AIG 2010 Annual Report Download - page 26

American International Group, Inc., and Subsidiaries
as more information becomes known about the individual claims and overall claim frequency and severity patterns. The
redundancy (deficiency) depicted in the table, for any particular calendar year, presents the aggregate change in
estimates over the period of years subsequent to the calendar year reflected at the top of the respective column
heading. For example, the deficiency of $2.68 billion at December 31, 2010 related to December 31, 2009 net losses
and loss expense reserves of $69.24 billion represents the cumulative amount by which reserves in 2009 and prior years
have developed unfavorably during 2010.
The bottom of each table below presents the remaining undiscounted and discounted net loss reserves for each year.
For example, in the table that excludes asbestos and environmental losses, for the 2002 year-end, the remaining
undiscounted reserves held at December 31, 2010 are $11.04 billion, with a corresponding discounted net reserve of
$10.08 billion.
For a sensitivity analysis of loss reserves held at December 31, 2010, see Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Critical Accounting Estimates — Liability for Unpaid Claims and
Claims Adjustment Expense.
Analysis of Consolidated Loss Reserve Development
The following table presents for each calendar year the loss reserves and the development thereof including those with
respect to asbestos and environmental claims.*
(in millions) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Net Reserves Held $25,684 $26,005 $29,347 $36,228 $47,253 $57,476 $62,630 $69,288 $72,455 $67,899 $71,507
Discount (in Reserves Held) 1,287 1,423 1,499 1,516 1,553 2,110 2,264 2,429 2,574 2,655 3,217
Net Reserves Held
(Undiscounted) 26,971 27,428 30,846 37,744 48,806 59,586 64,894 71,717 75,029 70,554 74,724
Paid (Cumulative) as of:
One year later 9,709 11,007 10,775 12,163 14,910 15,326 14,862 16,531 24,267 15,919
Two years later 17,149 18,091 18,589 21,773 24,377 25,152 24,388 31,791 36,164
Three years later 21,930 23,881 25,513 28,763 31,296 32,295 34,647 40,401
Four years later 26,090 28,717 30,757 33,825 36,804 40,380 40,447
Five years later 29,473 32,685 34,627 38,087 43,162 44,473
Six years later 32,421 35,656 37,778 42,924 46,330
Seven years later 34,660 38,116 41,493 45,215
Eight years later 36,497 41,055 43,312
Nine years later 38,943 42,591
Ten years later 40,153
(in millions) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Net Reserves Held
(Undiscounted) $26,971 $27,428 $30,846 $37,744 $48,806 $59,586 $64,894 $71,717 $75,029 $70,554 $74,724
Undiscounted Liability as of:
One year later 26,979 31,112 32,913 40,931 53,486 59,533 64,238 71,836 77,800 74,736
Two years later 30,696 33,363 37,583 49,463 55,009 60,126 64,764 74,318 82,043
Three years later 32,732 37,964 46,179 51,497 56,047 61,242 67,303 78,275
Four years later 36,210 45,203 48,427 52,964 57,618 63,872 70,733
Five years later 41,699 47,078 49,855 54,870 60,231 67,102
Six years later 43,543 48,273 51,560 57,300 63,348
Seven years later 44,475 49,803 53,917 60,283
Eight years later 45,767 52,034 56,827
Nine years later 47,682 54,847
Ten years later 50,422
Net Redundancy / (Deficiency) (23,451) (27,419) (25,981) (22,539) (14,542) (7,516) (5,839) (6,558) (7,014) (4,182)
Remaining Reserves
(Undiscounted) 10,269 12,256 13,515 15,068 17,018 22,629 30,286 37,874 45,879 58,817
Remaining Discount 824 941 1,116 1,245 1,363 1,531 1,751 2,056 2,425 2,836
Remaining Reserves 9,445 11,315 12,399 13,823 15,655 21,098 28,535 35,818 43,454 55,981
10 AIG 2010 Form 10-K