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U.S.-based American International Group Inc. (AIG) is one of the world?s largest insurance

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U.S.-based American International Group Inc. (AIG) is one of the world?s largest insurance companies, offering property-casualty, life insurance, and retirement services to customers in more than 130 countries. In its 2010 10-K report to the SEC, it discloses the following information on the loss reserves created for claims originating in 2000;(in millions);Net Reserves Held in 2000: $ 26,971;Cumulative net liability paid as of;One year later $ 9,709;Two years later 17,149;Three years later 21,930;Four years later 26,090;Five years later 29,473;Six years later 32,421;Seven years later 34,660;Eight years later 36,497;Nine years later 38,943;Ten years later 40,153;Net reserves for 2000 re-estimated as of;One year later $ 26,979;Two years later 30,696;Three years later 32,732;Four years later 36,210;Five years later 41,699;Six years later 43,543;Seven years later 44,475;Eight years later 45,767;Nine years later 47,682;Ten years later 50,422;Net Redundancy (Deficiency) $ (23,451);Was the initial estimate for loss reserves originating in 2000 too low or too high? How has the firm updated its estimate of this obligation over time? What percentage of the original liability remains outstanding for 2000 claims at the end of 2010? As a financial analyst, what questions would you have for the CFO on its 2000 liability?

 

Paper#30517 | Written in 18-Jul-2015

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