SEC Comment Letter for AMERICAN INTERNATIONAL GROUP, (AIG) — Jun 26, 2008
AMERICAN INTERNATIONAL GROUP, INC.
Date: June 26, 2008 · CIK: 0000005272 · Accession: 0000000000-08-031601
AI Filing Summary & Sentiment
Letter
Mail Stop 6010 Via Facsimile and U.S. Mail June 25, 2008 Mr. Robert B. Willumstad 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 Form 10-Q for Fiscal Quarter Ended March 31, 2008 File No. 1-8787
Dear Mr. Willumstad:
We have reviewed your May 23, 2008 response to our April 29, 2008 letter and have the following comments. In our co mments, we ask you to provide us with information so we may better understand your disclosure. Where a comment requests you to revise disclosure, the information you provide should show us what the revised disclosure will look like and identify the f iling in which you intend to first include it. If you do not believe that 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.
Form 10-Q for the Fiscal Quarter Ended March 31, 2008
Note 4 – Shareholders’ Equity and Earnings (Loss) Per Share, page 19
1. You disclose that you shortened the ve sting period of outstanding awards under your share-based employee compensation plan s during the first quarter of fiscal 2008. Please provide us your evaluation of the modification of these awards under paragraph 51 of SFAS 123(R) demonstrating why the unamortized portion of the awards should be amortized over a shorter period. Explain why there was apparently no incremental compensation expense that was required to be recorded as a result of the modifications.
Mr. Robert B. Willumstad American Interna tional Group, Inc. June 25, 2008 Page 2 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations
Financial Services, page 38
2. Please refer to prior comment three. You state that your credit-based analyses estimate potential real ized credit impairment pre-tax losses of approximately $1.2 billion to approximately $2.4 billion, as compared to the $20.6 billion of unrealized market losses rec ognized in the fourth quarter of 2007 and first quarter of 2008. Please expand your disclosure to ex plain the specific factors causing the divergence between your estimates of fa ir value and amounts to be ultimately realized upon settlement or maturity. Valuation of Level 3 Assets and Liabilities, page 46
3. Please refer to prior comment two. You have attributed the additional $9.1 billion unrealized market valuation loss for your super senior credit default swap portfolio to ongoing disruption in the US residential mortgage and credit markets and downgrades of RMBS and CDO securi ties. Please explain and quantify the effects on the valuation of the specific ch anges made to your model in the first quarter of 2008, particularly how change s in key assumptions during the period affected the unrealized market valuation lo ss of $9.1 billion, as well as the impact of the roll rate analysis that was in troduced in the first quarter of 2008.
4. Given the additional unrealized market va luation loss of $9.1 billion in the first quarter of 2008, please tell us why you believe that a five point variation in the assumed price of securities within th e CDO collateral pools is an appropriate measure of the reasonably likely varia tion in this model input. Revise your disclosures as appropriate. 5. We are continuing to evaluate your disc losures related to how you determine the fair value of your credit derivatives.
Contractual Obligations, page 86
6. Please refer to prior comment one. Please re vise your disclosure in footnote (f) to include the related amounts of credit default swap liabili ties that are recorded in the financial statements, along with the pot ential credit impairment pre-tax losses that you expect to realize.
* * * *
Mr. Robert B. Willumstad American Interna tional Group, Inc. June 25, 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.
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
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Mail Stop 6010
Via Facsimile and U.S. Mail
June 25, 2008
Mr. Robert B. Willumstad
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
Form 10-Q for Fiscal Quarter Ended March 31, 2008
File No. 1-8787
Dear Mr. Willumstad:
We have reviewed your May 23, 2008 response to our April 29, 2008 letter
and have the following comments. In our co mments, we ask you to provide us with
information so we may better understand your disclosure. Where a comment requests you
to revise disclosure, the information you provide should show us what the revised
disclosure will look like and identify the f iling in which you intend to first include it. If
you do not believe that 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.
Form 10-Q for the Fiscal Quarter Ended March 31, 2008
Note 4 – Shareholders’ Equity and Earnings (Loss) Per Share, page 19
1. You disclose that you shortened the ve sting period of outstanding awards under
your share-based employee compensation plan s during the first quarter of fiscal
2008. Please provide us your evaluation of the modification of these awards
under paragraph 51 of SFAS 123(R) demonstrating why the unamortized portion of the awards should be amortized over a shorter period. Explain why there was
apparently no incremental compensation expense that was required to be recorded as a result of the modifications.
Mr. Robert B. Willumstad
American Interna tional Group, Inc.
June 25, 2008 Page 2 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations
Financial Services, page 38
2. Please refer to prior comment three. You state that your credit-based analyses
estimate potential real ized credit impairment pre-tax losses of approximately $1.2
billion to approximately $2.4 billion, as compared to the $20.6 billion of
unrealized market losses rec ognized in the fourth quarter of 2007 and first quarter
of 2008. Please expand your disclosure to ex plain the specific factors causing the
divergence between your estimates of fa ir value and amounts to be ultimately
realized upon settlement or maturity.
Valuation of Level 3 Assets and Liabilities, page 46
3. Please refer to prior comment two. You have attributed the additional $9.1 billion
unrealized market valuation loss for your super senior credit default swap
portfolio to ongoing disruption in the US residential mortgage and credit markets
and downgrades of RMBS and CDO securi ties. Please explain and quantify the
effects on the valuation of the specific ch anges made to your model in the first
quarter of 2008, particularly how change s in key assumptions during the period
affected the unrealized market valuation lo ss of $9.1 billion, as well as the impact
of the roll rate analysis that was in troduced in the first quarter of 2008.
4. Given the additional unrealized market va luation loss of $9.1 billion in the first
quarter of 2008, please tell us why you believe that a five point variation in the assumed price of securities within th e CDO collateral pools is an appropriate
measure of the reasonably likely varia tion in this model input. Revise your
disclosures as appropriate.
5. We are continuing to evaluate your disc losures related to how you determine the
fair value of your credit derivatives.
Contractual Obligations, page 86
6. Please refer to prior comment one. Please re vise your disclosure in footnote (f) to
include the related amounts of credit default swap liabili ties that are recorded in
the financial statements, along with the pot ential credit impairment pre-tax losses
that you expect to realize.
* * * *
Mr. Robert B. Willumstad
American Interna tional Group, Inc.
June 25, 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.
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