AIG 2014 Annual Report Download - page 86

ITEM 7 / RESULTS OF OPERATIONS
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Results of Operations
The following section provides a comparative discussion of our Results of Operations on a reported basis for the three-year
period ended December 31, 2014. Factors that relate primarily to a specific business segment are discussed in more detail
within that business segment discussion. For a discussion of the Critical Accounting Estimates that affect the Results of
Operations, see the Critical Accounting Estimates section of this MD&A.
The following table presents our consolidated results of operations:
Years Ended December 31, Percentage Change
(in millions) 2014 2013 2012 2014 vs. 2013 2013 vs. 2012
Revenues:
Premiums $37,254 $ 37,499 $ 38,189 (1)% (2)%
Policy fees 2,615 2,340 2,192 12 7
Net investment income 16,079 15,810 20,343 2 (22)
Net realized capital gains 739 1,939 1,087 (62) 78
Aircraft leasing revenue 1,602 4,420 4,504 (64) (2)
Other income 6,117 6,866 4,899 (11) 40
Total revenues 64,406 68,874 71,214 (6) (3)
Benefits, losses and expenses:
Policyholder benefits and losses incurred 28,281 29,503 32,036 (4) (8)
Interest credited to policyholder account balances 3,768 3,892 4,340 (3) (10)
Amortization of deferred policy acquisition costs 5,330 5,157 5,709 3 (10)
General operating and other expenses 13,138 13,564 13,013 (3) 4
Interest expense 1,718 2,142 2,319 (20) (8)
Loss on extinguishment of debt 2,282 651 32 251 NM
Aircraft leasing expenses 1,585 4,549 4,138 (65) 10
Net (gain) loss on sale of divested businesses (2,197) 48 6,736 NM (99)
Total benefits, losses and expenses 53,905 59,506 68,323 (9) (13)
Income from continuing operations before
income tax expense (benefit) 10,501 9,368 2,891 12 224
Income tax expense (benefit) 2,927 360 )808( NM NM
Income from continuing operations 7,574 9,008 3,699 (16) 144
Income (loss) from discontinued operations,
net of income tax expense (benefit) (50) 84 1 NM NM
Net income 7,524 9,092 3,700 (17) 146
Less: Net income (loss) attributable to noncontrolling
interests (5) 7262 NM (97)
Net income attributable to AIG $7,529 $ 9,085 $ 3,438 (17)% 164 %
For the year ended December 31, 2014, the effective tax rate on income from continuing operations was 27.9 percent. The
effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily due to tax
benefits of $236 million associated with tax exempt interest income, $209 million related to a decrease in the U.S. Life
Insurance Companies’ capital loss carryforward valuation allowance, $182 million of income excludable from gross income
related to the global resolution of certain residential mortgage-related disputes and $68 million associated with the effect of
foreign operations.
For the year ended December 31, 2013, the effective tax rate on income from continuing operations was 3.8 percent. The
effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily due to tax
benefits of $2.8 billion related to a decrease in the U.S. Life Insurance Companies’ capital loss carryforward valuation
allowance, $396 million related to a decrease in certain other valuation allowances associated with foreign jurisdictions and
$298 million associated with tax exempt interest income. These items were partially offset by charges of $632 million related
to uncertain tax positions.
For the year ended December 31, 2012, the effective tax rate on income from continuing operations was (27.9) percent. The
effective tax rate on income from continuing operations differs from the statutory tax rate of 35 percent primarily due to
decreases in the U.S. Life Insurance Companies’ capital loss carryforward valuation allowance of $1.9 billion related to the
actual and projected gains from the U.S. Life Insurance Companies’ available-for-sale securities, and tax effects associated
with tax exempt interest income of $302 million. These items were partially offset by changes in uncertain tax positions of
$446 million.