AIG 2012 Annual Report Download - page 46

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If any of our insurance entities fell below prescribed levels of statutory surplus, it would be our intention to provide
appropriate capital or other types of support to that entity, under formal support agreements or capital maintenance
agreements (CMAs) or otherwise. For additional details regarding CMAs that we have entered into with our insurance
subsidiaries, see Item 7. MD&A – Liquidity and Capital Resources – Liquidity and Capital Resources of AIG Parent
and Subsidiaries – AIG Property Casualty and – AIG Life and Retirement.
The National Association of Insurance Commissioners (NAIC) has undertaken the Solvency Modernization Initiative
(SMI) which focuses on a review of insurance solvency regulations throughout the U.S. financial regulatory system
and is expected to lead to a set of long-term solvency modernization goals. SMI is broad in scope, but the NAIC has
stated that its focus will include the U.S. solvency framework, group solvency issues, capital requirements,
international accounting and regulatory standards, reinsurance and corporate governance.
A substantial portion of AIG Property Casualty’s business is conducted in foreign countries. The degree of regulation
and supervision in foreign jurisdictions varies. Generally, we must satisfy local regulatory requirements, licenses
issued by foreign authorities to our subsidiaries are subject to modification or revocation by such authorities, and
therefore these subsidiaries could be prevented from conducting business in certain of the jurisdictions where they
currently operate.
In addition to licensing requirements, our foreign operations are also regulated in various jurisdictions with respect to
currency, policy language and terms, advertising, amount and type of security deposits, amount and type of reserves,
amount and type of capital to be held, amount and type of local investment and the share of profits to be returned to
policyholders on participating policies. Some foreign countries regulate rates on various types of policies. Certain
countries have established reinsurance institutions, wholly or partially owned by the local government, to which
admitted insurers are obligated to cede a portion of their business on terms that may not always allow foreign
insurers, including our subsidiaries, full compensation. In some countries, regulations governing constitution of
technical reserves and remittance balances may hinder remittance of profits and repatriation of assets.
See Item 7. MD&A – Liquidity and Capital Resources – Regulation and Supervision and Note 20 to the Consolidated
Financial Statements.
OUR COMPETITIVE ENVIRONMENT
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AIG’s businesses operate in a highly competitive global environment. Principal sources of competition are insurance
companies, banks, and other non-bank financial institutions. AIG considers its principal competitors to be other large
multinational insurance organizations. We describe our competitive strengths, our strategies to retain existing
customers and attract new customers within each of our operating business segment descriptions.
OUR EMPLOYEES
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At December 31, 2012, AIG and its subsidiaries had approximately 63,000 employees. We believe that our relations
with our employees are satisfactory.
AIG Property
Casualty
Domestic
AIG Property
Casualty
International
15,000
30,000
AIG
PROPERTY
CASUALTY
45,000
12,000
6,000
AIG LIFE AND
RETIREMENT
OTHER OPERATIONS*
* Includes approximately 500 employees of ILFC, which was held for sale at December 31, 2012.
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AIG 2012 Form 10-K 29
ITEM 1 / BUSINESS