Business Context and Reporting Period
This Form 8-K, filed on August 2, 2010, by American International Group, Inc. (AIG), discloses information regarding the sale of its international life insurance business (ALICO and DelAm) to MetLife, Inc. The filing incorporates by reference financial data and an overview of the ALICO business prepared by MetLife for its public offering. The financial data covers the year ended November 30, 2009, and the six months ended May 31, 2010.
Key Financial Metrics
The following metrics relate specifically to the ALICO Business (ALICO and DelAm) being acquired, not AIG's consolidated results:
- Revenue: $14.1 billion for the year ended November 30, 2009; $7.0 billion for the six months ended May 31, 2010.
- Net Income: $807 million for the year ended November 30, 2009; $694 million for the six months ended May 31, 2010.
- Total Assets: $113.0 billion as of November 30, 2009; $109.6 billion as of May 31, 2010.
- Stockholders' Equity: $12.7 billion as of November 30, 2009; $13.2 billion as of May 31, 2010.
- Premium Income: $9.9 billion for the year ended November 30, 2009.
- Transaction Value: Approximately $15.5 billion in cash and MetLife equity securities.
Material Changes and Business Overview
The filing details the geographic and product diversification of the ALICO Business, which operates in over 50 countries with 12,500 employees and 20 million customers. Key revenue contributors for the year ended November 30, 2009, include:
- Japan: $7.8 billion (55% of total revenue).
- Western Europe: $2.7 billion (19% of total revenue).
- Central and Eastern Europe: $1.7 billion (12% of total revenue).
- Middle East, Africa, and South Asia: $0.8 billion (6% of total revenue).
- Latin America: $0.8 billion (6% of total revenue).
Principal products include traditional life insurance (35%), accident and health insurance (29%), fixed and variable annuities (23%), and group life insurance (13%).
Outlook, Risks, and Contingencies
Investment Portfolio Risks: As of November 30, 2009, the ALICO Business held significant sovereign debt, including $11.5 billion in Japanese debt, $1.3 billion in Greek debt, and an aggregate $1.3 billion in debt issued by Portugal, Spain, Italy, and Ireland.
Disclaimer: AIG explicitly states that the "Overview of the Alico Business" and the associated financial data (ALICO Data) were prepared by MetLife. AIG does not accept responsibility for this information, which was provided solely to facilitate MetLife's financing activities. Certain amounts in the ALICO Data may differ from AIG's consolidated financial statements due to the separate company basis of preparation.
Investor Verification Checklist
- Verify the distinction between the ALICO Business financials presented here and AIG's consolidated financial statements.
- Confirm the final closing status of the $15.5 billion acquisition by MetLife.
- Assess the exposure of the acquired portfolio to sovereign debt risks in Europe (Greece, Portugal, Spain, Italy, Ireland) and Japan.
- Review the full audited and unaudited financial statements included as Exhibits 99.1 and 99.2 for detailed line items not summarized in this text.