2007 Annual Report - AIG.com

More documents

Recommendations

Info

American International Group, Inc. and Subsidiaries Management’s Discussion and Analysis of Financial Condition and Results of Operations Continued Asia Results Asia results on a sub-product basis for 2007, 2006 and 2005 were as follows: Premiums Net Net Realized Operating and Other Investment Capital Gains Total Income (in millions) Considerations Income (Losses) Revenues (Loss) 2007 Life insurance $ 11,631 $ 5,360 $ 177 $17,168 $ 2,705 Personal accident 1,869 150 (2) 2,017 386 Group products 661 127 (77) 711 13 Individual fixed annuities 52 123 10 185 48 Individual variable annuities 1 6 (1) 6 1 Total $ 14,214 $ 5,766 $ 107 $20,087 $ 3,153 2006 Life insurance (a) $ 10,949 $ 4,188 $ 258 $15,395 $ 2,516 Personal accident 1,561 123 6 1,690 337 Group products 486 107 34 627 178 Individual fixed annuities 63 97 3 163 27 Individual variable annuities 1 4 — 5 2 Total $ 13,060 $ 4,519 $ 301 $17,880 $ 3,060 2005 Life insurance $ 10,779 $ 3,056 $ 146 $13,981 $ 1,907 Personal accident 1,214 118 (15) 1,317 241 Group products 452 78 25 555 131 Individual fixed annuities 69 56 — 125 8 Individual variable annuities — 4 — 4 (1) Total $ 12,514 $ 3,312 $ 156 $15,982 $ 2,286 Percentage Increase/(Decrease) 2007 vs. 2006: Life insurance 6% 28% (31)% 12% 8% Personal accident 20 22 — 19 15 Group products 36 19 — 13 (93) Individual fixed annuities (17) 27 233 13 78 Individual variable annuities — 50 — 20 (50) Total 9% 28% (64)% 12% 3% Percentage Increase/(Decrease) 2006 vs. 2005: Life insurance 2% 37% 77% 10% 32% Personal accident 29 4 — 28 40 Group products 8 37 36 13 36 Individual fixed annuities (9) 73 — 30 238 Individual variable annuities — — — 25 — Total 4% 36% 93% 12% 34% (a) Includes the effect of an out of period UCITS adjustment in 2006, which increased net investment income and operating income by $208 million and $137 million, respectively. 2007 and 2006 Comparison income grew due to higher policyholder trading gains, higher partnership and unit investment trust income and growth in Total revenues in Asia in 2007 increased compared to 2006 underlying invested assets. Net realized capital gains in 2007 primarily due to higher premiums and other considerations and were lower compared to 2006 due to an increase in other-thannet investment income, partially offset by lower net realized temporary impairment charges and the change in fair value of capital gains. Premiums and other considerations increased in derivatives that do not qualify for hedge accounting treatment 2007 compared to 2006, notwithstanding a continued trend under FAS 133, partially offset by a positive out-of-period toward investment-oriented products where only a portion of policy adjustment of $158 million related to foreign exchange remediacharges are reported as premiums. Sales of investment-oriented tion activities. Operating income in 2007 increased compared to life products have been particularly strong in Hong Kong, Korea 2006. Operating income in 2007 included a $370 million positive and Singapore and more recently in Taiwan. Net investment effect of changes in actuarial estimates along with higher 68 AIG 2007 Form 10-K
American International Group, Inc. and Subsidiaries and sales. However, operating income declined in 2007 compared to 2006, primarily due to net realized capital losses resulting from other-than-temporary impairment charges, a $29 million charge related to remediation activity and higher DAC amortization expense. Individual fixed annuities total revenues grew in 2007 compared to 2006 due primarily to higher net investment income and increased net realized capital gains. Deposits in 2007 declined compared to 2006 due to increased competition and a market shift to variable life products, particularly in Korea. 2006 and 2005 Comparison Revenues for Asia grew in 2006 compared to 2005. Premiums and other considerations in 2006 were negatively affected by the trend towards investment-oriented products as only a portion of the policy charges collected are reported as premiums. Net investment income in 2006 grew compared to 2005 due to higher policyholder trading gains. Net realized capital gains were significantly higher in 2006 compared to 2005 relating primarily to derivative instruments for transactions that do not qualify for hedge accounting treatment under FAS 133. Revenues and operating income in 2006 included increases of $208 million and $137 million, respectively, from out of period adjustments related to UCITS. In addition, operating income in 2006 increased due to a $163 million out of period adjustment related to participating policyholder dividend reserves primarily as a result of tax remediation adjustments and a correction to expense allocations between participating and non-participating accounts. partnership and UCITS income, partially offset by lower net realized capital gains and a $118 million charge related to remediation activity. Operating income in 2006 included an increase of $137 million from an out of period adjustment related to UCITS. In addition, operating income in 2006 included the positive effect of out of period reductions in participating policyholder dividend reserves of $163 million, primarily as a result of tax remediation adjustments and a correction to expense allocations between participating and non-participating accounts. Life insurance premiums and other considerations in 2007 reflected a moderate increase compared to 2006, benefiting from improved sales in Thailand and the favorable effect of foreign exchange rates, partially offset by the shift in product mix from traditional life insurance products to investment-oriented products. Net investment income grew in 2007 compared to 2006 due primarily to higher policyholder trading gains, the growth in the underlying invested assets and higher partnership income. Operat- ing income increased in 2007 compared to 2006 due to a $322 million positive effect of changes in actuarial estimates, partially offset by an $86 million charge related to remediation activity. Operating income in 2006 included the effect of the out of period UCITS adjustment and reduction in participating policyholder dividend reserves discussed above. Personal accident revenues grew in 2007 compared to 2006 primarily due to higher premiums and other considerations, particularly in Korea and Taiwan. Operating income reflects the combined effect of premium growth and stable loss ratios and a $51 million positive effect related to changes in actuarial estimates in 2007. Group products premiums and other considerations grew in 2007 compared to 2006 due to higher pension management fees Domestic Life Insurance Results Domestic Life Insurance results, presented on a sub-product basis for 2007, 2006 and 2005, were as follows: Premiums and Net Net Realized Operating Other Investment Capital Gains Total Income (in millions) Considerations Income (Losses) Revenues (Loss) 2007 Life insurance $ 2,352 $ 1,528 $ (584) $ 3,296 $ 226 Home service 767 640 (100) 1,307 216 Group life/health 842 200 (16) 1,026 67 Payout annuities (a) 1,820 1,153 (67) 2,906 74 Individual fixed and runoff annuities 55 474 (36) 493 59 Total $ 5,836 $ 3,995 $ (803) $ 9,028 $ 642 2006 Life insurance $ 2,127 $ 1,377 $ (83) $ 3,421 $ 654 Home service 790 630 (38) 1,382 282 Group life/health 995 213 (8) 1,200 (159) Payout annuities (a) 1,582 1,004 (51) 2,535 76 Individual fixed and runoff annuities 49 554 (35) 568 64 Total $ 5,543 $ 3,778 $ (215) $ 9,106 $ 917 AIG 2007 Form 10-K 69
Page 1 and 2:
AMERICAN INTERNATIONAL GROUP, INC.
Page 3 and 4:
FINANCIAL HIGHLIGHTS (in millions,
Page 5 and 6:
overall financial condition, althou
Page 7 and 8:
Group Executive Committee We are ad
Page 9 and 10:
AIG’s life insurance network is t
Page 11 and 12:
We have also begun to address the e
Page 13 and 14:
WHAT WE SEE The ability to see and
Page 15 and 16:
The Major Accounts Practice within
Page 17 and 18:
Around the world, the middle class
Page 19 and 20:
WE SEE GROWTH OPPORTUNITIES IN EMER
Page 21 and 22:
To grow the strength of the AIG glo
Page 23 and 24:
Since 2003, the AIG Disaster Relief
Page 25 and 26:
RESPECT Respect encompasses how we
Page 27 and 28:
Life Insurance & Retirement Service
Page 29 and 30:
Domestic Brokerage Group— Gross P
Page 31 and 32:
In the summer of 2007, widespread f
Page 33 and 34:
in gross premiums written. It launc
Page 35 and 36:
It grew new business premiums from
Page 37 and 38:
emerging markets for its services,
Page 39 and 40:
ILFC—Revenues by Region Total = $
Page 41 and 42:
AIG Investments acquired a 94 perce
Page 43 and 44:
and changing interest rates, as wel
Page 45 and 46:
American International Group, Inc.
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
UNITED STATES SECURITIES AND EXCHAN
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72: American International Group, Inc.
Page 121: American International Group, Inc.
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Index of Notes to Consolidated Fina
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
Page 271 and 272:
Page 273 and 274:
Page 275 and 276:
SHAREHOLDER INFORMATION Corporate H
show all

2007 Annual Report - AIG.com

Create successful ePaper yourself

Delete template?

Save as template?