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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS.....................................................................................................................................................................................Assumptions..............................................................................................................................................................................................The following table summarizes the weighted average assumptions used to determine the benefitobligations:December 31, 2012Discount rateRate of compensation increasePensionPostretirementU.S. Plans Non-U.S. Plans (a) U.S. Plans Non-U.S. Plans (a)3.93% 2.62% 3.67% 3.45%4.00% 2.86% N/A 3.55%December 31, 2011Discount rate 4.62% 3.02% 4.51% 4.19%Rate of compensation increase 4.00% 2.94% N/A 3.61%(a) The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiariesproviding such benefits.The following table summarizes assumed health care cost trend rates for the U.S. plans:At December 31, 2012 2011Following year:Medical (before age 65) 7.39% 7.59%Medical (age 65 and older) 6.82% 6.88%Ultimate rate to which cost increase is assumed to decline 4.50% 4.50%Year in which the ultimate trend rate is reached:Medical (before age 65) 2027 2027Medical (age 65 and older) 2027 2027A one percent point change in the assumed healthcare cost trend rate would have the following effect on ourpostretirement benefit obligations:One Percent One PercentAt December 31,Increase Decrease(in millions) 2012 2011 2012 2011U.S. plans $ 5 $ 3 $ (4) $ (3)Non-U.S. plans $ 15 $ 11 $ (11) $ (8)Our postretirement plans provide benefits primarily in the form of defined employer contributions rather than definedemployer benefits. Changes in the assumed healthcare cost trend rate are subject to caps for U.S. plans. Ournon-U.S. postretirement plans are not subject to caps...................................................................................................................................................................................................................................AIG 2012 Form 10-K 323
ITEM 8 / NOTE 22. EMPLOYEE BENEFITS.....................................................................................................................................................................................The following table presents the weighted average assumptions used to determine the net periodic benefitcosts:PensionPostretirementAt December 31, U.S. Plans Non-U.S. Plans (a) U.S. Plans Non-U.S. Plans (a)2012Discount rateRate of compensation increaseExpected return on assets4.62% 3.02% 4.51% 4.19%4.00% 2.94% N/A 3.61%7.25% 2.91% N/A N/A2011Discount rate 5.50% 2.25% 5.25% 4.00%Rate of compensation increase 4.00% 3.00% N/A 3.00%Expected return on assets 7.50% 3.14% N/A N/A2010Discount rate 6.00% 2.75% 5.75% 3.75%Rate of compensation increase 4.00% 3.50% N/A 3.75%Expected return on assets 7.75% 3.75% N/A N/A(a) The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of the subsidiaries providingsuch benefits.Discount Rate Methodology..............................................................................................................................................................................................The projected benefit cash flows under the U.S. AIG Retirement plan were discounted using the spot rates derivedfrom the Mercer Pension Discount Yield Curve at December 31, 2012 and December 31, 2011, which resulted in asingle discount rate that would produce the same liability at the respective measurement dates. The discount rateswere 3.94 percent at December 31, 2012 and 4.62 percent at December 31, 2011. The methodology wasconsistently applied for the respective years in determining the discount rates for the other U.S. plans.In general, the discount rates for non-U.S. pension plans were developed based on the duration of liabilities on aplan by plan basis and were selected by reference to high quality corporate bonds in developed markets or localgovernment bonds where developed markets are not as robust or are nonexistent.The projected benefit obligation for Japan represents approximately 57 and 62 percent of the total projected benefitobligations for our non-U.S. pension plans at December 31, 2012 and 2011, respectively. The weighted averagediscount rate of 1.54 and 1.70 percent at December 31, 2012 and 2011 respectively for Japan was selected byreference to the AA rated corporate bonds reported by Rating and Investment Information, Inc. based on the durationof the plans’ liabilities.Plan Assets..............................................................................................................................................................................................The investment strategy with respect to assets relating to our U.S. and non-U.S. pension plans is designed toachieve investment returns that will (a) provide for the benefit obligations of the plans over the long term; (b) limit therisk of short-term funding shortfalls; and (c) maintain liquidity sufficient to address cash needs. Accordingly, the assetallocation strategy is designed to maximize the investment rate of return while managing various risk factors,including but not limited to, volatility relative to the benefit obligations, diversification and concentration, and the riskand rewards profile indigenous to each asset class. The assessment of the expected rate of return for all our plans islong-term and thus not expected to change annually; however, significant changes in investment strategy oreconomic conditions may warrant such a change.There were no shares of AIG Common Stock included in the U.S. and non-U.S. pension plans assets atDecember 31, 2012 or 2011...................................................................................................................................................................................................................................324 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 1A / RISK FACTORS.............
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ITEM 1B / UNRESOLVED STAFF COMMENTS
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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 / 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 / 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 2. SUMMARY OF SIGNIFI
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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 6. FAIR VALUE MEASURE
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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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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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