AIG 2010 Annual Report Download - page 240

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
included in Income (loss) from continuing operations attributable to noncontrolling nonvoting, callable, junior and
senior preferred interests held by the FRBNY. These noncontrolling interests, other than the senior preferred
interests in the ALICO SPV, which were redeemed in full, were transferred to the Department of the Treasury as
part of the January 14, 2011 Recapitalization transactions.
Other Noncontrolling interests: Includes the equity interest of outside shareholders in AIG’s consolidated
subsidiaries and includes the preferred shareholders’ equity in outstanding preferred stock of ILFC, a wholly
owned subsidiary of AIG. Cash distributions on such preferred stock or interest are accounted for as interest
expense. This preferred stock consists of 1,000 shares of market auction preferred stock (MAPS) in two series
(Series A and B) of 500 shares each. Each of the MAPS shares has a liquidation value of $100,000 per share and
is not convertible. The dividend rate, other than the initial rate, for each dividend period for each series is reset
approximately every seven weeks (49 days) on the basis of orders placed in an auction, provided such auctions are
able to occur. At the present time, there is no ability to conduct such auctions, therefore, the MAPS certificate of
determination dictates that a maximum applicable rate, as defined in the certificate of determination, be paid on
the MAPS. At December 31, 2010, the dividend rate for each of the Series A and Series B MAPS was
0.53 percent and 0.61 percent respectively.
(x) Earnings (Loss) per Share: Basic earnings or loss per share and diluted loss per share are based on the
weighted average number of common shares outstanding, adjusted to reflect all stock dividends and stock splits.
Diluted earnings per share is based on those shares used in basic earnings per share plus shares that would have
been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding,
adjusted to reflect all stock dividends and stock splits.
See Note 17 herein for additional earnings (loss) per share disclosures.
(y) Recent Accounting Standards:
Future Application of Accounting Standards
Consolidation of Investments in Separate Accounts
In April 2010, the FASB issued an accounting standard that clarifies that an insurance company should not
combine any investments held in separate account interests with its interest in the same investment held in its
general account when assessing the investment for consolidation. Separate accounts represent funds for which
investment income and investment gains and losses accrue directly to the policyholders who bear the investment
risk. The standard also provides guidance on how an insurer should consolidate an investment fund in situations in
which the insurer concludes that consolidation of an investment is required and the insurer’s interest is through its
general account in addition to any separate accounts. The new standard is effective for interim and annual periods
beginning on January 1, 2011 for AIG. Earlier application is permitted. AIG expects to adopt this new standard
on January 1, 2011. AIG does not expect the adoption of this new standard to have a material effect on its
consolidated financial condition, results of operations or cash flows.
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts
In October 2010, the FASB issued an accounting standard update that amends the accounting for costs incurred
by insurance companies that can be capitalized in connection with acquiring or renewing insurance contracts. The
new standard clarifies how to determine whether the costs incurred in connection with the acquisition of new or
renewal insurance contracts qualify as deferred acquisition costs. The new standard is effective for interim and
annual periods beginning on January 1, 2012 with early adoption permitted. Prospective or retrospective
application is permitted. AIG has not determined whether it will adopt this new standard prospectively or
retrospectively. The accounting standard update will result in a decrease of the amount of capitalized costs in
connection with the acquisition or renewal of insurance contracts. AIG is currently assessing the effect of adoption
of this new standard on its consolidated financial condition, results of operations and cash flows.
224 AIG 2010 Form 10-K