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ITEM 7 / EXECUTIVE SUMMARY.....................................................................................................................................................................................The following table presents a reconciliation of pre-tax income (loss) to operating income (loss) by operatingsegment and after-tax operating income (loss), which are non-GAAP measures. See Use of Non-GAAPMeasures for additional information.Years Ended December 31,(in millions) 2012 2011 2010AIG Property CasualtyPre-tax income (loss) $ 1,837 $ 1,820 $ (93)Net realized capital (gains) losses 2 (607) 38Legal settlements * (17) – –Bargain purchase gain – – (332)Other (income) expense – net (2) 5 (669)Operating income (loss) $ 1,820 $ 1,218 $ (1,056)AIG Life and RetirementPre-tax income $ 3,780 $ 2,956 $ 2,701Legal settlements * (154) – –Changes in fair value of fixed maturity securities designated to hedgeliving benefit liabilities (37) – –Net realized capital (gains) losses (630) (6) 1,251Change in benefit reserves and DAC, VOBA and SIA related to netrealized capital (gains) losses 1,201 327 104Operating income $ 4,160 $ 3,277 $ 4,056Other OperationsPre-tax income (loss) $ 3,899 $ (4,703) $ 17,611Net realized capital gains (501) (12) (908)Net (gains) losses on sale of divested businesses 2 74 (18,897)Amortization of prepaid commitment fee asset – – 3,471Legal reserves 754 20 3Legal settlements * (39) – –Deferred gain on FRBNY credit facility – (296) –Loss on extinguishment of debt 9 3,143 104Divested businesses – – (1,875)Operating income (loss) $ 4,124 $ (1,774) $ (491)TotalOperating income of reportable segments and other operations $ 10,104 $ 2,721 $ 2,509Consolidations, eliminations and other adjustments (20) (190) (301)Income tax benefits (expenses) (3,187) 243 (1,585)Non-controlling interest (262) (688) (2,172)After-tax operating income (loss) $ 6,635 $ 2,086 $ (1,549)* Reflects litigation settlement income recorded in 2012 from settlements with three financial institutions that participated in the creation, offeringand sale of RMBS as to which AIG and its subsidiaries suffered losses either for their own accounts or in connection with their participation in AIG’ssecurities lending program...................................................................................................................................................................................................................................AIG 2012 Form 10-K 59