Bring on tomorrow - AIG.com

More documents

Recommendations

Info

ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................COMMERCIAL INSURANCE RATIOSACCIDENT YEAR LOSS RATIOS80.3 84.189.3Loss ratioGeneral operatingexpense ratio68.7 74.3 74.2Loss ratioGeneral operatingexpense ratioAcquisition ratioAcquisition ratio12.316.69.914.610.814.112.316.69.914.610.814.12012 2011 20102012 2011 201020FEB201315483033CONSUMER INSURANCE RATIOSACCIDENT YEAR LOSS RATIOS60.9 64.7 59.8Loss ratioGeneral operatingexpense ratio58.3 58.959.8Loss ratioGeneral operatingexpense ratio15.314.414.7Acquisition ratio15.314.414.7Acquisition ratio25.023.826.525.023.826.52012 2011 20102012 2011 201020FEB201315482879Given the nature of the lines of business and the expenses included in Other, management has determined that thetraditional underwriting measures of loss ratio, acquisition ratio, general operating expense ratio and combined ratiodo not provide an appropriate measure of underwriting performance. Therefore, these ratios are not separatelypresented for Other.See Liability for Unpaid Claims and Claims Adjustment Expense for further discussion of discounting of reserves andprior year development.2012 and 2011 ComparisonCommercial Insurance RatiosThe improvement in the accident year loss ratio, as adjusted, for the year ended December 31, 2012 reflects therealization of benefits from the continued execution of our multi-faceted strategy to enhance risk selection, pricingdiscipline, exposure management and claims processing. Although the execution of these strategies resulted in areduction of Casualty net premiums written, it also improved the accident year loss ratio as we remediated ourprimary and excess Casualty books in both the Americas and EMEA regions. Financial lines improved due to ratestrengthening and restructuring and re-underwriting of certain products. Property improved due to rate strengthening,enhanced engineering and exposure management.The acquisition ratio increased by 2.0 points primarily due to our strategy of growing higher value lines, whichtypically incur higher acquisition costs, and the restructuring of our Casualty lines, especially the loss-sensitive..................................................................................................................................................................................................................................AIG 2012 Form 10-K 83
ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................business in the U.S. In addition, ceding commissions decreased as a result of restructuring of the Property andSpecialty reinsurance program as part of the strategic decision to retain more profitable business while continuing tomanage aggregate exposures.The general operating expense ratio increased by 2.4 points due to increases in bad debt expense, investments instrategic initiatives and human resources, coupled with a lower net premiums earned base. The lower net premiumsearned base contributed approximately 0.2 points to the increase in the general operating expense ratio. Bad debtexpense increased by approximately $143 million, which contributed approximately 0.7 points to the generaloperating expense ratio increase in the year ended December 31, 2012. For the year ended December 31, 2012,investments in strategic initiatives, commercial lines platform, our newly formed scientific group, underwriting andpricing tools totaled approximately $51 million, representing an increase of approximately $41 million over the prioryear. The remainder of the general operating expense ratio increase was primarily due to higher personnel costs, aspart of AIG’s continued investment in its employees.Consumer Insurance RatiosThe accident year loss ratio, as adjusted, in the year ended December 31, 2012 improved in both A&H and Personallines. The improvement in A&H is primarily attributable to favorable underwriting performance of individual personalaccident business in Asia Pacific, targeted underwriting actions, coupled with rate increases and risk selection ofgroup A&H in the U.S. and the overall travel business. The improvement in Personal lines is primarily attributable toimproved underwriting and risk selection in the warranty line of business, price sophistication and rate strengtheningfor Japan, EMEA automobile and the U.S. private client group, and targeted business mix changes that resulted infaster growth in non-automobile products than the automobile line of business. Included in the accident year lossratio, as adjusted, for the year ended December 31, 2012, are severe losses totaling $33 million. There were nosevere losses for the year ended December 31, 2011.The acquisition ratio increased by 1.2 points primarily due to profit sharing arrangements in lines of business targetedfor growth, direct marketing expenses and the reduction in VOBA benefit. Overall direct marketing costs increased byapproximately 9 percent in 2012; total direct marketing spending outside the U.S. increased by approximately18 percent in the same period. There was also a decrease of approximately $49 million in the benefit from theamortization of VOBA liabilities recognized at the time of the Fuji acquisition.The general operating expense ratio increased by 0.9 points as a result of incurring additional expenses to grow keylines of business across a number of geographic areas and strategic expansion in growth economy nations. For theyear ended December 31, 2012, investments in strategic initiatives, including investments in an integrated consumerlines platform and information systems infrastructure totaled approximately $44 million, representing an increase ofapproximately $27 million or 0.2 points over the prior year. The remainder of the increase was primarily due to higherpersonnel costs, as we continue our efforts to align employee performance across the globe with our strategic goals.Other CategoryWe continued to invest in a number of strategic initiatives during 2012, including the implementation of global financeand information systems, preparation for Solvency II compliance, readiness for regulation by the FRB, legal entityrestructuring, and underwriting and claims improvement initiatives. We also continued to streamline our finance,policy and claims administration and human resources operations. The costs of these initiatives, which are notspecific to either Commercial Insurance or Consumer Insurance, are reported as part of the Other category. For theyear ended December 31, 2012, such costs totaled $391 million, representing an increase of approximately$195 million over the prior year, and contributed approximately 1.1 points to the AIG Property Casualty generaloperating expense ratio...................................................................................................................................................................................................................................84 AIG 2012 Form 10-K
Page 1 and 2:
American International Group, Inc.2
Page 3 and 4:
KEY FACTS & FIGURES52,000+ $65.7 bi
Page 5 and 6:
■We said we would return to profi
Page 7 and 8:
Financial HighlightsYears Ended Dec
Page 9 and 10:
~63,000AIG EMPLOYEES AROUND THE WOR
Page 11 and 12:
$115.1 millionAVERAGE CLAIMS PAID E
Page 13 and 14:
$10,000MAXIMUM DONATION MADE BY AIG
Page 15 and 16:
American International Group, Inc.F
Page 18 and 19:
AMERICAN INTERNATIONAL GROUP, INC.A
Page 20 and 21:
ITEM 1 / BUSINESS / AIG............
Page 22 and 23:
ITEM 1 / BUSINESS / AIG............
Page 24 and 25:
ITEM 1 / BUSINESS / AIG PROPERTY CA
Page 27 and 28:
ITEM 1 / BUSINESS / AIG PROPERTY CA
Page 29 and 30:
ITEM 1 / BUSINESS / AIG LIFE AND RE
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
ITEM 1 / BUSINESS / OTHER OPERATION
Page 37 and 38:
ITEM 1 / BUSINESS / OTHER OPERATION
Page 39 and 40:
ITEM 1 / BUSINESS..................
Page 41 and 42:
ITEM 1 / BUSINESS..................
Page 43 and 44:
ITEM 1 / BUSINESS..................
Page 45 and 46:
ITEM 1 / BUSINESS..................
Page 47 and 48:
ITEM 1 / BUSINESS..................
Page 49 and 50: ITEM 1A / RISK FACTORS.............
Page 61 and 62: ITEM 1B / UNRESOLVED STAFF COMMENTS
Page 63 and 64: ITEM 5 / MARKET FOR REGISTRANT’S
Page 65 and 66: ITEM 6 / SELECTED FINANCIAL DATA...
Page 67 and 68: ITEM 6 / SELECTED FINANCIAL DATA...
Page 69 and 70: ITEM 7 / MANAGEMENT’S DISCUSSION
Page 71 and 72: ITEM 7 / USE OF NON-GAAP MEASURES..
Page 73 and 74: ITEM 7 / EXECUTIVE SUMMARY.........
Page 85 and 86: ITEM 7 / RESULTS OF OPERATIONS.....
Page 99: ITEM 7 / RESULTS OF OPERATIONS.....
Page 137 and 138: ITEM 7 / LIQUIDITY AND CAPITAL RESO
Page 151 and 152:
ITEM 7 / LIQUIDITY AND CAPITAL RESO
Page 153 and 154:
ITEM 7 / LIQUIDITY AND CAPITAL RESO
Page 155 and 156:
ITEM 7 / INVESTMENTS...............
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
ITEM 7 / ENTERPRISE RISK MANAGEMENT
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
ITEM 7 / CRITICAL ACCOUNTING ESTIMA
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
ITEM 7 / GLOSSARY..................
Page 215 and 216:
ITEM 7 / GLOSSARY..................
Page 217 and 218:
ITEM 7A / QUANTITATIVE AND QUALITAT
Page 219 and 220:
ITEM 8 / INDEX TO FINANCIAL STATEME
Page 221 and 222:
AMERICAN INTERNATIONAL GROUP, INC.C
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
ITEM 8 / NOTE 1. BASIS OF PRESENTAT
Page 229 and 230:
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFI
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
ITEM 8 / NOTE 3. SEGMENT INFORMATIO
Page 243 and 244:
ITEM 8 / NOTE 3. SEGMENT INFORMATIO
Page 245 and 246:
ITEM 8 / NOTE 4. DIVESTED BUSINESSE
Page 247 and 248:
ITEM 8 / NOTE 4. DIVESTED BUSINESSE
Page 249 and 250:
ITEM 8 / NOTE 5. BUSINESS COMBINATI
Page 251 and 252:
ITEM 8 / NOTE 6. FAIR VALUE MEASURE
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
ITEM 8 / NOTE 7. INVESTMENTS.......
Page 271 and 272:
Page 273 and 274:
Page 275 and 276:
Page 277 and 278:
Page 279 and 280:
Page 281 and 282:
Page 283 and 284:
ITEM 8 / NOTE 8. LENDING ACTIVITIES
Page 285 and 286:
ITEM 8 / NOTE 9. REINSURANCE.......
Page 287 and 288:
ITEM 8 / NOTE 10. DEFERRED POLICY A
Page 289 and 290:
ITEM 8 / NOTE 10. DEFERRED POLICY A
Page 291 and 292:
ITEM 8 / NOTE 11. VARIABLE INTEREST
Page 293 and 294:
ITEM 8 / NOTE 11. VARIABLE INTEREST
Page 295 and 296:
ITEM 8 / NOTE 12. DERIVATIVES AND H
Page 297 and 298:
Page 299 and 300:
Page 301 and 302:
ITEM 8 / NOTE 13. LIABILITY FOR UNP
Page 303 and 304:
ITEM 8 / NOTE 14. VARIABLE LIFE AND
Page 305 and 306:
ITEM 8 / NOTE 15. DEBT OUTSTANDING.
Page 307 and 308:
ITEM 8 / NOTE 15. DEBT OUTSTANDING.
Page 309 and 310:
ITEM 8 / NOTE 16. CONTINGENCIES, CO
Page 311 and 312:
Page 313 and 314:
Page 315 and 316:
Page 317 and 318:
Page 319 and 320:
Page 321 and 322:
ITEM 8 / NOTE 17. TOTAL EQUITY.....
Page 323 and 324:
Page 325 and 326:
Page 327 and 328:
ITEM 8 / NOTE 18. NONCONTROLLING IN
Page 329 and 330:
ITEM 8 / NOTE 19. EARNINGS (LOSS) P
Page 331 and 332:
ITEM 8 / NOTE 20. STATUTORY FINANCI
Page 333 and 334:
ITEM 8 / NOTE 21. SHARE-BASED COMPE
Page 335 and 336:
ITEM 8 / NOTE 21. SHARE-BASED COMPE
Page 337 and 338:
ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
Page 339 and 340:
Page 341 and 342:
Page 343 and 344:
Page 345 and 346:
Page 347 and 348:
ITEM 8 / NOTE 24. INCOME TAXES.....
Page 349 and 350:
Page 351 and 352:
Page 353 and 354:
ITEM 8 / NOTE 26. QUARTERLY FINANCI
Page 355 and 356:
ITEM 8 / NOTE 27. INFORMATION PROVI
Page 357 and 358:
Page 359 and 360:
Page 361 and 362:
PART II............................
Page 363 and 364:
PART IV............................
Page 365 and 366:
SignatureTitle/s/ ARTHUR C. MARTINE
Page 367 and 368:
ExhibitNumber Description Location(
Page 369 and 370:
Page 371 and 372:
Page 373 and 374:
Page 375 and 376:
Condensed Financial Information of
Page 377 and 378:
Condensed Financial Information of
Page 379 and 380:
Notes to Condensed Financial Inform
Page 381 and 382:
Supplementary Insurance Information
Page 383 and 384:
Valuation and Qualifying AccountsFo
Page 385 and 386:
Subsidiaries of RegistrantExhibit 2
Page 387 and 388:
Percentageof VotingSecuritiesJurisd
Page 389 and 390:
Percentageof VotingSecuritiesJurisd
Page 391 and 392:
CONSENT OF INDEPENDENT REGISTERED P
Page 393 and 394:
CERTIFICATIONSI, Robert H. Benmosch
Page 395 and 396:
CERTIFICATIONExhibit 32In connectio
Page 397 and 398:
SECURITIES REGISTERED PURSUANT TO S
Page 399:
American International Group, Inc.1
show all

Bring on tomorrow - AIG.com

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?