U.S. $ 12.6 19.4
FOREIGN
Growth in Original Currency 10.4 15.7
Foreign Exchange Impact 3.2 5.8
Growth as Reported in U.S. $ 13.6 21.5
PREMIUMS, DEPOSITS AND OTHER CONSIDERATIONS EXCLUDING GICS(a)
WORLDWIDE
Growth in Original Currency 13.0 25.4
Foreign Exchange Impact 1.5 3.0
Growth as Reported in U.S. $ 14.5 28.4
FOREIGN
Growth in Original Currency 14.4 20.3
Foreign Exchange Impact 2.9 5.4
Growth as Reported in U.S. $ 17.3 25.7
GUARANTEED INVESTMENT CONTRACTS
WORLDWIDE
Growth in Original Currency (9.3) 82.4
Foreign Exchange Impact 2.5 2.4
Growth as Reported in U.S. $ (6.8) 84.8
FOREIGN
Growth in Original Currency (34.3) (23.7)
Foreign Exchange Impact 6.5 5.1
Growth as Reported in U.S. $ (27.8)% (18.6)%
(a) Premiums, deposits and other considerations represent aggregate business
activity during the respective periods presented on a non-GAAP basis.
SUPPLEMENTARY EARNINGS DATA - PAGE 6
TWELVE MONTHS ENDED DECEMBER 31, THREE MONTHS ENDED DECEMBER 31,
2003 2002 CHANGE 2003 2002 CHANGE
----------- ----------- ------ ----------- ----------- ------
FINANCIAL SERVICES:
REVENUES
Aircraft Finance $3,042,483 $ 2,844,977 6.9% $ 770,591 $ 749,519 2.8%
Capital Markets 1,845,312 1,544,425 19.5 602,988 509,568 18.3
Consumer Finance 2,642,074 2,472,573 6.9 684,592 634,501 7.9
Other 35,656 (47,091) -- 11,643 (39,382) --
----------- ----------- ----------- -----------
TOTAL 7,565,525 6,814,884 11.0 2,069,814 1,854,206 11.6
OPERATING INCOME
Aircraft Finance 727,956 801,099 (9.1) 179,599 213,077 (15.7)
Capital Markets 1,085,894 869,776 24.8 357,231 277,691 28.6
Consumer Finance 648,864 549,240 18.1 160,311 139,950 14.5
Other (a) 1,455 (31,395) -- 5,311 (10,419) --
----------- ----------- ----------- -----------
TOTAL 2,464,169 2,188,720 12.6 702,452 620,299 13.2
- -----------------------------------------------------------------------------------------------------------------------------------
RETIREMENT SERVICES & ASSET MANAGEMENT (b):
REVENUES
AIG VALIC (c) 2,305,243 2,133,149 8.1 603,344 527,031 14.5
AIG SunAmerica (d) 536,700 562,606 (4.6) 148,795 108,692 36.9
Other Asset Management and
Annuity Operations (e) 1,053,979 789,094 33.6 375,859 211,323 77.9
----------- ----------- ----------- -----------
TOTAL 3,895,922 3,484,849 11.8 1,127,998 847,046 33.2
OPERATING INCOME
AIG VALIC (c) 901,718 730,020 23.5 226,227 158,409 42.8
AIG SunAmerica (d) 38,666 32,029 20.7 15,746 (25,210) --
Other Asset Management and
Annuity Operations (e) 330,829 253,883 30.3 112,305 74,617 50.5
----------- ----------- ----------- -----------
TOTAL 1,271,213 1,015,932 25.1 354,278 207,816 70.5
VARIABLE ANNUITY NET FLOWS (f)
Deposits
AIG VALIC 5,359,804 5,041,725 6.3 1,355,189 1,280,745 5.8
AIG SunAmerica 3,412,173 2,995,580 13.9 926,735 791,626 17.1
----------- ----------- ----------- -----------
TOTAL DEPOSITS 8,771,977 8,037,305 9.1 2,281,924 2,072,371 10.1
Net Flows (f)
AIG VALIC 2,931,572 2,625,523 11.7 701,582 787,344 (10.9)
AIG SunAmerica 1,179,306 570,142 106.8 322,172 63,098 410.6
----------- ----------- ----------- -----------
TOTAL NET FLOWS $4,110,878 $ 3,195,665 28.6% $1,023,754 $ 850,442 20.4%
SURRENDER RATES
AIG VALIC 5.6% 6.0% 5.6% 5.0%
AIG SunAmerica 10.7% 10.9% 10.7% 13.3%
FOREIGN FIXED AND VARIABLE
ANNUITY DEPOSITS $5,079,867 $ 830,876 511.4% $2,908,255 $ 187,611 --%
EFFECTIVE TAX RATES:
Net Income 30.66% 28.59% 31.09% --
Realized Capital Gains (Losses) 33.68% 35.02% 35.28% --
(a) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b) At December 31, 2003, AIG's third party assets under management,
including mutual funds and institutional accounts, totaled over $46
billion.
(c) Reflects the sale of variable annuity products with fixed annuity
options.
(d) Includes variable annuity (separate account only), mutual fund and
broker-dealer operations.
(e) Includes AIG Global Investment Group and certain foreign fixed and
variable annuity operations.
(f) Net Flows are deposits net of surrenders.
SUPPLEMENTARY EARNINGS DATA - PAGE 7
ADDITIONAL RECONCILIATION IN ACCORDANCE WITH REGULATION G
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
2003 2002
------------------- -------------------
RETURN ON EQUITY RECONCILIATION
Return on Equity, GAAP basis 14.1% 9.9%
Percent Related to Reconciliation 3.1 3.5
---- ----
Return on Equity, as presented (a) 17.2% 13.4%
(a) Return on Equity, as presented is net income, before realized capital
gains (losses), expressed as a percentage of average shareholders'
equity, exclusive of unrealized appreciation (depreciation) of
investments, net of tax.
