American International Group Inc. says profits increased for the entire company and worldwide life and retirement operations during the fourth quarter of 2006 despite softness at the company’s domestic life and retirement operations.
AIG, New York, is reporting $3.4 billion in net income for the latest quarter on $19 billion in revenue, up from $444 million in net income on $18 billion in revenue for the fourth quarter of 2005.
Worldwide life and retirement services is reporting $2.6 billion in operating income for the latest quarter on $13 billion in revenue, up from $2.1 billion in operating income on $12 billion in revenue for the comparable quarter in 2005.
At the domestic life and retirement services operation, operating income fell to $790 million on $4.2 billion in revenue, from $906 million in operating income on $4.2 billion in revenue for the comparable quarter in 2005.
Factors contributing to the drop at the domestic operations include a $125 million charge for an arbitration ruling that went against the company and a $66 million loss related to the company’s decision to get out of the financial institutions credit life business, AIG says.
AIG notes that universal life sales dropped during the quarter because of “pricing and underwriting actions taken to limit investor owned life insurance sales.”
Similar actions involving retail single-premium immediate annuities contributed to a decline in payout annuity premiums, AIG says.