AIG 2011 Annual Report Download - page 93

Other income (expense) – net: In May 2009, AIG completed the legal sale of its interest in the Otemachi
Building in Japan, including the land and development rights. The transaction initially did not qualify as a sale for
accounting purposes at that time, due to AIG’s continued involvement with the property, which did not end until
December 2010. As a result, AIG recognized a gain of approximately $1.3 billion in pre-tax income, of which
$669 million was included in the Chartis results in 2010.
2010 and 2009 Comparison
Net investment income: The increase in 2010 was primarily the result of an increase in the value of partnership
investments as market conditions improved in 2010, while 2009 included losses from an equity method investment.
Net realized capital losses: Net realized capital losses for Chartis declined in 2010 compared to 2009 due to
increased gains on sales of fixed maturity and equity securities and lower other-than-temporary impairment
charges as market conditions continued to improve.
Bargain purchase gain: During 2010, Chartis recognized a bargain purchase gain of $332 million in connection
with the acquisition of Fuji.
Other income (expense) – net: Represents the Chartis portion of the gain on the sale of AIG’s Otemachi
Building in Japan.
See Consolidated Results for further discussion on net investment income and net realized capital gains (losses).
Commercial Insurance
Commercial Insurance Results
The following table presents Commercial Insurance results:
Percentage Change
Years Ended December 31,
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Underwriting results:
Net premiums written $ 21,469 $ 20,466 $ 21,461 5% (5)%
Decrease in unearned premiums 827 1,006 1,645 (18) (39)
Net premiums earned 22,296 21,472 23,106 4 (7)
Claims and claims adjustment expenses incurred 18,953 19,001 18,920 - -
Underwriting expenses 5,847 5,752 5,658 2 2
Underwriting loss (2,504) (3,281) (1,472) 24 (123)
Net investment income 3,248 3,348 3,883 (3) (14)
Pre-tax income $ 744 $ 67 $ 2,411 NM% (97)%
Commercial Insurance Net Premiums Written
Commercial Insurance business is transacted in most major foreign currencies. The following table summarizes
the effect of changes in foreign currency exchange rates on the growth of Commercial Insurance net premiums
written:
Years Ended December 31, 2011 vs. 2010 2010 vs. 2009
Increase (decrease) in original currency*3.7% (4.9)%
Foreign exchange effect 1.2 0.3
Increase (decrease) as reported in U.S. dollars 4.9% (4.6)%
* Computed using a constant exchange rate for each period.
AIG 2011 Form 10-K 79