AIG 2013 Annual Report Download - page 221

Glossary
Accident year The annual calendar accounting period in which loss events occurred, regardless of when the losses
are actually reported, booked or paid.
Accident year combined ratio, as adjusted the combined ratio excluding catastrophe losses and related
reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting.
Accident year loss ratio, as adjusted the loss ratio excluding catastrophe losses and related reinstatement
premiums, prior year development, net of premium adjustments, and the impact of reserve discounting.
Acquisition ratio acquisition costs divided by net premiums earned. Acquisition costs are those costs incurred to
acquire new and renewal insurance contracts and also include the amortization of value of business acquired
(VOBA) and deferred policy acquisition costs (DAC). Acquisition costs vary with sales and include, but are not limited
to, commissions, premium taxes, direct marketing costs, certain costs of personnel engaged in sales support
activities such as underwriting, and the change in DAC. Acquisition costs that are incremental and directly related to
successful sales efforts are deferred and recognized over the coverage periods of related insurance contracts.
Acquisition costs that are not incremental and directly related to successful sales efforts are recognized as incurred.
Additional premium/Return premium is a premium due either to or from an insured as a result of a change in
coverage (e.g. increase or decrease in limits or risk) or cancellation of an existing policy. In addition, certain policies
provide for adjustments to the original premium amount charged based on the experience of the policy, e.g. workers’
compensation policies and loss sensitive policies where changes to the original premium are based on variances of
the loss history against estimates built into the determination of the original premium.
AIG — After-tax operating income (loss) attributable to AIG is derived by excluding the following items from net
income (loss) attributable to AIG: income (loss) from discontinued operations, net loss (gain) on sale of divested
businesses and properties, income from divested businesses, legacy tax adjustments primarily related to certain
changes in uncertain tax positions and other tax adjustments, legal reserves (settlements) related to ‘‘legacy crisis
matters,’’ deferred income tax valuation allowance (releases) charges, changes in fair value of AIG Life and
Retirement fixed maturity securities designated to hedge living benefit liabilities (net of interest expense), changes in
benefit reserves and DAC, VOBA, and sales inducement assets (SIA) related to net realized capital (gains) losses,
AIG Property Casualty other (income) expense — net, (gain) loss on extinguishment of debt, net realized capital
(gains) losses, non-qualifying derivative hedging activities, excluding net realized capital (gains) losses, and bargain
purchase gain. ‘‘Legacy crisis matters’’ include favorable and unfavorable settlements related to events leading up to
and resulting from our September 2008 liquidity crisis and legal fees incurred by AIG as the plaintiff in connection
with such legal matters.
AIG Life and Retirement — Pre-tax operating income (loss) Pre-tax operating income (loss) is derived by
excluding the following items from pre-tax income (loss): legal settlements related to legacy crisis matters, changes in
fair values of fixed maturity securities designated to hedge living benefit liabilities (net of interest expense), net
realized capital (gains) losses, and changes in benefit reserves and DAC, VOBA, and SIA related to net realized
capital (gains) losses.
AIG Life and Retirement — Premiums and deposits includes direct and assumed amounts received on traditional
life insurance policies, group benefit policies and deposits on life-contingent payout annuities, as well as deposits
received on universal life, investment-type annuity contracts, guaranteed investment contracts and mutual funds.
AIG Life and Retirement — Surrender rate represents annualized surrenders and withdrawals as a percentage of
average reserves.
AIG Property Casualty — Net premiums written represent the sales of an insurer, adjusted for reinsurance
premiums assumed and ceded, during a given period. Net premiums earned are the revenue of an insurer for
covering risk during a given period. Net premiums written are a measure of performance for a sales period while Net
premiums earned are a measure of performance for a coverage period. From the period in which the premiums are
written until the period in which they are earned, the amount is presented as Unearned premium reserves in the
Consolidated Balance Sheets.
AIG Property Casualty — Pre-tax operating income (loss) includes both underwriting income (loss) and net
investment income, but excludes net realized capital (gains) losses, other (income) expense — net, legal settlements
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AIG 2013 Form 10-K 203
GLOSSARY
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