2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
( American General Life and Accident Insurance Company (AGLA)
Domestic Retirement Services
( The Variable Annuity Life Insurance Company (VALIC) ( AIG SunAmerica Life Assurance Company (AIG SunAmerica)
( AIG Annuity Insurance Company (AIG Annuity)
Life Insurance & Retirement Services Results
Life Insurance & Retirement Services results for 2007, 2006 and 2005 were as follows:
Premiums Net Net Realized
and Other Investment Capital Gains Total Operating
(in millions) Considerations Income (Losses) Revenues Income
2007
Foreign Life Insurance & Retirement Services $26,601 $11,849 $ (187) $38,263 $ 6,197
Domestic Life Insurance 5,836 3,995 (803) 9,028 642
Domestic Retirement Services 1,190 6,497 (1,408) 6,279 1,347
Total $33,627 $22,341 $(2,398) $53,570 $ 8,186
2006
Foreign Life Insurance & Retirement Services* $24,166 $ 9,758 $ 707 $34,631 $ 6,881
Domestic Life Insurance 5,543 3,778 (215) 9,106 917
Domestic Retirement Services 1,057 6,488 (404) 7,141 2,323
Total $30,766 $20,024 $ 88 $50,878 $10,121
2005
Foreign Life Insurance & Retirement Services $23,117 $ 8,718 $ 84 $31,919 $ 5,306
Domestic Life Insurance 5,447 3,733 35 9,215 1,495
Domestic Retirement Services 937 6,226 (277) 6,886 2,164
Total $29,501 $18,677 $ (158) $48,020 $ 8,965
Percentage Increase/(Decrease) 2007 vs. 2006:
Foreign Life Insurance & Retirement Services 10% 21% —% 10% (10)%
Domestic Life Insurance 5 6 — (1) (30)
Domestic Retirement Services 13 — — (12) (42)
Total 9% 12% —% 5% (19)%
Percentage Increase/(Decrease) 2006 vs. 2005:
Foreign Life Insurance & Retirement Services 5% 12% —% 8% 30%
Domestic Life Insurance 2 1 — (1) (39)
Domestic Retirement Services 13 4 — 4 7
Total 4% 7% —% 6% 13%
* Included an out of period UCITS adjustment which increased net investment income by $240 million and operating income by $169 million.
The following table presents the gross insurance in force losses resulting from other-than-temporary impairment charges of
for Life Insurance & Retirement Services at December 31, $2.8 billion and losses on derivative instruments not qualifying for
2007, 2006 and 2005:
hedge accounting treatment of $381 million compared to an other-
(in millions) 2007 2006 2005
than-temporary impairment charge of $641 million and gains on
derivative instruments of $268 million in 2006. In addition, net
Foreign * $1,327,251 $1,162,699 $1,027,682 investment income and certain products were negatively affected
Domestic 984,794 907,901 825,151
by the volatile markets. Life Insurance & Retirement Services
Total $2,312,045 $2,070,600 $1,852,833 continued its ongoing project to increase standardization of AIG’s
* Includes increases (decreases) of $55.1 billion, $41.5 billion and actuarial systems and processes throughout the world. Significant
$(76.5) billion related to changes in foreign exchange rates at progress was made on these initiatives, with only a minimal effect
December 31, 2007, 2006 and 2005, respectively.
on operating income in this segment. Premiums and other
considerations increased in 2007 compared to 2006 despite a
2007 and 2006 Comparison very competitive marketplace and a relatively flat yield curve for
The severe credit market disruption was a key driver of operating
most of the year.
results in 2007 principally due to significant net realized capital
AIG 2007 Form 10-K 63