AIG 2013 Annual Report Download - page 84

We continue to make strategic investments in systems, processes and talent worldwide, which are expected to
create additional value and greater efficiency in the years ahead.
We continue to execute capital management initiatives by enhancing broad-based risk tolerance guidelines for our
operating units, implementing underwriting strategies to increase return on equity by line of business and reducing
exposure to businesses with inadequate pricing and increased loss trends. In addition, we remain focused on
enhancing our global reinsurance strategy to improve overall capital efficiency, but with periodic income statement
volatility.
We continue to streamline our legal entity structure to enhance transparency with regulators and optimize capital and
tax efficiency. In 2013, we completed a series of legal entity and branch restructuring transactions resulting in a
simpler legal ownership structure with fewer ownership tiers and cross ownership. These legal entity restructuring
initiatives enhanced our dividend capacity, reduced required capital, and provided tax benefits. Additionally, the
restructurings are allowing us to simplify our reinsurance arrangements which further facilitate increased capital
optimization. As of February 2014, through branch incorporations, legal entity mergers, and reinsurance changes, we
established three key insurance operating units: one insurance pool in the United States with 12 direct writing
entities; one pan-European insurance entity in the United Kingdom with 25 branches throughout Europe; and one
Japan insurance holding company directly owning all of our operating units in that country. Key highlights include:
• Continued integration of our Japan operations including the 2013 conversion of the AIUI Insurance Company
Japan branch to a subsidiary and a plan to effect a similar conversion of the American Home Assurance Japan
Branch in 2014, subject to regulatory approval. On July 16, 2013, we announced the planned merger of AIU
Insurance Company Ltd. and Fuji, scheduled to take place in 2015 or later, subject to regulatory approvals. The
merger is consistent with our growth strategy for the Japan market, and is intended to combine the expertise and
experience of these companies to meet our customers’ and partners’ needs and provide products and services that
will target higher levels of customer satisfaction in a cost-effective manner.
• Simplification of the ownership structure of the Admitted and Surplus Lines Pool members, allowing for the
combination of our Admitted Lines and Surplus Lines pools, which became effective January 1, 2014. We also
transferred the majority of the existing intercompany reinsurance to the pools. In addition, we transferred the
majority of the existing intercompany reinsurance held by one of our Bermuda entities to the Admitted Lines pool.
We paid dividends of approximately $1.8 billion to AIG during 2013 as a result of these activities.
Our overall legal entity restructuring is expected to be substantially completed in 2014 (2015 or later for Japan)
subject to regulatory approvals in the relevant jurisdictions.
See Segment Results — AIG Property Casualty Operations — AIG Property Casualty Results — AIG Property
Casualty Net Investment Income and Net Realized Capital Gains (Losses) and Note 6 to the Consolidated Financial
Statements for additional information.
Operating Expense Discipline
Capital Efficiency
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AIG 2013 Form 10-K66
ITEM 7 / EXECUTIVE SUMMARY
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