American International (AIG) 10-Q 2013 Q2 Quarterly report

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

Exhibit 12

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except ratios)	2013		2012		2013		2012
Earnings:
Pre-tax income(a):	$	2,952	$	1,998	$	5,235	$	4,441
Add — Fixed charges		1,122		1,150		2,236		2,279
Adjusted Pre-tax income	$	4,074	$	3,148	$	7,471	$	6,720
Fixed charges:
Interest expense	$	836	$	889	$	1,734	$	1,799
Portion of rent expense representing interest		34		26		68		66
Interest credited to policy and contract holders		252		235		434		414
Total fixed charges	$	1,122	$	1,150	$	2,236	$	2,279
Total fixed charges, excluding interest credited to
policy and contract holders	$	870	$	915	$	1,802	$	1,865
Ratio of earnings to fixed charges		3.63		2.74		3.34		2.95
Ratio of earnings to fixed charges, excluding interest
credited to policy and contract holders(b):		4.68		3.44		4.15		3.60

(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 amounts 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. When these investments yield rates are greater than the rates on the related policyholders obligation or contract, a profit is earned from the spread.

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