AIG 2005 Annual Report Download - page 63

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
economic conditions in any one state, country or geographic independent producers, and sell their products largely to
region for the year ended December 31, 2005. See also indigenous persons in local and foreign currencies. In addition
Management’s Discussion and Analysis of Financial Condition to the agency outlets, these companies also distribute their
and Results of Operations. products through direct marketing channels, such as mass
Life insurance products such as whole life and endowment marketing, and through brokers and other distribution outlets,
continue to be significant in the overseas companies, especially such as financial institutions.
in Southeast Asia, while a mixture of life insurance, accident
and health and retirement services products are sold in Japan. Insurance Investment Operations
In addition to the above, AIG also has subsidiary operations A significant portion of AIG’s General Insurance and Life
in Canada, Egypt, Mexico, Poland, Switzerland and Puerto Insurance & Retirement Services operating revenues are
Rico, and conducts life insurance business through a joint derived from AIG’s insurance investment operations. See also
venture in Brazil and through an AIUO subsidiary company in Management’s Discussion and Analysis of Financial Condition
Russia, and in certain countries in Central and South America. and Results of Operations and Notes 1, 2 and 8 of Notes to
The Foreign Life Insurance & Retirement Services compa- Consolidated Financial Statements.
nies have over 270,000 full and part-time agents, as well as
The following table summarizes the investment results of the General Insurance operations. See also Management’s Discussion
and Analysis of Financial Condition and Results of Operations and Note 8 of Notes to Consolidated Financial Statements.
Annual Average Cash and Invested Assets
Cash
(including Return on Return on
Years Ended December 31, short-term Invested Average Cash Average
(in millions) investments) Assets(a) Total and Assets(b) Assets(c)
2005 $ 2,450 $ 86,211 $ 88,661 4.5% 4.7%
2004 2,012 73,338 75,350 4.2 4.4
2003 1,818 59,855 61,673 4.2 4.3
2002 1,537 47,477 49,014 4.8 5.0
2001 1,338 41,481 42,819 6.0 6.2
(a) Including investment income due and accrued, and real estate.
(b) Net investment income divided by the annual average sum of cash and invested assets.
(c) Net investment income divided by the annual average invested assets.
The following table summarizes the investment results of the Life Insurance & Retirement Services operations. See also
Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 8 of Notes to Consolidated
Financial Statements.
Annual Average Cash and Invested Assets
Cash
(including Return on Return on
Years Ended December 31, short-term Invested Average Cash Average
(in millions) investments) Assets(a) Total and Assets(b) Assets(c)
2005 $ 6,180 $ 352,250 $ 358,430 5.1% 5.1%
2004 5,089 307,659 312,748 4.9 5.0
2003 4,680 247,608 252,288 5.1 5.2
2002 3,919 199,750 203,669 5.5 5.6
2001 3,615 162,708 166,323 6.3 6.4
(a) Including investment income due and accrued, and real estate.
(b) Net investment income divided by the annual average sum of cash and invested assets.
(c) Net investment income divided by the annual average invested assets.
AIG’s worldwide insurance investment policy places primary imposed by the local regulatory authorities. See also Manage-
emphasis on investments in government and other high ment’s Discussion and Analysis of Financial Condition and
quality, fixed income securities in all of its portfolios and, to a Results of Operations.
lesser extent, investments in high yield bonds, common stocks,
real estate, hedge funds and partnerships, in order to enhance Financial Services Operations
returns on policyholders’ funds and generate net investment AIG’s Financial Services subsidiaries engage in diversified
income. The ability to implement this policy is somewhat activities including aircraft and equipment leasing, capital
limited in certain territories as there may be a lack of adequate markets transactions, consumer finance and insurance premium
long-term investments or investment restrictions may be financing.
AIG m Form 10-K 11