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ITEM 1 / BUSINESS / OTHER OPERATIONS.....................................................................................................................................................................................Corporate & Other Operations consist primarily of interest expense, intercompany interest income that is eliminatedin consolidation, expenses of corporate staff not attributable to specific reportable segments, certain expenses relatedto internal controls and the financial and operating platforms, corporate initiatives, certain compensation planexpenses, corporate level net realized capital gains and losses, certain litigation-related charges and credits, theresults of AIG’s real estate investment operations and net gains and losses on sale of divested businesses andproperties that did not meet the criteria for discontinued operations accounting treatment.Divested Businesses We have divested a number of businesses since 2009 in connection with our strategies tofocus on core businesses, repay governmental support, and improve our financial flexibility and risk management.Divested businesses include the historical results of divested entities that did not meet the criteria for discontinuedoperations accounting treatment.Divested businesses include the historical results of AIA through October 29, 2010 and AIG’s remaining consumerfinance business, discussed below. In the third quarter of 2010, AIG completed an initial public offering of ordinaryshares of AIA. Upon completion of this initial public offering, AIG owned approximately 33 percent of the outstandingshares of AIA. Because of this ownership position in AIA, as well as AIG’s prior representation on the AIA board ofdirectors, AIA was not presented as a discontinued operation.Discontinued Operations consist of entities that were sold, or are being sold, that met specificaccounting criteria discussed in Note 4 to the Consolidated Financial Statements.On December 9, 2012, AIG entered into an agreement to sell 80.1 percent of ILFC for approximately $4.2 billion incash, with an option for the purchaser to buy an additional 9.9 percent stake. The sale is expected to beconsummated in 2013. The operating results for ILFC are reflected as a discontinued operation in all periodspresented and its assets and liabilities have been classified as held for sale at December 31, 2012.On August 18, 2011, AIG closed the sale of Nan Shan Life Insurance Company, Ltd. (Nan Shan). On February 1,2011, AIG closed the sale of AIG Star Life Insurance Co., Ltd. (AIG Star) and AIG Edison Life Insurance Company(AIG Edison). The operating results for Nan Shan, AIG Star and AIG Edison through the dates of their respectivesales are reflected as discontinued operations in all periods prior to 2012.In the fourth quarter of 2010, AIG closed the sales of ALICO and American General Finance, Inc. (AGF). Periodsprior to 2011 reflect ALICO and AGF as discontinued operations.Additionally, following the classification of AGF as a discontinued operation in the third quarter of 2010, AIG’sremaining consumer finance business, which is primarily conducted through the AIG Federal Savings Bank and theConsumer Finance Group in Poland, is now reported in AIG’s Other operations category as part of Corporate &Other.A REVIEW OF LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSE..............................................................................................................................................................................................The liability for unpaid claims and claims adjustment expenses represents the accumulation of estimates for unpaidreported claims and claims that have been incurred but not reported (IBNR) for our AIG Property Casualtysubsidiaries and Mortgage Guaranty. Unpaid claims and claims adjustment expenses are also referred to as unpaidloss and loss adjustment expenses, or just loss reserves.We recognized as assets the portion of this liability that will be recovered from reinsurers. Reserves are discountedfor future expected investment income, where permitted, in accordance with U.S. GAAP...................................................................................................................................................................................................................................20 AIG 2012 Form 10-K