AIG 2015 Annual Report Download - page 234

ITEM 8 / NOTE 1. BASIS OF PRESENTATION
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1. BASIS OF PRESENTATION
American International Group, Inc. (AIG) is a leading global insurance organization serving customers in more than 100
countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most
extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life
insurance and retirement services in the United States. AIG Common Stock, par value $2.50 per share (AIG Common Stock),
is listed on the New York Stock Exchange (NYSE: AIG) and the Tokyo Stock Exchange. Unless the context indicates
otherwise, the terms “AIG,” “we,” “us” or “our” mean American International Group, Inc. and its consolidated subsidiaries and
the term “AIG Parent” means American International Group, Inc. and not any of its consolidated subsidiaries.
The consolidated financial statements include the accounts of AIG Parent, our controlled subsidiaries (generally through a
greater than 50 percent ownership of voting rights and voting interests), and variable interest entities (VIEs) of which we are
the primary beneficiary. Equity investments in entities that we do not consolidate, including corporate entities in which we have
significant influence and partnership and partnership-like entities in which we have more than minor influence over the
operating and financial policies, are accounted for under the equity method unless we have elected the fair value option.
Certain of our foreign subsidiaries included in the Consolidated Financial Statements report on different fiscal-period bases.
The effect on our consolidated financial condition and results of operations of all material events occurring at these
subsidiaries through the date of each of the periods presented in these Consolidated Financial Statements has been recorded.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (GAAP). All material intercompany accounts and transactions have been eliminated.
Sale of ILFC
On May 14, 2014, we completed the sale of 100 percent of the common stock of International Lease Finance Corporation
(ILFC) to AerCap Ireland Limited, a wholly owned subsidiary of AerCap Holdings N.V. (AerCap), in exchange for total
consideration of approximately $7.6 billion, including cash and 97.6 million newly issued AerCap common shares (the AerCap
Transaction). The total value of the consideration was based in part on AerCap’s closing price per share of $47.01 on May 13,
2014. ILFC’s results of operations are reflected in Aircraft leasing revenue and Aircraft leasing expenses in the Consolidated
Statements of Income (Loss) through the date of the completion of the sale.
In June 2015, we sold 86.9 million ordinary shares of AerCap by means of an underwritten public offering of 71.2 million
ordinary shares and a private sale of 15.7 million ordinary shares to AerCap. We received cash proceeds of approximately
$3.7 billion, reflecting proceeds of approximately $3.4 billion from the underwritten offering and cash proceeds of $250 million
from the private sale of shares to AerCap. In connection with the closing of the private sale of shares to AerCap, we also
received $500 million of 6.50% fixed-to-floating rate junior subordinated notes issued by AerCap Global Aviation Trust and
guaranteed by AerCap and certain of its subsidiaries. These notes, included in Bonds available for sale, mature in 2045 and
are callable beginning in 2025. We accounted for our interest in AerCap using the equity method of accounting through the
date of the June 2015 sale, and as available for sale thereafter. In August 2015, we sold our remaining 10.7 million ordinary
shares of AerCap by means of an underwritten public offering and received proceeds of approximately $500 million.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often
involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of
estimates and assumptions are considered our critical accounting estimates and are related to the determination of:
• income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax
operating profitability of the character necessary to realize the net deferred tax asset;