AIG 2015 Annual Report Download - page 57

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 Common Share Excluding Accumulated Other Comprehensive Income (AOCI) and Book Value Per
Common Share Excluding AOCI and Deferred Tax Assets (DTA) are used to show the amount of our net worth on a per-
share basis. We believe these measures are useful to investors because they eliminate 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, foreign
currency translation adjustments and U.S. tax attribute deferred tax assets. Deferred tax assets represent U.S. tax attributes
related to net operating loss carryforwards and foreign tax credits. Amounts for interim periods are estimates based on
projections of full-year attribute utilization. Book Value Per Common Share Excluding AOCI is derived by dividing Total AIG
shareholders’ equity, excluding AOCI, by Total common shares outstanding. Book Value Per Common Share Excluding AOCI
and DTA is derived by dividing Total AIG shareholders’ equity, excluding AOCI and DTA, 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.
Return on Equity – After-tax Operating Income Excluding AOCI and Return on Equity – After-tax Operating Income
Excluding AOCI and DTA are used to show the rate of return on shareholders’ equity. We believe these measures are useful
to investors because they eliminate 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, foreign currency translation adjustments and U.S. tax
attribute deferred tax assets. Deferred tax assets represent U.S. tax attributes related to net operating loss carryforwards and
foreign tax credits. Amounts for interim periods are estimates based on projections of full-year attribute utilization. Return on
Equity – After-tax Operating Income Excluding AOCI is derived by dividing actual or annualized after-tax operating income
attributable to AIG by average AIG shareholders’ equity, excluding average AOCI. Return on Equity – After-tax Operating
Income Excluding AOCI and DTA is derived by dividing actual or annualized after-tax operating income attributable to AIG by
average AIG shareholders’ equity, excluding average AOCI and DTA. The reconciliation to return on equity, 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.