AIG 2013 Annual Report Download - page 63

manufacturers entering the marketplace, additional governmental regulation, or the overall health of the airline
industry. This may result in declining lease rates, losses on sales, impairment charges or fair value adjustments and
may adversely affect ILFC’s business and our consolidated financial condition, results of operations and cash flows.
We face intense competition in each of our businesses. Our businesses operate in highly competitive
environments, both domestically and overseas. Our principal competitors are other large multinational insurance
organizations, as well as banks, investment banks and other non-bank financial institutions. The insurance industry in
particular is highly competitive. Within the U.S., AIG Property Casualty subsidiaries compete with approximately
4,000 other stock companies, specialty insurance organizations, mutual insurance companies and other underwriting
organizations. AIG Life and Retirement subsidiaries compete in the U.S. with approximately 2,300 life insurance
companies and other participants in related financial services fields. Overseas, our subsidiaries compete for business
with the foreign insurance operations of large U.S. insurers and with global insurance groups and local companies.
The past reduction of our credit ratings and past negative publicity have made, and may continue to make, it more
difficult to compete to retain existing customers and to maintain our historical levels of business with existing
customers and counterparties. General insurance and life insurance companies compete through a combination of
risk acceptance criteria, product pricing, and terms and conditions. Retirement services companies compete through
crediting rates and the issuance of guaranteed benefits. A decline in our position as to any one or more of these
factors could adversely affect our profitability.
Competition for employees in our industry is intense, and we may not be able to attract and retain the highly
skilled people we need to support our business. Our success depends, in large part, on our ability to attract and
retain key people. Due to the intense competition in our industry for key employees with demonstrated ability, we
may be unable to hire or retain such employees. Losing any of our key people also could have a material adverse
effect on our operations given their skills, knowledge of our business, years of industry experience and the potential
difficulty of promptly finding qualified replacement employees. Our results of operations and financial condition could
be materially adversely affected if we are unsuccessful in attracting and retaining key employees.
Mr. Benmosche may be unable to continue to provide services to AIG due to his health. Robert Benmosche,
our President and Chief Executive Officer, was diagnosed with cancer and has been undergoing treatment for his
disease. He continues to fulfill all of his responsibilities and has stated his desire to continue in such roles until the
first quarter of 2015. However, his condition may change and prevent him from continuing to perform these roles.
Managing key employee succession and retention is critical to our success. We would be adversely affected if
we fail to adequately plan for the succession of our senior management and other key employees. While we have
succession plans and long-term compensation plans designed to retain our employees, our succession plans may
not operate effectively and our compensation plans cannot guarantee that the services of these employees will
continue to be available to us.
Employee error and misconduct may be difficult to detect and prevent and may result in significant losses.
There have been a number of cases involving fraud or other misconduct by employees in the financial services
industry in recent years and we run the risk that employee misconduct could occur. Instances of fraud, illegal acts,
errors, failure to document transactions properly or to obtain proper internal authorization, misuse of customer or
proprietary information, or failure to comply with regulatory requirements or our internal policies may result in losses.
It is not always possible to deter or prevent employee misconduct, and the controls that we have in place to prevent
and detect this activity may not be effective in all cases.
Actual experience may differ from management’s estimates used in the preparation of financial statements.
Our financial statements are prepared in conformity with U.S. Generally Accepted Accounting Principles
(U.S. GAAP), which requires the application of accounting policies that often involve a significant degree of judgment.
The accounting policies that we consider most dependent on the application of estimates and assumptions, and
therefore may be viewed as critical accounting estimates, are described in Item 7. MD&A — Critical Accounting
Estimates. These accounting estimates require the use of assumptions, some of which are highly uncertain at the
time of estimation. These estimates are based on judgment, current facts and circumstances, and, when applicable,
COMPETITION AND EMPLOYEES
ESTIMATES AND ASSUMPTIONS
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AIG 2013 Form 10-K 45
ITEM 1A / RISK FACTORS
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