AIG 2011 Annual Report Download - page 284

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in Life Settlement Contracts
During 2011, 2010 and 2009, income recognized on life settlement contracts was $320 million, $213 million and
$106 million, respectively, and is included in Net investment income in the Consolidated Statement of Operations.
AIG’s life settlement contracts reported above are monitored for impairment on a contract-by-contract basis
quarterly. Impairment charges on life settlement contracts included in net realized capital gains (losses) totaled
$312 million, $74 million, and $79 million in 2011, 2010 and 2009, respectively.
The following table presents further information regarding life settlement contracts:
December 31, 2011
Number of Carrying Face Value
(dollars in millions) Contracts Value (Death Benefits)
Remaining Life Expectancy of Insureds:
0 - 1 year 6$ 2 $ 4
1 - 2 years 43 20 32
2 - 3 years 108 78 165
3 - 4 years 208 232 528
4 - 5 years 274 232 616
Thereafter 5,262 3,442 16,755
Total 5,901 $ 4,006 $ 18,100
At December 31, 2011, the anticipated life insurance premiums required to keep the life settlement contracts in
force, payable in the next 12 months ending December 31, 2012 and the four succeeding years ending
December 31, 2016 are $559 million, $573 million, $575 million, $581 million and $571 million, respectively.
Other Invested Assets – Carried at Fair Value
All of the equity investments carried at fair value are subject to other-than-temporary impairment evaluation
(see below for discussion on evaluating equity investments for other-than-temporary impairment). The gross
unrealized loss recorded in Accumulated other comprehensive income on such investments was $269 million and
$60 million at December 31, 2011 and 2010, respectively, the majority of which pertains to investments in private
equity funds and hedge funds that have been in continuous unrealized loss position for less than 12 months.
Other Invested Assets – Equity Method Investments
At December 31, 2011, AIG had a 33 percent interest in AIA, which AIG is accounting for under the fair value
option. AIG’s equity method investments include certain investment partnerships in which AIG holds in the
aggregate a five percent or greater interest or in which AIG has more than a minor influence over the operations
of the investee, and certain other strategic investments. Dividends received from AIG’s other strategic investments
were $17 million, $25 million and $12 million for the years ended December 31, 2011, 2010, and 2009,
respectively. The undistributed earnings of other strategic investments in which AIG’s ownership interest is less
than 50 percent were $9 million, $8 million and $7 million at December 31, 2011, 2010, and 2009, respectively.
The following table presents the carrying value and ownership percentage of AIA and all other equity method
investments:
2011 2010
Carrying Ownership Carrying Ownership
(in millions, except percentages) Value Percentage Value Percentage
AIA $ 12,367 33% $ 11,134 33%
All other equity method investments 9,026 Various 9,187 Various
Total $ 21,393 $ 20,321
270 AIG 2011 Form 10-K