AIG 2007 Annual Report Download - page 149

American International Group, Inc. and Subsidiaries
Contractual Obligations
Contractual obligations in total, and by remaining maturity at December 31, 2007 were as follows:
Payments due by Period
Total Less Than 1-3 3+-5 Over Five
(in millions) Payments One Year Years Years Years
Borrowings(a) $ 156,014 $ 43,891 $ 32,261 $26,032 $ 53,830
Interest payments on borrowings 83,551 5,326 8,899 7,073 62,253
Loss reserves(b) 85,500 23,513 26,078 12,397 23,512
Insurance and investment contract liabilities(c) 645,583 32,359 42,768 42,282 528,174
GIC liabilities(d) 29,797 9,266 8,052 3,458 9,021
Aircraft purchase commitments 20,104 4,174 3,852 2,095 9,983
Operating leases 4,426 747 1,041 693 1,945
Other purchase obligations(e) 1,091 1,056 35 — —
Total(f) $1,026,066 $120,332 $122,986 $94,030 $688,718
(a) Excludes commercial paper and borrowings incurred by consolidated investments and includes hybrid financial instrument liabilities recorded at fair value.
(b) Represents future loss and loss adjustment expense payments estimated based on historical loss development payment patterns. Due to the
significance of the assumptions used, the periodic amounts presented could be materially different from actual required payments.
(c) Insurance and investment contract liabilities include various investment-type products with contractually scheduled maturities, including periodic payments
of a term cer tain nature. Insurance and investment contract liabilities also include benefit and claim liabilities, of which a significant portion represents
policies and contracts that do not have stated contractual maturity dates and may not result in any future payment obligations. For these policies and
contracts (i) AIG is currently not making payments until the occurrence of an insurable event, such as death or disability, (ii) payments are conditional on
survivorship, or (iii) payment may occur due to a surrender or other non-scheduled event out of AIG’s control. AIG has made significant assumptions to
determine the estimated undiscounted cash flows of these contractual policy benefits, which assumptions include mor tality, morbidity, future lapse rates,
expenses, investment returns and interest crediting rates, offset by expected future deposits and premium on in-force policies. Due to the significance of
the assumptions used, the periodic amounts presented could be materially different from actual required payments. The amounts presented in this table
are undiscounted and therefore exceed the future policy benefits and policyholder contract deposits included in the balance sheet.
(d) Represents guaranteed maturities under GICs.
(e) Includes a $1.0 billion commitment to purchase shares under AIG’s share repurchase program which was paid in January 2008 and options to acquire
aircraft.
(f) Does not reflect unrecognized tax benefits of $1.3 billion, the timing of which is uncer tain. However, it is reasonably possible that $50 million to
$150 million may become payable during 2008. See Note 21 to Consolidated Financial Statements for a discussion on unrecognized tax benefits.
Off Balance Sheet Arrangements and Commercial Commitments
Off Balance Sheet Arrangements and Commercial Commitments in total, and by remaining maturity at December 31,
2007 were as follows:
Amount of Commitment Expiration
Less
Total Amounts Than 1-3 3+-5 Over Five
(in millions) Committed One Year Years Years Years
Guarantees:
Liquidity facilities(a) $ 2,495 $ 8 $ 8 $1,503 $ 976
Standby letters of credit 1,713 1,485 42 38 148
Construction guarantees(b) 687 — — — 687
Guarantees of indebtedness 1,124 106 83 500 435
All other guarantees 767 249 8 35 475
Commitments:
Investment commitments(c) 9,071 3,527 3,604 1,684 256
Commitments to extend credit 1,325 496 591 238 —
Letters of credit 1,196 910 6 121 159
Investment protection agreements(d) 11,991 3,088 2,094 855 5,954
Maturity shortening puts(e) 2,333 1,234 1,099 — —
Other commercial commitments 1,269 114 111 83 961
Total(f) $33,971 $11,217 $7,646 $5,057 $10,051
(a) Primarily liquidity facilities provided in connection with certain municipal swap transactions and collateralized bond obligations.
(b) Primarily AIG SunAmerica construction guarantees connected to affordable housing investments.
(c) Includes commitments to invest in limited partnerships, private equity, hedge funds and mutual funds and commitments to purchase and develop real
estate in the United States and abroad.
(d) Written generally with respect to investments in hedge funds and funds of hedge funds.
(e) Represents obligations under 2a-7 Puts to purchase certain multi-sector CDOs at pre-determined contractual prices.
(f) Excludes commitments with respect to pension plans. The annual pension contribution for 2008 is expected to be approximately $118 million for U.S.
and non-U.S. plans.
AIG 2007 Form 10-K 95