COMPUTATION OF RATIOS OF Exhibit 12
EARNINGS TO FIXED CHARGES
American International Group, Inc. and Subsidiaries
(in millions, except ratios)
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Years Ended December 31, 2001 2000 1999 1998 1997
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Income before income taxes, minority interest and
cumulative effect of accounting changes $ 8,139 $10,023 $ 9,399 $ 7,583 $6,383
Less-Equity income of less than 50% owned persons 15 9 22 98 169
Add-Dividends from less than 50% owned persons 3 3 13 24 30
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8,127 10,017 9,390 7,509 6,244
Add-Fixed charges 4,195 3,842 3,152 2,884 2,617
Less-Capitalized interest 71 69 60 86 65
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Income before income taxes, minority interest, cumulative
effect of accounting changes and fixed charges $12,251 $13,790 $12,482 $10,307 $8,796
Fixed charges:
Interest costs $ 4,038 $ 3,705 $ 3,022 $ 2,769 $2,513
Rental expense* 157 137 130 115 104
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Total fixed charges $ 4,195 $ 3,842 $ 3,152 $ 2,884 $2,617
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Ratio of earnings to fixed charges 2.92 3.59 3.96 3.57 3.36
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* 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 4.16, 5.06, 5.51,
4.76, and 4.37 for 2001, 2000, 1999, 1998 and 1997, 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.
Excluding $900 million with respect to the World Trade Center and related
losses and $2.02 billion with respect to acquisition, restructuring and related
charges, the ratio of earnings to fixed charges was 3.62 for 2001.
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