AIG 2014 Annual Report Download - page 164

ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES

147
Financing Cash Flow Activities
Net cash used in financing activities for 2014 includes:
• approximately $712 million in the aggregate to pay dividends of $0.125 per share on AIG Common Stock in each of the four
quarters of 2014;
• approximately $4.9 billion to repurchase approximately 88 million shares of AIG Common Stock;
• approximately $271 million to repay long-term debt of business held-for-sale; and
• approximately $16.2 billion to repay long-term debt.
Net cash used in financing activities for 2013 includes:
• approximately $294 million in the aggregate to pay dividends of $0.10 per share on AIG Common Stock in each of the third
and fourth quarters of 2013;
• approximately $597 million to repurchase approximately 12 million shares of AIG Common Stock;
• approximately $9.3 billion to repay long term debt; and
• approximately $4.9 billion in repayments of long term debt of business held-for-sale.
Net cash used in financing activities for 2012 includes:
• $8.6 billion to pay down the Department of the Treasury’s preferred interests (AIA SPV Preferred Interests) in the special
purpose vehicle holding the AIA ordinary shares; and
• total payments of approximately $13.0 billion for the purchase of shares of AIG Common Stock.
Liquidity and Capital Resources of AIG Parent and Subsidiaries
AIG Parent
As of December 31, 2014, AIG Parent had approximately $14.3 billion in liquidity sources. AIG Parent’s liquidity sources are
held in the form of cash, short-term investments and publicly traded, intermediate-term investment grade rated fixed maturity
securities. Fixed maturity securities consist of U.S. government and government sponsored entity securities, U.S. agency
mortgage-backed securities, and corporate and municipal bonds. AIG Parent actively manages its assets and liabilities in
terms of products, counterparties and duration. Based upon an assessment of its immediate and longer-term funding needs,
AIG Parent purchases publicly traded, intermediate-term investment grade rated fixed maturity securities that can be readily
monetized through sales or repurchase agreements. These securities allow us to diversify sources of liquidity while reducing
the cost of maintaining sufficient liquidity. AIG Parent liquidity sources are monitored through the use of various internal liquidity
risk measures. AIG Parent’s primary sources of liquidity are dividends, distributions, loans and other payments from
subsidiaries, as well as credit and contingent liquidity facilities. AIG Parent’s primary uses of liquidity are for debt service,
capital and liability management, operating expenses and subsidiary capital needs.
We generally manage capital flows between AIG Parent and its subsidiaries through internal, Board-approved policies and
guidelines. In addition, AIG Parent has unconditional capital maintenance agreements (CMAs) in place with certain
subsidiaries. Nevertheless, regulatory and other legal restrictions could limit our ability to transfer capital freely, either to or
from our subsidiaries.
We believe that we have sufficient liquidity and capital resources to satisfy our reasonably foreseeable future requirements and
meet our obligations to our creditors, debt-holders and insurance company subsidiaries. We expect to access the debt markets
from time to time to meet funding requirements as needed.