2008 0630 - AIG - 10Q
(p111) - Securities Lending Activities
- AIG’s securities lending program is a centrally managed program by AIG Investments for the benefit of certain of AIG’s insurance companies and the Asset Management segment.
- Securities are loaned to various financial institutions, primarily major banks and brokerage firms.
- Cash collateral generally ranging from 100 to 102 percent of the fair value of the loaned securities is received and is invested in fixed maturity securities to earn a net spread.
- To the extent that the collateral received is less than 102 percent, AIG has agreed with its insurance companies to deposit funds to the collateral pool for the benefit of the insurance company participants.
- AIG’s liability to the borrower for collateral received was $75.1 billion and the fair value of the collateral reinvested was $59.5 billion as of June 30, 2008.
- ⇒ In addition to the invested collateral, the securities on loan as well as all of the assets of the lending companies are generally available to satisfy the liability for collateral received.
- The composition of the securities lending invested collateral by credit rating at June 30, 2008 was as follows:
- At June 30, 2008, AIG had total consolidated shareholders’ equity of $78.1 billion and total consolidated borrowings of $178.6 billion.
- At that date, $68.6 billion of such borrowings were subsidiary borrowings not guaranteed by AIG.
- In May 2008, AIG raised a total of approximately $20 billion through the sale of: (i) 196,710,525 shares of AIG common stock at a price per share of $38, for an aggregate amount of $7.47 billion;(ii) 78.4 million equity units at a price per unit of $75, for an aggregate amount of $5.88 billion; and (iii) $6.9 billion of junior subordinated debentures in three series.
- The equity units and junior subordinated debentures receive hybrid equity treatment from the major rating agencies under their current policies.
- From time to time, AIG Global Asset Management Holdings Corp. and its subsidiaries and affiliated companies (collectively, AIG Investments)
- AIG’s General Insurance operations provide property and casualty products and services throughout the world.
- AIG’s Life Insurance & Retirement Services operations provide insurance, financial and investment-oriented products throughout the world.