AIG 2009 Annual Report Download - page 67

American International Group, Inc., and Subsidiaries
These credit ratings are current opinions of the rating agencies. As such, they may be changed, suspended or
withdrawn at any time by the rating agencies as a result of changes in, or unavailability of, information or based on
other circumstances. Ratings may also be withdrawn at AIG management’s request. This discussion of ratings is not a
complete list of ratings of AIG and its subsidiaries.
‘‘Ratings triggers’’ have been defined by one independent rating agency to include clauses or agreements the
outcome of which depends upon the level of ratings maintained by one or more rating agencies. ‘‘Ratings triggers’’
generally relate to events that (i) could result in the termination or limitation of credit availability, or require
accelerated repayment, (ii) could result in the termination of business contracts or (iii) could require a company to
post collateral for the benefit of counterparties.
A significant portion of AIGFP’s GIAs, structured financing arrangements and financial derivative transactions
include provisions that require AIGFP, upon a downgrade of AIG’s long-term debt ratings, to post collateral or, with
the consent of the counterparties, assign or repay its positions or arrange a substitute guarantee of its obligations by an
obligor with higher debt ratings. Furthermore, certain downgrades of AIG’s long-term senior debt ratings would
permit either AIG or the counterparties to elect early termination of contracts.
The actual amount of collateral that AIGFP would be required to post to counterparties in the event of such
downgrades, or the aggregate amount of payments that AIG could be required to make, depends on market
conditions, the fair value of outstanding affected transactions and other factors prevailing at the time of the
downgrade. For a discussion of the effect of a downgrade in AIG’s credit ratings on AIGFP’s financial derivative
transactions, see Item 1A. Risk Factors — Credit and Financial Strength Ratings.
Contractual Obligations
The following table summarizes contractual obligations in total, and by remaining maturity:
Payments due by Period
Year Ended December 31, 2009
Total 2011 - 2013 -
(in millions) Payments 2010 2012 2014 Thereafter
Long-term debt(a) $ 108,157 $ 19,432 $ 26,599 $ 12,240 $ 49,886
FRBNY Credit Facility 23,435 - - 23,435 -
Interest payments on borrowings 61,703 4,478 8,376 9,784 39,065
Loss reserves(b) 85,386 18,956 23,566 13,184 29,680
Insurance and investment contract liabilities(c) 628,521 24,535 46,274 45,959 511,753
GIC liabilities(d) 8,813 218 2,530 2,464 3,601
Aircraft purchase commitments 13,699 243 887 3,546 9,023
Operating leases 2,576 600 781 456 739
Purchase obligations(e) 675 286 189 74 126
Total(f)(g) $ 932,965 $ 68,748 $ 109,202 $ 111,142 $ 643,873
(a) Excludes commercial paper and borrowings incurred by consolidated investments and includes hybrid financial instrument liabilities recorded at fair
value.
(b) Represents future loss and loss adjustment expense payments estimated based on historical loss development payment patterns. Due to the
significance of the assumptions used, the periodic amounts presented could be materially different from actual required payments.
(c) Insurance and investment contract liabilities include various investment-type products with contractually scheduled maturities, including periodic
payments of a term certain nature. Insurance and investment contract liabilities also include benefit and claim liabilities, of which a significant
portion represents policies and contracts that do not have stated contractual maturity dates and may not result in any future payment obligations. For
these policies and contracts (i) AIG is currently not making payments until the occurrence of an insurable event, such as death or disability,
(ii) payments are conditional on survivorship, or (iii) payment may occur due to a surrender or other non-scheduled event out of AIG’s control. AIG
has made significant assumptions to determine the estimated undiscounted cash flows of these contractual policy benefits, which assumptions
include mortality, morbidity, future lapse rates, expenses, investment returns and interest crediting rates, offset by expected future deposits and
premiums on inforce policies. Due to the significance of the assumptions used, the periodic amounts presented could be materially different from
actual required payments. The amounts presented in this table are undiscounted and therefore exceed the future policy benefits and policyholder
contract deposits included in the Consolidated Balance Sheet.
59 AIG 2009 Form 10-K