AIG 2012 Annual Report Download - page 123

15FEB201317173483
.....................................................................................................................................................................................
TOTAL PREMIUMS, DEPOSITS AND OTHER CONSIDERATIONS BY PRODUCT LINE
(in millions)
2012 2011 2010
23%
32%
28%
11%
6%
27%
30%
22%
13%
8%
7%
34%
24%
22%
13% RETAIL MUTUAL FUNDS
INDIVIDUAL VARIABLE ANNUITY
DEPOSITS
GROUP RETIREMENT PRODUCT
DEPOSITS
LIFE INSURANCE
INDIVIDUAL FIXED ANNUITY
DEPOSITS
Total premiums, deposits and other considerations decreased in 2012 as substantial decreases in individual fixed
annuities were only partially offset by significant increases in individual variable annuities and retail mutual funds.
2012 and 2011 Comparison
Individual fixed annuity deposits declined due to the low interest rate environment as consumers are reluctant to
purchase these products at the relatively low crediting rates currently offered. Group retirement product deposits
(which include deposits into mutual funds and fixed options within variable annuities sold in group retirement
markets) decreased modestly due to slightly lower levels of individual rollover deposits and periodic deposits in 2012,
partially offset by higher mutual fund deposits. The low interest rate environment has affected group retirement
deposits, resulting in lower levels of deposits into fixed options. Individual variable annuity deposits increased due to
innovative product enhancements and expanded distribution as well as a more favorable competitive environment.
Premiums from life insurance products increased in 2012, but were more than offset by declines in deferred annuities
sold through life insurance distribution channels. Retail mutual fund sales growth was principally driven by
SunAmerica Asset Management Corp.’s Focused Dividend Strategy product offering which continues to be a top
long-term performer within its respective peer group.
AIG Life and Retirement’s total life sales decreased 1 percent during 2012 compared to 2011. Overall retail universal
life sales decreased 1 percent with sales of indexed products growing while sales of universal life products sensitive
to low interest rates declined. Retail term insurance sales increased 1 percent in 2012 compared to 2011 because
we continued our disciplined focus related to new business pricing and underwriting. Institutional life sales increased
4 percent in 2012 compared to 2011 from growth in single premium private placement universal life deposits.
2011 and 2010 Comparison
Group retirement deposits increased primarily due to higher levels of individual rollover deposits in 2011. Individual
fixed annuity deposits increased as certain bank distributors negotiated a lower commission in exchange for a higher
rate offered to policyholders which made our individual fixed annuity products more attractive. However, fixed annuity
deposits declined in the latter part of 2011 from the first six months of 2011 due to significant declines in interest
rates. Variable annuity sales increased due to reinstatements of relationships at a number of key broker-dealers, and
increased wholesaler productivity. Deposits from life insurance products increased in 2011, but were more than offset
by declines in deferred annuities sold through life insurance distribution channels and a large private placement
variable annuity sale in 2010. Retail mutual fund annual sales growth was driven by SunAmerica Asset Management
Corp.’s Specialty Series product offerings (Alternative Strategies and Global Trends) and the Focused Dividend
Strategy Portfolio.
AIG Life and Retirement grew new sales of mortality-based life insurance products during 2011 by strengthening the
core retail independent distribution channel and continuing to focus on career agent and direct-to-consumer
distribution. Retail life sales increased 17 percent during 2011 as we continued to re-engage independent distribution
channels. Affiliated distribution channels grew 11 percent in 2011 as a result of an enhanced product suite appealing
..................................................................................................................................................................................................................................
AIG 2012 Form 10-K106
ITEM 7 / RESULTS OF OPERATIONS