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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................Retained Interests..............................................................................................................................................................................................Change in Fair Value of AIA Securities Prior to Their SaleWe sold our remaining 33 percent interest in AIA ordinary shares for proceeds of $14.5 billion and a net gain of$2.1 billion through three sale transactions on March 7, September 11 and December 20, 2012.We recognized a $1.3 billion gain in 2011, representing a 12 percent increase in the value of AIG’s then 33 percentinterest in AIA, which is recorded in Other invested assets and accounted for under the fair value option. In 2010, werecognized a $638 million loss on our interest in AIA during the approximate two-month holding period following theinitial public offering in late October 2010.Change in Fair Value of ML III Prior to LiquidationThe gains attributable to AIG’s interest in ML III for 2012 were based in part on the completion of the final auction ofML III assets by the FRBNY, in the third quarter of 2012.The loss attributable to AIG’s interest in ML III for 2011 was due to significant spread widening and reduced interestrates.The gain on ML III for 2010 was attributable to the shortening of its weighted average life. Additionally, fair value for2010 was positively affected by a decrease in projected credit losses in the underlying collateral securities.Change in the Fair Value of the MetLife Securities Prior to Their SaleWe recognized a loss in 2011, representing the decline in the securities’ value, due to market conditions, fromDecember 31, 2010 through the date of their sale in the first quarter of 2011.Corporate & Other..............................................................................................................................................................................................Corporate & Other reported lower operating losses in 2012 compared to 2011 primarily due to the effects of thefollowing:• reduction in expense of $211 million in 2012 resulting from settlements of the liability for the Department of theTreasury’s underwriting fees for the sale of AIG Common Stock at amounts lower than had been estimated at thetime the accrual was established, and AIG purchased a significant amount of shares for which no payment to theunderwriters was required; and• a decline in interest expense as a result of the repayment of the FRBNY Credit Facility and the exchange ofoutstanding junior subordinated debentures for senior unsecured notes in 2011.Real estate and other non-core businesses declined due to lower gains on real estate dispositions and higher equitylosses on real estate investments in 2012 compared to 2011.Corporate & Other reported lower operating losses in 2011 compared to 2010. This was primarily due to:• a decline in interest expense as a result of the repayment of the FRBNY Credit Facility; and• improvement in real estate and other non-core businesses due to significantly lower levels of real estateinvestment impairment charges in 2011 compared to 2010.Divested Businesses..............................................................................................................................................................................................Divested businesses include the operating results of divested businesses that did not qualify for discontinuedoperations accounting through the date of their sale. The Divested businesses results for 2010 primarily representthe historical results of AIA, which was deconsolidated in November 2010 in conjunction with its initial public offering...................................................................................................................................................................................................................................AIG 2012 Form 10-K 115
ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................Discontinued OperationsIncome (loss) from Discontinued Operations is comprised of the following:Years Ended December 31,(in millions) 2012 2011 2010Foreign life insurance businesses $ – $ 1,170 $ (1,602)AGF – – (145)ILFC 304 (1,017) (581)Net gain (loss) on sale (6,733) 2,338 5,389Consolidation adjustments – (1) (356)Interest allocation – (2) (75)Income (loss) from discontinued operations (6,429) 2,488 2,630Income tax expense (benefit) (2,377) 698 3,599Income (loss) from discontinued operations, net of tax $ (4,052) $ 1,790 $ (969)Significant items affecting the comparison of results from discontinued operations included the following:• a pre-tax loss of $6.7 billion ($4.4 billion after tax) on the announced sale of ILFC in 2012;• a gain on the sale of AIG Star and AIG Edison in 2011, a gain on the sale of ALICO in 2010, a loss on the sale ofAGF in 2010 and a loss recognized in 2010 related to the sale of Nan Shan;• impairments of goodwill in 2010 of $4.6 billion related to ALICO, AIG Star and AIG Edison.• tax effects of the above transactions, notably the impact of non-deductible goodwill impairment and the change ininvestment in subsidiaries, which was principally related to changes in the estimated U.S. tax liability with respectto the planned sales.See Note 4 to the Consolidated Financial Statements for further discussion of discontinued operations.Consolidated Comprehensive Income (Loss)..............................................................................................................................................................................................The following table presents AIG’s consolidated comprehensive income (loss):Years Ended December 31,Percentage Change(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010Net income $ 3,700 $ 21,330 $ 12,285 (83)% 74%Change in unrealized appreciation ofinvestments 10,710 5,518 9,910 94 (44)Change in deferred acquisition costs adjustmentand other (889) (630) (657) (41) 4Change in future policy benefits (517) (2,302) – 78 NMChange in foreign currency translationadjustments (33) (97) 654 66 NMChange in net derivative gains arising from cashflow hedging activities 33 51 105 (35) (51)Change in retirement plan liabilities adjustment (319) (365) 9 13 NMChange attributable to divestitures anddeconsolidations – (5,041) (4,872) NM (3)Deferred tax asset (liability) (2,889) 262 (2,186) NM NMOther comprehensive income (loss) 6,096 (2,604) 2,963 NM NMComprehensive income 9,796 18,726 15,248 (48) 23Total comprehensive income attributable tononcontrolling interests 265 587 2,408 (55) (76)Comprehensive income attributable to AIG $ 9,531 $ 18,139 $ 12,840 (47)% 41%..................................................................................................................................................................................................................................116 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 6 / SELECTED FINANCIAL DATA...
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ITEM 6 / SELECTED FINANCIAL DATA...
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ITEM 7 / MANAGEMENT’S DISCUSSION
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ITEM 7 / USE OF NON-GAAP MEASURES..
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ITEM 7 / EXECUTIVE SUMMARY.........
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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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