AIG 2011 Annual Report Download - page 352

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIG Common Stock issued for the Series C Preferred Stock over the carrying value of the Series C Preferred
Stock is not a deemed dividend because the Series C Preferred Stock was contingently convertible into the
562,868,096 shares of AIG Common Stock for which it was exchanged. See Note 1 herein for further discussion of
shares exchanged in connection with the Recapitalization.
The following table presents statutory surplus and net income (loss) for AIG’s general insurance and life
insurance and retirement services operations in accordance with statutory accounting practices:
(in millions) 2011(d) 2010 2009
At December 31,
Statutory surplus(a):
General insurance(b) $ 39,298 $ 40,300
Life insurance and retirement services 14,451 14,038
Years Ended December 31,
Statutory net income (loss)(a)(c):
General insurance $ 2,194 $ 633 $ 2,937
Life insurance and retirement services 810 794 536
(a) Excludes discontinued operations and other divested businesses. Statutory surplus and net income (loss) with respect to foreign operations are
estimated at November 30.
(b) The 2010 amount was increased by $310 million from that previously reported as a result of the finalization of statutory filings.
(c) Includes catastrophe losses (General Insurance) and Net realized capital gains and losses.
(d) Amount subject to change based on final statutory filings.
AIG’s insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices
prescribed or permitted by domestic and foreign insurance regulatory authorities. The principal differences
between statutory financial statements and financial statements prepared in accordance with U.S. GAAP for
domestic companies are that statutory financial statements do not reflect DAC, some bond portfolios may be
carried at amortized cost, investment impairments are determined in accordance with statutory accounting
practices, assets and liabilities are presented net of reinsurance, policyholder liabilities are generally valued using
more conservative assumptions and certain assets are non-admitted.
At December 31, 2011, 2010 and 2009, statutory capital of AIG’s insurance subsidiaries exceeded minimum
company action level requirements.
Effective January 1, 2009, these domestic life insurance and domestic retirement services insurance entities, as
well as certain other AIG insurance entities were initially required to prospectively adopt Statements of Statutory
Accounting Principles (SSAP) No. 98, ‘‘Treatment of Cash Flows When Quantifying Changes in Valuation and
Impairments, an Amendment of SSAP No. 43 — Loan-backed and Structured Securities’’ (SSAP 98). However, in
the first quarter of 2009, the NAIC subsequently delayed the effective date of SSAP No. 98 until September 30,
2009, in consideration of the FASB’s issuance of a new other-than-temporary accounting standard. The NAIC
subsequently promulgated SSAP 43R (Revised) — Loan-backed and Structured Securities, which was effective for
the third quarter of 2009 and superseded SSAP No. 43 and also SSAP No. 98, prior to its delayed effective date.
Similar to the new other-than-temporary accounting standard, SSAP No. 43R requires that credit-related
other-than-temporary impairments of structured securities be measured based upon projected discounted cash
flows. SunAmerica insurance entities recognized a cumulative effect adjustment upon the adoption of SSAP
No. 43R that on a pre-tax basis increased regulatory capital by approximately $0.9 billion.
338 AIG 2011 Form 10-K
18. STATUTORY FINANCIAL DATA AND RESTRICTIONS
EFFECT OF NEW STANDARDS