AIG 2009 Annual Report Download - page 314

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the future minimum lease payments under operating leases:
At December 31, 2009
(in millions)
2010 $ 600
2011 442
2012 339
2013 255
2014 201
Remaining years after 2014 739
Total $2,576
Rent expense approximated $733 million, $896 million, and $771 million for the years ended December 31, 2009,
2008, and 2007, respectively.
Other Commitments
In the normal course of business, AIG enters into commitments to invest in limited partnerships, private equities,
hedge funds and mutual funds and to purchase and develop real estate in the U.S. and abroad. These commitments
totaled $7.4 billion at December 31, 2009.
On June 27, 2005, AIG entered into an agreement pursuant to which AIG agreed, subject to certain conditions, to
make any payment that is not promptly paid with respect to the benefits accrued by certain employees of AIG and its
subsidiaries under the SICO Plans (as discussed in (c) below under ‘‘Benefits Provided by Starr International
Company, Inc.’’).
During 2008, AIG granted retention awards to employees, which were payable in increments from December 2008
through 2011. At December 31, 2009, remaining amounts payable under these awards totaled $393 million.
(c) Contingencies
Liability for unpaid claims and claims adjustment expense
Although AIG regularly reviews the adequacy of the established Liability for unpaid claims and claims adjustment
expense, there can be no assurance that AIG’s ultimate Liability for unpaid claims and claims adjustment expense will
not develop adversely and materially exceed AIG’s current Liability for unpaid claims and claims adjustment expense.
Estimation of ultimate net claims, claims adjustment expenses and Liability for unpaid claims and 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, as well as for asbestos and environmental exposures. Generally, actual
historical loss development factors are used to project future loss development. However, there can be no assurance
that future loss development patterns will be the same as in the past. Moreover, any deviation in loss cost trends or in
loss development factors might not be discernible for an extended period of time subsequent to the recording of the
initial loss reserve estimates for any accident year. Thus, there is the potential for reserves with respect to a number of
years to be significantly affected by changes in loss cost trends or loss development factors that were relied upon in
setting the reserves. These changes in loss cost trends or loss development factors could be attributable to changes in
inflation, in labor and material costs or in the judicial environment, or in other social or economic phenomena
affecting claims.
AIG 2009 Form 10-K 306