AIG 2013 Annual Report Download - page 123

The following table provides a summary of reserve activity, including estimates for applicable IBNR, relating
to asbestos and environmental claims:
Asbestos:
Liability for unpaid claims and claims adjustment expense
at beginning of year $ 5,226 $ 537 $ 5,526 $ 2,223
Change in net loss reserves due to retroactive reinsurance:
Paid losses recoverable under retroactive reinsurance
contracts – 111 – 111
Re-estimation of amounts recoverable under retroactive
reinsurance contracts(a) – (21) – (1,814)
Change in net loss reserves due to retroactive reinsurance – 90 – (1,703)
Dispositions (10) (10) – –
Loss and loss expenses incurred:
Undiscounted 11 2 2
Change in discount 83 37 190 74
Losses and loss expenses incurred(b) 84 38 192 76
Losses and loss expenses paid(b) (404) (228) (492) (236)
Other changes – – – 177
Liability for unpaid claims and claims adjustment expense
at end of year $ 4,896 $ 427 $ 5,226 $ 537
Environmental:
Liability for unpaid claims and claims adjustment expense
at beginning of year $ 204 $ 119 $ 240 $ 127
Dispositions (1) (1) – –
Losses and loss expenses incurred 150 75 33 27
Losses and loss expenses paid (44) (30) (69) (35)
Liability for unpaid claims and claims adjustment expense
at end of year $ 309 $ 163 $ 204 $ 119
Combined:
Liability for unpaid claims and claims adjustment expense
at beginning of year $ 5,430 $ 656 $ 5,766 $ 2,350
Change in net loss reserves due to retroactive reinsurance:
Paid losses recoverable under retroactive reinsurance
contracts – 111 – 111
Re-estimation of amount recoverable under retroactive
reinsurance contracts – (21) – (1,814)
Change in net loss reserves due to retroactive reinsurance – 90 – (1,703)
Dispositions (11) (11) – –
Losses and loss expenses incurred:
Undiscounted 151 76 35 29
Change in discount 83 37 190 74
Losses and loss expenses incurred 234 113 225 103
Losses and loss expenses paid (448) (258) (561) (271)
Other changes – – – 177
Liability for unpaid claims and claims adjustment expense
at end of year $ 5,205 $ 590 $ 5,430 $ 656
(a) Re-estimation of amounts recoverable under retroactive reinsurance contracts includes effect of changes in reserve estimates and changes in
discount. Additionally, the 2011 Net amount includes the effect on net loss reserves of the initial cession to NICO.
(b) These amounts exclude benefit from retroactive reinsurance.
On June 17, 2011, we completed a transaction under which the bulk of AIG Property Casualty’s net domestic
asbestos liabilities were transferred to NICO, a subsidiary of Berkshire Hathaway, Inc. This was part of our ongoing
Transfer of Domestic Asbestos Liabilities Under a Retroactive Reinsurance Arrangement
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AIG 2013 Form 10-K 105
ITEM 7 / RESULTS OF OPERATIONS / LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE
2013 2012 2011
As of or for the Years Ended December 31,
(in millions) Gross Net Gross Net Gross Net
$ 4,896 $ 427
– 113
– (91)
–22
(12) (12)
169 92
51 18
220 110
(444) (145)
60 127
$ 4,720 $ 529
$ 309 $ 163
(1) (1)
98 61
(93) (60)
$ 313 $ 163
$ 5,205 $ 590
– 113
– (91)
–22
(13) (13)
267 153
51 18
318 171
(537) (205)
60 127
$ 5,033 $ 692
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