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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[ X ]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From                     to                     

For Quarter Ended September 30, 2003 Commission File Number 1-8787

AMERICAN INTERNATIONAL GROUP, INC.

(Exact name of registrant as specified in its charter)
     
 
Delaware
(State or other jurisdiction of incorporation or organization)		   13-2592361
(I.R.S. Employer Identification Number)
 
70 Pine Street, New York, New York
(Address of principal executive offices)		   10270
(Zip Code)
Registrant’s telephone number, including area code (212) 770-7000
NONE
Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 
YES  [ X ] NO  [     ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

 
YES  [ X ] NO  [     ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of September 30, 2003: 2,607,945,672.

 

AMERICAN INTERNATIONAL GROUP, INC.

 
CONSOLIDATED BALANCE SHEET
(in millions)
(unaudited)
                         
September 30, December 31,
2003 2002
ASSETS:
               
 
Investments, financial services assets and cash:
               
   
Fixed maturities:
               
     
Bonds available for sale, at market value (amortized cost: 2003 — $271,105; 2002 — $232,121)
  $ 285,304     $ 242,385  
     
Bonds held to maturity, at amortized cost (market value: 2003 — $6,831; 2002 — $0)
    6,784       —  
     
Bond trading securities, at market value (cost: 2003 — $0; 2002 — $963)
    —       981  
   
Equity securities:
               
     
Common stocks (cost: 2003 — $6,602; 2002 — $6,152)
    6,785       5,482  
     
Non-redeemable preferred stocks (cost: 2003 — $1,738; 2002 — $1,678)
    1,838       1,584  
   
Mortgage loans on real estate, net of allowance (2003 — $106; 2002 — $110)
    12,141       11,541  
   
Policy loans
    6,526       6,046  
   
Collateral and guaranteed loans, net of allowance (2003 — $17; 2002 — $54)
    2,523       2,341  
   
Financial services assets:
               
     
Flight equipment primarily under operating leases, net of accumulated depreciation (2003 — $5,075; 2002 — $4,426)
    29,370       26,867  
     
Securities available for sale, at market value (cost: 2003 — $16,324; 2002 — $16,715)
    16,294       16,687  
     
Trading securities, at market value
    3,269       4,146  
     
Spot commodities, at market value
    324       489  
     
Unrealized gain on interest rate and currency swaps, options and forward transactions
    17,341       15,376  
     
Trading assets
    4,221       4,786  
     
Securities purchased under agreements to resell, at contract value
    23,351       25,661  
     
Finance receivables, net of allowance (2003 — $436; 2002 — $477)
    16,757       15,857  
   
Securities lending collateral
    27,128       23,694  
   
Other invested assets
    15,713       12,680  
   
Short-term investments, at cost (approximates market value)
    14,478       6,993  
   
Cash
    949       1,165  
     
     
 
       
Total investments, financial services assets and cash
    491,096       424,761  
 
Investment income due and accrued
    5,046       4,297  
 
Premiums and insurance balances receivable, net of allowance (2003 — $195; 2002 — $150)
    15,147       13,088  
 
Reinsurance assets
    32,844       29,882  
 
Deferred policy acquisition costs
    24,577       22,256  
 
Investments in partially-owned companies
    1,409       1,575  
 
Real estate and other fixed assets, net of accumulated depreciation (2003 — $4,043; 2002 — $3,727)
    5,843       5,382  
 
Separate and variable accounts
    54,147       46,248  
 
Goodwill
    7,855       6,079  
 
Other assets
    9,692       7,661  
     
     
 
       
Total assets
  $ 647,656     $ 561,229  
     
     
 

See Accompanying Notes to Financial Statements.

1

 

AMERICAN INTERNATIONAL GROUP, INC.

CONSOLIDATED BALANCE SHEET — (continued)

(in millions, except share amounts)
(unaudited)
                       
September 30, December 31,
2003 2002
LIABILITIES:
               
 
Reserve for losses and loss expenses
  $ 58,448     $ 51,539  
 
Reserve for unearned premiums
    20,343       16,336  
 
Future policy benefits for life and accident and health insurance contracts
    86,810       72,547  
 
Policyholders’ contract deposits
    166,579       142,160  
 
Other policyholders’ funds
    8,728       7,582  
 
Reserve for commissions, expenses and taxes
    3,627       3,429  
 
Insurance balances payable
    3,425       3,273  
 
Funds held by companies under reinsurance treaties
    4,217       3,425  
 
Income taxes payable:
               
   
Current
    1,069       793  
   
Deferred
    5,816       4,289  
 
Financial services liabilities:
               
   
Borrowings under obligations of guaranteed investment agreements
    14,093       14,850  
   
Securities sold under agreements to repurchase, at contract value
    11,212       9,162  
   
Trading liabilities
    4,219       3,825  
   
Securities and spot commodities sold but not yet purchased, at market value
    5,241       11,765  
   
Unrealized loss on interest rate and currency swaps, options and forward transactions
    13,083       11,265  
   
Trust deposits and deposits due to banks and other depositors
    3,467       2,987  
   
Commercial paper
    4,777       7,467  
   
Notes, bonds, loans and mortgages payable
    49,411       43,233  
 
Commercial paper
    2,846       1,645  
 
Notes, bonds, loans and mortgages payable
    5,617       4,690  
 
Preferred shareholders’ equity in subsidiary companies subject to mandatory redemption
    1,682       —  
 
Separate and variable accounts
    54,147       46,248  
 
Minority interest
    1,799       1,580  
 
Securities lending payable
    27,128       23,694  
 
Other liabilities
    21,516       12,189  
     
     
 
     
Total liabilities
    579,300       499,973  
     
     
 
 
Preferred shareholders’ equity in subsidiary companies
    186       2,153  
     
     
 
CAPITAL FUNDS:
               
 
Common stock, $2.50 par value; 5,000,000,000 shares authorized; shares issued 2003 — 2,751,327,476; 2002 — 2,751,327,476
    6,878       6,878  
 
Additional paid-in capital
    583       607  
 
Retained earnings
    58,422       52,270  
 
Accumulated other comprehensive income (loss)
    3,711       691  
 
Treasury stock, at cost; 2003 — 143,381,804; 2002 — 141,726,645 shares of common stock
    (1,424 )     (1,343 )
     
     
 
     
Total capital funds
    68,170       59,103  
     
     
 
     
Total liabilities, preferred shareholders’ equity in subsidiary companies and capital funds
  $ 647,656     $ 561,229  
     
     
 

See Accompanying Notes to Financial Statements.

2

 

AMERICAN INTERNATIONAL GROUP, INC.

 
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share amounts)
(unaudited)
                                   
Nine Months Three Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
Revenues:
                               
 
Premiums and other considerations
  $ 39,895     $ 32,593     $ 13,721     $ 11,284  
 
Net investment income
    12,314       11,214       4,104       3,840  
 
Realized capital gains (losses)
    (1,348 )     (1,456 )     (360 )     (595 )
 
Other revenues
    8,263       7,598       2,841       2,621  
     
     
     
     
 
 
Total revenues
    59,124       49,949       20,306       17,150  
     
     
     
     
 
Benefits and expenses:
                               
 
Incurred policy losses and benefits
    34,405       28,730       11,660       9,945  
 
Insurance acquisition & other operating expenses
    14,861       12,764       5,142       4,476  
     
     
     
     
 
 
Total benefits and expenses
    49,266       41,494       16,802       14,421  
     
     
     
     
 
Income before income taxes and minority interest
    9,858       8,455       3,504       2,729  
     
     
     
     
 
Income taxes:
                               
 
Current
    2,384       1,380       873       324  
 
Deferred
    621       1,201       196       493  
     
     
     
     
 
      3,005       2,581       1,069       817  
     
     
     
     
 
Income before minority interest
    6,853       5,874       2,435       1,912  
     
     
     
     
 
Minority interest
    (286 )     (251 )     (98 )     (70 )
     
     
     
     
 
Net income
  $ 6,567     $ 5,623     $ 2,337     $ 1,842  
     
     
     
     
 
Earnings per common share:
                               
 
Basic
  $ 2.52     $ 2.15     $ 0.90     $ 0.70  
     
     
     
     
 
 
Diluted
  $ 2.50     $ 2.13     $ 0.89     $ 0.70  
     
     
     
     
 
Cash dividends per common share
  $ 0.159     $ 0.131     $ 0.065     $ 0.047  
     
     
     
     
 
Average shares outstanding:
                               
 
Basic
    2,610       2,613       2,610       2,610  
     
     
     
     
 
 
Diluted
    2,628       2,635       2,628       2,634  
     
     
     
     
 

See Accompanying Notes to Financial Statements.

3

 

AMERICAN INTERNATIONAL GROUP, INC.

 
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
                   
Nine Months
Ended September 30.
2003 2002
Cash Flows From Operating Activities:
               
Net Income
  $ 6,567     $ 5,623  
     
     
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
 
Non-cash revenues, expenses, gains and losses included in income:
               
 
Change in:
               
 
General and life insurance reserves
    16,843       10,782  
 
Premiums and insurance balances receivable and payable — net
    (1,795 )     (604 )
 
Reinsurance assets
    (2,962 )     (2,211 )
 
Deferred policy acquisition costs
    (2,128 )     (2,842 )
 
Investment income due and accrued
    (546 )     (635 )
 
Funds held under reinsurance treaties
    792       660  
 
Other policyholders’ funds
    380       (296 )
 
Current and deferred income taxes — net
    1,513       1,101  
 
Reserve for commissions, expenses and taxes
    132       119  
 
Other assets and liabilities — net
    (472 )     (819 )
 
Trading assets and liabilities — net
    959       835  
 
Trading securities, at market value
    877       1,004  
 
Spot commodities, at market value
    165       (131 )
 
Net unrealized (gain) loss on interest rate and currency swaps, options and forward transactions
    (147 )     (588 )
 
Securities purchased under agreements to resell
    2,310       (1,163 )
 
Securities sold under agreements to repurchase
    2,050       (2,493 )
 
Securities and spot commodities sold but not yet purchased, at market value
    (6,524 )     417  
Realized capital (gains) losses
    1,348       1,456  
Equity in income of partially-owned companies and other invested assets
    (389 )     (129 )
Amortization of premium and discount on securities
    (59 )     (118 )
Depreciation expenses, principally flight equipment
    1,386       1,212  
Change in cumulative translation adjustments
    24