AIG 2014 Annual Report Download - page 81

ITEM 2 / EXECUTIVE OVERVIEW

64
Underwriting Excellence
We continue to further enhance our risk selection process and refine technical pricing and producer management, through
enhanced tools and analytics. In addition, we remain focused on managing exposure to capital intensive long-tail lines. We
believe that accident year loss ratios, as adjusted, will continue to improve due to these actions.
Claims Excellence
We continue to reduce loss costs by realizing greater efficiencies in servicing customer claims, introducing improved claims
analytics and services, developing knowledge of the economic drivers of losses which collectively are expected to mitigate
reserve development and legal costs, and improve customer insights and pricing.
Operational Effectiveness
We continue to make strategic investments in systems, processes and talent worldwide, which are expected to create
additional value and greater efficiency in the years ahead. In addition, along with other areas of AIG, Commercial Insurance
continues to leverage its various off-shore centers, taking advantage of opportunities to centralize and standardize processes
and platforms.
Capital Efficiency
Commercial Insurance continues to execute capital management initiatives by enhancing broad-based risk tolerance
guidelines for its operating units, implementing underwriting strategies to increase return on equity by line of business and
reducing exposure to businesses with inadequate pricing and increased loss trends. In addition, Commercial Insurance
remains focused on enhancing its global reinsurance strategy to improve overall capital efficiency, although this strategy may
lead to periodic income statement volatility.
We also continue to streamline our legal entity structure to enhance transparency for regulators and optimize capital and tax
efficiency, particularly with respect to the Non-Life Insurance Companies in the Property Casualty and Personal Insurance
operating segments. Our legal entity restructuring initiatives have enhanced dividend capacity, reduced required capital, and
provided tax benefits for these operations. Additionally, the restructurings allow us to simplify our reinsurance arrangements,
which further facilitate increased capital optimization. In 2014, we completed the integration of our Japan operations into a
holding company structure through the conversion of the American Home Assurance Company’s Japan branch to a subsidiary
of the Japan holding company, American Home Assurance Japan, effective on April 1, 2014. We expect our overall legal entity
restructuring to be substantially completed in 2016, subject to regulatory approvals in the relevant jurisdictions.