AIG 2006 Annual Report Download - page 55

American International Group, Inc. and Subsidiaries
(f) Includes the effect of hedging activities that did not qualify for hedge accounting treatment under Statement of Financial Accounting Standards
No. 133, ‘‘Accounting for Derivative Instruments and Hedging Activities’’ (FAS 133) and the application of Statement of Financial Accounting Standards
No. 52, ‘‘Foreign Currency Translation’’ (FAS 52). For 2006, 2005, 2004, 2003 and 2002, respectively, the amounts included are $355 million,
$(495) million, $(140) million, $78 million and $(91) million.
(g) 2005 includes the effect of the non-renewal of a single large group life case of $36 billion. Also, the foreign in-force is translated to U.S. dollars at the
appropriate balance sheet exchange rate in each period.
(h) Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains
and losses. For 2006, 2005, 2004, 2003 and 2002, respectively, the effect was $(1.82) billion, $2.01 billion, $(122) million, $(1.01) billion and
$220 million in both revenues and operating income for Capital Markets. These amounts result primarily from interest rate and foreign currency
derivatives that are economically hedging available for sale securities and borrowings. For 2004, 2003 and 2002, respectively, the effect was
$(27) million, $49 million and $20 million in operating income for Aircraft Leasing. In 2006 and 2005, Aircraft Leasing derivative gains and losses
were reported as part of AIG’s Other category, and were not reported in Aircraft Leasing operating income.
(i) Includes $1.6 billion of regulatory settlement costs in 2005 as described under Item 3. Legal Proceedings.
(j) Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains
and losses. For 2006, 2005, 2004, 2003 and 2002, respectively, the effect was $(1.86) billion, $2.02 billion, $385 million, $(1.50) billion and
$(216) million in revenues and $(1.86) billion, $2.02 billion, $671 million, $(1.22) billion and $(58) million in operating income. These amounts result
primarily from interest rate and foreign currency derivatives that are hedging available for sale securities and borrowings.
(k) Represents the sum of General Insurance net premiums earned, Life Insurance & Retirement Services GAAP premiums, net investment income,
Financial Services interest, lease and finance charges, Asset Management net investment income from spread-based products and advisory and
management fees, and realized capital gains (losses).
(l) Represents income before income taxes, minority interest and cumulative effect of accounting changes.
Form 10-K 2006 AIG 5