AIG 2005 Annual Report Download - page 8

6Letter to Shareholders
AIG’s Foreign General Insurance
operations had very strong results in 2005.
The worldwide network of American
International Underwriters (AIU) is one
that could not be duplicated today, given
its market positions in more than 80 coun-
tries around the world, developed over
the past 86 years. AIU is increasingly a
multi-distribution organization, utilizing
brokers, agents, direct marketing, associa-
tions and bancassurance.
In Asia, our General Insurance net-
work extends throughout Southeast Asia
to China, Taiwan, Japan, Korea and India.
We are the number one foreign insurer
in many of these markets. We also have
the largest U.S.-based general insurance
business in the United Kingdom and
continental Europe. Foreign General net
premiums written in 2005 was a record,
totaling nearly $10 billion, and operating
income before realized capital gains rose
77.4 percent to $2.34 billion. The Foreign
General combined ratio was 85.56, com-
pared to 90.81 a year earlier.
We have long been leaders in opening
new insurance markets around the world,
drawing on our heritage, which extends
back to the 1920s in China. Continuing
this trend, in December, AIU received a
license to operate a wholly owned general
insurance company in Vietnam, a country
of 84 million people. This is the first prop-
erty-casualty license granted by Vietnam
to a U.S.-based insurer and complements
the life insurance license granted to
American International Assurance
Company, Ltd. (AIA) in 2000. In just five
years, AIA’s life operations in Vietnam
have had excellent growth, and we now
have more than 19,000 agents serving this
market. Going forward, we believe emerg-
ing markets such as Vietnam, India and
China will provide growth opportunities
for AIG in both general and life insur-
ance, as well as in retirement services,
financial services and asset management.
Life Insurance & Retirement Services
AIG’s Life Insurance &
Retirement Services businesses
had a successful year in 2005.
Worldwide Life Insurance & Retirement
Services had GAAP premiums in 2005 of
$29.40 billion, a gain of 4.7 percent over
2004. Operating income before realized
capital gains (losses) and pricing net
investment gains reached $9.06 billion, a
15.0 percent increase over the prior year.
In the United States, AIG American
General is one of the most profitable and
fastest growing life insurers, ranking first
in individual life insurance issued and in
term life sales, and is a leader in the
universal life and structured settlements
markets. AIG American General’s results
reflect our continued commitment to
growing the business through proven dis-
tribution channels, innovative strategies
and breadth of product. AIG American
General has initiatives under way to
increase accident and health sales through
worksite and direct marketing, while
remaining disciplined in underwriting and
risk selection.
Our overseas life network is the most
extensive of any life insurance organiza-
tion, encompassing more than 70 coun-
tries, many of which we have served for
50 years or more. AIG’s life insurance
companies lead the industry in many
countries. We have the proven ability to
grow greenfield operations and focus
on a multi-distribution strategy to support
a broad array of protection and savings
products.
In 2005, both AIA and American Life
Insurance Company (ALICO), our two
principal overseas life insurance
operations, reported good growth in first
year premiums, distributing a full range of
life insurance products through multiple
distribution channels. In Japan, the
world’s largest life market outside the
Jacob A. Frenkel (Left)
Vice Chairman
Global Economic Strategies
Frank G. Wisner
Vice Chairman
External Affairs