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ITEM 7 / GLOSSARY.....................................................................................................................................................................................Net premiums written Represent the sales of an insurer, adjusted for reinsurance premiums assumed and ceded,during a given period. Net premiums earned are the revenue of an insurer for covering risk during a given period.Net premiums written are a measure of performance for a sales period while Net premiums earned are a measure ofperformance for a coverage period. From the period in which the premiums are written until the period in which theyare earned, the amount is presented as Unearned premium reserves in the Consolidated Balance Sheet.Noncontrolling interest The portion of equity ownership in a consolidated subsidiary not attributable to thecontrolling parent company.Other Operations – Operating income (loss): income (loss) excluding certain legal reserves (settlements) relatedto legacy crisis matters, loss on extinguishment of debt, amortization of prepaid commitment fee asset, Net realizedcapital (gains) losses, net (gains) losses on sale of divested businesses and properties, and income from divestedbusinesses.Overturns The reversal of a rescinded mortgage guarantee policy.Policy fees An amount added to a policy premium, or deducted from a policy cash value or contract holder account,to reflect the cost of issuing a policy, establishing the required records, sending premium notices and other relatedexpenses.Prior year development Increase or decrease in estimates of losses and loss expenses for prior years that isincluded in earnings.RBC Risk-Based Capital A formula designed to measure the adequacy of an insurer’s statutory surplus compared tothe risks inherent in its business.Reinstatement premium Additional premiums payable to reinsurers to restore coverage limits that have beenexhausted as a result of reinsured losses under certain excess of loss reinsurance treaties.Reinsurance The practice whereby one insurer, the reinsurer, in consideration of a premium paid to that insurer,agrees to indemnify another insurer, the ceding company, for part or all of the liability of the ceding company underone or more policies or contracts of insurance which it has issued.Rescission Denial of claims and termination of coverage on loans related to fraudulent or undocumented claims,underwriting guideline violations and other deviations from contractual terms.Reserve deficiency When actual reported reserves are lower than the expected reserves. This is also referred to asunfavorable loss development.Reserve redundancy When actual reported reserves exceed expected reserves. This is also referred to asfavorable loss development.Retained Interest Category within AIG’s Other operations that includes the fair value gains or losses, prior to theirsale, of the AIA ordinary shares retained following the AIA initial public offering and the MetLife, Inc. (MetLife)securities that were received as consideration from the sale of American Life Insurance Company (ALICO) and thefair value gains or losses, prior to the FRBNY liquidation of ML III assets, on the retained interest in ML III.Second-lien Subordinate in ranking to the first-lien holder on a property in the event of default on a mortgage.Severe losses Individual non-catastrophe first party losses greater than $10 million, net of related reinsurance.Short-Tail Reserves Reserves for claims that are generally reported and paid within a relatively short period of timeduring and following the policy coverage period. Short-tail classes of business consist principally of property, personallines and certain casualty classes.SIA Sales Inducement Asset Represents amounts that are credited to policyholder account balances related to theenhanced crediting rates that a seller offers on certain of its annuity products.SIFI Systemically Important Financial Institutions Financial institutions are deemed systemically important (that is, thefailure of the financial institution could pose a threat to the financial stability of the United States) by the FinancialStability Oversight Council (FSOC) based on a three-stage analytical process.Solvency II Legislation in the European Union which reforms the insurance industry’s solvency framework, includingminimum capital and solvency requirements, governance requirements, risk management and public reporting..................................................................................................................................................................................................................................AIG 2012 Form 10-K 197
ITEM 7 / GLOSSARY.....................................................................................................................................................................................standards. The Solvency II Directive (2009/138/EEC), was adopted on November 25, 2009 and is expected tobecome effective in January 2014.SSDMF Social Security Death Master File A database of deceased individuals, most of whom were issued a socialsecurity number during their lifetimes, maintained by the U.S. Social Security Administration.Surrender charge A charge levied against an investor for the early withdrawal of funds from a life insurance orannuity contract, or for the cancellation of the agreement.Unearned premium reserve Liabilities established by insurers and reinsurers to reflect unearned premiums whichare usually refundable to policyholders if an insurance or reinsurance contract is canceled prior to expiration of thecontract term.VaR Value-at-Risk A summary statistical measure that uses the estimated volatility and correlation of market factorsto calculate the maximum loss that could occur over a defined period of time with a specified level of statisticalconfidence.VOBA Value of Business Acquired Present value of projected future gross profits from in-force policies fromacquired businesses...................................................................................................................................................................................................................................198 AIG 2012 Form 10-K
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American International Group, Inc.2
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KEY FACTS & FIGURES52,000+ $65.7 bi
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■We said we would return to profi
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Financial HighlightsYears Ended Dec
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~63,000AIG EMPLOYEES AROUND THE WOR
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$115.1 millionAVERAGE CLAIMS PAID E
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$10,000MAXIMUM DONATION MADE BY AIG
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American International Group, Inc.F
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AMERICAN INTERNATIONAL GROUP, INC.A
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG LIFE AND RE
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1A / RISK FACTORS.............
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ITEM 1B / UNRESOLVED STAFF COMMENTS
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ITEM 5 / MARKET FOR REGISTRANT’S
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ITEM 6 / SELECTED FINANCIAL DATA...
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ITEM 6 / SELECTED FINANCIAL DATA...
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ITEM 7 / MANAGEMENT’S DISCUSSION
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ITEM 7 / USE OF NON-GAAP MEASURES..
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ITEM 7 / EXECUTIVE SUMMARY.........
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ITEM 7 / RESULTS OF OPERATIONS.....
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ITEM 7 / LIQUIDITY AND CAPITAL RESO
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ITEM 7 / INVESTMENTS...............
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Page 163 and 164: ITEM 7 / INVESTMENTS...............
Page 173 and 174: ITEM 7 / ENTERPRISE RISK MANAGEMENT
Page 189 and 190: ITEM 7 / CRITICAL ACCOUNTING ESTIMA
Page 213: 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
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Page 241 and 242: ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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Page 245 and 246: ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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Page 249 and 250: ITEM 8 / NOTE 5. BUSINESS COMBINATI
Page 251 and 252: ITEM 8 / NOTE 6. FAIR VALUE MEASURE
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ITEM 8 / NOTE 6. FAIR VALUE MEASURE
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ITEM 8 / NOTE 6. FAIR VALUE MEASURE
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ITEM 8 / NOTE 7. INVESTMENTS.......
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ITEM 8 / NOTE 8. LENDING ACTIVITIES
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ITEM 8 / NOTE 9. REINSURANCE.......
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 12. DERIVATIVES AND H
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ITEM 8 / NOTE 13. LIABILITY FOR UNP
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ITEM 8 / NOTE 14. VARIABLE LIFE AND
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 16. CONTINGENCIES, CO
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ITEM 8 / NOTE 17. TOTAL EQUITY.....
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ITEM 8 / NOTE 18. NONCONTROLLING IN
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ITEM 8 / NOTE 19. EARNINGS (LOSS) P
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ITEM 8 / NOTE 20. STATUTORY FINANCI
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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ITEM 8 / NOTE 24. INCOME TAXES.....
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ITEM 8 / NOTE 26. QUARTERLY FINANCI
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ITEM 8 / NOTE 27. INFORMATION PROVI
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PART II............................
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PART IV............................
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SignatureTitle/s/ ARTHUR C. MARTINE
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ExhibitNumber Description Location(
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Condensed Financial Information of
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Condensed Financial Information of
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Notes to Condensed Financial Inform
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Supplementary Insurance Information
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Valuation and Qualifying AccountsFo
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Subsidiaries of RegistrantExhibit 2
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Percentageof VotingSecuritiesJurisd
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Percentageof VotingSecuritiesJurisd
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CONSENT OF INDEPENDENT REGISTERED P
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CERTIFICATIONSI, Robert H. Benmosch
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CERTIFICATIONExhibit 32In connectio
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SECURITIES REGISTERED PURSUANT TO S
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American International Group, Inc.1
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