2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements Continued
13. Preferred Shareholders’ Equity in Subsidiary 14. Shareholders’ Equity and Earnings Per
Companies
Share
At December 31, 2007, preferred shareholders’ equity in subsidi- Shareholders’ Equity
ary companies represents preferred stocks issued by ILFC, a
wholly owned subsidiary of AIG.
At December 31, 2007, the preferred stock consists of
1,000 shares of market auction preferred stock (MAPS) in two
series (Series A and B) of 500 shares each. Each of the MAPS
shares has a liquidation value of $100,000 per share and is not
convertible. The dividend rate, other than the initial rate, for each
dividend period for each series is reset approximately every seven
weeks (49 days) on the basis of orders placed in an auction.
During 2006, ILFC extended each of the MAPS dividend periods
for three years. At December 31, 2007, the dividend rate for
Series A MAPS was 4.70 percent and the dividend rate for
Series B MAPS was 5.59 percent.
AIG parent depends on its subsidiaries for cash flow in the form
of loans, advances, reimbursement for shared expenses, and
dividends. AIG’s insurance subsidiaries are subject to regulatory
restrictions on the amount of dividends that can be remitted to
AIG parent. These restrictions vary by jurisdiction. For example,
unless permitted by the New York Superintendent of Insurance,
general insurance companies domiciled in New York may not pay
dividends to shareholders that, in any twelve-month period, exceed
the lesser of ten percent of such company’s statutory policyholders’
surplus or 100 percent of its ‘‘adjusted net investment
income,’’ as defined. Generally, less severe restrictions applicable
to both general and life insurance companies exist in most of the
other states in which AIG’s insurance subsidiaries are domiciled.
Certain foreign jurisdictions have restrictions that could delay or
limit the remittance of dividends. There are also various local
restrictions limiting cash loans and advances to AIG by its
subsidiaries. Largely as a result of these restrictions, approximately
81 percent of the aggregate equity of AIG’s consolidated
subsidiaries was restricted from immediate transfer to AIG parent
at December 31, 2007.
Dividends declared per common share were $0.77, $0.65, and
$0.63 in 2007, 2006, and 2005, respectively.
During 2007 and 2005, AIG repurchased 76 million and
2 million shares of its common stock, respectively, at a total cost
of $5.1 billion and $165 million, respectively. The average price
paid per share for repurchased shares was $66.84 and $66.46 in
2007 and 2005, respectively. During 2006, AIG did not purchase
any shares of its common stock under its existing share
repurchase authorization.
At December 31, 2007, there were 6,000,000 shares of AIG’s
$5 par value serial preferred stock authorized, issuable in series,
none of which were outstanding.
180 AIG 2007 Form 10-K