AIG 2010 Annual Report Download - page 78

American International Group, Inc., and Subsidiaries
of the facilities, as noted below, contains a ‘‘term-out option’’ allowing for the conversion by the borrower of any
outstanding loans at expiration into one-year term loans. All facilities, except for the ILFC five-year syndicated
credit facility dated October 13, 2006, are unsecured.
At February 16, 2011 One-Year
(in millions) Available Term-Out Effective
Facility Size Borrower(s) Amount Expiration Option Date
AIG:
364-Day Syndicated Facility $1,500 AIG $1,500 January 2012 Yes 1/14/2011
3-Year Syndicated Facility 1,500 AIG 1,500 January 2014 No 1/14/2011
Total AIG $3,000 $3,000
Chartis 364-Day Syndicated Letter of Credit
Facility $1,300 Chartis $ - January 2012 No 1/14/2011
ILFC:
5-Year Syndicated Facility(a) $ 235 ILFC $ - October 2011 No 10/13/2006
5-Year Syndicated Facility(a)(b) 1,465 ILFC - October 2012 No 10/13/2006
3-Year Syndicated Facility 2,000 ILFC 2,000 January 2014 No 1/31/2011
Total ILFC $3,700 $2,000
(a) Prior to April 16, 2010, ILFC had a $2.5 billion five-year syndicated facility which was scheduled to expire in October 2011. On April 16, 2010,
ILFC extended the maturity date of $2.16 billion of its $2.5 billion revolving credit facility from October 2011 to October 2012. In December
2010, ILFC paid down $800 million on the $2.5 billion revolving credit facility. The amended facility prohibits ILFC from re-borrowing
amounts repaid under this facility for any reason; therefore the size of the outstanding facility is $1.7 billion.
(b) During 2010 ILFC entered into amendments to this revolving credit facility. Upon effectiveness of these amendments, the previously unsecured
bank debt became secured by the equity interest in certain of its non-restricted subsidiaries, which hold a pool of aircraft with an appraised
value of not less than 133 percent of the principal amount of the outstanding loans.
AIG’s ability to borrow under these facilities is conditioned on satisfaction of certain legal, operating,
administrative and financial covenants and other requirements contained in the facilities, including covenants
relating to AIG’s maintenance of a specified total consolidated net worth and consolidated total debt to
consolidated total capitalization. Failure to satisfy these and other requirements contained in the credit facilities
would restrict AIG’s access to the facilities when needed and, consequently, could have a material adverse effect
on AIG’s financial condition and results of operations.
The Chartis letter of credit facility provides for the issuance of letters of credit in favor of certain of its general
insurance companies to permit those companies to obtain statutory recognition of reinsurance recoverables from
unauthorized reinsurers. This facility requires Chartis to maintain a minimum combined statutory surplus and a
minimum combined net worth, and contains certain customary affirmative and negative covenants, including
limitations with respect to incurrence of certain types of indebtedness or liens, certain dispositions, entry into
certain restrictive agreements and transactions with affiliates and certain fundamental changes, as well as
customary events of default.
ILFC’s three-year credit facility which became effective January 31, 2011 contains customary events of default
and restrictive financial covenants that require ILFC to maintain a minimum fixed charge coverage ratio, a
minimum consolidated tangible net worth, and a maximum ratio of consolidated debt to consolidated tangible net
worth.
Credit Ratings
The cost and availability of unsecured financing for AIG and its subsidiaries are generally dependent on their
short-and long-term debt ratings. The following table presents the credit ratings of AIG and certain of its
subsidiaries as of February 16, 2011. In parentheses, following the initial occurrence in the table of each rating, is
an indication of that rating’s relative rank within the agency’s rating categories. That ranking refers only to the
62 AIG 2010 Form 10-K