AIG 2010 Annual Report Download - page 142

American International Group, Inc., and Subsidiaries
particularly Japan and Taiwan, is shorter than its liability duration, AIG views increasing interest rates in these
countries as economically advantageous, notwithstanding the effect that higher rates have on the market value of
its fixed maturity portfolio.
At December 31, 2010, approximately 88 percent of the fixed maturity securities were held by domestic entities.
Approximately 23 percent of such securities were rated AAA by one or more of the principal rating agencies.
Approximately 12 percent were below investment grade or not rated. AIG’s investment decision process relies
primarily on internally generated fundamental analysis and internal risk ratings. Third-party rating services’ ratings
and opinions provide one source of independent perspective for consideration in the internal analysis.
A significant portion of the foreign fixed maturity portfolio is rated by Moody’s, S&P or similar foreign rating
services. Rating services are not available in all overseas locations. AIG’s Credit Risk Committee closely reviews
the credit quality of the foreign portfolio’s non-rated fixed maturity securities. At December 31, 2010,
approximately 24 percent of the foreign fixed income investments were either rated AAA or, on the basis of
AIG’s internal analysis, were equivalent from a credit standpoint to securities so rated. Approximately 5 percent
were below investment grade or not rated at that date. Approximately 35 percent of the foreign fixed maturity
portfolio is sovereign fixed maturity securities supporting policy liabilities in the country of issuance.
The following table presents the credit ratings of AIG’s fixed maturity investments:
December 31, 2010 2009
Rating:
AAA 24% 23%
AA 22 24
A21 28
BBB 22 17
Below investment grade 76
Non-rated 42
Total 100% 100%
126 AIG 2010 Form 10-K