AIG 2009 Annual Report Download - page 12

American International Group, Inc., and Subsidiaries
Foreign Life Insurance & Retirement Services Financial Services
American Life Insurance Company (ALICO) International Lease Finance Corporation (ILFC)
AIG Star Life Insurance Co., Ltd. (AIG Star Life) AIG Financial Products Corp. and AIG Trading Group Inc.
and their respective subsidiaries (AIGFP)
AIG Edison Life Insurance Company (AIG Edison Life) American General Finance, Inc. (AGF)
American International Assurance Company, Limited, AIG Consumer Finance Group, Inc. (AIGCFG)
together with American International Assurance Company
(Bermuda) Limited (AIA)
The Philippine American Life and General Insurance AIG Credit Corp. (A.I. Credit)
Company (Philamlife)
Throughout this Annual Report on Form 10-K, AIG presents its operations in the way it believes will be most
meaningful, as well as most transparent. Certain of the measurements used by AIG management are ‘‘non-GAAP
financial measures’’ under SEC rules and regulations. Underwriting profit (loss) is utilized to report results for AIG’s
General Insurance operations. Pre-tax income (loss) before net realized capital gains (losses) is utilized to report
results for AIG’s life insurance and retirement services operations. For an explanation of why AIG management
considers these ‘‘non-GAAP measures’’ useful to investors, see Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Following is additional information about AIG’s operations:
General Insurance Operations
AIG’s General Insurance subsidiaries are multiple line companies writing substantially all lines of property and
casualty insurance both domestically and abroad and comprise the Commercial Insurance and the Foreign General
Insurance operating segments. In July 2009, AIG’s General Insurance subsidiaries were rebranded as Chartis
(Commercial Insurance operates as Chartis U.S. and Foreign General Insurance operates as Chartis International).
Chartis Private Client Group (Private Client Group) is part of Chartis U.S.
AIG is diversified both in terms of classes of business and geographic locations. In General Insurance, general and
auto liability business is the largest class of business written and represented approximately 15 percent of net
premiums written for the year ended December 31, 2009. During 2009, 8 percent, 6 percent and 6 percent of the direct
General Insurance premiums written (gross premiums less return premiums and cancellations, excluding reinsurance
assumed and before deducting reinsurance ceded) were written in the states of California, New York and Texas,
respectively, and 11 percent and 9 percent were written in Japan and the United Kingdom, respectively. No other state
or foreign country accounted for more than five percent of such premiums.
The majority of AIG’s General Insurance business is in the casualty classes, which tend to involve longer periods of
time for the reporting and settling of claims. This may increase the risk and uncertainty with respect to AIG’s loss
reserve development.
Commercial Insurance
Commercial Insurance’s business in the United States and Canada is conducted through American Home, National
Union, Lexington and certain other General Insurance company subsidiaries of AIG.
Chartis U.S. writes substantially all classes of business insurance, accepting such business mainly from insurance
brokers. This provides Chartis U.S. the opportunity to select specialized markets and retain underwriting control. Any
licensed broker is able to submit business to Chartis U.S. without the traditional agent-company contractual
relationship, but such broker usually has no authority to commit Chartis U.S. to accept a risk.
In addition to writing substantially all classes of business insurance, including large commercial or industrial
property insurance, excess liability, inland marine, environmental, workers’ compensation and excess and umbrella
AIG 2009 Form 10-K 4