AIG 2013 Annual Report Download - page 279

The following tables present information on our PCI securities, which are included in bonds available for
sale:
Contractually required payments (principal and interest) $ 25,374
Cash flows expected to be collected*20,037
Recorded investment in acquired securities 13,077
* Represents undiscounted expected cash flows, including both principal and interest.
Outstanding principal balance $ 11,791
Amortized cost 7,718
Fair value 8,823
The following table presents activity for the accretable yield on PCI securities:
Balance, beginning of year $ 4,135
Newly purchased PCI securities 1,620
Disposals (298)
Accretion (672)
Effect of changes in interest rate indices (213)
Net reclassification from non-accretable difference, including effects of prepayments 194
Balance, end of year $ 4,766
We enter into financing transactions whereby certain securities are transferred to financial institutions in exchange for
cash or other liquid collateral. Securities transferred by us under these financing transactions may be sold or
repledged by the counterparties. As collateral for the securities transferred by us, counterparties transfer assets to
us, such as cash or high quality fixed maturity securities. Collateral levels are monitored daily and are generally
maintained at an agreed-upon percentage of the fair value of the transferred securities during the life of the
transactions. Where we receive fixed maturity securities as collateral, we do not have the right to sell or repledge this
collateral unless an event of default occurs by the counterparties. At the termination of the transactions, we and our
counterparties are obligated to return the collateral provided and the securities transferred, respectively. We treat
these transactions as secured financing arrangements.
Secured financing transactions also include securities sold under agreements to repurchase (repurchase
agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same
or substantially similar securities. In the majority of these repurchase agreements, the securities transferred by us
may be sold or repledged by the counterparties. Repurchase agreements entered into by the DIB are carried at fair
value based on market-observable interest rates. All other repurchase agreements are recorded at their contracted
repurchase amounts plus accrued interest.
The following table presents the fair value of securities pledged to counterparties under secured financing
transactions:
Securities available for sale $ 8,180
Other securities 2,985
Pledged Investments
Secured Financing and Similar Arrangements
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AIG 2013 Form 10-K 261
ITEM 8 / NOTE 6. INVESTMENTS
(in millions) At Date of Acquisition
(in millions) December 31, 2013 December 31, 2012
$ 14,741
10,110
11,338
Years Ended December 31,
(in millions) 2013 2012
$ 4,766
1,773
(60)
(719)
302
878
$ 6,940
(in millions) December 31, 2013 December 31, 2012
$ 3,907
2,766
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