AIG 2015 Annual Report Download - page 241

ITEM 8 / NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Simplifying the Presentation of Debt Issuance Costs
In April 2015, the FASB issued an accounting standard that amends the guidance for debt issuance costs by requiring such
costs to be presented as a deduction to the corresponding debt liability, rather than as an asset, and for the amortization of
such costs to be reported as interest expense. The amendments are intended to simplify the presentation of debt issuance
costs and make it consistent with the presentation of debt discounts or premiums. The amendments, however, do not change
the recognition and measurement guidance applicable to debt issuance costs.
The standard is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The
standard must be applied retrospectively to all prior periods presented. We plan to adopt the standard on January 1, 2016, its
required effective date. Because the new standard does not affect accounting recognition or measurement of debt issuance
costs, the adoption of the standard will have not have a material effect on our consolidated financial condition, results of
operations, or cash flows.
Short Duration Insurance Contracts
In May 2015, the FASB issued an accounting standard that requires additional disclosures (including accident year
information) for short-duration insurance contracts. New disclosures about the liability for unpaid losses and loss adjustment
expenses will be required of public business entities for annual periods beginning after December 15, 2015. The annual
disclosures by accident year include: disaggregated net incurred and paid claims development tables segregated by business
type (not required to exceed 10 years), reconciliation of total net reserves included in development tables to the reported
liability for unpaid losses and loss adjustment expenses, incurred but not reported (IBNR) information, quantitative information
and a qualitative description about claim frequency, and the average annual percentage payout of incurred claims. Further, the
new standard requires, when applicable, disclosures about discounting liabilities for unpaid losses and loss adjustment
expenses and significant changes and reasons for changes in methodologies and assumptions used to determine unpaid
losses and loss adjustment expenses. In addition, the roll forward of the liability for unpaid losses and loss adjustment
expenses currently disclosed in annual financial statements will be required for interim periods beginning in the first quarter of
2017. Early adoption of the new annual and interim disclosures is permitted.
We plan to adopt the standard on its required effective date. Because the new standard does not affect accounting recognition
or measurement, the adoption of the standard will have no effect on our consolidated financial condition, results of operations,
or cash flows.
Recognition and Measurement of Financial Assets and Financial Liabilities
In January 2016, the FASB issued an accounting standard that affects the recognition, measurement, presentation, and
disclosure of financial instruments. Specifically, under the new standard, equity investments (other than those accounted for
using the equity method of accounting or those subject to consolidation) will be measured at fair value with changes in fair
value recognized in earnings. Also, for those financial liabilities for which fair value option accounting has been elected, the
new standard requires changes in fair value due to instrument-specific credit risk to be presented separately in other
comprehensive income. The standard updates certain fair value disclosure requirements for financial instruments carried at
amortized cost.
The standard is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption of certain
provisions is permitted. We are assessing the impact of the standard on our consolidated financial condition, results of
operations and cash flows.