AIG 2012 Annual Report Download - page 319

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Other Commitments
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In the normal course of business, we enter into commitments to invest in limited partnerships, private equity funds,
hedge funds and mutual funds and to purchase and develop real estate in the U.S. and abroad. These commitments
totaled $2.3 billion at December 31, 2012.
Guarantees
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Subsidiaries
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We have issued unconditional guarantees with respect to the prompt payment, when due, of all present and future
payment obligations and liabilities of AIGFP and AIG Markets arising from transactions entered into by AIGFP and
AIG Markets, respectively.
In connection with AIGFP’s business activities, AIGFP has issued, in a limited number of transactions, standby letters
of credit or similar facilities to equity investors in an amount equal to the termination value owing to the equity
investor by the lessee in the event of a lessee default (the equity termination value). The total amount outstanding at
December 31, 2012 was $306 million. In those transactions, AIGFP has agreed to pay such amount if the lessee
fails to pay. The amount payable by AIGFP is, in certain cases, partially offset by amounts payable under other
instruments typically equal to the present value of scheduled payments to be made by AIGFP. In the event that
AIGFP is required to make a payment to the equity investor, the lessee is unconditionally obligated to reimburse
AIGFP. To the extent that the equity investor is paid the equity termination value from the standby letter of credit
and/or other sources, including payments by the lessee, AIGFP takes an assignment of the equity investor’s rights
under the lease of the underlying property. Because the obligations of the lessee under the lease transactions are
generally economically defeased, lessee bankruptcy is the most likely circumstance in which AIGFP would be
required to pay.
Asset Dispositions
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General
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We are subject to financial guarantees and indemnity arrangements in connection with the completed sales of
businesses pursuant to our asset disposition plan. The various arrangements may be triggered by, among other
things, declines in asset values, the occurrence of specified business contingencies, the realization of contingent
liabilities, developments in litigation or breaches of representations, warranties or covenants provided by us. These
arrangements are typically subject to various time limitations, defined by the contract or by operation of law, such as
statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in
other cases such limitations are not specified or are not applicable.
We are unable to develop a reasonable estimate of the maximum potential payout under certain of these
arrangements. Overall, we believe that it is unlikely it will have to make any material payments related to completed
sales under these arrangements, and no material liabilities related to these arrangements have been recorded in the
Consolidated Balance Sheet. See Note 4 herein for additional information on sales of businesses and asset
dispositions.
ALICO Sale
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Pursuant to the terms of the ALICO stock purchase agreement, we have agreed to provide MetLife with certain
indemnities. The most significant remaining indemnities include:
• Indemnifications related to specific product, investment, litigation and other matters that are excluded from the
general representations and warranties indemnity. These indemnifications provide for various deductible amounts,
which in certain cases are zero, and maximum exposures, which in certain cases are unlimited, and may extend
for various periods after the completion of the sale.
• Tax indemnifications related to insurance reserves that extend for taxable periods ending on or before
December 31, 2013 and that are limited to an aggregate of $200 million, and certain other tax-related
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AIG 2012 Form 10-K302
ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES