10-KPeriod: FY2009

AMERICAN INTERNATIONAL GROUP, INC. Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:AIG

Summary

In the fiscal year ended December 31, 2009, American International Group, Inc. (AIG) continued its efforts to stabilize and restructure its operations following significant market turmoil. The company reported a net loss attributable to AIG of $10.9 billion, a substantial improvement from the $99.3 billion net loss in 2008, largely due to reduced other-than-temporary impairment charges and positive valuation adjustments in its Financial Services segment, although it still incurred significant interest expenses related to its Federal Reserve Bank of New York credit facility. AIG made progress in its asset disposition plan, selling several businesses and reducing its debt obligations under the FRBNY Credit Facility. The company's performance was heavily influenced by its ongoing restructuring and the significant financial support received from the U.S. government, with the U.S. Treasury effectively controlling the company through its equity stake. Key business segments, including General Insurance (Chartis) and its Life Insurance operations, showed signs of operational resilience, while the Financial Services segment, particularly AIG Financial Products (AIGFP), continued to wind down riskier portfolios. The report highlights the company's focus on stabilizing its core businesses, repaying government support, and managing liquidity amid ongoing market challenges and regulatory scrutiny.

Financial Highlights

28 data points
Beta

Revenue

$75.45B

Net Income

-$10.95B

-14.5% Net Margin

Total Assets

$847.59B

Cash & Equivalents

$4.40B

Free Cash Flow

$18.58B

Financial Statements
Beta
Revenue$75.45B
SG&A Expenses$6.82B
Operating Income-$10.95B
Interest Expense$14.36B
Net Income-$10.95B
Shares Outstanding (Basic)135.32M
Shares Outstanding (Diluted)135.32M

Key Highlights

  • 1AIG reported a net loss attributable to AIG of $10.9 billion for the year ended December 31, 2009, an improvement from the $99.3 billion net loss in 2008.
  • 2Total revenues significantly declined in 2009 to $96 billion from $103.6 billion in 2007 and a significantly lower $6.9 billion in 2008, largely impacted by asset dispositions and market volatility.
  • 3The company's restructuring efforts and asset disposals continued, including significant transactions with the Federal Reserve Bank of New York (FRBNY) to reduce its credit facility balance.
  • 4General Insurance (Chartis) improved its underwriting results year-over-year, though it remained in an underwriting loss position due to prior year reserve strengthening charges.
  • 5Financial Services segment, particularly AIG Financial Products (AIGFP), continued to unwind complex portfolios, with a substantial reduction in its super senior credit default swap portfolio notional amounts.
  • 6The company's ability to continue as a going concern was dependent on ongoing U.S. government support, a fact acknowledged by management.
  • 7Significant litigation and regulatory investigations remained ongoing, impacting operations and requiring substantial legal and compliance resources.

Frequently Asked Questions

AIG reported a net loss attributable to AIG of $10.9 billion for the year ended December 31, 2009. This was an improvement compared to the significant net loss of $99.3 billion reported in 2008. The improvement was largely driven by a reduction in other-than-temporary impairments on investments and positive valuation adjustments in its Financial Services segment, partially offset by substantial interest expenses related to the Federal Reserve Bank of New York credit facility and continued restructuring costs.

AIG received substantial financial support from the Federal Reserve Bank of New York and the U.S. Department of the Treasury, which effectively placed the company under government control. This support included a significant credit facility, and the U.S. Treasury held a controlling equity stake. Management acknowledged that AIG's ability to continue as a going concern was dependent on this ongoing support, and the company's strategic decisions, such as asset dispositions and dividend payments, were subject to government approval and influenced by the need to repay taxpayer funds.

AIG's operations are reported in four segments: General Insurance (rebranded as Chartis), Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services. General Insurance showed operational resilience despite prior year reserve strengthening. Domestic and Foreign Life Insurance & Retirement Services experienced impacts from market conditions and AIG-specific publicity, affecting sales. The Financial Services segment, particularly AIG Financial Products (AIGFP), was actively winding down its complex derivative portfolios. Other operations included results from non-core businesses and corporate functions.

AIG faced significant risks including the execution of its restructuring and asset disposition plans, liquidity constraints due to restrictions on accessing funds from subsidiaries, adverse credit and financial strength ratings, potential collateral calls on derivative transactions, and reputational harm from intense public scrutiny. The company also managed substantial legal proceedings and regulatory investigations across its various operations.