AIG 2011 Annual Report Download - page 62

Items affecting comparability between periods include:
• AIG was significantly and adversely affected by the market turmoil in late 2008 and early 2009 and
recognized other-than-temporary impairment charges in 2008 primarily related to collateralized mortgage-
backed securities, other structured securities and securities of financial institutions; losses related to the
change in AIG’s intent and ability to hold to recovery certain securities; and losses related to AIG’s
securities lending program.
• In 2008, AIG also recognized unrealized market valuation losses representing the change in fair value of its
super senior credit default swap portfolio, established a deferred tax valuation allowance and experienced an
unprecedented strain on liquidity. This strain led to several transactions and relationships with the Federal
Reserve Bank of New York (FRBNY) and the Department of the Treasury. See Note 1 to the Consolidated
Financial Statements for further discussion of these transactions and relationships.
• The decline in interest expense in 2010 was primarily due to a reduced weighted average interest rate on
borrowings, a lower average outstanding balance and a decline in amortization of the prepaid commitment
fee asset related to the partial repayment of the credit facility provided by the FRBNY. On January 14,
2011, AIG repaid the remaining $20.7 billion and terminated this facility, resulting in a net $3.3 billion
pre-tax charge in the first quarter of 2011, primarily representing the accelerated amortization of the
remaining prepaid commitment fee asset included in Net loss on extinguishment of debt. See Note 1 to the
Consolidated Financial Statements for further discussion of the Recapitalization.
• AIG executed multiple asset dispositions in 2011 and 2010, as further discussed in Note 4 to the
Consolidated Financial Statements, which included the completion of an initial public offering of AIA in
2010 for which AIG recognized a $16.3 billion gain.
• As further discussed in Note 22 to the Consolidated Financial Statements, AIG concluded that $16.6 billion
of the deferred tax asset valuation allowance for the U.S. consolidated income tax group should be released
through the Consolidated Statement of Operations in 2011.
• As a result of the closing of the Recapitalization on January 14, 2011, the SPV Preferred Interests held by
the Department of the Treasury are not considered permanent equity on AIG’s Consolidated Balance Sheet,
and were classified as redeemable non-controlling interests.
48 AIG 2011 Form 10-K