AIG 2010 Annual Report Download - page 91

American International Group, Inc., and Subsidiaries
Restructuring Expenses and Related Asset Impairment and Other Expenses
In the fourth quarter of 2008, following receipt of federal government assistance, AIG commenced an
organization-wide restructuring plan, which AIG continued to develop and modify throughout 2010. Restructuring
expenses decreased in 2010 reflecting progress made under the restructuring plan and asset disposition initiatives.
Restructuring expenses increased in 2009 compared to 2008 due to an increase in professional fees related to
disposition activities and AIG’s transactions with the FRBNY and the Department of the Treasury. See Note 23 to
the Consolidated Financial Statements for additional discussion regarding restructuring and separation expenses.
Net (Gain) Loss on Sale of Divested Businesses and Properties
Net (gain) loss on sale of divested businesses and properties includes the net (gain) loss on the sale of divested
businesses that did not qualify as discontinued operations as well as gains and losses from property disposals in
connection with AIG’s restructuring program. The gain in 2010 primarily represents a gain of $16.3 billion on the
sale of 67 percent of AIA, a gain of $228 million associated with the termination fee paid by Prudential plc to
AIG and a $1.3 billion gain on the sale of the Otemachi building in Japan. See Segment Results — Chartis
Operations — Chartis Results and Other Operations — Other Results herein for further information.
Other Expenses
2010 and 2009 Comparison
Other expenses decreased slightly in 2010 compared to 2009 due to:
• goodwill impairment charges of $612 million recorded in 2009 related to the Institutional Asset Management
business;
• lower compensation-related costs for the Institutional Asset Management business, including the effect of
deconsolidation of certain portfolio investments and the sale of the Swiss bank; and
• lower provisions for credit losses for consumer finance businesses not presented as discontinued operations.
These declines were partially offset by $1.6 billion of ILFC aircraft asset impairment charges and $90 million of
operating lease-related charges with respect to aircraft sold, otherwise disposed of or held for sale.
2009 and 2008 Comparison
Other expenses for 2009 decreased compared to 2008 primarily due to lower compensation-related costs for
Parent and Other operations and the Institutional Asset Management business, partially offset by the 2009
goodwill impairment charges noted above.
Income Tax Expense (Benefit)
2010, 2009 and 2008 Effective Tax Rates
For the year ended December 31, 2010, the effective tax rate on pretax income from continuing operations was
32.7 percent. The effective tax rate for the year ended December 31, 2010, attributable to continuing operations
differs from the statutory rate primarily due to tax benefits of $1.3 billion associated with AIG’s investment in
subsidiaries and partnerships, principally the AIA SPV which is treated as a partnership for U.S. tax purposes, and
$587 million associated with tax exempt interest, partially offset by an increase in the valuation allowance
attributable to continuing operations of $1.5 billion.
The effective tax rate on the pre-tax loss from continuing operations for the year ended December 31, 2009,
differs from the statutory rate primarily due to increases in the valuation allowance of $3.1 billion and reserve for
uncertain tax positions of $874 million, partially offset by tax exempt interest of $677 million and the change in
investment in subsidiaries and partnerships of $473 million which was principally related to changes in the
estimated U.S. tax liability with respect to the potential sales of subsidiaries.
AIG 2010 Form 10-K 75