Document/Exhibit Description Pages Size
1: 485BPOS Pea #15 Aig Life Executive Advantage Vul 76 345K
2: EX-99. (K) (2) Legal Opinion & Consent-Saul Ewing LLP 2 8K
3: EX-99. (K) (3) Legal Opinion & Consent-Sullivan & Cromwell 2 8K
LLP
4: EX-99. (N) (1) Consent of Pricewaterhousecoopers LLP 1 6K
Registration Nos. 333-34199
811-04867
As filed with the Securities and Exchange Commission on October 24, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-effective Amendment No. [ ]
Post-Effective Amendment No. [15]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. [7] [X]
VARIABLE ACCOUNT II OF AIG LIFE INSURANCE COMPANY
(Exact Name of Registrant)
AIG LIFE INSURANCE COMPANY
(Name of Depositor)
One ALICO Plaza
600 King Street
Wilmington, Delaware 19801
(Address of Depositor's Principal Executive Offices) (Zip Code)
(713) 831-8470
Depositor's Telephone Number, including Area Code
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
70 Pine Street
New York, New York 10270
(Name of Guarantor)
Lauren W. Jones, Esq.
Deputy General Counsel
American General Life Companies, LLC
2929 Allen Parkway
Houston, Texas 77019-2191
(Name and Address of Agent for Service for Depositor, Registrant and Guarantor)
Approximate Date of Proposed Public Offering: Continuous.
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post- effective amendment.
PART A
The Prospectus, dated May 2, 2005, is incorporated into Part A of this
Post-Effective Amendment No. 15 by reference to the Registrant's Post-Effective
Amendment No. 13, as filed on May 2, 2005 and to Registrant's Post-Effective
Amendment No. 14 as filed on August 12, 2005 (File No. 333-34199).
A supplement dated October 24, 2005 to the Prospectus is included in Part A of
this Post-Effective Amendment No. 15.
AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT II
EXECUTIVE ADVANTAGE/SM/
GROUP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
SUPPLEMENT DATED OCTOBER 24, 2005
TO PROSPECTUS DATED MAY 2, 2005
Effective October 24, 2005, AIG Life Insurance Company ("AIG Life") is amending
the Executive Advantage prospectus for the sole purposes of (i) adding
information about National Union Fire Insurance Company of Pittsburgh, Pa.,
guarantor of insurance obligations under the Policies, and (ii) adding financial
statements of National Union Fire Insurance Company of Pittsburgh, Pa.
The following paragraphs are added to the "General Information" section
following "The Variable Account" subsection of the prospectus under a new
subsection heading "Guarantee of Insurance Obligations":
Insurance obligations under Policies issued by AIG Life are guaranteed by
National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union"), an
affiliate of AIG Life. Insurance obligations include, without limitation, Policy
values invested in the Guaranteed Account, death benefits and Policy features
that provide return of premium or protection against Policy lapse. The guarantee
does not guarantee Policy value or the investment performance of the variable
investment options available under the Policies. The guarantee provides that
Policy owners can enforce the guarantee directly.
AIG Life expects that the National Union guarantee will be terminated within the
next year. However, the insurance obligations on Policies issued prior to
termination of the National Union guarantee would continue to be covered,
including obligations arising from premium payments or other payments received
after termination, until satisfied in full.
National Union is a stock property-casualty insurance company incorporated under
the laws of the Commonwealth of Pennsylvania on February 14, 1901. National
Union's principal executive office is located at 70 Pine Street, New York, New
York 10270. National Union is licensed in all 50 states of the United States and
the District of Columbia, as well as certain foreign jurisdictions, and engages
in a broad range of insurance and reinsurance activities. National Union is a
wholly owned subsidiary of American International Group, Inc. and an affiliate
of AIG Life.
The paragraph below should be inserted as the replacement of the "Financial
Statements" section of the prospectus:
The Financial Statements of AIG Life, the Variable Account and National Union
can be found in the Statement of Additional Information ("SAI"). You may obtain
a free copy of these Financial Statements if you write us at our Administrative
Center, which is located at 600 King Street, CLMK, Wilmington, Delaware, 19801
or call us at 1-302-594-2352.
PART B
The Statement of Additional Information, as supplemented, dated May 2, 2005 is
incorporated into Part B of this Post-Effective Amendment No. 15 by reference to
the Registrant's Post-Effective Amendment No. 13, as filed on May 2, 2005, to
Post-Effective Amendment No. 14, as filed on August 12, 2005 and to Registrant's
485(b) supplement filed on August 12, 2005 (File No. 333-34199).
A supplement dated October 24, 2005 to the Statement of Additional Information
is included in Part B of this Post-Effective Amendment No. 15.
AIG LIFE INSURANCE COMPANY
VARIABLE ACCOUNT II
EXECUTIVE ADVANTAGE/SM/
GROUP FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
SUPPLEMENT DATED OCTOBER 24, 2005 TO
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 2, 2005, AS
SUPPLEMENTED AUGUST 12, 2005
Effective October 24, 2005, AIG Life Insurance Company ("AIG Life") is
amending the Statement of Additional Information ("SAI") for the sole purposes
of (1) adding information about National Union Fire Insurance Company of
Pittsburgh, Pa., guarantor of insurance obligations under the Policies, and (2)
including the financial statements of National Union Fire Insurance Company of
Pittsburgh, Pa.
FIRST. On page 3 of the SAI, following "Variable Account II," add a new
subsection to read as follows:
National Union Fire Insurance Company of Pittsburgh, Pa.
National Union Fire Insurance Company of Pittsburgh, Pa. ("National Union")
is a stock property-casualty insurance company incorporated under the laws of
the Commonwealth of Pennsylvania on February 14, 1901. National Union's
principal executive office is located at 70 Pine Street, New York, New York
10270. National Union is licensed in all 50 states of the United States and the
District of Columbia, as well as certain foreign jurisdictions, and engages in a
broad range of insurance and reinsurance activities. National Union is a wholly
owned subsidiary of American International Group, Inc. and an affiliate of AIG
Life.
SECOND. On page 8 of the SAI, add a new subsection following "AIG Life
Financial Statements" as follows:
National Union Financial Statements
The Statutory statement of admitted assets, liabilities, capital and
surplus of National Union as of December 31, 2004, and the related statutory
statements of income and changes in capital and surplus and of cash flow for the
year then ended appear elsewhere herein, in reliance on the report (which
contains an explanatory paragraph relating to National Union's adjustment to
unassigned surplus at January 1, 2004) of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the authority of said
firm as experts in accounting and auditing.
THIRD. On page 9 of the SAI, delete the subsection titled "Index to
Financial Statements" in its entirety and replace it with the following:
- 1 -
INDEX TO FINANCIAL STATEMENTS
You should consider the financial statements of AIG Life that we include in
this SAI as bearing on the ability of AIG Life to meet its obligations under the
Contracts.
You should only consider the financial statements of National Union that we
include in this SAI as bearing on the ability of National Union, as guarantor,
to meet its obligations under the guarantee.
[Enlarge/Download Table]
I. Variable Account II 2004 Financial Statements Page
--------------------------------------------- ----
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm................ VA II - 1
Statement of Net Assets as of December 31, 2004.................................................... VA II - 2
Statement of Operations for the year ended December 31, 2004....................................... VA II - 4
Statement of Changes in Net Assets for the years ended December 31, 2004 and 2003
(restated)................................................................................ VA II - 6
Notes to Financial Statements...................................................................... VA II - 25
[Enlarge/Download Table]
II. AIG Life 2004 Financial Statements Page
---------------------------------- ----
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm................ F - 2
Balance Sheets as of December 31, 2004 and 2003 (restated)......................................... F - 3
Statements of Income for the years ended December 31, 2004, 2003 (restated)
and 2002 (restated)....................................................................... F - 5
Statements of Shareholders' Equity for the years ended December 31, 2004,
2003 (restated) and 2002 (restated)....................................................... F - 6
Statements of Cash Flows for the years ended December 31, 2004, 2003 (restated)
and 2002 (restated)....................................................................... F - 7
Statements of Comprehensive Income for the years ended December 31, 2004,
2003 (restated) and 2002 (restated)....................................................... F - 8
Notes to Financial Statements...................................................................... F - 9
[Enlarge/Download Table]
III. National Union December 31, 2004 Financial Statements (Statutory Basis) Page
----------------------------------------------------------------------- ----
Report of PricewaterhouseCoopers LLP, Independent Auditors........................................... 1
Statement of Admitted Assets, Liabilities, Capital and Surplus (Statutory Basis)
as of December 31, 2004 ................................................................... 3
Statement of Operations and Capital and Surplus Account (Statutory Basis)
for the year ended December 31, 2004........................................................ 5
Statement of Cash Flow (Statutory Basis) for the year ended
December 31, 2004........................................................................... 6
Notes to Statutory Basis Financial Statements........................................................ 7
- 2 -
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
NAIC Company Code: 19445
Financial Statements
(Statutory Basis)
December 31, 2004
Report of Independent Auditors
To the Board of Directors and Shareholders of National Union
Fire Insurance Company of Pittsburgh, Pa.
We have audited the accompanying statutory statement of admitted assets,
liabilities, capital and surplus of National Union Fire Insurance Company of
Pittsburgh, Pennsylvania (the "Company") as of December 31, 2004, and the
related statutory statement of income and changes in capital and surplus, and of
cash flow for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 1 and 2 to the financial statements, the Company prepared
these financial statements using accounting practices prescribed or permitted by
the Insurance Department of the State of Pennsylvania, which practices differ
from accounting principles generally accepted in the United States of America.
The effects on the financial statements of the variances between the statutory
basis of accounting and accounting principles generally accepted in the United
States of America, although not reasonably determinable, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States of
America, the financial position of the Company as of December 31, 2004, or the
results of its operations or its cash flow for the year then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities and surplus of the
Company as of December 31, 2004, and the results of its operations and its cash
flow for the year then ended, on the basis of accounting described in Notes 1
and 2 to the financial statements.
As discussed in Note 2 to the accompanying financial statements, as a result of
regulatory inquiries into certain transactions, AIG conducted an internal review
of information and a number of transactions. As part of the internal review, the
Company reviewed the statutory accounting treatment for matters identified
during the internal review and concluded that certain transactions required
adjustment. An agreement was reached with the Company's domiciliary state to
include a single 2004 year presentation of its financial statements and to
reflect the impact to its 2003 and prior year unassigned surplus as an
adjustment to unassigned surplus at January 1, 2004.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
New York, NY
October 17, 2005
2
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
Statement of Admitted Assets, Liabilities, Capital and Surplus
(Statutory Basis)
As of December 31,
[Enlarge/Download Table]
2004
------------------
Admitted Assets
---------------
Bonds, principally at amortized cost (NAIC market value: 2004 - $9,570,573,421) $ 9,305,455,243
Stocks:
Non-redeemable preferred stocks, at NAIC market value (cost: 2004 - $2,259,718,101) 2,259,869,600
Common stocks, at NAIC market value (cost: 2004 - $2,736,085,117) 5,869,968,485
Short-term investments, at amortized cost (approximates NAIC market value) 109,445,916
Other invested assets, primarily at equity (cost: 2004 - $778,680,448) 1,051,860,397
Cash 115,855,420
Receivable for securities 20,335,406
------------------
Total cash and invested assets 18,732,790,467
Agents' balances or uncollected premiums:
Premiums in course of collection 637,679,844
Premiums and installments booked but deferred and not yet due 732,071,029
Accrued retrospective premiums 8,146,022
Funds held by or deposited with reinsurers 170,139,026
Amounts billed and receivable under high deductible policies 387,572,138
Reinsurance recoverable on loss payments 258,992,292
Electronic data processing equipment, less accumulated depreciation -
Federal and foreign income tax recoverable from parent 630,957,888
Net deferred tax asset 379,831,649
Interest and dividends due and accrued 132,033,449
Receivable from parent, subsidiaries and affiliates 571,350,993
Equities in underwriting pools and associations 526,124,099
Deposit accounting assets 1,729,756,283
Deposit accounting assets - funds held 448,278,780
Other assets 356,464,639
------------------
Total admitted assets $ 25,702,188,598
==================
See Notes to Financial Statements
3
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
Statement of Admitted Assets, Liabilities, Capital and Surplus
(Statutory Basis)
As of December 31,
[Enlarge/Download Table]
2004
------------------
Liabilities
-----------
Unpaid losses $ 8,653,435,477
Reinsurance payable on paid loss and loss adjustment expenses 273,784,621
Unpaid loss adjustment expenses 1,157,932,033
Commissions payable, contingent commissions and other similar charges 17,127,133
Other expenses (excluding taxes, licenses and fees) 629,897
Taxes, licenses and fees (excluding federal and foreign income taxes) 125,541,913
Unearned premiums 4,142,836,959
Funds held under reinsurance treaties 275,189,079
Provision for reinsurance 334,695,745
Dividends declared and unpaid 50,133,001
Ceded reinsurance premiums payable, net of ceding commissions 66,516,298
Amounts withheld or retained by company for account of others 17,075,388
Accrued interest payable 128,955,013
Payable to parent, subsidiaries, and affiliates 1,190,865,179
Retroactive reinsurance reserve - assumed 11,269,882
Retroactive reinsurance reserve - ceded (86,065,351)
Deposit accounting liability - funds held 1,149,918,225
Deposit accounting liabilities 691,334,955
Other liabilities 124,191,623
------------------
Total liabilities 18,325,367,070
------------------
Capital and Surplus
-------------------
Special surplus funds from retroactive reinsurance 86,109,944
Common capital stock, $5 par value, 1,000,000 shares authorized,
895,750 shares issued and outstanding 4,478,750
Capital in excess of par value 2,494,261,950
Unassigned surplus 4,791,970,884
------------------
Total capital and surplus 7,376,821,528
------------------
Total liabilities, capital and surplus $ 25,702,188,598
==================
See Notes to Financial Statements
4
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
Statement of Operations and Capital and Surplus Account
(Statutory Basis)
For the Year Ended December 31,
[Enlarge/Download Table]
2004
-----------------
Underwriting income:
Premiums earned $ 6,592,661,871
-----------------
Deductions:
Losses incurred 4,943,209,544
Loss adjustment expenses incurred 755,383,964
Other underwriting expenses incurred 1,369,228,817
-----------------
Total underwriting deductions 7,067,822,325
-----------------
Net underwriting loss (475,160,454)
-----------------
Investment income:
Net investment income earned 826,486,953
Net realized capital gain 69,541,791
-----------------
Net investment gain 896,028,744
-----------------
Net loss from agents' or premium balances charged off (45,159,809)
Other gain 76,730,661
-----------------
Income before dividends to policyholders and federal and foreign income taxes 452,439,142
Dividends to policyholders 561,863
-----------------
Income after dividends to policyholders but before federal and foreign income taxes 451,877,279
Federal and foreign income tax benefit 125,487,048
-----------------
Net income $ 326,390,231
=================
Capital and Surplus Account
Total capital and surplus, as of December 31, previous year $ 6,899,255,658
Adjustment to beginning surplus (545,683,693)
-----------------
Total capital and surplus, as of January 1, 2004 6,353,571,965
Gains and (losses) in surplus:
Net income 326,390,231
Change in net unrealized capital gains 573,378,323
Change in net deferred income tax 298,937,727
Change in non-admitted assets (91,498,718)
Change in provision for reinsurance 42,397,392
Paid in surplus 143,782,280
Cash dividends to stockholder (207,198,576)
Other surplus adjustments (83,203,870)
Foreign exchange translation 20,264,774
-----------------
Change in surplus as regards policyholders for the year 1,023,249,563
-----------------
Total capital and surplus, December 31, current year $ 7,376,821,528
=================
See Notes to Financial Statements
5
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.
Statement of Cash Flow
(Statutory Basis)
For the Year Ended December 31,
[Enlarge/Download Table]
2004
-----------------
Premiums collected, net of reinsurance $ 6,963,058,854
Net investment income 831,974,047
Miscellaneous income 31,570,852
-----------------
Total 7,826,603,753
Benefit and loss related payments (65,275,726)
Commissions, expenses paid and aggregate write-ins for deductions 1,864,377,132
Dividends paid to policyholders 634,047
Federal and foreign income taxes paid 675,867,893
-----------------
Total 2,475,603,346
-----------------
Net cash from operations 5,351,000,407
-----------------
Proceeds from investments sold, matured or repaid:
Bonds 2,314,127,808
Stocks 550,432,733
Other invested assets 4,024,637,594
Miscellaneous proceeds 52,604,584
-----------------
Total investment proceeds 6,941,802,719
-----------------
Cost of investments acquired (long-term only):
Bonds 5,009,143,699
Stocks 459,758,296
Other invested assets 4,039,996,619
Miscellaneous applications 200,244,605
-----------------
Total investments acquired 9,709,143,219
-----------------
Net cash used for investments (2,767,340,500)
-----------------
Cash provided (applied):
Capital and paid in surplus, less treasury stock 143,782,280
Dividends to stockholders (206,319,826)
Net deposit on deposit-type contracts and other insurance (677,632,408)
Other cash applied (1,857,650,066)
-----------------
Net cash used in financing and miscellaneous sources (2,597,820,020)
-----------------
Net change in cash and short-term investments (14,160,113)
RECONCILIATION
Cash and short-term investments:
Beginning of year 239,461,449
-----------------
End of year $ 225,301,336
=================
See Notes to Financial Statements
6
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
1. Summary of Significant Statutory Basis Accounting Policies
(A) Organization
National Union Fire Insurance Company of Pittsburgh, PA (the "Company" or
"NUF") is a direct wholly-owned subsidiary of American International Group,
Inc. (the "Parent" or "AIG"). The Company writes substantially all lines of
property and casualty insurance with an emphasis on U.S. commercial
business. The Company accepts business primarily from insurance brokers,
enabling selection of specialized markets and retention of underwriting
control. The Company has significant transactions with the Parent and
affiliates (see Note 4).
(B) Accounting Practices
The accompanying financial statements of the Company have been prepared in
conformity with accounting practices prescribed or permitted by the
Insurance Department of the Commonwealth of Pennsylvania.
The Insurance Department of the Commonwealth of Pennsylvania recognizes
only statutory accounting practices prescribed or permitted by the
Commonwealth of Pennsylvania for determining and reporting the financial
condition and results of operations of an insurance company and for the
purpose of determining its solvency under the Pennsylvania Insurance Law.
The National Association of Insurance Commissioners Accounting Practices
and Procedures Manual ("NAIC SAP") has been adopted as a component of
prescribed or permitted practices by the Commonwealth of Pennsylvania. The
Commissioner of Insurance has the right to permit other specific practices
that deviate from prescribed practices.
The Insurance Department of the Commonwealth of Pennsylvania has adopted
the following accounting practices that differ from those found in NAIC
SAP. Specifically, the prescribed practices of discounting of workers
compensation reserves on a non-tabular basis (in NAIC SAP, discounting of
reserves is not permitted on a non tabular basis) and the permitted
practices that Schedule F is prepared on a New York basis including New
York Regulation 20 reinsurance credits for calculating the provision for
unauthorized reinsurance (in NAIC SAP, New York Regulation 20 credits are
not permitted).
A reconciliation of the Company's net income and capital and surplus
between NAIC SAP and practices prescribed and permitted by the Commonwealth
of Pennsylvania is shown below:
2004
-----------------
Net Income, Insurance Department of the
Commonwealth of Pennsylvania $ 326,390,231
State Practices - (Deduction) Income:
Non-Tabular Discounting (46,613,228)
-----------------
Net Income, NAIC SAP $ 279,777,003
=================
Statutory Surplus, Insurance Department of
the Commonwealth of Pennsylvania $ 7,376,821,528
State Practices - (Charge) Credit
Non-Tabular Discounting (191,238,825)
Reinsurance Credits (201,318,345)
-----------------
Statutory Surplus, NAIC SAP $ 6,984,264,358
-----------------
NAIC SAP is a comprehensive basis of accounting other than accounting
principles generally accepted in the United States of America ("GAAP").
NAIC SAP varies in certain respects from GAAP. Under GAAP: (1) costs
incidental to acquiring business related to premiums written and costs
allowed by assuming reinsurers related to premiums ceded are deferred and
amortized over the periods covered by the underlying policies or
reinsurance agreements; (2) statutory basis reserves, such as non-admitted
assets and unauthorized reinsurance are restored to surplus; (3) the equity
in earnings of affiliates with ownership between 20% and 50% is included in
net income, and investments in subsidiaries with greater than 50% ownership
are consolidated; (4) estimated undeclared dividends to policyholders are
accrued; (5) the reserve for losses and loss expenses and reserve for
unearned premiums are presented gross of ceded reinsurance by establishing
a reinsurance asset; (6) debt and equity securities deemed to be available
for sale and trading securities are reported at fair value, and the
difference between cost and fair value of securities available for sale is
reflected net of related deferred income tax, as a separate component of
accumulated other comprehensive income in shareholder's equity, for trading
7
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
securities, the difference between cost and fair value is included in
income, while securities held to maturity are valued at amortized cost; and
(7) premium contracts that do not have sufficient risk transfer are treated
as deposit accounting assets; (8) contracts are recorded as retroactive and
retain insurance accounting treatment if they pass the risk transfer test.
If risk transfer is not met, no insurance accounting treatment is
permitted. All income is then recognized based upon either the interest or
recovery method.; and (9) deferred federal income taxes are provided for
temporary differences for the expected future tax consequences of events
that have been recognized in the Company's financial statements. The
provision for deferred income taxes is reported in the income statement.
Under NAIC SAP: (1) costs incidental to acquiring business related to
premiums written and costs allowed by assuming reinsurers related to
premiums ceded are immediately expensed; (2) statutory basis reserves, such
as non-admitted assets and unauthorized reinsurance are charged directly to
surplus; (3) the equity in earnings of affiliates are included in
unrealized appreciation/(depreciation) of investments and subsidiaries
(which are not consolidated) are reported directly in surplus with
dividends reported as income; (4) declared dividends to policyholders are
accrued; (5) the reserve for losses and loss expenses and reserve for
unearned premiums are presented net of ceded reinsurance; (6) NAIC
investment grade debt securities are reported at amortized cost, while
non-NAIC investment grade debt securities (NAIC rated 3-6) are reported at
lower of cost or market; (7) premium contracts, regardless of risk
transfer, are reported as insurance as long as policies are issued in
accordance with insurance requirements; (8) regardless of risk transfer, an
insurance contract deemed to be retroactive receives special accounting
treatment. Gains or losses are recognized in the income statement and
surplus is segregated on the ceding entity to the extent of gains
recognized; and (9) deferred federal income taxes are provided for
temporary differences for the expected future tax consequences of events
that have been charged directly to surplus and have no impact on statutory
earnings. The admissibility of deferred tax assets is limited by statutory
guidance.
The effects on the financial statements of the variances between the
statutory basis of accounting and accounting principles generally accepted
in the United States of America, although not reasonably determinable, are
presumed to be material.
Significant statutory accounting practices are as follows:
A. The preparation of financial statements in conformity with accounting
practices prescribed or permitted by the Commonwealth of Pennsylvania
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities. On an ongoing basis, the
Company evaluates all of its estimates and assumptions. It also
requires disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from
management's estimates.
B. Investments are carried at values designated by the NAIC. Bonds are
carried at amortized cost using the scientific method, except non NAIC
investment grade bonds, which are carried at NAIC-designated values.
Other than temporary impairments of investments are provided for by
writing down the impaired security to fair value as the new cost
basis, with the corresponding surplus impact accounted for as a
realized loss. Mortgage-backed securities are carried at amortized
cost and generally are more likely to be prepaid than other fixed
maturities. The NAIC market value of mortgage-backed securities
approximated $237,683,000 at December 31, 2004. Unaffiliated common
and preferred stocks are carried principally at market value; certain
preferred stocks subject to a 100% mandatory sinking fund are carried
at amortized cost. Investments in affiliates are included in common
stocks based on the net worth of the entity, determined in accordance
with NAIC SAP. The Company considers all highly liquid debt securities
with maturities of twelve months or less to be short-term investments.
Short-term investments are carried at amortized cost which
approximates NAIC market value. Other invested assets consist
primarily of shares of an intermediate bond mutual fund and joint
venture and partnerships. The intermediate bond mutual fund is carried
principally at NAIC market value and the unrealized gain or loss
reported as unassigned surplus. The joint ventures and partnerships
are carried principally based upon the equity method. Dividends are
recorded in "Net investment income earned". Investment income is
recorded as earned. Realized gains or losses on the disposition of
investments are determined on the basis of specific identification.
Unrealized gains and losses on all stocks, bonds carried at NAIC
designated values, joint venture, partnerships and foreign currency
translation are credited or charged to unassigned surplus.
C. Premiums written are primarily earned on a pro-rata basis over the
terms of the policies to which they relate. Accordingly, unearned
premiums represent the portion of premiums written which is applicable
to the unexpired terms of policies in force. Premium estimates for
retrospectively rated policies are recognized within the periods in
which the related losses are incurred. Ceded premiums are amortized
into income over the contract period in proportion to the protection
received.
D. Certain assets, principally furniture, equipment, and leasehold
improvements and certain overdue agents' balances, are designated
"non-admitted assets" and are directly charged to unassigned surplus.
EDP is depreciated over five years on the straight line method.
Leasehold improvements are amortized over the shorter of the remaining
terms of the lease or estimated useful lives. The Company had
depreciation expense of $18,007,654 for the year ended 2004.
E. The liabilities for unpaid losses and loss adjustment expenses,
including incurred but not reported losses, are determined on the
basis of actuarial specialists' evaluations and other estimates,
including historical loss experience. The methods of making such
estimates and for establishing the resulting reserves are continually
reviewed and updated, and any resulting adjustments are recorded in
the current period. Accordingly, losses and loss adjustment expenses
are charged to income as incurred. Amounts
8
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
recoverable from reinsurers are estimated in a manner consistent with
the claim liability associated with the reinsured policy. The Company
discounts its loss and loss adjustment expense reserves on workers
compensation claims. The tabular and non-tabular discounted case
reserves amounted to $151,670,515 and $191,238,825, respectively, at
December 31, 2004. Tabular case reserves have been discounted using
the 1979-81 Decennial Mortality Table at 3.5%. Non-tabular case
reserves have been discounted using discount tables promulgated by the
Insurance Department of the Commonwealth of Pennsylvania. At December
31, 2004, liabilities include $2,334,788,934 of such discounted
reserves.
F. Certain required statutory basis reserves, principally the provision
for reinsurance, are charged to surplus and reflected as a liability
of the Company. In accordance with NAIC Statement of Statutory
Accounting Principles (SSAP) No. 62 Property and Casualty Reinsurance,
ceded expenses, net of acquisition costs, are earned over the policy
period.
G. Commissions, premium taxes, and certain other underwriting expenses
related to premiums written are charged to income at the time the
premiums are written and are included in "Other underwriting expenses
incurred."
H. Dividends to policyholders are charged to income as declared.
I. Assets and liabilities denominated in foreign currencies are
translated at the rate of exchange in effect at the close of the
reporting period. Unrealized gains and losses from translating
balances in foreign currencies are recorded as adjustments to surplus.
Gains and losses resulting from foreign currency transactions are
included in income.
J. Options are carried at market value. Put options owned are included in
"Other invested assets" on the statement of admitted assets,
liabilities, capital and surplus. Call options written are included in
"Other liabilities". Any change in unrealized gains or losses on
options owned or written are credited or charged to unassigned
surplus. Realized gains or losses on the disposition of options are
determined on the basis of specific identification are included in
income. Derivatives are not used for hedge accounting treatment.
K. Foreign exchange forward contracts are derivatives whereby the Company
agrees to exchange a specific amount of one currency at a specific
price and at a specific date in the future. Foreign exchange contracts
are entered into in order to hedge the foreign exchange component of
long-term foreign denominated bonds held by the Company. The contracts
are usually one to three months in duration and are marked to market
every month using publicly obtained foreign exchange rates. When the
contract expires, realized gains and losses are recorded in income.
Derivatives are not used for hedge accounting treatment.
L. Common capital stock and Capital in excess of par value represents
amounts received by the Company in exchange for shares issued. The
Common capital stock represents the value received by the Company of
shares issued multiplied by par value per share. Capital in excess of
par value represents the value received by the Company of shares
issued in excess of the par value per share.
M. Premium contracts, regardless of risk transfer, are reported as
insurance as long as policies are issued in accordance with NAIC
Statutory Statement of Accounting Practice.
N. In accordance with SSAP No. 62 Property and Casualty Reinsurance, the
Company records a liability for commissions recorded in excess of
acquisition costs. The liability is earned as income over the life of
the contract.
O. In accordance with SSAP No. 62 Property and Casualty Reinsurance, the
Company reviews its ultimate losses in respect to its premium
reserves. A liability is established if the premium reserves are not
sufficient to cover the ultimate loss projections and associated
acquisition expenses. Investment income is not considered in the
calculation.
P. In accordance with SSAP No. 56 Retrospectively Rated Contracts, the
Company estimates accrued retrospectively rated premium adjustments by
using the application of historical ratios of retrospective rated
premium development. The Company records accrued retrospectively rated
premiums as an adjustment to earned premiums. As of December 31, 2004,
accrued premiums related to the Company's retrospectively rated
contracts amounted to $8,146,022.
2. Accounting Adjustments
As a result of regulatory inquiries into certain transactions, AIG
conducted an internal review of information and certain transactions from
January 2000 to May 2005. As part of the internal review, the Company
reviewed the statutory accounting treatment for matters identified during
the internal review and concluded that certain transactions required
adjustment. An agreement was reached with the Company's domiciliary state
to re-file its 2004 annual statement using the methodology described under
Statements of Statutory Accounting Principles (SSAP) 3, "Accounting Changes
and Correction of Errors". The agreement included a single 2004 year
9
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
presentation of its audited statutory financial statements. In applying
this methodology, the Company has reflected the impact to its 2003 and
prior unassigned surplus as an adjustment to unassigned surplus as of
January 1, 2004.
The major components affecting the beginning surplus at January 1, 2004 are
as follows:
(In thousands) Amount
---------------------------------------------------------------------
Total capital and surplus, as of December 31, previous
year $ 6,899,256
Adjustments to beginning surplus:
1. Union Excess (391,211)
2. Richmond (46,662)
3. Coventry (16,817)
4. In-Substance Defeasance 19,500
5. Loss Reserves (79,040)
6. DBG Analysis (56,278)
7. Other Adjustments (42,334)
Risk Transfer (Other than Union Excess
and Richmond) (17,510)
-----------
Total Adjustments to beginning surplus (545,684)
-----------
Total capital and surplus, as of January 1, 2004 $ 6,353,572
===========
The above reconciliation of opening capital and surplus at January 1, 2004
is presented net of income taxes. The Company has evaluated any deferred
income tax assets arising from these adjustments for admissibility in
accordance with Statutory Accounting Principles.
Explanation of Accounting Adjustments
1. Union Excess- reinsurance ceded to Union Excess Reinsurance Company,
Ltd. (Union Excess), a Barbados-domiciled reinsurer, did not result in
sufficient risk transfer because of AIG's control over certain
transactions undertaken directly or indirectly with Union Excess,
including the timing and nature of certain commutations. These
transactions have been adjusted to deposit accounting in accordance
with SSAP 62 "Property and Casualty Reinsurance" and SSAP 75
"Reinsurance Deposit Accounting-An Amendment to SSAP 62, Property and
Casualty Reinsurance."
2. Richmond- reinsurance ceded to subsidiaries of Richmond Insurance
Company, Ltd.(Richmond), a Bermuda-based reinsurance holding company,
did not result in sufficient risk transfer because of AIG's ability to
exert control over that entity. Such determination was based, in part,
on arrangements and documents, including "put agreements", requiring
an AIG subsidiary to purchase Richmond's outstanding shares. These
transactions have been adjusted to deposit accounting in accordance
with SSAP 62 "Property and Casualty Reinsurance" and SSAP 75
"Reinsurance Deposit Accounting-An Amendment to SSAP 62, Property and
Casualty Reinsurance".
3. Coventry- life settlements are designed to assist life insurance
policyholders to monetize the existing value of life insurance
policies. The Company recorded its proportionate share of the net
death benefits from the purchased contracts, net of reinsurance to a
third party reinsurer, as premium. Costs incurred to acquire the
contracts and keep them in force were recorded as paid losses, net of
reinsurance. The Company has determined, in light of new information
not available to management of the Company at the
10
time the initial accounting determination was made, that the
accounting for these transactions as insurance and reinsurance is
a misapplication of statutory accounting. and such transactions
have been reversed in the Company's financial statements.
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes toStatutory Basis Financial Statements for the year ended
December 31, 2004
4. In-Substance Defeasance - Company entered into a funding agreement and
related interest rate swap. These contracts were intended to be
entered into by American International Surplus Lines Insurance Company
(AISLIC) to economically hedge a corresponding AISLIC contract. The
Company has since assigned the intercompany funding agreement and
novated the interest rate swap to AISLIC as if in each case the
contracts had been entered into by AISLIC at inception.
5. Loss Reserves- Estimation of ultimate net losses and loss expenses is
a complex process requiring the use of assumptions which may be highly
uncertain at the time of estimation. The Company has determined that
Incurred But Not Reported Reserves (IBNR) were adjusted on a regular
basis without appropriate support for the adjustment. The Company does
not believe that any changes made materially affected the balance of
the Company's loss reserves because in each instance IBNR as adjusted
was within appropriate tolerance of the applicable actuarial point
estimate. The Company has determined that the unsupported changes in
reserves independently from the actuarial process constituted errors
which have been adjusted accordingly.
6. Domestic Brokerage Group "DBG" Analysis- The Company has determined
that allowances related to certain premium receivable, reinsurance
recoverable and other assets were not sufficient. The adjustment has
established additional allowances for these items.
7. Other Adjustments- The Company has summarized other miscellaneous
adjustments, that individually did not have a significant impact on
the adjustment of its statutory financial statements.
In addition to the above, the following accounting treatment has also been
agreed with the Company's domiciliary state:
Risk Transfer (Other than Union Excess and Richmond)- All assumed and ceded
reinsurance transactions without sufficient risk transfer have been
adjusted to deposit accounting in accordance with SSAP 62 "Property and
Casualty Reinsurance" and SSAP 75 "Reinsurance Deposit Accounting-An
Amendment to SSAP 62, Property and Casualty Reinsurance". Direct insurance
transactions identified as part of the internal review for which there was
insufficient risk transfer, other than those where a policy was issued (i)
in respect of the insured's requirement for evidence of coverage pursuant
to applicable statutes (insurance statutes or otherwise), contractual terms
or normal business practices, (ii) in respect of an excess insurer's
requirement for an underlying primary insurance policy in lieu of self
insurance, or (iii) in compliance with filed forms, rates and/or rating
plans, were adjusted to deposit accounting.
Nine Month Rule- The Company analyzed the current status of all reinsurance
treaties entered into on or after January 1, 1994 for which ceded reserves
as of December 31, 2004 (including IBNR) exceeded $100,000 for compliance
with the nine month rule as described in SSAP 62. Any such treaties for
which the documentation required by SSAP No. 62 did not exist were
reclassified as retroactive, with appropriate adjustments to underwriting
accounts and unassigned surplus. Treaties entered into prior to January 1,
2005 for which such documentation is contained in the Company's files
retained prospective treatment, irrespective of whether such documentation
was executed within nine months of the treaty's effective date in
accordance with agreements reached with the Domiciliary Insurance
Department.
Foreign Property Casualty Business: The Company will continue to follow the
current presentation practices relating to its foreign branches and
participation in the business of the American International Underwriters
Overseas Association (AIUOA). Refer to Note 4 for a description of AIUOA
pooling arrangement and related financial statement presentation.
3. Federal Income Taxes
The Company files a consolidated U.S. federal income tax return with the
Parent pursuant to a consolidated tax sharing agreement. The agreement
provides that the Parent will not charge the Company a greater portion of
the consolidated tax liability than would have been paid by the Company if
it had filed a separate federal income tax return. In addition, the
agreement provides that the Company will be reimbursed by the Parent for
tax benefits relating to any net losses of the Company utilized in filing
the consolidated return as well as alternative minimum tax credits
generated by the Company. The federal income tax recoverable/payable in the
accompanying statement of admitted assets, liabilities, capital and surplus
are due from/to the Parent. The U.S. federal income tax rate applicable to
ordinary income is 35% at December 31, 2004.
11
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
The components of the net deferred tax asset as of December 31, 2004 are as
follows:
[Download Table]
Amount
---------------
Gross deferred tax assets $ 920,086,561
Gross deferred tax liabilities 475,058,795
Non-admitted deferred tax assets in accordance with SSAP No.10,
income taxes 65,196,117
---------------
Net deferred tax assets admitted 379,831,649
---------------
Change in deferred tax assets non-admitted $ 65,196,117
---------------
Tax benefit on net underwriting and net investment income $ 65,519,057
Federal income tax adjustment - prior year 35,628,364
Tax expense on net realized gain 24,339,627
---------------
Current income taxes incurred $ 125,487,048
---------------
Prior years' federal income tax adjustment of $35,628,364 is accounted for
by increasing federal and foreign income tax expense in the 2004 statement
of income.
The main components of deferred tax amounts as of December 31, 2004 are as
follows:
Deferred Tax Assets Amount
------------------- ---------------
Loss reserve discount $ 422,379,371
Non-admitted assets 157,780,340
Unearned premium reserve 289,998,587
Unrealized capital losses 254,974
Other temporary differences 49,673,289
---------------
Gross deferred tax assets 920,086,561
Non-admitted deferred tax assets (65,196,117)
---------------
Admitted deferred tax assets $ 854,890,444
---------------
Deferred Tax Liabilities
------------------------
Partnership adjustments
Deferred stock on ILFC sale $ (307,216,789)
Unrealized capital gains (167,842,006)
---------------
Gross deferred tax liabilities (475,058,795)
---------------
Net admitted deferred tax assets $ 379,831,649
---------------
Gross deferred tax assets $ 920,086,561
Gross deferred tax liabilities (475,058,795)
---------------
Net deferred tax (liabilities) / assets $ 445,027,766
---------------
Tax effect of unrealized gains
12
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Actual tax expense on income from operations differs from the tax expense
calculated at the statutory tax rate. Among the more significant book to
tax adjustments in 2004 were the following:
[Enlarge/Download Table]
Amount Tax Effect
--------------- ---------------
Income before taxes $ 451,877,280 $ 158,157,049
Federal income tax adjustment - prior year 101,795,326 35,628,364
Tax exempt income and dividends received deduction (259,564,711) (90,847,649)
Non-admitted assets - (157,780,340)
Permanent adjustment to provision - (521,828)
Intercompany dividends (369,165,486) (129,207,920)
Writeoffs 36,926,280 12,924,198
Other (5,150,150) (1,802,553)
--------------- ---------------
Total $ (43,281,461) $ (173,450,679)
--------------- ---------------
Federal income tax incurred $ 125,487,048
Change in deferred tax (298,937,727)
---------------
Taxable income $ (173,450,679)
===============
The amount of federal income tax incurred and available for recoupment in
the event of future net loss:
Current year $ 89,858,684
First preceding year $ 201,254,022
Second preceding year $ -
4. Related Party Transactions
The Company, as well as certain other insurance company subsidiaries of the
Parent, is a party to an intercompany reinsurance agreement. In accordance
with the terms and conditions of this agreement, the member companies cede
all direct and assumed business (except that of the foreign branch) to NUF,
the lead company. In turn, each pool participant receives their percentage
share of the pooled business. Variances may exist between pool participants
due to normal timing differences. The Company's share of the pool is 38%.
Accordingly, premiums earned, losses and loss expenses incurred, and other
underwriting expenses, as well as related assets and liabilities, in the
accompanying financial statements emanate from the Company's percentage
participation in the pool.
Following is a list of all pool participants and their respective
participation percentages.
[Enlarge/Download Table]
NAIC Company Pool
Company Code Participation %
1) AIU Insurance Company 19399 1%
2) American International Pacific Insurance Company 23795 0%
3) American International South Insurance Company 40258 0%
4) American Home Assurance Company 19380 36%
5) Birmingham Fire Insurance Company of Pennsylvania 19402 5%
6) Commerce and Industry Insurance Company 19410 10%
7) Granite State Insurance Company 23809 0%
8) Illinois National Insurance Co. 23817 0%
9) The Insurance Company of the State of Pennsylvania 19429 5%
10) National Union Fire Insurance Company of Pittsburgh, Pa * 19443 38%
11) New Hampshire Insurance Company 23481 5%
* Lead Company
13
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Included in "Receivable/(payable) from/to parent, subsidiaries and
affiliates" of the accompanying Statement of Admitted Assets and
Liabilities as of December 31, 2004 are balances with pool member companies
generated as a result of the pooling arrangement of $709,842,798 payable to
the pool members.
The Company also reinsures risks and assumes reinsurance from other
affiliates. As agreed upon with the Insurance Department of the
Commonwealth of Pennsylvania transactions with Union Excess and Richmond
are treated as affiliated.
AIG formed American International Underwriters Overseas Association (the
Association), a Bermuda unincorporated association, in 1976, as the pooling
mechanism for AIG's international general insurance operations. Members in
the Association and their respective participation are: American
International Underwriters Overseas Limited (67%), New Hampshire Insurance
Company ("NHIC") (12%), National Union Fire Insurance Company of
Pittsburgh, PA. ("NUF") (11%) and American Home Assurance Company ("AHAC")
(10%). In exchange for membership in the Association at the assigned
participation, the members contributed capital in the form of cash and
other assets, including rights to future business written by international
operations owned by the members. The legal ownership and insurance licenses
of these international branches remain in the name of NHIC, NUF and AHAC.
At the time of forming the Association, the member companies entered into
an open-ended reinsurance agreement, cancelable with six months written
notice by any member. The reinsurance agreement governs the insurance
business pooled in the Association. As mentioned in note 2, the Company
continues to follow the current practices relating to its foreign branches
and participation in the business of AIUOA by recording: (i) its net (after
pooling) liability on such business as direct writings in its statutory
financial statements, rather than recording gross direct writings with
reinsurance cessions to the other pool members; (ii) its corresponding
balance sheet position, excluding loss reserves, as a net equity interest
in "Equities in underwriting pools and associations"; and (iii) loss
reserves recorded on a gross basis. As of December 31, 2004, the Company's
interest in AIUOA amounted to $530,063,056, gross of $623,392,304 in loss
reserves.
Additionally the Company holds 16.88% of the issued share capital of AIG
Europe S.A. for the beneficial interest of the Association.
The following table summarizes the transactions by the Company with any
affiliated companies that met the reporting threshold (more than half of 1%
of admitted assets of the Company) in 2004 (excluding reinsurance and cost
allocation transactions).
[Enlarge/Download Table]
Assets Received by Assets Transferred by
2004 Insurer Insurer
---- -------------------------- -------------------------
Date of Explanation of Name of Name of Statement Statement
Transaction Transaction Insurer Affiliate * Value Description Value Description
3/3/2004 Dividend NUF PARENT $ - - $ 48,347,891 Cash
6/3/2004 Dividend NUF PARENT $ - - $ 59,518,653 Cash
9/3/2004 Dividend NUF PARENT $ - - $ 48,875,141 Cash
12/3/2004 Dividend NUF PARENT $ - - $ 49,578,141 Cash
12/17/2004 Purchase of Bonds NUF UGC $284,634,545 Bonds $284,634,545 Cash
3/3/2004 Dividend NUF ILFC & AIGCC $ 27,636,250 Cash $ - -
6/3/2004 Dividend NUF ILFC & AIGCC $ 27,812,000 Cash $ - -
9/3/2004 Dividend NUF ILFC & AIGCC $ 27,812,000 Cash $ - -
12/3/2004 Dividend NUF ILFC & AIGCC $ 28,866,500 Cash $ - -
* UGC: United Guaranty Corporation; ILFC: International Lease Finance
Corporation; AIGCC: AIG Capital Corporation
The Company did not change its methods of establishing terms regarding any
affiliate transaction during the year ended December 31, 2004.
The Company has ownership interests in certain affiliated real estate
holding companies. In the ordinary course of business, the Company utilizes
the services of certain affiliated companies for data center systems,
investment, salvage and subrogation and claims management. These companies
are AIG Data Center, Inc., AIG Global Investment Corp. and AIG Global Trust
Services, Limited, AI Recovery, Inc., and AIG Domestic Claims, Inc.,
respectively. In 2004 the Company paid these affiliated companies fees of
$25,777,906, $4,241,255, $229,185, $3,273,810 and $120,686,509,
respectively. Included in short-term investments and other invested assets
are AIG managed money market fund of $109,445,916 and the AIG domestic fund
of $424,496, respectively as of December 31, 2004.
14
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
At December 31, 2004 the Company had the following balances receivable from
its affiliates (excluding reinsurance transactions):
Company 2004
------- ---------------
AIG $ 630,957,888
---------------
Current federal and foreign income tax recoverable from
parent $ 630,957,888
---------------
During 2004, the Company sold $227,539,431 of premium receivables without
recourse to AI Credit Corp. and recorded a loss of $2,991,811.
The Company has issued guarantees whereby the Company unconditionally and
irrevocably guarantees all present and future obligations and liabilities
of any kind arising from the polices of insurance issued by the guaranteed
companies in exchange for an annual guarantee fee. The guarantees are not
expected to have a material effect upon the Company's surplus as guaranteed
companies have admitted assets in excess of policyholder liabilities. The
Company believes that the likelihood of a payment under the guarantee is
remote. These guarantees are provided to maintain the guaranteed company's
rating status issued by rating agencies. In the event of termination of a
guarantee, obligations in effect or contracted for on the date of
termination would remain covered until extinguished. The Company is party
to an agreement with AIG whereby AIG has agreed to make any payments due
under the guarantees in the place and stead of the Company.
The following is a list of guarantees in effect as of December 31, 2004.
[Enlarge/Download Table]
(in thousands) Guarantee Policyholder Invested Estimated Policyholder
Guaranteed Company Issued Obligations Assets Loss Surplus
------------------ ---------- ------------ ----------- ----------- ------------
Audubon Insurance Company 11/5/1997 $ 30,838 $ 124,091 $ - $ 56,654
Landmark Insurance Company 3/2/1998 85,746 198,958 - 88,380
Starr Excess Liability Insurance Company, Ltd. 7/29/1998 225,860 1,939,969 - 584,076
Starr Excess Liability Insurance International
Limited 5/28/1998 1,597,007 302,793 - 237,226
American International Insurance Company of Puerto
Rico 11/5/1997 276,599 172,268 - 109,561
AHICO First American-Hungarian Insurance Company 9/15/1998 13,794 15,874 - 15,791
AIG Europe (Ireland) Ltd. 12/15/1997 569,814 373,536 - 145,441
AIG Global Trade and Political Risk Ins. Co. 11/5/1997 - 312,219 - 213,107
AIG Poland Insurance Company 9/15/1998 24,946 41,456 - 23,651
AIG Russia Insurance Company ZAO 9/15/1998 87,954 91,484 - 14,464
AIG Slovakia Insurance Company A.S. 12/23/1998 5,444 3,285 - 3,118
La Meridional Compania Argentina de Seguros S.A. 1/6/1998 91,912 49,810 - 51,687
AIG Romania Insurance Company 12/23/1998 10,272 5,268 - 4,295
AIG Ukraine Insurance Company 10/1/2000 1,177 1,386 - 716
AIG Bulgaria Ins and Reinsurance Co 12/23/1998 4,998 4,055 - 4,015
AIG Life Insurance Company * 7/13/1998 9,200,210 10,143,973 - 739,951
American International Assurance Co (Bermuda) Ltd. 8/23/1999 5,813,905 8,102,130 - 1,322,741
American International Life Assurance Company of NY * 7/13/1998 7,391,673 7,949,041 - 565,892
New Hampshire Indemnity Company, Inc. 12/15/1997 97,465 230,177 - 98,133
------------ ------------ ----------- -----------
Total $ 25,529,614 $ 30,061,773 $ - $ 4,278,899
------------ ------------ ----------- -----------
* The guaranteed Company is also backed by a support agreement issued by AIG.
15
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Changes in the Company's equity in the following affiliates are included in
"Change in net unrealized capital gains."
[Enlarge/Download Table]
2004 Equity
Company Ownership Cost 2004 Equity 2004 Change
--------------------------------------------------------------------------------------------------
Preferred Stock:
----------------
AIG Life Insurance Company 100.00% $ 250,000 $ 250,000 $ -
AIG Capital Corporation 100.00% 2,000,000 2,000,000 -
Common stock:
-------------
International Lease Finance Corp. 35.15% 793,240 1,955,638 157,324
Lexington Insurance Company 70.00% 257,973 1,566,921 181,945
United Guaranty Corporation 45.88% 74,893 272,711 142,547
AIU Insurance Company 32.00% 40,000 189,216 37,909
American International Specialty
Lines Insurance Company 70.00% 74,497 245,798 (13,173)
Starr Excess Liability Ins. Co. Ltd. 100.00% 385,454 581,017 45,181
Pine Street Real Estate Holding Corp. 76.80% 3,139 14,961 642
Pine Street I Holdings LLC 76.79% - - (113,818)
21st Century Insurance Group 33.14% 467,720 290,917 (3,209)
American International Realty, Inc. 22.06% 20,736 19,123 (3,936)
Eastgreen, Inc. 9.40% 8,976 9,519 376
AIG Lodging Opportunities, Inc. 100.00% 3,139 3,236 761
National Union Fire Ins. Co. of Vermont 100.00% 1,000 - (2,510)
National Union Fire Ins. Co. of La. 100.00% 2,500 5,919 315
---------- ---------- ----------
Total $4,383,267 $7,404,976 $ 430,354
========== ========== ==========
The remaining equity interest in these equities, except for 21st Century
Insurance Group, is owned by other affiliated companies, which are wholly
owned by the Parent.
From time to time the Company may own investments in partnerships across
various other AIG affiliated entities with a combined percentage greater
than 10%.
16
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
5. Pension Plans and Deferred Compensation
Employees of AIG, the ultimate holding company, its subsidiaries and
certain affiliated companies, including employees in foreign countries, are
generally covered under various funded and insured pension plans.
Eligibility for participation in the various plans is based on either
completion of a specified period of continuous service or date of hire,
subject to age limitation.
AIG's U.S. retirement plan is a qualified, non-contributory defined benefit
retirement plan which is subject to the provisions of the Employee
Retirement Income Security Act of 1974. All employees of AIG and most of
its subsidiaries and affiliates who are regularly employed in the United
States, including certain U.S. citizens employed abroad on a U.S. dollar
payroll, and who have attained age 21 and completed twelve months of
continuous service are eligible to participate in this plan. An employee
with five or more years of service is entitled to pension benefits
beginning at normal retirement at age 65. Benefits are based upon a
percentage of average final compensation multiplied by years of credited
service limited to 44 years of credited service. The average final
compensation is subject to certain limitations. The employees may elect
certain options with respect to their receipt of their pension benefits
including a joint and survivor annuity. An employee with 10 or more years
of service may retire early from age 55 to 64. An early retirement factor
is applied resulting in a reduced benefit. If an employee terminates with
less than five years of service, such employees forfeit their right to
receive any pension benefits accumulated thus far.
Annual funding requirements are determined based on the "projected unit
credit" cost method which attributes a pro rata portion of the total
projected benefit payable at normal retirement to each year of credited
service.
The AIG projected benefit obligation was $2,750 million at December 31,
2004. Plan assets were $2,247 million at the same date. The assumptions
with respect to the discount rate and the average rate of increase in
future compensation levels used in determining the actuarial present value
of the projected benefit obligation for this plan at December 31, 2004 was
5.75 percent for discount rates and 4.25 percent for the average rate of
increase in future compensation levels at December 31, 2004.
The expected long term rate of return on plan assets was 8.25 percent at
December 31, 2004. The Company's share of net expense for the qualified
pension plan was $10.4 million at December 31, 2004.
AIG is the Plan Sponsor of the pension and post retirement and benefit
plans and is ultimately responsible for the conduct of the plans. The
Company is only obligated to the extent of their allocation of expenses
from these plans.
Deferred Compensation Plan
Some of the Company's officers and key employees are participants in AIG's
stock option plans of 1987 and 1991. Details of these plans are published
in AIG's 2004 Annual Report on Form 10-K. The Parent company is correctly
bearing the cost of these stock options and certain other deferred
compensation programs.
Postretirement Benefit Plans
AIG's US postretirement medical and life insurance benefits are based upon
the employee electing immediate retirement and having a minimum of 10 years
of service. Retirees and their dependents who were 65 by May 1, 1989
participate in the medical plan at no cost. Employees who retired after May
1, 1989 and or prior to January 1, 1993 pay the active employee premium if
under age 65 and 50% of the active employee premium if over age 65. Retiree
contributions are subject to adjustment annually. Other cost sharing
features of the medical plan include deductibles, coinsurance and Medicare
coordination and a lifetime maximum benefit of $2.0 million The maximum
life insurance benefit prior to age 70 is $32,500, with a maximum $25,000
thereafter.
Effective January 1, 1993 both plans' provisions were amended. Employees
who retire after January 1, 1993 are required to pay the actual cost of the
medical insurance benefit premium reduced by a credit which is based upon
years of service at retirement. The life insurance benefit varies by age at
retirement from $5,000 for retirement at ages 55 through 59 and $10,000 for
retirement at ages 60 through 64 and $15,000 from retirement at ages 65 and
over.
17
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Assumptions associated with the accrued post retirement benefit liability
at December 31, 2004 are as follows:
2004
----
Discount rate 5.75%
Average salary rate increase 4.25%
Medical trend rate year 1* 10.00%
Medical trend rate year 6 and
over* 5.00%
* The medical trend rate grades downward from years 1 through 5. The trend
rate remains level thereafter.
The postretirement benefit obligations and amounts recognized in AIG's
consolidated balance sheet as of December 31, 2004 was $243 million. These
obligations are not funded currently.
The medical trend rate assumptions have a significant effect on the amounts
reported. Increasing each trend rate by 1 percent in each year would
increase the accumulated postretirement benefit obligation as of December
31, 2004 by approximately $3.3 million and the aggregate service and
interest cost components of the periodic postretirement benefit costs for
2004 by approximately $0.2 million. Decreasing each trend rate by 1 percent
in each year would decrease the accumulated postretirement benefit
obligation as of December 31, 2004 by approximately $3.0 million and the
aggregate service and interest cost components of the periodic
postretirement benefit costs for 2004 by approximately $0.2 million.
The Company's share of other postretirement benefit plans was $134.4
thousand for 2004. Postretirement calculations are based principally on the
formula described in the AIG Retirement Plan document.
Post-employment Benefits and Compensated Absences
AIG provides certain benefits provided to inactive employees who are not
retirees. Certain of these benefits are insured and expensed currently;
other expenses are provided for currently. Such expenses include medical
and life insurance continuation and COBRA medical subsidies.
18
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
6. Investments
The actual fair market value priced by Interactive Data Corp., a third
party rating source, for the below listed securities as of December 31,
2004 was $9,673,296,000.
The amortized cost and NAIC market values of investments in debt securities
at December 31, 2004 was as follows:
[Enlarge/Download Table]
(in thousands)
--------------
Gross Gross NAIC
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ------------- ------------- -------------
2004
Debt securities:
U.S. governments: $ 45,062 $ 1,117 $ 144 $ 46,035
All other governments: 465,565 17,831 260 483,136
States, territories and possessions: 2,097,759 58,903 4,204 2,152,458
Political subdivisions of states, territories
and possessions: 1,933,929 56,880 555 1,990,254
Special revenue & special assessment obligation
and all non-guaranteed obligations of agencies and
authorities of government and their political
subdivisions: 4,300,455 131,102 2,836 4,428,721
Public utilities: 10,515 1,205 - 11,720
Industrial & miscellaneous: 452,170 6,795 716 458,249
------------- ------------- ------------- -------------
Total debt securities: $ 9,305,455 $ 273,833 $ 8,715 $ 9,570,573
------------- ------------- ------------- -------------
The amortized cost and NAIC market values of debt securities at December
31, 2004, by contractual maturity, are shown below. Actual maturities may
differ from contractual maturities because borrowers may have the right to
call or prepay certain obligations with or without call or prepayment
penalties.
[Download Table]
(in thousands)
--------------
Amortized NAIC
Cost Market Value
--------------- ---------------
Due in one year or less $ 29,408 $ 37,302
Due after one year through five years 507,375 519,338
Due after five years through ten years 1,447,668 1,482,452
Due after ten years 7,083,325 7,293,798
Mortgaged-backed securities 237,679 237,683
--------------- ---------------
Total $ 9,305,455 $ 9,570,573
--------------- ---------------
Proceeds from sales of investments in debt securities during 2004 were
$2,126,400,238. Gross gains of $18,766,509 and gross losses of $19,711,930
were realized on those sales in 2004.
Securities carried at amortized cost of $1,248,472,132 were deposited with
regulatory authorities as required by law at December 31, 2004.
19
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Proceeds from sales of equity investments amounted to $501,263,837 in 2004.
Gross gains of $57,844,801 and gross losses of $7,160,919 were realized on
those sales in 2004. Net unrealized appreciation of equity investments,
including affiliates, at December 31, 2004 included gross unrealized gains
of $3,326,964,622 and gross unrealized losses of $192,929,755.
In 2004 the Company reported the following write downs on its joint venture
and partnership investments due to an other than temporary decline in fair
value:
Marlwood $ 8,876,837
Odyssey Invest 1,914,359
Advance Technology Venture V 1,044,759
Items Less Than $1 Million 753,998
---------------
Total $ 12,589,953
===============
As of December 31, 2004 securities with a market value of $41,887,886 were
on loan. The Company receives as collateral 102% of the market value of
domestic transactions and 105% for cross-border transactions. Securities
lent, under the Securities Lending Agreement, are under exclusive control
of the Company. Pursuant to the Securities Agency Lending Agreement, AIG
Global Securities Lending Corporation, a Delaware registered company,
maintains responsibility for the investment and control of such collateral.
Therefore, no additional disclosures are required to be reported for these
transactions.
Included in "Net investment income earned" are investment expenses of
$121,624,316 for 2004.
Aging of the pre-tax unrealized losses with respect to debt securities
including the number of respective items is as follows:
[Enlarge/Download Table]
(in thousands)
--------------
Gross
Amortized Unrealized Number of
2004 Cost Loss Securities
---- ------------ ------------ -----------
Less than six months $ 146,927 $ 348 28
More than six months but less than nine months 648,929 3,922 49
More than nine months but less than twelve months 110,196 959 6
Twelve months or greater 318,343 3,486 21
------------ ------------ -----------
Total $ 1,224,395 $ 8,715 104
============ ============ ===========
The Company plans to hold its securities until the gross unrealized losses
are recovered.
7. Reinsurance
In the ordinary course of business, the Company reinsures certain risks
with affiliates and other companies. Such arrangements serve to limit the
Company's maximum loss on catastrophes, large and unusually hazardous
risks. To the extent that any reinsuring company might be unable to meet
its obligations, the Company would be liable for its respective
participation in such defaulted amounts. The Company purchased catastrophe
excess of loss reinsurance covers protecting its net exposures from an
excessive loss arising from property insurance losses and excessive losses
in the event of a catastrophe under workers' compensation contracts issued
without limit of loss.
As of December 31, 2004 the Company had reinsurance recoverables in dispute
of $80,435,000.
Reserves for unearned premiums and paid and unpaid losses and loss
adjustment expenses, including those incurred but not reported to the
Company, have been reduced for reinsurance ceded as follows:
20
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
[Download Table]
(in thousands)
--------------
Unpaid Losses
Paid Losses and and Loss
Unearned Premium Loss Adjustment Adjustment
2004 Reserves Expenses Expenses
---- ---------------- ---------------- ----------------
Affiliates $ 9,095,231 $ (5,225) $ 29,697,663
Non-Affiliates 488,434 264,218 2,999,793
---------------- ----------------- ----------------
Total $ 9,583,665 $ 258,993 $ 32,697,456
---------------- ----------------- ----------------
Net premiums written and earned comprise the following:
(in thousands)
--------------
Written Earned
--------------- ---------------
2004
Direct business $ 6,361,956 $ 6,291,282
Reinsurance assumed
Affiliates 21,103,816 19,703,510
Non-Affiliates 502,326 533,280
--------------- ---------------
Reinsurance ceded
Affiliates 19,544,479 18,386,791
Non-Affiliates 1,394,320 1,548,619
--------------- ---------------
Net premiums $ 7,029,299 $ 6,592,662
=============== ===============
Reinsurance Accounted for as a Deposit
The Company has entered into several reinsurance agreements, both treaty
and facultative, which, were determined to be of a deposit type nature. At
the inception of the agreements, the Company recorded initial deposit
assets of $2,216,986,587 and initial deposit liabilities of $(789,132,395).
As of December 31, 2004, the Company had a remaining deposit asset of
$1,870,606,809 after taking into account interest income of 112,880,397,
loss recoveries of $468,524,055 and additional deposits of $9,263,881 and a
remaining deposit liability of $(691,334,955) after taking into account
interest expense of $(38,858,587), loss payouts of $105,060,891,
amortization of margin of $47,798,181 and additional deposit liabilities of
$(16,203,045). As of December 31, 2004 the non-admitted portion of deposit
accounting assets was $140,850,525.
The following unsecured reinsurance recoverables exceeded 3% of the capital
and surplus of the Company at December 31, 2004:
21
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
[Enlarge/Download Table]
(in thousands)
---------------
Reinsurer Amount
--------- -------------------------------
Affiliates $ 37,207,997
Berkshire Hathaway International 337
Cologne Reinsurance Co. of America 1,285
Faraday Reinsurance Co. Ltd. (F/Cologne Re. Co.) 985
Geico General Insurance Co. 476
General & Cologne Life Re of America 2,562
General & Cologne Re Australasia Ltd. (New Zealand Branch) 92
General Cologne Re Ruckvers-Ag. Wien (F/Kolnische) 285
General Re Australasia Ltd. (formerly General Cologne Aust) 841
General Cologne Re UK Ltd. (F/ General Re Europe) 163
General Reinsurance Corporation 190,050
General Star Indemnity 10
General Star National Insurance Co. 2,463
Kolnische Ruckversicherungs Gesellschaft 73
National Indemnity Company 47,869
Republic Insurance Company 1,792
Unione Italiana Reinsurance Co. of America 486
-------------
Total Berkshire Hathaway Group 249,769
-------------
Total $ 37,457,766
=============
Reinsurance Assumed and Ceded
The maximum amount of return commission which would have been due
reinsurers if all of the Company's reinsurance had been cancelled as of
December 31, 2004 with the return of the unearned premium reserve is as
follows:
[Enlarge/Download Table]
2004
Assumed Reinsurance Ceded Reinsurance Net
------------------------- ------------------------- -------------------------
Premium Commission Premium Commission Premium Commission
(in thousands) Reserves Equity Reserves Equity Reserves Equity
Affiliated $ 9,810,548 $ 1,168,028 $ 9,095,231 $ 1,058,103 $ 715,317 $ 109,925
Non Affiliated 945,951 112,624 488,434 56,822 457,517 55,802
----------- ----------- ----------- ----------- ----------- -----------
Total $10,756,499 $ 1,280,652 $ 9,583,665 $ 1,114,925 $ 1,172,834 $ 165,727
=========== =========== =========== =========== =========== ===========
The Company has reported in its 2004 underwriting results $65,362,900 of
statutory loss comprised of premiums earned of $(8,776,886) and losses
incurred of $56,586,014 as a result of commutations with the following
reinsurers:
22
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Company Amount
------- ------------
Farm Bureau Mutual $ 669,519
Providence Washington (18,231)
TIG Insurance Co. (918,265)
Aviabel S.A. 289,327
Royal and Sun Alliance PLC 247,093
CX Reinsurance 4,511,170
SCOR Re 22,458,233
AXA Corporate Solutions 3,668,052
AXA Albingia 6,161,394
National Indemnity Co. 2,818,968
General Re Corp. 16,983,762
Western General Insurance -
Trenwick America 616,048
Cottrell Syndicate (70,715)
Converium Reins. 7,946,545
------------
Total $ 65,362,900
============
[Download Table]
Assumed Ceded
------------- -------------
Retroactive Reinsurance as of December 31, 2004
a Reserves Transferred:
1) Initial Reserves $ 228,366,301 $ 166,075,748
2) adjustments - prior year(s) - -
3) adjustments - current year (191,306,975) (54,220,952)
------------- -------------
4) current total $ 37,059,326 $ 111,854,796
------------- -------------
b Consideration Paid or Received:
1) Initial Reserves $ 205,770,000 $ 291,794,595
2) adjustments - prior year(s) - -
3) adjustments - current year (190,000,000) (19,040,279)
------------- -------------
4) current total $ 15,770,000 $ 272,754,316
------------- -------------
c Paid Loss Reimbursed or Recovered:
1) prior year(s) $ 1,511,434 $ 312,858,356
2) current year 1,879,380 31,209,799
------------- -------------
3) current total $ 3,390,814 $ 344,068,155
------------- -------------
d Special Surplus from Retroactive Reinsurance:
1) initial surplus gain or loss $ - $ 50,200,810
2) adjustments - prior year(s) - -
3) adjustments - current year - 35,909,134
------------- -------------
4) current year restricted surplus - 86,109,944
------------- -------------
5) cumulative total transferred to unassigned funds $ - $ 1,905,426
------------- -------------
e. All cedents and reinsurers involved in all transactions included in
summary totals above:
23
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
[Download Table]
NAIC/Alien
Code Company Assumed Ceded
--------------- --------------- --------------- ---------------
(in thousands)
--------------
AA-1320035 AXA RE $ - $ 1,066,149
19453 TRANSRECO - 1,104,850
AA-3194128 ALLIED WORLD ASSURANCE CO. LTD - 9,791
AA-3194126 ARCH REINSURANCE LTD. - 19,583
AA-3194130 ENDURANCE SPECIALTY INSURANCE - 178,537
AA-1121425 MARKEL INTL INSURANCE CO LTD. - 137,667
39845 EMPLOYERS REINSURANCE CO - 118,119
10357 PLATINUM UNDERWRITERS REINSURA - 79,477
23043 LIBERTY MUTUAL - 54,736
22977 LUMBERMENS MUTUAL CASUALTY CO - 182,428
42439 TOA RE INS CO OF AMERICA - 232,475
AA-1121366 SPHERE DRAKE INSURANCE LTD - 4,509
AA-1340099 ALLIANZ MARINE & AVIATION VERS - 50,865
30058 SCOR REINS. CO. - 15,638
AA-3190800 ALEA (BERMUDA) LTD. - 261,447
AA-1120355 CX REINSURANCE COMPANY LTD. - 364,856
AA-1340125 HANNOVER RUCKVERSICHERUNGS AG. - 332,674
19895 ATLANTIC MUTUAL INS. CO. - 13,299
AA-1930320 GORDIAN RUNOFF LTD. - 50,039
AA-1320105 COMPAGNIE TRANSCONTINENTALE DE - 3,337
AA-1340085 E&S RUCKVERSICHERUNGS AG - 5,338
AA-1340255 WURTTEMBURGISCHE VERSICHERUNG, - 151,740
AA-1120440 COPENHAGEN REINSURANCE (U.K.) - 3,008
AA-1120140 ALLIANZ CORNHILL INS PLC - 161,388
AA-1121400 SWISS REINSURANCE CO. (UK) LTD - 121,040
AA-1460080 HELVETIA, COMPAGNIE SUISSE D'A - 130,063
AA-1460025 LA BALOISE INS. CO. LTD. - 64,672
10103 AMERICAN AGRICULTURAL INS. CO. - 30,448
10227 AMERICAN REINSURANCE - 157,714
24767 ST. PAUL F&M-MN. - 629,661
25070 CLEARWATER INS. CO - 196,976
AA-1340218 TELA VERSICHERUNG AKT. - 45,130
22969 GE REINSURANCE CORP. - 82,143
AA-1120512 GE SPECIALTY - 9,060
25364 SWISS RE AMERICA CORP. - 1,755,792
20443 CONTINENTAL CASUALTY COMPANY - 166,103
13021 UNITED FIRE & CASUALTY COMPANY - 1,684
AA-1120481 QBE INT'L INS LTD - 96,559
AA-1560483 HANNOVER RE-CANADA - 301,112
AA-3190256 LYNDON PROPERTY INS. CO. - 277,258
10048 HYUNDAI M & F INS CO (US BR) - 2,527
AA-1126002 LLOYDS 0002 - 161,388
AA-1126033 LLOYDS 0033 - 1,501
AA-1126040 LLOYDS 0040 - 3,008
AA-1126079 LLOYDS 0079 - 15,071
AA-1126112 LLOYDS 0112 - 4,522
AA-1126122 LLOYDS 0122 - 3,008
AA-1126183 LLOYDS 0183 - 6,032
24
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
[Download Table]
AA-1126205 LLOYDS 0205 - 63,704
AA-1126376 LLOYDS 0376 - 3,008
AA-1126483 LLOYDS 0483 - 4,522
AA-1126484 LLOYDS 0484 - 2,255
AA-1126535 LLOYDS 0535 - 95,566
AA-1126957 LLOYDS 0957 - 84,612
AA-1126990 LLOYDS 0990 - 32,603
AA-1126991 LLOYDS 0991 - 3,008
AA-1127003 LLOYDS 1003 - 4,522
AA-1127047 LLOYDS 1047 - 1,501
AA-1127212 LLOYDS 1212 - 194,896
AA-1127215 LLOYDS 1215 - 3,008
AA-1127221 LLOYDS 1221 - 95,566
AA-1128488 LLOYDS 2488 - 212,435
AA-1126034 LLOYDS 0034 - 12,050
AA-1128001 LLOYDS 2001 - 48,417
AA-1127241 LLOYDS 1241 - 242,783
82627 SWISS RE LIFE & HEALTH AMERICA - 347,690
31089 REPUBLIC WESTERN INS CO - 4,211
38776 FOLKSAMERICA REINSURANCE CO. - 236,880
36552 AXA CORPORATE SOLUTIONS - 31,609
39322 GENERAL SECURITY NATIONAL - 244,494
34894 TRENWICK AMERICA RE - 207,995
32603 BERKLEY INS CO - 78,857
AA-1320035 AXA RE - 135,307
AA-1120126 ALEA LONDON LTD. - 80,695
39675 PMA CAPITAL INS CO - 157,714
AA-1560745 SCOR CANADA REINSURANCE COMPAN - 389,177
42439 TOA-RE INS CO. - 257,957
AA-1340090 GE FRANKONA RUCKVERSICHERUNGS - 14,736
AA-3190529 GAI INS CO. LTD. - 135,127
23680 ODYSSEY AMER RE CORP. - 1,193,283
AA-3190005 AMERICAN INTERNATIONAL REINS. CO., LTD. - 64,376,560
15032 GUIDEONE MUTUAL INS. CO. 11,269,882 -
AA-3191086 ASTRO LTD. - 664,722
10535 ALASKA SCHOOLS INS. CO. - 45,256
AA-3160040 DBB INSURANCE CO. LTD. - 186,064
- UPINSCO INC. - 3,405,007
- P.E.G. REINSURANCE CO. - 28,515,669
- BUILDERS INS. CO., LTD. - 145,075
19399 AIU INSURANCE CO. 1,074,171 1,031,829
19380 AMERICAN HOME ASSURANCE CO. 5,111,238 -
19445 NATIONAL UNION INS. CO. OF PITTSBURGH, PA. 19,604,035 -
------------ --------------
Total $ 37,059,326 $ 111,854,796
------------ --------------
25
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
8. Capital and Surplus and Dividend Restrictions
Under Pennsylvania law the Company may pay cash dividends only from earned
surplus determined on a statutory basis. Further, the Company is restricted
(on the basis of the greater of 10% of the Company's statutory surplus,
excluding approximately $1.9 billion from an investment in an affiliate for
which proper approval from the Insurance Department of the Commonwealth of
Pennsylvania has been received, as of December 31, 2004, or 100% of the
Company's net income, for the preceding twelve-month period ending December
31, 2004) as to the amount of dividends it may declare or pay in any
twelve-month period without the prior approval of the Insurance Department
of the Commonwealth of Pennsylvania. At December 31, 2004, the maximum
dividend payments, which may be made without prior approval during 2005, is
approximately $739,743,022. Within the limitations noted above, there are
no restrictions placed on the portion of Company profits that may be paid
as ordinary dividends to stockholders. There were no restrictions placed on
the Company's surplus including for whom the surplus is being held. There
is no stock held by the Company for any special purpose. The portion of
unassigned funds (surplus) at December 31, 2004 represented or reduced by
each item below is as follows:
(a) Unrealized gains and losses $ 3,366,545,473
(b) Non-admitted asset values $ (560,218,619)
(c) Separate account business $ -
(d) Assets valuation reserves $ -
(e) Provision for reinsurance $ (334,695,745)
The Company has 1,000,000 shares authorized, 895,750 issued and outstanding
of common stock with a par value per share of $5. The Company has no
preferred stock outstanding.
The issued capital and surplus position of the Company at December 31, 2004
was as follows:
2004
----------------
Common stock, par value $ 4,478,750
Common stock in excess of par value 2,494,261,950
----------------
Total capital 2,498,740,700
----------------
Unassigned surplus 4,791,970,884
Special surplus from retroactive
reinsurance 86,109,944
----------------
Total surplus 4,878,080,828
----------------
Total capital and
surplus $ 7,376,821,528
----------------
9. Other Items
September 11, 2001 Events
In 2004, the gross losses recognized as a result of September 11 events for
the Company were $(25,297,272) of which $(19,800,683) are recovered or
recoverable. Thus, the net incurred is $(5,496,589). All contingencies and
unpaid claims or losses resulting from the September 11 events have been
recognized in the financial statements. The Company does not expect any
unrecognized contingencies or unpaid claims or losses to impact the
financial statements in the near term. The Company does not believe it is
subject to any unusual risk concentrations.
The Company underwrites a significant concentration of its direct business
with brokers.
As of December 31, 2004 the amount of reserve credit recorded for high
deductibles on unpaid claims was $3,369.4 million and the amount billed and
recoverable on paid claims was $387.6 million. As of December 31, 2004 the
non-admitted balance was $22.3 million.
Guaranty fund receivables represent payments to various state insolvency
funds which are recoupable against future premium tax payment in the
respective states. Various states allow insurance companies to recoup
assessments over a period of five to ten years.
The Company's direct percentage of policyholder dividend participating
policies is 0%. Policyholder dividends are accounted for on an incurred
basis and the amount of policyholder dividends was $561,863 in 2004.
26
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
The following balances comprise "Other Assets" in the accompanying
Statement of Admitted Assets.
2004
-------------
Guaranty funds receivable or on deposit $ 19,744,875
Loss funds on deposit 79,741,087
Outstanding loss drafts 293,065,933
Accrued recoverables 6,294,320
Other (42,381,576)
-------------
Other assets $ 356,464,639
-------------
The Company routinely assesses the collectibility of its receivable
balances and has established reserves for potential uncollectible premiums
receivable due from agents' and reinsurance recoverable balances. The
Company has established reserves of $106.9 million to cover any potential
uncollectible balance, which are reported as a contra asset within "Other
Assets" in the accompanying Statement of Admitted Assets.
10. Contingencies
Legal Proceedings:
The Company is involved in various legal proceedings incident to the
operation of its business. Such proceedings include claims litigation in
the normal course of business involving disputed interpretations of policy
coverage. Other proceedings in the normal course of business include
allegations of underwriting errors or omissions, bad faith in the handling
of insurance claims, employment claims, regulatory activity, and disputes
relating to the Company's business ventures and investments.
Other legal proceedings include the following:
AIG, the Company, and American International Specialty Lines Insurance
Company (AISLIC) have been named defendants (the AIG Defendants) in two
putative class actions in state court in Alabama that arise out of the 1999
settlement of class and derivative litigation involving Caremark Rx, Inc.
(Caremark). An excess policy issued by a subsidiary of AIG with respect to
the 1999 litigation was expressly stated to be without limit of liability.
In the current actions, plaintiffs allege that the judge approving the 1999
settlement was misled as to the extent of available insurance coverage and
would not have approved the settlement had he known of the existence and/or
unlimited nature of the excess policy. They further allege that the AIG
Defendants and Caremark are liable for fraud and suppression for
misrepresenting and/or concealing the nature and extent of coverage. In
their complaint, plaintiffs request compensatory damages for the 1999 class
in the amount of $3.2 billion, plus punitive damages. The AIG Defendants
deny the allegations of fraud and suppression and have asserted, inter
alia, that information concerning the excess policy was publicly disclosed
months prior to the approval of the settlement. The AIG Defendants further
assert that the current claims are barred by the statute of limitations and
that plaintiffs' assertions that the statute was tolled cannot stand
against the public disclosure of the excess coverage. Plaintiffs, in turn,
have asserted that the disclosure was insufficient to inform them of the
nature of the coverage and did not start the running of the statute of
limitations. On January 28, 2005, the Alabama trial court determined that
one of the current actions may proceed as a class action on behalf of the
1999 classes that were allegedly defrauded by the settlement. The AIG
Defendants, and Caremark are seeking appellate relief from the Alabama
Supreme Court. The AIG Defendants cannot now estimate either the likelihood
of their prevailing in these actions, or the potential damages in the event
liability is determined.
On September 2, 2005 AIG sued Robert Plan Corporation, the agency, which
services the Personal Lines Pool assigned risk business alleging the
misappropriation of funds and other violations related to contractual
arrangements. On September 27, 2005, Robert Plan Corporation countersued
AIG for $370 million in disgorged profits and $500 million of punitive
damages. Subsequently, American Home Assurance Company was named as a
plaintiff in this case. AIG believes this lawsuit is without merit and
intends to defend it vigorously.
On October 14, 2004, the Office of the Attorney General of the State of New
York (NYAG) brought a lawsuit challenging certain insurance brokerage
practices related to contingent commissions. Neither AIG nor any of its
subsidiaries is a defendant in that action, although two employees of
American Home Assurance Company (American Home) pleaded guilty in
connection with the NYAG's investigation in October 2004 and two additional
employees of American Home pleaded guilty in February 2005. AIG and the
Company have cooperated, and will continue to cooperate, in the
investigation. Regulators from several additional states have commenced
investigations into the same matters, and the Company expects there will be
additional investigations as well.
In February 2005, AIG received subpoenas from the NYAG and the SEC relating
to investigations into the use of non-traditional insurance products and
certain assumed reinsurance transactions and AIG's accounting for such
transactions. The United States
27
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Department of Justice and various state regulators are also investigating
related issues. AIG and the Company have cooperated, and will continue
to cooperate, in producing documents and other information in response
to the subpoenas.
A number of lawsuits have been filed regarding the subject matter of the
investigations of insurance brokerage practices, including derivative
actions, individual actions and class actions under the federal securities
laws, Racketeer Influenced and Corrupt Organizations Act (RICO), Employee
Retirement Income Security Act (ERISA) and state common and corporate laws
in both federal and state courts.
Between October 19, 2004 and August 1, 2005, AIG or its subsidiaries,
including the Company, were named as a defendant in thirteen complaints
that were filed in federal court and two that were originally filed in
state court (Massachusetts and Florida) and removed to federal court. These
cases generally allege that AIG and its subsidiaries violated federal and
various state antitrust laws, as well as federal RICO laws, various state
deceptive and unfair practice laws and certain state laws governing
fiduciary duties. The alleged basis of these claims is that there was a
conspiracy between insurance companies and insurance brokers with regard to
the bidding practices for insurance coverage in certain sectors of the
insurance industry. The Judicial Panel on Multidistrict Litigation entered
an order consolidating most of these cases and transferring them to the
United States District Court for the District of New Jersey. The remainder
of these cases are in the process of being transferred to the District of
New Jersey. On August 1, 2005, the plaintiffs in the multidistrict
litigation filed a First Consolidated Amended Commercial Class Action
Complaint which names AIG, the Company, and the following additional AIG
subsidiaries as defendants: AIU Insurance Company, American Home, AISLIC,
American International Insurance Company, Birmingham Fire Insurance Company
of Pennsylvania, Commerce and Industry Insurance Company, Lexington
Insurance Company, National Union Fire Insurance Company of Louisiana, New
Hampshire Insurance Company, The Hartford Steam Boiler Inspection and
Insurance Company, and The Insurance Company of the State of Pennsylvania.
Also on August 1, 2005, AIG, American Home and AIG Life Insurance Company
were named as defendants in a First Consolidated Amended Employee Benefits
Complaint filed in the District of New Jersey that adds claims under ERISA.
In addition, two complaints were filed against AIG, and AIG and Lexington
Insurance Company, respectively, in Massachusetts state court, and one
complaint was filed against AIG in Florida state court, making claims
similar to those in the federal cases above.
Various federal and state regulatory agencies are reviewing certain other
transactions and practices of AIG and its subsidiaries, including the
Company, in connection with industry-wide and other inquiries. It is
possible that additional civil or regulatory proceedings will be filed.
Various actions have been brought against AIG arising out of the liability
of certain AIG subsidiaries, including the Company, for taxes, assessments,
and surcharges for policies of workers compensation insurance written
between 1985 and 1996.
On May 18, 2005, the Office of Insurance Regulation (the OIR) of the State
of Florida issued an Order (the Order) notifying 43 insurers within the AIG
holding company system, including the Company, which are either authorized
insurers or eligible surplus lines insurers in the State of Florida (the
AIG Insurers) of an investigation to be made of the AIG Insurers. The Order
requires the AIG Insurers to provide certain information about, and take
certain steps with respect to, the "improper or inappropriate transactions"
referenced in the March 30, 2005 and May 1, 2005 AIG press releases
referenced in and attached to the Order. The Order cites several provisions
of the Florida laws, including Section 624.404(3)(a) of the Florida
Statutes which prohibits the continuance of authority to transact insurance
in the State of Florida to any insurer the management, officers, or
directors of which are found to be, among other things, untrustworthy. The
Order was amended on June 10, 2005 to state that a number of the AIG
Insurers, based on representations they made to the OIR, have complied with
the Order. The amended Order also granted the remaining AIG Insurers an
extension of 90 days, until September 6, 2005, to complete their response
to certain aspects of the Order and provide the OIR with certain other
requested information. On September 6, 2005, the OIR agreed that the Order
would be again amended to grant the remaining AIG Insurers a further
extension of 90 days, until December 5, 2005, in which to complete their
response. The OIR indicated that this further extension is warranted in
light of the continuing cooperation of the AIG Insurers with the OIR's
investigation. A draft amended Order memorializing the extension is
presently pending execution.
AIG is also subject to various legal proceedings which have been disclosed
in AIG's periodic filings under the Securities Exchange Act of 1934, as
amended, in which the Company is not named as a party, but whose outcome
may nonetheless adversely affect the Company's financial condition or
results of operation.
The Company cannot predict the outcome of the matters described above,
estimate the potential costs related to these matters, or determine whether
other AIG subsidiaries, including the Company, would have exposure to
proceedings in which they are not named parties by virtue of their
participation in an intercompany pooling arrangement and, accordingly, no
reserve is being established in the Company's financial statements at this
time. In the opinion of management, the Company's ultimate liability for
the matters referred to above is not likely to have a material adverse
effect on the Company's financial condition, although it is possible that
the effect would be material to the Company's results of operations for an
individual reporting period.
Other Matters:
28
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
The Company continues to receive indemnity claims asserting injuries from
toxic waste, hazardous substances, asbestos and other environmental
pollutants and alleged damages to cover the clean-up costs of hazardous
waste dump sites (environmental claims). Estimation of environmental claims
loss reserves is a difficult process, as these claims, which emanate from
policies written in 1984 and prior years, cannot be estimated by
conventional reserving techniques. Environmental claims development is
affected by factors such as inconsistent court resolutions, the broadening
of the intent of policies and scope of coverage and increasing number of
new claims. The Company and other industry members have and will continue
to litigate the broadening judicial interpretation of policy coverage and
the liability issues. If the courts continue in the future to expand the
intent of the policies and the scope of the coverage, as they have in the
past, additional liabilities would emerge for amounts in excess of reserves
held. This emergence cannot now be reasonably estimated, but could have a
material impact on the Company's future operating results or financial
position.
The Company's environmental exposure arises from the sale of general
liability, product liability or commercial multi peril liability insurance,
or by assumption of reinsurance within these lines of business.
The Company tries to estimate the full impact of the asbestos and
environmental exposure by establishing full case basis reserves on all
known losses and establishes bulk reserves for incurred but not reported
losses (IBNR) and loss adjustment expenses based on management's judgment
after reviewing all the available loss, exposure, and other information.
The Company's asbestos related losses and loss adjustment expenses (case &
IBNR) are as follows:
[Enlarge/Download Table]
(in thousands)
----------------------------------------------------------------------------------------
Asbestos Losses- 2004
----------------------------------------------------------------------------------------
Gross of reinsurance:
Beginning reserve $ 306,613
Incurred loss and loss adjustment expenses 601,962
Calendar year payments for losses and loss adjustment expenses 81,857
------------
Ending reserves $ 826,718
============
Net of reinsurance:
Beginning reserve $ 108,999
Incurred loss and loss adjustment expenses 291,003
Calendar year payments for losses and loss adjustment expenses 32,393
------------
Ending reserves $ 367,609
============
The Company's environmental related losses and loss adjustment expenses
(case & IBNR) are as follows:
29
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
[Enlarge/Download Table]
(in thousands)
-------------------------------------------------------------------------------------
Environmental Losses - 2004
-------------------------------------------------------------------------------------
Gross of reinsurance:
Beginning reserve $ 204,822
Incurred loss and loss adjustment expenses 117,251
Calendar year payments for losses and loss adjustment expenses 43,919
------------
Ending reserves $ 278,154
============
Net of reinsurance:
Beginning reserve $ 85,324
Incurred loss and loss adjustment expenses 87,348
Calendar year payments for losses and loss adjustment expenses 22,757
------------
Ending reserves $ 149,915
============
Management believes that the reserves carried for the asbestos and
environmental claims at December 31, 2004 are adequate as they are based on
known facts and current law. AIG continues to receive claims asserting
injuries from toxic waste, hazardous substances, and other environmental
pollutants and alleged damages to cover the cleanup costs of hazardous
waste dump sites (hereinafter collectively referred to as environmental
claims) and indemnity claims asserting injuries from asbestos. Estimation
of asbestos and environmental claims loss reserves is a difficult process,
as these claims, which emanate from policies written in 1984 and prior
years, cannot be estimated by conventional reserving techniques.
In the ordinary course of business, the Company enters into structured
settlements to settle certain claims. Structured settlements involve the
purchase of an annuity to fund future claim obligations. In the event the
life insurers supplying the annuity , on certain structured settlements,
are unable to meet their obligations, the Company would be liable for the
payments of benefits. The Company has never incurred a loss and there has
been no default by any of the life insurers included in the transactions.
Management believes that based on the financial strength of the life
insurers involved the likelihood of a loss is remote.
Loss Reserves Eliminated By Annuities Unrecorded Loss Contingencies
$702,110,000 $685,500,000
The Company has entered into a credit agreement with its ultimate Parent,
whereby the Company may loan, subject to contractually agreed interest
rates, up to a maximum of $500 million.
As part of its private equity portfolio investment, as of December 31, 2004
the Company may be called upon for an additional capital investment of up
to $172.0 million. The Company expects only a small portion will be called
during 2005.
The Company has committed to provide 50.0 million sterling pounds ($95.8
million) in capital to a Lloyds Syndicate. The Company believes that the
likelihood of a payment during 2005 is remote.
11. Liability for Unpaid and Loss Adjustment Expenses
30
National Union Fire Insurance Company of Pittsburgh, Pa.
Notes to Statutory Basis Financial Statements for the year ended
December 31, 2004
Activity in the liability for unpaid claims and claim adjustment expenses
is summarized as follows:
(in thousands) 2004
---------------------------------------------------------------------------
Reserve for unpaid loss and LAE at the beginning
of the year $ 14,466,713
Less reinsurance recoverables 7,779,979
-------------
6,686,734
Incurred losses and LAE related to:
Current year 4,808,892
Prior year 1,798,026
-------------
Total Incurred losses and LAE 6,606,918
-------------
Paid losses and LAE related to:
Current year 930,546
Prior year 3,899,255
-------------
Total paid losses and LAE 4,829,801
-------------
Reserves for unpaid losses and LAE at end of year 9,811,368
Plus unpaid losses and LAE recoverable 6,341,990
-------------
$ 16,153,358
=============
"Due to SSAP No. 3 "Correction of an Error", the incurred figures do not
agree with the company financial statement (underwriting and investment
exhibit). The figures are presented in accordance with the Company's
Schedule P treatment."
Estimated ultimate incurred losses and loss adjustment expenses
attributable to insured events of prior years increased by $3,127,717,000
in calendar years 2004. This increase was generally the result of actual
loss emergence in 2004 as well as ongoing analysis of recent loss
development trends.
Unpaid losses and loss adjustment expenses have been reduced by anticipated
salvage and subrogation in the amount of approximately $170,076,000 at
December 31, 2004
12. Subsequent Events (Unaudited)
In late August 2005 a category 4 hurricane, Katrina hit the central gulf
coast area and New Orleans, Louisiana. The Company has estimated its
potential pre-tax loss exposure for Hurricane Katrina, including cost of
reinstatements to be $63.7 million.
On October 15, 2005, the Company entered into a Capital Maintenance
Agreement (CMA) with its ultimate Parent, AIG. The CMA requires a capital
contribution to the Company in the event its 2004 surplus drops below its
currently filed level, or its RBC ratio drops below 200% of Authorized
Control Level for 2004, each as determined by the Company domiciliary
regulator. The CMA expires 12 months after issuance.
31
PART C: OTHER INFORMATION
Item 26. Exhibits
(a) Board of Directors Resolution.
(1) Certificate of Resolution for AIG Life Insurance Company
pursuant to the Board of Directors' meeting dated June 5, 1986,
authorizing the establishment of separate accounts for the
issuance and sale of variable life insurance contracts, as well
as for variable and fixed annuity contracts. (1)
(2) Certificate of Resolution for AIG Life Insurance Company
pursuant to the Board of Directors' meeting dated September 12,
1995, amending in its entirety the resolution previously passed
by the Board of Directors on June 5, 1986, authorizing the
establishment of separate accounts for the issuance and sale of
variable life insurance contracts, as well as for variable and
fixed annuity contracts. (5)
(b) Custodian Agreements. Inapplicable
(c) Underwriting Contracts.
(1) Distribution Agreement between AIG Life Insurance Company and
American General Equity Services Corporation, effective May 1,
2003. (7)
(2) Form of Selling Group Agreement. (9)
(d) Contracts.
(1) Form of Group Flexible Premium Variable Life Insurance Policy -
Non-Participating, Form No. 11GVULD997. (2)
(2) Form of Group Flexible Premium Variable Life Insurance
Certificate, Form No. 16GVULD997. (2)
(e) Applications.
(1) Form of Application for Group Flexible Premium Variable Life
Insurance Policy, Form No. 14COLI400. (7)
(2) Form of Supplemental Application for Life Insurance, Form No.
14GVSUP997. (10)
(3) Form of Subaccount Transfer Request form. (10)
C-1
(4) Form of Premium Allocation form. (10)
(5) Form of Loan/Surrender Request form. (10)
(6) Form of Dollar Cost Averaging Request form. (10)
(7) Form of Change Request form. (7)
(8) Form of Reallocation and Rebalancing Request form. (10)
(f) Depositor's Certificate of Incorporation and By-Laws.
(1) By-Laws of AIG Life Insurance Company, restated as of April 27,
2005. (4)
(2) Certificate of Incorporation of AIG Life Insurance Company,
dated December 6, 1991. (1)
(3) Restated Certificate of Incorporation of AIG Life Insurance
Company, dated December 6, 1991. (1)
(4) Certificate of Amendment of Certificate of Incorporation of AIG
Life Insurance Company, dated December 3, 2001. (7)
(5) Certificate of Change of Location of Registered Office and of
Registered Agent, AIG Life Insurance Company, dated July 24,
2002. (9)
(g) Reinsurance Contracts. Inapplicable
(h) Participation Agreements.
(1)(a) Form of Participation Agreement among Alliance Variable
Products Series Fund, Inc., Alliance Fund Distributors,
Inc. and AIG Life Insurance Company. (7)
(1)(b) Form of Amendment to Participation Agreement among
Alliance Variable Products Series Fund, Inc. and AIG
Life Insurance Company. (7)
(2)(a) Form of Shareholder Services Agreement by and between
American Century Investment Services, Inc. and AIG Life
Insurance Company. (8)
(2)(b) Form of Amendment No. 1 to Shareholder Services
Agreement by and between American Century Investment
Services, Inc. and AIG Life Insurance Company, effective
January 1, 2001. (8)
C-2
(3)(a) Form of Participation Agreement by and among Credit
Suisse Warburg Pincus Trust, Credit Suisse Asset
Management, LLC, Credit Suisse Asset Management
Securities, Inc. and AIG Life Insurance Company. (8)
(4)(a) Form of Participation Agreement by and among Variable
Insurance Products Fund, Fidelity Distributors
Corporation and AIG Life Insurance Company. (8)
(4)(b) Form of Amendment to Participation Agreement by and
among Variable Insurance Products Fund, Fidelity
Distributors Corporation and AIG Life Insurance Company,
dated July 23, 1999. (8)
(4)(c) Form of Fifth Amendment to Participation Agreement by
and among Variable Insurance Products Fund, Fidelity
Distributors Corporation and AIG Life Insurance Company,
dated January 2, 2001. (8)
(5)(a) Form of Participation Agreement by and among Variable
Insurance Products Fund II, Fidelity Distributors
Corporation and AIG Life Insurance Company. (8)
(5)(b) Form of Amendment to Participation Agreement by and
among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and AIG Life Insurance Company,
dated July 23, 1999. (8)
(5)(c) Form of Fifth Amendment to Participation Agreement by
and among Variable Insurance Products Fund II, Fidelity
Distributors Corporation and AIG Life Insurance Company,
dated January 2, 2001. (8)
(6)(a) Form of Participation Agreement by and among Variable
Insurance Products Fund III, Fidelity Distributors
Corporation and AIG Life Insurance Company. (8)
(7)(a) Form of Participation Agreement by and between Franklin
Templeton Products Trust, Franklin Templeton
Distributors, Inc. and AIG Life Insurance Company. (8)
(7)(b) Form of Amendment to Participation Agreement by and
between Franklin Templeton Products Trust, Franklin
Templeton Distributors, Inc. and AIG Life Insurance
Company, effective May 1, 2001. (8)
(7)(c) Form of Amendment to Participation Agreement by and
between Franklin Templeton Products Trust, Franklin
Templeton Distributors, Inc. and AIG Life Insurance
Company, effective May 3, 2004. (10)
C-3
(8)(a) Form of Participation Agreement by and among Goldman
Sachs Variable Insurance Trust, Goldman, Sachs & Co.,
and AIG Life Insurance Company. (10)
(9)(a) Form of Fund Participation Agreement by and between J.P.
Morgan Series Trust II and AIG Life Insurance Company.
(8)
(9)(b) Form of Amendment No. 1 to Fund Participation Agreement
by and between J.P. Morgan Series Trust II and AIG Life
Insurance Company, dated June 16, 2003. (10)
(10)(a) Form of Participation Agreement by and among Merrill
Lynch Variable Series Funds, Inc., FAM Distributors,
Inc. and AIG Life Insurance Company. (8)
(11)(a) Form of Participation Agreement among Morgan Stanley
Universal Funds, Inc., Morgan Stanley Asset Management
Inc., Miller Anderson & Sherrerd, LLP and AIG Life
Insurance Company. (6)
(11)(b) Form of Amendment to Participation Agreement among The
Universal Institutional Funds, Inc. (formerly Morgan
Stanley Universal Funds, Inc.), Morgan Stanley
Investment Management Inc. (formerly Morgan Stanley
Asset Management Inc.), Morgan Stanley Investments LP
(formerly Miller Anderson & Sherrerd, LLP) and AIG Life
Insurance Company, dated October 1, 2001. (7)
(12)(a) Form of Fund Participation Agreement by and among
Neuberger & Berman Advisers Management Trust, Advisers
Managers Trust, Neuberger & Berman Management
Incorporated and AIG Life Insurance Company. (10)
(12)(b) Form of Amendment to Fund Participation Agreement by and
among Neuberger & Berman Advisers Management Trust,
Advisers Managers Trust, Neuberger & Berman Management
Incorporated and AIG Life Insurance Company. (10)
(13)(a) Form of Participation Agreement by and among PIMCO
Variable Insurance Trust, PIMCO Funds Distributors LLC
and AIG Life Insurance Company. (8)
(14)(a) Form of Participation Agreement by and between VALIC
Company I, The Variable Annuity Life Insurance Company
and AIG Life Insurance Company. (7)
C-4
(14)(b) Form of Amendment No. 1 to Participation Agreement by
and between VALIC Company I, The Variable Annuity Life
Insurance Company and AIG Life Insurance Company. (7)
(15)(a) Form of Participation Agreement by and among Vanguard
Variable Insurance Fund, The Vanguard Group, Inc.,
Vanguard Marketing Corporation and AIG Life Insurance
Company. (8)
(16)(a) Form of Administrative Services Agreement by and among
Credit Suisse Asset Management, LLC and AIG Life
Insurance Company. (8)
(i) Administrative Contracts.
(1) Form of Service and Expense Agreement dated February 1, 1974,
between American International Group, Inc. and various affiliate
subsidiaries, including AIG Life Insurance Company. (7)
(2) Form of Addendum No. 1 to Service and Expense Agreement dated
February 1, 1974, between American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company, dated May 21, 1975. (7)
(3) Form of Addendum No. 2 to Service and Expense Agreement dated
February 1, 1974, between American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company, dated September 23, 1975. (7)
(4) Form of Addendum No. 24 to Service and Expense Agreement dated
February 1, 1974, between American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company, dated December 30, 1998. (7)
(5) Form of Addendum No. 28 to Service and Expense Agreement dated
February 1, 1974, among American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company and American General Life Companies, effective January
1, 2002. (7)
(6) Form of Addendum No. 30 to Service and Expense Agreement dated
February 1, 1974, among American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company and American General Life Companies, LLC, effective
January 1, 2002. (9)
(7) Form of Addendum No. 32 to Service and Expense Agreement dated
February 1, 1974, among American International Group, Inc. and
various affiliate subsidiaries, including AIG Life Insurance
Company and American General Life Companies, LLC, effective May
1, 2004. (10)
C-5
(j) Other Material Contracts.
(1) General Guarantee Agreement from National Union Fire Insurance
Company of Pittsburgh, Pa. on behalf of AIG Life Insurance
Company. (4)
(2) AIG Support Agreement between AIG Life Insurance Company and
American International Group, Inc. (4)
(k) Legal Opinions.
(1) Opinion and Consent of Kenneth D. Walma, Vice President and
Counsel, AIG Life Insurance Company. (3)
(2) Opinion and Consent of Saul Ewing LLP, Counsel to National Union
Fire Insurance Company of Pittsburgh, Pa. (Filed herewith)
(3) Opinion and Consent of Sullivan & Cromwell LLP, Counsel to
National Union Fire Insurance Company of Pittsburgh, Pa. (Filed
herewith)
(l) Actuarial Opinions.
(1) Opinion and Consent of AIG Life Insurance Company's actuary. (3)
(2) Opinion and Consent of AIG Life Insurance Company's actuary. (7)
(m) Calculation. None
(n) Other Opinions.
(1) Consent of Independent Registered Public Accounting Firm,
PricewaterhouseCoopers LLP. (Filed herewith)
(o) Omitted Financial Statements. None
(p) Initial Capital Agreements. None
(q) Redeemability Exemption.
(1) Memorandum Regarding Procedures including Issuance, Transfer and
Redemption Procedures for Variable Universal Life Insurance
Policies Pursuant to Rule 6e- 3(T)(b)(12)(iii) under the
Investment Company Act of 1940. (10)
C-6
----------
(1) Incorporated by reference to Post-Effective Amendment No. 4 to Form S-6
Registration Statement (File No. 033-90684) of Variable Account II of
AIG Life Insurance Company filed on October 27, 1998.
(2) Incorporated by reference to Post-Effective Amendment No. 1 to Form S-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on March 13, 1998.
(3) Incorporated by reference to Post-Effective Amendment No. 8 to Form S-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on May 1, 2002.
(4) Incorporated by reference to Post-Effective Amendment No. 14 to Form N-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on August 12, 2005.
(5) Incorporated by reference to Post-Effective Amendment No. 9 to Form N-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on February 7, 2003.
(6) Incorporated by reference to Post-Effective Amendment No. 2 to Form N-4
Registration Statement (File No. 333-36260) of Variable Account I of AIG
Life Insurance Company filed on December 28, 2001.
(7) Incorporated by reference to Post-Effective Amendment No. 10 to Form N-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on April 25, 2003.
(8) Incorporated by reference to Post-Effective Amendment No. 11 to Form N-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on June 16, 2003.
(9) Incorporated by reference to Post-Effective Amendment No. 9 to Form N-4
Registration Statement (File No. 333-36260) of Variable Account I of AIG
Life Insurance Company filed on April 27, 2004.
(10) Incorporated by reference to Post-Effective Amendment No. 13 to Form N-6
Registration Statement (File No. 333-34199) of Variable Account II of
AIG Life Insurance Company filed on May 2, 2005.
C-7
Item 27. Directors and Officers of the Depositor
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Rodney O. Martin, Jr. Director, Chairman of the Board of Directors,
2929 Allen Parkway President and Chief Executive Officer
Houston, TX 77019
M. Bernard Aidinoff Director
Sullivan and Cromwell
125 Broad Street
New York, NY 10004
David J. Dietz Director and Chairman-Affluent & Corporate Markets
830 Third Avenue Profit Center
New York, NY 10022
David L. Herzog Director
70 Pine Street
New York, NY 10270
Richard A. Hollar Director, President-Life Brokerage Profit Center
750 West Virginia Street and Chief Executive Officer-Life Brokerage Profit
Milwaukee, WI 53204 Center
Royce G. Imhoff, II Director, President-Affluent & Corporate Markets
2929 Allen Parkway Profit Center and Chief Executive Officer-Affluent
Houston, TX 77019 & Corporate Markets Profit Center
Ernest T. Patrikis Director
70 Pine Street
New York, NY 10270
Gary D. Reddick Director, Executive Vice President and Chief
2929 Allen Parkway Administrative Officer
Houston, TX 77019
Christopher J. Swift Director, Executive Vice President and Chief
2929 Allen Parkway Financial Officer
Houston, TX 77019
C-8
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
James W. Weakley Director, President-Group Benefits & Financial
2929 Allen Parkway Institutions, and AIG Workplace Solutions Profit
Houston, TX 77019 Center and Chief Executive Officer-Group Benefits
& Financial Institutions, and Workplace Solutions
Profit Center
Thomas L. Booker President-Annuity Profit Center
2727 Allen Parkway
Houston, TX 77019
Lawrence J. O'Brien President-Agency Building Profit Center
2727 Allen Parkway
Houston, TX 77019
David R. Armstrong Executive Vice President
3600 Route 66
Neptune, NJ 07754
Chris T. Calos Executive Vice President
3600 Route 66
Neptune, NJ 07754
Rebecca G. Campbell Executive Vice President, Human Resources
2929 Allen Parkway
Houston, TX 77019
Steven D. Anderson Senior Vice President, Independent Advisor Group
2727 Allen Parkway
Houston, TX 77019
Erik A. Baden Senior Vice President, SPIA
2727 Allen Parkway
Houston, TX 77019
Wayne A. Barnard Senior Vice President, Illustration Actuary
2929 Allen Parkway
Houston, TX 77019
Robert M. Beuerlein Senior Vice President and Chief Appointed Actuary
2727-A Allen Parkway
Houston, TX 77019
C-9
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Patricia A. Bosi Senior Vice President
3600 Route 66
Neptune, NJ 07754-1580
Jeffrey H. Carlson Senior Vice President and Chief Information Officer
2727 Allen Parkway
Houston, TX 77019
James A. Galli Senior Vice President and
830 Third Avenue Chief Business Development Officer
New York, NY 10022
Robert M. Goldbloom Senior Vice President
70 Pine Street
New York, NY 10270
William F. Guterding Senior Vice President
830 Third Avenue
New York, NY 10022
Robert F. Herbert, Jr. Senior Vice President, Treasurer and Controller
2727-A Allen Parkway
Houston, TX 77019
S. Douglas Israel Senior Vice President
2929 Allen Parkway
Houston, TX 77019
Kyle L. Jennings Senior Vice President and General Counsel
2929 Allen Parkway
Houston, TX 77019
Althea R. Johnson Senior Vice President
2929 Allen Parkway
Houston, TX 77019
Glen D. Keller Senior Vice President
2727 Allen Parkway
Houston, TX 77019
C-10
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Simon J. Leech Senior Vice President
2727-A Allen Parkway
Houston, TX 77019
Kent D. Major Senior Vice President
2727-A Allen Parkway
Houston, TX 77019
Mark R. McGuire Senior Vice President
2727-A Allen Parkway
Houston, TX 77019
Laura W. Milazzo Senior Vice President
2727 Allen Parkway
Houston, TX 77019
Barry Pelleterri Senior Vice President
3600 Route 66
Neptune, NJ 07754
A. Hasan Qureshi Senior Vice President and Illustration Actuary
1 ALICO Plaza
600 King Street
Wilmington, DE 19801
Dennis H. Roberts Senior Vice President
2727 Allen Parkway
Houston, TX 77019
Richard C. Schuettner Senior Vice President
750 West Virginia Street
Milwaukee, WI 53204
James P. Sennett Senior Vice President
2727 Allen Parkway
Houston, TX 77019
C-11
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Dewitt M. Smith Senior Vice President
3600 Route 66
Neptune, NJ 07754
James P. Steele Senior Vice President
205 E. 10th Street
Amarillo, TX 79101
Robert E. Steele Senior Vice President
205 E. 10th Street
Amarillo, TX 79101
Dan E. Trudan Senior Vice President
750 West Virginia St.
Milwaukee, WI 53204
Frederic R. Yopps Senior Vice President
750 West Virginia St.
Milwaukee, WI 53204
Steven E. Zimmerman Senior Vice President and Medical Director
2727 Allen Parkway
Houston, TX 77019
Edward F. Bacon Vice President
2727-A Allen Parkway
Houston, TX 77019
Joan M. Bartel Vice President
2727 Allen Parkway
Houston, TX 77019
Walter E. Bednarski Vice President
3600 Route 66
Neptune, NJ 07754-1580
Paul Bell, III Vice President
Walnut Glen Tower
8144 Walnut Hill Lane
Dallas, TX 75231
C-12
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Michael B. Boesen Vice President
2727-A Allen Parkway
Houston, TX 77019
David R. Brady Vice President
70 Pine Street
New York, NY 10270
Stephen J. Brenneman Vice President
1 Alico Plaza
600 King Street
Wilmington, DE 19801
James B. Brown Vice President
2727 Allen Parkway
Houston, TX 77019
David W. Butterfield Vice President
3600 Route 66
Neptune, NJ 07754
Robert W. Chesner Vice President
2929 Allen Parkway
Houston, TX 77019
Valerie A. Childrey Vice President and Medical Director
750 West Virginia Street
Milwaukee, WI 53204
Mark E. Childs Vice President
2727 Allen Parkway
Houston, TX 77019
Robert M. Cicchi Vice President
2727 Allen Parkway
Houston, TX 77019
Steven A. Dmytrack Vice President
2929 Allen Parkway
Houston, TX 77019
C-13
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Douglas M. Donnenfield Vice President
750 West Virginia Street
Milwaukee, WI 53204
Timothy M. Donovan Vice President
2727 Allen Parkway
Houston, TX 77019
Donna F. Fahey Vice President
3600 Route 66
Neptune, NJ 07754-1580
Farideh N. Farrokhi Vice President and Assistant Secretary
2727-A Allen Parkway
Houston, TX 77019
Patrick Froze Vice President
750 West Virginia Street
Milwaukee, WI 53204
Frederick J. Garland, Jr. Vice President
2727 Allen Parkway
Houston, TX 77019
Richard L. Gravette Vice President and Assistant Treasurer
2727-A Allen Parkway
Houston, TX 77019
Kenneth J. Griesemer Vice President
6363 Forest Park Road
Dallas, TX 75235
Daniel J. Gutenberger Vice President and Medical Director
70 Pine Street
New York, NY 10270
Joel H. Hammer Vice President
1 Chase Manhattan Plaza
New York, NY 10005
C-14
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Craig H. Harrel Vice President
2929 Allen Parkway
Houston, TX 77019
D. Leigh Harrington Vice President
2727 Allen Parkway
Houston, TX 77019
Neal C. Hasty Vice President and Chief Underwriter
6363 Forest Park Road
Dallas, TX 75235
Keith C. Honig Vice President
1 SunAmerica Center
Los Angeles, CA 90067
Walter P. Irby Vice President
2727 Allen Parkway
Houston, TX 77019
Karen M. Isaacs Vice President
3600 Route 66
Neptune, NJ 07754
David S. Jorgensen Vice President
2727-A Allen Parkway
Houston, TX 77019
Stephen C. Kennedy Vice President
750 West Virginia Street
Milwaukee, WI 53204
Gary J. Kleinman Vice President and Real Estate Investment Officer
1 Chase Manhattan Plaza
New York, NY 10005
Frank A. Kophamel Vice President
3600 Route 66
Neptune, NJ 07754
C-15
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Charles L. Levy Vice President and Medical Director
2727 Allen Parkway
Houston, TX 77019
Linda Lewis Vice President
6363 Forest Park Road
Dallas, TX 75235
Robert J. Ley Vice President
70 Pine Street
New York, NY 10270
Jerry L. Livers Vice President
2727 Allen Parkway
Houston, TX 77019
Gwendolyn J. Mallett Vice President
2727 Allen Parkway
Houston, TX 77019
Randy J. Marash Vice President
3600 Route 66
Neptune, NJ 07754
David S. Martin Vice President
2929 Allen Parkway
Houston, TX 77019
W. Larry Mask Vice President, Real Estate Investment Officer and
2727 Allen Parkway Assistant Secretary
Houston, TX 77019
Gordon S. Massie Vice President
2929 Allen Parkway
Houston, TX 77019
Melvin C. McFall Vice President
2727 Allen Parkway
Houston, TX 77019
C-16
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Richard D. McFarland Vice President
2727 Allen Parkway
Houston, TX 77019
Richard A. Mercante Vice President
175 Water Street
New York, NY 10038
Beverly A. Meyer Vice President
750 West Virginia Street
Milwaukee, WI 53204
Candace A. Michael Vice President
2727 Allen Parkway
Houston, TX 77019
Anne K. Milio Vice President
2727 Allen Parkway
Houston, TX 77019
Sylvia A. Miller Vice President
#1 Franklin Square
Springfield, IL 62713
Michael R. Murphy Vice President
750 West Virginia Street
Milwaukee, WI 53204
Carl T. Nichols Vice President and Medical Director
205 E. 10th Street
Amarillo, TX 79101
Deanna D. Osmonson Vice President and Chief Compliance Officer
2727 Allen Parkway
Houston, TX 77019
Rembert R. Owen, Jr. Vice President, Real Estate Investment Officer and
2929 Allen Parkway Assistant Secretary
Houston, TX 77019
C-17
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Lori J. Payne Vice President
2727 Allen Parkway
Houston, TX 77019
Kirsten M. Pedersen Vice President
2929 Allen Parkway
Houston, TX 77019
Cathy A. Percival Vice President and Medical Director
2727 Allen Parkway
Houston, TX 77019
Rodney E. Rishel Vice President
American General Center
2000 American General Way
Brentwood, TN 37027
Terri Robbins Vice President
175 Water Street
New York, NY 10038
Walter J. Rucecki, Jr. Vice President
2929 Allen Parkway
Houston, TX 77019
Dale W. Sachtleben Vice President
#1 Franklin Square
Springfield, IL 62713
Robert C. Sage Vice President
2727 Allen Parkway
Houston, TX 77019
Kristin Sather Vice President
1 Chase Manhattan Plaza
New York, NY 10005
Richard W. Scott Vice President and Chief Investment Officer
70 Pine Street
New York, NY 10270
C-18
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Tom L. Scott Vice President and General Auditor
2929 Allen Parkway
Houston, TX 77019
T. Clay Spires Vice President and Assistant Tax Officer
2929 Allen Parkway
Houston, TX 77019
Gregory R. Thornton Vice President
#1 Franklin Square
Springfield, IL 62713
Veronica Torralba Vice President
2929 Allen Parkway
Houston, TX 77019
Paul Turner Vice President
2929 Allen Parkway
Houston, TX 77019
Richard P. Vegh Vice President
3600 Route 66
Neptune, NJ 07754
Curt Vondrasek Vice President
1000 E. Woodfield Road
Schaumburg, IL 60173
Christian D. Weiss Vice President
#1 Franklin Square
Springfield, IL 62713
Susan J. Wilhite Vice President
One Woodfield Lake
Schaumberg, IL 60173
Ronald Williams Vice President
3600 Route 66
Neptune, NJ 07754
C-19
Name and Principal Positions and Offices with Depositor
Business Address AIG Life Insurance Company
------------------ --------------------------------------------------
Elizabeth M. Tuck Secretary
70 Pine Street
New York, NY 10270
Lauren W. Jones Assistant Secretary
2929 Allen Parkway
Houston, TX 77019
Item 28. Persons Controlled by or Under Common Control with the Depositor or the
Registrant
The Depositor is an indirect wholly-owned subsidiary of American International
Group, Inc. ("AIG"). See footnotes to table below at end of Item 28. Table of
subsidiaries of AIG can be found as Exhibit 21 in Form 10-K, SEC file number
001-08787, accession number 0000950123-05- 006884, filed May 31, 2005.
SUBSIDIARIES OF AIG
[Enlarge/Download Table]
Percentage
of Voting
Securities
Jurisdiction of Owned by its
Incorporation Immediate
or Organization Parent/(2)/
--------------- -------------
American International Group, Inc./(1)/ ......................................................... Delaware ................. /(3)/
AIG Aviation, Inc. .......................................................................... Georgia ... ......... 100
AIG Bulgaria Insurance and Reinsurance Company EAD ......................................... Bulgaria .... ........ 100
AIG Capital Corporation .................................................................... Delaware ............. 100
AIG Consumer Finance Group, Inc. ....................................................... Delaware ............. 100
AIG Bank Polska S.A. ................................................................ Poland ........... 97.23
AIG Credit S.A. ..................................................................... Poland .............. 80
Compania Financiera Argentina S.A. ............................................... Argentina ............ 92.7
AIG Finance Holdings, Inc. ............................................................. New York ............. 100
AIG Finance (Hong Kong) Limited .................................................. Hong Kong ............. 100
AIG Global Asset Management Holdings Corp. ............................................. Delaware ............. 100
AIG Asset Management Services, Inc. ............................................... Delaware ............. 100
Brazos Capital Management, L.P. ............................................... Delaware .............. 92
AIG Capital Partners, Inc. ........................................................ Delaware ............. 100
AIG Equity Sales Corp. ............................................................ New York ............. 100
AIG Global Investment Corp. ..................................................... New Jersey ............. 100
International Lease Finance Corporation. ............................................. California ........... 64.85 /(4)/
AIG Global Real Estate Investment Corp. ................................................ Delaware ............. 100
AIG Credit Corp. ........................................................................... Delaware ............. 100
A.I. Credit Corp. ................................................................. New Hampshire ............. 100
Imperial Premium Finance, Inc. ....................................................... California ............. 100
C-20
SUBSIDIARIES OF AIG
[Enlarge/Download Table]
Percentage
of Voting
Securities
Jurisdiction of Owned by its
Incorporation Immediate
or Organization Parent/(2)/
--------------- -------------
Imperial Premium Finance, Inc. ......................................................... Delaware ............. 100
AIG Egypt Insurance Company, S.A.E. ........................................................... Egypt ........... 89.98
AIG Federal Savings Bank ................................................................... Delaware ............. 100
AIG Financial Advisor Services, Inc. ....................................................... Delaware ............. 100
AIG Financial Advisor Services (Europe), S.A. ........................................ Luxembourg ............. 100
AIG Financial Products Corp. ............................................................... Delaware ............. 100
AIG Matched Funding Corp. .............................................................. Delaware ............. 100
Banque AIG ............................................................................. France .............. 90 /(5)/
AIG Funding, Inc. .......................................................................... Delaware ............. 100
AIG Global Trade & Political Risk Insurance Company ...................................... New Jersey ............. 100
A.I.G. Golden Insurance Ltd. ................................................................. Israel ........... 50.01
AIG Life Insurance Company ................................................................. Delaware .............. 79 /(6)/
AIG Life Insurance Company of Canada ......................................................... Canada ............. 100
AIG Life Insurance Company of Puerto Rico ............................................... Puerto Rico ............. 100
AIG Liquidity Corp. ........................................................................ Delaware ............. 100
AIG Marketing, Inc. ........................................................................ Delaware ............. 100
AIG Memsa, Inc. ........................................................................... Delaware ............. 100 /(7)/
Tata AIG General Insurance Company Limited ................................................ India .............. 26
AIG Private Bank Ltd. ................................................................... Switzerland ............. 100
AIG Retirement Services, Inc. .............................................................. Delaware ............. 100 /(8)/
SunAmerica Life Insurance Company ....................................................... Arizona ............. 100
SunAmerica Investments, Inc. ....................................................... Georgia .............. 70 /(9)/
AIG Advisor Group, Inc. ....................................................... Maryland ............. 100
Advantage Capital Corporation ............................................. New York ............. 100
FSC Securities Corporation ................................................ Delaware ............. 100
Royal Alliance Associates, Inc. ........................................... Delaware ............. 100
Sentra Securities Corporation ........................................... California ............. 100
Spelman & Co., Inc. ..................................................... California ............. 100
SunAmerica Securities, Inc. ............................................... Delaware ............. 100
AIG SunAmerica Life Assurance Company .......................................... Arizona ............. 100 /(10)/
AIG SunAmerica Asset Management Corp. ..................................... Delaware ............. 100
AIG SunAmerica Capital Services. Inc. ................................ Delaware ............. 100
First SunAmerica Life Insurance Company ....................................... New York ............. 100
AIG Risk Management, Inc. .................................................................. New York ............. 100
AIG Technologies, Inc. ................................................................ New Hampshire ............. 100
AIGTI, Inc. ........................................................................... Delaware ............. 100
AIG Trading Group Inc. ..................................................................... Delaware ............. 100
AIG International, Inc. ................................................................ Delaware ............. 100
AIU Insurance Company ...................................................................... New York .............. 52 /(11)/
AIU North America, Inc. .................................................................... New York ............. 100
American General Corporation .................................................................. Texas ............. 100
American General Bancassurance Services, Inc. .......................................... Illinois ............. 100
AGC Life Insurance Company ............................................................. Missouri ............. 100
AIG Assurance Canada ................................................................ Canada ............. 100 /(7)/
AIG Life of Bermuda, Ltd. .......................................................... Bermuda ............. 100
American General Life and Accident Insurance Company ............................. Tennessee ............. 100
American General Life Insurance Company .............................................. Texas ............. 100
C-21
SUBSIDIARIES OF AIG
[Enlarge/Download Table]
Percentage
of Voting
Securities
Jurisdiction of Owned by its
Incorporation Immediate
or Organization Parent/(2)/
--------------- -------------
American General Annuity Service Corporation ..................................... Texas ............. 100
AIG Enterprise Services, LLC .................................................. Delaware ............. 100
American General Equity Services Corporation .................................. Delaware ............. 100
American General Life Companies, LLC .......................................... Delaware ............. 100
The Variable Annuity Life Insurance Company ...................................... Texas ............. 100
VALIC Retirement Services Company ............................................ Texas ............. 100
VALIC Trust Company .......................................................... Texas ............. 100
American General Property Insurance Company ...................................... Tennessee ........... 51.85 /(12)/
American General Property Insurance Company of Florida ......................... Florida ............. 100
AIG Annuity Insurance Company ........................................................ Texas ............. 100
The United States Life Insurance Company in the City of New York .................. New York ............. 100
American General Finance, Inc. .......................................................... Indiana ............. 100
American General Auto Finance, Inc. ............................................... Delaware ............. 100
American General Finance Corporation ............................................... Indiana ............. 100
MorEquity, Inc. ................................................................. Nevada ............. 100
Wilmington Finance, Inc. .................................................. Delaware ............. 100
Merit Life Insurance Co. ....................................................... Indiana ............. 100
Yosemite Insurance Company ..................................................... Indiana ............. 100
CommoLoCo, Inc. ........................................................ Puerto Rico ............. 100
American General Financial Services of Alabama, Inc. ............................... Alabama ............. 100
American General Investment Management Corporation ..................................... Delaware ............. 100
American General Realty Investment Corporation ............................................ Texas ............. 100
American General Assurance Company ..................................................... Illinois ............. 100
American General Indemnity Company ................................................ Illinois ............. 100
USLIFE Credit Life Insurance Company of Arizona .................................... Arizona ............. 100
Knickerbocker Corporation ................................................................. Texas ............. 100
American Home Assurance Company ............................................................ New York ............. 100
AIG Domestic Claims, Inc. .............................................................. Delaware .............. 50 /(13)/
AIG Hawaii Insurance Company, Inc. ....................................................... Hawaii ............. 100
American Pacific Insurance Company, Inc. ............................................ Hawaii ............. 100
American International Insurance Company ............................................... New York ............. 100
American International Insurance Company of California, Inc. .................... California ............. 100
American International Insurance Company of New Jersey .......................... New Jersey ............. 100
Minnesota Insurance Company ...................................................... Minnesota ............. 100
American International Realty Corp. .................................................... Delaware ............ 31.5 /(14)/
Pine Street Real Estate Holdings Corp. ............................................ New Hampshire ........... 31.47 /(14)/
Transatlantic Holdings, Inc. ........................................................... Delaware ........... 33.45 /(15)/
Transatlantic Reinsurance Company ................................................. New York ............. 100
Putnam Reinsurance Company .................................................... New York ............. 100
Trans Re Zurich ............................................................ Switzerland ............. 100
American International Insurance Company of Delaware ....................................... Delaware ............. 100
American International Life Assurance Company of New York .................................. New York ........... 77.52 /(16)/
American International Reinsurance Company, Ltd. ............................................ Bermuda ............. 100
AIG Edison Life Insurance Company ......................................................... Japan .............. 90 /(17)/
American International Assurance Company, Limited ..................................... Hong Kong ............. 100
American International Assurance Company (Australia) Limited .......................... Australia ............. 100
American International Assurance Company (Bermuda) Limited .............................. Bermuda ............. 100
C-22
SUBSIDIARIES OF AIG
[Enlarge/Download Table]
Percentage
of Voting
Securities
Jurisdiction of Owned by its
Incorporation Immediate
or Organization Parent/(2)/
--------------- -------------
American International Assurance Co. (Vietnam) Limited ............................. Vietnam ............. 100
Tata AIG Life Insurance Company Limited .............................................. India .............. 26
Nan Shan Life Insurance Company, Ltd. .................................................... Taiwan .............. 95
American International Underwriters Corporation ............................................ New York ............. 100
American International Underwriters Overseas, Ltd. .......................................... Bermuda ............. 100
AIG Europe (Ireland) Limited ............................................................ Ireland ............. 100
AIG Europe (U.K.) Limited ............................................................... England ............. 100
AIG Brasil Companhia de Seguros .......................................................... Brazil .............. 50
Universal Insurance Co., Ltd. .......................................................... Thailand ............. 100
La Seguridad de Centroamerica, Compania de Seguros S.A. ............................... Guatemala ............. 100
La Meridional Compania Argentina de Seguros ........................................... Argentina ............. 100
American International Insurance Company of Puerto Rico ............................. Puerto Rico ............. 100
A.I.G. Colombia Seguros Generales S.A. ................................................. Colombia ............. 100
American International Underwriters GmBH ................................................ Germany ............. 100
Underwriters Adjustment Company, Inc. .................................................... Panama ............. 100
American Life Insurance Company ............................................................ Delaware ............. 100
AIG Life (Bulgaria) Z.D. A.D ........................................................... Bulgaria ............. 100
ALICO, S.A. .............................................................................. France ............. 100
First American Polish Life Insurance and Reinsurance Company, S.A. ....................... Poland ............. 100
Inversiones Interamericana S.A. (Chile) .................................................. Chile ............. 100
Pharaonic American Life Insurance Company ................................................. Egypt ........... 71.63
Unibanco AIG Seguros S.A. ................................................................ Brazil ........... 47.81 /(18)/
AIG Life Insurance Company (Switzerland) Ltd. ........................................... Switzerland ............. 100
American Security Life Insurance Company, Ltd. ......................................... Lichtenstein ............. 100
Birmingham Fire Insurance Company of Pennsylvania ...................................... Pennsylvania ............. 100
China America Insurance Company, Ltd. ...................................................... Delaware .............. 50
Commerce and Industry Insurance Company .................................................... New York ............. 100
Commerce and Industry Insurance Company of Canada ........................................... Ontario ............. 100
Delaware American Life Insurance Company ................................................... Delaware ............. 100
Hawaii Insurance Consultants, Ltd. ........................................................... Hawaii ............. 100
HSB Group, Inc. ............................................................................ Delaware ............. 100
The Hartford Steam Boiler Inspection and Insurance Company .......................... Connecticut ............. 100
The Hartford Steam Boiler Inspection and Insurance Company of Connecticut ...... Connecticut ............. 100
HSB Engineering Insurance Limited .................................................. England ............. 100
The Boiler Inspection and Insurance Company of Canada ........................... Canada ............. 100
The Insurance Company of the State of Pennsylvania ..................................... Pennsylvania ............. 100
Landmark Insurance Company ............................................................... California ............. 100
Mt. Mansfield Company, Inc. ................................................................. Vermont ............. 100
National Union Fire Insurance Company of Pittsburgh, Pa ................................ Pennsylvania ............. 100
American International Specialty Lines Insurance Company ................................. Alaska .............. 70 /(19)/
Lexington Insurance Company ............................................................ Delaware .............. 70 /(19)/
AIG Centennial Insurance Company .............................................. Pennsylvania ............. 100
AIG Premier Insurance Company ............................................. Pennsylvania ............. 100
AIG Indemnity Insurance Company ....................................... Pennsylvania ............. 100
AIG Preferred Insurance Company ........................................... Pennsylvania ............. 100
AIG Auto Insurance Company of New Jersey .................................... New Jersey ............. 100
JI Accident & Fire Insurance Co. Ltd. ................................................ Japan .............. 50
C-23
SUBSIDIARIES OF AIG
[Enlarge/Download Table]
Percentage
of Voting
Securities
Jurisdiction of Owned by its
Incorporation Immediate
or Organization Parent/(2)/
--------------- -------------
National Union Fire Insurance Company of Louisiana .................................... Louisiana ............. 100
National Union Fire Insurance Company of Vermont ........................................ Vermont ............. 100
21st Century Insurance Group ......................................................... California ........... 33.03 /(20)/
21st Century Insurance Company .................................................. California ............. 100
21st Century Casualty Company ................................................... California ............. 100
21st Century Insurance Company of the Southwest ...................................... Texas ............. 100
Starr Excess Liability Insurance Company, Ltd. ......................................... Delaware ............. 100
Starr Excess Liability Insurance International Ltd. ................................ Ireland ............. 100
NHIG Holding Corp. ......................................................................... Delaware ............. 100
Audubon Insurance Company ............................................................. Louisiana ............. 100
Audubon Indemnity Company ...................................................... Mississippi ............. 100
Agency Management Corporation .................................................... Louisiana ............. 100
The Gulf Agency, Inc. .......................................................... Alabama ............. 100
New Hampshire Insurance Company .................................................... Pennsylvania ............. 100
AIG Europe, S.A. .................................................................... France ..............(21)
AI Network Corporation ............................................................ Delaware ............. 100
American International Pacific Insurance Company .................................. Colorado ............. 100
American International South Insurance Company ................................ Pennsylvania ............. 100
Granite State Insurance Company ............................................... Pennsylvania ............. 100
New Hampshire Indemnity Company, Inc. ......................................... Pennsylvania ............. 100
AIG National Insurance Company, Inc. .......................................... New York ............. 100
Illinois National Insurance Co. ................................................... Illinois ............. 100
New Hampshire Insurance Services, Inc. ....................................... New Hampshire ............. 100
AIG Star Life Insurance Co., Ltd. ......................................................... Japan ............. 100
The Philippine American Life and General Insurance Company .............................. Philippines ........... 99.78
Pacific Union Assurance Company ...................................................... California ............. 100
Philam Equitable Life Assurance Company, Inc. ....................................... Philippines ........... 95.31
Philam Insurance Company, Inc. ...................................................... Philippines ............. 100
Risk Specialist Companies, Inc. ............................................................ Delaware ............. 100
United Guaranty Corporation .......................................................... North Carolina ........... 36.3l /(22)/
United Guaranty Insurance Company ................................................ North Carolina ............. 100
United Guaranty Mortgage Insurance Company ....................................... North Carolina ............. 100
United Guaranty Mortgage Insurance Company of North Carolina ..................... North Carolina ............. 100
United Guaranty Partners Insurance Company .............................................. Vermont .............. 80
United Guaranty Residential Insurance Company of North Carolina .................. North Carolina ............. 100
United Guaranty Residential Insurance Company .................................... North Carolina ........... 75.03 /(23)/
United Guaranty Commercial Insurance Company of North Carolina .............. North Carolina ............. 100
United Guaranty Mortgage Indemnity Company .................................. North Carolina ............. 100
United Guaranty Credit Insurance Company .................................... North Carolina ............. 100
United Guaranty Services, Inc. ................................................... North Carolina ............. 100
----------
(1) All subsidiaries listed are consolidated in the financial statements of
AIG as filed in its Form 10-K on May 31, 2005. Certain subsidiaries have
been omitted from the tabulation. The omitted subsidiaries, when
considered in the aggregate as a single subsidiary, do not constitute a
significant subsidiary.
(2) Percentages include directors' qualifying shares.
C-24
(3) The common stock is owned approximately 12.0 percent by Starr
International Company, Inc., 1.8 percent by C.V. Starr & Co., Inc. and
2.0 percent by The Starr Foundation.
(4) Also owned 35.15 percent by National Union Fire Insurance Company of
Pittsburgh, Pa.
(5) Also owned 10 percent by AIG Matched Funding Corp.
(6) Also owned 21 percent by Commerce and Industry Insurance Company.
(7) Indirect wholly-owned subsidiary.
(8) Formerly known as AIG SunAmerica Inc.
(9) Also owned 30 percent by AIG Retirement Services, Inc.
(10) Formerly known as Anchor National Life Insurance Company.
(11) Also owned eight percent by The Insurance Company of the State of
Pennsylvania, 32 percent by National Union Fire Insurance Company of
Pittsburgh, Pa. and eigh percent by Birmingham Fire Insurance Company of
Pennsylvania.
(12) Also owned 48.15 percent by American General Life and Accident Insurance
Company.
(13) Also owned 50 percent by The Insurance Company of the State of
Pennsylvania.
(14) Also owned by 11 other AIG subsidiaries.
(15) Also owned 25.95 percent by AIG.
(16) Also owned 22.48 percent by American Home Assurance Company.
(17) Also owned ten percent by a subsidiary of American Life Insurance
Company.
(18) Also owned 1.7 percent by American International Underwriters Overseas,
Ltd. and .48 percent by American Home Assurance Company.
(19) Also owned 20 percent by The Insurance Company of the State of
Pennsylvania and ten percent by Birmingham Fire Insurance Company of
Pennsylvania.
(20) Also owned 16.85 percent by American Home Assurance Company, 6.34
percent by Commerce and Industry Insurance Company and 6.34 percent by
New Hampshire Insurance Company.
(21) 100 percent to be held with other AIG companies.
(22) Also owned 45.88 percent by National Union Fire Insurance Company of
Pittsburgh, Pa., 16.95 percent by New Hampshire Insurance Company and
0.86 percent by The Insurance Company of the State of Pennsylvania.
(23) Also owned 24.97 percent by United Guaranty Residential Insurance
Company of North Carolina.
The Registrant is a separate account of AIG Life Insurance Company (Depositor).
Item 29. Indemnification
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "Act") 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.
AIG Life Insurance Company
Except as otherwise required by applicable law:
C-25
(a) The company shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or on behalf of the company) by reason of
the fact that he is or was director, officer, or employee or agent of the
company, or is or was serving at the request of the company as director,
officer, employee or agent of another company or enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding; provided that he (1) acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
company; and, (2) with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, by itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the company,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was lawful.
(b) The company shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or on behalf of the company to procure a
judgement in the company's favor, by reason of the fact that he is or was a
director, officer, employee or agent of the company, or is or was serving at the
request of the company as a director, officer, employee or agent of another
company or enterprise, against expenses (including attorney's fees), judgments
and amounts paid in settlement actually and reasonably incurred by him in
connection with the defense or settlement of such action, suit or proceeding;
provided that he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the company, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the company unless and only to the
extent that the court in which such action, suit or proceeding was brought or
any other court of competent jurisdiction shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity.
(c) To the extent that a director, officer, or employee or agent of the company
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraphs (a) and (b) above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraphs (a) and (b) above (unless ordered by a
court or made pursuant to a determination by a court as hereinafter provided)
shall be made by the company upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances and he has
met the applicable standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board by a majority of a quorum
consisting of directors who were not parties to such action, suit or proceeding
(disinterested), or (2) by a committee of disinterested directors designated by
majority vote of disinterested directors, even though less than a quorum, or (3)
by independent legal counsel in a written opinion, and such legal counsel was
C-26
selected by a majority vote of a quorum of the disinterested directors, or (4)
by the stockholders. In the absence of a determination that indemnification is
proper, the director, officer or employee may apply to the court conducting the
proceeding or another court of competent jurisdiction which shall determine
whether the director, officer, employee or agent has met the applicable standard
of conduct set forth in paragraphs (a) and (b). If the court shall so determine,
indemnification shall be made under paragraph (a) or (b) as the case may be.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the company in advance of the final disposition of
such action, suit or proceeding as authorized by the Board in the manner
provided in paragraph (d) upon receipt of a written instrument acceptable to the
Board by or on behalf of the director, officer, employee or agent to repay such
amount unless it shall ultimately be determined that he is entitled to be
indemnified by the company as authorized in this section.
(f) The indemnification provided by these By-Laws shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled under
any agreement, or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit or the heirs, executors and administrators of such a
person.
(g) The company shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
company, or is or was serving at the request of the company as a director,
officer, employee or agent of another company, or enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the company would have the
power to indemnify him against such liability under the provisions of these
By-Laws.
Item 30. Principal Underwriters
(a) Other Activity. Registrant's principal underwriter, American General Equity
Services Corporation, also acts as principal underwriter for Variable Account I
of AIG Life Insurance Company, which offers interests in variable annuities.
American General Equity Services Corporation also acts as principal underwriter
for certain other separate accounts of AIG Life Insurance Company affiliates.
(b) Management.
Name and Principal Positions and Offices with Underwriter
Business Address American General Equity Services Corporation
------------------ --------------------------------------------------
Rodney O. Martin, Jr. Director and Chairman of the Board of Directors
2929 Allen Parkway
Houston, TX 77019
C-27
Name and Principal Positions and Offices with Underwriter
Business Address American General Equity Services Corporation
------------------ --------------------------------------------------
Mark R. McGuire Director and Senior Vice President
2727 Allen Parkway
Houston, TX 77019
Ernest T. Patrikis Director
70 Pine Street
New York, NY 10270
Gary D. Reddick Director
2929 Allen Parkway
Houston, TX 77019
Royce G. Imhoff, II President
2929 Allen Parkway
Houston, TX 77019
Robert F. Herbert, Jr. Vice President
2727-A Allen Parkway
Houston, TX 77019
Lucille S. Martinez Vice President, Treasurer and Controller
2727 Allen Parkway
Houston, TX 77019
Deanna D. Osmonson Vice President, Chief Compliance Officer and Anti-
2727 Allen Parkway Money Laundering Compliance Officer
Houston, TX 77019
T. Clay Spires Tax Officer
2727-A Allen Parkway
Houston, TX 77019
Elizabeth M. Tuck Secretary
70 Pine Street
New York, NY 10270
Tammi L. Willy Assistant Vice President
2727 Allen Parkway
Houston, TX 77019
C-28
Name and Principal Positions and Offices with Underwriter
Business Address American General Equity Services Corporation
------------------ --------------------------------------------------
Sarah Hosker Assistant Secretary
70 Pine Street
New York, NY 10270
Lauren W. Jones Assistant Secretary
2929 Allen Parkway
Houston, TX 77019
David M. Robinson Assistant Secretary
2929 Allen Parkway
Houston, TX 77019
John D. Fleming Assistant Treasurer
2929 Allen Parkway
Houston, TX 77019
Barbara J. Moore Assistant Tax Officer
2919 Allen Parkway
Houston, TX 77019
(c) Compensation From the Registrant.
[Download Table]
Net Compensation on
Underwriting Events Occasioning the
Name of Principal Discounts and Deduction of a Brokerage Other
Underwriter Commissions Deferred Sales Load Commissions Compensation
American General 0 0 0 0
Equity Services
Corporation
Item 31. Location of Accounts and Records
All records referenced under Section 31(a) of the 1940 Act, and Rules 31a-1
through 31a-3 thereunder, are maintained and in the custody of AIG Life
Insurance Company at its principal executive office located at 70 Pine Street,
New York, New York 10270 or at its offices located at 2727-A Allen Parkway,
Houston, Texas 77019-2191 or One ALICO Plaza, 600 King Street, Wilmington,
Delaware 19801.
Item 32. Management Services Inapplicable
C-29
Item 33. Fee Representation
AIG Life Insurance Company hereby represents that the fees and charges deducted
under the Policy, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and risks assumed by AIG Life
Insurance Company.
Undertakings of the Depositor
During any time there are insurance obligations outstanding and covered by the
guarantee issued by the National Union Fire Insurance Company of Pittsburgh, Pa.
("National Union Guarantee Period"), filed as an exhibit to this Registration
Statement (the "National Union Guarantee"), the Depositor hereby undertakes to
provide notice to policy owners covered by the National Union Guarantee promptly
after the happening of significant events related to the National Union
Guarantee.
These significant events include: (i) termination of the National Union
Guarantee that has a material adverse effect on the policy owner's rights under
the National Union Guarantee; (ii) a default under the National Union Guarantee
that has a material adverse effect on the policy owner's rights under the
National Union Guarantee; or (iii) the insolvency of National Union Fire
Insurance Company of Pittsburgh, Pa. ("National Union").
Depositor hereby undertakes during the National Union Guarantee Period to cause
Registrant to file post-effective amendments to this Registration Statement as
frequently as is necessary to ensure that the audited financial statements of
National Union in the Registration Statement are current and to cause Registrant
to include as an exhibit to this Registration Statement the consent of the
independent registered public accounting firm of National Union regarding such
financial statements.
During the National Union Guarantee Period, the Depositor hereby undertakes to
include in the prospectus to policy owners, an offer to supply the Statement of
Additional Information which shall contain current financial statements of
National Union, free of charge upon a policy owner's request.
C-30
POWERS OF ATTORNEY
Each person whose signature appears below hereby appoints Robert F.
Herbert, Jr., Gary D. Reddick and Kyle L. Jennings and each of them, any one of
whom may act without the joinder of the others, as his/her attorney-in-fact to
sign on his/her behalf and in the capacity stated below and to file all
amendments to this Registration Statement, which amendment or amendments may
make such changes and additions to this Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Variable Account II of AIG Life
Insurance Company, certifies that it meets all of the requirements for
effectiveness of this amended Registration Statement under Rule 485(b) under the
Securities Act of 1933 and has duly caused this amended Registration Statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Houston, and State of Texas on the 20th day of October, 2005.
VARIABLE ACCOUNT II OF AIG LIFE
INSURANCE COMPANY
(Registrant)
BY: AIG LIFE INSURANCE COMPANY
(On behalf of the Registrant and itself)
BY: ROBERT F. HERBERT, JR.
-----------------------------------------
ROBERT F. HERBERT, JR.
SENIOR VICE PRESIDENT, TREASURER
AND COMPTROLLER
[SEAL]
ATTEST: LAUREN W. JONES
-------------------
LAUREN W. JONES
ASSISTANT SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons, on behalf
of the Registrant and Depositor, in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
RODNEY O. MARTIN, JR. Director, Chairman, October 20, 2005
------------------------- President and Chief
RODNEY O. MARTIN, JR. Executive Officer
CHRISTOPHER J. SWIFT Director and Chief October 20, 2005
------------------------- Financial Officer
CHRISTOPHER J. SWIFT
M. BERNARD AIDINOFF Director October 20, 2005
-------------------------
M. BERNARD AIDINOFF
DAVID J. DIETZ Director October 20, 2005
-------------------------
DAVID J. DIETZ
DAVID L. HERZOG Director October 20, 2005
-------------------------
DAVID L. HERZOG
RICHARD A. HOLLAR Director October 20, 2005
-------------------------
RICHARD A. HOLLAR
ROYCE G. IMHOFF II Director October 20, 2005
-------------------------
ROYCE G. IMHOFF II
Signature Title Date
--------- ----- ----
ERNEST T. PATRIKIS Director October 20, 2005
-------------------------
ERNEST T. PATRIKIS
GARY D. REDDICK Director October 20, 2005
-------------------------
GARY D. REDDICK
JAMES W. WEAKLEY Director October 20, 2005
-------------------------
JAMES W. WEAKLEY
SIGNATURES
National Union Fire Insurance Company of Pittsburgh, Pa. has caused this
amended Registration Statement to be signed on its behalf by the undersigned,
duly authorized, in the City of New York, and State of New York on the 20th day
of October, 2005.
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA.
BY: ROBERT S. SCHIMEK
-----------------------------------
ROBERT S. SCHIMEK
SENIOR VICE PRESIDENT AND TREASURER
[SEAL]
ATTEST: ELIZABETH M. TUCK
--------------------------
ELIZABETH M. TUCK
SECRETARY
This amended Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
KRISTIAN P. MOOR Director and Chairman October 20, 2005
--------------------------
KRISTIAN P. MOOR
JOHN W. KEOGH Director, President and October 20, 2005
-------------------------- Chief Executive Officer
JOHN W. KEOGH
ROBERT S. SCHIMEK Director, Senior Vice October 20, 2005
-------------------------- President and Treasurer
ROBERT S. SCHIMEK
M. BERNARD AIDINOFF Director October 20, 2005
--------------------------
M. BERNARD AIDINOFF
STEVEN J. BENSINGER Director October 20, 2005
--------------------------
STEVEN J. BENSINGER
CHARLES H. DANGELO Director October 20, 2005
--------------------------
CHARLES H. DANGELO
DAVID L. HERZOG Director October 20, 2005
--------------------------
DAVID L. HERZOG
ROBERT E. LEWIS Director October 20, 2005
--------------------------
ROBERT E. LEWIS
Signature Title Date
--------- ----- ----
WIN J. NEUGER Director October 20, 2005
--------------------------
WIN J. NEUGER
ERNEST T. PATRIKIS Director October 20, 2005
--------------------------
ERNEST T. PATRIKIS
ROBERT M. SANDLER Director October 20, 2005
--------------------------
ROBERT M. SANDLER
NICHOLAS S. TYLER Director October 20, 2005
--------------------------
NICHOLAS S. TYLER
NICHOLAS C. WALSH Director October 20, 2005
--------------------------
NICHOLAS C. WALSH
EXHIBIT INDEX
Item 26. Exhibits
(k)(2) Opinion and Consent of Saul Ewing LLP, Counsel to National
Union Fire Insurance Company of Pittsburgh, Pa.
(k)(3) Opinion and Consent of Sullivan & Cromwell LLP, Counsel to
National Union Fire Insurance Company of Pittsburgh, Pa.
(n)(1) Consent of Independent Registered Public Accounting Firm,
PricewaterhouseCoopers LLP.
E-1
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0001193125-05-206433 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Wed., May 1, 8:46:46.2am ET 
