AIG Reports Rise in 2Q 2001 Income to $1.66 Billion

July 30, 2001

American International Group Inc. (AIG) reported that its income excluding net realized capital gains (losses) increased 15.8 percent to $1.66 billion in the second quarter and, also excluding the first quarter cumulative effect of a FASB mandated accounting change, 15.5 percent to $3.23 billion for the first six months of 2001.

Net income for the second quarter of 2001 increased 15.6 percent to $1.63 billion, compared to $1.41 billion in the second quarter of 2000. For the first six months of 2001, net income totaled $3.16 billion, an increase of 14.7 percent compared to $2.75 billion in the same period of 2000.

Revenues in the second quarter of 2001 rose 10.1 percent to $12.58 billion from $11.43 billion in the year-earlier quarter. For the first six months, revenues totaled $24.73 billion, an increase of 10.8 percent over $22.32 billion in 2000.

At June 30, 2001, AIG’s consolidated assets and shareholders’ equity approximated $335 billion and $42.5 billion, respectively.

Income before income taxes, minority interest and realized capital gains (losses) for the second quarter of 2001 amounted to $2.43 billion, an increase of 14.0 percent over the $2.13 billion reported in 2000. For the first six months of 2001, income before income taxes, minority interest, cumulative effect of a first quarter accounting change and realized capital gains (losses) increased 14.7 percent to $4.75 billion from $4.14 billion reported last year.

Foreign exchange rates negatively affected the translation into U.S. dollars of foreign currency general insurance net premiums written and life insurance premium income and other considerations, as shown in the following table, which compares second quarter 2001 to second quarter 2000.

General insurance pretax income before realized capital losses for the second quarter of 2001 was $946.2 million, 6.6 percent above the $887.6 million last year. For the first six months of 2001, general insurance pretax income before realized capital gains (losses) was $1.92 billion, an increase of 8.9 percent, compared to $1.76 billion in 2000.

Worldwide general insurance net premiums written in the second quarter of 2001 amounted to $5.06 billion, 12.3 percent ahead of the $4.50 billion in 2000. For the first six months of 2001, general insurance net premiums written were $9.92 billion, an increase of 13.6 percent, compared to $8.73 billion last year.

General insurance net investment income rose 7.2 percent to $706.9 million in the second quarter and 7.6 percent to $1.42 billion in the first six months of 2001.

LIFE INSURANCE

AIG’s worldwide life insurance operations reported second quarter 2001 pretax income before realized capital losses of $1.07 billion, an increase of 19.7 percent, compared to $894.6 million in 2000. For the first six months of 2001, life insurance pretax income before realized capital losses increased 18.8 percent to $2.03 billion, compared to $1.71 billion last year.

Life insurance premium income and other considerations of $9.24 billion was 14.8 percent above second quarter 2000 premium income and other considerations of $8.04 billion. For the first six months, premium income and other considerations amounted to $18.01 billion, a gain of 22.5 percent, compared to $14.70 billion in 2000.

Life insurance net investment income rose 12.1 percent to $1.95 billion in the second quarter of 2001, compared to $1.74 billion for the same period last year. For the first six months, net investment income amounted to $3.87 billion, an increase of 13.5 percent, compared to $3.41 billion in 2000.

FINANCIAL SERVICES

Financial services pretax operating income during the second quarter of 2001 increased 22.3 percent to $372.3 million, compared to $304.5 million in 2000. For the first six months of 2001, financial services operating income was $700.9 million, a 19.7 percent increase, compared to $585.4 million in 2000.

ASSET MANAGEMENT

Asset management pretax operating income for the second quarter of 2001 amounted to $99.9 million, a decrease of 6.3 percent, compared to $106.6 million in 2000. For the first six months of 2001, pretax operating income increased 0.4 percent to $211.1 million, compared to $210.3 million last year.

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