AIG 2011 Annual Report Download - page 252

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ALICO Sale
On March 7, 2010, AIG and the ALICO SPV entered into a definitive agreement with MetLife for the sale of
ALICO by the ALICO SPV to MetLife, and the sale of Delaware American Life Insurance Company by AIG to
MetLife, for consideration then valued at approximately $15.5 billion, consisting of $6.8 billion in cash and the
remainder in equity securities of MetLife, subject to closing adjustments. The ALICO sale closed on November 1,
2010. AIG does not have any significant continuing involvement with or significant continuing cash flows from
ALICO. The fair value of the consideration at closing was approximately $16.2 billion. At December 31, 2010, a
total of $6.5 billion was included in common and preferred stock trading.
On the closing date, as consideration for the ALICO sale, the ALICO SPV received net cash consideration of
$7.2 billion (which included an upward price adjustment of approximately $400 million pursuant to the terms of
the ALICO stock purchase agreement), 78,239,712 shares of MetLife common stock, 6,857,000 shares of newly
issued MetLife participating preferred stock convertible into 68,570,000 shares of MetLife common stock upon the
approval of MetLife shareholders and 40,000,000 equity units of MetLife with an aggregate stated value of
$3.2 billion. AIG recorded a pre-tax gain of $4.1 billion on the transaction in 2010.
As part of the Recapitalization, AIG used approximately $6.1 billion of the cash proceeds from the ALICO sale
to pay down a portion of the liquidation preference of the SPV Preferred Interests.
AGF Sale
On August 10, 2010, AIG entered into a definitive agreement to sell an 80 percent economic interest
(84 percent voting interest) in American General Finance, Inc. (AGF) for $125 million. The AGF sale closed on
November 30, 2010. AIG’s voting ownership interest in AGF was reduced to approximately 16 percent, and AIG
does not otherwise have significant continuing involvement with or significant continuing cash flows from AGF.
AIG is carrying its retained investment in AGF of approximately $30 million as a cost method investment in
Other invested assets. As a result of this transaction, AIG recorded a pre-tax loss of $1.7 billion in 2010.
The components of the $1.7 billion charge consisted of the difference between (i) the sum of the fair value of
the agreed consideration and AIG’s retained 20 percent economic interest and (ii) the net book value of the
assets. Prior to the agreed sale, AGF’s business and underlying assets were subject to periodic impairment
assessments under a held-for-use model and did not meet the criteria for held-for-sale accounting. The large
majority of AGF’s assets were consumer finance and mortgage loans held for investment and thus were not
carried at fair value.
AIG Star and AIG Edison Sale
On September 30, 2010, AIG entered into a definitive agreement with Prudential Financial, Inc. for the sale of
its Japan-based insurance subsidiaries, AIG Star and AIG Edison, for total consideration of $4.8 billion, including
the assumption of certain outstanding debt totaling $0.6 billion owed by AIG Star and AIG Edison. The
transaction closed on February 1, 2011 and AIG recognized a pre-tax gain of $2.0 billion on the sale that is
reflected in Income (loss) from discontinued operations in the Consolidated Statement of Operations. In
connection with the sale, AIG recorded a goodwill impairment charge of $1.3 billion in the third quarter of 2010.
Nan Shan Sale
On January 12, 2011, AIG entered into an agreement to sell its 97.57 percent interest in Nan Shan to a Taiwan-
based consortium. The transaction was consummated on August 18, 2011 for net proceeds of $2.15 billion in cash.
AIG recorded a pre-tax loss of $976 million for the year ended December 31, 2011 largely offsetting Nan Shan
operating results for the period, which is reflected in Income (loss) from discontinued operations in the
238 AIG 2011 Form 10-K