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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................AIG Property Casualty Underwriting Ratios..............................................................................................................................................................................................The following table presents the AIG Property Casualty combined ratios based on GAAP data andreconciliation to the accident year combined ratio, as adjusted:Years Ended December 31,Increase (Decrease)2012 2011 2010 2012 vs. 2011 2011 vs. 2010Commercial InsuranceLoss ratio 80.3 84.1 89.3 (3.8) (5.2)Catastrophe losses and reinstatement premiums (10.9) (11.9) (4.8) 1.0 (7.1)Prior year development net of premium adjustments (1.2) 1.9 (12.2) (3.1) 14.1Change in discount 0.5 0.2 1.9 0.3 (1.7)Accident year loss ratio, as adjusted 68.7 74.3 74.2 (5.6) 0.1Acquisition ratio 16.6 14.6 14.1 2.0 0.5General operating expense ratio 12.3 9.9 10.8 2.4 (0.9)Expense ratio 28.9 24.5 24.9 4.4 (0.4)Combined ratio 109.2 108.6 114.2 0.6 (5.6)Catastrophe losses and reinstatement premiums (10.9) (11.9) (4.8) 1.0 (7.1)Prior year development net of premium adjustments (1.2) 1.9 (12.2) (3.1) 14.1Change in discount 0.5 0.2 1.9 0.3 (1.7)Accident year combined ratio, as adjusted 97.6 98.8 99.1 (1.2) (0.3)Consumer InsuranceLoss ratio 60.9 64.7 59.8 (3.8) 4.9Catastrophe losses and reinstatement premiums (2.7) (5.2) (0.6) 2.5 (4.6)Prior year development net of premium adjustments 0.1 (0.6) 0.6 0.7 (1.2)Accident year loss ratio, as adjusted 58.3 58.9 59.8 (0.6) (0.9)Acquisition ratio 25.0 23.8 26.5 1.2 (2.7)General operating expense ratio 15.3 14.4 14.7 0.9 (0.3)Expense ratio 40.3 38.2 41.2 2.1 (3.0)Combined ratio 101.2 102.9 101.0 (1.7) 1.9Catastrophe losses and reinstatement premiums (2.7) (5.2) (0.6) 2.5 (4.6)Prior year development net of premium adjustments 0.1 (0.6) 0.6 0.7 (1.2)Accident year combined ratio, as adjusted 98.6 97.1 101.0 1.5 (3.9)Total AIG Property CasualtyLoss ratio 73.9 78.3 85.7 (4.4) (7.4)Catastrophe losses and reinstatement premiums (7.5) (9.2) (3.3) 1.7 (5.9)Prior year development net of premium adjustments (1.4) (0.3) (14.9) (1.1) 14.6Change in discount 0.2 (0.1) 1.7 0.3 (1.8)Accident year loss ratio, as adjusted 65.2 68.7 69.2 (3.5) (0.5)Acquisition ratio 19.9 18.1 18.3 1.8 (0.2)General operating expense ratio 14.8 12.4 12.8 2.4 (0.4)Expense ratio 34.7 30.5 31.1 4.2 (0.6)Combined ratio 108.6 108.8 116.8 (0.2) (8.0)Catastrophe losses and reinstatement premiums (7.5) (9.2) (3.3) 1.7 (5.9)Prior year development net of premium adjustments (1.4) (0.3) (14.9) (1.1) 14.6Change in discount 0.2 (0.1) 1.7 0.3 (1.8)Accident year combined ratio, as adjusted 99.9 99.2 100.3 0.7 (1.1)..................................................................................................................................................................................................................................82 AIG 2012 Form 10-K