UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 19, 2011
AMERICAN INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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1-8787
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13-2592361 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
180 Maiden Lane
New York, New York 10038
(Address of principal executive offices)
Registrants telephone number, including area code: (212) 770-7000
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions ( see General
Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 1 Registrants Business and Operations
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Item 1.01. |
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Entry Into a Material Definitive Agreement. |
On April 19, 2011, Eaglestone Reinsurance Company (Eaglestone), a subsidiary of American
International Group, Inc., (AIG), and National Indemnity Company (NICO), a subsidiary of
Berkshire Hathaway, Inc. (Berkshire), entered into a Master Transaction Agreement, pursuant to
which, at closing, Eaglestone and NICO will enter into a Loss Portfolio Retrocession Agreement.
The Loss Portfolio Retrocession Agreement will transfer the bulk of AIGs U.S. asbestos liabilities
to NICO. The transaction does not cover asbestos accounts that AIG believes have already been
reserved to their limit of liability or certain other ancillary asbestos exposure assumed by AIG
insurance company subsidiaries. Eaglestone, and certain other AIG insurance company subsidiaries,
will also enter into certain other related agreements with NICO at closing (such agreements,
including the Loss Portfolio Retrocession Agreement, the Agreements).
Under the Agreements: (i) in exchange for a payment of approximately $1.65 billion, NICO will
assume from Eaglestone the bulk of the asbestos loss portfolio Eaglestone previously assumed from
certain AIG insurance company subsidiaries pursuant to a separate reinsurance agreement; (ii) NICO
will obtain the benefit of, and assume the risk of collection on, AIGs third-party reinsurance
recoverables of approximately $2.8 billion in respect of the ceded asbestos reserves; (iii) NICO
will assume responsibility for certain administrative services, including claims handling, for the
portfolio it will assume; (iv) NICO, in order to secure its obligations to Eaglestone, will deposit
the aforementioned $1.65 billion payment into a collateral trust; and (v) Berkshire will provide a
limited guarantee of NICOs payment obligations to Eaglestone. In addition, under a Capital
Maintenance Agreement between AIG and Eaglestone, AIG has committed to provide capital to
Eaglestone in the event that Eaglestones statutory capital falls below a certain defined level.
NICOs overall limit of liability under the Agreements, net of third party reinsurance it actually
recovers, is $3.5 billion.
This transaction will be accounted for as retroactive reinsurance in AIGs
consolidated financial statements and is expected to result in a deferred pre-tax gain of approximately $200 million in the second quarter of 2011.
The closing of the transaction contemplated by the Master Transaction Agreement is subject to
receipt of required regulatory approvals, execution of definitive transaction documentation, and
satisfaction of other conditions.