AIG 2012 Annual Report Download - page 147

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Collateral posted by operations included in the DIB to third parties was $4.3 billion and $5.1 billion at December 31,
2012 and December 31, 2011, respectively. This collateral primarily consists of securities of the U.S. government and
government sponsored entities and generally cannot be repledged or resold by the counterparties.
The following summarizes significant liquidity events during 2012:
• The DIB used current program liquidity to pay down $6.6 billion in debt. In addition, in the first quarter of 2012, AIG
issued $2.0 billion aggregate principal amount of unsecured notes, consisting of $750 million principal amount of
3.000% Notes Due 2015 and $1.25 billion principal amount of 3.800% Notes Due 2017. The proceeds from the
sale of these notes were used to reduce overall risk and better match the assets and liabilities in the MIP. The
notes are included within MIP notes payable in the debt outstanding table in ‘‘Debt – Debt Maturities’’ below.
• AIG Parent allocated cash from the MIP to pay down the AIA SPV Preferred Interests. In exchange, AIG’s
remaining interest in ML III and the future proceeds from the cash held in escrow to secure indemnities provided to
MetLife were allocated to the MIP.
• The DIB received approximately $8.5 billion in distributions from the FRBNY’s auctions of ML III assets.
Credit Facilities
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We maintain a committed revolving four-year syndicated credit facility (the Four-Year Facility) as a potential
source of liquidity for general corporate purposes. The Four-Year Facility also provides for the issuance of letters
of credit. We currently expect to replace or extend the Four-Year Facility on or prior to its expiration in October 2016,
although no assurance can be given that the Four-Year Facility will be replaced on favorable terms or at all.
The Four-Year Facility provides for $4.0 billion of unsecured revolving loans, which includes a $2.0 billion letter of
credit sublimit. Our ability to borrow under the Four-Year Facility is not contingent on our credit ratings. However, our
ability to borrow under the Four-Year Facility is conditioned on the satisfaction of certain legal, operating,
administrative and financial covenants and other requirements contained in the Four-Year Facility. These include
covenants relating to our maintenance of a specified total consolidated net worth and total consolidated debt to total
consolidated capitalization. Failure to satisfy these and other requirements contained in the Four-Year Facility would
restrict our access to the Four-Year Facility and could have a material adverse effect on our financial condition,
results of operations and liquidity.
See Note 15 to the Consolidated Financial Statements for further discussion of the Four-Year Facility.
Contingent Liquidity Facilities
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AIG Parent has access to a contingent liquidity facility of up to $500 million as a potential source of liquidity for
general corporate purposes. Under this facility, we have the unconditional right, prior to December 15, 2015, to issue
up to $500 million in senior debt to the counterparty, based on a put option agreement between AIG Parent and the
counterparty.
Our ability to borrow under this facility is not contingent on our credit ratings.
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AIG 2012 Form 10-K130
ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES