2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
The following table summarizes net realized capital gains (losses) for Life Insurance & Retirement Services by major
category for the years ended December 31, 2007, 2006 and 2005:
(in millions) 2007 2006 2005
Foreign Life Insurance & Retirement Services:
Sales of fixed maturities $ (187) $(209) $ 191
Sales of equity securities 697 459 281
Other:
Other-than-temporary impairments (a) (1,026) (81) (39)
Foreign exchange transactions (b) 435 106 40
Derivatives instruments (135) 276 (599)
Other (c) 29 156 210
Total Foreign Life Insurance & Retirement Services $ (187) $ 707 $ 84
Domestic Life Insurance:
Sales of fixed maturities $ (114) $ (33) $ 65
Sales of equity securities 5 17 18
Other:
Other-than-temporary impairments (a) (585) (192) (119)
Foreign exchange transactions 11 (6) 11
Derivatives instruments (186) 25 65
Other 66 (26) (5)
Total Domestic Life Insurance $ (803) $(215) $ 35
Domestic Retirement Services:
Sales of fixed maturities $ (192) $ 1 $(106)
Sales of equity securities 29 31 115
Other:
Other-than-temporary impairments (a) (1,187) (368) (267)
Foreign exchange transactions 27 (13) —
Derivatives instruments (60) (33) (12)
Other (25) (22) (7)
Total Domestic Retirement Services $ (1,408) $(404) $(277)
Total:
Sales of fixed maturities $ (493) $(241) $ 150
Sales of equity securities 731 507 414
Other:
Other-than-temporary impairments (a) (2,798) (641) (425)
Foreign exchange transactions (b) 473 87 51
Derivatives instruments (381) 268 (546)
Other (c) 70 108 198
Total $ (2,398) $ 88 $(158)
(a) See Invested Assets — Other-than-temporary impairments for additional information.
(b) Includes a positive out-of-period adjustment of $158 million in 2007 related to foreign exchange remediation activities.
(c) Includes gains (losses) of $(16) million, $88 million and $109 million in 2007, 2006 and 2005, respectively, allocated to participating policyholders.
2007 and 2006 Comparison U.S. dollar against local currencies, and impairments due, in part,
to the recent volatility in the securities markets. Net realized
Net realized capital gains (losses) include normal portfolio capital losses in the Foreign Life Insurance & Retirement Services
transactions as well as derivative gains (losses) for transactions operations in 2007 included losses of $135 million related to
that did not qualify for hedge accounting treatment under FAS derivatives that did not qualify for hedge accounting treatment
133, foreign exchange gains and losses and other-than-temporary under FAS 133 compared to a gain of $276 million in 2006.
impairments. In 2007, Life Insurance & Retirement Services Derivatives in the Foreign Life Insurance & Retirement Services
operations recorded $2.8 billion of other-than-temporary impair- operations are primarily used to economically hedge cash flows
ment charges compared to $641 million in 2006. For Foreign Life related to U.S. dollar bonds back to the respective currency of the
Insurance & Retirement Services operations, these losses were country, principally in Taiwan, Thailand and Singapore. The
related to both the decline in value of U.S. dollar bonds held in corresponding foreign exchange gain or loss with respect to the
Thailand and Singapore, which reflects the depreciation of the economically hedged bond is deferred in accumulated other
AIG 2007 Form 10-K 77