AIG 2014 Annual Report Download - page 119

ITEM 7 / RESULTS OF OPERATIONS / CONSUMER INSURANCE
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2013 and 2012 Comparison
The combined ratio decreased by 0.6 points in 2013 compared to 2012, primarily due to a lower loss ratio, partially offset by
higher acquisition and expense ratios as discussed below.
The accident year combined ratio, as adjusted, increased by 2.8 points in 2013 compared to 2012.
The accident year loss ratio, as adjusted, increased by 0.9 points in 2013 compared to 2012, primarily due to the effect of
higher losses associated with a warranty retail program, group accident, and travel business in the U.S. and Canada, which in
the aggregate increased the loss ratio by 1.7 points. This was partially offset by improvements in automobile and personal
property, as a result of rate and underwriting actions taken in 2013 and prior years. The higher losses associated with the
warranty retail program were largely offset by a decrease in the related profit sharing arrangement reflected in acquisition
costs.
The acquisition ratio increased by 0.9 points in 2013 compared to 2012, primarily due to the combined effect of lower net
premiums earned base, change in business mix and higher costs in growth-targeted lines of business. This was partially offset
by a decrease in a profit sharing arrangement associated with the warranty retail program noted above.
The general operating expense ratio increased by 1.0 point in 2013 compared to 2012, primarily due to the increase in
employee incentive compensation expense, partially offset by lower infrastructure project costs.
CORPORATE AND OTHER
Corporate and Other Results
The following table presents AIG’s Corporate and Other results:
Years Ended December 31,
Percentage Change
(in millions)
2014 2013 2012 2014 vs. 2013 2013 vs. 2012
Corporate and Other pre-tax operating loss:
Direct Investment book $1,241 $1,448 $1,215 (14)%19 %
Global Capital Markets 359 625 557 (43) 12
Run-off insurance Lines (445) 403 (135)
NM NM
Other businesses 236 (97) (87)
NM (11)
AIG Parent and Other:
Equity in pre-tax operating earnings of AerCap(b) 434 - - NM NM
Fair value earnings on PICC Group shares(c) 37 - - NM NM
Corporate expenses, net:
Other income (expense), net 128 90 149 42 (40)
General operating expenses (1,146) (1,115) (1,054)
(3) (6)
Total Corporate expenses, net (1,018) (1,025) (905)
1(13)
Severance expense(a) -(265) - NM NM
Interest expense (1,233) (1,412) (1,597)
13 12
Total AIG Parent and Other operating loss (1,780) (2,702) (2,502)
34 (8)
Retained interests:
Change in fair value of AIA securities,
including realized gain in 2012 --2,069 NM NM
Change in fair value of ML III --2,888 NM NM
Consolidation and eliminations 14 - (75) NM
Total Corporate and Other pre-tax operating income (loss) (388) (319) 4,005 (22) NM
(a) Includes $263 million of severance expense attributable to Property Casualty and Personal Insurance operating segments.
(b) Represents our share of AerCap’s pre-tax operating income, which excludes certain post-acquisition transaction expenses incurred by AerCap in connection
with its acquisition of ILFC and the difference between expensing AerCap’s maintenance rights assets over the remaining lease term as compared to the
remaining economic life of the related aircraft.