AIG - GICS - Guaranteed Investment Contracts

2006 1117 - MarketWatch.com - AIG and Genworth subpoenaed by DOJ, SEC: Regulators probe big-rigging in guaranteed investment contracts, By Alistair Barr - [link]

  • AIG used to sell GICs through its SunAmerica unit.
  • But the company has replaced that with a new, so-called matched investment program run by the parent company AIG.
  • 2006 1118 - WSJ - GIC Issuers Receive Subpoenas - [link]
  • 436 For AIGFP, a guaranteed investment agreement (GIA) is the same as a guaranteed investment contract (GIC) (the terms are used interchangeably). Panel staff conversation with AIG (May 27, 2010).  (p114)

2010 0610 - COP - Report - The AIG Rescue, Its Impact on Markets, and the Government’s Exit Strategy - 337p

  • (p205) - GICs and GIAs are entered into by AIG’s insurance subsidiaries, principally SunAmerica Life Insurance Company and AIG Financial Products Corp. and its subsidiaries, respectively.

2009 0620 - AIG 10-Q - 209p

Rating triggers:
GICs are issued out of AlG-Financial Products (AlG-FP), insured by the holding company.

  • downgrade by 1 rating agency leads to $10B in collateral calls, plus an additional $4B-$5B in portfolio obligations that are puttable if downgraded (total of $15B in liquidity needs)
  • downgrade by 2 rating agencies - additional $3B in liquidity needs.
  • If downgraded, they must post half of the additional collateral within 2 days, and the other half in 10 days.

2008 0912 - FRBNY / AIG Meeting Notes - 2p

Patricia Mosser – New York Federal Reserve

    • *He also noted negative consequences in insurance markets in general if AIG goes down (ie cost of insurance is likely be much higher if they file) and negative consequences in muni bond market if GICs default so regulatory forbearance can be justified politically.

2008 0913 - Financial Crisis Inquiry Commission (FCIC) - FRBNY Email Mahoney and Mosser re AIG Update - SB-AIG-35651

    • *Eric Dinallo - New York State Superintendent of Insurance - January 2007 through July 2009

(p4) - Mr. Schreiber provided an overview of the Project Metropolis structure, which addresses liquidity demands related to AIGFP's municipal guaranteed investment agreement portfolio on a downgrade.

  • He explained that the structure effectively gave AIGFP the ability to put its obligations to post collateral under the municipal guaranteed investment agreements to a Berkshire Hathaway subsidiary, and to pay a premium for the service provided in the form of an illiquid asset, life settlement policies.

2008 0905 - AIG Board of Directors Minutes 9/5/2008 - 5p

  • 2008 0912 - FRB (From: Hayley Boesky/NY/FRS) - Subject AIG panic - FCIC-SSI0000710 - FRBNYAIG00511 - 1p
    • More panic from HFs.
    • Now focus is on AIG.
    • I am hearing worse than LEH.
    • Every bank and dealer has exposure to them.
    • People I heard from worry they can't roll over their funding.
    • Were big writers of GIC and negative basis buyers.
    • Estimate I hear is 2 trillion balance sheet.