AIG 2009 Annual Report Download - page 256

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in certain entities carried at fair value using net asset value per share
The following table includes information related to AIG’s investments in certain other invested assets, including
private equity funds, hedge funds and other alternative investments that calculate net asset value per share (or its
equivalent). For these investments, which are measured at fair value on a recurring or non-recurring basis at
December 31, 2009, AIG uses the net asset value per share as a practical expedient for fair value.
As of December 31, 2009 Fair Value
Using Net Unfunded
(in millions) Investment Category Includes Asset Value Commitments
Investment Category
Private equity funds:
Leveraged buyout Debt and/or equity investments made as part of a transaction in which assets of $ 3,166 $ 1,553
mature companies are acquired from the current shareholders, typically with
the use of financial leverage.
Non-U.S. Investments that focus primarily on Asian and European based buyouts, 543 103
expansion capital, special situations, turnarounds, venture capital, mezzanine
and distressed opportunities strategies.
Venture capital Early-stage, high-potential, growth companies expected to generate a return 427 48
through an eventual realization event, such as an initial public offering or sale
of the company.
Fund of funds Funds that invest in other funds, which invest in various diversified strategies. 616 40
Distressed Securities of companies or government entities that are already in default, 238 91
under bankruptcy protection, or troubled.
Other Real estate, energy, multi-strategy, mezzanine, and industry-focused strategies. 223 117
Total private equity funds 5,213 1,952
Hedge funds:
Event-driven Securities of companies undergoing material structural changes, including 1,373 -
mergers, acquisitions, and other reorganizations.
Long-short Securities the manager believes are undervalued, with corresponding short 825 -
positions to hedge market risk.
Fund of funds Funds that invest in other funds, which invest in various diversified strategies. 304 -
Relative value Simultaneous long and short positions in closely related markets. 286 -
Distressed Securities of companies or government entities that are already in default, 272 -
under bankruptcy protection, or troubled.
Other Non-U.S. companies, futures and commodities, and multi-strategy and industry- 394 -
focused strategies.
Total hedge funds 3,454 -
Global real estate funds U.S. and Non-U.S. commercial real estate. 929 64
Total $ 9,596* $ 2,016
* Includes investments of entities classified as held for sale of approximately $1.1 billion.
Private equity fund investments included above are not redeemable during the lives of the funds, and have expected
remaining lives that extend in some cases to 10 years. Twenty-five percent of the total above have expected remaining
lives of less than three years, 29 percent between 3 and 7 years, and 46 percent between 7 and 10 years. Expected lives
are based upon legal maturity, which can be extended at the general manager’s discretion, typically in one year
increments.
Hedge fund investments included above are redeemable monthly (16 percent), quarterly (42 percent),
semi-annually (7 percent) and annually (35 percent), with redemption notices ranging from 1 day to 180 days. More
than 90 percent require redemption notices of 90 days or less. Investments representing approximately 8 percent of
AIG 2009 Form 10-K 248