AIG 2006 Annual Report Download - page 35

seeking comprehensive investment advice and discretionary man-
aged accounts services through programs like its Guided Portfolio
Services. This platform now meets both accumulation and retirement
income needs and at year end exceeded $5 billion in assets under
management. AIG VALIC continued to focus on expanding its sales
organization through the introduction of dedicated wholesalers and a
recruitment strategy geared toward attracting high-caliber financial
advisors.
Product innovation and market responsiveness propelled AIG
SunAmerica Retirement Markets (AIG SunAmerica) to achieve
record variable annuity sales, fee income and assets under manage-
ment in 2006. The company launched two enhancements to its popu-
lar “MarketLock” guaranteed minimum withdrawal benefit: a lifetime
income component and “MarketLock for Two,” which protects spouses
for both their lifetimes. Today, AIG SunAmerica is a leader in meeting
the growing demand of investors at or near retirement for variable
annuity living benefit options that provide predictability of income,
protection against market risk and participation in the equity market.
As a result, the company is well positioned to benefit from the
enormous opportunity presented by the IRA rollover market, which rep-
resents a key driver of future growth and market leadership.
AIG SunAmerica’s continued success in penetrating the bank channel,
improving customer service and operational efficiencies also provides
astrong foundation for growth.
Annual Report 2006 AIG 33Annual Report 2006 AIG 33
electronic application submission process. Beyond operational excel-
lence, the organization differentiates itself in the marketplace with
an emphasis on ease of doing business for both consumers and dis-
tributors. AIG American General regularly evaluates, modifies and
enhances its business processes and service models to meet the
changing needs and expectations of policyholders, distribution part-
ners and today’s consumers.
With these strategies in action — diversification, differentiation
and operational excellence—AIG American General continues to
demonstrate that the life insurance industry remains a profitable and
sustainable growth market.
Market responsiveness and product innovation fuel AIG Annuity’s
leadership position in the fixed annuity marketplace. AIG Annuity
ranked as the largest issuer of fixed annuities in the United States and,
for the 10th consecutive year, the largest issuer of fixed annuities
through the bank channel. Despite a challenging interest rate environ-
ment for fixed annuities again in 2006, AIG Annuity accounted for
over 25 percent of all bank fixed annuity sales, reflecting the quality of
its product portfolio and responsive, disciplined pricing strategy. AIG
Annuity’s continuing success also reflects the strength of its bank part-
ner relationships, its flexibility in customizing fixed annuities specific to
bank customer needs, and the superior service and marketing support
offered by its sales organization. AIG Annuity’s focus on innovation led
to the launch of the first lifetime withdrawal benefit option available on
atraditional fixed annuity product.
AIG VALIC continued to focus on its core business drivers—
deposit growth, asset retention, product development and expanded
distribution and on strengthening its leadership position in the retire-
ment savings industry. The success of its Rollover Education Center
has led to an increase in new sales and the retention of existing
client assets. New products and features like IncomeLOCK, a guar-
anteed-income-for-life retirement solution designed to meet the
needs of clients at or near retirement, helped position AIG VALIC as a
strong competitor in the growing market for income protection bene-
fits. AIG VALIC was also successful in meeting the needs of clients
AIG American General's independent agents gather several times a year to study
advanced marketing techniques for the life insurer’s innovative product line.
At a Santa Monica seminar,agents focused on the competitive advantages that
new products offer,such as AIG Elite Global IUL, a groundbreaking universal life
product that credits interest based in part on the performance of three global,
large-cap indices.
Domestic Life Insurance & Retirement Services
PDOC by Major Product
Total = $23.2billion
Individual Fixed Annuities 25.2%
Group Retirement Products 23.5%
Individual Variable Annuities 18.4%
Life Insurance 13.1%
Payout Annuities
(a)
10.6%
Group Life/Health 4.3%
Home Service 4.1%
Individual Annuities–Runoff
(b)
0.8%
(a) Includes structured settlements, single premium immediateannuities and
terminal funding annuities.
(b) Primarily represents runoff annuity business sold through discontinued
distribution relationships.
Domestic Life Insurance &
Retirement Services Premiums
(billions of dollars)
GAAP Premiums
PDOC
’02 ’03 ’04 ’05 ’06
5.2
24.4
6.2
27.0
6.4
23.7
6.6
23.2
5.6
27.0