AIG 2013 Annual Report Download - page 151

In the normal course, it is expected that a portion of the capital generated by our core insurance operations through
earnings or through the utilization of AIG’s deferred tax assets may be available for distribution to shareholders.
Additionally, it is expected that capital associated with businesses or investments that do not directly support our core
insurance operations may be available for distribution to shareholders or deployment towards liability management
upon their monetization.
In developing plans to distribute capital, AIG considers a number of factors, including, but not limited to: the capital
resources available to support our core insurance operations and business strategies, AIG’s funding capacity and
capital resources in comparison to internal benchmarks, expectations for capital generation, rating agency
expectations for capital, as well as regulatory standards for capital and capital distributions.
The following table presents AIG Parent’s liquidity sources:
Cash and short-term investments(a)(b) $ 12,586
Unencumbered fixed maturity securities(c) –
Total AIG Parent liquidity 12,586
Available capacity under syndicated credit facility(d) 3,037
Available capacity under contingent liquidity facility(e) 500
Total AIG Parent liquidity sources $ 16,123
(a) Cash and short-term investments include reverse repurchase agreements totaling $6.9 billion and $8.9 billion as of December 31, 2013 and
2012, respectively.
(b) $5.9 billion and $4.6 billion of cash and short-term investments as of December 31, 2013 and 2012, respectively, are allocated toward future
maturities of liabilities and contingent liquidity stress needs of DIB and GCM.
(c) Unencumbered securities consist of publicly traded, intermediate-term investment grade rated fixed maturity securities. Fixed maturity securities
consist of U.S. government and government sponsored entity securities, U.S. agency mortgage-backed securities, and corporate and municipal
bonds.
(d) For additional information relating to this syndicated credit facility, see Credit Facilities below.
(e) For additional information relating to the contingent liquidity facility, see Contingent Liquidity Facilities below.
We expect that AIG Property Casualty subsidiaries will be able to continue to satisfy reasonably foreseeable future
liquidity requirements and meet their obligations, including those arising from reasonably foreseeable contingencies
or events, through cash from operations, portfolio interest, scheduled investment maturities and, to the extent
necessary, monetization of invested assets. AIG Property Casualty’s subsidiaries’ liquidity resources are held in the
form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities.
National Union Fire Insurance Company of Pittsburgh, Pa. (NUFI) is a member of the Federal Home Loan Bank
(FHLB) of Pittsburgh, AIG Specialty Insurance Company (ASI) is a member of the FHLB of Chicago and Lexington
Insurance Company (Lexington) is a member of the FHLB of Boston. FHLB membership provides participants with
access to various services, including access to low-cost advances through pledging of certain mortgage-backed
securities, government and agency securities and other qualifying assets. These advances may be used to provide
an additional source of liquidity for balance sheet management or contingency funding purposes. As of December 31,
2013, there were no FHLB advances outstanding for NUFI, CSI or Lexington.
AIG Property Casualty’s subsidiaries may require additional funding to meet capital or liquidity needs under certain
circumstances.
Large catastrophes may require AIG to provide additional support to our affected operations. Downgrades in AIG’s
credit ratings could put pressure on the insurer financial strength ratings of AIG’s subsidiaries, which could result in
non-renewals or cancellations by policyholders and adversely affect the subsidiary’s ability to meet its own
obligations. Increases in market interest rates may adversely affect the financial strength ratings of our subsidiaries,
as rating agency capital models may reduce the amount of available capital relative to required capital. Other
potential events that could cause a liquidity strain include an economic collapse of a nation or region significant to
AIG Property Casualty
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AIG 2013 Form 10-K 133
ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES
As of As of
(In millions) December 31, 2013 December 31, 2012
$ 10,154
2,968
13,122
3,947
500
$ 17,569
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