AIG 2009 Annual Report Download - page 76

American International Group, Inc., and Subsidiaries
These increases were partially offset by:
• a $2.4 billion decline in noncore Institutional Asset Management revenues due to impairments on proprietary
real estate and private equity investments and lower base management fees on lower base assets under
management in 2009;
• a decline of $1.0 billion in income from consolidated managed partnerships and funds, which is partially offset
by Net income (loss) attributable to noncontrolling interests; and
• lower finance charges and other revenues in Consumer Finance reflecting the sales of AGF real estate portfolios
as part of AGF’s liquidity management efforts as well as the effect of sales of Consumer Finance businesses in
2009.
2008 and 2007 Comparison
Other Income (loss) decreased in 2008 compared to 2007 primarily due to increased losses in Capital Markets of
$13.7 billion, which includes a credit valuation adjustment of $9.1 billion on AIGFP’s assets and liabilities which are
measured at fair value.
These decreases were partially offset by increased rental revenues for ILFC, driven by a larger aircraft fleet and
higher lease rates.
Policyholder Benefits and Claims Incurred
2009 and 2008 Comparison
Policyholder benefits and claims incurred increased in 2009 compared to 2008 due to:
• an increase in incurred policy losses and benefits expenses for Foreign Life Insurance & Retirement Services
due to policyholder trading gains of $4.0 billion in 2009 compared to policyholder trading losses of $6.8 billion in
2008 as discussed above in Net Investment Income; and
• adverse development from prior years in Commercial Insurance primarily for excess casualty and excess
workers’ compensation and increased current year losses in Foreign General Insurance from exposure to
financial lines claims.
These increases were partially offset by:
• a reduction of $5.2 billion from dispositions, primarily the sale of the Brazilian operations in 2008, sales of HSB,
21st Century and AIG Life Canada in 2009 and the deconsolidation of Transatlantic in 2009;
• catastrophe-related losses of $53 million in 2009 compared to $1.6 billion in 2008 (losses in 2008 were primarily
related to hurricanes Ike and Gustav); and
• the effects of lower production levels for General Insurance and Domestic Life & Retirement Services.
2008 and 2007 Comparison
Policyholder benefits and claims incurred decreased in 2008 compared to 2007 due to a reduction in incurred policy
losses and benefits expense for Foreign Life Insurance & Retirement Services of $9.4 billion related to policyholder
trading gains (losses) as discussed above in Net investment income. These losses more than offset increased claims
and claims adjustment expenses of $5.6 billion in AIG’s General Insurance operations and Noncore insurance
businesses, which reflected increased catastrophe losses of $1.5 billion principally from hurricanes Ike and Gustav.
Results for 2008 also included a $1.8 billion increase in Mortgage Guaranty claims incurred, reflecting the
deterioration of the U.S. housing market.
AIG 2009 Form 10-K 68