2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
(f) In 2007, 2006, 2005, 2004 and 2003, includes other-than-temporary impairment charges of $2.8 billion, $641 million, $425 million, $441 million
and $1.2 billion. See Management’s Discussion and Analysis of Financial Condition and Results of Operations — Invested Assets — Other-thantemporary
impairments.
(g) Includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment under Statement of Financial Accounting Standards
(FAS) No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities’’ (FAS 133), including the related foreign exchange gains and losses. In
2007, 2006, 2005, 2004 and 2003, respectively, the effect was $211 million, $(1.82) billion, $2.01 billion, $(122) million and $(1.01) billion in both
revenues and operating income for Capital Markets. These amounts result primarily from interest rate and foreign currency derivatives that are effective
economic hedges of investments and borrowings. These gains (losses) in 2007 include a $380 million out of period charge to reverse net gains
recognized on transfers of available for sale securities among legal entities consolidated within AIGFP. In 2006, includes an out of period charge of
$223 million related to the remediation of the material weakness in internal control over the accounting for certain derivative transactions under
FAS 133. In the first quarter of 2007, AIGFP began applying hedge accounting for certain of its interest rate swaps and foreign currency forward
contracts hedging its investments and borrowings.
(h) In 2007, both revenues and operating income (loss) include an unrealized market valuation loss of $11.5 billion on AIGFP super senior credit default
swap portfolio and an other-than-temporary impairment charge of $643 million on AIGFP’s available for sale investment securities. See Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Invested Assets — Other-than-temporary impairments.
(i) In 2005, includes $1.6 billion of regulatory settlement costs as described under Item 3. Legal Proceedings.
(j) In 2007, 2006, 2005, 2004 and 2003, includes other-than-temporary impairment charges of $4.7 billion, $944 million, $598 million, $684 million and
$1.5 billion. Also includes gains (losses) from hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related
foreign exchange gains and losses. In 2007, 2006, 2005, 2004 and 2003, respectively, the effect was $(1.44) billion, $(1.87) billion, $2.02 billion,
$385 million and $(1.50) billion in revenues and $(1.44) billion, $(1.87) billion, $2.02 billion, $671 million and $(1.22) billion in operating income.
These amounts result primarily from interest rate and foreign currency derivatives that are effective economic hedges of investments and borrowings.
(k) Represents income before income taxes, minority interest and cumulative effect of accounting changes.
AIG 2007 Form 10-K 5