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ITEM 8 / NOTE 7. INVESTMENTS.....................................................................................................................................................................................The following table presents further information regarding life settlement contracts:December 31, 2012Number of Carrying Face Value(dollars in millions) Contracts Value (Death Benefits)Remaining Life Expectancy of Insureds:0 - 1 year1 - 2 years2 - 3 years3 - 4 years4 - 5 yearsThereafterTotalAt December 31, 2012, the anticipated life insurance premiums required to keep the life settlement contracts in force,payable in the next 12 months ending December 31, 2013 and the four succeeding years ending December 31, 2017are $546 million, $555 million, $562 million, $554 million and $555 million, respectively.Net Investment Income..............................................................................................................................................................................................Net investment income represents income primarily from the following sources in our insurance operations and AIGParent:• Interest income and related expenses, including amortization of premiums and accretion of discounts on bondswith changes in the timing and the amount of expected principal and interest cash flows reflected in the yield, asapplicable.• Dividend income from common and preferred stock and distributions from other investments.• Realized and unrealized gains and losses from investments in trading securities accounted for at fair value andinvestments for which the fair value option has been elected.• Earnings from private equity funds and hedge fund investments accounted for under the equity method.• The difference between the carrying amount of a life settlement contract and the life insurance proceeds of theunderlying life insurance policy recorded in income upon the death of the insured.• Changes in the fair values of our interests in ML II, AIA and MetLife securities prior to sale and change in the fairvalue of our interests in ML III prior to the FRBNY liquidation of ML III assets.The following table presents the components of Net investment income:Fixed maturity securities, including short-term investments $ 12,592 $ 11,814 $ 14,445Change in fair value of ML II 246 42 513Change in fair value of ML III 2,888 (646) 1,792Change in fair value of AIA securities including realized gain in 2012 2,069 1,289 (638)Change in the fair value of MetLife securities prior to their sale – (157) 665Equity securities 162 92 234Interest on mortgage and other loans 1,083 1,065 1,268Alternative investments * 1,769 1,622 1,957Real estate 127 107 126Other investments 11 36 177Total investment income before policyholder income and trading gains 20,947 15,264 20,539Policyholder investment income and trading gains – – 886Total investment income 20,947 15,264 21,425Investment expenses 604 509 491Net investment income $ 20,343 $ 14,755 $ 20,934* Includes hedge funds, private equity funds, affordable housing partnerships and other investment partnerships.1 $ 3 $ 829 19 3590 138 269234 250 554296 283 7235,023 3,509 16,0675,673 $ 4,202 $ 17,656Years Ended December 31,(in millions) 2012 2011 2010..................................................................................................................................................................................................................................AIG 2012 Form 10-K 259