AIG 2005 Annual Report Download - page 165

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
13. Fair Value of Financial Instruments
Continued
The carrying values and fair values of AIG’s financial instruments at December 31, 2005 and 2004 were as follows:
2005 2004
Carrying Fair Carrying Fair
(in millions) Value* Value Value* Value
Assets:
Fixed maturities $385,680 $386,199 $365,677 $366,174
Equity securities 23,588 23,588 17,706 17,706
Mortgage loans on real estate, policy and collateral loans 24,909 26,352 23,484 23,980
Securities available for sale 37,511 37,511 31,225 31,225
Trading securities 6,499 6,499 2,746 2,746
Spot commodities 92 96 534 534
Unrealized gain on swaps, options and forward transactions 18,695 18,695 22,670 22,670
Trading assets 1,204 1,204 3,433 3,433
Securities purchased under agreements to resell 14,547 14,547 26,272 26,272
Finance receivables, net of allowance 27,995 27,528 23,574 24,133
Securities lending collateral 59,471 59,471 49,169 49,169
Other invested assets 27,267 27,267 23,559 23,559
Short-term investments 15,342 15,342 16,102 16,102
Cash 1,897 1,897 2,009 2,009
Liabilities:
Policyholders’ contract deposits 227,027 223,244 216,474 212,543
Borrowings under obligations of guaranteed investment agreements 20,811 22,373 18,919 20,897
Securities sold under agreements to repurchase 11,047 11,047 23,581 23,581
Trading liabilities 2,546 2,546 2,503 2,503
Securities and spot commodities sold but not yet purchased 5,975 5,975 5,404 5,404
Unrealized loss on swaps, options and forward transactions 12,740 12,740 15,985 15,985
Trust deposits and deposits due to banks and other depositors 4,877 5,032 4,248 4,553
Commercial paper 9,208 9,208 9,693 9,693
Notes, bonds, loans and mortgages payable 78,439 79,518 66,798 68,700
Securities lending payable 60,409 60,409 49,972 49,972
* The carrying value of all other financial instruments approximates fair value.
discussion of prospective change to AIG’s accounting for
14. Stock Compensation Plans
retiree eligibility provisions.
At December 31, 2005, AIG had five types of stock-based Statement of Financial Accounting Standards No. 148,
compensation plans: (i) a stock option plan; (ii) an incentive ‘‘Accounting for Stock-Based Compensation – Transition and
stock plan under which restricted stock units had been issued; Disclosure, an amendment to FASB Statement No. 123’’
(iii) an employee stock purchase plan; (iv) SICO’s Deferred (FAS 148), was issued in 2002. This statement amended
Compensation Profit Participation Plan (SICO DCPPP) (con- FAS 123 and provides alternative methods of transition for a
sistent with SICO’s change to equity settlement of selected voluntary change to the recognition provisions of FAS 123.
awards); and (v) AIG’s Deferred Compensation Profit Partici- Also, FAS 148 amended certain of the disclosure requirements
pation Plan (AIG DCPPP) which is the replacement for the of FAS 123.
SICO DCPPP. AIG elected the ‘‘Prospective Method’’ in the application of
Effective January 1, 2003, AIG adopted the recognition the recognition provisions as prescribed by FAS 123. Such
provision of Statement of Financial Accounting Standards method provides for the recognition of the fair value with
No. 123, ‘‘Accounting for Stock-Based Compensation’’ respect to stock-based compensation for shares subscribed for or
(FAS 123). This statement establishes the financial accounting granted on or after January 1, 2003.
and reporting standards for stock-based employee compensation Prior to adoption of the recognition provisions of FAS 123,
plans, such as AIG’s stock purchase plan, stock option plan, as amended, AIG recognized stock compensation in accordance
stock incentive plan, SICO DCPPP, and AIG DCPPP. Under with the provisions of APB Opinion No. 25 ‘‘Accounting for
the recognition provisions of FAS 123, costs with respect to Stock Issued to Employees.’’ Shares subscribed for or granted
stock compensation are measured using the fair value of the prior to January 1, 2003 continue to be accounted for pursuant
shares subscribed or granted as at the date of grant recognized to APB Opinion No. 25. See Note 1(gg) herein for discussion
ratably over the vesting period. Such fair value is derived of AIG’s accounting for the unvested portion of its APB 25
through an option pricing model or the fair value of AIG’s awards according to the requirements of FAS 123R.
common stock, as applicable. See Note 1(gg) herein for
AIG m Form 10-K 113