AIG 2012 Annual Report Download - page 122

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Change in Benefit Reserves and DAC, VOBA and SIA Related to Net Realized Capital Gains (Losses)
In conjunction with a program to utilize capital loss tax carryforwards, we sold approximately $19.5 billion of
investments in 2012. These and other sales with subsequent reinvestment at lower yields triggered loss recognition
on certain long-term payout annuity contracts in the amount of $1.2 billion, which effectively transferred shadow loss
recognition from unrealized (AOCI) to actual loss recognition (benefit expense) and, to a much lesser extent,
transferred shadow DAC (AOCI) to DAC amortization expense in 2012. Assumptions related to investment yields,
mortality experience and expenses will be reviewed periodically and updated as appropriate, which may result in
additional loss recognition reserves. In addition, due to the reinvestment of the assets at lower yields, earnings
related to this payout annuity block of business are expected to decline beginning in 2013.
Premiums
Premiums represent amounts received on traditional life insurance policies, group benefit policies and deposits on
life-contingent payout annuities. Premiums, deposits and other considerations is a non-GAAP measure that includes
life insurance premiums and deposits on annuity contracts and mutual funds.
The following table presents a reconciliation of premiums, deposits and other considerations to premiums:
Premiums, deposits and other considerations $ 24,392 $ 19,505
Deposits (21,338) (16,405)
Other (541) (580)
Premiums $ 2,513 $ 2,520
Sales and Deposits
The following tables summarize AIG Life and Retirement premiums, deposits and other considerations by
product*:
Premiums, deposits and other considerations
Individual fixed annuity deposits $ 6,606 $ 4,410 (77)% 50%
Group retirement product deposits 7,312 6,309 (4) 16
Life insurance 5,267 5,529 (3) (5)
Individual variable annuity deposits 3,212 2,072 42 55
Retail mutual funds 1,925 1,101 41 75
Individual annuities runoff 70 84 (17) (17)
Total premiums, deposits and other
considerations $ 24,392 $ 19,505 (14)% 25%
Life Insurance Sales
Retail – Independent $ 144 $ 123 (4)% 17%
Retail – Affiliated (Career and AIG Direct) 109 98 1 11
Total Retail 253 221 (2) 14
Institutional – Independent 25 32 4 (22)
Total life insurance sales $ 278 $ 253 (1)% 10%
* Life insurance sales include periodic premiums from new business expected to be collected over a one-year period and 10 percent of single
premiums and unscheduled deposits from new and existing policyholders. Annuity sales represent deposits from new and existing customers.
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AIG 2012 Form 10-K 105
Years Ended December 31,
(in millions) 2012 2011 2010
$ 20,994
(17,934)
(632)
$ 2,428
Percentage Change
Years Ended December 31,
(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
$ 1,495
7,028
5,129
4,561
2,723
58
$ 20,994
$ 138
110
248
26
$ 274
ITEM 7 / RESULTS OF OPERATIONS