American International Group Inc., whose earnings more than doubled in the latest quarter in part because of a much calmer hurricane season, is looking to expand globally, particularly in Asia.
Martin J. Sullivan, AIG's president and chief executive officer, said during the company's quarterly conference call Friday that the New York insurer sees several opportunities to increase distribution. Asia, as always, is a focal point in its growth plans.
AIG is the largest foreign life insurer in Japan. Mr. Sullivan said the company is preparing products in anticipation of a full deregulation of the market.
"The introduction of investment-linked products has been well received in a number of key markets and distribution channels," he said. "Market conditions in Japan remain challenging due to increased competition. However, we are taking action with our product and distribution strategies."
In August, AIG bought Central Insurance Co., a general insurance business in Taiwan, to increase its scale there. Edmund S.W. Tse, AIG's vice chairman of life insurance, said the company has switched from emphasizing traditional savings products in Taiwan to selling more investment-linked products.
It hopes to generate organic growth in Southeast Asia by the end of 2007 or early 2008, Mr. Tse said.
Analysts said AIG is well established in Asian markets, including Japan and Taiwan, but wants to expand further.
"They are very much a global company, and they have been for really over a decade, and they want to be even more so," said Donald Light, an analyst with Celent LLC, a Boston investment research firm. "Their primary aim is the Asian-Pacific region, and within that market their next focus is China."
AIG announced Thursday that its third-quarter earnings soared 141.4% from a year earlier, to $4.22 billion, or $1.61 a share. Operating earnings rose 116.1%, to $4.02 billion, or $1.53 a share, 10 cents more than the average estimate of analysts, according to Thomson First Call.
By midday Friday, AIG's stock had risen 2.63%, to $69.83 a share.
Mr. Sullivan said the company had a very good quarter, led by strong performance in its worldwide general insurance businesses and improved results in its life insurance and retirement services operations.
AIG, like other insurers, benefited from a tame hurricane season this year. Its property and casualty business, which paid $1.6 billion of claims caused by hurricanes Katrina and Rita a year earlier, faced no significant catastrophes this year, Mr. Sullivan said.
A 22% drop in claim costs from property and casualty policies led to $1.23 billion of pretax underwriting profits. A year earlier, when Hurricane Katrina produced record damage along the Gulf Coast, AIG posted a $1.2 billion underwriting loss.
Analysts said other insurers, including Hartford Financial Services Group Inc., had strong quarters for the same reason.
Despite these strengths, AIG experienced some outflows in its domestic retirement services business. Mr. Sullivan said sales of individual fixed annuities were slow, while sales of variable annuities remained strong.
Investors throughout the market are choosing "low-cost mutual funds over annuities, and that has led to only moderate asset growth," he said.
He added, "We want to continue to focus on deposit growth, asset retention, and improving client needs."
Overall, life insurance and retirement savings products boosted AIG's pretax earnings 15%, to $2.7 billion, before investment losses. The company increased profit outside the United States by 18%, to $1.69 billion.
Kenneth Kehrer, an analyst at Limra International Ltd.'s Kehrer-Limra in Princeton, N.J., agreed that investors are choosing mutual funds over annuities.
"There is no doubt, specifically in term of the bank space, that mutual funds have taken share from fixed and variable annuities over the last few months," he said. "Mutual fund sales have moved faster than variable annuities, and fixed annuities have been hurt by interest rates and the stock market environment."
Sluggish domestic results have prompted insurers like AIG to focus internationally, Mr. Kehrer said.
"There are really great opportunities over there with high savings rates and very low interest rates," he said. "Dollar-denominated fixed annuities look very attractive to savers in Asia."
