Bring on tomorrow - AIG.com

More documents

Recommendations

Info

ITEM 7 / CRITICAL ACCOUNTING ESTIMATES.....................................................................................................................................................................................Class of Business or Category and Actuarial MethodApplication of Actuarial MethodProfessional LiabilityWe generally use a combination of loss development methodsand expected loss ratio methods for professional liabilityclasses of business.Frequency/severity methods are used in pricing andprofitability analyses for some classes of professional liability;however, for loss reserve adequacy testing, the need toensure sufficient credibility generally results in segmentationsthat are not sufficiently homogenous to utilize frequency/severity methods.Loss development methods are used for the more matureaccident years. Greater weight is given to expected loss ratiomethods in the more recent accident years. Reserves aretested separately for claims made classes and classes writtenon occurrence policy forms. Further segmentations are madein a manner believed to provide an appropriate balancebetween credibility and homogeneity of the data.We also use claim department projections of the ultimatevalue of each reported claim to supplement and inform thestandard actuarial approaches......................................................................................................................................................................................................................Catastrophic CasualtyWe use expected loss ratio methods for all accident years for The expected loss ratios and loss development assumptionscatastrophic casualty business. This class of businessused are based upon the results of prior accident years forconsists of casualty or financial lines coverage that attach in this business as well as for similar classes of business writtenexcess of very high attachment points; thus the claimsabove lower attachment points. The business can be writtenexperience is marked by very low frequency and high severity. on a claims-made or occurrence basis. We use ground-upBecause of the limited number of claims, loss development claim projections provided by our claims staff to assist inmethods are not used.developing the appropriate reserve......................................................................................................................................................................................................................AviationWe generally use a combination of loss development methods Expected loss ratio methods are used to determine the lossand expected loss ratio methods for aviation exposures.reserves for the latest accident year.Aviation claims are not very long-tail in nature; however, theyare driven by claim severity. Thus a combination of bothdevelopment and expected loss ratio methods are used for allbut the latest accident year to determine the loss reserves.Frequency/severity methods are not employed due to the highseverity nature of the claims and different mix of claims fromyear to year......................................................................................................................................................................................................................Personal AutoWe generally use frequency/severity methods and lossFor many classes of business, greater reliance is placed ondevelopment methods for domestic personal auto classes. frequency/severity methods as claim counts emerge quicklyfor personal auto and allow for more immediate analysis ofresulting loss trends and comparisons to industry and otherdiagnostic metrics......................................................................................................................................................................................................................Fidelity/SuretyWe generally use loss development methods for fidelityExpected loss ratio methods are also given weight for theexposures for all but the latest accident year. For suretymore recent accident years. For the latest accident year theyexposures, we generally use the same method as for short-tail may be given 100 percent weight.classes (discussed below)........................................................................................................................................................................................................................................................................................................................................................................................................................................................AIG 2012 Form 10-K 183
ITEM 7 / CRITICAL ACCOUNTING ESTIMATES.....................................................................................................................................................................................Class of Business or Category and Actuarial MethodApplication of Actuarial MethodMortgage GuarantyWe test mortgage guaranty reserves using loss development The reserve analysis projects ultimate losses for claims withinmethods, supplemented by an internal claim analysis byeach of several categories of delinquency based on actualactuaries and staff who specialize in the mortgage guaranty historical experience, using primarily a frequency/severity lossbusiness.development approach. Additional reserve tests are alsoemployed, such as tests measuring losses as a percent of riskin force. Reserves are reviewed separately for each line ofbusiness considering the loss development characteristics,volume of claim data available and applicability of variousactuarial methods to each line.Reserves for mortgage guaranty insurance losses and lossadjustment expenses are established for reported mortgageloan delinquencies and estimates of delinquencies that havebeen incurred but have not been reported by loan servicers,based upon historical reporting trends. We establish reservesusing a percentage of the contractual liability (for eachdelinquent loan reported) that is based upon projected claimexperience for each category of delinquency, consistent intotal with the overall reserve estimate.Mortgage Guaranty losses and loss adjustment expenseshave been adversely affected by macroeconomic events, suchas declining home prices and increasing unemployment.Because these macroeconomic events are subject to adverseor favorable change, the determination of the ultimate lossesand loss adjustment expenses requires a high degree ofjudgment. Responding to these adverse macroeconomicinfluences, numerous government and lender loanmodification programs have been implemented to mitigatemortgage losses. The loan modification programs haveproduced additional cures of delinquent loans in 2012 thatmay not continue in 2013 as some modification programs arephased out or retired. In addition, these loan modificationsmay re-default resulting in new losses for Mortgage Guaranty.Occurrences of fraudulent loans, underwriting violations, andother deviations from contractual terms, mostly related to the2006 and 2007 blocks of business, have resulted inhistorically high levels of claim rescissions and denials(collectively referred to as rescissions) during 2011. As aresult, many lenders have increased their rescission appealsactivity as well as the success rate on those appeals byfocusing additional resources on the process. The increasedlender attention on tracking down missing loan documentsalong with the heightened focus on appeals of rescissionscaused the estimated ultimate rescission rate (net of appeals)assumed in the loss reserves to be lower than the rescissionlevel projected in 2011. If this trend continues it mayunfavorably affect future results. We believe we have providedappropriate reserves for currently delinquent loans, consistentwith industry practices........................................................................................................................................................................................................................................................................................................................................................................................................................................................184 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 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
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 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
ITEM 7 / RESULTS OF OPERATIONS.....
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
ITEM 7 / LIQUIDITY AND CAPITAL RESO
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150: ITEM 7 / LIQUIDITY AND CAPITAL RESO
Page 155 and 156: ITEM 7 / INVESTMENTS...............
Page 173 and 174: ITEM 7 / ENTERPRISE RISK MANAGEMENT
Page 189 and 190: ITEM 7 / CRITICAL ACCOUNTING ESTIMA
Page 199: ITEM 7 / CRITICAL ACCOUNTING ESTIMA
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 227 and 228: ITEM 8 / NOTE 1. BASIS OF PRESENTAT
Page 229 and 230: ITEM 8 / NOTE 2. SUMMARY OF SIGNIFI
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

Create successful ePaper yourself

Delete template?

Save as template?