AIG 2012 Annual Report Download - page 176

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At December 31, 2012:
• $80.6 billion, or 94 percent, of these global financial institution credit exposures were considered investment grade
based on our internal ratings.
• $4.9 billion, or 6 percent, were considered non-investment grade. Most of the non-investment grade exposure was
to financial institutions in countries that we believe are not of investment grade quality. Aggregate credit exposure
to the ten largest below investment grade-rated financial institutions was $2.1 billion.
• Our aggregate credit exposure to fixed maturity securities of the financial institution sector amounted to
$34.4 billion.
• Short-term bank deposit placements, reverse repurchase agreements, repurchase agreements and commercial
paper issued by financial institutions (primarily commercial banks), operating account balances with banks and
bank-issued commercial letters of credit supporting insurance credit exposures were $20.4 billion, or 24 percent of
the total global financial institution credit exposure.
• The remaining credit exposures to this sector were primarily related to reinsurance recoverables, collateral
extended to counterparties mostly pursuant to derivative transactions, derivatives, and captive fronting risk
management programs for these financial institutions.
European Concentrations
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We actively monitor our European credit exposures, especially those exposures to issuers in the Euro-Zone
periphery. We use various stress assumptions to identify issuers and securities warranting review by senior
management and to determine the need for mitigating actions. As a mitigating action, we typically decide not to
renew maturing exposures or, when the opportunity presents itself, to sell or to tender securities. To date, we have
not actively used credit default protection. We periodically evaluate the financial condition of issuers and adjust
internal risk ratings as warranted.
The result of these continuing reviews has led us to believe that our combined credit risk exposures to sovereign
governments, financial institutions and non-financial corporations in the Euro-Zone are manageable risks given the
type and size of exposure and the credit quality and size of the issuers.
The following table presents our aggregate United Kingdom and European credit exposures (excluding ILFC)
by major sector:
Euro-Zone countries:
France $ 8,612
Germany 14,696
Netherlands 8,650
Spain 4,909
Italy 2,816
Belgium 1,062
Ireland 1,644
Luxembourg 613
Austria 557
Finland 378
Other Euro-Zone 253
Total Euro-Zone $ 44,190
Remainder of Europe
United Kingdom $ 29,052
Switzerland 7,670
Sweden 5,584
Other remainder of Europe 5,492
Total remainder of Europe $ 47,798
Total $ 91,988
(a) Other represents mortgage guaranty insurance ($1.3 billion), primarily in Spain ($941 million) and Italy ($188 million).
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AIG 2012 Form 10-K 159
December 31, 2012
Structured December 31,
Financial Non-Financial Products/ 2011
(in millions) Sovereign Institution Corporates Other(a) Total Total
$ 1,207 $ 2,535 $ 6,728 $ 63 $ 10,533
1,446 3,675 3,879 248 9,248
442 4,205 2,295 1,391 8,333
146 682 2,197 1,042 4,067
96 348 2,168 236 2,848
132 209 833 – 1,174
– 98 858 62 1,018
– 24 607 35 666
157 168 198 – 523
138 32 262 – 432
26 22 245 13 306
$ 3,790 $ 11,998 $ 20,270 $ 3,090 $ 39,148
$ 816 $ 9,557 $ 15,802 $ 4,197 $ 30,372
67 4,521 2,702 – 7,290
195 2,934 514 – 3,643
1,098 1,659 1,715 1,140 5,612
$ 2,176 $ 18,671 $ 20,733 $ 5,337 $ 46,917
$ 5,966 $ 30,669 $ 41,003 $ 8,427 $ 86,065
ITEM 7 / ENTERPRISE RISK MANAGEMENT