AIG 2011 Annual Report Download - page 338

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Litigation Matters Relating to AIG’s Insurance Operations
Caremark. AIG and certain of its subsidiaries have been named defendants in two putative class actions in
state court in Alabama that arise out of the 1999 settlement of class and derivative litigation involving Caremark
Rx, Inc. (Caremark). The plaintiffs in the second-filed action intervened in the first-filed action, and the second-
filed action was dismissed. An excess policy issued by a subsidiary of AIG with respect to the 1999 litigation was
expressly stated to be without limit of liability. In the current actions, plaintiffs allege that the judge approving the
1999 settlement was misled as to the extent of available insurance coverage and would not have approved the
settlement had he known of the existence and/or unlimited nature of the excess policy. They further allege that
AIG, its subsidiaries, and Caremark are liable for fraud and suppression for misrepresenting and/or concealing the
nature and extent of coverage. In addition, the intervenors originally alleged that various lawyers and law firms
who represented parties in the underlying class and derivative litigation (the Lawyer Defendants) were also liable
for fraud and suppression, misrepresentation, and breach of fiduciary duty.
The complaints filed by the plaintiffs and the intervenors request compensatory damages for the 1999 class in
the amount of $3.2 billion, plus punitive damages. AIG and its subsidiaries deny the allegations of fraud and
suppression, assert that information concerning the excess policy was publicly disclosed months prior to the
approval of the settlement, that the claims are barred by the statute of limitations, and that the statute cannot be
tolled in light of the public disclosure of the excess coverage. The plaintiffs and intervenors, in turn, have asserted
that the disclosure was insufficient to inform them of the nature of the coverage and did not start the running of
the statute of limitations.
In November 2007, the trial court dismissed the intervenors’ complaint against the Lawyer Defendants, and the
Alabama Supreme Court affirmed that dismissal in September 2008. After the case was sent back down to the
trial court, the intervenors retained additional counsel and filed an Amended Complaint in Intervention that
named only Caremark and AIG and various subsidiaries as defendants, purported to bring claims against all
defendants for deceit and conspiracy to deceive, and purported to bring a claim against AIG and its subsidiaries
for aiding and abetting Caremark’s alleged deception. The defendants moved to dismiss the Amended Complaint
in Intervention, and the plaintiffs moved to disqualify all of the lawyers for the intervenors because, among other
things, the newly retained firm had previously represented Caremark. The intervenors, in turn, moved to disqualify
the lawyers for the plaintiffs in the first-filed action. The cross-motions to disqualify were withdrawn after the two
sets of plaintiffs agreed that counsel for the original plaintiffs would act as lead counsel, and intervenors also
withdrew their Amended Complaint in Intervention. The trial court approved all of the foregoing steps and, in
April 2009, established a schedule for class action discovery that was to lead to a hearing on class certification in
March 2010. The Court has since appointed a special master to oversee class action discovery and has directed the
parties to submit a new discovery schedule after certain discovery disputes are resolved. Class discovery is ongoing.
A class certification hearing has been set for March 2012, but it is expected to be adjourned until later in the
Spring.
As of February 23, 2012, the parties have not completed class action discovery, general discovery has not
commenced, and the court has not determined if a class action is appropriate or the size or scope of any class. As
a result, AIG is unable to reasonably estimate the possible loss or range of losses, if any, arising from the
litigation.
Flight Equipment
At December 31, 2011, ILFC had committed to purchase 232 new aircraft and 26 additional aircraft, mostly
through sale-leaseback transactions with airlines, deliverable from 2012 through 2019, with aggregate estimated
total remaining payments of approximately $19.0 billion. ILFC will be required to find lessees for any aircraft
acquired and to arrange financing for a substantial portion of the purchase price.
324 AIG 2011 Form 10-K
(B) COMMITMENTS