AIG 2011 Annual Report Download - page 64

• judgments concerning the recoverability of aircraft values in ILFC’s fleet; and
• such other factors as are discussed throughout this Management’s Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) and in Item 1A. Risk Factors of this Annual Report on
Form 10-K.
AIG is not under any obligation (and expressly disclaims any obligation) to update or alter any projections,
goals, assumptions or other statements, whether written or oral, that may be made from time to time, whether as
a result of new information, future events or otherwise. Unless the context otherwise requires, the terms AIG, the
Company, we, us, and our mean AIG and its consolidated subsidiaries.
Throughout this MD&A, AIG presents its operations in the way it believes will be most meaningful and
representative of ongoing operations as well as most transparent. Certain of the measurements used by AIG
management are ‘‘non-GAAP financial measures’’ under Securities and Exchange Commission (SEC) rules and
regulations.
AIG analyzes the operating performance of Chartis using underwriting profit (loss). Operating income (loss),
which is income (loss) before net realized capital gains (losses) and related deferred policy acquisition costs
(DAC) and sales inducement asset (SIA) amortization, is utilized to report results for SunAmerica Financial
Group (SunAmerica) operations. Management believes that these measures enhance the understanding of the
underlying profitability of the ongoing operations of these businesses and allow for more meaningful comparisons
with AIG’s insurance competitors. Reconciliations of these measures to the most directly comparable
measurement derived from accounting principles generally accepted in the United States (GAAP), pre-tax income,
are included in Results of Operations.
This executive overview of management’s discussion and analysis highlights selected information and may not contain
all of the information that is important to current or potential investors in AIG’s securities. This Annual Report on
Form 10-K should be read in its entirety for a complete description of events, trends and uncertainties as well as the
capital, liquidity, credit, operational and market risks and the critical accounting estimates affecting AIG and its
subsidiaries.
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.
AIG’s loss from continuing operations before income taxes represented a $19.0 billion decrease compared to its
2010 income and reflected the following:
• a $3.3 billion net loss on extinguishment of debt recorded in the first quarter of 2011, primarily consisting of
the accelerated amortization of the prepaid commitment fee asset resulting from the termination of the
Credit Agreement, dated as of September 22, 2008 (as amended, the Federal Reserve Bank of New York
(FRBNY) Credit Facility) on January 14, 2011, partially offset by a $484 million gain on extinguishment of
debt in the fourth quarter of 2011 related to the exchange of junior subordinated debt;
• significant catastrophe losses for Chartis totaling $3.3 billion, including losses from Thailand floods in the
fourth quarter of 2011, Hurricane Irene in the third quarter of 2011, the U.S. tornadoes in the second
quarter of 2011 and the Great Tohoku Earthquake & Tsunami (the Tohoku catastrophe) in the first quarter
of 2011, compared to catastrophe losses of $1.1 billion in 2010;
• losses for Aircraft Leasing of $1.7 billion due to impairment charges, fair value adjustments and lease-related
charges on aircraft in both 2011 and 2010;
50 AIG 2011 Form 10-K
USE OF NON-GAAP MEASURES
EXECUTIVE OVERVIEW
FINANCIAL OVERVIEW