AIG 2008 Annual Report Download - page 296

affirmative relief from AIG. On February 14, 2008, the Court granted a motion to add former AIG officer Thomas
Tizzio as a defendant. As a result, the remaining defendants in the case are AIG (the nominal defendant), Starr and
former directors and officers Maurice Greenberg, Howard Smith, Edward Matthews and Thomas Tizzio. On
September 30, 2008, the parties filed a stipulation of settlement, where defendants agreed to payment of
$115 million to AIG, net of attorneys’ fees and costs, in exchange for receipt of a broad release of claims relating
to the allegations in the complaint. At the settlement hearing on December 17, 2008, the Court approved the terms of
the settlement and entered final judgment.
Litigation Matters Relating to AIG’s General Insurance Operations
Caremark. AIG and certain of its subsidiaries have been named defendants in two putative class actions in
state court in Alabama that arise out of the 1999 settlement of class and derivative litigation involving Caremark Rx,
Inc. (Caremark). The plaintiffs in the second-filed action have intervened in the first-filed action, and the second-
filed action has been dismissed. An excess policy issued by a subsidiary of AIG with respect to the 1999 litigation
was expressly stated to be without limit of liability. In the current actions, plaintiffs allege that the judge approving
the 1999 settlement was misled as to the extent of available insurance coverage and would not have approved the
settlement had he known of the existence and/or unlimited nature of the excess policy. They further allege that AIG,
its subsidiaries, and Caremark are liable for fraud and suppression for misrepresenting and/or concealing the nature
and extent of coverage. In addition, the intervenor-plaintiffs originally alleged that various lawyers and law firms
who represented parties in the underlying class and derivative litigation (the Lawyer Defendants) were also liable
for fraud and suppression, misrepresentation, and breach of fiduciary duty. The complaints filed by the plaintiffs and
the intervenor-plaintiffs request compensatory damages for the 1999 class in the amount of $3.2 billion, plus
punitive damages. AIG and its subsidiaries deny the allegations of fraud and suppression and have asserted that
information concerning the excess policy was publicly disclosed months prior to the approval of the settlement. AIG
and its subsidiaries further assert that the current claims are barred by the statute of limitations and that plaintiffs’
assertions that the statute was tolled cannot stand against the public disclosure of the excess coverage. The plaintiffs
and intervenor-plaintiffs, in turn, have asserted that the disclosure was insufficient to inform them of the nature of
the coverage and did not start the running of the statute of limitations. On November 26, 2007, the trial court issued
an order that dismissed the intervenors’ complaint against the Lawyer Defendants and entered a final judgment in
favor of the Lawyer Defendants. The matter was stayed pending appeal to the Alabama Supreme Court. In
September 2008 the Alabama Supreme Court affirmed the trial court’s dismissal of the Lawyer Defendants. After
the case was remanded to the trial court, the intervenor-plaintiffs retained additional counsel — the law firm of
Haskell Slaughter Young & Rediker, LLC (Haskell Slaughter) — and filed an Amended Complaint in Intervention
on December 1, 2008. The Amended Complaint in Intervention names only Caremark and AIG and various
subsidiaries as defendants and purports to bring claims against all defendants for deceit and conspiracy to deceive
and against AIG and its subsidiaries for aiding and abetting Caremark’s alleged deception. The defendants have
moved to dismiss the Amended Complaint, and, in the alternative, for a more definite statement. After the
appearance of the Haskell Slaughter firm on behalf of the intervenor-plaintiffs, the plaintiffs moved to disqualify all
of the lawyers for the intervenor-plaintiffs because, among other things, the Haskell Slaughter firm previously
represented Caremark. The intervenor-plaintiffs, in turn, moved to disqualify the lawyers for the plaintiffs in the
first-filed action. The trial court heard oral argument on the motions to disqualify on February 6, 2009, and the court
has also clarified that the defendants’ motion to dismiss and any class action scheduling conference will be deferred
until the motions to disqualify have been decided. At this time, class discovery has yet to begin. AIG cannot
reasonably estimate either the likelihood of its prevailing in these actions or the potential damages in the event
liability is determined.
(b) Commitments
Flight Equipment
At December 31, 2008, ILFC had committed to purchase 168 new aircraft deliverable from 2009 through 2019
at an estimated aggregate purchase price of $16.7 billion. ILFC will be required to find customers for any aircraft
acquired, and it must arrange financing for portions of the purchase price of such equipment.
290 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)