AIG 2008 Annual Report Download - page 44

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations,
AIG presents its operations in the way it believes will be most meaningful. Statutory underwriting profit (loss) is
presented in accordance with accounting principles prescribed by insurance regulatory authorities because these are
standard measures of performance used in the insurance industry and thus allow more meaningful comparisons with
AIG’s insurance competitors. AIG has also incorporated into this discussion a number of cross-references to
additional information included throughout this Annual Report on Form 10-K to assist readers seeking additional
information related to a particular subject.
Index Page
Cautionary Statement Regarding Forward-Looking Information ........................... 39
Overview....................................................................... 39
Liquidity Events in the Second Half of 2008 ........................................... 40
Debt ......................................................................... 53
Results of Operations ............................................................. 63
Consolidated Results ............................................................. 63
Segment Results ................................................................ 71
General Insurance Operations .................................................... 71
Liability for unpaid claims and claims adjustment expense ............................. 79
Life Insurance & Retirement Services Operations ...................................... 99
Deferred Policy Acquisition Costs and Sales Inducement Assets ......................... 113
Financial Services Operations .................................................... 115
Asset Management Operations .................................................... 119
Critical Accounting Estimates ...................................................... 123
Capital Resources and Liquidity .................................................... 152
Shareholders’ Equity ............................................................. 152
Investments ..................................................................... 154
Investment Strategy.............................................................. 155
Portfolio Review ................................................................ 167
Other-than-temporary impairments ................................................. 167
Unrealized gains and losses ...................................................... 171
Risk Management ................................................................ 172
Overview ..................................................................... 172
Corporate Risk Management ..................................................... 173
Credit Risk Management ........................................................ 174
Market Risk Management ....................................................... 176
Operational Risk Management .................................................... 178
Insurance Risk Management ..................................................... 179
Segment Risk Management ...................................................... 181
Insurance Operations ......................................................... 181
Financial Services ........................................................... 185
Asset Management .......................................................... 188
Recent Accounting Standards ....................................................... 189
38 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries