AIG 2015 Annual Report Download - page 60

ITEM 7 / EXECUTIVE OVERVIEW
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Executive Overview
This overview of the MD&A highlights selected information and may not contain all of the information that is important to
current or potential investors in AIG’s securities. You should read this Annual Report on Form 10-K in its entirety for a complete
description of events, trends, uncertainties, risks and critical accounting estimates affecting us.
As a result of the progress of the wind down and de-risking activities of the Direct Investment book (DIB) and the derivative
portfolio of AIG Financial Products Corp. and related subsidiaries (collectively, AIGFP) included within Global Capital Markets
(GCM), AIG has discontinued separate reporting of the DIB and GCM. Their results are reported within Income from other
assets, net, beginning in 2015. This reporting aligns with the manner in which AIG manages its financial resources. Prior
periods are presented in the historical format for informational purposes. AIG borrowings supported by assets continue to be
managed as such with assets allocated to support the timely repayment of those liabilities. Assets previously held in the DIB
and GCM that are otherwise not required to meet the obligations and capital requirements of the DIB and GCM have been
made available to AIG Parent.
As part of our broad and on-going efforts to transform AIG for long-term competitiveness, in the third quarter of 2015 we
finalized a series of initiatives focused on organizational simplification, operational efficiency, and business rationalization,
which are expected to result in pre-tax restructuring and other costs of approximately $0.7 billion, as well as generate pre-tax
annualized savings of approximately $0.7 billion to $0.8 billion when fully implemented. Results for 2015 include approximately
$0.5 billion of pre-tax restructuring and other costs, composed of $0.3 billion of employee severance and one-time termination
benefits, approximately $0.1 billion associated with the modernization of information technology platforms, and the balance
relating to costs associated with consolidation of legal entities and exiting lower return lines of business. We expect the
remaining $0.2 billion to be recognized through 2017, as well as approximately $0.3 billion of the aggregate pre-tax costs to result
in cash expenditures.
On January 26, 2016, we announced several actions designed to create a leaner, more profitable and focused insurer. These
actions include a plan to reorganize our operating model into “modular”, more self-contained business units to enhance
transparency and accountability. Additionally, we are introducing a new Legacy Portfolio that aims to maximize value and
release capital of certain run-off non-strategic assets and highlight progress on improving the ROE of our Operating Portfolio.
When the new operating structure is finalized, the presentation of our segment results may be modified and prior periods’
presentation may be revised to conform to the new structure.