Summary
This Form 8-K filing by American International Group, Inc. (AIG) primarily serves to update its 2011 Annual Report on Form 10-K regarding a change in accounting for acquisition costs. Effective January 1, 2012, AIG retrospectively adopted a new accounting standard that modifies how costs incurred to acquire or renew insurance contracts are capitalized. This adoption impacts prior periods, leading to adjustments in reported AIG shareholders' equity and net income (loss) attributable to AIG for the years 2007 through 2011. The change specifically involves including anticipated investment income in the recoverability analysis for deferred policy acquisition costs for short-duration insurance contracts. AIG views this as a preferable policy reflecting the timing differences between premium collection, investment, and loss/expense payment. The filing provides detailed tables showing the effects of this adoption on equity and net income across several past fiscal years.
Key Highlights
- 1AIG adopted a new accounting standard for insurance acquisition costs, effective January 1, 2012, with retrospective application.
- 2The adoption includes anticipated investment income in the recoverability analysis of deferred policy acquisition costs for short-duration insurance contracts.
- 3Shareholders' equity as of December 31, 2011, was adjusted downward by $3,413 million due to the new standard.
- 4Net income attributable to AIG for the year ended December 31, 2011, was increased by $2,824 million as a result of the adoption.
- 5The filing provides revised financial data for shareholders' equity and net income (loss) for the years 2007 through 2011.
- 6The report also notes a reclassification of certain Chartis products between operating segments (Commercial to Consumer Insurance) and updates to financial statements and disclosures.
- 7This 8-K is intended to supplement the 2011 Annual Report on Form 10-K and subsequent quarterly filings.