AIG 2015 Annual Report Download - page 93

ITEM 7 / RESULTS OF OPERATIONS / COMMERCIAL INSURANCE
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low interest rate environment, partially offset by growth in average assets. See MD&A – Investments – Life Insurance
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 Institutional Markets business.
General operating expenses in 2014 increased slightly compared to 2013, primarily due to investments in technology.
Institutional Markets Premiums, Deposits and Net Flows
For Institutional Markets, premiums represent amounts received on traditional life insurance 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 wrap funding agreements.
The following table presents a reconciliation of Institutional Markets premiums and deposits to GAAP premiums:
Years Ended December 31,
(in millions) 2015 2014 2013
Premiums and deposits $ 1,782 $ 3,797 $ 991
Deposits (169) (3,344) (354)
Other (33) (21) (27)
Premiums $ 1,580 $ 432 $ 610
Premiums and deposits for 2015 decreased compared to 2014, primarily due to a $2.5 billion deposit to the separate accounts
of one of the Life Insurance Companies for a stable value wrap funding agreement that was reflected in 2014. Excluding the
$2.5 billion deposit in the prior year period, premiums and deposits for 2015 increased compared to 2014, primarily due to
higher premiums, which reflected increased sales of terminal funding annuities in 2015.
The decrease in premiums in 2014 compared to 2013 was primarily due to a high volume of single-premium products sold in
2013, including life-contingent payout annuities. Sales of these products decreased in 2014 compared to 2013 due to a more
competitive environment as well as continued low interest rates. The increase in deposits in 2014 compared to 2013 included
a $2.5 billion deposit to the separate accounts of one of the Life Insurance Companies for a stable value wrap funding
agreement. The majority of stable value wrap sales are measured based on the notional amount included in assets under
management, but do not include the receipt of funds that would be included in premiums and deposits. The increase in
deposits in 2014 compared to 2013 also reflected a $450 million GIC issued in 2014.