AIG 2009 Annual Report Download - page 54

American International Group, Inc., and Subsidiaries
Subsidiaries — Financial Services — AGF below). In addition, AIG is exploring restructuring opportunities for
AGF. AIG intends to provide support to AGF through February 28, 2011, to the extent that asset sales,
securitizations and/or other transactions are not sufficient to meet AGF’s liquidity needs.
• Debt maturities for the MIP are expected to be funded through cash flows generated from invested assets
(principal and interest) as well as the sale or financing of the asset portfolios in the program. In addition, as a
result of AIG’s restructuring activities, AIG expects to utilize assets from its noncore businesses and subsidiaries
to provide future cash flow enhancement and help the MIP meet its maturing debt obligations.
• Approximately $1.4 billion of AIGFP’s debt maturities through December 31, 2010 are fully collateralized, with
assets backing the corresponding liabilities, which AIGFP expects will reduce the net amount of cash required to
repay the maturing debt. However, in addition to the cash requirements shown above for AIGFP, Curzon
Funding LLC, an AIGFP asset-backed commercial paper conduit and Nightingale Finance LLC, a structured
investment vehicle sponsored, but not consolidated by AIGFP, had $1.2 billion and $1.1 billion, respectively, of
commercial paper outstanding under the CPFF at February 17, 2010, all of which matures in April 2010. AIGFP
intends to repay this commercial paper at maturity, which is expected to lead to an increase in borrowings under
the FRBNY Credit Facility.
• AIG expects to meet its debt maturities primarily through the cash flows from, and the disposition of, assets
supporting these obligations as well as through borrowings under the FRBNY Credit Facility. In addition, AIG
also expects to collect dividends, distributions and other payments from certain subsidiaries to fund payments on
its obligations. Additional liquidity is also available under the Department of the Treasury Commitment.
In the future, AIG may need to provide additional capital support for its subsidiaries. AIG has developed certain
plans (described below), some of which have already been implemented, to 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 future. AIG continually reassesses this plan to maximize value
while maintaining flexibility in its liquidity and capital, and expects to accomplish these objectives over a longer time
frame than originally contemplated.
Sales of Businesses and Specific Asset Dispositions
Dispositions of certain businesses will be subject to regulatory approval. Proceeds from dispositions, to the extent
they do not represent capital of AIG’s insurance subsidiaries required for regulatory or ratings purposes, are
contractually required to be applied toward the repayment of the FRBNY Credit Facility as mandatory prepayments
unless otherwise agreed with the FRBNY.
During 2009 and through February 17, 2010, AIG entered into agreements to sell or completed the sale of
operations and assets, excluding AIGFP assets, that had aggregate assets and liabilities with carrying values of
$88.1 billion and $71.3 billion, respectively, at December 31, 2009 or the date of sale or, in the case of Transatlantic,
deconsolidation. These transactions are expected to generate approximately $5.6 billion of aggregate net cash
proceeds that will be available to repay outstanding borrowings and reduce the maximum lending commitment under
the FRBNY Credit Facility, after taking into account taxes, transaction expenses, settlement of intercompany loan
facilities, and capital required to be retained for regulatory or ratings purposes. Gains and losses recorded in
connection with the dispositions of businesses include estimates that are subject to subsequent adjustment. Based on
the transactions thus far, AIG does not believe that such adjustments will be material to future results of operations or
cash flows.
AIG 2009 Form 10-K 46