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ITEM 7 / USE OF NON-GAAP MEASURES.....................................................................................................................................................................................Catastrophe losses are generally weather or seismic events having a net impact on AIG Property Casualty in excessof $10 million each.• Accident year combined ratio, as adjusted: the combined ratio excluding catastrophe losses and relatedreinstatement premiums, prior year development, net of premium adjustments, and the impact of reservediscounting.• AIG Life and Retirement• Operating income (loss): In 2012, we revised our definition of operating income (loss). Operating income(loss) is derived by excluding the following items from net income (loss): legal settlements related to legacycrisis matters described above, changes in fair values of fixed maturity securities designated to hedge livingbenefit liabilities, net realized capital (gains) losses, and changes in benefit reserves and DAC, VOBA, andSIA related to net realized capital (gains) losses. We believe that Operating income (loss) is useful becauseexcluding these volatile items permits investors to better assess the operating performance of the underlyingbusiness by highlighting the results from ongoing operations.• Premiums, deposits and other considerations: includes life insurance premiums and deposits on annuitycontracts and mutual funds.• Other Operations – Operating income (loss): income (loss) excluding certain legal reserves (settlements) relatedto legacy crisis matters described above, loss on extinguishment of debt, amortization of prepaid commitment feeasset, Net realized capital (gains) losses, net (gains) losses on sale of divested businesses and properties, andincome from divested businesses.Results from discontinued operations are excluded from all of these measures...................................................................................................................................................................................................................................AIG 2012 Form 10-K 55
ITEM 7 / EXECUTIVE SUMMARY.....................................................................................................................................................................................Executive OverviewThis overview of management’s discussion and analysis highlights selected information and may not contain all ofthe information that is important to current or potential investors in AIG’s securities. You should read this AnnualReport on Form 10-K in its entirety for a complete description of events, trends and uncertainties as well as thecapital, liquidity, credit, operational and market risks and the critical accounting estimates affecting AIG and itssubsidiaries.Executive SummaryAIG made solid progress toward many of its strategic objectives in 2012.We fully repaid governmental support as a result of the Department of the Treasury’s sale of its remaining sharesof AIG common stock, par value $2.50 per share (AIG Common Stock).*..............................................................................................................................................................................................We improved our financial and operational performance, leading to a third consecutive year of profitability:• AIG Property Casualty reported improved operating income and the business also has continued to experiencepositive pricing trends.• AIG Life and Retirement assets under management grew significantly in 2012 from deposits and net flows fromindividual variable annuities and retail mutual funds and appreciation due to higher equity markets. We enhancedspread income and actively managed through the low interest rate environment.• Mortgage Guaranty reported new insurance written of $37.5 billion for 2012 compared to $18.8 billion in 2011 andhas experienced improving credit trends.• Our investment portfolio performance improved through the use of yield enhancements, including the reductionof our concentration in lower-yielding tax-exempt municipal securities and the purchase of other higher-yieldingsecurities. These purchases include securities acquired through the Federal Reserve Bank of New York’s (FRBNY)auction of Maiden Lane III LLC (ML III) assets. Realized capital gains increased because certain assets inunrealized gain positions were sold as part of a program to utilize capital loss tax carryforwards.• Our balance sheet is stronger as a result of the issuance of unsecured notes and the monetization of non-coreassets...............................................................................................................................................................................................Our financial flexibility was enhanced by $5.2 billion in cash distributions from subsidiaries...............................................................................................................................................................................................We announced an agreement to sell ILFC, received final distributions on our interests in Maiden Lane II LLC(ML II) and ML III, and sold our remaining interest in AIA Group Limited (AIA), which will support our capitalmanagement initiatives, sharpen our business focus, and enable us to redeploy assets in a more productive manner...............................................................................................................................................................................................We completed $13.0 billion in share purchases using a portion of the proceeds of our asset sales...............................................................................................................................................................................................* The Department of the Treasury continues to hold warrants to purchase approximately 2.7 million shares of AIG Common Stock...................................................................................................................................................................................................................................56 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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Page 49 and 50: ITEM 1A / RISK FACTORS.............
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Page 65 and 66: ITEM 6 / SELECTED FINANCIAL DATA...
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Page 69 and 70: ITEM 7 / MANAGEMENT’S DISCUSSION
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ITEM 7 / RESULTS OF OPERATIONS.....
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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 / CRITICAL ACCOUNTING ESTIMA
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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 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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ITEM 8 / NOTE 10. DEFERRED POLICY A
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 11. VARIABLE INTEREST
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ITEM 8 / NOTE 12. DERIVATIVES AND H
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ITEM 8 / NOTE 13. LIABILITY FOR UNP
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ITEM 8 / NOTE 14. VARIABLE LIFE AND
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 15. DEBT OUTSTANDING.
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ITEM 8 / NOTE 16. CONTINGENCIES, CO
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ITEM 8 / NOTE 17. TOTAL EQUITY.....
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ITEM 8 / NOTE 18. NONCONTROLLING IN
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ITEM 8 / NOTE 19. EARNINGS (LOSS) P
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ITEM 8 / NOTE 20. STATUTORY FINANCI
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 21. SHARE-BASED COMPE
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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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ITEM 8 / NOTE 24. INCOME TAXES.....
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ITEM 8 / NOTE 26. QUARTERLY FINANCI
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ITEM 8 / NOTE 27. INFORMATION PROVI
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PART II............................
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PART IV............................
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SignatureTitle/s/ ARTHUR C. MARTINE
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ExhibitNumber Description Location(
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Condensed Financial Information of
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Condensed Financial Information of
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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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