AIG 2014 Annual Report Download - page 286

ITEM 8 / NOTE 10. VARIABLE INTEREST ENTITIES

269
The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our
maximum exposure to loss associated with these VIEs:
Maximum Exposure to Loss
Total VIE On-Balance Off-Balance
(in millions) Assets Sheet* Sheet Total
December 31, 2014
Real estate and investment entities $19,949 $2,785 $ 454 $3,239
Affordable housing partnerships 7,911 425 -425
Other 617 32 -32
Tota l $28,477 $3,242 $ 454 $3,696
December 31, 2013
Real estate and investment entities $ 17,572 $ 2,343 $ 289 $ 2,632
Affordable housing partnerships 8,559 477 - 477
Other 708 37 - 37
Total $ 26,839 $ 2,857 $ 289 $ 3,146
* At December 31, 2014 and 2013, $3.2 billion and $2.8 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.
Real Estate and Investment Entities
Through our insurance operations and AIG Global Real Estate, we are an investor in various real estate investment entities,
some of which are VIEs. These investments are typically with unaffiliated third-party developers via a partnership or limited
liability company structure. The VIEs’ activities consist of the development or redevelopment of commercial, industrial and
residential real estate. Our involvement varies from being a passive equity investor or finance provider to actively managing
the activities of the VIEs.
Our insurance operations participate as passive investors in the equity issued by certain third-party-managed hedge and
private equity funds that are VIEs. Our insurance operations typically are not involved in the design or establishment of these
VIEs, nor do they actively participate in the management of the VIEs.
Securitization Vehicles
We created certain VIEs that hold investments, primarily in investment-grade debt securities and loans, and issued beneficial
interests in these investments. The majority of these beneficial interests are owned by our insurance operations and we
maintain the power to direct the activities of the VIEs that most significantly impact their economic performance and bear the
obligation to absorb losses or receive benefits from the entities that could potentially be significant to the entities. Accordingly,
we consolidate these entities and those beneficial interests issued to third-parties are reported as Long-term debt.
We also created VIEs for the purpose of acquiring, owning, leasing, maintaining, operating and selling aircraft. We hold
beneficial interests, including all the equity interests, in these entities. Other beneficial interests include passive investments by
our insurance operations in the majority of the debt issued by these entities. We maintain the power to direct the activities of
the VIEs that most significantly impact the entities’ economic performance and bear the obligation to absorb economic losses
or receive economic benefits that could potentially be significant to the VIEs. As a result, we consolidate the assets and
liabilities of these entities.
Structured Investment Vehicle
Through DIB, we sponsor Nightingale Finance Ltd., a structured investment vehicle (SIV), which is a VIE. Nightingale Finance
Ltd. invests in variable rate, investment-grade debt securities, the majority of which are ABS. We have no equity interest in the
SIV, but we maintain the power to direct the activities of the SIV that most significantly impact the entity’s economic
performance and bear the obligation to absorb economic losses that could potentially be significant to the SIV. We are the
primary beneficiary and consolidate the SIV.