Greenberg Sees Positive Signs For AIG, SARs

He also opined that he "didn't think it was a bad quarter," for his company, pointing to, among other things, a $29 billion increase in consolidated assets for a company record of $590 billion.

Mr. Greenberg's comments during a conference call with analysts included remarks that it may be "optimistic" to report Congress is near to agreement on legislation to restrict the spread of asbestos lawsuits.

On a consolidated basis, AIG reported its net income was $1.95 billion, or 74 cents per share, a decrease of $27 million from last year's first quarter $1.98 billion or 75 cents a share.

AIG said for the quarter its pretax realized capital losses increased by $399.7 million to $631.5 million compared with capital loss of $231.8 million for the period last year. The company blamed continued stock market declines and the inclusion of impairment loss provisions for equity and fixed income holdings for jump in realized losses, saying that future market conditions might allow for a portion of these losses to be recovered when the holding are ultimately sold.

AIG also said it had a net loss of $114.4 million primarily attributable to AIG Sun America partnership investments that show less return than in 2002.

For AIG's general insurance (property-casualty) operations, net income before taxes was 1.1 billion, up 22 percent over $933.3 million in last year's first quarter. Pretax operating income, excluding realized losses of $172.5 million, was 1.3 billion for general insurance, up nearly 25 percent over last year.

AIG retirement savings and asset management earned $16.9 million less than last year–$282.8 million in pretax operating income for the quarter?as its variable annuity and mutual fund businesses suffered from weak equity markets and fees from broker dealer operations declined.

Overall, when adjusted to exclude capital losses, AIG's consolidated first quarter per share income was 90 cents, an increase of 11.1 percent over 81 cents in first quarter 2002.

The company said that for the quarter it saw shareholders equity hit a record $62 billion, a $3 billion increase over Dec.31.

General insurance net premium written was $8.24 billion, up 30.1 percent, and life insurance GAAP premium income of $5.66 billion, up 18.3 percent.

Mr. Greenberg said the company had been obtaining rate increases of 30-to-40 percent and that, in the next 12 months, he expects more price increases and growth.

AIG noted that for its General Insurance unit, the combined ratio improved to 93.13 compared with 95.76 last year.

Discussing the impact of SARS, Mr. Greenberg noted that there is a belief in some quarters that the disease may have outbreaks on a seasonal basis, like influenza, and may soon abate.

He noted that it is "difficult for agents in Hong Kong and Beijing to make calls on clients." A statement from the company said that, as a result, it is doing more direct marketing and telephone sales. Mr. Greenberg said any dropoff in Asia would be made up in other areas.

On the issue of proposed asbestos legislation involving a settlement of claims through a fund supported by insurers and businesses, Mr. Greenberg said he has participated in continuing meetings in Washington and "it's a long ways to get everybody to the table and agreeing."

Items under discussion include a federal asbestos court, requirements that signs of asbestos-caused illness are present, a cap on legal fees along the lines of workers' compensation and a restriction venue shopping for lawsuits.

He said there is disagreement over what various insurers responsibilities should be to the fund. "Those with greatest exposure would like to shed that to somebody else." AIG, he said has a low exposure to asbestos claims and "we have our view on how it ought to be allocated. This will be one of the last things to be agreed on."