AIG 2008 Annual Report Download - page 20

Insurance Investment Operations
A significant portion of AIG’s General Insurance and Life Insurance & Retirement Services revenues are derived
from AIG’s insurance investment operations. The following table summarizes the investment results of the
insurance operations:
Years Ended December 31,
Cash (including
short-term
investments)(a)
Invested
Assets(a) Total
Return on
Average Cash
and Invested
Assets(b)
Return on
Average
Invested
Assets(c)
Annual Average Cash and Invested Assets
(In millions)
General Insurance:
2008 .......................... $ 9,766 $111,435 $121,201 2.9% 3.1%
2007 . ......................... 5,874 117,050 122,924 5.0 5.2
2006 . ......................... 3,201 102,231 105,432 5.4 5.6
2005 . ......................... 2,450 86,211 88,661 4.5 4.7
2004 . ......................... 2,012 73,338 75,350 4.2 4.4
Life Insurance & Retirement Services:
2008 .......................... $29,278 $385,980 $415,258 2.4% 2.6%
2007 . ......................... 25,926 423,743 449,669 5.0 5.3
2006 . ......................... 13,698 392,348 406,046 4.9 5.1
2005 . ......................... 11,137 356,839 367,976 5.1 5.2
2004 . ......................... 7,737 309,627 317,364 4.9 5.1
(a) Including investment income due and accrued and real estate. Also, includes collateral assets invested under
the securities lending program.
(b) Net investment income divided by the annual average sum of cash and invested assets.
(c) Net investment income divided by the annual average invested assets.
AIG’s worldwide insurance investment policy places primary emphasis on investments in government and
fixed income securities in all of its portfolios and, to a lesser extent, investments in high-yield bonds, common
stocks, real estate, hedge funds and other alternative investments, in order to enhance returns on policyholders’
funds and generate net investment income. The ability to implement this policy is somewhat limited in certain
territories as there may be a lack of attractive long-term investment opportunities or investment restrictions may be
imposed by the local regulatory authorities.
Financial Services Operations
AIG’s Financial Services subsidiaries engage in diversified activities including aircraft leasing, capital
markets, consumer finance and insurance premium finance. Together, the Aircraft Leasing, Capital Markets
and Consumer Finance operations generate the majority of the revenues produced by the Financial Services
operations. A.I. Credit also contributes to Financial Services results principally by providing insurance premium
financing for both AIG’s policyholders and those of other insurers.
Aircraft Leasing
AIG’s Aircraft Leasing operations are the operations of ILFC, which generates its revenues primarily from
leasing new and used commercial jet aircraft to foreign and domestic airlines. Revenues also result from the
remarketing of commercial jet aircraft for ILFC’s own account, and remarketing and fleet management services for
airlines and financial institutions. See also Note 3 to Consolidated Financial Statements.
Capital Markets
Capital Markets is comprised of the operations of AIGFP, which engaged as principal in a wide variety of
financial transactions, including standard and customized financial products involving commodities, credit,
14 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries