AIG 2005 Annual Report Download - page 156

Notes to Consolidated Financial Statements Continued
transactions to manage its effective borrowing rates with
9. Debt Outstanding
respect to these notes.
Continued
(ii) Medium Term Notes Payable Issued by ILFC: ILFC’s
At December 31, 2005, long-term borrowings were $77.00 Medium Term Notes are unsecured obligations which generally
billion and short-term borrowings were $31.50 billion, may not be redeemed by ILFC prior to maturity and bear
excluding $1.35 billion with respect to debt of VIE’s required interest at either fixed rates set by ILFC at issuance or variable
to be consolidated under the provisions of FIN 46R. Long-term rates determined by an interest rate or other formula.
borrowings include commercial paper and exclude that portion As of December 31, 2005, notes aggregating $4.69 billion
of long-term debt maturing in less than one year. were outstanding with maturity dates from 2006 to 2013 at
interest rates ranging from 2.25 percent to 6.98 percent. To the
(a) Commercial Paper: extent deemed appropriate, ILFC may enter into swap
transactions to manage its effective borrowing rates with
At December 31, 2005, the commercial paper issued and
respect to these notes.
outstanding was as follows:
(iii) Medium Term Notes Payable Issued by AIG: AIG’s
Unamortized Weighted Weighted
Net Discount Average Average Medium Term Notes are unsecured obligations which generally
Book and Accrued Face Interest Maturity
(dollars in millions) Value Interest Amount Rate in Days may not be redeemed by AIG prior to maturity and bear
interest at either fixed rates set by AIG at issuance or variable
ILFC $2,615 $10 $2,625 4.17% 36 rates determined by reference to an interest rate or other
AGF 3,423 10 3,433 4.32 29
formula.
AIG Funding 2,694 7 2,701 4.32 32
AIGCCC – An analysis of AIG’s Medium Term Notes for the year ended
Taiwan*476 2 478 2.08 63 December 31, 2005 was as follows:
Total $9,208 $29 $9,237 — —
* Issued in Taiwan N.T. dollars at prevailing local interest rates. (in millions) AIG SAI Total
Balance December 31, 2004 $ 565 $102 $ 667
At December 31, 2005, AIG did not guarantee the
Matured during year (500) (55) (555)
commercial paper of any of its subsidiaries other than AIG
Funding. Balance December 31, 2005 $ 65 $ 47 $ 112
(b) Borrowings under Obligations of Guaranteed Investment The interest rate on AIG’s Medium Term Note is 0.5 percent.
Agreements: Borrowings under obligations of guaranteed To the extent deemed appropriate, AIG may enter into swap
investment agreements, which are guaranteed by AIG, are transactions to manage its effective borrowing rate with respect
recorded at the amount outstanding under each contract. to this note.
Obligations may be called at various times prior to maturity at At December 31, 2005, Medium Term Notes originally
the option of the counterparty. Interest rates on these issued by SunAmerica, Inc. (SAI), which was merged into
borrowings are primarily fixed, vary by maturity, and range up AIG on January 1, 1999, aggregating $47 million had maturity
to 9.8 percent. dates ranging from 2006 to 2026 at interest rates ranging from
Funds received from GIA borrowings are invested in a 6.43 percent to 7.05 percent.
diversified portfolio of securities and derivative transactions. At During 2000, AIG issued $210 million of equity-linked
December 31, 2005, the market value of securities pledged as Medium Term Notes due May 15, 2007. These notes accrue
collateral with respect to these obligations approximated interest at the rate of 0.50 percent and the total return on
$7.0 billion. these notes is linked to the appreciation in market value of
AIG’s common stock. The notes may be redeemed, at the
(c) Medium Term Notes Payable: option of AIG, as a whole but not in part, at any time on or
(i) Medium Term Notes Payable Issued by AGF: AGF’s after May 15, 2003. In conjunction with the issuance of these
Medium Term Notes are unsecured obligations which generally notes, AIG entered into a series of swap transactions which
may not be redeemed by AGF prior to maturity and bear effectively converted its interest expense to a fixed rate of
interest at either fixed rates set by AGF at issuance or variable 7.17 percent until May 15, 2003 and a floating rate of LIBOR
rates determined by reference to an interest rate or other minus 0.50 percent thereafter and transferred the equity
formula. appreciation exposure to a third party for the life of the notes.
As of December 31, 2005, notes aggregating $17.74 billion AIG is exposed to credit risk with respect to the counterparties
were outstanding with maturity dates ranging from 2006 to to these swap transactions. During 2003 and 2004, $45 million
2015 at interest rates ranging from 1.65 percent to 7.50 percent. and $100 million of these notes were redeemed, respectively.
To the extent deemed appropriate, AGF may enter into swap
104 AIG m Form 10-K