AIG 2007 Annual Report Download - page 123

American International Group, Inc. and Subsidiaries
partnership and UCITS income, partially offset by lower net and sales. However, operating income declined in 2007 compared
realized capital gains and a $118 million charge related to to 2006, primarily due to net realized capital losses resulting from
remediation activity. Operating income in 2006 included an other-than-temporary impairment charges, a $29 million charge
increase of $137 million from an out of period adjustment related related to remediation activity and higher DAC amortization
to UCITS. In addition, operating income in 2006 included the expense.
positive effect of out of period reductions in participating Individual fixed annuities total revenues grew in 2007 com-
policyholder dividend reserves of $163 million, primarily as a pared to 2006 due primarily to higher net investment income and
result of tax remediation adjustments and a correction to expense increased net realized capital gains. Deposits in 2007 declined
allocations between participating and non-participating accounts. compared to 2006 due to increased competition and a market
Life insurance premiums and other considerations in 2007 shift to variable life products, particularly in Korea.
reflected a moderate increase compared to 2006, benefiting from
improved sales in Thailand and the favorable effect of foreign 2006 and 2005 Comparison
exchange rates, partially offset by the shift in product mix from Revenues for Asia grew in 2006 compared to 2005. Premiums
traditional life insurance products to investment-oriented products. and other considerations in 2006 were negatively affected by the
Net investment income grew in 2007 compared to 2006 due trend towards investment-oriented products as only a portion of
primarily to higher policyholder trading gains, the growth in the the policy charges collected are reported as premiums. Net
underlying invested assets and higher partnership income. Operat- investment income in 2006 grew compared to 2005 due to higher
ing income increased in 2007 compared to 2006 due to a policyholder trading gains. Net realized capital gains were signifi-
$322 million positive effect of changes in actuarial estimates, cantly higher in 2006 compared to 2005 relating primarily to
partially offset by an $86 million charge related to remediation derivative instruments for transactions that do not qualify for
activity. Operating income in 2006 included the effect of the out hedge accounting treatment under FAS 133. Revenues and
of period UCITS adjustment and reduction in participating policy- operating income in 2006 included increases of $208 million and
holder dividend reserves discussed above. $137 million, respectively, from out of period adjustments related
Personal accident revenues grew in 2007 compared to 2006 to UCITS. In addition, operating income in 2006 increased due to
primarily due to higher premiums and other considerations, a $163 million out of period adjustment related to participating
particularly in Korea and Taiwan. Operating income reflects the policyholder dividend reserves primarily as a result of tax
combined effect of premium growth and stable loss ratios and a remediation adjustments and a correction to expense allocations
$51 million positive effect related to changes in actuarial between participating and non-participating accounts.
estimates in 2007.
Group products premiums and other considerations grew in
2007 compared to 2006 due to higher pension management fees
Domestic Life Insurance Results
Domestic Life Insurance results, presented on a sub-product basis for 2007, 2006 and 2005, were as follows:
Premiums and Net Net Realized Operating
Other Investment Capital Gains Total Income
(in millions) Considerations Income (Losses) Revenues (Loss)
2007
Life insurance $ 2,352 $ 1,528 $ (584) $ 3,296 $ 226
Home service 767 640 (100) 1,307 216
Group life/health 842 200 (16) 1,026 67
Payout annuities(a) 1,820 1,153 (67) 2,906 74
Individual fixed and runoff annuities 55 474 (36) 493 59
Total $ 5,836 $ 3,995 $ (803) $ 9,028 $ 642
2006
Life insurance $ 2,127 $ 1,377 $ (83) $ 3,421 $ 654
Home service 790 630 (38) 1,382 282
Group life/health 995 213 (8) 1,200 (159)
Payout annuities(a) 1,582 1,004 (51) 2,535 76
Individual fixed and runoff annuities 49 554 (35) 568 64
Total $ 5,543 $ 3,778 $ (215) $ 9,106 $ 917
AIG 2007 Form 10-K 69