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AIG’s Group Retirement Business Saw Rise in Premiums and Deposits

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Premiums and net investment income

In 9M17 and 9M16, American International Group’s (AIG) Group Retirement business garnered $21.0 million in premiums, reflecting no change. The business generated policy fees of $313.0 million in 9M17 compared to $285.0 million in 9M16, reflecting a 10% increase.

The Group Retirement business garnered premiums and deposits of $5.7 billion in 9M17 compared to $5.5 billion in 9M16, reflecting a rise in deposits related to group acquisitions. The business reported pretax operating income of $758.0 million in 9M17 versus $670.0 million in 9M16, reflecting a 13.0% rise.

On an LTM (last-12-months) basis, AIG’s net income margin stood at ~-4.8%. Its peers (XLF) Travelers Companies (TRV), Hartford Financial Services (HIG), and Aflac (AFL) posted net income margins of ~8.5%, ~2.6%, and ~12.5%, respectively.

Net investment income and net flows

AIG’s Group Retirement business garnered net investment income of $1.6 billion in 9M17 compared to $1.5 billion in 9M16. This trend reflects a marginal 2.0% increase. This increase implies a rise in the returns related to the investments in alternative assets, as well as profits generated from the securities in which AIG opted for a fair value option.

In 9M17, AIG’s Group Retirement business witnessed net outflows of $578.0 million compared to $22.0 million in 9M16, reflecting more surrenders than growth seen in these sales. The business saw surrenders in its group plan of ~$350.0 million.

The Group Retirement business incurred advisory fee expenses of $59.0 million in 9M17 compared to $52.0 million in 9M16, reflecting a 13% increase.

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