AIG 2005 Annual Report Download - page 34

32 Review of Operations
Agency Auto had strong growth for the
second consecutive year, with net written
premium increasing more than 30 percent.
21st Century Insurance Group had profitable
growth with good results stemming from
the ongoing implementation of its state
expansion strategy, particularly through its
entry into Texas early in 2005. The AIG
Private Client Group had strong net written
premium growth of over 40 percent in
2005. Focusing exclusively on personal
insurance and risk management services
for high-net-worth individuals and their
families, the group benefited from an
influx of new policyholders, as well as high
customer retention at 93.5 percent.
United Guaranty Corporation
United Guaranty Corporation (UGC) subsidiaries
provide mortgage guaranty insurance for first
and second mortgages, as well as a compre-
hensive range of financial products and ser-
vices to lenders and mortgage investors,
including mortgage fraud recovery services and
private education loan default insurance.
(in millions, except ratios) 2005 2004
Net premiums written $ 628 $ 607
Combined ratio 49.08 53.31
Combined ratio, excluding
catastrophe losses 47.17 53.31
UGC had a successful year in both its
domestic and international operations.
In the United States, UGC reported one of
the best combined ratios in the domestic
mortgage guaranty insurance industry,
while UGC’s consumer group marked its
seventh consecutive year of growth. UGC’s
global expansion effort continued as
planned in 2005, with new offices estab-
lished in Asia, Europe and the Americas.
Transatlantic Holdings, Inc.
Transatlantic Holdings, Inc. (Transatlantic) is
a leading international reinsurance organiza-
tion with a network of offices located in the
Americas, Europe, Asia and Australia.
Transatlantic is majority-owned by AIG.
(in millions, except ratios) 2005 2004
Net premiums written $ 3,466 $ 3,749
Combined ratio 112.17 101.46
Combined ratio, excluding
catastrophe losses 97.21 95.59
Transatlantic had a profitable year in
2005 in an insurance industry sector that
was particularly hard hit by losses from the
year’s record catastrophe activity. Many in
the industry reported negative results.
Transatlantic’s performance was driven
by strategies focused on global reach,
product diversification, prudent capital
management and stringent risk selection
efforts, in addition to the reinsurance
coverage Transatlantic purchased for itself
to protect its property and marine-energy
portfolios. For the year, net premiums
written declined due largely to weaker
market conditions and higher ceding com-
pany retentions, with the major reductions
confined to a few classes. At year end,
Transatlantic’s balance sheet remained
strong.
Foreign General Insurance
AIG’s Foreign General Insurance Group has the
most extensive worldwide network of any
property-casualty insurance organization. Its
operations encompass more than 80 countries
in Asia, the Pacific Rim, Latin America, Europe,
Africa and the Middle East.
(in millions, except ratios) 2005 2004
Net premiums written $9,997 $ 9,407
Combined ratio 85.56 90.81
Combined ratio, excluding
catastrophe losses 81.75 88.18
AIG Aviation, Inc. is the leading provider
of aviation insurance and airline terrorism
coverage. Serving most of the world’s major
airlines, AIG Aviation had a very good
year. Major customer segments include
airlines, airports, manufactured products,
business and light aircraft, commercial/
charter, ground services and aviation
workers compensation.
The Hartford Steam Boiler Inspection and
Insurance Company and its insurance sub-
sidiaries (HSB) had strong results in 2005.
HSB’s loss prevention initiatives play an
important role in its underwriting perform-
ance and help deliver excellent returns on
capital. In 2005, HSB conducted more
than 500,000 on-site customer loss preven-
tion inspections of equipment. HSB uses its
technical knowledge of equipment in
concert with on-site inspections to help
its customers prevent losses.
Domestic Personal Lines
The core businesses of AIG’s Domestic Personal
Lines are AIG Direct, Agency Auto, 21st Century
Insurance Group and the AIG Private Client
Group.
(in millions, except ratios) 2005 2004
Net premiums written $ 4,653 $4,354
Combined ratio 100.70 96.51
Combined ratio, excluding
catastrophe losses 98.25 95.94
AIG’s Domestic Personal Lines
operations had good premium growth in
2005. Overall, underwriting results for the
year were adversely affected by catastrophe
losses, reserve strengthening and costs
incurred in exiting the assigned risk busi-
ness. AIG Direct, which provides voluntary
auto insurance through a range of direct
sales channels, fully integrated and
re-underwrote the previously acquired GE
business, and is running off its homeowners
business while producing solid auto results.
General Insurance
Continued