1
EXHIBIT 12.1
AMERICAN INTERNATIONAL GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
Income before income $1,801 $1,457 $6,277 5,310 $4,468 $3,783 $3,222
taxes, minority
interests, and the
cumulative effect of
accounting changes
Less -- Equity income of 9 34 98 120 121 91 54
less than 50% owned
persons
Add -- Dividends from 3 10 24 30 13 6 4
less than 50% owned
persons
- ------------------------------------------------------------------------------------------------------------------------------------
1,795 1,433 6,203 5,220 4,360 3,698 3,172
Add -- Fixed charges 528 515 2,172 1,954 1,697 1,550 1,465
Less -- Capitalized 15 15 86 60 61 51 46
interest
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income $2,308 $1,933 $8,289 $7,114 $5,996 $5,197 $4,591
taxes, minority
interest, the cumulative
effect of
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed charges:
Interest costs $ 502 $ 493 $2,076 $1,870 $1,621 $1,478 $1,395
Rental expenses* 26 22 96 84 76 72 70
- ------------------------------------------------------------------------------------------------------------------------------------
Total fixed charges $ 528 $ 515 $2,172 $1,954 $1,697 $1,550 $1,465
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of earnings to 4.37 3.75 3.82 3.64 3.53 3.35 3.13
fixed charges
- ----------
* 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 purchased 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 5.93, 5.48, 5.29,
4.85, and 5.27 for 1998, 1997, 1996, 1995 and 1994, 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.