AIG 2008 Annual Report Download - page 120

DAC/VOBA SIA Total DAC/VOBA SIA Total
2008 2007
Years Ended December 31,
(In millions)
Domestic Life Insurance
Balance at beginning of year ......... $ 6,432 $ 53 $ 6,485 $ 6,006 $ 46 $ 6,052
Acquisition costs deferred ......... 865 16 881 895 15 910
Amortization (charged) or credited to
operating income .............. (324) (4) (328) (652) (8) (660)
Change in unrealized gains (losses) on
securities .................... 379 —379 162 — 162
Increase (decrease) due to foreign
exchange .................... (116) —(116) 85 — 85
Other(b) ...................... — 11(64) — (64)
Balance at end of year .............. $ 7,236 $ 66 $ 7,302 $ 6,432 $ 53 $ 6,485
Domestic Retirement Services
Balance at beginning of year ......... $ 5,838 $ 991 $ 6,829 $ 5,651 $ 887 $ 6,538
Acquisition costs deferred ......... 790 210 1,000 741 201 942
Amortization (charged) or credited to
operating income(a) ............ (198) 39 (159) (836) (151) (987)
Change in unrealized gains (losses) on
securities .................... 779 175 954 282 54 336
Increase (decrease) due to foreign
exchange .................... 2—2———
Balance at end of year .............. $ 7,211 $1,415 $ 8,626 $ 5,838 $ 991 $ 6,829
Total Life Insurance & Retirement
Services
Balance at beginning of year ......... $38,445 $1,725 $40,170 $32,810 $1,337 $34,147
Acquisition costs deferred ......... 7,277 292 7,569 7,276 457 7,733
Amortization (charged) or credited to
operating income(a) ............ (4,971) (55) (5,026) (3,367) (149) (3,516)
Change in unrealized gains (losses) on
securities .................... 1,419 167 1,586 745 70 815
Increase due to foreign exchange .... (466) (33) (499) 916 10 926
Other(b) ...................... (1,091) (298) (1,389) 65 — 65
Balance at end of year .............. $40,613 $1,798 $42,411 $38,445 $1,725 $40,170
(a) In 2007, Foreign Life Insurance & Retirement Services includes lower amortization of $836 million related to
changes in actuarial estimates, mostly offset in Policyholder benefits and claims incurred. Domestic Retire-
ment Services includes higher amortization of $104 million related to changes in actuarial estimates.
(b) In 2008, primarily represents the cumulative effect of adoption of FAS 159. In 2007, includes the cumulative
effect of adoption of SOP 05-1.
As AIG operates in various global markets, the estimated gross profits used to amortize DAC, VOBA and SIA
are subject to differing market returns and interest rate environments in any single period. The combination of
market returns and interest rates may lead to acceleration of amortization in some products and regions and
simultaneous deceleration of amortization in other products and regions.
114 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries