AIG 2012 Annual Report Download - page 286
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.....................................................................................................................................................................................
statutory-basis on certain term and universal life insurance policies and certain fixed annuities to onshore and
offshore affiliates.
AIG Life and Retirement generally obtains letters of credit to obtain statutory recognition of its intercompany
reinsurance transactions, particularly with respect to redundant statutory reserves requirements on term insurance
and universal life with secondary guarantees (XXX and AXXX reserves). For this purpose, AIG Life and Retirement
has a $585 million syndicated letter of credit facility outstanding at December 31, 2012, all of which relates to
long-duration intercompany reinsurance transactions. AIG Life and Retirement has also obtained approximately
$215 million of letters of credit on a bilateral basis all of which relates to long-duration intercompany reinsurance
transactions. All of these approximately $800 million of letters of credit are due to mature on December 31, 2015.
Reinsurance Security
..............................................................................................................................................................................................
Our third-party reinsurance arrangements do not relieve us from our direct obligation to our insureds. Thus, a credit
exposure exists with respect to both short-duration and long-duration reinsurance ceded to the extent that any
reinsurer fails to meet the obligations assumed under any reinsurance agreement. We hold substantial collateral as
security under related reinsurance agreements in the form of funds, securities, and/or letters of credit. A provision
has been recorded for estimated unrecoverable reinsurance.
..................................................................................................................................................................................................................................
AIG 2012 Form 10-K 269
ITEM 8 / NOTE 9. REINSURANCE