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ITEM 7 / LIQUIDITY AND CAPITAL RESOURCES.....................................................................................................................................................................................The actual amount of collateral that we would be required to post to counterparties in the event of such downgrades,or the aggregate amount of payments that we could be required to make, depend on market conditions, the fairvalue of outstanding affected transactions and other factors prevailing at the time of the downgrade.For a discussion of the effects of downgrades in the financial strength ratings of our insurance companies or ourcredit ratings, see Note 12 to the Consolidated Financial Statements and Part I, Item 1A. Risk Factors.Regulation and Supervision..............................................................................................................................................................................................We are currently regulated by the Board of Governors of the Federal Reserve System (FRB) and subject to itsexamination, supervision and enforcement authority and reporting requirements as a savings and loan holdingcompany (SLHC). In addition, under Dodd-Frank we may separately become subject to the examination, enforcementand supervisory authority of the FRB. In October 2012, we received a notice that we are under consideration by theFinancial Stability Oversight Council created by Dodd-Frank for a proposed determination that we are a systemicallyimportant financial institution (SIFI). Changes mandated by Dodd-Frank include directing the FRB to promulgateminimum capital requirements for both SLHCs and SIFIs. See Item 1. Business – Regulation and Item 1A. RiskFactors – Regulation for further information.Our insurance subsidiaries are subject to regulation and supervision by the states and jurisdictions in which they dobusiness. In the United States, the NAIC has developed RBC Model Law requirements. The RBC formula isdesigned to measure the adequacy of an insurer’s statutory surplus in relation to the risks inherent in its business.The statutory surplus of each of our U.S.-based life and property and casualty insurance subsidiaries exceededminimum required RBC levels as of December 31, 2012. Our foreign insurance operations are individually subject tolocal solvency margin requirements that require maintenance of adequate capitalization. We comply with theserequirements in each country.To the extent that any of our insurance entities were to fall below prescribed levels of statutory surplus, it would beour intention to provide appropriate capital or other types of support to that entity, under formal support agreements,CMAs or otherwise. For additional details regarding CMAs that we have entered into with our insurance subsidiaries,see Liquidity and Capital Resources of AIG Parent and Subsidiaries – AIG Property Casualty and Liquidity andCapital Resources of AIG Parent and Subsidiaries – AIG Life and Retirement.Dividend Restrictions..............................................................................................................................................................................................Payment of future dividends to our shareholders depends in part on the regulatory framework that will ultimately beapplicable to us, including our status as an SLHC under Dodd-Frank and whether we are determined to be a SIFI.See Note 17 to the Consolidated Financial Statements for additional discussion of potential restrictions on dividendpayments to common shareholders.Dividend payments to AIG Parent by our insurance subsidiaries are subject to certain restrictions imposed byregulatory authorities. With respect to our domestic insurance subsidiaries, the payment of any dividend requiresformal notice to the insurance department in which the particular insurance subsidiary is domiciled. Foreignjurisdictions may restrict the ability of our foreign insurance subsidiaries to pay dividends, which may also haveunfavorable income tax consequences. There are also various local restrictions limiting cash loans and advances toAIG Parent by our subsidiaries. See Note 20 to the Consolidated Financial Statements for additional discussion ofrestrictions on payments of dividends by AIG and its subsidiaries...................................................................................................................................................................................................................................AIG 2012 Form 10-K 137