AIG 2009 Annual Report Download - page 324

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Statutory Financial Data
The following table presents statutory surplus and net income (loss) for General Insurance, including non-core
insurance companies, and Life Insurance & Retirement Services operations in accordance with statutory accounting
practices:
Years Ended December 31,
(in millions) 2009(e) 2008 2007
Statutory surplus(a):
General Insurance(b) $37,946 $ 35,847 $37,705
Domestic Life Insurance & Retirement Services 13,016 11,312 14,014
Foreign Life Insurance & Retirement Services 17,873 13,199 19,198
Statutory net income (loss)(a)(c):
General Insurance(d) 2,402 216 8,018
Domestic Life Insurance & Retirement Services 702 (22,257) 1,107
Foreign Life Insurance & Retirement Services(a) 1,368 (1,301) 3,358
(a) Statutory surplus and net income (loss) with respect to foreign operations are estimated at November 30. The basis of presentation for branches of
AIA is the Hong Kong statutory filing basis. The basis of presentation for branches of ALICO is the U.S. statutory filing basis. AIG Star Life, AIG
Edison Life, Philamlife and Nan Shan, which is reported as a discontinued operation, are estimated based on their respective local country filing
basis.
(b) 2008 amount was increased by $1.2 billion from that previously reported.
(c) Includes Net realized capital gains and losses and taxes.
(d) Includes catastrophe losses, net of tax, of $34 million, $1.15 billion, and $177 million in 2009, 2008 and 2007, respectively.
(e) Amount subject to change based on final statutory filings.
AIG’s insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices
prescribed or permitted by domestic and foreign insurance regulatory authorities. The principal differences between
statutory financial statements and financial statements prepared in accordance with U.S. GAAP for domestic
companies are that statutory financial statements do not reflect DAC, some bond portfolios may be carried at
amortized cost, investment impairments are determined in accordance with statutory accounting practices, assets and
liabilities are presented net of reinsurance, policyholder liabilities are generally valued using more conservative
assumptions and certain assets are non-admitted.
At December 31, 2009, 2008 and 2007, statutory capital of AIG’s insurance subsidiaries exceeded minimum
company action level requirements.
Dividend Restrictions
Payments of dividends to AIG by its insurance subsidiaries are subject to certain restrictions imposed by regulatory
authorities. With respect to AIG’s domestic insurance subsidiaries, the payment of any dividend requires formal
notice to the insurance department in which the particular insurance subsidiary is domiciled. For example, unless
permitted by the New York Superintendent of Insurance, general insurance companies domiciled in New York may
not pay dividends to shareholders that, in any twelve-month period, exceed the lesser of ten percent of such company’s
statutory policyholders’ surplus or 100 percent of its ‘‘adjusted net investment income,’’ as defined. Generally, less
severe restrictions applicable to both general and life insurance companies exist in most of the other states in which
AIG’s insurance subsidiaries are domiciled. Under the laws of many states, an insurer may pay a dividend without
prior approval of the insurance regulator when the amount of the dividend is below certain regulatory thresholds.
Other foreign jurisdictions may restrict the ability of AIG’s foreign insurance subsidiaries to pay dividends. There are
also various local restrictions limiting cash loans and advances to AIG by its subsidiaries. Largely as a result of these
restrictions, a significant majority of the aggregate equity of AIG’s consolidated subsidiaries was restricted from
AIG 2009 Form 10-K 316