AIG 2011 Annual Report Download - page 81

purchase gain of $332 million related to the Fuji acquisition and reduced losses from AIGFP from lower unwind
costs.
Policyholder Benefits and Claims Incurred
2011 and 2010 Comparison
Policyholder benefits and claims incurred decreased in 2011 compared to 2010 as a result of the following:
• a decline of $8.7 billion related to the deconsolidation of AIA; and
• Chartis’ $72 million of net reserve strengthening in 2011 compared to net strengthening of $4.3 billion in
2010.
This decline was partially offset by:
• increased catastrophe losses throughout the year, including the Thailand floods in the fourth quarter of 2011,
Hurricane Irene in the third quarter of 2011, the U.S. tornadoes in the second quarter of 2011, and the
Tohoku Catastrophe in the first quarter of 2011;
• the effect of Chartis’ consolidation of Fuji;
• increased claims and claims adjustment expenses for Mortgage Guaranty operations due to increased
overturns of denied and rescinded claims; and
• increased claims at SunAmerica due to enhanced death benefit reserving practices.
2010 and 2009 Comparison
Policyholder benefits and claims incurred decreased in 2010 primarily due to:
• a reduction of $2.2 billion as a result of the dispositions in 2009 noted above that did not meet the criteria
for discontinued operations accounting;
• a decrease in incurred policy losses and benefit expenses for AIA of $1.3 billion related to a decline in
policyholder trading gains which are discussed above in Net Investment Income; and
• a decrease in claims and claims adjustment expense of $2.4 billion for Mortgage Guaranty operations
primarily due to lower levels of newly reported delinquencies in the first-lien, second-lien and international
products, higher cure rates on existing first-lien and international delinquent loans and the recognition of
stop loss limits on certain second-lien policies.
Partially offsetting these declines were:
• the net $4.3 billion of reserve strengthening in 2010 compared to reserve strengthening of $2.8 billion in
2009;
• increased catastrophe losses for Chartis; and
• the effect of the consolidation of Fuji in 2010.
See Segments Results — Chartis Operations — Chartis Results herein for further discussion.
Amortization of Deferred Acquisition Costs
2011 and 2010 Comparison
The decrease in Amortization of deferred acquisition costs in 2011 compared to 2010 resulted primarily from
the deconsolidation of AIA in the fourth quarter of 2010. The AIA amortization of deferred acquisition costs in
2010 totaled $977 million.
AIG 2011 Form 10-K 67