AIG 2013 Annual Report Download - page 284

The following table presents short-duration insurance premiums written and earned:
Premiums written:
Direct $ 40,428 $ 41,710 $ 938 $ 898 $ – $ – $ 41,366 $ 42,608
Assumed 3,428 3,031 (10) – 7 2 3,425 3,033
Ceded (9,420) (9,901) (70) (97) (7) (2) (9,497) (10,000)
Net $ 34,436 $ 34,840 $ 858 $ 801 $ – $ – $ 35,294 $ 35,641
Premiums earned:
Direct $ 40,954 $ 42,878 $ 754 $ 835 $ – $ – $ 41,708 $ 43,713
Assumed 3,254 3,294 31 55 (30) (46) 3,255 3,303
Ceded (9,335) (10,483) (70) (98) 30 46 (9,375) (10,535)
Net $ 34,873 $ 35,689 $ 715 $ 792 $ – $ – $ 35,588 $ 36,481
For the years ended December 31, 2013, 2012 and 2011, reinsurance recoveries, which reduced loss and loss
expenses incurred, amounted to $3.3 billion, $4.5 billion and $6.1 billion, respectively.
Long-duration reinsurance is effected principally under yearly renewable term treaties. The premiums with respect to
these treaties are earned over the contract period in proportion to the protection provided. Amounts recoverable from
reinsurers on long-duration contracts are estimated in a manner consistent with the assumptions used for the
underlying policy benefits and are presented as a component of Reinsurance assets.
The following table presents premiums for our long-duration insurance and retirement services operations:
Gross premiums $ 3,066 $ 3,140 $ 11 $ 17 $ 3,077 $ 3,157
Ceded premiums (602) (591) – (6) (602) (597)
Net $ 2,464 $ 2,549 $ 11 $ 11 $ 2,475 $ 2,560
Long-duration reinsurance recoveries, which reduced Policyholder benefits and claims incurred, were approximately
$714 million, $758 million and $611 million, respectively, for the years ended December 31, 2013, 2012 and 2011.
The following table presents long-duration insurance in force ceded to other insurance companies:
Long-duration insurance in force ceded $129,159 $140,156
* Excludes amounts related to held-for-sale entities.
Long-duration insurance in force assumed represented 0.05 percent of gross long-duration insurance in force at
December 31, 2013, 0.05 percent at December 31, 2012 and 0.07 percent at December 31, 2011, and premiums
assumed by AIG Life and Retirement represented 0.4 percent, 0.6 percent and 0.7 percent of gross premiums for the
years ended December 31, 2013, 2012 and 2011, respectively.
AIG Life and Retirement utilizes internal and third-party reinsurance relationships to manage insurance risks and to
facilitate capital management strategies. As a result of these reinsurance arrangements, AIG Life and Retirement is
able to minimize the use of letters of credit and utilize capital more efficiently. Pools of highly-rated third-party
reinsurers are utilized to manage net amounts at risk in excess of retention limits.
AIG Life and Retirement manages the capital impact on its insurance subsidiaries of statutory reserve requirements
under Regulation XXX and Guideline AXXX through intercompany reinsurance transactions. Under GAAP, these
intercompany reinsurance transactions are eliminated in consolidation. Under one of these intercompany
arrangements, AIG Life and Retirement obtains letters of credit to support statutory recognition of the ceded
reinsurance. As of December 31, 2013, AIG Life and Retirement had obtained for this purpose a $260 million
syndicated letter of credit facility and a $190 million bilateral letter of credit. As of December 31, 2013, all of the
$450 million of letters of credit were due to mature on December 31, 2015. On February 7, 2014, these letters of
Long-Duration Reinsurance
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AIG 2013 Form 10-K266
ITEM 8 / NOTE 8. REINSURANCE
AIG Property Casualty Mortgage Guaranty Eliminations Total
Years Ended December 31,
(in millions) 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011
$ 39,545 $ 1,099 $ – $ 40,644
3,659 (13) 3 3,649
(8,816) (38) (3) (8,857)
$ 34,388 $ 1,048 $ – $ 35,436
$ 38,996 $ 840 $ – $ 39,836
3,521 7 (18) 3,510
(8,564) (38) 18 (8,584)
$ 33,953 $ 809 $ — $ 34,762
AIG Life and Retirement Divested Businesses Total
Years Ended December 31,
(in millions) 2013 2012 2011 2013 2012 2011 2013 2012 2011
$ 3,269 $ 9 $ 3,278
(673) – (673)
$ 2,596 $ 9 $ 2,605
At December 31,
(in millions) 2013 2012 2011*
$122,012
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