AIG 2005 Annual Report Download - page 9

AIG ■2005 Annual Report 7
United States, AIG companies constitute
the largest foreign-owned life insurance
operation and the fifth largest of all
life insurers in the country based on total
premiums.
First year life premiums and annuities
had good growth in China. We now have
a 19.9 percent market share of total 2005
life insurance premiums written by foreign
life insurers in that rapidly expanding
market. In India, our joint venture with
The Tata Group is positioned to take
advantage of opportunities to serve the
expanding Indian middle class, which is
increasingly turning to life insurance to
provide for their families’ futures. Along
with China and Vietnam, India is one
of the most promising growth markets
for life insurance. AIG’s excellent position
in each of these countries should yield
important benefits for us in the future.
In the Philippines, The Philippine
American Life and General Insurance
Company, the country’s leading life insurer
for over half a century, substantially
increased its market share. Nan Shan Life
Insurance Company, Ltd. is the second
largest life insurer in Taiwan.
Outside of Asia, ALICO reported solid
results in the United Kingdom and the
Central and Eastern Europe region. In
many of the markets of Central and
Eastern Europe, AIG’s operations are the
largest foreign-owned life insurance
businesses. During 2005, ALICO’s Polish
life insurance company received approval
from the country’s insurance regulators to
establish branches in Lithuania and Latvia.
AIG’s life insurance agency force now
numbers over 270,000 full-time and part-
time agents and is widely recognized as
the strongest and most professional in the
industry. Agency remains our core
distribution system, and we will continue
to emphasize training to deliver superior
customer service. At the same time, we
are expanding our distribution channels,
which include banks, credit cards, travel
agents, retailers, worksite marketing,
direct marketing and brokerage.
Retirement Services is a growth busi-
ness for AIG, both domestically and over-
seas. In the United States, AIG VALIC
is the leader in the primary and secondary
education market, second in healthcare
and third in higher education. AIG
Annuity Insurance Company is the num-
ber one issuer of fixed annuities in the
United States. It also had strong operating
income growth in 2005, in spite of being
affected by the low interest rate and flat
yield curve environment. Finally, AIG
SunAmerica Retirement Markets reported
substantial increases in fee income and
assets under management.
International Retirement Services
had excellent results. Our strategy is to
leverage AIG companies’ presence in local
markets worldwide to build our retirement
services business. We have had initial
success via bancassurance in both Korea
and Japan. We believe there are numerous
opportunities to use our expertise in the
United States and our successes in Japan
and Korea to expand AIG’s Retirement
Services operations into new territories.
The growing need for private sector retire-
ment savings solutions is a global phenom-
enon, fed in part by the realization that
government programs will not be able to
provide for the growing number of senior
citizens in the years ahead.
Financial Services
Financial Services is a core business
for AIG, one that benefits from our
strong financial position and global
reach. Our Financial Services operations
are leaders in their markets and provide
diversification to AIG’s overall earnings
stream.
International Lease Finance Corpora-
tion (ILFC) is one of the largest lessors
of new advanced technology commercial
aircraft to airlines around the world. In
2005, ILFC had operating income of
$679.5 million, compared to $642.2 mil-
lion in 2004. As a lead customer of Boeing
and Airbus, ILFC is able to offer its cus-
tomers attractive lease terms and delivery
positions for their fleet expansions and
modernizations. During the year, ILFC
experienced strong demand and an overall
firming of lease rates and residual values.
ILFC’s customer base is well diversified
geographically and its fleet of more than
750 jet aircraft is one of the most modern
of any lessor.
Going forward, we believe
emerging markets such as Vietnam, India and China
will provide growth opportunities for AIG.