AIG 2014 Annual Report Download - page 304

ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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We have accrued our current estimate of probable loss with respect to the pending litigations and other potential related
litigations.
ERISA Actions – Southern District of New York. Between June 25, 2008 and November 25, 2008, AIG, certain directors and
officers of AIG, and members of AIG’s Retirement Board and Investment Committee were named as defendants in eight
purported class action complaints asserting claims on behalf of participants in certain pension plans sponsored by AIG or its
subsidiaries. The Court subsequently consolidated these eight actions as In re American International Group, Inc. ERISA
Litigation II. On December 19, 2014, lead plaintiffs’ counsel filed under seal a third consolidated amended complaint. The
action purports to be brought as a class action under the Employee Retirement Income Security Act of 1974, as amended
(ERISA), on behalf of all participants in or beneficiaries of certain benefit plans of AIG and its subsidiaries that offered shares
of AIG Common Stock. In the third consolidated amended complaint, plaintiffs allege, among other things, that the defendants
breached their fiduciary responsibilities to plan participants and their beneficiaries under ERISA, by continuing to offer the AIG
Stock Fund as an investment option in the plans after it allegedly became imprudent to do so. The alleged ERISA violations
relate to, among other things, the defendants’ purported failure to monitor and/or disclose certain matters, including the
Subprime Exposure Issues.
On January 6, 2015, the parties informed the Court that they had accepted a mediator’s proposal to settle the action for $40
million. On January 7, 2015, the Court removed all previously scheduled deadlines from the Court’s calendar, subject to the
parties’ submission of settlement papers to the Court seeking an order preliminarily approving the proposed settlement and
providing for notice to the class and a final settlement hearing. The entirety of the $40 million settlement is expected to be paid
by AIG’s fiduciary liability insurance carriers.
Canadian Securities Class Action – Ontario Superior Court of Justice. On November 12, 2008, an application was filed in
the Ontario Superior Court of Justice for leave to bring a purported class action against AIG, AIGFP, certain directors and
officers of AIG and Joseph Cassano, the former Chief Executive Officer of AIGFP, pursuant to the Ontario Securities Act. If the
Court grants the application, a class plaintiff will be permitted to file a statement of claim against defendants. The proposed
statement of claim would assert a class period of March 16, 2006 through September 16, 2008 and would allege that during
this period defendants made false and misleading statements and omissions in quarterly and annual reports and during oral
presentations in violation of the Ontario Securities Act.
On April 17, 2009, defendants filed a motion record in support of their motion to stay or dismiss for lack of jurisdiction and
forum non conveniens. On July 12, 2010, the Court adjourned a hearing on the motion pending a decision by the Supreme
Court of Canada in a pair of actions captioned Club Resorts Ltd. v. Van Breda 2012 SCC 17. On April 18, 2012, the Supreme
Court of Canada clarified the standard for determining jurisdiction over foreign and out-of-province defendants, such as AIG,
by holding that a defendant must have some form of “actual,” as opposed to a merely “virtual,” presence to be deemed to be
“doing business” in the jurisdiction. The Supreme Court of Canada also suggested that in future cases, defendants may
contest jurisdiction even when they are found to be doing business in a Canadian jurisdiction if their business activities in the
jurisdiction are unrelated to the subject matter of the litigation. The matter has been stayed pending further developments in
the Consolidated 2008 Securities Litigation. Plaintiff has not yet moved to lift the stay.
In plaintiff’s proposed statement of claim, plaintiff alleged general and special damages of $500 million and punitive damages
of $50 million plus prejudgment interest or such other sums as the Court finds appropriate. As of February 20, 2015, the Court
has not determined whether it has jurisdiction or granted plaintiff’s application to file a statement of claim, no merits discovery
has occurred and the action has been stayed. As a result, we are unable to reasonably estimate the possible loss or range of
losses, if any, arising from the litigation.
Starr International Litigation
On November 21, 2011, Starr International Company, Inc. (SICO) filed a complaint against the United States in the United
States Court of Federal Claims (the Court of Federal Claims), bringing claims, both individually and on behalf of the classes
defined below and derivatively on behalf of AIG (the SICO Treasury Action). The complaint challenges the government’s
assistance of AIG, pursuant to which AIG entered into a credit facility with the Federal Reserve Bank of New York (the FRBNY,
and such credit facility, the FRBNY Credit Facility) and the United States received an approximately 80 percent ownership in
AIG. The complaint alleges that the interest rate imposed on AIG and the appropriation of approximately 80 percent of AIG’s