American International Group (AIG) officials said Friday that its life and retirement business achieved its highest level of sales in the company’s history.
AIG Life and Health CEO Jay Wintrob said the unit “continues to experience strong sales momentum, and that all product lines “contributed to this favorable trend.”
Wintrob said the majority of the improvement was driven by the increase in fixed annuity sales and continued strength of variable annuities and retail mutual fund activity.
Wintrob made his comments on the company’s earnings conference call. Late yesterday, the company reported net income attributable to AIG of $2.2 billion for the quarter ended September 30, 2013, compared to $1.9 billion for the third quarter of 2012.
Life and retirement earnings were about $1.14 billion, reflecting continued disciplined spread management and lower alternative investment returns, offset by net favorable DAC unlocking from the annual assumption review, said AIG president and CEO Robert Benmosche. Total life and retirement premiums and deposits were “very strong,” totaling $8.4 billion.
In the conference call, Benmosche tried to tamp down expectations that AIG will be able to meet all the goals for 2015 that the company had outlined when it offered stock to the public again in May 2011.
Benmosche called the company’s results “solid,” but in comments consistent with Benmosche’s efforts to drive down future expectations, Keefe Bruyette Wood’s Meyer Shelds called the results “disappointing.” He said AIG sought to match investor expectations by relying on favorable tax settlements. Shields said lower-than-expected taxes increased income by 14 cents a share.
The company also disclosed that it is integrating its Japanese operations, which it said was its largest property and casualty consumer operation, and that it strongest hope for growth in the Japanese market were sales of life and retirement products.
On the expectations issue, Benmosche said the company will seek to achieve its previously-outlined goals, but we cannot commit ourselves to saying that we will meet all of them by 2015.
In the company’s 2011 annual report, Benmosche said “our over-arching aspirational goals by the end of 2015 are to achieve a return on equity above 10 percent and annual earnings per share growth in the mid-teens.