AIG 2012 Annual Report Download - page 60

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ESTIMATES AND ASSUMPTIONS
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Actual experience may differ from management’s estimates used in the preparation of financial statements.
Our financial statements are prepared in conformity with U.S. Generally Accepted Accounting Principles, which
requires the application of accounting policies that often involve a significant degree of judgment. The accounting
policies that we consider most dependent on the application of estimates and assumptions, and therefore may be
viewed as critical accounting estimates, are described in Item 7. MD&A – Critical Accounting Estimates. These
accounting estimates require the use of assumptions, some of which are highly uncertain at the time of estimation.
These estimates are based on judgment, current facts and circumstances, and, when applicable, internally developed
models. Therefore, actual results could differ from these estimates, possibly in the near term, and could have a
material effect on our consolidated financial statements.
Our ability to achieve our long-term goals, including return on equity (ROE) and earnings per share (EPS), is
based on significant assumptions, and our actual results may differ, possibly materially, from these goals. In
setting our long-term goals for ROE and EPS, described in Part I, Item 2. MD&A – Long-Term Aspirational Goals in
our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011, we made significant assumptions
that include, among other things:
• the general conditions of the markets in which we operate;
• revenues and combined ratios of our subsidiaries;
• investment yields;
• our subsidiaries’ capacity to distribute dividends to AIG Parent;
• our ability to deploy capital towards share purchases, dividend payments, acquisitions or organic growth;
• the impact of a change in our credit ratings on our ability to maintain financial leverage;
• the exclusion of the reversal of the tax valuation allowance on shareholders’ equity in calculating our long-term
ROE goal;
• effectiveness of our cost rationalization measures;
• regulatory approval of our planned actions (including share purchases, dividend payments or acquisitions);
• the overall credit rating implications of our proposed strategic actions; and
• general financial market and interest rate conditions.
These assumptions are not historical facts but instead represent our expectations about future events. Many of these
events, by their nature, are inherently subject to significant uncertainties and contingencies and are outside our
control. It is very likely that actual events and results will differ from some or all of the assumptions we made. While
we remain committed to our long-term aspirational goals, our actual results are likely to differ from these aspirational
goals and the difference may be material and adverse.
The aspirational goals and their underlying assumptions are forward-looking statements. Shareholders and other
investors should not place undue reliance on any of these assumptions or aspirational goals. We are not under any
obligation (and expressly disclaim any obligation) to update or alter any assumptions, goals, projections or other
related statements, whether written or oral, that may be made from time to time, whether as a result of new
information, future events or otherwise. See Cautionary Statement Regarding Forward-Looking Information for
additional information about forward-looking statements.
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AIG 2012 Form 10-K 43
ITEM 1A / RISK FACTORS