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8-K - FORM 8-K - AMERICAN INTERNATIONAL GROUP, INC. | y92266e8vk.htm |
Exhibit 99.1
Contact:
|
Liz Werner (Investment Community) | Mark Herr (News Media) | ||
(O): (212) 770-7074 | (O): (212) 770-3505 | |||
(C): (718) 685-9348 |
AIG REPORTS SECOND QUARTER 2011 NET INCOME OF $1.8 BILLION
Second Quarter 2011 After-Tax Operating Income of $1.3 Billion
NEW YORK, August 4, 2011 American International Group, Inc. (NYSE:
AIG) today reported net income attributable to AIG of $1.8 billion and
after-tax operating income of $1.3 billion for the quarter ended June 30,
2011, compared with a net loss of $2.7 billion and after-tax operating
income of $793 million for the second quarter of 2010. The second quarter
2010 loss was primarily due to a $3.3 billion non-cash goodwill impairment
charge included in discontinued operations. The diluted earnings per share
were $1.00 for the second quarter of 2011, representing a return on equity
of 8.3 percent, compared with a loss per share of $19.57 for the second
quarter of 2010. The 2011 second quarter after-tax operating income per
share was $0.69, a 6.3 percent return on equity, compared with after-tax
operating income per share of $1.18 for the second quarter last year.
Earnings per share for the current period reflect the 1.655 billion shares
issued to the United States Treasury Department on January 14, 2011.
Our results for the second quarter demonstrate the hard work from
employees across all of our business units and our unrelenting focus on
performance, said Robert H. Benmosche, AIG President and Chief Executive
Officer. We also achieved a significant recapitalization milestone during
the quarter with an $8.7 billion common stock offering, consisting of the
issuance and sale of 100 million shares by AIG and the sale of 200 million
shares at a profit by the U.S. Treasury. Our continued improving operating
results should provide a catalyst for the U.S. Treasury to sell its shares
at a profit for the taxpayers. Now that we have fully repaid our debt to
the Federal Reserve, we are on the right path to demonstrate AIGs long-term
value as an investment-grade company independent of government support.
Highlights
| Chartis reported operating income of $789 million for the second quarter of 2011, compared to operating income of $955 million in the second quarter of 2010. Second quarter 2011 results include catastrophe losses of $539 million and reflect no significant prior year loss reserve development. Net premiums written increased 17.6 percent. | |
| SunAmerica Financial Group (SunAmerica) operating income was $743 million for the second quarter of 2011, compared to $858 million in the second quarter of 2010. Net investment income was lower due to Maiden Lane II fair value changes compared to the second quarter of 2010, while base yields in the current quarter increased to 5.36 percent from 5.00 percent in the first quarter of 2011 with the redeployment of cash to other investments. | |
| Financial Services reported an operating loss of $146 million for the second quarter of 2011, compared with operating income of $25 million in the second quarter of 2010. These results include an operating loss of $160 million from Capital Markets for the second quarter of 2011, compared to an operating loss of $145 million in last years second quarter, largely due to unrealized market valuation losses on the super senior credit default swap portfolio. International Lease Finance Corporation (ILFC) contributed operating income of $86 million for the second quarter of 2011, compared with operating income of $182 million last year. | |
| AIGs Parent and Other operations reported operating income of $344 million for the second quarter of 2011, compared to an operating loss of $131 million in the second quarter of 2010. The results include operating income of $13 million from Mortgage Guaranty operations for the second quarter of 2011 compared to operating income of $226 million in the second |
180 Maiden Lane New York, NY 10038
quarter of 2010. Additionally, AIGs holding of AIA ordinary shares produced fair value income of $1.5 billion during the quarter, while the value of its holding in Maiden Lane III decreased $667 million from widening spreads on the underlying multi-sector CDO portfolio. | ||
| During the quarter, AIG reduced its tax exempt municipal bond portfolio by approximately $5 billion as part of its investment portfolio strategy. The U.S. municipal bond portfolio is composed primarily of essential service revenue bonds and high-quality tax-backed bonds with 97 percent of the portfolio rated A or higher, and represented 9.47 percent of the investment portfolio. | |
| On May 27, 2011, AIG and the Treasury Department completed a registered public offering of AIG Common Stock. AIG issued and sold 100 million shares of AIG Common Stock for aggregate net proceeds of approximately $2.9 billion and the Treasury Department sold 200 million shares of AIG Common Stock. As a result, the Series G Drawdown Right was terminated, the Series G Preferred Stock was cancelled and the Treasury Department ownership was reduced from approximately 92 percent to approximately 77 percent of the AIG Common Stock outstanding after the completion of the offering. | |
| The active wind-down of the AIGFP derivatives portfolio was completed by the end of the second quarter of 2011. The remaining AIGFP derivatives portfolio consists predominantly of transactions AIG believes are of low complexity, low risk, supportive of AIGs risk management objectives or not economically appropriate to unwind based on cost versus benefit analysis, although the portfolio may experience periodic mark-to-market volatility. | |
| On July 27, 2011, AIGs agreement to sell its 97.57 percent interest in Nan Shan Life Insurance Company, Ltd. (Nan Shan) to a Taiwan-based consortium for $2.16 billion in cash received final approval from the Taiwanese regulators. The sale is expected to close in the third quarter. | |
| Total equity was $93.6 billion at June 30, 2011, and book value per share was $49.18, including the effect of shares issued August 1, 2011 for equity units. |
AFTER-TAX OPERATING INCOME (LOSS) RECONCILIATION
Second Quarter Results | Per Diluted Share (1) | |||||||||||||||
(in millions, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net income (loss) attributable to AIG |
$ | 1,840 | $ | (2,656 | ) | $ | 1.00 | $ | (19.57 | ) | ||||||
To compute after-tax operating income
(loss), add losses and deduct gains (amounts are
net of tax): |
||||||||||||||||
Realized capital gains (losses), net of
SunAmerica DAC offset and taxes |
6 | (360 | ) | |||||||||||||
Net gain (loss) on sale of divested businesses |
(1 | ) | 93 | |||||||||||||
Non-qualifying derivative hedging gains (losses) |
28 | (96 | ) | |||||||||||||
FRBNY Credit Facility total amortization |
| (353 | ) | |||||||||||||
Net income from divested businesses(2) |
10 | 467 | ||||||||||||||
Deferred income tax valuation allowance (charge)
release(3) |
570 | (576 | ) | |||||||||||||
Net income (loss) from discontinued
operations(4) |
(49 | ) | (2,624 | ) | ||||||||||||
After-tax operating income attributable to AIG |
$ | 1,276 | $ | 793 | $ | 0.69 | $ | 1.18 | ||||||||
(1) | 2010 computation based on net income (loss) available to common shareholders after attribution of net income (loss) to Series C preferred shareholder. No attribution made in 2011 as a result of the completion of the Recapitalization. | |
(2) | Primarily AIA in 2010. | |
(3) | Tax valuation allowance attributable to continuing operations. | |
(4) | Second quarter 2011 discontinued operations include Nan Shan. Second quarter 2010 discontinued operations was comprised of AIG Star Life Insurance Co., Ltd., AIG Edison Life Insurance Company, American Life Insurance Company, American General Finance, Inc. and Nan Shan. |
2
RECAP OF AFTER-TAX OPERATING INCOME
Second Quarter Results (in millions) | 2011 | 2010 | ||||||
Continuing insurance pre-tax operating income: |
||||||||
Chartis |
$ | 789 | $ | 955 | ||||
SunAmerica Financial Group |
743 | 858 | ||||||
Sub-Total Continuing Insurance |
1,532 | 1,813 | ||||||
ILFC (reported in Financial Services segment) |
86 | 182 | ||||||
Mortgage Guaranty (reported in Other) |
13 | 226 | ||||||
Interest on third party debt |
(420 | ) | (484 | ) | ||||
Other |
||||||||
Maiden Lane III |
(667 | ) | 358 | |||||
Corporate & Eliminations |
(177 | ) | (369 | ) | ||||
Asset Management |
92 | 303 | ||||||
Capital Markets |
(160 | ) | (145 | ) | ||||
Financial Services Other |
(72 | ) | (12 | ) | ||||
Sub-Total Ongoing Operations |
227 | 1,872 | ||||||
AIA fair value income |
1,521 | | ||||||
FRBNY/Treasury interest and return on preferred interest |
(141 | ) | (720 | ) | ||||
Other Noncontrolling Interest |
(75 | ) | (28 | ) | ||||
Income tax (expense) / benefit |
(256 | ) | (331 | ) | ||||
After-tax operating income attributable to AIG |
$ | 1,276 | $ | 793 | ||||
RECAP OF AFTER-TAX OPERATING INCOME
Six Months Ended June 30, 2011 (in millions) | 2011 | 2010 | ||||||
Continuing insurance pre-tax operating income: |
||||||||
Chartis |
$ | 326 | $ | 1,834 | ||||
SunAmerica Financial Group |
1,886 | 1,977 | ||||||
Sub-Total Continuing Insurance |
2,212 | 3,811 | ||||||
ILFC (reported in Financial Services segment) |
203 | 126 | ||||||
Mortgage Guaranty (reported in Other) |
26 | 299 | ||||||
Interest on third party debt |
(847 | ) | (959 | ) | ||||
Other |
||||||||
Maiden Lane III |
77 | 1,109 | ||||||
Corporate & Eliminations |
(118 | ) | (425 | ) | ||||
Asset Management |
580 | 293 | ||||||
Capital Markets |
117 | (231 | ) | |||||
Financial Services Other |
(147 | ) | (41 | ) | ||||
Sub-Total Ongoing Operations |
2,103 | 3,982 | ||||||
AIA and MetLife fair value income |
2,426 | | ||||||
FRBNY/Treasury interest and return on preferred
interest |
(121 | ) | (1,433 | ) | ||||
Other Noncontrolling Interest |
(19 | ) | (160 | ) | ||||
Income tax (expense) / benefit |
(1,083 | ) | (959 | ) | ||||
After-tax operating income attributable to AIG |
$ | 3,306 | $ | 1,430 | ||||
3
CHARTIS
Chartis reported second quarter operating income before net realized
capital gains (losses) of $789 million, compared to operating income of $955
million in the second quarter of 2010. Second quarter 2011 results included
$539 million of catastrophe losses, including $348 million related to
tornadoes in the Midwest, Southeastern and Northeastern regions of the
United States; $84 million for U.S. floods and other storms; and $54 million
related to the New Zealand earthquake in June, compared to $300 million in
catastrophe losses in the second quarter of 2010. Chartis 2011 six-month
operating income was adversely affected by the extraordinary level of
catastrophe losses in 2011, including the $1.3 billion Tohoku earthquake and
tsunami.
The second quarter 2011 combined ratio was 104.0 compared to 102.0 in
the second quarter of 2010. The current accident year combined ratio,
excluding catastrophes, was 97.7, compared to 96.9 in the prior year period.
The second quarter 2011 results reflect no significant prior year loss
reserve development and no changes in the loss estimate related to the
earthquake that occurred in Japan in March.
Second quarter 2011 net premiums increased 2.4 percent and were
essentially flat compared to last year, excluding Fuji and the impact of
foreign exchange. When those items are included, worldwide net premiums
increased 17.6 percent compared to the same period last year. U.S. pricing
generally improved during the quarter, primarily driven by commercial
property and workers compensation, while pricing on other lines was
generally stable. Chartis retention continued to show positive trends.
Chartis has made significant progress reorganizing its businesses to a
more truly global commercial and consumer business. Chartis currently
anticipates that it will complete its organization and operating design and
related segment reporting changes in the third quarter of 2011.
SUNAMERICA FINANCIAL GROUP
SunAmerica reported operating income of $743 million in the second
quarter of 2011 compared to $858 million in the second quarter of 2010.
Second quarter 2011 results were affected by reduced net investment income,
driven by a $176 million lower fair market valuation of SunAmericas holding
of ML II compared with income of $120 million in the second quarter of 2010.
Excluding ML II, net investment income increased due to higher partnership
income and the redeployment of $8.4 billion of cash and short-term
investments to higher yielding fixed income securities, including certain ML
II securities.
Assets under management of $254.9 billion at the end of the second
quarter increased 9 percent compared to $233.8 billion in the second quarter
of 2010. Unrealized appreciation of investment securities totaled $4.6
billion compared to $4.1 billion at March 31, 2011.
Premiums, deposits, and other considerations totaled $6.1 billion, a
23.7 percent increase compared to $5.0 billion last year, as both fixed
annuities and variable annuity deposits showed significant improvements.
Fixed annuity deposits increased 58 percent over the prior year as certain
bank distributors negotiated a lower commission in exchange for a higher
crediting rate which made SunAmerica offerings more attractive to
policyholders. Variable annuity deposits were $832 million in the quarter,
a 68 percent increase over the second quarter of 2010 due to competitive
product enhancements, reinstatements during the last year at a number of key
broker-dealers, increased wholesaler productivity, and improvements in the
equity markets. Group retirement products and retail mutual fund deposits
also increased 6 percent and 29 percent, respectively. Retail life
insurance sales grew 16 percent over the second quarter of last year as
product enhancements and efforts to re-engage independent distribution and
improve productivity of the career agency force continue to produce results.
4
FINANCIAL SERVICES
Financial Services reported a second quarter operating loss before net
realized capital gains (losses) of $146 million, compared with operating
income of $25 million in the second quarter of 2010.
ILFC reported second quarter operating income of $86 million, compared
to operating income of $182 million in the second quarter of 2010. During
the second quarter of 2011, ILFC recorded rental revenues of $1.1 billion
and depreciation expense of $459 million compared to rental revenues of $1.2
billion and depreciation expense of $480 million in the second quarter of
2010, due to a reduction in the size of ILFCs aircraft fleet under
operating leases as a result of the sales of aircraft during 2010 and 2011
and the impact of lower lease rates on used aircraft. ILFC recorded a $61
million loss on the extinguishment of debt and $42 million of impairment
charges, fair value adjustments and lease-related charges in the current
quarter. At June 30, 2011, ILFC had 933 aircraft in its fleet, compared to
946 at June 30, 2010.
Capital Markets, whose active wind-down of the remaining AIGFP
derivatives portfolio was completed as of June 30, 2011, reported a second
quarter operating loss of $160 million, compared to an operating loss of
$145 million in the second quarter of 2010. The results were primarily due
to unrealized market valuation losses related to the super senior credit
default swap portfolio, partially offset by improvement related to the net
effect of changes in credit spreads on the valuation of Capital Markets
derivative assets and liabilities as well as lower operating expenses.
Active wind-down of AIGFP derivatives portfolios:
| The notional amount of the AIGFP derivatives portfolio was reduced 42 percent from $341.3 billion, including $59.9 billion of super senior credit default swap contracts, at December 31, 2010 to $198.4 billion, including $29.1 billion of super senior credit default swap contracts, at June 30, 2011. The notional amount at June 30, 2011 and December 31, 2010 excludes approximately $8 billion and $11.5 billion of intercompany derivatives, respectively. |
| The number of outstanding trade positions has been reduced by approximately 1,700, or 44 percent, from approximately 3,900 at December 31, 2010, to approximately 2,200 at June 30, 2011. The June 30, 2011 trade count excludes approximately 4,800 trade positions that are non-derivative asset and liability positions, the management of which was transferred to AIGs Direct Investment book in 2010. |
PARENT & OTHER
AIGs Parent and Other operations reported second quarter operating
income of $344 million, compared to an operating loss of $131 million in the
second quarter of 2010. Holdings of AIA ordinary shares produced income of
$1.5 billion during the quarter, as this position is recorded at fair value
based on the June 30, 2011 closing price on the Hong Kong Stock Exchange.
Unallocated corporate expenses totaled $261 million in the quarter compared
to $761 million in the second quarter of 2010, which included a significant
litigation reserve. AIAs results were consolidated with those of AIG in
the second quarter of 2010.
Mortgage Guaranty reported operating income of $13 million for the
second quarter of 2011, compared to operating income of $226 million in the
second quarter of 2010. The results for the 2010 quarter reflect $232
million of favorable loss reserve development. For the current quarter,
newly reported delinquent loans continued to decline, although overturns of
previous rescissions rose.
AIGs Direct Investment book had second quarter operating income of $93
million before net realized capital gains (losses) compared to operating
income of $307 million in the second quarter of 2010, with the lower income
primarily driven by substantially wider credit spreads this quarter.
5
The fair value of AIGs interest in Maiden Lane III decreased $667
million during the second quarter, compared with an increase of $358 million
in the second quarter of 2010, due to wider credit spreads on U.S.
housing-related assets in the current quarter. Estimates of future cash
flows supporting the recovery of AIGs investment and share of the residual
interests remained steady.
Conference Call
AIG will host a conference call tomorrow, August 5, 2011, at 8:00 a.m.
ET to review these results. The call is open to the public and can be
accessed via a live listen-only webcast at http://www.aig.com. A replay
will be available after the call at the same location.
Additional supplementary financial data is available in the Investor
Information section at www.aig.com.
# # #
It should be noted that the conference call (including the conference
call presentation material), this earnings release and the financial
supplement may include projections and statements which may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These projections and statements are not
historical facts but instead represent only AIGs belief regarding future
events, many of which, by their nature, are inherently uncertain and outside
AIGs control. These projections and statements may address, among other
things: the timing of the disposition of the ownership position of the
United States Department of the Treasury (the Treasury Department) in AIG;
the timing and method of repayment of the preferred interests in AIA Aurora
LLC held by the Treasury Department; AIGs exposures to subprime mortgages,
monoline insurers and the residential and commercial real estate markets,
state and municipal bond issuers, and sovereign bond issuers; AIGs strategy
for risk management; AIGs ability to retain and motivate its employees;
AIGs generation of deployable capital; AIGs return on equity and earnings
per share long-term aspirational goals; AIGs strategy to grow net
investment income, efficiently manage capital and reduce expenses; AIGs
strategy for customer retention, growth, product development, market
position, financial results and reserves; and the revenues and combined
ratios of AIGs subsidiaries. It is possible that AIGs actual results and
financial condition will differ, possibly materially, from the results and
financial condition indicated in these projections and statements. Factors
that could cause AIGs actual results to differ, possibly materially, from
those in the specific projections and statements include: actions by credit
rating agencies; changes in market conditions; the occurrence of
catastrophic events; significant legal proceedings; concentrations in AIGs
investment portfolios, including its municipal bond portfolio; judgments
concerning casualty insurance underwriting and reserves; judgments
concerning the recognition of deferred tax assets; judgments concerning the
recoverability of ILFCs fleet of aircraft; and such other factors as
discussed throughout Part I, Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations of AIGs Quarterly Report on
Form 10-Q for the quarter ended June 30, 2011, in Part II, Item 1A. Risk
Factors of AIGs Quarterly Report on Form 10-Q for the quarter ended March
31, 2011, throughout Part II, Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations and in Part I, Item 1A.
Risk Factors in AIGs Annual Report on Form 10-K for the year ended December
31, 2010. AIG is not under any obligation (and expressly disclaims any
obligation) to update or alter any projection or other statement, whether
written or oral, that may be made from time to time, whether as a result of
new information, future events or otherwise.
American International Group, Inc. (AIG) is a leading international
insurance organization serving customers in more than 130 countries. AIG
companies serve commercial, institutional, and individual customers through
one of the most extensive worldwide property-casualty networks of any
insurer. In addition, AIG companies are leading providers of life insurance
and retirement services in the United States. AIG common stock is listed on
the New York Stock Exchange, as well as the stock exchanges in Ireland and
Tokyo.
6
Comment on Regulation G
This press release, including the financial highlights, includes
certain non-GAAP financial measures. The reconciliations of such measures
to the most comparable GAAP measures in accordance with Regulation G are
included within the relevant tables or in the second quarter 2011 Financial
Supplement available in the Investor Information section of AIGs website,
www.aig.com.
Throughout this press release, 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 AIGs financial information in
evaluating the performance of AIG. That presentation includes the use of
certain non-GAAP measures. In addition to the GAAP presentations, in some
cases, revenues, net income, operating income and related rates of
performance are shown exclusive of the effect of tax benefits not obtained
for losses incurred, results from divested businesses, discontinued
operations, amortization of the FRBNY prepaid commitment fee asset, the
recognition of other-than-temporary impairments, restructuring-related
activities, conversion of the Series C, E and F Preferred Stock, realized
capital gains (losses), net of SunAmerica DAC offset, partnership income,
other enhancements to income, the effect of non-qualifying derivative
hedging activities, the effect of goodwill impairments, credit valuation
adjustments, unrealized market valuation gains (losses), the effect of
catastrophe-related losses and prior year loss development, asbestos losses,
foreign exchange rates, deferred income tax valuation allowance charges or
credits, and the bargain purchase gain on the Fuji acquisition.
In all such instances, AIG believes that excluding these items permits
investors to better assess the performance of AIGs underlying businesses.
AIG believes that providing information in a non-GAAP manner is more useful
to investors and analysts and 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 it should present and discuss its financial information in
a manner most meaningful to its financial statement users. Underwriting
profit (loss) is utilized to report results for Chartis operations.
Operating income (loss), which is before net realized capital gains (losses)
and related DAC and sales inducement asset (SIA) amortization and goodwill
impairment charges, is utilized to report results for SunAmerica Financial
Group (SunAmerica) operations. Results from discontinued operations and net
gains (losses) on sales of divested businesses are excluded from these
measures. AIG believes that these measures allow for a better assessment
and enhanced understanding of the operating performance of each business by
highlighting the results from ongoing operations and the underlying
profitability of its businesses. When such measures are disclosed,
reconciliations to GAAP pre-tax income are provided.
Life and retirement services production (premiums, deposits and other
considerations and life insurance CPPE sales) is a non-GAAP measure which
includes life insurance premiums, deposits on annuity contracts and mutual
funds. AIG uses this measure because it is a standard measure of
performance used in the insurance industry and thus allows for more
meaningful comparisons with AIGs insurance competitors.
In light of the companys significant divestiture and
restructuring-related activities, AIG revised its definition of after-tax
operating income (loss) (formerly adjusted net income) in the fourth quarter
of 2010. AIG revised the definition in order to present and discuss its
financial information in a manner most meaningful to financial statement
users. AIGs definition of after-
7
tax operating income (loss) was revised to exclude income (loss) from
divested businesses that did not qualify for discontinued operations
accounting treatment, amortization of the FRBNY prepaid commitment fee
asset, goodwill impairment charges arising from divestiture-related
activities, the DAC offset associated with net realized capital gains
(losses) for SunAmerica, and deferred income tax valuation allowance charges
and releases.
AIG believes that this revised measure of after-tax operating income
(loss) permits a better assessment and enhanced understanding of the
operating performance of its businesses by highlighting the results from
ongoing operations and the underlying profitability of its businesses,
without the distortive effects of the highly unusual events that have
affected AIG since 2008. In addition, the DAC offset adjustment is a common
adjustment for non-GAAP operating financial measures in the life insurance
industry, and is a better measure of how AIG assesses the operating
performance of SunAmericas operations.
# # #
8
American International Group, Inc.
Financial Highlights*
(in millions, except share data)
Financial Highlights*
(in millions, except share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
% Inc. | % Inc. | |||||||||||||||||||||||
2011 | 2010 | (Dec.) | 2011 | 2010 | (Dec.) | |||||||||||||||||||
Chartis Insurance Operations: |
||||||||||||||||||||||||
Net Premiums Written |
$ | 9,167 | $ | 7,792 | 17.6 | % | $ | 18,333 | $ | 15,436 | 18.8 | % | ||||||||||||
Net Premiums Earned |
9,033 | 7,733 | 16.8 | 17,684 | 15,374 | 15.0 | ||||||||||||||||||
Claims and claims adjustment expenses incurred |
6,680 | 5,575 | 19.8 | 14,436 | 11,034 | 30.8 | ||||||||||||||||||
Underwriting expenses |
2,706 | 2,316 | 16.8 | 5,243 | 4,690 | 11.8 | ||||||||||||||||||
Underwriting profit (loss) |
(353 | ) | (158 | ) | (123.4 | ) | (1,995 | ) | (350 | ) | (470.0 | ) | ||||||||||||
Net Investment Income |
1,142 | 1,113 | 2.6 | 2,321 | 2,184 | 6.3 | ||||||||||||||||||
Operating Income |
789 | 955 | (17.4 | ) | 326 | 1,834 | (82.2 | ) | ||||||||||||||||
Net Realized Capital Gains (a) |
39 | 58 | (32.8 | ) | 86 | 195 | (55.9 | ) | ||||||||||||||||
Bargain Purchase Gain (b) |
| | | | 332 | | ||||||||||||||||||
Pre-tax Income |
828 | 1,013 | (18.3 | ) | 412 | 2,361 | (82.5 | ) | ||||||||||||||||
Loss Ratio |
74.0 | 72.1 | 81.6 | 71.8 | ||||||||||||||||||||
Expense Ratio |
30.0 | 29.9 | 29.6 | 30.5 | ||||||||||||||||||||
Combined Ratio |
104.0 | 102.0 | 111.2 | 102.3 | ||||||||||||||||||||
SunAmerica Financial Group Operations: |
||||||||||||||||||||||||
Premiums |
662 | 658 | 0.6 | 1,283 | 1,325 | (3.2 | ) | |||||||||||||||||
Policy fees |
682 | 657 | 3.8 | 1,366 | 1,305 | 4.7 | ||||||||||||||||||
Deposits and other considerations not included in revenues under GAAP |
4,800 | 3,653 | 31.4 | 9,721 | 7,075 | 37.4 | ||||||||||||||||||
Premiums, deposits and other considerations |
6,144 | 4,968 | 23.7 | 12,370 | 9,705 | 27.5 | ||||||||||||||||||
Net Investment Income |
2,461 | 2,628 | (6.4 | ) | 5,215 | 5,335 | (2.2 | ) | ||||||||||||||||
Operating Income |
743 | 858 | (13.4 | ) | 1,886 | 1,977 | (4.6 | ) | ||||||||||||||||
Amortization (expense) benefit of DAC, VOBA, and SIA related to net
realized capital gains (losses) |
(59 | ) | 196 | | (42 | ) | 200 | | ||||||||||||||||
Net Realized Capital Gains (Losses) (a) |
91 | (966 | ) | | (129 | ) | (1,762 | ) | 92.7 | |||||||||||||||
Pre-tax Income |
775 | 88 | 780.7 | 1,715 | 415 | 313.3 | ||||||||||||||||||
Financial Services Operations: |
||||||||||||||||||||||||
Operating Income (Loss) |
(146 | ) | 25 | | 173 | (146 | ) | | ||||||||||||||||
Net Realized Capital Gains (Losses) (a) |
3 | (1 | ) | | 9 | (32 | ) | | ||||||||||||||||
Pre-tax Income (Loss) |
(143 | ) | 24 | | 182 | (178 | ) | | ||||||||||||||||
Other Operations, before Net Realized Capital Gains (Losses) |
344 | (131 | ) | | (1,423 | ) | (93 | ) | (1,430.1 | ) | ||||||||||||||
Other Operations, Net Realized Capital Gains (Losses) (a) |
(27 | ) | 395 | | (465 | ) | 560 | | ||||||||||||||||
Consolidation and Elimination Adjustments (a) |
29 | 112 | (74.1 | ) | 5 | 77 | (93.5 | ) | ||||||||||||||||
Income from Continuing Operations before Income Tax Expense (Benefit) |
1,806 | 1,501 | 20.3 | 426 | 3,142 | (86.4 | ) | |||||||||||||||||
Income Tax Expense (Benefit) |
(288 | ) | 1,005 | | (488 | ) | 558 | | ||||||||||||||||
Income from Continuing Operations |
2,094 | 496 | | 914 | 2,584 | (64.6 | ) | |||||||||||||||||
Income (Loss) from Discontinued Operations, net of income tax expense |
(37 | ) | (2,611 | ) | 98.6 | 1,616 | (2,268 | ) | | |||||||||||||||
Net Income (Loss) |
2,057 | (2,115 | ) | | 2,530 | 316 | 700.6 | |||||||||||||||||
Less: |
||||||||||||||||||||||||
Net Income from Continuing Operations Attributable
to Noncontrolling Interests: |
||||||||||||||||||||||||
Noncontrolling Nonvoting, Callable, Junior and Senior Preferred |
||||||||||||||||||||||||
Interests |
141 | 508 | (72.2 | ) | 393 | 1,027 | (61.7 | ) | ||||||||||||||||
Other |
64 | 20 | 220.0 | 9 | 139 | (93.5 | ) | |||||||||||||||||
Total Net Income from Continuing Operations Attributable to Noncontrolling Interests |
205 | 528 | (61.2 | ) | 402 | 1,166 | (65.5 | ) | ||||||||||||||||
Net Income from Discontinued Operations Attributable to
Noncontrolling interests |
12 | 13 | (7.7 | ) | 19 | 23 | (17.4 | ) | ||||||||||||||||
Total net income attributable to noncontrolling interests |
217 | 541 | (59.9 | ) | 421 | 1,189 | (64.6 | ) | ||||||||||||||||
Net Income (Loss) Attributable to AIG |
1,840 | (2,656 | ) | | 2,109 | (873 | ) | | ||||||||||||||||
Net Income (Loss) Attributable to AIG Common Shareholders |
$ | 1,840 | $ | (2,656 | ) | | % | $ | 1,297 | $ | (176 | ) | | % | ||||||||||
9
Financial Highlights -continued
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
% Inc. | % Inc. | |||||||||||||||||||||||
2011 | 2010 | (Dec.) | 2011 | 2010 | (Dec.) | |||||||||||||||||||
Net Income (Loss) Attributable to AIG |
$ | 1,840 | $ | (2,656 | ) | | % | $ | 2,109 | $ | (873 | ) | | % | ||||||||||
Income (Loss) from Discontinued Operations Attributable to AIG, net of tax |
(49 | ) | (2,624 | ) | 98.1 | 1,597 | (2,291 | ) | | |||||||||||||||
Net Gain (Loss) on Sale of Divested Businesses, net of tax |
(1 | ) | 93 | | (48 | ) | 17 | | ||||||||||||||||
Net Income from Divested Businesses, net of tax |
10 | 467 | (97.9 | ) | 16 | 951 | (98.3 | ) | ||||||||||||||||
Deferred Income Tax Valuation allowance (charge) / release |
570 | (576 | ) | | 7 | 245 | (97.1 | ) | ||||||||||||||||
Amortization of FRBNY prepaid commitment fee asset, net of tax |
| (353 | ) | | (2,358 | ) | (768 | ) | (207.0 | ) | ||||||||||||||
Net Realized Capital Gains (Losses) |
44 | (487 | ) | | (343 | ) | (716 | ) | 52.1 | |||||||||||||||
SunAmerica DAC offset related to Net Realized Capital Gains(Losses) |
(38 | ) | 127 | | (27 | ) | 130 | | ||||||||||||||||
Non-qualifying Derivative Hedging Gains (Losses) , net of tax |
28 | (96 | ) | | (41 | ) | (203 | ) | 79.8 | |||||||||||||||
Bargain Purchase Gain |
| | | | 332 | | ||||||||||||||||||
After-Tax Operating Income Attributable to AIG |
$ | 1,276 | $ | 793 | 60.9 | $ | 3,306 | $ | 1,430 | 131.2 | ||||||||||||||
Income (Loss) Per Common Share Diluted: |
||||||||||||||||||||||||
Net Income (Loss) Attributable to AIG Common Shareholders |
$ | 1.00 | $ | (19.57 | ) | | $ | 0.76 | $ | (1.30 | ) | | ||||||||||||
After-Tax Operating Income Attributable to AIG Common Shareholders |
$ | 0.69 | $ | 1.18 | (41.5) | % | $ | 1.95 | $ | 2.13 | (8.5 | ) | ||||||||||||
Book Value Per Common Share on AIG Shareholders Equity (c) |
$ | 48.83 | $ | 558.56 | (91.3 | ) | ||||||||||||||||||
Pro forma Book Value Per Common Share on AIG Shareholders Equity (d) |
$ | 49.18 | $ | 45.25 | 8.7 | % | ||||||||||||||||||
Return on equity |
8.3 | % | | 4.8 | % | | ||||||||||||||||||
Return on equity After-tax operating income (e) |
6.3 | % | 4.7 | % | 8.3 | % | 4.3 | % |
Financial Highlights Notes
* | Including reconciliation in accordance with Regulation G. | |
(a) | Includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment, including the related foreign exchange gains | |
and losses. | ||
(b) | Represents a bargain purchase gain related to the purchase of additional voting shares of Fuji. | |
(c) | Represents total AIG shareholders equity divided by common shares issued and outstanding. | |
(d) | In 2010, Pro-forma book value per common share computation gives effect to the Recapitalization. | |
(e) | Computed using adjusted shareholders equity, which excludes Accumulated other comprehensive income. |
10