FinSupp 2Q2008_08.5.2008_04.17PM

Transcription

American International Group, Inc.
Financial Supplement
Second Quarter 2008
This report should be read in conjunction with AIG's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2008 filed with the Securities and Exchange Commission.
Financial Supplement
Table of Contents
Consolidated
Foreign Life Insurance & Retirement Services Product Statistics.................................................. 39 - 40
Consolidated Statement of Income (Loss)……. ......................................................................................1
Japan and Other Product Statistics................................................................................................. 41 - 42
Consolidated Statement of Segment Operations .................................................................................2 - 3
Asia Product Statistics ................................................................................................................... 43 - 44
Consolidated Statement of Segment Operations Revenues and Income Graphs ......................................4
Foreign Life Insurance & Retirement Services Premium Statistics................................................ 45 - 46
Summary of FAS 133 Effect ..............................................................................................................5 - 6
Foreign Life Insurance & Retirement Services Premiums, Deposits and Other Considerations.............47
Consolidated Balance Sheet.....................................................................................................................7
Foreign Life Insurance & Retirement Services Reserves ............................................................... 48 - 49
Debt and Capital Structure.......................................................................................................................8
Foreign Retirement Services Spread Information ..................................................................................50
Book Value per Share..............................................................................................................................9
Foreign Life Insurance & Retirement Services Deferred Policy Acquisition
General Insurance
Costs, Sales Inducements and Value of Business Acquired ...................................................... 51 - 52
General Insurance Operating Statistics ..................................................................................................10
Foreign Life Insurance & Retirement Services Notes .................................................................... 53 - 54
Reconciliation of Net Loss Reserves .....................................................................................................11
Life Insurance & Retirement Services Partnership Income....................................................................55
AIG Commercial Insurance Operating Statistics ...................................................................................12
Life Insurance & Retirement Services Net Realized Capital Gains (Losses) .........................................56
AIG Commercial Insurance Gross Premiums Written by Line of Business...........................................13
Financial Services
Personal Lines Insurance Operating Statistics .......................................................................................14
Financial Services Operating Statistics ..................................................................................................57
Mortgage Guaranty (UGC) Insurance Operating Statistics....................................................................15
International Lease Finance Corporation Aircraft Leases and Orders....................................................58
Mortgage Guaranty (UGC) Insurance Product Statistics .......................................................................16
Consumer Finance Operating Statistics .................................................................................................59
Transatlantic Holdings, Inc. Insurance Operating Statistics...................................................................17
Consumer Finance Other Data...............................................................................................................60
Foreign General Insurance Operating Statistics.....................................................................................18
Financial Services Notes........................................................................................................................61
Foreign General Insurance Gross Premiums Written.............................................................................19
Asset Management
General Insurance Notes........................................................................................................................20
Asset Management Operating Statistics.................................................................................................62
Life Insurance & Retirement Services
Asset Management Other Data ..............................................................................................................63
Life Insurance & Retirement Services Operating Statistics ...................................................................21
Asset Management Notes ......................................................................................................................64
Domestic Life Insurance & Retirement Services Operating Statistics ...................................................22
Domestic Life Insurance Other Data ....................................................................................................25
Other .................................................................................................................................................65
Consolidated Net Realized Capital Gains (Losses) ............................................66
Investments
Domestic Life Insurance Deferred Policy Acquisition Costs,
Cash and Invested Assets by Segment ........................................................................................... 67 - 70
Domestic Life Insurance Product Statistics ...................................................................................23 - 24
Sales Inducements and Value of Business Acquired..................................................................26 - 27
Other Invested Assets by Segment.........................................................................................................71
Domestic Life Insurance Notes..............................................................................................................28
Return on Average Partnerships and Mutual Funds Assets by Segment ................................................72
Domestic Retirement Services Product Statistics ..........................................................................29 - 30
Worldwide Insurance and Asset Management Bond Portfolio Ratings..................................................73
Domestic Retirement Services Account Value Rollforward ..................................................................31
Domestic Insurance and Asset Management Bond Portfolio Ratings ....................................................74
Domestic Retirement Services Spread Information ........................................................................32 - 33
Asset-Backed Securities and Collateralized Debt Obligations that Include Residential Mortgages .......75
Domestic Retirement Services Deferred Policy Acquisition Costs,
Commercial Mortgage-Backed Securities..............................................................................................76
Sales Inducements and Value of Business Acquired.........................................................................34
Comment on Regulation G ..................................................................................77
Domestic Retirement Services – Individual Variable Annuities Guaranteed Benefits ....................35 - 36
Domestic Retirement Services Notes.....................................................................................................37
Foreign Life Insurance & Retirement Services Operating Statistics ......................................................38
Investor Relations
Charlene M. Hamrah, Vice President and Director
(212)770-6293
Consolidated Statement of Income (Loss)
(in millions, except per share data)
Three Months Ended
June 30,
March 31,
June 30,
2008
Revenues:
Premiums and other considerations
Net investment income
Net realized capital gains (losses) (1) (2)
Unrealized market valuation losses on AIGFP super senior
credit default swap portfolio
Other income (1)
Total revenues (1)
Benefits and expenses:
Incurred policy losses and benefits
Insurance acquisition and other operating expenses
Total benefits and expenses
Income (loss) before income taxes (benefits) and minority interest
Income taxes (benefits) (3)
Income (loss) before minority interest
Minority interest
Net income (loss)
Earnings (loss) per common share:
Basic
Diluted
Dividends declared per common share
Average shares outstanding:
Basic
Diluted
$
$
$
$
21,735
6,728
(6,081)
2007
19,533
7,853
(28)
11.3 %
(14.3)
NM
(5,565)
3,116
19,933
3,792
31,150
NM
(17.8)
(36.0)
18,450
10,239
28,689
(8,756)
(3,357)
(5,399)
42
(5,357)
16,221
8,601
24,822
6,328
1,679
4,649
(372)
4,277
13.7
19.0
15.6
NM
NM
NM
NM
NM %
1.64
1.64
0.200
NM %
NM
10.0 %
(2.06)
(2.06)
0.220
2,605
2,605
$
% Chg
$
$
$
2,602
2,613
2008
$
20,672
4,954
(6,089)
(9,107)
3,601
14,031
$
$
$
Sequential
June 30,
% Chg
2008
5.1 %
35.8
NM
NM
(13.5)
42.1
15,882
9,413
25,295
(11,264)
(3,537)
(7,727)
(78)
(7,805)
16.2
8.8
13.4
NM
NM
NM
NM
NM %
(3.09)
(3.09)
0.200
NM %
NM
10.0 %
2,528
2,528
$
$
$
$
42,407
11,682
(12,170)
2007
8.3 %
(22.0)
NM
(14,672)
6,717
33,964
7,741
61,795
NM
(13.2)
(45.0)
34,332
19,652
53,984
(20,020)
(6,894)
(13,126)
(36)
(13,162)
32,367
16,928
49,295
12,500
3,405
9,095
(688)
8,407
6.1
16.1
9.5
NM
NM
NM
NM
NM %
3.22
3.21
0.365
NM %
NM
15.1 %
(5.11)
(5.11)
0.420
2,575
2,575
133), including the related foreign exchange gains and losses. For the three months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007,
net realized capital gains (losses) includes a gain of $298 million, a gain of $80 million, a loss of $316 million, a loss of $18 million and a loss of $57 million, respectively; other
income includes a loss of $26 million, a loss of $510 million, a loss of $432 million, a loss of $458 million and a loss of $825 million, respectively; and total revenues includes a gain of
$272 million, a loss of $430 million, a loss of $748 million, a loss of $476 million and a loss of $882 million, respectively.
(2) Includes other-than-temporary impairment charges of $6.78 billion, $417 million, $5.59 billion, $12.37 billion and $884 million in the three months ended June 30, 2008 and 2007 and
March 31, 2008 and the six months ended June 30, 2008 and 2007, respectively.
(3) Includes increased reserves of $703 million for uncertain tax positions and other discrete period items in first quarter of 2008.
$
% Chg
39,175
14,977
(98)
Note: (1) Includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment under FAS 133 "Accounting for Derivative Instruments and Hedging Activities" (FAS
1
Six Months Ended
June 30,
$
$
$
2,607
2,621
Consolidated Statement of Segment Operations
(in millions, except per share data)
June 30,
2008
General insurance
Net premiums written
Net premiums earned
Underwriting expenses
Underwriting profit (1)
Income before net realized capital gains (losses)
Net realized capital gains (losses) (2)
Operating income
$
Three Months Ended
June 30,
March 31, Sequential
2007
% Chg
2008
% Chg
12,220 $
12,153
8,787
3,143
223
1,167
1,390
(563)
827
12,139
11,363
7,259
2,693
1,411
1,628
3,039
(63)
2,976
0.7 % $
7.0
21.0
16.7
(84.2)
(28.3)
(54.3)
NM
(72.2)
12,080
11,357
7,998
2,954
405
1,205
1,610
(273)
1,337
1.2 %
7.0
9.9
6.4
(44.9)
(3.2)
(13.7)
NM
(38.1)
June 30,
2008
$
Six Months Ended
June 30,
2007
% Chg
24,300
23,510
16,785
6,097
628
2,372
3,000
(836)
2,164
$
24,245
22,582
14,459
5,300
2,823
3,191
6,014
58
6,072
0.2 %
4.1
16.1
15.0
(77.8)
(25.7)
(50.1)
NM
(64.4)
Life insurance & retirement services
Deposits and other considerations not included in
revenues under GAAP
Premiums, deposits and other considerations
Income before net realized capital gains (losses)
Operating income (loss)
9,585
8,170
17.3
9,318
2.9
18,903
16,595
13.9
16,077
25,662
5,586
2,609
(5,010)
(2,401)
13,877
22,047
6,132
2,899
(279)
2,620
15.9
16.4
(8.9)
(10.0)
NM
NM
16,775
26,093
3,803
2,538
(4,369)
(1,831)
(4.2)
(1.7)
46.9
2.8
NM
NM
32,852
51,755
9,389
5,147
(9,379)
(4,232)
26,826
43,421
11,645
5,436
(535)
4,901
22.5
19.2
(19.4)
(5.3)
NM
NM
Financial services
Operating income (loss) excluding FAS 133 and net
realized capital gains (losses) (3) (4)
FAS 133 (2)
(5,880)
(40)
15
(5,905)
512
(528)
63
47
NM
NM
(76.2)
NM
(8,545)
(76)
(151)
(8,772)
NM
NM
NM
NM
(14,425)
(116)
(136)
(14,677)
956
(613)
(4)
339
NM
NM
NM
NM
Asset management
Operating income before net realized capital gains (losses)
150
(464)
(314)
575
352
927
(73.9)
NM
NM
154
(1,405)
(1,251)
(2.6)
NM
NM
304
(1,869)
(1,565)
Other before net realized capital gains (losses)
Other net realized capital gains (losses) (2)
Consolidation and elimination adjustments (2) (5) (6) (7)
(745)
30
(248)
(482)
22
218
NM
36.4
NM
(503)
(265)
21
NM
NM
NM
(1,248)
(235)
(227)
1,353
332
1,685
(903)
(27)
433
(77.5)
NM
NM
NM
NM
NM
(8,756)
6,328
NM
(11,264)
NM
(20,020)
12,500
Income taxes (benefits) (8)
(3,357)
1,679
NM
(3,537)
NM
(6,894)
3,405
NM
Income (loss) before minority interest
(5,399)
4,649
NM
(7,727)
NM
(13,126)
9,095
NM
NM
NM
(81)
3
NM
33.3
(43)
7
Minority interest, after tax:
Income (loss) before net realized capital gains (losses)
Net realized capital gains (losses)
38
4
Net income (loss) (9)
(5,357)
FAS 133 gains (losses), excluding net realized capital
gains (losses), net of tax
(4,019)
Adjusted net income (loss) (9) (11)
Effect of Capital Markets unrealized market valuation (losses) on super
senior credit default swaps, net of tax, included in adjusted net loss above
Effect of Capital Markets credit valuation adjustment, net of tax,
included in adjusted net loss above
Earnings per share - diluted:
Net income (loss)
Effect of Capital Markets unrealized market valuation (losses) on super
senior credit default swaps, net of tax, included in adjusted net loss above
Effect of Capital Markets credit valuation adjustment, net of tax,
included in adjusted net loss above
Average shares outstanding - diluted
Effective tax rates (8) (12):
Net income (loss)
Return on equity (13)
(359)
(13)
4,277
(17)
NM
(7,805)
NM
(13,162)
(17)
NM
(3,963)
NM
(7,982)
(332)
NM
(281)
NM
(682)
(6)
8,407
(298)
NM
NM
NM
NM
(73)
NM
(537)
NM
$
(1,321) $
4,626
NM % $
(3,561)
NM %
$
(4,882)
$
9,017
NM %
$
(3,617) $
-
NM % $
(5,920)
NM %
$
(9,537)
$
-
NM %
(337)
-
NM
(24)
NM
(361)
-
NM
(2.06)
(0.51)
1.64
1.77
NM
NM
(3.09)
(1.41)
NM
NM
(5.11)
(1.90)
3.21
3.44
NM
NM
(1.39)
-
NM
(2.34)
NM
(3.70)
-
NM
-
NM % $
(0.01)
NM %
-
NM %
$
(0.13) $
$
(0.14)
$
2,605
2,613
2,528
2,575
2,621
38.4%
39.0%
50.6%
(27.2)%
26.5%
27.5%
28.3%
16.6%
31.4%
31.3%
26.5%
(35.6)%
34.4%
34.6%
35.1%
(31.1)%
27.2%
28.2%
28.7%
16.3%
(See Accompanying Notes on Page 3)
2
Consolidated Statement of Segment Operations
Notes
(1) Underwriting profit is statutory underwriting profit (loss) adjusted for changes in the deferral of policy acquisition costs that are necessary to
present the financial statements in accordance with GAAP.
(2) Includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related
foreign exchange gains and losses.
(3) Includes $5.56 billion, $9.11 billion and $14.67 billion of pre-tax net unrealized market valuation losses on Capital Markets’ super senior
credit default swap portfolio in the three months ended June 30, 2008 and March 31, 2008 and the six months ended June 30, 2008,
respectively.
(4) Includes the effect of changes in pre-tax credit spreads on the valuation of Capital Markets’ assets of $(362) million and $(3.0) billion and
liabilities of $(156) million and $2.5 billion, (but excludes $44 million and $109 million of gains on the super senior credit default portfolio
reported with the unrealized market valuation loss), in the three and six months ended June 30, 2008, respectively. The losses on the assets
were primarily driven by continued significant widening of credit spreads on collateralized debt obligations (CDOs) and asset-backed
securities (ABS) products, which represent a significant portion of Capital Markets’ investment portfolio. While historically AIG’s credit
spreads and those on its assets moved in a similar fashion, that relationship did not exist in the second quarter of 2008. Credit spreads on ABS
and CDO investments widened significantly more than the widening in AIG’s credit spreads. Furthermore, while AIG’s credit spreads
increased during the second quarter of 2008, the credit valuation adjustment on its liabilities decreased due to a decline in Capital Markets’
outstanding debt obligation and the shortened maturity of its liabilities resulting in a further loss to earnings.
(5) Includes the income from certain AIG managed partnerships, private equity and real estate funds that are consolidated. Such income is offset
in minority interest expense, which is not a component of operating income, on the consolidated statement of income (loss). In order to better
align financial reporting with the manner in which AIG’s chief operating decision makers manage their businesses, beginning in fourth
quarter 2007, the effect of consolidating managed partnerships and funds, which were historically reported in the Asset Management
segment, are now being reported in Consolidation and elimination adjustments. Prior periods have been revised to conform to the current
presentation.
(6) Includes a gain of $14 million, a gain of $18 million, a loss of $356 million, a loss of $342 million and a loss of $212 million, in the three
months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007, respectively, attributable to
the elimination of revenues reported in the Financial Services segment from intercompany hedging activities and the reclassification of the
related foreign exchange rates on economically hedged exposures.
(7) Includes a loss of $58 million, a loss of $121 million, a gain of $366 million, a gain of $308 million and a gain of $109 million, in the three
months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007, respectively, attributable to
the elimination of net realized capital gains (losses) reported in the General Insurance, Life Insurance & Retirement Services, Financial
Services and Asset Management segments and the Other category from intercompany hedging activities and the reclassification of the
related foreign exchange rates on economically hedged exposures.
(8) Includes increased reserves of $703 million for uncertain tax positions and other discrete period items in first quarter of 2008.
(9) Net income (loss) for the three and six months ended June 30, 2008 includes out of period after-tax charges of $120 million and $187
million, respectively. The effect on adjusted net income (loss) of all out of period adjustments are summarized below:
Three Months Ended June 30,
2008
2007 % Change
$(5,357)
$4,277
NM
(4,019)
(17)
(17)
(332)
$(1,321)
$4,626
NM
(dollars in millions)
Net income (loss) as reported
FAS 133 gains (losses)
Adjusted net income (loss) as reported
Out of period adjustments affecting adjusted net income
(loss) - increase / (decrease)
Adjusted net income (loss) excluding out of period
adjustments
(127)
123
$(1,194)
$4,503
NM
Six Months Ended June 30,
2008
2007 % Change
$(13,162)
$8,407
NM
(7,982)
(73)
(298)
(537)
$(4,882)
$9,017
NM
(187)
(170)
$(4,695)
$9,187
NM
(10) Includes a gain of $193 million, a gain of $52 million, a loss of $205 million, a loss of $12 million and a loss of $37 million, net of tax, in
the three months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007, respectively,
attributable to FAS 133.
(11) Adjusted net income (loss) excludes net realized capital gains (losses) and FAS 133, net of tax.
(12) The calculation of the effective tax rates is as follows:
Loss before income tax benefits and minority
interest
Minority interest
Net loss
FAS 133 gains (losses)
Adjusted net loss
Three Months Ended June 30, 2008
Income
Pre-tax
Tax
Net
Effective
Loss Benefits
Loss
Tax Rate
$(8,756)
(18)
(8,774)
(6,074)
(26)
$(2,674)
$(3,357)
(60)
(3,417)
(2,055)
(9)
$(1,353)
$(5,399)
42
(5,357)
(4,019)
(17)
$(1,321)
38.4%
39.0%
50.6%
Six Months Ended June 30, 2008
Income
Pre-tax
Tax
Net
Effective
Loss
Benefits
Loss
Tax Rate
$(20,020)
(115)
(20,135)
(12,160)
(458)
$(7,517)
$(6,894)
(79)
(6,973)
(4,178)
(160)
$(2,635)
$(13,126)
(36)
(13,162)
(7,982)
(298)
$(4,882)
34.4%
34.6%
35.1%
(13) Return on equity is annualized net income (loss), expressed as a percentage of average shareholders' equity. Return on equity, as adjusted, is
annualized adjusted net income (loss) expressed as a percentage of average shareholders’ equity, adjusted to exclude the effects of FAS 133
of $853 million and $821 million, respectively; and accumulated other comprehensive income of $2.59 billion and $177 million,
respectively, in the three and six months ended June 30, 2008.
Return on equity, GAAP basis
Adjustments related to:
FAS 133 and net realized capital gains (losses)
Accumulated other comprehensive income
Return on equity, as adjusted
Three Months Ended
June 30, 2008
(27.2)%
20.6%
0.2%
(6.4)%
3
Six Months Ended
June 30, 2008
(31.1)%
19.7%
0.0%
(11.4)%
Revenues and Income Graphs
Revenues
Asset
Management
4.1%
Financial Services
7.7%
Domestic General
Insurance
29.4%
Foreign Life
Insurance &
Retirement
Services
32.2%
Domestic Life
Insurance &
Retirement
Services
13.9%
Foreign General
Insurance
12.7%
Excludes Unrealized
Market Valuation Losses
of $14.7 billion. See Page
57.
Income Before Income Taxes and Minority Interest
Financial Services
2.8%
Asset Management
3.5%
Foreign Life
Insurance &
Retirement Services
36.1%
Domestic General
Insurance
16.4%
Foreign General
Insurance
18.1%
Domestic Life
Insurance &
Retirement Services
23.1%
Excludes Unrealized
Market Valuation Losses
of $14.7 billion. See Page
57.
Note: The effects of net realized capital gains (losses), unrealized market valuation losses, FAS 133, other and
consolidation and elimination adjustments are excluded.
4
Summary of FAS 133 Effect (1)
(in millions)
Three Months Ended
June 30,
2007
June 30,
2008
Six Months Ended
June 30,
June 30,
2008
2007
March 31,
2008
FAS 133 effect on operating income (loss) before net realized capital gains (losses):
$
Financial Services (2)
Intercompany Eliminations (3)
(40)
$
(528)
$
(76)
$
(116) $
(613)
(4)
(22)
46
42
(21)
18
(89)
(402)
(384)
(191)
Foreign Exchange Rates on Economically Hedged Debt Exposures:
Financial Services
Asset Management
-
23
-
-
-
Other
-
106
-
-
-
18
40
(402)
(384)
(191)
Total pre-tax effect
(26)
(510)
(432)
(458)
(825)
Total after-tax effect
(17)
(332)
(281)
(298)
(537)
45
85
(128)
(83)
10
381
(130)
Total Foreign Exchange Rates on Economically Hedged Debt Exposures (3)
FAS 133 effect on net realized capital gains (losses):
Financial Services (4)
Asset Management
General Insurance
(59)
(444)
(63)
(7)
(5)
(22)
(29)
(8)
(83)
41
90
7
(82)
20
139
(178)
(158)
44
(58)
(121)
366
308
109
298
80
(316)
(18)
(57)
Total after-tax effect
193
52
(205)
(12)
(37)
Other
Eliminations and Reclassifications (5)
FAS 133 effect on total income:
272
Total after tax-effect
$
5
176
(430)
$
(280)
(748)
$
(486)
(476)
$
(310)
(882)
$
(574)
Summary of FAS 133 Effect
Notes
(1)
(2)
(3)
(4)
(5)
This schedule summarizes the effect of derivative gains and losses on operating income that are effective economic
hedges of investments and borrowings that did not qualify for hedge accounting treatment under FAS 133. In cases
where hedge accounting has not been applied to these derivative transactions during the periods presented, an offsetting
gain or loss on the hedged exposure has not been recognized in operating income. The mismatch in the earnings
recognition on the derivatives and the hedged exposures has resulted in increased volatility in the operating results that
does not reflect properly the effectiveness of these hedging activities.
The three and six months ended June 30, 2007 include out of period charges of $431 million and $326 million,
respectively, including a $380 million charge in both periods to reverse net gains recognized on transfers of available
for sale securities among legal entities consolidated within AIGFP. The net loss in both the three and six months ended
June 30, 2007, includes a $166 million reduction in the fair value of certain derivatives that are an integral part of, and
economically hedge, the structured transactions potentially affected by proposed guidance by the U.S. Treasury
Department affecting the ability to claim foreign tax credits.
Represents the elimination of revenues reported in the Financial Services segment from intercompany hedging activities
and the reclassification of the related foreign exchange rates on economically hedged exposures.
In the second quarter of 2007, AGF and ILFC began applying hedge accounting to most of their derivatives hedging
interest rate and foreign exchange risks associated with their floating rate and foreign currency denominated
borrowings.
Represents the elimination of net realized capital gains (losses) from intercompany hedging activities and the
reclassification of the related foreign exchange rates on economically hedged exposures.
6
Consolidated Balance Sheet
(in millions)
June 30,
2008
Assets:
Investments and financial services assets:
Fixed maturity securities
Equity securities
Mortgage and other loans receivable, net of allowance
Financial services assets:
Flight equipment primarily under operating leases, net of accumulated depreciation
Securities available for sale, at fair value
Trading securities, at fair value
Spot commodities
Unrealized gain on swaps, options and forward transactions
Trade receivables
Securities purchased under agreements to resell
Finance receivables, net of allowance
Securities lending invested collateral, at fair value
Other invested assets
Short-term investments
$
Total investments and financial services assets
Cash
Investment income due and accrued
Premiums and insurance balances receivable, net of allowance
Reinsurance assets, net of allowance
Current and deferred income taxes
Deferred policy acquisition costs
Investments in partially owned companies
Real estate and other fixed assets, net of accumulated depreciation
Separate and variable accounts
Goodwill
Other assets
Total assets
Liabilities:
Reserve for losses and loss expenses
Unearned premiums
Future policy benefits for life and accident and health insurance contracts
Policyholders' contract deposits
Other policyholders' funds
Commissions, expenses and taxes payable
Insurance balances payable
Funds held by companies under reinsurance treaties
Current income taxes payable
Financial services liabilities:
Securities sold under agreements to repurchase, at fair value
Trade payables
Securities and spot commodities sold but not yet purchased
Unrealized loss on swaps, options and forward transactions
Trust deposits and deposits due to banks and other depositors
Commercial paper and extendible commercial notes
Long-term borrowings
Separate and variable accounts
Securities lending payable
Minority interest
Other liabilities
Total liabilities
Preferred shareholders' equity in subsidiary companies
Shareholders' equity:
Common stock
Additional paid-in capital
Payments advanced to purchase shares
Unrealized appreciation (depreciation) of investments, net of taxes *
Cash flow hedging activities, net of taxes
Foreign currency translation adjustments, net of taxes
Retirement plan liabilities adjustment, net of taxes
Retained earnings *
Treasury stock, at cost
Total shareholders' equity
Total liabilities, preferred shareholders' equity in subsidiary companies
and shareholders' equity
$
428,935
41,646
33,727
43,887
1,205
35,170
90
11,548
2,294
16,597
33,311
59,530
62,029
69,492
41,984
40,305
4,197
238
12,318
672
20,950
31,234
75,662
58,823
51,351
835,602
2,229
6,614
20,050
22,940
8,211
46,733
628
5,692
73,401
10,661
17,115
842,042
2,284
6,587
18,395
23,103
43,914
654
5,518
78,684
9,414
17,766
$
1,049,876
$
1,048,361
$
88,747
28,738
147,232
265,411
13,773
5,597
5,569
2,498
-
$
85,500
27,703
136,387
258,459
12,599
6,310
4,878
2,501
3,823
9,659
1,622
3,189
24,232
6,165
15,061
163,577
73,401
75,056
11,149
31,012
971,688
100
8,331
6,445
4,709
14,817
4,903
13,114
162,935
78,684
81,965
10,422
27,975
952,460
100
360
365
365
370
376
375
378
380
385
7,370
9,446
(5,171)
(81)
1,864
(515)
73,743
(8,568)
6,878
2,848
(912)
4,375
(87)
880
(525)
89,029
(6,685)
390
78,088
95,801
$
* Includes a reduction of $105 million and $1.00 billion to Unrealized appreciation (depreciation) of investments and
Retained earnings opening balances, respectively, due to the cumulative effect of adopting FAS 157 and 159.
7
423,749
42,316
34,384
December 31,
2007
1,049,876
$
1,048,361
Debt and Capital Structure
June 30,
2008
Financial debt:
AIG notes and bonds payable
AIG loans and mortgage payable
AIG LH notes and bonds payable
Liabilities connected to trust preferred stock
AIG loans to financial services subsidiaries
Net (deposit) / loan with AIG Funding
Total
$
Operating debt:
AIG Funding commercial paper
MIP matched notes and bonds payable
Series AIGFP matched notes and bonds payable
AIGFP borrowings
ILFC borrowings
AGF borrowings
AIGCFG borrowings
AIG Finance Taiwan Limited commercial paper
Other subsidiaries
Borrowings of consolidated investments
AIG loans to financial services subsidiaries
Net (deposit) / loan with AIG Funding
Total
Hybrid - mandatorily convertible units:
Junior subordinated debt attributable to equity units
AIG capitalization:
Shareholders' equity *
Hybrid - debt securities
Hybrid - mandatorily convertible units
Total equity and hybrid capital
Financial debt
Total capital
Ratios:
Shareholders' equity / Total capital
Hybrid - debt securities / Total capital
Hybrid - mandatorily convertible units / Total capital
Financial debt / Total capital
$
5,765
14,621
998
53,839
32,425
25,465
2,530
3
709
7,472
1,172
(497)
144,502
Hybrid - debt securities:
Junior subordinated debt
Total debt and hybrid capital
12,960
893
797
1,415
(1,172)
497
15,390
March 31,
2008
Sequential
% Chg
14,800
584
797
1,424
(848)
279
17,036
5,008
15,080
1,071
59,254
32,036
25,672
2,214
783
7,549
848
(279)
149,236
12,866
5,898
5,880
-
$
178,638
$
172,170
$
78,088
12,866
5,880
96,834
15,390
112,224
$
79,703
5,898
85,601
17,036
102,637
$
69.6%
11.5%
5.2%
13.7%
* Includes unrealized appreciation / depreciation of investments.
8
$
77.7%
5.7%
16.6%
December 31,
2007
(12.4) %
52.9
0.0
(0.6)
38.2
78.1
(9.7)
$
15.1
(3.0)
(6.8)
(9.1)
1.2
(0.8)
14.3
NM
(9.5)
(1.0)
38.2
78.1
(3.2)
4,222
14,267
874
65,447
31,219
26,519
2,126
775
7,242
1,143
153,834
118.1
5,809
NM
3.8
14,588
729
797
1,435
(1,143)
16,406
%
$
176,049
(2.0) %
118.1
NM
13.1
(9.7)
9.3 %
$
95,801
5,809
101,610
16,406
118,016
$
81.2%
4.9%
13.9%
% Chg
(11.2) %
22.5
0.0
(1.4)
NM
NM
(6.2)
36.5
2.5
14.2
(17.7)
3.9
(4.0)
19.0
NM
(8.5)
3.2
NM
NM
(6.1)
121.5
NM
1.5
%
(18.5) %
121.5
NM
(4.7)
(6.2)
(4.9) %
Book Value per Share
Book Value
Per Share
excluding
URA (1)
Book Value
Per Share
December 31, 2000
December 31, 2001
December 31, 2002
$
17.25
19.07
22.34
$
17.28
18.27
19.99
Shareholders'
Equity
Shareholders'
Equity
excluding
URA (1)
(in millions)
(in millions)
$
45,239
49,881
58,303
$
45,320
47,790
52,154
March 31, 2003
June 30, 2003
September 30, 2003
December 31, 2003
23.56
25.98
25.54
26.54
20.61
21.44
22.17
23.06
61,462
67,774
66,612
69,230
53,750
55,933
57,807
60,159
March 31, 2004
June 30, 2004
September 30, 2004
December 31, 2004
28.73
27.08
29.34
30.69
24.05
25.07
26.01
26.71
74,921
70,544
76,427
79,673
62,739
65,304
67,747
69,347
March 31, 2005
June 30, 2005
September 30, 2005
December 31, 2005
31.45
34.15
34.03
33.24
27.96
29.48
29.95
30.03
81,608
88,613
88,333
86,317
72,561
76,509
77,729
77,969
March 31, 2006
June 30, 2006
September 30, 2006
December 31, 2006
34.03
33.76
36.99
39.09
31.39
32.66
34.11
35.21
88,390
87,709
96,154
101,677
81,541
84,851
88,658
91,594
March 31, 2007
June 30, 2007
September 30, 2007
December 31, 2007
39.64
40.44
40.81
37.87
35.43
36.81
38.10
36.14
103,055
104,330
104,067
95,801
92,121
94,959
97,148
91,426
March 31, 2008 (2)
June 30, 2008 (2)
Note: (1)
(2)
(3)
$
31.93
29.04 (3)
$
32.96
30.97
$
79,703
78,088
Unrealized appreciation / depreciation of investments (URA), net of taxes.
Includes a reduction of $1.11 billion to opening shareholders' equity due to the cumulative
effect of adopting FAS 157 and 159.
Total shareholders' equity
Total common shares issued - treasury shares
$78,087,978,858
2,948,038,001 - 259,225,244
9
= $29.04
$
82,257
83,259
General Insurance Operating Statistics
Three Months Ended
June 30,
2008
Gross premiums written
$
Ceded premiums written
14,710
June 30,
2007
$
15,105
March 31,
2008
% Chg
(2.6) %
$
16,038
Sequential
% Chg
(8.3) %
June 30,
2008
$
Six Months Ended
June 30,
2007
30,748 $
31,117
% Chg
(1.2) %
2,490
2,966
(16.0)
3,958
(37.1)
6,448
6,872
(6.2)
12,220
12,139
0.7
12,080
1.2
24,300
24,245
0.2
Net premiums earned
12,153
11,363
7.0
11,357
7.0
23,510
22,582
4.1
7,160
1,820
193
6,223
1,288
252
15.1
41.3
(23.4)
6,737
1,331
70
6.3
36.7
175.7
13,897
3,151
263
11,884
2,789
214
16.9
13.0
22.9
Losses and loss expenses incurred (1) (2) (3)
8,787
7,259
21.0
7,998
9.9
16,785
14,459
16.1
Statutory underwriting expenses
3,106
2,820
10.1
3,193
(2.7)
6,299
5,646
11.6
260
1,284
(79.8)
166
56.6
426
2,477
(82.8)
Paid losses
Change in net loss reserves
Less foreign exchange effect
Statutory underwriting profit
Change in deferred acquisition costs
(37)
127
NM
239
NM
202
346
(41.6)
Underwriting profit
223
1,411
(84.2)
405
(44.9)
628
2,823
(77.8)
1,212
(14)
56
2
68
(157)
1,152
314
141
2
181
(162)
5.2
NM
(60.3)
0.0
(62.4)
(3.1)
1,266
66
(92)
1
73
(109)
(4.3)
NM
NM
100.0
(6.8)
44.0
2,478
52
(36)
3
141
(266)
2,309
689
264
3
247
(321)
7.3
(92.5)
NM
0.0
(42.9)
(17.1)
1,167
1,628
(28.3)
1,205
(3.2)
2,372
3,191
(25.7)
1,390
3,039
(54.3)
1,610
(13.7)
3,000
6,014
(50.1)
Net investment income (4)
Interest and dividends
Partnership income
Mutual funds
Securities lending
Other investment income (5)
Investment expense
Total
Operating income
(563)
$
827
(63)
$
2,976
Net loss and loss expense reserve (at period end)
NM
(72.2) %
(273)
NM
(836)
58
1,337
(38.1) %
$
2,164 $
6,072
(64.4) %
$
70,836
2.6 %
$
72,654 $
65,419
11.1 %
Underwriting ratios:
Loss ratio (3)
Expense ratio
Combined ratio
Combined ratio excluding significant
current year catastrophe-related losses
72.30
25.41
97.71
63.88
23.24
87.12
70.43
26.43
96.86
71.40
25.92
97.32
64.03
23.29
87.32
97.05
86.44
96.13
96.62
86.98
Foreign exchange effect on worldwide growth:
Growth in original currency (6)
Foreign exchange effect
Growth as reported in U.S. $
(2.2) %
2.9
0.7 %
(2.8) %
3.0
0.2 %
10
NM
$
Reconciliation of Net Loss Reserves
(in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
March 31,
June 30,
June 30,
2008
2007
2008
2008
2007
Net reserve for losses and loss expenses
at beginning of period - Consolidated *
$
70,507
$
64,034
$
69,288
$
69,288
$
62,630
193
252
70
263
214
8,620
7,334
8,021
16,641
14,549
Losses and loss expenses incurred:
Current year
Prior years:
Other than the accretion of loss reserve discount and
Transatlantic's general insurance operations
95
(105)
(130)
(35)
(254)
Transatlantic general insurance operations including
prior year catastrophe development
Asbestos settlements *
Accretion of loss reserve discount
Total prior years *
(2)
18
3
1
36
-
(33)
(37)
(37)
(50)
72
12
104
176
128
165
(108)
(60)
105
(140)
Total losses and loss expenses incurred
8,785
7,226
7,961
16,746
14,409
Losses and loss expenses paid *
7,154
6,315
6,812
13,966
12,056
Net reserve for losses and loss expenses
at end of period - Consolidated *
$
72,331
$
65,197
*Includes certain favorable asbestos settlements that are not included in the General Insurance segment, but which are included in the consolidated results. The effects of such
settlements on losses and loss expenses incurred are shown above.
11
$
70,507
$
72,331
$
65,197
AIG Commercial Insurance Operating Statistics
Three Months Ended
June 30,
2008
$
5,988
June 30,
2007
$
6,439
% Chg
(7.0) %
$
March 31,
2008
Sequential
% Chg
5,113
17.1
June 30,
2008
%
$
11,101
Six Months Ended
June 30,
2007
$
12,448
% Chg
(10.8) %
Net premiums earned
5,912
5,996
(1.4)
5,417
9.1
11,329
11,977
Losses and loss expenses incurred (1) (2)
4,383
3,928
11.6
3,975
10.3
8,358
7,969
4.9
1,172
1,122
4.5
1,224
(4.2)
2,396
2,278
5.2
357
946
575
1,730
(66.8)
(1)
Underwriting profit
(62.3)
218
(3)
63.8
NM
(4)
(5.4)
50
NM
85
NM
356
996
(64.3)
215
65.6
571
1,815
(68.5)
712
(61)
19
1
32
(116)
707
211
37
163
(134)
0.7
NM
(48.6)
NM
(80.4)
(13.4)
775
38
(39)
46
(77)
(8.1)
NM
NM
NM
(30.4)
50.6
1,487
(23)
(20)
1
78
(193)
1,422
548
108
206
(267)
4.6
NM
NM
NM
(62.1)
(27.7)
587
984
(40.3)
743
(21.0)
1,330
2,017
(34.1)
943
1,980
(52.4)
958
(1.6)
1,901
3,832
(50.4)
(173)
NM
785
(51.5) %
Partnership income
Mutual funds
Securities lending
Investment expense
Total
Operating income
(562)
$
381
(76)
$
1,904
NM
(80.0) %
$
(735)
$
1,166
1
$
3,833
Loss ratio
Expense ratio
Combined ratio
74.14
19.60
93.74
65.50
17.45
82.95
73.38
23.94
97.32
73.78
21.60
95.38
66.54
18.30
84.84
92.50
82.95
95.78
93.99
84.84
12
NM
(69.6) %
AIG Commercial Insurance
Gross Premiums Written by Line of Business
Aviation
1.8%
Management /
Professional
Liability
10.7%
Boiler and
Machinery
3.3%
Multinational P&C
4.7%
A&H Products
4.9%
Programs
4.6%
Environmental
3.1%
All Other *
11.8%
Commercial
Umbrella / Excess
9.2%
Workers’
Compensation
13.9%
Property
17.4%
General Liability /
Auto Liability
14.6%
Gross Premiums Written
$14.8 billion
* All Other includes $817 million of Personal Lines premiums.
13
Personal Lines Insurance Operating Statistics
Three Months Ended
June 30,
2008
June 30,
2007
March 31,
2008
% Chg
Sequential
% Chg
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
Net premiums written:
aigdirect.com
Agency Auto
Private Client Group
Other
$
Subtotal
Net premiums earned
674
250
305
1
$
710
280
214
(1)
1,230
1,203
(5.1) %
(10.7)
42.5
NM
$
773
300
215
-
2.2
1,288
1,209
1,168
3.5
1,199
Losses and loss expenses incurred (1) (2)
931
823
13.1
950
Statutory underwriting expenses (7)
320
289
10.7
312
Statutory underwriting profit (loss)
(42)
56
NM
(63)
13
7
85.7
13
(29)
63
NM
58
1
(3)
59
1
(3)
56
27
(6)
Underwriting profit (loss)
(12.8) %
(16.7)
41.9
NM
$
(4.5)
1,447
550
520
1
$
2,518
1,478
584
371
(1)
2,432
(2.1) %
(5.8)
40.2
NM
3.5
0.8
2,408
2,323
3.7
(2.0)
1,881
1,640
14.7
2.6
632
594
6.4
NM
(105)
89
NM
0.0
26
22
18.2
(50)
NM
(79)
111
NM
(1.7)
NM
NM
NM
NM
0.0
59
(2)
(1.7)
NM
NM
NM
NM
50.0
117
1
(5)
118
1
(5)
(0.8)
NM
NM
NM
NM
0.0
57
(1.8)
57
(1.8)
113
114
(0.9)
120
(77.5)
34
225
(84.9)
Partnership income
Mutual funds
Securities lending
Other investment income
Investment expense
Total
Operating income
$
21
(2)
$
118
7
NM
(82.2) %
(4)
$
3
285.7
NM
NM %
(10)
$
24
(1)
$
224
Loss ratio
Expense ratio
Combined ratio
77.05
25.96
103.01
70.52
23.98
94.50
79.20
24.23
103.43
78.12
25.07
103.19
70.60
24.41
95.01
102.85
94.50
103.43
103.11
95.01
14
NM
(89.3) %
Mortgage Guaranty (UGC) Insurance Operating Statistics
Three Months Ended
June 30,
2008
$
June 30,
2007
288
$
March 31,
2008
% Chg
272
5.9 %
$
304
Net premiums earned
269
221
21.7
256
Losses and loss expenses incurred (2)
785
286
174.5
48
61
(21.3)
(564)
(126)
Statutory underwriting loss
(5.3) %
June 30,
2008
$
Six Months Ended
June 30,
2007
592
$
% Chg
538
10.0 %
431
21.8
189.2
5.1
525
603
30.2
1,388
480
60
(20.0)
108
119
(9.2)
NM
(407)
NM
(971)
(168)
NM
(77.8)
11
(81.8)
13
21
(38.1)
(117)
NM
(396)
NM
(958)
(147)
NM
39
1
(1)
10.3
NM
NM
NM
NM
45
(1)
(4.4)
NM
NM
NM
NM
NM
88
1
(1)
76
1
(1)
15.8
NM
NM
NM
0.0
0.0
44
39
12.8
44
0.0
88
76
15.8
(518)
(78)
NM
(352)
NM
(870)
(71)
NM
(3)
NM
(2)
NM
(2)
NM
2
Underwriting loss
Sequential
% Chg
9
(562)
Partnership income
Mutual funds
Securities lending
Other investment income
Investment expense
43
1
-
Total
Operating loss before net realized capital gains (losses)
Operating loss
$
(518)
$
(81)
NM %
$
(354)
NM %
(2)
$
(872)
$
(73)
Loss ratio
Expense ratio
Combined ratio
291.99
16.47
308.46
129.91
22.42
152.33
15
235.57
19.84
255.41
264.47
18.20
282.67
111.48
22.07
133.55
NM %
Mortgage Guaranty (UGC) Insurance Product Statistics
Three Months Ended
June 30,
2008
June 30,
2007
March 31,
2008
% Chg
Sequential
% Chg
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
Domestic first-lien
Domestic second-lien
Student loan
International
Other
$
Total
173
63
48
4
$
140
50
7
67
8
288
272
(279)
(275)
3
(14)
1
(6)
(114)
1
(5)
(2)
23.6 %
26.0
NM
(28.4)
(50.0)
$
5.9
174
55
15
56
4
(0.6) %
14.5
NM
(14.3)
0.0
$
347
118
15
104
8
$
269
102
33
119
15
29.0 %
15.7
(54.5)
(12.6)
(46.7)
304
(5.3)
592
538
10.0
(196)
(197)
4
(18)
-
NM
NM
(25.0)
NM
NM
(475)
(472)
7
(32)
1
25
(177)
(11)
(5)
NM
NM
NM
NM
NM
(168)
NM %
Statutory underwriting profit (loss):
Domestic first-lien
Student loan
International
Other
Total
$
(564)
$
(126)
NM
NM
200.0
NM
NM
NM %
$
(407)
NM %
$
(971)
$
Loss ratio:
Domestic first-lien
Student loan
International
Other
Total
253.86
556.02
69.37
97.07
NM
291.99
84.08
317.96
72.79
30.77
NM
129.91
16
203.64
442.41
41.96
85.06
NM
235.57
228.99
500.71
58.48
91.38
NM
264.47
70.57
261.60
76.63
28.03
NM
111.48
Transatlantic Holdings, Inc. Insurance Operating Statistics
Three Months Ended
June 30,
2008
June 30,
2007
Six Months Ended
March 31,
2008
% Chg
Sequential
% Chg
June 30,
2008
June 30,
2007
% Chg
Domestic
International
$
Subtotal
Net premiums earned
455
533
$
494
489
(7.9) %
9.0
$
548
488
(17.0) %
9.2
$
1,003
1,021
$
1,010
957
(0.7) %
6.7
988
983
0.5
1,036
(4.6)
2,024
1,967
2.9
1,023
948
7.9
1,017
0.6
2,040
1,913
6.6
Losses and loss expenses incurred (1) (2) (8)
681
642
6.1
675
0.9
1,356
1,318
2.9
276
269
2.6
288
(4.2)
564
542
4.1
78.4
54
22.2
120
53
126.4
1
14
(92.9)
121
67
80.6
234
2
2
4
(5)
213
21
1
4
(4)
9.9
(90.5)
NM
100.0
0.0
25.0
66
37
(5)
10
Underwriting profit
61
47
118
1
1
3
(3)
NM
6
NM
29.8
60
1.7
108
13
(2)
9.3
(92.3)
NM
NM
NM
50.0
116
1
1
1
(2)
120
119
0.8
117
2.6
237
235
0.9
181
166
9.0
177
2.3
358
302
18.5
Partnership income
Mutual funds
Securities lending
Investment expense
Total
Operating income
(40)
$
141
2
$
168
NM
(16.1) %
(15)
$
162
1.7
0.0
NM
0.0
200.0
50.0
NM
(13.0) %
(55)
$
303
17
$
319
Loss ratio
Expense ratio
Combined ratio
66.55
27.85
94.40
67.71
27.32
95.03
66.40
27.82
94.22
66.48
27.83
94.31
68.87
27.56
96.43
94.40
94.05
94.22
94.31
95.95
Foreign exchange effect on Transatlantic's growth:
(3.2) %
3.7
0.5 %
(0.9) %
3.8
2.9 %
17
NM
(5.0) %
Foreign General Insurance Operating Statistics
June 30,
2008
$
Net premiums earned
3,726
June 30,
2007
$
3,740
Three Months Ended
March 31,
% Chg
2008
3,242
14.9
3,030
23.4
%
$
4,339
Sequential
% Chg
June 30,
2008
(14.1) %
3,468
7.8
$
Six Months Ended
June 30,
2007
% Chg
8,065
$
7,208
6,860
17.6
5,938
21.4
Losses and loss expenses incurred (1) (2) (3) (8)
2,007
1,580
27.0
1,795
11.8
3,802
3,052
24.6
Statutory underwriting expenses (9)
1,290
1,079
19.6
1,309
(1.5)
2,599
2,113
23.0
19.4
443
371
807
773
4.4
(46)
51
NM
212
364
21.7
NM
166
204
(18.6)
Underwriting profit
397
422
(5.9)
576
(31.1)
973
977
(0.4)
278
45
37
32
(35)
237
90
104
2
16
(22)
17.3
(50.0)
(64.4)
NM
100.0
59.1
269
27
(53)
26
(27)
3.3
66.7
NM
NM
23.1
29.6
547
72
(16)
58
(62)
477
120
156
2
35
(44)
14.7
(40.0)
NM
NM
65.7
40.9
357
427
(16.4)
242
47.5
599
746
(19.7)
754
849
(11.2)
818
(7.8)
1,572
1,723
(8.8)
18
133.3
(82)
NM
736
8.2
%
Partnership income
Mutual funds
Securities lending
Investment expense
Total
Operating income (10)
Loss ratio (3)
Expense ratio
Combined ratio
42
$
796
$
867
(8.2) %
$
(40)
%
$
1,532
1,776
53.65
34.62
88.27
52.13
33.28
85.41
51.78
30.16
81.94
52.75
32.22
84.97
51.40
30.80
82.20
88.13
83.18
81.94
84.90
81.07
Foreign exchange effect on Foreign General's growth:
53
$
5.2 %
9.7
14.9 %
8.1 %
9.5
17.6 %
18
NM
(13.7) %
Foreign General Insurance Gross Premiums Written
Gross Premiums Written by Division
Personal Lines
14.4%
Other / Service
Business
5.7%
Accident &
Health
17.2%
Aviation
2.4%
Gross Premiums Written by Region
Marine and
Energy
19.3%
Africa / Middle
East /
Mediterranean /
South Asia
3.4%
U.K. / Ireland
31.7%
Asia /
Australasia
8.1%
Property
7.0%
Europe
27.4%
Americas
13.4%
Lloyd's
4.5%
Casualty
13.7%
Far East
16.0%
Specialty Lines
15.8%
Gross Premiums Written
$12.4 billion
19
General Insurance
Notes
(1)
Includes significant current year catastrophe-related losses and net reinstatement premiums as follows:
(in millions)
Personal Lines
Transatlantic
Foreign General
Total
(2)
Three Months Ended
June 30, 2007
$9
68
$77
March 31, 2008
$83
$83
Six Months Ended
June 30, 2008
June 30, 2007
$157
$2
9
5
68
$164
$77
The following table summarizes development, (favorable) or unfavorable, of incurred losses and loss expenses for prior years (other than accretion of
discount).
(in millions)
Personal Lines
Mortgage Guaranty
Foreign General
Subtotal
Transatlantic
Asbestos settlement
Total
(3)
(4)
(5)
(6)
(7)
(8)
June 30, 2008
$74
2
5
$81
June 30, 2008
$75
29
(10)
1
95
(2)
$93
Three Months Ended
June 30, 2007
$(65)
(32)
(4)
(4)
(105)
18
(33)
$(120)
March 31, 2008
$(217)
36
68
(17)
(130)
3
(37)
$(164)
Six Months Ended
June 30, 2008
June 30, 2007
$(142)
$(152)
65
(61)
58
27
(16)
(68)
(35)
(254)
1
36
(37)
(50)
$(71)
$(268)
Total General Insurance and Foreign General both include changes in future policy benefits for certain accident and health insurance contracts.
Total may not equal the sum of the individual group totals due to consolidating eliminations.
Other investment income is comprised principally of real estate income and changes in market value associated with trading portfolios.
Computed using a constant exchange rate for each period.
Statutory underwriting expenses include the results of wholly owned Personal Lines agencies and the amortization of advertising costs.
Includes severe but non-catastrophic losses as follows:
(in millions)
Transatlantic
Foreign General
Total
June 30, 2008
$11
49
$60
Three Months Ended
June 30, 2007
$4
14
$18
March 31, 2008
$61
$61
Six Months Ended
June 30, 2008
June 30, 2007
$11
$40
110
39
$121
$79
(9) Statutory underwriting expenses include the results of wholly owned Foreign General agencies and the amortization of advertising costs.
(10) Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using average exchange rates.
20
Life Insurance & Retirement Services Operating Statistics
Three Months Ended
June 30,
2007
% Chg
June 30,
2008
Revenues:
Partnership income excluding synfuels
Partnership loss - synfuels
Mutual funds
Trading account losses
Securities lending
Other
Investment expenses
Net investment income before policyholder investment income and trading gains (losses)
Net investment income related to policyholder investment income and trading gains (losses)
Total net investment income
March 31,
2008
June 30,
2008
Sequential
% Chg
Six Months Ended
June 30,
2007
% Chg
$
25,662
$
22,047
16.4 %
$
26,093
(1.7) %
$
51,755
$
43,421
19.2 %
$
9,585
$
8,170
17.3 %
$
9,318
2.9 %
$
18,903
$
16,595
13.9 %
4,824
86
(4)
79
(133)
61
173
(117)
4,969
617
5,586
4,670
351
(42)
106
(14)
19
71
(108)
5,053
1,079
6,132
3.3
(75.5)
NM
(25.5)
NM
221.1
143.7
8.3
(1.7)
(42.8)
(8.9)
4,717
44
(4)
(82)
(88)
17
129
(145)
4,588
(785)
3,803
2.3
95.5
NM
NM
NM
258.8
34.1
(19.3)
8.3
NM
46.9
9,541
130
(8)
(3)
(221)
78
302
(262)
9,557
(168)
9,389
9,188
556
(75)
168
(14)
35
125
(214)
9,769
1,876
11,645
3.8
(76.6)
NM
NM
NM
122.9
141.6
22.4
(2.2)
NM
(19.4)
Total revenues excluding net realized capital gains (losses) and policyholder investment
income and trading gains (losses)
14,554
13,223
10.1
13,906
4.7
28,460
26,364
8.0
Total revenues excluding net realized capital gains (losses)
15,171
14,302
6.1
13,121
15.6
28,292
28,240
0.2
Incurred policy losses and benefits before the effect of incurred policy losses and benefits
related to policyholder investment income and trading gains (losses)
Incurred policy losses and benefits related to policyholder investment income and trading gains (losses)
9,059
617
9,676
2,886
12,562
7,914
1,079
8,993
2,410
11,403
14.5
(42.8)
7.6
19.8
10.2
8,710
(785)
7,925
2,658
10,583
4.0
NM
22.1
8.6
18.7
17,769
(168)
17,601
5,544
23,145
16,077
1,876
17,953
4,851
22,804
10.5
NM
(2.0)
14.3
1.5
Operating income excluding net realized capital gains (losses)
2,609
(5,010)
(2,401)
(10.0)
NM
NM %
2,538
(4,369)
(1,831)
Foreign exchange effect on worldwide growth:
Growth in original currency*
Growth in original currency*
$
$
2,899
(279)
2,620
$
2.8
NM
NM %
$
5,147
(9,379)
(4,232)
11.6 %
4.8
16.4
15.2 %
4.0
19.2
8.8
8.5
17.3 %
7.4
6.5
13.9 %
Gross life insurance in force (at period end)
$
* Computed using a constant exchange rate for each period.
21
2,410,145
1.8 %
$
2,453,094
$
$
5,436
(535)
4,901
2,141,913
(5.3)
NM
NM %
14.5 %
Domestic Life Insurance & Retirement Services Operating Statistics
Three Months Ended
June 30,
March 31,
% Chg
2007
2008
June 30,
2008
Revenues:
Net investment income:
Partnership income excluding synfuels
Partnership loss - synfuels
Mutual funds
Securities lending
Other
Investment expenses
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
$
7,274
$
6,610
10.0 %
$
7,561
(3.8) %
$
14,835
$
12,734
16.5 %
$
1,894
$
1,667
13.6 %
$
1,871
1.2 %
$
3,765
$
3,479
8.2 %
2,268
77
(4)
3
56
44
(31)
2,413
11
2,424
2,490
313
(42)
3
16
14
(23)
2,771
2,771
4,307
4,438
(3.0)
4,249
4,318
4,438
(2.7)
4,226
2,714
11
2,725
666
3,391
2,420
2,420
755
3,175
12.1
NM
12.6
(11.8)
6.8
2,591
(23)
2,568
577
3,145
927
(4,101)
(3,174)
1,263
(297)
966
(26.6)
NM
NM %
Sequential
% Chg
$
$
(8.9)
(75.4)
NM
0.0
250.0
214.3
34.8
(12.9)
NM
(12.5)
2,340
42
(4)
(2)
15
19
(32)
2,378
(23)
2,355
$
$
22
1,081
(3,647)
(2,566)
998,771
(3.1)
83.3
NM
NM
273.3
131.6
(3.1)
1.5
NM
2.9
4,608
119
(8)
1
71
63
(63)
4,791
(12)
4,779
5,024
470
(75)
5
30
2
(55)
5,401
5,401
1.4
8,556
8,880
(3.6)
2.2
8,544
8,880
(3.8)
4.7
NM
6.1
15.4
7.8
5,305
(12)
5,293
1,243
6,536
5,003
5,003
1,596
6,599
6.0
NM
5.8
(22.1)
(1.0)
2,008
(7,748)
(5,740)
2,281
(318)
1,963
(12.0)
NM
NM %
(14.2)
NM
NM %
$
1.6 %
$
1,014,785
$
$
946,598
(8.3)
(74.7)
NM
(80.0)
136.7
NM
14.5
(11.3)
NM
(11.5)
7.2 %
Domestic Life Insurance Product Statistics
Three Months Ended
June 30,
2008
Premiums, deposits and other considerations (1):
Life insurance
Home service
Group life/health
Payout annuities
Individual fixed and runoff annuities
$
Total premiums, deposits and other considerations
Premiums and other considerations:
Life insurance
Home service
Group life/health
Payout annuities (2)
Total premiums and other considerations
Net investment income (3):
Life insurance
Home service
Group life/health
Payout annuities
Net investment income related to policyholder investment income and trading gains (losses) (4)
Incurred policy losses and benefits excluding amortization of
sales inducement related to net realized capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Total incurred policy losses and benefits excluding amortization of sales inducements
related to net realized capital gains (losses) before the effect of incurred policy losses
and benefits related to policyholder investment income and trading gains (losses)
Incurred policy losses and benefits related to policyholder investment income and trading gains (losses) (4)
Total incurred policy losses and benefits excluding amortization
of sales inducements related to net realized capital gains (losses)
Insurance acquisition and other operating expenses excluding amortization of
deferred acquisition costs and VOBA related to net realized capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Total insurance acquisition and other operating expenses excluding amortization
of deferred acquisition costs and VOBA related to net realized capital gains (losses)
$
878
244
221
751
256
June 30,
2007
$
831
232
203
600
101
March 31,
2008
% Chg
5.7 %
5.2
8.9
25.2
153.5
$
2,350
1,967
621
186
218
564
15
603
192
197
364
13
1,604
1,369
354
163
48
320
110
402
158
51
276
119
(11.9)
3.2
(5.9)
15.9
(7.6)
396
153
47
303
108
995
11
1,006
1,006
1,006
(1.1)
NM
0.0
603
169
163
809
75
597
176
146
565
69
1,819
11
$
1,677
477
429
1,550
340
Six Months Ended
June 30,
2007
$
% Chg
1,588
460
434
1,285
188
5.6 %
3.7
(1.2)
20.6
80.9
4,473
3,955
13.1
5.4
(1.1)
6.9
(5.1)
25.0
1,210
374
422
1,158
27
1,181
387
426
876
27
2.5
(3.4)
(0.9)
32.2
0.0
1.1
3,191
2,897
10.1
(10.6)
6.5
2.1
5.6
1.9
750
316
95
623
218
774
319
104
565
249
(3.1)
(0.9)
(8.7)
10.3
(12.4)
1,007
(23)
984
(1.2)
NM
2.2
2,002
(12)
1,990
2,011
2,011
(0.4)
NM
(1.0)
1.0
(4.0)
11.6
43.2
8.7
559
171
151
809
64
7.9
(1.2)
7.9
0.0
17.2
1,162
340
314
1,618
139
1,147
350
324
1,285
153
1.3
(2.9)
(3.1)
25.9
(9.2)
1,553
-
17.1
NM
1,754
(23)
3.7
NM
3,573
(12)
3,259
-
9.6
NM
1,830
1,553
17.8
1,731
5.7
3,561
3,259
9.3
193
95
86
25
27
194
95
97
23
33
406
190
170
53
49
404
194
197
47
70
23
$
442
2,123
9.9 %
4.7
6.3
(6.0)
204.8
June 30,
2008
10.7
426
19.5
799
233
208
799
84
Sequential
% Chg
3.0
(3.1)
10.7
54.9
15.4
589
188
204
594
12
17.2
1,587
(0.5)
0.0
(11.3)
8.7
(18.2)
(3.6) %
213
95
84
28
22
$
442
(9.4)
0.0
2.4
(10.7)
22.7
(3.6) %
$
868
$
912
0.5
(2.1)
(13.7)
12.8
(30.0)
(4.8) %
Domestic Life Insurance Product Statistics (continued)
Three Months Ended
June 30,
2008
Operating income excluding net realized capital gains (losses) and related
amortization of acquisition costs, VOBA and sales inducements:
Life insurance
Home service
Group life/health
Payout annuities
$
Total operating income excluding net realized capital gains (losses) and
related amortization of acquisition costs, VOBA and sales inducements
$
354
Amortization (benefit) of deferred acquisition costs, VOBA
and sales inducements related to net realized capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Total amortization (benefit) of deferred acquisition costs, VOBA
and sales inducements related to net realized capital gains (losses)
Operating income before net realized capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Total operating income before net realized capital gains (losses)
Net realized capital gains (losses):
Life insurance
Home service
Group life/health
Payout annuities
Total net realized capital gains (losses)
Operating income (loss):
Life insurance
Home service
Group life/health
Payout annuities
Total operating income (loss)
179
85
17
50
23
June 30,
2007
380
% Chg
(16.4) %
7.6
240.0
(3.8)
(23.3)
$
Sequential
% Chg
June 30,
2008
213
75
16
60
34
(16.0) %
13.3
6.3
(16.7)
(32.4)
$
392
160
33
110
57
(6.8)
398
(11.1)
752
Six Months Ended
June 30,
2007
% Chg
$
404
162
9
109
53
737
(3.0) %
(1.2)
266.7
0.9
7.5
2.0
(13)
(1)
(3)
(5)
2
(1)
NM
NM
NM
NM
NM
(3)
(3)
(14)
NM
NM
NM
NM
NM
(16)
(4)
(17)
(5)
1
-
NM
NM
NM
NM
NM
(17)
(4)
NM
NM
(20)
NM
(37)
(4)
NM
192
86
17
50
26
219
77
5
52
31
(12.3)
11.7
240.0
(3.8)
(16.1)
216
78
16
60
48
(11.1)
10.3
6.3
(16.7)
(45.8)
408
164
33
110
74
409
161
9
109
53
371
384
(3.4)
418
(11.2)
789
741
6.5
(1,110)
(198)
(13)
(33)
(22)
43
(11)
(4)
(35)
(9)
NM
NM
NM
NM
NM
(1,055)
(140)
(14)
(22)
(57)
NM
NM
NM
NM
NM
(2,165)
(338)
(27)
(55)
(79)
40
(13)
(5)
(41)
(9)
NM
NM
NM
NM
NM
(1,376)
(16)
NM
(1,288)
NM
(2,664)
(28)
NM
NM
NM
300.0
0.0
(81.8)
(839)
(62)
2
38
(9)
NM
NM
100.0
(55.3)
NM
(1,757)
(174)
6
55
(5)
449
148
4
68
44
(918)
(112)
4
17
4
$
214
79
5
52
30
March 31,
2008
(1,005)
24
262
66
1
17
22
$
368
NM %
$
(870)
NM %
$
(1,875)
$
713
(0.2)
1.9
266.7
0.9
39.6
NM
NM
50.0
(19.1)
NM
NM %
Domestic Life Insurance Other Data
Three Months Ended
June 30,
2008
Life insurance
Periodic premium sales (5):
Individual/retail
Institutional markets
Total periodic premium sales
$
115
10
125
June 30,
2007
$
116
3
119
March 31,
2008
% Chg
(0.9) %
233.3
5.0
$
June 30,
2008
Sequential
% Chg
110
19
129
4.5 %
(47.4)
(3.1)
$
225
29
254
Six Months Ended
June 30,
2007
$
234
6
240
% Chg
(3.8) %
383.3
5.8
Periodic premium sales and deposits by product:
Universal life
Variable universal life
Term life
Whole life/other
Total periodic premium sales
46
15
61
3
125
47
12
57
3
119
(2.1)
25.0
7.0
0.0
5.0
47
27
52
3
129
(2.1)
(44.4)
17.3
0.0
(3.1)
93
42
113
6
254
98
25
112
5
240
(5.1)
68.0
0.9
20.0
5.8
Unscheduled and single deposits
Total sales and deposits (5)
113
238
115
234
(1.7)
1.7
60
189
88.3
25.9
173
427
181
421
(4.4)
1.4
18,764
5,160
813,690
1.8
0.3
2.6
19,104
5,175
834,593
17,563
5,775
761,907
8.8
(10.4)
9.5
20
29
5
54
20.0
37.9
0.0
27.8
44
69
10
123
49
45
8
102
(10.2)
53.3
25.0
20.6
7,450
65,508
0.4
0.9
7,479
66,077
7,397
64,809
1.1
2.0
Life insurance reserves:
General account
Separate accounts
Gross life insurance in force
Home service
Life/Accident & Health sales
Fixed annuity sales
Unscheduled and single deposits
Total sales and deposits (5)
24
40
5
69
25
25
5
55
(4.0)
60.0
0.0
25.5
Total insurance reserves
Group life/health
Sales and deposits (5)
Annualized earned premium
Payout annuities
Insurance reserves
Individual fixed annuities (including runoff)
Insurance reserves
$
31
22
40.9
41
897
99,144
(24.4)
1.6
(2.2)
72
911
96,962
60
933
98,733
20.0
(2.4)
(1.8)
751
600
25.2
799
17,022
(6.0)
3.3
1,550
17,580
1,285
15,332
20.6
14.7
84
8,909
204.8
(1.6) %
256
$
101
153.5 %
$
25
$
340
8,770
$
188
10,301
80.9
(14.9) %
Domestic Life Insurance
Deferred Policy Acquisition Costs, Sales Inducements and Value of Business Acquired
Three Months Ended
June 30,
2008
Life insurance
Balance at beginning of period
Acquisition costs deferred
Amortization (charged) or credited to operating income:
Related to net realized capital gains (losses)
Related to unlocking future assumptions
All other amortization
Change in unrealized gains (losses) on securities
Increase (decrease) due to foreign exchange (6)
Other
Balance at end of period
$
Home service
Increase (decrease) due to foreign exchange
Other
Group life/health
Other
$
4,544
162
June 30,
2007
$
% Chg
4,046
137
12.3 % $
18.2
160.0
NM
NM
(23.6)
(87.2)
NM
11.0
March 31,
2008
4,447
164
13
(78)
55
5
4,701
5
(1)
(64)
72
39
4,234
1,532
40
1,496
43
2.4
(7.0)
1,499
40
1
(44)
40
1,569
(2)
(44)
55
1,548
NM
NM
NM
(27.3)
NM
NM
1.4
104
4
122
18
(6)
2
104 $
(30)
3
113
26
3
(86)
38
(22)
4,544
Sequential
% Chg
2.2 %
(1.2)
June 30,
2008
$
333.3
NM
NM
44.7
NM
NM
3.5
4,447
326
Six Months Ended
June 30,
2007
% Chg
$
3,919
313
13.5 %
4.2
16
(164)
93
(17)
4,701
5
(152)
105
44
4,234
2.2
0.0
1,499
80
1,517
87
(1.2)
(8.0)
3
(43)
33
1,532
(66.7)
NM
NM
21.2
NM
NM
2.4
4
(87)
73
1,569
(1)
(88)
41
(8)
1,548
NM
NM
NM
78.0
NM
NM
1.4
(14.8)
(77.8)
106
5
(1.9)
(20.0)
106
9
193
23
(45.1)
(60.9)
NM
NM
NM
(33.3)
NM
NM
(8.0) % $
(8)
1
104
NM
NM
NM
100.0
NM
NM
0.0 %
(14)
3
104 $
(49)
2
(56)
113
$
220.0
NM
NM
(11.4)
NM
NM
11.0
NM
NM
NM
50.0
NM
NM
(8.0) %
Deferred Policy Acquisition Costs, Sales Inducements and Value of Business Acquired (continued)
Three Months Ended
June 30,
2008
Payout annuities
Other
$
$
(1)
81
Other
Total
Increase due to foreign exchange (6)
Other
78
4
June 30,
2007
$
% Chg
65
5
20.0 % $
(20.0)
(2)
68
NM
NM
NM
NM
NM
NM
19.1
March 31,
2008
Sequential
% Chg
75
4
4.0 %
0.0
(1)
78
NM
NM
NM
NM
NM
NM
3.8
June 30,
2008
$
75
8
Six Months Ended
June 30,
2007
% Chg
$
(2)
81
62
9
(3)
68
21.0 %
(11.1)
NM
NM
NM
NM
NM
NM
19.1
388
15
345
11
12.5
36.4
358
11
8.4
36.4
358
26
361
20
(0.8)
30.0
3
(24)
19
1
402
1
(28)
79
1
409
200.0
NM
NM
(75.9)
0.0
NM
(1.7)
14
(16)
22
(1)
388
(78.6)
NM
NM
(13.6)
NM
NM
3.6
17
(40)
41
402
(55)
82
1
409
NM
NM
NM
(50.0)
NM
NM
(1.7)
6,646
225
6,074
214
17
(153)
116
6
6,857 $
4
(1)
(168)
209
40
6,372
9.4
5.1
325.0
NM
NM
(44.5)
(85.0)
NM
7.6 % $
27
6,485
224
20
(154)
94
(23)
6,646
2.5
0.4
(15.0)
NM
NM
23.4
NM
NM
3.2 %
$
6,485
449
6,052
452
7.2
(0.7)
37
(307)
210
(17)
6,857 $
4
(347)
230
45
(64)
6,372
NM
NM
NM
(8.7)
NM
NM
7.6 %
Notes
(1)
(2)
(3)
Premiums, deposits and other considerations represent aggregate business activity presented on a non-GAAP basis.
Includes structured settlements, single premium immediate annuities and terminal funding annuities.
The components of net investment income were as follows:
(in millions)
Base investment income
Partnership income – excluding Synfuels
Partnership loss - Synfuels
Other enhancements (a)
Net investment income before policyholder investment
Net investment income related to policyholder investment
% Change
2008
2007
$946
$929
1.8%
(6)
60
NM
(4)
(42)
(90.5)
59
59
0.0
995
11
$1,006
1,006
-131
$1,006
% Change
2008
2007
$1,887
$1,861
1.4%
25
87
(71.3)
(8)
(75)
(89.3)
98
138
(29.0)
(1.1)
2,002
2,011
(0.4)
NM
0.0%
(12)
$1,990
$2,011
NM
(1.0)%
(a) Enhancements include gains on calls, prepayments fees and trading gains (losses) not associated with SOP 03-1. Both the three months and
six months ended June 30, 2008 include a reduction of $21 million as result of a change in the projected cash flows relating to income taxes with
respect to certain leveraged lease investments.
(4)
(5)
(6)
Relates principally to assets held in various trading securities accounts that did not qualify for separate account treatment
under SOP 03-1. These amounts are offset by an equal amount included in incurred policy losses and benefits.
Life insurance sales include periodic premium from new business expected to be collected over a one-year period and
unscheduled and single premiums from new and existing policyholders. Sales of group accident and health insurance
represent annualized first year premium from new policies. Annuity sales represent deposits from new and existing
policyholders.
Relates to business in Canada.
-49
28
Domestic Retirement Services Product Statistics
Three Months Ended
June 30,
2008
Group retirement products (1)
Individual fixed annuities
Individual variable annuities
Individual annuities - runoff
$
1,843
1,944
1,122
15
June 30,
2007
$
1,793
1,633
1,204
13
4,924
4,643
Fee and other income:
Group retirement products
111
17
157
5
112
26
155
5
Total fee and other income
290
Investment spread:
March 31,
2008
% Chg
2.8 %
19.0
(6.8)
15.4
$
(1.8) %
(23.2)
10.3
15.4
June 30,
2008
$
3,720
4,475
2,139
28
Six Months Ended
June 30,
2007
$
% Chg
3,676
2,864
2,212
27
1.2 %
56.3
(3.3)
3.7
18.0
5,438
(9.5)
10,362
8,779
(0.9)
(34.6)
1.3
0.0
107
23
152
2
3.7
(26.1)
3.3
150.0
218
40
309
7
217
51
301
13
0.5
(21.6)
2.7
(46.2)
298
(2.7)
284
2.1
574
582
(1.4)
488
817
34
79
641
981
43
100
(23.9)
(16.7)
(20.9)
(21.0)
494
759
35
83
(1.2)
7.6
(2.9)
(4.8)
982
1,576
69
162
1,211
1,895
85
199
(18.9)
(16.8)
(18.8)
(18.6)
1,418
1,765
(19.7)
1,371
3.4
2,789
3,390
(17.7)
Interest credited:
306
503
29
61
291
488
29
67
5.2
3.1
0.0
(9.0)
301
479
27
61
1.7
5.0
7.4
0.0
607
982
56
122
581
974
55
134
4.5
0.8
1.8
(9.0)
Total interest credited
899
875
2.7
868
3.6
1,767
1,744
Net investment spread:
182
314
5
18
350
493
14
33
(48.0)
(36.3)
(64.3)
(45.5)
193
280
8
22
(5.7)
12.1
(37.5)
(18.2)
375
594
13
40
630
921
30
65
(40.5)
(35.5)
(56.7)
(38.5)
Total net investment spread
519
890
(41.7)
503
3.2
1,022
1,646
(37.9)
98
132
156
18
104
148
113
17
(5.8)
(10.8)
38.1
5.9
96
135
114
13
2.1
(2.2)
36.8
38.5
194
267
270
31
203
284
225
40
(4.4)
(6.0)
20.0
(22.5)
358
12.8 %
$
404
$
(See Accompanying Notes on Pages 37)
29
382
6.1
1,877
2,531
1,017
13
Sequential
% Chg
5.8 %
$
$
762
$
752
1.3
1.3 %
Domestic Retirement Services Product Statistics (continued)
Three Months Ended
June 30,
2008
Operating income excluding net realized capital gains (losses) and related
$
Amortization expense (benefit) of deferred acquisition costs, VOBA
Total amortization expense (benefit) of deferred acquisition costs, VOBA
Operating income (loss) before net realized capital gains (losses):
Total operating income before net realized capital gains (losses) (2)
$
195
199
6
5
June 30,
2007
$
March 31,
2008
% Chg
358
371
56
21
(45.5) %
(46.4)
(89.3)
(76.2)
405
806
(49.8)
(46)
(118)
13
-
(10)
(48)
(14)
(1)
(151)
(73)
241
317
(7)
5
368
419
70
22
556
879
$
204
168
46
11
Sequential
% Chg
(4.4) %
18.5
(87.0)
(54.5)
June 30,
2008
$
399
367
52
16
Six Months Ended
June 30,
2007
% Chg
$
644
688
106
38
1,476
(38.0) %
(46.7)
(50.9)
(57.9)
429
(5.6)
834
(43.5)
NM
NM
NM
NM
(43)
(122)
(69)
-
NM
NM
NM
NM
(89)
(240)
(56)
-
(10)
(45)
(6)
(3)
NM
NM
NM
NM
NM
(234)
NM
(385)
(64)
NM
(34.5)
(24.3)
NM
(77.3)
247
290
115
11
(2.4)
9.3
NM
(54.5)
488
607
108
16
654
733
112
41
(25.4)
(17.2)
(3.6)
(61.0)
(36.7)
663
(16.1)
1,219
1,540
(20.8)
(940)
(1,591)
(43)
(151)
(103)
(158)
(17)
(3)
NM
NM
NM
NM
(740)
(1,246)
(252)
(121)
NM
NM
NM
NM
(1,680)
(2,837)
(295)
(272)
(113)
(169)
(7)
(1)
NM
NM
NM
NM
(2,725)
(281)
NM
(2,359)
NM
(5,084)
(290)
NM
(699)
(1,274)
(50)
(146)
265
261
53
19
NM
NM
NM
NM
(493)
(956)
(137)
(110)
NM
NM
NM
NM
(1,192)
(2,230)
(187)
(256)
541
564
105
40
NM
NM
NM
NM
598
NM %
(2,169)
$
30
$
(1,696)
NM %
$
(3,865)
$
1,250
NM %
Domestic Retirement Services
Account Value Rollforward
Three Months Ended
June 30,
2008
Balance at beginning of period (3)
Deposits - annuities (4)
Deposits - mutual funds (4)
Deposits - subtotal
Surrenders and other withdrawals (4)
Death benefits
Net flows
Change in fair value of underlying investments, interest credited, net of fees
Other
Balance at end of period (3)
$
65,640
1,472
371
1,843
(1,282)
(64)
497
52
66,189
June 30,
2007
$
% Chg
Six Months Ended
March 31,
2008
June 30,
2008
Sequential
% Chg
65,216
1,463
330
1,793
(1,487)
(70)
236
2,234
1
67,687
0.7 % $
0.6
12.4
2.8
(13.8)
(8.6)
110.6
(97.7)
NM
(2.2)
68,109
1,453
424
1,877
(1,490)
(59)
328
(2,797)
65,640
(3.6) %
1.3
(12.5)
(1.8)
(14.0)
8.5
51.5
NM
NM
0.8
$
68,109
2,925
795
3,720
(2,772)
(123)
825
(2,745)
66,189
June 30,
2007
$
% Chg
64,357
2,881
795
3,676
(3,412)
(130)
134
3,195
1
67,687
5.8 %
1.5
0.0
1.2
(18.8)
(5.4)
NM
NM
NM
(2.2)
Deposits (4)
Surrenders and other withdrawals (4)
Death benefits
Net flows
51,540
1,944
(1,461)
(442)
41
496
52,077
52,339
1,633
(1,859)
(449)
(675)
506
52,170
(1.5)
19.0
(21.4)
(1.6)
NM
(2.0)
(0.2)
50,508
2,531
(1,579)
(382)
570
462
51,540
2.0
(23.2)
(7.5)
15.7
(92.8)
7.4
1.0
50,508
4,475
(3,040)
(824)
611
958
52,077
52,685
2,864
(3,519)
(857)
(1,512)
997
52,170
(4.1)
56.3
(13.6)
(3.9)
NM
(3.9)
(0.2)
Deposits
Surrenders and other withdrawals
Death benefits
Net flows
30,830
1,122
(964)
(123)
35
(198)
30,667
31,432
1,204
(1,057)
(129)
18
1,601
33,051
(1.9)
(6.8)
(8.8)
(4.7)
94.4
NM
(7.2)
33,108
1,017
(909)
(127)
(19)
(2,259)
30,830
(6.9)
10.3
6.1
(3.1)
NM
NM
(0.5)
33,108
2,139
(1,873)
(250)
16
(2,457)
30,667
31,093
2,212
(2,047)
(250)
(85)
2,043
33,051
6.5
(3.3)
(8.5)
0.0
NM
NM
(7.2)
148,010
4,909
(3,707)
(629)
573
350
148,933
5,476
154,409
148,987
4,630
(4,403)
(648)
(421)
4,341
1
152,908
5,977
158,885
(0.7)
6.0
(15.8)
(2.9)
NM
(91.9)
NM
(2.6)
(8.4)
(2.8) % $
151,725
5,425
(3,978)
(568)
879
(4,594)
148,010
5,580
153,590
(2.4)
(9.5)
(6.8)
10.7
(34.8)
NM
NM
0.6
(1.9)
0.5 %
151,725
10,334
(7,685)
(1,197)
1,452
(4,244)
148,933
5,476
154,409
148,135
8,752
(8,978)
(1,237)
(1,463)
6,235
1
152,908
5,977
158,885
2.4
18.1
(14.4)
(3.2)
NM
NM
NM
(2.6)
(8.4)
(2.8) %
90,729
60,554
151,283
7,602
158,885
0.8 % $
(9.8)
(3.4)
9.4
(2.8) % $
90,576
54,952
145,528
8,062
153,590
1.0 %
(0.6)
0.4
3.1
0.5 %
90,729
60,554
151,283
7,602
158,885
0.8 %
(9.8)
(3.4)
9.4
(2.8) %
Total
Deposits
Surrenders and other withdrawals
Death benefits
Net flows
Other
Balance at end of period, excluding runoff
Individual annuities runoff
Total general and separate account reserves and mutual funds
General account reserve
Separate account reserve
Total general and separate account reserves
Group retirement mutual funds
Total reserves and mutual funds
Surrender rates (5)
$
$
$
91,467
54,629
146,096
8,313
154,409
$
$
$
7.7 %
11.2 %
12.2 %
8.9 %
14.2 %
13.0 %
31
9.1 %
12.5 %
11.7 %
$
$
$
91,467
54,629
146,096
8,313
154,409
8.4 %
11.8 %
12.0 %
$
$
$
10.4 %
13.4 %
12.8 %
Domestic Retirement Services Spread Information
Three Months Ended
June 30,
2008
June 30,
2007
March 31,
2008
% Chg
June 30,
2008
Sequential
% Chg
Six Months Ended
June 30,
2007
% Chg
Spread information
Base investment income (a)
Partnerships (b)
Other enhancements (c)
$
$
Base yield (a)
Partnerships (b)
Total
Cost of funds (d)
Net spread rate, as reported (d)
Net spread rate excluding partnerships
and other enhancements
Partnerships (b)
Base yield (a)
Partnerships (b)
Total
Cost of funds (d)
487
31
(30)
488
6.09
(0.05)
(0.38)
5.66
3.91
1.75
$
$
%
%
%
%
%
%
6.26
0.80
0.46
7.52
3.83
3.69
2.18 %
$
$
730
54
33
817
5.56
0.04
0.25
5.85
3.60
2.25
$
$
%
%
%
%
%
%
1.96 %
500
105
36
641
(2.6) %
(70.5)
NM
(23.9) %
$
%
%
%
%
%
%
(10.3) %
797
145
39
981
(8.4) %
(62.8)
(15.4)
(16.7) %
%
%
%
%
%
%
2.45 %
32
487
13
(6)
494
6.14
(0.29)
(0.07)
5.78
3.91
1.87
2.43 %
5.98
0.76
0.29
7.03
3.53
3.50
$
$
$
$
$
%
%
%
%
%
%
(2.2) %
753
1
5
759
(3.1) %
NM
NM
7.6 %
%
%
%
%
%
%
2.30 %
974
44
(36)
982
6.12
(0.17)
(0.23)
5.72
3.91
1.81
2.23 %
5.83
(0.33)
0.04
5.54
3.53
2.01
(20.0) %
0.0 %
138.5
NM
(1.2) %
$
%
%
%
%
%
%
$
$
1,483
55
38
1,576
$
2.13 %
(1.8) %
(71.4)
NM
(18.9) %
%
%
%
%
%
%
2.37 %
$
%
%
%
%
%
%
992
154
65
1,211
6.18
0.50
0.41
7.09
3.81
3.28
2.21 %
5.70
(0.14)
0.15
5.71
3.57
2.14
(14.8) %
$
1,591
226
78
1,895
5.96
0.53
0.29
6.78
3.51
3.27
(6.8) %
(6.8) %
(75.7)
(51.3)
(16.8) %
%
%
%
%
%
%
2.45 %
(13.1) %
Domestic Retirement Services Spread Information (continued)
Three Months Ended
June 30,
2008
June 30,
2007
Sequential
% Chg
March 31,
2008
% Chg
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
Spread information
Partnerships (b)
Base yield (a)
Partnerships (b)
Total
Cost of funds (d)
$
$
35
(2)
1
34
5.22
(0.67)
0.23
4.78
3.11
1.67
$
$
%
%
%
%
%
%
2.11 %
39
3
1
43
5.59
0.22
0.16
5.97
3.06
2.91
(10.3) %
NM
0.0
(20.9) %
%
%
%
%
%
%
2.53 %
$
$
37
(3)
1
35
5.46
(0.86)
0.11
4.71
3.10
1.61
(16.6) %
(5.4) %
NM
0.0
(2.9) %
%
%
%
%
%
%
2.36 %
$
$
72
(5)
2
69
5.34
(0.76)
0.17
4.75
3.10
1.65
(10.6) %
$
$
%
%
%
%
%
%
2.24 %
(a) Includes the investment return on surplus other than partnership or yield enhancements activities.
(b) Includes incremental effect to base yield of investments in hedge funds and private equity funds.
(c) Includes incremental effect to base yield of gains on calls, dollar roll income, prepayment fees and trading gains (losses). The three months and six months periods of 2008 include a reduction in net investment
income of $57 million as a result of a change in the projected cash flows relating to income taxes with respect to certain leveraged lease investments.
(d) Excludes the amortization of sales inducement assets.
33
79
3
3
85
5.60
0.11
0.20
5.91
3.03
2.88
(8.9) %
NM
(33.3)
(18.8) %
%
%
%
%
%
%
2.57 %
(12.8) %
Three Months Ended
June 30,
2008
Increase due to foreign exchange
$
Total
$
2,129
58
June 30,
2007
$
March 31,
2008
% chg
1,895
56
12.3
3.6
46
(34)
195
2,394
10
(40)
123
2,044
360.0
NM
NM
58.5
NM
17.1
43
(33)
(10)
1
2,129
3,227
137
2,687
126
20.1
8.7
118
(146)
213
3,549
48
(153)
346
3,054
1,765
83
1,699
75
(13)
(79)
29
1,785
14
(62)
1,726
7.0
NM
NM
NM
NM
12.4
89
(67)
185
1
2,394
10
2
(81)
110
2,044
NM
NM
NM
68.2
NM
17.1
2,980
163
8.3
(16.0)
2,980
300
2,835
230
5.1
30.4
145.8
NM
NM
(38.4)
16.2
122
(143)
105
3,227
(3.3)
NM
NM
102.9
10.0
240
(289)
318
3,549
45
(300)
244
3,054
433.3
NM
NM
30.3
16.2
3.9
10.7
1,666
75
5.9
10.7
1,666
158
1,679
141
(0.8)
12.1
69
(50)
5
1,765
NM
NM
NM
480.0
1.1
56
(129)
34
1,785
6
(121)
21
1,726
NM
NM
NM
61.9
3.4
(9.2)
109
127
(14.2)
NM
NM
NM
NM
(8.1)
(16)
(2)
91
3
(22)
7
115
NM
NM
NM
NM
(20.9)
114
(13.2)
(8)
91
1
(9)
9
115
NM
NM
NM
NM
(20.9)
6,395
257
12.9
8.2
151
(267)
437
7,819 $
73
(264)
478
6,939
34
106.8
NM
NM
(8.6)
NM
12.7 % $
109
(8)
(2)
99
6,829
292
234
(234)
98
1
7,220
2.7 %
7.4
$
Six Months Ended
June 30,
2007
% chg
1,897
106
NM
NM
NM
NM
3.4
2,074
54
June 30,
2008
2,074 $
112
99
7,220
278
% $
Sequential
% chg
5.7
(4.8)
(35.5)
NM
NM
345.9
NM
8.3 %
$
9.3 %
5.7
6,829
570
6,538
477
4.5
19.5
385
(501)
535
1
7,819 $
64
2
(524)
382
6,939
NM
NM
NM
40.1
NM
12.7 %
Domestic Retirement Services - Individual Variable Annuities
Guaranteed Benefits
June 30, 2008
Net Amount
at Risk
Account
Value
Guaranteed Minimum Death Benefit ("GMDB") Type (including Earnings Enhancement Benefit) (a):
Return of premium (b)
Reset (c)
Ratchet (d)
Roll-up (e)
Combination (f)
Return of premium, with earnings enhancement (g)
Ratchet, with earnings enhancement (h)
Roll-up, with earnings enhancement (i)
Combination with earnings enhancement (j)
Guaranteed Minimum Income Benefit ("GMIB") Type (k):
Roll-up (e)
No roll-up (l)
Guaranteed Minimum Account Value ("GMAV") Type (m):
Ten year waiting period
Guaranteed Minimum Withdrawal Benefit ("GMWB") Type (n):
Minimum amount guarantees (o)
Lifetime guarantees (p)
(a)
$
4,251
920
14,777
7,480
237
2
1,729
711
52
30,159
$
97
65
1,440
678
49
243
74
11
2,657
Retained
NAR
$
97
65
1,205
660
49
73
12
11
2,172
532
5,551
6,083
51
18
69
18
10
28
1,968
10
10
1,018
6,008
7,026
5
437
442
5
437
442
A guaranteed minimum death benefit is an amount paid from a variable annuity at death of the owner. This benefit protects beneficiaries from market volatility and may be different than the account value.
Each of these benefits may be subject to a maximum amount based on age of owner or dollar amount.
(b) Premium deposited into the contract.
(c) An amount that is reset to the account value, if greater, at a specified contract anniversary.
(d) An amount equal to the highest account value achieved on any contract anniversary.
(e) An amount equal to premiums deposited accumulated at a set interest rate.
(f) An amount equal to the greater of a ratchet or a roll-up.
(g) A return of premium benefit that also pays a percent of the earnings in the contract, if any.
(h) A ratchet benefit that also pays a percent of earnings in the contract, if any.
(i) A roll-up benefit that also pays a percent of earnings in the contract, if any.
(j) A combination benefit that also pays a percent of earnings in the contract, if any.
(k) A guaranteed minimum income benefit establishes a minimum amount available to be annuitized regardless of actual performance in the product. The benefit is not available until a set number of years after contract issue.
(l) An amount based on premiums deposited or other set amount.
(m) A guaranteed minimum account value ensures a return of premium invested at the end of 10 years. The amount is based on premium in a defined period.
(n) A guaranteed minimum withdrawal benefit establishes an amount that can be taken as withdrawals which can be taken over a fixed period or for life, regardless of market performance, even if the account value drops to zero.
(o) Amount is available over a fixed period.
(p) Amount is available over the life of the owner (and spouse, if elected).
35
Domestic Retirement Services - Individual Variable Annuities
Guaranteed Benefits (continued)
June 30,
2008
Other Data
S&P 500 Index value
Total Account Value
March 31,
2008
1,280
$
30,668
Dec. 31,
2007
1,323
$
30,830
Sept. 30,
2007
1,469
$
33,108
June 30,
2007
1,527
$
33,777
1,504
$
33,051
Account value by benefit type:
Guaranteed Minimum Death Benefits
Guaranteed Minimum Income Benefits
Guaranteed Minimum Account Value
Guaranteed Minimum Withdrawal Benefits
30,159
6,083
1,968
7,026
30,233
6,373
2,027
6,381
32,812
7,226
2,272
6,248
33,484
7,685
2,365
5,751
32,764
7,826
2,364
4,958
Net amount at risk:
2,657
69
10
442
2,548
84
9
357
1,250
39
1
45
1,098
28
6
1,160
36
6
Retained net amount at risk:
2,172
28
10
442
2,073
34
9
357
1,005
15
1
45
879
11
6
952
14
6
Liability for guaranteed benefits (GMDB & GMIB)
$
36
105
$
82
$
77
$
89
$
81
Notes
(1)
(2)
(3)
Premiums, deposits and other considerations represent aggregate business activity presented on a non-GAAP basis. Group
retirement products include mutual funds of $371 million, $330 million, $424 million, $795 million and $795 million for the three
months ended June 30, 2008 and 2007 and March 31, 2008, and the six months ended June 30, 2008 and 2007, respectively.
Both the three months and six months ended June 30, 2008 include a $31 million change in actuarial estimate which increased benefit
reserves and related DAC amortization.
Includes group retirement annuities and group mutual funds. The balance at the beginning and end of the period for Group Mutual
Funds are as follows:
(in millions)
Beginning Balance
Ending Balance
(4)
(5)
Three Months Ended
June 30,
June 30,
March 31,
2008
2007
2008
$8,062
$6,870
$8,154
8,313
7,602
8,062
Six Months Ended
June 30,
June 30,
2008
2007
$8,154
$6,403
8,313
7,602
Excludes internal replacements from one contract into a new contract. If included, deposits and surrenders for group retirement
products and individual fixed annuities would increase.
Surrender rates are based upon all benefits, surrenders and withdrawals except for death benefits and excluding internal
replacements from one contract into a new contract.
37
Foreign Life Insurance & Retirement Services Operating Statistics
Three Months Ended
June 30,
2008
Premiums, deposits and other considerations (1)
Revenues:
June 30,
2007
March 31,
2008
% Chg
$
18,388
$
15,437
19.1 %
$
18,532
$
7,691
$
6,503
18.3 %
$
7,447
Partnership income
Mutual funds (2)
Trading account losses (3)
Securities lending
Other
Investment expenses
2,556
9
76
(133)
5
129
(86)
2,556
606
3,162
2,180
38
103
(14)
3
57
(85)
2,282
1,079
3,361
17.2
(76.3)
(26.2)
NM
66.7
126.3
1.2
12.0
(43.8)
(5.9)
2,377
2
(80)
(88)
2
110
(113)
2,210
(762)
1,448
June 30,
2008
Sequential
% Chg
(0.8) %
3.3
%
Six Months Ended
June 30,
2007
% Chg
$
36,920
$
30,687
20.3 %
$
15,138
$
13,116
15.4 %
7.5
350.0
NM
NM
150.0
17.3
(23.9)
15.7
NM
118.4
4,933
11
(4)
(221)
7
239
(199)
4,766
(156)
4,610
4,164
86
163
(14)
5
123
(159)
4,368
1,876
6,244
18.5
(87.2)
NM
NM
40.0
94.3
25.2
9.1
NM
(26.2)
10,247
8,785
16.6
9,657
6.1
19,904
17,484
13.8
10,853
9,864
10.0
8,895
22.0
19,748
19,360
2.0
Insurance acquisition and other operating expenses (5)
6,345
606
6,951
2,220
9,171
5,494
1,079
6,573
1,655
8,228
15.5
(43.8)
5.8
34.1
11.5
6,119
(762)
5,357
2,081
7,438
3.7
NM
29.8
6.7
23.3
12,464
(156)
12,308
4,301
16,609
11,074
1,876
12,950
3,255
16,205
12.6
NM
(5.0)
32.1
2.5
Operating income excluding net realized capital gains (losses)
Operating income
1,682
(909)
773
1,636
18
1,654
2.8
NM
(53.3) %
1,457
(722)
735
15.4
NM
5.2 %
3,139
(1,631)
1,508
Foreign exchange effect on foreign growth:
Premiums, deposits and other considerations (1)
Growth in original currency *
Foreign exchange impact
Growth in original currency *
Foreign exchange impact
$
$
$
$
$
12.3 %
6.8
19.1
14.7 %
5.6
20.3
7.5
10.8
18.3 %
7.1
8.3
15.4 %
$
(See Accompanying Notes on Pages 53 - 54)
* Computed using a constant exchange rate for each period.
38
1,411,374
1.9
%
$
$
1,438,309
$
$
3,155
(217)
2,938
1,195,315
(0.5)
NM
(48.7) %
20.3 %
Foreign Life Insurance & Retirement Services Product Statistics
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Personal accident & health
Group products
Subtotal life insurance
$
8,693
1,879
1,464
12,036
Subtotal retirement services
8,514
1,518
1,024
11,056
2.1 %
23.8
43.0
8.9
$
9,452
1,728
1,513
12,693
(8.0) %
8.7
(3.2)
(5.2)
June 30,
2008
$
Six Months Ended
June 30,
2007
18,145
3,607
2,977
24,729
$
16,968
2,999
2,137
22,104
% Chg
6.9 %
20.3
39.3
11.9
2,311
4,041
6,352
1,258
3,123
4,381
83.7
29.4
45.0
1,541
4,298
5,839
50.0
(6.0)
8.8
3,852
8,339
12,191
2,375
6,208
8,583
62.2
34.3
42.0
18,388
15,437
19.1
18,532
(0.8)
36,920
30,687
20.3
4,634
1,855
1,002
7,491
4,105
1,487
690
6,282
12.9
24.7
45.2
19.2
4,512
1,691
996
7,199
2.7
9.7
0.6
4.1
9,146
3,546
1,998
14,690
8,272
2,960
1,443
12,675
10.6
19.8
38.5
15.9
79
121
200
118
103
221
208
240
448
246
195
441
7,691
6,503
18.3
7,447
3.3
15,138
13,116
15.4
1,721
109
149
1,979
1,534
87
118
1,739
12.2
25.3
26.3
13.8
1,479
92
130
1,701
16.4
18.5
14.6
16.3
3,200
201
280
3,681
2,919
170
202
3,291
9.6
18.2
38.6
11.9
Life insurance
Group products
Individual fixed annuities (6)
Life insurance (3)
Group products
Individual variable annuities (3)
640
(63)
577
Net investment income before policyholder income and trading gains (losses)
Life insurance (7)
Group products
Life insurance
Group products
Total insurance acquisition and other operating expenses excluding amortization of
deferred acquisition costs and VOBA related to net realized capital gains (losses) (5)
$
Sequential
% Chg
$
39
129
119
248
(38.8)
1.7
(19.4)
(15.4)
23.1
1.6
14.9
NM
6.3
599
(90)
509
6.8
NM
13.4
1,239
(154)
1,085
1,090
(13)
1,077
13.7
NM
0.7
4,766
(156)
4,610
4,368
1,876
6,244
9.1
NM
(26.2)
2,556
606
3,162
2,282
1,079
3,361
12.0
(43.8)
(5.9)
2,210
(762)
1,448
15.7
NM
118.4
4,142
1,028
643
5,813
3,814
804
430
5,048
8.6
27.9
49.5
15.2
4,081
892
679
5,652
1.5
15.2
(5.3)
2.8
8,223
1,920
1,322
11,465
7,732
1,593
917
10,242
6.4
20.5
44.2
11.9
511
20
531
435
10
445
17.5
100.0
19.3
463
2
465
10.4
NM
14.2
974
22
996
821
12
833
18.6
83.3
19.6
6,344
606
5,493
1,079
15.5
(43.8)
6,117
(762)
3.7
NM
6,950
6,572
5.8
5,355
1,206
524
381
2,111
811
447
283
1,541
48.7
17.2
34.6
37.0
1,118
474
328
1,920
98
56
154
94
47
141
4.3
19.1
9.2
101
75
176
2,265
557
(14)
543
(33.1)
17.5
(9.5)
$
1,682
34.7 %
$
2,096
12,461
(156)
11,075
1,876
12.5
NM
29.8
12,305
12,951
(5.0)
7.9
10.5
16.2
9.9
2,324
998
709
4,031
1,624
838
549
3,011
43.1
19.1
29.1
33.9
199
131
330
204
85
289
(3.0)
(25.3)
(12.5)
8.1 %
$
4,361
$
3,300
(2.5)
54.1
14.2
32.2 %
Foreign Life Insurance & Retirement Services Product Statistics (continued)
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Operating income (loss) excluding net realized capital gains (losses) and related
Life insurance
Group products
$
1,007
412
127
1,546
$
110
(18)
92
Life insurance
Group products
1,014
323
95
1,432
146
32
178
1,638
1,610
5
5
-
(0.7) %
27.6
33.7
8.0
$
(24.7)
NM
(48.3)
792
417
119
1,328
164
(48)
116
1.7
1,444
Sequential
% Chg
27.1 %
(1.2)
6.7
16.4
June 30,
2008
$
(32.9)
NM
(20.7)
Six Months Ended
June 30,
2007
1,799
829
247
2,875
$
274
(67)
207
13.4
3,082
1,835
699
179
2,713
% Chg
(2.0) %
18.6
38.0
6.0
311
85
396
(11.9)
NM
(47.7)
3,109
(0.9)
NM
NM
NM
NM
(6)
(6)
NM
NM
NM
NM
(1)
(1)
1
1
NM
NM
NM
NM
(49)
(49)
(26)
(26)
NM
NM
NM
(7)
(7)
NM
NM
NM
(56)
(56)
(47)
(47)
NM
NM
NM
(44)
(26)
NM
(13)
NM
(57)
(46)
NM
Life insurance
Group products
1,002
412
127
1,541
159
(18)
141
1,682
Life insurance
Group products
1,014
323
95
1,432
(1.2)
27.6
33.7
7.6
172
32
204
(7.6)
NM
(30.9)
1,636
798
417
119
1,334
171
(48)
123
2.8
1,457
25.6
(1.2)
6.7
15.5
1,800
829
247
2,876
(7.0)
NM
14.6
330
(67)
263
15.4
3,139
1,834
699
179
2,712
(1.9)
18.6
38.0
6.0
358
85
443
(7.8)
NM
(40.6)
3,155
(0.5)
(750)
(26)
(11)
(787)
141
2
(6)
137
NM
NM
NM
NM
(567)
(40)
(30)
(637)
NM
NM
NM
NM
(1,317)
(66)
(41)
(1,424)
(27)
(6)
(27)
(60)
NM
NM
NM
NM
(115)
(7)
(122)
(120)
1
(119)
NM
NM
NM
(113)
28
(85)
NM
NM
NM
(228)
21
(207)
(157)
(157)
NM
NM
NM
(909)
18
NM
(722)
NM
(1,631)
(217)
NM
1,155
325
89
1,569
(78.2)
18.8
30.3
(51.9)
231
377
89
697
9.1
2.4
30.3
8.2
52
33
85
(15.4)
NM
(77.6)
58
(20)
38
(24.1)
NM
(50.0)
Life insurance
Group products
252
386
116
754
Total operating income
44
(25)
19
$
773
40
$
1,654
(53.3) %
$
735
5.2 %
483
763
206
1,452
102
(46)
56
$
1,508
$
1,807
693
152
2,652
(73.3)
10.1
35.5
(45.2)
201
85
286
(49.3)
NM
(80.4)
2,938
(48.7) %
Japan and Other Product Statistics
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Group products
$
Life insurance
Group products
3,924
1,358
1,250
6,532
Life insurance
Group products
$
(12.3) %
13.6
(1.9)
(5.9)
$
8,399
2,553
2,524
13,476
$
7,322
2,081
1,801
11,204
14.7 %
22.7
40.1
20.3
60.9
(7.5)
9.3
3,525
8,000
11,525
2,034
6,178
8,212
73.3
29.5
40.3
12,551
9,874
27.1
12,450
0.8
25,001
19,416
28.8
1,568
1,336
802
3,706
1,350
1,041
539
2,930
16.1
28.3
48.8
26.5
1,328
1,177
750
3,255
18.1
13.5
6.9
13.9
2,896
2,513
1,552
6,961
2,566
2,069
1,114
5,749
12.9
21.5
39.3
21.1
70
120
190
101
102
203
187
237
424
217
193
410
3,896
3,133
24.4
3,489
11.7
7,385
6,159
19.9
562
69
116
747
500
52
96
648
12.4
32.7
20.8
15.3
561
52
99
712
0.2
32.7
17.2
4.9
1,123
121
216
1,460
955
102
158
1,215
17.6
18.6
36.7
20.2
606
(64)
542
528
(15)
513
14.8
NM
5.7
566
(91)
475
7.1
NM
14.1
1,172
(156)
1,016
1,033
(15)
1,018
13.5
NM
(0.2)
(30.7)
17.6
(6.4)
117
117
234
(40.2)
2.6
(18.8)
(13.8)
22.8
3.4
1,289
613
1,902
1,161
664
1,825
11.0
(7.7)
4.2
1,187
(437)
750
8.6
NM
153.6
2,476
176
2,652
2,233
1,382
3,615
10.9
(87.3)
(26.6)
1,211
683
497
2,391
1,104
515
333
1,952
9.7
32.6
49.2
22.5
1,176
561
496
2,233
3.0
21.7
0.2
7.1
2,387
1,244
993
4,624
2,078
1,023
675
3,776
14.9
21.6
47.1
22.5
486
18
504
398
10
408
22.1
80.0
23.5
437
1
438
11.2
NM
15.1
923
19
942
755
11
766
22.3
72.7
23.0
2,895
613
2,360
664
22.7
(7.7)
2,671
(437)
8.4
NM
5,566
176
4,542
1,382
22.5
(87.3)
3,508
3,024
16.0
2,234
57.0
5,742
5,924
(3.1)
472
377
327
1,176
341
335
240
916
38.4
12.5
36.3
28.4
415
339
275
1,029
13.7
11.2
18.9
14.3
887
716
602
2,205
667
618
467
1,752
33.0
15.9
28.9
25.9
90
63
153
89
45
134
1.1
40.0
14.2
96
67
163
186
130
316
192
83
275
of deferred acquisition costs and VOBA related to net realized capital gains (losses) (5)
4,475
1,195
1,274
6,944
1,351
4,155
5,506
$
% Chg
108.2
24.1
45.3
Individual variable annuities (3)
Life insurance
Group products
3.1 %
28.1
44.3
14.0
Six Months Ended
June 30,
2007
1,044
3,098
4,142
Life insurance (3)
Group products
3,806
1,060
866
5,732
June 30,
2008
2,174
3,845
6,019
$
Sequential
% Chg
1,329
41
$
1,050
26.6 %
$
1,192
(6.3)
(6.0)
(6.1)
11.5 %
$
2,521
$
2,027
(3.1)
56.6
14.9
24.4 %
Japan and Other Product Statistics (continued)
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Group products
$
447
345
94
886
$
405
243
62
710
10.4 %
42.0
51.6
24.8
$
298
329
78
705
Sequential
% Chg
50.0 %
4.9
20.5
25.7
100
(25)
75
142
32
174
(29.6)
NM
(56.9)
150
(42)
108
(33.3)
NM
(30.6)
961
884
8.7
813
18.2
5
5
-
Life insurance
Group products
June 30,
2008
$
Six Months Ended
June 30,
2007
745
674
173
1,592
$
250
(68)
182
1,774
776
530
130
1,436
% Chg
(4.0) %
27.2
33.1
10.9
303
84
387
(17.5)
NM
(53.0)
1,823
(2.7)
NM
NM
NM
NM
(6)
(6)
NM
NM
NM
NM
(1)
(1)
1
1
NM
NM
NM
NM
(50)
(50)
(21)
(21)
NM
NM
NM
(7)
(7)
NM
NM
NM
(57)
(57)
(42)
(42)
NM
NM
NM
(45)
(21)
NM
NM
(13)
NM
NM
(58)
(41)
NM
NM
442
345
94
881
405
243
62
710
9.1
42.0
51.6
24.1
304
329
78
711
45.4
4.9
20.5
23.9
150
(25)
125
163
32
195
(8.0)
NM
(35.9)
157
(42)
115
(4.5)
NM
8.7
905
11.2
826
21.8
Life insurance
Group products
1,006
Life insurance
Group products
746
674
173
1,593
307
(68)
239
1,832
775
530
130
1,435
(3.7)
27.2
33.1
11.0
345
84
429
(11.0)
NM
(44.3)
1,864
(1.7)
(298)
(7)
(10)
(315)
33
1
34
NM
NM
NM
NM
(247)
(28)
(7)
(282)
NM
NM
NM
NM
(545)
(35)
(17)
(597)
15
2
6
23
NM
NM
NM
NM
(107)
(7)
(114)
(129)
(129)
NM
NM
NM
(89)
28
(61)
NM
NM
NM
(196)
21
(175)
(164)
(164)
NM
NM
NM
(429)
(95)
NM
(343)
NM
(772)
(141)
NM
144
338
84
566
438
243
63
744
(67.1)
39.1
33.3
(23.9)
57
301
71
429
152.6
12.3
18.3
31.9
201
639
156
996
43
(32)
11
34
32
66
26.5
NM
(83.3)
68
(14)
54
(36.8)
NM
(79.6)
111
(47)
64
Life insurance
Group products
$
577
42
$
810
(28.8) %
$
483
19.5 %
$
1,060
$
790
532
136
1,458
(74.6)
20.1
14.7
(31.7)
181
84
265
(38.7)
NM
(75.8)
1,723
(38.5) %
Asia Product Statistics
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Group products
$
4,769
521
214
5,504
Life insurance
Group products
214
25
239
5,837
5,563
3,066
519
200
3,785
2,755
446
151
3,352
9
1
10
17
1
18
3,795
3,370
1,159
40
33
1,232
34
1
35
Life insurance (7)
Group products
$
(36.0)
NM
39.3
4,977
533
239
5,749
(4.2) % $
(2.3)
(10.5)
(4.3)
Six Months Ended
June 30,
2007
9,746
1,054
453
11,253
$
9,646
918
336
10,900
% Chg
1.0 %
14.8
34.8
3.2
190
143
333
(27.9)
37.1
0.0
327
339
666
341
30
371
4.9
6,082
(4.0)
11,919
11,271
5.7
11.3
16.4
32.5
12.9
3,184
514
246
3,944
(3.7)
1.0
(18.7)
(4.0)
6,250
1,033
446
7,729
5,706
891
329
6,926
9.5
15.9
35.6
11.6
12
2
14
(25.0)
(50.0)
(28.6)
21
3
24
29
2
31
12.6
3,958
(4.1)
7,753
6,957
11.4
1,034
35
22
1,091
12.1
14.3
50.0
12.9
918
40
31
989
26.3
0.0
6.5
24.6
2,077
80
64
2,221
1,964
68
44
2,076
5.8
17.6
45.5
7.0
29
1
30
17.2
0.0
16.7
33
1
34
3.0
0.0
2.9
67
2
69
57
2
59
17.5
0.0
16.9
(47.1)
0.0
(44.4)
(4.1)
NM
79.5
(27.6)
50.0
(22.6)
1,121
415
1,536
13.0
NM
(18.0)
1,023
(325)
698
23.9
NM
80.5
2,290
(332)
1,958
2,135
494
2,629
7.3
NM
(25.5)
2,931
345
146
3,422
2,710
289
97
3,096
8.2
19.4
50.5
10.5
2,905
331
183
3,419
0.9
4.2
(20.2)
0.1
5,836
676
329
6,841
5,654
570
242
6,466
3.2
18.6
36.0
5.8
25
2
27
37
37
(32.4)
NM
(27.0)
26
1
27
(3.8)
100.0
0.0
51
3
54
66
1
67
(22.7)
200.0
(19.4)
3,449
(7)
3,133
415
10.1
NM
3,446
(325)
6,895
(332)
6,533
494
5.5
NM
3,442
3,548
(3.0)
3,121
10.3
6,563
7,027
(6.6)
734
147
54
935
470
112
43
625
56.2
31.3
25.6
49.6
703
135
53
891
4.4
8.9
1.9
4.9
1,437
282
107
1,826
957
220
82
1,259
50.2
28.2
30.5
45.0
60.0
NM
(85.7)
5
8
13
60.0
NM
(92.3)
13
1
14
12
2
14
Life insurance
Group products
1.3 %
13.8
35.4
3.4
June 30,
2008
1,267
(7)
1,260
4,708
458
158
5,324
137
196
333
Life insurance
Group products
$
Sequential
% Chg
8
(7)
1
$
936
43
5
2
7
$
632
48.1 %
$
904
0.1
NM
3.5 % $
1,840
$
1,273
8.3
(50.0)
0.0
44.5 %
Asia Product Statistics (continued)
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Group products
$
560
67
33
660
$
609
80
33
722
(8.0) %
(16.3)
0.0
(8.6)
$
494
88
41
623
10
7
17
4
4
150.0
NM
325.0
677
726
(6.7)
631
-
-
NM
NM
NM
NM
-
1
1
(5)
(5)
NM
NM
NM
1
(5)
Life insurance
Group products
Life insurance
Group products
Life insurance
Group products
Life insurance
Group products
$
44
13.4 % $
(23.9)
(19.5)
5.9
(28.6)
NM
112.5
Six Months Ended
June 30,
2007
June 30,
2008
1,054
155
74
1,283
$
1,059
169
49
1,277
% Chg
(0.5) %
(8.3)
51.0
0.5
24
1
25
8
1
9
200.0
0.0
177.8
1,308
1,286
1.7
NM
NM
NM
NM
-
-
NM
NM
NM
NM
-
NM
NM
NM
1
1
(5)
(5)
NM
NM
NM
NM
-
NM
1
(5)
NM
494
88
41
623
13.4
(23.9)
(19.5)
5.9
1,054
155
74
1,283
1,059
169
49
1,277
(35.7)
NM
100.0
23
1
24
13
1
14
76.9
0.0
71.4
1,307
1,291
1.2
7.3
560
67
33
660
609
80
33
722
(8.0)
(16.3)
0.0
(8.6)
9
7
16
9
9
0.0
NM
77.8
676
731
(7.5)
631
7.1
(452)
(19)
(1)
(472)
108
2
(7)
103
NM
NM
NM
NM
(320)
(12)
(23)
(355)
NM
NM
NM
NM
(772)
(31)
(24)
(827)
(42)
(8)
(33)
(83)
NM
NM
NM
NM
(8)
(8)
9
1
10
NM
NM
NM
(24)
(24)
NM
NM
NM
(32)
(32)
7
7
NM
NM
NM
(480)
113
NM
(379)
NM
(859)
(76)
NM
108
48
32
188
717
82
26
825
(84.9)
(41.5)
23.1
(77.2)
174
76
18
268
1
7
8
18
1
19
(94.4)
NM
(57.9)
(10)
(6)
(16)
(76.8) % $
252
196
14
(6)
8
Sequential
% Chg
$
844
14
(6)
8
(37.9)
(36.8)
77.8
(29.9)
NM
NM
NM
(22.2) % $
282
124
50
456
(9)
1
(8)
448
$
(0.5)
(8.3)
51.0
0.5
1,017
161
16
1,194
(72.3)
(23.0)
212.5
(61.8)
20
1
21
NM
0.0
NM
1,215
(63.1) %
Foreign Life Insurance & Retirement Services Premium Statistics
First Year Premiums (9)
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Life insurance
Japan
China
Taiwan
Other Asia
Europe (10)
All other regions
Total
$
205
25
156
420
44
43
893
$
275
22
226
350
34
42
949
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
157
13
25
79
23
14
311
156
11
24
86
22
11
310
Group products
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
12
6
4
32
30
208
292
4
4
4
16
17
109
154
Total premiums
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total (11)
374
44
185
531
97
265
1,496
435
37
254
452
73
162
1,413
$
$
(25.5) % $
13.6
(31.0)
20.0
29.4
2.4
(5.9)
0.6
18.2
4.2
(8.1)
4.5
27.3
0.3
200.0
50.0
0.0
100.0
76.5
90.8
89.6
(14.0)
18.9
(27.2)
17.5
32.9
63.6
5.9 % $
Sequential
% Chg
Single Premiums
Three Months Ended
June 30,
2007
% Chg
June 30,
2008
29.7 %
0.0
(0.6)
9.7
2.3
4.9
10.7
146
9
26
77
24
12
294
7.5
44.4
(3.8)
2.6
(4.2)
16.7
5.8
67
1
1
5
4
78
2
1
4
3
10
NM
0.0
NM
NM
25.0
33.3
NM
26
1
5
4
36
157.7
0.0
NM
NM
0.0
0.0
116.7
6
6
5
32
27
183
259
100.0
0.0
(20.0)
0.0
11.1
13.7
12.7
4
25
200
123
352
1
17
135
69
222
NM
NM
300.0
47.1
48.1
78.3
58.6
2
20
242
91
355
NM
NM
100.0
25.0
(17.4)
35.2
(0.8)
530
54
64
775
1,498
150
3,071
349
120
271
532
1,667
104
3,043
20.6
10.0
(1.6)
7.9
3.2
12.3
10.0 %
45
$
463
53
60
749
1,293
23
2,641
$
$
347
119
270
515
1,528
32
2,811
33.4 % $
(55.5)
(77.8)
45.4
(15.4)
(28.1)
(6.0)
51.9
(55.0)
(76.4)
45.7
(10.1)
44.2
0.9 % $
368
100
182
652
2,180
40
3,522
Sequential
% Chg
158
25
157
383
43
41
807
310
40
188
492
94
236
1,360
$
March 31,
2008
394
101
184
672
2,427
135
3,913
25.8 %
(47.0)
(67.0)
14.9
(40.7)
(42.5)
(25.0)
34.5
(46.5)
(65.2)
15.3
(38.3)
11.1
(21.5) %
Foreign Life Insurance & Retirement Services Premium Statistics
First Year Premiums (9)
Six Months Ended
June 30,
June 30,
2008
2007
% Chg
Life insurance
Japan
China
Taiwan
Other Asia
Europe (10)
All other regions
Total
$
363
50
313
803
87
84
1,700
$
486
49
405
663
68
78
1,749
(25.3) %
2.0
(22.7)
21.1
27.9
7.7
(2.8)
June 30,
2008
$
831
153
242
1,401
3,473
63
6,163
Single Premiums
Six Months Ended
June 30,
2007
$
692
185
464
885
2,943
62
5,231
% Chg
20.1 %
(17.3)
(47.8)
58.3
18.0
1.6
17.8
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
303
22
51
156
47
26
605
309
19
51
178
43
22
622
(1.9)
15.8
0.0
(12.4)
9.3
18.2
(2.7)
93
2
1
10
8
114
4
1
8
7
20
NM
100.0
NM
NM
25.0
14.3
470.0
Group products
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
18
12
9
64
57
391
551
7
7
7
35
37
243
336
157.1
71.4
28.6
82.9
54.1
60.9
64.0
6
45
442
214
707
2
33
296
106
437
NM
NM
200.0
36.4
49.3
101.9
61.8
Total premiums
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total (11)
684
84
373
1,023
191
501
2,856
802
75
463
876
148
343
2,707
924
155
248
1,447
3,925
285
6,984
696
186
466
918
3,247
175
5,688
$
$
46
(14.7)
12.0
(19.4)
16.8
29.1
46.1
5.5 %
$
$
32.8
(16.7)
(46.8)
57.6
20.9
62.9
22.8 %
Foreign Life Insurance & Retirement Services
Premiums, Deposits and Other Considerations
Three Months Ended
June 30,
2008
Life insurance
Life insurance
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
$
June 30,
2007
2,085 $
226
1,546
3,040
1,583
213
8,693
1,804
264
1,865
2,623
1,760
198
8,514
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
1,181
39
164
325
114
56
1,879
918
33
146
283
94
44
1,518
Group products
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
138
8
33
173
488
624
1,464
Total life insurance
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
% Chg
Six Months Ended
March 31,
2008
June 30,
2008
28.6
18.2
12.3
14.8
21.3
27.3
23.8
1,033
34
194
311
108
48
1,728
14.3
14.7
(15.5)
4.5
5.6
16.7
8.7
2,214
73
358
636
222
104
3,607
1,807
60
321
544
185
82
2,999
22.5
21.7
11.5
16.9
20.0
26.8
20.3
118
5
28
127
345
401
1,024
16.9
60.0
17.9
36.2
41.4
55.6
43.0
134
11
27
201
529
611
1,513
3.0
(27.3)
22.2
(13.9)
(7.8)
2.1
(3.2)
272
19
60
374
1,017
1,235
2,977
241
8
54
274
734
826
2,137
12.9
137.5
11.1
36.5
38.6
49.5
39.3
3,404
273
1,743
3,538
2,185
893
12,036
2,840
302
2,039
3,033
2,199
643
11,056
19.9
(9.6)
(14.5)
16.7
(0.6)
38.9
8.9
2,932
306
2,150
3,338
3,097
870
12,693
16.1
(10.8)
(18.9)
6.0
(29.4)
2.6
(5.2)
6,336
579
3,893
6,876
5,282
1,763
24,729
5,513
533
4,639
5,816
4,320
1,283
22,104
14.9
8.6
(16.1)
18.2
22.3
37.4
11.9
2,050
103
34
108
16
2,311
954
195
19
78
12
1,258
114.9
(47.2)
78.9
38.5
33.3
83.7
1,239
166
24
98
14
1,541
65.5
(38.0)
41.7
10.2
14.3
50.0
3,289
269
58
206
30
3,852
1,873
309
32
142
19
2,375
75.6
(12.9)
81.3
45.1
57.9
62.2
Japan
Taiwan
Other Asia
Europe
Total
242
196
1
3,602
4,041
251
25
2,847
3,123
(3.6)
NM
NM
26.5
29.4
244
142
3,912
4,298
(0.8)
38.0
NM
(7.9)
(6.0)
486
338
1
7,514
8,339
525
30
5,653
6,208
(7.4)
NM
NM
32.9
34.3
Total retirement services
Japan
Korea
Taiwan
Other Asia
Europe
All other regions
Total (11)
2,292
103
196
35
3,710
16
6,352
1,205
195
25
19
2,925
12
4,381
90.2
(47.2)
NM
84.2
26.8
33.3
45.0
1,483
166
142
24
4,010
14
5,839
54.6
(38.0)
38.0
45.8
(7.5)
14.3
8.8
3,775
269
338
59
7,720
30
12,191
2,398
309
30
32
5,795
19
8,583
57.4
(12.9)
NM
84.4
33.2
57.9
42.0
$
18,388 $
15,437
19.1 % $
18,532
47
(0.8) %
$
3,850
487
3,475
5,866
4,043
424
18,145
36,920
$
$
3,465
465
4,264
4,998
3,401
375
16,968
% Chg
18.1 %
(13.4)
(19.9)
7.6
(35.7)
0.9
(8.0)
Total premiums, deposits and
other considerations
$
June 30,
2007
1,765
261
1,929
2,826
2,460
211
9,452
Retirement services
Japan
Korea
Other Asia
Europe
All other regions
Total
15.6 % $
(14.4)
(17.1)
15.9
(10.1)
7.6
2.1
Sequential
% Chg
30,687
11.1 %
4.7
(18.5)
17.4
18.9
13.1
6.9
20.3 %
Foreign Life Insurance & Retirement Services Reserves*
June 30,
2008
Life Insurance Reserves
Life insurance
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
$
38,464
4,130
41,139
51,794
11,740
2,930
150,197
June 30,
2007
$
30,733
2,981
34,095
44,182
8,690
2,654
123,335
March 31,
2008
% Chg
25.2 %
38.5
20.7
17.2
35.1
10.4
21.8
$
38,062
3,915
39,588
50,899
11,897
2,906
147,267
Sequential
% Chg
1.1 %
5.5
3.9
1.8
(1.3)
0.8
2.0
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
6,188
104
2,129
1,315
278
64
10,078
4,514
69
1,716
998
213
53
7,563
37.1
50.7
24.1
31.8
30.5
20.8
33.3
5,969
91
2,022
1,306
263
64
9,715
3.7
14.3
5.3
0.7
5.7
0.0
3.7
Group products
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
2,958
7
50
1,606
2,429
5,820
12,870
2,753
4
43
1,333
1,724
4,129
9,986
7.4
75.0
16.3
20.5
40.9
41.0
28.9
3,073
7
47
1,588
2,281
4,892
11,888
(3.7)
0.0
6.4
1.1
6.5
19.0
8.3
47,610
4,241
43,318
54,715
14,447
8,814
173,145
38,000
3,054
35,854
46,513
10,627
6,836
140,884
Total life insurance reserves
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
$
$
*Certain amounts have been reclassified in 2007 to conform to the 2008 presentation.
48
25.3
38.9
20.8
17.6
35.9
28.9
22.9 %
$
47,104
4,013
41,657
53,793
14,441
7,862
168,870
1.1
5.7
4.0
1.7
0.0
12.1
2.5 %
Foreign Life Insurance & Retirement Services Reserves (continued)*
June 30,
2008
Retirement Services Reserves
Japan
Korea
Other Asia
Europe
All other regions
Total
$
Japan
Taiwan
Other Asia
Europe
All other regions
Total
Policy and Contract Claims Reserves
Japan
China
Taiwan
Other Asia
Europe
All other regions
Total
Group accident & health
Japan
Taiwan
Other Asia
Europe
All other regions
Total
$
47,624
1,923
452
2,045
426
52,470
June 30,
2007
$
41,467
1,939
378
1,802
360
45,946
14.8 %
(0.8)
19.6
13.5
18.3
14.2
6,433
413
70
23,097
30,013
5,527
21
64
20,337
25,949
16.4
NM
9.4
13.6
NM
15.7
283
8
64
136
88
38
617
264
6
57
109
82
27
545
4
27
9
60
100
4
18
6
77
105
$
*Certain amounts have been reclassified in 2007 to conform to the 2008 presentation.
49
March 31,
2008
% Chg
$
7.2
33.3
12.3
24.8
7.3
40.7
13.2
NM
0.0
50.0
50.0
(22.1)
(4.8) %
$
Sequential
% Chg
45,551
2,051
449
1,988
679
50,718
4.6 %
(6.2)
0.7
2.9
(37.3)
3.5
6,231
214
78
22,118
28,641
3.2
93.0
(10.3)
4.4
NM
4.8
290
7
69
115
86
40
607
(2.4)
14.3
(7.2)
18.3
2.3
(5.0)
1.6
4
22
10
92
128
NM
0.0
22.7
(10.0)
(34.8)
(21.9) %
Foreign Retirement Services Spread Information
Three Months Ended
June 30,
2008
Spread information
Japan (a)
Partnerships/other enhancements
Total net investment income (b)
$
$
513
513
June 30,
2007
$
$
March 31,
2008
% Chg
434
434
18.2 %
NM
18.2 %
$
$
June 30,
2008
Sequential
% Chg
489
489
4.9 %
NM
4.9 %
$
$
Six Months Ended
June 30,
2007
1,002
1,002
$
$
862
862
% Chg
16.2 %
NM
16.2 %
Base yield (a)
Total
5.20 %
0.00 %
5.20 %
5.02 %
0.00 %
5.02 %
5.24 %
0.00 %
5.24 %
5.22 %
0.00 %
5.22 %
5.02 %
0.00 %
5.02 %
Cost of funds (b) (c)
Net spread rate, as reported (c)
3.66 %
1.54 %
3.43 %
1.59 %
3.58 %
1.66 %
3.61 %
1.61 %
3.44 %
1.58 %
1.54 %
1.59 %
(3.1) %
1.61 %
1.58 %
1.9 %
24
(1)
23
16.7 %
NM
21.7 %
47
(1)
46
19.1 %
NM
21.7 %
Korea
Total net investment income (b)
$
$
28
28
$
$
1.66 %
$
$
(7.2) %
28
28
0.0 %
NM
0.0 %
$
$
56
56
$
$
Base yield (c)
Total
5.54 %
0.00 %
5.54 %
5.40 %
(0.19) %
5.21 %
5.41 %
0.00 %
5.41 %
5.49 %
0.00 %
5.49 %
5.36 %
(0.10) %
5.26 %
Cost of funds (b) (c)
Net spread rate, as reported (c)
4.78 %
0.76 %
4.59 %
0.62 %
4.75 %
0.66 %
4.76 %
0.73 %
4.56 %
0.70 %
0.76 %
0.81 %
(6.2) %
0.73 %
0.80 %
Net flows (d)
Japan
Korea
Japan
Surrender rates
Japan
Korea
0.66 %
$
1,237
(72)
$
165
163
NM %
NM
$
553
112
$
154
$
172
(10.5) %
$
144
15.2
%
123.7 %
NM
6.9
%
$
1,790
40
$
56
242
NM %
(83.5)
$
298
$
337
(11.6) %
2.4 %
3.8 %
5.0 %
4.6 %
2.8 %
4.6 %
2.6 %
4.2 %
6.5 %
5.9 %
33.7 %
7.1 %
9.9 %
21.9 %
7.4 %
(a) Excludes acquired block of Yen annuities no longer being sold.
(b) For Japan and Korea, the net investment income and cost of funds are translated into U.S. dollars at the average exchange rates for the quarter while the
denominator is translated at the quarter ending exchange rate. This can cause fluctuations of a few basis points from quarter to quarter if there is a sharp
change in the appreciation/depreciation during a quarter.
(c) For Japan and Korea, the calculation methodology for spread information takes the month-end assets/liabilities that are then averaged. Quarterly figures use
two point averages (beginning of quarter and end of quarter) while six months figures use three point averages (beginning of year plus each of the quarter ends).
(d) Net flows are defined as deposits received less benefits, surrenders, withdrawals and death benefits. For Japan and Korea, net flows are calculated at the
average exchange rate for the quarter and include the acquired block of Yen annuities no longer being sold.
50
(8.8) %
Three Months Ended
June 30,
2007
% chg
June 30,
2008
Life insurance
Other (12)
$
Other (12)
Group products
Other (12)
$
17,590
781
$
14,802
840
18.8 % $
(7.0)
March 31,
2008
18,198
781
(3.3) %
0.0
NM
NM
NM
NM
NM
NM
2.7
(5)
(527)
275
(102)
57
18,069
8
(338)
56
75
(18)
15,425
NM
NM
NM
391.1
NM
NM
17.1
6
(8)
(524)
(42)
640
(1,461)
17,590
6,010
376
4,876
350
23.3
7.4
5,601
341
(258)
(106)
6,022
(230)
(93)
4,903
NM
NM
NM
NM
NM
22.8
(228)
279
17
6,010
553
71
139
22
297.8
222.7
474
107
1
(30)
(1)
21
(2)
613 $
(25)
4
140
NM
NM
NM
NM
425.0
NM
337.9 % $
(54)
26
553
51
Sequential
% chg
Six Months Ended
June 30,
2007
% chg
June 30,
2008
$
18,198
1,562
$
14,519
1,586
25.3 %
(1.5)
1
(8)
(1,051)
233
538
(1,404)
18,069
(1)
19
(701)
51
(24)
(24)
15,425
NM
NM
NM
356.9
NM
NM
17.1
5,601
717
4,769
735
17.4
(2.4)
(486)
173
17
6,022
(406)
(195)
4,903
NM
NM
NM
NM
NM
22.8
16.7
(33.6)
474
178
200
35
137.0
408.6
NM
NM
NM
NM
(19.2)
NM
10.8 %
1
(84)
(1)
47
(2)
613 $
(43)
2
(54)
140
NM
NM
NM
NM
NM
NM
337.9 %
7.3
10.3
NM
NM
NM
NM
NM
0.2
$
Deferred Policy Acquisition Costs, Sales Inducements and Value of Business Acquired (continued)
Three Months Ended
June 30,
2007
% chg
June 30,
2008
Other
$
Other
Total
Other (12)
$
1,927
101
$
March 31,
2008
Sequential
% chg
June 30,
2008
1,579
75
22.0 % $
34.7
1,954
87
(1.4) %
16.1
49
(1)
(44)
510
(11)
2,531
26
13
(79)
494
(25)
2,083
88.5
NM
NM
3.2
NM
NM
21.5
7
2
(90)
(45)
12
1,927
NM
NM
NM
NM
NM
NM
31.3
56
1
(134)
465
1
2,531
47
13
(163)
487
2,083
19.1
(92.3)
NM
(4.5)
NM
NM
21.5
676
54
527
34
28.3
58.8
629
61
7.5
(11.5)
629
115
505
79
24.6
45.6
(19)
1
712
(13)
(5)
543
NM
NM
NM
NM
NM
NM
31.1
(37)
23
676
NM
NM
NM
NM
(95.7)
NM
5.3
(56)
24
712
(29)
(12)
543
NM
NM
NM
NM
NM
NM
31.1
26,756
1,383
21,923
1,321
22.0
4.7
26,856
1,377
44
(878)
784
(197)
55
27,947 $
26
21
(685)
550
(44)
(18)
23,094
69.2
NM
NM
42.5
NM
NM
21.0 % $
13
(6)
(933)
(87)
980
(1,444)
26,756
52
$
(0.4)
0.4
238.5
NM
NM
NM
NM
NM
4.5 %
$
1,954
188
Six Months Ended
June 30,
2007
% chg
$
1,564
135
24.9 %
39.3
26,856
2,760
21,557
2,570
24.6
7.4
57
(6)
(1,811)
697
783
(1,389)
27,947 $
46
32
(1,342)
538
(229)
(78)
23,094
23.9
NM
NM
29.6
NM
NM
21.0 %
Notes
(1)
(2)
(3)
(4)
(5)
Premiums, deposits and other considerations represent aggregate business activity presented on a non-GAAP basis.
For the three months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007, $10
million, $20 million, $(27) million, $(16) million and $26 million, respectively, were allocated to policyholder accounts through
incurred policy losses and benefits.
Consists of trading account losses associated with certain investment-link products in the UK. Life insurance includes $(56) million,
$(3) million and $(59) million for the three months ended June 30, 2008 and March 31, 2008 and the six months ended June 30, 2008,
respectively. Individual variable annuities includes $(77) million, $(14) million, $(85) million, $(162) million and $(14) million for the
three months ended June 30, 2008 and 2007 and March 31, 2008 and the six months ended June 30, 2008 and 2007, respectively.
Relates principally to assets held in various trading securities accounts that did not qualify for separate account treatment under SOP
03-1. These amounts are offset by an equal change included in incurred policy losses and benefits.
AIG elected on January 1, 2008 to apply fair value accounting to a closed block of business in Japan and an investment-linked product
sold primarily in Asia. Effectively, the adoption of fair value accounting changed the classification of the deferral and amortization of
acquisition costs (change in DAC) from an expense to a component of the change in fair value liabilities. Insurance acquisition and
operating expenses in 2008 therefore excludes the change in DAC component, while in 2007 includes the change in DAC component.
In order to compute expense growth between periods on a comparable basis, the change in DAC was added back in the tables below to
reported expenses in the prior year periods as a proxy for fair value basis reporting. Expense growth excluding the effect of foreign
exchange, amortization of deferred acquisition costs and VOBA related to realized capital gains (losses) and the effect of adopting
FAS159 is:
Japan and Other
Asia
(6)
(7)
(8)
2008 % Change
Three months
Six months
14%
16%
12%
12%
17%
21%
For the three months ended June 30, 2008 and 2007 and March 31, 2008 and six months ended June 30, 2008 and 2007, Japan
individual fixed annuities premiums and other considerations include a charge of $(43) million, $(10) million, $(10) million, $(53)
million and $(28) million, respectively, for amortization of unearned revenue liability associated with net realized capital losses. The
charges are partially offset by a benefit to deferred acquisition costs, VOBA and sales inducements related to net realized capital
losses.
Both the three months and six months ended June 30, 2008 include a benefit of $6 million and the six months ended June 30, 2007
includes a charge of $50 million related to balance sheet reconciliation remediation activities.
The following tables summarize the effect of infrequent or unusual items on operating income before net realized capital gains
(losses):
(in millions)
Trading account losses (UK)
Effect of remediation activities
Change in actuarial estimate
Japan regulatory claim review
Operating income excluding unusual items
Japan and Other
(in millions)
Trading account losses (UK)
Japan regulatory claim review
Asia
(in millions)
% Change
2008
2007
$1,682
$1,636
2.8%
(133)
(14)
(25)
13
(26)
$1,840
$1,663
10.6%
% Change
2008
2007
$3,139
$3,155
(0.5)%
(221)
(14)
(25)
(50)
8
11
(63)
$3,377
$3,271
3.2%
% Change
2008
2007
$1,006
$905
11.2%
(133)
(14)
(10)
19
(26)
$1,149
$926
24.1%
% Change
2008
2007
$1,832
$1,864
(1.7)%
(221)
(14)
(10)
2
16
(63)
$2,061
$1,925
7.1%
% Change
2008
2007
$676
$731
(7.5)%
(15)
(6)
$691
$737
(6.2)%
% Change
2008
2007
$1,307
$1,291
1.2%
(15)
(50)
6
(5)
$1,316
$1,346
(2.2)%
53
Notes (continued)
(9) Represents premium recorded within the first policy year from new sales other than single premiums.
(10) Includes Guaranteed Income Bonds (GIBs) sales of $1.3 billion, $1.5 billion, $2.1 billion, $3.4 billion and $2.8 billion for the
three months ended June 30, 2008 and 2007 and March 31, 2007, and the six months ended June 30, 2008 and 2007,
respectively.
(11) The following tables reflect first year premiums, single premiums and annuity deposits by reporting segment with growth rates
presented in US dollars and original currency.
Foreign Life Insurance &
Retirement Services
(in millions)
First year premiums
Single premiums
Annuity deposits
Japan and Other
(in millions)
First year premiums
Single premiums
Annuity deposits
Asia
(in millions)
First year premiums
Single premiums
Annuity deposits
Three Months Ended
June 30,
2008
$1,496
3,071
6,352
2007
$1,413
3,043
4,381
Three Months Ended
June 30,
2008
$734
2,178
6,018
2007
$673
2,121
4,141
Three Months Ended
June 30,
2008
$762
893
334
2007
$740
922
240
Percentage
Increase/(Decrease)
US$
6%
1
45
Original
Currency
(2)%
(4)
42
Six Months Ended
June 30,
2008
$2,856
6,984
12,191
2007
$2,707
5,688
8,583
Percentage
Increase/(Decrease)
Original
Currency
US$
9%
(4)%
3
(1)
45
43
Six Months Ended
June 30,
Percentage
Increase/(Decrease)
Original
US$
Currency
3%
-%
(3)
(9)
39
34
Six Months Ended
June 30,
2008
$1,376
5,134
11,525
2008
$1,480
1,850
666
2007
$1,293
4,118
8,212
2007
$1,414
1,570
371
(12) For the three months ended March 31, 2008, Other represents the cumulative effect of adoption of FAS 159.
54
Percentage
Increase/(Decrease)
US$
1%
22
20
Original
Currency
(1)%
18
40
Percentage
Increase/(Decrease)
Original
Currency
US$
6%
(4)%
25
21
40
38
Percentage
Increase/(Decrease)
Original
US$
Currency
5%
2%
18
12
80
76
Life Insurance & Retirement Services Partnership Income
Three Months Ended
June 30,
2008
Foreign life insurance & retirement services:
Life insurance
Group Products
Total
$
Domestic life insurance:
Excluding Synfuels:
Life insurance
Home service
Payout annuities
Subtotal excluding Synfuels
Synfuels *:
Life insurance
Home service
Subtotal Synfuels
Total
Domestic retirement services:
Total
Total life insurance & retirement services
$
June 30,
2007
% Chg
Six Months Ended
March 31,
2008
Sequential
% Chg
29
3
1
5
38
(79.3) % $
(33.3)
NM
(80.0)
(76.3)
2
(2)
2
2
200.0 %
NM
NM
(50.0)
350.0
(12)
2
4
(6)
55
5
60
NM
(60.0)
NM
NM
24
3
4
31
NM
(33.3)
0.0
NM
(3)
(1)
(4)
(28)
(14)
(42)
NM
NM
NM
(2)
(2)
(4)
(10)
18
NM
27
31
54
(2)
83
105
145
3
253
(70.5)
(62.8)
NM
(67.2)
13
1
(3)
11
138.5
NM
NM
NM
309
(73.5) % $
40
105.0 %
6
2
1
9
82
$
$
* Investment in certain limited liability companies that invest in synthetic fuel production facilities as a means of generating income tax credits.
55
June 30,
2008
June 30,
2007
% Chg
66
10
1
9
86
(87.9) %
NM
NM
(66.7)
(87.2)
12
5
8
25
78
9
87
(84.6)
(44.4)
NM
(71.3)
NM
NM
NM
(5)
(3)
(8)
(50)
(25)
(75)
NM
NM
NM
NM
17
12
41.7
44
55
(5)
94
154
226
3
383
(71.4)
(75.7)
NM
(75.5)
481
(74.6) %
$
$
8
3
11
122
$
$
Life Insurance & Retirement Services Realized Capital Gains (Losses)
Three Months Ended
June 30,
2008
Foreign life insurance & retirement services:
Transactions gains (losses)
Other-than-temporary impairments:
Severity
Lack of intent to hold to recovery
Foreign currency declines
Issuer-specific credit events
Adverse projected cash flows on structured securities
Total other-than-temporary impairments
Foreign exchange transactions
Derivative instruments
Other
Total
$
Domestic life insurance:
Severity
Other
Total
Domestic retirement services:
Severity
Other
Total
Total life insurance & retirement services
$
211
June 30,
2007
$
155
(323)
(51)
(633)
(51)
(13)
(1,071)
(170)
(32)
153
(909)
(35)
(92)
(4)
(131)
(25)
52
(33)
18
(16)
(54)
(1,155)
(89)
(51)
(145)
(1,440)
6
58
16
(1,376)
(45)
(4)
(49)
41
46
(16)
(52)
(74)
(1,896)
(97)
(174)
(515)
(2,682)
14
15
(20)
(2,725)
(131)
(7)
(6)
(144)
1
(52)
(12)
(281)
(5,010)
$
56
(279)
Six Months Ended
March 31,
2008
$
76
June 30,
2008
$
(333)
(264)
(401)
(13)
(5)
(1,016)
(23)
115
126
(722)
9
(1,004)
(179)
(32)
(4)
(1,219)
(2)
(125)
49
(1,288)
12
(1,819)
(248)
(67)
(23)
(2,157)
(15)
(200)
1
(2,359)
$
(4,369)
$
287
June 30,
2007
$
167
(656)
(315)
(1,034)
(64)
(18)
(2,087)
(193)
83
279
(1,631)
(96)
(304)
(62)
(462)
90
(65)
53
(217)
(7)
(34)
(2,159)
(268)
(83)
(149)
(2,659)
4
(67)
65
(2,664)
(62)
(6)
(68)
2
30
42
(28)
(40)
(44)
(3,715)
(345)
(241)
(538)
(4,839)
(1)
(185)
(19)
(5,084)
(140)
(39)
(7)
(186)
7
(47)
(20)
(290)
(9,379)
$
(535)
Financial Services Operating Statistics
Three Months Ended
June 30,
2008
June 30,
2007
March 31,
2008
% Chg
Sequential
% Chg
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
Revenues:
Aircraft Leasing
$
1,316
$
1,156
13.8 %
$
1,216
8.2 %
$
2,532
$
2,243
12.9 %
Capital Markets:
Excluding unrealized market valuation losses,
credit valuation adjustment and FAS 133 (1)
35
Unrealized market valuation losses (2)
Credit valuation adjustment (3)
Subtotal
Consumer Finance (4)
Other, including intercompany adjustments
Total revenues excluding FAS 133 and net
realized capital gains (losses)
(92.4)
774
(33.9)
-
NM
(9,107)
NM
(14,672)
-
NM
(518)
-
NM
(37)
NM
(555)
-
NM
(6,048)
461
NM
(8,667)
NM
(14,715)
774
NM
1,039
894
16.2
1,007
3.2
2,046
1,777
15.1
113
77
46.8
111
1.8
224
147
52.4
(3,580)
FAS 133 - Capital Markets (5) (6)
2,588
(40)
Total revenues
461
(5,565)
(528)
15
$
(3,605)
63
477
(92.7)
512
NM
(6,333)
NM
(9,913)
NM
(76)
NM
(116)
(76.2)
(151)
$
2,123
NM %
$
$
190
85.3 %
$
(6,560)
NM
4,941
(136)
NM %
$
29.4 %
$
(10,165)
NM
(613)
NM
(4)
NM
$
4,324
NM %
$
383
62.9 %
Aircraft Leasing
$
352
272
624
Capital Markets:
Excluding unrealized market valuation losses,
credit valuation adjustment and FAS 133 (1)
Unrealized market valuation losses (2)
Credit valuation adjustment (3)
Subtotal
Consumer Finance (4)
Other, including intercompany adjustments
Total operating income (loss) excluding FAS 133
and net realized capital gains (losses)
273
NM
426
(69.0)
-
NM
(9,107)
NM
(14,672)
-
NM
(518)
-
NM
(37)
NM
(555)
-
NM
(6,244)
273
NM
(8,851)
NM
(15,095)
426
NM
(22)
58
NM
24
2
132
(98.5)
34
(9)
NM
10
44
15
193.3
(5,880)
FAS 133 - Capital Markets (5) (6)
(40)
(161)
(5,565)
15
$
(5,905)
NM
132
NM
240.0
512
NM
(8,545)
NM
(14,425)
(528)
NM
(76)
NM
(116)
63
$
293
47
57
(76.2)
NM %
(151)
$
(8,772)
NM
NM %
(136)
$
(14,677)
956
NM
(613)
NM
(4)
$
339
NM
NM %
International Lease Finance Corporation (ILFC)
Aircraft Leases and Orders
June 30, 2008
Number of Aircraft
Aircraft Type:
Airbus:
A300-600R
A310-300
A319
A320-200
A321-100
A321-200
A330-200
A330-300
A340-300
A340-600
A350-800
A350-900
A380 (9)
Boeing:
737-300/400/500
737-600/700/800
747-200F
747-300
747-400
747-400ERF
757-200
767-200
767-300
777-200B
777-300
787-800
787-900
McDonnell Douglas:
MD-11
MD-83
Total
In Fleet (8)
Year of Delivery
Orders
Orders
2008
2009
2010
2011-2017
6
7
121
164
12
66
58
28
15
13
0
0
0
490
0
0
13
17
0
10
5
1
0
0
12
8
10
76
0
0
13
17
0
10
5
1
0
0
12
8
10
76
0
0
4
3
0
0
0
1
0
0
0
0
0
8
0
0
8
11
0
9
5
0
0
0
0
0
0
33
0
0
1
3
0
1
0
0
0
0
0
0
0
5
0
0
0
0
0
0
0
0
0
0
12
8
10
30
56
193
1
2
13
4
64
3
51
39
31
0
0
457
0
25
0
0
0
0
0
0
0
0
4
67
7
103
0
25
0
0
0
0
0
0
0
0
4
67
7
103
0
9
0
0
0
0
0
0
0
0
1
0
0
10
0
6
0
0
0
0
0
0
0
0
3
0
0
9
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
10
0
0
0
0
0
0
0
0
0
67
7
84
8
1
9
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
956
179
179
18
42
5
114
100%
98%
40%
Orders Placed (10)
58
Consumer Finance Operating Statistics
Three Months Ended
June 30,
2008
June 30,
2007
March 31,
2008
% Chg
Sequential
% Chg
June 30,
2008
Six Months Ended
June 30,
2007
% Chg
Revenues:
American General Finance (4)
$
AIG Consumer Finance Group, Inc.
AIG Federal Savings Bank
Total revenues excluding net realized
capital gains (losses)
Total revenues
758
$
8.9 %
$
757
0.1 %
$
1,515
$
1,399
8.3 %
269
182
47.8
236
14.0
505
347
45.5
12
16
(25.0)
14
(14.3)
26
31
(16.1)
1,039
894
16.2
2,046
1,777
17
NM
(11)
$
696
1,028
1,007
(76)
3.2
NM
(87)
$
911
12.8 %
$
931
10.4 %
$
$
43
NM %
$
11
NM %
$
1,959
(21)
15.1
NM
$
1,756
11.6 %
$
93
NM %
American General Finance (4)
$
Total operating income (loss) excluding net
realized capital gains (losses)
(40)
15
12
25.0
11
36.4
26
33
(21.2)
3
3
0.0
2
50.0
5
6
(16.7)
(22)
58
NM
24
NM
2
132
(98.5)
(11)
$
(29)
(33)
$
17
NM
75
NM %
59
$
(76)
NM
(52)
NM %
(87)
$
(85)
$
(21)
NM
111
NM %
Consumer Finance Other Data
June 30,
2008
Three Months Ended / As of
June 30,
March 31,
2007
2008
Six Months Ended / As of
June 30,
June 30,
2008
2007
% Chg
Sequential
% Chg
American General Finance
Receivables (12):
Real Estate
Non Real Estate
Retail Sales Finance
Total receivables
Allowance for loan losses
Net Receivables
$
$
20,092
4,207
2,240
26,539
(803)
25,736
$
$
19,176
3,729
1,989
24,894
(508)
24,386
$
$
20,270
4,169
2,223
26,662
(680)
25,982
(0.9) %
0.9
0.8
(0.5)
18.1
(0.9) %
$
$
20,092
4,207
2,240
26,539
(803)
25,736
$
$
19,176
3,729
1,989
24,894
(508)
24,386
4.8 %
12.8
12.6
6.6
58.1
5.5 %
Credit Ratios:
Delinquencies - 60+:
Real Estate
Non Real Estate
Total Delinquencies - 60+
3.50 %
4.42
2.48
3.56
1.95 %
3.52
1.70
2.18
2.99 %
4.09
2.29
3.11
3.50 %
4.42
2.48
3.56
1.95 %
3.52
1.70
2.18
Net Charge-off:
Real Estate
Non Real Estate
Total Net Charge-off
0.93
4.95
3.02
1.73
3.02 %
0.41
3.68
2.11
1.02
2.04 %
0.68
5.04
2.89
1.53
2.55 %
0.81
4.99
2.96
1.64
3.02 %
0.37
3.80
2.00
1.00
2.04 %
Total receivables
$
Net Receivables
6,013
$
(313)
$
5,700
4,023
$
(204)
$
3,819
5,166
(289)
$
4,877
16.4 %
$
8.3
6,013
$
(313)
16.9 %
$
143
(2)
20.3 %
0.0
$
141
20.6
5,700
4,023
(204)
$
3,819
49.5 %
53.4
49.3 %
Total receivables
$
Net Receivables
Total Net Receivables (13)
172
(2)
$
170
$
31,606
136
(1)
$
135
$
28,340
60
$
31,000
2.0 %
172
(2)
$
170
$
31,606
136
(1)
135
$
28,340
26.5 %
100.0
25.9
11.5 %
Financial Services
Notes
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Includes net unrealized market valuation gains of $130 million in both the three months ended March 31, 2008 and the
six months ended June 30, 2008 related to certain credit default swaps and embedded credit derivatives in credit-linked
notes.
Includes unrealized market valuation losses on Capital Markets’ super senior credit default swap portfolio.
Represents the effect of changes in credit spreads on the valuation of Capital Markets’ assets of $(362) million and
$(3.0) billion and liabilities of $(156) million and $2.5 billion, (but excludes $44 million and $109 million of gains on
the super senior credit default portfolio reported with the unrealized market valuation loss), in the three and six months
ended June 30, 2008, respectively. The losses on the assets were primarily driven by continued significant widening of
credit spreads on collateralized debt obligations (CDOs) and asset-backed securities (ABS) products, which represent a
significant portion of Capital Markets’ investment portfolio. While historically AIG’s credit spreads and those on its
assets moved in a similar fashion, that relationship did not exist in the second quarter of 2008. Credit spreads on ABS
and CDO investments widened significantly more than the widening in AIG’s credit spreads. Furthermore, while
AIG’s credit spreads increased during the second quarter of 2008, the credit valuation adjustment on its liabilities
decreased due to a decline in Capital Markets’ outstanding debt obligation and the shortened maturity of its liabilities
resulting in a further loss to earnings.
The three and six months ended June 30, 2007 includes pre-tax charges of $50 million and $178 million, respectively,
in connection with domestic consumer finance’s mortgage banking activities. Based on current evaluation of the
estimated cost of implementing the Supervisory Agreement entered into with the Office of Thrift Supervision, partial
reversals of these prior year charges of $18 million, $25 million and $43 million, respectively, are included in the threemonth period ended March 31, 2008 and the three- and six-month periods ended June 30, 2008. The six months ended
June 30, 2007 also include a recovery of $65 million from a favorable out of court settlement. In addition operating
income for the three and six months ended June 30, 2008 includes a pre-tax charge of $27 million resulting from
consumer finance decision to cease its wholesale mortgage originations.
Includes the gains (losses) from hedging activities that did not qualify for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses. These amounts result primarily from interest rate and foreign
currency derivatives that are effective economic hedges of borrowings.
The three and six months ended June 30, 2007 include out of period charges of $431 million and $326 million,
respectively, including a $380 million charge in both periods, to reverse net gains recognized on transfers of available
for sale securities among legal entities consolidated within AIGFP. The net loss in the first six months of 2007 includes
a $166 million reduction in the fair value of certain derivatives that are an integral part of, and economically hedge,
certain structured transactions potentially affected by proposed guidance by the U.S. Treasury Department affecting the
ability to claim foreign tax credits.
Net realized capital gains (losses) are as follows;
(in millions)
Aircraft Leasing
Consumer Finance
Other
Total
(8)
(9)
(10)
(11)
(12)
(13)
June 30, 2008
$(18)
(11)
44
$15
Three Months Ended
June 30, 2007 March 31, 2008
$17
$(51)
17
(76)
29
(24)
$63
$(151)
Six Months Ended
June 30, 2008 June 30, 2007
$(69)
$(12)
(87)
(21)
20
29
$(136)
$(4)
These amounts result primarily from the effect of hedging activities that did not qualify for hedge accounting treatment
under FAS 133, including the related foreign exchange gains and losses. In second quarter 2007, AGF and ILFC began
applying hedge accounting to most of their floating rate and foreign currency denominated borrowings.
In fleet includes 9 finance leases.
ILFC has a cancellation option in 2010 on the 10 A380 firm orders.
Subsequent to June 30, 2008, all of the new aircraft scheduled for delivery in 2009 have been leased.
Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including
the related foreign exchange gains and losses. For the three months ended June 30, 2008 and 2007 and March 31, 2008
and the six months ended June 30, 2008 and 2007, the effect was $15 million, $21 million, $(46) million, $(31) million
and $(15) million, respectively. The amounts result primarily from interest rate and foreign currency derivatives that
are effective economic hedges of borrowings. In second quarter 2007, AGF began applying hedge accounting to most
of its derivatives hedging interest rate and foreign exchange risks associated with its floating rate and foreign currency
denominated borrowings.
Effective February 29, 2008, AGF purchased a portion of Equity One, Inc.’s consumer finance receivable portfolio
consisting of $1.0 billion of real estate loans, $290 million of non-real estate loans and $156 million of retail sales
finance receivables.
Total net receivables exclude finance receivables held for sale of $36 million, $608 million and $80 million at June 30,
2008 and 2007 and March 31, 2008, respectively.
61
Asset Management Operating Statistics (1) (2)
Three Months Ended
June 30,
March 31,
2007
% Chg
2008
June 30,
2008
Six Months Ended
June 30,
June 30,
2008
2007
% Chg
Sequential
% Chg
Revenues:
Guaranteed investment contracts (3) (4)
Matched investment program
Institutional asset management (5) (6)
Brokerage service and mutual funds
Other asset management (7)
$
Total excluding net realized capital gains (losses)
Total revenues
Guaranteed investment contracts (3) (4)
Matched investment program (9)
Institutional asset management (5) (6)
Brokerage service and mutual funds
Other asset management (7)
$
1,261
(464)
672
129
450
82
96
(56.8) %
102.3
33.8
(9.8)
(64.6)
1,429
352
(11.8)
NM
$
371
142
607
74
62
1,256
(1,405)
$
797
$
1,781
(55.2) %
$
(149)
$
27
102
(27)
17
31
$
276
35
150
21
93
(90.2) %
191.4
NM
(19.0)
(66.7)
$
51
20
5
19
59
575
352
(73.9)
NM
Total excluding net realized capital gains (losses)
290
261
602
74
34
150
(464)
$
(314)
$
927
62
NM %
$
(21.8) %
83.8
(0.8)
0.0
(45.2)
$
0.4
NM
661
403
1,209
148
96
$
2,517
(1,869)
1,589
247
879
160
243
(58.4) %
63.2
37.5
(7.5)
(60.5)
3,118
332
(19.3)
NM
NM %
$
648
$
3,450
(81.2) %
(47.1) %
410.0
NM
(10.5)
(47.5)
$
78
122
(22)
36
90
$
761
61
247
47
237
(89.8) %
100.0
NM
(23.4)
(62.0)
154
(1,405)
(2.6)
NM
(1,251)
NM %
304
(1,869)
$
(1,565)
1,353
332
$
1,685
(77.5)
NM
NM %
Asset Management Other Data
Three Months Ended / As of
June 30,
March 31, Sequential
2007
% Chg
2008
% Chg
June 30,
2008
Six Months Ended / As of
June 30,
June 30,
2008
2007
% Chg
Guaranteed Investment Contracts:
Reserves
Spread Information
Partnerships (4)
Other enhancements
$
22,958
$
26,207
(12.4) %
$
23,621
(2.8) %
$
22,958
$
26,207
(12.4) %
$
288
(1)
3
$
389
236
47
(26.0) %
NM
(93.6)
$
320
45
6
(10.0) %
NM
(50.0)
$
608
44
9
$
819
698
72
(25.8) %
(93.7)
(87.5)
$
290
$
672
(56.8) %
$
371
(21.8) %
$
661
$
1,589
(58.4) %
Base yield
Partnerships (10)
Other enhancements (11)
5.37%
(0.95)%
0.06%
5.88%
2.17%
0.72%
5.56%
(0.27)%
0.11%
5.47%
(0.60)%
0.09%
5.87%
3.52%
0.51%
Total
4.48%
8.77%
5.40%
4.96%
9.90%
Spread Data Without Hedge Accounting (12)
Cost of funds
4.48%
5.49%
5.01%
4.76%
5.49%
0.00%
3.28%
0.39%
0.20%
4.41%
0.89%
0.39%
0.55%
0.71%
0.38%
4.72%
4.99%
4.67%
4.69%
4.99%
(0.23)%
3.78%
0.73%
0.26%
4.90%
0.66%
0.89%
0.89%
0.77%
0.87%
Net spread rate, as reported
Net spread rate excluding
partnerships and other enhancements
Spread Data Assuming Hedge Accounting (13)
Cost of funds with effect of
economic hedges
Net spread rate with effect of
economic hedges
Net economic spread rate excluding
partnerships and other enhancements
Matched Investment Program
Securities issuance
Notes and bonds payable
$
$
14,621
$
$
4,164
11,756
63
NM % $
24.4 % $
15,080
NM %
(3.0) %
$
$
14,621
$
$
6,311
11,756
NM %
24.4 %
Asset Management
Notes
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
AIG's non-affiliated client assets under management, including mutual funds and institutional accounts, approximated $96.4 billion, $92.1 billion
and $98.1 billion at June 30, 2008 and 2007 and March 31, 2008, respectively.
In order to better align financial reporting with the manner in which AIG’s chief operating decision makers manage their businesses, beginning in
fourth quarter 2007, the effect of consolidating managed partnerships and funds, which were historically reported in the Asset Management
segment, are now being reported in the Consolidation and elimination adjustments category. Prior period amounts have been revised to conform to
the current presentation.
The Matched Investment Program (MIP) has replaced the Guaranteed Investment Contracts (GIC) program, which is in runoff, as AIG’s principal
spread-based investment activity.
The six months ended June 30, 2007 includes a distribution from a single partnership of $164 million, which became available after a five-year
restriction on capital withdrawal.
Includes AIG Investments and certain smaller asset management operations.
Institutional Asset Management operating income includes $14 million, $(27) million and $(91) million for the three-month periods ended June
30, 2008 and 2007 and March 31, 2008, respectively, related to warehoused investments. The operating income from warehoused investments
includes $63 million, $16 million and $(74) million of net realized capital gains (losses) on derivative positions, primarily used to hedge financing
related to warehoused investments in the three-month periods ended June 30, 2008 and 2007 and March 31, 2008, respectively. Institutional Asset
Management operating income includes $(77) million and $(39) million for the six-month periods ended June 30, 2008 and 2007, respectively,
related to warehoused investments. The operating income from warehoused investments also includes $(11) million and $16 million of net
realized capital gains (losses) on derivative positions, primarily used to hedge financing related to warehoused investments in the six-month
periods ended June 30, 2008 and 2007, respectively.
Consists primarily of SunAmerica Inc. partnership investments.
Net realized capital gains (losses) are as follows:
(in millions)
Spread-Based Investment business - GIC
Spread-Based Investment business - MIP
Institutional Asset Management
Total
June 30, 2008
$(473)
(76)
85
$(464)
Three Months Ended
June 30, 2007
$(12)
(55)
419
$352
March. 31, 2008
$(372)
(950)
(83)
$(1,405)
Six Months Ended
June 30, 2008
June 30, 2007
$(845)
$(42)
(1,026)
(45)
2
419
$(1,869)
$332
The net realized capital losses for the GIC and MIP for the quarter ended June 30, 2008 were primarily due to other-than-temporary impairments
on fixed maturity investments off-set partially by interest rate and foreign exchange net mark to market gains on derivative instruments that while
economically hedged did not qualify for hedge accounting treatment. For the quarter ended March 31, 2008, net realized capital losses for the
GIC and MIP were primarily due to other-than-temporary impairments on fixed maturity investments, foreign exchange, interest rate and credit
related net mark to market losses on derivative instruments that while economically hedged did not qualify for hedge accounting treatment, and
the impact of foreign exchange movements on foreign denominated GIC reserves. For the quarter ended June 30, 2007, net realized capital losses
were comprised primarily of net mark to market losses on interest rate and foreign exchange derivative instruments that while economically
hedged did not qualify for hedge accounting treatment. The net realized capital losses for the GIC and MIP for the six-month period ended June
30, 2008 were primarily due to other-than-temporary impairments on fixed maturity investments, interest rate and foreign exchange net mark to
market gains on derivative instruments that while economically hedged did not qualify for hedge accounting treatment, and the impact of foreign
exchange movements on foreign denominated GIC reserves. Also in the 2008 period was net mark to market losses on short credit default swap
investments. For the six-month period ended June 30, 2007, net realized capital losses were comprised primarily of net mark to market losses on
interest rate and foreign exchange derivative instruments that did not qualify for hedge accounting treatment and the impact of foreign exchange
movements on foreign denominated GIC reserves.
Other-than-temporary impairments on fixed maturity securities were as follows:
(in millions)
Spread-Based Investment business - GIC
Spread-Based Investment business - MIP
Institutional Asset Management
Total
(9)
(10)
(11)
(12)
(13)
June 30, 2008
$(522)
(358)
(2)
$(882)
Three Months Ended
June 30, 2007
$(1)
$(1)
March 31, 2008
$(539)
(494)
$(1,033)
Six Months Ended
June 30, 2008
June 30, 2007
$(1,061)
$(29)
(852)
(1)
(2)
$(1,915)
$(30)
Net realized capital gains for the Institutional Asset Management business for the three- and six-month periods ended June 30, 2008 consisted
primarily of net mark to market gains on interest rate swaps associated with financing of warehoused investments and foreign exchange
transaction gains resulting from the weakening U.S. Dollar. For the quarter ended March 31, 2008, net realized capital losses consisted primarily
of mark to market losses on interest rate swap positions associated with financing warehoused investments. For the three- and six-month periods
ended June 30, 2007, the net mark to market gain was primarily the result of a $398 million gain on the sale of a portion of AIG’s investment in
The Blackstone Group, L.P.
The three months ended June 30, 2008 and March 31, 2008 and the six months ended June 30, 2008 include $9 million, $16 million and $25
million, respectively, of lower of cost or market adjustments on bank loans held for sale.
Includes incremental effect to base yields of investments in hedge funds, private equity funds and affordable multi-housing partnerships.
Includes incremental effect to base yields of gains on calls, dollar roll income, prepayment fees and trading gains (losses).
Represents cost of funds without FAS 133 accounting for economic hedges where the effects of derivative transactions are recorded in net realized
capital gains (losses) as reflected in the reported operating income for the Guaranteed Investment Contracts on page 62.
Represents cost of funds on an economic basis including the effects of derivative transactions assuming hedge accounting treatment under FAS
133 is applied.
64
Other
(in millions)
June 30,
2008
Three Months Ended
June 30,
2007
Six Months Ended
June 30,
June 30,
2008
2007
March 31,
2008
Other before net realized capital gains (losses):
Equity earnings in partially owned companies
$
8
$
50
$
8
$
16
$
91
Interest expense
(452)
(302)
(368)
(820)
(554)
Unallocated corporate expenses (1)
(282)
(210)
(93)
(375)
(382)
(19)
(20)
(50)
(69)
(58)
(745)
(482)
(503)
(1,248)
Other miscellaneous, net
Subtotal (2)
Other net realized capital gains (losses)
Total other - net
$
30
(715)
$
14
$
22
(460)
$
(265)
(768)
$
18
$
(356)
$
(235)
(1,483)
$
(903)
( )
(27)
(930)
(342)
$
(212)
Consolidation and elimination adjustments:
Before net realized capital gains (losses)
FAS 133 (3)
$
Income from consolidated managed partnerships & funds (2) (4)
All other (2)
Subtotal
Reclassification of FAS 133 to other (5)
All other eliminations
Subtotal
Total consolidation and elimination adjustments
$
(152)
243
41
(111)
(21)
80
(38)
(59)
78
(159)
341
(353)
(512)
355
(58)
(31)
(89)
(248)
(121)
(2)
(123)
218
366
8
374
21
308
(23)
285
(227)
109
(31)
78
433
$
$
Note: (1) Includes a charge for settlement of a dispute, expenses of corporate staff not attributable to specific business segments, expenses related
to efforts to improve internal controls, corporate initiatives and certain compensation plan expenses.
(2) Components of adjusted net income (loss).
(3) Represents the elimination of revenues reported in the Financial Services segment from intercompany hedging activities and the
reclassification of the related foreign exchange rates on economically hedged exposures.
(4) Includes the income from certain AIG managed partnerships, private equity and real estate funds that are consolidated. Such income is
offset in minority interest expense, which is not a component of operating income, on the consolidated statement of income (loss). In
order to better align financial reporting with the manner in which AIG’s chief operating decision makers manage their businesses,
beginning in fourth quarter 2007, the effect of consolidating managed partnerships and funds, which were historically reported as a
component of the Asset Management segment, are now being reported in Other. Prior period amounts have been revised to conform to
the current presentation.
(5) Represents the elimination of net realized capital gains (losses) reported in the General Insurance, Life Insurance & Retirement
Services, Financial Services and Asset Managements segments and in AIG’s Other category from intercompany hedging activities and
the reclassification of the related foreign exchange rates on economically hedged exposures.
65
$
489
$
Consolidated Net Realized Capital Gains (Losses)
June 30,
2008
Three Months Ended
June 30,
March 31,
2007
2008
Six Months Ended
June 30,
June 30,
2008
2007
General Insurance
Sales of fixed maturities
Sales of equity securities
Sales of real estate and other assets
Foreign exchange transactions (1)
Other-than-temporary impairments
$
Total General Insurance
28 $
45
3
53
(7)
(685)
(54) $
89
(21)
12
(5)
(84)
(7)
(36)
6
(59)
(22)
(155)
$
21 $
9
9
(6)
(29)
(840)
(55)
194
24
33
(8)
(130)
(563)
(63)
(273)
(836)
(54)
197
149
(150)
41
(5,193)
(162)
189
1
(24)
41
(324)
(3)
100
176
(40)
(210)
(4,392)
(57)
297
325
(190)
(169)
(9,585)
(144)
233
75
99
(82)
(716)
(5,010)
(279)
(4,369)
(9,379)
(535)
10
(3)
25
(17)
(18)
(99)
182
(2)
(8)
7
(138)
(12)
2
4
(113)
(29)
(1)
(11)
(198)
208
(2)
15
63
(151)
(136)
(4)
11
(2)
18
47
344
(882)
3
7
394
(24)
(27)
(1)
32
16
(8)
(340)
(72)
(1,033)
43
14
10
(293)
272
(1,915)
27
16
415
(87)
(9)
(30)
(464)
352
(1,405)
(1,869)
332
9
(31)
52
-
3
30
(63)
58
(6)
5
(94)
(175)
(1)
14
(125)
(123)
(1)
4
28
(99)
46
(6)
30
22
(265)
(235)
(27)
(14)
(17)
10
(68)
(22)
(46)
(55)
(3)
(18)
(138)
533
(17)
(35)
(128)
465
(32)
144
(34)
(89)
(123)
374
285
78
(29)
240
172
(74)
387
(6,777)
(210)
285
364
(244)
194
(417)
58
Total Life Insurance & Retirement Services
Financial Services
Total Financial Services
Asset Management
Sales of real estate and other assets (2)
Total Asset Management
Other
Total Other
Reclassifications and Eliminations
Total Reclassifications and Eliminations
Net Realized Capital Gains (Losses)
Note :
19
80
153
(664)
(84)
(5,593)
(10)
320
325
(738)
303
(12,370)
(169)
443
499
(108)
121
(884)
Total Net Realized Capital Gains (Losses)
$
(6,081) $
(28) $
(6,089)
$
(12,170) $
(98)
Total Net Realized Capital Gains (Losses), net of tax
$
(4,019) $
(17) $
(3,963)
$
(7,982) $
(73)
(1) Includes foreign exchange gains and losses from hedging activities.
(2) The three months and the six months ended June 30, 2007 both include a gain of $398 million on the sale of a portion of AIG's investment in The Blackstone
Group, L.P. in connection with its initial public offering.
66
Cash and Invested Assets
June 30, 2008
General
Insurance
Life
Insurance &
Retirement
Services
Financial
Services
Asset
Management
Total
Company
Other
Percent
of
Total
Fixed maturities:
Bonds available for sale, at fair value
Bonds held to maturity, at amortized cost
$
297,095 $
1
1,370 $
0
21,870 $
285
0
8,764
0
37
0
8,801
1.0
Common stocks available for sale, at fair value *
Common and preferred stocks trading, at fair value
4,522
285
12,018
22,200
0
0
787
29
(21)
0
17,306
22,514
2.0
2.7
Preferred stocks available for sale, at fair value
1,943
543
10
0
0
2,496
0.3
10
15,073
147
4,221
0
19,451
2.3
Policy loans
2
8,552
2
48
Collateral and guaranteed loans, net of allowance
1
833
889
1,254
Bond trading securities, at fair value
72,981 $
21,346
0 $
0
393,316
21,632
46.5 %
2.6
Equity securities:
Mortgage loans on real estate, net of allowance
Other loans receivable, net of allowance
Real estate, net of accumulated depreciation
3
1,552
0
1,752
1,380
4,952
29
255
342
965
28
95
0
0
43,887
0
0
1,205
(9)
8,595
1.0
49
3,026
0.4
5
3,312
0.4
(2)
6,614
0.8
224
1,654
0.2
0
0
43,887
5.2
0
0
1,205
0.1
Flight equipment primarily under operating leases,
net of accumulated depreciation
0
0
35,170
0
0
35,170
4.2
Spot commodities, at fair value
0
0
90
0
0
90
0.0
Unrealized gain on swaps, options and
forward transactions, at fair value
Trade receivables
0
0
12,720
0
11,548
1.4
0
0
2,294
0
(1,172)
0
2,294
0.3
0
0
0
5
16,597
33,306
0
0
0
0
16,597
33,311
2.0
3.9
Securities purchased under agreements
to resell, at fair value,
Cash
Total cash and invested assets
Percent of total company
$
4,951
48,312
141
6,126
0
59,530
7.0
12,616
20,810
3,670
17,840
7,093
62,029
7.3
9,967
32,724
3,974
7,125
15,702
69,492
8.2
499
979
476
269
6
2,229
0.2
130,848 $
475,378 $
156,005 $
61,993 $
21,875 $
15.5%
56.2%
18.4%
7.3%
2.6%
* Relates principally to common stock within the Life Insurance & Retirement Services segment that did not qualify for separate account treatment under SOP 03 -1.
67
846,099
100.0%
100.0 %
General Insurance
Domestic
Fixed maturities:
$
Equity securities:
Common stocks available for sale, at fair value
Policy loans
Trade receivables
to resell, at fair value
Cash
$
Return on average invested assets
Return on average invested assets excluding securities lending collateral
53,420
21,206
June 30, 2008
Foreign
$
19,561
140
Percent
of
Total
Total
$
72,981
21,346
55.8 %
16.3
December 31, 2007
Domestic
Foreign
$
54,583
21,176
$
19,474
179
$
Percent
of
Total
Total
74,057
21,355
57.1 %
16.5
0
0
0
0.0
0
0
0
0.0
3,476
285
1,941
8
0
0
3
1,060
44
1,046
0
2
2
2
1
0
320
298
4,522
285
1,943
10
2
1
3
1,380
342
3.5
0.2
1.5
0.0
0.0
0.0
0.0
1.1
0.2
4,509
321
1,883
8
0
0
0
1,042
46
1,090
0
2
3
1
1
0
389
303
5,599
321
1,885
11
1
1
0
1,431
349
4.3
0.2
1.5
0.0
0.0
0.0
0.0
1.1
0.3
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0
0
0
0
0.0
0.0
0
0
0
0
0
0
0.0
0.0
0
0
2,196
10,547
3,734
305
98,225
0
0
2,755
2,069
6,233
194
32,623
0
0
4,951
12,616
9,967
499
130,848
0
0
2,552
9,996
2,405
281
98,802
0
0
2,479
1,899
4,951
216
30,987
0
0
5,031
11,895
7,356
497
129,789
11.6%
$
3.9%
68
$
15.5%
3.6%
3.8%
0.0
0.0
3.8
9.6
7.6
0.4
100.0 %
$
11.5%
$
3.6%
$
15.1%
5.0%
5.2%
0.0
0.0
3.9
9.2
5.7
0.2
100.0 %
Domestic
Fixed maturities:
$
Equity securities:
Policy loans
Trade receivables
Cash
$
Return on average invested assets
Return on average invested assets excluding securities lending collateral
122,549
0
June 30, 2008
Foreign
$
174,546
1
Percent
of
Total
Total
$
297,095
1
62.5 %
0.0
December 31, 2007
Domestic
Foreign
$
127,839
0
$
166,323
1
$
Percent
of
Total
Total
294,162
1
62.5 %
0.0
263
8,501
8,764
1.8
423
9,525
9,948
2.1
189
581
316
11,408
3,061
300
990
1,740
63
11,829
21,619
227
3,665
5,491
533
562
3,212
902
12,018
22,200
543
15,073
8,552
833
1,552
4,952
965
2.5
4.7
0.1
3.2
1.8
0.2
0.3
1.0
0.2
170
594
250
11,447
3,012
289
770
1,762
114
11,446
20,432
227
3,261
5,045
492
535
2,966
862
11,616
21,026
477
14,708
8,057
781
1,305
4,728
976
2.5
4.5
0.1
3.1
1.7
0.2
0.3
1.0
0.2
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0
0
0
0
0.0
0.0
0
0
0
0
0
0
0.0
0.0
0
0
41,553
10,176
9,379
61
202,629
0
5
6,759
10,634
23,345
918
272,749
0
5
48,312
20,810
32,724
979
475,378
0
0
49,527
9,877
3,329
70
209,473
0
5
7,944
9,138
21,907
930
261,039
0
5
57,471
19,015
25,236
1,000
470,512
24.0%
$
32.2%
69
$
56.2%
4.0%
4.5%
0.0
0.0
10.2
4.4
6.9
0.2
100.0 %
$
24.3%
$
30.3%
$
54.6%
5.0%
5.6%
0.0
0.0
12.2
4.0
5.4
0.2
100.0 %
Financial Services
June 30, 2008
Aircraft
Leasing
Fixed maturities:
$
Equity securities:
Policy loans
Trade receivables
Cash
$
Capital
Markets
Consumer
Finance
1,370 $
0
Other
Financial
Services
Percent
of
Total
Total
0 $
0
0 $
0
0 $
0
0
0
0
0
0
0.0
0
0
0
0
0
144
0
3
0
0
0
0
0
0
745
0
0
0
0
0
10
140
2
0
0
19
28
0
0
0
7
0
0
0
7
0
0
0
10
147
2
889
0
29
28
0.0
0.0
0.0
0.1
0.0
0.6
0.0
0.0
0.0
43,887
1
0
0
0
0
35,170
90
0
619
0
0
0
585
0
0
43,887
1,205
35,170
90
28.1
0.8
22.5
0.1
0
0
12,720
2,294
0
0
0
0
12,720
2,294
8.2
1.5
16,597
33,306
141
3,670
3,974
476
156,005
10.6
21.3
0.1
2.4
2.5
0.3
100.0 %
0
298
0
0
87
23
44,443 $
16,597
0
0
3,322
2,522
23
73,483 $
0
31,642
141
343
1,135
368
35,817 $
0
1,366
0
5
230
62
2,262 $
5.3%
8.7%
4.2%
0.2%
70
1,370
0
18.4%
0.9 %
0.0
American International Group, Inc
Other Invested Assets
June 30,
2008
Domestic General Insurance
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Domestic General Insurance
$
7,499
265
2,783
10,547
Dec. 31,
2007
$
7,416
294
2,286
9,996
% chg
1.1 %
(9.9)
NM
21.7
5.5
Foreign General Insurance
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Foreign General Insurance
984
844
153
88
2,069
877
857
150
15
1,899
12.2
(1.5)
2.0
486.7
9.0
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Domestic Life Insurance
1,210
84
150
707
2,151
976
83
115
727
1,901
24.0
1.2
30.4
(2.8)
13.2
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Domestic Retirement Services
6,569
21
88
1,347
8,025
6,482
12
86
1,396
7,976
1.3
75.0
2.3
(3.5)
0.6
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Foreign Life Insurance & Retirement Services
1,774
3,273
2,684
2,903
10,634
1,589
3,027
2,566
1,956
9,138
11.6
8.1
4.6
48.4
16.4
Asset Management
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Asset Management
9,968
7,196
676
17,840
9,669
6,960
632
17,261
3.1
NM
3.4
7.0
3.4
Financial Services and Other
Partnerships (1)
Mutual Funds
Real Estate
All Other
Total Financial Services and Other
Consolidated Managed Partnerships & Funds (2)
1,938
619
1,648
4,205
6,558
1,929
618
1,491
4,038
6,614
0.5
0.2
NM
10.5
4.1
(0.8)
Total AIG Other Invested Assets
Partnerships (1)
Mutual Funds
Real Estate
All Other (3)
Consolidated Managed Partnerships & Funds (2)
29,942
5,106
10,271
10,152
6,558
28,938
4,891
9,877
8,503
6,614
3.5
4.4
4.0
19.4
(0.8)
58,823
5.5
Total AIG Other Invested Assets
Note:
$
62,029
(1) Includes private equity partnerships, hedge funds and AIG managed funds.
(2) Represents AIG managed partnerships and funds that are consolidated.
(3) Consist primarily of Life Insurance investments in aircraft equipment, investments in life settlement
contracts and other miscellaneous investments.
71
$
%
Return on Average Partnerships and Mutual Funds Assets (1)
Three Months Ended
June 30, 2008
Return on
Average
Income
Assets
June 30, 2007
Return on
Average
Income
Assets
Six Months Ended
March 31, 2008
Income
Assets
June 30, 2008
Return on
Average
Assets
Income
Assets
June 30, 2007
Return on
Average
Assets
Income
Assets
Return on
Average
Assets
Partnerships (2) (3):
General Insurance
$
Asset Management
Financial Services and Other
Total excluding Consolidated Managed Partnerships and Funds
Partnership Type:
Private Equity
Hedge Funds
Total excluding Consolidated Managed Partnerships and Funds
(3.2) % $
18.6
224
90
14.8 % $
56.7
39 $
27
7,476
954
(14)
(0.7)
314
18.8
66
8,430
3.2
52
8,483
(10)
83
9
(3.5)
5.2
2.0
18
253
38
11.7
19.7
11.9
27
11
2
1,094
6,170
1,747
10.4
0.7
0.5
17
94
11
2.1 %
11.8
$
(20) $
72
7,499
984
569 $
120
6,269
632
19.6 %
35.0
1.2
689
6,901
21.2
1,210
6,569
1,774
3.1
2.9
1.3
12
383
86
683
5,531
1,393
4.3
15.8
14.0
82
3.5
309
17.6
40
9,011
1.8
122
9,553
2.7
481
7,607
14.5
3.0
365
15.5
94
9,943
3.8
168
9,968
3.4
1,021
9,340
22.0
(51)
(10.2)
4
1.1
(3)
2,058
(0.6)
(54)
1,938
(5.5)
16
1,805
288
29,942
2,207
25,653
1.2 %
992
(151)
16.1 %
197
83
127
29,442
2.7 %
7,044
(24)
2.0 %
6,558
2.7
18.7 %
239
3,232
$
264 $
36,500
$
2,446 $
28,885
$
186 $
102
288 $
18,129
11,813
29,942
2.1 % $
1.7
2.0 % $
1,302 $
905
2,207 $
15,670
9,983
25,653
18.4 %
19.2
18.7 %
(20) $
(16)
265
844
(14.7) % $
(3.8)
108 $
156
484
1,126
50.0 %
32.0
(6.5)
264
1,610
37.5
2.4
(7.4)
4
199
84
23
2,056
9.8
23.7
$
(60)
$
1,075
$
324 $
36,486
$
(116)
207
91
(2.6) % $
7.1
1.2 % $
549
443
992
14.8 % $
18.2
16.1 % $
302 $
(105)
197 $
17,930
11,512
29,442
7.0 %
(3.5)
2.7 %
19
37
29.0 % $
17.9
37
104
31.5 % $
39.2
(39) $
(53)
259
808
(56.4) %
(25.5)
56
20.6
141
36.8
(92)
1,067
(33.2)
(36)
1,109
3
40
14.5
9.4
2
148
9.6
32.9
(2)
(97)
82
21
1,908
(9.7)
(24.9)
1
(57)
84
21
1,499
$
(0.5) % $
15.3
74
91
Consolidated Managed Partnerships and Funds (4)
Total
(59)
45
$
Mutual Funds (5):
General Insurance
$
Total
Total Partnerships and Mutual Funds
150
31.5
$
99
43
13.7 % $
9.5
291
33.9 % $
$
190
$
1,283
$
(99)
2,011
(23.9)
(191) $
3,078
(27.6) %
6
Note: (1) Annualized income (loss) expressed as a percentage of average assets.
(2) Represents private equity partnerships and hedge funds.
(3) Partnership income is on a lag basis. Hedge Funds are on a one month lag (second quarter represents March - May period) while Private Equity are generally
on a one quarter lag.
(4) Represents AIG managed partnerships and funds that are consolidated.
(5) Comprised of equity-method mutual fund investments. Excludes mutual funds accounted for as equity securities and mutual funds supporting SOP 03 -1 products.
72
$
(56)
1,604
(6.8)
203
2,163
22.8
$
(92) $
2,713
(6.7) % $
467 $
3,773
29.3 %
$
196
$
2,674
Worldwide Insurance and Asset Management
Bond Portfolio
June 30, 2008
Total Domestic Bond Portfolio Ratings
Total Foreign Bond Portfolio Ratings (1)
AA
37%
AA
24%
AAA
38%
AAA
20%
A
16%
Lower
5%
Non-Rated
2%
Lower
2%
BBB
17%
Domestic Bonds (2)
$261.8 billion
A
32%
BBB
7%
Foreign Bonds (2)
$211.2 billion
(1) Ratings by nationally recognized rating agencies or similar foreign services. AIG reviews the credit quality of the non-rated fixed income investments.
(2) Includes bonds reported in securities lending invested collateral on the consolidated balance sheet.
73
Domestic Insurance and Asset Management
Bond Portfolio
June 30, 2008
Domestic Life Insurance &
Retirement Services and Asset Management
Bond Ratings
Bond Ratings
AAA..............................
45.8%
AAA.............................. 34.9%
AA................................
45.9%
AA................................ 15.1%
A...................................
7.0%
A................................... 19.2%
BBB..............................
0.8%
BBB.............................. 23.6%
Non-Rated....................
0.2%
Non-Rated.................... 0.2%
Lower...........................
0.3%
Lower...........................
Taxable
19%
7.0%
Domestic Life Insurance &
Retirement Services and
Asset Management Bonds *
$185.3 billion
Tax Exempt
81%
Domestic General Insurance Bonds *
$76.5 billion
* Includes bonds reported in securities lending invested collateral on the consolidated balance sheet.
74
American International Group, Inc. (Excludes AIGFP)
Asset-Backed Securities and Collateralized Debt Obligations that Include Residential Mortgages
June 30, 2008
Asset Class
Total
RMBS
CMBS
CDO/ABS
Amortized
Cost
Rating
AAA
$
AA
67,231 $
18,240 $
4,333 $
89,804
2,473
11,685
6,407
2,805
A
1,154
1,535
2,813
5,502
BBB and below
2,739
355
1,593
4,687
Total
$
77,531 $
$
16,642
22,935 $
11,212 $
111,678
Collateral Type
U.S. agencies
Prime non-agency
17,575
Alt-A
20,236
Other housing related
3,090
Subprime
Total
19,988
$
77,531
Year of Vintage
Total
Amortized
Subprime Mortgages
Prior
2004
2005
2006
2007
2008
Cost
Rating
AAA
$
AA
A
BBB and below
Total
$
398 $
423 $
4,403 $
7,760 $
3,884 $
-
129
102
398
785
276
-
1,690
77
62
68
126
103
-
436
1
66
65
475
387
-
4,650 $
-
605 $
653
4,934 $
$
75
9,146
$
$
16,868
994
$
19,988
American International Group, Inc. (Excludes AIGFP)
Commercial Mortgage-Backed Securities
June 30, 2008
CMBS Portfolio
Description
Amortized Cost
CMBS (traditional)
ReRemic / CRE CDO
Agency
Other
Total
$
$
20,819
1,465
246
405
22,935
Percentage
91%
6%
1%
2%
100%
CMBS by Rating
Rating
AAA
AA
A
BBB and below
Total
Percentage
79%
12%
7%
2%
100%
CMBS by Vintage
Year of Vintage
2008
2007
2006
2005
2004
Prior
Total
Percentage
1%
24%
14%
18%
15%
28%
100%
CMBS by Geographic Region
Geographic Region
New York
California
Texas
Florida
Virginia
Illinois
New Jersey
Pennsylvania
Georgia
Massachusetts
All Other
Total
Percentage
17%
15%
7%
6%
4%
4%
3%
3%
3%
3%
35%
100%
76
Comment on Regulation G
This financial supplement includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in
accordance with Regulation G are included within the relevant tables.
Throughout this financial supplement, AIG presents its operations in the way it believes will be most meaningful and useful, as well as most transparent,
to the investing public and others who use AIG’s financial information in evaluating the performance of AIG. That presentation includes the use of certain nonGAAP measures. In addition to the GAAP presentations, in some cases, revenues, net income, operating income and related rates of performance, and out of
period adjustments are shown exclusive of realized capital gains (losses), the effect of FIN 46(R), the effect of EITF 04-5, the effect of FAS 133, the effect of
trading account losses, the effect of remediation activities, the effect of change in actuarial estimate, the effect of expenses of industry wide reviews, the effect of
catastrophe-related losses, the effect of sales inducements and the effect of credit valuation adjustment.
AIG excludes the effects of FIN 46(R) and EITF 04-5, and the effect of hedging activities that did not qualify for hedge accounting treatment under FAS
133, although they are economically effective hedges, because AIG believes that excluding these items permits investors to better assess the performance of the
underlying businesses. AIG believes that providing information in a non-GAAP manner is more useful to investors and analysts. Likewise, AIG excludes certain
entities consolidated pursuant to FIN 46(R) or EITF 04-5, including certain AIG managed partnerships, private equity and real estate funds, where AIG does not
in fact have the economic interest that is presumed to be held by consolidation, because AIG believes this presentation is more meaningful than the GAAP
presentation.
Although the investment of premiums to generate investment income (or loss) and realized capital gains or losses is an integral part of both life and
general insurance operations, the determination to realize capital gains or losses is independent of the insurance underwriting process. Moreover, under applicable
GAAP accounting requirements, losses can be recorded as the result of other than temporary declines in value without actual realization. In sum, investment
income and realized capital gains or losses for any particular period are not indicative of underlying business performance for such period.
AIG believes that underwriting profit (loss) provides investors with financial information that is not only meaningful but critically important to
understanding the results of property and casualty insurance operations. Operating income of a property and casualty insurance company includes three
components: underwriting profit (loss), net investment income and realized capital gains (losses). Without disclosure of underwriting profit (loss), it is impossible
to determine how successful an insurance company is in its core business activity of assessing and underwriting risk. Including investment income and net
realized capital gains (losses) in operating income without disclosing underwriting profit (loss) can mask underwriting losses. The amount of net investment
income may be driven by changes in interest rates and other factors that are totally unrelated to underwriting performance.
Underwriting profit (loss) is an important measurement used by AIG senior management to evaluate the performance of its property and casualty
insurance operations. AIG includes the measurement required in statutory financial statements filed with state insurance departments and adjusts for changes in
deferred acquisition costs in order to make the measure more consistent with the information provided in AIG’s consolidated financial statements. Further, the
equity analysts who follow AIG exclude the realized capital transactions in their analyses for the same reason and consistently request that AIG provide the nonGAAP information.
Life and retirement services production (premiums, deposits and other considerations), gross premiums written, net premiums written and loss, expense
and combined ratios are presented in accordance with accounting principles prescribed or permitted by insurance regulatory authorities because these are standard
measures of performance used in the insurance industry and thus allow for more meaningful comparisons with AIG’s insurance competitors.
77

FinSupp 2Q2008_08.5.2008_04.17PM

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