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What Helped AIG’s Life Insurance Segment in 4Q17?

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Business sales

American International Group’s (AIG) Life Insurance segment garnered premiums and deposits of $963.0 million in 4Q17 compared to $911.0 million in 4Q16. The segment witnessed a significant rise in new business sales. 

Compared to 4Q16, its universal life, health, and other products witnessed increases. However, sales of its term products declined in 4Q17.

In 4Q17, AIG’s Life Insurance segment reported $117.0 million in new business, up from $86.0 million in 4Q16. Of the total new business reported in 4Q17, term life contributed 46.0% compared to 55.0% in 4Q16. However, universal life contributed 39.0%, and health and other products contributed 15.0% in 4Q17.

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Adjusted revenues

In the US, AIG reported positive momentum in its Life Insurance segment as the company focuses on revenue-generating products. However, efforts made to ease distribution and make the platform more customer-friendly were also major contributors. The segment posted adjusted pretax income of $2.0 million in 4Q17. In 4Q16, its adjusted pretax loss was $10.0 million.

AIG’s Life Insurance segment garnered $420.0 million of total new business in 2017 compared to $321.0 million in 2016. Of the $420.0 million, the US region contributed 85.0% while the UK region contributed 15.0%.

AIG’s price-to-sales ratio stood at ~1.1x on an LTM (last-12-months) basis. Among its peers (XLF), Hartford Financial Services (HIG), Aspen Insurance Holdings (AHL), and RenaissanceRe Holdings (RNR) have price-to-sales ratios of ~1.0x, 0.83x, and ~2.5x, respectively, on an LTM basis.

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