American International Group's ( AIG) chief restructuring officer, Paula Reynolds, said in an off-the-cuff remark during this week's earnings conference call that she told CEO Ed Liddy that it "might be better to go to jail" than to deal with securities laws relating to reorganizing the insurer.

An analysis of the 10-K document filed with the Securities and Exchange Commission explains why she might feel that way. AIG, the largest U.S. insurer, released 725 pages of information on Monday. In the summary, there wasn't one figure that showed how much AIG paid for its investments such as fixed income, equities, mortgages.

AIG has reinvented the definition of "cost" and, consequently, made it impossible to understand where the investment losses lie. AIG's group insurance companies posted $23.6 billion in investment losses in the first nine months of last year, so this is an important detail.

AIG lists investment types by category on its balance sheet. There are three columns of figures: cost, fair value and amount, enabling investors to see the purchase price of an investment, what AIG thinks it's currently worth and the total amount. Nothing special there, except there is a note at the bottom of the page that reads: "Original cost of equity securities and fixed maturities are reduced by other than temporarily impairment charges, and, as to fixed maturities, reduced by repayments and adjusted for amortization of premiums or accrual of discounts."

In other words, AIG isn't reporting the original cost of its investments. The insurer is instead listing the cost, minus losses already taken.

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