AIG 2015 Annual Report Download - page 75

ITEM 7 / RESULTS OF OPERATIONS
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liabilities relating to indefinitely reinvested foreign earnings would not be significant. Deferred taxes have been provided on
earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested.
For the year ended December 31, 2014, the effective tax rate on income from continuing operations was 27.9 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 $236 million associated with tax exempt interest income, $209 million related to a decrease in the U.S. Life
Insurance Companies’ capital loss carryforward valuation allowance, $182 million of income excludible from gross income
related to the global resolution of certain residential mortgage-related disputes and $68 million associated with the effect of
foreign operations. See Note 22 to the Consolidated Financial Statements for additional information.
For the year ended December 31, 2013, the effective tax rate on income from continuing operations was 3.8 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 $2.8 billion related to a decrease in the U.S. Life Insurance Companies’ capital loss carryforward valuation
allowance, $396 million related to a decrease in certain other valuation allowances associated with foreign jurisdictions and
$298 million associated with tax exempt interest income. These items were partially offset by charges of $632 million related
to uncertain tax positions.
The following table presents a reconciliation of net income attributable to AIG to after-tax operating income
attributable to AIG:
Years Ended December 31,
(in millions) 2015 2014 2013
Net income attributable to AIG $2,196 $ 7,529 $9,085
Uncertain tax positions and other tax adjustments 112 59 791
Deferred income tax valuation allowance (releases) charges 110 (181) (3,237)
Changes in fair value of securities used to hedge guaranteed
living benefits 28 (169) 105
Changes in benefit reserves and DAC, VOBA and SIA
related to net realized capital gains (losses) 10 141 1,148
Other (income) expense - net 151 -47
Loss on extinguishment of debt 491 1,483 423
Net realized capital gains (476) (470) (1,285)
(Income) loss from discontinued operations - 50 (84)
(Income) loss from divested businesses 16 (1,462) 117
Non-operating litigation reserves and settlements (53) (350) (460)
Reserve development related to non-operating run-off
insurance business 20 - -
Restructuring and other costs 322 - -
After-tax operating income attributable to AIG $2,927 $ 6,630 $6,650
Weighted average diluted shares outstanding 1,334,464,883 1,447,553,652 1,481,206,797
Income per common share attributable to AIG (diluted) $1.65 $ 5.20 $6.13
After-tax operating income per common share attributable
to AIG (diluted) $2.19 $ 4.58 $4.49
After-tax operating income attributable to AIG for 2015 decreased compared to 2014 primarily due to a decrease in income
from insurance operations, reflecting adverse prior year loss reserve development in Commercial Property Casualty,
decreased net investment income, and lower income on assets held by AIG Parent.
After-tax operating income attributable to AIG for 2014 was essentially flat compared to 2013, primarily due to higher income
tax expense, partially offset by an increase in income from insurance operations.
For the year ended December 31, 2015, the effective tax rate on pre-tax operating income was 28.0 percent. The significant
factors that contributed to the difference from the statutory rate included tax benefits resulting from tax-exempt interest income,