AIG 2014 Annual Report Download - page 290

ITEM 8 / NOTE 11. DERIVATIVES AND HEDGE ACCOUNTING
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The following table presents the gain (loss) recognized in earnings on our derivative instruments in fair value hedging
relationships in the Consolidated Statements of Income:
Gains/(Losses) Recognized in
Earnings for: Including Gains/(Losses) Attributable to:
Hedging Hedged Hedge Excluded
(in millions) Derivatives(a) Items Ineffectiveness Components Other(b)
Year ended December 31, 2014
Interest rate contracts:
Realized capital gains/(losses) $ 1$(2) $- $ -$(1)
Interest credited to policyholder
account balances - (1) - - (1)
Other income - 43 - - 43
Gain/(Loss) on extinguishment of debt - 164 - - 164
Foreign exchange contracts:
Realized capital gains/(losses) (129) 147 - 810
Interest credited to policyholder
account balances - (3) - - (3)
Other income - 23 - - 23
Gain/(Loss) on extinguishment of debt - 2 - - 2
Equity contracts:
Realized capital gains/(losses) (23) 22 - (1) -
Year ended December 31, 2013
Interest rate contracts:
Realized capital gains/(losses) $ (5) $ 5 $ - $ - $ -
Interest credited to policyholder
account balances - (2) - - (2)
Other income - 99 - - 99
Foreign exchange contracts:
Realized capital gains/(losses) (187) 204 - 17 -
Policyholder benefits - - - - -
Other income - - - - -
Year ended December 31, 2012
Interest rate contracts:
Other income $ -$124 $- $ -$124
Foreign exchange contracts:
Realized capital gains/(losses) (2) 2 - - -
(a) The amounts presented do not include the periodic net coupon settlements of the derivative contract or the coupon income (expense) related to the hedged
item.
(b) Represents accretion/amortization of opening fair value of the hedged item at inception of hedge relationship, amortization of basis adjustment on hedged
item following the discontinuation of hedge accounting, and the release of debt basis adjustment following the repurchase of issued debt that was part of
previously-discontinued fair value hedge relationship.
The following table presents the effect of our derivative instruments in cash flow hedging relationships in the
Consolidated Statements of Income:
Years Ended December 31,
(in millions) 2014 2013 2012
Interest rate contracts(a):
Loss recognized in Other comprehensive income on derivatives $ - $-$(2)
Loss reclassified from Accumulated other comprehensive income into earnings(b) - - (35)
(a) Hedge accounting was discontinued in December 2012 in connection with ILFC being classified as held-for-sale. Gains and losses recognized in earnings
are recorded in Income from continuing operations. Previously the effective portion of the change in fair value of a derivative qualifying as a cash flow hedge was
recorded in Accumulated other comprehensive income until earnings were affected by the variability of cash flows in the hedged item. Gains and losses
reclassified from Accumulated other comprehensive income were previously recorded in Other income. Gains or losses recognized in earnings on derivatives for
the ineffective portion were previously recorded in Net realized capital gains (losses).
(b) Includes $19 million for the year ended December 2012, representing the reclassification from Accumulated other comprehensive income into earnings
following the discontinuation of cash flow hedges of ILFC debt.