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ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.....................................................................................................................................................................................Presentation of Comprehensive Income..............................................................................................................................................................................................In February 2013 the FASB issued guidance on the presentation requirements for items reclassified out ofaccumulated other comprehensive income. We will be required to disclose the effect of significant items reclassifiedout of accumulated other comprehensive income on the respective line items of net income or provide a crossreferenceto other disclosures currently required under U.S. GAAP for relevant items.The standard is effective for annual and interim reporting periods beginning after December 15, 2012. We do notexpect adoption of the standard to have a material effect on our consolidated financial condition, results of operationsor cash flows.Accounting Standards Adopted During 2012..............................................................................................................................................................................................We adopted the following accounting standards on January 1, 2012Accounting for Costs Associated with Acquiring or Renewing Insurance ContractsIn October 2010, the FASB issued an accounting standard update that amends the accounting for costs incurred byinsurance companies that can be capitalized in connection with acquiring or renewing insurance contracts. Thestandard clarifies how to determine whether the costs incurred in connection with the acquisition of new or renewalinsurance contracts qualify as DAC. We adopted the standard retrospectively on January 1, 2012.Deferred policy acquisition costs represent those costs that are incremental and directly related to the successfulacquisition of new or renewal insurance contracts. We defer incremental costs that result directly from, and areessential to, the acquisition or renewal of an insurance contract. Such costs generally include agent or brokercommissions and bonuses, premium taxes, and medical and inspection fees that would not have been incurred if theinsurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable.We partially defer costs, including certain commissions, when we do not believe the entire cost is directly related tothe acquisition or renewal of insurance contracts.We also defer a portion of employee total compensation and payroll-related fringe benefits directly related to timespent performing specific acquisition or renewal activities, including costs associated with the time spent onunderwriting, policy issuance and processing, and sales force contract selling. The amounts deferred are those thatresulted in successful policy acquisition or renewal for each distribution channel and/or cost center from which thecost originates.Advertising costs related to the issuance of insurance contracts that meet the direct-advertising criteria are deferredand amortized as part of DAC.The method we use to amortize DAC for either short- or long-duration insurance contracts did not change as a resultof the adoption of the standard.The adoption of the standard resulted in a reduction to beginning of period retained earnings for the earliest periodpresented and a decrease in the amount of capitalized costs in connection with the acquisition or renewal ofinsurance contracts. Accordingly, we revised our historical financial statements and accompanying notes to theconsolidated financial statements for the changes in DAC and associated changes in acquisition expenses andincome taxes for affected entities and segments, including divested entities presented in continuing and discontinuedoperations...................................................................................................................................................................................................................................AIG 2012 Form 10-K 217
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.....................................................................................................................................................................................The following table presents amounts previously reported as of December 31, 2011, to reflect the effect of thechange due to the retrospective adoption of the standard, and the adjusted amounts that are reflected in ourConsolidated Balance Sheet.December 31, 2011 As Previously Effect of As Currently(in millions) Reported Change ReportedBalance Sheet:Deferred income taxes $ 17,897 $ 1,718 $ 19,615Deferred policy acquisition costs 14,026 (5,089) 8,937Other assets 11,705 (42) 11,663Total assets 556,467 (3,413) 553,054Retained earnings 14,332 (3,558) 10,774Accumulated other comprehensive income 6,336 145 6,481Total AIG shareholders’ equity 104,951 (3,413) 101,538The following tables present amounts previously reported for the years ended December 31, 2011 and 2010to reflect the effect of the change due to the retrospective adoption of the standard, and the adjustedamounts that are reflected in our Consolidated Statement of Operations and Consolidated Statement of CashFlows.Year Ended December 31, 2011 As Previously Effect of As Currently(dollars in millions, except per share data) Reported (a) Change ReportedStatement of Operations:Total net realized capital gains $ 681 $ 20 $ 701Total revenues 59,792 20 59,812Interest credited to policyholder account balances 4,446 21 4,467Amortization of deferred acquisition costs 8,019 (2,533) 5,486Other acquisition and other insurance expenses 6,091 2,367 8,458Net (gain) loss on sale of properties and divested businesses 74 – 74Total benefits, claims and expenses 59,840 (144) 59,696Income (loss) from continuing operations before income tax benefit (48) 164 116Income tax benefit (b) (17,696) (1,728) (19,424)Income from continuing operations 17,648 1,892 19,540Income from discontinued operations, net of income tax expense (c) 858 932 1,790Net income 18,506 2,824 21,330Net income attributable to AIG 17,798 2,824 20,622Net income attributable to AIG common shareholders 16,986 2,824 19,810Income per share attributable to AIG common shareholders:Basic and dilutedIncome from continuing operations $ 8.98 $ 1.05 $ 10.03Income from discontinued operations $ 0.46 $ 0.52 $ 0.98(a) Includes $140 million in Total net realized capital gains attributable to the effect of the reclassification of certain derivative activity discussed inNote 1 herein. Also includes the effect of the reclassification of ILFC as discontinued operations.(b) Includes an adjustment to the deferred tax valuation allowance of $1.8 billion in the fourth quarter of 2011.(c) Represents the effect on the gain on sale of AIG Star and AIG Edison which were sold in first quarter of 2011...................................................................................................................................................................................................................................218 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 / OTHER OPERATION
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ITEM 1 / BUSINESS / OTHER OPERATION
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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 / INVESTMENTS...............
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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
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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 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 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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