AIG 2014 Annual Report Download - page 302

ITEM 8 / NOTE 15. DEBT
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one of the termination provisions set forth in the New RCCs was triggered when it was determined that neither series of junior
subordinated debentures received equity credit any longer for rating agency purposes.
In 2014, we repurchased approximately $2.4 billion aggregate principal amount of our 8.175% Series A-6 Junior Subordinated
Debentures.
AIGLH Junior Subordinated Debentures (Formerly, Liabilities Connected To Trust Preferred Stock)
In connection with our acquisition of AIG Life Holdings, Inc. (AIGLH) in 2001, we entered into arrangements with AIGLH with
respect to outstanding AIGLH capital securities. In 1996, AIGLH issued capital securities through a trust to institutional
investors and funded the trust with AIGLH junior subordinated debentures issued to the trust with the same terms as the
capital securities.
On July 11, 2013, the AIGLH junior subordinated debentures were distributed to holders of the capital securities, the capital
securities were cancelled and the trusts were dissolved. At December 31, 2014, the junior subordinated debentures
outstanding consisted of $155 million of 8.5 percent junior subordinated debentures due July 2030, $245 million of 8.125
percent junior subordinated debentures due March 2046 and $136 million of 7.57 percent junior subordinated debentures due
December 2045, each guaranteed by AIG Parent.
Credit Facilities
The five-year syndicated credit facility that we entered into on June 19, 2014 (the Five-Year Facility) provides for $4.0 billion of
unsecured revolving loans and/or standby letters of credit without any limits on the type of borrowings. As of December 31,
2014, a total of $4 billion remains available under the Five-Year Facility. We expect we may draw down on the Five-Year
Facility from time to time, and may use the proceeds for general corporate purposes. The Five-Year Facility is summarized in
the following table.
At December 31, 2014 Available
Effective
(in millions) Size Amount Expiration Date
Five-Year Syndicated Credit Facility $4,000 $4,000 June 2019 6/19/2014
16. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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.
Legal Contingencies
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 losses and loss adjustment expenses. 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.