AIG 2008 Annual Report Download - page 244

(c) Amounts exclude short-term investments that are carried at cost, which approximates fair value of $443 million.
(d) Approximately 14.6 percent of the fair value of the assets recorded as Level 3 relates to various private equity,
real estate, hedge fund and fund-of-funds which are consolidated by AIG. AIG’s ownership in these funds
represented 27.6 percent, or $1.7 billion of the Level 3 amount.
(e) Included in Level 3 is the fair value derivative liability of $9.0 billion on AIGFP super senior credit default
swap portfolio.
At December 31, 2008, Level 3 assets were 4.9 percent of total assets, and Level 3 liabilities were 2.6 percent
of total liabilities.
The following tables present changes during 2008 in Level 3 assets and liabilities measured at fair value
on a recurring basis, and the realized and unrealized gains (losses) recorded in income during 2008 related to
the Level 3 assets and liabilities that remained in the consolidated balance sheet at December 31, 2008:
Balance
Beginning
of Year(a)
Net
Realized and
Unrealized
Gains (Losses)
Included
in Income(b)
Accumulated
Other
Comprehensive
Income (Loss)
Purchases,
Sales,
Issuances and
Settlements-net
Transfers
In (Out)
Balance at
December 31,
2008
Changes in
Unrealized Gains
(Losses) on
Instruments
Held at
December 31,
2008
(In millions)
Assets:
Bonds available for
sale . ........... $19,071 $ (5,968) $ (653) $ 803 $ 5,138 $ 18,391 $ —
Bond trading
securities . . ...... 4,563 (3,905) 5 6,268 56 6,987 (2,468)
Securities lending
invested collateral . . 11,353 (6,667) 1,668 (11,732) 5,813 435 —
Common and preferred
stocks available for
sale . ........... 359 (25) (53) (173) 3 111 —
Common and preferred
stocks trading ..... 30 — (4) (25) 2 3 (1)
Mortgage and other
loans receivable . . . . — (4) — — 4 — —
Other invested assets . . 10,373 112 (382) 1,042 23 11,168 991
Short-term
investments ...... — — — — — — —
Other assets . . ...... 141 12 — 172 — 325 12
Separate account
assets .......... 1,003 (221) — 48 — 830 (221)
Total . . . ........... $46,893 $(16,666) $ 581 $ (3,597) $11,039 $ 38,250 $(1,687)
Liabilities:
Policyholder contract
deposits . . . ...... $ (3,674) $ (986) $ 5 $ (803) $ — $ (5,458) $ 2,163
Securities sold under
agreements to
repurchase . ...... (208) (17) — (82) 222 (85) (3)
Unrealized loss on
swaps, options and
forward transactions,
net............ (11,710) (26,824) (19) 27,956 27 (10,570) (177)
Other long-term debt . . (3,578) 730 — 1,309 392 (1,147) (126)
Other liabilities...... (511) — — 511 — — —
Total . . . ........... $(19,681) $(27,097) $ (14) $ 28,891 $ 641 $(17,260) $ 1,857
(a) Total Level 3 derivative exposures have been netted on these tables for presentation purposes only.
238 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)