Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events

Subsequent Events

16. Subsequent Events

October 2011 Syndicated Credit and Contingent Liquidity Facilities

    On October 12, 2011, the previously outstanding AIG 364-Day Syndicated Facility, AIG 3-Year Syndicated Facility and Chartis letter of credit facility were terminated upon AIG entering into a $1.5 billion 364-Day Syndicated Facility and a $3.0 billion 4-Year Syndicated Facility. The new 4-Year Syndicated Facility provides for $1.5 billion of revolving loans and includes a $1.5 billion letter of credit sublimit. The $1.3 billion of previously issued letters of credit under the Chartis letter of credit facility were rolled into the letter of credit sublimit within the 4-Year Syndicated Facility, so that a total of $1.7 billion remains available under this facility, of which $0.2 billion is available for letters of credit. AIG expects that it may draw down on these facilities from time to time, and may use the proceeds for general corporate purposes.

    In October 2011, AIG entered into an additional contingent liquidity facility. Under this facility, AIG has the right, for a period of one year, to enter into put option agreements, with an aggregate notional amount of up to $500 million, with an unaffiliated international financial institution pursuant to which AIG has the right, for a period of five years, to issue up to $500 million in senior debt to the financial institution, at AIG's discretion.

October 2011 Exchange Offer

    On October 24, 2011, AIG commenced an unregistered offer to exchange its new Dollar Notes due November 15, 2037 (the New Dollar Notes) for its outstanding Series A-1 and Series A-6 Junior Subordinated Debentures, its new Euro Notes due November 15, 2017 (the New Euro Notes) for its outstanding Series A-3 Junior Subordinated Debentures and its new Sterling Notes due November 15, 2017 (the New Sterling Notes) for its outstanding Series A-2 and Series A-8 Junior Subordinated Debentures. The interest rates of the New Dollar Notes, New Euro Notes and New Sterling Notes have not been established, but will not exceed 7.35 percent, 7.35 percent and 7.25 percent per annum, respectively. The maximum aggregate principal amount of those junior subordinated debentures to be accepted in the exchange offer (converted, in the case of junior subordinated debentures denominated in Euro or Pounds Sterling, into Dollars at exchange rates of €1=$1.4319 and £1=$1.6510) is $2.5 billion, which maximum AIG reserves the right to increase, subject to applicable law. The offer has an early participation date of November 8, 2011 and an expiration date of November 22, 2011, unless extended by AIG. The early settlement date is expected to be November 15, 2011, and the final settlement date is expected to be November 23, 2011. The exchange offer is subject to certain conditions and AIG has reserved the right, subject to applicable law, to amend the terms of the exchange offer (including by increasing the maximum amount to be accepted) or to terminate the exchange offer. No assurance can be given that the exchange offer will be completed or, if completed, what the final terms of the exchange offer would be. The new notes to be issued in the exchange offer will be senior unsecured obligations of AIG.

ALICO Escrow Release

    On November 1, 2011, in accordance with the MetLife escrow agreement from the sale of ALICO, approximately $918 million was released to AIG. These proceeds were applied to pay down a portion of the liquidation preference of the Department of the Treasury's AIA SPV Preferred Interests. See Note 11 herein.

SAFG Litigation Settlement Proceeds

    In two separate agreements, SAFG Retirement Services, Inc., formerly known as AIG Retirement Services, Inc. (SAFG) has agreed to resolve all its remaining claims in the matter titled AIG Retirement Services, Inc. v. Altus Finance S.A. et al, pending in the Central District Court of California. In this lawsuit SAFG sought damages in connection with an acquisition in 1993 of 33 percent of the stock of New California Life Holdings, Inc. (NCLH), which owns the stock of Aurora National Life Insurance Company. SAFG alleged that the defendants wrongfully prevented it from acquiring all the stock of NCLH. Pursuant to the agreements, SAFG will record $213 million of income upon receipt of the settlement in the fourth quarter of 2011.

Common Stock Repurchase Authorization

    On November 3, 2011, the AIG Board of Directors authorized the repurchase of shares of AIG Common Stock with an aggregate purchase price of up to $1 billion from time to time in the open market, through derivative or automatic purchase contracts or otherwise. The timing of such purchases will depend on market conditions, AIG's financial condition, results of operations, liquidity and other factors.