10-QPeriod: Q2 FY2004

AMERICAN INTERNATIONAL GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2004

Filed August 9, 2004For Securities:AIG

Summary

American International Group, Inc. (AIG) reported strong financial performance for the six months ended June 30, 2004. Total revenues grew to $47.4 billion, a 22.2% increase year-over-year, driven by robust growth in General Insurance premiums and Life Insurance & Retirement Services net investment income. Net income also saw a significant rise of 30.2% to $5.5 billion, compared to the same period in 2003, with earnings per diluted share reaching $2.10. The company's diversified business segments, including General Insurance, Life Insurance & Retirement Services, Financial Services, and Asset Management, all contributed positively to operating income, with General Insurance and Life Insurance & Retirement Services showing particularly strong gains. The company's balance sheet remains robust, with total assets increasing to $736 billion. Shareholders' equity grew to $73.6 billion, reflecting strong retained earnings. AIG's liquidity position is solid, supported by $18.16 billion in cash and short-term investments and $14.29 billion in net cash provided by operating activities for the six-month period. The company continues to execute its long-term strategies, focusing on disciplined underwriting, global expansion, and developing new distribution channels, positioning itself for continued growth.

Key Highlights

  • 1Total revenues increased 22.2% to $47.4 billion for the first six months of 2004 compared to the prior year.
  • 2Net income rose 30.2% to $5.5 billion for the first six months of 2004.
  • 3Diluted earnings per share were $2.10 for the first six months of 2004.
  • 4Total assets grew to $735.98 billion as of June 30, 2004.
  • 5Shareholders' equity increased to $73.58 billion as of June 30, 2004.
  • 6Consolidated net cash provided by operating activities was $14.29 billion for the six months ended June 30, 2004.
  • 7General Insurance operating income increased significantly due to strong growth in Domestic Brokerage Group and Foreign General operations.

Frequently Asked Questions

AIG's revenue growth of 22.2% for the first six months of 2004 was primarily driven by increased net premiums earned from global General Insurance operations, along with growth in net investment income from both General Insurance and Life Insurance & Retirement Services segments. Additionally, a significant reduction in realized capital losses compared to the same period in 2003 also contributed positively to overall financial performance.

All major segments contributed positively. General Insurance saw strong operating income growth, particularly from its Domestic Brokerage Group and Foreign General operations. Life Insurance & Retirement Services also experienced a significant increase in operating income, driven by growth across its businesses and improved capital gains. Financial Services operating income saw a slight decrease, attributed to ILFC's securitization activities and the transaction-oriented nature of Capital Markets. Asset Management operating income grew robustly, benefiting from upturns in financial markets.

AIG maintains a strong liquidity position. As of June 30, 2004, the company had $18.16 billion in cash and short-term investments. Furthermore, net cash provided from operating activities for the first six months of 2004 was $14.29 billion. AIG believes its liquid assets, operating cash flow, and access to capital markets are sufficient to meet foreseeable cash requirements.

Yes, AIG adopted Statement of Position 03-1 (SOP 03-1) in 2004, which required the recognition of a liability for guaranteed minimum death benefits and other benefits related to variable annuity and variable life contracts. This adoption resulted in a one-time cumulative accounting charge of $181 million in the first quarter of 2004.