AIG 2015 Annual Report Download - page 27

ITEM 1 / BUSINESS
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requirements, including swap reporting, the mandatory clearing of certain interest rate swaps and credit default swaps,
margin requirements for uncleared swaps, and the mandatory trading of certain swaps on swap execution facilities. The
SEC has proposed certain rules with respect to certain of the regulations and restrictions noted above governing security-
based swaps but has yet to finalize the majority of rules comprising its security-based swap regulatory regime. These
regulations have affected and may further affect various activities of AIG and its insurance and financial services
subsidiaries as further rules are finalized to implement additional elements of the regulatory regime.
Similar regulations have been proposed or adopted outside the United States. For instance, the EU has also established a
set of new regulatory requirements for EU derivatives activities under EMIR. These requirements include, among other
things, various risk mitigation, risk management and regulatory reporting requirements that have already become effective
and clearing requirements that were outlined in EU delegated legislation at the end of 2015, and are phased in over three
years. These requirements could result in increased administrative costs with respect to our EU derivatives activities and
overlapping or inconsistent regulation depending on the ultimate application of cross-border regulatory requirements
between and among U.S. and non-U.S. jurisdictions.
• Dodd-Frank mandated a study to determine whether stable value contracts should be included in the definition of "swap." If
that study concludes that stable value contracts are swaps, Dodd-Frank authorizes certain federal regulators to determine
whether an exemption from the definition of a swap for stable value contracts is appropriate and in the public interest.
Certain of our affiliates participate in the stable value contract business. We cannot predict what regulations might emanate
from the aforementioned study or be promulgated applicable to this business in the future.
• Dodd-Frank established a Federal Insurance Office (FIO) within the United States Department of the Treasury (Department
of the Treasury) headed by a director appointed by the Secretary of the Treasury. While not having a general supervisory or
regulatory authority over the business of insurance, the director of this office performs various functions with respect to
insurance (other than health insurance), including serving as a non-voting member of the Council. On December 12, 2013,
the FIO released a Dodd-Frank mandated study on how to modernize and improve the system of insurance regulation in the
United States. The report listed several actions that states could take to improve the uniformity and efficiency of the current
state based regulatory system and highlighted certain areas in which Federal involvement is recommended. The FIO
recommended that the states undertake reforms regarding capital adequacy, reform of insurer resolution practices, and
marketplace regulation. On November 20, 2015, the Department of Treasury and the United States Trade Representative
announced their intention to negotiate an agreement between the U.S. and the EU regarding prudential measures with
respect to insurance and reinsurance.
• Dodd-Frank established the Consumer Financial Protection Bureau (CFPB) as an independent bureau within the FRB to
regulate consumer financial products and services offered primarily for personal, family or household purposes. Insurance
products and services are not within the CFPB's general jurisdiction, although the U.S. Department of Housing and Urban
Development has since transferred authority to the CFPB to investigate mortgage insurance practices. Broker-dealers and
investment advisers are not subject to the CFPB's jurisdiction when acting in their registered capacity.
• Title XIV of Dodd-Frank also restricts certain terms for mortgage loans, such as loan fees, prepayment fees and other
charges, and imposes certain duties on a lender to ensure that a borrower can afford to repay the loan.
Dodd-Frank imposes various assessments on financial companies, including, as applicable to us, fees for our supervision by
the FRB and assessments to cover the costs of any special resolution of a financial company conducted under Title II
(although the regulatory authority would have to take account of the amounts paid by us into state guaranty funds).
We cannot predict whether these actions will become effective or the effect they may have on the financial markets or on our
business, results of operations, cash flows, financial condition and credit ratings. However, it is possible that such effect could
be materially adverse. See Item 1A. Risk Factors — Regulation for additional information.
Other Regulatory Developments
As described below, AIG has been designated as a Global Systemically Important Insurer (G-SII).