AIG 2011 Annual Report Download - page 140

AIG has established and maintains substantial actual and contingent liquidity.
The following table presents AIG Parent’s liquidity:
As of
(In millions) December 31, 2011
Cash(a) $ 176
Short-term investments(b) 9,627
Available capacity under Syndicated Credit Facilities(c) 3,200
Available capacity under Contingent Liquidity Facilities(d) 1,000
Total AIG Parent liquidity sources $ 14,003
(a) Excludes Cash and Short-term Investments held by AIGFP which are considered to be unrestricted and available for use by AIG Parent of
$64 million at December 31, 2011.
(b) Includes reverse repurchase agreements totaling $6.6 billion used to reduce unsecured exposures.
(c) For additional information relating to the syndicated bank credit facilities, see Credit Facilities below.
(d) For additional information relating to the contingent liquidity facilities, see Contingent Liquidity Facilities below.
Sources of Liquidity
AIG’s primary sources of cash flow are dividends, distributions, and other payments from subsidiaries. In 2011,
AIG Parent:
• collected $3.3 billion in payments from subsidiaries, including $1.5 billion in dividends from Chartis and
$1.4 billion in note repayments from SunAmerica funded by payments of dividends from subsidiaries;
• raised approximately $2.9 billion in net proceeds from the sale of AIG Common Stock;
• raised approximately $2.0 billion in net proceeds from the issuance of senior unsecured notes; and
• arranged a $500 million contingent liquidity facility.
These items are discussed under Liquidity of Parent and Subsidiaries — AIG Parent above.
In addition, on September 2, 2011, ILFC Holdings, an indirect, wholly-owned subsidiary of AIG, which is
intended to become a holding company for ILFC, filed a registration statement on Form S-1 with the SEC for a
proposed initial public offering. The number of shares to be offered, price range and timing for any offering have
not been determined. The timing of any offering will depend on market conditions and no assurance can be given
regarding the terms of any offering or that an offering will be completed. All proceeds received by AIG will be
used to pay down a portion of the liquidation preference of the Department of the Treasury’s AIA SPV Preferred
Interests.
Uses of Liquidity
AIG Parent’s primary uses of cash flow are for debt service, operating expenses and subsidiary capital needs. In
2011, AIG Parent retired $6.2 billion of debt, including $3.2 billion of MIP obligations, and made interest
payments totaling $2.2 billion. Approximately $4.4 billion of AIG Parent’s cash and short-term investments balance
is attributable to the MIP and is available to meet obligations of the DIB. See Liquidity of Parent and
Subsidiaries — Other Operations — Direct Investment Book below for additional details.
AIG Parent made $2.9 billion in net capital contributions to subsidiaries in 2011 (which amount reflects the
$3.7 billion contributed to Chartis in response to the reserve strengthening in the fourth quarter of 2010). This
transaction was funded from the retention of $2 billion of net cash proceeds from the sale of AIG Star and AIG
Edison (for which the Department of the Treasury provided a waiver permitting AIG to use such proceeds for this
purpose instead of using the proceeds to pay down the liquidation preference of the SPV Preferred Interests) and
available cash at AIG Parent.
126 AIG 2011 Form 10-K