AIG 2006 Annual Report Download - page 117

American International Group, Inc. and Subsidiaries
clients primarily in the U.S. marketplace. SAAMCo manages,
Asset Management Operations
advises and/or administers retail mutual funds, as well as the
AIG’s Asset Management operations comprise a wide variety of underlying assets of variable annuities sold by AIG SunAmerica
investment-related services and investment products. Such ser- and VALIC to individuals and groups throughout the United States.
vices and products are offered to individuals and institutions both
domestically and overseas, and are primarily comprised of Spread- Other
Based Investment Businesses, Institutional Asset Management
Included in the Other category for Asset Management is income or
and Brokerage Services and Mutual Funds.
loss from partnerships. Partnership assets consist of investments
The revenues and operating income for this segment are
in a diversified portfolio of private equity funds, affordable housing
subject to variability because they are affected by the general
partnerships and hedge fund investments.
conditions in the equity and credit markets. In addition, realized
gains and performance fees are contingent upon various fund
Asset Management Results
closings, maturity levels and market conditions.
Asset Management results for 2006, 2005 and 2004
Spread-Based Investment Business were as follows:
In prior years, the sale of GICs to investors, both domestically and (in millions) 2006 2005 2004
overseas, was AIG’s primary institutional Spread-Based Invest- Revenues:
ment Business. During 2005, AIG launched its MIP and its asset Spread-Based Investment
management subsidiaries, primarily SunAmerica Life, ceased Business $3,554 $3,547 $3,192
writing new GIC business. The GIC business will continue to run Institutional Asset
off for the foreseeable future while the MIP business is expected Management 1,670 1,195 1,049
to grow. Brokerage Services and
Mutual Funds 293 257 249
Institutional Asset Management Other 297 326 224
AIG’s Institutional Asset Management business provides an array Total $5,814 $5,325 $4,714
of investment products and services globally to institutional Operating income:
investors, AIG subsidiaries and affiliates and high net worth Spread-Based Investment
investors. These products and services include traditional equity Business(a) $ 947 $1,185 $1,328
and fixed income investment management and a full range of Institutional Asset
alternative asset classes. Delivery of AIG’s Institutional Asset Management(b)(c) 1,031 686 515
Management products and services is accomplished via a global Brokerage Services and
network of operating subsidiaries comprising AIGGIG. The primary Mutual Funds 87 66 70
operating entities within this group are AIG Global Investment Other 281 316 212
Corp., AIG Global Real Estate Investment Corp. and AIG Private Total $2,346 $2,253 $2,125
Bank. AIG Private Bank offers banking, trading and investment
(a) Includes the effect of hedging activities that did not qualify for hedge
management services to private client and high net worth accounting treatment under FAS 133, including the related foreign
individuals and institutions globally. exchange gains and losses. For 2004, the effect was a gain of
Within the alternative investment asset class, AIGGIG offers $313 million in operating income. During 2006 and 2005, these
derivative gains and losses were reported as part of AIG’s Other
hedge and private equity fund-of-funds, direct investments and
category, and were not reported in Asset Management operating
distressed debt investments. Within the structured fixed income income.
and equity product asset class, AIGGIG offers various forms of (b) Includes the full results of certain AIG managed private equity and real
structured and credit linked notes, various forms of collateralized estate funds that are consolidated pursuant to FIN 46(R), ‘‘Consolida-
debt obligations and other investment strategies aimed at achiev- tion of Variable Interest Entities’’. Also includes $346 million, $261 mil-
lion and $195 million for 2006, 2005 and 2004, respectively, of third-
ing superior returns or capital preservation. In addition, Institu- party limited partner earnings offset in minority interest expense on the
tional Asset Management’s product offerings include various consolidated statement of income which is not a component of
forms of principal protected and liability management structures. operating income.
(c) Includes the full results of certain AIG managed partnerships that are
consolidated effective Januar y 1, 2006 pursuant to EITF 04-5,
Brokerage Services and Mutual Funds
‘‘Determining Whether a General Par tner, or the General Partners as a
AIG’s Brokerage Services and Mutual Funds business provides Group, Controls a Limited Partnership or Similar Entity When the
Limited Partners Have Certain Rights’’. For 2006, operating income
mutual fund and broker-dealer related services to retail investors, includes $252 million of third-party limited partner earnings offset in
group trusts and corporate accounts through an independent minority interest expense which is not a component of operating
network of financial advisors. The AIG Advisor Group, Inc., a income.
subsidiary of AIG Retirement Services, Inc., is comprised of
several broker-dealer entities that provide these services to
Form 10-K 2006 AIG 67