AIG 2013 Annual Report Download - page 60

signed into law. Dodd-Frank directs existing and newly created government agencies and bodies to promulgate
regulations implementing the law, an ongoing process anticipated to continue over the next few years.
We cannot predict the requirements of the regulations ultimately adopted, the level and magnitude of supervision we
may become subject to, or how Dodd-Frank and such regulations will affect the financial markets generally or our
businesses, results of operations or cash flows. It is possible that the regulations adopted under Dodd-Frank and our
regulation by the FRB as an SLHC or as a SIFI could significantly alter our business practices, limit our ability to
engage in capital or liability management, require us to raise additional capital, and impose burdensome and costly
requirements and additional costs. Some of the regulations may also affect the perceptions of regulators, customers,
counterparties, creditors or investors about our financial strength and could potentially affect our financing costs.
See Item 1. Business — Regulation for further discussion of the details of the aforementioned regulations to which
AIG and its businesses are subject.
Actions by foreign governments and regulators could subject us to substantial additional regulation. We
cannot predict the impact laws and regulations adopted in foreign jurisdictions may have on the financial markets
generally or our businesses, results of operations or cash flows. It is possible such laws and regulations, and the
impact of our designation as a global systemically important insurer (G-SII), may significantly alter our business
practices, limit our ability to engage in capital or liability management, require us to raise additional capital, and
impose burdensome requirements and additional costs. It is possible that the laws and regulations adopted in foreign
jurisdictions will differ from one another and that they could be inconsistent with the laws and regulations of other
jurisdictions including the United States.
In addition to the adoption of Dodd-Frank in the United States, regulators and lawmakers around the world are
actively reviewing the causes of the financial crisis and taking steps to avoid similar problems in the future. The FSB,
consisting of representatives of national financial authorities of the G20 nations, has issued a series of frameworks
and recommendations intended to produce significant changes in how financial companies, particularly global
systemically important financial institutions, should be regulated. These frameworks and recommendations address
such issues as financial group supervision, capital and solvency standards, corporate governance including
compensation, and a number of related issues associated with responses to the financial crisis. The FSB has
directed the IAIS to create standards relative to these areas and incorporate them within that body’s ICPs.
Lawmakers and regulatory authorities in a number of jurisdictions in which our subsidiaries conduct business have
already begun implementing legislative and regulatory changes consistent with these recommendations.
The FSB has also charged the IAIS with developing a template for measuring systemic risks posed by insurer
groups. The IAIS has requested data from selected insurers around the world to determine which elements of the
insurance sector, if any, could materially and adversely impact other parts of the global financial services sector
(e.g., commercial and investment banking, securities trading, etc.). The IAIS has provided its assessment template to
the FSB. Based on this assessment template, on July 18, 2013, the FSB, in consultation with the IAIS and national
authorities, identified an initial list of global systemically important insurers (G-SIIs), which includes AIG. The IAIS
intends G-SIIs to be subject to a policy framework that includes recovery and resolution planning requirements,
enhanced group-wide supervision, basic capital requirements (BCR) and higher loss absorbency (HLA) capital
requirements.
The IAIS is also developing a ComFrame, a Common Framework for the Supervision of Internationally Active
Insurance Groups (IAIGs), which includes additional supervisory oversight based on its ICPs but also adds
requirements and supervisory processes pertaining to the international business activities of IAIGs. As currently
delineated under the ComFrame, we meet the parameters set forth to define an IAIG. While we currently do not
know when any ComFrame requirements will be finalized and become effective, the IAIS will undertake a field testing
of the ComFrame, including the possibility of additional capital requirements for IAIGs, which is expected to
commence in the beginning of 2014. It is expected that implementation of the ComFrame would begin in 2019.
Solvency II Legislation in the European Union could also affect our international insurance operations by reforming
minimum capital and solvency requirements, governance requirements, risk management and public reporting
standards.
For further details on these international regulations and their potential impact on AIG and its businesses, see Item 1.
Business — Regulation — Other Regulatory Developments.
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AIG 2013 Form 10-K42
ITEM 1A / RISK FACTORS
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