AIG 2005 Annual Report Download - page 64

AIG’s Aircraft Finance operations represent the operations equity investment funds. Each of these subsidiary operations
of ILFC, which generates its revenues primarily from leasing receives fees for investment products and services provided. See
new and used commercial jet aircraft to domestic and foreign also Management’s Discussion and Analysis of Financial
airlines. Revenues also result from the remarketing of commer- Condition and Results of Operations and Note 2 of Notes to
cial jets for its own account, for airlines and for financial Consolidated Financial Statements.
institutions. See also Note 2 of Notes to Consolidated
Financial Statements. Other Operations
The Capital Markets operations of AIG are conducted Certain other AIG subsidiaries provide insurance-related ser-
primarily through AIGFP, which engages as principal in vices such as adjusting claims and marketing specialized
standard and customized interest rate, currency, equity, com- products. Several wholly owned foreign subsidiaries of AIG
modity, energy and credit products with top-tier corporations, operating in countries or jurisdictions such as Ireland, Ber-
financial institutions, governments, agencies, institutional in- muda, Barbados and Gibraltar provide insurance and related
vestors, and high-net-worth individuals throughout the world. administrative and back office services to a variety of insurance
AIGFP also raises funds through municipal reinvestment and reinsurance companies. These companies include captive
contracts and other private and public security offerings, insurance companies unaffiliated with AIG, subsidiaries of AIG
investing the proceeds in a diversified portfolio of high grade and the subsidiaries of holding companies in which AIG holds
securities and derivative transactions. See also Note 2 of Notes an interest, such as IPC Holdings, Ltd (IPC) and Allied World
to Consolidated Financial Statements. Assurance Holdings, Ltd. (AWAC). AIG also has several other
Consumer Finance operations include AGF as well as AIG subsidiaries which engage in various businesses. Mt. Mansfield
Consumer Finance Group, Inc. (AIGCFG). AGF provides a Company, Inc. owns and operates the ski slopes, lifts, school
wide variety of consumer finance products, including real estate and an inn located at Stowe, Vermont. Also included in other
mortgages, consumer loans, retail sales finance and credit- operations are unallocated corporate expenses, including the
related insurance to customers in the United States. AIGCFG, settlement costs more fully described in Item 3. Legal
through its subsidiaries, is engaged in developing a multi- Proceedings and Note 12(i) of Notes to Consolidated Financial
product consumer finance business with an emphasis on Statements.
emerging markets. See also Note 2 of Notes to Consolidated
Financial Statements. Additional Investments
Together, the Aircraft Finance, Capital Markets and Con-
sumer Finance operations generate the vast majority of the AIG holds a 24.3 percent interest in IPC, a reinsurance
revenues produced by AIG’s consolidated Financial Services holding company, a 23.4 percent interest in AWAC, a
operations. property-casualty insurance holding company, and a 24.5 per-
Imperial A.I. Credit Companies also contribute to Financial cent interest in The Fuji Fire and Marine Insurance Co., Ltd.,
Services income. This operation engages principally in insur- a general insurance company. See also Note 1(s) of Notes to
ance premium financing for both AIG’s customers and those of Consolidated Financial Statements.
other insurers. See Note 1 of Notes to Consolidated Financial
Statements. Locations of Certain Assets
As of December 31, 2005, approximately 34 percent of the
Asset Management Operations consolidated assets of AIG were located in foreign countries
AIG’s Asset Management operations comprise a wide variety of (other than Canada), including $4.4 billion of cash and
investment-related services and investment products, including securities on deposit with foreign regulatory authorities. Foreign
institutional and retail asset management, broker dealer ser- operations and assets held abroad may be adversely affected by
vices and spread-based investment business from the sale of political developments in foreign countries, including such
guaranteed investment contracts, also known as funding possibilities as tax changes, nationalization, and changes in
agreements (GICs). Such products and services are offered to regulatory policy, as well as by consequence of hostilities and
individuals and institutions both domestically and overseas. unrest. The risks of such occurrences and their overall effect
AIG’s principal Asset Management operations are con- upon AIG vary from country to country and cannot easily be
ducted through certain subsidiaries of AIG Retirement Ser- predicted. If expropriation or nationalization does occur, AIG’s
vices, Inc. (AIG SunAmerica), including SAAMCo and the policy is to take all appropriate measures to seek recovery of
AIG Advisor Group broker dealers and AIG Global Invest- such assets. Certain of the countries in which AIG’s business is
ment Group. AIG SunAmerica sells and manages mutual funds conducted have currency restrictions which generally cause a
and provides financial advisory services through independent- delay in a company’s ability to repatriate assets and profits. See
contractor registered representatives. AIG Global Investment also Notes 1 and 2 of Notes to Consolidated Financial
Group manages invested assets on a global basis for third-party Statements and ‘‘Risk Factors — Foreign Operations’’ in
institutional, retail, private equity and real estate investment Item 1A. Risk Factors.
funds, provides securities lending and custodial services and
organizes and manages the invested assets of institutional private
12 AIG m Form 10-K