NU Online News Service, April 22, 2004, 1:58 p.m. EDT – Improving fixed annuity profits helped first-quarter profits at American International Group Inc., New York.[@@]
The giant multiline insurer is reporting $2.7 billion in net income for the latest quarter on $23.6 billion in revenue, up from $2 billion in net income on $18.9 billion in revenue for the first quarter of 2003.
Worldwide life and retirement services operating income increased 60%, to $2.1 billion, and life and retirement premium revenue increased 19%, to $6.9 billion.
The domestic life and retirement unit is reporting $1 billion in operating income on $1.5 billion in premium revenue, up from $739.8 million in operating income on $1.4 billion in premium revenue.
“We are paying careful attention to product profitability by focusing on spreads and reducing expenses,” AIG Chairman Maurice Greenberg says in a discussion of the domestic life and retirement results.
Although the AIG life and retirement operation in China is relatively small, it has been one of the fastest growing units at the company. The China life and retirement unit produced $24.4 million in first-year individual life premiums, up 62% from the total for the first quarter of 2003. The China unit’s group life and health sales increased 54%, to $31.9 million.
The domestic fixed annuity unit was another star. AIG announced in 2003 that it was cutting back on fixed annuity sales because of narrow margins between the rates it was earning on its own investments and the rates that consumers were expecting fixed annuities to pay.
Net flow of cash into AIG domestic fixed annuities fell 4.7% in the first quarter, to $2.2 billion. But operating income for domestic fixed annuities increased 64%, to $232.9 million.