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ITEM 8 / NOTE 6. FAIR VALUE MEASUREMENTS.....................................................................................................................................................................................upon age groups and duration. In general, increases in volatility and utilization rates will increase the fair value, whileincreases in lapse rates and mortality rates will decrease the fair value of the liability associated with the GMWB.Derivative liabilities – credit contracts..............................................................................................................................................................................................The significant unobservable inputs used for Derivatives liabilities – credit contracts are recovery rates, diversityscores, and the weighted average life of the portfolio. AIG non-performance risk is also considered in themeasurement of the liability.An increase in recovery rates and diversity score will decrease the fair value of the liability. An increase in theweighted average life will have a directionally similar corresponding effect on the fair value measurement of theliability.Investments in Certain Entities Carried at Fair Value Using Net Asset Value per Share..............................................................................................................................................................................................The following table includes information related to our investments in certain other invested assets,including private equity funds, hedge funds and other alternative investments that calculate net asset valueper share (or its equivalent). For these investments, which are measured at fair value on a recurring basis,we use the net asset value per share as a practical expedient to measure fair value.December 31, 2012 December 31, 2011Fair Value UsingFair Value UsingNet Asset ValueNet Asset ValuePer Share Unfunded Per Share Unfunded(in millions) Investment Category Includes (or its equivalent) Commitments (or its equivalent) CommitmentsInvestment CategoryPrivate equity funds:Leveraged buyoutDebt and/or equity investments made as part of atransaction in which assets of mature companiesare acquired from the current shareholders,typically with the use of financial leverage $ 2,549 $ 659$ 3,185 $ 945Non-U.S.Investments that focus primarily on Asian andEuropean based buyouts, expansion capital,special situations, turnarounds, venture capital,mezzanine and distressed opportunities strategies 179 25165 57Venture capital Early-stage, high-potential, growth companiesexpected to generate a return through an eventualrealization event, such as an initial public offeringor sale of the company 163 16316 39Distressed Securities of companies that are already indefault, under bankruptcy protection, or troubled 87 21182 42OtherReal estate, energy, multi-strategy, mezzanine,and industry-focused strategies 255 152252 98Total private equityfunds 3,233 8734,100 1,181Hedge funds:Event-driven Securities of companies undergoing materialstructural changes, including mergers, acquisitionsand other reorganizations 747 2774 2Long-short Securities that the manager believes areundervalued, with corresponding short positions tohedge market risk 1,091 –927 –MacroInvestments that take long and short positions infinancial instruments based on a top-down view ofcertain economic and capital market conditions 238 –173 –Distressed Securities of companies that are already indefault, under bankruptcy protection or troubled 316 –272 10OtherNon-U.S. companies, futures and commodities,relative value, and multi-strategy and industryfocusedstrategies 416 –627 –Total hedge funds 2,808 22,773 12Total $ 6,041 $ 875$ 6,873 $ 1,193..................................................................................................................................................................................................................................248 AIG 2012 Form 10-K