18. NONCONTROLLING INTERESTS

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

	Redeemable Noncontrolling interests


	Redeemable Noncontrolling interests									Non-redeemable Noncontrolling interests
	Held by Department of Treasury									Non-redeemable Noncontrolling interests
(in millions)	Held by Department of Treasury			Other			Total			Held by FRBNY			Other			Total

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	)		–			–			–
Net contributions (distributions)		–			36			36			–			(87	)		(87	)
Consolidation (deconsolidation)		–			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

Year Ended December 31, 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		(12,425	)		–			(12,425	)		–			–			–
Net distributions		–			(21	)		(21	)		–			(8	)		(8	)
Deconsolidation		–			(307	)		(307	)		–			(123	)		(123	)
Acquisition of noncontrolling interest		–			–			–			–			(489	)		(489	)
Comprehensive income (loss):
Net income (loss)		560			(8	)		552			74			82			156
Other comprehensive income (loss), net of tax:
Unrealized losses on investments		–			(2	)		(2	)		–			(155	)		(155	)
Foreign currency translation adjustments		–			–			–			–			36			36

Total other comprehensive income (loss), net of tax		–			(2	)		(2	)		–			(119	)		(119	)

Total comprehensive income (loss)		560			(10	)		550			74			(37	)		37

Other		–			–			–			–			(50	)		(50	)

Balance, end of year	$	8,427		$	96		$	8,523		$	–		$	855		$	855

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 Series F Preferred Stock. Under the terms of the SPVs' limited liability company agreements, the SPVs generally may not distribute funds to us until the liquidation preferences and preferred returns on the respective SPV Preferred Interests had been repaid in full and concurrent distributions had been made on certain participating returns attributable to the respective SPV Preferred Interests. In connection with the Recapitalization, we agreed to cause the proceeds of certain asset dispositions to be used to pay down the remaining SPV Preferred Interests.

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 Sheet, and were classified as redeemable non-controlling 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 Income (loss) from continuing operations attributable to noncontrolling interests – Nonvoting, callable, junior and senior preferred interests in the Consolidated Statement of Operations. The difference between the SPV Preferred Interests' fair value and the initial liquidation preference was amortized and included in Net income (loss) 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. See Note 16 herein for a discussion of indemnity payments made to MetLife pursuant to the terms of the ALICO stock purchase agreement.

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 is held for sale at December 31, 2012. The preferred stock in ILFC consists 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 has a liquidation value of $100,000 per share and is not convertible. Dividends on the MAPS are accounted for as a reduction of the noncontrolling interest. The dividend rate, other than the initial rate, for each dividend period for each series is reset approximately every seven weeks (49 days) on the basis of orders placed in an auction, provided such auctions are able to occur. At December 31, 2012, there is no ability to conduct such auctions; therefore, the MAPS certificate of determination dictates that a maximum applicable rate, as defined in the certificate of determination, be paid on the MAPS. At December 31, 2012, the dividend rate for each of the Series A and Series B MAPS was 0.50 percent and 0.36 percent respectively.

For the years ended December 31, 2012 and 2011, the Noncontrolling interests balance declined by $188 million and $707 million, respectively. In 2012, this decline was primarily caused by an adjustment for the reclassification of noncontrolling interest from permanent to temporary and acquisitions of noncontrolling interests in 2012. In 2011, the decline in noncontrolling interest balance was mostly due to the acquisition of Fuji's noncontrolling interest.