AIG 2005 Annual Report Download - page 146

Notes to Consolidated Financial Statements Continued
2. Segment Information
Continued
(e) A substantial portion of AIG’s operations is conducted in countries other than the United States and Canada. The following
table summarizes AIG’s operations by major geographic segment. Allocations have been made on the basis of the location of
operations and assets.
Geographic Segments
Other
(in millions) Domestic(a) Far East Foreign Consolidated
2005
Revenues(b) $ 59,858 $ 32,036 $17,011 $ 108,905
Real estate and other fixed assets, net of accumulated depreciation 3,840 2,669 937 7,446
Flight equipment primarily under operating leases, net of accumulated depreciation(c) 36,245 – – 36,245
2004
Revenues(b) $53,827 $27,761 $16,078 $ 97,666
Real estate and other fixed assets, net of accumulated depreciation 2,341 2,834 1,017 6,192
Flight equipment primarily under operating leases, net of accumulated depreciation(c) 32,130 – – 32,130
2003
Revenues(b) $43,221 $22,787 $13,413 $ 79,421
Real estate and other fixed assets, net of accumulated depreciation 2,539 2,518 909 5,966
Flight equipment primarily under operating leases, net of accumulated depreciation(c) 29,870 – – 29,870
(a) Including revenues from General Insurance operations in Canada of $638 million, $549 million, and $433 million in 2005, 2004, and 2003,
respectively.
(b) Represents the sum of General Insurance net premiums earned, Life Insurance & Retirement Services GAAP premiums, net investment income,
Financial Services interest, lease and finance charges, Asset Management advisory and management fees and net investment income with respect to
guaranteed investment contracts, and realized capital gains (losses).
(c) Approximately 90 percent of ILFC’s fleet is operated by foreign airlines.
any provision in the accompanying financial statements for
3. Federal Income Taxes
taxation of this amount as management has no intention of
(a) AIG and its eligible domestic subsidiaries file a consoli- making any taxable distributions from this surplus. During
dated U.S. Federal income tax return. The AGC group of life 2004, the American Jobs Creation Act amended federal
insurance companies also files a consolidated U.S. Federal income tax law to permit life insurance companies to distribute
income tax return and will not be included in AIG’s amounts from policyholders’ surplus accounts in 2005 and 2006
consolidated federal income tax return until 2007. Commenc- without incurring federal income tax on the distributions.
ing with taxable year 2004, the AIG SunAmerica group of life During 2005, AIG reduced its policyholders’ surplus accounts
insurance companies is included in AIG’s consolidated tax to $253 million and expects to eliminate its exposure to federal
return. Other U.S. entities included in the consolidated income taxation on the remaining balance in 2006.
financial statements also file separate U.S. Federal income tax Revenue Agent’s Reports proposing to assess additional
returns. Subsidiaries operating outside the U.S. are taxed, and taxes for the years 1991-1996 and 1997-1999 have been issued
income tax expense is recorded, based on applicable U.S. and to AIG. Apart from some relatively minor issues, years prior to
foreign statutes. 1991 are closed. Letters of Protest contesting the proposed
U.S. federal income taxes have not been provided on assessments for 1991-1996 and 1997-1999 have been filed with
$750 million of undistributed earnings of certain U.S. subsidiaries the Internal Revenue Service (IRS).
that are not included in the consolidated AIG U.S. Federal In addition, Revenue Agent’s Reports proposing to assess
income tax return because tax planning strategies are available, additional taxes for the years ended September 30, 1993-1994,
and would be utilized, to eliminate the tax liability related to 1995-1996, and September 30, 1997-December 31, 1998 have
these earnings. U.S. federal income taxes have not been provided been issued to AIG SunAmerica. Such proposed assessments
on the undistributed earnings of certain non-U.S. subsidiaries to relate to years prior to AIG’s acquisition of SunAmerica, Inc.
the extent that such earnings have been reinvested abroad for an Letters of Protest contesting the proposed assessments have
indefinite period of time. At December 31, 2005, the cumulative been filed with the IRS. SunAmerica Life Insurance Company
amount of undistributed earnings in these subsidiaries approxi- (SunAmerica Life) has also received a proposed assessment,
mated $13.8 billion. and has filed a protest, for the year ended December 31, 1999.
A component of life insurance surplus accumulated prior to It is management’s belief that there are substantial arguments
1984 is not taxable unless it exceeds certain statutory in support of the positions taken by AIG, SunAmerica and
limitations or is distributed to shareholders. This surplus, SunAmerica Life in their Letters of Protest. Although the final
accumulated in policyholder surplus accounts, totaled approxi- outcome of any issues raised in connection with these
mately $253 million at December 31, 2005. AIG has not made examinations is uncertain, AIG believes that any tax obliga-
94 AIG m Form 10-K