AIG 2015 Annual Report Download - page 304

ITEM 8 / NOTE 14. DEBT
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304
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, 2015, the junior subordinated debentures
outstanding consisted of $116 million of 8.5 percent junior subordinated debentures due July 2030, $227 million of 8.125
percent junior subordinated debentures due March 2046 and $79 million of 7.57 percent junior subordinated debentures due
December 2045, each guaranteed by AIG Parent.
Credit Facilities
On November 5, 2015, we amended and restated the five-year syndicated credit facility entered into on June 19, 2014 (the
Previous Facility). The amended and restated five-year syndicated facility (the Five-Year Facility) provides for aggregate
commitments by the bank syndicate to provide unsecured revolving loans and/or standby letters of credit of up to $4.5 billion
(increased from a $4.0 billion commitment in the Previous Facility) without any limits on the type of borrowings and is
scheduled to expire in November 2020 (the Previous Facility was scheduled to expire in June 2019). The increased
commitment of $500 million to the Five-Year Facility offsets the effect of the expiration of our $500 million contingent liquidity
facility.
At December 31, 2015 Available
Effective
(in millions) Size Amount Expiration Date
Five-Year Syndicated Credit Facility $4,500 $4,500 November 2020 11/5/2015
15. 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.