AIG 2008 Annual Report Download - page 18

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
(In millions)
Net Reserves Held (Undiscounted). . . . $25,451 $ 25,820 $ 26,116 $ 26,709 $ 30,149 $ 37,075 $47,295 $57,337 $62,715 $70,026 $73,636
Undiscounted Liability as of:
One year later ............... 24,890 25,437 26,071 30,274 32,129 39,261 51,048 57,077 62,043 70,133
Two years later . . . ........... 24,602 26,053 29,670 32,438 35,803 46,865 52,364 57,653 62,521
Three years later . . ........... 25,084 28,902 31,619 36,043 43,467 48,691 53,385 58,721
Four years later . . . ........... 26,813 30,014 34,102 42,348 45,510 50,140 54,908
Five years later . . . ........... 27,314 31,738 38,655 44,018 46,925 51,997
Six years later ............... 28,345 34,978 40,294 45,201 48,584
Seven years later . . ........... 30,636 36,283 41,213 46,685
Eight years later . . ........... 31,556 36,889 42,459
Nine years later . . . ........... 32,113 37,795
Ten years later . . . ........... 32,672
Net Redundancy/(Deficiency) ....... (7,221) (11,975) (16,343) (19,976) (18,435) (14,922) (7,613) (1,384) 194 (107)
Remaining Reserves (Undiscounted). . . 5,011 6,326 7,916 10,332 12,425 15,396 19,427 27,558 38,986 53,950
Remaining Discount . ........... 453 537 644 768 903 1,040 1,190 1,398 1,691 2,113
Remaining Reserves . ........... 4,558 5,789 7,272 9,564 11,522 14,356 18,237 26,160 37,295 51,837
The following table presents the gross liability (before discount), reinsurance recoverable and net liability
recorded at each year-end and the reestimation of these amounts as of December 31, 2008:
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
(In millions)
Gross Liability, End of Year . . . ...... $34,474 $ 34,666 $ 36,777 $ 40,400 $ 46,036 $ 51,363 $ 59,790 $73,808 $77,111 $83,551 $87,973
Reinsurance Recoverable, End of Year . . . 9,023 8,846 10,661 13,691 15,887 14,288 12,495 16,472 14,396 13,525 14,337
Net Liability, End of Year .......... 25,451 25,820 26,116 26,709 30,149 37,075 47,295 57,336 62,715 70,026 73,636
Reestimated Gross Liability . . . ...... 46,549 53,249 60,393 65,655 67,678 68,955 70,056 76,802 77,439 83,658
Reestimated Reinsurance Recoverable . . . 13,877 15,454 17,934 18,970 19,094 16,958 15,148 18,081 14,918 13,525
Reestimated Net Liability . .......... 32,672 37,795 42,459 46,685 48,584 51,997 54,908 58,721 62,521 70,133
Cumulative Gross
Redundancy/(Deficiency) . . . ...... (12,075) (18,583) (23,616) (25,255) (21,642) (17,592) (10,266) (2,994) (328) (107)
The liability for unpaid claims and claims adjustment expense as reported in AIG’s consolidated balance sheet
at December 31, 2008 differs from the total reserve reported in the Annual Statements filed with state insurance
departments and, where appropriate, with foreign regulatory authorities. The differences at December 31, 2008
relate primarily to reserves for certain foreign operations not required to be reported in the United States for
statutory reporting purposes. Further, statutory practices in the United States require reserves to be shown net of
applicable reinsurance recoverable.
The reserve for gross losses and loss expenses is prior to reinsurance and represents the accumulation for
reported losses and IBNR. Management reviews the adequacy of established gross loss reserves in the manner
previously described for net loss reserves.
For further discussion regarding net reserves for losses and loss expenses, see Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Results of Operations — Segment Results —
General Insurance Operations — Liability for unpaid claims and claims adjustment expense.
Life Insurance & Retirement Services Operations
AIG’s Life Insurance & Retirement Services operations provide insurance, financial and investment-oriented
products throughout the world. Insurance-oriented products consist of individual and group life, payout annuities
(including structured settlements), endowment and accident and health policies. Retirement savings products
consist generally of fixed and variable annuities.
12 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries