AIG 2009 Annual Report Download - page 235

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A rollforward of the restructuring liability, reported in Other liabilities on AIG’s Consolidated Balance Sheet, for the
years ended December 31, 2009 and 2008, the cumulative amounts incurred since inception of the restructuring plan,
and the total amounts expected to be incurred are summarized as follows:
Total
Contract Asset Other Subtotal Restructuring
Severance Termination Write- Exit Restructuring Separation and Separation
(in millions) Expenses(a) Expenses Downs Expenses(b) Expenses Expenses(c) Expenses
Year Ended December 31, 2009
Balance, beginning of year $ 77 $ 27 $ - $ 87 $ 191 $ 284 $ 475
Additional charges 150 42 129 453 774 606 1,380
Cash payments (96) (29) - (444) (569) (578) (1,147)
Non-cash items(d) (10) (31) (129) (1) (171) 52 (119)
Changes in estimates 13 11 - (14) 10 (4) 6
Activity of discontinued operations (5) - - - (5) 1 (4)
Reclassified to Liabilities of businesses
held for sale (4) - - - (4) (1) (5)
Balance, end of year $125 $ 20 $ - $ 81 $ 226 $ 360 $ 586
Cumulative amounts incurred since
inception of restructuring plan $247 $ 80 $ 180 $ 579 $ 1,086 $1,104 $2,190
Total amounts expected to be
incurred(e) $250 $115 $ 180 $ 757 $ 1,302 $1,268 $2,570
Year Ended December 31, 2008
Balance, beginning of year $ - $ - $ - $ - $ - $ - $ -
Additional charges 84 27 51 140 302 502 804
Cash payments (12) - - (53) (65) (218) (283)
Non-cash items(d) - - (51) - (51) - (51)
Activity of discontinued operations 5 - - - 5 - 5
Balance, end of year $ 77 $ 27 $ - $ 87 $ 191 $ 284 $ 475
Total amounts expected to be
incurred(e) $164 $106 $ 51 $ 585 $ 906 $1,031 $1,937
(a) Restructuring expenses included $66 million in 2009 and $44 million in 2008 for retention awards for employees expected to be terminated.
(b) Primarily includes professional fees related to (i) disposition activities, (ii) AIG’s capital restructuring program with the FRBNY and the Department
of the Treasury and (iii) unwinding most of AIGFP’s businesses and portfolios.
(c) Separation expenses included $437 million in 2009 and $500 million in 2008 for retention awards for key employees.
(d) Primarily represents asset impairment charges, foreign currency translation and reclassification adjustments.
(e) Includes cumulative amounts incurred and future amounts to be incurred that can be reasonably estimated at the balance sheet date.
4. Segment Information
AIG reports the results of its operations through four reportable segments: General Insurance, Domestic Life
Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services. AIG
evaluates performance based on pre-tax income (loss), excluding results from discontinued operations and net gains
(losses) on sales of divested businesses because AIG believes that this provides more meaningful information on how
its operations are performing.
During 2009, AIG realigned its financial reporting structure to reflect the effects of its restructuring activities on
how management views and manages its businesses. Consequently, beginning in 2009, the results for Transatlantic,
21st Century Insurance Group and Agency Auto Division (excluding the results of the Private Client Group)
(21st Century), and Mortgage Guaranty, previously reported as part of the General Insurance reportable segment, are
now included in AIG’s Other operations category. In addition, the historical results for HSB Group, Inc. (HSB)
227 AIG 2009 Form 10-K