AIG 2008 Annual Report Download - page 246

extending to the end of the aircraft’s economic life in its highest and best use configuration, plus its
disposition value.
•Collateral Securing Foreclosed Loans and Real Estate and Other Fixed Assets: When AIG takes collateral
in connection with foreclosed loans, AIG generally bases its estimate of fair value on the price that would be
received in a current transaction to sell the asset by itself.
•Goodwill: AIG tests goodwill for impairment whenever events or changes in circumstances indicate the
carrying amount of goodwill may not be recoverable, but at least annually. When AIG determines goodwill
may be impaired, AIG uses techniques including discounted expected future cash flows, appraisals, or, in the
case of reporting units being considered for sale, third-party indications of fair value, if available.
•Long-Lived Assets: AIG tests its long-lived assets for impairment whenever events or changes in
circumstances indicate the carrying amount of a long-lived asset may not be recoverable. AIG measures
the fair value of long-lived assets based on an in-use premise that considers the same factors used to estimate
the fair value of its real estate and other fixed assets under an in-use premise discussed above.
See Notes 1(c), (d), (e), and (s) herein for additional information about how AIG tests various asset classes for
impairment.
Assets measured at fair value on a non-recurring basis on which impairment charges were recorded
were as follows:
Level 1 Level 2 Level 3 Total
Year Ended
December 31,
2008
(In millions)
Goodwill ............................ $— $— $ — $ — $4,085
Real estate owned...................... — — 1,379 1,379 242
Other investments ...................... 15 — 3,122 3,137 265
Other assets .......................... — 29 1,160 1,189 107
Total ............................... $15 $29 $5,661 $5,705 $4,699
AIG recognized goodwill impairment charges of $4.1 billion in 2008, which were primarily related to the
General Insurance, Domestic Life Insurance and Domestic Retirement Services, Consumer Finance and the Capital
Markets businesses. At December 31, 2008, the carrying value of remaining goodwill in the General Insurance, Life
Insurance & Retirement Services and Asset Management operating segments totaled $1.3 billion, $4.4 billion and
$1.3 billion, respectively.
AIG recognized an impairment charge on certain investment real estate and other long-lived assets of
$614 million for 2008, which was included in other income. As required by FAS 157, the fair value disclosed in the
table above is unadjusted for transaction costs. The amounts recorded on the consolidated balance sheet are net of
transaction costs.
Fair Value Option
FAS 159 permits a company to choose to measure at fair value many financial instruments and certain other
assets and liabilities that are not required to be measured at fair value. Subsequent changes in fair value for
designated items are required to be reported in income. Unrealized gains and losses on financial instruments in
AIG’s insurance businesses and in AIGFP for which the fair value option was elected under FAS 159 are classified
in policyholder benefits and claims incurred and in other income, respectively, in the consolidated statement of
income (loss).
240 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)