AIG 2011 Annual Report Download - page 402

American International Group, Inc.
Computation of Ratios of Earnings to Fixed Charges
Exhibit 12
Years Ended December 31,
(in millions, except ratios) 2011 2010 2009 2008 2007
Earnings:
Pre-tax income (loss)(a):$ (3,000) $ 17,936 $ (13,990) $ (103,056) $ 4,697
Add – Fixed charges 4,644 8,811 16,592 20,456 11,470
Adjusted Pre-tax income (loss) 1,644 26,747 2,602 (82,600) 16,167
Fixed charges:
Interest expense $ 3,576 $ 7,613 $ 15,136 $ 17,665 $ 4,553
Portion of rent expense representing interest 161 196 244 299 257
Interest credited to policy and contract holders 907 1,002 1,212 2,492 6,660
Total fixed charges $ 4,644 $ 8,811 $ 16,592 $ 20,456 $ 11,470
Preferred stock dividend requirements $-$ - $ 1,204 $ 400 $ -
Total fixed charges and preferred stock dividend requirements $ 4,644 $ 8,811 $ 17,796 $ 20,856 $ 11,470
Total fixed charges, excluding interest credited to policy and
contract holders $ 3,737 $ 7,809 $ 15,380 $ 17,964 $ 4,810
Ratio of earnings to fixed charges:
Ratio n/a 3.04 n/a n/a 1.41
Coverage deficiency $ (3,000) n/a $ (13,990) $ (103,056) n/a
Ratio of earnings to fixed charges and preferred stock dividends:
Ratio n/a 3.04 n/a n/a 1.41
Coverage deficiency $ (3,000) n/a $ (15,194) $ (103,456) n/a
Ratio of earnings to fixed charges, excluding interest credited to
policy and contract holders(b):
Ratio n/a 3.43 n/a n/a 3.36
Coverage deficiency $ (2,093) n/a $ (12,778) $ (100,564) n/a
(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest.
(b) The Ratio of earnings to fixed charges excluding interest credited to policy and contract holders removes interest credited to guaranteed
investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed
from earnings used in this calculation. GICs and GIAs are entered into by AIG’s subsidiaries. The proceeds from GICs and GIAs are invested
in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related
policyholders obligation or contract, with the intent of earning a profit from the spread.
388 AIG 2011 Form 10-K