AIG 2011 Annual Report Download - page 136

including domestic entities. In 2011, the most significant entities were AIG Star, AIG Edison and Nan Shan. In
2010, the most significant entities were AIA and ALICO. In 2009, the most significant entities were Transatlantic,
21st Century and HSB.
Deferred Taxes on Other Comprehensive Income
For the year ended December 31, 2011, the effective tax rate on pre-tax Other Comprehensive Loss was
5.9 percent. The effective tax rate differs from the statutory 35 percent rate primarily due to the effects of the
Nan Shan disposition.
For the year ended December 31, 2010, the effective tax rate on pre-tax Other Comprehensive Income was
47.7 percent, primarily due to the effects of the AIA initial public offering, the ALICO disposition and changes in
the estimated U.S. tax liability with respect to the potential sale of subsidiaries, including AIG Star and AIG
Edison.
For the year ended December 31, 2009, the effective tax rate on pre-tax Other Comprehensive Income was
34.7 percent, which did not materially differ from the statutory 35 percent rate.
AIG Parent’s primary sources of liquidity are short-term investments and borrowing availability under syndicated
credit and contingent liquidity facilities. Subject to market conditions, AIG expects to access the debt markets
from time to time to meet its financing needs, which include the payment of maturing debt of AIG and its
subsidiaries.
Highlights of 2011 actions affecting capital resources and liquidity include:
• the Recapitalization in January 2011 (more fully described in Note 1 to the Consolidated Financial
Statements);
• approximately $3.0 billion paid to AIG Parent from Chartis and SunAmerica funded by payments of
dividends from their subsidiaries;
• $2.9 billion issuance of AIG Common Stock;
• $2.0 billion senior unsecured note issuance;
• additional $500 million contingent liquidity facility arranged;
• $1.0 billion share repurchase authorization in November 2011, with repurchases of approximately $70 million
at year-end;
• exchange of $2.4 billion of outstanding junior subordinated debentures for $1.8 billion of new senior
unsecured notes;
• membership of certain SunAmerica insurance companies in the Federal Home Loan Banks (FHLBs), which
provides these companies access to collateralized borrowing opportunities to enhance their liquidity;
• repayment of total debt of $18.5 billion, excluding the Recapitalization in January 2011; and
• $3.8 billion net capital contributions to Chartis, partially funded from the retention of $2 billion in net cash
proceeds from the sale of AIG Star and AIG Edison and available cash at AIG Parent (more fully described
in Uses of Liquidity below).
Liquidity Adequacy Management
AIG maintains a stress testing and liquidity framework to systematically assess AIG’s aggregate exposure to its
most significant risks. This framework is built on AIG’s existing Enterprise Risk Management (ERM) stress
122 AIG 2011 Form 10-K
CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW