AIG 2013 Annual Report Download - page 113

Net investment income increased $527 million or 12 percent in 2012, compared to 2011, primarily due to the impact
of the overall diversification in the asset portfolio during the year. We adopted yield-enhancement initiatives in 2011,
and continued through 2012, which increased the average yield of our investment portfolio by 0.3 points to
4.0 percent during 2012.
Our invested asset portfolio grew by approximately $4.3 billion, or 3.0 percent during the year with declining interest
rates and narrowing spreads in both investment grade and higher yield asset classes contributing to higher
unrealized appreciation in our portfolio.
Net investment income from other investment categories increased by $231 million in 2012 compared to 2011, of
which $113 million was attributed to the strong performance of alternative investments, following a 16 percent
increase in the S&P 500 Index during 2012. Other investment income also increased by $69 million due to the
strategic group benefits partnership with AIG Life and Retirement, all of which is reported in Consumer Insurance.
Net realized capital gains in 2012 were driven by gains recognized on the sale of fixed maturity and equity securities,
which were partially offset by an other-than-temporary impairments charge attributed to a decrease in recoverable
values for structured securities, as well as alternative and equity security investments that were in an unrealized loss
position for 12 months. Net realized capital gains were less than 2011, due to fewer gains on sales in our fixed
maturity securities portfolio and derivative losses as opposed to derivative gains in 2011 resulting from long term
interest rate movements.
The following discussion of the consolidated liability for unpaid claims and claims adjustment expense (loss reserves)
presents loss reserves for AIG Property Casualty as well as the loss reserves pertaining to the Mortgage Guaranty
reporting unit, which is reported in Other Operations.
The following table presents the components of AIG’s gross loss reserves by major lines of business on a
U.S. statutory basis*:
Other liability occurrence (including asbestos and environmental) $ 21,533
International 17,453
Workers’ compensation (net of discount) 17,319
Other liability claims made 11,443
Property 4,961
Auto liability 3,060
Products liability 2,195
Medical malpractice 1,651
Mortgage guaranty / credit 1,957
Accident and health 1,518
Commercial multiple peril 1,310
Aircraft 1,065
Fidelity / surety 647
Other 1,879
Total $ 87,991
* Presented by lines of business pursuant to statutory reporting requirements as prescribed by the National Association of Insurance
Commissioners.
2012 and 2011 Comparison
Net Investment Income
Net Realized Capital Gains (Losses)
Liability for Unpaid Claims and Claims Adjustment Expense
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AIG 2013 Form 10-K 95
ITEM 7 / RESULTS OF OPERATIONS / AIG PROPERTY CASUALTY
At December 31,
(in millions) 2013 2012
$ 21,023
17,126
15,390
10,645
4,111
2,581
1,463
1,714
1,348
1,378
1,886
1,276
538
1,068
$ 81,547
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