AIG 2009 Annual Report Download - page 313

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
motions to withdraw and ordered the parties to appear on March 26, 2009 for a status conference. Before the
conference, the McArthur intervenors purported to dismiss their claims against Lauriello with prejudice pursuant to
Ala. R. Civ. P. 41. The defendants argued that such dismissal was improper absent Court approval, but the Court
approved the dismissal on April 2, 2009. At a class action scheduling conference held on April 14, 2009, the Court
established a schedule for class action discovery that will lead to a hearing on class certification in March 2010. The
parties are presently engaged in class discovery.
Litigation 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 others,
was reinsured by USLIFE, a subsidiary of AGC. In its 2-1 ruling, the arbitration panel refused to rescind the contract
as requested by USLIFE. Instead, the panel reformed the contract to reduce USLIFE’s participation by ten percent.
Further, the arbitration ruling established a second phase of arbitration for USLIFE to present its challenges to
certain cessions to the contract. In the second phase the arbitration panel issued two awards resolving the challenges
in favor of the cedents. On January 4, 2010, the Ninth Circuit Court of Appeals affirmed the arbitration awards.
USLIFE is currently considering its legal options. AIG is holding reserves of $639 million as of December 31, 2009.
AIG believes that the reserves should be adequate to fund unpaid claims.
(b) Commitments
Flight Equipment
At December 31, 2009, ILFC had committed to purchase 120 new aircraft deliverable from 2010 through 2019, at an
estimated aggregate purchase price of $13.7 billion, including $243 million for 2010. ILFC will be required to find
lessees for any aircraft acquired and to arrange financing for a substantial portion of the purchase price.
Included in the 120 new aircraft are 74 Boeing 787 aircraft (B787s), with the first aircraft currently scheduled to be
delivered in July 2012. ILFC is in discussion with Boeing related to revisions to the delivery schedule and potential
delay compensation and penalties for which ILFC may be eligible. ILFC has signed contracts for 29 of the 74 B787s on
order. Under the terms of ILFC’s B787 leases, the lessees may be entitled to share in any compensation which ILFC
receives from Boeing for late delivery of the aircraft.
The following table presents the minimum future rental income on noncancelable operating leases of flight equipment
that has been delivered:
At December 31, 2009
(in millions)
2010 $ 4,670
2011 4,171
2012 3,473
2013 2,725
2014 2,073
Remaining years after 2014 3,737
Total $20,849
Flight equipment is leased under operating leases with remaining terms ranging from 1 to 11 years.
Lease Commitments
AIG and its subsidiaries occupy leased space in many locations under various long-term leases and have entered
into various leases covering the long-term use of data processing equipment.
305 AIG 2009 Form 10-K