AIG Reports Higher Profits, Strong China Life Sales

By Allison Bell

July 24, 2003 at 08:00 PM

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NU Online News Service, July 24, 2003, 6:19 p.m. EDT – The chairman of American International Group Inc., New York, says SARS may have helped AIG's life insurance sales in Asia during the second quarter by heightening awareness of the importance of protection policies.

The company as a whole is reporting $2.3 billion in net income for the latest quarter on $20 billion in revenue, up from $1.8 billion in net income on $17 billion in revenue for the second quarter of 2002.

The life operations generated $1.6 billion in operating income on $5.5 billion in premium revenue, up from $1.2 billion in operating income on $5.2 billion in premium revenue for the comparable quarter in 2002.

Excluding the results for guaranteed investment contracts and U.S. fixed annuities, total worldwide life production was up 6.4%.

But production was up 28% in China, AIG says.

Although SARS caused temporary problems for business people in China in April and May, "conditions have improved dramatically since then," AIG Chairman Maurice Greenberg says in a statement about second quarter results. "Beijing, Shanghai, Southern China and Hong Kong are virtually back to normal."

In the United States, sales of variable annuities showed solid gains.

VA sales increased 17% at the AIG VALIC unit, to $681 million, and 18% at the AIG SunAmerica unit, to $290 million.

Total premiums, deposits and other considerations for domestic individual fixed annuities fell 25%, to $2.8 billion.

Greenberg says AIG has been protecting the net interest margins of its domestic fixed annuities by curtailing sales when it has not been able to reduce crediting rates enough to maintain adequate margins.

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