AIG 2012 Annual Report Download - page 248

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See Note 16 herein for a discussion of guarantees and indemnifications associated with sales of businesses.
Certain other sales completed during 2011 and 2010 were not classified as discontinued operations because we
continued to generate significant direct revenue-producing or cost-generating cash flows from the businesses or
because associated assets, liabilities and results of operations were not material, individually or in the aggregate, to
our consolidated financial position or results of operations.
The following table summarizes income (loss) from discontinued operations:
Revenues:
Premiums $ 5,012 $ 18,296
Net investment income 1,632 6,924
Net realized capital gains 834 158
Aircraft leasing revenue 4,508 4,749
Other income (48) 1,697
Total revenues 11,938 31,824
Benefits, claims and expenses, excluding Aircraft leasing expenses*7,910 30,458
Aircraft leasing expenses 3,876 4,050
Interest expense allocation 275
Income (loss) from discontinued operations 150 (2,759)
Gain (loss) on sale 2,338 5,389
Income (loss) from discontinued operations, before tax income tax expense
(benefit) 2,488 2,630
Income tax expense (benefit) 698 3,599
Income (loss) from discontinued operations, net of income tax $ 1,790 $ (969)
* In 2010, includes goodwill impairment charges of $3.3 billion related to the sale of ALICO and $1.3 billion related to the sale of AIG
Star and AIG Edison. In 2012, includes goodwill impairment charges of $23 million related to the ILFC Transaction. See Note 2 – Goodwill
herein for further discussion.
Interest Expense Allocation
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Interest expense allocated to discontinued operations gives effect to the provisions of the Recapitalization discussed
in Note 25 for all periods presented. For this reason, an interest allocation to discontinued operations related to a
portion of the ALICO and all the AGF proceeds was required.
The interest expense allocated to discontinued operations was based on the anticipated net proceeds that would be
applied toward the repayment of the FRBNY Credit Facility from the sales of ALICO and AGF multiplied by the daily
interest rate on the FRBNY Credit Facility for each respective period. The periodic amortization of the prepaid
commitment fee allocated to discontinued operations was determined based on the ratio of funds committed to repay
the FRBNY Credit Facility to the total amount of credit available under the FRBNY Credit Facility.
Prior to the Recapitalization, the terms of the FRBNY Credit Facility contractually required net proceeds from
dispositions, after taxes and transaction expenses, to the extent such proceeds did not represent capital of AIG’s
insurance subsidiaries required for regulatory or ratings purposes, to be applied toward the repayment of the FRBNY
Credit Facility as mandatory prepayments unless otherwise agreed with the FRBNY. Mandatory prepayments
reduced the amount available to be borrowed under the FRBNY Credit Facility by the amount of the prepayment. In
conjunction with anticipated prepayments, AIG allocated interest expense, including periodic amortization of the
prepaid commitment fee asset, to Income (loss) from discontinued operations. As a result of the revised terms for
repayment of the FRBNY Credit Facility, interest expense that was previously allocated to discontinued operations in
connection with the sales of AIG Star, AIG Edison and Nan Shan was reclassified to continuing operations for all
periods presented.
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AIG 2012 Form 10-K 231
Years Ended December 31,
(in millions) 2012 2011 2010
$–
–
1
4,504
(18)
4,487
1,596
2,587
–
304
(6,733)
(6,429)
(2,377)
$ (4,052)
ITEM 8 / NOTE 4. DIVESTED BUSINESSES, HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED
OPERATIONS