AIG 2014 Annual Report Download - page 54

ITEM 1A / RISK FACTORS
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We may experience difficulty in marketing and distributing products through our current and future distribution
channels. Although we distribute our products through a wide variety of distribution channels, we maintain relationships with
certain key distributors. Distributors have in the past, and may in the future, elect to renegotiate the terms of existing
relationships, or reduce or terminate their distribution relationships with us, including for such reasons as industry consolidation
of distributors or other industry changes that increase the competition for access to distributors, adverse developments in our
business, adverse rating agency actions or concerns about market-related risks. An interruption in certain key relationships
could materially affect our ability to market our products and could have a material adverse effect on our businesses, operating
results and financial condition.
In addition, when our products are distributed through unaffiliated firms, we may not be able to monitor or control the manner of
their distribution, despite our training and compliance programs. If our products are distributed to customers for whom they are
unsuitable or distributed in any other inappropriate manner, we may suffer reputational and other harm to our business.
Our ownership of a material amount of the common stock of, and our obligations to, AerCap exposes us to risks. As a
result of the AerCap Transaction, we hold approximately 46 percent of the outstanding common stock of AerCap. As a result,
declines in the value of AerCap’s common stock, and the other effects of our accounting for this investment under the equity
method of accounting, could have a material adverse effect on our results of operations in a reporting period.
In addition, in connection with the AerCap Transaction, AIG, AerCap, AerCap Ireland Limited, AerCap Ireland Capital Limited
(AerCap Ireland) and certain subsidiaries of AerCap, as guarantors, entered into a credit agreement for a senior unsecured
revolving credit facility between AerCap Ireland, as borrower, and AIG, as lender and administrative agent (the AerCap Credit
Facility). The AerCap Credit Facility provides for an aggregate commitment of $1.0 billion and permits loans for general
corporate purposes. Depending on the amount of outstanding borrowings under the AerCap Credit Facility, an event of default
under the AerCap Credit Facility could have a material adverse effect on our results of operations and financial condition.
Significant legal proceedings may adversely affect our results of operations or financial condition. We are party to
numerous legal proceedings, including securities class actions and regulatory and governmental investigations. Due to the
nature of these proceedings, the lack of precise damage claims and the type of claims we are subject to, we cannot currently
quantify our ultimate or maximum liability for these actions. Developments in these unresolved matters could have a material
adverse effect on our consolidated financial condition or consolidated results of operations for an individual reporting period.
Starr International Company, Inc. (SICO) has brought suit against the United States challenging the government’s assistance
of AIG, pursuant to which (i) AIG entered into a credit facility with the Federal Reserve Bank of New York and (ii) the United
States received an approximately 80 percent ownership interest in AIG. The United States has alleged that AIG is obligated to
indemnify the United States for any recoveries in these lawsuits. A determination that the United States is liable for damages
in such suits, together with a determination that AIG is obligated to indemnify the United States for any such damages, could
have a material adverse effect on our business, consolidated financial condition and results of operations. For a discussion of
the SICO litigation and other unresolved matters, see Note 16 to the Consolidated Financial Statements.
If we are unable to maintain the availability of our electronic data systems and safeguard the security of our data, our
ability to conduct business may be compromised, which could adversely affect our consolidated financial condition
or results of operations. We use computer systems to store, retrieve, evaluate and utilize customer, employee, and company
data and information. Some of these systems in turn, rely upon third-party systems. Our business is highly dependent on our
ability to access these systems to perform necessary business functions, including providing insurance quotes, processing
premium payments, making changes to existing policies, filing and paying claims, administering variable annuity products and
mutual funds, providing customer support and managing our investment portfolios. Systems failures or outages could
compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business and
hurt our relationships with our business partners and customers. In the event of a natural disaster, a computer virus,
unauthorized access, a terrorist attack or other disruption inside or outside the U.S., our systems may be inaccessible to our
employees, customers or business partners for an extended period of time, and our employees may be unable to perform their
duties for an extended period of time if our data or systems are disabled or destroyed. Our systems have in the past been, and
may in the future be, subject to unauthorized access, such as physical or electronic break-ins or unauthorized tampering. Like
other global companies, we have, from time to time, experienced threats to our data and systems, including malware and
computer virus attacks, unauthorized access, systems failures and disruptions. There is no assurance that our security
measures will provide fully effective security from such events. AIG maintains cyber risk insurance, but this insurance may not
cover all costs associated with the consequences of personal, confidential or proprietary information being compromised. In