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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................The following table presents the components of AIG’s gross loss reserves by major lines of business on aU.S. statutory basis*:At December 31,(in millions) 2012 2011Other liability occurrence $ 21,533 $ 22,471International 17,453 17,726Workers’ compensation (net of discount) 17,319 17,420Other liability claims made 11,443 11,216Property 4,961 6,165Auto liability 3,060 3,081Products liability 2,195 2,416Medical malpractice 1,651 1,690Mortgage guaranty / credit 1,957 3,101Accident and health 1,518 1,553Commercial multiple peril 1,310 1,134Aircraft 1,065 1,020Fidelity/surety 647 786Other 1,879 1,366Total $ 87,991 $ 91,145* Presented by lines of business pursuant to statutory reporting requirements as prescribed by the National Association of InsuranceCommissioners.AIG’s gross loss reserves represent the accumulation of estimates of ultimate losses, including estimates for IBNRand loss expenses, less applicable discount for future investment income. We regularly review and update themethods and assumptions used to determine loss reserve estimates and to establish the resulting reserves. Anyadjustments resulting from this review are reflected in pre-tax income. Because loss reserve estimates are subject tothe outcome of future events, changes in estimates are unavoidable given that loss trends vary and time is oftenrequired for changes in trends to be recognized and confirmed. Reserve changes that increase prior years’ estimatesof ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changesthat decrease prior years’ estimates of ultimate cost are referred to as favorable development.The net loss reserves represent loss reserves reduced by reinsurance recoverable, net of an allowance forunrecoverable reinsurance, less applicable discount for future investment income.The following table classifies the components of net loss reserves by business unit:December 31,(in millions)2012 2011AIG Property Casualty:Commercial Insurance $ 56,462 $ 57,718Consumer Insurance 5,592 5,438Other 4,895 4,823Total AIG Property Casualty 66,949 67,979Other operations – Mortgage Guaranty 1,833 2,846Net liability for unpaid claims and claims adjustment expense at end of year $ 68,782 $ 70,825..................................................................................................................................................................................................................................AIG 2012 Form 10-K 89