AIG 2010 Annual Report Download - page 257

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AGF Sale
On August 10, 2010, AIG entered into a definitive agreement to sell an 80 percent economic interest
(84 percent voting interest) in American General Finance, Inc. (AGF) for $125 million. The AGF sale closed on
November 30, 2010. AIG’s voting ownership interest in AGF was reduced to approximately 16 percent, and AIG
does not otherwise have significant continuing involvement with or significant continuing cash flows from AGF.
AIG is carrying its retained investment in AGF of approximately $30 million as a cost method investment in
Other invested assets. As a result of this transaction, AIG recorded a pre-tax loss of $1.7 billion in 2010.
The components of the $1.7 billion charge consisted of the difference between (i) the sum of the fair value of
the agreed consideration and AIG’s retained 20 percent economic interest and (ii) the net book value of the
assets. Prior to the agreed sale, AGF’s business and underlying assets were subject to periodic impairment
assessments under a held-for-use model and did not meet the criteria for held-for-sale accounting. The large
majority of AGF’s assets were consumer finance and mortgage loans held for investment and thus were not
carried at fair value.
AIG Star and AIG Edison Sale
On September 30, 2010, AIG entered into a definitive agreement with Prudential Financial, Inc. for the sale of
its Japan-based insurance subsidiaries, AIG Star and AIG Edison, for total consideration of $4.8 billion, including
the assumption of certain outstanding debt totaling $0.6 billion owed by AIG Star and AIG Edison. The
transaction closed on February 1, 2011. AIG has no continuing significant involvement with or significant
continuing cash flows from AIG Star and AIG Edison. In connection with the sale, AIG recorded a goodwill
impairment charge of $1.3 billion in 2010.
Nan Shan Sale Agreement
On January 12, 2011, AIG entered into an agreement to sell its 97.57 percent interest in Nan Shan for
$2.16 billion to a Taiwan-based consortium. While AIG believes the consortium meets certain basic criteria
established by the Financial Supervisory Commission of Taiwan, the transaction is still subject to regulatory
approvals and customary closing conditions. The sale of Nan Shan is expected to be consummated in 2011. AIG
continues to classify Nan Shan as a discontinued operation for all periods presented since AIG will not retain any
interest or continuing involvement within Nan Shan and Nan Shan is not expected to generate significant
continuing cash flows.
The transaction meets the criteria for held for sale accounting and discontinued operations classification.
See Note 16 for a discussion of guarantees and indemnifications associated with sales of businesses.
ALICO, Nan Shan, AIG Star and AIG Edison previously were components of the Foreign Life Insurance &
Retirement Services reportable segment and AGF previously was a component of the Financial Services reportable
segment.
Certain other sales completed during 2010 and 2009 were not classified as discontinued operations because AIG
continued to generate significant direct revenue-producing or cost-generating cash flows from the businesses or
because associated assets, liabilities and results of operations were not material, individually or in the aggregate, to
AIG’s consolidated financial position or results of operations.
AIG 2010 Form 10-K 241