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ITEM 8 / NOTE 18. NONCONTROLLING INTERESTS.....................................................................................................................................................................................terms of the SPVs’ limited liability company agreements, the SPVs generally may not distribute funds to us until theliquidation preferences and preferred returns on the respective SPV Preferred Interests had been repaid in full andconcurrent distributions had been made on certain participating returns attributable to the respective SPV PreferredInterests. In connection with the Recapitalization, we agreed to cause the proceeds of certain asset dispositions to beused to pay down the remaining SPV Preferred Interests.The common interests, which we retained, entitled us to 100 percent of the voting power of the SPVs. The votingpower allowed us to elect the boards of managers of the SPVs, who oversaw the management and operation of theSPVs. Primarily due to the substantive participation rights of the SPV Preferred Interests, the SPVs were determinedto be VIEs. As the primary beneficiary of the SPVs, we consolidated the SPVs.As a result of the closing of the Recapitalization on January 14, 2011, the SPV Preferred Interests held by theDepartment of the Treasury were no longer considered permanent equity on our Consolidated Balance Sheet, andwere classified as redeemable non-controlling interests. As part of the Recapitalization, we used approximately$6.1 billion of the cash proceeds from the sale of ALICO to pay down a portion of the liquidation preference of theSPV Preferred Interests. The liquidation preference of the SPV Preferred Interests was further reduced byapproximately $12.4 billion using proceeds from the sale of AIG Star, AIG Edison, Nan Shan, and MetLife securitiesreceived in the sale of ALICO. During the first quarter of 2011, the remaining liquidation preference of the ALICOSPV Preferred Interests was paid in full.The SPV Preferred Interests were measured at fair value on their issuance date. The SPV Preferred Interests initiallyhad a liquidation preference of $25 billion and had a preferred return of five percent per year compounded quarterlythrough September 22, 2013 and nine percent thereafter. The preferred return is reflected in Income (loss) fromcontinuing operations attributable to noncontrolling interests – Nonvoting, callable, junior and senior preferredinterests in the Consolidated Statement of Operations. The difference between the SPV Preferred Interests’ fair valueand the initial liquidation preference was amortized and included in Net income (loss) from continuing operationsattributable to noncontrolling interests – Nonvoting, callable, junior and senior preferred interests.During the first quarter of 2012, the liquidation preference of the AIA SPV Preferred Interests was paid down in full.See Note 16 herein for a discussion of indemnity payments made to MetLife pursuant to the terms of the ALICOstock purchase agreement.Non-redeemable noncontrolling interests..............................................................................................................................................................................................Non-redeemable noncontrolling interests include the equity interests of third-party shareholders in ourconsolidated subsidiaries and includes the preferred shareholders’ equity in outstanding preferred stock of ILFC, awholly-owned subsidiary that is held for sale at December 31, 2012. The preferred stock in ILFC consists of 1,000shares of market auction preferred stock (MAPS) in two series (Series A and B) of 500 shares each. Each of theMAPS shares has a liquidation value of $100,000 per share and is not convertible. Dividends on the MAPS areaccounted for as a reduction of the noncontrolling interest. The dividend rate, other than the initial rate, for eachdividend period for each series is reset approximately every seven weeks (49 days) on the basis of orders placed inan auction, provided such auctions are able to occur. At December 31, 2012, there is no ability to conduct suchauctions; therefore, the MAPS certificate of determination dictates that a maximum applicable rate, as defined in thecertificate of determination, be paid on the MAPS. At December 31, 2012, the dividend rate for each of the Series Aand Series B MAPS was 0.50 percent and 0.36 percent respectively.For the years ended December 31, 2012 and 2011, the Noncontrolling interests balance declined by $188 million and$707 million, respectively. In 2012, this decline was primarily caused by an adjustment for the reclassification ofnoncontrolling interest from permanent to temporary and acquisitions of noncontrolling interests in 2012. In 2011, thedecline in noncontrolling interest balance was mostly due to the acquisition of Fuji’s noncontrolling interest...................................................................................................................................................................................................................................AIG 2012 Form 10-K 311