American International (AIG) 10-Q 2016 Q3 Quarterly report

Computation of Ratios of Earnings to Fixed Charges

							Exhibit 12
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions, except ratios)		2016		2015		2016		2015
Earnings:
Pre-tax income (loss)(a):	$	666	$	(419)	$	3,437	$	5,198
Add - Fixed charges		432		448		1,250		1,362
Adjusted Pre-tax income	$	1,098	$	29	$	4,687	$	6,560
Fixed charges:
Interest expense	$	319	$	311	$	925	$	930
Portion of rent expense representing interest		27		45		82		134
Interest credited to policy and contract holders		86		92		243		298
Total fixed charges	$	432	$	448	$	1,250	$	1,362
Total fixed charges, excluding interest credited to
policy and contract holders	$	346	$	356	$	1,007	$	1,064
Ratio of earnings to fixed charges:
Ratio		2.54		n/a		3.75		4.82
Coverage deficiency		n/a	$	(419)		n/a		n/a
Ratio of earnings to fixed charges, excluding interest
credited to policy and contract holders(b):
Ratio		3.17		n/a		4.65		6.17
Coverage deficiency		n/a	$	(327)		n/a		n/a

(a) From continuing operations, excluding undistributed earnings (loss) from equity method investments and capitalized interest. 

(b) The Ratio of earnings to fixed charges, excluding interest credited to policy and contract holders, removes interest credited to guaranteed investment contract (GIC) policyholders and guaranteed investment agreement (GIA) contract holders. Such interest expenses are also removed from earnings used in this calculation. GICs and GIAs are entered into by our subsidiaries. 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.

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