AIG 2012 Annual Report Download - page 88

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The following table presents a reconciliation of income attributable to AIG from continuing operations to
after-tax operating income (loss):
Net income $ 21,330 $ 12,285
Income (loss) from discontinued operations, net of income tax expense (benefit) 1,790 (969)
Income from continuing operations 19,540 13,254
Net (gains) losses on sale of divested businesses 48 (15,326)
Income from divested businesses (16) (1,552)
Legacy FIN 48 and other tax adjustments – –
Legal reserves (settlements) related to legacy crisis matters 13 2
Deferred income tax valuation allowance (releases) charges (18,307) 1,392
Amortization of FRBNY prepaid commitment fee asset 2,358 2,255
Changes in fair value of AIG Life and Retirement fixed income securities
designated to hedge living benefit liabilities – –
Change in benefit reserves and DAC, VOBA and SIA related to net realized
capital (gains) losses 202 74
(Gain) loss on extinguishment of debt (520) 104
Net realized capital (gains) losses (460) 1,104
Non-qualifying derivative hedging gains, excluding net realized capital (gains)
losses (84) (352)
Bargain purchase gain – (332)
After-tax operating income 2,774 623
Net income from continuing operations attributable to noncontrolling interests 688 2,172
After-tax operating income (loss) $ 2,086 $ (1,549)
After-tax operating income increased in 2012 compared to 2011 primarily due to increases in income from insurance
operations and in the fair value gains on AIG’s interest in AIA ordinary shares and AIG’s interest in ML III, discussed
above. This was partially offset by an increase in income tax expenses in 2012 compared to an income tax benefit in
2011.
For the year ended December 31, 2012, the effective tax rate on pre-tax operating income was 31.6 percent. The
effective tax rate for the year ended December 31, 2012, attributable to pre-tax operating income differs from the
statutory rate primarily due to tax exempt interest income and other permanent tax items.
For the year ended December 31, 2011, the effective tax rate on pre-tax operating income was (9.6) percent. The
significant factors that contributed to the difference from the statutory rate included tax benefits resulting from tax
exempt interest income, tax benefits associated with non-controlling interests, as well as discrete tax benefits
recorded during the year.
We reported after-tax operating income in 2011 compared to after-tax operating losses in 2010 primarily due to a net
charge to strengthen AIG Property Casualty’s loss reserves in 2010, partially offset by higher catastrophe losses in
2011.
For the year ended December 31, 2010, the effective tax rate on pre-tax operating income was 70.2 percent. The
effective tax rate attributable to pre-tax operating income for the year ended December 31, 2010 differs from the
statutory rate primarily due to tax benefits associated with divested businesses, which are excluded from after-tax
operating income.
Segment Results
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AIG reports the results of its operations through two reportable segments: AIG Property Casualty and AIG Life and
Retirement. The Other operations category consists of businesses and items not allocated to our reportable
segments.
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AIG 2012 Form 10-K 71
Years Ended December 31,
(in millions) 2012 2011 2010
$ 3,700
(4,052)
7,752
1
–
543
353
(1,911)
–
(24)
781
6
(586)
(18)
–
6,897
262
$ 6,635
ITEM 7 / RESULTS OF OPERATIONS