AIG 2011 Annual Report Download - page 102

Years Ended December 31,
(in millions) 2011 2010 2009
Prior Accident Year Development by Major Class of Business:
Excess casualty $ (414) $ 1,071 $ 1,507
D&O and related management liability (167) (94) (39)
Excess workers’ compensation 2793 956
Healthcare (45) (75) (92)
Environmental 413 14 25
Asbestos and environmental (1984 and prior) 30 1,503 155
Commercial risk 265 224 -
Primary (specialty) workers’ compensation 145 518 37
All other, net (34) 228 222
Prior years, other than accretion of discount $ 195 $ 4,182 $ 2,771
Calendar Year
Years Ended December 31,
(in millions) 2011 2010 2009
Prior Accident Year Development by Accident Year:
Accident Year
2010 $ 402
2009 117 $ (61)
2008 (294) 286 $ 289
2007 (172) 528 (57)
2006 (273) 199 (91)
2005 (164) 113 18
2004 (16) 134 182
2003 13 73 73
2002 (8) 97 126
2001 and prior 590 2,813 2,231
Prior years, other than accretion of discount $ 195 $ 4,182 $ 2,771
Offsetting the unfavorable development were related additional premiums on loss-sensitive business of
$172 million and $8 million in 2011 and 2010, respectively.
In determining the loss development from prior accident years, AIG conducts analysis to determine the change
in estimated ultimate loss for each accident year for each class of business. For example, if loss emergence for a
class of business is different than expected for certain accident years, the actuaries examine the indicated effect
such emergence would have on the reserves of that class of business. In some cases, the higher or lower than
expected emergence may result in no clear change in the ultimate loss estimate for the accident years in question,
and no adjustment would be made to the reserves for the class of business for prior accident years. In other cases,
the higher or lower than expected emergence may result in a larger change, either favorable or unfavorable, than
the difference between the actual and expected loss emergence. Such additional analyses were conducted for each
class of business, as appropriate, in 2011 to determine the loss development from prior accident years for that
period. As part of its reserving process, AIG also considers notices of claims received with respect to emerging
and/or evolving issues, such as those related to the U.S. mortgage and housing market.
See Chartis Results herein and Other Operations — Other Operations Results — Mortgage Guaranty for
further discussion of net loss development.
Net Loss Development by Class of Business
The following is a discussion of the primary reasons for the development in 2011, 2010 and 2009 of those
classes of business that experienced significant prior accident year developments during the three-year period. See
Asbestos and Environmental Reserves below for a further discussion of asbestos and environmental reserves and
development on pre-1985 exposures.
88 AIG 2011 Form 10-K