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Both companies stressed that the claims estimates are subject to a higher-than-usual degree of uncertainty, and that determining precise claims information will take several months. Moreover, AIG’s preliminary estimate excludes losses arising from AIG's general insurance operations in Japan that participate in the Japanese Earthquake Reinsurance Company (JERC). The JERC is a government-run insurance scheme that provides cover for earthquake shock and tsunami for residential properties insured by non-life companies. In accordance with Japanese statutory accounting rules, AIG's general insurance operations in Japan have previously established catastrophe reserves of approximately $500 million for potential claims associated with earthquake damage to personal dwellings and have deposited funds for a substantial portion of these reserves with the JERC.
"The catastrophe in Japan has affected people, their homes, infrastructure, and businesses both in and outside of Japan, and our industry is working hard to quantify the complex impact of the devastation, a process that will take some time,” AIG President and CEO Robert Benmosche said in a statement. "As a result, our preliminary loss estimate will change as the industry losses from JERC for earthquake damage to personal dwellings become known and other information becomes available as the situation in the quarter evolves. Our preliminary estimate is based on our current assessment of what our policies cover and the provisions of reinsurance purchased by AIG and its affiliates."
