AIG 2007 Annual Report Download - page 210

American International Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements Continued
was $1.6 billion, and is included in Other invested assets in the
3. Investments
consolidated balance sheet. These investments are monitored for
Continued
impairment on a contract by contract basis quarterly. During
(g) Other Invested Assets: 2007, income recognized on life settlement contracts previously
held in non-consolidated trusts was $32 million, and is included in
Other invested assets at December 31, 2007 and 2006
net investment income in the consolidated statement of income.
consisted of the following:
At December 31, Further information regarding life settlement contracts at
(in millions) 2007 2006 December 31, 2007 is as follows:
Partnerships(a) $28,938 $21,657 (dollars in millions)
Mutual funds 4,891 4,892 Remaining Life
Expectancy of Number of Carrying Face Value
Investment real estate(b) 9,877 5,694
Insureds Contracts Value (Death Benefits)
Aircraft asset investments(c) 1,689 1,784
Life settlement contracts(d) 1,627 1,090 0 – 1 year 11 $ 7 $ 9
Consolidated managed partnerships 1 – 2 years 34 34 47
and funds(e) 6,614 2,923 2 – 3 years 79 61 98
All other investments 5,187 4,071 3 – 4 years 151 111 210
4 – 5 years 176 130 277
Other invested assets $58,823 $42,111
Thereafter 2,181 1,284 5,400
(a) Includes private equity partnerships and hedge funds. Total 2,632 $1,627 $6,041
(b) Net of accumulated depreciation of $548 million and $585 million in
2007 and 2006, respectively. At December 31, 2007, the anticipated life insurance premi-
(c) Consist primarily of Life Insurance & Retirement Services investments ums required to keep the life settlement contracts in force,
in aircraft equipment. payable in the ensuing twelve months ending December 31, 2008
(d) See paragraph (h) below for additional information. and the four succeeding years ending December 31, 2012 are
(e) Represents AIG managed partnerships and funds that are consolidated. $132 million, $141 million, $149 million, $146 million, and
$152 million, respectively.
At December 31, 2007 and 2006, $7.2 billion and $5.3 billion
In June 2006, AIG restructured its ownership of life settlement
of Other invested assets related to available for sale investments
contracts with no effect on the economic substance of these
carried at fair value, with unrealized gains and losses recorded in
investments. At the same time, AIG paid $610 million to its
of Accumulated other comprehensive income (loss), net of
former co-investors to acquire all the remaining interests in life
deferred taxes, with almost all of the remaining investments being
settlement contracts held in previously non-consolidated trusts.
accounted for on the equity method of accounting. All of the
The life insurers for a small portion of AIG’s consolidated life
investments are subject to impairment testing (see Note 1(c)
settlement contracts include AIG subsidiaries. As a result,
herein). The gross unrealized loss on the investments accounted
amounts related to life insurance issued by AIG subsidiaries are
for as available for sale at December 31, 2007 was $621 million,
eliminated in consolidation.
the majority of which represents investments that have been in a
continuous unrealized loss position for less than 12 months.
(h) Investments in Life Settlement Contracts: At Decem-
ber 31, 2007, the carrying value of AIG’s life settlement contracts
4. Lending activities
Mortgages and other loans receivable at December 31, 2007 and 2006 are comprised of the following:
Years Ended December 31,
(in millions) 2007 2006
Mortgages – commercial $17,105 $15,219
Mortgages – residential* 2,153 1,903
Life insurance policy loans 8,099 7,501
Collateral, guaranteed, and other commercial loans 6,447 3,859
Total mortgage and other loans receivable 33,804 28,482
Allowance for losses (77) (64)
Mortgage and other loans receivable, net $33,727 $28,418
*Primarily consists of foreign mortgage loans.
156 AIG 2007 Form 10-K