AIG 2011 Annual Report Download - page 318

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
securities. In 2001, AIG guaranteed the same payments to the holders of capital securities. Like the SAFG, Inc.
guarantee, the AIG guarantee only applies to any payments actually made to the trust in respect of the
debentures. If no payments are made on the debentures, AIG is not required to make any payments to the trust.
AIG also guaranteed the debentures pursuant to a guarantee that is expressly subordinated to certain SAFG, Inc.
senior debt securities. Under AIG’s guarantee, AIG is not required to make any payments in respect of the
debentures if such payment would be prohibited by the subordination provisions of the debentures. As a result,
AIG will never be required to make a payment under its guarantee of the debentures for so long as SAFG, Inc. is
prohibited from making a payment on the debentures.
At December 31, 2011, the preferred stock outstanding consisted of $300 million liquidation value of 8.5 percent
preferred stock issued by American General Capital II in June 2000, $500 million liquidation value of
8.125 percent preferred stock issued by American General Institutional Capital B in March 1997 and $500 million
liquidation value of 7.57 percent preferred stock issued by American General Institutional Capital A in December
1996.
The following table presents maturities of AIG’s borrowings supported by assets:
December 31, 2011 Year Ending
(in millions) Total 2012 2013 2014 2015 2016 Thereafter
MIP notes payable $ 10,147 $ 2,300 $ 856 $ 1,612 $ 396 $ 1,494 $ 3,489
Series AIGFP matched notes and bonds payable 3,807 50 3 - - - 3,754
GIAs, at fair value 7,964 421 201 659 601 303 5,779
Notes and bonds payable, at fair value 2,316 778 372 63 185 337 581
Loans and mortgages payable, at fair value 486 208 85 64 - - 129
Total borrowings supported by assets $ 24,720 $ 3,757 $ 1,517 $ 2,398 $ 1,182 $ 2,134 $ 13,732
MIP Notes Payable
On September 13, 2011, AIG raised $2.0 billion in proceeds from the issuance of senior unsecured notes,
comprised of $1.2 billion in three-year notes and $800 million in five-year notes. The proceeds from the sale of
these notes are being used to pay maturing notes that were issued by AIG to fund the MIP.
Series AIGFP Matched Notes and Bonds Payable
At December 31, 2011, AIG has outstanding $3.25 billion principal amount of senior unsecured notes that were
issued in a Rule 144A/Regulation S offering which bear interest at a per annum rate of 8.25 percent and mature
in 2018. The proceeds from the sale of these notes were used by the Direct Investment book for its general
corporate purposes. In addition, the Direct Investment book has used $310 million of senior notes outstanding
under AIG’s medium-term note program. These notes are included within ‘‘Series AIGFP matched notes and
bonds payable’’ in the preceding tables.
GIAs at Fair Value
Borrowings under obligations of GIAs, which are guaranteed by AIG, are recorded at fair value using
discounted cash flow calculations based upon interest rates currently being offered for similar contracts and AIG’s
current market observable implicit credit spread rates with maturities consistent with those remaining for the
contracts being valued. Obligations may be called at various times prior to maturity at the option of the
counterparty. Interest rates on these borrowings are primarily fixed, vary by maturity and range up to 9.8 percent.
304 AIG 2011 Form 10-K
AIG BORROWINGS SUPPORTED BY ASSETS