AIG 2013 Annual Report Download - page 38

shown in the 2012 column includes the amount shown in the 2011 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, 2013, AIG had paid a total of $51.6 billion of the
$62.1 billion in re-estimated reserves for 2003, resulting in Remaining Reserves (Undiscounted) of $10.5 billion for
2003. 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 2003 through 2013 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, 2013.(a)
Net Reserves Held(b) $ 36,228 $ 47,253 $ 57,476 $ 62,630 $ 69,288 $ 72,456 $ 67,899 $ 71,507 $ 70,825 $ 68,782
Discount (in Reserves Held) 1,516 1,553 2,110 2,264 2,429 2,574 2,655 3,217 3,183 3,246
Net Reserves Held (Undiscounted) 37,744 48,806 59,586 64,894 71,717 75,030 70,554 74,724 74,008 72,028
Net undiscounted Reserve re-estimated as of:
One year later 40,931 53,486 59,533 64,238 71,836 77,800 74,736 74,919 74,429 72,585
Two years later 49,463 55,009 60,126 64,764 74,318 82,043 74,529 75,502 75,167
Three years later 51,497 56,047 61,242 67,303 78,275 81,719 75,187 76,023
Four years later 52,964 57,618 63,872 70,733 78,245 82,422 76,058
Five years later 54,870 60,231 67,102 70,876 79,098 83,135
Six years later 57,300 63,348 67,518 71,572 79,813
Seven years later 60,283 63,928 68,233 72,286
Eight years later 60,879 64,532 69,023
Nine years later 61,449 65,261
Ten years later 62,116
Net Deficiency on net reserves held (24,372) (16,455) (9,437) (7,392) (8,096) (8,105) (5,504) (1,299) (1,159) (557)
Net Deficiency related to asbestos and
environmental (A&E) (4,038) (3,033) (2,104) (1,895) (1,877) (1,827) (1,675) (174) (144) (68)
Net Deficiency excluding A&E (20,334) (13,422) (7,333) (5,497) (6,219) (6,278) (3,829) (1,125) (1,015) (489)
Paid (Cumulative) as of:
One year later 12,163 14,910 15,326 14,862 16,531 24,267 15,919 17,661 19,235 18,758
Two years later 21,773 24,377 25,152 24,388 31,791 36,164 28,428 30,620 31,766
Three years later 28,763 31,296 32,295 34,647 40,401 46,856 38,183 40,091
Four years later 33,825 36,804 40,380 40,447 48,520 53,616 45,382
Five years later 38,087 43,162 44,473 46,474 53,593 58,513
Six years later 42,924 46,330 49,552 50,391 57,686
Seven years later 45,215 50,462 52,243 53,545
Eight years later 48,866 52,214 54,332
Nine years later 50,292 53,693
Ten years later 51,578
Remaining Reserves (Undiscounted) 10,538 11,568 14,691 18,741 22,127 24,622 30,676 35,932 43,401 53,827
Remaining Discount 1,624 1,723 1,861 2,038 2,251 2,487 2,722 2,955 3,186 3,375
Remaining Reserves $ 8,914 $ 9,845 $ 12,830 $ 16,703 $ 19,876 $ 22,135 $ 27,954 $ 32,977 $ 40,215 $ 50,452
Net Liability, End of Year $ 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 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 53,388 63,430 79,279 82,263 87,929 91,833 88,041 94,368 94,328 91,237
Re-estimated Net Liability 62,116 65,261 69,023 72,286 79,813 83,135 76,058 76,023 75,167 72,585
Re-estimated Reinsurance Recoverable 23,728 21,851 24,710 20,998 19,494 18,905 18,509 16,488 18,423 19,408
Re-estimated Gross Liability 85,844 87,112 93,733 93,284 99,307 102,040 94,567 92,511 93,590 91,993
Cumulative Gross
Redundancy (Deficiency) $ (32,456) $ (23,682) $ (14,454) $ (11,021) $ (11,378) $ (10,207) $ (6,526) $ 1,857 $ 738 $ (756)
(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.
The Liability for unpaid claims and claims adjustment expense as reported in AIG’s Consolidated Balance Sheet at
December 31, 2013 differs from the total reserve reported in the annual statements filed with state insurance
departments and, where applicable, with foreign regulatory authorities primarily for the following reasons:
• Reserves for certain foreign operations are not required or permitted to be reported in the United States for
statutory reporting purposes, including contingency reserves for catastrophic events;
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AIG 2013 Form 10-K20
ITEM 1 / BUSINESS
(in millions) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$ 64,316
3,555
$ 67,871
$ 67,871
17,231
$ 85,102
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