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): April 24, 2003
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 9. Regulation FD Disclosure.
The following information, including the text of the press release
attached as an Exhibit to this Form 8-K, is furnished pursuant to Item 9,
"Regulation FD Disclosure" and Item 12, "Disclosure of Results of Operations
and Financial Condition".
On April 24, 2003, American International Group, Inc. (AIG) issued a press
release announcing its results for the quarter ended March 31, 2003. A copy of
the press release is attached as Exhibit 99.1 to this Form 8-K.
Throughout the press release, AIG presents its operations in the way it
believes will be most meaningful, as well as most transparent. Income and
operating income and related rates of performance for general and life insurance
operations are shown exclusive of realized capital gains and losses because the
determination to realize capital gains or losses is generally independent of the
underwriting process. Moreover, the equity analysts who follow AIG exclude such
realized transactions in their analyses for the same reason. Premium income, in
some cases, and combined ratios are presented in accordance with principles
prescribed by insurance regulatory authorities. A reconciliation to generally
accepted accounting principles is included in the Financial Highlights table of
the press release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AMERICAN INTERNATIONAL GROUP, INC.
(Registrant)
Date: April 24, 2003 By /s/ KATHLEEN E. SHANNON
------------------------------------
Name: Kathleen E. Shannon
Title: Vice President and Secretary
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of American International
Group, Inc. dated April 24, 2003.
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 FIRST QUARTER 2003 NET INCOME OF $1.95 BILLION
----------------------------------------------------------
VS. $1.98 BILLION IN THE FIRST QUARTER OF 2002;
-----------------------------------------------
INCOME AS ADJUSTED TO EXCLUDE REALIZED CAPITAL LOSSES
-----------------------------------------------------
ROSE 11.1 PERCENT TO $2.37 BILLION
----------------------------------
NEW YORK, NY, April 24, 2003 - American International Group, Inc. (AIG) today
reported that its first quarter 2003 net income was $1.95 billion or $0.74 per
share, compared to $1.98 billion or $0.75 per share in the first quarter of
2002. First quarter 2003 income as adjusted to exclude net realized capital
gains (losses), increased 11.1 percent to $2.37 billion, compared to $2.13
billion in the first quarter of 2002. Per share income, as adjusted was $0.90,
an increase of 11.1 percent over $0.81 in first quarter 2002.
Following is a summary table of first quarter information (in millions,
except per share amounts):
FIRST QUARTER
PER SHARE
2003 2002 Change 2003 2002 Change
---- ---- ------ ---- ---- ------
Net income, as reported $1,953.5 $1,980.3 (1.4)% $ 0.74 $ 0.75 (1.3)%
Realized capital gains
(losses), net of taxes (412.8) (150.4) - (0.16) (0.06) -
Income, as adjusted $2,366.3 $2,130.7 11.1% $ 0.90 $ 0.81 11.1%
Average shares outstanding 2,628.1 2,641.0
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In this press release, income and operating income and related rates of
performance for general and life insurance operations are shown exclusive of
realized capital gains and losses. Premium income, in certain instances, and
combined ratios are presented in accordance with principles prescribed by
insurance regulatory authorities. A reconciliation to generally accepted
accounting principles (GAAP) is included in the Financial Highlights table of
this press release.
Highlights of the first quarter of 2003 include:
o Record capital funds (shareholders' equity) at March 31, 2003 of
approximately $62 billion, an increase of approximately $3 billion over
December 31, 2002.
o Annualized return on equity of 16.9 percent. Return on equity 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 taxes.
o Record consolidated assets at March 31, 2003 of approximately $590 billion,
an increase of approximately $29 billion over December 31, 2002.
o Record General Insurance net premiums written of $8.24 billion, an increase
of 30.1 percent over the first quarter of 2002.
o Record General Insurance pretax operating income, excluding realized
capital losses, of $1.32 billion.
o Record General Insurance cash flow of $3.24 billion.
o General Insurance net loss and loss adjustment reserves totaling $31.52
billion as of March 31, 2003, an increase of $1.17 billion for the first
quarter of 2003.
o Record Life Insurance GAAP premium income of $5.66 billion, up 18.3 percent
over the first quarter of 2002. Life Insurance premium income, deposits and
other considerations of $13.01 billion, an increase of 1.5 percent over the
first quarter of 2002 (see footnote 'a' on page 4 for definitions).
Excluding guaranteed investment contracts, life insurance premium income,
deposits and other considerations increased 18.8 percent.
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Income before income taxes and minority interest was $2.92 billion in
the first quarter of 2003, compared to $2.96 billion in 2002. The following
table outlines the results for the first quarter (in millions):
FIRST QUARTER
2003 2002 Change
---- ---- ------
General Insurance operating income (1) $1,316.4 $1,055.1 24.8%
Life Insurance operating income (2) 1,540.1 1,355.4 13.6
Financial Services operating income 530.5 473.9 11.9
Retirement Savings &
Asset Management operating income 282.8 299.7 (5.6)
Other Income (Deductions)-net (114.4) 6.4 -
Adjusted income before income
taxes and minority interest 3,555.4 3,190.5 11.4
Realized capital gains (losses) (3) (631.5) (231.8) -
Income before income
taxes and minority interest $2,923.9 $2,958.7 (1.2)%
(1) General insurance income before income taxes in first quarter
2003 was $1,143.9 million, including $172.5 million of
realized capital losses, compared to $933.3 million in first
quarter 2002, including realized capital losses of $121.8
million.
(2) Life insurance income before income taxes in first quarter
2003 was $1,195.1 million, including $345.0 million of
realized capital losses, compared to $1,326.6 million in first
quarter 2002, including realized capital losses of $28.8
million.
(3) Realized capital gains (losses) include both actual asset
sales and impairment provisions, which may be recovered on
ultimate disposition depending on future market conditions.
The following tables outline the impact of foreign exchange on
property-casualty and life insurance premiums for the first quarter 2003:
GENERAL INSURANCE NET PREMIUMS WRITTEN
-----------------
WORLDWIDE FOREIGN
--------- -------
Premium Growth in Original Currency 28.4% 25.0%
Foreign Exchange Impact 1.7 5.7
Premium Growth as Reported in U.S. $ 30.1% 30.7%
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LIFE INSURANCE PREMIUM INCOME,
-------------- DEPOSITS AND OTHER
CONSIDERATIONS (a) GAAP PREMIUMS
WORLDWIDE FOREIGN WORLDWIDE FOREIGN
--------- ------- --------- -------
Premium Growth in Original Currency (0.3)% 5.3% 15.7% 13.8%
Foreign Exchange Impact 1.8 4.3 2.6 3.3
Premium Growth as Reported in U.S. $ 1.5% 9.6% 18.3% 17.1%
(a) Premium income, deposits and other considerations represents total
revenue flow exclusive of investment income. This differs from the revenue
concept for GAAP, which recognizes only risk coverage as premium and
excludes deposits and other considerations.
Commenting on first quarter results, AIG Chairman M. R. Greenberg said,
"AIG had a good first quarter. General Insurance, Life Insurance and Financial
Services all had double-digit growth in operating income, excluding realized
capital losses. Retirement Savings continues to be impacted by weak global
equity markets.
"Shareholders' equity at March 31, 2003 was a record $62 billion.
Assets were a record high $590 billion and the annualized return on equity for
the quarter was a strong 16.9 percent.
"First quarter General Insurance operating income grew 24.8 percent to
a record $1.32 billion, as a result of strong performance in both the Domestic
Brokerage Group and Foreign General operations. Net premiums written were a
record $8.24 billion in the first quarter of 2003, up 30.1 percent over a year
ago. The General Insurance combined ratio was 93.13 versus 95.76 in last year's
first quarter, and the expense ratio was excellent, 18.98 compared to 20.52 a
year ago.
"In the United States, Domestic Brokerage Group net premiums written in
the first quarter of 2003 increased 31.7 percent (approximately 37 percent
adjusting for cancelled or nonrenewed business) to a record $4.54 billion. The
combined ratio was 94.80, compared to 97.65 in the first quarter of 2002.
Although some competitors have been pricing commercial property and smaller
commercial casualty lines more aggressively, AIG has maintained strong pricing
discipline and is still implementing necessary rate increases for these lines,
as well as for major corporate accounts and the specialized classes of business
that are a core strength of AIG. The flight to quality continues, given the
recent ratings downgrades of several insurers and reinsurers. We are working for
tort reform at the federal, state and local levels, with a broad-based coalition
of businesses of every size that recognize the enormous costs to the entire U.S.
economy of the explosion of litigation and liability claims.
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"HSB Group, Inc., the industry leader in providing equipment breakdown
insurance and related engineering and loss control services, had another good
quarter as it increased unit growth domestically and continued to leverage AIG's
global network to expand its presence in international markets.
"Domestic Personal Lines had an excellent quarter. Net premiums written
were $884.2 million, up 21.8 percent over the prior year. The combined ratio was
96.43 in the first quarter of 2003, compared to 101.08 a year ago.
"United Guaranty Corporation had a good quarter with an excellent
combined ratio. Its strong increase in new business was largely offset by a
decline in renewal premiums, reflecting the continuing high level of
refinancings.
"Foreign General Insurance had outstanding results in the quarter. Net
premiums written were a record $1.93 billion, an increase of 30.7 percent, or
25.0 percent in original currency, over the first quarter of 2002. The combined
ratio was 88.90, compared to 91.95 in the first quarter of 2002. These excellent
results demonstrate once again the strength of our global franchise and the
exceptional quality of the Foreign General management team. Every major region
of the worldwide network contributed to this performance, and we expect
continued strong results in the foreseeable future.
"The General Insurance paid loss ratio declined in the first quarter of
2003 to 58.10, from 72.93 a year ago. We added $1.17 billion to AIG's General
Insurance net loss and loss adjustment reserves in the first quarter of 2003,
bringing the total of those reserves to $31.52 billion at March 31, 2003.
"Total General Insurance cash flow continues to be outstanding. New
cash flow for investments from General Insurance operations in the first quarter
of 2003 was a record of approximately $3.24 billion, compared to $1.39 billion
in the first quarter of 2002. Net investment income from General Insurance grew
5.2 percent. Even though interest rates remain at historic lows, we are
beginning to benefit from the substantial net increases in cash flow since the
beginning of 2002.
"Worldwide Life Insurance operating income was $1.54 billion, compared
to $1.36 billion in the first quarter of 2002. Results were strong in most
regions. Worldwide Life Insurance premium income, deposits and other
considerations were $13.01 billion, an increase of 1.5 percent over the first
quarter of 2002. Excluding worldwide guaranteed investment contracts, which vary
from quarter to quarter depending on market conditions, premium income, deposits
and other considerations increased 18.8 percent compared to the first quarter of
2002. Life insurance cash flow from both foreign and domestic operations
continues to be outstanding.
"Asia, the largest region of Foreign Life, had good results in terms
of both operating income and premium growth. AIG Star Life Insurance Co., Ltd.
has provided us with an additional distribution platform to serve the life
insurance, accident and health and related needs of Japan, the world's second
largest life insurance market. AIG Star Life has been receiving benefit in the
form of operating income related to surrender charges on
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policies that lapsed after it obtained approval to lower policy crediting rates.
As expected, most of these excess surrender charges occurred by the end of first
quarter of 2003. We expect comparatively lower operating income from AIG Star
Life beginning in the second quarter of this year. Going forward, growth at AIG
Star Life will be based on new and renewal business, a growing agency force and
productivity gains. However, we anticipate AIG Star Life earnings in 2004 will
be comparable to its expected 2003 earnings.
"Domestic Life operating income was $664.2 million in the first
quarter 2003, compared to $632.2 million in first quarter 2002. Premium income,
deposits and other considerations were $6.93 billion, compared to $7.27 billion
in the first quarter of 2002. Excluding guaranteed investment contracts, life
insurance premium income, deposits and other considerations increased 18.1
percent over first quarter of 2002. AIG American General had strong growth from
the universal and term life products and structured settlements. American
General Life and Accident Insurance Company (AGLA), the home services business,
has continued to grow through the introduction of new products and an enhanced
agency force. First year AGLA sales of life and accident and health products
increased approximately 18 percent in the quarter.
"The individual fixed annuity business (reported in the Life Insurance
segment), continued to experience strong demand for its guaranteed fixed return
products. Premium income, deposits and other considerations increased 22.6
percent in the first quarter to $2.77 billion. AIG Annuity Insurance Company,
the largest provider of fixed annuities through banks, also is expanding its
distribution through broker-dealers and mutual funds.
"We have lowered crediting rates in response to a lower interest rate
environment and are giving greater emphasis to protection products such as
accident and health coverages, which are less interest rate sensitive.
"The outbreak of Severe Acute Respiratory Syndrome (SARS) did not
impact our business in the first quarter. Going forward, SARS may impede agents
from freely visiting prospects and will likely have some dampening effect on new
sales in certain Asian markets in the second quarter. As a result, we have
increased our direct marketing efforts including telephone marketing. There is
growing demand for some of AIG's traditional policyholder protection and
critical illness products. We expect the outbreak of SARS to have only a slight
impact on profitability.
"Financial Services operating income grew 11.9 percent to $530.5
million in the first quarter of 2003, compared to $473.9 million in the first
quarter of 2002.
"International Lease Finance Corporation (ILFC) reported operating
income of $174.3 million in the first quarter of 2003, versus $173.1 million a
year ago. We have cancelled or deferred delivery on some new aircraft, which we
are able to do under the terms of our contracts with the manufacturers with no
financial impact to AIG. At the end of the first quarter, all but one aircraft
with leases that have expired or that have been returned to us as a result of
airline difficulties have been profitably redeployed. In a difficult commercial
aviation environment, ILFC continues to perform well as a result of
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its geographically diversified customer base, its modern and efficient fleet and
the industry's best management team.
"AIG Financial Products Corp. (AIGFP) reported operating income of
$195.9 million in the first quarter of 2003, compared to $176.2 million in the
first quarter of 2002. AIGFP's growing earnings are largely derived from
providing innovative solutions to the financial requirements of its clients
worldwide.
"American General Finance had a good quarter, with total originations
and renewals increasing 15 percent over last year, as the company continued to
expand its real estate loan portfolio. Credit quality remains solid, and in
spite of weak economic conditions, the net charge-off and delinquency ratios
improved. Our small but growing overseas consumer finance business is performing
profitably.
"Retirement Savings & Asset Management earned $282.8 million in the
first quarter of 2003, compared to $299.7 million in the same period of 2002.
The Group Retirement Savings business, led by AIG VALIC in the United States, is
experiencing good growth, but results in the individual variable annuity and
mutual fund businesses continue to be impacted by weak equity markets. Fees are
also down in the broker-dealer operations. However, the institutional asset
management business of AIG Global Investment Group, Inc. performed well in the
quarter.
"AIG had pretax realized capital losses of $631.5 million in the first
quarter of 2003, compared to $231.8 million realized capital losses in the first
quarter of 2002. These realized capital losses reflect continued weakness in the
equity markets and impairment loss provisions for both equity and fixed income
holdings. The largest portion of these losses is derived from the inclusion of
unrealized losses on investments previously written down to market through
shareholders' equity. Upon the ultimate disposition of these holdings, a portion
of these losses may be recovered depending on future market conditions. To put
these numbers in perspective, first quarter realized capital losses represented
0.1 percent of AIG's total March 31, 2003 cash and invested assets of
approximately $460 billion.
"In the Other Income/Deductions-net category, AIG reported net losses
of $114.4 million in the first quarter of 2003 compared to a net gain of $6.4
million a year earlier. This is primarily attributable to AIG SunAmerica
partnership investments, which experienced significantly less income returns in
the first quarter of 2003 compared to that recorded a year ago.
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"As previously reported, beginning January 1, 2003, AIG expensed stock
options pursuant to FAS 123, Accounting for Stock-Based Compensation. AIG's
incentive plans have always rewarded long-term performance that contributes to
shareholder value, and the expensing of stock options has not been an economic
issue for AIG. In 2003, we expect the expense to be less than $0.01 per share."
# # # #
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 savings 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 savings 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. 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, May 2, 2003.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. Please refer to
the AIG Annual Report on Form 10-K for the year ended December 31, 2002 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.
American International Group, Inc.
Financial Highlights*
(in thousands, except per share amounts)
Three Months Ended March 31,
2003 2002 CHANGE
------------ ------------ ------
General Insurance Operations:
Net Premiums Written $ 8,243,084 $ 6,334,283 30.1 %
Net Premiums Earned 7,286,763 5,506,528 32.3
Adjusted Underwriting Profit 532,539 309,701 72.0
Net Investment Income 783,874 745,366 5.2
Income Before Realized Capital Gains (Losses) 1,316,413 1,055,067 24.8
Realized Capital Gains (Losses) (172,507) (121,758) --
Operating Income $ 1,143,906 $ 933,309 22.6 %
- ------------------------------------------------------------------------------------------------------------------
Loss Ratio 74.15 75.24
Expense Ratio 18.98 20.52
Combined Ratio 93.13 95.76
- ------------------------------------------------------------------------------------------------------------------
Life Insurance Operations:
GAAP Premiums $ 5,658,490 $ 4,783,447 18.3 %
Deposits and Other Considerations not
included in revenues under GAAP 7,354,770 8,033,735 (8.5)
Premium Income, Deposits and Other Considerations (a)(b) 13,013,260 12,817,182 1.5
Net Investment Income 3,240,401 2,902,586 11.6
Income Before Realized Capital Gains (Losses) 1,540,053 1,355,391 13.6
Realized Capital Gains (Losses) (344,959) (28,761) --
Operating Income 1,195,094 1,326,630 (9.9)
Financial Services Operating Income 530,461 473,914 11.9
Retirement Savings & Asset Management Operating Income 282,798 299,678 (5.6)
Other Realized Capital Gains (Losses) (114,034) (81,320) --
Other Income (Deductions) - net (114,355) 6,492 --
Income before Income Taxes and Minority Interest 2,923,870 2,958,703 (1.2)
Income Taxes 876,362 891,828 --
Income before Minority Interest 2,047,508 2,066,875 (0.9)
Minority Interest, after-tax - Operating Income (91,928) (87,024) --
Minority Interest, after-tax - Realized Capital Gains (Losses) (2,055) 449 --
Net Income, as reported 1,953,525 1,980,300 (1.4)
Realized Capital Gains (Losses), net of taxes (412,846) (150,395) --
Income, as adjusted $ 2,366,371 $ 2,130,695 11.1 %
- ------------------------------------------------------------------------------------------------------------------
Per Share - Diluted:
Net Income, as reported $ 0.74 $ 0.75 (1.3)%
Realized Capital Gains (Losses), net of taxes (0.16) (0.06) --
Income, as adjusted $ 0.90 $ 0.81 11.1 %
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Average Diluted Common Shares Outstanding 2,628,084 2,640,990
* Including reconciliation in accordance with Regulation G.
(a) Represents a non-GAAP measurement used by AIG to help manage its life
insurance operation, and may not be comparable to similarly captioned
measurements used by other life insurance companies.
(b) Premium income, deposits and other considerations represent aggregate
business activity during the respective periods.
American International Group, Inc.
Supplementary Data
(in thousands)
Three Months Ended March 31,
2003 2002 Change
------------ ------------ --------
General Insurance Operations:
Net Premiums Written
Domestic Brokerage Group $ 4,540,142 $ 3,446,162 31.7 %
Personal Lines 884,198 726,100 21.8
Mortgage Guaranty 121,188 122,222 (0.8)
Transatlantic Holdings 768,081 563,555 36.3
Foreign General (a)(b) 1,929,475 1,476,244 30.7
------------ ------------
Total 8,243,084 6,334,283 30.1
Operating Income Before Realized
Capital Gains (Losses) (c)
Domestic Brokerage Group 708,847 531,088 33.5
Personal Lines 69,300 23,136 199.5
Mortgage Guaranty 109,995 111,649 (1.5)
Transatlantic Holdings 79,400 72,048 10.2
Foreign General (a) 347,154 311,463 11.5
Intercompany Adjustments 1,717 5,683 --
------------ ------------
Total $ 1,316,413 $ 1,055,067 24.8 %
- ------------------------------------------------------------------------------------------------------------------
Combined Ratio:
Domestic Brokerage Group 94.80 97.65
Personal Lines 96.43 101.08
Mortgage Guaranty 46.03 41.49
Transatlantic Holdings 97.36 98.19
Foreign General (a) 88.90 91.95
Losses and Loss Expenses Paid $ 4,233,655 $ 4,016,317 5.4 %
Change in Loss and Loss Expense Reserve 1,169,765 126,966 --
------------ ------------
Losses and Loss Expenses Incurred 5,403,420 4,143,283 30.4
Net Loss and Loss Expense Reserve 31,519,704 26,022,478 21.1
GAAP Underwriting Profit $ 532,539 $ 309,701 72.0 %
(a) Foreign general insurance excludes the foreign operations of Transatlantic
Holdings, Inc.
(b) The growth in Foreign General net premiums written in original currency was
25.0 percent for the first quarter 2003.
(c) Excludes realized capital gains (losses) which are not deemed to be an
integral part of AIG's General Insurance operations' internal reporting
groups.
Supplementary Data Continued
Three Monts Ended March 31,
2003 2002 Change
------------ ------------ --------
Life Insurance Operations:
GAAP Premiums
Domestic
Life Insurance $ 430,747 $ 396,248 8.7 %
Individual Fixed Annuities 12,303 11,423 7.7
Guaranteed Investment Contracts 3,673 773 --
Home Service 208,745 215,917 (3.3)
Group Life/Health 232,248 237,910 (2.4)
Pension and Investment Products 434,430 218,816 98.5
------------ ------------
Total 1,322,146 1,081,087 22.3
Foreign
Life Insurance 3,267,881 2,793,514 17.0
Personal Accident 691,168 565,827 22.2
Group Products 349,504 316,075 10.6
Guaranteed Investment Contracts 27,791 26,944 3.1
------------ ------------
Total 4,336,344 3,702,360 17.1
Total GAAP Premiums 5,658,490 4,783,447 18.3
Premium Income, Deposits and
Other Considerations (a)(b)
Domestic
Life Insurance 652,420 655,767 (0.5)
Individual Fixed Annuities 2,772,926 2,261,945 22.6
Guaranteed Investment Contracts 2,469,478 3,492,026 (29.3)
Home Service 234,616 216,011 8.6
Group Life/Health 236,759 245,156 (3.4)
Pension and Investment Products 567,476 400,745 41.6
------------ ------------
Total 6,933,675 7,271,650 (4.6)
Foreign
Life Insurance 3,676,266 3,087,666 19.1
Personal Accident 692,409 563,469 22.9
Group Products 569,823 487,111 17.0
Guaranteed Investment Contracts 1,141,087 1,407,286 (18.9)
------------ ------------
Total (c) 6,079,585 5,545,532 9.6
Total Premium Income, Deposits
and Other Considerations $ 13,013,260 $ 12,817,182 1.5 %
(a) Represents a non-GAAP measurement used by AIG to help manage its life
insurance operation, and may not be comparable to similarly captioned
measurements used by other life insurance companies.
(b) Premium income, deposits and other considerations represent aggregate
business activity during the respective periods.
(c) The growth in foreign premium income, deposits and other considerations in
original currency was 5.3 percent in the quarter.
Supplementary Data Continued
Three Months Ended March 31,
2003 2002 Change
------------ ------------ ------
Life Insurance Operations:
Net Investment Income
Domestic
Life Insurance $ 316,403 $ 342,884 (7.7)%
Individual Fixed Annuities 854,612 731,967 16.8
Guaranteed Investment Contracts 507,963 481,309 5.5
Home Service 168,577 168,758 (0.1)
Group Life/Health 27,931 25,684 8.7
Pension and Investment Products 235,224 201,736 16.6
Intercompany Adjustments (63) (57) --
------------ ------------
Total 2,110,647 1,952,281 8.1
Foreign
Life Insurance 909,327 775,707 17.2
Personal Accident 36,528 33,057 10.5
Group Products 82,141 59,969 37.0
Guaranteed Investment Contracts 104,844 84,329 24.3
Intercompany Adjustments (3,086) (2,757) --
------------ ------------
Total 1,129,754 950,305 18.9
Total Net Investment Income 3,240,401 2,902,586 11.6
Operating Income Before Realized
Capital Gains (Losses) (a)
Domestic
Life Insurance 189,699 164,200 15.5
Individual Fixed Annuities 201,635 167,268 20.5
Guaranteed Investment Contracts 110,677 141,208 (21.6)
Home Service 100,218 95,390 5.1
Group Life/Health 28,482 26,554 7.3
Pension and Investment Products 33,553 37,662 (10.9)
Intercompany Adjustments (63) (57) --
------------ ------------
Total 664,201 632,225 5.1
Foreign
Life Insurance 625,238 524,723 19.2
Personal Accident 197,492 153,586 28.6
Group Products 47,809 38,977 22.7
Guaranteed Investment Contracts 8,399 8,637 (2.8)
Intercompany Adjustments (3,086) (2,757) --
------------ ------------
Total 875,852 723,166 21.1
Total Operating Income $ 1,540,053 $ 1,355,391 13.6 %
(a) AIG does not specifically identify realized capital gains (losses) to
products within Life Insurance operations.
Supplementary Data Continued
Three Months Ended March 31,
2003 2002 Change
------------ ------------ ------
Financial Services:
Revenues
International Lease Finance Corp. $ 722,111 $ 640,842 12.7 %
AIG Financial Products Corp. 271,723 272,095 (0.1)
Consumer Finance 638,876 612,937 4.2
AIG Trading Group Inc. 52,907 43,221 22.4
Other 7,265 (2,604) --
------------ ------------
Total 1,692,882 1,566,491 8.1
Operating Income
International Lease Finance Corp. 174,271 173,088 0.7
AIG Financial Products Corp. 195,882 176,172 11.2
Consumer Finance 148,103 124,371 19.1
AIG Trading Group Inc. 15,359 10,115 51.8
Other (a) (3,154) (9,832) --
------------ ------------
Total 530,461 473,914 11.9
Retirement Savings & Asset Management (b):
Revenues
AIG VALIC (c) 544,182 534,495 1.8
AIG SunAmerica (d) 120,978 153,932 (21.4)
Other Asset Management and
Annuity Operations(e) 230,949 176,392 30.9
------------ ------------
Total 896,109 864,819 3.6
Operating Income (Loss)
AIG VALIC (c) 218,597 191,535 14.1
AIG SunAmerica (d) (1,313) 38,825 --
Other Asset Management and
Annuity Operations(e) 65,514 69,318 (5.5)
------------ ------------
Total 282,798 299,678 (5.6)
Variable Annuity Net Sales
Sales
AIG VALIC 1,239,072 1,284,136 (3.5)
AIG SunAmerica 765,538 704,838 8.6
Surrenders
AIG VALIC 554,082 628,516 (11.8)
AIG SunAmerica 560,336 505,048 10.9
Total
AIG VALIC 684,990 655,620 4.5
AIG SunAmerica 205,202 199,790 2.7
------------ ------------
Total Net Sales $ 890,192 $ 855,410 4.1 %
Effective Tax Rates:
Excluding Realized Capital Gains (Losses) 30.86% 30.49%
Realized Capital Gains (Losses) Alone 34.95% 34.94%
As Reported 29.97% 30.14%
(a) Includes Other Financial Services Companies and Intercompany
Reclassifications.
(b) At March 31, 2003 AIG's third party assets under management, including
mutual funds and institutional accounts, totaled approximately $41 billion.
(c) Reflects 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, John McStay Investment Counsel, L. P.
and certain overseas variable annuity operations.
