1
Exhibit 12
Computation of Ratios of
Earnings to Fixed Charges American International Group, Inc. and Subsidiaries
(in millions, except ratios)
- ----------------------------------------------------------------------------------------------------------
Years Ended December 31, 1999 1998 1997 1996 1995
==========================================================================================================
Income before income taxes, minority interest and
cumulative effect of accounting change $7,512 $6,277 $5,310 $4,468 $3,783
Less-Equity income of less than 50% owned persons 22 98 120 121 91
Add-Dividends from less than 50% owned persons 13 24 30 13 6
- ----------------------------------------------------------------------------------------------------------
7,503 6,203 5,220 4,360 3,698
Add-Fixed charges 2,357 2,172 1,954 1,697 1,550
Less-Capitalized interest 60 86 60 61 51
- ----------------------------------------------------------------------------------------------------------
Income before income taxes, minority interest cumulative
effect of accounting change and fixed charges $9,800 $8,289 $7,114 $5,996 $5,197
==========================================================================================================
Fixed charges:
Interest costs $2,251 $2,076 $1,870 $1,621 $1,478
Rental expense * 106 96 84 76 72
- ----------------------------------------------------------------------------------------------------------
Total fixed charges $2,357 $2,172 $1,954 $1,697 $1,550
==========================================================================================================
Ratio of earnings to fixed charges 4.16 3.82 3.64 3.53 3.35
==========================================================================================================
* The proportion deemed representative of the interest factor.
The ratios shown are significantly affected as a result of the inclusion of the
fixed charges and operating results of AIG Financial Products Corp. and its
subsidiaries (AIGFP). AIGFP structures borrowings through guaranteed investment
agreements and engages in other complex financial transactions, including
interest rate and currency swaps. In the course of its business, AIGFP enters
into borrowings that are primarily used to purchase assets that yield rates
greater than the rates on the borrowings with the intent of earning a profit on
the spread and to finance the acquisition of securities utilized to hedge
certain transactions. The pro forma ratios of earnings to fixed charges,
excluding the effects of the operating results of AIGFP, are 6.96, 5.93, 5.48,
5.29 and 4.85 for 1999, 1998, 1997, 1996 and 1995, respectively. As AIGFP will
continue to be a subsidiary, AIG expects that these ratios will continue to be
lower than they would be if the fixed charges and operating results of AIGFP
were not included therein.
II-9