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ITEM 8 / NOTE 1. BASIS OF PRESENTATION.....................................................................................................................................................................................• Revisions attributable to discontinued operations presented in Note 4 herein.• Reclassified approximately $1.3 billion of income taxes from Accumulated other comprehensive income toAdditional paid in capital as of January 1, 2010 to correct the presentation of components of Shareholders’ Equity.These income taxes related to the creation in 2009 of special purpose vehicles that held our interests in AIAGroup Ltd. (AIA) and American Life Insurance Company (ALICO). There was no effect on Total AIG shareholders’equity or on Total equity as a result of this reclassification.• Changes were made to the presentation within the Consolidated Statement of Operations to align the presentationof changes in the fair value of derivatives with changes in the administration of AIG’s derivatives portfolio.Specifically, amounts attributable to derivative activity where AIG Financial Products Corp. and AIG TradingGroup Inc. and their respective subsidiaries (collectively, AIGFP) executed transactions with third parties on behalfof AIG subsidiaries have been reclassified from Other income to Net realized capital gains (losses)...................................................................................................................................................................................................................................AIG 2012 Form 10-K 211
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.....................................................................................................................................................................................2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES..............................................................................................................................................................................................(a)Revenues and expenses:Premiums: Premiums for short duration contracts are recorded as written on the inception date of the policy.Premiums are earned primarily on a pro rata basis over the term of the related coverage. Sales of extended servicescontracts are reflected as premiums and earned on a pro rata basis over the term of the related coverage. Thereserve for unearned premiums includes the portion of premiums written relating to the unexpired terms of coverage.Reinsurance premiums under a reinsurance contract are typically earned over the same period as the underlyingpolicies, or risks, covered by the contracts. As a result, the earning pattern of a reinsurance contract may extend upto 24 months, reflecting the inception dates of the underlying policies throughout a year.Reinsurance premiums ceded are recognized as a reduction in revenues over the period the reinsurance coverage isprovided in proportion to the risks to which the premiums relate.Premiums for long duration insurance products and life contingent annuities are recognized as revenues when due.Estimates for premiums due but not yet collected are accrued.Policy fees: Policy fees represent fees recognized from universal life and investment-type products consisting ofpolicy charges for the cost of insurance, policy administration charges, amortization of unearned revenue reservesand surrender charges.Net investment income:For a discussion of our policies on net investment income, see Note 7 herein.Net realized capital gains (losses):Note 7 herein.For a discussion of our policies on net realized capital gains (losses), seeOther income: Other income includes unrealized gains and losses on derivatives, including unrealized marketvaluation gains and losses associated with the Global Capital Markets (GCM) super senior credit default swap (CDS)portfolio, as well as income from the Direct Investment book (DIB).Other income from the operations of the DIB and our Other Operations category consists of the following:• Change in fair value relating to financial assets and liabilities for which the fair value option has been elected.• Interest income and related expenses, including amortization of premiums and accretion of discounts on bondswith changes in the timing and the amount of expected principal and interest cash flows reflected in the yield, asapplicable.• Dividend income from common and preferred stock and distributions from other investments.• Changes in the fair value of trading securities and spot commodities sold but not yet purchased, futures, hybridfinancial instruments, securities purchased under agreements to resell, and securities sold under agreements torepurchase for which the fair value option was elected.• Realized capital gains and losses from the sales of available for sale securities and investments in private equityfunds and hedge funds and other investments.• Income earned on real estate based investments and related losses from property level impairments and financingcosts.• Exchange gains and losses resulting from foreign currency transactions.• Reductions to the cost basis of securities available for sale for other-than-temporary impairments.• Earnings from private equity funds and hedge fund investments accounted for under the equity method.• Gains and losses recognized in earnings on derivatives for the effective portion and their related hedged items.Policyholder benefits and claims incurred: Incurred claims and claims adjustment expense for short durationinsurance contracts consist of the estimated ultimate cost of settling claims incurred within the reporting period,including incurred but not reported claims, plus changes in estimates of current and prior period losses resulting fromthe continuous review process, which are charged to income as incurred. Benefits for long duration insurance..................................................................................................................................................................................................................................212 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 / RESULTS OF OPERATIONS.....
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ITEM 7 / LIQUIDITY AND CAPITAL RESO
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ITEM 7 / INVESTMENTS...............
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ITEM 7 / ENTERPRISE RISK MANAGEMENT
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ITEM 7 / ENTERPRISE RISK MANAGEMENT
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Page 217 and 218: ITEM 7A / QUANTITATIVE AND QUALITAT
Page 219 and 220: ITEM 8 / INDEX TO FINANCIAL STATEME
Page 221 and 222: AMERICAN INTERNATIONAL GROUP, INC.C
Page 227: ITEM 8 / NOTE 1. BASIS OF PRESENTAT
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Page 245 and 246: ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 7. INVESTMENTS.......
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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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