AIG 2014 Annual Report Download - page 222

GLOSSARY

205
G-SII Global Systemically Important Insurer An insurer that is deemed globally systemically important (that is, of such size,
market importance and global interconnectedness that the distress or failure of the insurer would cause significant dislocation
in the global financial system and adverse economic consequences across a range of countries) by the Financial Stability
Board, in consultation with and based on a methodology developed by the International Association of Insurance Supervisors.
IBNR Incurred But Not Reported Estimates of claims that have been incurred but not reported to us.
LAE Loss Adjustment Expenses The expenses of settling claims, including legal and other fees and the portion of general
expenses allocated to claim settlement costs.
Loss Ratio Losses and loss adjustment expenses incurred divided by net premiums earned. Loss adjustment expenses are
directly attributed to settling and paying claims of insureds and include, but are not limited to, legal fees, adjuster’s fees, and
claims department personnel costs.
Loss reserve development The increase or decrease in incurred losses and loss adjustment expenses as a result of the re-
estimation of liability for unpaid losses and loss adjustment expenses at successive valuation dates for a given group of
claims.
Loss reserves Liability for unpaid losses and loss adjustment expenses. The estimated ultimate cost of settling claims
relating to insured events that have occurred on or before the balance sheet date, whether or not reported to the insurer at that
date.
LTV Loan-to-Value Ratio Principal amount of loan amount divided by appraised value of collateral securing the loan.
Master netting agreement An agreement between two counterparties who have multiple derivative contracts with each other
that provides for the net settlement of all contracts, as well as cash collateral, through a single payment, in a single currency, in
the event of default on or upon termination of any one contract.
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.
Nonbank SIFI Nonbank Systemically Important Financial Institutions Financial institutions are deemed nonbank systemically
important (that is, the failure of the financial institution could pose a threat to the financial stability of the United States) by the
Financial Stability Oversight Council based on a three-stage analytical process.
Noncontrolling interest The portion of equity ownership in a consolidated subsidiary not attributable to the controlling parent
company.
Policy fees An amount added to a policy premium, or deducted from a policy cash value or contract holder account, to reflect
the cost of issuing a policy, establishing the required records, sending premium notices and other related expenses.
Pool A reinsurance arrangement whereby all of the underwriting results of the pool members are combined and then shared
by each member in accordance with its pool participation percentage. Prior to January 1, 2014, AIG maintained two pools (the
admitted lines pool and the surplus lines pool. Our members in the admitted lines pool are licensed to write standard lines of
business by the individual state departments of insurance, and the policy forms and rates are regulated by those departments.
Our members in the surplus lines pool provide policyholders with insurance coverage for risks which are generally not
available in the standard insurance market. Surplus lines policy forms and rates are not regulated by the insurance
departments. Effective January 1, 2014, these two pools were merged into one combined pool (the combined pool).
Premiums and deposits – Institutional Markets include direct and assumed amounts received and earned on group benefit
policies and life-contingent payout annuities, deposits received on investment-type annuity contracts including GICs.
Premiums and deposits – Retirement and – Life include 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 and mutual funds.
Prior year development Increase or decrease in estimates of losses and loss adjustment expenses incurred for prior years
that is included in earnings.
RBC Risk-Based Capital A formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks
inherent in its business.
Reinstatement premium Additional premiums payable to reinsurers to restore coverage limits that have been exhausted as a
result of reinsured losses under certain excess of loss reinsurance treaties.