AIG 2009 Annual Report Download - page 109

American International Group, Inc., and Subsidiaries
Domestic Life Insurance & Retirement Services Operations
AIG’s Domestic Life Insurance & Retirement Services segment, operating as SunAmerica Financial Group, is
comprised of several life insurance and retirement services businesses that market their products and services under
the brands of American General, AGLA, VALIC, Western National, SunAmerica Retirement Markets, SunAmerica
Mutual Funds, SunAmerica Affordable Housing Partners, FSC Securities, Royal Alliance and SagePoint Financial.
The businesses offer a comprehensive suite of life insurance, retirement savings products and guaranteed income
solutions through an established multi-channel distribution network that includes banks, national, regional and
independent broker-dealers, career financial advisors, wholesale life brokers, insurance agents and a
direct-to-consumer platform.
AIG’s Domestic Life Insurance businesses offer a broad range of protection products, including individual term and
universal life insurance, and group life and health products. In addition, Domestic Life Insurance offers a variety of
payout annuities, which include single premium immediate annuities, structured settlements and terminal funding
annuities. Domestic Retirement Services businesses offer group retirement products and individual fixed and variable
annuities. Certain previously acquired closed blocks and other fixed and variable annuity blocks that have been
discontinued are reported as ‘‘runoff’’ annuities. Domestic Retirement Services also maintains a runoff block of
Guaranteed Investment Contracts (GICs) that were written in (or issued to) the institutional market place prior to
2006.
In managing its Domestic Life Insurance & Retirement Services businesses, AIG analyzes the operating
performance of each business using pre-tax income (loss) before net realized capital gains (losses). Pre-tax income
(loss) before net realized capital gains (losses) is not a substitute for pre-tax income determined in accordance with
U.S. GAAP. However, AIG believes that the presentation of pre-tax income (loss) before net realized capital gains
(losses) enhances the understanding of the underlying profitability of the ongoing operations of the Domestic Life
Insurance & Retirement Services businesses. The reconciliations to pre-tax income are provided in the tables that
follow.
In order to better align financial reporting to be consistent with the manner in which AIG’s chief operating decision
makers review the businesses to make decisions about resources to be allocated and to assess performance, beginning
in 2009, results for certain brokerage service, mutual fund, GIC and other asset management activities previously
reported in the Asset Management segment are now included in Domestic Life Insurance & Retirement Services. The
remaining Asset Management operations are now included in AIG’s Other operations category. See Capital
Resources and Liquidity — AIG’s Strategy for Stabilization and Repayment of its Obligations as They Come Due —
Asset Disposition Plan for discussion of the sale of AIG’s investment advisory and third party institutional asset
management business. Prior period amounts have been revised to conform to the current presentation.
Domestic Life Insurance & Retirement Services Results
The following table presents Domestic Life Insurance & Retirement Services results:
Percentage Increase/(Decrease)
Years Ended December 31,
(in millions) 2009 2008 2007 2009 vs. 2008 2008 vs. 2007
Premiums and other considerations $ 5,327 $ 7,644 $ 7,342 (30)% 4%
Net investment income 9,553 9,134 13,582 5 (33)
Policyholder benefits and claims incurred 9,097 11,535 11,572 (21) -
Policy acquisition and other expenses 3,448 3,779 3,547 (9) 7
Pre-tax income before net realized capital losses 2,335 1,464 5,805 59 (75)
Net realized capital losses (3,514) (36,412) (2,735) - -
Pre-tax income (loss) $ (1,179) $ (34,948) $ 3,070 -% -%
101 AIG 2009 Form 10-K