EQUITY

9 Months Ended

Sep. 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
Nine Months Ended September 30, 2014
Shares, beginning of year	1,906,645,689	(442,582,366)	1,464,063,323
Shares issued	25,803	1,143	26,946
Shares repurchased	-	(60,317,318)	(60,317,318)
Shares, end of period	1,906,671,492	(502,898,541)	1,403,772,951

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. On September 25, 2014, AIG paid a dividend of $0.125 per share on AIG Common Stock to shareholders of record on September 11, 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 of $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 of $2.0 billion.

We repurchased approximately 60 million shares of AIG Common Stock during the nine-month period ended September 30,2014, for an aggregate purchase price of approximately $3.4 billion. As of September 30,2014, less than $1 million remained under our repurchase authorization.

In the second and third quarters of 2014, we executed three accelerated stock repurchase (ASR) agreements with third-party financial institutions. The total number of shares of AIG Common Stock repurchased in the nine-month period ended September 30,2014, and the aggregate purchase price of those shares, each as set forth above, reflect our payment of approximately $1.7 billion in the aggregate under the ASR agreements and the receipt of approximately 27 million shares of AIG Common Stock in the aggregate, including the initial receipt of 70 percent of the total notional share equivalent, or approximately 8.8 million shares of AIG Common Stock, under an ASR agreement executed in September 2014. That ASR agreement settled in October 2014, at which time we received approximately 3.9 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 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
Balance, December 31, 2013, net of tax	$	936	$	6,789	$	(952)	$	(413)	$	6,360
Change in unrealized appreciation of investments		268		6,330		-		-		6,598
Change in deferred acquisition costs adjustment and other		61		(433)		-		-		(372)
Change in future policy benefits		(114)		(781)		-		-		(895)
Change in foreign currency translation adjustments		-		-		(149)		-		(149)
Net actuarial gain		-		-		-		40		40
Prior service cost		-		-		-		(36)		(36)
Change in deferred tax asset (liability)		(41)		(144)		(40)		9		(216)
Total other comprehensive income (loss)		174		4,972		(189)		13		4,970
Noncontrolling interests		-		(1)		-		-		(1)
Balance, September 30, 2014, net of tax	$	1,110	$	11,762	$	(1,141)	$	(400)	$	11,331
Balance, December 31, 2012, net of tax	$	575	$	13,446	$	(403)	$	(1,044)	$	12,574
Change in unrealized appreciation (depreciation) of investments		314		(13,048)		-		-		(12,734)
Change in deferred acquisition costs adjustment and other		(108)		939		-		-		831
Change in future policy benefits		80		2,727		-		-		2,807
Change in foreign currency translation adjustments		-		-		(709)		-		(709)
Net actuarial gain		-		-		-		94		94
Prior service cost		-		-		-		(39)		(39)
Change in deferred tax asset (liability)		(114)		3,714		82		(20)		3,662
Total other comprehensive income (loss)		172		(5,668)		(627)		35		(6,088)
Noncontrolling interests		-		(16)		(7)		-		(23)
Balance, September 30, 2013, net of tax	$	747	$	7,794	$	(1,023)	$	(1,009)	$	6,509

The following table presents the other comprehensive income reclassification adjustments for thethree- and nine-month periods ended September 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 September 30, 2014
Unrealized change arising during period	$	132	$	(575)	$	(120)	$	(8)	$	(571)
Less: Reclassification adjustments
included in net income		9		12		-		1		22
Total other comprehensive income (loss),
before income tax expense (benefit)		123		(587)		(120)		(9)		(593)
Less: Income tax expense (benefit)		64		(419)		(42)		(15)		(412)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	59	$	(168)	$	(78)	$	6	$	(181)
Three Months Ended September 30, 2013
Unrealized change arising during period	$	(30)	$	(652)	$	(143)	$	(44)	$	(869)
Less: Reclassification adjustments
included in net income		1		219		-		(22)		198
Total other comprehensive loss,
before income tax benefit		(31)		(871)		(143)		(22)		(1,067)
Less: Income tax expense (benefit)		(8)		(437)		(94)		4		(535)
Total other comprehensive loss,
net of income tax expense (benefit)	$	(23)	$	(434)	$	(49)	$	(26)	$	(532)
Nine Months Ended September 30, 2014
Unrealized change arising during period	$	242	$	5,522	$	(149)	$	3	$	5,618
Less: Reclassification adjustments
included in net income		27		406		-		(1)		432
Total other comprehensive income (loss),
before income tax expense (benefit)		215		5,116		(149)		4		5,186
Less: Income tax expense (benefit)		41		144		40		(9)		216
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	174	$	4,972	$	(189)	$	13	$	4,970
Nine Months Ended September 30, 2013
Unrealized change arising during period	$	342	$	(8,784)	$	(709)	$	(18)	$	(9,169)
Less: Reclassification adjustments
included in net income		56		598		-		(73)		581
Total other comprehensive income (loss),
before income tax expense (benefit)		286		(9,382)		(709)		55		(9,750)
Less: Income tax expense (benefit)		114		(3,714)		(82)		20		(3,662)
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	172	$	(5,668)	$	(627)	$	35	$	(6,088)

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 September 30,
(in millions)		2014		2013
Unrealized appreciation (depreciation) of fixed maturity investments on which other-than-temporary credit impairments were recognized
Investments		$	9	$	1		Other realized capital gains
Total			9		1		-
Unrealized appreciation (depreciation) of all other investments
Investments			117		501		Other realized capital gains
Deferred acquisition costs adjustment			(40)		(39)		Amortization of deferred acquisition costs
Future policy benefits			(65)		(243)		Policyholder benefits and claims incurred
Total			12		219
Change in retirement plan liabilities adjustment
Prior-service costs			11		13		*
Actuarial gains/(losses)			(10)		(35)		*
Total			1		(22)
Total reclassifications for the period		$	22	$	198
	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Consolidated Statements of Income
	Nine Months Ended September 30,
(in millions)		2014		2013
Unrealized appreciation (depreciation) of fixed maturity investments on which other-than-temporary credit impairments were recognized
Investments		$	27	$	56		Other realized capital gains
Total			27		56
Unrealized appreciation (depreciation) of all other investments
Investments			528		2,093		Other realized capital gains
Deferred acquisition costs adjustment			(35)		(33)		Amortization of deferred acquisition costs
Future policy benefits			(87)		(1,462)		Policyholder benefits and claims incurred
Total			406		598
Change in retirement plan liabilities adjustment
Prior-service costs			35		35		*
Actuarial gains/(losses)			(36)		(108)		*
Total			(1)		(73)		-
Total reclassifications for the period		$	432	$	581		-

* 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.