AIG 2011 Annual Report Download - page 84

differed from the statutory rate primarily due to tax benefits of $1.3 billion associated with AIG’s investment in
subsidiaries and partnerships, principally the AIA SPV which is treated as a partnership for U.S. tax purposes, and
$587 million associated with tax exempt interest, partially offset by an increase in the valuation allowance
attributable to continuing operations of $1.5 billion.
2009 Effective Tax Rate
For the year ended December 31, 2009, the effective tax rate on the pre-tax loss from continuing operations was
10.4 percent. The effective tax rate on the pre-tax loss from continuing operations for the year ended
December 31, 2009, differed from the statutory rate primarily due to increases in the valuation allowance of
$3.1 billion and reserve for uncertain tax positions of $874 million, partially offset by tax exempt interest of
$677 million and the change in investment in subsidiaries and partnerships of $473 million which was principally
related to changes in the estimated U.S. tax liability with respect to sales of subsidiaries.
See Critical Accounting Estimates — Recoverability of Deferred Tax Asset herein and Note 22 to the
Consolidated Financial Statements for additional information.
Discontinued Operations
Income (loss) from Discontinued Operations is comprised of the following:
Years Ended December 31,
(in millions) 2011 2010 2009
Foreign life insurance businesses $ 1,133 $ (1,237) $ 2,581
AGF -(145) (904)
Net gain (loss) on sale 942 1,588 (2,758)
Consolidation adjustments (1) (356) 54
Interest allocation (2) (75) (89)
Income (loss) from discontinued operations 2,072 (225) (1,116)
Income tax expense (benefit) 537 1,839 (1,621)
Income (loss) from discontinued operations, net of tax $ 1,535 $ (2,064) $ 505
Significant items affecting the comparison of results from discontinued operations included the following:
• a pre-tax gain of $2.0 billion on the sale of AIG Star and AIG Edison in 2011;
• impairments of goodwill in 2010 of $4.6 billion related to ALICO, AIG Star and AIG Edison. See Note 2(j)
to the Consolidated Financial Statements for further discussion;
• a pre-tax gain of $4.1 billion on the sale of ALICO in 2010;
• a pre-tax loss of approximately $1.7 billion on the sale of AGF in 2010;
• a pre-tax loss of $2.8 billion recognized in 2009 related to the sale of Nan Shan, as well as an additional loss
on sale of $874 million recognized in 2010; and
• tax effects of the above transactions, notably the impact of non-deductible goodwill impairments and the
change in investment in subsidiaries, which was principally related to changes in the estimated U.S. tax
liability with respect to the planned sales.
See Notes 4 and 22 to the Consolidated Financial Statements for further discussion of discontinued operations.
70 AIG 2011 Form 10-K