AIG 2012 Annual Report Download - page 39

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The middle of the table shows Net Redundancy/(Deficiency). This is the aggregate change in estimates over the
period of years covered by the table. For example, the net loss reserve deficiency of $27.1 billion for 2002 is the
difference between the original undiscounted reserve of $30.8 billion at December 31, 2002 and the $58.0 billion of
re-estimated reserves at December 31, 2012. The net redundancy/(deficiency) amounts are cumulative; in other
words, the amount shown in the 2011 column includes the amount shown in the 2010 column, and so on. Conditions
and trends that have affected development of the liability in the past may not necessarily occur in the future.
Accordingly, it generally is not appropriate to extrapolate future development based on this table.
The bottom portion of the table shows the Paid (Cumulative) amounts during successive years related to the
undiscounted loss reserves. For example, as of December 31, 2012, AIG had paid a total of $47.9 billion of the
$58.0 billion in re-estimated reserves for 2002, resulting in Remaining Reserves (Undiscounted) of $10.1 billion for
2002. Also included in this section are the Remaining Reserves (Undiscounted) and the Remaining Discount for
each year.
The following table presents loss reserves and the related loss development 2002 through 2012 and
consolidated gross liability (before discount), reinsurance recoverable and net liability recorded for each
calendar year, and the re-estimation of these amounts as of December 31, 2012.(a)
(in millions) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Net Reserves Held(b) $ 29,347 $ 36,228 $ 47,253 $ 57,476 $62,630 $ 69,288 $ 72,455 $67,899 $71,507 $70,825 $68,782
Discount (in Reserves Held) 1,499 1,516 1,553 2,110 2,264 2,429 2,574 2,655 3,217 3,183 3,246
Net Reserves Held (Undiscounted) 30,846 37,744 48,806 59,586 64,894 71,717 75,029 70,554 74,724 74,008 $72,028
Net undiscounted Reserve re-estimated as of:
One year later 32,913 40,931 53,486 59,533 64,238 71,836 77,800 74,736 74,919 74,429
Two years later 37,583 49,463 55,009 60,126 64,764 74,318 82,043 74,529 75,502
Three years later 46,179 51,497 56,047 61,242 67,303 78,275 81,719 75,187
Four years later 48,427 52,964 57,618 63,872 70,733 78,245 82,422
Five years later 49,855 54,870 60,231 67,102 70,876 79,098
Six years later 51,560 57,300 63,348 67,518 71,572
Seven years later 53,917 60,283 63,928 68,233
Eight years later 56,827 60,879 64,532
Nine years later 57,410 61,449
Ten years later 57,967
Net Deficiency on net reserves held (27,121) (23,705) (15,726) (8,647) (6,678) (7,381) (7,393) (4,633) (778) (421)
Net Deficiency related to A&E (4,042) (3,970) (2,965) (2,036) (1,827) (1,809) (1,759) (1,607) (106) (76)
Net Deficiency excluding A&E (23,079) (19,735) (12,761) (6,611) (4,851) (5,572) (5,634) (3,026) (672) (345)
Paid (Cumulative) as of:
One year later 10,775 12,163 14,910 15,326 14,862 16,531 24,267 15,919 17,661 19,235
Two years later 18,589 21,773 24,377 25,152 24,388 31,791 36,164 28,428 30,620
Three years later 25,513 28,763 31,296 32,295 34,647 40,401 46,856 38,183
Four years later 30,757 33,825 36,804 40,380 40,447 48,520 53,616
Five years later 34,627 38,087 43,162 44,473 46,474 53,593
Six years later 37,778 42,924 46,330 49,552 50,391
Seven years later 41,493 45,215 50,462 52,243
Eight years later 43,312 48,866 52,214
Nine years later 46,622 50,292
Ten years later 47,856
Remaining Reserves (Undiscounted) 10,111 11,157 12,318 15,990 21,181 25,505 28,806 37,004 44,882 55,194
Remaining Discount 876 993 1,087 1,203 1,362 1,589 1,869 2,203 2,535 2,899
Remaining Reserves $ 9,235 $ 10,164 $ 11,231 $ 14,787 $19,819 $ 23,916 $ 26,937 $34,801 $42,347 $52,295
Net Liability, End of Year $ 30,846 $ 37,744 $ 48,806 $ 59,586 $64,894 $ 71,717 $ 75,030 $70,554 $74,724 $74,008 $72,028
Reinsurance Recoverable, End of Year 17,327 15,644 14,624 19,693 17,369 16,212 16,803 17,487 19,644 20,320 19,209
Gross Liability, End of Year 48,173 53,388 63,430 79,279 82,263 87,929 91,833 88,041 94,368 94,328 $91,237
Re-estimated Net Liability 57,967 61,449 64,532 68,233 71,572 79,098 82,422 75,187 75,502 74,429
Re-estimated Reinsurance Recoverable 25,535 23,131 21,249 24,093 20,528 19,135 18,480 18,371 16,861 20,395
Re-estimated Gross Liability 83,502 84,580 85,781 92,326 92,100 98,233 100,902 93,558 92,363 94,824
Cumulative Gross
Redundancy/(Deficiency) $(35,329) $(31,192) $(22,351) $(13,047) $ (9,837) $(10,304) $ (9,069) $ (5,517) $ 2,005 $ (496)
(a) During 2009, we deconsolidated Transatlantic Holdings, Inc. and sold 21st Century Insurance Group and HSB Group, Inc. The sales and
deconsolidation are reflected in the table above as a reduction in December 31, 2009 net reserves of $9.7 billion and as an $8.6 billion increase in
paid losses for the years 2000 through 2008 to remove the reserves for these divested entities from the ending balance.
(b) The increase in Net Reserves Held from 2009 to 2010 is partially due to the $1.7 billion in Net Reserves Held by Fuji, which was acquired in
2010. The decrease in 2011 is due to the cession of asbestos reserves described in Item 7. MD&A – Results of Operations – Segment Results –
AIG Property Casualty Operations – Liability for Unpaid Claims and Claims Adjustment Expense – Asbestos and Environmental Reserves.
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AIG 2012 Form 10-K22
ITEM 1 / BUSINESS