AIG 2005 Annual Report Download - page 111

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
and those of certain of its subsidiaries for general corporate tions. There are currently no loans outstanding under the
purposes, as well as for a matched investment program. facility, nor were any loans outstanding as of December 31,
In September 2005, AIG entered into loan agreements with 2005. As of such dates, $1.14 billion was available to be drawn
third-party banks and borrowed a total of $600 million under under the facility, with the remainder having been drawn in
the loan agreements on an unsecured basis, $500 million of the form of letters of credit.
which matures in August 2006 but can be extended by AIG AIG is also a party to an unsecured 364-day inter-company
for an additional seven-month period and $100 million of revolving credit facility provided by certain of its subsidiaries
which matures in September 2006. aggregating $2 billion that expires in October of 2006. The
AIGFP uses the proceeds from the issuance of notes and facility allows for the conversion of any outstanding loans at
bonds and GIA borrowings to invest in a diversified portfolio expiration into one-year term loans. The facility can be used
of securities and derivative transactions. The borrowings may for general corporate purposes and also to provide backup for
also be temporarily invested in securities purchased under AIG’s commercial paper programs. AIG expects to replace or
agreements to resell. AIG guarantees the obligations of AIGFP extend this credit facility on or prior to its expiration. There
under AIGFP’s notes and bonds and GIA borrowings. See also are currently no borrowings outstanding under the inter-
the discussions under ‘‘Operating Review,’’ ‘‘Liquidity’’ and company facility, nor were any borrowings outstanding as of
‘‘Derivatives’’ herein and Notes 1, 8, 9 and 20 of Notes to December 31, 2005.
Consolidated Financial Statements. As of November 2001, AIG guaranteed the notes and
AIGFP has a Euro Medium Term Note Program under bonds of AGC. During 2005, $300 million of previously issued
which an aggregate nominal amount of up to $10.0 billion of notes matured.
notes may be outstanding at any one time. The program ILFC fulfills its short term cash requirements through the
provides that additional notes may be issued to replace issuance of commercial paper. The issuance of commercial
matured or redeemed notes. As of December 31, 2005, paper is subject to the approval of ILFC’s Board of Directors.
$3.48 billion of notes were outstanding under the program, The commercial paper issued by ILFC is not guaranteed by
including $221 million resulting from foreign exchange transla- AIG. ILFC is a party to unsecured syndicated revolving credit
tion into U.S. dollars. Notes issued under this program are facilities aggregating $6.0 billion at December 31, 2005. The
included in Notes and Bonds Payable in the preceding table of facilities can be used for general corporate purposes and also to
borrowings. provide backup for ILFC’s commercial paper program. They
AIG Funding, Inc. (AIG Funding), through the issuance of consist of $2.0 billion in a 364-day revolving credit facility
commercial paper, helps fulfill the short-term cash requirements that expires in October 2006, with a one-year term out option,
of AIG and its subsidiaries. AIG Funding intends to continue $2.0 billion in a five-year revolving credit facility that expires
to meet AIG’s funding requirements through the issuance of in October 2009 and $2.0 billion in a five-year revolving credit
commercial paper guaranteed by AIG. The issuance of AIG facility that expires in October 2010. ILFC expects to replace
Funding’s commercial paper is subject to the approval of AIG’s or extend these credit facilities on or prior to their expiration.
Board of Directors. There are currently no borrowings outstanding under these
AIG and AIG Funding are parties to unsecured syndicated facilities, nor were any borrowings outstanding as of Decem-
revolving credit facilities aggregating $2.75 billion, consisting ber 31, 2005.
of $1.375 billion in a 364-day revolving credit facility that ILFC was a party to two 180-day revolving credit facilities
expires in July of 2006 and $1.375 billion in a five-year aggregating to $1.0 billion, each of which expired in 2005.
revolving credit facility that expires in July of 2010. The At December 31 2005, ILFC had increased the aggregate
364-day facility allows for the conversion by AIG of any principal amount outstanding of its medium term and long-
outstanding loans at expiration into one-year term loans. The term notes. The foreign exchange adjustment for the foreign
facilities can be used for general corporate purposes and also to currency denominated debt was $197 million at December 31,
provide backup for AIG’s commercial paper programs adminis- 2005 and $1.2 billion at December 31, 2004. ILFC had
tered by AIG Funding. AIG expects to replace or extend these $13.13 billion of debt securities registered for public sale at
credit facilities on or prior to their expiration. There are December 31, 2005. As of December 31, 2005, $8.66 billion of
currently no borrowings outstanding under these facilities, nor debt securities were issued. In addition, ILFC has a Euro
were any borrowings outstanding as of December 31, 2005. Medium Term Note Program for $7.0 billion, under which
In November 2005, AIG and AIG Funding entered into a $4.98 billion in notes were sold through December 31, 2005.
364-day revolving credit facility for an aggregate amount of ILFC has substantially eliminated the currency exposure arising
$3 billion, which can be drawn in the form of loans or letters from foreign-currency denominated notes by economically
of credit. The credit facility expires in November 2006 but hedging that portion of the note exposure not already offset by
allows for the issuance of letters of credit with terms of up to Euro denominated operating lease payments, although such
ten years and provides for the conversion by AIG of any hedges do not qualify for hedge accounting treatment under
outstanding loans at expiration into one-year term loans. The FAS 133. Notes issued under this program are included in
facility can be used for general corporate purposes, including Notes and Bonds Payable in the preceding table of borrowings.
providing backup for AIG’s commercial paper programs admin- ILFC had a $4.3 billion Export Credit Facility (ECA) for
istered by AIG Funding and obtaining letters of credit to use in connection with the purchase of approximately 75
secure obligations under insurance and reinsurance transac- aircraft delivered through 2001. This facility was guaranteed by
AIG m Form 10-K 59