AIG 2006 Annual Report Download - page 197

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American International Group, Inc. and Subsidiaries
currently being offered for similar contracts with maturities
13. Fair Value of Financial Instruments
consistent with those remaining for the contracts being valued.
Continued
Finance receivables: Fair values were estimated using discounted GIAs: Fair values of AIG’s obligations under investment type
cash flow calculations based upon the weighted average rates agreements were estimated using discounted cash flow calcula-
currently being offered for similar finance receivables. tions based on interest rates currently being offered for similar
agreements with maturities consistent with those remaining for
Securities lending collateral and securities lending payable: The the agreements being valued.
contract values of these financial instruments approximate fair
value. Securities and spot commodities sold but not yet purchased: The
carrying amounts for the securities and spot commodities sold but
Spot commodities: Fair values are based on current market not yet purchased approximate fair values. Fair values for spot
prices. commodities sold short were based on current market prices.
Unrealized gains and losses on swaps, options and forward Trust deposits and deposits due to banks and other depositors:
transactions: Fair values were based on the use of valuation To the extent cer tain amounts are not demand deposits or
models that utilize, among other things, current interest, foreign certificates of deposit which mature in more than one year, fair
exchange commodity, equity and volatility rates, as applicable. values were not calculated as AIG believes it would have to
Securities purchased (sold) under agreements to resell (repur- expend excessive costs for the benefits derived.
chase), at contract value: As these securities (obligations) are Commercial paper: The carrying amount approximates fair value.
short-term in nature, the contract values approximate fair values.
Notes, bonds, loans and mortgages: Where practical, the fair
Other invested assets: Consisting principally of hedge funds and values of these obligations were estimated using discounted cash
limited partnerships. Fair values are determined based on the net flow calculations based upon AIG’s current incremental borrowing
asset values provided by the general partner or manager of each rates for similar types of borrowings with maturities consistent
investment. with those remaining for the debt being valued.
Policyholders’ contract deposits: Fair values were estimated using
discounted cash flow calculations based upon interest rates
Form 10-K 2006 AIG 147