AIG 2009 Annual Report Download - page 167

American International Group, Inc., and Subsidiaries
Other Noncore Businesses
Noncore Asset Management invested assets include those supporting the MIP, proprietary investments of AIG
Global Real Estate and other proprietary investments including investments originally acquired for warehouse
purposes described below.
The MIP business strategy is to generate spread income from investments yielding returns greater than AIG’s cost
of funds. The asset-liability relationship is actively managed. The goal of the business is to capture a spread between
income earned on investments and the funding costs of the program while mitigating interest rate and foreign
currency exchange rate risk. The invested assets are predominantly fixed maturity securities and include U.S.
residential mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. In
addition, the MIP sold credit protection by issuing predominantly single-name investment grade corporate credit
default swaps with the intent to earn spread income on credit exposure in an unfunded and leveraged form.
AIG Global Real Estate maintains a proprietary investment portfolio of direct real estate investments and
investments in real estate based joint ventures and partnerships. AIG Global Real Estate invests primarily in strategic
and opportunistic development projects domiciled in the U.S., Europe and Asia. AIG Investments holds investments
in various direct private equity and private equity funds that were originally acquired as warehouse investments
targeted for future managed investment products but which are now considered proprietary investments.
The following table presents the credit ratings of AIG’s fixed maturity investments:
December 31,
2009 2008
Rating:
AAA 23% 27%
AA 24 28
A28 26
BBB 17 13
Below investment grade 64
Non-rated 22
Total 100% 100%
159 AIG 2009 Form 10-K