AIG 2015 Annual Report Download - page 80

ITEM 7 / RESULTS OF OPERATIONS / COMMERCIAL INSURANCE
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Property Casualty Results
The following table presents Property Casualty results:
Years Ended December 31, Percentage Change
(in millions) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Underwriting results:
Net premiums written $20,436 $ 21,020 $ 20,880 (3)% 1 %
Increase in unearned premiums (407) (135) (203) (201) 33
Net premiums earned 20,029 20,885 20,677 (4) 1
Losses and loss adjustment expenses incurred 17,274 14,956 14,872 15 1
Acquisition expenses:
Amortization of deferred policy acquisition costs 2,309 2,486 2,394 (7) 4
Other acquisition expenses 907 796 937 14 (15)
Total acquisition expenses 3,216 3,282 3,331 (2) (1)
General operating expenses 2,542 2,697 2,810 (6) (4)
Underwriting loss (3,003) (50) (336) NM 85
Net investment income 3,596 4,298 4,431 (16) (3)
Pre-tax operating income $593 $ 4,248 $ 4,095 (86)% 4 %
NET PREMIUMS WRITTEN
(in millions)
PRE-TAX OPERATING INCOME
(in millions)
2015 and 2014 Comparison
Pre-tax operating income decreased in 2015 compared to 2014 primarily due to an increase in net adverse prior year loss
reserve development and lower net investment income. Net adverse prior year loss reserve development, including related
premium adjustments, was $3.5 billion in 2015 compared to $550 million in 2014. The increase in net adverse prior year loss
reserve development primarily reflected the loss reserve strengthening of $3.0 billion in the fourth quarter of 2015, in classes of
business with long reporting tails, primarily excess and primary casualty and financial lines. Premium adjustments consisted of
return premiums of $49 million in 2015 compared to additional premiums of $105 million in 2014. See Insurance Reserves –
Non-Life Insurance Companies — Net Loss Development for further discussion. Current accident year loss ratio, as adjusted,
increased due to higher casualty and severe losses, which were mostly offset by improvement in attritional losses in Property
and Specialty. Net loss reserve discount benefit was $68 million in 2015 compared to a net loss reserve discount charge of $71