AIG 2009 Annual Report Download - page 78

American International Group, Inc., and Subsidiaries
of severance expenses of $163 million, contract termination expenses of $53 million, asset write-downs of $129 million,
other exit expenses of $439 million, and separation expenses of $602 million.
Other exit expenses primarily include 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 of AIGFP’s
businesses and portfolios.
Severance and separation expenses for 2009 described above include retention awards of $503 million to key
employees to maintain ongoing business operations and facilitate the successful execution of the restructuring and
asset disposition plan. The awards under these retention plans were granted in 2008 and are accrued ratably over the
future service periods, which range from 2008 to 2011. The total amount expected to be incurred related to these 2008
retention plans is approximately $1.1 billion. AIG made payments to the employees under these plans in 2008 and
2009 and expects to make further payments through 2011. The ultimate amount paid could be less primarily due to the
effect of forfeitures.
The following table presents amounts charged to expense, and expected to be charged to expense, and the total amounts
expected to be incurred under the 2008 retention plans, by reportable segment:
Domestic Life Foreign Life
Insurance & Insurance &
General Retirement Retirement Financial
(In millions) Insurance Services Services Services Other Total
Amounts charged to expense:
Year Ended December 31, 2009 $122 $ 56 $ 95 $173 $ 57 $ 503
Year Ended December 31, 2008 83 52 25 288 96 544
Cumulative incurred since inception of
restructuring plan(a) 205 108 120 461 153 1,047
Amounts expected to be incurred in
future periods:
2010 2 - 5 - 2 9
2011 - - 1 - - 1
Total amounts expected to be incurred in
future periods 2 - 6 - 2 10
Total amounts expected to be incurred(b) $207 $108 $126 $461 $155 $1,057
(a) Includes an adjustment of $51 million in Financial Services to increase the cumulative amount incurred since inception for retention amounts paid
in 2008.
(b) At December 31, 2009, remaining amounts payable totaled $393 million.
Total restructuring and separation expenses could have a material effect on future consolidated results of
operations and cash flows for an individual reporting period.
See Note 3 to the Consolidated Financial Statements for additional discussion regarding restructuring and
separation expenses.
Net loss on Sale of Divested Businesses
Includes the net loss on sales of divested businesses during 2009 that did not qualify as discontinued operations. See
Segment Results — Other Operations — Other Results herein for further information.
Other Expenses
2009 and 2008 Comparison
Other expenses for 2009 decreased compared to 2008 primarily due to a decrease in compensation-related costs for
Parent and Other operations and the noncore Asset Management businesses, including the effect of deconsolidation
AIG 2009 Form 10-K 70