AIG 2007 Annual Report Download - page 82

American International Group, Inc. and Subsidiaries
Item 6.
Selected Financial Data
American International Group, Inc. and Subsidiaries
Selected Consolidated Financial Data
The Selected Consolidated Financial Data should be read in conjunction with Management’s Discussion and Analysis of
Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes
included elsewhere herein.
Years Ended December 31,
(in millions, except per share data) 2007 2006(a) 2005(a) 2004(a) 2003(a)
Revenues(b)(c)(d):
Premiums and other considerations $ 79,302 $ 74,213 $ 70,310 $ 66,704 $ 54,874
Net investment income 28,619 26,070 22,584 19,007 16,024
Net realized capital gains (losses) (3,592) 106 341 44 (442)
Unrealized market valuation losses on AIGFP super senior credit
default swap portfolio (11,472) ————
Other income 17,207 12,998 15,546 12,068 9,145
Total revenues 110,064 113,387 108,781 97,823 79,601
Benefits and expenses:
Incurred policy losses and benefits 66,115 60,287 64,100 58,600 46,362
Insurance acquisition and other operating expenses 35,006 31,413 29,468 24,378 21,332
Total benefits and expenses 101,121 91,700 93,568 82,978 67,694
Income before income taxes, minority interest and cumulative effect
of accounting changes(b)(c)(d)(e)(f) 8,943 21,687 15,213 14,845 11,907
Income taxes 1,455 6,537 4,258 4,407 3,556
Income before minority interest and cumulative effect of accounting
changes 7,488 15,150 10,955 10,438 8,351
Minority interest (1,288) (1,136) (478) (455) (252)
Income before cumulative effect of accounting changes 6,200 14,014 10,477 9,983 8,099
Cumulative effect of accounting changes, net of tax —34 — (144) 9
Net income 6,200 14,048 10,477 9,839 8,108
Earnings per common share:
Basic
Income before cumulative effect of accounting changes 2.40 5.38 4.03 3.83 3.10
Cumulative effect of accounting changes, net of tax —0.01 — (0.06) —
Net income 2.40 5.39 4.03 3.77 3.10
Diluted
Income before cumulative effect of accounting changes 2.39 5.35 3.99 3.79 3.07
Cumulative effect of accounting changes, net of tax —0.01 — (0.06) —
Net income 2.39 5.36 3.99 3.73 3.07
Dividends declared per common share 0.77 0.65 0.63 0.29 0.24
Year-end balance sheet data:
Total assets 1,060,505 979,410 853,048 801,007 675,602
Long-term borrowings(g) 162,935 135,316 100,314 86,653 73,881
Commercial paper and extendible commercial notes 13,114 13,363 9,535 10,246 6,468
Total liabilities 964,604 877,542 766,545 721,135 606,180
Shareholders’ equity $ 95,801 $101,677 $ 86,317 $ 79,673 $ 69,230
(a) Certain reclassifications have been made to prior period amounts to conform to the current period presentation.
(b) In 2007, 2006, 2005, 2004 and 2003, includes other-than-temporary impairment charges of $4.7 billion, $944 million, $598 million, $684 million
and $1.5 billion, respectively. Also includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment under FAS 133,
including the related foreign exchange gains and losses. In 2007, 2006, 2005, 2004 and 2003, respectively, the effect was $(1.44) billion,
$(1.87) billion, $2.02 billion, $385 million and $(1.50) billion in revenues and $(1.44) billion, $(1.87) billion, $2.02 billion, $671 million and
$(1.22) billion in operating income. These amounts result primarily from interest rate and foreign currency derivatives that are effective economic
hedges of investments and borrowings. These gains (losses) in 2007 include a $380 million out of period charge to reverse net gains recognized on
transfers of available for sale securities among legal entities consolidated within AIGFP. The gains (losses) in 2006 include an out of period charge of
$223 million related to the remediation of the material weakness in internal control over the accounting for certain derivative transactions under FAS
133. In the first quarter of 2007, AIG began applying hedge accounting for cer tain transactions, primarily in its Capital Markets operations. In the
second quarter of 2007, AGF and ILFC began applying hedge accounting to most of their derivatives hedging interest rate and foreign exchange risks
associated with their floating rate and foreign currency denominated borrowings.
(c) In 2006, includes the effect of out of period adjustments related to the accounting for UCITS. The effect was an increase of $490 million in both
revenues and operating income for General Insurance and an increase of $240 million and $169 million in revenues and operating income,
respectively, for Life Insurance & Retirement Services.
(d) In 2007, includes an unrealized market valuation loss of $11.5 billion on AIGFP’s super senior credit default swap por tfolio and an other-than-temporary
impairment charge of $643 million on AIGFP’s available for sale investment securities reported in other income.
(e) Includes current year catastrophe-related losses of $276 million in 2007, $3.28 billion in 2005 and $1.16 billion in 2004. There were no significant
catastrophe-related losses in 2006 and 2003.
(f) Reduced by fourth quarter charges of $1.8 billion and $850 million in 2005 and 2004, respectively, related to the annual review of General Insurance
loss and loss adjustment reserves. In 2006, 2005 and 2004, changes in estimates for asbestos and environmental reserves were $198 million,
$873 million and $850 million, respectively.
(g) Includes that por tion of long-term debt maturing in less than one year. See also Note 11 to Consolidated Financial Statements.
28 AIG 2007 Form 10-K