AIG 2015 Annual Report Download - page 105

ITEM 7 / RESULTS OF OPERATIONS / CONSUMER INSURANCE
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Acquisition expenses increased in 2014 compared to 2013, primarily due to the change in business mix and higher costs in
growth-targeted lines of business, partially offset by the effect of foreign exchange as a result of the strengthening of the U.S.
dollar against the Japanese yen. Direct marketing expenses, excluding commissions, for 2014 were $392 million, compared to
$440 million in 2013. Excluding the impact of foreign exchange, direct marketing expenses decreased by approximately $24
million in 2014 compared to 2013. Direct marketing accounted for approximately 17 percent of net premiums written in both
2014 and 2013.
General operating expenses decreased in 2014 compared to 2013. Excluding the effect of foreign exchange, general
operating expenses remained flat, as efficiencies from organizational realignment initiatives were offset by increased
technology-related expenses.
Net investment income decreased in 2014 compared to 2013, primarily due to a decrease in interest rates during 2014, as
yields on new purchases were lower than the weighted average yield of the overall portfolio, lower income on alternative
investments, and lower income associated with investments accounted for under the fair value option method as an increase
related to the PICC P&C rights offerings was more than offset by a decrease from fixed maturity investments accounted for
under the fair value option. These were partially offset by the effect of continued portfolio diversification. The decrease 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 following table presents Personal Insurance net premiums written by major line of business:
Years Ended December 31, Percentage Change in Percentage Change in
U.S. dollars Original Currency
(in millions) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013 2015 vs. 2014 2014 vs. 2013
Accident & Health $ 4,990 $ 5,441 $ 5,714 (8)% (5) % 1 % (2)%
Personal Lines 6,590 6,971 6,986 (5) - 4 5
Total Personal Insurance net
premiums written $ 11,580 $ 12,412 $ 12,700 (7)% (2) % 3 % 2 %