AIG 2010 Annual Report Download - page 135

American International Group, Inc., and Subsidiaries
had fully amortized through the final legal maturity date. As a result, an unrealized market valuation gain of
$137 million was recorded in 2009. This gain was partially offset by losses on the mezzanine tranches of
those same transactions.
During 2009, Capital Markets:
• recognized a gain of $240 million on credit default swap contracts referencing single-name exposures written
on corporate, index and asset backed credits which are not included in the super senior credit default swap
portfolio, compared to a net loss of $888 million in 2008;
• recognized a net gain of $827 million (including $52 million of gains reflected in the unrealized market
valuation gain on super senior credit default swaps) as compared to a loss of $807 million (including
$185 million of gains reflected in the unrealized market valuation loss on super senior credit default swaps)
in 2008, representing the impact of credit valuation adjustments on Capital Markets’ derivative assets and
liabilities; and
• incurred an additional charge of $198 million related to a transaction entered into in 2002 whereby Capital
Markets guaranteed obligations under leases of office space from a counterparty.
Other Operations
AIG’s Other operations includes results from Parent & Other operations, after allocations to AIG’s business
segments, Mortgage Guaranty operations, Asset Management operations, and results from those divested
businesses not included in Discontinued operations.
AIG’s Parent & Other operations consist primarily of interest expense, intercompany interest income that is
eliminated in consolidation, restructuring costs, expenses of corporate staff not attributable to specific reportable
segments, expenses related to efforts to improve internal controls and the financial and operating platforms,
corporate initiatives, certain compensation plan expenses, corporate-level net realized capital gains and losses,
certain litigation-related charges and net gains and losses on sale of divested businesses which did not qualify for
discontinued operations accounting treatment. In addition, fair value gains or losses on AIG’s remaining interest
in AIA and in the MetLife securities received as consideration from the sale of ALICO are included in Parent &
Other.
Divested businesses include results of certain businesses that have been divested or are being wound down or
repositioned.
As discussed in Note 3 to the Consolidated Financial Statements, in order to align financial reporting, including
changes made during the third quarter of 2010, with the manner in which AIG’s chief operating decision makers
review the businesses to make decisions about resources to be allocated and to assess performance, changes were
made to AIG’s segment information. Gains and losses related to non-derivative assets and liabilities of the Capital
Markets businesses, primarily consisting of credit valuation adjustment gains and losses are reported in AIG’s
Other operations category as part of Asset Management — Direct Investment business. Also, intercompany
interest income related to loans from AIG Funding to AIGFP is no longer being recognized in Parent & Other.
Prior periods have been revised to conform with the current period presentation for the above changes.
AIG 2010 Form 10-K 119