ESTILOS DE APRENDIZAJE

AIG’s retirement savings business segments include group retirement products, variable annuities, retail mutual funds and financial planning/broker-dealer services, as well as fixed annuity and guaranteed investment contracts, which are discussed in the Life Insurance section of this report. With approximately 140,000 financial professionals licensed to sell its products and services, AIGSunAmerica served more than five million customers in 2002.

AIG VALICachieved record operating results during 2002

in every major category of performance, including record first- year annuity sales of $2.31 billion, record total annuity and mutual fund deposits of $5.57 billion, and a record $3.09 billion in total annuity and mutual fund net flows, which is deposits less redemptions. This performance demonstrates AIG VALIC’s sales success within its core markets and underscores the value of the personalized service offered by AIG VALIC financial advisors and the company’s business retention efforts. More than 1,900 AIG VALIC financial advisors serve the retirement planning needs of 1.7 million participants in 41,000 group-sponsored retirement plans nationwide.

AIG VALICfinancial advisors capitalize on many cross-selling opportunities throughout AIG and offer life and auto insurance, individual annuities, mutual funds and long-term financial planning services, in addition to core group-sponsored retirement plans. In 2002, the company also entered new markets, including the small-plan 401(k) sector, and developed AIG VALIC Guided Portfolio Services, an industry-first investment advisory service designed to provide 401(k)-style plan participants with independ- ent investment advice and automated portfolio management services. Development of this service was made possible by an advisory opinion AIG SunAmerica received from the U.S. Department of Labor that allows service providers, such as AIG VALIC, to begin offering independent advice to individual participants in 401(k)-style plans. As a result, AIG VALIC became the first financial services provider to offer independent investment advice to partic- ipants in employer-sponsored, defined-contribution retirement plans.

AIGSunAmerica Retirement Markets, Inc.provides

individual variable annuities through independent broker-dealers, national and regional securities firms, insurance agencies, and major banks and financial institutions. More than 100,000 financial advisors are appointed to sell AIG SunAmerica variable annuities, including the flagship Polaris®_{‚ Seasons}®_{and Alliance Ovation} product lines. Issued primarily through AIG SunAmerica Life Assurance Company, these variable annuities offer a wide range of features designed to achieve long-term retirement savings goals.

In 2002, AIG SunAmerica responded to the challenging market conditions for equity-based investment products by identifying

operating and marketing efficiencies, and redesigning its individual variable annuity product line to achieve a lower risk profile. AIGSunAmerica’s asset allocation-based portfolios in the Seasons product line outperformed their S&P 500 performance bench- marks during the past one-year period, five-year period and since inception. Enhancements to the company’s overall product line-up were introduced throughout the year, including access to American Funds, a highly respected family of mutual funds, and sophisticated asset allocation tools.

AIGSunAmerica’s skill in forging strategic distribution part- nerships was underscored last year as it increased individual variable annuity sales through banks by 49 percent. AIG SunAmerica also made significant strides leveraging opportunities throughout AIG’s extensive distribution system. AIG VALIC, AIG Advisor Group and AIG American General generated 31 percent of total indi- vidual variable annuity sales in 2002.

AIGAdvisor Groupencompasses six affiliated broker-dealers

– Royal Alliance, SunAmerica Securities, FSC Securities, Advantage Capital, Sentra Securities and Spelman & Co. Its network of financial advisors represents the largest independent broker-dealer organization in the United States and is a market leader in meeting the financial and retirement planning needs of clients nationwide.

Throughout the year, AIG Advisor Group provided its financial advisors with the technology, products and tools to expand their practices amid growing demand for professional investment advice and comprehensive financial planning, including a fee-based asset management platform that accounted for over $500 million of new client assets. The group also expanded its national recruiting efforts as financial professionals sought to affiliate with a broker- dealer backed by AIG’s strength and reputation.

AIGSunAmerica Asset Management Corp. (AIG

SAAMCo)manages and administers 38 retail mutual funds

marketed under the AIG SunAmerica brand, as well as the separate investment accounts of variable annuities sold to individuals and groups across the country. In total, AIG SAAMCo manages and/or administers more than $31 billion of assets, including $7 billion in retail mutual funds and $24 billion of investments in variable annuities.

While poor equity market performance continued to impact the mutual fund industry, AIG SunAmerica Mutual Funds gen- erated positive net sales in 2002, with increased demand for its strong-performing bond and other fixed income funds. It also benefited from AIG SunAmerica’s expanded distribution capabilities and had approximately one-third of its mutual fund sales through AIG VALICfinancial advisors and AIG Advisor Group.

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Serving the financial and retirement planning needs of 1.7 million clients, AIG Advisor Group and its member broker-dealers are committed to providing independent financial advisors, like Alexandra Armstrong, with the investment products, technology tools and educational programs required to help ensure their success and the financial independence of their clients. Ms. Armstrong is affiliated with FSC Securities Corporation, an AIG Advisor Group member broker-dealer, and is Chairman of Washington, D.C.-based Armstrong, MacIntyre & Severns, Inc. With more than 40 years of financial planning experience, she specializes in building long-term relationships with clients by meeting their growing expectations for sound financial advice, a broad array of products and superior, personalized service.

AIGGlobal Investment Group, Inc. (AIG Global

Investment Group)subsidiaries and other investment man-

agement operations of AIG manage approximately $40 billion of third-party assets, in addition to the $314.62 billion of invested assets of AIG’s insurance subsidiaries.

Taken together, these global investment operations comprise one of the world’s largest institutional asset management businesses, with a client list that includes leading pension funds, endowments and other financial institutions. Offering both traditional and alternative investment products and services, AIG Global Investment Group enables clients to benefit from the strategies AIG is known for applying to its own investment portfolios. AIG Global Investment Group also provides products to individuals, many through AIG’s extensive global network, including AIG SunAmerica and AIG VALICin the United States, AIA in Hong Kong and Singapore, ALICOin Japan, and AIG Private Bank and AIG Financial Advisor Services in Europe.

In 2002, AIG Global Investment Group launched a number of new publicly-traded funds worldwide. In Europe, the group introduced the Ireland-registered AIG U.S. Dollar Managed Cash Fund plc, a Triple-A rated fund designed to provide institutional clients with a high-quality, short-term investment vehicle. The group also launched the AIG Greater China Equity Fund plc, which invests in public companies listed in mainland China, Hong Kong and Taiwan in addition to a U.S. Preferred Securities Fund for distribution in Japan. AIG Global Investment Group closed on two private equity funds in 2002, one that makes direct investments in energy, transportation and telecommunications industries where deregulation has resulted in attractive opportunities, as well as one that focuses on investments in Western Europe.

The group also launched two new hedge funds in 2002. AIG Select Hedge, Ltd. was structured in conjunction with AIG Life for use in variable insurance products, and AIG Select Diversified Hedge, Ltd. was set up for institutional and individual investors. Deepening its capability in an important sector, AIG Global Investment Group hired a team of healthcare investment profes- sionals to capitalize on growing opportunities in an industry that has historically delivered very attractive returns.

In 2002, Dallas-based John McStay Investment Counsel,

L.P. (JMIC)leveraged the scope of AIG Global Investment

Group’s network, established its first client relationship in Asia and put plans in place to expand its international customer base. JMIC’s performance consistently ranks in the top group of investment management firms specializing in smaller and mid-capitalization equity securities.

With primary operations in Europe, Japan and Southeast Asia,

AIGFinancial Advisor Services, Inc. (AIGFAS)is respon-

sible for retail asset management product development and distribution outside the United States. AIGFAS focuses on mutual funds and unit-linked life products in the areas of product devel- opment, marketing materials and programs, training, technology and sales tools to support broker-dealers, bank employees, insurance agents and independent financial advisors. AIGFAS supports a growing customer base of third-party distributors, along with AIG’s extensive international distribution through ALICO, AIA and Nan Shan. In 2002, AIGFAS successfully launched a unit-linked product in Germany and Italy, achieving projected sales goals.

AIGPrivate Bank Ltd.provides clients with personalized

and structured solutions through its headquarters in Zurich, as well as branch and representative offices in Geneva, Hong Kong, Lugano, Sao Paulo and Singapore. Working in cooperation with other asset management businesses in AIG’s global network, AIGPrivate Bank broadened its alternative investment product range through the launch of AIG International Real Estate GmbH & Co. KgaA, which invests in carefully selected real estate properties worldwide and was the largest initial public offering on the Frankfurt Stock Exchange in 2002. During the year, the bank expanded its retail operations through the acqui- sition of accounts from other Swiss banks.

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Retirement Savings & Asset Management – Revenues* (millions of dollars) 92 93 94 95 96 97 98 99 00 01 02 550 1,100 1,650 2,200 2,750 3,300 3,850

*Includes commissions and other fees.

The Clark Construction Group, Inc., a subsidiary of Clark Enterprises, Inc., is one of the largest privately held general contractors in the United States. Since its founding in 1906, Clark has become one of the nation’s most experienced and respected contractors, undertaking diverse projects, including convention centers, airports, sports facilities, manufacturing plants and highways, for both public and private clients. In 1997, Clark Enterprises, Inc. turned to AIG Global Investment Group for alternative investment services. AIG Global Investment Group’s diverse product range, global network, and ability to respond quickly to changes provided Clark with the strategic portfolio needed to further grow its business assets. Dan T. Montgomery (left) is President, The Clark Construction Group, Inc. and Lawrence C. Nussdorf is President, Clark Enterprises, Inc.

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