AIG 2013 Annual Report Download - page 62

If we were to experience an ‘‘ownership change’’, it is possible that a significant portion of our tax losses and credits
carryforwards could expire before we would be able to use them to offset future taxable income.
On March 9, 2011, our Board adopted our Tax Asset Protection Plan (the Plan) to help protect these tax losses and
credits carryforwards, and on January 8, 2014, the Board adopted an amendment to the Plan, extending its
expiration date to January 8, 2017. The Board intends to submit the amendment of the Plan to our shareholders for
ratification at our 2014 Annual Meeting of Shareholders. At our 2011 Annual Meeting of Shareholders, shareholders
adopted a protective amendment to our Restated Certificate of Incorporation (Protective Amendment), which is
designed to prevent certain transfers of AIG Common Stock that could result in an ‘‘ownership change’’ and currently
expires on May 11, 2014. The Board intends to submit to our shareholders for approval at our 2014 Annual Meeting
of Shareholders an amendment to our Restated Certificate of Incorporation to adopt a successor to the Protective
Amendment that contains substantially the same terms as the Protective Amendment but would expire on the third
anniversary of the date of our 2014 Annual Meeting of Shareholders.
The Plan is designed to reduce the likelihood of an ‘‘ownership change’’ by (i) discouraging any person or group from
becoming a 4.99 percent shareholder and (ii) discouraging any existing 4.99 percent shareholder from acquiring
additional shares of AIG Common Stock. The Protective Amendment generally restricts any transfer of AIG Common
Stock that would (i) increase the ownership by any person to 4.99 percent or more of AIG stock then outstanding or
(ii) increase the percentage of AIG stock owned by a Five Percent Stockholder (as defined in the Plan). Despite the
intentions of the Plan and the Protective Amendment to deter and prevent an ‘‘ownership change’’, such an event
may still occur. In addition, the Plan and the Protective Amendment may make it more difficult and more expensive
to acquire us, and may discourage open market purchases of AIG Common Stock or a non-negotiated tender or
exchange offer for AIG Common Stock. Accordingly, the Plan and the Protective Amendment may limit a
shareholder’s ability to realize a premium over the market price of AIG Common Stock in connection with any stock
transaction.
Changes in tax laws could increase our corporate taxes, reduce our deferred tax assets or make some of our
products less attractive to consumers. Changes in tax laws or their interpretation could negatively impact our
business or results. Some proposed changes could have the effect of increasing our effective tax rate by reducing
deductions or increasing income inclusions, such as by limiting rules that allow for deferral of tax on certain foreign
insurance income. Conversely, other changes, such as lowering the U.S. federal corporate tax rate discussed
recently in the context of tax reform, could reduce the value of our deferred tax assets. In addition, changes in the
way foreign taxes can be credited against U.S. taxes, methods for allocating interest expense, the ways insurance
companies calculate and deduct reserves for tax purposes, and impositions of new or changed premium, value
added and other indirect taxes could increase our tax expense, thereby reducing earnings.
In addition to proposing to change the taxation of corporations in general and insurance companies in particular, the
Executive Branch of the U.S. Government and Congress have considered proposals that could increase taxes on
owners of insurance products. For example, there are proposals that would limit the deferral of tax on income from
life and annuity contracts relative to other investment products. These changes could reduce demand in the U.S. for
life insurance and annuity contracts, or cause consumers to shift from these contracts to other investments, which
would reduce our income due to lower sales of these products or potential increased surrenders of in-force business.
Governments’ need for additional revenue makes it likely that there will be continued proposals to change tax rules in
ways that would reduce our earnings. However, it remains difficult to predict whether or when there will be any tax
law changes having a material adverse effect on our financial condition or results of operations.
We will be subject to the following risks until we complete the AerCap Transaction:
Our aircraft leasing business depends on lease revenues and exposes us to the risk of lessee
nonperformance. A decrease in ILFC’s customers’ ability to meet their obligations to ILFC under their leases may
negatively affect our business, results of operations and cash flows.
Customer demand for certain aircraft may be lower than anticipated, which could negatively impact ILFC’s
business. Aircraft are long-lived assets and demand for a particular model and type can decline over time. Demand
may fall for a variety of reasons, including obsolescence following the introduction of newer technologies, market
saturation due to increased production rates, technical problems associated with a particular model, new
BUSINESS AND OPERATIONS OF ILFC PRIOR TO COMPLETION OF THE AERCAP TRANSACTION
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AIG 2013 Form 10-K44
ITEM 1A / RISK FACTORS
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