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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