AIG 2009 Annual Report Download - page 277

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
qualitative standpoint if AIG was the primary beneficiary, AIG used a quantitative analysis to calculate the probability
weighted expected losses and probability weighted expected residual returns by using cash flow modeling.
AIG’s total off-balance sheet exposure associated with VIEs, primarily consisting of financial guarantees and
commitments to real estate and investment funds was $2.5 billion and $3.3 billion at December 31, 2009 and 2008,
respectively.
The following table presents AIG’s total assets, total liabilities and off-balance sheet exposure associated with its
significant variable interests in consolidated VIEs:
Off-Balance
At December 31, VIE Assets*VIE Liabilities Sheet Exposure
(in billions) 2009 2008 2009 2008 2009 2008
Real estate and investment funds $ 4.6 $ 5.6 $2.9 $ 3.1 $0.6 $0.9
Commercial paper conduit 3.6 6.2 3.0 8.0 --
CDOs 0.2 0.3 0.1 ---
Affordable housing partnerships 2.5 2.7 ----
Other 3.4 0.9 2.1 0.6 --
Total $14.3 $15.7 $8.1 $11.7 $0.6 $0.9
* Each of the VIE’s assets can be used only to settle specific obligations of that VIE.
AIG defines a variable interest as significant relative to the materiality of its interest in the VIE. AIG calculates its
maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of
VIE assets or liabilities where AIG has also provided credit protection to the VIE with the VIE as the referenced
obligation, and (iii) other commitments and guarantees to the VIE. Interest holders in VIEs sponsored by AIG
generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to AIG, except in
limited circumstances when AIG has provided a guarantee to the VIE’s interest holders.
The following table presents total assets of unconsolidated VIEs in which AIG holds a significant variable interest or is
a sponsor that holds a variable interest in a VIE, and AIG’s maximum exposure to loss associated with these VIEs:
Maximum Exposure to Loss
On-Balance Sheet Off-Balance Sheet
Total Purchased Commitments
VIE and Retained and
(in billions) Assets Interests Other Guarantees Derivatives Total
December 31, 2009
Real estate and investment funds $ 23.3 $ 3.2 $0.4 $1.6 $ - $ 5.2
CDOs 84.7 6.5 - - 0.3 6.8
Affordable housing partnerships 1.3 - 1.3 - - 1.3
Maiden Lane Interests 38.7 5.3 - - - 5.3
Other 7.6 0.9 0.5 - - 1.4
Total $155.6 $15.9 $2.2 $1.6 $0.3 $20.0
December 31, 2008
Real estate and investment funds $ 23.5 $ 2.5 $0.5 $1.6 $ - $ 4.6
CDOs 95.9 6.4 - - 0.5 6.9
Affordable housing partnerships 1.0 - 1.0 - - 1.0
Maiden Lane Interests 46.4 4.9 - - - 4.9
Other 8.7 2.1 0.5 0.3 - 2.9
Total $175.5 $15.9 $2.0 $1.9 $0.5 $20.3
269 AIG 2009 Form 10-K