AIG 2011 Annual Report Download - page 83

Net Loss on Extinguishment of Debt
The loss on extinguishment of debt for 2011 includes:
• a $3.3 billion charge primarily consisting of the accelerated amortization of the remaining prepaid
commitment fee asset resulting from the termination of the FRBNY Credit Facility, which is further
discussed in Note 1 to the Consolidated Financial Statements; and
• a $484 million gain on extinguishment related to the junior subordinated debt exchange in the fourth quarter
of 2011.
Net (Gain) Loss on Sale of Divested Businesses and Properties
Net (gain) loss on sale of divested businesses and properties includes the net (gain) loss on the sale of divested
businesses that did not qualify as discontinued operations as well as gains and losses from property disposals in
connection with AIG’s restructuring program.
The gain in 2010 primarily represents a gain of $16.3 billion on the sale of 67 percent of AIA, a gain of
$228 million associated with the termination fee paid by Prudential plc to AIG related to the termination of the
agreement to purchase AIA and a $1.3 billion gain on the sale of the Otemachi building in Japan. See Segment
Results — Chartis Operations — Chartis Results — Chartis Other — Chartis Other Results herein for further
information.
Other Expenses
2011 and 2010 Comparison
Other expenses decreased in 2011 compared to 2010 due to;
• lower securities-related litigation charges; and
• lower restructuring charges.
2010 and 2009 Comparison
Other expenses decreased in 2010 compared to 2009 due to:
• goodwill impairment charges of $612 million recorded in 2009 related to the Institutional Asset Management
business;
• lower compensation-related costs for the Institutional Asset Management business, including the effect of
deconsolidation of certain portfolio investments and the sale of the Swiss bank; and
• lower provisions for credit losses for consumer finance businesses not presented as discontinued operations.
Income Taxes
2011 Effective Tax Rate
For the year ended December 31, 2011, the effective tax rate on pretax loss from continuing operations was not
meaningful, due to the significant effect of releasing approximately $16.6 billion of the deferred tax asset valuation
allowance. Other less significant factors that contributed to the difference from the statutory rate included tax
benefits of $454 million associated with tax exempt interest income, $346 million associated with the effect of
foreign operations, and $224 million associated with AIG’s investment in subsidiaries and partnerships
2010 Effective Tax Rate
For the year ended December 31, 2010, the effective tax rate on pre-tax income from continuing operations was
32.7 percent. The effective tax rate for the year ended December 31, 2010, attributable to continuing operations
AIG 2011 Form 10-K 69