AIG 2014 Annual Report Download - page 170

ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES

153
nature. These liabilities also include benefit and claim liabilities, of which a significant portion represents policies and contracts
that do not have stated contractual maturity dates and may not result in any future payment obligations. For these policies and
contracts (i) we are not currently making payments until the occurrence of an insurable event, such as death or disability,
(ii) payments are conditional on survivorship or (iii) payment may occur due to a surrender or other non-scheduled event
beyond our control.
We have made significant assumptions to determine the estimated undiscounted cash flows of these contractual policy
benefits. These assumptions include mortality, morbidity, future lapse rates, expenses, investment returns and interest
crediting rates, offset by expected future deposits and premiums on in-force policies. Due to the significance of the
assumptions, the periodic amounts presented could be materially different from actual required payments. The amounts
presented in this table are undiscounted and exceed the future policy benefits and policyholder contract deposits included in
the Consolidated Balance Sheets.
We believe that our Life Insurance Companies have adequate financial resources to meet the payments actually required
under these obligations. These subsidiaries have substantial liquidity in the form of cash and short-term investments. In
addition, our Life Insurance Companies maintain significant levels of investment grade rated fixed maturity securities, including
substantial holdings in government and corporate bonds, and could seek to monetize those holdings in the event operating
cash flows are insufficient. We expect liquidity needs related to GIC liabilities to be funded through cash flows generated from
maturities and sales of invested assets.
Borrowings
Our borrowings exclude those incurred by consolidated investments and include hybrid financial instrument liabilities recorded
at fair value. We expect to repay the long-term debt maturities and interest accrued on borrowings by AIG through maturing
investments and dispositions of invested assets, future cash flows from operations, cash flows generated from invested assets,
future debt issuance and other financing arrangements.
Off-Balance Sheet Arrangements and Commercial Commitments
The following table summarizes Off-Balance Sheet Arrangements and Commercial Commitments in total, and by
remaining maturity:
December 31, 2014 Amount of Commitment Expiring
Total Amounts 2016 - 2018 -
(in millions) Committed 2015 2017 2019 Thereafter
Insurance operations
Guarantees:
Standby letters of credit $852 $19 $783 $ 42 $ 8
Guarantees of indebtedness 180 -23 - 157
All other guarantees(a) 8 - 1 - 7
Commitments:
Investment commitments(b) 2,238 1,730 452 56 -
Commitments to extend credit 1,695 869 174 468 184
Letters of credit 6 6 - - -
Tota l(c) $4,979 $2,624 $1,433 $ 566 $356
Other
Guarantees:
Liquidity facilities(d) $77 $ - $ - $ - $ 77
Standby letters of credit 215 213 2 - -
All other guarantees 35 10 25 - -