AIG 2015 Annual Report Download - page 43

ITEM 1A / RISK FACTORS

43
Changes in tax laws could increase our corporate taxes, reduce our deferred tax assets or make some of our
products less attractive to consumers. Changes in tax laws or their interpretation could negatively impact our business or
results. Some proposed changes could have the effect of increasing our effective tax rate by reducing deductions or
increasing income inclusions, such as by limiting rules allowing deferral of tax on certain foreign insurance income.
Conversely, other changes, such as lowering the U.S. federal corporate tax rate discussed recently in the context of tax reform,
could reduce the value of our deferred tax assets. In addition, changes in the way foreign taxes can be credited against U.S.
taxes, methods for allocating interest expense, the ways insurance companies calculate and deduct reserves for tax purposes,
and impositions of new or changed premium, value added and other indirect taxes could increase our tax expense, thereby
reducing earnings.
In addition to proposing to change the taxation of corporations in general and insurance companies in particular, the Executive
Branch of the U.S. Government and Congress have considered proposals that could increase taxes on owners of insurance
products. For example, there have been proposals that would have limited the deferral of tax on income from life and annuity
contracts relative to other investment products. These changes could reduce demand in the U.S. for life insurance and annuity
contracts, or cause consumers to shift from these contracts to other investments, which would reduce our income due to lower
sales of these products or potential increased surrenders of in-force business.
The need for governments to seek additional revenue makes it likely that there will be continued proposals to change tax rules
in ways that would reduce our earnings. However, it remains difficult to predict whether or when there will be any tax law
changes having a material adverse effect on our financial condition or results of operations.
COMPETITION AND EMPLOYEES
We face intense competition in each of our businesses. Our businesses operate in highly competitive environments, both
domestically and overseas. Our principal competitors are other large multinational insurance organizations, as well as banks,
investment banks and other nonbank financial institutions. The insurance industry in particular is highly competitive. Within the
U.S., our Non-Life Insurance Companies compete with other stock companies, specialty insurance organizations, mutual
insurance companies and other underwriting organizations. Our Life Insurance Companies compete in the U.S. with life
insurance companies and other participants in related financial services fields. Overseas, our subsidiaries compete for
business with the foreign insurance operations of large U.S. insurers and with global insurance groups and local companies.
The past reduction of our credit ratings and past negative publicity have made, and may continue to make, it more difficult to
compete to retain existing customers and to maintain our historical levels of business with existing customers and
counterparties. General insurance and life insurance companies compete through a combination of risk acceptance criteria,
product pricing, and terms and conditions. Retirement services companies compete through crediting rates and the issuance
of guaranteed benefits. A decline in our position as to any one or more of these factors could adversely affect our profitability.
Competition for employees in our industry is intense, and we may not be able to attract and retain the highly skilled
people we need to support our business. Our success depends, in large part, on our ability to attract and retain key people.
Due to the intense competition in our industry for key employees with demonstrated ability, we may be unable to hire or retain
such employees. In addition, we may experience higher than expected employee turnover and difficulty attracting new
employees as a result of uncertainty from strategic actions and organizational and operational changes. Losing any of our key
people also could have a material adverse effect on our operations given their skills, knowledge of our business, years of
industry experience and the potential difficulty of promptly finding qualified replacement employees. Our results of operations
and financial condition could be materially adversely affected if we are unsuccessful in attracting and retaining key employees.
Managing key employee succession and retention is critical to our success. We would be adversely affected if we fail to
adequately plan for the succession of our senior management and other key employees. While we have succession plans and
long-term compensation plans designed to retain our employees, our succession plans may not operate effectively and our
compensation plans cannot guarantee that the services of these employees will continue to be available to us.