AIG 2012 Annual Report Download - page 249

.....................................................................................................................................................................................
5. BUSINESS COMBINATIONS
..............................................................................................................................................................................................
On March 31, 2010, through an AIG Property Casualty subsidiary, we purchased additional voting shares in Fuji, a
publicly traded Japanese insurance company with property/casualty insurance operations and a life insurance
subsidiary. The acquisition of the additional voting shares for $145 million increased AIG Property Casualty’ total
voting ownership interest in Fuji from 41.7 percent to 54.8 percent, which resulted in AIG Property Casualty obtaining
control of Fuji. In connection with the acquisition, we recognized a bargain purchase gain of $332 million in the
Consolidated Statement of Operations for the year ended December 31, 2010. The bargain purchase gain was
primarily attributable to the depressed market value of Fuji’s common stock, which we believe was the result of
macroeconomic, capital market and regulatory factors in Japan coupled with Fuji’s financial condition and results of
operations. The acquisition was consistent with AIG Property Casualty’s desire to increase its share in the substantial
Japanese insurance market and to achieve cost savings from synergies.
In March 2011, AIG Property Casualty completed the acquisition of approximately 305 million shares of Fuji tendered
in response to a public offer at an offer price of 146 Yen per share ($1.76 per share) for a purchase price of
$538 million. In August 2011, AIG Property Casualty acquired the remaining outstanding voting shares of Fuji. As a
result of these actions, AIG Property Casualty now owns 100 percent of Fuji.
The 2011 purchases were accounted for as equity transactions because we previously consolidated Fuji due to our
controlling interest. Accordingly, the difference between the fair value of the total consideration paid of $560 million
and the carrying value of the noncontrolling interest acquired of $489 million was recognized as a reduction of our
equity in Fuji. There was no gain or loss recorded in the Consolidated Statement of Operations for the year ended
December 31, 2011.
..................................................................................................................................................................................................................................
AIG 2012 Form 10-K232
ITEM 8 / NOTE 5. BUSINESS COMBINATIONS