AIG 2012 Annual Report Download - page 96

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Consumer Insurance Net Premiums Written
The Consumer Insurance business continued to grow its net premiums written and build momentum through its
multiple distribution channels and continuing focus on direct marketing. Consumer Insurance is well-diversified across
the major lines of business and has global strategies that are executed across its regions to enhance customer
relationships and business performance. Consumer Insurance currently has direct marketing operations in over 50
countries, and we continued to emphasize the growth of this channel, which for the year ended December 31, 2012,
accounted for approximately 15 percent of our overall net premiums written.
A&H net premiums written increased, due to the growth of group personal accident business in the Americas and
Asia Pacific, strong growth of new business sales in Fuji Life, travel insurance business, direct marketing programs in
Japan and other Asia Pacific nations and growth in individual personal accident in other Asia Pacific nations. This
was partially offset by the continuing strategies to reposition U.S. direct marketing operations, as well as pricing and
underwriting actions in Europe.
Personal lines net premiums written increased primarily due to the execution of our strategic initiative to grow higher
value lines of business in non-automobile products and rate increases in Japan automobile products. Growth in
non-automobile net premiums written outpaced growth in automobile net premiums written, increasing its proportion
to total net premiums written, due to our focus on diversifying the global product mix.
2011 and 2010 Comparison
Commercial Insurance Net Premiums Written
In 2011, net premiums written increased due to the effects of overall improvements in ratable exposures (i.e., asset
values, payrolls and sales), general pricing improvement and retrospective premium adjustments on loss-sensitive
contracts. We implemented certain initiatives designed to provide for a more effective use of capital, further growth in
the strategic higher value lines of business and improvement in foreign exchange rates.
Casualty net premiums written decreased primarily due to our strategic initiatives in workers’ compensation and
certain other lines of business, as well as a continued commitment to maintain price discipline in lines where market
rates are unsatisfactory. However, given the capital intensive nature of these classes of casualty business, we expect
that over time, these actions will improve our results. Net premiums written decreased by approximately $0.6 billion
as we ceased writing excess workers’ compensation business as a stand-alone product. This was slightly offset by
an increase in additional premiums on loss-sensitive business in the amount of approximately $164 million compared
to 2010.
Property net premiums written increased due to particularly strong pricing trends in the U.S. and Japan, coupled with
changes in the reinsurance strategy resulting in increased retentions. The catastrophe bond transactions in 2011 and
2010 reduced net premiums written by approximately $201 million and $208 million, respectively.
Specialty net premiums written increased due to the strategic initiative to grow higher value lines, including
aerospace, global marine, and credit insurance, all of which benefited from the impact of rate increases as well as
new business growth.
Financial lines net premiums written increased primarily due to a multi-year Errors and Omissions policy in the
Americas that produced net premiums written of $148 million in 2011.
Consumer Insurance Net Premiums Written
Consumer Insurance net premiums written increased in 2011 primarily due to the effect of including Fuji results for a
full year, improvement in foreign currency exchange rates, primarily in the Japanese Yen, and further growth in the
strategic higher value lines of business. Excluding the effect of the Fuji acquisition and foreign exchange, Consumer
Insurance net premiums written declined by one percent in 2011, primarily due to the non-renewal of certain
programs in the U.S. and Canada that did not meet internal performance targets in Personal lines business.
A&H net premiums written increased primarily due to the Fuji acquisition, direct marketing, group and individual
accident, travel business, and the execution of new business strategies at Fuji Life. Excluding the Fuji acquisition,
A&H net premiums written increased by approximately 7 percent, mainly attributable to favorable marketing programs
and the benefits of rate increases implemented in 2010 in Japan and the effect of foreign exchange. Growth was
also demonstrated in key geographic markets such as China, Continental Europe and Israel.
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AIG 2012 Form 10-K 79
ITEM 7 / RESULTS OF OPERATIONS