AIG 2013 Annual Report Download - page 117

The following table summarizes development, (favorable) or unfavorable, of incurred losses and loss
expenses for prior years, net of reinsurance, by major class of business:
Prior accident year development by major class of business:
Commercial Insurance U.S.:
Excess casualty $ 157 $ (588)
Financial lines including professional liability (283) (257)
On-going specialty, excluding pollution products 127 29
On-going pollution products 34 3
Primary casualty:
Loss-sensitive 54 172
Other 477 514
Healthcare 68 (45)
Property excluding natural catastrophes (95) (154)
Natural catastrophes (144) 9
All other, net 147 214
Total Commercial Insurance – U.S.542 (103)
Commercial Insurance International:
Excess casualty (10) (14)
Primary casualty (36) (89)
Financial lines 33 –
Specialty (77) 7
Property excluding natural catastrophes (54) –
Natural catastrophes (105) (84)
All other, net (3) –
Total Commercial Insurance – International (252) (180)
Consumer Insurance – U.S.:
Natural catastrophes 11 6
All other, net 940
Total Consumer Insurance – U.S. 20 46
Consumer Insurance – International:
Natural catastrophes (26) –
All other, net (14) 39
Total Consumer Insurance – International (40) 39
Other – U.S.:
Asbestos and environmental (1986 and prior) 70 27
Run-off environmental (1987 to 2004) 166 382
Total all other, net –(1)
Total Other – U.S. 236 408
Other – International:
Asbestos and environmental (1986 and prior) 5–
Total all other, net (12) 1
Total Other – International (7) 1
Total AIG Property Casualty 499 211
Other Operations – Mortgage Guaranty (78) (16)
Total prior year unfavorable development $ 421 $ 195
During 2013, the adverse prior year loss development net of premium accruals was $438 million. The increase was
primarily due to the increases in reserves by $108 million for Storm Sandy, $219 million for U.S. construction primary
general liability lines and $238 million for the run-off environmental (1987 to 2004) book.
In addition, we recognized additional premiums on loss-sensitive business of $89 million, $54 million and $172 million
for the years ended December 31, 2013, 2012 and 2011, respectively.
For the year ended December 31, 2013, we incurred reinstatement premiums of $27 million, compared to $0 for both
years 2012 and 2011.
In determining the loss development from prior accident years, we analyze and evaluate the change in estimated
ultimate loss for each accident year by class of business. For example, if loss emergence for a class of business is
different than expected for certain accident years, we examine the indicated effect such emergence would have on
Net Loss Development by Class of Business
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AIG 2013 Form 10-K 99
ITEM 7 / RESULTS OF OPERATIONS / LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE
Years Ended December 31,
(in millions) 2013 2012 2011
$ (144)
(113)
120
31
89
409
(54)
(80)
179
23
460
(15)
(25)
74
(51)
(3)
(71)
(14)
(105)
(69)
(46)
(115)
–
(40)
(40)
57
238
22
317
10
–
10
527
30
$ 557
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