AIG 2012 Annual Report Download - page 141

.....................................................................................................................................................................................
• gross proceeds of approximately $14.5 billion from the sale of approximately 4.0 billion AIA ordinary shares; and
• approximately $2.1 billion of cash collateral received in connection with the securities lending program launched
during 2012 by AIG Life and Retirement.
Net cash provided by investing activities in 2011 was primarily attributable to:
• the utilization of $26.4 billion of restricted cash generated from the AIA IPO and ALICO sale in connection with the
Recapitalization and $9.6 billion from the disposition of MetLife securities;
• the sale of AIG Star, AIG Edison and Nan Shan in 2011 for total proceeds of $6.4 billion; and
• net sales of short term investments and maturities of available for sale investments, primarily at AIG Property
Casualty and AIG Life and Retirement, which were partially offset by purchases of available for sale investments.
Net cash used in investing activities in 2010 primarily resulted from net purchases of fixed maturity securities,
resulting from our investment of cash generated from operating activities, and the redeployment of liquidity that had
been accumulated by the insurance companies in 2009.
Financing Cash Flow Activities
..............................................................................................................................................................................................
Net cash used in financing activities during 2012 includes the following activities:
• $8.6 billion pay down of the Department of the Treasury’s AIA SPV Preferred Interests; and
• total payments of approximately $13.0 billion for the purchase of approximately 421 million shares of AIG Common
Stock.
Net cash used in financing activities for 2011 primarily resulted from the repayment of the FRBNY Credit Facility and
the $12.4 billion partial repayment of the AIA SPV Preferred Interests and the ALICO SPV in connection with the
Recapitalization and use of proceeds received from the sales of foreign life insurance entities in 2011.
Net cash used in financing activities in 2010 reflected declines in policyholder contract withdrawals, due to improved
conditions for the life insurance and retirement services businesses. This was partially offset by the issuance of
long-term debt.
Liquidity and Capital Resources of AIG Parent and Subsidiaries
..............................................................................................................................................................................................
AIG Parent
..............................................................................................................................................................................................
As of December 31, 2012, AIG Parent had $16.1 billion in liquidity resources. AIG Parent’s primary sources of
liquidity are dividends, distributions, and other payments from subsidiaries, as well as credit and contingent liquidity
facilities. AIG Parent’s primary uses of liquidity are for debt service, capital management, operating expenses and
subsidiary capital needs.
AIG Parent’s primary sources of capital are dividends and distributions from subsidiaries. AIG Parent has
unconditional capital maintenance agreements (CMAs) in place with certain AIG Property Casualty and AIG Life and
Retirement subsidiaries to facilitate the transfer of capital and liquidity within the consolidated company. We expect
these CMAs to continue to enhance AIG’s capital management practices, and help manage the flow of capital
between AIG Parent and these subsidiaries. We have entered into and expect to enter into additional CMAs with
certain other insurance companies in 2013. See AIG Property Casualty and AIG Life and Retirement below for
additional information. Nevertheless, regulatory and other legal restrictions could limit our ability to transfer capital
freely, either to or from our subsidiaries.
We believe that we have sufficient liquidity and capital resources to satisfy future requirements and meet our
obligations to policyholders, customers, creditors and debt-holders. We expect to access the debt markets from time
to time to meet funding requirements as needed.
..................................................................................................................................................................................................................................
AIG 2012 Form 10-K124
ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES