AIG 2011 Annual Report Download - page 126

Years Ended December 31,
(in millions) 2011 2010 2009
Individual variable annuities
Balance, beginning of year $ 25,581 $ 24,637 $ 23,593
Deposits 3,212 2,072 891
Surrenders and other withdrawals (2,982) (2,725) (2,667)
Death benefits (452) (437) (404)
Net outflows (222) (1,090) (2,180)
Change in fair value of underlying investments, interest credited, net of fees (463) 2,034 3,224
Balance, end of year $ 24,896 $ 25,581 $ 24,637
Retail mutual funds
Balance, beginning of year $ 5,975 $ 5,879 $ 5,767
Deposits 1,925 1,101 782
Redemptions (1,447) (1,252) (1,174)
Net inflows (outflows) 478 (151) (392)
Change in fair value of underlying investments, interest credited, net of fees (232) 247 504
Balance, end of year 6,221 5,975 5,879
Total Domestic Retirement Services
Balance, beginning of year $ 148,410 $ 141,137 $ 134,615
Deposits 19,055 13,892 13,222
Surrenders, redemptions and other withdrawals (13,738) (14,144) (17,789)
Death benefits (2,393) (2,233) (2,379)
Net inflows (outflows) – excluding retail mutual funds 2,924 (2,485) (6,946)
Change in fair value of underlying investments, interest credited, net of fees 1,590 9,758 13,468
Future policy benefits related to unrealized investment appreciation 394 --
Balance, end of year, excluding runoff 153,318 148,410 141,137
Individual annuities runoff 4,299 4,430 4,637
GIC runoff 6,706 8,486 8,536
Balance, end of year $ 164,323 $ 161,326 $ 154,310
General and separate account reserves and mutual funds
General account reserve $ 102,580 $ 97,515 $ 94,912
Separate account reserve 46,006 48,804 45,444
Total general and separate account reserves 148,586 146,319 140,356
Group retirement mutual funds 9,516 9,032 8,075
Retail mutual funds 6,221 5,975 5,879
Total reserves and mutual funds $ 164,323 $ 161,326 $ 154,310
2011 and 2010 Comparison
Net flows improved in 2011 due to both the significant increase in deposits and favorable surrender experience
in group retirement and individual fixed annuities. However, individual fixed annuities net flows declined in the
second half of the year due to lower deposits resulting from the low interest rate environment. Should the current
low interest rate environment persist, net flows are likely to decline in 2012 from 2011 levels. Surrender rates for
individual fixed annuities also decreased in 2011 due to the low interest rate environment and the relative
competitiveness of interest credited rates on the existing block of fixed annuities versus interest rates on
alternative investment options available in the marketplace. SunAmerica has returned to a more normal level of
group surrender activity that no longer reflects the negative AIG publicity associated with the events of 2008
and 2009. Individual variable annuities net flows improved from 2010 levels due primarily to higher deposits
throughout 2011 and turned positive in the fourth quarter of 2011.
112 AIG 2011 Form 10-K