Computation of Ratios of Earnings to Fixed Charges

Exhibit 12

Years Ended December 31,
(in millions, except ratios)		2005			2004			2003			2002			2001
Income before income taxes, minority interest and cumulative effect of accounting changes		$	15,213		$	14,845		$	11,907		$	7,808		$	5,917
Less – Equity income of less than 50% owned persons			(129	)		164			146			168			14
Add – Dividends from less than 50% owned persons			146			22			13			13			2
			15,488			14,703			11,774			7,653			5,905
Add – Fixed charges			7,663			6,049			5,762			4,893			5,695
Less – Capitalized interest			64			59			52			61			71
Income before income taxes, minority interest, cumulative effect of accounting changes and fixed charges		$	23,087		$	20,693		$	17,484		$	12,485		$	11,529
Fixed charges:
	Interest costs	$	7,464		$	5,860		$	5,588		$	4,725		$	5,538
	Rental expense*		199			189			174			168			157
Total fixed charges		$	7,663		$	6,049		$	5,762		$	4,893		$	5,695
Ratio of earnings to fixed charges			3.01			3.42			3.03			2.55			2.02
Secondary Ratio
Interest credited to GIC and GIA policy and contract holders		$	(4,760	)	$	(3,674	)	$	(3,578	)	$	(2,702	)	$	(3,196	)
Total fixed charges excluding interest credited to GIC and GIA policy and contract holders		$	2,903		$	2,375		$	2,184		$	2,191		$	2,499
Secondary ratio of earnings to fixed charges			6.31			7.17			6.37			4.47			3.33

* The proportion deemed representative of the interest factor.

The secondary ratio is disclosed for the convenience of fixed income investors and the rating agencies that serve them and is more comparable to the ratios disclosed by all issuers of fixed income securities. The secondary ratio removes interest credited to guaranteed investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contractholders. Such expenses are also removed from earnings used in this calculation. GICs and GIAs are entered into by AIG’s insurance subsidiaries, principally SunAmerica Life Insurance Company and AIG Financial Products Corp. and its subsidiaries, respectively. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related policyholders obligation or contract, with the intent of earning a profit from the spread.

AIG  - Form 10-K

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