AIG 2014 Annual Report Download - page 71

ITEM 7 / USE OF NON-GAAP MEASURES
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USE OF NON-GAAP MEASURES
In Item 6. Selected Financial Data and throughout this MD&A, we present our financial condition and results of operations in the
way we believe will be most meaningful and representative of our business results. Some of the measurements we use are
“non-GAAP financial measures” under SEC rules and regulations. GAAP is the acronym for “accounting principles generally
accepted in the United States.” The non-GAAP financial measures we present may not be comparable to similarly-named
measures reported by other companies.
Book Value Per Share Excluding Accumulated Other Comprehensive Income (AOCI) is used to show the amount of our
net worth on a per-share basis. We believe Book Value Per Share Excluding AOCI is useful to investors because it eliminates
the effect of non-cash items that can fluctuate significantly from period to period, including changes in fair value of our
available for sale securities portfolio and foreign currency translation adjustments. Book Value Per Share Excluding AOCI is
derived by dividing Total AIG shareholders’ equity, excluding AOCI, by Total common shares outstanding. The reconciliation to
book value per common share, the most comparable GAAP measure, is presented in Item 6. Selected Financial Data.
We use the following operating performance measures because we believe they enhance the understanding of the underlying
profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful
comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP
measure are provided in the Results of Operations section of this MD&A on a consolidated basis.
After-tax operating income attributable to AIG is derived by excluding the following items from net income attributable to
AIG:
• deferred income tax valuation allowance releases and
charges;
• changes in fair value of fixed maturity securities designated
to hedge living benefit liabilities (net of interest expense);
• changes in benefit reserves and deferred policy acquisition
costs (DAC), value of business acquired (VOBA), and
sales inducement assets (SIA) related to net realized
capital gains and losses;
• other income and expense — net, related to Corporate and
Other run-off insurance lines;
• loss on extinguishment of debt;
• net realized capital gains and losses;
• non-qualifying derivative hedging activities, excluding net
realized capital gains and losses;
• income or loss from discontinued operations;
• income and loss from divested businesses, including:
• gain on the sale of International Lease Finance
Corporation (ILFC); and
• certain post-acquisition transaction expenses incurred
by AerCap Holdings N.V. (AerCap) in connection with its
acquisition of ILFC and the difference between
expensing AerCap’s maintenance rights assets over the
remaining lease term as compared to the remaining
economic life of the related aircraft and related tax
effects;
• legacy tax adjustments primarily related to certain changes
in uncertain tax positions and other tax adjustments; and
• legal reserves and settlements related to legacy crisis
matters, which include favorable and unfavorable
settlements related to events leading up to and resulting
from our September 2008 liquidity crisis and legal fees
incurred as the plaintiff in connection with such legal
matters.