2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
Management’s Discussion and Analysis of
Financial Condition and Results of Operations Continued
At December 31, 2007 and 2006, AIG’s net borrowings amounted to $20.3 billion and $15.4 billion, respectively, as
follows:
(in millions) 2007 2006
AIG’s total borrowings $176,049 $148,679
Less:
Junior subordinated debt 5,809 —
Liabilities connected to trust preferred stock 1,435 1,440
MIP matched notes and bonds payable 14,267 5,468
Series AIGFP matched notes and bonds payable 874 72
AIGFP
GIAs 19,908 20,664
Notes and bonds payable 36,676 37,528
Loans and mortgages payable 1,384 —
Hybrid financial instrument liabilities* 7,479 8,856
Borrowings not guaranteed by AIG 67,881 59,277
AIG’s net borrowings $ 20,336 $ 15,374
* Represents structured notes issued by AIGFP that are accounted for at fair value.
A roll forward of long-term borrowings, excluding borrowings of consolidated investments, for the year ended
December 31, 2007 is as follows:
Balance at Maturities Effect of Balance at
December 31, and Foreign Other December 31,
(in millions) 2006 Issuances Repayments Exchange Changes 2007
AIG
Notes and bonds payable $ 8,915 $ 5,591 $ (165) $ 122 $ 125 $ 14,588
Junior subordinated debt — 5,590 — 218 1 5,809
Loans and mortgages payable 841 600 (724) 12 — 729
MIP matched notes and bonds payable 5,468 8,092 — (4) 711 14,267
Series AIGFP matched notes and bonds payable 72 810 (10) — 2 874
AIGFP
GIAs 20,664 8,830 (10,172) 43 543 19,908
Notes and bonds payable and hybrid financial
instrument liabilities 46,384 50,854 (53,540) 321 136 44,155
Loans and mortgages payable — 1,388 (9) 9 (4) 1,384
AIGLH notes and bonds payable 797 — — — — 797
Liabilities connected to trust preferred stock 1,440 — — — (5) 1,435
ILFC notes and bonds payable 25,592 3,783 (3,938) 295 5 25,737
ILFC junior subordinated debt 999 — — — — 999
AGF notes and bonds payable 19,261 7,481 (4,824) 255 196 22,369
AGF junior subordinated debt — 349 — — — 349
AIGCFG loans and mortgages payable 1,453 3,941 (3,647) 98 (6) 1,839
Other subsidiaries 672 189 (189) 3 100 775
Total $132,558 $97,498 $(77,218) $1,372 $1,804 $156,014
AIG (Parent Company)
AIG intends to continue its customary practice of issuing debt
securities from time to time to meet its financing needs and those
of certain of its subsidiaries for general corporate purposes, as
well as for the MIP. As of December 31, 2007, AIG had up to
$17.5 billion of debt securities, preferred stock and other
securities, and up to $12.0 billion of common stock, registered
and available for issuance under its universal shelf registration
statement.
AIG maintains a medium-term note program under its shelf
registration statement. As of December 31, 2007, approximately
$7.3 billion principal amount of senior notes were outstanding
under the medium-term note program, of which $3.2 billion was
used for AIG’s general corporate purposes, $873 million was used
by AIGFP (referred to as ‘‘Series AIGFP’’ in the preceding tables)
and $3.2 billion was used to fund the MIP. The maturity dates of
these notes range from 2008 to 2052. To the extent deemed
appropriate, AIG may enter into swap transactions to manage its
effective borrowing rates with respect to these notes.
AIG also maintains a Euro medium-term note program under
which an aggregate nominal amount of up to $20.0 billion of
senior notes may be outstanding at any one time. As of
December 31, 2007, the equivalent of $12.7 billion of notes were
outstanding under the program, of which $9.8 billion were used to
fund the MIP and the remainder was used for AIG’s general
90 AIG 2007 Form 10-K