AIG 2013 Annual Report Download - page 307

In the normal course of business, various contingent liabilities and commitments are entered into by AIG and our
subsidiaries. In addition, AIG Parent guarantees various obligations of certain subsidiaries.
Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including
those referred to below, it is possible that such liability could have a material adverse effect on AIG’s consolidated
financial condition or its consolidated results of operations or consolidated cash flows for an individual reporting
period.
Overview. In the normal course of business, AIG and our subsidiaries are, like others in the insurance and
financial services industries in general, subject to litigation, including claims for punitive damages. In our insurance
and mortgage guaranty operations, litigation arising from claims settlement activities is generally considered in the
establishment of our liability for unpaid claims and claims adjustment expense. However, the potential for increasing
jury awards and settlements makes it difficult to assess the ultimate outcome of such litigation. AIG is also subject to
derivative, class action and other claims asserted by its shareholders and others alleging, among other things,
breach of fiduciary duties by its directors and officers and violations of insurance laws and regulations, as well as
federal and state securities laws. In the case of any derivative action brought on behalf of AIG, any recovery would
accrue to the benefit of AIG.
Various regulatory and governmental agencies have been reviewing certain transactions and practices of AIG and
our subsidiaries in connection with industry-wide and other inquiries into, among other matters, certain business
practices of current and former operating insurance subsidiaries. We have cooperated, and will continue to
cooperate, in producing documents and other information in response to subpoenas and other requests.
AIG, AIGFP and certain directors and officers of AIG, AIGFP and other AIG subsidiaries have been named in various
actions relating to our exposure to the U.S. residential subprime mortgage market, unrealized market valuation losses
on AIGFP’s super senior credit default swap portfolio, losses and liquidity constraints relating to our securities lending
program and related disclosure and other matters (Subprime Exposure Issues).
Consolidated 2008 Securities Litigation. Between May 21, 2008 and January 15, 2009, eight purported
securities class action complaints were filed against AIG and certain directors and officers of AIG and AIGFP, AIG’s
outside auditors, and the underwriters of various securities offerings in the United States District Court for the
Southern District of New York (the Southern District of New York), alleging claims under the Securities Exchange Act
of 1934, as amended (the Exchange Act), or claims under the Securities Act of 1933, as amended (the Securities
Act). On March 20, 2009, the Court consolidated all eight of the purported securities class actions as In re American
International Group, Inc. 2008 Securities Litigation (the Consolidated 2008 Securities Litigation).
On May 19, 2009, the lead plaintiff in the Consolidated 2008 Securities Litigation filed a consolidated complaint on
behalf of purchasers of AIG Common Stock during the alleged class period of March 16, 2006 through
September 16, 2008, and on behalf of purchasers of various AIG securities offered pursuant to AIG’s shelf
registration statements. The consolidated complaint alleges that defendants made statements during the class period
in press releases, AIG’s quarterly and year-end filings, during conference calls, and in various registration statements
and prospectuses in connection with the various offerings that were materially false and misleading and that
artificially inflated the price of AIG Common Stock. The alleged false and misleading statements relate to, among
other things, the Subprime Exposure Issues. The consolidated complaint alleges violations of Sections 10(b) and
20(a) of the Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act. On August 5, 2009, defendants
filed motions to dismiss the consolidated complaint, and on September 27, 2010, the Court denied the motions to
dismiss.
On April 1, 2011, the lead plaintiff in the Consolidated 2008 Securities Litigation filed a motion to certify a class of
plaintiffs. On November 2, 2011, the Court terminated the motion without prejudice to an application for restoration.
On March 30, 2012, the lead plaintiff filed a renewed motion to certify a class of plaintiffs.
15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
Legal Contingencies
AIG’s Subprime Exposure, AIGFP Credit Default Swap Portfolio and Related Matters
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AIG 2013 Form 10-K 289
ITEM 8 / NOTE 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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