AIG 2013 Annual Report Download - page 45

Similar regulations have been proposed or adopted outside the United States. For instance, the EU has also
established a set of new regulatory requirements for EU derivatives activities under EMIR. These requirements
include, among other things, various risk mitigation, risk management and regulatory reporting requirements that
have already become effective and clearing requirements that are expected to become effective in 2014. These
requirements could result in increased administrative costs with respect to our EU derivatives activities and
overlapping or inconsistent regulation depending on the ultimate application of cross-border regulatory
requirements between and among U.S. and non-U.S. jurisdictions.
• Dodd-Frank mandated a study to determine whether stable value contracts should be included in the definition of
‘‘swap.’’ If that study concludes that stable value contracts are swaps, Dodd-Frank authorizes certain federal
regulators to determine whether an exemption from the definition of a swap for stable value contracts is
appropriate and in the public interest. Certain of our affiliates participate in the stable value contract business. We
cannot predict what regulations might emanate from the aforementioned study or be promulgated applicable to this
business in the future.
• Dodd-Frank established a Federal Insurance Office (FIO) within the Department of the Treasury headed by a
director appointed by the Secretary of the Treasury. While not having a general supervisory or regulatory authority
over the business of insurance, the director of this office performs various functions with respect to insurance
(other than health insurance), including serving as a non-voting member of the Council . On December 12, 2013,
the FIO released a Dodd-Frank mandated study on how to modernize and improve the system of insurance
regulation in the United States. The report concluded that the uniformity and efficiency of the current state based
regulatory system could be improved and highlighted areas in which Federal involvement is recommended. In the
near-term, the FIO recommended that the states undertake reforms regarding capital adequacy, reform of insurer
resolution practices, and marketplace regulation.
• Dodd-Frank established the Consumer Financial Protection Bureau (CFPB) as an independent agency within the
FRB to regulate consumer financial products and services offered primarily for personal, family or household
purposes. Insurance products and services are not within the CFPB’s general jurisdiction, although the U.S.
Department of Housing and Urban Development has since transferred authority to the CFPB to investigate
mortgage insurance practices. Broker-dealers and investment advisers are not subject to the CFPB’s jurisdiction
when acting in their registered capacity.
• Title XIV of Dodd-Frank also restricts certain terms for mortgage loans, such as loan fees, prepayment fees and
other charges, and imposes certain duties on a lender to ensure that a borrower can afford to repay the loan.
Dodd-Frank imposes various assessments on financial companies, including, as applicable to us, ex-post
assessments to provide funds necessary to repay any borrowing and to cover the costs of any special resolution of a
financial company conducted under Title II (although the regulatory authority would have to take account of the
amounts paid by us into state guaranty funds).
We cannot predict whether these actions will become effective or the effect they may have on the financial markets
or on our business, results of operations, cash flows, financial condition and credit ratings. However, it is possible
that such effect could be materially adverse. See Item 1A. Risk Factors — Regulation for additional information.
As described below, AIG has been designated as a Global Systemically Important Insurer (G-SII).
In addition to the adoption of Dodd-Frank in the United States, regulators and lawmakers around the world are
actively reviewing the causes of the financial crisis and taking steps to avoid similar problems in the future. The FSB,
consisting of representatives of national financial authorities of the G20 nations, has issued a series of frameworks
and recommendations intended to produce significant changes in how financial companies, particularly global
systemically important financial institutions, should be regulated. These frameworks and recommendations address
such issues as financial group supervision, capital and solvency standards, systemic economic risk, corporate
governance including compensation, and a number of related issues associated with responses to the financial crisis.
The FSB has directed the International Association of Insurance Supervisors (the IAIS, headquartered in Basel,
Switzerland) to create standards relative to these areas and incorporate them within that body’s Insurance Core
Principles (ICPs). IAIS’s ICPs form the baseline threshold against which countries’ financial services regulatory efforts
in the insurance sector are measured. That measurement is made by periodic Financial Sector Assessment Program
Other Regulatory Developments
..................................................................................................................................................................................................................................
AIG 2013 Form 10-K 27
ITEM 1 / BUSINESS
..................................................................................................................................................................................
............................................................................................................................................................................................