AIG 2015 Annual Report Download - page 222

GLOSSARY

222
Premiums and deposits – Institutional Markets include direct and assumed amounts received and earned on group benefit
policies and life-contingent payout annuities and deposits received on investment-type annuity contracts, including GICs.
Premiums and 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 year development Increase (referred to as unfavorable or adverse development or reserve strengthening) or decrease
(referred to as favorable development) in estimates of losses and loss expenses for prior years that is included in earnings.
RBC Risk-Based Capital A formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks
inherent in its business.
Reinstatement premium Additional premiums payable to reinsurers to restore coverage limits that have been exhausted as a
result of reinsured losses under certain excess of loss reinsurance treaties.
Reinsurance The practice whereby one insurer, the reinsurer, in consideration of a premium paid to that insurer, agrees to
indemnify another insurer, the ceding company, for part or all of the liability of the ceding company under one or more policies
or contracts of insurance which it has issued.
Rescission Denial of claims and termination of coverage on loans related to fraudulent or undocumented claims, underwriting
guideline violations and other deviations from contractual terms.
Retroactive Reinsurance See Deferred Gain on Retroactive Reinsurance.
Return on Equity – After-tax Operating Income Excluding AOCI and Return on Equity – After-tax Operating Income
Excluding AOCI and DTA are non-GAAP measures and are used to show the rate of return on shareholders’ equity. Return
on Equity – After-tax Operating Income Excluding AOCI is derived by dividing actual or annualized after-tax operating income
attributable to AIG by average AIG shareholders’ equity, excluding average AOCI. Return on Equity – After-tax Operating
Income Excluding AOCI and DTA is derived by dividing actual or annualized after-tax operating income attributable to AIG by
average AIG shareholders’ equity, excluding average AOCI and DTA.
Salvage The amount that can be recovered by us for the sale of damaged goods for which our policyholder has been
indemnified (and to which title was transferred to us).
Second-lien Subordinate in ranking to the first-lien holder claims on a property in the event of default on a mortgage.
Severe losses Individual non-catastrophe first party losses and surety losses greater than $10 million, net of related
reinsurance and salvage and subrogation. Severe losses include claims related to satellite explosions, plane crashes, and
shipwrecks.
SIA Sales Inducement Asset Represents enhanced crediting rates or bonus payments to contract holders on certain annuity
and investment contract products that meet the criteria to be deferred and amortized over the life of the contract.
Solvency II Legislation in the European Union which reforms the insurance industry’s solvency framework, including minimum
capital and solvency requirements, governance requirements, risk management and public reporting standards. The Solvency
II Directive (2009/138/EEC) was adopted on November 25, 2009 and is expected to become effective on January 1, 2016.
Subrogation The amount of recovery for claims we have paid our policyholders, generally from a negligent third party or such
party’s insurer.
Surrender charge A charge levied against an investor for the early withdrawal of funds from a life insurance or annuity
contract, or for the cancellation of the agreement.
Surrender rate represents annualized surrenders and withdrawals as a percentage of average account value.
Unearned premium reserve Liabilities established by insurers and reinsurers to reflect unearned premiums, which are
usually refundable to policyholders if an insurance or reinsurance contract is canceled prior to expiration of the contract term.
VOBA Value of Business Acquired Present value of projected future gross profits from in-force policies of acquired
businesses.