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ITEM 7 / RESULTS OF OPERATIONS.....................................................................................................................................................................................Change in Retirement Plan Liabilities Adjustment..............................................................................................................................................................................................The decrease in 2011 was primarily due to the announced redesign and resulting remeasurement of the AIGRetirement and AIG Excess Plans, which was converted to cash balance plans effective April 1, 2012. AIGrecognized a $590 million pre-tax reduction to Accumulated other comprehensive income in connection with theremeasurement in 2011, primarily due to a decrease in the discount rate since December 31, 2010. This decrease inAccumulated other comprehensive income was partially offset by the effect of the increase in the discount rate in thefourth quarter of 2011 in connection with the year end remeasurement.Change Attributable to Divestitures and Deconsolidations..............................................................................................................................................................................................The change attributable to divestitures and deconsolidations in both periods reflect the derecognition of all items inAccumulated other comprehensive income (loss) at the point of sale and deconsolidation for all entities, includingdomestic entities. In 2011, the most significant entities were AIG Star, AIG Edison and Nan Shan. In 2010, the mostsignificant entities were AIA and ALICO.Deferred Taxes on Other Comprehensive Income..............................................................................................................................................................................................As discussed above, for the year ended December 31, 2011, the effective tax rate differs from the statutory35 percent rate primarily due to the effects of the Nan Shan disposition.For the year ended December 31, 2010, the effective tax rate on pre-tax Other Comprehensive Income was42.5 percent, primarily due to the effects of the AIA initial public offering, the ALICO disposition and changes in theestimated U.S. tax liability with respect to the potential sale of subsidiaries, including AIG Star and AIG Edison...................................................................................................................................................................................................................................AIG 2012 Form 10-K 119