LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE AND FUTURE POLICY BENEFITS FOR LIFE AND ACCIDENT AND HEALTH INSURANCE CONTRACTS AND POLICYHOLDER CONTRACT DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2012

LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE AND FUTURE POLICY BENEFITS FOR LIFE AND ACCIDENT AND HEALTH INSURANCE CONTRACTS AND POLICYHOLDER CONTRACT DEPOSITS

Schedule of reconciliation of activity in the liability for unpaid claims and claims adjustment expense




Years Ended December 31, (in millions)	2012			2011			2010

Liability for unpaid claims and claims adjustment expense, beginning of year	$	91,145		$	91,151		$	85,386
Reinsurance recoverable		(20,320	)		(19,644	)		(17,487	)

Net liability for unpaid claims and claims adjustment expense, beginning of year		70,825			71,507			67,899

Foreign exchange effect		757			353			(126	)
Acquisitions^(a)		–			–			1,538
Dispositions		(11	)		–			(87	)
Changes in net loss reserves due to NICO transaction		90			(1,703	)		–

Total		71,661			70,157			69,224

Losses and loss expenses incurred^(b):
Current year		25,385			27,931			24,455
Prior years, other than accretion of discount^(c)		421			195			4,182
Prior years, accretion of discount		(63	)		34			(562	)

Total		25,743			28,160			28,075

Losses and loss expenses paid^(b):
Current year		9,297			11,534			9,873
Prior years		19,325			15,958			15,919

Total		28,622			27,492			25,792

Balance, end of year:
Net liability for unpaid claims and claims adjustment expense		68,782			70,825			71,507
Reinsurance recoverable		19,209			20,320			19,644

Total	$	87,991		$	91,145		$	91,151

(a) Represents the acquisition of Fuji on March 31, 2010.

(b) Includes amounts related to dispositions through the date of disposition.

(c) In 2012, includes $262 million, $46 million and $326 million related to excess casualty, commercial specialty workers' compensation and environmental, respectively. In 2011, includes $(414) million, $145 million and $413 million related to excess casualty, commercial specialty workers' compensation and environmental, respectively. In 2010, includes $1.1 billion, $793 million and $1.5 billion related to excess casualty, excess workers' compensation and asbestos, respectively.

Schedule of components of future policy benefits




At December 31, (in millions)	2012		2011

Future policy benefits:
Long duration and contracts	$	36,121	$	33,322
Short duration contracts		219		995

Total future policy benefits	$	36,340	$	34,317

Schedule of policyholder contract deposits liabilities




At December 31, (in millions)	2012		2011

Policyholder contract deposits:
Annuities	$	98,544	$	98,657
Universal life products		13,045		12,917
Guaranteed investment contracts		6,178		6,788
Variable products – fixed account option		3,936		3,181
Corporate life products		2,284		2,239
Other investment contracts		3,130		3,116

Total policyholder contract deposits	$	127,117	$	126,898

- Definition

The entire disclosure for the present values of future benefits to be paid to or on behalf of policyholders and related expenses less the present value of future net premiums using assumptions such as estimates of expected investment yields, mortality, morbidity, terminations and expenses, applicable at the time the insurance contracts are made and unpaid claim costs relating to insurance contracts including estimates of costs relating to incurred but not reported claims based on the estimated ultimate cost of settling the claims (including effects of inflation and other societal and economic factors), using past experience adjusted for current trends and any other factors that would modify past experience by element such as business segment, country and interest rate range.

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- Definition

Tabular disclosure of the activity in the reserve for settling insured claims and expenses incurred in the claims settlement process for the period. The estimated liability includes the amount of money that will be required for future payments of (a) claims that have been reported to the insurer, (b) claims related to insured events that have occurred but that have not been reported to the insurer as of the date the liability is estimated, and (c) claim adjustment expenses. Claim adjustment expenses include costs incurred in the claim settlement process such as legal fees; outside adjuster fees; and costs to record, process, and adjust claims.

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