AIG - Board of Directors

  • AIG - Board of Directors Minutes
    • 2008 0312 - AIG Board of Directors Minutes - 53p
    • 2008 0505 - AIG Board of Directors Minutes - 3p
    • 2008 0506 - AIG Board of Directors Minutes - 4p
    • 2008 0508 - AIG Board of Directors Minutes - 26p
    • 2008 0514 - AIG Board of Directors Minutes - 27p 
    • 2008 0615 - AIG Board of Directors Minutes - 5p
    • 2008 0630 - AIG Board of Directors Minutes - 6p
    • 2008 0716 - AIG Board of Directors Minutes - 11p
    • 2008 0905 - AIG Board of Directors Minutes - 5p
    • 2008 0916 - AIG Board of Directors Minutes - 24p 

2008 0514 - AIG Board of Directors Minutes - 27p 

  • (p13) - Mr. Bensinger reported that Moody's and AM. Best have not yet announced their conclusions on possible ratings actions, and there is some concern with the statutory capital of the insurance company subsidiaries.
    • He said that it is likely that AIG will need to inject capital into these companies.
  • (p22) - Mr. Offit next presented the recommendation of the Finance Committee that the Board approve a commitment by AIG to deposit into the domestic securities lending pool such amounts as are necessary to make whole the pool (for the benefit of the insurance company and other subsidiaries who participate in the pool as lenders) for losses realized by the pool in connection with sales of the collateral from the pool to insurance subsidiaries and third parties.   <GSL Pools>
  • (p23) - Mr. Offit next presented the recommendation of the Finance Committee that the Board approve the disposition of AIG's 59 percent ownership interest in Transatlantic Holdings, Inc. through a tax-free split off transaction.
    • He explained that the Finance Committee had reviewed the transaction and agreed that the proposed structure was an efficient way of disposing of the assets.

2008 0615 - AIG Board of Directors Minutes - 5p

  • The Chairman explained that the purpose of the meeting was to consider the continuing employment of Martin J. Sullivan as President and Chief Executive Officer of the Corporation.
  • The Board also determined that, in light of the separation of the roles, it would appoint a lead independent director.
  • After a discussion, the Board unanimously appointed Mr. Bollenbach to that role.

2008 0630 - AIG Board of Directors Minutes - 6p

  • Mr. Willumstad said that the purpose of the meeting was to review the proposed severance agreement and arrangements in connection with Mr. Sullivan's termination, as well as to discuss compensation arrangements for the Chief Executive Officer.
  • Mr. Orr added that Mr. Sullivan would be provided with office space and an assistant until December 31, 2008.
  • A brief discussion followed on an appropriate public relations strategy for dealing with the publicity expected to result from the disclosure of Mr. Sullivan's termination arrangements. Management agreed to discuss an appropriate strategy with outside consultants and keep the Board advised of developments.

2008 0716 - AIG Board of Directors Minutes - 11p

  • (p3) - Mr. Willumstad advised the Board that the early snapshot of the second quarter focused on liquidity issues, potential asset sales and transactions and expense reduction.
  • (p4) - With respect to estimated results, Mr. Bensinger reported that credit markets declined sharply again in late June into July, irrespective of quality, so that the AIGFP valuation adjustment caused an overall operating loss. He added that partnership income showed a very noticeable decline, United Guaranty operating losses increased significantly, prior year development of loss reserves is adverse, largely for 2002 and prior years, and the general deterioration in pricing both domestically and overseas in general insurance is becoming more acute.
  • (p4) - Mr. Bensinger next provided an overview of securities lending activities, emphasizing key points: the change in the market with collateral received declining from·102 percent and the differential between the market value of assets in the securities lending pool and the settlement value of the liability is widening. He reviewed the borrowers using the program, and indicated that they continue to rol'I their positions. In response to inquiries from Board members, Mr. Bensinger explained the way in which the program works, liquidity issues with the program and the difficulties with exiting the business. He added that if overall market conditions become reflective of the move to provide less than 102 percent collateral pushed by certain of AlG's counterparties, the program may need to change accordingly.
  • (p5) - Mr. Gender detailed the use to date of the proceeds from the capital raising activities. He said that $12.3 billion remained at the parent level at that date with $3.4 billion having previously been provided to AlG Financial Products Corp. and an additional $1.3 billion to be funded that day. Mr. Gender advised the Board that Treasury forecasts cash flows on an ongoing basis, and the additional need that day resulted from Fidelity not rolling a $1 billion note. He explained that AIGFP's liquidity risks stem from its debt obligations and the obligations to post collateral arising in connection with pricing declines in the credit default swaps and rating downgrades in connection with the guaranteed investment agreements. In response to a Director inquiry, Mr. Gender said that AIGFP negotiates with every counterparty on valuation and the proper amount of collateral.
  • (p5) - Mr. Gender outlined AIG's most significant areas of significant liquidity risk: commercial paper programs, AIGFP, global securities lending and ALICO money market products.
    • He said that AIG's commercial paper programs are all active, with no problems to date, although the market is much more tentative and it is harder to issue on a longer term basis.
    • With respect to securities lending, Mr. Gender said that the assets of the insurance companies are available to provide cash to repay Counterparties.
    • He added that the ALICO money market deposits had historically been run with a significant mismatch in duration, but currently 50 percent of the assets backing the deposits would be liquid within 90 days, and ALICO has the ability, if necessary, to freeze withdrawals if a run were to start.
    •  In response to a Director inquiry, Mr. Gender stated that AIGFP presents the greatest risk, because it is very difficult to predict collateral calls and the market effect of a downgrade in AIG's ratings.
  • (p6) - Mr. Schreiber next described:
    • a project known internally as Project Metropolis, which is intended to address AIGFP credit and liquidity issues. He explained that a third party would guarantee certain obligations of AIGFP, so AIGFP would effectively be renting that party's credit ratings.
    • A discussion followed on the potential benefits of membership in the Federal Home loan Bank system by the insurance company subsidiaries, 
    • and the capacity and willingness of third party banks to facilitate access to the Federal Reserve Bank window.
  • (p6) - Mr. Schreiber also described types of transactions under consideration to enhance AIG's capital and liquidity positions,
    • such as reinsurance and structured transactions, tracking stocks for various operations, private placements to important financial partners around the world, and new types of securitrzations.
  • (p11) - Mr. Willumstad updated the Board on plans for the strategic planning session to be held on September 16th and 17th in the Boardroom at 175 Water Street. He said thata full review of AIG operations is planned, bringing in the senior team to gain an understanding of AIG's strategic position in its various businesses, and the presentations will be fairly detailed and numbers driven.

2008 0905 - AIG Board of Directors Minutes - <All of it> - 5p

  • (p2) - Mr. Willumstad ... said that the markets have not been kind and the Corporation's residential mortgage backed securities portfolio <Securities Lending> and credit default swap portfolio have continued to deteriorate
    • . Mr. Willumstad described the liquidity and capital issues facing the organization...
  • good bank/bad bank structure
  • A discussion followed on the magnitude of the necessary capital raise, and the Corporation's ability to raise enough capital to reduce its exposure in AIGFP or investments. <Securities Lending>

2008 0916 - AIG Board of Directors Minutes - <All of it> - 24p 

  • (p2-3) - Mr. Willumstad next brought the Board up to date on recent collateral calls and reported that:
    • ...the Corporation's guaranteed commercial paper did not roll.
    • ...the securities lending program was also having trouble rolling the borrowings
    • ...and that there had also been strong redemption demand in the United Kingdom on a money market fund product.
  • (p3) - Mr. Willumstad also indicated that he expected downgrades by the major rating agencies later in the day. 
  • (p3) - In response to a director inquiry, Mr. Willumstad said that the statement of support made by the New York Governor was mostly political, but the New York regulators had been helpful in allowing securities to be moved up to the holding company to improve liquidity.
  • (p8) - David Herzog, AIG Senior Vice President and Comptroller, then joined the meeting.
    • Mr. Herzog explained AIG's immediate liquidity needs.
    • He stated that AIG had used $10 billion to $11 billion through the securities lending program and was still approximately $4.5 billion short in that program.
    • Mr. Herzog explained that the securities lending program resides in the operating insurance companies, which are state regulated. 
    • The regulators made clear that if AIG made use of insurance company assets to pay the securities lending liabilities without the permission of the regulators, the regulators would seize the insurance companies.
    • Mr. Herzog then explained that because AIG did not have sufficient funds to pay the liabilities that would come due tomorrow, if AIG does not obtain a loan to provide funds for the next day, the securities lending program will go into default.
    • Because the securities lending liabilities reside at the individual insurance company level, that would cause the insurance companies to be in default and the regulators would likely seize the insurance companies. 
  • (p9) - Mr. Bensinger added that the New York Department of Insurance stated that it would seize the New York insurance companies if AIG went into bankruptcy.
    • Mr. Herzog agreed and stated that, based on his discussions, other insurance commissioners would likely do the same.
  • (p10) - Mr. Herzog then explained that the cash needs for securities lending - which are in the regulated insurance companies and therefore not eliminated in a bankruptcy filing - for the remainder of the week were significant, and reviewed with the Board estimates of the amounts that would be required.