AIG 2015 Annual Report Download - page 305

ITEM 8 / NOTE 15. CONTINGENCIES, COMMITMENTS AND GUARANTEES
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Various regulatory and governmental agencies have been reviewing certain transactions and practices of AIG and our
subsidiaries in connection with industry-wide and other inquiries into, among other matters, certain business practices of
current and former operating insurance subsidiaries. We have cooperated, and will continue to cooperate, in producing
documents and other information in response to subpoenas and other requests.
AIG’s Subprime Exposure, AIGFP Credit Default Swap Portfolio and Related Matters
AIG, AIG Financial Products Corp. and related subsidiaries (collectively AIGFP), and certain directors and officers of AIG,
AIGFP and other AIG subsidiaries have been named in various actions relating to our exposure to the U.S. residential
subprime mortgage market, unrealized market valuation losses on AIGFP’s super senior credit default swap portfolio, losses
and liquidity constraints relating to our securities lending program and related disclosure and other matters (Subprime
Exposure Issues).
Consolidated 2008 Securities Litigation. On May 19, 2009, a consolidated class action complaint, resulting from the
consolidation of eight purported securities class actions filed between May 2008 and January 2009, was filed against AIG and
certain directors and officers of AIG and AIGFP, AIG’s outside auditors, and the underwriters of various securities offerings in
the United States District Court for the Southern District of New York (the Southern District of New York) in In re American
International Group, Inc. 2008 Securities Litigation (the Consolidated 2008 Securities Litigation), asserting claims under the
Securities Exchange Act of 1934, as amended (the Exchange Act), and claims under the Securities Act of 1933, as amended
(the Securities Act), for allegedly materially false and misleading statements in AIG’s public disclosures from March 16, 2006 to
September 16, 2008 relating to, among other things, the Subprime Exposure Issues.
On July 15, 2014 and August 1, 2014, lead plaintiff, AIG and AIG’s outside auditor accepted mediators’ proposals to settle the
Consolidated 2008 Securities Litigation against all defendants. On October 22, 2014, AIG made a cash payment of $960
million, which is being held in escrow until all funds are distributed. On March 20, 2015, the Court issued an Order and Final
Judgment approving the class settlement and dismissing the action with prejudice, and the AIG settlement became final on
June 29, 2015.
Individual Securities Litigations. Between November 18, 2011 and February 9, 2015, eleven separate, though similar,
securities actions (Individual Securities Litigations) were filed asserting claims substantially similar to those in the Consolidated
2008 Securities Litigation against AIG and certain directors and officers of AIG and AIGFP (one such action also names as a
defendant AIG’s outside auditor and two such actions also name as defendants the underwriters of various securities
offerings). Two of the actions were voluntarily dismissed. On September 10, 2015, the Southern District of New York granted
AIG’s motion to dismiss some of the claims in the Individual Securities Litigations in whole or in part. AIG has settled seven of
the nine remaining actions.
On March 27, 2015, an additional securities action was filed in state court in Orange County, California asserting a claim
against AIG pursuant to Section 11 of the Securities Act (the California Action) that is substantially similar to those in the
Consolidated 2008 Securities Litigation and the two remaining Individual Securities Litigations pending in the Southern District
of New York. On July 10, 2015, AIG filed a motion to stay the California Action. On September 18, 2015, the court denied
AIG’s motion to stay the California Action. On October 23, 2015, AIG filed an appeal of the court’s denial. On January 28,
2016, the California appellate court summarily denied AIG’s appeal. On February 8, 2016, AIG filed a petition for review in the
California Supreme Court.
On April 29, 2015, AIG filed a complaint for declaratory relief in the Southern District of New York seeking a declaration that the
Section 11 claims filed in the California Action are time-barred (the SDNY Action). On July 10, 2015, AIG filed a motion for
summary judgment and the plaintiff in the California Action cross moved to dismiss the SDNY Action.
We have accrued our current estimate of probable loss with respect to these litigations.