AIG 2005 Annual Report Download - page 153

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
8. Investment Information
Continued
(e) Fixed Maturities Below Investment Grade: At Decem-
ber 31, 2005, fixed maturities held by AIG that were below
investment grade or not rated totaled $20.54 billion.
(f) Non-Income Producing Invested Assets: At December 31,
2005, non-income producing invested assets were insignificant.
(g) Gross Unrealized Losses and Estimated Fair Values on Investments:
The following table summarizes the gross unrealized losses and cost basis on insurance and asset management investment
securities, aggregated by major investment category and length of time that individual securities have been in a continuous
unrealized loss position, at December 31, 2005 and December 31, 2004.
Less than 12 Months 12 Months or More Total
Unrealized Unrealized Unrealized
(in millions) Cost(a) Losses Cost(a) Losses Cost(a) Losses
2005
Bonds(b) $121,631 $2,715 $21,160 $1,009 $142,791 $3,724
Equity securities 3,894 246 97 11 3,991 257
Total $125,525 $2,961 $21,257 $1,020 $146,782 $3,981
2004
Bonds(b) $51,901 $758 $14,204 $816 $66,105 $1,574
Equity securities 2,435 256 – – 2,435 256
Total $54,336 $1,014 $14,204 $816 $68,540 $1,830
(a) For bonds, represents amortized cost.
(b) Primarily relates to the ‘‘All other corporate’’ category.
As of December 31, 2005, AIG held 18,308 and 1,503 of 2005 was $440 million, the majority of which represents
individual bond and stock investments that were in an investments that have been in a continuous unrealized loss
unrealized loss position, of which 3,074 individual investments position for less than 12 months.
were in an unrealized loss position continuously for 12 months
or more. (h) Hedging of Securities Available for Sale: AIGFP follows a
AIG recorded impairment losses net of taxes of policy of minimizing interest rate, currency, commodity, and
approximately $389 million, $369 million and $1.0 billion in equity risks associated with securities available for sale by
2005, 2004 and 2003, respectively. See Note 1(c) herein for entering into internal offsetting positions, on a security by
AIG’s other-than-temporary impairment accounting policy. security basis within its derivatives portfolio, thereby offsetting
The carrying value, which approximates market value, of a significant portion of the unrealized appreciation and
other invested assets as of December 31, 2005 was depreciation. In addition, to reduce its credit risk, AIGFP has
$27.3 billion, consisting primarily of hedge funds and limited entered into credit derivative transactions with respect to
partnerships. Of the $27.3 billion, approximately $5.1 billion $125 million of securities available for sale to economically
relates to investments accounted for on an available for sale hedge its credit risk. As previously discussed these economic
basis, with almost all of the remaining investments being offsets do not meet the hedge accounting requirements of
accounted for on the equity method of accounting. All of the FAS 133 and, as such, are recorded in other revenue in the
investments are subject to impairment testing (refer to Consolidated Statement of Income.
Note 1(c) herein). Of the investments accounted for as
available for sale, the gross unrealized loss as of December 31,
AIG m Form 10-K 101