AIG 2010 Annual Report Download - page 60

American International Group, Inc., and Subsidiaries
Underwriting profit (loss) is utilized to report results for Chartis operations. Operating income (loss), which is
before net realized capital gains (losses) and related DAC and sales inducement asset (SIA) amortization and
goodwill impairment charges, is utilized to report results for SunAmerica Financial Group (SunAmerica)
operations. Management believes that these measures enhance the understanding of the underlying profitability of
the ongoing operations of these businesses and allow for more meaningful comparisons with AIG’s insurance
competitors.
Executive Overview
This executive overview of management’s discussion and analysis highlights selected information and may not contain
all of the information that is important investors in AIG’s securities. This Annual Report on Form 10-K should be read
in its entirety for a complete description of events, trends and uncertainties as well as the capital, liquidity, credit,
operational and market risks and the critical accounting estimates affecting AIG and its subsidiaries.
Highlights
AIG has completed the following significant milestones in connection with executing its recapitalization plan
(the Recapitalization), raising capital and executing its asset disposition plan:
Recapitalization and Raising Capital
• On January 14, 2011 (the Closing), AIG completed the Recapitalization, which included repaying and
terminating the credit facility provided by the Federal Reserve Bank of New York (the FRBNY, and such
credit facility, the FRBNY Credit Facility), applying proceeds from the AIA Group Limited (AIA) initial
public offering and American Life Insurance Company (ALICO) sale to partially repay the government’s
ownership interests in special purpose vehicles that held AIA and ALICO, and exchanging preferred stock
held by the Department of the Treasury and the AIG Credit Facility Trust (the Trust) for AIG Common
Stock. As a result of the termination of the FRBNY Credit Facility, AIG expects to record a net $3.3 billion
pre-tax charge in the first quarter of 2011, primarily representing the accelerated amortization of the prepaid
commitment fee asset.
• During 2010, International Lease Finance Corporation (ILFC) raised a total of $9.8 billion in debt
financings and entered into an unsecured $2.0 billion three-year revolving credit facility in January 2011.
• On December 23, 2010, AIG entered into 364-day and three-year bank credit facilities totaling $3 billion and
Chartis, Inc. entered into a one-year $1.3 billion letter of credit facility.
• On December 8, 2010, AIG established a $500 million contingent liquidity facility.
• On November 30, 2010, AIG issued $2.0 billion in senior debt in its first bond sale since the summer of
2008.
• On November 24, 2010, AIG exchanged 49,474,600 of its Equity Units for 4,881,667 shares of AIG Common
Stock and $162 million in cash.
Sales of Businesses and Specific Asset Dispositions
• On February 1, 2011, AIG completed the sale of its Japan-based life insurance subsidiaries, AIG Star Life
Insurance Co., Ltd. (AIG Star) and AIG Edison Life Insurance Company (AIG Edison), to Prudential
Financial, Inc., for $4.8 billion, consisting of $4.2 billion in cash and $0.6 billion in the assumption of third-
party debt.
• On January 12, 2011, AIG entered into an agreement to sell its 97.57 percent interest in Nan Shan Life
Insurance Company, Ltd. (Nan Shan) for $2.16 billion in cash.
• On November 30, 2010, AIG completed the sale of 80 percent of American General Finance Inc. (AGF)
and retained a 20 percent economic interest in the AGF business.
44 AIG 2010 Form 10-K