AIG 2007 Annual Report Download - page 157

American International Group, Inc. and Subsidiaries
The amortized cost or cost and estimated fair value of AIG’s available for sale and held to maturity securities at
December 31, 2007 and 2006 were as follows:
December 31, 2007* December 31, 2006
Amortized Gross Gross Amortized Gross Gross
Cost or Unrealized Unrealized Fair Cost or Unrealized Unrealized Fair
(in millions) Cost Gains Losses Value Cost Gains Losses Value
Available for sale:*
U.S. government and government
sponsored entities $ 7,956 $ 333 $ 37 $ 8,252 $ 7,667 $ 221 $ 140 $ 7,748
Obligations of states, municipalities
and political subdivisions 46,087 927 160 46,854 59,785 1,056 210 60,631
Non-U.S. governments 67,023 3,920 743 70,200 62,860 5,461 437 67,884
Corporate debt 239,822 6,216 4,518 241,520 257,383 7,443 2,536 262,290
Mortgage-backed, asset-backed and
collateralized 140,982 1,221 7,703 134,500 104,687 502 362 104,827
Total bonds $501,870 $12,617 $13,161 $501,326 $492,382 $14,683 $3,685 $503,380
Equity securities 15,188 5,545 463 20,270 13,147 2,807 159 15,795
Total $517,058 $18,162 $13,624 $521,596 $505,529 $17,490 $3,844 $519,175
Held to maturity:*
Bonds — Obligations of states,
municipalities and political
subdivisions $ 21,581 $ 609 $ 33 $ 22,157 $ 21,437 $ 731 $ 14 $ 22,154
* At December 31, 2007 and 2006, fixed maturities held by AIG that were below investment grade or not rated totaled $27.0 billion and $26.6 billion,
respectively.
AIG’s held to maturity and available for sale fixed maturity securities so rated. Approximately five percent were below invest-
investments totaled $523.5 billion at December 31, 2007, ment grade or not rated at that date. A large portion (approxi-
compared to $525.5 billion at December 31, 2006. At Decem- mately one third) of the foreign fixed income portfolio is sovereign
ber 31, 2007, approximately 63 percent of the fixed maturities fixed maturity securities supporting the policy liabilities in the
investments were in domestic portfolios. Approximately 53 per- country of issuance.
cent of such domestic securities were rated AAA by one or more
of the principal rating agencies. Approximately five percent were The credit ratings of AIG’s fixed maturity investments, other
below investment grade or not rated. AIG’s investment decision than those of AIGFP, at December 31, 2007 and 2006 were as
process relies primarily on internally generated fundamental follows:
analysis and internal risk ratings. Third party rating services’
Rating 2007 2006
ratings and opinions provide one source of independent perspec-
tives for consideration in the internal analysis. AAA 38% 37%
A significant portion of the foreign fixed income portfolio is AA 28 26
rated by Moody’s, S&P or similar foreign rating services. Rating A18 20
services are not available in all overseas locations. The Credit BBB 11 12
Risk Committee (CRC) closely reviews the credit quality of the Below investment grade 44
foreign portfolio’s non-rated fixed income investments. At Decem-
Non-rated 11
ber 31, 2007, approximately 19 percent of the foreign fixed
income investments were either rated AAA or, on the basis of Total 100% 100%
AIG’s internal analysis, were equivalent from a credit standpoint to
AIG 2007 Form 10-K 103