AIG 2008 Annual Report Download - page 253

As a result of AIG’s periodic evaluation of its securities for other-than-temporary impairments in value, AIG
recorded other-than-temporary impairment charges of $50.8 billion, $4.7 billion (including $643 million related to
AIGFP recorded in other income) and $944 million in 2008, 2007 and 2006, respectively.
In light of the recent significant disruption in the U.S. residential mortgage and credit markets, AIG has
recognized an other-than-temporary impairment charge (severity loss) of $29.1 billion in 2008, primarily related to
mortgage-backed, asset-backed and collateralized securities, and securities of financial institutions. Notwithstand-
ing AIG’s intent and ability to hold such securities until they have recovered their cost basis (except for securities
lending invested collateral comprising $9.2 billion of the severity loss for 2008), and despite structures that indicate
that a substantial amount of the securities should continue to perform in accordance with original terms, AIG
concluded that it could not reasonably assert that the impairment period would be temporary.
In addition to the above severity losses, AIG recorded other-than-temporary impairment charges in 2008, 2007
and 2006 related to:
• securities that AIG does not intend to hold until recovery;
• declines due to foreign exchange rates;
• issuer-specific credit events;
• certain structured securities impaired under Emerging Issues Task Force Issue No. 99-20, “Recognition of
Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to
be Held by a Transferor in Securitized Financial Assets” and related interpretive guidance; and
• other impairments, including equity securities and partnership investments.
The gross realized gains and gross realized losses from sales of AIG’s available for sale securities were as
follows:
Gross
Realized
Gains
Gross
Realized
Losses
Gross
Realized
Gains
Gross
Realized
Losses
Gross
Realized
Gains
Gross
Realized
Losses
2008 2007 2006
Years Ended December 31,
(In millions)
Fixed maturities ....................... $6,620 $11,886 $ 680 $1,148 $ 711 $1,093
Equity securities ...................... 1,415 1,569 1,368 291 1,111 320
Preferred stocks ....................... 35 — 10 — 22 —
Total ............................... $8,070 $13,455 $2,058 $1,439 $1,844 $1,413
AIG 2008 Form 10-K 247
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)