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ITEM 8 / NOTE 1. BASIS OF PRESENTATION.....................................................................................................................................................................................1. BASIS OF PRESENTATION..............................................................................................................................................................................................American International Group, Inc. is a leading international insurance organization serving customers in more than130 countries. AIG companies serve commercial, institutional and individual customers through one of the mostextensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers oflife insurance and retirement services in the United States. AIG Common Stock, par value $2.50 per share (AIGCommon Stock), is listed on the New York Stock Exchange and the Tokyo Stock Exchange. Unless the contextindicates otherwise, the terms ‘‘AIG,’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’ mean American International Group, Inc. and itsconsolidated subsidiaries and the term ‘‘AIG Parent’’ means American International Group, Inc. and not to any of itsconsolidated subsidiaries.The consolidated financial statements include the accounts of AIG, our controlled subsidiaries (generally through agreater than 50 percent ownership of voting rights of a voting interest entity), and variable interest entities (VIEs) inwhich we are the primary beneficiary. Equity investments in corporate entities that we do not consolidate, but inwhich we hold 20 percent to 50 percent of the voting rights and investments in partnership and partnership-likeentities for which we have more than minor influence over operating and financial policies, are accounted for underthe equity method unless we have elected the fair value option.Certain of our foreign subsidiaries included in the consolidated financial statements report on different annual fiscalperiod bases, in most cases ending November 30. The effect on our consolidated financial condition and results ofoperations of all material events occurring at these subsidiaries between such fiscal year end and December 31 forall periods presented has been recorded.The accompanying consolidated financial statements have been prepared in accordance with accounting principlesgenerally accepted in the United States (GAAP). All material intercompany accounts and transactions have beeneliminated.Use of Estimates..............................................................................................................................................................................................The preparation of financial statements in accordance with GAAP requires the application of accounting policies thatoften involve a significant degree of judgment. We consider the accounting policies that are most dependent on theapplication of estimates and assumptions to be those relating to items considered by management in thedetermination of:• classification of International Lease Finance Corporation (ILFC) as held for sale;• insurance liabilities, including property and casualty and mortgage guaranty unpaid claims and claims adjustmentexpenses and future policy benefits for life and accident and health contracts;• income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability offuture tax operating profitability of the character necessary to realize the net deferred tax asset;• recoverability of assets including reinsurance assets;• estimated gross profits for investment-oriented products;• impairment charges, including other-than-temporary impairments of financial instruments and goodwill impairments;• liabilities for legal contingencies; and• fair value measurements of certain financial assets and liabilities.These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at thetime of estimation. To the extent actual experience differs from the assumptions used, our consolidated financialcondition, results of operations and cash flows could be materially affected.Prior Period Reclassifications and Segment Changes..............................................................................................................................................................................................Prior period amounts were reclassified to conform to the current period presentation. Significant items include:• Segment changes discussed in Note 3 herein...................................................................................................................................................................................................................................210 AIG 2012 Form 10-K