AIG 2010 Annual Report Download - page 62

American International Group, Inc., and Subsidiaries
See Results of Operations herein for additional discussion of our results.
2011 Outlook
Priorities for 2011
AIG is focused on the following priorities for 2011:
• continuing to strengthen and grow AIG’s businesses;
• executing one or more primary offerings of AIG Common Stock;
• implementing plans to maximize the value of resources available for repayment of the SPV Preferred
Interests held by the Department of the Treasury;
• continuing to build and strengthen the financial and operating systems infrastructure throughout the
organization, particularly in financial reporting, financial operations and human resources;
• restructuring AIG’s operations consistent with its smaller size and plans to increase its competitiveness;
• completing the active unwind of AIGFP’s portfolios by June 30, 2011; and
• closing the Nan Shan sale.
2011 Business Outlook
Chartis
Given current insurance capital levels and overall economic conditions, 2011 will be a challenging year as
Chartis expects a weak growth environment in most developed economies. The continued weakness of ratable
exposures (i.e. asset values, payrolls, and sales) over the past year and its negative impact on the overall market
premium base, and in addition, in the U.S., continued weakness in commercial insurance rates, are likely to
continue into much of 2011. In Growth Economies such as Brazil, Turkey, India, and Asia Pacific countries,
Chartis anticipates improved growth rates.
In 2011, Chartis expects to continue to execute capital management initiatives by enhancing broad-based risk
tolerance guidelines for its operating units and executing underwriting and reinsurance strategies to improve
capital ratios and reduce volatility, increase return on equity by line of business and reduce exposure to businesses
where inadequate pricing and increased loss trends exist. Chartis will also continue to aggressively pursue cost
saving initiatives that were undertaken in the later part of 2010. Further, Chartis plans to continue to attract,
retain and develop human capital and continue to build on strategies implemented during 2010 to better align
employee performance incentive programs with profitability, capital management, risk management and
compliance objectives.
Chartis U.S. expects both gross and net written premiums to remain generally consistent with 2010 levels.
However, its business mix is expected to continue to reflect efforts to align risk profile with risk tolerance, with
the goal of meeting profitability and capital management objectives. Also, Chartis has initiated a number of steps
to address historical experience with respect to adverse development. Changes include exiting certain classes of its
excess workers’ compensation business, increased actuarial involvement in product pricing and attachments,
increased utilization of pricing models with actuarial support, policy form changes, increased policy exclusions and
fewer multi-year policies being offered. As a result, Chartis U.S. expects continued growth within its consumer
lines business and an overall decline in certain classes of its commercial lines businesses.
Chartis International expects continued growth of its net written premiums in 2011. Given its well-established
franchises and operations, expectations with regards to continued globalization and growth in the gross domestic
product within countries included in the Growth Economies region, Chartis International intends to increase its
insurance penetration and growth within commercial liability businesses overseas. This growth is expected in the
Far East and Growth Economy Regions. Strong pricing discipline in a continued soft market is expected to keep
46 AIG 2010 Form 10-K