Bring on tomorrow - AIG.com

ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.....................................................................................................................................................................................Level 3 valuation inputs. The new disclosure requirements were applied prospectively. The standard becameeffective beginning on January 1, 2012. The standard did not have any effect on our consolidated financial condition,results of operations or cash flows. See Note 6 for additional information related to fair value measurements.Presentation of Comprehensive IncomeIn June 2011, the FASB issued an accounting standard that requires the presentation of comprehensive incomeeither in a single continuous statement of comprehensive income or in two separate but consecutive statements. Inthe two-statement approach, the first statement should present total net income and its components, followedconsecutively by a second statement that presents total other comprehensive income and its components. Thestandard became effective beginning January 1, 2012 with retrospective application required. The standard did nothave any effect on our consolidated financial condition, results of operations or cash flows.Testing Goodwill for ImpairmentIn September 2011, the FASB issued an accounting standard that amends the approach to testing goodwill forimpairment. The standard simplifies how entities test goodwill for impairment by permitting an entity to first assessqualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than itscarrying amount as a basis for determining whether it is necessary to perform the quantitative, two-step goodwillimpairment test. The standard became effective for annual and interim goodwill impairment tests performed for fiscalyears beginning after December 15, 2011. The adoption of the standard did not have any effect on our consolidatedfinancial condition, results of operations or cash flows.Accounting Standards Adopted During 2011..............................................................................................................................................................................................In January 2010, the FASB issued an accounting standard that requires fair value disclosures about significanttransfers between Level 1 and 2 measurement categories and separate presentation of purchases, sales, issuances,and settlements within the rollforward of Level 3 activity. Also, this fair value guidance clarifies the disclosurerequirements about the level of disaggregation and valuation techniques and inputs. This guidance became effectivefor us beginning on January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlementswithin the rollforward of Level 3 activity, which became effective for us beginning on January 1, 2011. See Note 6 foradditional information related to fair value measurements.In April 2010, the FASB issued an accounting standard that clarifies that an insurance company should not combineany investments held in separate account interests with its interest in the same investment held in its generalaccount when assessing the investment for consolidation. Separate accounts represent funds for which investmentincome and investment gains and losses accrue directly to the policyholders who bear the investment risk. Thestandard also provides guidance on how an insurer should consolidate an investment fund when the insurerconcludes that consolidation of an investment is required and the insurer’s interest is through its general account inaddition to any separate accounts.In April 2011, the FASB issued an accounting standard that amends the guidance for a creditor’s evaluation ofwhether a restructuring is a troubled debt restructuring and requires additional disclosures about a creditor’s troubleddebt restructuring activities. The standard clarifies the two criteria used to determine whether a modification orrestructuring is a troubled debt restructuring: (i) whether the creditor has granted a concession and (ii) whether thedebtor is experiencing financial difficulties.The adoption of these standards did not have a material effect on our consolidated financial condition, results ofoperations or cash flows.Accounting Standards Adopted During 2010..............................................................................................................................................................................................In June 2009, the FASB issued an accounting standard addressing transfers of financial assets that removes theconcept of a qualifying special-purpose entity (QSPE) from the FASB Accounting Standards Codification andremoves the exception that exempted transferors from applying the consolidation rules to QSPEs.In March 2010, the FASB issued an accounting standard that amends the accounting for embedded credit derivativefeatures in structured securities that redistribute credit risk in the form of subordination of one financial instrument toanother. The standard clarifies how to determine whether embedded credit derivative features, including those incollateralized debt obligations (CDOs), credit-linked notes (CLNs), synthetic CDOs and CLNs and other synthetic..................................................................................................................................................................................................................................AIG 2012 Form 10-K 221