AIG 2014 Annual Report Download - page 223

GLOSSARY

206
Reinsurance The practice whereby one insurer, the reinsurer, in consideration of a premium paid to that insurer, agrees to
indemnify another insurer, the ceding company, for part or all of the liability of the ceding company under one or more policies
or contracts of insurance which it has issued.
Rescission Denial of claims and termination of coverage on loans related to fraudulent or undocumented claims, underwriting
guideline violations and other deviations from contractual terms.
Retained Interest Category within AIG’s Corporate and Other that includes the fair value gains or losses, prior to their sale, of
the AIA ordinary shares retained following the AIA Group Limited initial public offering and the fair value gains or losses, prior to
the FRBNY liquidation of Maiden Lane III LLC assets in 2012, on the retained interest in Maiden Lane III LLC.
Retroactive Reinsurance See Deferred Gain on Retroactive Reinsurance.
Salvage The amount that can be recovered by us for the sale of damaged goods for which our policyholder has been
indemnified (and to which title was transferred to us).
Second-lien Subordinate in ranking to the first-lien holder claims on a property in the event of default on a mortgage.
Severe losses Individual non-catastrophe first party losses and surety losses greater than $10 million, net of related
reinsurance and salvage and subrogation. Severe losses include claims related to satellite explosions, plane crashes, and
shipwrecks.
SIA Sales Inducement Asset Represents amounts that are credited to policyholder account balances related to the enhanced
crediting rates that a seller offers on certain of its annuity products.
Solvency II Legislation in the European Union which reforms the insurance industry’s solvency framework, including minimum
capital and solvency requirements, governance requirements, risk management and public reporting standards. The Solvency
II Directive (2009/138/EEC), was adopted on November 25, 2009 and is expected to become effective on January 1, 2016.
Subrogation The amount of recovery for claims we have paid our policyholders, generally from a negligent third party or such
party’s insurer.
Surrender charge A charge levied against an investor for the early withdrawal of funds from a life insurance or annuity
contract, or for the cancellation of the agreement.
Surrender rate represents annualized surrenders and withdrawals as a percentage of average account value.
Unearned premium reserve Liabilities established by insurers and reinsurers to reflect unearned premiums which are usually
refundable to policyholders if an insurance or reinsurance contract is canceled prior to expiration of the contract term.
VOBA Value of Business Acquired Present value of projected future gross profits from in-force policies from acquired
businesses.