AIG 2015 Annual Report Download - page 77

ITEM 7 / RESULTS OF OPERATIONS
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77
PRE-TAX OPERATING INCOME
(in millions)
COMMERCIAL INSURANCE
CONSUMER INSURANCE
PRE-TAX INCOME COMPARISON FOR 2015 AND 2014
Pre-tax income decreased in 2015 compared to 2014 primarily due to:
• a decrease in Commercial Insurance pre-tax operating income, reflecting an underwriting loss in 2015 compared to
underwriting income in 2014 driven by adverse prior year loss reserve development from Property Casualty of $3.5 billion in
2015 compared to $655 million in 2014 and lower net investment income;
• a decrease in 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 advisory fees;
• restructuring and other costs; and
• lower income from divested businesses as a result of the sale of ILFC in the second quarter of 2014.
These decreases were partially offset by:
• a lower loss on extinguishment of debt from ongoing liability management activities;
• a $264 million increase from the change in the fair value of GMWB and GMAB embedded derivatives related to variable
annuity guaranteed living benefits, net of all related economic hedges (See Insurance Reserves – Life Insurance
Companies DAC and Reserves – Variable Annuity Guaranteed Features and Hedging Program for additional discussion);
and
• higher net realized capital gains from sales of investments, which included realized gains on the sales of Class B shares of
Prudential Financial, Inc., a portion of our holdings in PICC P&C shares and common shares of Springleaf Holdings Inc.
(Springleaf), mostly offset by a realized loss on the sale of ordinary shares of AerCap and an increase in other-than-
temporary impairment charges.