AIG 2007 Annual Report Download - page 156

American International Group, Inc. and Subsidiaries
Management’s Discussion and Analysis of
Financial Condition and Results of Operations Continued
Life
Insurance &
General Retirement Financial Asset
(in millions) Insurance Services Services Management Other Total
2006
Fixed maturities:
Bonds available for sale, at fair value $ 67,994 $288,018 $ 1,357 $29,500 $ — $386,869
Bonds held to maturity, at amortized cost 21,437 — — — — 21,437
Bond trading securities, at fair value 1 10,835 — — — 10,836
Equity securities:
Common stocks available for sale, at fair value 4,245 8,705 — 226 80 13,256
Common stocks trading, at fair value 350 14,505 — — — 14,855
Preferred stocks available for sale, at fair value 1,884 650 5 — — 2,539
Mortgage and other loans receivable, net of allowance 17 21,043 2,398 4,884 76 28,418
Financial services assets:
Flight equipment primarily under operating leases, net of
accumulated depreciation — — 39,875 — — 39,875
Securities available for sale, at fair value — — 47,205 — — 47,205
Trading securities, at fair value — — 5,031 — — 5,031
Spot commodities — — 220 — — 220
Unrealized gain on swaps, options and forward transactions — — 19,607 — (355) 19,252
Trade receivables — — 4,317 — — 4,317
Securities purchased under agreements to resell, at
contract value — — 30,291 — — 30,291
Finance receivables, net of allowance — — 29,573 — — 29,573
Securities lending invested collateral, at fair value 5,376 50,099 76 13,755 — 69,306
Other invested assets 9,207 13,962 2,212 13,198 3,532 42,111
Short-term investments, at cost 3,281 15,192 2,807 6,198 5 27,483
Total investments and financial services assets as shown on
the balance sheet 113,792 423,009 184,974 67,761 3,338 792,874
Cash 334 740 390 118 8 1,590
Investment income due and accrued 1,363 4,378 23 326 1 6,091
Real estate, net of accumulated depreciation 570 698 17 75 26 1,386
Total invested assets(a)(b) $116,059 $428,825 $185,404 $68,280 $3,373 $801,941
(a) Certain reclassifications and format changes have been made to prior period amounts to conform to the current period presentation.
(b) At December 31, 2006, approximately 68 percent and 32 percent of invested assets were held in domestic and foreign investments, respectively.
products. At the local operating unit level, the strategies are
Investment Strategy
based on considerations that include the local market, liability
duration and cash flow characteristics, rating agency and regula-
AIG’s investment strategies are tailored to the specific business
tory capital considerations, legal investment limitations, tax
needs of each operating unit. The investment objectives are driven
optimization and diversification. In addition to local risk manage-
by the business model for each of the businesses: General
ment considerations, AIG’s corporate risk management guidelines
Insurance, Life Insurance, Retirement Services and Asset Manage-
impose limitations on concentrations to promote diversification by
ment’s Spread-Based Investment business. The primary objectives
industry, asset class and geographic sector.
are in terms of preservation of capital, growth of surplus and
generation of investment income to support the insurance
102 AIG 2007 Form 10-K