<< Back
CLARIFICATION OF MEDIA STORIES ABOUT THE AIG SECURITIES LENDING PROGRAM
CLARIFICATION OF MEDIA STORIES ABOUT THE AIG SECURITIES LENDING PROGRAM

Reports in the media about AIG’s Securities Lending program have created the impression that AIG has realized a new $5 billion loss in conjunction with its Securities Lending Program. This is not the case. AIG has increased its commitment to support the capital of its insurance company subsidiaries who participate in the Securities Lending program for amounts up to $5 billion resulting from losses incurred by those insurance company subsidiaries from sales of securities held as collateral in the program.

Under AIG’s Securities Lending program, AIG lends securities owned by it and various of its subsidiaries to financial institutions, which provide AIG cash collateral as security for those loans. AIG earns incremental investment income by reinvesting the collateral from the loans. While the market value of these collateral investments has declined significantly since July 2007, the majority of them have continued to perform and maintain predominantly AAA and AA ratings.

The $5 billion capital commitment does not represent additional losses or further declines in value from those recorded by AIG in its current public filings. It is a commitment by AIG to support its insurance company subsidiaries for losses actually incurred by them in the future through these collateral investments. AIG is providing this commitment to its insurance company subsidiaries to restore capital to the insurance units in support of their policyholders.