AIG 2005 Annual Report Download - page 159

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
companies of ILFC and liabilities connected to trust preferred
9. Debt Outstanding
stock of AGC subsidiaries are accounted for as interest expense
Continued
in the consolidated statement of income. The cash distribu-
providing backup for AIG’s commercial paper programs admin- tions for ILFC were approximately $5 million, $4 million, and
istered by AIG Funding and obtaining letters of credit to $4 million for the years ended December 31, 2005, 2004, and
secure obligations under insurance and reinsurance transac- 2003, respectively. The cash distributions for AGC subsidiaries
tions. There are currently no loans outstanding under the were approximately $112 million, $123 million and $128 mil-
facility, nor were any loans outstanding as of December 31, lion for the years ended December 31, 2005, 2004 and 2003,
2005. As of such dates, $1.14 billion was available to be drawn respectively.
under the facility, with the remainder having been drawn in
the form of letters of credit. 10. Preferred Shareholders’ Equity in Subsidiary
AIG is also a party to an unsecured inter-company Companies
revolving credit facility provided by certain of its subsidiaries
aggregating $2 billion that expires in October of 2006. The As of December 31, 2005, preferred shareholders’ equity in
facility allows for the conversion of any outstanding loans at subsidiary companies represents preferred stocks issued by ILFC,
expiration into one-year term loans. The facility can be used a wholly owned subsidiary of AIG.
for general corporate purposes and also to provide backup for At December 31, 2005, the preferred stock consists of 1,000
AIG’s commercial paper programs. AIG expects to replace or shares of market auction preferred stock (MAPS) in two series
extend this credit facility on or prior to its expiration. There (Series A and B) of 500 shares each. Each of the MAPS shares
are currently no borrowings outstanding under the inter- has a liquidation value of $100,000 per share and is not
company facility, nor were any borrowings outstanding as of convertible. The dividend rate, other than the initial rate, for
December 31, 2005. each dividend period for each series is reset approximately
AGF is a party to unsecured syndicated revolving credit every seven weeks (49 days) on the basis of orders placed in an
facilities aggregating $4.25 billion, consisting of $2.125 billion auction. During 2001, ILFC extended the term of the Series A
in a 364-day revolving credit facility that expires in July 2006 to five years at a dividend rate of 5.90 percent. At
and $2.125 billion in a five-year credit facility that expires in December 31, 2005, the dividend rate for Series B was
July 2010. The 364-day facility allows for the conversion by 4.51 percent.
AGF of any outstanding loan at expiration into a one-year
term loan. The facilities can be used for general corporate 11. Shareholders’ Equity
purposes and also to provide backup for AGF’s commercial (a) AIG parent depends on its subsidiaries for cash flow in the
paper programs. AGF expects to replace or extend these credit
form of loans, advances, reimbursement for shared expenses,
facilities on or prior to their expiration. There are currently no
and dividends. AIG’s insurance subsidiaries are subject to
borrowings outstanding under these facilities, nor were any
regulatory restrictions on the amount of dividends which can
borrowings outstanding as of December 31, 2005.
be remitted to AIG parent. These restrictions vary by state.
ILFC is a party to unsecured syndicated revolving credit
For example, unless permitted by the New York Superinten-
facilities aggregating $6.0 billion. The facilities can be used for
dent of Insurance, general insurance companies domiciled in
general corporate purposes and also to provide backup for
New York may not pay dividends to shareholders which in any
ILFC’s commercial paper program. They consist of $2.0 billion
twelve month period exceed the lesser of ten percent of the
in a 364-day revolving credit facility that expires in October
company’s statutory policyholders’ surplus or 100 percent of its
2006, with a one-year term out option, $2.0 billion in a five-
‘‘adjusted net investment income,’’ as defined. Generally, less
year revolving credit facility that expires in October 2009 and
severe restrictions applicable to both General and Life Insur-
$2.0 billion in a five-year revolving credit facility that expires
ance companies exist in most of the other states in which
in October 2010. ILFC expects to replace or extend these
AIG’s insurance subsidiaries are domiciled. Certain foreign
credit facilities on or prior to their expiration. There are
jurisdictions have restrictions which could delay or limit the
currently no borrowings outstanding under these facilities, nor
remittance of dividends. There are also various local restric-
were any borrowings outstanding as of December 31, 2005.
tions limiting cash loans and advances to AIG by its
ILFC was a party to two 180-day revolving credit facilities
subsidiaries. Largely as a result of the restrictions, approxi-
aggregating to $1.0 billion, each of which expired in 2005.
mately 89 percent of consolidated shareholders’ equity was
(h) Interest Expense for All Indebtedness: Total interest ex- restricted from immediate transfer to AIG parent at Decem-
pense for all indebtedness, net of capitalized interest, aggre- ber 31, 2005.
gated $5.67 billion in 2005, $4.43 billion in 2004 and (b) At December 31, 2005, there were 6,000,000 shares of
$4.22 billion in 2003. Capitalized interest was $64 million in
AIG’s $5 par value serial preferred stock authorized, issuable in
2005, $59 million in 2004 and $52 million in 2003. Cash
series, none of which were outstanding.
distributions on the preferred shareholders’ equity in subsidiary
AIG m Form 10-K 107