2007 Annual Report - AIG.com

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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
American International Group, Inc. and Subsidiaries Consolidated Statement of Cash Flows Continued Years Ended December 31, (in millions) 2007 2006 2005 Cash flows from investing activities: Proceeds from (payments for) Sales and maturities of fixed maturity securities available for sale and hybrid investments $ 132,320 $ 112,894 $ 140,076 Sales of equity securities available for sale 9,616 12,475 11,661 Proceeds from fixed maturity securities held to maturity 295 205 46 Sales of flight equipment 303 697 573 Sales or distributions of other invested assets 14,109 14,084 14,899 Payments received on mortgage and other loans receivable 9,062 5,165 3,679 Principal payments received on finance receivables held for investment 12,553 12,586 12,461 Purchases of fixed maturity securities available for sale and hybrid investments (139,184) (146,465) (175,657) Purchases of equity securities available for sale (10,933) (14,482) (13,273) Purchases of fixed maturity securities held to maturity (266) (197) (3,333) Purchases of flight equipment (4,772) (6,009) (6,193) Purchases of other invested assets (25,327) (16,040) (15,059) Acquisitions, net of cash acquired (1,361) — — Mortgage and other loans receivable issued (12,439) (7,438) (5,310) Finance receivables held for investment — originations and purchases (15,271) (13,830) (17,276) Change in securities lending invested collateral (12,303) (9,835) (10,301) Net additions to real estate, fixed assets, and other assets (870) (1,097) (941) Net change in short-term investments (23,484) (10,620) 1,801 Net change in non-AIGFP derivative assets and liabilities (55) (45) 688 Net cash used in investing activities $ (68,007) $ (67,952) $ (61,459) Cash flows from financing activities: Proceeds from (payments for) Policyholders’ contract deposits $ 64,829 57,197 51,699 Policyholders’ contract withdrawals (58,675) (43,413) (36,339) Change in other deposits (182) 1,269 (957) Change in commercial paper and extendible commercial notes (338) 2,960 (702) Long-term borrowings issued 103,210 71,028 67,061 Repayments on long-term borrowings (79,738) (36,489) (51,402) Change in securities lending payable 11,757 9,789 10,437 Redemption of subsidiary company preferred stock — — (100) Issuance of treasury stock 206 163 82 Payments advanced to purchase treasury stock (6,000) — — Cash dividends paid to shareholders (1,881) (1,638) (1,421) Acquisition of treasury stock (16) (20) (176) Other, net 308 398 (85) Net cash provided by financing activities $ 33,480 $ 61,244 $ 38,097 Supplementary disclosure of cash flow information: Cash paid during the period for: Interest $ 8,818 $ 6,539 $ 4,883 Taxes $ 5,163 $ 4,693 $ 2,593 Non-cash financing activities: Interest credited to policyholder accounts included in financing activities $ 11,628 $ 10,746 $ 9,782 Treasury stock acquired using payments advanced to purchase shares $ 5,088 $ — $ — Non-cash investing activities: Debt assumed on acquisitions and warehoused investments $ 791 $ — $ — See accompanying Notes to Consolidated Financial Statements. AIG 2007 Form 10-K 135
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AMERICAN INTERNATIONAL GROUP, INC.
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FINANCIAL HIGHLIGHTS (in millions,
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overall financial condition, althou
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Group Executive Committee We are ad
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AIG’s life insurance network is t
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We have also begun to address the e
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WHAT WE SEE The ability to see and
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The Major Accounts Practice within
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Around the world, the middle class
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WE SEE GROWTH OPPORTUNITIES IN EMER
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To grow the strength of the AIG glo
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Since 2003, the AIG Disaster Relief
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RESPECT Respect encompasses how we
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Life Insurance & Retirement Service
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Domestic Brokerage Group— Gross P
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In the summer of 2007, widespread f
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in gross premiums written. It launc
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It grew new business premiums from
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emerging markets for its services,
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ILFC—Revenues by Region Total = $
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AIG Investments acquired a 94 perce
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and changing interest rates, as wel
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American International Group, Inc.
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UNITED STATES SECURITIES AND EXCHAN
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Page 137 and 138: American International Group, Inc.
Page 187: American International Group, Inc.
Page 191 and 192: Index of Notes to Consolidated Fina
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SHAREHOLDER INFORMATION Corporate H
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2007 Annual Report - AIG.com

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