NONCONTROLLING INTERESTS

12 Months Ended

Dec. 31, 2014

18. NONCONTROLLING INTERESTS

The following table presents a rollforward of noncontrolling interests:

		Redeemable						Non-redeemable
		Noncontrolling interests						Noncontrolling interests
		Held by
		Department						Held by
(in millions)		of Treasury		Other		Total		FRBNY		Other		Total
Year Ended December 31, 2014
Balance, beginning of year	$	-	$	30	$	30	$	-	$	611	$	611
Contributions from noncontrolling interests		-		1		1		-		17		17
Distributions to noncontrolling interests		-		-		-		-		(147)		(147)
Deconsolidation		-		(31)		(31)		-		(99)		(99)
Comprehensive loss:
Net loss		-		-		-		-		(5)		(5)
Other comprehensive income (loss), net of tax:
Unrealized gains on investments		-		-		-		-		-		-
Foreign currency translation adjustments		-		-		-		-		-		-
Total other comprehensive
income (loss), net of tax		-		-		-		-		-		-
Total comprehensive income (loss)		-		-		-		-		(5)		(5)
Other		-		-		-		-		(3)		(3)
Balance, end of year	$	-	$	-	$	-	$	-	$	374	$	374
Year Ended December 31, 2013
Balance, beginning of year	$	-	$	334	$	334	$	-	$	667	$	667
Contributions from noncontrolling interests		-		48		48		-		33		33
Distributions to noncontrolling interests		-		(167)		(167)		-		(81)		(81)
Consolidation (deconsolidation)		-		(169)		(169)		-		-		-
Comprehensive loss:
Net income		-		2		2		-		5		5
Other comprehensive loss, net of tax:
Unrealized losses on investments		-		(16)		(16)		-		-		-
Foreign currency translation adjustments		-		(2)		(2)		-		(5)		(5)
Total other comprehensive
loss, net of tax		-		(18)		(18)		-		(5)		(5)
Total comprehensive loss		-		(16)		(16)		-		-		-
Other		-		-		-		-		(8)		(8)
Balance, end of year	$	-	$	30	$	30	$	-	$	611	$	611
Year Ended December 31, 2012
Balance, beginning of year	$	8,427	$	96	$	8,523	$	-	$	855	$	855
Repayment to Department of the Treasury		(8,635)		-		(8,635)		-		-		-
Contributions from noncontrolling interests		-		36		36		-		(87)		(87)
Distributions to noncontrolling interests		-		68		68		-		(27)		(27)
Comprehensive income:
Net income		208		14		222		-		40		40
Other comprehensive income (loss), net of tax:
Unrealized gains on investments		-		4		4		-		5		5
Foreign currency translation adjustments		-		-		-		-		(6)		(6)
Total other comprehensive
income (loss), net of tax		-		4		4		-		(1)		(1)
Total comprehensive income		208		18		226		-		39		39
Other		-		116		116		-		(113)		(113)
Balance, end of year	$	-	$	334	$	334	$	-	$	667	$	667

Redeemable noncontrolling interest

Nonvoting, callable, junior preferred interests held by the Department of Treasury represented preferred interests in the AIA SPV and ALICO SPV. In connection with the execution of our orderly asset disposition plan, as well as the repayment of the FRBNY Credit Facility, we transferred two of our wholly-owned businesses, AIA and ALICO, to two newly created SPVs in exchange for all the common and preferred interests (the SPV Preferred Interests) of those SPVs. On December 1, 2009, AIG transferred the SPV Preferred Interests to the FRBNY in consideration for a $25 billion reduction of the outstanding loan balance and of the maximum amount of credit available under the FRBNY Credit Facility and amended the terms of the FRBNY Credit Facility. As part of the closing of the Recapitalization, the remaining SPV Preferred Interests, with an aggregate liquidation preference of approximately $20.3 billion at January 14, 2011, were purchased from the FRBNY by AIG and transferred to the Department of the Treasury as part of the consideration for the exchange of our Series F Preferred Stock.

The common interests, which we retained, entitled us to 100 percent of the voting power of the SPVs. The voting power allowed us to elect the boards of managers of the SPVs, who oversaw the management and operation of the SPVs. Primarily due to the substantive participation rights of the SPV Preferred Interests, the SPVs were determined to be VIEs. As the primary beneficiary of the SPVs, we consolidated the SPVs.

As a result of the closing of the Recapitalization on January 14, 2011, the SPV Preferred Interests held by the Department of the Treasury were no longer considered permanent equity on our Consolidated Balance Sheets, and were classified as redeemable noncontrolling interests. As part of the Recapitalization, we used approximately $6.1 billion of the cash proceeds from the sale of ALICO to pay down a portion of the liquidation preference of the SPV Preferred Interests. The liquidation preference of the SPV Preferred Interests was further reduced by approximately $12.4 billion using proceeds from the sale of AIG Star, AIG Edison, Nan Shan, and MetLife securities received in the sale of ALICO. During the first quarter of 2011, the remaining liquidation preference of the ALICO SPV Preferred Interests was paid in full.

The SPV Preferred Interests were measured at fair value on their issuance date. The SPV Preferred Interests initially had a liquidation preference of $25 billion and had a preferred return of five percent per year compounded quarterly through September 22, 2013 and nine percent thereafter. The preferred return is reflected in Net income from continuing operations attributable to noncontrolling interests - Nonvoting, callable, junior and senior preferred interests in the Consolidated Statements of Income. The difference between the SPV Preferred Interests’ fair value and the initial liquidation preference was amortized and included in Net income from continuing operations attributable to noncontrolling interests - Nonvoting, callable, junior and senior preferred interests.

During the first quarter of 2012, the liquidation preference of the AIA SPV Preferred Interests was paid down in full.

Non-redeemable noncontrolling interests

Non-redeemable noncontrolling interests include the equity interests of third-party shareholders in our consolidated subsidiaries and includes the preferred shareholders’ equity in outstanding preferred stock of ILFC, a wholly-owned subsidiary that was held for sale at December 31, 2013 and 2012. The preferred stock in ILFC consisted of 1,000 shares of market auction preferred stock (MAPS) in two series (Series A and B) of 500 shares each. Each of the MAPS shares had a liquidation value of $100,000 per share and was not convertible. Dividends on the MAPS were accounted for as a reduction of the noncontrolling interest. The dividend rate, other than the initial rate, for each dividend period for each series was reset approximately every seven weeks (49 days) on the basis of orders placed in an auction, provided such auctions were able to occur. The MAPS were transferred as part of the sale of ILFC.

On May 14, 2014, we completed the sale of International Lease Finance Corporation (ILFC) to AerCap Ireland Limited, a wholly owned subsidiary of AerCap Holdings N.V. (AerCap). See Note 4 – Held-For-Sale Classification and Discontinued Operations for further discussion.

For the years ended December 31, 2014 and 2013, the Noncontrolling interests balance declined by $237 million and $56 million, respectively, primarily caused by distributions to noncontrolling interest

- Definition

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

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