2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Years Ended December 31,
(in millions) 2007 2006 2005
Summary:
Net cash provided by operating activities $ 35,171 $ 6,287 $ 23,413
Net cash used in investing activities (68,007) (67,952) (61,459)
Net cash provided by financing activities 33,480 61,244 38,097
Effect of exchange rate changes on cash 50 114 (163)
Change in cash 694 (307) (112)
Cash at beginning of year 1,590 1,897 2,009
Cash at end of year $ 2,284 $ 1,590 $ 1,897
Cash flows from operating activities:
Net income $ 6,200 $ 14,048 $ 10,477
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income:
Unrealized market valuation losses on AIGFP super senior credit default swap portfolio 11,472 — —
Net gains on sales of securities available for sale and other assets (1,349) (763) (1,218)
Foreign exchange transaction (gains) losses (104) 1,795 (3,330)
Net unrealized (gains) losses on non-AIGFP derivative assets and liabilities 116 (713) 878
Equity in income of partially owned companies and other invested assets (4,760) (3,990) (1,421)
Amortization of deferred policy acquisition costs 11,602 11,578 10,693
Amortization of premium and discount on securities and long-term borrowings 580 699 207
Depreciation expenses, principally flight equipment 2,790 2,374 2,200
Provision for finance receivable losses 646 495 435
Other-than-temporary impairments 4,715 944 598
Changes in operating assets and liabilities:
General and life insurance reserves 16,242 12,930 27,045
Premiums and insurance balances receivable and payable — net (207) (1,214) 192
Reinsurance assets 923 1,665 (5,365)
Capitalization of deferred policy acquisition costs (15,846) (15,363) (14,454)
Investment income due and accrued (401) (249) (171)
Funds held under reinsurance treaties (151) (1,612) 770
Other policyholders’ funds 1,374 (498) 811
Income taxes payable (3,709) 2,003 1,543
Commissions, expenses and taxes payable 989 408 140
Other assets and liabilities — net 3,657 (77) 2,863
Bonds, common and preferred stocks trading (3,667) (9,147) (5,581)
Trade receivables and payables — net 2,243 (197) 2,272
Trading securities 835 1,339 (3,753)
Spot commodities (18) (128) 442
Net unrealized (gain) loss on swaps, options and forward transactions 1,413 (1,482) 934
Securities purchased under agreements to resell 9,341 (16,568) 9,953
Securities sold under agreements to repurchase (11,391) 9,552 (12,534)
Securities and spot commodities sold but not yet purchased 633 (1,899) 571
Finance receivables and other loans held for sale — originations and purchases (5,145) (10,786) (13,070)
Sales of finance receivables and other loans — held for sale 5,671 10,602 12,821
Other, net 477 541 (1,535)
Total adjustments 28,971 (7,761) 12,936
Net cash provided by operating activities $ 35,171 $ 6,287 $ 23,413
See Accompanying Notes to Consolidated Financial Statements.
134 AIG 2007 Form 10-K