AIG 2013 Annual Report Download - page 156

Loss reserves relate to the AIG Property Casualty and the Mortgage Guaranty businesses, and represent future loss
and loss adjustment expense payments estimated based on historical loss development payment patterns. Due to
the significance of the assumptions used, the payments by period presented above could be materially different from
actual required payments. We believe that AIG Property Casualty and Mortgage Guaranty subsidiaries maintain
adequate financial resources to meet the actual required payments under these obligations.
Insurance and investment contract liabilities, including GIC liabilities, relate to AIG Life and Retirement businesses.
These liabilities include various investment-type products with contractually scheduled maturities, including periodic
payments of a term certain nature. These liabilities also include benefit and claim liabilities, of which a significant
portion represents policies and contracts that do not have stated contractual maturity dates and may not result in any
future payment obligations. For these policies and contracts (i) we are currently not making payments until the
occurrence of an insurable event, such as death or disability, (ii) payments are conditional on survivorship or
(iii) payment may occur due to a surrender or other non-scheduled event out of our control.
We have made significant assumptions to determine the estimated undiscounted cash flows of these contractual
policy benefits. These assumptions include mortality, morbidity, future lapse rates, expenses, investment returns and
interest crediting rates, offset by expected future deposits and premiums on in-force policies. Due to the significance
of the assumptions, the periodic amounts presented could be materially different from actual required payments. The
amounts presented in this table are undiscounted and exceed the future policy benefits and policyholder contract
deposits included in the Consolidated Balance Sheets.
We believe that AIG Life and Retirement subsidiaries have adequate financial resources to meet the payments
actually required under these obligations. These subsidiaries have substantial liquidity in the form of cash and
short-term investments. In addition, AIG Life and Retirement businesses maintain significant levels of investment-
grade rated fixed maturity securities, including substantial holdings in government and corporate bonds, and could
seek to monetize those holdings in the event operating cash flows are insufficient. We expect liquidity needs related
to GIC liabilities to be funded through cash flows generated from maturities and sales of invested assets.
Our borrowings exclude those incurred by consolidated investments and include hybrid financial instrument liabilities
recorded at fair value. We expect to repay the long-term debt maturities and interest accrued on borrowings by AIG
through maturing investments and dispositions of invested assets, future cash flows from operations, cash flows
generated from invested assets, future debt issuance and other financing arrangements.
Loss Reserves
Insurance and Investment Contract Liabilities
Borrowings
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AIG 2013 Form 10-K138
ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES
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