AIG 2015 Annual Report Download - page 110

ITEM 7 / RESULTS OF OPERATIONS / CONSUMER INSURANCE
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* Severe losses are defined as non-catastrophe individual first party losses and surety losses greater than $10 million, net of related reinsurance and salvage
and subrogation.
2015 and 2014 Comparison
The combined ratio increased by 1.4 points in 2015 compared to 2014, reflecting an increase in the loss ratio and acquisition
ratio, partially offset by a decrease in the general operating expense ratio. The accident year combined ratio, as adjusted,
increased by 0.7 points in 2015 compared to 2014.
The accident year loss ratio, as adjusted, increased by 0.2 points in 2015, compared to 2014, due to higher large but not
severe losses in automobile and personal property businesses, partially offset by a decrease in losses in warranty service
programs and lower severe losses. The loss ratio improvement in warranty service programs was offset by an increase in the
acquisition ratio due to a related profit sharing arrangement.
The acquisition ratio increased by 1.1 points in 2015 compared to 2014, primarily due to increases in acquisition costs in
warranty 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
The combined ratio decreased by 1.6 points in 2014 compared to 2013, primarily due to a lower loss ratio, partially offset by a
higher acquisition ratio as discussed below.
The accident year combined ratio, as adjusted, decreased by 2.6 points in 2014 compared to 2013, primarily due to an
improved accident year loss ratio, as adjusted.
The accident year loss ratio, as adjusted, decreased by 3.6 points in 2014 compared to 2013, as a result of improvements
across all lines of business. The lower losses associated with a warranty retail program were largely offset by an increase in
the related profit sharing arrangement, which increased the acquisition ratio in 2014 compared to 2013. The severe losses of
$54 million, resulting largely from four fire claims, accounted for 0.5 points of the accident year loss ratio, as adjusted, in 2014.
The general operating expense ratio remained unchanged in 2014 compared to 2013, reflecting the impact of efficiencies from
organizational realignment initiatives, offset by increased technology-related expenses.
CORPORATE AND OTHER
Corporate and Other Results
The following table presents AIG’s Corporate and Other results:
Years Ended December 31,
Percentage Change
(in millions) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Corporate and Other pre-tax operating loss:
Equity in pre-tax operating earnings of AerCap(a) $255 $434 $ - (41)% NM%
Fair value of PICC investments(b) 33 37 - (11) NM
Income from other assets, net(c) 1,382 373 47 271 NM
Corporate general operating expenses (985) (1,146) (1,115)
14 (3)
Severance expense(d) --(265)
NM NM
Interest expense (1,101) (1,233) (1,412)
11 13