AIG 2008 Annual Report Download - page 58

AIG believes that the funding needs of AIGCFG have stabilized, but it is possible that renewed customer and
counterparty concerns could substantially increase AIGCFG’s liquidity needs in 2009. Through February 18, 2009,
AIGCFG had entered into contracts to sell certain of its operations in Taiwan, Thailand and the Philippines.
Asset Management
Asset Management’s principal cash requirements are to fund general working capital needs, investment
commitments related to proprietary investments originally acquired for warehouse purposes, contractual capital
commitments, proprietary investments of AIG Global Real Estate and any liquidity mismatches in the Spread-
Based Investment business. Requirements related to Institutional Asset Management are funded through general
operating cash flows from management and performance fees, proceeds from events in underlying funds (capital
calls to third parties, sale of portfolio companies, etc.) as well as intercompany funding provided by AIG.
Accordingly, Institutional Asset Management’s ability to fund certain of its needs may depend on advances from
AIG under various intercompany borrowing facilities. Restrictions on these facilities would have adverse con-
sequences on the ability of the business to satisfy its respective obligations. With respect to the Global Real Estate
business, investing activities are also funded through third-party financing arrangements which are secured by the
relevant properties.
The GIC and MIP programs are in run-off. AIG expects to fund its obligations under these programs through
cash flows generated from invested assets (principal and interest) as well as sales of investments, primarily fixed
maturity securities. However, illiquidity and diminished values within the investment portfolios may impair AIG’s
ability to sell the related program assets or sell such assets for a price adequate to settle the corresponding liabilities
when they come due. In such a case, AIG parent would need to fund the payments.
52 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries