AIG 2015 Annual Report Download - page 129

ITEM 7 / INVESTMENTS
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129
We recorded other-than-temporary impairment charges in the years ended December 31, 2015, 2014 and 2013 related to:
• issuer-specific credit events;
• securities that we intend to sell or for which it is more likely than not that we will be required to sell;
• declines due to foreign exchange rates;
• adverse changes in estimated cash flows on certain structured securities; and
• securities that experienced severe market valuation declines.
In addition, impairments are recorded on real estate and investments in life settlements.
In periods subsequent to the recognition of an other-than-temporary impairment charge for available for sale fixed maturity
securities that is not foreign-exchange related, we generally prospectively accrete into earnings the difference between the
new amortized cost and the expected undiscounted recoverable value over the remaining life of the security. The accretion that
was recognized for these securities in earnings was $735 million in 2015, $725 million in 2014 and $774 million in 2013. See
Note 6 to the Consolidated Financial Statements for a discussion of our other-than-temporary impairment accounting policy.
The following table shows the aging of the pre-tax unrealized losses of fixed maturity and equity securities, the extent
to which the fair value is less than amortized cost or cost, and the number of respective items in each category:
December 31, 2015 Less Than or Equal Greater Than 20% Greater Than 50%
to 20% of Cost(b) to 50% of Cost(b) of Cost(b) Tot a l
Aging(a) Unrealized
Unrealized Unrealized Unrealized
(dollars in millions) Cost(c) Loss Items(e)
Cost(c) Loss Items(e) Cost(c) Loss Items(e)
Cost(c) Loss(d) Items(e)
Investment grade
bonds
0-6 months $ 35,961 $ 815 5,516 $408 $115 82 $ - $ - - $ 36,369 $930 5,598
7-11 months 23,134 1,342 3,594 1,061 275 201 -- - 24,195 1,617 3,795
12 months or more 6,883 501 938 2,363 733 183 21 13 6 9,267 1,247 1,127
Tot al $ 65,978 $ 2,658 10,048 $3,832 $1,123 466 $21 $13 6 $ 69,831 $3,794 10,520
Below investment
grade bonds
0-6 months $ 6,024 $ 199 2,341 $567 $168 100 $17 $11 13 $ 6,608 $378 2,454
7-11 months 2,706 168 814 199 59 132 76 3 2,912 233 949
12 months or more 5,164 324 766 871 278 200 385 243 83 6,420 845 1,049
Tot al $ 13,894 $ 691 3,921 $1,637 $505 432 $409 $260 99 $ 15,940 $1,456 4,452
Total bonds
0-6 months $ 41,985 $ 1,014 7,857 $975 $283 182 $17 $11 13 $ 42,977 $1,308 8,052
7-11 months 25,840 1,510 4,408 1,260 334 333 76 3 27,107 1,850 4,744
12 months or more 12,047 825 1,704 3,234 1,011 383 406 256 89 15,687 2,092 2,176
Tot a l (e) $ 79,872 $ 3,349 13,969 $5,469 $1,628 898 $430 $273 105 $ 85,771 $5,250 14,972
Equity securities
0-11 months $ 280 $ 13 124 $35 $11 50 $ - $ - - $ 315 $24 174
Tot al $ 280 $ 13 124 $35 $11 50 $ - $ - - $ 315 $24 174
(a) Represents the number of consecutive months that fair value has been less than cost by any amount.
(b) Represents the percentage by which fair value is less than cost at December 31, 2015.
(c) For bonds, represents amortized cost.
(d) The effect on Net income of unrealized losses after taxes will be mitigated upon realization because certain realized losses will result in current decreases in
the amortization of certain DAC.
(e) Item count is by CUSIP by subsidiary.