AIG 2012 Annual Report Download - page 230

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contracts consist of benefits paid and changes in future policy benefits liabilities. Benefits for universal life and
investment-type products primarily consist of benefit payments made in excess of policy account balances except for
certain contracts for which the fair value option was elected, for which benefits represent the entire change in fair
value (including derivative gains and losses on related economic hedges).
Represents interest on account-value-based policyholder
deposits consisting of amounts credited on non-equity-indexed account values, accretion to the host contract for
equity indexed products, and net amortization of sales inducements.
For a discussion of our accounting policies on amortization of
deferred policy acquisition costs, see Note 10 herein.
For a discussion of our accounting policies on reporting a
business as held for sale or as discontinued operations, see Note 4 herein.
For a discussion of our accounting policies on classification,
measurement and other-than-temporary impairment of fixed maturity and equity securities, see Note 7 herein.
For discussion of our policies on classification, measurement and
the allowance for credit losses on mortgages and other loans receivable, see Note 8 herein.
For a discussion of our accounting policies on classification, measurement and
other-than-temporary impairment of other invested assets, see Note 7 herein.
Short-term investments consist of interest-bearing cash equivalents, time deposits,
securities purchased under agreements to resell, and investments, such as commercial paper, with original maturities
within one year from the date of purchase.
For a discussion of our accounting policies on securities purchased under agreements to resell, see Note 7 herein.
Cash represents cash on hand and non-interest bearing demand deposits.
Premiums and other receivables includes premium balances
receivable, amounts due from agents and brokers and insureds, trade receivables for the DIB and GCM and other
receivables. Trade receivables for GCM include cash collateral posted to derivative counterparties that are not
eligible to be netted against derivative liabilities. The allowance for doubtful accounts on premiums and other
receivables was $619 million and $484 million at December 31, 2012 and 2011, respectively.
For a discussion about our accounting policies on reinsurance assets – net, see
Note 9 herein.
For discussion of our accounting policies on deferred policy
acquisition costs, see Note 10 herein.
For discussion of our accounting policies on
derivative assets and derivative liabilities, at fair value, see Note 12 herein.
Other assets consists of sales inducement assets, prepaid expenses, deposits, other deferred
charges, real estate, other fixed assets, capitalized software costs, goodwill, intangible assets other than goodwill,
and restricted cash.
We offer sales inducements, which include enhanced crediting rates or bonus payments to contract holders (bonus
interest) on certain annuity and investment contract products. Sales inducements provided to the contractholder are
recognized as part of the liability for policyholders’ contract deposits in the Consolidated Balance Sheet. Such
amounts are deferred and amortized over the life of the contract using the same methodology and assumptions used
to amortize DAC (see Note 10 herein). To qualify for such accounting treatment, the bonus interest must be explicitly
identified in the contract at inception. We must also demonstrate that such amounts are incremental to amounts we
credit on similar contracts without bonus interest, and are higher than the contract’s expected ongoing crediting rates
for periods after the bonus period. The deferred bonus interest and other deferred sales inducement assets totaled
$517 million and $803 million at December 31, 2012 and 2011, respectively. The amortization expense associated
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AIG 2012 Form 10-K 213
Interest credited to policyholder account balances:
Amortization of deferred acquisition costs:
(b) Held-for-sale and discontinued operations:
(c) Investments:
Fixed maturity and equity securities:
Mortgage and other loans receivable – net:
Other invested assets:
Short-term investments:
(d) Cash:
(e) Premiums and other receivables – net:
(f) Reinsurance assets – net:
(g) Deferred policy acquisition costs (DAC):
(h) Derivative assets and derivative liabilities, at fair value:
(i) Other assets:
ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES