AIG 2013 Annual Report Download - page 103

The increase in net premiums written was partially offset by the effect of catastrophe bond transactions which provide
coverage for several years with ceded written premium recognized at the inception of the transaction. In 2013, we
entered into two multi-year catastrophe bond transactions, which will provide $525 million of indemnity protection, in
the aggregate, against U.S., Caribbean and Gulf of Mexico named storms, and U.S. and Canadian earthquakes
through the end of 2018. These transactions reduced net premiums written in 2013 by $140 million. Our previous
catastrophe bond issuance occurred in the fourth quarter of 2011.
Specialty net premiums written increased in 2013 compared to the prior year, primarily due to rate increases in
environmental business, small-and medium-sized enterprise markets in the Americas region, new business growth in
EMEA, as well as the restructuring of our reinsurance program to retain more favorable risks while continuing to
manage aggregate exposure, which increased net premiums written by $144 million, compared to the prior year.
Financial lines net premiums written increased in 2013 compared to the prior year, reflecting growth in new
business related to targeted growth products, particularly in the EMEA region as well as an improved rate
environment globally. Global professional indemnity net premiums written increased by $86 million in 2013, due to
improved rates, strong new business growth and the restructuring of our reinsurance program, as part of our decision
to retain more favorable risks while continuing to manage aggregate exposure.
See Part I. Item 1 Business — Reinsurance Activities for further discussion on catastrophe bond transactions.
Consumer Insurance net premiums written decreased in 2013, compared to the prior year, primarily due to the
impact of foreign exchange as the U.S. dollar strengthened against the Japanese yen. Excluding the impact of
foreign exchange, net premiums written increased compared to the prior year as the business continued to build
momentum through multiple distribution channels and continued focus on direct marketing. In 2013, excluding the
impact of foreign exchange, net premiums written generated by direct marketing increased by approximately
5.1 percent compared to the prior year, and accounted for approximately 16.4 percent of Consumer Insurance net
premiums written.
A&H net premiums written, excluding the effect of foreign exchange, increased slightly compared to the prior year,
primarily due to our focus on the growth of Fuji Life products, direct marketing, individual A&H in Asia Pacific, and
travel business which continued to increase in most geographies across the globe.
Personal lines net premiums written, excluding the effects of foreign exchange, increased in 2013 compared to the
prior year. The increases were driven by growth in U.S. private client group and warranty business, automobile
products and the continued execution of our strategic initiative to grow higher value lines of business in
non-automobile products. In addition, the impact of the timing of recognizing the excess of loss ceded premiums
written in the second quarter and of the catastrophe bond issuances reduced net premiums written by approximately
$58 million compared to the prior year.
In 2012, Commercial Insurance focused on the execution of the previously announced strategic objectives. The
overall decrease in Casualty was partially offset by increases in all the other lines of business.
Casualty net premiums written decreased in 2012, compared to the prior year, as planned, primarily due to the
execution of our strategy to improve loss ratios. Our enhanced risk selection process, and adherence to pricing
targets resulted in the non-renewal of approximately $800 million of net premiums written, primarily within the
workers’ compensation business in the Americas, and within the Primary Casualty business in EMEA. In addition, the
restructuring of the loss-sensitive programs decreased Casualty net premiums written by approximately $260 million
in 2012. The additional premiums associated with prior year development in the loss-sensitive business also
decreased by approximately $120 million. We also entered into a quota share reinsurance treaty in the U.S. for the
Excess Casualty business that decreased net premiums written by approximately $60 million. We implemented rate
increases in retained business, especially in the U.S., that partially offset the premium decreases noted above.
Property net premiums written increased in 2012, compared to the prior year, due to rate increases, primarily in the
U.S., reduced catastrophe bond purchases in 2012, and the restructuring of the per-risk reinsurance program as part
Consumer Insurance Net Premiums Written
2012 and 2011 Comparison
Commercial Insurance Net Premiums Written
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AIG 2013 Form 10-K 85
ITEM 7 / RESULTS OF OPERATIONS / AIG PROPERTY CASUALTY
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