AIG 2011 Annual Report Download - page 134

Corporate & Other
Corporate & Other reported pre-tax losses of $5.7 billion in 2011 compared to pre-tax gains of $9.6 billion in
2010 primarily due to gains on sales of divested businesses in 2010, primarily related to AIA, partially offset by:
• a decline in interest expense as a result of the repayment of the FRBNY Credit Facility;
• a reduction in other corporate expenses due to the securities litigation charges recorded in 2010; and
• a pre-tax gain on extinguishment of debt of approximately $484 million resulting from the exchange of
outstanding junior subordinated debentures for senior notes pursuant to an exchange offer.
These improvements were mostly offset by a loss on extinguishment of debt of $3.3 billion in connection with
the Recapitalization, primarily consisting of the accelerated amortization of the prepaid commitment fee asset
resulting from the termination of the FRBNY Credit Facility and net realized capital losses recorded in 2011
compared to net realized capital gains in 2010.
Corporate & Other reported pre-tax income in 2010 compared to a pre-tax loss in 2009 primarily due to the
following:
• a decline in interest expense on the FRBNY Credit Facility; and
• gains on sales of divested businesses in 2010, primarily related to AIA, compared to losses in 2009.
Divested Businesses
Divested businesses include the operating results of divested businesses that did not qualify for discontinued
operations accounting through the date of their sale. The Divested businesses results for 2010 primarily represent
the historical results of AIA, which was deconsolidated in November 2010 in conjunction with its initial public
offering.
The following table presents AIG’s consolidated other comprehensive income (loss):
Increase (Decrease)
Years Ended December 31,
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Change in unrealized appreciation of investments $ 5,518 $ 9,910 $ 33,221 $ (4,392) $ (23,311)
Change in deferred acquisition costs adjustment and
other (819) (946) (3,890) 127 2,944
Change in future policy benefits (2,302) - - (2,302) -
Change in foreign currency translation adjustments 8703 2,933 (695) (2,230)
Change in net derivative gains (losses) arising from cash
flow hedging activities 51 105 95 (54) 10
Change in retirement plan liabilities adjustment (365) 9 168 (374) (159)
Change attributable to divestitures and deconsolidations (5,098) (5,082) 809 (16) (5,891)
Deferred tax asset (liability) 177 (2,242) (11,579) 2,419 9,337
Total other comprehensive income (loss) $ (2,830) $ 2,457 $ 21,757 $ (5,287) $ (19,300)
Change in Unrealized Appreciation of Investments
The $5.5 billion increase in 2011 was primarily attributable to continued appreciation in bonds available for sale
of $0.7 billion and $4.6 billion recognized by Chartis and SunAmerica, respectively, due to continued
improvements in financial market conditions and declines in U.S. Treasury rates, which were partially offset by
widening spreads.
The $9.9 billion increase in 2010 primarily reflects the $0.6 billion and $7.0 billion appreciation in bonds
available for sale held by Chartis and SunAmerica operations, respectively, due to lower U.S. Treasury rates and
120 AIG 2011 Form 10-K
CONSOLIDATED OTHER COMPREHENSIVE INCOME