AIG 2013 Annual Report Download - page 197

common shares. The consideration has a value of approximately $5.4 billion based on AerCap’s pre-announcement
closing price per share of $24.93 on December 13, 2013. Upon closing of the transaction, AIG will record the
97.6 million AerCap shares received at their then fair value and adjust the final gain (loss) on sale. The transaction is
subject to required regulatory approvals, including all applicable U.S. and foreign regulatory reviews and approvals,
as well as other customary closing conditions. The AerCap Transaction was approved by AerCap shareholders on
February 13, 2014. We determined ILFC met the criteria for held-for-sale accounting at December 31, 2013. Because
we expect to hold approximately 46 percent of the common stock of AerCap upon closing of the transaction,
however, ILFC does not qualify for discontinued operations presentation in the Consolidated Statements of Income.
Consequently, ILFC’s operating results are presented in continuing operations for all periods presented.
The evaluation of the recoverability of our net deferred tax asset and the need for a valuation allowance requires us
to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some
portion of the net deferred tax asset will not be realized. The weight given to the evidence is commensurate with the
extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is
necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.
We consider a number of factors to reliably estimate future taxable income, so we can determine the extent of our
ability to realize net operating losses (NOLs), foreign tax credits (FTCs), capital loss and other carryforwards. These
factors include forecasts of future income for each of our businesses and actual and planned business and
operational changes, both of which include assumptions about future macroeconomic and AIG-specific conditions and
events. We subject the forecasts to stresses of key assumptions and evaluate the effect on tax attribute utilization.
We also apply stresses to our assumptions about the effectiveness of relevant prudent and feasible tax planning
strategies. Our income forecasts, coupled with our tax planning strategies and stress scenarios, all resulted in
sufficient taxable income to achieve realization of the tax attributes (other than capital loss carryforwards) prior to
their expiration.
See Note 23 to the Consolidated Financial Statements for a discussion of our framework for assessing the
recoverability of our deferred tax asset.
The U.S. federal income tax laws applicable to determining the amount of income taxes related to differences
between the book carrying values and tax bases of subsidiaries are complex. Determining the amount also requires
significant judgment and reliance on reasonable assumptions and estimates.
The estimate of the Liability for unpaid claims and claims adjustment expense consists of several key judgments:
• the determination of the actuarial models used as the basis for these estimates;
• the relative weights given to these models by class;
• the underlying assumptions used in these models; and
• the determination of the appropriate groupings of similar classes and, in some cases, the segmentation of
dissimilar claims within a class.
We use numerous assumptions in determining the best estimate of reserves for each class of business. The
importance of any specific assumption can vary by both class of business and accident year. Because actual
experience can differ from key assumptions used in establishing reserves, there is potential for significant variation in
Income Taxes
Recoverability of Net Deferred Tax Asset
U.S. Income Taxes on Earnings of Certain Foreign Subsidiaries
Insurance Liabilities
Liability for Unpaid Claims and Claims Adjustment Expense (AIG Property Casualty and Mortgage
Guaranty)
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AIG 2013 Form 10-K 179
ITEM 7 / CRITICAL ACCOUNTING ESTIMATES
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