AIG 2010 Annual Report Download - page 47

American International Group, Inc., and Subsidiaries
Indemnity Obligations
Claims under indemnity obligations may be material. We have provided financial guarantees and indemnities in
connection with the businesses sold or under contract for sale, including ALICO, AGF, AIG Star and AIG Edison.
While we do not currently believe that the claims under these indemnities will be material, it is possible that
significant indemnity claims could be made against us. If such a claim were successful, our results of operations,
cash flows and liquidity could be materially adversely affected. See Note 16 to the Consolidated Financial
Statements for more information on these financial guarantees and indemnities.
Regulation
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act will subject us to substantial
additional federal regulation, which may materially and adversely affect our businesses, results of operations, cash flows,
financial condition and credit ratings. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank), which effects comprehensive changes to the regulation of financial services in the
United States, was signed into law. Dodd-Frank directs existing and newly created government agencies and bodies
to promulgate regulations implementing the law, an ongoing process anticipated to continue over the next few
years. We cannot predict with certainty the requirements of the regulations ultimately adopted or how or whether
Dodd-Frank and such regulations will affect our businesses, results of operations, cash flows or financial condition,
require us to raise additional capital or result in a downgrade of our credit ratings.
We may become subject to the examination, enforcement and supervisory authority of the FRB as a savings and
loan holding company or a Designated Financial Company. In such an event:
• We would become subject to the examination, enforcement and supervisory authority of the FRB. We cannot
predict how the FRB would exercise general supervisory authority over us.
• The FRB would be required to impose minimum leverage and risk-based capital requirements on us not less
than those applicable to insured depository institutions.
• We may be required to place our financial activities in an intermediate holding company separate from our
non-financial activities (as defined for purposes of the Bank Holding Company Act) subject to restrictions on
transactions between the two businesses, which could be burdensome and costly to implement.
If we are designated a Designated Financial Company:
• We may become subject to stress tests to determine whether, on a consolidated basis, we have the capital
necessary to absorb losses due to adverse economic conditions.
• We would be subject to stricter prudential standards not yet specified, including stricter requirements and
limitations relating to risk-based capital, leverage, liquidity and credit exposure, as well as overall risk
management requirements, management interlock prohibitions and a requirement to maintain a plan for rapid
and orderly dissolution in the event of severe financial distress.
• We would become subject to a new early remediation regime process, the details of which are not yet
established, to be administered by the FRB.
If we are designated as a Designated Financial Company and determined to be a grave threat to U.S. financial
stability:
• We would be required to maintain a debt-to-equity ratio of no more than 15:1.
• The FRB may:
• limit our ability to merge with, acquire, consolidate with, or become affiliated with another company;
• restrict our ability to offer specified financial products;
• require us to terminate specified activities;
AIG 2010 Form 10-K 31