2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements Continued
3. Investments
Continued
(g) Other Invested Assets:
Other invested assets at December 31, 2007 and 2006
consisted of the following:
was $1.6 billion, and is included in Other invested assets in the
consolidated balance sheet. These investments are monitored for
impairment on a contract by contract basis quarterly. During
2007, income recognized on life settlement contracts previously
held in non-consolidated trusts was $32 million, and is included in
net investment income in the consolidated statement of income.
At December 31,
Further information regarding life settlement contracts at
(in millions) 2007 2006
December 31, 2007 is as follows:
Partnerships (a) $28,938 $21,657 (dollars in millions)
Mutual funds 4,891 4,892 Remaining Life
Investment real estate (b) 9,877 5,694 Expectancy of Number of Carrying Face Value
Aircraft asset investments (c) 1,689 1,784 Insureds Contracts Value (Death Benefits)
Life settlement contracts (d) 1,627 1,090 0 – 1 year 11 $ 7 $ 9
Consolidated managed partnerships 1 – 2 years 34 34 47
and funds (e) 6,614 2,923 2 – 3 years 79 61 98
All other investments 5,187 4,071 3 – 4 years 151 111 210
Other invested assets $58,823 $42,111 4 – 5 years 176 130 277
Thereafter 2,181 1,284 5,400
(a) Includes private equity partnerships and hedge funds.
(b) Net of accumulated depreciation of $548 million and $585 million in
Total 2,632 $1,627 $6,041
2007 and 2006, respectively.
At December 31, 2007, the anticipated life insurance premi-
(c) Consist primarily of Life Insurance & Retirement Services investments
ums required to keep the life settlement contracts in force,
in aircraft equipment.
payable in the ensuing twelve months ending December 31, 2008
(d) See paragraph (h) below for additional information.
and the four succeeding years ending December 31, 2012 are
(e) Represents AIG managed partnerships and funds that are consolidated.
$132 million, $141 million, $149 million, $146 million, and
At December 31, 2007 and 2006, $7.2 billion and $5.3 billion $152 million, respectively.
of Other invested assets related to available for sale investments In June 2006, AIG restructured its ownership of life settlement
carried at fair value, with unrealized gains and losses recorded in contracts with no effect on the economic substance of these
of Accumulated other comprehensive income (loss), net of
investments. At the same time, AIG paid $610 million to its
deferred taxes, with almost all of the remaining investments being former co-investors to acquire all the remaining interests in life
accounted for on the equity method of accounting. All of the settlement contracts held in previously non-consolidated trusts.
investments are subject to impairment testing (see Note 1(c) The life insurers for a small portion of AIG’s consolidated life
herein). The gross unrealized loss on the investments accounted settlement contracts include AIG subsidiaries. As a result,
for as available for sale at December 31, 2007 was $621 million, amounts related to life insurance issued by AIG subsidiaries are
the majority of which represents investments that have been in a eliminated in consolidation.
continuous unrealized loss position for less than 12 months.
(h) Investments in Life Settlement Contracts: At December
31, 2007, the carrying value of AIG’s life settlement contracts
4. Lending activities
Mortgages and other loans receivable at December 31, 2007 and 2006 are comprised of the following:
Years Ended December 31,
(in millions) 2007 2006
Mortgages – commercial $17,105 $15,219
Mortgages – residential* 2,153 1,903
Life insurance policy loans 8,099 7,501
Collateral, guaranteed, and other commercial loans 6,447 3,859
Total mortgage and other loans receivable 33,804 28,482
Allowance for losses (77) (64)
Mortgage and other loans receivable, net $33,727 $28,418
* Primarily consists of foreign mortgage loans.
156 AIG 2007 Form 10-K