AIG 2011 Annual Report Download - page 78

Private Client Group) (21st Century) and AIG Life of Canada (AIG Life Canada), as well as the deconsolidation
of Transatlantic Holdings, Inc (Transatlantic) in 2009.
Policy Fees
2011 and 2010 Comparison
Policy fees decreased slightly in 2011 compared to 2010 as higher variable annuity fee income was more than
offset by lower surrender charges due to decreased surrender rates and universal life unlockings.
2010 and 2009 Comparison
Policy fees increased slightly for 2010 compared to 2009 primarily due to higher variable annuity fees on
separate account assets consistent with the growth in variable accounts assets as a result of favorable equity
market conditions in late 2010.
Net Investment Income
The following table summarizes the components of consolidated Net investment income:
Years Ended December 31, Percentage Change
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Fixed maturity securities, including short-term
investments $ 11,814 $ 14,445 $ 14,535 (18)% (1)%
Change in fair value of ML II 42 513 (25) (92) NM
Change in fair value of ML III (646) 1,792 419 NM 328
Change in fair value of AIA securities 1,289 (638) - NM NM
Change in the fair value of MetLife securities prior to
their sale (157) 665 - NM NM
Equity securities 92 234 186 (61) 26
Interest on mortgage and other loans 1,065 1,268 1,347 (16) (6)
Alternative investments* 1,213 1,602 4 (24) NM
Mutual funds 47 (25) 315 NM NM
Real estate 107 126 139 (15) (9)
Other investments 398 557 306 (29) 82
Total investment income before policyholder income
and trading gains 15,264 20,539 17,226 (26) 19
Policyholder investment income and trading gains -886 2,305 NM (62)
Total investment income 15,264 21,425 19,531 (29) 10
Investment expenses 509 491 539 4 (9)
Net investment income $ 14,755 $ 20,934 $ 18,992 (30)% 10%
* Includes hedge funds, private equity funds and affordable housing partnerships.
2011 and 2010 Comparison
Net investment income decreased primarily due to the following:
• the effect of the deconsolidation of AIA in the fourth quarter of 2010. AIA net investment income prior to
deconsolidation in 2010 totaled $4.0 billion, which included $886 million in policyholder trading gains;
• a decline in the fair value of the Maiden Lane Interests of $604 million due to significant widening of credit
spreads and reduced interest rates compared to gains of $2.3 billion in 2010; and
• fair value losses on the MetLife securities prior to their sale in March 2011.
64 AIG 2011 Form 10-K