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American International Group, Inc.
2009 Annual Report

Table of contents

  • Page 1
    American International Group, Inc. 2009 Annual Report

  • Page 2
    ... commercial, institutional, and individual customers through one of the most extensive worldwide property casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG common stock is listed on the New York Stock...

  • Page 3
    ... focused on building successful businesses for AIG, creating value through the sale of some businesses and strengthening the company's capital structure. Among the new leaders of our company is Peter Hancock, Executive Vice President, Finance, Risk, and Investments. Peter AIG 2009 Annual Report 1

  • Page 4
    ... and makes it harder to repay the taxpayers. All of our actions, as well as those of management, are aimed at restoring AIG as a strong company with an effective governance system, solid businesses, and a risk profile and capital structure in which our customers, regulators, employees, shareholders...

  • Page 5
    ... back to producing good business results. sole benefit of the U.S. Department of the The fundamental purpose of our Treasury. This ownership stake represented company is to serve our clients professionin effect a pre-paid commitment fee that ally and fairly. We are also a company that AIG valued at...

  • Page 6
    ...largest marketing plan in its history, meeting with tens of thousands of brokers and customers to reassure them of the financial stability and operating strengths of the company. Chartis also integrated its domestic and foreign businesses to form, for the first time, a truly global property casualty...

  • Page 7
    ... quarter of 2008, resulting in a far superior risk profile on new business written in 2009. In addition, the company increased its resources to manage the large number of claims submitted by mortgage lenders to ensure appropriate loss mitigation. At AIG Star Life and AIG Edison Life in Japan, it...

  • Page 8
    ... restructuring activities. We are working hard to execute our asset disposition plan as we remain sharply focused on business results. During 2009, we sold or entered into agreements to sell assets that are expected to generate approximately $5.6 billion of aggregate net cash proceeds. In March, we...

  • Page 9
    ...period from to អ Commission file number 1-8787 American International Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 70 Pine Street, New York, New York (Address of principal executive offices) 13-2592361...

  • Page 10
    ... on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information 31 33 35 190 191 346 346 347 348 348 348 348 348 349 350 PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of...

  • Page 11
    ... each of AIG's reportable segments at year-end 2009 are shown below. For information on AIG's reportable segments, including geographic areas of operation, and changes made in 2009, see Note 4 to the Consolidated Financial Statements. General Insurance American Home Assurance Company (American Home...

  • Page 12
    ... Assurance Company, Limited, together with American International Assurance Company (Bermuda) Limited (AIA) The Philippine American Life and General Insurance Company (Philamlife) Financial Services International Lease Finance Corporation (ILFC) AIG Financial Products Corp. and AIG Trading Group...

  • Page 13
    American International Group, Inc., and Subsidiaries coverages, Chartis U.S. offers many specialized forms of insurance such as aviation, accident and health, equipment breakdown, directors and officers liability (D&O), difference-in-conditions, kidnap-ransom, export credit and political risk, and ...

  • Page 14
    ... and Analysis of Financial Condition and Results of Operations - Results of Operations - Segment Results - General Insurance Operations - Liability for unpaid claims and claims adjustment expense.* (in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Reserves...

  • Page 15
    ... and Analysis of Financial Condition and Results of Operations - Results of Operations - Segment Results - General Insurance Operations - Liability for unpaid claims and claims adjustment expense.* (in millions) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Reserves...

  • Page 16
    ... 2008 to reflect no impact on incurred losses for these periods. The Liability for unpaid claims and claims adjustment expense as reported in AIG's Consolidated Balance Sheet at December 31, 2009 differs from the total reserve reported in the Annual Statements filed with state insurance departments...

  • Page 17
    ..., personal accident and health products, group products, including pension, life and health, and fixed and variable annuities. The Foreign Life Insurance & Retirement Services products are sold through independent producers, career agents, financial institutions and direct marketing channels. AIG...

  • Page 18
    ... of AIG's insurance operations, excluding the results of discontinued operations: Years Ended December 31, (in millions) Annual Average Investments(a) Net Investment Income Pre-tax Return on Average Investments(b) General Insurance: 2009 2008 2007 Domestic Life Insurance & Retirement Services: 2009...

  • Page 19
    ... of Financial Condition and Results of Operations - 2010 Business Outlook - Financial Services. Consumer Finance AIG's Consumer Finance operations in North America are principally conducted through AGF. AGF derives most of its revenues from finance charges assessed on real estate loans, secured and...

  • Page 20
    ... classes, AIG Investments offers various forms of structured investments. Within the alternative asset class, AIG Investments offers hedge and private equity funds and fund-of-funds, direct investments and distressed debt investments. AIG Global Real Estate Investment Corp. (AIG Global Real Estate...

  • Page 21
    American International Group, Inc., and Subsidiaries income asset and liability management for AIG's insurance company subsidiaries and the AIG Global Real Estate investment management business, as well as proprietary real estate and private equity investments. AIG expects to continue relationships...

  • Page 22
    ... the corporation that controls the registered insurer and the other companies in the holding company system and prior approval of intercorporate services and transfers of assets (including in some instances payment of dividends by the insurance subsidiary) within the holding company system. AIG...

  • Page 23
    ...operations of large U.S. insurers and with global insurance groups and local companies in particular areas in which they are active. As a result of the reduction of the credit ratings of AIG and its subsidiaries, uncertainty relating to AIG's financial condition and AIG's asset disposition plan, AIG...

  • Page 24
    ... this Annual Report on Form 10-K. Directors and Executive Officers of AIG All directors of AIG are elected for one-year terms at the annual meeting of shareholders. In addition, the terms of each of the AIG Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share, (AIG...

  • Page 25
    ...the Board of Directors Director Director Director Director Director Director Director Director Executive Vice President - Finance, Risk and Investments Executive Vice President and Chief Financial Officer Executive Vice President - Life Insurance Executive Vice President - Domestic General Insurance...

  • Page 26
    ..., it is possible that these risks could delay AIG from preparing timely financial statements and making required filings in a timely manner, and otherwise adversely affect AIG's internal controls over financial reporting. The restructuring of AIG's businesses is a complex undertaking requiring the...

  • Page 27
    ...'s total consolidated cash and invested assets at December 31, 2009. In addition, the steep decline in the U.S. real estate market and tight credit markets have materially adversely affected the liquidity of other AIG securities portfolios, including its residential and commercial mortgage-related...

  • Page 28
    ... to trade with or to extend adequate credit limits to AIG or its subsidiaries, AIG could be exposed to open positions or other unhedged risks, resulting in increased volatility of results and increased losses. A downgrade in the Insurer Financial Strength ratings of AIG's insurance companies could...

  • Page 29
    American International Group, Inc., and Subsidiaries reducing the funds available for investment in its businesses. Moreover, because AIG's debt service obligations are very high, AIG may be more vulnerable to competitive pressures and have less flexibility to plan for or respond to changing ...

  • Page 30
    ... not to AIG's other shareholders. Moreover, the Trust's ability to cause or prevent a change in control of AIG could also have an adverse effect on the market price of AIG's Common Stock. The Trust may also, subject to the terms of the Trust Agreement and applicable securities laws, transfer all, or...

  • Page 31
    American International Group, Inc., and Subsidiaries environment have generally stabilized and improved in mid and late 2009, asset values for many asset classes have not returned to previous levels and business, and financial and economic conditions, particularly unemployment levels, lending ...

  • Page 32
    ... benefits. A loss of key employees could reduce the value of AIG's businesses and impair its ability to effect a successful restructuring plan. A loss of key employees in AIG's financial reporting process could prevent AIG from making required filings and preparing financial statements on a timely...

  • Page 33
    ... Furthermore, AIG's ability to sell assets relating to such particular groups of related assets may be limited if other market participants are seeking to sell at the same time. Concentration of AIG's insurance and other risk exposures may have adverse effects. AIG seeks to manage the risks to which...

  • Page 34
    ... of ultimate net losses, loss expenses and loss reserves is a complex process for long-tail casualty lines of business, which include excess and umbrella liability, D&O, professional liability, medical malpractice, workers' compensation, general liability, products liability and related classes, as...

  • Page 35
    .... When interest rates rise or customers lose confidence in a company, policy loans and policy surrenders and withdrawals of life insurance policies and annuity contracts may increase as policyholders seek to buy products with perceived higher returns or more stability, requiring AIG subsidiaries to...

  • Page 36
    ... refusal to make timely payments under the terms of its agreements with the AIG subsidiaries could have a material adverse effect on AIG's results of operations and liquidity. For additional information on AIG's reinsurance, see Management's Discussion and Analysis of Financial Condition and Results...

  • Page 37
    ...and financial condition. AIG provides insurance, investment and other financial products and services to both businesses and individuals in more than 130 countries and jurisdictions. A substantial portion of AIG's General Insurance business and all of its Foreign Life Insurance & Retirement Services...

  • Page 38
    ... a material effect on the consolidated financial statements. Aircraft Suppliers There are limited suppliers of aircraft and engines. The supply of jet transport aircraft, which ILFC purchases and leases, is dominated by two airframe manufacturers, Boeing and Airbus, and a limited number of engine...

  • Page 39
    ... of dividends to AIG by some of its insurance subsidiaries, see Item 1A. Risk Factors - Liquidity - AIG parent's ability to access funds from its subsidiaries is limited, and Note 16 to the Consolidated Financial Statements. AIG's table of equity compensation plans previously approved by security...

  • Page 40
    ..., Inc., Prudential Financial, Inc., The Travelers Companies, Inc. and XL Capital Ltd. FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURNS Value of $100 Invested on December 31, 2004 $250 $200 $150 $100 $50 $0 2004 2005 2006 2007 2008 2009 Years Ending AMERICAN INTERNATIONAL GROUP S&P 500 INDEX...

  • Page 41
    ... share data) 2009(a) 2008(a) 2007(a) 2006(a) 2005(a) Revenues(b): Premiums and other considerations Net investment income Net realized capital gains (losses) Unrealized market valuation gains (losses) on AIGFP super senior credit default swap portfolio Other income Total revenues Benefits, claims...

  • Page 42
    ... 31, 2008. Includes that portion of long-term debt maturing in less than one year. See Note 14 to the Consolidated Financial Statements. (c) (d) (e) (f) (g) (h) (i) See Note 1(y) to the Consolidated Financial Statements for effects of adopting new accounting standards. AIG 2009 Form 10...

  • Page 43
    ... Life Insurance & Retirement Services Operations Financial Services Operations Other Operations Critical Accounting Estimates Investments Investment Strategy Other-Than-Temporary Impairments Risk Management Overview Corporate Risk Governance Credit Risk Management Market Risk Management Operational...

  • Page 44
    ... accident and health products, group products including pension, life and health, and fixed and variable annuities. • Financial Services - engages in diversified activities, including commercial aircraft and equipment leasing, capital markets operations, consumer finance and insurance premium...

  • Page 45
    ... address funding needs of International Lease Finance Corporation (ILFC) and American General Finance, Inc. (AGF) and explore alternative restructuring opportunities. 2009 Financial Overview Global financial markets continued their recovery in the second half of 2009, as investors returned to equity...

  • Page 46
    ... value of certain private equity and real estate assets held for investment purposes, resulting in impairment charges. The persistence of the troubled global economy driven by tight credit markets and high unemployment will likely continue to adversely affect pre-tax income in future AIG 2009 Form...

  • Page 47
    ... financial institutions. Domestic Life Insurance & Retirement Services companies maintained higher liquidity in 2008 and 2009 which negatively affected net investment income results. As such cash balances are reinvested into longer term securities in 2010-2011, AIG expects investment yields...

  • Page 48
    American International Group, Inc., and Subsidiaries AIA and ALICO have experienced improved operating conditions and are expected to continue to improve as the rebranding initiatives and revitalization of their agency and direct marketing distribution networks continues. Financial Services Capital...

  • Page 49
    ... AGF closed 200 branch offices, reduced retail sales financing operations, reduced its number of employees by approximately 1,400 through reductions in force and attrition, and sold $1.9 billion of finance receivables held for sale. In July 2009, AGF securitized $1.9 billion of real estate loans and...

  • Page 50
    ... AIG's Series E Fixed Rate Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share (AIG Series E Preferred Stock). See Note 16 to the Consolidated Financial Statements for further discussion. Department of the Treasury Commitment On April 17, 2009, AIG entered into a Securities Purchase...

  • Page 51
    ... and the Purchase Agreement between AIG and the FRBNY dated June 25, 2009 (ALICO Purchase Agreement); • The planned sales of significant subsidiaries; • The continuing liquidity issues in certain of AIG's businesses and AIG's actions to address such issues; and • The substantial risks to which...

  • Page 52
    ... to AIG Capital contributions and loans to insurance companies(a) Repayment of obligations to securities lending program Repayment of intercompany loans Contributions to AIGCFG subsidiaries(b) Loans to ILFC Debt payments Issuance of preferred interests in AIA LLC and ALICO LLC Funding of equity...

  • Page 53
    ... 9, 2010. AIG's plans for meeting these maturing obligations are as follows: • ILFC's sources of liquidity available to meet these needs include future cash flows from operations, aircraft sales, and potentially additional secured financing arrangements (see Liquidity of Parent and Subsidiaries...

  • Page 54
    ... provide stability to its businesses and to provide for the timely repayment of the FRBNY Credit Facility. Asset Disposition Plan Since September 2008, AIG has been working to protect and enhance the value of its key businesses, execute an orderly asset disposition plan, and position itself for the...

  • Page 55
    ... of a cash payment determined at closing based on the net assets of the business being sold plus contingent consideration. This transaction met the criteria for held-for-sale accounting. • On October 12, 2009, AIG entered into an agreement to sell its 97.57 percent share of Nan Shan Life Insurance...

  • Page 56
    ... and the Department of the Treasury as its primary sources of liquidity. Primary uses of cash flow are for debt service and subsidiary funding. In 2009, AIG parent collected $2.2 billion in dividends and other payments from subsidiaries (primarily from insurance company subsidiaries), and retired...

  • Page 57
    ... of General Insurance subsidiaries as rating agency capital models may reduce the amount of available capital relative to required capital. At December 31, 2009, Chartis had liquidity in the form of cash and short-term investments. These are consolidated cash and short-term investments for a number...

  • Page 58
    ... investment-related items. Of this amount, $1.2 billion was funded by drawdowns under the Department of the Treasury Commitment in May 2009. AIG believes that its Domestic Life Insurance & Retirement Services companies currently have adequate capital to support their business plans. Further capital...

  • Page 59
    ..., the sale price, and whether a sale agreement could be agreed upon with acceptable terms to the buyers and AIG and ILFC. Because the current market for aircraft is depressed due to the economic downturn and limited availability of buyer financing, it is likely that if a group of aircraft is sold to...

  • Page 60
    ... flow from operations, AGF has significantly limited its lending activities and aggressively managed its expenses. Since September 2008 and through February 17, 2010, AGF's alternative funding sources have included proceeds of $1.9 billion from real estate loan portfolio sales and cash proceeds of...

  • Page 61
    ... contracts to sell the AIGCFG operations in Argentina, Colombia and Poland. Noncore Businesses The principal cash requirements of AIG's noncore asset management operations are to fund general working capital needs, investment commitments related to proprietary investments in private equity and real...

  • Page 62
    ...AIG Global Real Estate Investment ALICO SunAmerica Total debt of consolidated investments Total debt not guaranteed by AIG Total debt: Total commercial paper and other short-term debt Federal Reserve Bank of New York commercial paper funding facility Total long-term debt Total debt December 31, 2009...

  • Page 63
    ...in the fair value of AIGFP debt and $123 million reclassified to Liabilities of businesses held for sale for AIGCFG reported in other non-cash changes. AIG (Parent Company) AIG historically issued debt securities from time to time to meet its financing needs and those of certain of its subsidiaries...

  • Page 64
    ... be sold to satisfy maturing liabilities. Depending on market conditions and AIGFP's ability to sell assets at that time, proceeds from sales may not be sufficient to satisfy the full amount due on maturing liabilities. Any shortfalls would need to be funded by AIG parent. ILFC At December 31, 2009...

  • Page 65
    ...AGF's one-year term loans (previously, a 364-day syndicated facility). Under this support agreement, AIG has agreed to cause AIG's wholly owned subsidiary, American General Finance Corporation, to maintain (1) consolidated net worth of $2.2 billion and (2) an adjusted tangible leverage ratio of less...

  • Page 66
    ... to the rating by the rating agencies to denote relative position within such generic or major category. Short-Term Debt Moody's AIG AIG Financial Products Corp.(f) AIG Funding, Inc.(f) ILFC American General Finance Corporation American General Finance, Inc. (a) (b) (c) (d) (e) (f) (g) (h) P-1 (1st...

  • Page 67
    ... 9,023 739 126 $ 643,873 Long-term debt FRBNY Credit Facility Interest payments on borrowings Loss reserves(b) Insurance and investment contract liabilities(c) GIC liabilities(d) Aircraft purchase commitments Operating leases Purchase obligations(e) Total(f)(g) (a) (b) (c) (a) $ 108,157 23,435 61...

  • Page 68
    ... 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. Includes options to acquire aircraft. Excludes commitments with respect to pension plans. The annual pension contribution for 2010 is...

  • Page 69
    ... Capital (RBC) Model Law requirements. RBC relates an individual insurance company's statutory surplus to the risk inherent in its overall operations. AIG's insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by domestic...

  • Page 70
    ...extensive property-casualty and life insurance and retirement services network. AIG's Financial Services businesses include commercial aircraft and equipment leasing, capital markets operations and consumer finance, both in the United States and abroad. AIG also provides asset management services to...

  • Page 71
    ...) 2009 vs. 2008 2008 vs. 2007 Revenues: Premiums and other considerations Net investment income Net realized capital losses Unrealized market valuation gains (losses) on AIGFP super senior credit default swap portfolio Other income Total revenues Benefits, claims and expenses: Policyholder benefits...

  • Page 72
    ... in Commercial Insurance net premiums written due to reductions in workers' compensation, construction, real estate and transportation lines of business; • a decrease in Foreign General Insurance due to the negative effect of foreign exchange and the sale of the Brazilian operations in 2008 noted...

  • Page 73
    ... and mutual fund investments reflecting significantly weaker market conditions in 2008 than in 2007; • policyholder trading losses for Foreign Life Insurance & Retirement Services in 2008 compared to policyholder trading gains in 2007, reflecting equity market declines; 65 AIG 2009 Form 10-K

  • Page 74
    ... in 2008; and • the effect of increased levels of short-term investments, for liquidity purposes. Net Realized Capital Gains (Losses) Years Ended December 31, (in millions) 2009 $ 2008 2007 Sales of fixed maturity securities Sales of equity securities Sales of real estate and loans Other...

  • Page 75
    ... Services Results - Capital Markets Results and Critical Accounting Estimates - Valuation of Level 3 Assets and Liabilities and Note 6 to the Consolidated Financial Statements. Other Income (Loss) 2009 and 2008 Comparison Other income increased in 2009 compared to 2008 due to: • a net credit...

  • Page 76
    ... a credit valuation adjustment of $9.1 billion on AIGFP's assets and liabilities which are measured at fair value. These decreases were partially offset by increased rental revenues for ILFC, driven by a larger aircraft fleet and higher lease rates. Policyholder Benefits and Claims Incurred 2009 and...

  • Page 77
    ... in 2009; • a reduction of $3.3 billion due to goodwill impairment charges recorded in 2008 as discussed below; and • the effects of lower production levels for General Insurance and both Domestic and Foreign Life Insurance & Retirement Services. 2008 and 2007 Comparison Policy acquisition...

  • Page 78
    ... information. Other Expenses 2009 and 2008 Comparison Other expenses for 2009 decreased compared to 2008 primarily due to a decrease in compensation-related costs for Parent and Other operations and the noncore Asset Management businesses, including the effect of deconsolidation AIG 2009 Form...

  • Page 79
    ... Other expenses increased in 2008 compared to 2007 primarily due to goodwill impairment charges of $791 million in 2008 in the Financial Services segment related to the Consumer Finance and Capital Markets businesses, which resulted from the downturn in the housing markets, the credit crisis and the...

  • Page 80
    ... the operations of each reportable segment. (See also Note 4 to Consolidated Financial Statements.) Percentage Increase/ (Decrease) 2009 vs. 2008 2008 vs. 2007 Years Ended December 31, (in millions) 2009 2008 2007 Total revenues : General Insurance Domestic Life Insurance & Retirement Services...

  • Page 81
    ... the sale of the Brazilian operations in 2008 and a negative impact from changes in foreign exchange rates. General Insurance net premiums written decreased in 2008 compared to 2007, as Commercial Insurance net premiums written reflected a decline in workers' compensation and other casualty lines of...

  • Page 82
    ...excess casualty and excess workers' compensation, two long-tail lines of business, largely from accident years 2002 and prior; • lower levels of favorable development related to loss sensitive policies for Commercial Insurance which amounted to $118 million in 2009 compared to $339 million in 2008...

  • Page 83
    ... net premiums written by line of business: Percentage Increase/ (Decrease) 2009 vs. 2008 2008 vs. 2007 Years Ended December 31, (in millions) 2009 2008 2007 General liability/auto liability Workers' compensation Property Management/professional liability Commercial umbrella/excess A&H products...

  • Page 84
    ... the general liability and commercial umbrella lines of business; and • adverse effect of AIG's negative publicity in 2009. Commercial Insurance net premiums written decreased in 2008 compared to 2007 primarily due to declines in premiums from workers' compensation as well as other casualty lines...

  • Page 85
    ... Foreign General Insurance net premiums written by line of business: Percentage Increase/ (Decrease) 2009 vs. 2008 2008 vs. 2007 Years Ended December 31, (in millions) 2009 2008 2007 A&H products Specialty lines Personal lines Casualty Marine & Energy Lloyds Property Aviation Other Total...

  • Page 86
    ... general economic conditions which continued to negatively affect new business; and • adverse effect of negative publicity regarding AIG in 2009. Net premiums written increased in 2008 compared to 2007 due to growth in commercial and consumer lines driven by new business from established and new...

  • Page 87
    ... business on a statutory annual statement basis(a): At December 31, (in millions) 2009 2008 Other liability occurrence Workers' compensation Other liability claims made International Mortgage Guaranty/Credit Auto liability Property Products liability Accident and health Medical malpractice Aircraft...

  • Page 88
    ... future investment income. The following table classifies the components of the net liability for unpaid claims and claims adjustment expense by business unit: Years Ended December 31, (in millions) 2009 2008 General Insurance segment: Commercial Insurance(a) Foreign General Insurance Total General...

  • Page 89
    ... effect on AIG's consolidated results of operations for an individual reporting period. See Item 1A. Risk Factors - Casualty Insurance Underwriting and Reserves. The following table presents the reconciliation of net loss reserves: Years Ended December 31, (in millions) 2009 2008 2007 Net liability...

  • Page 90
    ...was sold during the first quarter of 2009. Years Ended December 31, (in millions) 2009 2008 2007 Prior Accident Year Development by Major Class of Business: Excess casualty (Commercial Insurance) D&O and related management liability (Commercial Insurance) Excess workers compensation (Commercial...

  • Page 91
    ... loss development assumptions for excess casualty business (see Net Loss Development by Class of Business below); • $956 million pertaining to excess workers' compensation within Commercial Insurance. In 2009, Commercial Insurance experienced an emergence of losses on accident years 1999 and prior...

  • Page 92
    ...and related management liability classes of business within Commercial Insurance; • $286 million pertaining to Foreign General, primarily relating to financial lines and excess casualty lines; and • $194 million pertaining to healthcare business within Commercial Insurance. In 2007, most classes...

  • Page 93
    ... primarily related to excess casualty business from accident years 2000 and prior. For the year-end 2007 loss reserve review, AIG claims staff updated its review of accounts with significant exposure to construction defect-related claims. AIG's actuaries determined that no significant changes in...

  • Page 94
    ...the excess casualty reserves included in the other liability claims made line of business, as presented in the table above. Excess Workers' Compensation: AIG experienced significant adverse development for this class during 2009, following two years of immaterial development in 2007 and 2008. Excess...

  • Page 95
    ... of property, personal lines and certain casualty classes. The other group is long-tail casualty classes of business which includes excess and umbrella liability, D&O, professional liability, medical malpractice, workers' compensation, general liability, products liability and related classes. Short...

  • Page 96
    ... reflects the projected loss ratio from prior accident years, adjusted for the loss trend (see above) and the effect of rate changes and other quantifiable factors on the loss ratio. For low-frequency, high-severity classes such as excess casualty, expected loss ratios generally are used for at...

  • Page 97
    ...primary casualty exposures would generally not be combined into the same class as excess casualty exposures. Expected loss ratio methods are generally utilized by AIG where the reported loss data lacks sufficient credibility to utilize loss development methods, such as for new classes of business or...

  • Page 98
    ... frequency, higher severity commercial classes of business where average claim severity is volatile. Excess Casualty: AIG generally uses a combination of loss development methods and expected loss ratio methods for excess casualty classes. Expected loss ratio methods are generally utilized for at...

  • Page 99
    ..., the indicated losses based on the pricing analysis may be utilized to record the initial estimated loss reserves for these accounts. Excess Workers' Compensation: AIG generally utilizes a combination of loss development methods and expected loss ratio methods. Loss development methods are given...

  • Page 100
    ... accident years for catastrophic casualty business. This class of business consists of casualty or financial lines coverage which attaches in excess of very high attachment points; thus the claims experience is marked by very low frequency and high severity. Because of the limited number of claims...

  • Page 101
    ...light of emerging claim experience as well as rate changes or other factors that could affect the adequacy of the IBNR factor being employed. International: Business written by AIG's Foreign General Insurance operating segment includes both long-tail and short-tail classes of business. For long-tail...

  • Page 102
    ...claim analysis, loss evaluation reports from on-site field adjusters, and market share estimates. AIG's loss reserve analyses do not calculate a range of loss reserve estimates. Because a large portion of the loss reserves from AIG's General Insurance business relates to longer-tail casualty classes...

  • Page 103
    ... exceptionally high deviation. For D&O and related management liability classes of business, the assumed loss development factors are also an important assumption but less critical than for excess casualty. Because these classes are written on a claims made basis, the loss reporting and development...

  • Page 104
    American International Group, Inc., and Subsidiaries able to use loss development projections for all but the most recent accident year's reserves, so there is limited need to rely on loss cost trend assumptions for primary workers' compensation business. However, for primary workers' compensation ...

  • Page 105
    ... the policyholders can be modeled in this manner. In order to ensure its ground-up analysis was comprehensive, AIG staff produced the information required at policy and claim level detail for nearly 800 asbestos defendants. This represented over 95 percent of all accounts for which AIG had received...

  • Page 106
    ...• The increase in the volume of claims by currently unimpaired plaintiffs; • Claims filed under the non-aggregate premises or operations section of general liability policies; • The number of insureds seeking bankruptcy protection and the effect of prepackaged bankruptcies; • Diverging legal...

  • Page 107
    ...the gross and net IBNR included in the Liability for unpaid claims and claims adjustment expense, relating to asbestos and environmental claims separately and combined: At December 31, (in millions) 2009 Gross 2008 Gross 2007 Gross Net Net Net Asbestos Environmental Combined $ 2,072 161 $ 2,233...

  • Page 108
    ...in the rolling average reflect higher claims payments. In addition, AIG's survival ratio for asbestos claims was negatively affected by certain favorable settlements during 2008 and 2007. These settlements reduced gross and net asbestos survival ratios at December 31, 2009 by approximately 0.9 years...

  • Page 109
    ... broker-dealers, career financial advisors, wholesale life brokers, insurance agents and a direct-to-consumer platform. AIG's Domestic Life Insurance businesses offer a broad range of protection products, including individual term and universal life insurance, and group life and health products...

  • Page 110
    ... 2009. See Results of Operations - Consolidated Results - Premiums and Other Considerations; - Net Investment Income; and - Net Realized Capital Gains (Losses). 2008 and 2007 Comparison Domestic Life Insurance & Retirement Services reported a significant decrease in pre-tax income (loss) before net...

  • Page 111
    ... related to realized capital losses. Domestic Life Insurance pre-tax income before net realized capital losses decreased slightly in 2008 compared to 2007 primarily due to the following: • lower net investment income, reflecting reduced overall investment yields from increased levels of short-term...

  • Page 112
    ... and single premiums from new and existing policyholders. Sales of group accident and health insurance represent annualized first year premium from new policies. Annuity sales represent deposits from new and existing customers. 2009 and 2008 Comparison Total Domestic Life Insurance sales and...

  • Page 113
    ...and fixed annuity blocks. As the GIC block is in runoff, AIG anticipates reserve and asset declines in future periods; and • a decline in fee income related to lower average policyholder account values. The reduced pre-tax loss for Domestic Retirement Services in 2009 reflected lower levels of net...

  • Page 114
    ...International Group, Inc., and Subsidiaries The pre-tax loss for Domestic Retirement Services in 2008 reflected higher levels of net realized capital losses compared to 2007 due to a $19.6 billion increase in other-than-temporary impairment charges, a $2.8 billion increase in trading losses related...

  • Page 115
    ...Foreign Life Insurance & Retirement Services Operations AIG's Foreign Life Insurance & Retirement Services operations include insurance and investment-oriented products such as whole and term life, investment linked, universal life and endowments, personal accident and health 107 AIG 2009 Form 10...

  • Page 116
    ... International Group, Inc., and Subsidiaries products, group products including pension, life and health, and fixed and variable annuities. The Foreign Life Insurance & Retirement Services products are sold through independent producers, career agents, financial institutions and direct marketing...

  • Page 117
    ... by a change in policyholder benefits and claims incurred. The decrease in policy acquisition and other expenses resulted from lower new business sales. Pre-tax income before net realized capital losses for Foreign Life Insurance & Retirement Services declined in 2009 compared to 2008 primarily due...

  • Page 118
    American International Group, Inc., and Subsidiaries 2008 and 2007 Comparison Premiums and other considerations increased primarily due to growth in new business related to life insurance products in Japan and Korea, as well as group credit life sales in Europe. Net investment income declined in ...

  • Page 119
    ... leasing, capital markets, and consumer finance and insurance premium finance. Together, the Aircraft Leasing, Capital Markets and Consumer Finance operations generate the majority of the revenues produced by the Financial Services operations. Aircraft Leasing AIG's Aircraft Leasing operations...

  • Page 120
    ...protection written through credit default swaps on super senior risk tranches of diversified pools of loans and debt securities. Historically, AIG's Capital Markets operations derived a significant portion of their revenues from hedged financial positions entered into in connection with counterparty...

  • Page 121
    ... aircraft fleet, higher lease rates and lower composite borrowing rates. • The net loss in the Other reporting unit resulted primarily from the change in fair value of interest rate swaps on economically hedged exposures. Capital Markets Results 2009 and 2008 Comparison AIGFP reported a pre-tax...

  • Page 122
    ... credit default swap portfolio and the effect of credit spreads on the valuation of its assets and liabilities. The 2008 net pre-tax loss was driven by the extreme market conditions experienced during 2008 and the effects of downgrades of AIG's credit ratings by the rating agencies. AIG 2009 Form...

  • Page 123
    ...International Group, Inc., and Subsidiaries AIG recognized an unrealized market valuation loss of $28.6 billion in 2008 compared to $11.5 billion in 2007, representing the change in fair value of its super senior credit default swap portfolio. The principal components of the loss recognized in 2008...

  • Page 124
    ... the 2008 pre-tax loss is the transition amount of $291 million related to the adoption of new accounting standards on fair value measurements and fair value option for financial assets and financial liabilities. Other Operations AIG's Other operations includes results from Parent & Other operations...

  • Page 125
    ... commitment asset Total interest expense on FRBNY Credit Facility Other interest expense Unallocated corporate expenses Restructuring expenses Change in fair value of ML III* Net realized capital gains (losses) Net loss on sale of divested businesses Other miscellaneous, net Total Parent & Other...

  • Page 126
    ...guaranty insurance, both domestically and internationally, that covers the first loss for credit defaults on high loan-to-value conventional first-lien mortgages for the purchase or refinance of one- to four-family residences. Mortgage Guaranty's pre-tax loss for 2009 decreased compared to 2008. The...

  • Page 127
    ... contingent upon investment maturity levels and market conditions. In the Institutional Asset Management business, carried interest, computed in accordance with each fund's governing agreement, is based on the investment's performance over the life of each fund. Unrealized 119 AIG 2009 Form 10-K

  • Page 128
    ...despite being effective economic hedges. Further, the MIP invests in short single name credit default swaps in order to obtain unfunded credit exposure. 2008 and 2007 Comparison The MIP reported increased pre-tax losses in 2008 compared to 2007 due to significantly higher Net realized capital losses...

  • Page 129
    ... impairment; • liability for legal contingencies; • estimates with respect to income taxes; and • fair value measurements of certain financial assets and liabilities, including credit default swaps and AIG's investments in ML II and ML III (Maiden Lane Interests). 121 AIG 2009 Form 10-K

  • Page 130
    ...the marketability of assets to be disposed of and the timing and amount of related cash proceeds to be used to repay indebtedness; • the planned sales of significant subsidiaries; • plans to raise new funds or refinance debt; • the commitment of the U.S. government to continue to work with AIG...

  • Page 131
    ... International Group, Inc., and Subsidiaries Future Policy Benefits for Life and Accident and Health Contracts (life insurance & retirement services companies): • Investment returns: which vary by geographical region, year of issuance and products. • Mortality, morbidity and surrender rates...

  • Page 132
    American International Group, Inc., and Subsidiaries Flight Equipment Recoverability (Financial Services): • Expected undiscounted future net cash flows: based upon current lease rates, projected future lease rates and lease periods and estimated residual or sales values of each aircraft based on...

  • Page 133
    ...'s assets and liabilities in a hypothetical business combination. An impairment charge is recognized in earnings to the extent of the excess. Management observed a narrowing of the fair value over the carrying value of the Foreign Life Insurance & Retirement Services - Japan & Other reporting unit...

  • Page 134
    ..., non-traded equity investments and certain private limited partnerships and certain hedge funds included in other invested assets, certain short-term investments, separate and variable account assets, certain policyholder contract deposits, securities and spot commodities sold but not yet purchased...

  • Page 135
    ... Financial Statements for more detailed information about AIG's accounting policy for the incorporation of credit risk in fair value measurements and the measurement of fair value of financial assets and financial liabilities. Level 3 Assets and Liabilities Assets and liabilities recorded at fair...

  • Page 136
    ... the fair value of the major classes of assets and liabilities classified in Level 3. Private equity and real estate fund investments: These assets initially are valued at the transaction price, i.e., the price paid to acquire the asset. Subsequently, they are measured based on net asset value using...

  • Page 137
    ... over the remaining life of the investments after repayment of the first priority obligations owed to the FRBNY. AIG's cash flow methodology considers the capital structure of the collateral securities and their expected credit losses from the underlying asset pools. The fair values of the Maiden...

  • Page 138
    American International Group, Inc., and Subsidiaries The following table presents the net notional amount, fair value of derivative (asset) liability and unrealized market valuation gain (loss) of the AIGFP super senior credit default swap portfolio, including credit default swaps written on ...

  • Page 139
    ...stand-alone but rather part of the related regulatory capital trades. The effect on unrealized market valuation gain (loss) was not significant. Includes $6.3 billion and $9.7 billion in net notional amount of credit default swaps written with cash settlement provisions at December 31, 2009 and 2008...

  • Page 140
    ... International Group, Inc., and Subsidiaries General Contractual Terms AIGFP entered into CDS transactions in the ordinary course of its business. In the majority of AIGFP's credit derivative transactions, AIGFP sold credit protection on a designated portfolio of loans or debt securities. Generally...

  • Page 141
    ...of a CDS transaction written on a European RMBS security of $1.5 billion in net notional amount that was reported as part of Regulatory Capital - Other at a level approximating its fair value at that time. Given its unique structure and concentrated exposure to high loan-to-value Spanish residential...

  • Page 142
    ... asset for these transactions. The following table presents, for each of the regulatory capital CDS transactions in the corporate loan portfolio, the gross transaction notional amount, net notional amount, attachment points, inception to date realized losses and percent non-investment grade...

  • Page 143
    ...All of the regulatory capital CDS transactions directly or indirectly reference tranched pools of large numbers of whole loans that were originated by the financial institution (or its affiliates) receiving the credit protection, rather than structured securities containing loans originated by other...

  • Page 144
    ... in any such pool, AIG receives a notice detailing the identity or identification number of the borrower, notional amount of such loan and the effective date of such credit event. Ratings from independent ratings agencies for the underlying assets of the corporate loan portfolio are not universally...

  • Page 145
    ... of assets. This analysis includes a review of changes in pool balances, subordination levels, delinquencies, realized losses, and expected performance under more adverse credit conditions. Using data provided by the Report Providers, and information available from rating agencies, governments, and...

  • Page 146
    ... senior risk layer, net notional amount and fair value of derivative liability by underlying collateral type: At December 31, 2009 Gross Transaction Notional Amount(a) Subordination Below the Super Senior Risk Layer (in millions) Net Notional Amount Fair Value of Derivative Liability High grade...

  • Page 147
    ... super senior multisector CDO credit default swap portfolio: (in millions) Years Ended December 31, 2009 December 31, 2008 Fair value of derivative liability, beginning of year Unrealized market valuation (gain) loss Purchases of underlying CDO securities(a) Terminated in connection with the ML III...

  • Page 148
    ... and vintage breakdown of collateral securities in the multi-sector CDOs, by asset-backed securities (ABS) category: At December 31, 2009 (in millions) ABS Category Gross Transaction Notional Percent Amount of Total Ratings BBB BB Vintage 2007 2006 AAA AA A

  • Page 149
    ... International Group, Inc., and Subsidiaries Corporate Debt/CLOs The corporate arbitrage portfolio consists principally of CDS written on portfolios of corporate obligations that were generally rated investment grade at the inception of the CDS. These CDS transactions require cash settlement...

  • Page 150
    ... a single payment by AIGFP in return for physical delivery by the counterparty of the reference security (see Physical Settlement below). Cash Settlement. Transactions requiring cash settlement (principally on a ''pay as you go'' basis) are generally in respect of baskets of reference credits (which...

  • Page 151
    ...super senior CDO securities does not provide additional subordination that protects holders of the super senior CDO securities, as holders of such pari passu securities are entitled to receive payments from available cash flows at the same level of priority as holders of the 143 AIG 2009 Form 10-K

  • Page 152
    ...of which $8.0 billion was funded using existing liquidity arrangements. In connection with the ML III transaction, ML III purchased $8.5 billion of multi-sector CDOs underlying 2a-7 Puts written by AIGFP. A portion of the net payment made by ML III to the counterparties for the purchase of the multi...

  • Page 153
    ... default swaps written for regulatory capital relief, with a net notional amount of $79.2 billion at December 31, 2009, include triggers that require certain actions to be taken by AIG once AIG's rating level falls to certain levels, which, if not taken, give rise to a right of the counterparties...

  • Page 154
    ...a rating-agency model. Negotiated Amount-Under this mechanism, the amount of collateral to be posted is determined based on terms negotiated between AIGFP and the counterparty, which could be a fixed percentage of the notional amount or present value of premiums to be earned by AIGFP. AIG 2009 Form...

  • Page 155
    ...is the price at which a marketplace participant would be willing to purchase such CDO security in a market transaction on such date, while the ''replacement value of the transaction'' is the cost on such date of entering into a credit default swap transaction with substantially the same terms on the...

  • Page 156
    ... to post in the future. Models and Modeling AIGFP values its credit default swaps written on the super senior risk layers of designated pools of debt securities or loans using internal valuation models, third-party price estimates and market indices. The principal market was determined to be the...

  • Page 157
    American International Group, Inc., and Subsidiaries require payment of the full difference between the cash price of the underlying tranches of the referenced securities portfolio and the net notional amount specified in the credit default swap. AIGFP uses a modified version of the Binomial ...

  • Page 158
    ...sector super senior credit default swap portfolio using AIGFP's fair value methodology: At December 31, (in millions) Net Notional Amount 2009 2008 Fair Value Derivative Liability 2009 2008 BET model Third party price Average of BET model and third party price European RMBS Total $ 2,186 2,466 193...

  • Page 159
    ...of a CDS transaction written on a European RMBS security of $1.5 billion in net notional amount that was reported as part of Regulatory Capital - Other at a level approximating its fair value at that time. Given its unique structure and concentrated exposure to high loan-to-value Spanish residential...

  • Page 160
    ... rating agency. AIGFP utilizes a LIBOR-based interest rate curve to derive its discount rates. AIGFP employs similar control processes to validate these model inputs as those used to value AIG's investment portfolio as described in Fair Value Measurements of Certain Financial Assets and Liabilities...

  • Page 161
    ... CDO credit default swap portfolio, the change in valuation derived using the BET model is used to estimate the change in the fair value of the derivative liability. Out of the total $7.9 billion net notional amount of CDS written on multi-sector CDOs outstanding at December 31, 2009, a BET value is...

  • Page 162
    ... assets out of Level 3. These transfers out of Level 3 primarily related to investments in certain ABS and RMBS and investments in private placement corporate debt. See Note 5 to the Consolidated Financial Statements for additional information about transfers into and out of Level 3. AIG 2009 Form...

  • Page 163
    ... of AIG's investments by segment: Domestic Life Insurance & Retirement Services Foreign Life Insurance & Retirement Services (in millions) General Insurance Financial Services Other Total At December 31, 2009 Fixed maturity securities: Bonds available for sale, at fair value Bond trading...

  • Page 164
    ...have consisted primarily of laddered holdings of tax-exempt municipal bonds, which provided attractive after-tax returns and limited credit risk. In order to meet the Commercial Insurance Group's current risk/return and tax objectives, the domestic property and casualty companies have begun to shift...

  • Page 165
    ...large capitalization, high-dividend, public equity strategies and to alternative investments, including private equity and hedge funds. Notwithstanding the current environment, these investments have provided a combination of added diversification and attractive long-term returns over time. Domestic...

  • Page 166
    ... commodities sold but not yet purchased, at fair value, are marked to fair value daily with the unrealized gain or loss recognized in income. These trading securities are purchased and sold as necessary to meet the risk management and business objectives of Capital Markets operations. AIG 2009 Form...

  • Page 167
    ... securities and commercial mortgage-backed securities. In addition, the MIP sold credit protection by issuing predominantly single-name investment grade corporate credit default swaps with the intent to earn spread income on credit exposure in an unfunded and leveraged form. AIG Global Real Estate...

  • Page 168
    ...for sale held by AIG that were below investment grade or not rated totaled $24.5 billion and $19.4 billion, respectively. At December 31, 2009 and 2008, fixed maturity securities reported on the Consolidated Balance Sheet include $188 million and $442 million, respectively, of short-term investments...

  • Page 169
    ...: Money Center /Global Bank Groups Regional banks - other Life insurance Securities firms and other finance companies Insurance non-life Regional banks - North America Other financial institutions Utilities Communications Consumer noncyclical Capital goods Consumer cyclical Energy Other Total...

  • Page 170
    ... rating agencies. AIG's investments rated BBB or below totaled $8.7 billion, or approximately 1 percent of AIG's total invested assets at December 31, 2009. As of February 17, 2010, $12.1 billion of AIG's RMBS portfolio had been downgraded as a result of rating agency actions since January 1, 2007...

  • Page 171
    ...the manager, the servicer, security credit ratings, underlying characteristics of the mortgages, borrower characteristics, and the level of credit enhancement in the transaction. AIG's strategy is typically to invest in securities rated AA or better at the time of the investment. 163 AIG 2009 Form...

  • Page 172
    ... the adoption of the new other-than-temporary impairments accounting standard. The following table presents the percentage of AIG's CMBS investments, other than those of AIGFP, by credit rating: At December 31, 2009 2008 Rating: AAA AA A BBB Below investment grade Non-rated Total 46% 12 10 12...

  • Page 173
    ... in underlying commercial real estate fundamentals and the market's anticipation of increasing delinquencies and defaults. Although the market has improved and CMBS spreads have tightened during 2009, the market value of the holdings continues to be below amortized cost. AIG's investments in CMBS...

  • Page 174
    American International Group, Inc., and Subsidiaries The following table presents the amortized cost of AIG's CDO investments, other than those of AIGFP, by credit rating: At December 31, (in millions) 2009 Amortized Percent Cost of Total 2008 Amortized Percent Cost of Total Rating: AAA AA A BBB ...

  • Page 175
    ..., $48.6 billion and $4.6 billion (including $643 million related to AIGFP recorded in other income) in 2009, 2008, and 2007 respectively. Refer to Note 6 to the Consolidated Financial Statements for a discussion of AIG's other-than-temporary impairment accounting policy. 167 AIG 2009 Form 10-K

  • Page 176
    ... Services Foreign Life Insurance & Retirement Services (in millions) General Insurance Financial Services Other Total December 31, 2009 Impairment Type: Severity Change in intent Foreign currency declines Issuer-specific credit events Adverse projected cash flows on structured securities Total...

  • Page 177
    ...CMBS Other Fixed Income Equities/Other Invested Assets* Total December 31, 2009 Impairment Type: Severity Change in intent Foreign currency declines Issuer-specific credit events Adverse projected cash flows on structured securities Total December 31, 2008 Impairment Type: Severity Change in intent...

  • Page 178
    American International Group, Inc., and Subsidiaries The following table presents other-than-temporary impairment charges in earnings by type of security and credit rating: (in millions) RMBS CDO/ABS CMBS Other Fixed Income Equities/Other Invested Assets* Total December 31, 2009 Rating: AAA AA A ...

  • Page 179
    ...2009 and 2008 related to: • securities for which AIG has changed its intent to hold or sell; • declines due to foreign exchange rates; • issuer-specific credit events; • certain structured securities; and • other impairments, including equity securities, partnership investments and private...

  • Page 180
    ... securities lending invested collateral. Item count is by CUSIP by subsidiary. For 2009, net unrealized gains related to fixed maturity and equity securities increased by $14.3 billion ($9.3 billion after tax), reflecting an increase in fair value primarily due to the narrowing of credit spreads...

  • Page 181
    ... the risk categories outlined above. Corporate Risk Governance AIG's major risks are addressed at the corporate level through Enterprise Risk Management (ERM), which is headed by AIG's Chief Risk Officer (CRO). ERM reports to the Chief Executive Officer and is responsible for 173 AIG 2009 Form 10...

  • Page 182
    ...: (i) through the downgrading of credit ratings of counterparties whose credit instruments AIG may be holding, or, in some cases, insuring, causing the value of the assets to decline or insured risks to rise; and (ii) as cross-border risk where a country (sovereign government risk) or one or...

  • Page 183
    ... International Group, Inc., and Subsidiaries AIG's credit risks are managed at the corporate level by the Credit Risk Management department (CRM) whose primary role is to support and supplement the work of the businesses and the CRC. CRM is headed by AIG's Chief Credit Officer (CCO), who reports...

  • Page 184
    ... subsidiaries. Nine countries had cross-border exposures in excess of 10 percent of Total equity at December 31, 2009 (eight countries and 20 percent at December 31, 2008). Based on AIG's internal risk ratings, at that date, six were rated AAA, two were rated AA and one was rated A. The two largest...

  • Page 185
    ... also known as risk-free interest rates and are associated with either the government / treasury yield curve or the swap curve. The fair value of AIG's significant fixed maturity securities portfolio changes as benchmark interest rates change. • Credit spread or risk premium. Credit spread risk is...

  • Page 186
    ... securities, loans, finance receivables and short-term investments (excluding consolidated separate account assets). Exposures for equity and alternative investment prices include investments in common stocks, preferred stocks, mutual funds, hedge funds, private equity funds, commercial real estate...

  • Page 187
    ...surrender activity in Japan; partially offset by a number of relatively small decreases in other currencies with a net combined position totaling approximately $4.0 billion. The above sensitivities of a 100 basis point increase in yield curves, a 20 percent decline in equities and alternative assets...

  • Page 188
    ..., insurer financial strength rating downgrades, declines in statutory surplus below pre-determined levels, decreases in NAIC risk-based capital (RBC) below certain levels, or setting maximum limits for reinsurance recoverables. In addition, AIG's CRC reviews all reinsurer exposures and credit limits...

  • Page 189
    ...587 $ 1,197 $ $ 920 809 The financial strength ratings reflect the ratings of the various reinsurance subsidiaries of the companies listed as of February 5, 2010. Excludes collateral held in excess of applicable treaty balances. Excludes Equitas gross reinsurance assets that are unrated, which are...

  • Page 190
    ... with financial reporting and capital and solvency targets; • extensive use of reinsurance, both internal and third-party; and • review and establishment of reserves. AIG closely manages insurance risk by overseeing and controlling the nature and geographic location of the risks in each line of...

  • Page 191
    ... Japan and Taiwan earthquakes. These exposures represent the largest share of A&H exposures to earthquakes. A&H losses were modeled using April 2008 data. The property exposures for the divisions with AIG's largest property exposures, Lexington commercial lines and Private Client Group, were modeled...

  • Page 192
    ... table. Single-event modeled property and workers' compensation losses to AIG's worldwide portfolio of risk for key geographic areas are set forth below. Gross values represent AIG's liability after the application of policy limits and deductibles, and net values represent losses after reinsurance...

  • Page 193
    ... term reinsurance. For AIG's life insurance & retirement services companies, the reinsurance programs provide risk mitigation per life for individual and group covers and for catastrophic risk events. Pandemic Influenza On June 11, 2009, the World Health Organization (WHO) raised its alert level...

  • Page 194
    ..., the Aircraft Leasing, Capital Markets and Consumer Finance operations generate the majority of the revenues produced by the Financial Services operations. A.I. Credit also contributes to Financial Services income principally by providing insurance premium financing for both AIG's policyholders and...

  • Page 195
    ... the fair value of Capital Markets derivatives portfolios by counterparty credit rating: At December 31, (in millions) 2009 2008 Rating: AAA AA A BBB Below investment grade Total $ 896 1,286 3,682 1,535 213 $ 3,278 4,963 5,815 1,694 251 $ 7,612 $ 16,001 See Critical Accounting Estimates...

  • Page 196
    ... of Level 3 Assets and Liabilities for a comprehensive discussion of AIGFP's super senior credit default swap portfolio. Aircraft Leasing AIG's Aircraft Leasing operations represent the operations of ILFC, which generates its revenues primarily from leasing new and used commercial jet aircraft to...

  • Page 197
    ... secured and unsecured non-real estate loans and retail sales finance receivables generally have a maximum term of 60 months. Current economic conditions, such as interest rate and employment levels, can have a direct effect on the borrowers' ability to repay these loans. AGF manages the credit risk...

  • Page 198
    ... suggest that the value of AIG Global Real Estate's real estate investments may be impaired, including but not limited to declines in property operating performance, general market conditions, and changes to asset plans or strategies. Increases in capitalization rates, discount rates, and vacancies...

  • Page 199
    ... * Schedules listed were included in the Form 10-K filed with the Securities and Exchange Commission but have not been included herein. Copies may be obtained electronically through AIG's website at www.aigcorporate.com or from the Director of Investor Relations, American International Group, Inc...

  • Page 200
    ...selected financial assets and liabilities at fair value. Also, on January 1, 2007 AIG changed the manner in which it accounts for internal replacements of certain insurance and investment contracts, uncertainty in income taxes, and changes or projected changes in the timing of cash flows relating to...

  • Page 201
    ... at fair value: 2009 - $23,975; 2008 - $19,316) Total investments Cash Accrued investment income Premiums and other receivables, net of allowance Reinsurance assets, net of allowance Current and deferred income taxes Deferred policy acquisition costs Real estate and other fixed assets, net of...

  • Page 202
    ... claims and claims adjustment expense Unearned premiums Future policy benefits for life and accident and health insurance contracts Policyholder contract deposits (portion measured at fair value: 2009 - $5,214; 2008 - $5,458) Other policyholder funds Commissions, expenses and taxes payable Insurance...

  • Page 203
    ... International Group, Inc., and Subsidiaries Consolidated Statement of Income (Loss) (dollars in millions, except per share data) Revenues: Premiums and other considerations Net investment income Net realized capital losses: Total other-than-temporary impairments on available for sale securities...

  • Page 204
    American International Group, Inc., and Subsidiaries Consolidated Statement of Comprehensive Income (Loss) (in millions) Years Ended December 31, 2009 2008 2007 Net income (loss) Other comprehensive income (loss): Cumulative effect of change in accounting principle Income tax benefit on above ...

  • Page 205
    ...' controlling Stock Stock Stock Capital Shares Deficit) Income (Loss) Equity Interests Total Equity (in millions) Balance, January 1, 2007 Common stock issued under stock plans Payments advanced Shares purchased Cumulative effect of change in accounting principle, net of tax Net Income* Dividends...

  • Page 206
    American International Group, Inc., and Subsidiaries Consolidated Statement of Equity (Continued) (in millions) Payments Retained Accumulated Total AIG Additional Advanced Earnings/ Other ShareNonPreferred Common Treasury Paid-in to Purchase (Accumulated Comprehensive holders' controlling Stock ...

  • Page 207
    American International Group, Inc., and Subsidiaries Consolidated Statement of Cash Flows Years Ended December 31, (in millions) 2009 2008 2007 Summary: Net cash provided Net cash provided Net cash provided Effect of exchange by (used in) operating activities by (used in) investing activities by ...

  • Page 208
    ...received for preferred stock not yet issued Interest credited to policyholder accounts included in financing activities Treasury stock acquired using payments advanced to purchase shares Present value of future contract adjustment payments related to issuance of equity units Long-term debt reduction...

  • Page 209
    ...Policy Benefits for Life and Accident and Health Insurance Contracts and Policyholder Contract Deposits Variable Life and Annuity Contracts Debt Outstanding Commitments, Contingencies and Guarantees Total Equity and Earnings (Loss) Per Share Statutory Financial Data Share-based Employee Compensation...

  • Page 210
    ...accounting estimates, are those relating to items considered by management in the determination of • AIG's ability to continue as a going concern; • liability for general insurance unpaid claims and claims adjustment expenses; • future policy benefits for life and accident and health contracts...

  • Page 211
    ...2008 Financial Statements, management disclosed the conditions and events that led management to conclude that AIG would have adequate liquidity to finance and operate AIG's businesses, execute its asset disposition plan and repay its obligations for at least the next twelve months. On March 2, 2009...

  • Page 212
    .... Each SPV has (directly or indirectly) as its only asset 100 percent of the common stock of an operating subsidiary (American International Assurance Company, Ltd. (AIA) in one case and American Life Insurance Company (ALICO) in the other). AIG owns all of the voting common equity interests of each...

  • Page 213
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS securities. Upon drawings under this commitment, the liquidation preference of the AIG Series F Preferred Stock increases proportionately. Sales of Businesses and Specific Asset Dispositions Since September 2008...

  • Page 214
    ...the Department of the Treasury; • AIG's highly leveraged capital structure; • the effect of the provisions of the Troubled Asset Relief Program (TARP) Standards for Compensation and Corporate Governance and the Determination Memoranda issued by the Office of the Special Master for TARP Executive...

  • Page 215
    ... contingent upon investment maturity levels and market conditions. Income from the operations of AIGFP included in Other income consists of the following: • Change in fair value relating to financial assets and liabilities for which the fair value option has been elected. 207 AIG 2009 Form 10-K

  • Page 216
    ... Changes in the fair value of trading securities and spot commodities sold but not yet purchased, futures and hybrid financial instruments. • Realized capital gains and losses from the sale of available for sale securities and investments in private equities, joint ventures, limited partnerships...

  • Page 217
    ...'s Financial Services subsidiaries, those securities for which the fair value option was not elected, are held to meet long-term investment objectives and are accounted for as available for sale, carried at fair values and recorded on a trade-date basis. For AIG parent and its insurance subsidiaries...

  • Page 218
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS investment income. AIG generally obtains and maintains cash collateral from securities borrowers at current market levels for the securities lent. During the fourth quarter of 2008, in connection with ...

  • Page 219
    ...2009, 2008 and 2007, respectively. Also included in Other invested assets are real estate held for investment, aircraft asset investments held by non-Financial Services subsidiaries and investments in life settlement contracts. See Note 6(e) herein for further information. Securities purchased (sold...

  • Page 220
    ...at the time of acquisition and is reported in the Consolidated Balance Sheet with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase. For participating life, traditional life and accident and health insurance products, VOBA...

  • Page 221
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Beginning in 2008, for contracts accounted for at fair value, policy acquisition costs are expensed as incurred and not deferred or amortized. (i) Real estate and other fixed assets - net: The costs of ...

  • Page 222
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the excess of the fair value of the reporting unit over the amounts that would be assigned to the reporting unit's assets and liabilities in a hypothetical business combination. The following table ...

  • Page 223
    ... policy benefits are liabilities for annuities issued in structured settlement arrangements whereby a claimant has agreed to settle a general insurance claim in exchange for fixed payments over a fixed determinable period of time with a life contingency feature. Structured settlement liabilities...

  • Page 224
    ...and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS structured settlement arrangement with no life contingency and (c) certain contracts that AIG has elected to account for at fair value beginning in 2008. See Note 5 herein for additional fair value disclosures. (p) Other policyholder funds...

  • Page 225
    ... assets, unearned revenue liabilities and future policy benefits for life and accident and health insurance contracts resulting from a shorter expected life related to certain group life and health insurance contracts and the effect on the gross profits of investment-oriented products related...

  • Page 226
    ... when measuring liabilities at fair value. The fair value measurement and related disclosure guidance in the standard do not apply to fair value measurements associated with AIG's share-based employee compensation awards. AIG adopted the standard on January 1, 2008, its required effective date. The...

  • Page 227
    ... to the fair value measurements of a security when the market for that security is inactive. AIG adopted this guidance in the third quarter of 2008. The effects of adopting this standard on AIG's consolidated financial condition and results of operations were not material. 219 AIG 2009 Form 10-K

  • Page 228
    ... and equity securities and other related guidance. AIG adopted this guidance in the fourth quarter of 2008. The effects of adopting the standard on AIG's consolidated financial condition and results of operations were not material. AIG adopted the following accounting standards during 2009: Business...

  • Page 229
    ... ended June 30, 2009. The adoption of the new standard did not affect AIG's consolidated financial condition, results of operations or cash flows. Accounting for Transfers of Financial Assets and Repurchase Financing Transactions In February 2008, the FASB issued an accounting standard that requires...

  • Page 230
    ... disclosures in interim and annual reporting periods for fixed maturity and equity securities. See Note 6 herein for the expanded disclosures. AIG adopted the new standard on April 1, 2009 and recorded an after-tax cumulative effect adjustment to increase AIG shareholders' equity by $2.5 billion as...

  • Page 231
    ... fair values such as certain hedge funds and private equity funds. The new standard was effective for interim and annual periods ending after December 15, 2009. The adoption of the new standard did not have a material effect on AIG's consolidated financial condition, results of operations or cash...

  • Page 232
    ... separately as single line items in the asset and liability sections of the Consolidated Balance Sheet at December 31, 2009. Nan Shan previously had been a component of the Foreign Life Insurance & Retirement Services reportable segment. AIG expects the sale to close in 2010. A summary of income...

  • Page 233
    ... loans receivable, net Other invested assets Short-term investments Deferred policy acquisition costs Separate account assets Other assets Total Assets of businesses held for sale Liabilities: Future policy benefits for life and accident and health insurance contracts Policyholder contract deposits...

  • Page 234
    ... payments made through December 31, 2009. Restructuring expenses and related asset impairment and other expenses by reportable segment consisted of the following: Domestic Life Insurance & Retirement Services Foreign Life Insurance & Retirement Services (in millions) General Insurance Financial...

  • Page 235
    ... sheet date. 4. Segment Information AIG reports the results of its operations through four reportable segments: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services. AIG evaluates performance based on pre-tax income...

  • Page 236
    ... savings products and guaranteed income solutions through an established multi-channel distribution network that includes banks, national, regional and independent broker-dealers, career financial advisors, wholesale life brokers, insurance agents and a direct-to-consumer platform. AIG 2009 Form...

  • Page 237
    ...protection written through credit default swaps on super senior risk tranches of diversified pools of loans and debt securities. Historically, AIG's Capital Markets operations derived a significant portion of their revenues from hedged financial positions entered into in connection with counterparty...

  • Page 238
    ...to efforts to improve internal controls, corporate initiatives, certain compensation plan expenses, certain litigation related charges, corporate level net realized capital gains and losses and net gains and losses on sale of divested businesses. Additionally, Other operations include the results of...

  • Page 239
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents AIG's General Insurance operations by operating segment: Commercial Insurance Foreign General Insurance Total Operating Segments Consolidation and Eliminations Total General ...

  • Page 240
    ... Domestic Retirement Services Total Operating Segment Consolidation and Eliminations 2009 Total revenues: Insurance-oriented products Retirement savings products Asset management revenues Total revenues Depreciation and amortization Pre-tax income (loss) from continuing operations Capital...

  • Page 241
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents AIG's Foreign Life Insurance & Retirement Services operations by operating segment: Total Foreign Life Insurance & Retirement Services (in millions) Japan & Other Asia ...

  • Page 242
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents AIG's Financial Services operations by operating segment: Aircraft Leasing Capital Consumer Markets Finance Total Consolidation Total Operating and Financial Other Segments ...

  • Page 243
    ...International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents components of AIG's Other operations: Noncore (in millions) Parent & Other Insurance Operations Asset Management Operations Consolidation and Eliminations Total Other Operations 2009...

  • Page 244
    ... exchange or dealer markets. AIG does not adjust the quoted price for such instruments. Assets and liabilities measured at fair value on a recurring basis and classified as Level 1 include certain government and agency securities, actively traded listed common stocks and derivative contracts, most...

  • Page 245
    ... default swap portfolio), policyholder contract deposits carried at fair value, private equity and real estate fund investments, and direct private equity investments. AIG's non-financial instrument assets that are measured at fair value on a non-recurring basis generally are classified as Level...

  • Page 246
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS incorporate counterparty credit risk by using discount rates that take into consideration cash issuance spreads for similar instruments or other observable information. Fixed Maturity Securities - ...

  • Page 247
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Direct Private Equity Investments - Other Invested Assets AIG initially estimates the fair value of equity instruments not traded in active markets, which includes direct private equity investments, by ...

  • Page 248
    ...of market index returns to funds, fund performance, discount rates and policyholder behavior. With respect to embedded policy derivatives in AIG's equity-indexed annuity and life contracts, option pricing models are used to estimate fair value, taking into account assumptions for future equity index...

  • Page 249
    ... debt/Collateralized loan obligation (CLO) portfolios: In the case of credit default swaps written on portfolios of investment-grade corporate debt, AIGFP previously estimated the fair value of its obligations by comparing the contractual premium of each contract to the current market levels of the...

  • Page 250
    ... a market return and the uncertainty inherent in the model inputs. The change in fair value of these policyholder contract deposits is recorded as Policyholder benefits and claims incurred in the Consolidated Statement of Income (Loss). Securities and spot commodities sold but not yet purchased Fair...

  • Page 251
    ... securities trading Mortgage and other loans receivable Other invested assets(d) Unrealized gain on swaps, options and forward transactions Securities purchased under agreements to resell Short-term investments Separate account assets Other assets Total Level 1 Level 2 Level 3 Counterparty Cash...

  • Page 252
    ... and 15 percent of the fair value of the total assets recorded as Level 3 relates to various private equity, real estate, hedge fund and fund-of-funds investments that are consolidated by AIG at December 31, 2009 and 2008, respectively. AIG's ownership in these funds represented 71.1 percent, or...

  • Page 253
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in Level 3 recurring fair value measurements The following tables present changes during 2009 and 2008 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the ...

  • Page 254
    ...) Transfers(c) Activity of Discontinued Operations Liabilities: Policyholder contract deposits Securities sold under agreements to repurchase Unrealized loss on swaps, options and forward transactions, net Other long-term debt Total December 31, 2008 Assets: Bonds available for sale Bond trading...

  • Page 255
    ... at December 31, 2009 and 2008 may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable inputs (e.g., changes in unobservable long-dated volatilities). AIG's policy is to transfer assets and liabilities into Level 3 when...

  • Page 256
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Investments in certain entities carried at fair value using net asset value per share The following table includes information related to AIG's investments in certain other invested assets, including private...

  • Page 257
    ... rates, the credit exposure to the insurance company that issued the life settlement contract and AIG's estimate of the risk margin an investor in the contracts would require. • Flight Equipment Primarily Under Operating Leases: When AIG determines the carrying value of its commercial aircraft...

  • Page 258
    ... average interest rates offered in the marketplace for similar finance receivables. Cash flows are projected based on contractual payment terms, adjusted for delinquencies and estimates of prepayments and credit-related losses. • Businesses Held for Sale: When AIG determines that a business...

  • Page 259
    ... primarily related to General Insurance, Domestic Life Insurance and Retirement Services, Consumer Finance and the Capital Markets businesses. The remaining impairment charges related to certain investment real estate and other long-lived assets which were included in other income. The fair value...

  • Page 260
    ... or the related distribution systems. • Securities lending payable: The contract values of securities lending payable approximate fair value as these obligations are short-term in nature. • Cash, short-term investments, trade receivables, trade payables, securities purchased (sold) under...

  • Page 261
    ... maturities Equity securities Mortgage and other loans receivable Finance receivables, net of allowance Other invested assets* Securities purchased under agreements to resell Short-term investments Cash Unrealized gain on swaps, options and forward transactions Liabilities: Policyholder contract...

  • Page 262
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Investments (a) Securities Available for Sale The following table presents the amortized cost or cost and fair value of AIG's available for sale securities: Amortized Cost or Cost Gross Unrealized ...

  • Page 263
    ...for sale held by AIG that were below investment grade or not rated totaled $24.5 billion and $19.4 billion, respectively. At December 31, 2009 and 2008, fixed maturity securities reported on the Consolidated Balance Sheet include $188 million and $442 million, respectively, of short-term investments...

  • Page 264
    ...) 2009 2008 2007 Fixed maturities, including short-term investments Maiden Lane interests Equity securities Interest on mortgage and other loans Partnerships Mutual funds Trading account gains (losses) Real estate Other investments Total investment income before policyholder investment income...

  • Page 265
    ... 31, 2009, the aggregate fair value of available for sale securities sold was $9.5 billion, which resulted in a net realized capital loss of $1.0 billion. The average periods of time that securities sold at a loss during the year ended December 31, 2009 were trading continuously at a price below...

  • Page 266
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Evaluating Investments for Other-Than-Temporary Impairments On April 1, 2009, AIG adopted prospectively a new accounting standard addressing the evaluation of fixed maturity securities for other-than-...

  • Page 267
    ... as credit enhancement and priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class: • Current delinquency rates; • Expected default rates and timing of such...

  • Page 268
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Equity Securities The impairment model for equity securities and other cost and equity method investments was not affected by the adoption of the new accounting standard related to other-than-temporary ...

  • Page 269
    ... deferred contingent purchase price) at fair value. This interest is reported in Bonds - trading securities, with changes in fair value reported as a component of Net investment income. See Note 5 herein for further discussion of AIG's fair value methodology. The life insurance companies applied the...

  • Page 270
    ...) 2009 2008 Category: Alternative funds(a) Mutual funds Investment real estate(b) Aircraft asset investments(c) Life settlement contracts Consolidated managed partnerships and funds Direct private equity investments All other investments Other invested assets (a) (b) (c) Includes hedge funds...

  • Page 271
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents further information regarding life settlement contracts: At December 31, 2009 Carrying Face Value Value (Death Benefits) (dollars in millions) Number of Contracts Remaining Life...

  • Page 272
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table summarizes finance receivables, net of unearned finance charges: Years Ended December 31, (in millions) 2009 2008 Real estate loans Non-real estate loans Retail sales finance Credit...

  • Page 273
    ...a consolidated level, manage global counterparty risk and relationships and manage global life catastrophe risks. The following table presents General Insurance premiums written and earned: Years Ended December 31, (in millions) General Insurance 2009 2008 2007 Noncore Insurance* 2009 2008 2007 2009...

  • Page 274
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents premiums for AIG's life insurance and retirement services operations: Years Ended December 31, (in millions) Domestic Life Insurance & Retirement Services 2009 2008 2007 Foreign Life...

  • Page 275
    ... a new accounting standard addressing the fair value option for financial assets and financial liabilities for Foreign Life Insurance & Retirement Services. Includes $86 million, $1.0 billion, and $(112) million for Domestic Life Insurance & Retirement Services at December 31, 2009, 2008 and 2007...

  • Page 276
    ... related to Net realized capital gains (losses), primarily in the Domestic Retirement Services business. In 2009, 2008 and 2007, the rate of amortization expense (increased) decreased by $(484) million, $2.2 billion and $291 million, respectively. As AIG operates in various global markets...

  • Page 277
    ...'s total assets, total liabilities and off-balance sheet exposure associated with its significant variable interests in consolidated VIEs: At December 31, (in billions) VIE Assets* 2009 2008 VIE Liabilities 2009 2008 Off-Balance Sheet Exposure 2009 2008 Real estate and investment funds Commercial...

  • Page 278
    ... billions) Consolidated VIEs 2009 2008 Unconsolidated VIEs 2009 2008 Assets: Mortgage and other loans receivable Available for sale securities(a)(b) Trading securities(a)(b) Other invested assets Other asset accounts(b) Total Liabilities: FRBNY commercial paper funding facility Other long-term debt...

  • Page 279
    ... Internal Revenue Code. The pre-tax income of SAAHP is reported, along with other SunAmerica partnership income, as a component of AIG's Domestic Life Insurance and Retirement Services segment. Maiden Lane Interests ML II On December 12, 2008, certain AIG wholly owned life insurance companies sold...

  • Page 280
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS sheet'' secured financings because the transfer of these real estate loans to the trusts did not qualify as sales. AGF evaluated the securitization trusts and determined that these entities are VIEs of ...

  • Page 281
    ... and are not paid or received, except for certain contracts such as currency swaps and certain credit contracts. Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral. Includes cross currency swaps. (b) (c) 273 AIG 2009 Form 10-K

  • Page 282
    ...fair value or cash flow hedges of certain debt issued by AIG Parent (including the Matched Investment Program (MIP)), International Lease Finance Corporation (ILFC) and AGF. The fair value hedges included (i) interest rate swaps that were designated as hedges of the change in the fair value of fixed...

  • Page 283
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents the effect of AIG's derivative instruments in fair value hedging relationships on the Consolidated Statement of Income (Loss): Year Ended December 31, (in millions) 2009 ...

  • Page 284
    ...not hedge its exposures related to the credit default swaps it had written. As a dealer, AIGFP structured and entered into derivative transactions to meet the needs of counterparties who may be seeking to hedge certain aspects of such counterparties' operations or obtain a desired financial exposure...

  • Page 285
    ... swap portfolio, including credit default swaps written on mezzanine tranches of certain regulatory capital relief transactions, by asset class: Net Notional Amount December 31, 2008(a) 2009(a)(b) Fair Value of Derivative (Asset) Liability at December 31, 2009(b)(c)(d) 2008(c)(d) Unrealized Market...

  • Page 286
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (j) (k) Includes $1.4 billion and $1.5 billion in net notional amount of credit default swaps written on the super senior tranches of CLOs as of December 31, 2009 and 2008, respectively. Net of ...

  • Page 287
    ... expected time frame. Arbitrage Portfolio A total of $30.0 billion and $63.1 billion in net notional amount of AIGFP's super senior credit default swaps as of December 31, 2009 and 2008, respectively, are arbitrage-motivated transactions written on multi-sector CDOs or designated pools of investment...

  • Page 288
    ... CDS transactions with a net notional of $1.4 billion written on the senior part of the capital structure of CLOs, which require physical settlement. Certain of the super senior credit default swaps provide the counterparties with an additional termination right if AIG's rating level falls to BBB or...

  • Page 289
    ... of their financial risk management programs. Interest rate derivatives (such as interest rate swaps) are used to manage interest rate risk associated with investments in fixed income securities, outstanding medium- and long-term notes, and other interest rate sensitive assets and liabilities. In...

  • Page 290
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Matched Investment Program Written Credit Default Swaps The MIP has entered into CDS contracts as a writer of protection, with the intention of earning spread income on credit exposure in an unfunded ...

  • Page 291
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Liability for Unpaid Claims and Claims Adjustment Expense and Future Policy Benefits for Life and Accident and Health Insurance Contracts and Policyholder Contract Deposits The following table ...

  • Page 292
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Commercial Insurance; $130 million - non-tabular discount for other liability occurrence and products liability occurrence in AIRCO for Commercial Insurance business. Future policy benefits and policyholder...

  • Page 293
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • Domestically, guaranteed investment contracts (GICs) have market value withdrawal provisions for any funds withdrawn other than benefit responsive payments. Interest rates credited generally range ...

  • Page 294
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS that do not qualify for separate account treatment are reported in Net investment income and are principally offset by amounts reported in Policyholder benefits and claims incurred. The vast majority of ...

  • Page 295
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expected assessments. AIG periodically evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence ...

  • Page 296
    ...drawn on its 364-Day Syndicated Facility into one-year term loans. AIG has provided a capital support agreement for the benefit of the lenders of these termed-out loans, which must be repaid by July 9, 2010. AIG (Parent Company) (i) FRBNY Credit Facility: On September 22, 2008, AIG entered into the...

  • Page 297
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pursuant to the FRBNY Credit Agreement, in consideration for the FRBNY's extension of credit under the FRBNY Credit Facility and the payment of $500,000, AIG agreed to issue 100,000 shares of AIG Series ...

  • Page 298
    ... the major rating agencies under their current policies but are recorded as long-term debt on the Consolidated Balance Sheet. The Equity Units consist of an ownership interest in AIG junior subordinated debentures and a stock purchase contract obligating the holder of an equity unit to purchase, and...

  • Page 299
    ... remainder are at fixed rates. ILFC enters into swap transactions to manage its effective borrowing rates with respect to these notes. On October 13, 2009, ILFC entered into two term loan agreements (the Term Loans) with AIG Funding comprised of a new $2.0 billion credit agreement and a $1.7 billion...

  • Page 300
    ...31, 2008, the interest rate of the loans outstanding ranged from 2.51 percent to 4.71 percent. The debt is collateralized by a pledge of shares of a subsidiary of ILFC, which holds title to the aircraft financed under the facility. At December 31, 2009, the net book value of the related aircraft was...

  • Page 301
    ... one-year term loans (previously, a 364-day syndicated facility). Under this support agreement, AIG has agreed to cause AIG's wholly-owned subsidiary, American General Finance Corporation to maintain (1) consolidated net worth of $2.2 billion and (2) an adjusted tangible leverage ratio of less than...

  • Page 302
    ... Exposure and AIGFP's Employee Retention Plan Securities Actions - Southern District of New York. Between May 21, 2008 and January 15, 2009, eight purported securities class action complaints were filed against AIG and certain of its current and former officers and directors, AIG's outside auditors...

  • Page 303
    ... 20, 2007, two purported shareholder derivative actions were filed in the Southern District of New York naming as defendants directors and officers of AIG and its subsidiaries and asserting claims on behalf of nominal defendant AIG. The actions were consolidated as In re American International Group...

  • Page 304
    ... 2007 Derivative Litigation. Derivative Action - Supreme Court of New York, Nassau County. On February 29, 2008, a purported shareholder derivative complaint was filed in the Supreme Court of Nassau County naming as defendants certain directors and officers of AIG and its subsidiaries concerning AIG...

  • Page 305
    ... derivative agreements or other contracts between third parties, such as credit default swaps under which AIG is a reference credit, which could affect the trading price of AIG securities. On December 17, 2009 defendants filed a motion to dismiss, and that motion is pending. 297 AIG 2009 Form 10-K

  • Page 306
    ... to resolve claims asserted against AIG by investors, including the securities class action shareholder lawsuits described below. On April 14, 2008, the Court overseeing the Fair Fund approved a plan for distribution of monies in the fund, and on May 18, 2009 ordered that the Distribution Agent was...

  • Page 307
    ... that it marketed and sold ''income smoothing'' insurance products to other companies; and (4) misled investors about the scope of government investigations. In addition, the lead plaintiff alleges that AIG's former Chief Executive Officer, Maurice R. Greenberg, manipulated AIG's stock price. The...

  • Page 308
    ... stay discovery pending the resolution of claims against AIG in the New York consolidated securities action. On April 11, 2008, the shareholder plaintiffs filed the First Amended Combined Complaint, which added claims against former AIG directors and officers Maurice Greenberg, Edward Matthews, and...

  • Page 309
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS against certain current and former AIG directors and officers, as well as INS Regulatory Insurance Services, Inc. Defendant Smith has also filed his answer to AIG's complaint, which was amended on July ...

  • Page 310
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Policyholder Antitrust and RICO Actions. Commencing in 2004, policyholders brought multiple federal antitrust and RICO class actions in jurisdictions across the nation against insurers and brokers, including AIG...

  • Page 311
    ... to AIG's financial condition, results of operations or cash flows. Actions Relating to Workers' Compensation Premium Reporting - Northern District of Illinois. On May 24, 2007, the National Workers' Compensation Reinsurance Pool (the NWCRP), on behalf of its participant members, filed a lawsuit...

  • Page 312
    ... by March 12, 2010. Discovery is proceeding and is currently scheduled to be completed by March 15, 2011. 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...

  • Page 313
    ... Matters Relating to AIG's Domestic Life Insurance & Retirement Services Operations Superior National. On December 30, 2004, an arbitration panel issued its ruling in connection with a 1998 workers' compensation quota share reinsurance agreement under which Superior National Insurance Company, among...

  • Page 314
    ... claims adjustment expense is a complex process for long-tail casualty lines of business, which include excess and umbrella liability, directors and officers liability (D&O), professional liability, medical malpractice, workers' compensation, general liability, products liability and related classes...

  • Page 315
    ...Deferred Compensation Profit Participation Plans (SICO Plans) to certain AIG employees. The SICO Plans were created in 1975 when the voting shareholders and Board of Directors of SICO, a private holding company whose principal asset is AIG Common Stock, decided that a portion of the capital value of...

  • Page 316
    ... payments under these arrangements, and no significant liabilities related to these arrangements have been recognized in the Consolidated Balance Sheet. See Note 1 herein for additional information on sales of businesses and asset dispositions. 16. Total Equity and Earnings (Loss) Per Share Shares...

  • Page 317
    ...such financial assistance. The AIG Series E Exchange Agreement and the AIG Series F Purchase Agreement restrict AIG's ability to repurchase capital stock and require AIG to continue to maintain policies limiting corporate expenses, lobbying activities and executive compensation. The terms of the AIG...

  • Page 318
    ...that time. Common Stock Reverse Stock Split On June 30, 2009, AIG's shareholders approved a one-for-twenty reverse common stock split, which became effective on that date. All references to common shares and per-share data for all periods presented in this report have been adjusted to give effect to...

  • Page 319
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dividends Dividends declared per common share were $8.40 and $15.40 in 2008 and 2007, respectively. No dividends were declared in 2009 as effective September 23, 2008, AIG's Board of Directors suspended ...

  • Page 320
    ... investments Net changes in foreign currency translation adjustments Net gains (losses) on cash flow hedges Net actuarial gain Prior service credit Deferred tax asset (liability) Total other comprehensive income (loss) Noncontrolling interests Balance, December 31, 2007, net of tax Cumulative effect...

  • Page 321
    ...Preferred Interests In connection with the ongoing execution of its orderly asset disposition plan, as well as plans to timely repay the FRBNY Credit Facility, on November 30, 2009, AIG transferred two of its wholly owned businesses, AIA and ALICO, to two newly-created special purpose vehicles (SPVs...

  • Page 322
    ... also included an option pricing model that incorporated market-participant assumptions regarding the SPVs' enterprise value, expected term, volatility and the risk-free interest rate, among others. Due to the preferred interests' increasing rate preferred return from an initial rate of five percent...

  • Page 323
    ... treasury stock method and include dilutive shares from share-based employee compensation plans, and the AIG Series F Warrants. The number of shares excluded from diluted shares outstanding were 12 million, 9 million and 0.4 million for the years ended December 31, 2009, 2008 and 2007, respectively...

  • Page 324
    ..., policyholder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted. At December 31, 2009, 2008 and 2007, statutory capital of AIG's insurance subsidiaries exceeded minimum company action level requirements. Dividend Restrictions Payments of...

  • Page 325
    ... Domestic Life Insurance & Retirement Services insurance entities recognized a cumulative effect adjustment upon the adoption of SSAP No. 43R that on a pre-tax basis increased regulatory capital by approximately $0.9 billion. 18. Share-based Employee Compensation Plans Included in AIG's Consolidated...

  • Page 326
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • The AIG Partners Plan replaced the AIG DCPPP. Share-based employee compensation awarded under the AIG Partners Plan was granted as performance-based RSUs under the 2002 Plan, except for the December 2007...

  • Page 327
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following weighted-average assumptions were used for stock options granted: 2008 2007 Expected Expected Risk-free Expected (a) (b) (c) (d) annual dividend yield volatility(b) interest rate(c) term...

  • Page 328
    ... in 2008 under the 2007 Plan vest on the third anniversary of the date of grant. In December 2009, AIG granted 351,259 fully-vested shares of non-transferable AIG Common Stock (restricted stock) under the 2007 Stock Incentive Plan to certain of AIG's most highly compensated employees and executive...

  • Page 329
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AIG DCPPP The AIG DCPPP provides share-based compensation to key AIG employees, including senior executive officers. The AIG DCPPP contingently allocated a fixed number of time-vested RSUs to each ...

  • Page 330
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The total unrecognized compensation cost (net of expected forfeitures) related to non-vested share-based compensation awards granted under the 2002 Plan, the 2007 Plan, the AIG DCPPP, the AIG Partners ...

  • Page 331
    ... in a fixed number of RSUs in March 2010. These RSUs will be subsequently cash-settled in March 2013 based on the value of AIG Common Stock on the settlement date. Modifications During the first quarter of 2008, AIG reviewed the vesting schedules of its share-based employee compensation plans, and...

  • Page 332
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental Executive Retirement Plan, which provides additional retirement benefits to designated executives. Under the Supplemental Plan, an annual benefit accrues at a percentage of final average pay...

  • Page 333
    ...AIG contributions Participant contributions Benefits paid: AIG assets Plan assets Plan settlements Foreign exchange effect Other Fair value of plan assets, end of year Funded status, end of year Amounts recognized in the consolidated balance sheet: Assets Liabilities Total amounts recognized Pre tax...

  • Page 334
    ... 2009 2008 2007 (in millions) Components of net periodic benefit cost: Service cost Interest cost Expected return on assets Amortization of prior service credit Amortization of transitional obligation Amortization of net loss Plan curtailments Plan settlements Other Net periodic benefit cost Total...

  • Page 335
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the same. Conversely, a 100 basis point decrease in the discount rate or expected long-term rate of return would increase the 2010 expense by approximately $110 million and $41 million, respectively, ...

  • Page 336
    ... of the plans' liabilities. Plan Assets The investment strategy with respect to assets relating to AIG's U.S. and non-U.S. pension plans is designed to achieve investment returns that will (a) provide for the benefit obligations of the plans over the long term; (b) limit AIG 2009 Form 10-K 328

  • Page 337
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the risk of short-term funding shortfalls; and (c) maintain liquidity sufficient to address cash needs. Accordingly, the asset allocation strategy is designed to maximize the investment rate of return ...

  • Page 338
    American International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Assets Measured at Fair Value In accordance with the accounting standard on Employers' Disclosures about Postretirement Benefit Plan Assets, AIG is required to disclose the level of the fair value ...

  • Page 339
    ...Purchases, Sales, Issuances and Settlements-Net Transfers In (Out) Balance at December 31, 2009 Non-U.S. Plan Assets: Real estate Private equity Insurance contracts Total U.S. Plan Assets: Fixed income U.S. investment grade U.S. high yield Mortgage backed securities Other asset-backed securities...

  • Page 340
    ...Act), reporting sales of shares of common stock, no amendment to the Schedule 13D has been filed to report a change in ownership subsequent to June 5, 2009. (b) Reinsurance: Following its deconsolidation, after confirmation from the New York Insurance Department that AIG is not considered to control...

  • Page 341
    ... exempt interest and the effect of foreign operations, partially offset by an increase in uncertain tax positions. In connection with AIG's restructuring and anticipated sales of certain of its businesses, at December 31, 2008, AIG recorded a deferred tax liability reflecting the difference between...

  • Page 342
    ... other Investments in foreign subsidiaries and joint ventures Loss reserve discount Loan loss and other reserves Unearned premium reserve reduction Employee benefits Unrealized losses related to available-for-sale debt securities Total deferred tax assets* Deferred tax liabilities: Deferred policy...

  • Page 343
    ..., certain domestic subsidiaries that file separate tax returns and state and local tax obligations. At December 31, 2009 and 2008, AIG had deferred tax assets related to stock compensation of $178 million and $239 million, respectively. Due to AIG's current stock price, these deferred tax assets may...

  • Page 344
    ... International Group, Inc., and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The statute of limitations for all tax years prior to 2000 has now expired for AIG's consolidated federal income tax return. AIG is currently under examination for the tax years 2000 through 2005. In April 2008...

  • Page 345
    ... are generally accrued for as part of the unrecognized tax benefits or related reserves. However, the effects of any unanticipated adjustments or the resolution of adjustments compared to AIG's estimates could be material to AIG's consolidated results of operations for an individual reporting period...

  • Page 346
    ... previously reported 2009 quarterly results. 23. Information Provided in Connection With Outstanding Debt The following condensed consolidating financial statements reflect the results of AIG Life Holdings (US), Inc. (AIGLH), formerly known as American General Corporation, a holding company and...

  • Page 347
    ... 31, 2008 Assets: Investments(a) Cash Loans to subsidiaries(b) Debt issuance costs, including prepaid commitment asset of $15,458 Investment in consolidated subsidiaries(b) Other assets Total assets Liabilities: Insurance liabilities Federal Reserve Bank of New York Commercial Paper Funding Facility...

  • Page 348
    ... Condensed Consolidating Statement of Income (Loss) American International Group, Inc. (As Guarantor) (in millions) Year Ended December 31, 2009 Revenues: Equity in undistributed net income (loss) of consolidated subsidiaries(a) Dividend income from consolidated subsidiaries(a) Change in fair value...

  • Page 349
    ... 2008, and 2007, respectively, for American International Group, Inc. (As Guarantor). Income taxes recorded by the Parent company include deferred tax expense attributable to the potential sale of foreign and domestic businesses and a valuation allowance to reduce the consolidated deferred tax asset...

  • Page 350
    ... operations Net cash (used in) provided by operating activities Cash flows from investing activities: Sales of investments Sales of divested businesses, net Purchase of investments Loans to subsidiaries - net Other, net* Net cash (used in) provided by investing activities - continuing operations Net...

  • Page 351
    ... other long-term debt Intercompany loans - net Payments advanced to purchase shares Cash dividends paid to shareholders Other, net Net cash (used in) provided by financing activities - continuing operations Net cash (used in) provided by financing activities - discontinued operations Net cash (used...

  • Page 352
    ... in the form of forgiveness of payables and contribution of assets - net During 2009, AIG made certain revisions to the American International Group, Inc. (As Guarantor) Condensed Statement of Cash Flows, primarily relating to the effect of reclassifying dividend income received from consolidated...

  • Page 353
    ... TO CONSOLIDATED FINANCIAL STATEMENTS The revisions and their effect on the American International Group, Inc. (as Guarantor) Condensed Statement of Cash Flows for the years ended December 31, 2008 and December 31, 2007 were as follows: Year Ended December 31, (in millions) Originally Reported 2008...

  • Page 354
    ... firm, as stated in their report, which is included in this Annual Report on Form 10-K. Changes in Internal Control over Financial Reporting Material Changes in Controls AIG has entered and continues to enter into a number of significant, non-routine transactions (e.g., sales of businesses, capital...

  • Page 355
    ..., AIG's internal control over financial reporting: • Enhanced the design of certain controls to increase the precision level at which they operate in consideration of divestiture and other changes in operations of the business. • Instituted additional management review controls, particularly...

  • Page 356
    ... and Corporate Governance Except for the information provided in Part I under the heading ''Directors and Executive Officers of AIG'', information required by Item 10 of this Form 10-K is incorporated by reference from the definitive proxy statement for AIG's 2010 Annual Meeting of Shareholders...

  • Page 357
    American International Group, Inc., and Subsidiaries Part IV ITEM 15. Exhibits, Financial Statement Schedules (a) Financial Statements and Schedules. See accompanying Index to Financial Statements. (b) Exhibits. See accompanying Exhibit Index. 349 AIG 2009 Form 10-K

  • Page 358
    ... duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on the 26th of February, 2010. AMERICAN INTERNATIONAL GROUP, INC. By /s/ ROBERT H. BENMOSCHE (Robert H. Benmosche, President and Chief Executive Officer) KNOW ALL PERSONS BY THESE...

  • Page 359
    ...) * Director This power of attorney was not included on the signature pages of Messrs. Robert H. Benmosche, David L. Herzog, Joseph D. Cook, Robert S. Miller or Suzanne Nora Johnson; the powers of attorney for Messrs. Benmosche, Herzog and Cook are filed as Exhibit 24. 351 AIG 2009 Form 10-K

  • Page 360
    ... SunAmerica Life Insurance Company and AIG Financial Products Corp. and its subsidiaries, respectively. The proceeds from GICs and GIAs are invested in a diversified portfolio of securities, primarily investment grade bonds. The assets acquired yield rates greater than the rates on the related...

  • Page 361
    ... Asset Management (Asia) Limited ...AIG Asset Management (U.S.), LLC ...AIG Asset Management Services, Inc...AIG Global Real Estate Investment Corp...AIG Ports America, Inc...Port America Holdings, Inc...Ports America, Inc...Ports Insurance Company, Inc...AIG Securities Lending Corp...Brazos Capital...

  • Page 362
    ... General Life Insurance Company ...AIG Enterprise Services, LLC ...American General Annuity Service Corporation ...American General Life Companies, LLC ...The Variable Annuity Life Insurance Company ...VALIC Retirement Services Company ...American International Life Assurance Company of New York...

  • Page 363
    ... Securities held by Immediate Parent(1) American General Investment Management Corporation ...American General Realty Investment Corporation ...Knickerbocker Corporation ...AIG Life Insurance Company (Switzerland) Ltd...AIG Liquidity Corp...AIG Lotus LLC ...AIG Retirement Services, Inc...SunAmerica...

  • Page 364
    ... Insurance Company JSC ...American Security Life Insurance Company, Ltd...Chartis Inc...Chartis U.S., Inc...AIG Risk Management, Inc...American Home Assurance Company ...American International Realty Corp...Chartis Non-Life Holding Company (Japan), Inc...Fuji Fire & Marine Insurance Company, Limited...

  • Page 365
    ... Gulf Agency, Inc...Design Professionals Association Risk Purchasing Group, Inc...Chartis International, LLC ...AIG Egypt Insurance Company S.A.E...AIG Global Trade & Political Risk Insurance Company ...AIU Insurance Company ...Chartis Insurance Company China Limited ...Chartis Taiwan Insurance Co...

  • Page 366
    ... In connection with AIG's asset disposition plan, through February 26, 2010, AIG has entered into agreements to sell this company. Percentages include directors' qualifying shares. Substantially, all subsidiaries listed are consolidated in the accompanying financial statements. Certain subsidiaries...

  • Page 367
    ... Financing Limited. Also owned 8.68 percent by Chartis Overseas Limited. Also owned 0.01 percent by Chartis Latin America Investments, LLC. Also owned 4.99 percent by Chartis Global Management Company Limited. (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) (35) (36) 359 AIG 2009 Form...

  • Page 368
    ... report dated February 26, 2010, relating to the financial statements, financial statement schedules, and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers New York, New York February 26, 2010 AIG 2009 Form...

  • Page 369
    ... fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2010 /s/ ROBERT H. BENMOSCHE Robert H. Benmosche President and Chief Executive Officer 361 AIG 2009 Form 10-K

  • Page 370
    ..., whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 26, 2010 /s/ DAVID L. HERZOG David L. Herzog Executive Vice President and Chief Financial Officer AIG 2009 Form 10-K 362

  • Page 371
    ... In connection with this Annual Report on Form 10-K of American International Group, Inc. (the ''Company'') for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Robert H. Benmosche, President and Chief Executive Officer of...

  • Page 372
    ... Annual Report on Form 10-K of American International Group, Inc. (the ''Company'') for the year ended December 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, David L. Herzog, Executive Vice President and Chief Financial Officer of the Company...

  • Page 373
    ...to Shareholders and Annual Report on Form 10-K for the year ended December 31, 2009, should be directed to: Investor Relations Listings and Certifications Stock Market Listings New York, Irish and Tokyo Stock Exchanges NYSE trading symbol: AIG SEC Certifications American International Group, Inc...

  • Page 374
    American International Group, Inc. 70 Pine Street New York, NY 10270 www.aig.com