AIG 2007 Annual Report Download - page 66

American International Group, Inc. and Subsidiaries
vices and products are offered to individuals, pension funds and recovering its investment upon transfer or divestment. In the event
institutions globally through AIG’s Spread-Based Investment busi- that AIG is unable to transfer or otherwise divest its interest in
ness, Institutional Asset Management, and Brokerage Services the warehoused investment to third parties, AIG could be required
and Mutual Funds business. Also included in Asset Management to hold these investments indefinitely. In cer tain instances, the
operations are the results of certain SunAmerica sponsored consolidated warehoused investments are not wholly owned by
partnership investments. AIG. In such cases, AIG shares the risk associated with warehous-
ing the asset with the minority interest investors.
Spread-Based Investment Business
Brokerage Services and Mutual Funds
AIG’s Spread-Based Investment business includes the results of
AIG’s proprietary spread-based investment operations, the AIG’s Brokerage Services and Mutual Funds business, conducted
Matched Investment Program (MIP), which was launched in through AIG Advisor Group, Inc. and AIG SunAmerica Asset
September of 2005 to replace the Guaranteed Investment Management Corp., provides broker-dealer related services and
Contract (GIC) program, which is in runoff. The MIP is an mutual funds to retail investors, group trusts and corporate
investment strategy that involves investing in various asset accounts through an independent network of financial advisors.
classes with financing provided through third parties. This busi- AIG Advisor Group, Inc., a subsidiary of AIG Retirement Services,
ness uses various risk mitigating strategies designed to hedge Inc., is comprised of several broker-dealer entities that provide
interest rate and currency risk associated with underlying invest- these services to clients primarily in the U.S. marketplace. AIG
ments and related liabilities. SunAmerica Asset Management Corp. manages, advises and/or
administers retail mutual funds, as well as the underlying assets
of variable annuities sold by AIG SunAmerica and VALIC to
Institutional Asset Management
individuals and groups throughout the United States.
AIG’s Institutional Asset Management business, conducted
through AIG Investments, provides an array of investment prod- Other Asset Management
ucts and services globally to institutional investors, pension
funds, AIG subsidiaries and high net worth investors. These Included in Other Asset Management is income or loss from
products include traditional equity and fixed income investments, certain AIG SunAmerica sponsored partnerships and par tnership
and a wide range of alternative asset classes. These services investments. Partnership assets consist of investments in a
include investment advisory and subadvisory services, investment diversified portfolio of private equity funds, affordable housing
monitoring and investment transaction structuring. Within the fixed partnerships and hedge fund investments.
income and equity asset classes, AIG Investments offers various
forms of structured investments aimed at achieving superior Other Operations
returns or capital preservation. Within the alternative asset class, Certain AIG subsidiaries provide insurance-related services such
AIG Investments offers hedge and private equity fund-of-funds, as adjusting claims and marketing specialized products. Several
direct investments and distressed debt investments. wholly owned foreign subsidiaries of AIG operating in countries or
AIG Global Real Estate provides a wide range of real estate jurisdictions such as Ireland, Bermuda, Barbados and Gibraltar
investment and management services for AIG subsidiaries, as well provide insurance and related administrative and back office
as for third-party institutional investors, high net worth investors services to affiliated and unaffiliated insurance and reinsurance
and pension funds. Through a strategic network of local real companies, including captive insurance companies unaffiliated
estate ventures, AIG Global Real Estate actively invests in and with AIG.
develops office, industrial, multi-family residential, retail, hotel and AIG has several other subsidiaries that engage in various
resort properties globally. businesses. Mt. Mansfield Company, Inc. owns and operates the ski
AIG Private Bank offers banking, trading and investment slopes, lifts, a school and an inn located in Stowe, Vermont. Also
management services to private clients and institutions globally. reported in AIG’s Other operations are interest expense, expenses of
From time to time, AIG Investments acquires alternative corporate staff not attributable to specific business segments,
investments, primarily consisting of direct controlling equity inter- expenses related to efforts to improve internal controls, corporate
ests in private enterprises, with the intention of ‘‘warehousing’’ initiatives, certain compensation plan expenses and the settlement
such investments until the investment or economic benefit thereof costs more fully described in Item 3. Legal Proceedings and
is transferred to a fund or other AIG-managed investment product. Note 12(a) to Consolidated Financial Statements.
During the warehousing period, AIG bears the cost and risks
associated with carrying these investments and consolidates Additional Investments
them on its balance sheet and records the operating results until
the investments are transferred, sold or otherwise divested. AIG’s significant investments in partially owned companies (which
Changes in market conditions may negatively affect the fair value are accounted for under the equity method) include a 25.4 per-
of these warehoused investments. Market conditions may impede cent interest in The Fuji Fire and Marine Insurance Co., Ltd., a
AIG from launching new investment products for which these general insurance company in Japan, a 26.0 percent interest in
warehoused assets are being held, which could result in AIG not Tata AIG Life Insurance Company, Ltd. and a 26.0 percent interest
12 AIG 2007 Form 10-K