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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................The following table presents survival ratios for asbestos and environmental claims, separately andcombined, which were based upon a three-year average payment:Years Ended December 31,2012 2011 2010Gross Net * Gross Net * Gross NetSurvival ratios:Asbestos 9.6 8.7 9.1 10.3 8.6 9.2Environmental 4.5 4.4 3.0 3.1 3.7 3.2Combined 9.0 8.1 8.4 9.3 8.1 8.4* Survival ratios are calculated consistent with the basis on historical reserve excluding the effects of the NICO reinsurance transaction.AIG Life and RetirementAIG Life and Retirement HighlightsThe results of AIG Life and Retirement for 2012 and 2011 reflected the following:• Disciplined spread management, primarily through the effect of reinvestment during 2011 of significant amounts ofcash and short term investments and crediting rate changes, resulted in improvements in base net investmentspreads for 2012. Private equity and hedge fund investment income increased $112 million in 2012 compared to2011.• Investment income from the ML II investment prior to its liquidation and distribution in March 2012 increased$200 million in 2012 compared to 2011.• More favorable separate account performance driven in large part by equity markets had a positive effect onpolicyholder benefits and DAC amortization expenses for 2012.• Reserve increases related to enhanced death claim practices in connection with the resolution of multi-stateexaminations were lower in 2012 compared to 2011.• Higher net realized capital gains from the sale of investments were reflected in 2012 in conjunction with a programto utilize capital loss tax carryforwards. The sales of securities in unrealized gain positions that support certainpayout annuity products, and subsequent reinvestment of the proceeds at generally lower yields, triggered lossrecognition accruals in 2012.AIG Life and Retirement OperationsCommencing in the third quarter of 2012, the SunAmerica segment was renamed AIG Life and Retirement, althoughcertain existing brands will continue to be used in the marketplace.AIG Life and Retirement presents its business in two operating segments:• Life Insurance, which focuses on mortality and morbidity-based protection products, and• Retirement Services, which focuses on investment, retirement savings and income solution products...................................................................................................................................................................................................................................AIG 2012 Form 10-K 99
ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................AIG Life and Retirement Results..............................................................................................................................................................................................The following table presents AIG Life and Retirement results:Years Ended December 31,Percentage Change(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010Life Insurance:Revenue:Premiums $ 2,428 $ 2,513 $ 2,520 (3)% –%Policy fees 1,465 1,478 1,576 (1) (6)Net investment income 4,101 3,925 4,313 4 (9)Other income 1 3 – (67) NMOperating expenses:Policyholder benefits and claims incurred 4,511 4,510 4,277 – 5Interest credited to policyholder account balances 822 851 843 (3) 1Amortization of deferred acquisition costs 467 389 596 20 (35)Other acquisition and insurance expenses 1,059 1,126 1,140 (6) (1)Operating income 1,136 1,043 1,553 9 (33)Net realized capital gains (losses) 1,471 363 (75) 305 NMLegal settlements 43 – – NM NMChange in benefit reserves and DAC, VOBA and SIA related to net realizedcapital gains (losses) (684) (19) (37) NM 49Pre-tax income $ 1,966 $ 1,387 $ 1,441 42% (4)%Retirement Services:Revenue:Policy fees $ 1,326 $ 1,227 $ 1,134 8% 8%Net investment income 6,617 5,957 6,455 11 (8)Other income 8 206 – (96) NMOperating expenses:Policyholder benefits and claims incurred 22 104 (1) (79) NMInterest credited to policyholder account balances 3,540 3,616 3,644 (2) (1)Amortization of deferred acquisition costs 345 477 375 (28) 27Other acquisition and insurance expenses 1,020 959 1,068 6 (10)Operating income 3,024 2,234 2,503 35 (11)Legal settlements 111 – – NM NMChanges in fair value of fixed maturity securities designated to hedge livingbenefit liabilities 37 – – NM NMNet realized capital losses (841) (357) (1,176) (136) 70Change in benefit reserves and DAC, VOBA and SIA related to net realizedcapital losses (517) (308) (67) (68) (360)Pre-tax income $ 1,814 $ 1,569 $ 1,260 16% 25%Total AIG Life and Retirement:Revenue:Premiums $ 2,428 $ 2,513 $ 2,520 (3)% –%Policy fees 2,791 2,705 2,710 3 –Net investment income 10,718 9,882 10,768 8 (8)Other income 9 209 – (96) NMOperating expenses:Policyholder benefits and claims incurred 4,533 4,614 4,276 (2) 8Interest credited to policyholder account balances 4,362 4,467 4,487 (2) –Amortization of deferred acquisition costs 812 866 971 (6) (11)Other acquisition and insurance expenses 2,079 2,085 2,208 – (6)Operating income 4,160 3,277 4,056 27 (19)Legal settlements 154 – – NM NMChanges in fair value of fixed maturity securities designated to hedge livingbenefit liabilities 37 – – NM NMNet realized capital gains (losses) 630 6 (1,251) NM NMChange in benefit reserves and DAC, VOBA and SIA related to net realizedcapital gains (losses) (1,201) (327) (104) (267) (214)Pre-tax income $ 3,780 $ 2,956 $ 2,701 28% 9%..................................................................................................................................................................................................................................100 AIG 2012 Form 10-K
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American International Group, Inc.2
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KEY FACTS & FIGURES52,000+ $65.7 bi
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■We said we would return to profi
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Financial HighlightsYears Ended Dec
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~63,000AIG EMPLOYEES AROUND THE WOR
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$115.1 millionAVERAGE CLAIMS PAID E
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$10,000MAXIMUM DONATION MADE BY AIG
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American International Group, Inc.F
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AMERICAN INTERNATIONAL GROUP, INC.A
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG............
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG PROPERTY CA
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ITEM 1 / BUSINESS / AIG LIFE AND RE
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS / OTHER OPERATION
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1 / BUSINESS..................
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ITEM 1A / RISK FACTORS.............
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ITEM 1B / UNRESOLVED STAFF COMMENTS
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ITEM 5 / MARKET FOR REGISTRANT’S
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ITEM 7 / INVESTMENTS...............
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ITEM 7 / ENTERPRISE RISK MANAGEMENT
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ITEM 7 / CRITICAL ACCOUNTING ESTIMA
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ITEM 7 / GLOSSARY..................
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ITEM 7 / GLOSSARY..................
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ITEM 7A / QUANTITATIVE AND QUALITAT
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ITEM 8 / INDEX TO FINANCIAL STATEME
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AMERICAN INTERNATIONAL GROUP, INC.C
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ITEM 8 / NOTE 1. BASIS OF PRESENTAT
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ITEM 8 / NOTE 2. SUMMARY OF SIGNIFI
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ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 5. BUSINESS COMBINATI
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ITEM 8 / NOTE 6. FAIR VALUE MEASURE
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ITEM 8 / NOTE 7. INVESTMENTS.......
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ITEM 8 / NOTE 8. LENDING ACTIVITIES
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ITEM 8 / NOTE 9. REINSURANCE.......
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 12. DERIVATIVES AND H
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ITEM 8 / NOTE 13. LIABILITY FOR UNP
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ITEM 8 / NOTE 14. VARIABLE LIFE AND
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 16. CONTINGENCIES, CO
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ITEM 8 / NOTE 17. TOTAL EQUITY.....
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ITEM 8 / NOTE 18. NONCONTROLLING IN
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ITEM 8 / NOTE 19. EARNINGS (LOSS) P
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ITEM 8 / NOTE 20. STATUTORY FINANCI
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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ITEM 8 / NOTE 24. INCOME TAXES.....
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ITEM 8 / NOTE 26. QUARTERLY FINANCI
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ITEM 8 / NOTE 27. INFORMATION PROVI
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PART II............................
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PART IV............................
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SignatureTitle/s/ ARTHUR C. MARTINE
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ExhibitNumber Description Location(
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Condensed Financial Information of
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Condensed Financial Information of
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Notes to Condensed Financial Inform
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Supplementary Insurance Information
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Valuation and Qualifying AccountsFo
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Subsidiaries of RegistrantExhibit 2
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Percentageof VotingSecuritiesJurisd
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Percentageof VotingSecuritiesJurisd
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CONSENT OF INDEPENDENT REGISTERED P
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CERTIFICATIONSI, Robert H. Benmosch
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CERTIFICATIONExhibit 32In connectio
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SECURITIES REGISTERED PURSUANT TO S
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American International Group, Inc.1
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