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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
ITEM 8 / NOTE 19. EARNINGS (LOSS) PER SHARE (EPS).....................................................................................................................................................................................19. EARNINGS (LOSS) PER SHARE (EPS)..............................................................................................................................................................................................Basic and diluted earnings (loss) per share are based on the weighted average number of common sharesoutstanding, adjusted to reflect all stock dividends and stock splits. Diluted EPS is based on those shares used inbasic EPS plus shares that would have been outstanding assuming issuance of common shares for all dilutivepotential common shares outstanding, adjusted to reflect all stock dividends and stock splits. Basic EPS was notaffected by outstanding stock purchase contracts. Diluted EPS was not affected by outstanding stock purchasecontracts because they were not dilutive.In connection with the issuance of the Series C Preferred Stock, we applied the two-class method for calculatingEPS. The two-class method is an earnings allocation method for computing EPS when a company’s capital structureincludes either two or more classes of common stock or common stock and participating securities. This methoddetermines EPS based on dividends declared on common stock and participating securities (i.e., distributedearnings), as well as participation rights of participating securities in any undistributed earnings. The Series CPreferred Stock was retired as part of the Recapitalization on January 14, 2011.We applied the two-class method due to the participation rights of the Series C Preferred Stock through January 14,2011. However, application of the two-class method had no effect on earnings per share for 2011 because werecognized a net loss attributable to AIG common shareholders from continuing operations, which is not applicable toparticipating stock for EPS, for 2011. Subsequent to January 14, 2011, we have not had any outstandingparticipating securities that would subject us to the two-class method.The following table presents the computation of basic and diluted EPS:Years Ended December 31,(dollars in millions, except per share data) 2012 2011 2010Numerator for EPS:Income from continuing operations $ 7,752 $ 19,540 $ 13,254Net income from continuing operations attributable to noncontrolling interests:Nonvoting, callable, junior and senior preferred interests 208634 1,818Other 5454 354Total net income from continuing operations attributable to noncontrollinginterests 262688 2,172Net income attributable to AIG from continuing operations 7,49018,852 11,082Income (loss) from discontinued operations $ (4,052) $ 1,790 $ (969)Net income from discontinued operations attributable to noncontrolling interests –20 55Net income (loss) attributable to AIG from discontinued operations, applicableto common stock for EPS (4,052)1,770 (1,024)Deemed dividends to AIG Series E and F Preferred Stock –(812) –Income (loss) allocated to the Series C Preferred Stock – continuing operations –– (8,828)Net income attributable to AIG common shareholders from continuingoperations, applicable to common stock for EPS $ 7,490 $ 18,040 $ 2,254Income (loss) allocated to the Series C Preferred Stock – discontinuedoperations –– 816Net income (loss) attributable to AIG common shareholders from discontinuedoperations, applicable to common stock for EPS $ (4,052) $ 1,770 $ (208)Denominator for EPS:Weighted average shares outstanding – basic 1,687,197,038 1,799,385,757 136,585,844Dilutive shares 29,60372,740 63,436Weighted average shares outstanding – diluted * 1,687,226,641 1,799,458,497 136,649,280EPS attributable to AIG common shareholders:Basic and diluted:Income from continuing operations $ 4.44 $ 10.03 $ 16.50Income (loss) from discontinued operations $ (2.40) $ 0.98 $ (1.52)* Dilutive shares are calculated using the treasury stock method and include dilutive shares from share-based employee compensationplans, and the warrants issued to the Department of the Treasury in 2009. The number of shares excluded from diluted shares outstandingwere 78 million, 76 million and 11 million for the years ended December 31, 2012, 2011 and 2010, respectively, because the effect wouldhave been anti-dilutive...................................................................................................................................................................................................................................312 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 / EXECUTIVE SUMMARY.........
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ITEM 7 / INVESTMENTS...............
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ITEM 7 / GLOSSARY..................
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ITEM 7 / GLOSSARY..................
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ITEM 7A / QUANTITATIVE AND QUALITAT
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ITEM 8 / INDEX TO FINANCIAL STATEME
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AMERICAN INTERNATIONAL GROUP, INC.C
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ITEM 8 / NOTE 1. BASIS OF PRESENTAT
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ITEM 8 / NOTE 3. SEGMENT INFORMATIO
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 4. DIVESTED BUSINESSE
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ITEM 8 / NOTE 5. BUSINESS COMBINATI
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ITEM 8 / NOTE 7. INVESTMENTS.......
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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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