2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
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American International Group, Inc. and Subsidiaries<br />
Notes to Consolidated Financial Statements Continued<br />
3. Investments<br />
Continued<br />
(c) Net Realized Gains and Losses:<br />
The Net realized capital gains (losses) and increase (decrease) in unrealized appreciation of <strong>AIG</strong>’s available for sale<br />
investments were as follows:<br />
(in millions) <strong>2007</strong> 2006 2005<br />
Net realized capital gains (losses):<br />
Sales of fixed maturities $ (468) $ (382) $ 372<br />
Sales of equity securities 1,087 813 643<br />
Sales of real estate and other assets 619 303 88<br />
Other-than-temporary impairments (4,072) (944) (598)<br />
Foreign exchange transactions (643) (382) 701<br />
Derivative instruments (115) 698 (865)<br />
Total $(3,592) $ 106 $ 341<br />
Increase (decrease) in unrealized appreciation of investments:<br />
Fixed maturities $(5,504) $ (198) $(4,656)<br />
Equity securities 2,440 432 850<br />
Other investments (3,842) 986 2,138<br />
<strong>AIG</strong>FP investments (1,140) 1,354 (1,909)<br />
Increase (decrease) in unrealized appreciation $(8,046) $2,574 $(3,577)<br />
Net unrealized gains (losses) included in the consolidated statement of in<strong>com</strong>e from investment securities classified as trading<br />
securities in <strong>2007</strong>, 2006 and 2005 were $1.1 billion, $938 million and $1.1 billion, respectively.<br />
The gross realized gains and gross realized losses from sales of <strong>AIG</strong>’s available for sale securities were as follows:<br />
<strong>2007</strong> 2006 2005<br />
Gross Gross Gross Gross Gross Gross<br />
Realized Realized Realized Realized Realized Realized<br />
(in millions) Gains Losses Gains Losses Gains Losses<br />
Fixed maturities $ 680 $ 1,148 $ 711 $1,093 $1,586 $1,214<br />
Equity securities 1,368 291 1,111 320 930 354<br />
Preferred stocks 10 — 22 — 101 34<br />
Total $2,058 $ 1,439 $1,844 $1,413 $2,617 $1,602<br />
(d) Fair Value of Investment Securities:<br />
The amortized cost or cost and estimated fair value of <strong>AIG</strong>’s available for sale and held to maturity securities at<br />
December 31, <strong>2007</strong> and 2006 were as follows:<br />
December 31, <strong>2007</strong>* December 31, 2006<br />
Amortized Gross Gross Amortized Gross Gross<br />
Cost or Unrealized Unrealized Fair Cost or Unrealized Unrealized Fair<br />
(in millions) Cost Gains Losses Value Cost Gains Losses Value<br />
Available for sale: *<br />
U.S. government and government<br />
sponsored entities $ 7,956 $ 333 $ 37 $ 8,252 $ 7,667 $ 221 $ 140 $ 7,748<br />
Obligations of states, municipalities<br />
and political subdivisions 46,087 927 160 46,854 59,785 1,056 210 60,631<br />
Non-U.S. governments 67,023 3,920 743 70,200 62,860 5,461 437 67,884<br />
Corporate debt 239,822 6,216 4,518 241,520 257,383 7,443 2,536 262,290<br />
Mortgage-backed, asset-backed and<br />
collateralized 140,982 1,221 7,703 134,500 104,687 502 362 104,827<br />
Total bonds $501,870 $12,617 $13,161 $501,326 $492,382 $14,683 $3,685 $503,380<br />
Equity securities 15,188 5,545 463 20,270 13,147 2,807 159 15,795<br />
Total $517,058 $18,162 $13,624 $521,596 $505,529 $17,490 $3,844 $519,175<br />
Held to maturity: *<br />
Bonds — Obligations of states,<br />
municipalities and political<br />
subdivisions $21,581 $609 $33 $22,157 $21,437 $731 $14 $22,154<br />
* At December 31, <strong>2007</strong> and 2006, fixed maturities held by <strong>AIG</strong> that were below investment grade or not rated totaled $27.0 billion and $26.6 billion,<br />
respectively.<br />
154 <strong>AIG</strong> <strong>2007</strong> Form 10-K