Investor Presentaiton
Glossary of Non-GAAP Financial Measures
Glossary of Non-GAAP
■ Accident year loss and combined ratios, as adjusted: both the accident year loss and combined ratios, as adjusted, exclude catastrophe losses and related reinstatement
premiums, prior year development, net of premium adjustments, and the impact of reserve discounting. Natural catastrophe losses are generally weather or seismic events having
a net impact on AIG in excess of $10 million each and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold. We believe that
as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they exclude catastrophes and the impact of reserve discounting which are outside
of management's control. We also exclude prior year development to provide transparency related to current accident year results.
Underwriting ratios are computed as follows:
a) Loss ratio = Loss and loss adjustment expenses incurred Net premiums earned (NPE)
b) Acquisition ratio = Total acquisition expenses
NPE
c) General operating expense ratio = General operating expenses
NPE
d) Expense ratio = Acquisition ratio + General operating expense ratio
e) Combined ratio = Loss ratio + Expense ratio
f) Accident year loss ratio, as adjusted (AYLR) = [Loss and loss adjustment expenses incurred - CATS - PYD] [NPE +/(-) Reinstatement premiums related to catastrophes
(CYRIPS) +/(-) RIPS related to prior year catastrophes (PYRIPS) + (Additional) returned premium related to PYD on loss sensitive business ((AP)RP) + Adjustment for
ceded premiums under reinsurance contracts related to prior accident years]
g) Accident year combined ratio, as adjusted = AYLR + Expense ratio
h) Catastrophe losses (CATS) and reinstatement premiums = [Loss and loss adjustment expenses incurred - (CATS)] [NPE +/(-) CYRIPS] - Loss ratio
i) Prior year development net of (additional) return premium related to PYD on loss sensitive business = [Loss and loss adjustment expenses incurred - CATS - PYD]
[NPE +/(-) CYRIPS +/(-) PYRIPS + (AP)RP] - Loss ratio - CAT ratio
■ Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies, group benefit policies and life-contingent payout
annuities, as well as deposits received on universal life, investment-type annuity contracts, Federal Home Loan Bank (FHLB) funding agreements and mutual funds.
Results from discontinued operations are excluded from all of these measures.
AIG
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