AIG 2010 Annual Report Download - page 247

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
earnings of $448 million. Included in this amount are net unrealized gains of $105 million that were reclassified to
retained earnings from accumulated other comprehensive income (loss) related to available for sale securities
recorded in the consolidated balance sheet at January 1, 2008 for which the fair value option was elected.
See Note 6 herein for additional fair value disclosures.
The following table summarizes the after-tax increase (decrease) from adopting the accounting standards on Fair
Value Measurements and Fair Value Option on the opening shareholders’ equity accounts:
Accumulated Cumulative
Other Effect of
At January 1, 2008 Comprehensive Retained Accounting
(in millions) Income/(Loss) Earnings Changes
Fair Value Measurements $ - $ 4 $ 4
Fair Value Option (105) (1,007) (1,112)
Cumulative effect of change in accounting principles $ (105) $ (1,003) $ (1,108)
Offsetting of Amounts Related to Certain Contracts
In April 2007, the FASB issued an accounting standard that permitted companies to offset cash collateral
receivables or payables against derivative instruments under certain circumstances. AIG adopted the provisions of
the standard effective January 1, 2008, which required retrospective application to all prior periods presented. At
December 31, 2008, the amounts of cash collateral received and posted that were offset against net derivative
positions totaled $7.1 billion and $19.2 billion, respectively. The cash collateral received and paid related to
Capital Markets derivative instruments was previously recorded in Other liabilities and Premiums and other
receivables. Cash collateral received related to AIG and its subsidiaries (other than Capital Markets) derivative
instruments was previously recorded in Other liabilities.
Disclosures about Credit Derivatives and Certain Guarantees
In September 2008, the FASB issued an accounting standard that requires additional disclosures by sellers of
credit derivatives, including derivatives embedded in a hybrid instrument. The standard also requires an additional
disclosure about the current status of the payment/performance risk of a guarantee. The additional disclosures are
included in Note 12 herein.
Fair Value of Financial Assets in Inactive Markets
In October 2008, the FASB issued an accounting standard that provides guidance clarifying certain aspects with
respect to the fair value measurements of a security when the market for that security is inactive. AIG adopted
this guidance in the third quarter of 2008. The effects of adopting this standard on AIG’s consolidated financial
condition, results of operations and cash flows were not material.
Disclosures about Transfers of Financial Assets and Variable Interest Entities
In December 2008, the FASB issued an accounting standard that amends and expands the disclosure
requirements regarding transfers of financial assets and a company’s involvement with variable interest entities.
The standard was effective for interim and annual periods ending after December 15, 2008. Adoption of the
standard did not affect AIG’s financial condition, results of operations or cash flow, as only additional disclosures
were required. The additional disclosures are included in Note 11 herein.
AIG 2010 Form 10-K 231