2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
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American International Group, Inc. and Subsidiaries<br />
Contractual Obligations<br />
Contractual obligations in total, and by remaining maturity at December 31, <strong>2007</strong> were as follows:<br />
Payments due by Period<br />
Total Less Than 1-3 3 + -5 Over Five<br />
(in millions) Payments One Year Years Years Years<br />
Borrowings (a) $ 156,014 $ 43,891 $ 32,261 $26,032 $ 53,830<br />
Interest payments on borrowings 83,551 5,326 8,899 7,073 62,253<br />
Loss reserves (b) 85,500 23,513 26,078 12,397 23,512<br />
Insurance and investment contract liabilities (c) 645,583 32,359 42,768 42,282 528,174<br />
GIC liabilities (d) 29,797 9,266 8,052 3,458 9,021<br />
Aircraft purchase <strong>com</strong>mitments 20,104 4,174 3,852 2,095 9,983<br />
Operating leases 4,426 747 1,041 693 1,945<br />
Other purchase obligations (e) 1,091 1,056 35 — —<br />
Total (f) $1,026,066 $120,332 $122,986 $94,030 $688,718<br />
(a) Excludes <strong>com</strong>mercial paper and borrowings incurred by consolidated investments and includes hybrid financial instrument liabilities recorded at fair value.<br />
(b) Represents future loss and loss adjustment expense payments estimated based on historical loss development payment patterns. Due to the<br />
significance of the assumptions used, the periodic amounts presented could be materially different from actual required payments.<br />
(c) Insurance and investment contract liabilities include various investment-type products with contractually scheduled maturities, including periodic payments<br />
of a term certain nature. Insurance and investment contract liabilities also include benefit and claim liabilities, of which a significant portion represents<br />
policies and contracts that do not have stated contractual maturity dates and may not result in any future payment obligations. For these policies and<br />
contracts (i) <strong>AIG</strong> is currently not making payments until the occurrence of an insurable event, such as death or disability, (ii) payments are conditional on<br />
survivorship, or (iii) payment may occur due to a surrender or other non-scheduled event out of <strong>AIG</strong>’s control. <strong>AIG</strong> has made significant assumptions to<br />
determine the estimated undiscounted cash flows of these contractual policy benefits, which assumptions include mortality, morbidity, future lapse rates,<br />
expenses, investment returns and interest crediting rates, offset by expected future deposits and premium on in-force policies. Due to the significance of<br />
the assumptions used, the periodic amounts presented could be materially different from actual required payments. The amounts presented in this table<br />
are undiscounted and therefore exceed the future policy benefits and policyholder contract deposits included in the balance sheet.<br />
(d) Represents guaranteed maturities under GICs.<br />
(e) Includes a $1.0 billion <strong>com</strong>mitment to purchase shares under <strong>AIG</strong>’s share repurchase program which was paid in January 2008 and options to acquire<br />
aircraft.<br />
(f) Does not reflect unrecognized tax benefits of $1.3 billion, the timing of which is uncertain. However, it is reasonably possible that $50 million to<br />
$150 million may be<strong>com</strong>e payable during 2008. See Note 21 to Consolidated Financial Statements for a discussion on unrecognized tax benefits.<br />
Off Balance Sheet Arrangements and Commercial Commitments<br />
Off Balance Sheet Arrangements and Commercial Commitments in total, and by remaining maturity at December 31,<br />
<strong>2007</strong> were as follows:<br />
Amount of Commitment Expiration<br />
Less<br />
Total Amounts Than 1-3 3 + -5 Over Five<br />
(in millions) Committed One Year Years Years Years<br />
Guarantees:<br />
Liquidity facilities (a) $ 2,495 $ 8 $ 8 $1,503 $ 976<br />
Standby letters of credit 1,713 1,485 42 38 148<br />
Construction guarantees (b) 687 — — — 687<br />
Guarantees of indebtedness 1,124 106 83 500 435<br />
All other guarantees 767 249 8 35 475<br />
Commitments:<br />
Investment <strong>com</strong>mitments (c) 9,071 3,527 3,604 1,684 256<br />
Commitments to extend credit 1,325 496 591 238 —<br />
Letters of credit 1,196 910 6 121 159<br />
Investment protection agreements (d) 11,991 3,088 2,094 855 5,954<br />
Maturity shortening puts (e) 2,333 1,234 1,099 — —<br />
Other <strong>com</strong>mercial <strong>com</strong>mitments 1,269 114 111 83 961<br />
Total (f) $33,971 $11,217 $7,646 $5,057 $10,051<br />
(a) Primarily liquidity facilities provided in connection with certain municipal swap transactions and collateralized bond obligations.<br />
(b) Primarily <strong>AIG</strong> SunAmerica construction guarantees connected to affordable housing investments.<br />
(c) Includes <strong>com</strong>mitments to invest in limited partnerships, private equity, hedge funds and mutual funds and <strong>com</strong>mitments to purchase and develop real<br />
estate in the United States and abroad.<br />
(d) Written generally with respect to investments in hedge funds and funds of hedge funds.<br />
(e) Represents obligations under 2a-7 Puts to purchase certain multi-sector CDOs at pre-determined contractual prices.<br />
(f) Excludes <strong>com</strong>mitments with respect to pension plans. The annual pension contribution for 2008 is expected to be approximately $118 million for U.S.<br />
and non-U.S. plans.<br />
<strong>AIG</strong> <strong>2007</strong> Form 10-K 95