Q: Were AIGFP and the AIG Insurance Companies Connected?

  • A disorderly failure of AIG clearly would have placed additional pressures on, and magnified the risks facing, AIG's insurance subsidiaries.
    • For example, AIG's insurance subsidiaries had substantial derivatives exposures to AIGFP and were interconnected with the parent company and its unregulated affiliates in a variety of other financial and operational ways. - 

2010 0119 - Federal Reserve (Bernanke) to GOV (Senators Dodd and Shelby)  -  [link-666p]

  • AIGFP / SunAmerica - GICs
  • AIGFP / Securities Lending
  • AIGFP / Loan from AGC Life insurance Company (Missouri, Texas?) to AIGFP
    • OTS Report

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