AIG 2014 Annual Report Download - page 235

ITEM 8 / NOTE 1. BASIS OF PRESENTATION
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Use of Estimates
The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often
involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of
estimates and assumptions are considered our critical accounting estimates and are related to the determination of:
• classification of ILFC as held for sale and related fair value measurement for applicable years;
• income tax assets and liabilities, including recoverability of our net deferred tax asset and the predictability of future tax
operating profitability of the character necessary to realize the net deferred tax asset;
• liability for unpaid losses and loss adjustment expenses;
• reinsurance assets;
• valuation of future policy benefit liabilities and timing and extent of loss recognition;
• valuation of liabilities for guaranteed benefit features of variable annuity products;
• estimated gross profits to value deferred acquisition costs for investment-oriented products;
• impairment charges, including other-than-temporary impairments on available for sale securities, impairments on
investments in life settlements and goodwill impairment;
• liability for legal contingencies; and
• fair value measurements of certain financial assets and liabilities.
These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of
estimation. To the extent actual experience differs from the assumptions used, our consolidated financial conditions, results of
operations and cash flows could be materially affected.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following table identifies our significant accounting policies presented in other Notes to these Consolidated Financial
Statements, with a reference to the Note where a detailed description can be found:
Note 4. Held-for-Sale Classification, Divested Businesses and Discontinued Operations
 Held-for-sale classification
 Discontinued operations
Note 6. Investments
 Fixed maturity and equity securities
 Other invested assets
 Short-term investments
 Net investment income
 Net realized capital gains (losses)
 Other-than-temporary impairments
Note 7. Lending Activities
 Mortgage and other loans receivable – net of allowance
Note 8. Reinsurance
 Reinsurance assets – net of allowance
Note 9. Deferred Policy Acquisition Costs
 Deferred policy acquisition costs
 Amortization of deferred policy acquisition costs
Note 11. Derivatives and Hedge Accounting
 Derivative assets and liabilities, at fair value
Note 12. Goodwill
Note 13. Insurance Liabilities
 Liability for unpaid losses and loss adjustment expenses
 Discounting of reserves