| Years Ended December 31, | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||
| (in millions, except ratios) | (Restated) | (Restated) | (Restated) | (Restated) | (Restated) | ||||||||||||||||
| Income before income taxes, minority interest and cumulative effect of accounting changes | $ | 14,845 | $ | 11,907 | $ | 7,808 | $ | 5,917 | $ | 8,939 | |||||||||||
| Less – Equity income of less than 50% owned persons | 164 | 146 | 168 | 14 | 8 | ||||||||||||||||
| Add – Dividends from less than 50% owned persons | 22 | 13 | 13 | 2 | 2 | ||||||||||||||||
| 14,703 | 11,774 | 7,653 | 5,905 | 8,933 | |||||||||||||||||
| Add – Fixed charges | 6,049 | 5,762 | 4,893 | 5,695 | 5,290 | ||||||||||||||||
| Less – Capitalized interest | 59 | 52 | 61 | 71 | 69 | ||||||||||||||||
| Income before income taxes, minority interest, cumulative effect of accounting changes and fixed charges | $ | 20,693 | $ | 17,484 | $ | 12,485 | $ | 11,529 | $ | 14,154 | |||||||||||
| Fixed charges: | |||||||||||||||||||||
| Interest costs | $ | 5,860 | $ | 5,588 | $ | 4,725 | $ | 5,538 | $ | 5,153 | |||||||||||
| Rental expense* | 189 | 174 | 168 | 157 | 137 | ||||||||||||||||
| Total fixed charges | $ | 6,049 | $ | 5,762 | $ | 4,893 | $ | 5,695 | $ | 5,290 | |||||||||||
| Ratio of earnings to fixed charges | 3.42 | 3.03 | 2.55 | 2.02 | 2.68 | ||||||||||||||||
| Secondary Ratio | |||||||||||||||||||||
| Interest credited to GIC and GIA policy and contract holders | $ | (3,674 | ) | $ | (3,578 | ) | $ | (2,702 | ) | $ | (3,196 | ) | $ | (2,780 | ) | ||||||
| Total fixed charges excluding interest credited to GIC and GIA policy and contract holders | $ | 2,375 | $ | 2,184 | $ | 2,191 | $ | 2,499 | $ | 2,510 | |||||||||||
| Secondary ratio of earnings to fixed charges | 7.17 | 6.37 | 4.47 | 3.33 | 4.53 | ||||||||||||||||
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 Sun America 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.
