AIG 2010 Annual Report Download - page 33

American International Group, Inc., and Subsidiaries
UGC previously insured second-lien and private student loans, but ceased insuring new business in these products
in 2008, although certain of the second-lien policies are subject to reinstatement.
Mortgage Guaranty is seeking to take advantage of its risk-based pricing approach, expand into new attractive
markets and manage its legacy exposures through risk mitigation strategies.
Asset Management Operations
AIG’s Asset Management operations include the results of the Direct Investment business and the Institutional
Asset Management business.
On March 26, 2010, AIG completed the sale of its third-party asset management business. The results of
operations through the closing of the sale are included in the Institutional Asset Management results. Subsequent
to the sale, Institutional Asset Management derives the majority of its revenues from providing asset management
services to AIG and its subsidiaries and are eliminated in consolidation.
Direct Investment Business
The Direct Investment business includes results of AIG Global Real Estate, the Matched Investment Program
(MIP), AIG’s historical program to generate spread income from investments yielding returns greater than AIG’s
cost of funds, and certain non-derivative assets and liabilities of AIGFP. The MIP assets and liabilities and the
AIGFP portfolio are being managed as a single portfolio to better match maturities of assets and liabilities. AIG
Global Real Estate is selling, restructuring or otherwise divesting its assets and reducing its funding obligations.
Direct Investment business operating results are significantly impacted by performance in the credit, equity,
interest rate, foreign exchange and real estate markets.
Institutional Asset Management Business
AIG’s Institutional Asset Management business is conducted through AIG Global Asset Management Holdings
Corp. and its subsidiaries, including AIG Markets, Inc. (AIG Markets). AIG Markets acts as a derivative
intermediary transacting with AIG, its subsidiaries and third parties.
Divested Businesses
Divested businesses include the historical results of divested entities that did not meet the criteria for
discontinued operations accounting treatment as well as certain immaterial non-core businesses currently in
run-off. Divested businesses include the historical results of AIA through October 29, 2010 and AIG’s remaining
consumer finance business, discussed below. In the third quarter of 2010 AIG completed an initial public offering
of ordinary shares of AIA; upon completion of the initial public offering, AIG owned approximately 33 percent of
the outstanding shares of AIA. Based on AIG’s continuing involvement with AIA, as a result of its ownership of
33 percent of AIA’s shares and board representation, AIA is not presented as a discontinued operation.
Discontinued Operations
Discontinued operations include the results of ALICO, AIG Star, AIG Edison, Nan Shan and AGF. In the
fourth quarter of 2010 AIG closed the sales of ALICO and AGF, and on February 1, 2011 AIG closed the sale of
AIG Star and AIG Edison. On January 12, 2011, AIG entered into an agreement to sell Nan Shan, and expects to
close the sale within the next 12 months. See Note 4 to the Consolidated Financial Statements for additional
information on discontinued operations.
Additionally, following the classification of AGF as a discontinued operation in the third quarter of 2010 (see
Note 4 to the Consolidated Financial Statements), AIG’s remaining consumer finance business, which is conducted
through the AIG Federal Savings Bank and the Consumer Finance Group in Poland, is now reported in AIG’s
Other operations category as part of Divested businesses.
AIG 2010 Form 10-K 17