AIG 2015 Annual Report Download - page 366

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COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Exhibit 12
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Years Ended December 31,
(in millions, except ratios) 2015 2014 2013 2012 2011
Earnings:
Pre-tax income (loss)(a): $2,471 $ 9,106 $ 7,942 $ 433 $ (2,836)
Add — Fixed charges 1,716 2,911 4,279 4,717 4,644
Adjusted Pre-tax income (loss) $4,187 $ 12,017 $ 12,221 $ 5,150 $ 1,808
Fixed charges:
Interest expense $1,227 $ 2,034 $ 3,292 $ 3,605 $ 3,576
Portion of rent expense representing interest 109 157 138 148 161
Interest credited to policy and contract holders 380 720 849 964 907
Total fixed charges $1,716 $ 2,911 $ 4,279 $ 4,717 $ 4,644
Total fixed charges, excluding interest credited to
policy and contract holders $1,336 $ 2,191 $ 3,430 $ 3,753 $ 3,737
Ratio of earnings to fixed charges:
Ratio 2.44 4.13 2.86 1.09 n/a
Coverage deficiency n/a n/a n/a n/a $ (2,836)
Ratio of earnings to fixed charges, excluding interest
credited to policy and contract holders(b):
Ratio 3.13 5.48 3.56 1.37 n/a
Coverage deficiency n/a n/a n/a n/a $ (1,929)
(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest.
(b) The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment
contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed from earnings used in this
calculation. GICs and GIAs are entered into by our subsidiaries. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily
investment grade bonds. The assets acquired yield rates greater than the rates on the related policyholders obligation or contract, with the intent of earning a
profit from the spread.