AIG 2013 Annual Report Download - page 161

On August 1, 2013, our Board of Directors authorized the repurchase of shares of AIG Common Stock, with an
aggregate purchase price of up to $1.0 billion, from time to time in the open market, private purchases, through
forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. As of December 31,
2013, we have repurchased approximately 12 million shares of AIG Common Stock for an aggregate purchase price
of approximately $597 million pursuant to this authorization. On February 13, 2014, our Board of Directors authorized
an increase to the August 1, 2013 repurchase authorization of AIG Common Stock by $1.0 billion, resulting in an
aggregate remaining authorization of approximately $1.4 billion of AIG Common Stock, which may be repurchased
from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or
automatic repurchase transactions or otherwise. The timing of such repurchases will depend on market conditions,
our financial condition, results of operations, liquidity and other factors.
Dividend payments to AIG Parent by our insurance subsidiaries are subject to certain restrictions imposed by
regulatory authorities. With respect to our domestic insurance subsidiaries, the payment of any dividend requires
formal notice to the insurance department in which the particular insurance subsidiary is domiciled. Foreign
jurisdictions may restrict the ability of our foreign insurance subsidiaries to pay dividends, and dividends from foreign
subsidiaries may also have unfavorable income tax consequences. There are also various local restrictions limiting
cash loans and advances to AIG Parent by our subsidiaries. See Note 19 to the Consolidated Financial Statements
for additional discussion of restrictions on payments of dividends by AIG and its subsidiaries.
Investments
Our investment strategies are tailored to the specific business needs of each operating unit. The investment
objectives are driven by the respective business models for AIG Property Casualty, AIG Life and Retirement, and
AIG Parent including the DIB. The primary objectives are generation of investment income, preservation of capital,
liquidity management and growth of surplus to support the insurance products. The majority of assets backing our
insurance liabilities consist of intermediate and long duration fixed maturity securities.
Investments Highlights in 2013
• An increase in interest rates on investment grade fixed maturity securities, partially offset by narrowing spreads
of high yield securities, resulted in net unrealized losses in the investment portfolio. Net unrealized gains in our
available-for-sale portfolio declined to approximately $12 billion as of December 31, 2013 from approximately
$25 billion as of December 31, 2012.
• We continued to make investments in structured securities, other fixed maturity securities and mortgage loans
with favorable risk versus return characteristics to improve yields and increase net investment income.
• Net investment income benefited from higher returns on alternative investments primarily due to strong equity
market performance.
• Blended investment yields on new AIG Life and Retirement and AIG Property Casualty investments were lower
than blended rates on investments that were sold, matured or called.
• Other-than-temporary-impairment charges on fixed maturity securities, equity securities, private equity funds
and hedge funds remained at low levels, with a small portion of impairments attributable to structured
securities.
• Impairments on investments in life settlements increased in 2013 compared to 2012 as a result of updated
longevity assumptions in the valuation tables used to estimate future expected cash flows.
Dividend Restrictions
OVERVIEW
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AIG 2013 Form 10-K 143
ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES
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