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ITEM 8 / NOTE 16. CONTINGENCIES, COMMITMENTS AND GUARANTEES.....................................................................................................................................................................................1990 interest rate swap agreement between Brookfield and AIGFP (guaranteed by AIG) terminated upon theoccurrence of certain alleged events that Brookfield contends constituted defaults under the swap agreement’sstandard ‘‘bankruptcy’’ default provision. Brookfield claims that it is excused from all future payment obligations underthe swap agreement on the basis of the purported termination. At December 31, 2012, the estimated present valueof expected future cash flows discounted at LIBOR was $1.5 billion, which represents our maximum contractual lossfrom the alleged termination of the contract. It is our position that no termination event has occurred and that theswap agreement remains in effect. A determination that a termination event has occurred could result in a loss of ourentitlement to all future payments under the swap agreement and result in a loss to us of the full value at which weare carrying the swap agreement.Additionally, a determination that AIG triggered a ‘‘bankruptcy’’ event of default under the swap agreement couldalso, depending on the Court’s precise holding, affect other AIG or AIGFP agreements that contain the same orsimilar default provisions. Such a determination could also affect derivative agreements or other contracts betweenthird parties, such as credit default swaps under which AIG is a reference credit, which could affect the trading priceof AIG securities. During the third quarter of 2011, beneficiaries of certain previously repaid AIGFP guaranteedinvestment agreements brought an action against AIG Parent and AIGFP making ‘‘bankruptcy’’ event of defaultallegations similar to those made by Brookfield. The Court subsequently issued a decision dismissing that action,which is currently on appeal.Employment Litigation against AIG and AIG Global Real Estate Investment Corporation...............................................................................................................................................................................................Fitzpatrick matter. On December 9, 2009, AIG Global Real Estate Investment Corporation’s (AIGGRE) formerPresident, Kevin P. Fitzpatrick, several entities he controls, and various other single purpose entities (the SPEs) fileda complaint in the Supreme Court of the State of New York, New York County against AIG and AIGGRE (theDefendants). The case was removed to the Southern District of New York, and an amended complaint was filed onMarch 8, 2010. The amended complaint asserts that the Defendants violated fiduciary duties to Fitzpatrick and hiscontrolled entities and breached Fitzpatrick’s employment agreement and agreements of SPEs that purportedlyentitled him to carried interest fees arising out of the sale or disposition of certain real estate. Fitzpatrick has alsobrought derivative claims on behalf of the SPEs, purporting to allege that the Defendants breached contractual andfiduciary duties in failing to fund the SPEs with various amounts allegedly due under the SPE agreements. Fitzpatrickhas also requested injunctive relief, an accounting, and that a receiver be appointed to manage the affairs of theSPEs. He has further alleged that the SPEs are subject to a constructive trust. Fitzpatrick also has alleged a violationof ERISA relating to retirement benefits purportedly due. Fitzpatrick has claimed that he is currently owed damagestotaling approximately $196 million, and that potential future amounts owed to him are approximately $78 million, fora total of approximately $274 million. Fitzpatrick further claims unspecified amounts of carried interest on certainadditional real estate assets of AIG and its affiliates. He also seeks punitive damages for the alleged breaches offiduciary duties. Defendants assert that Fitzpatrick has been paid all amounts currently due and owing pursuant tothe various agreements through which he seeks recovery. As set forth above, the possible range of our loss is $0 to$274 million, although Fitzpatrick claims that he is also entitled to additional unspecified amounts of carried interestand punitive damages.Behm matter. Frank Behm, former President of AIG Global Real Estate Asia Pacific, Inc. (AIGGREAP), has filedtwo actions in connection with the termination of his employment. Behm filed an action on or about October 1, 2010in Delaware Superior Court in which he asserts claims of breach of implied covenant of good faith and fair dealingfor termination in violation of public policy, deprivation of compensation, and breach of contract. Additionally, on orabout March 29, 2011, Behm filed an arbitration proceeding before the American Arbitration Association allegingwrongful termination, in which he sought the payment of carried interest or ‘‘promote’’ distributed through the SPEs,based on the sales of certain real estate assets. Behm also contended that he was entitled to promote as a thirdpartybeneficiary of Kevin Fitzpatrick’s employment agreement, which, Behm claimed, defined broadly a class ofindividuals, allegedly including himself, who, with the approval of our former Chief Investment Officer, became eligibleto receive promote payments. Behm claimed approximately $67 million in carried interest. Multiple AIG entities (theAIG Entities) are named as parties in each of the Behm matters. The AIG Entities have filed a counterclaim in theDelaware case, contending that Behm owes them approximately $3.6 million (before pre-judgment interest) in taxequalization payments made by the AIG Entities on Behm’s behalf...................................................................................................................................................................................................................................AIG 2012 Form 10-K 295