AIG 2007 Annual Report Download - page 155

American International Group, Inc. and Subsidiaries
potential operating environments and market conditions. Assess- situation may arise due to circumstances that AIG may be unable
ing liquidity risk involves forecasting of cash inflows and outflows to control, such as a general market disruption or an operational
on both a short- and long-term basis. Corporate Treasury is problem that affects third parties or AIG. Regulatory and other
responsible for formulating the parent company’s liquidity and legal restrictions may limit AIG’s ability to transfer funds freely,
contingency planning efforts, as well as for execution of AIG’s either to or from its subsidiaries. In particular, many of AIG’s
specific funding activities. Through active liquidity management, subsidiaries, including its insurance subsidiaries, are subject to
AIG seeks to retain stable, reliable and cost-effective funding laws and regulations that authorize regulatory bodies to block or
sources. In addition to current liquidity requirements, factors reduce the flow of funds to the parent holding company, or that
which affect funding decisions include market conditions, prevail- prohibit such transfers altogether in certain circumstances. These
ing interest rates and the desired maturity profile of liabilities. The laws and regulations may hinder AIG’s ability to access funds that
objectives of contingency planning are to ensure maintenance of it may need to make payments on its obligations. Because of the
appropriate liquidity during normal and stressed periods, to wide geographic profile of AIG’s regulated subsidiaries, manage-
measure and project funding requirements during periods of ment believes that these cash flows represent a diversified source
stress, and to manage access to funding sources. Diversification of liquidity for AIG. For a further discussion of the regulatory
of funding sources is an important element of AIG’s liquidity risk environment in which AIG subsidiaries operate and other issues
management approach. affecting AIG’s liquidity, see Item 1A. Risk Factors.
AIG’s liquidity could be impaired by an inability to access the
capital markets or by unforeseen significant outflows of cash. This
Invested Assets
The following tables summarize the composition of AIG’s invested assets by segment:
Life
Insurance &
General Retirement Financial Asset
(in millions) Insurance Services Services Management Other Total
2007
Fixed maturities:
Bonds available for sale, at fair value $ 74,057 $294,162 $ 1,400 $27,753 $ — $397,372
Bonds held to maturity, at amortized cost 21,355 1 — 225 — 21,581
Bond trading securities, at fair value — 9,948 — 34 — 9,982
Equity securities:
Common stocks available for sale, at fair value 5,599 11,616 — 609 76 17,900
Common and preferred stocks trading, at fair value 321 21,026 — 29 — 21,376
Preferred stocks available for sale, at fair value 1,885 477 8 — — 2,370
Mortgage and other loans receivable, net of allowance 13 24,851 1,365 7,442 56 33,727
Financial services assets:
Flight equipment primarily under operating leases, net of
accumulated depreciation — — 41,984 — — 41,984
Securities available for sale, at fair value — — 40,305 — — 40,305
Trading securities, at fair value — — 4,197 — — 4,197
Spot commodities — — 238 — — 238
Unrealized gain on swaps, options and forward transactions — — 17,134 — (692) 16,442
Trade receivables — — 6,467 — — 6,467
Securities purchased under agreements to resell, at
contract value — — 20,950 — — 20,950
Finance receivables, net of allowance — 5 31,229 — — 31,234
Securities lending invested collateral, at fair value 5,031 57,471 148 13,012 — 75,662
Other invested assets 11,895 19,015 3,663 17,261 6,989 58,823
Short-term investments, at cost 7,356 25,236 12,249 4,919 1,591 51,351
Total investments and financial services assets as shown on
the balance sheet 127,512 463,808 181,337 71,284 8,020 851,961
Cash 497 1,000 389 269 129 2,284
Investment income due and accrued 1,431 4,728 29 401 (2) 6,587
Real estate, net of accumulated depreciation 349 976 17 89 231 1,662
Total invested assets*$129,789 $470,512 $181,772 $72,043 $8,378 $862,494
* At December 31, 2007, approximately 65 percent and 35 percent of invested assets were held in domestic and foreign investments, respectively.
AIG 2007 Form 10-K 101