TOTAL EQUITY AND EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2012

TOTAL EQUITY AND EARNINGS (LOSS) PER SHARE

TOTAL EQUITY AND EARNINGS (LOSS) PER SHARE

10. TOTAL EQUITY AND EARNINGS (LOSS) PER SHARE

SHARES OUTSTANDING

The following table presents a rollforward of outstanding shares:

	Preferred Stock
													Common Stock Issued		Treasury Stock			Outstanding Shares
	AIG Series E			AIG Series F			AIG Series C			AIG Series G
Six Months Ended June 30, 2012
Shares, beginning of year		-			-			-			-			1,906,568,099		(9,746,617	)		1,896,821,482
Issuances		-			-			-			-			44,567		625,815			670,382
Shares repurchased		-			-			-			-			-		(169,022,046	)		(169,022,046	)
Shares, end of period		-			-			-			-			1,906,612,666		(178,142,848	)		1,728,469,818
Six Months Ended June 30, 2011
Shares, beginning of year		400,000			300,000			100,000			-			147,124,067		(6,660,908	)		140,463,159
Issuances		-			-			-			20,000			100,066,640		-			100,066,640
Settlement of equity unit stock purchase contracts		-			-			-			-			2,404,278		-			2,404,278
Shares exchanged*		(400,000	)		(300,000	)		(100,000	)		-			1,655,037,962		(11,678	)		1,655,026,284
Shares cancelled		-			-			-			(20,000	)		-		-			-
Shares, end of period		-			-			-			-			1,904,632,947		(6,672,586	)		1,897,960,361

*

See Note 1 to the Consolidated Financial Statements in the 2011 Annual Report for further discussion of shares exchanged in connection with the Recapitalization.

Repurchases of Equity Securities

    In the first quarter of 2012, AIG's Board of Directors (the Board) authorized the repurchase of shares of AIG Common Stock with an aggregate purchase amount of up to $3.0 billion from time to time in the open market, private purchases, through derivative or automatic purchase contracts, or otherwise. This authorization replaced all prior AIG Common Stock repurchase authorizations.

    On March 13, 2012, the Department of the Treasury, as the selling shareholder, closed the sale of approximately 207 million shares of AIG Common Stock, at a public offering price of $29.00 per share. AIG purchased approximately 103 million shares of AIG Common Stock in the March Offering at the public offering price for an aggregate purchase amount of approximately $3.0 billion.

    On May 10, 2012, the Department of the Treasury, as the selling shareholder, closed the sale of approximately 189 million shares of AIG Common Stock, at a public offering price of $30.50 per share. In connection with the May Offering, the Board authorized the repurchase of shares of AIG Common Stock with an aggregate purchase amount of up to $2.0 billion. AIG purchased approximately 66 million shares of AIG Common Stock in the May Offering at the public offering price for an aggregate purchase amount of approximately $2.0 billion, thus utilizing the full amount of the repurchase authorization.

Dividends

    Payment of future dividends depends on the regulatory framework that will ultimately be applicable to AIG. This framework will depend on, among other things, whether AIG is treated as either a systemically important financial institution (SIFI) or as a savings and loan holding company under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The level of the Department of the Treasury's ownership in AIG may also affect AIG's regulatory status. In addition, dividends will be payable on AIG's Common Stock only when, as and if declared by the Board in its discretion, from funds legally available therefor. In considering whether to pay a dividend or repurchase shares of AIG Common Stock, the Board will take into account such matters as AIG's financial position, the performance of its businesses, its consolidated financial condition, results of operations and liquidity, available capital, the existence of investment opportunities, contractual, legal and regulatory restrictions on the payment of dividends by subsidiaries to AIG, rating agency considerations, including the potential effect on AIG's debt ratings, and such other factors as AIG's Board may deem relevant. AIG has not paid any cash dividends in 2011 or 2012.

    See Note 18 to the Consolidated Financial Statements in the 2011 Annual Report for a discussion of restrictions on payments of dividends by AIG subsidiaries.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

(in millions)	Unrealized Appreciation (Depreciation) of Fixed Maturity Investments on Which Other-Than- Temporary Credit Impairments Were Taken			Unrealized Appreciation (Depreciation) of All Other Investments			Foreign Currency Translation Adjustments			Net Derivative Gains (Losses) Arising from Cash Flow Hedging Activities			Change in Retirement Plan Liabilities Adjustment			Total
Balance, December 31, 2011, net of tax	$	(736	)	$	7,891		$	(1,028	)	$	(17	)	$	(957	)	$	5,153
Change in unrealized appreciation of investments		1,069			3,722			-			-			-			4,791
Change in deferred acquisition costs adjustment and other		(7	)		(491	)		-			-			-			(498	)
Change in future policy benefits		(31	)		(36	)		-			-			-			(67	)
Change in foreign currency translation adjustments		-			-			(425	)		-			-			(425	)
Change in net derivative gains arising from cash flow hedging activities		-			-			-			8			-			8
Net actuarial gain		-			-			-			-			70			70
Prior service credit		-			-			-			-			(24	)		(24	)
Deferred tax asset (liability)		(401	)		(909	)		89			15			(14	)		(1,220	)
Total other comprehensive income (loss)		630			2,286			(336	)		23			32			2,635
Noncontrolling interests		-			2			(5	)		-			-			(3	)
Balance, June 30, 2012, net of tax	$	(106	)	$	10,175		$	(1,359	)	$	6		$	(925	)	$	7,791
Balance, December 31, 2010, net of tax	$	(659	)	$	8,888		$	298		$	(34	)	$	(869	)	$	7,624
Cumulative effect of change in accounting principle		-			283			(364	)		-			-			(81	)
Change in unrealized appreciation of investments		559			2,267			-			-			-			2,826
Change in deferred acquisition costs adjustment and other		(75	)		(613	)		-			-			-			(688	)
Change in foreign currency translation adjustments		-			-			957			-			-			957
Change in net derivative gains arising from cash flow hedging activities		-			-			-			31			-			31
Net actuarial gain		-			-			-			-			11			11
Prior service credit		-			-			-			-			(1	)		(1	)
Change attributable to divestitures and deconsolidations		53			(1,129	)		(1,506	)		-			248			(2,334	)
Deferred tax asset (liability)		(248	)		529			320			40			(109	)		532
Total other comprehensive income (loss)		289			1,054			(229	)		71			149			1,334
Acquisition of noncontrolling interest		-			43			62			-			(17	)		88
Noncontrolling interests		3			(81	)		31			-			-			(47	)
Balance, June 30, 2011, net of tax	$	(373	)	$	10,349		$	(264	)	$	37		$	(737	)	$	9,012

The following table presents the other comprehensive income (loss) reclassification adjustments for the six months ended June 30, 2012 and 2011:

(in millions)	Unrealized Appreciation (Depreciation) of Fixed Maturity Investments on Which Other-Than- Temporary Credit Impairments Were Taken			Unrealized Appreciation (Depreciation) of All Other Investments			Foreign Currency Translation Adjustments			Net Derivative Gains (Losses) Arising from Cash Flow Hedging Activities			Change in Retirement Plan Liabilities Adjustment			Total
Three Months Ended June 30, 2012
Unrealized change arising during period	$	26		$	2,149		$	(512	)	$	-		$	4		$	1,667
Less: Reclassification adjustments included in net income		(2	)		317			-			(4	)		(13	)		298
Total other comprehensive income (loss), before income tax expense (benefit)		28			1,832			(512	)		4			17			1,369
Less: Income tax expense (benefit)		11			527			(85	)		3			3			459
Total other comprehensive income (loss), net of income tax expense (benefit)	$	17		$	1,305		$	(427	)	$	1		$	14		$	910
Three Months Ended June 30, 2011
Unrealized change arising during period	$	(76	)	$	2,407		$	308		$	(3	)	$	(19	)	$	2,617
Less: Reclassification adjustments included in net income		(1	)		613			-			(16	)		(27	)		569
Total other comprehensive income (loss), before income tax expense (benefit)		(75	)		1,794			308			13			8			2,048
Less: Income tax expense (benefit)		32			(67	)		20			(45	)		(6	)		(66	)
Total other comprehensive income (loss), net of income tax expense (benefit)	$	(107	)	$	1,861		$	288		$	58		$	14		$	2,114
Six Months Ended June 30, 2012
Unrealized change arising during period	$	1,027		$	4,472		$	(425	)	$	(1	)	$	4		$	5,077
Less: Reclassification adjustments included in net income		(4	)		1,277			-			(9	)		(42	)		1,222
Total other comprehensive income (loss), before income tax expense (benefit)		1,031			3,195			(425	)		8			46			3,855
Less: Income tax expense (benefit)		401			909			(89	)		(15	)		14			1,220
Total other comprehensive income (loss), net of income tax expense (benefit)	$	630		$	2,286		$	(336	)	$	23		$	32		$	2,635
Six Months Ended June 30, 2011
Unrealized change arising during period	$	500		$	2,503		$	957		$	(3	)	$	(19	)	$	3,938
Less: Reclassification adjustments included in net income		(37	)		1,978			1,506			(34	)		(277	)		3,136
Total other comprehensive income (loss), before income tax expense (benefit)		537			525			(549	)		31			258			802
Less: Income tax expense (benefit)		248			(529	)		(320	)		(40	)		109			(532	)
Total other comprehensive income (loss), net of income tax expense (benefit)	$	289		$	1,054		$	(229	)	$	71		$	149		$	1,334

NONCONTROLLING INTERESTS

    During the quarter ended March 31, 2012, the remaining liquidation preference of the AIA SPV Preferred Interests was paid down in full. See Note 1 herein for a description of the transactions that provided funds to pay down the remaining liquidation preference.

The following table presents a rollforward of non-controlling interests:

	Redeemable Noncontrolling interests									Non-redeemable Noncontrolling interests
(in millions)	Held by Department of Treasury			Other			Total			Held by FRBNY			Other			Total
Six Months Ended June 30, 2012
Balance, beginning of year	$	8,427		$	96		$	8,523		$	-		$	855		$	855
Repayment to Department of the Treasury		(8,635	)		-			(8,635	)		-			-			-
Net contributions (distributions)		-			23			23			-			(54	)		(54	)
Consolidation (deconsolidation)		-			(4	)		(4	)		-			-			-
Comprehensive income:
Net income (loss)		208			(3	)		205			-			43			43
Accumulated other comprehensive loss, net of tax:
Unrealized gains on investments		-			-			-			-			2			2
Foreign currency translation adjustments		-			-			-			-			(5	)		(5	)
Total accumulated other comprehensive loss, net of tax		-			-			-			-			(3	)		(3	)
Total comprehensive income (loss)		208			(3	)		205			-			40			40
Other		-			-			-			-			(21	)		(21	)
Balance, end of period	$	-		$	112		$	112		$	-		$	820		$	820
Six Months Ended June 30, 2011
Balance, beginning of year	$	-		$	434		$	434		$	26,358		$	1,562		$	27,920
Repurchase of SPV preferred interests in connection with Recapitalization		-			-			-			(26,432	)		-			(26,432	)
Exchange of consideration for preferred stock in connection with Recapitalization		20,292			-			20,292			-			-			-
Repayment to Department of the Treasury		(9,146	)		-			(9,146	)		-			-			-
Net distributions		-			(21	)		(21	)		-			(74	)		(74	)
Deconsolidation		-			(308	)		(308	)		-			(6	)		(6	)
Acquisition of noncontrolling interest		-			-			-			-			(468	)		(468	)
Comprehensive income:
Net income		319			6			325			74			22			96
Accumulated other comprehensive income (loss), net of tax:
Unrealized losses on investments		-			-			-			-			(78	)		(78	)
Foreign currency translation adjustments		-			-			-			-			31			31
Total accumulated other comprehensive income (loss), net of tax		-			-			-			-			(47	)		(47	)
Total comprehensive income (loss)		319			6			325			74			(25	)		49
Other		-			-			-			-			(41	)		(41	)
Balance, end of period	$	11,465		$	111		$	11,576		$	-		$	948		$	948

EARNINGS (LOSS) PER SHARE (EPS)

    Basic and diluted earnings (loss) per share are based on the weighted average number of common shares outstanding, adjusted to reflect all stock dividends and stock splits. Diluted EPS is based on those shares used in basic EPS plus shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding, adjusted to reflect all stock dividends and stock splits. Basic EPS was not affected by outstanding stock purchase contracts. Diluted EPS is determined considering the potential dilution from outstanding stock purchase contracts using the treasury stock method and was not affected by the previously outstanding stock purchase contracts because they were not dilutive.

The following table presents the computation of basic and diluted EPS:

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions, except per share data)	2012			2011			2012		2011
Numerator for EPS:
Income from continuing operations	$	2,344		$	2,090		$	5,780	$	1,006
Net income from continuing operations attributable to noncontrolling interests:
Nonvoting, callable, junior and senior preferred interests		-			141			208		393
Other		7			64			40		9
Total net income from continuing operations attributable to noncontrolling interests		7			205			248		402
Net income attributable to AIG from continuing operations		2,337			1,885			5,532		604
Income (loss) from discontinued operations	$	(5	)	$	(37	)	$	8	$	2,548
Net income from discontinued operations attributable to noncontrolling interests		-			12			-		19
Net income (loss) attributable to AIG from discontinued operations, applicable to common stock for EPS		(5	)		(49	)		8		2,529
Deemed dividends to AIG Series E and F Preferred Stock		-			-			-		(812	)
Net income (loss) attributable to AIG common shareholders from continuing operations, applicable to common stock for EPS	$	2,337		$	1,885		$	5,532	$	(208	)

	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in millions, except per share data)	2012		2011			2012		2011
Denominator for EPS:
Weighted average shares outstanding – basic		1,756,689,067		1,836,713,069			1,816,331,019		1,698,001,301
Dilutive shares		25,408		58,444			27,606		-
Weighted average shares outstanding – diluted*		1,756,714,475		1,836,771,513			1,816,358,625		1,698,001,301
EPS attributable to AIG common shareholders:
Basic:
Income (loss) from continuing operations	$	1.33	$	1.03		$	3.05	$	(0.12	)
Income (loss) from discontinued operations	$	-	$	(0.03	)	$	-	$	1.49
Diluted:
Income (loss) from continuing operations	$	1.33	$	1.03		$	3.05	$	(0.12	)
Income (loss) from discontinued operations	$	-	$	(0.03	)	$	-	$	1.49

*

Dilutive shares are calculated using the treasury stock method and include dilutive shares from share-based employee compensation plans, the warrants issued to the Department of the Treasury in 2009 and the warrants issued to common shareholders (other than the Department of the Treasury) in January 2011. The number of shares and warrants excluded from diluted shares outstanding were 78 million for both the three and six months ended June 30, 2012, and 80 million and 72 million for the three and six months ended June 30, 2011, respectively, because the effect of including those shares and warrants in the calculation would have been anti-dilutive. Included in the anti-dilutive total were 75 million shares for both the three and six months ended June 30, 2012 and 75 million and 67 million shares for the three and six months ended June 30, 2011, respectively, representing the weighted average number of warrants to purchase AIG Common Stock that were issued to common shareholders.

    Deemed dividends resulted from the Recapitalization and represent the excess of:

(i)

the fair value of the consideration transferred to the Department of the Treasury, which consists of 1,092,169,866 shares of AIG Common Stock, $20.2 billion of redeemable AIA SPV Preferred Interests and preferred interests in the ALICO SPV, and a liability for a commitment by AIG to pay the Department of the Treasury's costs to dispose of all of its shares, over

(ii)

the carrying value of the Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share, and Series F Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share.

    The fair value of the AIG Common Stock issued for the Series C Perpetual, Convertible, Participating Preferred Stock, par value $5.00 per share (Series C Preferred Stock) over the carrying value of the Series C Preferred Stock is not a deemed dividend because the Series C Preferred Stock was contingently convertible into the 562,868,096 shares of AIG Common Stock for which it was exchanged. See Notes 1 and 17 to the Consolidated Financial Statements in the 2011 Annual Report for further discussion on the Recapitalization.