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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Decembe
r
31, 2015 Commission file number 1-8787
American International Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
13-2592361
(I.R.S. Employer
Identification No.)
175 Water Street, New York, New York
(Address of principal executive offices)
10038
(Zip Code)
Registrant’s telephone number, including area code (212) 770-7000
______________________________
Securities registered pursuant to Section 12(b) of the Act: See Exhibit 99.02
Securities registered pursuant to Section 12(g) of the Act: None
______________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of the voting and nonvoting common equity held by nonaffiliates of the registrant (based on the closing price of
the registrant’s most recently completed second fiscal quarter) was approximately $80,826,000,000.
As of February 11, 2016, there were outstanding 1,149,448,256 shares of Common Stock, $2.50 par value per share, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Document of the Registrant Form 10-K Reference Locations
Portions of the registrant’s definitive proxy statement for the 2016
Annual Meeting of Shareholders
Part II, Item 5 and Part III, Items 10, 11, 12, 13 and 14

Table of contents

  • Page 1
    ... 31, 2015 Commission file number 1-8787 American International Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 175 Water Street, New York, New York (Address of principal executive offices) 13-2592361...

  • Page 2
    ... Market Risk Financial Statements and Supplementary Data Index to Financial Statements and Schedules Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Directors, Executive Officers and Corporate Governance Executive Compensation Security...

  • Page 3
    ... / BUSINESS American International Group, Inc. (AIG) is a leading global insurance organization. Founded in 1919, today we provide a wide range of property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 100 countries...

  • Page 4
    ... and accountability, including the introduction of a new Legacy Portfolio that aims to maximize value and release capital from run-off of non-strategic assets Reducing general operating expenses Improving the Commercial Insurance Property Casualty accident year loss ratio Returning excess...

  • Page 5
    ... part on AerCap's closing price per share of $47.01 on May 13, 2014, the date the sale of ILFC to AerCap was completed. (b) Book value per common share excluding AOCI is a non-GAAP measure. See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) -Use...

  • Page 6
    ... returns and limited credit risk. To meet our domestic operations' current risk return and business objectives, our domestic Non-Life Insurance Companies have been shifting investment allocations to a broader array of investments, including structured securities, mortgage loans, equity related...

  • Page 7
    ... broad portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. It holds long-standing, leading market positions in many of its U.S. product lines, and its global footprint provides the opportunity to leverage its multinational servicing...

  • Page 8
    ... market. P&D is a non-GAAP financial measure that includes direct and assumed amounts received on traditional life insurance policies, group benefit policies and deposits on life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts and mutual...

  • Page 9
    ... Businesses* (dollars in millions) * Represents revenues from insurance operations. Revenues for Property Casualty, Mortgage Guaranty, and Personal Insurance include net premiums earned and net investment income. Revenues for Institutional Markets, Retirement and Life include premiums, policy fees...

  • Page 10
    ...Insurance Business Strategy Customer: Strive to be our clients' most valued insurer by offering innovative products, superior service and access to an extensive global network. Sharpen Commercial Focus: Achieve ROE in excess of target across our businesses primarily through improvements in our loss...

  • Page 11
    ... balance sheet highly valued by customers that allows us to be a market leader in many lines of business Scale - size and scope of business facilitates risk diversification to optimize returns on capital Diversification - breadth of customers served, products underwritten and distribution channels...

  • Page 12
    ..., workers' compensation, excess casualty and crisis management insurance products. Casualty also includes risk-sharing and other customized structured programs for large corporate and multinational customers. Property: Products include commercial, industrial and energy-related property insurance...

  • Page 13
    ... Markets Product Lines Products primarily include stable value wrap products, structured settlement and terminal funding annuities, high net worth products, corporate- and bank-owned life insurance and guaranteed investment contracts (GICs). Institutional Markets products are primarily distributed...

  • Page 14
    ..., improve service and product capabilities and facilitate delivery of our target customer experience. Investment Strategy: Maintain a diversified, high quality portfolio of fixed maturity securities that largely matches the duration characteristics of related insurance liabilities with assets of...

  • Page 15
    ... - broad portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks Market leader - long-standing, leading positions in many of our product lines and key distribution channels Global business - ability to leverage multinational servicing...

  • Page 16
    ... as identity theft and credit card protection. Products are distributed through various channels, including agents, brokers and direct marketing. Personal Insurance also provides insurance for high net worth individuals offered through AIG Private Client Group, including auto, homeowners, umbrella...

  • Page 17
    ... mutual funds, banks and other life and property casualty insurance companies. Competition is primarily based on product pricing and design, distribution, financial strength, customer service and ease of doing business. Consumer Insurance competes based on its long-standing market leading positions...

  • Page 18
    ...1 / BUSINESS OUR EMPLOYEES At December 31, 2015, we had approximately 66,400 employees. We believe that our relations with our employees are satisfactory. * Includes employees in Finance; Enterprise Risk Management; Legal, Regulatory and Compliance; Human Resources and Administration; and Internal...

  • Page 19
    ...-Life Insurance Companies' reserves are for the U.S. commercial casualty class, including excess casualty, asbestos and environmental, which tends to involve longer periods of time for the reporting and settlement of claims than other types of insurance and therefore may increase the inherent risk...

  • Page 20
    ... 59,586 2006 62,630 $ 2,264 64,894 2007 69,288 $ 2,429 71,717 2008 72,455 $ 2,574 75,029 2009 67,899 $ 2,655 70,554 2010 71,507 $ 3,217 74,724 2011 70,825 $ 3,183 74,008 2012 68,782 $ 3,246 72,028 2013 64,316 $ 3,555 67,871 2014 61,612 $ 3,077 64,689 $ 2015 60,603...

  • Page 21
    ... prior). The Liability for unpaid losses and loss adjustment expenses as reported in our Consolidated Balance Sheet at December 31, 2015 differs from the total reserves reported in the annual statements filed with state insurance departments and, when applicable, with foreign regulatory authorities...

  • Page 22
    ... Non-Life Insurance Companies revised the ceded reinsurance framework and strategy to improve capital management and support our global product line risk and profitability objectives. As a result of adopting the revised framework and strategy, many individual reinsurance contracts were consolidated...

  • Page 23
    ...securities and security-based swap markets, U.S. mutual funds, U.S. broker-dealers and U.S. investment advisors. Principal regulator of the mutual funds offered by our broker-dealer subsidiaries. The SEC is in the process of implementing rules and regulations governing reporting, clearing, execution...

  • Page 24
    ... financial risk and corporate governance in order to reinforce international financial stability. The FSB also charged the IAIS with developing a framework for measuring systemic risks posed by insurance groups. Based on the IAIS' assessment methodology for identifying global systemically important...

  • Page 25
    ... (2009/138/EEC) (Solvency II), which became effective on January 1, 2016, includes minimum capital and solvency requirements, governance requirements, risk management and public reporting standards. 2. Regulation of Foreign Insurance Company Subsidiaries: Generally, our subsidiaries operating in...

  • Page 26
    ... adverse economic conditions; • enhanced prudential standards, including new group-wide requirements relating to risk-based capital, leverage, liquidity and credit exposure, as well as overall risk management requirements; • management interlock prohibitions and a requirement to maintain a plan...

  • Page 27
    ... have to take account of the amounts paid by us into state guaranty funds). We cannot predict whether these actions will become effective or the effect they may have on the financial markets or on our business, results of operations, cash flows, financial condition and credit ratings. However, it is...

  • Page 28
    ... global systemically important financial institutions, should be regulated. These frameworks and recommendations address such issues as financial group supervision, capital and solvency standards, systemic financial risk, corporate governance including compensation, and a number of related...

  • Page 29
    ...II. ERISA Considerations We provide products and services to certain employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA) or the Internal Revenue Code of 1986, as amended (the Internal Revenue Code). Plans subject to ERISA include pension...

  • Page 30
    ... of insurance companies, the form and content of reports of financial condition required to be filed, reserves for unearned premiums, losses and other purposes and enterprise risk management and corporate governance requirements. In general, such regulation is for the protection of policyholders...

  • Page 31
    ... Corporate Governance Guidelines (which include Director Independence Standards) • Director, Executive Officer and Senior Financial Officer Code of Business Conduct and Ethics (we will post on our website any amendment or waiver to this Code within the time period required by the SEC) • Employee...

  • Page 32
    ... market events, such as the global financial crisis during 2008 and 2009, have at times led, and could in the future lead, to a lack of liquidity, highly volatile markets, a steep depreciation in asset values across all classes, an erosion of investor and public confidence, and a widening of credit...

  • Page 33
    ... in real estate and real estate-related securities, including residential mortgage-backed, commercial mortgage-backed and other asset-backed securities and commercial mortgage loans. We also have significant exposures to financial institutions and, in particular, to money center and global banks...

  • Page 34
    ... associated with property, workers' compensation, A&H, business interruption and mortality and morbidity claims; • loss resulting from a decline in the value of our invested assets; • limitations on our ability to recover deferred tax assets; • loss resulting from actual policy experience that...

  • Page 35
    ... to pay claims for losses insured under our policies, it does make the reinsurer liable to them for the reinsured portion of the risk. For this reason, reinsurance is an important tool to manage transaction and insurance line risk retention and to mitigate losses from catastrophes. Market conditions...

  • Page 36
    ... new business and retaining customers and business. Insurer Financial Strength (IFS) ratings are an important factor in establishing the competitive position of insurance companies. IFS ratings measure an insurance company's ability to meet its obligations to contract holders and policyholders. High...

  • Page 37
    ...if interest rates rise rapidly and significantly, customers with policies that have interest crediting rates below the current market may seek competing products with higher returns and we may experience an increase in surrenders and withdrawals of life and annuity contracts, resulting in a decrease...

  • Page 38
    ... but not limited to equity options, futures contracts, interest rate swap and swaption contracts, as well as fixed maturity securities with a fair value election. See Enterprise Risk Management - Life Insurance Companies Key Insurance Risks - Variable Annuity Risk Management and Hedging Program...

  • Page 39
    ... business functions, including providing insurance quotes, processing premium payments, making changes to existing policies, filing and paying claims, administering variable annuity products and mutual funds, providing customer support and managing our investment portfolios. Systems failures...

  • Page 40
    ...on us. We cannot predict the effect these initiatives may have on our business, results of operations, cash flows and financial condition. We provide products and services to certain employee benefit plans that are subject to restrictions imposed by ERISA and the Internal Revenue Code, including the...

  • Page 41
    ... effect on our financial condition and results of operations. The NAIC Model Regulation "Valuation of Life Insurance Policies" (Regulation XXX) requires insurers to establish additional statutory reserves for term life insurance policies with long-term premium guarantees and universal life policies...

  • Page 42
    ... consolidated results of operations, financial condition and ability to compete effectively. An "ownership change" could limit our ability to utilize tax loss and credit carryforwards to offset future taxable income. As of December 31, 2015, we had a U.S. federal net operating loss carryforward of...

  • Page 43
    ...existing customers and counterparties. General insurance and life insurance companies compete through a combination of risk acceptance criteria, product pricing, and terms and conditions. Retirement services companies compete through crediting rates and the issuance of guaranteed benefits. A decline...

  • Page 44
    ... of a new insurance contracts standard as well as other future accounting standards could have a material effect on our reported results of operations and reported financial condition. Changes in our assumptions regarding the discount rate, expected rate of return, and expected compensation for our...

  • Page 45
    ... Winston-Salem, North Carolina Corporate and Other: • 175 Water Street in New York, New York • Livingston, New Jersey • Stowe, Vermont • Ft. Worth, Texas In addition, Non-Life Insurance Companies own offices in approximately 20 foreign countries and jurisdictions including Argentina, Bermuda...

  • Page 46
    ITEM 3 / LEGAL PROCEEDINGS For a discussion of legal proceedings, see Note 15 - Contingencies, Commitments and Guarantees to the Consolidated Financial Statements, which is incorporated herein by reference. ITEM 4 / MINE SAFETY DISCLOSURES Not applicable. 46

  • Page 47
    ... on the payment of dividends to AIG by some of its insurance subsidiaries, see Item 1A. Risk Factors - Liquidity, Capital and Credit - AIG Parent's ability to access funds from our subsidiaries is limited, and Note 18 to the Consolidated Financial Statements. EQUITY COMPENSATION PLANS Our table...

  • Page 48
    ... be effected through Exchange Act Rule 10b5-1 repurchase plans. The timing of any future share repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors. See Note 16 to the Consolidated Financial Statements for additional information on...

  • Page 49
    ... on AIG Common Stock for a five-year period (December 31, 2010 to December 31, 2015) with the cumulative total return of the S&P's 500 stock index (which includes AIG) and a peer group of companies consisting of 15 insurance companies to which we compare our business and operations: • ACE Limited...

  • Page 50
    ...Five-Year Cumulative Total Shareholder Returns Value of $100 Invested on December 31, 2010 Dividend reinvestment has been assumed and returns have been weighted to reflect relative stock market capitalization. 2010 2011 As of December 31, 2012 2013 2014 2015 AIG S&P 500 Peer Group $ 100.00...

  • Page 51
    ...Interest credited to policyholder account balances Amortization of deferred policy acquisition costs General operating and other expenses Interest expense Net loss on extinguishment of debt Aircraft leasing expenses Net (gain) loss on sale of properties and divested businesses Total benefits, losses...

  • Page 52
    ... be released through the Consolidated Statements of Income in 2011. The valuation allowance resulted primarily from losses subject to U.S. income taxes recorded from 2008 through 2010. See Note 22 to the Consolidated Financial Statements for further discussion. Capitalization and Book Value Per...

  • Page 53
    ... in 2011, 2014 and 2015 We completed the sale of ILFC on May 14, 2014, and in 2015 we sold all of our ordinary shares of AerCap Holdings N.V. (AerCap) received as part of the consideration for the sale of ILFC, as further discussed in Note 1 to the Consolidated Financial Statements. We also executed...

  • Page 54
    ... MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This Annual Report on Form 10-K and other publicly available documents may include, and officers and representatives of American International Group, Inc...

  • Page 55
    ... timing and applicable requirements of any new regulatory framework to which we are subject as a nonbank systemically important financial institution (SIFI) and as a global systemically important insurer (G-SII); • concentrations in our investment portfolios; • actions by credit rating agencies...

  • Page 56
    ... Summary Strategic Outlook RESULTS OF OPERATIONS Segment Results Commercial Insurance Consumer Insurance Corporate and Other INVESTMENTS Overview Investment Highlights Investment Strategies Investments by Legal Entity Credit Ratings Impairments INSURANCE RESERVES Non-Life Insurance Companies Life...

  • Page 57
    ... changes in fair value of our available for sale securities portfolio, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. Deferred tax assets represent U.S. tax attributes related to net operating loss carryforwards and foreign tax credits. Amounts for interim...

  • Page 58
    ...Commercial Insurance and Consumer Insurance reportable segments as well as Corporate and Other. • Commercial Insurance: Property Casualty and Mortgage Guaranty; Consumer Insurance: Personal Insurance • Pre-tax operating income: includes both underwriting income and loss and net investment income...

  • Page 59
    ... and earned on traditional life insurance policies, group benefit policies and life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts and mutual funds. ï,· Corporate and Other - Pre-tax operating income and loss is derived by excluding...

  • Page 60
    ... de-risking activities of the Direct Investment book (DIB) and the derivative portfolio of AIG Financial Products Corp. and related subsidiaries (collectively, AIGFP) included within Global Capital Markets (GCM), AIG has discontinued separate reporting of the DIB and GCM. Their results are reported...

  • Page 61
    ... mortality experience in Life, and an underwriting loss in Personal Insurance in 2015. These decreases were partially offset by higher policy and advisory fees in 2015 compared to 2014, driven by growth in separate account assets under management in Retirement. Our investment portfolio performance...

  • Page 62
    ...tax operating income per common share attributable to AIG (diluted) Key metrics: Commercial Insurance Pre-tax operating income Property Casualty combined ratio Property Casualty accident year combined ratio, as adjusted Property Casualty net premiums written Mortgage Guaranty domestic first-lien new...

  • Page 63
    ... I N G I NC O M E AT T R IB UTAB L E TO AI G ( e xclu des ne t re alize d capit al gai ns and ce rt ain oth e r it ems ) (in millions) PRE - TAX OP ER AT I N G I NC OM E ( L OSS ) BY SE G ME NT (in millions) * Includes a gain of $1.4 billion associated with the completion of the sale of ILFC. 63

  • Page 64
    ... (in millions) TO TAL AI G S H AR E H O LDE RS' E QU ITY (in millions) B O OK VAL U E PE R C OMM O N S H AR E AN D B O OK VAL UE P E R C O M M O N S H AR E E X C L U D I N G AO C I * Includes operating borrowings of other subsidiaries and consolidated investments and hybrid debt securities. 64

  • Page 65
    ...of new investment allocations, we continued to make investments in structured securities, mortgage loans and other fixed income investments with favorable risk versus return characteristics to improve yields and increase net investment income. Net unrealized gains in our available for sale portfolio...

  • Page 66
    ...reducing investment returns and unfavorably affecting loss reserve discounting, primarily related to our workers' compensation reserves. In addition, current market conditions may not necessarily permit insurance companies to increase pricing across all our product lines. Currency volatility in 2015...

  • Page 67
    ... protections. For additional information on TRIPRA, see Item 1A. Risk Factors - Reserves and Exposures and Item 7. MD&A - Enterprise Risk Management - Insurance Operations Risks - Non-Life Insurance Companies Key Insurance Risks - Terrorism Risk. Mortgage Guaranty During 2015, the U.S. market...

  • Page 68
    ... of our alternative investment portfolio will continue to affect Institutional Markets' results. Strategic Initiatives Customer - Strive to be our clients' most valued insurer by offering innovative products, superior service and access to an extensive global network. Sharpen Commercial Focus...

  • Page 69
    ... of workers' compensation, Property Casualty has observed different experience and trends, which helps inform its risk appetite, pricing and loss mitigation decisions. Invest to Grow Grow most profitable lines As part of our strategic goal of diversifying product offerings and providing customers...

  • Page 70
    .... Low interest rates have also driven strong sales growth of our fixed index annuity products, which provide additional interest crediting tied to favorable performance in certain equity market indices. Consumer Insurance provides products and services to certain employee benefit plans that are...

  • Page 71
    ... Effectiveness - Simplify processes and enhance operating environments to increase competitiveness, improve service and product capabilities and facilitate delivery of our target customer experience. Investment Strategy - Maintain a diversified, high quality portfolio of fixed maturity securities...

  • Page 72
    ... asset classes, to investors seeking higher returns. Fixed Annuities sales will continue to be challenged by the low interest rate environment. Sales of fixed annuities could improve if interest rates rise and the yield curve steepens, as these market conditions make fixed annuity products...

  • Page 73
    ...to sell AIG Advisor Group, our network of independent broker-dealers, to investment funds affiliated with Lightyear Capital LLC and PSP Investments. The transaction is expected to close in the second quarter of 2016, subject to regulatory approvals. See Results of Operations - Consumer Insurance and...

  • Page 74
    ... 31, (in millions) Revenues: Premiums Policy fees Net investment income Net realized capital gains Aircraft leasing revenue Other income Total revenues Benefits, losses and expenses: Policyholder benefits and losses incurred Interest credited to policyholder account balances Amortization of deferred...

  • Page 75
    ... AIG for 2015 decreased compared to 2014 primarily due to a decrease in income from insurance operations, reflecting adverse prior year loss reserve development in Commercial Property Casualty, decreased net investment income, and lower income on assets held by AIG Parent. After-tax operating income...

  • Page 76
    ... 708 9,368 Commercial Insurance Consumer Insurance* Corporate and Other Consolidations, eliminations and other adjustments Pre-tax operating income Changes in fair value of securities used to hedge guaranteed living benefits Changes in benefit reserves and DAC, VOBA, and SIA related to net realized...

  • Page 77
    ... Consumer Insurance pre-tax operating income, reflecting lower net investment income, less favorable adjustments related to the update of actuarial assumptions, less favorable mortality experience in Life, and an underwriting loss in Personal Insurance in 2015, partially offset by higher policy and...

  • Page 78
    ... on internal models consistent with the nature of the underlying businesses. For Commercial Insurance - Property Casualty and Consumer Insurance - Personal Insurance, we estimate investable funds based primarily on loss reserves, unearned premiums and a capital allocation for each operating segment...

  • Page 79
    ... (6) 11 % Revenues: Premiums Policy fees Net investment income Benefits and expenses: Policyholder benefits and losses incurred Interest credited to policyholder account balances Amortization of deferred policy acquisition costs General operating and other expenses* Pre-tax operating income * $ 22...

  • Page 80
    ...primary casualty and financial lines. Premium adjustments consisted of return premiums of $49 million in 2015 compared to additional premiums of $105 million in 2014. See Insurance Reserves - Non-Life Insurance Companies - Net Loss Development for further discussion. Current accident year loss ratio...

  • Page 81
    ... in net investment income related to assets accounted for under the fair value option. See MD&A - Investments for additional information on the Non-Life Insurance Companies invested assets, investment strategy, and asset-liability management process. 2014 and 2013 Comparison Pre-tax operating income...

  • Page 82
    ...targeted growth products. The following paragraphs discuss the changes within our lines of business exclusive of the effect of foreign exchange. Casualty net premiums written decreased in 2015 compared to 2014, reflecting continued execution of our strategy to enhance the portfolio mix, particularly...

  • Page 83
    ..., 2015 reflected the first quarter renewal of a multi-year E&O policy in the U.S. 2014 and 2013 Comparison Property Casualty net premiums written increased in 2014 compared to 2013, reflecting increases in new business related to targeted growth products in Property and Financial lines. The...

  • Page 84
    ... our product portfolio in Casualty, largely offset by strong growth in new business related to targeted growth products in Property, Specialty and Financial lines. Additionally, for 2015, net premiums written reflected the renewal of a multi-year E&O policy in the U.S. Asia Pacific net premiums...

  • Page 85
    ...Property Casualty combined ratios based on GAAP data and reconciliation to the accident year combined ratio, as adjusted: Years Ended December 31, Loss ratio Catastrophe losses and reinstatement premiums Prior year development net of premium adjustments Net reserve discount benefit (charge) Accident...

  • Page 86
    ... of the accident year loss ratio, as adjusted, respectively, in 2015 and 2014. The acquisition ratio increased by 0.4 points in 2015 compared to 2014 primarily due to higher commission expenses in certain classes of business in Property and Specialty and higher premium taxes and other assessments...

  • Page 87
    ... expenses Underwriting income Net investment income Pre-tax operating income Key metrics: Prior year loss reserve development (favorable)/ unfavorable Domestic first-lien: New insurance written Combined ratio Risk in force 60+ day delinquency ratio on primary loans(a) Domestic second-lien: Risk in...

  • Page 88
    ...tax operating income increased in 2015 compared to 2014 due to an increase in first-lien net premiums earned as a result of higher new insurance written increasing the amount of insurance in-force, an acceleration of earnings on the cancellations of single premium business for which a return premium...

  • Page 89
    ...-related and customer service initiatives expenses and severance. Other Business Results Other business results include international mortgage insurance operations and the run-off portfolios of second-lien insurance and student loan insurance. The Other business' pre-tax operating income for 2015...

  • Page 90
    ..., improvements in existing home sales due to lower down payment requirements and new purchase volume. The decline in domestic first-lien new insurance written to $42.0 billion in 2014 from $49.4 billion in 2013 was primarily due to the contraction in the mortgage originations market and an increase...

  • Page 91
    ... Revenues: Premiums Policy fees Net investment income Benefits and expenses: Policyholder benefits and losses incurred Interest credited to policyholder account balances Amortization of deferred policy acquisition costs Other acquisition expenses General operating expenses Pre-tax operating income...

  • Page 92
    ...2015 decreased compared to 2014, primarily due to lower returns on alternative investments in hedge funds and lower yield enhancements from bond call and tender income. See MD&A - Investments - Life Insurance Companies for additional information on the investment strategy, asset-liability management...

  • Page 93
    ... policies and life-contingent payout annuities or structured settlements. Premiums and deposits is a non-GAAP financial measure that includes direct and assumed premiums as well as deposits received on universal life insurance and investment-type annuity contracts, including GICs and stable value...

  • Page 94
    ...) Revenues: Premiums Policy fees Net investment income Other income Benefits and expenses: Policyholder benefits and losses incurred Interest credited to policyholder account balances Amortization of deferred policy acquisition costs General operating and other expenses* Pre-tax operating income...

  • Page 95
    ...Companies for additional information on the investment strategy, asset-liability management process and invested assets of our Life Insurance Companies, which include the invested assets of the Retirement business. Overall, Retirement fixed maturity portfolio yields in 2015 declined compared to 2014...

  • Page 96
    ...on the investment strategy, asset-liability management process and invested assets of our Life Insurance Companies, which include the invested assets of the Retirement business. Overall, Retirement fixed maturity portfolio yields in 2014 declined compared to 2013, primarily as a result of investment...

  • Page 97
    ...include fixed options within variable annuities sold in Group Retirement and Retirement Income Solutions product lines. Retirement Premiums and Deposits, Surrenders and Net Flows Premiums For Retirement, premiums primarily represent amounts received on life-contingent payout annuities. Premiums and...

  • Page 98
    ... Retirement premiums and deposits and net flows by product line: (in millions) Fixed Annuities Retirement Income Solutions Retail Mutual Funds Group Retirement Total Retirement premiums and deposits* Years Ended December 31, (in millions) $ $ 2015 3,702 $ 10,828 3,791 6,920 25,241 $ 2014...

  • Page 99
    ...of business that is within the surrender charge period. Retail Mutual Funds deposits and net flows increased in 2015 compared to 2014, and decreased in 2014 compared to 2013, driven primarily by activity within the Focused Dividend Strategy Portfolio. After record sales in 2013, the Focused Dividend...

  • Page 100
    ... rates for deferred annuities by product line: Years Ended December 31, 2015 Surrenders as a percentage of average account value Fixed Annuities Retirement Income Solutions Group Retirement 6.9 % 6.0 10.0 2014 7.0 7.1 11.6 % 2013 6.6 8.7 9.0 % Life Results The following table presents Life results...

  • Page 101
    ... Life Insurance Companies DAC and Reserves - Update of Actuarial Assumptions for amounts by financial statement line item and additional discussion of loss recognition. Net investment income for 2015 decreased compared to 2014, primarily due to lower returns on alternative investments in hedge funds...

  • Page 102
    ... laws for new sales. Universal life insurance interest rate guarantees are generally two to three percent on new non-indexed products and zero to two percent on new indexed products, and are designed to meet targeted net investment spreads. In-force Management. Crediting rates for in-force policies...

  • Page 103
    ...Life Premiums and Deposits Premiums for Life represent amounts received on traditional life insurance policies and group benefit policies. Premiums and deposits for Life is a non-GAAP financial measure that includes direct and assumed premiums as well as deposits received on universal life insurance...

  • Page 104
    ... for additional information on the Non-Life Insurance Companies invested assets, investment strategy, and asset-liability management process. 2014 and 2013 Comparison Pre-tax operating income increased in 2014 compared to 2013, primarily due to a decrease in current accident year losses and lower...

  • Page 105
    ... in allocated net investment income was also due to a reduction in net loss reserves. See MD&A - Investments for additional information on the Non-Life Insurance Companies invested assets, investment strategy, and asset-liability management process. Personal Insurance Net Premiums Written The...

  • Page 106
    ...partially offset by the decrease in Accident and Health in the U.S., due to continued underwriting discipline. Personal Lines net premiums written increased in 2015 compared to 2014. These increases were primarily due to increased production in personal property business in the U.S. and Japan and in...

  • Page 107
    ... business sales and improved retention in AIG Private Client Group in the U.S., as well as the changes in the reinsurance structure discussed above. Asia Pacific net premiums written increased in 2015 compared to 2014, primarily due to increased production in personal property, Accident and Health...

  • Page 108
    ... in all product lines in our Latin America operations and growth in U.S. personal property and automobile businesses. These were partially offset by a decrease in U.S. Accident and Health due to our continued focus on maintaining underwriting discipline. Asia Pacific net premiums written increased...

  • Page 109
    ... Catastrophes are generally weather or seismic events having a net impact on AIG in excess of $10 million each. Severe Losses(b) Years Ended December 31, (in millions) 2015 2014 2013 # of Events Americas 1 $ 12 $ 4 $ 50 $ 1 $ 17 $ Asia Pacific - $ 4 $ - $ EMEA - $ - $ - $ Total 12 54 17 109

  • Page 110
    ... service programs and in the automobile business, partially offset by lower direct marketing expenses in the Accident and Health business. The general operating expense ratio decreased by 0.6 points in 2015 compared to 2014, reflecting an ongoing focus on cost efficiency. 2014 and 2013 Comparison...

  • Page 111
    ... 2014, the Life Insurance Companies sold their investment in PICC Group to AIG Parent. (c) Consists of the results of investments held by AIG Parent to support various corporate needs as well as the remaining positions of AIGFP, life settlements, real estate, equipment leasing and lending and...

  • Page 112
    ...2014. • We continued to make investments in structured securities and other fixed maturity securities and increased lending activities in mortgage loans with favorable risk versus return characteristics to improve yields and increase net investment income. • Our alternative investments portfolio...

  • Page 113
    ... practicable. AIG Parent actively manages its assets and liabilities in terms of products, counterparties and duration. AIG Parent's liquidity sources are held in the form of cash, short-term investments and publicly traded, intermediate term investmentgrade rated fixed maturity securities. Based...

  • Page 114
    ... agencies and also invest in structured securities collateralized by, among other assets, residential and commercial real estate and commercial mortgage loans. While invested assets backing reserves of the Non-Life Insurance Companies are primarily invested in conventional fixed maturity securities...

  • Page 115
    ...other governmental agencies; structured securities collateralized by, among other assets, residential and commercial real estate; and commercial mortgage loans. In addition, the Life Insurance Companies seek to enhance returns through investments in a diversified portfolio of alternative investments...

  • Page 116
    ... filing. The following table presents the fixed maturity security portfolio of Life Insurance Companies categorized by composite AIG credit rating, at fair value: December 31, 2015 (in millions) Total Total Investment Composite AIG Credit Rating Other fixed maturity securities Mortgage-backed...

  • Page 117
    ...Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (S&P), or similar foreign rating services. Rating services are not available for some foreign-issued securities. Our Credit Risk Management department closely reviews the credit quality of the foreign portfolio's non-rated fixed...

  • Page 118
    ... Total mortgage-backed, asset-backed and collateralized Total bonds available for sale* Equity securities available for sale: Common stock Preferred stock Mutual funds Total equity securities available for sale Total $ $ * At December 31, 2015 and 2014, the fair value of bonds available for sale...

  • Page 119
    ... of Europe Total - Remainder of Europe Total $ $ $ $ $ $ $ $ Investments in Municipal Bonds At December 31, 2015, the U.S. municipal bond portfolio was composed primarily of essential service revenue bonds and high-quality tax-backed bonds with over 95 percent of the portfolio rated A or...

  • Page 120
    ... 144,433 Financial institutions: Money Center /Global Bank Groups Regional banks - other Life insurance Securities firms and other finance companies Insurance non-life Regional banks - North America Other financial institutions Utilities(a) Communications Consumer noncyclical Capital goods Energy...

  • Page 121
    ... December 31, 2014 resulted from unrealized losses due to reduction in the energy sector pricing, sales of securities and other-thantemporary impairments. While the energy investments are primarily investment grade and are actively managed, the category continues to experience volatility that could...

  • Page 122
    ... Consolidated Financial Statements for additional discussion on Purchased Credit Impaired (PCI) Securities. The following table presents our RMBS available for sale investments by credit rating: Fair Value at December 31, 2015 Fair Value at December 31, 2014 (in millions) Rating: Total RMBS AAA...

  • Page 123
    ..., 2014. Our underwriting practices for investing in RMBS, other asset-backed securities and CDOs take into consideration the quality of the originator, the manager, the servicer, security credit ratings, underlying characteristics of the mortgages, borrower characteristics, and the level of credit...

  • Page 124
    ... Multi-family* Lodging Industrial Other Total * Includes Agency-backed CMBS. $ $ The fair value of CMBS holdings remained stable throughout 2015. The majority of our investments in CMBS are in tranches that contain substantial protection features through collateral subordination. The majority...

  • Page 125
    ...table presents the commercial mortgage loan exposure by location and class of loan based on amortized cost: Number of Loans Class Retail Industrial Percent of Total Total (dollars in millions) Apartments Offices Hotel Others December 31, 2015 State: New York California Texas New Jersey Florida...

  • Page 126
    ... their estimated fair value which is determined on a discounted cash flow basis, incorporating current market mortality assumptions and market yields. In late 2015, several insurance providers gave notice of increases in policy premiums related to our investments in life settlements. The increase in...

  • Page 127
    ... recorded in earnings on fixed maturity securities, equity securities, private equity funds and hedge funds. Other-than-temporary impairment charges by reportable segment and impairment type: Non-Life Insurance Companies Life Insurance Companies Corporate and Other Operations (in millions) Total...

  • Page 128
    ...private equity funds, hedge funds and direct private equity investments. Other-than-temporary impairment charges by investment type and credit rating: (in millions) RMBS CDO/ABS CMBS Other Fixed Maturity Equities/Other Invested Assets* Total For the Year Ended December 31, 2015 Rating: AAA AA...

  • Page 129
    ... due to foreign exchange rates; • adverse changes in estimated cash flows on certain structured securities; and • securities that experienced severe market valuation declines. In addition, impairments are recorded on real estate and investments in life settlements. In periods subsequent to...

  • Page 130
    ...) Workers' compensation (net of discount) Other liability claims made Property Auto liability Accident and health Products liability Medical malpractice Aircraft Mortgage guaranty / credit Other Total Total U.S. & Canada Total International (c) (a) Presented by lines of business pursuant...

  • Page 131
    ... Commercial Property Casualty: Casualty Financial lines Specialty Property Total Commercial Property Casualty Commercial Mortgage Guaranty Consumer Personal Insurance Personal lines Accident and health Total Consumer Personal Insurance Other run-off insurance lines* Net liability for unpaid losses...

  • Page 132
    ...) Casualty $ 182 $ 2015 Run-off Insurance Lines - $ Total 182 $ Property Casualty 189 $ 2014 Run-off Insurance Lines - $ Total 189 $ Property Casualty 175 $ 2013 Run-off Insurance Lines - $ Total 175 U.S. Workers' Compensation The Non-Life Insurance Companies discount certain workers' compensation...

  • Page 133
    ...participants of the combined pool, the Non-Life Insurance Companies recognized a discount benefit of $110 million in the first quarter of 2014. Annual Reserving Conclusion AIG net loss reserves represent our best estimate of the liability for net losses and loss adjustment expenses as of December 31...

  • Page 134
    ... losses and loss expenses for prior years, net of reinsurance, by business unit and major class of business: Years Ended December 31, (in millions) 2015 2014 2013 Prior accident year development by major class of business: Commercial Property Casualty - U.S. & Canada: Excess casualty Financial...

  • Page 135
    ... in Commercial Property Casualty, Mortgage Guaranty business and Run-off Insurance Lines, partially offset by Consumer Personal Insurance. See Results of Operations - Commercial Insurance and Results of Operations - Consumer Personal Insurance Results herein for further discussion of net loss...

  • Page 136
    ... remainder of the primary workers' compensation portfolio our analysis was based on the refined segmentation from 2014, which indicated that prior year loss reserve development was flat after taking into account the initiatives that our claim function had undertaken to manage high risk claims. 136

  • Page 137
    ... to U.S. & Canada primary casualty. The balance was distributed among other classes. During 2014, we continued to refine our segmentation of primary workers' compensation into guaranteed cost and excess of large deductible business by deductible size group. The net result of the analysis was adverse...

  • Page 138
    ...insurance recoveries as a way to recoup some of that lost value. Financial Lines - U.S. and Canada Financial Lines business includes Director and Officer (D&O) and Related Management Liability, various Professional Liability classes of business as well as the Fidelity book of business. The Financial...

  • Page 139
    ...to properties in the downtown New York metropolitan area. Mortgage Guaranty Mortgage Guaranty business includes domestic first liens (96 percent of total reserves) and run-off books in second liens, student loans and international. During 2015, we recognized $69 million of favorable prior year loss...

  • Page 140
    ... development in 2014 was primarily from Homeowners, International Accident & Health and U.S. Warranty. Run-Off Insurance Lines The following is a discussion of the primary reasons for the Run-Off Insurance Lines development in 2015, 2014 and 2013 of those classes of business that experienced...

  • Page 141
    ... expected loss emergence for primary and excess Auto Liability, Financial Lines and Healthcare. Individual large claims in the non-Auto Excess Casualty and International Casualty books along with deterioration in specific large accounts in the government contractors workers' compensation portfolio...

  • Page 142
    ...-off portfolios, updated industry experience for asbestos and revised estimates on expected future recoveries from risk-sharing policies. For 2014, the favorable development in accident years 2013 and 2012 was driven by Financial Lines, Commercial Property and other short tailed lines, like Personal...

  • Page 143
    ... exposures in workers' compensation, general liability and the commercial auto classes of business which collectively accounted for approximately $660 million across the three years; • Update of the Environmental run-off portfolio's losses following the 2012 comprehensive claims review that...

  • Page 144
    ... on a number of large accounts. In addition to the U.S. asbestos and environmental reserve amounts shown in the tables below, the Non - Life Insurance Companies also have asbestos reserves relating to foreign risks written by non-U.S. entities of $121 million gross and $93 million net as of...

  • Page 145
    ... Property Casualty's net domestic asbestos liabilities were transferred to National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway, Inc. This was part of our ongoing strategy to reduce our overall loss reserve development risk. This transaction covers potentially volatile U.S.related...

  • Page 146
    ... for Life Insurance Companies. Update of Actuarial Assumptions The Life Insurance Companies review and update estimated gross profit assumptions used to amortize DAC and related items for investment-oriented products at least annually. Estimated gross profit assumptions include net investment income...

  • Page 147
    ... related to investment spread assumptions in the Retirement operating segment from the update of estimated gross profit assumptions in Fixed Annuities and Group Retirement, partially offset by loss recognition for certain long-term care business and additions to reserves for universal life...

  • Page 148
    ... positive adjustment of $306 million in the Fixed Annuities product line was the result of active spread management of crediting rates and higher future investment yields than those previously assumed. In Retirement Income Solutions, there were offsetting changes to assumed investment fees, modeled...

  • Page 149
    ... including but not limited to equity options, futures contracts and interest rate swap and swaption contracts, as well as fixed maturity securities with a fair value election. See Enterprise Risk Management - Life Insurance Companies Key Insurance Risks - Variable Annuity Risk Management and Hedging...

  • Page 150
    ... and losses in 2013 from the change in the fair value of the fixed maturities securities were due to market interest rates, which decreased in 2014 and increased 2013. • Changes in the fair value of interest rate derivative contracts, which included swaps, swaptions, futures and options, resulted...

  • Page 151
    ... annuity hedging program, the Life Insurance Companies have cash and invested assets available to cover future claims payable under these guarantees. The primary sources of difference between the change in the fair value of the hedging portfolio and the economic hedge target include: • Basis risk...

  • Page 152
    ... result in unlocking in this product line in the future, with a positive effect on pre-tax income in the period of the unlocking. See Critical Accounting Estimates - Estimated Gross Profits for Investment-Oriented Products (Life Insurance Companies) for additional discussion of assumptions related...

  • Page 153
    ...of investments Reinsurance ceded Total insurance reserves and mutual fund assets under management Life: Balance at beginning of year, gross Premiums and deposits Surrenders and withdrawals Death and other contract benefits Subtotal Change in fair value of underlying assets and reserve accretion, net...

  • Page 154
    ...See Enterprise Risk Management - Risk Appetite, Limits, Identification, and Measurement and Enterprise Risk Management - Liquidity Risk Management below for additional information. Capital refers to the long-term financial resources available to support the operation of our businesses, fund business...

  • Page 155
    ... form of cash and fixed maturity securities from our Life Insurance Companies. The $7.8 billion in dividends and loan repayments included $2.8 billion of dividends that were declared during the fourth quarter of 2014. AIG Parent also received a net amount of $1.4 billion(a) in tax sharing payments...

  • Page 156
    ... net of $818 million of tax payments to the Life Insurance Companies, which were returned in the form of dividends. (b) In January 2016, AIG Parent made a capital contribution of approximately $2.9 billion to our Non-Life Insurance Companies. (c) Pursuant to Exchange Act Rule 10b5-1 repurchase plans...

  • Page 157
    ...U R C E S Uses: Change in restricted cash Change in policyholder contract balances Repayments of long-term debt Purchases of AIG Common Stock Net cash used in other financing activities Total uses Effect of exchange rate changes on cash Increase (decrease) in cash * $ (9,805) (10,691) (210) (20...

  • Page 158
    ...2015 included: • approximately $1.8 billion of cash collateral received in connection with our Life Insurance Companies' securities lending program; and • approximately $4.2 billion of net cash proceeds from the sale of ordinary shares of AerCap. Net cash provided by investing activities in 2014...

  • Page 159
    ... Insurance Companies as a result of our fourth quarter reserve strengthening. The following table presents AIG Parent's liquidity sources: (In millions) Cash and short-term investments(a) Unencumbered fixed maturity securities(b) Total AIG Parent liquidity Available capacity under syndicated credit...

  • Page 160
    ... held in the form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities. Each of our Non-Life Insurance Companies' liquidity is monitored through the use of various internal liquidity risk measures. The primary sources of liquidity are premiums, fees...

  • Page 161
    ... held in the form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities. Each of our Life Insurance Companies' liquidity is monitored through the use of various internal liquidity risk measures. The primary sources of liquidity are premiums, fees...

  • Page 162
    ... a material adverse effect on our financial condition, results of operations and liquidity. We expect to borrow under the Five-Year Facility from time to time, and may use the proceeds for general corporate purposes. Contingent Liquidity Facilities AIG Parent had access to a contingent liquidity...

  • Page 163
    ... contract liabilities, including GIC liabilities, relate to our Life Insurance Companies. These liabilities include various investment-type products with contractually scheduled maturities, including periodic payments of a term certain nature. These liabilities also include benefit and claim...

  • Page 164
    ... form of cash and short-term investments. In addition, our Life Insurance Companies maintain significant levels of investment grade rated fixed maturity securities, including substantial holdings in government and corporate bonds, and could seek to monetize those holdings in the event operating cash...

  • Page 165
    ... Off-Balance Sheet Arrangements and Commercial Commitments in total, and by remaining maturity: December 31, 2015 (in millions) Total Amounts Committed Amount of Commitment Expiring 2017 2019 2016 2018 2020 Thereafter Insurance operations Guarantees: Standby letters of credit Guarantees of...

  • Page 166
    ... at fair value Total AIG borrowings supported by assets Total debt issued or guaranteed by AIG Debt not guaranteed by AIG: Other subsidiaries notes, bonds, loans and mortgages payable Debt of consolidated investments Total debt not guaranteed by AIG Total debt $ (c) (a) December 31, 2014 $ 15,570...

  • Page 167
    ...of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties. (b) Primarily represents adjustments to the fair value of debt. (c) At December 31, 2015, includes debt of consolidated investment vehicles related to real estate...

  • Page 168
    ...be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors prevailing at the time of the downgrade. For a discussion of the effects of downgrades in the financial strength ratings of our insurance companies or our credit ratings, see Note...

  • Page 169
    ... plans. The timing of any future share repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors, including the regulatory framework applicable to us. Dividend Restrictions Payments of dividends to AIG by its insurance subsidiaries...

  • Page 170
    ... Board of Directors. Our Chief Risk Officer (CRO) reports to both the RCC and our Chief Executive Officer (CEO). The Group Risk Committee (GRC): The GRC is the senior management group charged with assessing all significant risk issues on a global basis to protect our financial strength, optimize our...

  • Page 171
    ... risks. The ORC ensures applicable governance structures are established to provide oversight of operational risk at each business unit and corporate function. The ORC also reviews aggregate firm-wide operational risk reports and provides a forum for senior management to assess our operational risk...

  • Page 172
    ... long-term value for our shareholders. The framework includes our Risk Appetite Statement approved by the Board of Directors or a committee thereof and a set of supporting tools, including risk tolerances, risk limits and policies, which we use to manage our risk profile and financial resources...

  • Page 173
    ... risk may also result from a downgrade of a counterparty's credit ratings or a widening of its credit spreads. We devote considerable resources to managing our direct and indirect credit exposures. These exposures may arise from, but are not limited to, fixed income investments, equity securities...

  • Page 174
    ... commercial real estate values, interest rates, credit spreads, foreign exchange, inflation, and their levels of volatility. We are engaged in a variety of insurance, investment and other financial services businesses that generate market risk, directly and indirectly. We are exposed to market risks...

  • Page 175
    ... capital market instruments as well as equity-linked insurance products, including but not limited to index annuities, variable annuities, universal life insurance and variable universal life insurance. Residential and commercial real estate values. Our investment portfolios are exposed to the risk...

  • Page 176
    ... policies that define the rules for our market risk-taking activities and provide clear guidance regarding their execution and management; • a limit framework that aligns with our Board-approved Risk Appetite Statement; • independent measurement, monitoring and reporting for line of business...

  • Page 177
    ... due to modeling limitations. (b) Includes our investments in PICC Group and PICC P&C. (c) In September 2015, we sold the remainder of our ordinary shares of AerCap. Our 2014 sensitivity calculation for AerCap was based on our carrying value rather than the stock price as of the applicable date, as...

  • Page 178
    ... inability to meet our short-term cash, collateral or other financial obligations. Failure to appropriately manage liquidity risk can result in insolvency, reduced operating flexibility, increased costs, reputational harm and regulatory action. AIG and its legal entities seek to maintain sufficient...

  • Page 179
    ..., and to meet short-term financial obligations in a timely manner in both normal and stressed conditions. Our Liquidity Risk Management Framework includes a number of liquidity and funding policies and monitoring tools to address AIG-specific, broader industry and market related liquidity events...

  • Page 180
    ... potential risks that could result in severe financial losses. ORM, working together with other key second lines of defense functions (e.g., Model Validation and the Technology Risk office, as well as Compliance, SOX, and Global Business Continuity), provides an independent view of Operational Risk...

  • Page 181
    ...• management of relationship between assets and liabilities, including hedging; • enhanced pricing models; • modeling and reporting of aggregations and limit concentrations at multiple levels (policy, line of business, product group, country, individual/group, correlation and catastrophic risk...

  • Page 182
    ...-Life Insurance Companies - risks covered include property, casualty, fidelity/surety, accident and health, aviation, management liability and mortgage insurance. We manage risks in the general insurance business through aggregations and limitations of concentrations at multiple levels: policy, line...

  • Page 183
    ... hierarchy of limits Non-Life Insurance Companies Key Insurance Risks We manage insurance risks through risk review and selection processes, exposure limitations, exclusions, deductibles, selfinsured retentions, coverage limits, attachment points, and reinsurance. This management is supported by...

  • Page 184
    ... A&H business lines. The OEP estimates provided above reflect our in-force portfolios at September 30, 2015, for both U.S. and Japan exposures. The catastrophe reinsurance program is as of January 1, 2016. As noted above, AIG, along with other non-life insurance and reinsurance companies, utilizes...

  • Page 185
    ... attacks. Our largest terrorism exposures are in New York City, and estimated losses are largely driven by the Property and Workers' Compensation lines of business. At our largest exposure location, modeled losses for a five-ton bomb attack net of the Terrorism Risk Insurance Program Reauthorization...

  • Page 186
    ... Reinsurance Group of Companies (d) (a) The financial strength ratings reflect the ratings of the various reinsurance subsidiaries of the companies listed as of February 5, 2016. (b) Total reinsurance assets include both the Non-Life Insurance Companies and the Life Insurance Companies reinsurance...

  • Page 187
    ...Critical Accounting Estimates - Guaranteed Benefit Features of Variable Annuity Products (Life Insurance Companies). For additional discussion of business risks, see Item 1A. Risk Factors - Business and Operations. Variable Annuity Risk Management and Hedging Program Our Retirement Income Solutions...

  • Page 188
    ... changes in the fair value recorded in Other realized capital gains (losses). GMWB and GMAB features subject the Life Insurance Companies to market risk, including exposure to changes in interest rates, equity prices, credit spreads and market volatility. Variable annuity product design is the first...

  • Page 189
    ... of our derivatives portfolios in asset positions by internal counterparty credit rating: At December 31, (in millions) 2015 $ 56 103 256 767 127 1,309 $ 2014 11 129 441 838 184 1,603 Rating: AAA AA A BBB Below investment grade Total $ $ See Note 10 to the Consolidated Financial Statements for...

  • Page 190
    ...foreign tax credits (FTCs), realized capital loss and other carryforwards. These factors include forecasts of future income for each of our businesses and actual and planned business and operational changes, both of which include assumptions about future macroeconomic and AIG-specific conditions and...

  • Page 191
    ... M ATE S planning strategies, all resulted in sufficient taxable income to achieve realization of the U.S. tax attributes prior to their expiration. We separately assess the recoverability of our net deferred tax asset related to unrealized tax capital losses in the U.S. Life Insurance Companies...

  • Page 192
    ... groups. Short-tail classes of business consist principally of property, Personal Insurance and certain casualty classes. Long-tail casualty classes of business include excess and umbrella liability, D&O, professional liability, medical malpractice, workers' compensation, general liability, products...

  • Page 193
    ... accident years. We record quarterly changes in loss reserves for each of the Non-Life Insurance Companies classes of business. The overall change in our loss reserves is based on the sum of the changes for all classes of business. For most long-tail classes of business, the quarterly loss...

  • Page 194
    ... third party workers' compensation claims adjusters and third party actuarial advisors to help inform our judgments. In 2015, the third party actuarial reviews covered the majority of net reserves held for our Commercial long-tail classes of business, and run-off portfolios reported in Corporate and...

  • Page 195
    ... assessment of economic conditions including real GDP growth, inflation, employment rates or unemployment duration, stock market volatility and changes in corporate bond spreads; • changes in the legal, regulatory, judicial and social environment including changes in road safety, public health and...

  • Page 196
    ... by a claim file review and associated with potentially costly medical procedures (i.e., increases in both utilization and intensity of medical care) over the course of the injured worker's lifetime; • Analysis of the cost of medical price inflation for each category of medical spend (services and...

  • Page 197
    ... of expected levels of future inflation as measured by the Personal Consumption Expenditure (PCE) Deflator (Health Services Component) published by the U.S. Bureau of Economic Analysis on our ultimate loss costs for medical benefits in the primary workers' compensation class of business. We believe...

  • Page 198
    ... to mitigate our known long-tail environmental exposures through a combination of proactive claim-resolution techniques, including policy buybacks, complete environmental releases, compromise settlements, and, when appropriate, litigation. Known asbestos claims are managed in a similar manner. Over...

  • Page 199
    ... product aggregate limits, or mass torts are reviewed separately due to the unique emergence patterns of losses relating to these claims. The expected loss ratios used for recent accident years are based on the projected ultimate loss ratios of prior years, adjusted for rate changes, estimated loss...

  • Page 200
    ... a leading writer of workers' compensation, and thus have sufficient volume of claims experience to use development methods. We generally segregate California (CA) business from other business in evaluating workers' compensation reserves. Commencing in 2012, we segmented out New York (NY) from the...

  • Page 201
    ... insurance component. These risk-sharing programs generally are large and complex, comprising multiple products, years and structures, and are subject to amendment over time. We generally use premium and expected loss ratio methods for these programs. As part of the 2015 reserve review related...

  • Page 202
    ... of recently enacted health care reform on workers' compensation costs; ï,· underlying policy pricing, terms and conditions; ï,· claims settlement trends that can materially alter the mix and ultimate cost of claims; ï,· changes in claims reporting and management practices of insureds and their...

  • Page 203
    ... calculate pure IBNR. Commencing in 2014, we continued to refine our loss reserving techniques for the domestic primary casualty classes of business and adopted further segmentations based on our analysis of the differing emerging loss patterns for certain classes of insureds. Due to the fairly long...

  • Page 204
    ...accident years for catastrophic casualty business. This class of business consists of casualty or financial lines coverage that attach in excess of very high attachment points; thus the claims experience is marked by very low frequency and high severity. Because of the limited number of claims, loss...

  • Page 205
    ... methods are utilized for domestic personal auto classes. For these classes of business, reliance is placed on frequency/severity methods as claim counts emerge quickly for personal auto. Frequency/severity methods allow for more immediate analysis of resulting loss trends and comparisons to...

  • Page 206
    ... each line of business considering the loss development characteristics, volume of claim data available and applicability of various actuarial methods to each line. Reserves for mortgage guaranty insurance losses and loss adjustment expenses are established for reported mortgage loan delinquencies...

  • Page 207
    ... to reflect emerging claim experience, rate changes or other factors that could affect the adequacy of the IBNR factor being employed. International Business written by the Non-Life Insurance Companies internationally includes both long-tail and short-tail classes of business. For long-tail classes...

  • Page 208
    ...the claims initiatives to new and in-force business and to different classes and sub-classes of business. In 2015, we increased our estimates of our claims department costs to reflect higher expected future costs associated with new technology and operating models. Catastrophes and Severe Losses In...

  • Page 209
    ..., business unit executives and senior management and involves several iterative levels of feedback and response during the regular reserving process. The following sensitivity analysis table summarizes the effect on the loss reserve position of using certain alternative loss cost trend (for accident...

  • Page 210
    ... is critical for the excess casualty class of business due to the long-tail nature of the claims and therefore is applied across many accident years. Thus, there is the potential for the reserves with respect to a number of accident years (the expected loss ratio years) to be significantly affected...

  • Page 211
    ... the historical loss cost trends from prior accident years since the early 1990s, including the potential effect of recent claims relating to the credit crisis, in our judgment, it is reasonably likely that actual loss cost trends applicable to the year-end 2015 loss reserve review for these...

  • Page 212
    ...dimensional loss development models incorporating accident year, development year and calendar year trends with our traditional loss development projections. This allows us to consider for example, the effect of changing levels of inflation (specifically the PCE Deflator for Health Care Services) on...

  • Page 213
    ... products include whole life insurance, term life insurance, accident and health insurance, longterm care insurance, and certain payout annuities for which the payment period is life-contingent, which include certain of our single premium immediate annuities and structured settlements. For long...

  • Page 214
    ... is limited additional judgment in this process. Guaranteed Benefit Features of Variable Annuity Products (Life Insurance Companies) Variable annuity products offered by our Retirement Income Solutions and Group Retirement product lines offer guaranteed benefit features. These guaranteed features...

  • Page 215
    ... for guaranteed benefit features to changes in the assumptions for interest rates, equity market returns, volatility, and mortality. For additional discussion of market risk management related to these product features, see Enterprise Risk Management - Life Insurance Companies Key Insurance Risks...

  • Page 216
    ... interest rate and equity option prices • Allocation of fees between the embedded derivative and host contract Estimated Gross Profits for Investment-Oriented Products (Life Insurance Companies) Policy acquisition costs and policy issuance costs that are incremental and directly related to...

  • Page 217
    ... for guaranteed benefits in our Retirement Income Solutions and Group Retirement product lines, as well as universal life insurance with secondary guarantees. Changes in mortality assumptions primarily impact DAC in our universal life insurance business. Other Reserves Related to Guaranteed Benefits...

  • Page 218
    ... of fair value of financial assets and financial liabilities and our accounting policy regarding the incorporation of credit risk in fair value measurements. The following table presents the fair value of fixed maturity and equity securities by source of value determination: December 31, 2015 (in...

  • Page 219
    ... contractual terms, prices and rates, yield curves, credit curves, measures of volatility, prepayment rates, default rates, mortality rates and correlations of such inputs. See Note 4 to the Consolidated Financial Statements for discussion of the valuation methodologies for assets and liabilities...

  • Page 220
    ..., the CVA also accounts for our own credit risk in the fair value measurement of all derivative net liability positions and liabilities where AIG has elected the fair value option, when appropriate. DAC Deferred Policy Acquisition Costs Deferred costs that are incremental and directly related to the...

  • Page 221
    ... to claim settlement costs. Loss Ratio Losses and loss adjustment expenses incurred divided by net premiums earned. Loss adjustment expenses are directly attributed to settling and paying claims of insureds and include, but are not limited to, legal fees, adjuster's fees, and claims department...

  • Page 222
    ... deposits - Retirement and - Life include direct and assumed amounts received on traditional life insurance policies and group benefit policies, and deposits on life-contingent payout annuities, as well as deposits received on universal life, investment-type annuity contracts and mutual funds. Prior...

  • Page 223
    ...CMBS Commercial Mortgage-Backed Securities EGPs Estimated gross profits FASB Financial Accounting Standards Board FRBNY Federal Reserve Bank of New York GAAP Accounting principles generally accepted in the United States of America GMAB Guaranteed Minimum Accumulation Benefits GMDB Guaranteed Minimum...

  • Page 224
    ... 7A / QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is set forth in the Enterprise Risk Management section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference. 224

  • Page 225
    ... / FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AMERICAN INTERNATIONAL GROUP, INC. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Page FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at December 31, 2015 and 2014 Consolidated Statements of Income...

  • Page 226
    ...: Summary of Investments - Other than Investments in Related Parties at December 31, 2015 Condensed Financial Information of Registrant at December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and 2013 Schedule III Supplementary Insurance Information at December 31, 2015, 2014...

  • Page 227
    ... R M REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of American International Group, Inc.: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of...

  • Page 228
    ... restricted cash of $170 in 2015 and $2,025 in 2014 Separate account assets, at fair value Total assets Liabilities: Liability for unpaid losses and loss adjustment expenses Unearned premiums Future policy benefits for life and accident and health insurance contracts Policyholder contract deposits...

  • Page 229
    ...Interest credited to policyholder account balances Amortization of deferred policy acquisition costs General operating and other expenses Interest expense Aircraft leasing expenses Loss on extinguishment of debt Net (gain) loss on sale of properties and divested businesses Total benefits, losses and...

  • Page 230
    AMERICAN INTERNATIONAL GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Net income Other comprehensive income (loss), net of tax Change in unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were ...

  • Page 231
    AMERICAN INTERNATIONAL GROUP, INC. CONSOLIDATED STATEMENTS OF EQUITY NonAccumulated Additional Common (in millions) Balance, January 1, 2013 Purchase of common stock Net income attributable to AIG or other noncontrolling interests* Dividends Other comprehensive loss Deferred income taxes ...

  • Page 232
    ... income taxes - net Other, net Total adjustments Net cash provided by operating activities Cash flows from investing activities: Proceeds from (payments for) Sales or distribution of: Available for sale investments Other securities Other invested assets Divested businesses, net Maturities of fixed...

  • Page 233
    ... Taxes Non-cash investing/financing activities: Interest credited to policyholder contract deposits included in financing activities Non-cash consideration received from sale of ILFC Non-cash consideration received from sale of AerCap See accompanying Notes to Consolidated Financial Statements...

  • Page 234
    ... retirement services in the United States. AIG Common Stock, par value $2.50 per share (AIG Common Stock), is listed on the New York Stock Exchange (NYSE: AIG) and the Tokyo Stock Exchange. Unless the context indicates otherwise, the terms "AIG," "we," "us" or "our" mean American International Group...

  • Page 235
    ...accounting policies presented in other Notes to these Consolidated Financial Statements, with a reference to the Note where a detailed description can be found: Note 5. Investments ï,· Fixed maturity and equity securities ï,· Other invested assets ï,· Short-term investments ï,· Net investment income...

  • Page 236
    ... policyholder funds Variable Life and Annuity Contracts Debt ï,· Long-term debt Contingencies, Commitments and Guarantees ï,· Legal contingencies Earnings Per Share Income Taxes Other significant accounting policies Premiums for short-duration contracts are recorded as written on the inception date...

  • Page 237
    ..., real estate, other fixed assets, capitalized software costs, goodwill, intangible assets other than goodwill, restricted cash and derivative assets. We offer sales inducements which include enhanced crediting rates or bonus payments to contract holders (bonus interest) on certain annuity and...

  • Page 238
    ... sales of securities not owned at the time of sale. The obligations arising from such transactions are recorded on a trade-date basis and carried at fair value. Fair values of securities sold but not yet purchased are based on current market prices. Foreign currency: Financial statement accounts...

  • Page 239
    ...December 15, 2016, including interim periods within that reporting period. We plan to adopt the standard on its required effective date of January 1, 2018 and are assessing the impact of the standard on our consolidated financial condition, results of operations and cash flows. Accounting for Share...

  • Page 240
    ... new or modified awards thereafter. We plan to adopt the standard on its required effective date of January 1, 2016 and do not expect the adoption of the standard to have a material effect on our consolidated financial condition, results of operations and cash flows. Measuring the Financial Assets...

  • Page 241
    ... effect on our consolidated financial condition, results of operations, or cash flows. Short Duration Insurance Contracts In May 2015, the FASB issued an accounting standard that requires additional disclosures (including accident year information) for short-duration insurance contracts. New...

  • Page 242
    ... Markets - consists of stable value wrap products, structured settlement and terminal funding annuities, high net worth products, corporate- and bank-owned life insurance and guaranteed investment contracts (GICs). Property Casualty products are primarily distributed through a network of independent...

  • Page 243
    ...ATI O N independent agents and direct marketing. Personal insurance products are distributed primarily through agents and brokers, as well as through direct marketing and partner organizations. Corporate and Other Our Corporate and Other consists of: • Income from assets held by AIG Parent and...

  • Page 244
    ...: Total Revenues Net Investment Income Interest Expense Depreciation and Amortization Pre-Tax Operating Income (Loss) (in millions) 2015 Commercial Insurance Property Casualty Mortgage Guaranty Institutional Markets Total Commercial Insurance Consumer Insurance Retirement Life Personal Insurance...

  • Page 245
    ... area: Total Revenues* 2015 2014 42,366 $ 44,274 $ 5,942 7,523 10,019 12,609 58,327 $ 64,406 $ Real Estate and Other Fixed Assets, Net of Accumulated Depreciation 2015 2014 2013 $ 2,213 $ 1,886 $ 1,606 602 521 448 320 293 261 $ 3,135 $ 2,700 $ 2,315 (in millions) U.S. Asia Pacific Other Foreign...

  • Page 246
    ... at the balance sheet date. For a description of how we incorporate our own credit risk in the valuation of embedded derivatives related to certain annuity and life insurance products, see Embedded Derivatives within Policyholder Contract Deposits, below. • Counterparty Credit Risk. Fair value...

  • Page 247
    ... sheet date to measure fixed maturity securities at fair value. Market price data is generally obtained from dealer markets. We employ independent third-party valuation service providers to gather, analyze, and interpret market information to derive fair value estimates for individual investments...

  • Page 248
    ... based on discounted cash flow models using discount rates based on credit spreads, yields or price levels of comparable securities, adjusted for illiquidity and structure. Fair values determined internally are also subject to management review to ensure that valuation models and related inputs are...

  • Page 249
    ...balance sheet date. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price...

  • Page 250
    ... corporate credit indices to approximate the claims-paying ability rating of our Life Insurance Companies. Long-Term Debt The fair value of non-structured liabilities is generally determined by using market prices from exchange or dealer markets, when available, or discounting expected cash...

  • Page 251
    ... loans receivable Other invested assets Derivative assets: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Credit contracts Other contracts Counterparty netting and cash collateral Total derivative assets Short-term investments Separate account assets 91 91...

  • Page 252
    ...Other policyholder funds Derivative liabilities: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Credit contracts Other contracts Counterparty netting and cash collateral Total derivative liabilities Long-term debt Other liabilities Total December 31, 2014 (in...

  • Page 253
    ... Short-term investments Separate account assets Total Liabilities: Policyholder contract deposits Other policyholder funds Derivative liabilities: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Credit contracts Other contracts Counterparty netting and cash...

  • Page 254
    ... receivable Other invested assets Total Liabilities: Policyholder contract deposits Derivative liabilities, net: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Credit contracts Other contracts Total derivative liabilities, net(a) Long-term debt(b) Total $ (74...

  • Page 255
    ... Mutual funds Total equity securities available for sale Mortgage and other loans receivable Other invested assets Total Liabilities: Policyholder contract deposits Derivative liabilities, net: Interest rate contracts Foreign exchange contracts Equity contracts Commodity contracts Credit contracts...

  • Page 256
    ... 31, 2014 Bonds available for sale Other bond securities Equity securities available for sale Other invested assets Policyholder contract deposits Derivative liabilities, net Long-term debt $ The following table presents the gross components of purchases, sales, issues and settlements, net, shown...

  • Page 257
    ...debt, RMBS, CMBS, CDO/ABS, and investments in hedge funds. Transfers of private placement corporate debt and certain ABS into Level 3 assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based on inputs that are adjusted...

  • Page 258
    ... of market liquidity as well as related transparency of pricing and associated observable inputs for these investments. Transfers of certain investments in private placement corporate debt and certain ABS out of Level 3 assets were primarily the result of using observable pricing information that...

  • Page 259
    ... cash flow Indexed Life 332 Discounted cash flow (in millions) Fair Value at December 31, 2014 Valuation Technique Unobservable Input(b) Range (Weighted Average) Assets: Obligations of states, municipalities and political subdivisions Corporate debt $ 1,178 Discounted cash flow Yield...

  • Page 260
    ... on discounted cash flow models using discount rates based on credit spreads, yields or price levels of publicly-traded debt of the issuer or other comparable securities, considering illiquidity and structure. The significant unobservable input used in the fair value measurement of corporate debt is...

  • Page 261
    ...within variable annuity products, and certain enhancements to interest crediting rates based on market indices within index annuities, indexed life and guaranteed investment contracts (GICs). For any given contract, assumptions for unobservable inputs vary throughout the period over which cash flows...

  • Page 262
    ... from the current shareholders, typically with the use of financial leverage Investments in real estate properties and infrastructure positions, including power plants and other energy generating facilities Early-stage, high-potential, growth companies expected to generate a return through an...

  • Page 263
    ... risk Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions Securities of companies that are in default, under bankruptcy protection or troubled Investments in the financial markets of developing countries...

  • Page 264
    ... value option: Years Ended December 31, (in millions) 2015 $ 616 36 2 Gain (Loss) 2014 $ 2,099 313 10 $ 2013 3 1,667 360 11 327 (15) 2,353 Assets: Mortgage and other loans receivable Bond and equity securities Alternative investments(a) Other, including Short-term investments Liabilities: Long...

  • Page 265
    ... of Investments in Life Settlements are measured using their fair values as determined using a discounted cash flow methodology that incorporates the best available market assumptions for mortality as well as market yields based on reported transactions. Effective December 31, 2015, AIG adopted...

  • Page 266
    ... Fair Value Level 2 Level 3 Total Carrying Value December 31, 2015 Assets: Mortgage and other loans receivable Other invested assets Short-term investments Cash Liabilities: Policyholder contract deposits associated with investment-type contracts Other liabilities Long-term debt December 31, 2014...

  • Page 267
    ... and losses from fixed maturity and equity securities measured at fair value at our election are reflected in Net investment income (for insurance subsidiaries) or Other income (for Corporate and Other). Investments in fixed maturity and equity securities are recorded on a trade-date basis. Premiums...

  • Page 268
    ...CDO/ABS Total mortgage-backed, asset-backed and collateralized Total bonds available for sale(b) Equity securities available for sale: Common stock Preferred stock Mutual funds Total equity securities available for sale Total December 31, 2014 Bonds available for sale: U.S. government and government...

  • Page 269
    ...investment category and length of time that individual securities have been in a continuous unrealized loss position: Less than 12 Months Gross Fair Unrealized Value Losses 12 Months or More Gross Fair Unrealized Value Losses Total Fair Value Gross Unrealized Losses (in millions) December 31, 2015...

  • Page 270
    ...2,764 $ 221 (in millions) Fixed maturity securities Equity securities Total $ $ For the years ended December 31, 2015, 2014 and 2013, the aggregate fair value of available for sale securities sold was $28.7 billion, $25.3 billion and $35.9 billion, which resulted in net realized capital gains of...

  • Page 271
    ... other collateralized* Total mortgage-backed, asset-backed and collateralized Total fixed maturity securities Equity securities Total * $ $ Includes $712 million and $859 million of U.S. Government agency backed ABS at December 31, 2015 and 2014, respectively. Other Invested Assets The following...

  • Page 272
    ... fair value option. Under the equity method of accounting, our carrying amount generally is our share of the net asset value of the funds or the partnerships, and changes in our share of the net asset values are recorded in Net investment income with the exception of investments of AIG's Corporate...

  • Page 273
    ...in yield, as applicable. • Dividend income from common and preferred stocks and earnings distributions from other investments. • Realized and unrealized gains and losses from investments in other securities and investments for which we elected the fair value option. • Earnings from alternative...

  • Page 274
    ... securities Interest on mortgage and other loans Alternative investments* Real estate Other investments Total investment income Investment expenses Net investment income * $ $ 2015 11,332 $ 99 1,417 1,476 181 76 14,581 528 14,053 $ 2014 12,322 $ 221 1,272 2,624 110 47 16,596 517 16,079 $ 2013...

  • Page 275
    ... (a separate component of accumulated other comprehensive income). When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CDO, ABS) management considers historical performance of underlying assets and available market information as well as bond-specific...

  • Page 276
    ... available for sale fixed maturity securities that is not foreign exchange related, we prospectively accrete into earnings the difference between the new amortized cost and the expected undiscounted recoverable value over the remaining expected holding period of the security. Credit Impairments The...

  • Page 277
    ... fair value which is determined on a discounted cash flow basis, incorporating current market mortality assumptions and market yields. In general, fair value estimates for the investments in life settlements are calculated using cash flows based on medical underwriting ratings of the policies from...

  • Page 278
    ...the fair value of securities pledged to counterparties under secured financing transactions, including repurchase and securities lending agreements: (in millions) Fixed maturity securities available for sale Other bond securities, at fair value $ December 31, 2015 1,145 $ 1,740 December 31, 2014...

  • Page 279
    ... counterparties. At December 31, 2015, $439 million of short-term investments were held in escrow accounts or were otherwise subject to restriction as to their use. 6. LENDING ACTIVITIES Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy...

  • Page 280
    ... benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy. The following table presents the composition of Mortgage and other loans receivable, net: (in millions) Commercial mortgages* Residential mortgages Life insurance...

  • Page 281
    ...159 $ (12) 2013 Other Loans 246 (104) $ Total 405 (116) * Of the total allowance at the end of the year, $24 million and $55 million relates to individually assessed credit losses on $507 million and $192 million of commercial mortgages as of December 31, 2015 and 2014, respectively. Troubled Debt...

  • Page 282
    ...unpaid losses and loss adjustment expenses(a) Future policy benefits for life and accident and health insurance contracts Reserve for unearned premiums Reinsurance assets(b) 2015 As Net of Reported Reinsurance $ (74,942) $ (60,603) (43,585) (42,506) (21,318) (18,380) 18,356 2014 As Net of Reported...

  • Page 283
    ... assets. The following table presents premiums for our long-duration insurance and retirement services operations: Years Ended December 31, (in millions) Life Insurance Companies 2015 $ $ (756) 2014 (661) 2013 4,155 (620) 3,535 $ $ 5,234 $ 4,059 $ 4,478 $ 3,398 $ Run-off insurance lines 2015...

  • Page 284
    ... and 0.3 percent of gross premiums for the years ended December 31, 2015, 2014 and 2013, respectively. The U.S. Life Insurance Companies utilize internal and third-party reinsurance relationships to manage insurance risks and to facilitate capital management strategies, which allows them to minimize...

  • Page 285
    ... life products, payout annuities and long-term care products. Once loss recognition has been recorded for a block of business, the old assumption set is replaced and the assumption set used for the loss recognition would then be subject to the lock-in principle. Investment-oriented contracts: Policy...

  • Page 286
    ... Consolidated Balance Sheets with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase. For participating life, traditional life and accident and health insurance products, VOBA is amortized over the life of the business in...

  • Page 287
    ... in the Consolidated Balance Sheets: Real Estate and Investment (d) Entities (in millions) Securitization Vehicles Structured Investment Vehicle Affordable Housing Partnerships Other Total December 31, 2015 Assets: Bonds available for sale Other bond securities Mortgage and other loans...

  • Page 288
    ... the Maximum Exposure to Loss as of December 31, 2014, which are not considered material to previously issued financial statements. Real Estate and Investment Entities Through our insurance operations and AIG Global Real Estate, we are an investor in various real estate investment entities, some of...

  • Page 289
    ... Housing Partners, Inc. (SAAHP) organized and invested in limited partnerships that develop and operate affordable housing qualifying for federal, state, and historic tax credits, in addition to a few market rate properties across the United States. The operating partnerships are VIEs, whose debt is...

  • Page 290
    ... and commodity swaps, credit contracts, swaptions, options and forward transactions are accounted for as derivatives, recorded on a trade-date basis and carried at fair value. Unrealized gains and losses are reflected in income, when appropriate. Aggregate asset or liability positions are netted on...

  • Page 291
    ... (1,429) 2,273 Total derivatives on consolidated balance sheets $ 1,309 (a) Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral. (b) As of December 31, 2015 and 2014, included super senior multi-sector CDOs with a net notional amount of...

  • Page 292
    ..., 2015 Interest rate contracts: Realized capital gains/(losses) Interest credited to policyholder account balances Other income Gain/(Loss) on extinguishment of debt Foreign exchange contracts: Realized capital gains/(losses) Interest credited to policyholder account balances Other income Gain/(Loss...

  • Page 293
    ... contracts Credit contracts Other contracts Embedded derivatives Total By Classification: Policy fees Net investment income Net realized capital gains (losses) Other income Policyholder benefits and claims incurred Total $ $ $ $ Credit Risk-Related Contingent Features The aggregate fair value...

  • Page 294
    ... of our long-term senior debt ratings to BBB+ by Standard & Poor's Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (S&P), would permit counterparties to make additional collateral calls and permit certain counterparties to elect early termination of contracts, resulting in...

  • Page 295
    ...reported and claim adjustments expenses, less applicable discount for future investment income. We continually review and update the methods used to determine loss reserve estimates and to establish the resulting reserves. Any adjustments resulting from this review are reflected currently in pre-tax...

  • Page 296
    ... for U.S. commercial casualty business. With respect to the deductible portion of the claim, the Non-life Insurance Companies manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. At December 31, 2015 and 2014, we held...

  • Page 297
    ...a result of adverse loss emergence in recent accident years. Financial Lines - U.S. & Canada experienced $579 million of adverse development related to development of several reported claims above expectations, in D&O and professional liability principally related to accident years 2006 through 2010...

  • Page 298
    ... present value of future net premiums. Included in Future policy benefits are liabilities for annuities issued in structured settlement arrangements whereby a claimant has agreed to settle a general insurance claim in exchange for fixed payments over a fixed determinable period of time with a life...

  • Page 299
    ...Life Insurance Companies by product line: At December 31, (in millions) 2015 $ 52,397 $ 37,865 14,028 13,927 9,371 127,588 $ 2014 53,370 37,693 13,717 10,040 9,793 124,613 Policyholder contract deposits: Fixed Annuities Group Retirement Life Retirement Income Solutions Institutional Markets Total...

  • Page 300
    ... additive to that of other features. Account balances of variable annuity contracts with guarantees were invested in separate account investment options as follows: At December 31, (in millions) Equity funds Bond funds Balanced funds Money market funds Total 300 $ $ 2015 39,284 7,261 24,849 826...

  • Page 301
    ...accumulation period based on total expected assessments, through Policyholder benefits and losses incurred. The net amount at risk for GMDB represents the amount of benefits in excess of account value if death claims were filed on all contracts on the balance sheet date. The following table presents...

  • Page 302
    ... that totaled $38 billion and $35 billion at December 31, 2015 and 2014, respectively. The net amount at risk for GMWB represents the present value of minimum guaranteed withdrawal payments, in accordance with contract terms, in excess of account value, assuming no lapses. The net amount at risk for...

  • Page 303
    ...of long-term debt (including unamortized original issue discount, hedge accounting valuation adjustments and fair value adjustments, when applicable), excluding $5 billion in borrowings of debt of consolidated investments: December 31, 2015 (in millions) Debt issued or guaranteed by AIG: AIG general...

  • Page 304
    ...effect on AIG's consolidated financial condition or its consolidated results of operations or consolidated cash flows for an individual reporting period. Legal Contingencies Overview. In the normal course of business, AIG and our subsidiaries are, like others in the insurance and financial services...

  • Page 305
    ...Swap Portfolio and Related Matters AIG, AIG Financial Products Corp. and related subsidiaries (collectively AIGFP), and certain directors and officers of AIG, AIGFP and other AIG subsidiaries have been named in various actions relating to our exposure to the U.S. residential subprime mortgage market...

  • Page 306
    ...shares on September 22, 2008 (the Credit Agreement Shareholder Class); and (2) persons and entities who owned shares of AIG Common Stock on June 30, 2009 and were eligible to vote those shares at AIG's June 30, 2009 annual meeting of shareholders (the Reverse Stock Split Shareholder Class). SICO has...

  • Page 307
    ... a final determination that AIG is obligated to indemnify the United States for any such damages, could have a material adverse effect on our business, consolidated financial condition and results of operations. False Claims Act Complaint On February 25, 2010, a complaint was filed in the United...

  • Page 308
    ..., the National Association of Insurance Commissioners (NAIC) formed a Settlement Review Working Group, directed by the State of Indiana, to review the Workers' Compensation Residual Market Assessment portion of the settlement between AIG, the Office of the New York Attorney General, and the New York...

  • Page 309
    ... entered into by AIG Markets. In connection with AIGFP's business activities, AIGFP has issued, in a limited number of transactions, standby letters of credit or similar facilities to equity investors of structured leasing transactions in an amount equal to the termination value owing to the...

  • Page 310
    ... payments related to completed sales under these arrangements, and no material liabilities related to these arrangements have been recorded in the Consolidated Balance Sheets. Other ï,· See Note 9 to the Consolidated Financial Statements for additional discussion on commitments and guarantees...

  • Page 311
    ... a dividend or purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital resources available to support our insurance operations and business strategies, AIG's funding capacity and capital resources in comparison to internal...

  • Page 312
    ...policy benefits Change in foreign currency translation adjustments Net actuarial gain Prior service credit Change in deferred tax asset (liability) Total other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2013, net of tax Change in unrealized appreciation of investments...

  • Page 313
    ... Other Comprehensive Income 2015 2014 2013 Years Ended December 31, (in millions) Affected Line Item in the Consolidated Statements of Income Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were recognized Investments $ 71...

  • Page 314
    ...Unrealized appreciation (depreciation) of all other investments Investments Deferred acquisition costs adjustment Future policy benefits Total Change in retirement plan liabilities adjustment Prior-service costs Actuarial gains/(losses) Total Total reclassifications for the period 71 28 91 1,054...

  • Page 315
    ... statutory accounting practices: (in millions) 2015 2014 2013 Years Ended December 31, Statutory net income (loss)(a)(b)(c)(d)(e): Non-Life Insurance Companies: Domestic(d)(e) Foreign Total Non-Life Insurance Companies Life Insurance Companies: Domestic Foreign Total Life Insurance Companies At...

  • Page 316
    ..., the payment of any dividend requires formal notice to the insurance department in which the particular insurance subsidiary is domiciled. For example, unless permitted by the Superintendent of Financial Services, property casualty companies domiciled in New York generally may not pay dividends to...

  • Page 317
    ...2015, 2014 and 2013, respectively. Employee Plans The Company grants annual Long Term Incentive (LTI) awards under the 2013 Long Term Incentive Plan (2013 LTIP), which is governed by the AIG 2013 Omnibus Incentive Plan (2013 Plan). The 2013 Plan replaced the AIG 2010 Stock Incentive Plan (2010 Plan...

  • Page 318
    ...were made under the 2010 Plan. Share-settled Awards AIG 2013 Long Term Incentive Plan The 2013 LTIP provides for the annual grant of PSUs to certain employees, including our senior executive officers and other highly compensated employees. Each recipient of an award is granted a number of PSUs (the...

  • Page 319
    ... on the applicable payout date. SICO Plan awards issued in the form of restricted stock were valued based on the closing price of AIG's Common Stock on the grant date. Although none of the costs of the various benefits provided under the SICO Plans have been paid by us, we have recorded compensation...

  • Page 320
    ...TARP RSU awards, and other cash-settled RSU awards, to certain of our most highly compensated employees and executive officers in the form of restricted stock units that were either fully vested with payment deferred, or subject to specified service and performance conditions. After the repayment of...

  • Page 321
    ... to a cash balance formula comprised of pay credits based on six percent of a plan participant's annual compensation (subject to IRS limitations) and annual interest credits. In addition, employees can take their vested benefits when they leave AIG as a lump sum or an annuity option after completing...

  • Page 322
    ... existing cash balance accounts and participants are continuing to accrue years of service for purposes of vesting and early retirement eligibility and subsidies as they continue to be employed by AIG. Postretirement Plans We also provide postretirement medical care and life insurance benefits in...

  • Page 323
    ... effect Acquisitions Other Fair value of plan assets, end of year Funded status, end of year Amounts recognized in the balance sheet: Assets Liabilities Total amounts recognized Pre-tax amounts recognized in Accumulated other comprehensive income: Net gain (loss) Prior service (cost) credit Total...

  • Page 324
    ... 3 16 13 2015 2014 2013 Non-U.S. Plans 2015 2014 2013 U.S. Plans 2015 2014 2013 Postretirement Non-U.S. Plans 2015 2014 2013 143 $ (793) $ 135 $ (915) $ Total recognized in net periodic benefit cost $ and other comprehensive income (loss) The estimated net loss and prior service credit that will...

  • Page 325
    ... of each of the subsidiaries providing such benefits. (b) Compensation increases are no longer applicable due to the plan freeze that became effective 1/1/2016. The following table summarizes assumed health care cost trend rates for the U.S. plans: At December 31, Following year: Medical (before...

  • Page 326
    ... obligations of the plans over the long term, limit the risk of short-term funding shortfalls and maintain liquidity sufficient to address cash needs. Accordingly, the asset allocation strategy is designed to maximize the investment rate of return while managing various risk factors, including but...

  • Page 327
    ... market conditions, asset volatility and the expectations for future market returns. Non-U.S. Pension Plans The assets of the non-U.S. pension plans are held in various trusts in multiple countries and are invested primarily in equities and fixed maturity securities to maximize the long-term return...

  • Page 328
    ... high yield(d) Mortgage and other asset-backed securities(e) Other fixed maturity securities Other investment types: Hedge funds(f) Futures Real Estate Private equity(g) Insurance contracts Total At December 31, 2014 Assets: Cash and cash equivalents Equity securities: U.S.(a) International(b) Fixed...

  • Page 329
    ...investment strategy, we had no significant concentrations of risks at December 31, 2015. The U.S. pension plan holds a group annuity contract with U.S. Life, one of our subsidiaries, which totaled $23 million and $26 million at December 31, 2015 and 2014, respectively. Changes in Level 3 fair value...

  • Page 330
    ... with the date of the determination of fair value. During the year ended December 31, 2015, we transferred certain investments in hedge funds into Level 3 as a result of limited market activity due to fund-imposed redemption restrictions. Expected Cash Flows Funding for the U.S. pension plan ranges...

  • Page 331
    ... purposes of the AIG Tax Asset Protection Plan and Article 13 of our Restated Certificate of Incorporation is different than beneficial ownership for Schedule 13G. 22. INCOME TAXES The following table presents income (loss) from continuing operations before income tax expense (benefit) by U.S. and...

  • Page 332
    .... The effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily due to tax benefits of $236 million associated with tax exempt interest income, $209 million related to a decrease in the U.S. Life Insurance Companies' capital loss carryforward...

  • Page 333
    ...) Net operating loss carryforwards Foreign tax credit carryforwards Other carryforwards Total AIG U.S. consolidated income tax group tax losses and credits carryforwards on a tax return basis Unrecognized tax benefit Total AIG U.S. consolidated income tax group tax losses and credits carryforwards...

  • Page 334
    ...in market conditions, including rising interest rates, impacted the unrealized tax losses in the U.S. Life Insurance Companies' available for sale portfolio, resulting in an increase to the related deferred tax asset. The deferred tax asset relates to the unrealized losses for which the carryforward...

  • Page 335
    ... Litigation We file a consolidated U.S. federal income tax return with our eligible U.S. subsidiaries. Income earned by subsidiaries operating outside the U.S. is taxed, and income tax expense is recorded, based on applicable U.S. and foreign law. The statute of limitations for all tax years prior...

  • Page 336
    ...liability that could result from these government actions. We continue to monitor legal and other developments in this area and evaluate the effect, if any, on our position, including recent decisions affecting other taxpayers. Accounting For Uncertainty in Income Taxes The following table presents...

  • Page 337
    ...E TAX E S Listed below are the tax years that remain subject to examination by major tax jurisdictions: At December 31, 2015 Major Tax Jurisdiction Open Tax Years United States Australia France Japan Korea Singapore United Kingdom 2000-2014 2011-2014 2013-2014 2009-2014 2010-2014 2011-2014 2013...

  • Page 338
    ... primarily related to impairments of Other invested assets and changes in Liability for unpaid losses and loss adjustment expenses and income tax liabilities. Had these adjustments, which were determined not to be material, been recorded in their appropriate periods, Net income attributable to AIG...

  • Page 339
    ... owned subsidiary of AIG. AIG provides a full and unconditional guarantee of all outstanding debt of AIGLH. Condensed Consolidating Balance Sheets American International Group, Inc. (in millions) December 31, 2015 Assets: Short-term investments Other investments(a) Total investments Cash Loans to...

  • Page 340
    ...December 31, 2014 Assets: Short-term investments Other investments(a) Total investments Cash Loans to subsidiaries(b) Investment in consolidated subsidiaries(b) Other assets, including deferred income taxes Total assets Liabilities: Insurance liabilities Long-term debt Other liabilities, including...

  • Page 341
    ... (benefit) Income (loss) from continuing operations Income (loss) from discontinued operations, net of income taxes Net income (loss) Less: Net income from continuing operations attributable to noncontrolling interests Net income (loss) attributable to AIG Year Ended December 31, 2014 Revenues...

  • Page 342
    ... tax expense (benefit) Income tax expense (benefit) Income (loss) from continuing operations Income (loss) from discontinued operations, net of income taxes Net income (loss) Less: Net income from continuing operations attributable to noncontrolling interests Net income (loss) attributable to AIG...

  • Page 343
    ... Statements of Comprehensive Income (Loss) American International Group, Inc. (in millions) Year Ended December 31, 2015 Net income (loss) Other comprehensive income (loss) Comprehensive income (loss) Total comprehensive income attributable to noncontrolling interests Comprehensive income (loss...

  • Page 344
    ... Statements of Cash Flows American International Group, Inc. (in millions) Year Ended December 31, 2015 Net cash (used in) provided by operating activities Cash flows from investing activities: Sales of investments Purchase of investments Loans to subsidiaries - net Contributions to subsidiaries Net...

  • Page 345
    ... of long-term debt Intercompany loans - net Purchase of common stock Cash dividends paid to shareholders Other, net Net cash (used in) provided by financing activities Effect of exchange rate changes on cash Change in cash Cash at beginning of year Reclassification to assets held for sale Cash at...

  • Page 346
    ... - net Return of capital * 2015 $ - $ 2,326 494 500 2014 - $ 3,088 2,457 4,836 - 2013 341 523 - Non-cash financing/investing activities: Consideration received from sale of shares of AerCap * Includes $4.8 billion return of capital from AIG Capital Corporation related to the sale of ILFC. 346

  • Page 347
    ...declared a cash dividend on AIG Common Stock of $0.32 per share, payable on March 28, 2016, to shareholders of record on March 14, 2016. On February 11, 2016, our Board of Directors authorized an additional increase to the repurchase authorization of AIG Common Stock of $5.0 billion, resulting in an...

  • Page 348
    ...changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. AIG management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2015 based on the criteria established in the 2013 Internal Control...

  • Page 349
    ...Control Over Financial Reporting There have been no changes in our internal control over financial reporting that have occurred during the quarter ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 349

  • Page 350
    PART III ITEM 10 / DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE All information required by Items 10, 11, 12, 13 and 14 of this Form 10-K is incorporated by reference from the definitive proxy statement for AIG's 2016 Annual Meeting of Shareholders, which will be filed with the SEC not ...

  • Page 351
    ... caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on the 19th of February, 2016. AMERICAN INTERNATIONAL GROUP, INC. By /s/ PETER D. HANCOCK (Peter D. Hancock, President and Chief Executive Officer) KNOW ALL PERSONS BY THESE PRESENTS...

  • Page 352
    ... Miller) /s/ LINDA A. MILLS (Linda A. Mills) /s/ SUZANNE NORA JOHNSON (Suzanne Nora Johnson) /s/ RONALD A. RITTENMEYER (Ronald A. Rittenmeyer) /s/ DOUGLAS M. STEENLAND (Douglas M. Steenland) /s/ THERESA M. STONE (Theresa M. Stone) Director Director Director Director Director Director Director 352

  • Page 353
    ... (1) Credit Agreement, dated as of September 22, 2008, between AIG and Federal Reserve Bank of New York (2) Warrant Agreement (including Form of Warrant), dated as of January 6, 2011, between AIG and Wells Fargo Bank, N.A., as Warrant Agent (3) Tax Asset Protection Plan, dated as of March 9, 2011...

  • Page 354
    ...to AIG's (16) Asset Purchase Agreement, dated as of Current Report on Form 8-K filed with the SEC on December 12, 2008, among the Sellers party thereto, AIF Securities Lending Corp., AIG, Maiden Lane II LLC December 15, 2008 (File No. 1-8787). and the Federal Reserve Bank of New York (17) AIG Credit...

  • Page 355
    ... Number Two to the American General Corporation' Supplemental Executive Retirement Plan* (31) Master Transaction Agreement, dated as of April 19, 2011, by and among American Home Assurance Company, Chartis Casualty Company (f/k/a American International South Insurance Company), Chartis Property...

  • Page 356
    ...of Compensation* Directors" in AIG's Definitive Proxy Statement on Schedule 14A, dated March 30, 2015 (File No. 18787). (44) AIG 2012 Executive Severance Plan (as amended)* Incorporated by reference to Exhibit 10.3 of AIG's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 (File...

  • Page 357
    ... Comprehensive Income (Loss) for the three years ended December 31, 2015 and (vi) the Notes to the Consolidated Financial Statements. Filed herewith. Filed herewith. * This exhibit is a management contract or a compensatory plan or arrangement. ** This information is furnished and not filed for...

  • Page 358
    ... Common stock: Public utilities Banks, trust and insurance companies Industrial, miscellaneous and all other Total common stock Preferred stock Mutual funds Total equity securities and mutual funds Mortgage and other loans receivable, net of allowance Other invested assets Short-term investments, at...

  • Page 359
    ...885 32,319 $ 2014 6,078 11,415 17,493 26 31,070 3,561 18,309 62,811 1,965 135,235 343 15,821 2,466 2,870 33 951 5,853 28,337 4,766 (19,218) 80,958 29,775 10,617 106,898 135,235 Assets: Short-term investments Other investments Total investments Cash Loans to subsidiaries* Due from affiliates - net...

  • Page 360
    ... (benefit) Income tax benefit Net income Loss from discontinued operations Net income attributable to AIG Parent Company * Eliminated in consolidation. See Accompanying Notes to Condensed Financial Information of Registrant. $ Condensed Financial Information of Registrant (Continued) Statements of...

  • Page 361
    ...Other capital contributions - net Return of capital* Dividends received in the form of securities See Accompanying Notes to Condensed Financial Information of Registrant. * Includes $4.8 billion return of capital from AIG Capital Corporation related to the sale of ILFC. $ 2015 4,443 $ 7,609 (1,881...

  • Page 362
    ...to the Consolidated Financial Statements for additional information. The consolidated U.S. deferred tax asset for net operating loss, capital loss and tax credit carryforwards and valuation allowance are recorded by the Parent Company, which files the consolidated U.S. Federal income tax return, and...

  • Page 363
    ...Policy and Contract Claims 851 11 862 818 11 829 Costs $ 2,631 8,467 17 $ $ 11,115 2,551 7,258 18 $ 9,827 For the years ended December 31, 2015, 2014 and 2013 Losses Premiums and Policy Segment (in millions) 2015 Commercial Insurance Consumer Insurance Corporate and Other 2014 Commercial Insurance...

  • Page 364
    ...319 $ $ Net Amount 874,918 33,066 4,478 6 37,550 853,513 34,456 3,398 11 37,865 825,158 34,625 3,535 9 38,169 2015 Long-duration insurance in force Premiums: Non-Life Insurance Companies Life Insurance Companies Run-off insurance lines Total 2014 Long-duration insurance in force Premiums: Non-Life...

  • Page 365
    ... Businesses Other Changes* Balance, End of year of year 2015 Allowance for mortgage and other loans receivable Allowance for premiums and insurances balances receivable Allowance for reinsurance assets Federal and foreign valuation allowance for deferred tax assets 2014 Allowance for mortgage...

  • Page 366
    ... operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest. (b) The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment contract (GIC) policyholders...

  • Page 367
    ... 31, 2015 American International Group, Inc. AIG Capital Corporation AIG Credit Corp. AIG Global Asset Management Holdings Corp. AIG Asset Management (Europe) Limited AIG Asset Management (U.S.), LLC AIG Global Real Estate Investment Corp. Mt. Mansfield Company, Inc. AIG Employee Services, Inc. AIG...

  • Page 368
    ... CHARTIS Investment Holdings (Private) Limited Chartis Kazakhstan Insurance Company Joint Stock Company AIG Travel, Inc. AIG Travel Assist, Inc. AIG Travel Asia Pacific Pte. Ltd. AIG Travel EMEA Limited Travel Guard Americas LLC AIG Travel Insurance Agency, Inc. Livetravel, Inc. Travel Guard Group...

  • Page 369
    ... American International Realty Corp. National Union Fire Insurance Company of Vermont Pine Street Real Estate Holdings Corp. New Hampshire Insurance Company NSM Holdings, Inc. NSM Investments, Inc. NSM Insurance Group, LLC Risk Specialists Companies Insurance Agency, Inc. The Insurance Company...

  • Page 370
    ...Asia Pacific Insurance Pte.Ltd. Also owned 13.39361 percent by AIG Brazil Holding II, LLC. Also owned 3.7 percent by AIG Insurance Company- Puerto Rico, 0.77 percent by AIG Property Casualty International, LLC, 0.77 percent by AIG Latin America Holdings, LLC, and 0.76 percent by AIG Insurance Agency...

  • Page 371
    ... American International Group, Inc. of our report dated February 19, 2016 relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP New York...

  • Page 372
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 19, 2016 /s/ PETER D. HANCOCK...

  • Page 373
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 19, 2016 /s/ DAVID L. HERZOG...

  • Page 374
    ... with this Annual Report on Form 10-K of American International Group, Inc. (the "Company") for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter D. Hancock, President and Chief Executive Officer of the Company, certify...

  • Page 375
    ... with this Annual Report on Form 10-K of American International Group, Inc. (the "Company") for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David L. Herzog, Executive Vice President and Chief Financial Officer of the...

  • Page 376
    ...Par Value $2.50 Per Share Warrants (expiring January 19, 2021) 5.75% Series A-2 Junior Subordinated Debentures 4.875% Series A-3 Junior Subordinated Debentures Stock Purchase Rights Name of Each Exchange on Which Registered New York Stock Exchange New York Stock Exchange New York Stock Exchange New...