AIG 2009 Annual Report Download - page 180

American International Group, Inc., and Subsidiaries
An aging of the pre-tax unrealized losses of fixed maturity and equity securities, distributed as a percentage of cost
relative to unrealized loss (the extent by which the fair value is less than amortized cost or cost), including the number
of respective items was as follows:
At December 31, 2009 Less than or equal Greater than 20% Greater than 50%
to 20% of Cost
(b)
to 50% of Cost
(b)
of Cost
(b)
Total
Aging
(a)
Unrealized Unrealized Unrealized Unrealized
(dollars in millions) Cost
(c)
Loss Items
(f)
Cost
(c)
Loss Items
(f)
Cost
(c)
Loss Items
(f)
Cost
(c)
Loss
(d)
Items
(f)
Investment grade bonds
0-6 months $ 30,644 $ 815 3,493 $ 1,773 $ 519 165 $ 244 $ 151 24 $ 32,661 $ 1,485 3,682
7-12 months 10,663 589 1,102 7,057 2,286 666 2,870 1,967 324 20,590 4,842 2,092
> 12 months 33,662 2,471 4,337 8,845 2,507 933 1,172 751 128 43,679 5,729 5,398
Total $ 74,969 $ 3,875 8,932 $ 17,675 $ 5,312 1,764 $ 4,286 $ 2,869 476 $ 96,930 $ 12,056 11,172
Below investment grade
bonds
0-6 months $ 1,721 $ 106 271 $ 681 $ 179 63 $ 169 $ 113 51 $ 2,571 $ 398 385
7-12 months 2,893 338 456 2,862 986 293 2,626 1,840 276 8,381 3,164 1,025
> 12 months 2,176 194 370 1,920 556 154 514 358 82 4,610 1,108 606
Total $ 6,790 $ 638 1,097 $ 5,463 $ 1,721 510 $ 3,309 $ 2,311 409 $ 15,562 $ 4,670 2,016
Total bonds
0-6 months $ 32,365 $ 921 3,764 $ 2,454 $ 698 228 $ 413 $ 264 75 $ 35,232 $ 1,883 4,067
7-12 months 13,556 927 1,558 9,919 3,272 959 5,496 3,807 600 28,971 8,006 3,117
> 12 months 35,838 2,665 4,707 10,765 3,063 1,087 1,686 1,109 210 48,289 6,837 6,004
Total
(e)
$ 81,759 $ 4,513 10,029 $ 23,138 $ 7,033 2,274 $ 7,595 $ 5,180 885 $ 112,492 $ 16,726 13,188
Equity securities
0-6 months $ 1,195 $ 69 682 $ 94 $ 24 75 $ - $ - 1 $ 1,289 $ 93 758
7-12 months 262 29 63 16 6 29 3 3 4 281 38 96
> 12 months - - - - - - - - - - - -
Total $ 1,457 $ 98 745 $ 110 $ 30 104 $ 3 $ 3 5 $ 1,570 $ 131 854
(a) Represents the number of consecutive months that fair value has been less than cost by any amount.
(b) Represents the percentage by which fair value is less than cost at the balance sheet date.
(c) For bonds, represents amortized cost.
(d) The effect on Net income of unrealized losses after taxes will be mitigated upon realization because certain realized losses will be charged to participating policyholder
accounts, or realization will result in current decreases in the amortization of certain DAC.
(e) Includes securities lending invested collateral.
(f) Item count is by CUSIP by subsidiary.
For 2009, net unrealized gains related to fixed maturity and equity securities increased by $14.3 billion ($9.3 billion
after tax), reflecting an increase in fair value primarily due to the narrowing of credit spreads, partially offset by the
reversal of prior other-than-temporary impairment charges in connection with the adoption of a new accounting
standard which changed the recognition criteria for other-than-temporary impairment charges.
See also Note 6 to the Consolidated Financial Statements.
Risk Management
Overview
AIG continues to focus on enhancing its risk management control environment, risk management processes and its
enterprise risk management functions, at the board, corporate and individual business levels. In March 2009, the
Board of Directors expanded the role of its Finance Committee to incorporate risk and finalized the charter of the
Finance & Risk Management Committee. Similarly, the revised charter of the expanded Compensation &
Management Resources Committee was approved. At the corporate level, the AIG Risk & Capital Committee
(ARCC) was formed to ensure that risks and their effect on capital are assessed and consolidated in a coordinated
AIG 2009 Form 10-K 172