01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- AIG 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.
- Total 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.
- The 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.
- General Insurance (Chartis) improved its underwriting results year-over-year, though it remained in an underwriting loss position due to prior year reserve strengthening charges.
- Financial 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.
- The company's ability to continue as a going concern was dependent on ongoing U.S. government support, a fact acknowledged by management.
- Significant litigation and regulatory investigations remained ongoing, impacting operations and requiring substantial legal and compliance resources.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $75.45B-$6.84B | +1203.0% |
| SG&A Expenses | $6.82B$20.83B | −67.3% |
| Operating Income | -$10.95B— | — |
| Interest Expense | $14.36B$15.71B | −8.6% |
| Net Income | -$10.95B-$99.29B | +89.0% |
| Shares Outstanding (Basic) | 135.32M131.71M | +2.7% |
| Shares Outstanding (Diluted) | 135.32M131.71M | +2.7% |
05—Questions
Frequently Asked Questions
What was AIG's overall financial performance in 2009?
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.
How is AIG's relationship with the U.S. government impacting its operations?
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.
What were the key segments and their performance in 2009?
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.
What significant risk factors did AIG face in 2009?
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.
06—Continue