AIG 2014 Annual Report Download - page 246

ITEM 8 / NOTE 4. HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED OPERATIONS
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31, 2014. In connection with the AerCap Transaction, we entered into a five-year credit agreement for a senior unsecured
revolving credit facility between AerCap Ireland Capital Limited, as borrower, and AIG Parent as lender (the Revolving Credit
Facility). The Revolving Credit Facility provides for an aggregate commitment of $1.0 billion and permits loans for general
corporate purposes after the closing of the AerCap Transaction. At December 31, 2014, no amounts were outstanding under
the Revolving Credit Facility.
As a result of the AerCap Transaction, we own approximately 46 percent of the outstanding common stock of AerCap. This
common stock is subject to certain restrictions as to the amount and timing of potential sales as set forth in the Stockholders’
Agreement and Registration Rights Agreement between AIG and AerCap. We account for our interest in AerCap using the
equity method of accounting. The difference between the carrying amount of our investment in AerCap common stock and our
share of the underlying equity in the net assets of AerCap was approximately $1.4 billion at December 31, 2014.
Approximately $0.4 billion of this difference was allocated to the assets and liabilities of AerCap based on their respective fair
values and is being amortized into income over the estimated lives of the related assets and liabilities. The remainder was
allocated to goodwill.
ILFC’s results of operations are reflected in Aircraft leasing revenue and Aircraft leasing expenses in the Consolidated
Statements of Income through the date of the completion of the sale. ILFC’s assets and liabilities were classified as held-for-
sale at December 31, 2013 in the Consolidated Balance Sheets.
Discontinued Operations
We report the results of operations of a business as discontinued operations if the business is classified as held for sale, the
operations and cash flows of the business have been or will be eliminated from our ongoing operations as a result of a
disposal transaction and we will not have any significant continuing involvement in the operations of the business after the
disposal transaction. The results of discontinued operations are reported in Discontinued Operations in the Consolidated
Statements of Income for current and prior periods commencing in the period in which the business meets the criteria of a
discontinued operation, and include any gain or loss recognized on closing or adjustment of the carrying amount to fair value
less cost to sell.
The results of operations for the following business is presented as discontinued operations in our Consolidated Statements of
Income.
In connection with the 2010 sale of American Life Insurance Company (ALICO) to MetLife, Inc. (MetLife), we
recognized the following income (loss) from discontinued operations:
Years Ended December 31,
(in millions) 2014 2013 2012
Gain on sale $23 $ 150 $ 1
Income from discontinued operations, before income tax expense 23 150 1
Income tax expense 73 66 -
Income from discontinued operations, net of income tax expense $(50) $ 84 $ 1
5. FAIR VALUE MEASUREMENTS
Fair Value Measurements on a Recurring Basis
We carry certain of our financial instruments at fair value. We define the fair value of a financial instrument as the amount that
would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. We are responsible for the determination of the value of the investments carried at fair value and the
supporting methodologies and assumptions.
The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of
observable valuation inputs. We maximize the use of observable inputs and minimize the use of unobservable inputs when