U.S.-based American International Group Inc. (AIG) is one of the worlds 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?