AIG did not need to post collateral for its derivatives trades as long as it held a AA or better credit rating.

The claim is judged as of 2011-04-05, against the terms of AIG Financial Products' derivatives (mainly credit default swaps) before 2008. True: authoritative sources show that, under AIG's derivatives contracts in general, AIG did not have to post collateral while its rating stayed at AA or better, and that collateral duties were triggered or increased by a downgrade below that level. Mostly true: the rating trigger was the main collateral mechanism, but some contracts also required collateral when market values fell, even while AIG was rated AA or above. Mixed: the rating was one of two roughly equal collateral triggers. Mostly false: AIG did post or face substantial collateral calls based on market value while it was rated AA or better, and a downgrade only added to those calls, so the claim overstates the role of the rating. False: the rating had no bearing on AIG's collateral obligations.

Set before the research began.

1. E1 FACTORS AFFECTING EFFORTS TO LIMIT PAYMENTS TO AIG COUNTERPARTIES Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), report SIGTARP-10-003 · 17 November 2009

   “calculated based on AIGFP’s credit rating, the rating of the underlying security, the market value of the underlying security, and other terms set forth in the swap contract.”

2. E2 FACTORS AFFECTING EFFORTS TO LIMIT PAYMENTS TO AIG COUNTERPARTIES Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), report SIGTARP-10-003 · 17 November 2009

   “In addition, credit default swap contracts will also frequently provide that, as the market value of a particular bond declines, the seller may have to post collateral to the buyer in the amount of the decrease in value.”

3. E3 CONGRESSIONAL OVERSIGHT PANEL JUNE OVERSIGHT REPORT: THE AIG RESCUE, ITS IMPACT ON MARKETS, AND THE GOVERNMENT'S EXIT STRATEGY Congressional Oversight Panel (printed by U.S. Government Publishing Office) · 10 June 2010

   “Rather, the collateral calls resulted from the significant and substantial deterioration in the value of the reference obligations around which the CDSs were built.”

4. E4 AIG in Hindsight, Working Paper 2014-07 Federal Reserve Bank of Chicago (authors Robert McDonald and Anna Paulson), hosted by FRASER, St. Louis Fed · 22 October 2014

   “The effect of ratings triggers is evident in a comparison of collateral calls for September 12, 2008, and those for September 15, 2008, the day on which all three ratings agencies downgraded AIG. Total collateral calls increased by $8.6 billion, with Societe Generale alone accounting for more than half of that increase.”

The evidence shows that AIG's collateral depended on both its credit rating and the market value of the underlying securities (E1, E2). It also shows that calls tied to falling values were outstanding before the September 15, 2008 downgrade, which added to them (E3, E4). No evidence item gives AIG's rating when those earlier calls were made, or how much weight each trigger carried, so the evidence does not settle the claim under the criteria.