AIG 2007 Annual Report Download - page 79

American International Group, Inc. and Subsidiaries
an answer denying SICO’s allegations and setting forth defenses Effect on AIG
to SICO’s claims. In addition, AIG filed counterclaims asserting
In the opinion of AIG management, AIG’s ultimate liability for the
breach of contract, unjust enrichment, conversion, breach of
unresolved litigation and investigation matters referred to above is
fiduciary duty, a constructive trust and declaratory judgment,
not likely to have a material adverse effect on AIG’s consolidated
relating to SICO’s breach of its commitment to use its AIG shares
financial condition, although it is possible that the effect would be
only for the benefit of AIG and AIG employees. Fact and expert
material to AIG’s consolidated results of operations for an
discovery has been concluded and SICO’s motion for summary
individual reporting period.
judgment is pending.
Regulatory Investigations. Regulators from several states have Item 4.
commenced investigations into insurance brokerage practices Submission of Matters to a Vote of Security
related to contingent commissions and other industry wide Holders
practices as well as other broker-related conduct, such as alleged
There were no matters submitted to a vote of security holders
bid-rigging. In addition, various federal, state and foreign regula-
during the fourth quarter of 2007.
tory and governmental agencies are reviewing certain transactions
and practices of AIG and its subsidiaries in connection with
industry wide and other inquiries. AIG has cooperated, and will
continue to cooperate, in producing documents and other informa-
tion in response to subpoenas and other requests. On Janu-
ary 29, 2008, AIG reached settlement agreements with nine
states and the District of Columbia. The settlement agreements
call for AIG to pay a total of $12.5 million to be allocated among
the ten jurisdictions and also require AIG to continue to maintain
certain producer compensation disclosure and ongoing compliance
initiatives. AIG will also continue to cooperate with these states in
their ongoing investigations. AIG has not admitted liability under
the settlement agreements and continues to deny the allegations.
Nevertheless, AIG agreed to settle in order to avoid the expense
and uncertainty of protracted litigation. The settlement agree-
ments, which remain subject to court approvals, were reached
with the Attorneys General of the States of Florida, Hawaii,
Maryland, Michigan, Oregon, Texas and West Virginia, the Com-
monwealths of Massachusetts and Pennsylvania, and the District
of Columbia, the Florida Department of Financial Services, and
the Florida Office of Insurance Regulation. The agreement with the
Texas Attorney General also settles allegations of anticompetitive
conduct relating to AIG’s relationship with Allied World Assurance
Company and includes an additional settlement payment of
$500,000 related thereto.
Wells Notices. AIG understands that some of its employees have
received Wells notices in connection with previously disclosed SEC
investigations of certain of AIG’s transactions or accounting
practices. Under SEC procedures, a Wells notice is an indication
that the SEC staff has made a preliminary decision to recommend
enforcement action that provides recipients with an opportunity to
respond to the SEC staff before a formal recommendation is
finalized. It is possible that additional current and former
employees could receive similar notices in the future as the
regulatory investigations proceed.
AIG 2007 Form 10-K 25