AIG 2015 Annual Report Download - page 74

ITEM 7 / RESULTS OF OPERATIONS
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Results of Operations
The following section provides a comparative discussion of our Results of Operations on a reported basis for the three-year
period ended December 31, 2015. Factors that relate primarily to a specific business segment are discussed in more detail
within that business segment discussion. For a discussion of the Critical Accounting Estimates that affect the Results of
Operations, see the Critical Accounting Estimates section of this MD&A.
The following table presents our consolidated results of operations:
Years Ended December 31, Percentage Change
(in millions) 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Revenues:
Premiums $36,655 $ 37,254 $ 37,499 (2)% (1)%
Policy fees 2,755 2,615 2,340 512
Net investment income 14,053 16,079 15,810 (13) 2
Net realized capital gains 776 739 1,939 5 (62)
Aircraft leasing revenue -1,602 4,420 NM (64)
Other income 4,088 6,117 6,866 (33) (11)
Total revenues 58,327 64,406 68,874 (9) (6)
Benefits, losses and expenses:
Policyholder benefits and losses incurred 31,345 28,281 29,503 11 (4)
Interest credited to policyholder account balances 3,731 3,768 3,892 (1) (3)
Amortization of deferred policy acquisition costs 5,236 5,330 5,157 (2) 3
General operating and other expenses 12,686 13,138 13,564 (3) (3)
Interest expense 1,281 1,718 2,142 (25) (20)
Loss on extinguishment of debt 756 2,282 651 (67) 251
Aircraft leasing expenses - 1,585 4,549 NM (65)
Net (gain) loss on sale of divested businesses 11 )2,197(48 NM NM
Total benefits, losses and expenses 55,046 53,905 59,506 2(9)
Income from continuing operations before
income tax expense 3,281 10,501 9,368 (69) 12
Income tax expense 1,059 2,927 360 (64) NM
Income from continuing operations 2,222 7,574 9,008 (71) (16)
Income (loss) from discontinued operations,
net of income tax expense -)50(84 NM NM
Net income 2,222 7,524 9,092 (70) (17)
Less: Net income (loss) attributable to noncontrolling
interests 26 )5( 7 NM NM
Net income attributable to AIG $2,196 $ 7,529 $ 9,085 (71)% (17)%
For the year ended December 31, 2015, the effective tax rate on income from continuing operations was 32.3 percent. The
effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily due to tax
benefits of $195 million associated with tax exempt interest income, $127 million related to reclassifications from accumulated
other comprehensive income to income from continuing operations related to the disposal of available for sale securities, $58
million associated with the effect of foreign operations, and $109 million related to the partial completion of the Internal
Revenue Service examination covering tax year 2006, partially offset by $324 million of tax charges and related interest
associated with increases in uncertain tax positions related to cross border financing transactions, and $110 million related to
increases in the deferred tax asset valuation allowances associated with certain foreign jurisdictions. See Note 22 to the
Consolidated Financial Statements for additional information.
For the year ended December 31, 2015, our repatriation assumptions related to certain European operations changed, and
related foreign earnings are now considered to be indefinitely reinvested. These earnings relate to ongoing operations and
have been reinvested in active non-U.S. business operations. Further, we do not intend to repatriate these earnings to fund
U.S. operations. As a result, U.S. deferred taxes have not been provided on $1.8 billion of accumulated earnings, including
accumulated other comprehensive income, of these non-U.S. affiliates. Potential U.S. income tax liabilities related to such
earnings would be offset, in whole or in part, by allowable foreign tax credits resulting from foreign taxes paid to foreign
jurisdictions in which such operations are located. As a result, we currently believe that any incremental U.S. income tax