AIG 2010 Annual Report Download - page 327

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Notes, Bonds, Loans and Mortgages Payable, consisted of the following:
At December 31, 2010 Uncollateralized Collateralized
Notes/Bonds/Loans Loans and
(in millions) Payable Mortgages Payable
AIG $ 218 $ -
Other subsidiaries 96 350
Total $ 314 $ 350
16. Commitments, Contingencies and Guarantees
In the normal course of business, various commitments and contingent liabilities are entered into by AIG and
certain of its subsidiaries. In addition, AIG guarantees various obligations of certain subsidiaries.
Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters
including those referred to below, it is possible that such liability could have a material adverse effect on AIG’s
consolidated financial condition or its consolidated results of operations or consolidated cash flows for an
individual reporting period.
(a) Litigation and Investigations
Overview. AIG and its subsidiaries, in common with the insurance and financial services industries in general,
are subject to litigation, including claims for punitive damages, in the normal course of their business. In AIG’s
insurance operations (including United Guaranty Corporation (UGC)), litigation arising from claims settlement
activities is generally considered in the establishment of AIG’s liability for unpaid claims and claims adjustment
expense. However, the potential for increasing jury awards and settlements makes it difficult to assess the ultimate
outcome of such litigation. AIG is also subject to derivative, class action and other claims asserted by its
shareholders and others alleging, among other things, breach of fiduciary duties by its directors and officers and
violations of federal and state securities laws. In the case of any derivative action brought on behalf of AIG, any
recovery would accrue to the benefit of AIG.
Various regulatory and governmental agencies have been reviewing certain public disclosures, transactions and
practices of AIG and its subsidiaries in connection with industry-wide and other inquiries into, among other
matters, AIG’s liquidity, compensation paid to certain employees, payments made to counterparties, and certain
business practices and valuations of current and former operating insurance subsidiaries. AIG has cooperated, and
will continue to cooperate, in producing documents and other information in response to subpoenas and other
requests.
AIG’s Subprime Exposure, Capital Markets Credit Default Swap Portfolio and Related Matters
AIG, AIGFP and certain directors and officers of AIG, AIGFP and other AIG subsidiaries have been named in
various actions relating to AIG’s exposure to the U.S. residential subprime mortgage market, unrealized market
valuation losses on AIGFP’s super senior credit default swap portfolio, losses and liquidity constraints relating to
AIG’s securities lending program and related disclosure and other matters (Subprime Exposure Issues).
Consolidated 2008 Securities Litigation. Between May 21, 2008 and January 15, 2009, eight purported securities
class action complaints were filed against AIG and certain directors and officers of AIG and AIGFP, AIG’s
outside auditors, and the underwriters of various securities offerings in the United States District Court for the
Southern District of New York (the Southern District of New York), alleging claims under the Securities Exchange
Act of 1934 (the Exchange Act) or claims under the Securities Act of 1933 (the Securities Act). On March 20,
2009, the Court consolidated all eight of the purported securities class actions as In re American International
Group, Inc. 2008 Securities Litigation (the Consolidated 2008 Securities Litigation).
AIG 2010 Form 10-K 311