2007 Annual Report - AIG.com

More documents

Recommendations

Info

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
American International Group, Inc. and Subsidiaries 4. Lending activities Continued Finance receivables, net of unearned finance charges, were as follows: Years Ended December 31, (in millions) 2007 2006 Real estate loans $20,023 $20,321 Non-real estate loans 5,447 4,506 Retail sales finance 3,659 3,092 Credit card loans 1,566 1,413 Other loans 1,417 978 Total finance receivables 32,112 30,310 Allowance for losses (878) (737) Finance receivables, net $31,234 $29,573 5. Reinsurance ment (retention, volatility, concentrations) and capital planning locally (branch and subsidiary). It also allows AIG to pool its In the ordinary course of business, AIG’s General Insurance and insurance risks and purchase reinsurance more efficiently at a Life Insurance companies place reinsurance with other insurance consolidated level, manage global counterparty risk and relationcompanies in order to provide greater diversification of AIG’s ships and manage global life catastrophe risks. business and limit the potential for losses arising from large risks. In addition, AIG’s General Insurance subsidiaries assume reinsurance from other insurance companies. General Reinsurance General reinsurance is effected under reinsurance treaties and by Supplemental information for gross loss and benefit negotiation on individual risks. Certain of these reinsurance reserves net of ceded reinsurance at December 31, 2007 arrangements consist of excess of loss contracts which protect and 2006 follows: AIG against losses over stipulated amounts. Ceded premiums are As Net of considered prepaid reinsurance premiums and are recognized as (in millions) Reported Reinsurance a reduction of premiums earned over the contract period in 2007 proportion to the protection received. Amounts recoverable from Reserve for losses and loss expenses $ (85,500) $ (69,288) general reinsurers are estimated in a manner consistent with the Future policy benefits for life and claims liabilities associated with the reinsurance and presented accident and health insurance as a component of reinsurance assets. Assumed reinsurance contracts (136,068) (134,461) premiums are earned primarily on a pro-rata basis over the terms Reserve for unearned premiums (28,022) (24,029) of the reinsurance contracts. For both ceded and assumed Reinsurance assets* 21,811 — reinsurance, risk transfer requirements must be met in order for 2006 reinsurance accounting to apply. If risk transfer requirements are Reserve for losses and loss expenses $ (79,999) $ (62,630) not met, the contract is accounted for as a deposit, resulting in Future policy benefits for life and the recognition of cash flows under the contract through a deposit accident and health insurance asset or liability and not as revenue or expense. To meet risk contracts (121,004) (119,430) transfer requirements, a reinsurance contract must include both Reserve for unearned premiums (26,271) (22,759) insurance risk, consisting of both underwriting and timing risk, Reinsurance assets* 22,456 — and a reasonable possibility of a significant loss for the assuming * Represents gross reinsurance assets, excluding allowances and reinsurance recoverable on paid losses. entity. Similar risk transfer criteria are used to determine whether AIRCO acts primarily as an internal reinsurance company for AIG’s insurance operations. This facilitates insurance risk manage- directly written insurance contracts should be accounted for as insurance or as a deposit. AIG 2007 Form 10-K 157
Page 1 and 2:
AMERICAN INTERNATIONAL GROUP, INC.
Page 3 and 4:
FINANCIAL HIGHLIGHTS (in millions,
Page 5 and 6:
overall financial condition, althou
Page 7 and 8:
Group Executive Committee We are ad
Page 9 and 10:
AIG’s life insurance network is t
Page 11 and 12:
We have also begun to address the e
Page 13 and 14:
WHAT WE SEE The ability to see and
Page 15 and 16:
The Major Accounts Practice within
Page 17 and 18:
Around the world, the middle class
Page 19 and 20:
WE SEE GROWTH OPPORTUNITIES IN EMER
Page 21 and 22:
To grow the strength of the AIG glo
Page 23 and 24:
Since 2003, the AIG Disaster Relief
Page 25 and 26:
RESPECT Respect encompasses how we
Page 27 and 28:
Life Insurance & Retirement Service
Page 29 and 30:
Domestic Brokerage Group— Gross P
Page 31 and 32:
In the summer of 2007, widespread f
Page 33 and 34:
in gross premiums written. It launc
Page 35 and 36:
It grew new business premiums from
Page 37 and 38:
emerging markets for its services,
Page 39 and 40:
ILFC—Revenues by Region Total = $
Page 41 and 42:
AIG Investments acquired a 94 perce
Page 43 and 44:
and changing interest rates, as wel
Page 45 and 46:
American International Group, Inc.
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
UNITED STATES SECURITIES AND EXCHAN
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160: American International Group, Inc.
Page 191 and 192: Index of Notes to Consolidated Fina
Page 209: American International Group, Inc.
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
Page 271 and 272:
Page 273 and 274:
Page 275 and 276:
SHAREHOLDER INFORMATION Corporate H
show all

2007 Annual Report - AIG.com

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?