SEC Comment Letter for AMERICAN INTERNATIONAL GROUP, (AIG) — Jun 23, 2008
AMERICAN INTERNATIONAL GROUP, INC.
Date: June 23, 2008 · CIK: 0000005272 · Accession: 0000000000-08-030919
AI Filing Summary & Sentiment
Letter
Mail Stop 6010 Via Facsimile and U.S. Mail April 29, 2008 Mr. Martin J. Sullivan President and Chief Executive Officer American Internati onal Group, Inc. 70 Pine Street New York, New York 10270
Re: American International Group, Inc. Form 10-K for fiscal year ended December 31, 2007 File No. 1-8787
Dear Mr. Sullivan:
We have reviewed your filing and have the following comments. We have limited our review to your financial statements a nd related disclosures and do not intend to expand our review to other portions of your document. In our comments, we ask you to provide us with information to better unders tand your disclosure. Where it requests you to revise disclosure, the information you provide should show us what the revised disclosure will look like and identify the a nnual or quarterly fili ng, as applicable, in which you intend to first include it. If you do not believe th at revised disclosure is necessary, explain the reason in your response. After reviewing the information provided, we may raise additional comments and/or request that you amend your filing.
Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Capital Resources and Liquidity
Contractual Obligations, page 95
1. Please revise your table of contractual obligations to include estimated payment obligations associated with the underl ying guarantees arising from your credit default swap activities.
Mr. Martin J. Sullivan American Interna tional Group, Inc. April 29, 2008 Page 2 Credit Derivatives, page 121
2. In 2007, you recognized an $11.5 billion unrealiz ed market valuation loss related primarily to the multi-sector CDO component of your super senior credit default swap portfolio. You state that a modified version of the BET model was used to value the super senior credit default swaps, and that th is model utilizes diversity scores, weighted average lives, recovery rates and discount rates, and that the most significant assumption is the prici ng of the securities within the CDO collateral pools. You provide a sensitivity analysis with respect to the pricing of the securities within the CDO collateral poo ls, but not with respect to the other significant assumptions. Please expand your disclosure to pr ovide sensitivity analysis that includes quan tification of the impact on fair value of reasonably likely changes for each of the other key identified assumptions. Also, please revise to provide a discussion of the st rengths and weaknesse s of your modified BET model. 3. You disclose on page 124 that you believe th at any realized losses relating to the super senior credit default swap oblig ations will not be material to your consolidated financial co ndition, but could be materi al to your results of operations for any individual reporting pe riod. Please revise your disclosure to clarify the context of this statement in relation to the $11.5 billion loss recorded during the quarter ended December 31, 2007. Clarify whether your disclosure indicates that incremental realized losses beyond the previously recorded $11.5 billion of unrealized losses may be incurre d, or should be interpreted to mean that when realized losses are incurred, all or a portion of the previously recorded unrealized losses will be reversed. Note 1 – Summary of Significant Accounting Policies, page 138
4. You disclose that various out-of-peri od adjustments were recorded during 2007 and 2006. Please tell us:
• the material information that you are intending to communicate to investors about these out-of-period adjustments; • what constitutes an out-of-period adjust ment both in terms of its nature and materiality; • why you recorded each adjustment in 2006 or 2007; and • whether there are any other out-of-pe riod adjustments recorded in your financial statements during the periods pr esented, and if so, why they are not included in this disclosure.
* * * *
Mr. Martin J. Sullivan American Interna tional Group, Inc. April 29, 2008 Page 3 Please respond to the comments within 10 business days or tell us when you will provide us with a response. Your letter should key your responses to our comments. Detailed cover letters greatly facilitate our review. Please furnish your letter on EDGAR under the form type label CORRESP.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our co mments, please provide, in your letter, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the filings; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the company may not assert staff comme nts as a defense in any proceeding initiated by the Commission or any person under the federal secu rities laws of the United States.
In addition, please be advi sed that the Division of En forcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
You may contact Frank Wyman, St aff Accountant, at 202-551-3660 or Carlton Tartar, Accounting Branch Chief, at 202-551- 3387, if you have questi ons regarding these comments. In this regard, do not he sitate to contact me, at 202-551-3679.
S i n c e r e l y ,
J i m B . R o s e n b e r g Senior Assistant Chief Accountant
Show Raw Text
Mail Stop 6010
Via Facsimile and U.S. Mail
April 29, 2008
Mr. Martin J. Sullivan
President and Chief Executive Officer
American Internati onal Group, Inc.
70 Pine Street New York, New York 10270
Re: American International Group, Inc.
Form 10-K for fiscal year ended December 31, 2007
File No. 1-8787
Dear Mr. Sullivan:
We have reviewed your filing and have the following comments. We have limited
our review to your financial statements a nd related disclosures and do not intend to
expand our review to other portions of your document. In our comments, we ask you to
provide us with information to better unders tand your disclosure. Where it requests you
to revise disclosure, the information you provide should show us what the revised
disclosure will look like and identify the a nnual or quarterly fili ng, as applicable, in
which you intend to first include it. If you do not believe th at revised disclosure is
necessary, explain the reason in your response. After reviewing the information
provided, we may raise additional comments and/or request that you amend your filing.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Capital Resources and Liquidity
Contractual Obligations, page 95
1. Please revise your table of contractual obligations to include estimated payment
obligations associated with the underl ying guarantees arising from your credit
default swap activities.
Mr. Martin J. Sullivan
American Interna tional Group, Inc.
April 29, 2008 Page 2 Credit Derivatives, page 121
2. In 2007, you recognized an $11.5 billion unrealiz ed market valuation loss related
primarily to the multi-sector CDO component of your super senior credit default swap portfolio. You state that a modified version of the BET model was used to
value the super senior credit default swaps, and that th is model utilizes diversity
scores, weighted average lives, recovery rates and discount rates, and that the
most significant assumption is the prici ng of the securities within the CDO
collateral pools. You provide a sensitivity analysis with respect to the pricing of the securities within the CDO collateral poo ls, but not with respect to the other
significant assumptions. Please expand your disclosure to pr ovide sensitivity
analysis that includes quan tification of the impact on fair value of reasonably
likely changes for each of the other key identified assumptions. Also, please revise to provide a discussion of the st rengths and weaknesse s of your modified
BET model.
3. You disclose on page 124 that you believe th at any realized losses relating to the
super senior credit default swap oblig ations will not be material to your
consolidated financial co ndition, but could be materi al to your results of
operations for any individual reporting pe riod. Please revise your disclosure to
clarify the context of this statement in relation to the $11.5 billion loss recorded
during the quarter ended December 31, 2007. Clarify whether your disclosure
indicates that incremental realized losses beyond the previously recorded $11.5
billion of unrealized losses may be incurre d, or should be interpreted to mean that
when realized losses are incurred, all or a portion of the previously recorded
unrealized losses will be reversed.
Note 1 – Summary of Significant Accounting Policies, page 138
4. You disclose that various out-of-peri od adjustments were recorded during 2007
and 2006. Please tell us:
• the material information that you are intending to communicate to investors
about these out-of-period adjustments;
• what constitutes an out-of-period adjust ment both in terms of its nature and
materiality;
• why you recorded each adjustment in 2006 or 2007; and
• whether there are any other out-of-pe riod adjustments recorded in your
financial statements during the periods pr esented, and if so, why they are not
included in this disclosure.
* * * *
Mr. Martin J. Sullivan
American Interna tional Group, Inc.
April 29, 2008 Page 3
Please respond to the comments within 10 business days or tell us when you will
provide us with a response. Your letter should key your responses to our comments.
Detailed cover letters greatly facilitate our review. Please furnish your letter on EDGAR
under the form type label CORRESP.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the
filings;
• staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.
In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
You may contact Frank Wyman, St aff Accountant, at 202-551-3660 or Carlton
Tartar, Accounting Branch Chief, at 202-551- 3387, if you have questi ons regarding these
comments. In this regard, do not he sitate to contact me, at 202-551-3679.
S i n c e r e l y ,
J i m B . R o s e n b e r g
Senior Assistant Chief Accountant