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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................For certain categories of claims (e.g., construction defect claims and environmental claims), losses may sometimesbe reclassified to an earlier or later accident year as more information about the date of occurrence becomesavailable to AIG. These reclassifications are shown as development in the respective years in the table above.Years Ended December 31,(in millions) 2012 2011 2010Prior accident year development by major class of business:Commercial Insurance:Excess casualty – U.S. $ 262 $ (414) $ 1,071D&O and related management liability – U.S. (307) (167) 94Environmental (post 1986 – ongoing) – U.S. 161 32 –Commercial risk – U.S. 46 265 224Healthcare – U.S. 68 (45) (75)Primary (specialty) workers’ compensation – U.S. 46 145 518Primary casualty – U.S. 367 247 633Natural catastrophes:U.S. (144) 9 18International (105) (84) (11)All other, net:U.S. 42 (175) 12International (146) (96) 93Total all other, net (104) (271) 105Total Commercial Insurance 290 (283) 2,577Total Consumer Insurance (20) 85 (63)OtherAsbestos and environmental (1986 and prior)U.S. 70 29 1,151International 6 – 352Total asbestos and environmental 76 29 1,503Environmental (1987 - 2004) – U.S. 166 382 14Excess workers’ compensation – U.S. – – 825All other, net (13) (2) (6)Total Other 229 409 2,336Total AIG Property Casualty 499 211 4,850Other operations – Mortgage Guaranty (78) (16) (668)Total $ 421 $ 195 $ 4,182Net Loss Development by Class of BusinessIn determining the loss development from prior accident years, we analyze and evaluate the change in estimatedultimate loss for each accident year by class of business. For example, if loss emergence for a class of business isdifferent than expected for certain accident years, the actuaries examine the indicated effect such emergence wouldhave on the reserves of that class of business. In some cases, the higher or lower than expected emergence mayresult in no clear change in the ultimate loss estimate for the accident years in question, and no adjustment would bemade to the reserves for the class of business for prior accident years. In other cases, the higher or lower thanexpected emergence may result in a larger change, either favorable or unfavorable. As appropriate, we makeadjustments for the difference between the actual and expected loss emergence. As part of our reserving process,we also consider notices of claims received with respect to emerging and/or evolving issues, such as those related tothe U.S. mortgage and housing market.The following is a discussion of the primary reasons for the development in 2012, 2011 and 2010 of those classes ofbusiness that experienced significant prior accident year development during the three-year period. See CriticalAccounting Estimates for a description of our loss reserving process...................................................................................................................................................................................................................................92 AIG 2012 Form 10-K