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Exhibit 99
UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i)to include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933 unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 and incorporated herein by reference,
(ii)to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
the registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 and incorporated herein by reference, and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
(2) that, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering; and
(4) that, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus to each employee to whom the prospectus is sent or
given, a copy of the registrant's annual report to shareholders for its last
fiscal year, unless such employee otherwise has received a copy of such report
in which case the registrant shall state in the prospectus that it will promptly
furnish, without charge, a copy of such report on written request of the
employee. If the last fiscal year of the registrant has ended within 120 days
prior to the use of the prospectus, the annual report of the registrant for the
preceding fiscal year may be so delivered, but within such 120-day period the
annual report for the last fiscal year will be furnished to each such employee.
(c) The undersigned registrant hereby undertakes to transmit or cause to be
transmitted to all employees participating in the plan, who do not otherwise
receive such material as shareholders of the registrant, at the time and in the
manner such material is sent to its shareholders, copies of all reports, proxy
statements and other communications distributed to its shareholders generally.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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Schedule I
AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
SUMMARY OF INVESTMENTS--OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 1998
(in millions)
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AMOUNT AT
WHICH SHOWN
IN THE
BALANCE
TYPE OF INVESTMENT COST* VALUE SHEET
==================================================================================================================================
Fixed maturities:
Bonds:
United States Government and government agencies
and authorities $ 2,135 $ 2,303 $ 2,301
States, municipalities and political subdivisions 19,415 20,762 19,789
Foreign governments 11,202 11,846 11,846
Public utilities 3,874 4,213 4,213
All other corporate 23,212 23,757 23,757
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Total bonds 59,838 62,881 61,906
Preferred stocks -- -- --
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Total fixed maturities 59,838 62,881 61,906
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Equity securities:
Common stocks:
Public utilities 249 275 275
Banks, trust and insurance companies 760 828 828
Industrial, miscellaneous and all other 4,421 4,462 4,462
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Total common stocks 5,430 5,565 5,565
Non-redeemable preferred stocks 335 328 328
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Total equity securities 5,765 5,893 5,893
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Mortgage loans on real estate, policy and collateral loans 8,247 8,247 8,247
Financial services assets:
Flight equipment primarily under operating leases, net of
accumulated depreciation 16,330 -- 16,330
Securities available for sale, at market value 10,667 10,674 10,674
Trading securities, at market value -- 5,668 5,668
Spot commodities, at market value -- 476 476
Unrealized gain on interest rate and currency swaps,
options and forward transactions -- 9,881 9,881
Trading assets 6,229 -- 6,229
Securities purchased under agreements to resell, at contract value 4,838 -- 4,838
Other invested assets 6,419 -- 6,419
Short-term investments, at cost (approximates market value) 4,944 -- 4,944
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Total investments $ 123,277 $ -- $ 141,505
==================================================================================================================================
* Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts.
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Schedule II
AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET -- PARENT COMPANY ONLY
(in millions)
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DECEMBER 31, 1998 1997
=============================================================================
ASSETS:
Cash $2 $4
Short-term investments 10 1
Invested assets 815 584
Carrying value of subsidiaries and partially-
owned companies, at equity 27,745 24,477
Premiums and insurance balances receivable-net 56 62
Other assets 440 270
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TOTAL ASSETS $29,068 $25,398
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LIABILITIES:
Insurance balances payable $229 $205
Due to affiliates-net 747 230
Medium term notes payable 239 248
Zero coupon notes 102 91
Italian Lire bonds 159 159
Other liabilities 461 464
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TOTAL LIABILITIES $1,937 $1,397
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CAPITAL FUNDS:
Common stock $2,847 $1,898
Additional paid-in capital 85 106
Retained earnings 25,513 22,921
Accumulated other comprehensive income (206) 172
Treasury stock (1,108) (1,096)
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TOTAL CAPITAL FUNDS 27,131 24,001
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TOTAL LIABILITIES AND CAPITAL FUNDS $29,068 $25,398
=============================================================================
STATEMENT OF INCOME--PARENT COMPANY ONLY
(in millions)
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YEARS ENDED DECEMBER 31, 1998 1997 1996
===============================================================================================
Agency income (loss) $ (6) $ -- $ 1
Financial services income 263 106 227
Dividend income from consolidated subsidiaries:
Cash 856 1,458 1,142
Dividend income from partially-owned companies 14 22 7
Equity in undistributed net income of consolidated subsidiaries
and partially-owned companies 3,130 2,341 1,900
Other income (deductions)-net (119) (302) (81)
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Income before income taxes 4,138 3,625 3,196
Income taxes 372 293 299
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Net income $ 3,766 $ 3,332 $ 2,897
===============================================================================================
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SCHEDULE II
AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT--(continued)
STATEMENT OF CASH FLOWS--PARENT COMPANY ONLY
(in millions)
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YEARS ENDED DECEMBER 31, 1998 1997 1996
=================================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,766 $ 3,332 $ 2,897
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ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Non-cash revenues, expenses, gains and losses included in income:
Equity in undistributed net income of consolidated subsidiaries and
partially-owned companies (3,130) (2,341) (1,900)
Change in premiums and insurance balances receivable and payable-net 30 32 22
Change in cumulative translation adjustments (18) 41 66
Other-net 174 401 (294)
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Total adjustments (2,944) (1,867) (2,106)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 822 1,465 791
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Cash flows from investing activities:
Purchase of investments (154) (10) --
Sale of investments -- -- 34
Change in short-term investments (9) (1) 10
Change in collateral and guaranteed loans (25) (237) 2
Contributions to subsidiaries and investments in partially-owned companies (551) (700) (292)
Other-net (36) (4) (94)
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NET CASH USED IN INVESTING ACTIVITIES (775) (952) (340)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Change in medium term notes (9) 108 25
Proceeds from common stock issued 40 37 23
Change in loans payable 218 44 151
Cash dividends to shareholders (225) (199) (174)
Acquisition of treasury stock (81) (508) (494)
Other-net 8 8 19
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NET CASH USED IN FINANCING ACTIVITIES (49) (510) (450)
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CHANGE IN CASH (2) 3 1
CASH AT BEGINNING OF YEAR 4 1 --
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CASH AT END OF YEAR $ 2 $ 4 $ 1
=================================================================================================================================
NOTES TO FINANCIAL STATEMENTS--PARENT COMPANY ONLY
(1) Agency operations conducted in New York through the North American Division
of AIU are included in the financial statements of the parent company.
(2) Certain accounts have been reclassified in the 1997 and 1996 financial
statements to conform to their 1998 presentation.
(3) "Equity in undistributed net income of consolidated subsidiaries and
partially-owned companies" in the accompanying Statement of Income--Parent
Company Only--includes equity in income of the minority-owned insurance
operations.
(4) See also Notes to Consolidated Financial Statements.
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SCHEDULE III
AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
AS OF DECEMBER 31, 1998, 1997 AND 1996 AND FOR THE YEARS THEN ENDED
(in millions)
- -----------------------------------------------------------------------------------
RESERVES FOR
LOSSES AND
DEFERRED LOSS RESERVE POLICY
POLICY EXPENSES, FOR AND
ACQUISITION FUTURE POLICY UNEARNED CONTRACT PREMIUM
SEGMENT COSTS BENEFITS(A) PREMIUMS CLAIMS(B) REVENUE
- -----------------------------------------------------------------------------------
1998
GENERAL INSURANCE $ 1,852 $38,310 $10,009 $ -- $14,098
LIFE INSURANCE 5,795 29,571 -- 1,135 10,247
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$ 7,647 $67,881 $10,009 $ 1,135 $24,345
===================================================================================
1997
General insurance $ 1,637 $33,400 $ 8,739 $ -- $12,421
Life insurance 4,956 24,502 -- 795 9,926
- -----------------------------------------------------------------------------------
$ 6,593 $57,902 $ 8,739 $ 795 $22,347
===================================================================================
1996
General insurance $ 1,416 $33,430 $ 7,599 $ -- $11,855
Life insurance 5,055 24,003 -- 794 8,978
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$ 6,471 $57,433 $ 7,599 $ 794 $20,833
===================================================================================
(in millions)
- --------------------------------------------------------------------------------------------
LOSSES AND AMORTIZATION
LOSS OF DEFERRED
NET EXPENSES POLICY OTHER NET
INVESTMENT INCURRED, ACQUISITION OPERATING PREMIUMS
SEGMENT INCOME BENEFITS COSTS(C) EXPENSES WRITTEN
============================================================================================
1998
GENERAL INSURANCE $ 2,192 $10,657 $ 1,358 $ 1,552 $14,586
LIFE INSURANCE 3,232 9,094 589 1,981 --
- --------------------------------------------------------------------------------------------
$ 5,424 $19,751 $ 1,947 $ 3,533 $14,586
============================================================================================
1997
General insurance $ 1,854 $ 9,356 $ 1,216 $ 1,359 $13,408
Life insurance 2,896 8,811 631 1,830 --
- --------------------------------------------------------------------------------------------
$ 4,750 $18,167 $ 1,847 $ 3,189 $13,408
============================================================================================
1996
General insurance $ 1,691 $ 8,997 $ 1,180 $ 1,228 $12,692
Life insurance 2,676 8,103 628 1,634 --
- --------------------------------------------------------------------------------------------
$ 4,367 $17,100 $ 1,808 $ 2,862 $12,692
============================================================================================
(a) Reserves for losses and loss expenses with respect to the general insurance
operations are net of discounts of $551 million, $294 million and $62
million for 1998, 1997 and 1996, respectively.
(b) Reflected in insurance balances payable on the accompanying balance sheet.
(c) Amounts shown for general insurance segment exclude amounts deferred and
amortized in the same period.
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SCHEDULE IV
AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
REINSURANCE
AS OF DECEMBER 31, 1998, 1997 AND 1996 AND FOR THE YEARS THEN ENDED
(dollars in millions)
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PERCENT OF
CEDED ASSUMED AMOUNT
TO OTHER FROM OTHER NET ASSUMED
GROSS AMOUNT COMPANIES COMPANIES AMOUNT TO NET
=================================================================================================================================
1998
Life insurance in-force $497,876 $ 58,235 $ 1,291 $440,932 0.3%
=================================================================================================================================
Premiums:
General insurance $ 17,931 $ 6,098 $ 2,753* $ 14,586 18.9%
Life insurance 10,504 285 28 10,247 0.3
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Total premiums $ 28,435 $ 6,383 $ 2,781 $ 24,833 11.2%
=================================================================================================================================
1997
Life insurance in-force $435,330 $ 50,924 $ 1,243 $385,649 0.3%
=================================================================================================================================
Premiums:
General insurance $ 17,097 $ 5,334 $ 1,645 $ 13,408 12.3%
Life insurance 10,191 286 21 9,926 0.2
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Total premiums $ 27,288 $ 5,620 $ 1,666 $ 23,334 7.1%
=================================================================================================================================
1996
Life insurance in-force $421,167 $ 44,691 $ 816 $377,292 0.2%
=================================================================================================================================
Premiums:
General insurance $ 16,696 $ 5,627 $ 1,623 $ 12,692 12.8%
Life insurance 9,227 261 12 8,978 0.1
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Total premiums $ 25,923 $ 5,888 $ 1,635 $ 21,670 7.5%
=================================================================================================================================
* The increase results from the consolidation of Transatlantic.
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