EQUITY

6 Months Ended

Jun. 30, 2014

EQUITY

EQUITY

11.EQUITY

Shares Outstanding

The following table presents a rollforward of outstanding shares:

	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Six Months Ended June 30, 2014
Shares, beginning of year	1,906,645,689	(442,582,366)	1,464,063,323
Shares issued	16,873	-	16,873
Shares repurchased	-	(35,504,806)	(35,504,806)
Shares, end of period	1,906,662,562	(478,087,172)	1,428,575,390

Dividends

Payment of future dividends to our shareholders and repurchases of AIG Common Stock depends in part on the regulatory framework that we are currently subject to and that will ultimately be applicable to us, including as a nonbank systemically important financial institution under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and a global systemically important insurer. In addition, dividends are payable on AIG Common Stock only when, as and if declared by our Board of Directors in its discretion, from funds legally available therefor. In considering whether to pay a dividend or purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital resources available to support our core insurance operations and business strategies, AIG’s funding capacity and capital resources in comparison to internal benchmarks, expectations for capital generation, rating agency expectations for capital, regulatory standards for capital and capital distributions, and such other factors as our Board of Directors may deem relevant.

On March 25, 2014, AIG paid a dividend of $0.125 per share on AIG Common Stock to shareholders of record on March 11, 2014. On June 24, 2014, AIG paid a dividend of $0.125per share on AIG Common Stock to shareholders of record on June 10, 2014.

See Note 19to the Consolidated Financial Statements in the 2013 Annual Report for a discussion of restrictions on payments of dividends to AIG Parent by its subsidiaries.

Repurchase of AIG Common Stock

On August 1, 2013, our Board of Directors authorized the repurchase of shares of AIG Common Stock, with an aggregate purchase price of up to $1.0billion, from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. On February 13, 2014, our Board of Directors authorized an increase to the August 1, 2013 repurchase authorization of AIG Common Stock by $1.0 billion. On June 5, 2014, our Board of Directors authorized an additional increase to the August 1, 2013 repurchase authorization of AIG Common Stock by $2.0 billion, resulting in an aggregate remaining authorization at such time of approximately $2.1 billion of AIG Common Stock.

During the six-month period ended June 30,2014, we repurchased approximately 36millionshares of AIG Common Stock for an aggregate purchase price of approximately $1.9billion pursuant to this authorization, resulting in a remaining authorization of approximately $1.5 billion at June 30,2014.

In the second quarter of 2014, we executed an accelerated stock repurchase (ASR) agreement with a third-party financial institution. The total number of shares of AIG Common stock repurchased in the first half of 2014, and the aggregate purchase price of those shares, each as set forth above, reflect our payment of $300 million to the financial institution under the ASR agreement and our initial receipt of 70 percent of the total notional share equivalent, or approximately 3.8 million shares of AIG Common Stock. The ASR agreement settled with the financial institution in July 2014, at which time we received approximately 1.7 million additional shares of AIG Common Stock based on a formula specified by the terms of the ASR agreement.

The timing of any future repurchases will depend on market conditions, our financial condition, results of operations, liquidity and other factors.

Accumulated Other Comprehensive Income

The following table presents a rollforward of Accumulated other comprehensive income:

		Unrealized Appreciation
		(Depreciation) of Fixed
		Maturity Investments		Unrealized Appreciation (Depreciation) of All Other Investments		Foreign Currency Translation Adjustments		Change in Retirement Plan Liabilities Adjustment
		on Which Other-Than-
		Temporary Credit
(in millions)		investments								Total
Balance, December 31, 2013, net of tax	$	936	$	6,789	$	(952)	$	(413)	$	6,360
Change in unrealized appreciation of investments		199		7,517		-		-		7,716
Change in deferred acquisition costs adjustment and other		36		(629)		-		-		(593)
Change in future policy benefits		(143)		(1,185)		-		-		(1,328)
Change in foreign currency translation adjustments		-		-		(29)		-		(29)
Net actuarial gain		-		-		-		37		37
Prior service cost		-		-		-		(24)		(24)
Change in deferred tax asset (liability)		23		(563)		(82)		(6)		(628)
Total other comprehensive income (loss)		115		5,140		(111)		7		5,151
Noncontrolling interests		-		-		-		-		-
Balance, June 30, 2014, net of tax	$	1,051	$	11,929	$	(1,063)	$	(406)	$	11,511
Balance, December 31, 2012, net of tax	$	575	$	13,446	$	(403)	$	(1,044)	$	12,574
Change in unrealized appreciation (depreciation) of investments		355		(11,632)		-		-		(11,277)
Change in deferred acquisition costs adjustment and other		(87)		630		-		-		543
Change in future policy benefits		49		2,491		-		-		2,540
Change in foreign currency translation adjustments		-		-		(566)		-		(566)
Net actuarial gain		-		-		-		104		104
Prior service cost		-		-		-		(27)		(27)
Change in deferred tax asset (liability)		(122)		3,277		(12)		(16)		3,127
Total other comprehensive income (loss)		195		(5,234)		(578)		61		(5,556)
Noncontrolling interests		-		(16)		(5)		-		(21)
Balance, June 30, 2013, net of tax	$	770	$	8,228	$	(976)	$	(983)	$	7,039

The following table presents the other comprehensive income reclassification adjustments for thethree- and six-month periods ended June 30,2014 and 2013:

		Unrealized Appreciation (Depreciation) of Fixed Maturity Investments on Which Other-Than- Temporary Credit Impairments Were Recognized
				Unrealized Appreciation (Depreciation) of All Other Investments		Foreign Currency Translation Adjustments		Change in Retirement Plan Liabilities Adjustment
(in millions)										Total
Three Months Ended June 30, 2014
Unrealized change arising during period	$	21	$	2,909	$	73	$	10	$	3,013
Less: Reclassification adjustments
included in net income		10		165		-		(1)		174
Total other comprehensive income (loss),
before income tax expense (benefit)		11		2,744		73		11		2,839
Less: Income tax expense (benefit)		(15)		389		26		13		413
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	26	$	2,355	$	47	$	(2)	$	2,426
Three Months Ended June 30, 2013
Unrealized change arising during period	$	(102)	$	(6,854)	$	(273)	$	8	$	(7,221)
Less: Reclassification adjustments
included in net income		6		152		-		(26)		132
Total other comprehensive income (loss),
before income tax expense (benefit)		(108)		(7,006)		(273)		34		(7,353)
Less: Income tax expense (benefit)		(21)		(2,560)		32		17		(2,532)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(87)	$	(4,446)	$	(305)	$	17	$	(4,821)
Six Months Ended June 30, 2014
Unrealized change arising during period	$	110	$	6,097	$	(29)	$	11	$	6,189
Less: Reclassification adjustments
included in net income		18		394		-		(2)		410
Total other comprehensive income (loss),
before income tax expense (benefit)		92		5,703		(29)		13		5,779
Less: Income tax expense (benefit)		(23)		563		82		6		628
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	115	$	5,140	$	(111)	$	7	$	5,151
Six Months Ended June 30, 2013
Unrealized change arising during period	$	372	$	(8,132)	$	(566)	$	26	$	(8,300)
Less: Reclassification adjustments
included in net income		55		379		-		(51)		383
Total other comprehensive income (loss),
before income tax expense (benefit)		317		(8,511)		(566)		77		(8,683)
Less: Income tax expense (benefit)		122		(3,277)		12		16		(3,127)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	195	$	(5,234)	$	(578)	$	61	$	(5,556)

The following table presents the effect of the reclassification of significant items out of Accumulated other comprehensive income on the respective line items in the Condensed Consolidated Statements of Income:

	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Consolidated Statements of Income
	Three Months Ended June 30,
(in millions)		2014		2013
Unrealized appreciation (depreciation) of fixed maturity investments on which other-than-temporary credit impairments were recognized
Investments		$	10	$	6		Other realized capital gains
Total			10		6		-
Unrealized appreciation (depreciation) of all other investments
Investments			207		1,306		Other realized capital gains
Deferred acquisition costs adjustment			(30)		(37)		Amortization of deferred acquisition costs
Future policy benefits			(12)		(1,117)		Policyholder benefits and claims incurred
Total			165		152
Change in retirement plan liabilities adjustment
Prior-service costs			12		10		*
Actuarial gains/(losses)			(13)		(36)		*
Total			(1)		(26)
Total reclassifications for the period		$	174	$	132
	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Consolidated Statements of Income
	Six Months Ended June 30,
(in millions)		2014		2013
Unrealized appreciation (depreciation) of fixed maturity investments on which other-than-temporary credit impairments were recognized
Investments		$	18	$	55		Other realized capital gains
Total			18		55
Unrealized appreciation (depreciation) of all other investments
Investments			411		1,592		Other realized capital gains
Deferred acquisition costs adjustment			5		6		Amortization of deferred acquisition costs
Future policy benefits			(22)		(1,219)		Policyholder benefits and claims incurred
Total			394		379
Change in retirement plan liabilities adjustment
Prior-service costs			24		22		*
Actuarial gains/(losses)			(26)		(73)		*
Total			(2)		(51)		-
Total reclassifications for the period		$	410	$	383		-

* These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. See Note 14 to the Condensed Consolidated Financial Statements.