AIG 2010 Annual Report Download - page 397

American International Group, Inc., and Subsidiaries
Exhibit 12
Computation of Ratios of Earnings to Fixed Charges
Years Ended December 31,
(in millions, except ratios) 2010 2009 2008 2007 2006
Earnings:
Pre-tax income (loss)(a):$17,936 $(13,990) $(103,056) $ 4,697 $16,300
Add – Fixed charges 8,812 16,592 20,456 11,470 9,062
Adjusted Pre-tax income 26,748 2,602 (82,600) 16,167 25,362
Fixed charges:
Interest expense $ 7,613 $ 15,136 $ 17,665 $ 4,553 $ 3,715
Portion of rent expense representing interest 196 244 299 257 219
Interest credited to policy and contract holders 1,002 1,212 2,492 6,660 5,128
Total fixed charges $ 8,812 $ 16,592 $ 20,456 $11,470 $ 9,062
Preferred stock dividend requirements $-$ 1,204 $ 400 $ - $ -
Total fixed charges and preferred stock dividend requirements $ 8,812 $ 17,796 $ 20,856 $11,470 $ 9,062
Total fixed charges, excluding interest credited to policy
and contract holders $ 7,809 $ 15,380 $ 17,964 $ 4,810 $ 3,934
Ratio of earnings to fixed charges:
Ratio 3.03 n/a n/a 1.41 2.80
Coverage deficiency n/a (13,990) (103,056) n/a n/a
Ratio of earnings to fixed charges and preferred stock dividends:
Ratio 3.03 n/a n/a 1.41 2.80
Coverage deficiency n/a (15,194) (103,456) n/a n/a
Ratio of earnings to fixed charges, excluding interest credited to policy
and contract holders(b):
Ratio 3.42 n/a n/a 3.36 6.45
Coverage deficiency n/a (12,778) (100,564) n/a n/a
(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest.
(b) The Ratio of earnings to fixed charges excluding interest credited to policy and contract holders removes interest credited to guaranteed
investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed
from earnings used in this calculation. GICs and GIAs are entered into by AIG’s subsidiaries. The proceeds from GICs and GIAs are invested
in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related
policyholders obligation or contract, with the intent of earning a profit from the spread.
AIG 2010 Form 10-K 381