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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 4, 2012

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American International Group, Inc.
(Exact name of registrant as specified in its charter)

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Delaware (State or other jurisdiction of incorporation or organization)		1-8787 (Commission File Number)		13-2592361 (I.R.S. Employer Identification No.)

180 Maiden Lane
New York, New York 10038
(Address of principal executive offices)

Registrant's telephone number, including area code (212) 770-7000

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Table of Contents

Table of Contents

Index		Description		Page
Item 8.01.		Other Events		3
Item 9.01.		Financial Statements and Exhibits		5
Signature				6
EX-99.1		Selected Financial Data		7-10
EX-99.2		Management's Discussion and Analysis of Financial Condition and Results of Operations		11-52
EX-99.3		Financial Statements and Supplementary Data		53-243
EX-99.4		Computation of Ratios of Earnings to Fixed Charges		244
EX-99.5		Consent of Independent Registered Public Accounting Firm		245
EX-101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T

2            AIG Form 8-K

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Table of Contents

ITEM 8.01 OTHER EVENTS

    American International Group, Inc. (AIG) is filing this Current Report on Form 8-K (Form 8-K) to update AIG's Annual Report on Form 10-K for the year ended December 31, 2011, as amended by Amendment No. 1 and Amendment No. 2 on Form 10-K/A filed on February 27, 2012 and March 30, 2012, respectively (collectively, the 2011 Annual Report on Form 10-K), for the following changes:

Changes in Accounting for Acquisition Costs

    On January 1, 2012, AIG retrospectively adopted an accounting standard that amends the accounting for costs incurred by insurance companies that can be capitalized in connection with acquiring or renewing insurance contracts. The standard clarifies how to determine whether the costs incurred in connection with the acquisition of new or renewal insurance contracts qualify as deferred policy acquisition costs. The effects on AIG shareholders' equity, Net income (loss) attributable to AIG and Net income (loss) per common share attributable to AIG common shareholders are summarized below:

At December 31, (in millions)		2011			2010			2009			2008			2007
AIG shareholders' equity as previously reported		$	104,951		$	85,319		$	69,824		$	52,710		$	95,801
Effect of adoption of new standard on AIG shareholders' equity			(3,413	)		(6,463	)		(9,239	)		(11,866	)		(9,279	)
AIG shareholders' equity as currently reported		$	101,538		$	78,856		$	60,585		$	40,844		$	86,522

 

Years Ended December 31, (in millions, except per share data)				2011			2010			2009			2008			2007
Net income (loss) attributable to AIG as previously reported				$	17,798		$	7,786		$	(10,949	)	$	(99,289	)	$	6,200
Effect of adoption of new standard on net income (loss) attributable to AIG					2,824			2,272			2,587			(2,495	)		(1,138	)
Net income (loss) attributable to AIG as currently reported				$	20,622		$	10,058		$	(8,362	)	$	(101,784	)	$	5,062
Net income (loss) per common share:
	Basic:
		Income (loss) attributable to AIG as previously reported		$	9.44		$	11.60		$	(90.48	)	$	(756.85	)	$	47.98
		Effect of adoption of new standard on net income (loss) allocated to Series C Preferred Stock			-			2.69			-			-			-
		Effect of adoption of new standard on net income (loss) applicable to Common Stock			1.57			0.69			19.11			(18.95	)		(8.81	)
		Income (loss) attributable to AIG as currently reported		$	11.01		$	14.98		$	(71.37	)	$	(775.80	)	$	39.17
	Diluted:
		Income (loss) attributable to AIG as previously reported		$	9.44		$	11.60		$	(90.48	)	$	(756.85	)	$	47.73
		Effect of adoption of new standard on net income (loss) allocated to Series C Preferred Stock			-			2.69			-			-			-
		Effect of adoption of new standard on net income (loss) applicable to Common Stock			1.57			0.69			19.11			(18.95	)		(8.76	)
		Income (loss) attributable to AIG as currently reported		$	11.01		$	14.98		$	(71.37	)	$	(775.80	)	$	38.97

    For short-duration insurance contracts, starting on January 1, 2012, AIG has elected to include anticipated investment income in its determination of whether the deferred policy acquisition costs are recoverable. AIG believes the inclusion of anticipated investment income in the recoverability analysis is a preferable accounting policy, as it includes in the recoverability analysis the fact that there is a timing difference between when the premiums are collected and in turn invested and when the losses and related expenses are paid. This is considered a change in accounting principle that requires retrospective application to all periods presented. Because AIG

AIG Form 8-K            3

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Table of Contents

historically has not recorded any premium deficiency on its short-duration insurance contracts even without the inclusion of anticipated investment income, there were no changes to the historical financial statements for the change in accounting principle.

Presentation of Comprehensive Income

    On January 1, 2012, AIG adopted an accounting standard that requires the presentation of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components, followed consecutively by a second statement that presents total other comprehensive income and its components. The adoption of this accounting standard resulted in the inclusion of condensed consolidating statements of comprehensive income (loss) in Note 24 to the Consolidated Financial Statements and condensed statements of comprehensive income of the Registrant included in Schedule II. The standard did not have any effect on AIG's consolidated financial condition, results of operations or cash flows.

Chartis Segment Changes

    The historical Chartis financial information has been revised to reflect the reclassification in 2012 of certain Chartis products that were previously reported in the Commercial Insurance operating segment to the Consumer Insurance operating segment. These revisions did not affect the total Chartis reportable segment results previously reported or on AIG's consolidated financial condition, results of operations or cash flows.

Exhibits

    Exhibits filed with this Form 8-K and incorporated in this Item 8.01 by reference revise the following sections in the 2011 Annual Report on Form 10-K for all applicable periods presented:

•

Exhibit 99.1 — Item 6. Selected Financial Data

•

Exhibit 99.2 — Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

•

Exhibit 99.3 — Item 8. Financial Statements and Supplementary Data, and Item 15. Financial Statement Schedules I to V

•

Exhibit 99.4 — Computation of Ratios of Earnings to Fixed Charges

    Except for matters noted above, no other information in the 2011 Annual Report on Form 10-K is being updated in this Form 8-K for events or developments that occurred subsequent to the filing of the 2011 Annual Report on Form 10-K on February 23, 2012.

    This document should be read in conjunction with and as a supplement to information contained in the 2011 Annual Report on Form 10-K. For significant developments since the filing of the 2011 Annual Report on Form 10-K on February 23, 2012, refer to AIG's subsequent 2012 Quarterly Reports on Form 10-Q and other relevant Securities and Exchange Commission filings.

4            AIG Form 8-K

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Table of Contents

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)

Exhibits

Exhibit Number
	99.1		Selected Financial Data updated for the adoption of a new acquisition cost standard.
	99.2		Management's Discussion and Analysis of Financial Condition and Results of Operations updated for the adoption of a new acquisition cost standard and the reclassification of certain Chartis products that were previously reported in the Commercial Insurance operating segment to the Consumer Insurance operating segment.
	99.3		Financial Statements and Supplementary Data updated for the adoption of new accounting standards for acquisition costs and the presentation of comprehensive income. Additionally, updates were made for the reclassification of certain Chartis products that were previously reported in the Commercial Insurance operating segment to the Consumer Insurance operating segment.
	99.4		Computation of Ratios of Earnings to Fixed Charges updated for the adoption of a new acquisition cost standard.
	99.5		Consent of PricewaterhouseCoopers LLP.
	101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheet as of December 31, 2011 and December 31, 2010, (ii) the Consolidated Statement of Operations for the years ended December 31, 2011, 2010 and 2009 (iii) the Consolidated Statement of Shareholders' Equity for the years ended December 31, 2011, 2010 and 2009 (iv) the Consolidated Statement of Cash Flows for the years ended December 31, 2011, 2010 and 2009 (v) the Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2011, 2010 and 2009 and (vi) the Notes to the Consolidated Financial Statements.

AIG Form 8-K            5

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SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		AMERICAN INTERNATIONAL GROUP, INC. (Registrant)
		/s/ KATHLEEN E. SHANNON Kathleen E. Shannon Senior Vice President and Deputy General Counsel

Dated: May 4, 2012

6            AIG Form 8-K

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Exhibit 99.1

ITEM 6. SELECTED FINANCIAL DATA

The Selected Consolidated Financial Data reflects changes described in Item 8.01 of this Current Report on Form 8-K, and should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying notes included elsewhere herein.

Years Ended December 31, (in millions, except per share data)			2011(a)			2010(a)			2009(a),(b)			2008(c)			2007(c)
Revenues:
	Premiums		$	38,990		$	45,319		$	48,583		$	60,147		$	58,575
	Policy fees			2,705			2,710			2,656			2,990			3,006
	Net investment income			14,755			20,934			18,992			10,453			23,933
	Net realized capital gains (losses)			541			(164	)		(5,210	)		(46,796	)		(3,249	)
	Aircraft leasing revenue			4,508			4,749			4,967			4,830			4,431
	Other income			2,758			3,989			5,459			(38,293	)		(5,180	)
Total revenues				64,257			77,537			75,447			(6,669	)		81,516
Benefits, claims and expenses:
	Policyholder benefits and claims incurred			33,450			41,392			45,314			45,447			44,995
	Interest credited to policyholder account balances			4,467			4,487			4,611			5,582			5,936
	Amortization of deferred acquisition costs			5,486			5,821			6,670			6,425			9,255
	Other acquisition and insurance expenses			8,458			10,163			9,815			14,783			7,059
	Interest expense			3,871			7,981			14,358			15,997			3,483
	Aircraft leasing expenses			3,974			4,050			2,385			2,137			1,880
	Net loss on extinguishment of debt			2,908			104			-			-			-
	Net (gain) loss on sale of properties and divested businesses			74			(19,566	)		1,271			-			-
	Other expenses			2,470			3,439			5,465			6,182			4,848
Total benefits, claims and expenses				65,158			57,871			89,889			96,553			77,456
Income (loss) from continuing operations before income tax expense (benefit)				(901	)		19,666			(14,442	)		(103,222	)		4,060
Income tax expense (benefit)				(19,764	)		6,736			(2,055	)		(7,699	)		(104	)
Income (loss) from continuing operations				18,863			12,930			(12,387	)		(95,523	)		4,164
Income (loss) from discontinued operations, net of tax				2,467			(645	)		2,661			(7,359	)		2,186
Net income (loss)				21,330			12,285			(9,726	)		(102,882	)		6,350
Net income (loss) attributable to AIG				20,622			10,058			(8,362	)		(101,784	)		5,062
Income (loss) per common share attributable to AIG common shareholders:
Basic:
	Income (loss) from continuing operations			9.65			16.02			(90.51	)		(720.80	)		22.87
	Income (loss) from discontinued operations			1.36			(1.04	)		19.14			(55.00	)		16.30
	Net income (loss) attributable to AIG			11.01			14.98			(71.37	)		(775.80	)		39.17
Diluted:
	Income (loss) from continuing operations			9.65			16.02			(90.51	)		(720.80	)		22.75
	Income (loss) from discontinued operations			1.36			(1.04	)		19.14			(55.00	)		16.22
	Net income (loss) attributable to AIG			11.01			14.98			(71.37	)		(775.80	)		38.97
Dividends declared per common share				-			-			-			8.40			15.40
Year-end balance sheet data:
	Total investments			410,438			410,412			601,165			636,912			829,468
	Total assets			552,360			675,573			838,346			848,552			1,034,174
	Long-term debt			75,253			106,461			136,733			177,485			162,935
	Total liabilities			441,444			568,363			748,550			797,692			937,131
	Total AIG shareholders' equity			101,538			78,856			60,585			40,844			86,522
	Total equity			102,393			106,776			88,837			48,939			94,994
Other data (from continuing operations):
	Other-than-temporary impairments			1,280			3,039			6,696			41,867			4,212
	Goodwill impairment charges			-			-			693			3,744			-
	Adjustment to federal and foreign deferred tax valuation allowance			(18,307	)		1,361			2,986			22,172			212
	Amortization of prepaid commitment fee			49			3,471			8,359			9,279			-
	Catastrophe-related losses			3,307			1,076			53			1,840			276

AIG Form 8-K            7

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(a)

See Note 2 to the Consolidated Financial Statements for further discussion on the changes to certain financial statement line items as of December 31, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009.

(b)

Adoption of the new accounting standard related to acquisition costs decreased both total assets and equity by $9.2 billion at December 31, 2009.

(c)

The following tables present the changes from the adoption of the new accounting standard related to acquisition costs to certain financial statement line items as of December 31, 2008 and 2007, and for the years ended December 31, 2008 and 2007:

Year Ended December 31, 2008 (in millions, except per share data)			As Previously Reported			Effect of Change			As Currently Reported
Statement of Operations:
	Net realized capital losses		$	(46,794	)	$	(2	)	$	(46,796	)
Total revenues				(6,667	)		(2	)		(6,669	)
	Interest credited to policyholder account balances			5,589			(7	)		5,582
	Amortization of deferred acquisition costs			9,439			(3,014	)		6,425
	Other acquisition and insurance expenses			11,571			3,212			14,783
Total benefits, claims and expenses				96,362			191			96,553
Loss from continuing operations before income tax expense (benefit)				(103,029	)		(193	)		(103,222	)
Income tax expense (benefit)				(9,683	)		1,984			(7,699	)
Loss from continuing operations				(93,346	)		(2,177	)		(95,523	)
Loss from discontinued operations, net of tax				(7,041	)		(318	)		(7,359	)
Net loss				(100,387	)		(2,495	)		(102,882	)
Net loss attributable to AIG				(99,289	)		(2,495	)		(101,784	)
Loss per common share attributable to AIG common shareholders:
Basic:
	Loss from continuing operations			(704.26	)		(16.54	)		(720.80	)
	Loss from discontinued operations			(52.59	)		(2.41	)		(55.00	)
	Net loss attributable to AIG			(756.85	)		(18.95	)		(775.80	)
Diluted:
	Loss from continuing operations			(704.26	)		(16.54	)		(720.80	)
	Loss from discontinued operations			(52.59	)		(2.41	)		(55.00	)
	Net loss attributable to AIG			(756.85	)		(18.95	)		(775.80	)
December 31, 2008 balance sheet data:
	Total assets			860,418			(11,866	)		848,552
	Total liabilities			797,692			-			797,692
	Total AIG shareholders' equity			52,710			(11,866	)		40,844
	Total equity			60,805			(11,866	)		48,939
Other data (from continuing operations):
	Adjustment to federal and foreign deferred tax valuation allowance			20,121			2,051			22,172

8            AIG Form 8-K

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    Items affecting comparability among periods include:

•

AIG was significantly and adversely affected by the market turmoil in late 2008 and early 2009 and recognized other-than-temporary impairment charges in 2008 primarily related to collateralized mortgage-backed securities, other structured securities and securities of financial institutions; losses related to the change in AIG's intent and ability to hold to recovery certain securities; and losses related to AIG's securities lending program.



•

In 2008, AIG also recognized unrealized market valuation losses representing the change in fair value of its super senior credit default swap portfolio, established a deferred tax valuation allowance and experienced an unprecedented strain on liquidity. This strain led to several transactions and relationships with the Federal Reserve Bank of New York (FRBNY) and the United States Department of the Treasury. See Note 1 to the Consolidated Financial Statements for further discussion of these transactions and relationships.



•

The decline in interest expense in 2010 was primarily due to a reduced weighted average interest rate on borrowings, a lower average outstanding balance and a decline in amortization of the prepaid commitment fee asset related to the partial repayment of the credit facility provided by the FRBNY. On January 14, 2011, AIG repaid the remaining $20.7 billion and terminated this facility, resulting in a net $3.3 billion pre-tax charge in the first quarter of 2011, primarily representing the accelerated amortization of the remaining prepaid commitment fee asset included in Net loss on extinguishment of debt. See Note 1 to the Consolidated Financial Statements for further discussion of the Recapitalization.

AIG Form 8-K            9

•

AIG executed multiple asset dispositions in 2011 and 2010, as further discussed in Note 4 to the Consolidated Financial Statements, which included the completion of an initial public offering of AIA in 2010 for which AIG recognized an $18.1 billion gain.



•

As further discussed in Note 22 to the Consolidated Financial Statements, AIG concluded that $18.4 billion of the deferred tax asset valuation allowance for the U.S. consolidated income tax group should be released through the Consolidated Statement of Operations in 2011.



•

As a result of the closing of the Recapitalization on January 14, 2011, the preferred interests in the special purpose vehicles that held the proceeds of the AIA initial public offering (the AIA SPV Preferred Interests) and the American Life Insurance Company (ALICO) sale (the ALICO SPV Preferred Interests, and together with the AIA SPV Preferred Interests, the SPV Preferred Interests) held by the United States Department of the Treasury are not considered permanent equity on AIG's Consolidated Balance Sheet, and were classified as redeemable non-controlling interests.

10            AIG Form 8-K

Exhibit 99.2

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

REVISIONS

    The information contained herein revises selected sections of Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) as previously presented in Item 7 of Part II of AIG's Annual Report on Form 10-K for the year ended December 31, 2011, as amended by Amendment No. 1 and Amendment No. 2 on Form 10-K/A filed on February 27, 2012 and March 30, 2012, respectively (collectively, the 2011 Annual Report on Form 10-K). As more fully described in Item 8.01 of this Current Report on Form 8-K, sections of the 2011 Annual Report on Form 10-K are being revised to reflect the following:

Changes in Accounting for Acquisition Costs

    On January 1, 2012, AIG retrospectively adopted a standard that changed its method of accounting for costs associated with acquiring or renewing insurance contracts. The standard clarifies how to determine whether the costs incurred in connection with the acquisition of new or renewal insurance contracts qualify as deferred policy acquisition costs.

The effects on AIG shareholders' equity and Net income (loss) attributable to AIG is summarized below:

    For short-duration insurance contracts, starting in 2012, AIG has elected to include anticipated investment income in its determination of whether the deferred policy acquisition costs are recoverable. AIG believes the inclusion of anticipated investment income in the recoverability analysis is a preferable accounting policy, as it includes in the recoverability analysis the fact that there is a timing difference between when the premiums are collected and in turn invested and when the losses and related expenses are paid. This is considered a change in accounting principle that requires retrospective application to all periods presented. Because AIG historically has not recorded any premium deficiency on its short-duration insurance contracts even without the inclusion of anticipated investment income, there were no changes to the historical financial statements for the change in accounting principle.

Chartis Segment Changes

    Chartis financial information has been revised to reflect the reclassification in 2012 of certain Chartis products that were previously reported in the Commercial Insurance operating segment to the Consumer Insurance operating segment. These revisions did not affect the total Chartis segment results previously reported.

    The sections of MD&A as previously presented in Item 7 of Part II of the 2011 Annual Report on Form 10-K that are being revised, in whole or in part, are as follows:

•

Executive Overview

AIG Form 8-K            11

•

Financial Overview



•

Results of Operations



•

Consolidated Results



•

Segment Results



•

Chartis Operations (under the sub-section Chartis Operations — Liability for Unpaid Claims and Claims Adjustment Expense, only the two tables that have been revised for changes in Chartis operating segments are included herein)



•

SunAmerica Operations (excluding Sales and Deposits, Premiums, and Domestic Retirement Services Net Flows)



•

Other Operations



•

Consolidated Comprehensive Income (which is titled "Consolidated Other Comprehensive Income" in the 2011 Annual Report on Form 10-K)



•

Critical Accounting Estimates



•

Recoverability of Deferred Tax Asset



•

Deferred Policy Acquisition Costs – Short Duration (Chartis) (which is titled Deferred Policy Acquisition Costs—Short Duration (Chartis and Mortgage Guaranty) in the 2011 Annual Report on Form 10-K)

    Sections and sub-sections of the MD&A as previously presented in Item 7 of Part II of the 2011 Annual Report on Form 10-K that are not being revised are not included herein. Accordingly, readers should also refer to the 2011 Annual Report on Form 10-K for financial and other information that is not being revised.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

    This Current Report on Form 8-K and other publicly available documents may include, and AIG's officers and representatives may from time to time make, projections, goals, assumptions and statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These projections, goals, assumptions and statements are not historical facts but instead represent only AIG's belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG's control. These projections, goals, assumptions and statements include statements preceded by, followed by or including words such as "believe", "anticipate", "expect", "intend", "plan", "view", "target" or "estimate". These projections, goals, assumptions and statements may address, among other things:

•

the timing of the disposition of the ownership position of the United States Department of the Treasury (Department of the Treasury) in AIG;



•

the timing and method of repayment of the preferred interests in AIA Aurora LLC held by the Department of the Treasury;



•

the fair value of AIA and cash flow projections for AIG's Maiden Lane Interests;



•

the monetization of AIG's interests in International Lease Finance Corporation (ILFC);



•

AIG's exposures to subprime mortgages, monoline insurers, the residential and commercial real estate markets, state and municipal bond issuers and sovereign bond issuers;



•

AIG's exposure to European governments and European financial institutions;



•

AIG's strategy for risk management;



•

AIG's ability to retain and motivate its employees;



•

AIG's generation of deployable capital;



•

AIG's return on equity and earnings per share long-term aspirational goals;



•

AIG's strategy to grow net investment income, efficiently manage capital and reduce expenses;

12            AIG Form 8-K

•

AIG's strategy for customer retention, growth, product development, market position, financial results and reserves; and



•

the revenues and combined ratios of AIG's subsidiaries.

    It is possible that AIG's actual results and financial condition will differ, possibly materially, from the results and financial condition indicated in these projections, goals, assumptions and statements. Factors that could cause AIG's actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include:

•

actions by credit rating agencies;



•

changes in market conditions;



•

the occurrence of catastrophic events;



•

significant legal proceedings;



•

concentrations in AIG's investment portfolios, including its municipal bond portfolio;



•

judgments concerning casualty insurance underwriting and reserves;



•

judgments concerning the recognition of deferred tax assets;



•

judgments concerning deferred policy acquisition costs (DAC) recoverability;



•

judgments concerning the recoverability of aircraft values in ILFC's fleet; and



•

such other factors as are discussed throughout this MD&A and in Item 1A. Risk Factors discussed in AIG's 2011 Annual Report on Form 10-K.

    AIG is not under any obligation (and expressly disclaims any obligation) to update or alter any projections, goals, assumptions or other statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise. Unless the context otherwise requires, the terms AIG, the Company, we, us, and our mean AIG and its consolidated subsidiaries.

USE OF NON-GAAP MEASURES

    Throughout this MD&A, AIG presents its operations in the way it believes will be most meaningful and representative of ongoing operations as well as most transparent. Certain of the measurements used by AIG management are "non-GAAP financial measures" under Securities and Exchange Commission (SEC) rules and regulations.

    AIG analyzes the operating performance of Chartis using underwriting profit (loss). Operating income (loss), which is income (loss) before net realized capital gains (losses) and related deferred policy acquisition costs (DAC) and sales inducement asset (SIA) amortization, is utilized to report results for SunAmerica Financial Group (SunAmerica) operations. Management believes that these measures enhance the understanding of the underlying profitability of the ongoing operations of these businesses and allow for more meaningful comparisons with AIG's insurance competitors. Reconciliations of these measures to the most directly comparable measurement derived from accounting principles generally accepted in the United States (GAAP), pre-tax income, are included in Results of Operations.

EXECUTIVE OVERVIEW

    This executive overview of management's discussion and analysis highlights selected information and may not contain all of the information that is important to current or potential investors in AIG's securities. This Current Report on Form 8-K should be read in its entirety for a complete description of events, trends and uncertainties as well as the critical accounting estimates affecting AIG and its subsidiaries.

AIG Form 8-K            13

FINANCIAL OVERVIEW

    As further discussed in Note 22 to the Consolidated Financial Statements, AIG concluded that $18.4 billion of the deferred tax asset valuation allowance for the U.S. consolidated income tax group should be released through the Consolidated Statement of Operations in 2011.

    AIG's loss from continuing operations before income taxes represented a $20.6 billion decrease compared to its 2010 income and reflected the following:

•

a $3.3 billion net loss on extinguishment of debt recorded in the first quarter of 2011, primarily consisting of the accelerated amortization of the prepaid commitment fee asset resulting from the termination of the Credit Agreement, dated as of September 22, 2008 (as amended, the Federal Reserve Bank of New York (FRBNY) Credit Facility) on January 14, 2011, partially offset by a $484 million gain on extinguishment of debt in the fourth quarter of 2011 related to the exchange of junior subordinated debt;



•

significant catastrophe losses for Chartis totaling $3.3 billion, including losses from Thailand floods in the fourth quarter of 2011, Hurricane Irene in the third quarter of 2011, the U.S. tornadoes in the second quarter of 2011 and the Great Tohoku Earthquake & Tsunami (the Tohoku catastrophe) in the first quarter of 2011, compared to catastrophe losses of $1.1 billion in 2010;



•

losses for Aircraft Leasing of $1.7 billion due to impairment charges, fair value adjustments and lease-related charges on aircraft in both 2011 and 2010;



•

$604 million in unfavorable fair value adjustments on AIG's economic interest in Maiden Lane II LLC (ML II) and equity interest in Maiden Lane III LLC (ML III) (together, the Maiden Lane Interests);



•

2010 included a gain of $19.6 billion on sales of divested businesses, primarily consisting of a gain of $18.1 billion from the completion of the initial public offering and listing of AIA Group Limited (AIA) ordinary shares on the Hong Kong Stock Exchange on October 29, 2010, as well as a gain of $1.3 billion recognized in 2010 related to the sale of AIG's headquarters building in Tokyo in 2009 which gain had been deferred until the expiration of certain lease provisions; and



•

income in 2010 from divested businesses prior to their sale totaling $2.4 billion, primarily representing AIA.

    Partially offsetting these declines were;

•

a reduction in prior year adverse loss development in 2011 compared to 2010;



•

a decrease in interest expense of $4.1 billion primarily resulting from the January 2011 repayment of the FRBNY Credit Facility;



•

an increase in the fair value of AIA ordinary shares; and



•

a reduction in realized capital losses in 2011 compared to 2010.

    In 2011, AIG recorded income from discontinued operations net of taxes of $2.5 billion, which included a pre-tax gain of $3.5 billion recorded in the first quarter of 2011 on the sale of AIG Star Life Insurance Co., Ltd. (AIG Star) and AIG Edison Life Insurance Company (AIG Edison) compared to a net loss of $645 million in 2010, which included goodwill impairment charges of $4.6 billion associated with the sale of American Life Insurance Company (ALICO), AIG Star and AIG Edison.

    See Results of Operations herein for additional discussion of our results.

RESULTS OF OPERATIONS

    In order to align financial reporting with changes made during 2011 to the manner in which AIG's chief operating decision makers review the businesses to assess performance and make decisions about resources to be allocated, AIG changed its segments in the third quarter of 2011. AIG now reports the results of its operations through three reportable segments: Chartis, SunAmerica Financial Group (SunAmerica), and Aircraft Leasing. Through these reportable segments, AIG provides insurance, financial and investment products and services to both businesses and individuals in more than 130 countries. AIG's subsidiaries serve commercial, institutional and individual customers through an extensive property-casualty and life insurance and retirement services network. Aircraft Leasing includes commercial aircraft and equipment leasing. AIG's Other operations category consists of businesses and items not allocated to AIG's reportable segments.

14            AIG Form 8-K

CONSOLIDATED RESULTS

    During 2011, AIG experienced significant favorable developments, including the completion of the Recapitalization in January 2011, the wind-down of AIGFP's portfolios, the sale of certain life insurance businesses, emergence from cumulative losses in recent years and a return to sustainable operating profits within its primary operations. Notably:

•

AIG released approximately $18.4 billion of the deferred tax asset valuation allowance for the U.S. consolidated income tax group. The fourth quarter effect was $19.5 billion, which included valuation allowance increases during the first nine months of 2011. See Critical Accounting Estimates — Recoverability of Deferred Tax Asset and Note 22 of the Consolidated Financial Statements for additional information;



•

Chartis prior year adverse loss reserve development declined by $4.6 billion to $211 million;



•

Interest expense declined $4.1 billion, primarily due to the termination of the FRBNY Credit Facility; and



•

Improving equity markets contributed to a $1.3 billion increase in the market valuation of AIG's holding of AIA ordinary shares.

    Offsetting these favorable developments were record catastrophe losses for Chartis and the effects of several macroeconomic drivers, including declining equity markets, widening credit spreads, and declining interest rates, including:

•

Total catastrophe losses of $3.3 billion for Chartis in 2011 compared to $1.1 billion in 2010;



•

Aircraft Leasing losses of $1.7 billion due to impairment charges, fair value adjustments and lease-related charges on aircraft;



•

The widening of credit spreads, reduced interest rates, and changes in the timing of estimated future cash flows drove declines of $604 million in the recorded fair value of the Maiden Lane Interests;



•

AIG recognized a $3.3 billion loss on extinguishment of debt related to the termination of the FRBNY Credit Facility, which was partially offset by a $484 million gain on extinguishment of debt associated with the exchange of junior subordinated debt; and



•

Components of operating results decreased due to the deconsolidation of AIA in the fourth quarter of 2010.

AIG Form 8-K            15

The following table presents AIG's consolidated results of operations (comparability with 2010 and 2009 is affected by the deconsolidation of AIA in the fourth quarter of 2010):

    The comparisons of 2011 and 2010 results to the respective prior year follow:

Premiums

2011 and 2010 Comparison

    Premiums decreased in 2011 compared to 2010 primarily due to the deconsolidation in the fourth quarter of 2010 of AIA, which accounted for $9.3 billion of premiums in 2010. The decline in premiums for 2011 compared to 2010 was partially offset by an increase in Chartis premiums, primarily resulting from the consolidation of Fuji commencing in the third quarter of 2010, and the favorable effect of foreign exchange rates.

2010 and 2009 Comparison

    Premiums decreased in 2010 compared to 2009 primarily due to a reduction of $3.3 billion related to 2009 dispositions that did not meet the criteria for discontinued operations accounting. These dispositions included HSB Group, Inc. (HSB), 21st Century Insurance Group (including Agency Auto Division and excluding Chartis

16            AIG Form 8-K

Private Client Group) (21st Century) and AIG Life of Canada (AIG Life Canada), as well as the deconsolidation of Transatlantic Holdings, Inc (Transatlantic) in 2009.

Policy Fees

2011 and 2010 Comparison

    Policy fees decreased slightly in 2011 compared to 2010 as higher variable annuity fee income was more than offset by lower surrender charges due to decreased surrender rates and universal life unlockings.

2010 and 2009 Comparison

    Policy fees increased slightly for 2010 compared to 2009 primarily due to higher variable annuity fees on separate account assets consistent with the growth in variable accounts assets as a result of favorable equity market conditions in late 2010.

Net Investment Income

The following table summarizes the components of consolidated Net investment income: