AIG 2011 Annual Report Download - page 253

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Operations. The net proceeds from the transaction were used to pay down a portion of
the liquidation preference of the Department of the Treasury’s AIA SPV Preferred Interests.
See Note 16 herein for a discussion of guarantees and indemnifications associated with sales of businesses.
ALICO, Nan Shan, AIG Star and AIG Edison previously were components of the Foreign Life Insurance &
Retirement Services reportable segment and AGF previously was a component of the Financial Services reportable
segment. Results from discontinued operations for 2011, 2010 and 2009 include the results of Nan Shan, AIG Star
and AIG Edison through the date of disposition. Results from discontinued operations for 2010 and 2009 also
include the results of ALICO and AGF, which were sold during 2010. The results also include adjustments for
guarantees and indemnifications related to these sold businesses.
Certain other sales completed during 2011, 2010 and 2009 were not classified as discontinued operations
because AIG continued to generate significant direct revenue-producing or cost-generating cash flows from the
businesses or because associated assets, liabilities and results of operations were not material, individually or in
the aggregate, to AIG’s consolidated financial position or results of operations.
The following table summarizes income (loss) from discontinued operations:
Years Ended December 31,
(in millions) 2011 2010 2009
Revenues:
Premiums $ 5,012 $ 18,296 $ 18,325
Net investment income 1,632 6,924 7,851
Net realized capital gains (losses) 844 289 (920)
Other income 51,607 2,285
Total revenues 7,493 27,116 27,541
Benefits, claims and expenses*6,361 28,854 25,810
Interest expense allocation 275 89
Income (loss) from discontinued operations 1,130 (1,813) 1,642
Gain (loss) on sales 942 1,588 (2,758)
Income (loss) from discontinued operations, before tax expense (benefit) 2,072 (225) (1,116)
Income tax expense (benefit) 537 1,839 (1,621)
Income (loss) from discontinued operations, net of income tax $ 1,535 $ (2,064) $ 505
* In 2010, includes goodwill impairment charges of $3.3 billion related to the sale of ALICO and $1.3 billion related to the sale of AIG Star and
AIG Edison. See Note 2(j) – Goodwill herein for further discussion.
Interest Expense Allocation
Interest expense allocated to discontinued operations gives effect to the provisions of the Recapitalization
discussed in Note 1 for all periods presented. For this reason, an interest allocation to discontinued operations
related to a portion of the ALICO and all the AGF proceeds was required.
The interest expense allocated to discontinued operations was based on the anticipated net proceeds that would
be applied toward the repayment of the FRBNY Credit Facility from the sales of ALICO and AGF multiplied by
the daily interest rate on the FRBNY Credit Facility for each respective period. The periodic amortization of the
prepaid commitment fee allocated to discontinued operations was determined based on the ratio of funds
committed to repay the FRBNY Credit Facility to the total amount of credit available under the FRBNY Credit
Facility.
AIG 2011 Form 10-K 239