HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2013

HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED OPERATIONS

HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED OPERATIONS

4. HELD-FOR-SALE CLASSIFICATION AND DISCONTINUED OPERATIONS

International Lease Finance Corporation Sale

On December 9, 2012, we entered into a definitive agreement with Jumbo Acquisition Limited for the sale of 80.1 percent of the common stock of ILFC for approximately $4.2 billion in cash (the ILFC Transaction). Jumbo Acquisition Limited may elect to purchase an additional 9.9 percent of the common stock of ILFC for $522.5 million (the Option) within ten days after approval of the ILFC Transaction and the Option by the Committee on Foreign Investment in the United States. We will retain a 10 percent ownership interest in ILFC if the Option is exercised, or a 19.9 percent ownership interest in ILFC if the Option is not exercised by Jumbo Acquisition Limited. If the Option is exercised, we expect our ownership at closing will be 9.4 percent due to immediate dilution from anticipated management issuances. The transaction is subject to required regulatory approvals and other customary closing conditions.

We determined ILFC met the criteria for held for sale and discontinued operations accounting at March 31, 2013 and December 31, 2012. Depreciation and amortization expense is not recorded on the assets of a business after the business is classified as held for sale. At the closing of the transaction, AIG will return $1.1 billion to ILFC in connection with the termination of intercompany arrangements between AIG and ILFC.

The following table summarizes the components of assets and liabilities held-for-sale on the Condensed Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012:

(in millions)	March 31, 2013			December 31, 2012
Assets:
Equity securities	$	2		$	1
Mortgage and other loans receivable, net		118			117
Flight equipment primarily under operating leases, net of accumulated depreciation		34,810			34,468
Short-term investments		2,103			1,861
Cash		48			63
Premiums and other receivables, net of allowance		291			308
Other assets		1,714			1,864
Assets of businesses held for sale		39,086			38,682
Less: Loss accrual		(7,270	)		(6,717	)
Total assets held for sale	$	31,816		$	31,965
Liabilities:
Other liabilities	$	3,050		$	3,043
Other long-term debt		24,114			24,323
Total liabilities held for sale	$	27,164		$	27,366

The following table summarizes income from discontinued operations:

Three Months Ended March 31, (in millions)	2013			2012
Revenues:
Aircraft leasing revenue	$	1,078		$	1,156
Net realized capital gains		(1	)		1
Other income		(3	)		(5	)
Total revenues		1,074			1,152
Benefits, claims and expenses, excluding Aircraft leasing expenses*		388			409
Aircraft leasing expenses		90			625
Income from discontinued operations		596			118
Gain (loss) on sale		(436	)		20
Income from discontinued operations, before tax income tax expense		160			138
Income tax expense		67			74
Income from discontinued operations, net of income tax	$	93		$	64

We recorded a $4.4 billion after tax loss on the sale of ILFC for the year ended December 31, 2012. In the three month period ended March 31, 2013, we recorded an additional $553 million pre-tax loss on the sale of ILFC, largely offsetting ILFC operating results for the period. ILFC operating results did not include depreciation and amortization expense in the three month period ended March 31, 2013 as a result of its classification as held for sale.

We also recognized in the first quarter of 2013 a $117 million pre-tax gain in connection with the sale of American Life Insurance Company (ALICO) as a result of a refund of taxes, interest and penalties after a successful appeal to the Japanese tax authorities related to the deduction of unrealized foreign exchange losses on certain bond securities held by ALICO prior to its sale to MetLife, Inc. (MetLife) in 2010.