AIG 2006 Annual Report Download - page 33

Annual Report 2006 AIG 31Annual Report 2006 AIG 31
In Latin America, ALICO’s region-wide strategies are focused on,
among other objectives, increasing direct sales and exploring non
traditional distribution channels and specialty niches. In Brazil,
Unibanco AIG Seguros S.A. is expanding its product line to attract
more customers, including the development of new pure risk prod-
ucts, educational savings products and a universal life-like product
to tap specific niches.
In Japan, AIG Edison Life Insuranceand AIG Star Life Insurance
announced plans during 2006 to integrate the two organizations.
The new combined entity will be known as AIG Life. The Japanese life
insurance industry is in an intensely competitive period. With antici-
pated completion during 2009, the integration will facilitate greater
operational efficiencies, enhanced product development capabilities,
and improved distribution and customer service platforms. The
streamlined organization and its expansive distribution channels will
primarily driven by premiums from life and accident and health (A&H)
products, as well as growth in assets under management in variable
and fixed annuities. ALICO Japan’s strategies include shifting from
yen-based savings and tax-deferred products to risk protection and
U.S. dollar-denominated life products.
In continental Western Europe, ALICO’s strategy focuses on sell-
ing risk-oriented life and A&H products through multiple channels. In
France and Spain, ALICO continued to develop direct marketing and
other alternative distribution channels. In the United Kingdom, where
ALICO reported substantial growth in sales and profits, the company
continued laying the foundation for a comprehensive individual high-
net-worth and wealth-management strategy, uniting onshore and off-
shore, pension and retirement business.
ALICO’s Central and Eastern European operations achieved
greater than 10 percent market share for total life premiums in
Slovakia, Romania, Russia, Bulgaria and Ukraine. In addition to
strengthening its agency force in the region, particularly in countries
such as Poland and Ukraine, ALICO is pursuing alternative distribu-
tion channels, especially via banks and financial institutions. ALICO
launched a number of cross-selling campaigns throughout the region
in 2006 to leverage the capabilities of other AIG companies and
their relationships with banking partners and multinationals.
From its new regional headquarters at the Dubai International
Financial Centre (DIFC), one of the world’s newest global financial
centers, ALICO-AIG Life’s Middle East, Africa and South Asia (MEASA)
region is poised to accelerate growth. The region benefits from
leading agency distribution and the largest multi-country presence of
any insurer. In 2006, ALICO concentrated on expanding distribution,
including increasing its cross-marketing initiatives and agency force.
Also in 2006, ALICO expanded its focus to develop products to meet
the needs of the region’s affluent and high-net-worth markets.
Life Insurance & Retirement Services Financial Results
(in millions) 2006 2005
Premiums, deposits and other considerations (PDOC)*$66,589 $66,448
GAAP premiums 30,636 29,400
Net investment income 19,439 18,134
Operating income before realized capital gains (losses) 9,944 9,062
Realized capital gains (losses) 88 (158)
Operating income 10,032 8,904
*Represents aggregate business activity presented on a non-GAAP basis.
Foreign Life Insurance &
Retirement Services Premiums
(billions of dollars)
GAAP Premiums
PDOC
’02 ’03 ’04 ’05 ’06
15.5
18.5
21.9
39.9
23.0
42.7
24.0
43.4
17.9
26.1