AIG 2011 Annual Report Download - page 129

charges aggregating $597 million on aircraft sold. ILFC also incurred increased interest expense driven by higher
composite borrowing rates, and an increase in the provision for overhauls to reflect an increase in future
reimbursements.
Other Operations
The components of AIG’s Other operations were revised in the third quarter of 2011, primarily as a result of
the reclassification of non-aircraft leasing operations from the Financial Services reportable segment as discussed
in Note 3 to the Consolidated Financial Statements, as follows:
• AIGFP’s derivatives portfolio, previously reported as a component of the Financial Services reportable
segment is now reported with AIG Markets, Inc. (AIG Markets) as Global Capital Markets in Other
Operations.
• AIG Global Real Estate Investment Corp. operations and Institutional Asset Management, previously
reported as components of Direct Investment book and Asset Management operations within Other
operations, respectively, are now reported in Corporate & Other.
AIG’s Other operations include the following:
•Mortgage Guaranty — UGC subsidiaries issue residential mortgage guaranty insurance, both domestically and
to a lesser extent internationally, that covers mortgage lenders from the first loss for credit defaults on high
loan-to-value conventional first-lien mortgages for the purchase or refinance of one-to four-family residences.
•Global Capital Markets — consist of the operations of AIG Markets and the remaining AIGFP derivatives
portfolio. AIG Markets acts as the derivatives intermediary between AIG companies and third parties. The
active wind-down of the AIGFP derivatives portfolio was completed by the end of the second quarter
of 2011. Although the remaining AIGFP derivatives portfolio may experience periodic fair value volatility,
the portfolio consists predominantly of transactions AIG believes are of low complexity, low risk, supportive
of AIG’s risk management objectives or not economically appropriate to unwind based on a cost versus
benefit analysis. AIGFP is entering into new derivative transactions only to hedge its current portfolio.
•Direct Investment book — includes results for the MIP and the results of certain non-derivative assets and
liabilities of AIGFP.
•Retained Interests — Fair value gains or losses on AIG’s remaining interest in AIA ordinary shares retained
following the AIA initial public offering, the retained interest in ML III, and, prior to their sale on March 8,
2011, the MetLife securities that were received as consideration from the sale of ALICO.
•Corporate & Other — consists primarily of interest expense, intercompany interest income that is eliminated
in consolidation, expenses of corporate staff not attributable to specific business segments (including
restructuring costs), expenses related to internal controls, corporate initiatives, certain compensation plan
expenses, corporate-level net realized capital gains and losses, certain litigation-related charges and credits,
and net gains and losses on sales of divested businesses that did not qualify for discontinued operations
accounting treatment.
•Divested Businesses — include operating results of certain businesses that have been divested that did not
meet the criteria for discontinued operations classification, primarily consisting of AIA in 2010.
AIG 2011 Form 10-K 115