AIG 2015 Annual Report Download - page 274

ITEM 8 / NOTE 5. INVESTMENTS
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The following table presents the components of Net investment income:
Years Ended December 31,
(in millions) 2015
2014 2013
Fixed maturity securities, including short-term investments $11,332 $ 12,322 $ 12,044
Equity securities 99 221 178
Interest on mortgage and other loans 1,417 1,272 1,144
Alternative investments* 1,476 2,624 2,803
Real estate 181 110 128
Other investments 76 47 61
Total investment income 14,581 16,596 16,358
Investment expenses 528 517 548
Net investment income $14,053 $ 16,079 $ 15,810
* Includes hedge funds, private equity funds, affordable housing partnerships, investments in life settlements and other investment partnerships.
Net Realized Capital Gains and Losses
Net realized capital gains and losses are determined by specific identification. The net realized capital gains and losses are
generated primarily from the following sources:
• Sales or full redemptions of available for sale fixed maturity securities, available for sale equity securities, real estate and
other alternative investments.
• Reductions to the cost basis of available for sale fixed maturity securities, available for sale equity securities and certain
other invested assets for other-than-temporary impairments.
• Impairments on investments in life settlements.
• Changes in fair value of derivatives except for (1) those derivatives at AIGFP and (2) those instruments that are designated
as hedging instruments when the change in the fair value of the hedged item is not reported in Net realized capital gains
(losses).
• Exchange gains and losses resulting from foreign currency transactions.
The following table presents the components of Net realized capital gains (losses):
Years Ended December 31,
(in millions) 2015 2014 2013
Sales of fixed maturity securities $94 $ 585 $ 2,432
Sales of equity securities(a) 1,032 111 111
Other-than-temporary impairments:
Severity (13) (3) (6)
Change in intent (233) (40) (48)
Foreign currency declines (57) (19) (1)
Issuer-specific credit events (348) (169) (170)
Adverse projected cash flows (20) (16) (7)
Provision for loan losses (58) (1) (26)
Foreign exchange transactions 416 598 151
Derivative instruments 341 (177) 287
Impairments on investments in life settlements (540) (201) (971)
Other 162 (b) 71 187
Net realized capital gains $776 $ 739 $ 1,939
(a) Includes realized gains on the sale of our equity interests in PICC.
(b) Includes realized gains due to the sale of Class B shares of Prudential Financial, Inc. and common shares of Springleaf Holdings, Inc. and realized losses on
the sale of ordinary shares of AerCap.