AIG 2009 Annual Report Download - page 115

American International Group, Inc., and Subsidiaries
2009 and 2008 Comparison
Deposits have been negatively affected by lower AIG ratings and the lingering effects of negative AIG publicity. For
individual variable annuities, the decrease in 2009 compared to 2008 is also attributable to a general decline in
industry sales volumes. Individual fixed and variable annuity sales have decreased due to the temporary suspension of
product sales at certain selling organizations due to the effect of the AIG events. However, deposits for individual
fixed annuities increased in the second half of 2009 primarily due to increased demand for guaranteed products as
well as reinstatement of sales at certain financial institutions that had previously suspended sales.
Surrenders and other withdrawals increased in 2009 for group retirement products primarily due to higher large
group surrenders. However, surrender rates and withdrawals have improved for individual fixed annuities and
individual variable annuities.
2008 and 2007 Comparison
Deposits were negatively affected by the AIG ratings downgrades and AIG’s liquidity issues commencing in
September 2008. The decrease in group retirement products deposits was due to a decline in both group annuity
deposits and group mutual fund deposits. The improvement in individual fixed annuity deposits was due to a
steepened yield curve, providing the opportunity to offer higher interest crediting rates than certificates of deposits
and mutual fund money market rates available at the time. Both group retirement products and individual fixed
annuities deposits decreased after the AIG ratings downgrades. Individual variable annuity product sales declined due
to the AIG ratings downgrades and continued weakness in the equity markets.
Group retirement products and individual annuities surrenders and other withdrawals increased in all three product
lines in 2008 compared to 2007 primarily due to the AIG ratings downgrades and AIG’s liquidity issues.
The following table presents reserves by surrender charge category and surrender rates:
Group Individual Individual
At December 31, Retirement Fixed Variable
(in millions) Products* Annuities Annuities
2009
No surrender charge $47,854 $11,444 $11,161
0% – 2% 1,509 3,054 4,094
Greater than 2% – 4% 1,918 5,635 2,066
Greater than 4% 3,213 23,885 6,758
Non-Surrenderable 850 3,184 558
Total Reserves $55,344 $47,202 $24,637
Surrender rates 12.3% 14.4% 12.1%
2008
No surrender charge $43,797 $10,287 $ 8,594
0% – 2% 1,320 3,043 3,097
Greater than 2% – 4% 1,714 6,711 2,187
Greater than 4% 2,710 25,110 7,663
Non-Surrenderable 1,032 3,243 2,052
Total Reserves $50,573 $48,394 $23,593
Surrender rates 10.5% 18.8% 14.9%
* Excludes mutual funds of $8.1 billion and $6.3 billion in 2009 and 2008, respectively.
Foreign Life Insurance & Retirement Services Operations
AIG’s Foreign Life Insurance & Retirement Services operations include insurance and investment-oriented
products such as whole and term life, investment linked, universal life and endowments, personal accident and health
107 AIG 2009 Form 10-K