2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
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American International Group, Inc. and Subsidiaries<br />
Management’s Discussion and Analysis of<br />
Financial Condition and Results of Operations Continued<br />
Asia Results<br />
Asia results on a sub-product basis for <strong>2007</strong>, 2006 and 2005 were as follows:<br />
Premiums Net Net Realized Operating<br />
and Other Investment Capital Gains Total In<strong>com</strong>e<br />
(in millions) Considerations In<strong>com</strong>e (Losses) Revenues (Loss)<br />
<strong>2007</strong><br />
Life insurance $ 11,631 $ 5,360 $ 177 $17,168 $ 2,705<br />
Personal accident 1,869 150 (2) 2,017 386<br />
Group products 661 127 (77) 711 13<br />
Individual fixed annuities 52 123 10 185 48<br />
Individual variable annuities 1 6 (1) 6 1<br />
Total $ 14,214 $ 5,766 $ 107 $20,087 $ 3,153<br />
2006<br />
Life insurance (a) $ 10,949 $ 4,188 $ 258 $15,395 $ 2,516<br />
Personal accident 1,561 123 6 1,690 337<br />
Group products 486 107 34 627 178<br />
Individual fixed annuities 63 97 3 163 27<br />
Individual variable annuities 1 4 — 5 2<br />
Total $ 13,060 $ 4,519 $ 301 $17,880 $ 3,060<br />
2005<br />
Life insurance $ 10,779 $ 3,056 $ 146 $13,981 $ 1,907<br />
Personal accident 1,214 118 (15) 1,317 241<br />
Group products 452 78 25 555 131<br />
Individual fixed annuities 69 56 — 125 8<br />
Individual variable annuities — 4 — 4 (1)<br />
Total $ 12,514 $ 3,312 $ 156 $15,982 $ 2,286<br />
Percentage Increase/(Decrease) <strong>2007</strong> vs. 2006:<br />
Life insurance 6% 28% (31)% 12% 8%<br />
Personal accident 20 22 — 19 15<br />
Group products 36 19 — 13 (93)<br />
Individual fixed annuities (17) 27 233 13 78<br />
Individual variable annuities — 50 — 20 (50)<br />
Total 9% 28% (64)% 12% 3%<br />
Percentage Increase/(Decrease) 2006 vs. 2005:<br />
Life insurance 2% 37% 77% 10% 32%<br />
Personal accident 29 4 — 28 40<br />
Group products 8 37 36 13 36<br />
Individual fixed annuities (9) 73 — 30 238<br />
Individual variable annuities — — — 25 —<br />
Total 4% 36% 93% 12% 34%<br />
(a) Includes the effect of an out of period UCITS adjustment in 2006, which increased net investment in<strong>com</strong>e and operating in<strong>com</strong>e by $208 million and<br />
$137 million, respectively.<br />
<strong>2007</strong> and 2006 Comparison in<strong>com</strong>e grew due to higher policyholder trading gains, higher<br />
partnership and unit investment trust in<strong>com</strong>e and growth in<br />
Total revenues in Asia in <strong>2007</strong> increased <strong>com</strong>pared to 2006<br />
underlying invested assets. Net realized capital gains in <strong>2007</strong><br />
primarily due to higher premiums and other considerations and<br />
were lower <strong>com</strong>pared to 2006 due to an increase in other-thannet<br />
investment in<strong>com</strong>e, partially offset by lower net realized<br />
temporary impairment charges and the change in fair value of<br />
capital gains. Premiums and other considerations increased in<br />
derivatives that do not qualify for hedge accounting treatment<br />
<strong>2007</strong> <strong>com</strong>pared to 2006, notwithstanding a continued trend<br />
under FAS 133, partially offset by a positive out-of-period<br />
toward investment-oriented products where only a portion of policy<br />
adjustment of $158 million related to foreign exchange remediacharges<br />
are reported as premiums. Sales of investment-oriented<br />
tion activities. Operating in<strong>com</strong>e in <strong>2007</strong> increased <strong>com</strong>pared to<br />
life products have been particularly strong in Hong Kong, Korea<br />
2006. Operating in<strong>com</strong>e in <strong>2007</strong> included a $370 million positive<br />
and Singapore and more recently in Taiwan. Net investment<br />
effect of changes in actuarial estimates along with higher<br />
68 <strong>AIG</strong> <strong>2007</strong> Form 10-K