Implementation and Uses of Economic Capital ... - ERM Symposium
Implementation and Uses of Economic Capital ... - ERM Symposium
Implementation and Uses of Economic Capital ... - ERM Symposium
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$BN<br />
25.0<br />
20.0<br />
15.0<br />
10.0<br />
5.0<br />
0.0<br />
AIG Disclosures (3 <strong>of</strong> 3)<br />
Change in Conservative Estimate <strong>of</strong> Excess <strong>Capital</strong><br />
Estimate <strong>of</strong> Excess <strong>Economic</strong><br />
<strong>Capital</strong> (incl. Hybrid) September<br />
30, 2007<br />
September 30, 2007 to December 31, 2007<br />
16.0 to 21.0 (0.9) (0.6) 14.5 to 19.5<br />
High<br />
Low<br />
Estimated Change in Available<br />
<strong>Economic</strong> <strong>Capital</strong> Q4'2007<br />
Estimated Change in Required<br />
<strong>Economic</strong> <strong>Capital</strong> Q4' 2007<br />
Estimate <strong>of</strong> Excess <strong>Economic</strong><br />
<strong>Capital</strong> (incl. Hybrid) December<br />
31, 2007<br />
• Estimated<br />
Available<br />
<strong>Economic</strong> <strong>Capital</strong><br />
was reduced by<br />
$0.9 billion in<br />
Q4’07, driven by<br />
Net Income, Share<br />
Repurchases <strong>and</strong><br />
OCI Unrealized<br />
Losses<br />
• Estimated<br />
Required<br />
<strong>Economic</strong> <strong>Capital</strong><br />
increased<br />
marginally by $0.6<br />
billion in Q4’07<br />
AIG’s conservative estimate <strong>of</strong> excess capital has reduced slightly by $1.5 billion over Q4’07 to a range <strong>of</strong><br />
$14.5 to $19.5 billion as at December 31, 2007 1 . This estimate is based on a roll-forward <strong>of</strong> the September 30,<br />
2007 disclosure <strong>and</strong> will be “refreshed” consequent to the full model valuation update at December 31, 2007 2 .<br />
1. Before allowance for an additional $1 billion that was required to be advanced in January 2008 for share repurchases pursuant to commitments that existed at December 31, 2007.<br />
2. The full model valuation update will use the published results <strong>of</strong> <strong>of</strong><br />
AIG as at December 31, 2007, as inputs <strong>and</strong> is therefore expected expected<br />
to be available in May 2008.<br />
Source: AIG Investor Relations Website, February 2008<br />
High<br />
Low<br />
22 22
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