2007 Annual Report - AIG.com

emerging markets for its services, including group employee benefits
in China, credit life in Poland and the Middle East, and pension
products through a new venture in Romania.
Domestic Life Insurance & Retirement Services
AIG’s Domestic Life Insurance & Retirement Services companies
maintained leadership positions in 2007 despite challenging conditions
in some markets. Life insurance, payout annuity and variable
annuity products delivered solid performances while fixed annuities
continued to face a difficult interest rate environment. These businesses
are positioned extremely well to benefit from increasing
demand for products that serve the protection, accumulation and
income distribution needs of a growing customer base.
With more than 80 years of experience, AIG American General
is a leader among life insurance providers in the United States, with
a track record of delivering innovative solutions to meet emerging
consumer needs. The leading issuer of life insurance, as measured
by policy face value, it also ranks among the leaders in term life,
universal life, structured settlements and single premium immediate
annuity products.
In 2007, AIG American General introduced more than 25 new
or revised products and riders to meet the needs of both agents and
consumers. New or revised products contributed 88 percent of
individual life sales through independent distributors in 2006-2007.
It increased the competitiveness of its employer and association
benefit products by introducing five new group worksite and four
new dental products, and by establishing a relationship with the
Lance Armstrong Foundation to offer supplemental health insurance
products under the LIVESTRONG TM brand. AIG American General
also acquired Matrix Direct, Inc., to expand its distribution of term
life products directly to the consumer marketplace.
AIG American General continued to emphasize operational
excellence and superior customer service as competitive advantages
in 2007. To improve the customer experience, AIG American General
implemented systems to capture and respond to customer feedback
at various “touch points” across the organization. In addition, it made
significant enhancements to the websites that support its agents,
making it easier for them to do business with AIG American General.
DALBAR Inc.’s WebMonitor recognized these improvements when
it ranked AIG American General’s independent agent website
among its top eight “Excellent” websites for financial professionals.
In 2007, AIG Annuity Insurance Company faced a difficult
sales environment for the fourth consecutive year as a flat yield curve
and extremely competitive bank certificate of deposit and money
market rates continued to challenge the fixed annuity market.
Nevertheless, AIG Annuity continued to launch new products,
while expanding distribution with new bank partners, including
one of the nation’s largest banks. It also maintained its historic share
of the bank fixed annuity market. AIG Annuity ranked as the largest
issuer of fixed annuities in the United States and, for the 11th consecutive
year, the largest issuer of fixed annuities through the bank
channel. The key account management team helped AIG Annuity
strengthen existing client relationships and improve market share
at its largest bank partners.
Domestic Life Insurance & Retirement Services—Premiums,
Deposits and Other Considerations by Major Product
Total = $25.2 billion
Group Retirement Products 29.8%
Individual Fixed Annuities and Run off 22.0%
Individual Variable Annuities 17.7%
Life Insurance 13.0%
(a)
Payout Annuities 10.4%
Home Service 3.7%
Group Life/Health 3.4%
(a) Includes structured settlements, single premium immediate annuities and
terminal funding annuities.
In 2007, AIG Retirement’s (formerly branded as AIG VALIC)
focus on increasing assets under management and expanding its
capabilities as a leader in both asset accumulation and the income
distribution phase of retirement led to a 10 percent increase in sales.
Productivity of its career financial advisors improved, reflecting the
launch of several new products designed to help the baby boomer
generation manage its accumulated wealth in retirement. To reflect its
expanded product and service capabilities, the marketing name was
changed to AIG Retirement, effective January 1, 2008.
Product development initiatives at AIG SunAmerica Retirement
Markets (AIG SunAmerica) kept pace with the growing demand
for innovative “income for life” solutions, resulting in record variable
annuity sales, fee income and assets under management in 2007.
It launched a new enhancement to its popular “MarketLock”
guaranteed minimum withdrawal benefit, called “MarketLock for
Life Plus,” which can guarantee an increase in future income
despite the volatility of equity market returns. AIG SunAmerica’s
multiyear effort to achieve service excellence earned the “DALBAR
Service Award,” which recognizes the highest tier of service quality
in the financial services industry.
Domestic Life Insurance & Retirement Services
(billions of dollars)
27.6
27.9
24.6 24.6 25.2
5.6 6.2 6.4 6.6 7.0
2003 2004 2005 2006 2007
(a) Represents aggregate business activity presented on a non-GAAP basis.
(b) Includes GAAP premiums and other GAAP Life Insurance revenue.
Premiums, Deposits
and Other
Considerations (a)
Premiums and Other
Considerations(b)
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