AIG 2014 Annual Report Download - page 127

ITEM 7 / INVESTMENTS

110
The following table presents the fixed maturity security portfolio of Life Insurance Companies categorized by NAIC
Designation, at fair value:
December 31, 2014
(in millions)
Total
Total Below
Investment Investment
NAIC Designation 1 2 Grade 3 4 5 6Grade Total
Other fixed maturity securities $ 48,633 $61,428 $110,061 $4,817 $2,372 $ 237 $ 136 $7,562 $117,623
Mortgage-backed, asset-backed and collateralized 42,370 1,598 43,968 473 168 170 657 1,468 45,436
Tot al * $ 91,003 $63,026 $154,029 $5,290 $2,540 $ 407 $ 793 $9,030 $163,059
* Excludes $4.3 billion of fixed maturity securities for which no NAIC Designation is available because they are not held in legal entities within Life Insurance
Companies that require a statutory filing.
The following table presents the fixed maturity security portfolio of Life Insurance Companies categorized by
composite AIG credit rating, at fair value:
December 31, 2014
(in millions)
Tota l
Total Below
Investment CCC and Investment
Composite AIG Credit Rating AAA/AA/A BBB Grade BB B Lower Grade Total
Other fixed maturity securities $ 48,550 $ 61,875 $ 110,425 $ 4,354 $ 2,538 $ 306 $ 7,198 $ 117,623
Mortgage-backed, asset-backed and collateralized 26,240 2,893 29,133 1,470 1,613 13,220 16,303 45,436
Tot al * $ 74,790 $ 64,768 $ 139,558 $ 5,824 $ 4,151 $ 13,526 $ 23,501 $ 163,059
* Excludes $4.3 billion of fixed maturity securities for which no NAIC Designation is available because they are not held in legal entities within Life Insurance
Companies that require a statutory filing.
Credit Ratings
At December 31, 2014, approximately 90 percent of our fixed maturity securities were held by our domestic entities.
Approximately 17 percent of such securities were rated AAA by one or more of the principal rating agencies, and
approximately 17 percent were rated below investment grade or not rated. Our investment decision process relies primarily on
internally generated fundamental analysis and internal risk ratings. Third-party rating services’ ratings and opinions provide
one source of independent perspective for consideration in the internal analysis.
A significant portion of our foreign entities’ fixed maturity securities portfolio is rated by Moody’s Investors’ Service Inc.
(Moody’s), Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (S&P), or similar
foreign rating services. Rating services are not available for some foreign-issued securities. Our Credit Risk Management
department closely reviews the credit quality of the foreign portfolio’s non-rated fixed maturity securities. At December 31,
2014, approximately 17 percent of such investments were either rated AAA or, on the basis of our internal analysis, were
equivalent from a credit standpoint to securities rated AAA, and approximately five percent were below investment grade or not
rated. Approximately 44 percent of the foreign entities’ fixed maturity securities portfolio is comprised of sovereign fixed
maturity securities supporting policy liabilities in the country of issuance.
Composite AIG Credit Ratings
With respect to our fixed maturity investments, the credit ratings in the table below and in subsequent tables reflect: (a) a
composite of the ratings of the three major rating agencies, or when agency ratings are not available, the rating assigned by
the National Association of Insurance Commissioners (NAIC) Securities Valuations Office (SVO) (over 99 percent of total fixed
maturity investments), or (b) our equivalent internal ratings when these investments have not been rated by any of the major
rating agencies or the NAIC. The “Non-rated” category in those tables consists of fixed maturity securities that have not been
rated by any of the major rating agencies, the NAIC or us.