AIG 2010 Annual Report Download - page 231

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and certain other specified criteria are met. A business classified as held for sale is recorded at the lower of its
carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its
estimated fair value, a loss is recognized. Depreciation is not recorded on assets of a business classified as held for
sale. Assets and liabilities related to a business classified as held for sale are segregated in the Consolidated
Balance Sheet and major classes are separately disclosed in the notes to the Consolidated Financial Statements
commencing in the period in which the business is classified as held for sale.
AIG reports the results of operations of a business as discontinued operations if the business is classified as
held for sale, the operations and cash flows of the business have been or will be eliminated from the ongoing
operations of AIG as a result of a disposal transaction and AIG will not have any significant continuing
involvement in the operations of the business after the disposal transaction. The results of discontinued operations
are reported in Discontinued Operations in the Consolidated Statement of Income (Loss) for current and prior
periods commencing in the period in which the business is either disposed of or is classified as held for sale,
including any gain or loss recognized on closing or adjustment of the carrying amount to fair value less cost to
sell.
(d) Investments:
Fixed maturities and equity securities: Bonds held to maturity are carried at amortized cost when AIG has the
ability and positive intent to hold these securities until maturity. None of the fixed maturity securities met the
criteria for held to maturity classification at December 31, 2010 and 2009. When AIG does not have the positive
intent to hold bonds until maturity, these securities are classified as available for sale or as trading and are carried
at fair value.
Premiums and discounts arising from the purchase of bonds classified as held to maturity or available for sale
are treated as yield adjustments over their estimated lives, until maturity, or call date, if applicable.
Common and preferred stocks are carried at fair value.
For AIG’s Financial Services subsidiaries, those securities for which the fair value option was not elected, are
held to meet long-term investment objectives and are accounted for as available for sale, carried at fair values and
recorded on a trade-date basis.
For AIG Parent and its insurance subsidiaries, unrealized gains and losses on investments in trading securities
are reported in Net investment income. Unrealized gains and losses from available for sale investments in equity
and fixed maturity securities are reported as a separate component of Accumulated other comprehensive income
(loss), net of deferred acquisition costs and deferred income taxes, in consolidated shareholders’ equity.
Investments in fixed maturities and equity securities are recorded on a trade-date basis.
Trading securities include the investment portfolio of Direct Investment business and the Maiden Lane
Interests, all of which are carried at fair value.
Trading securities for Direct Investment business are held to meet short-term investment objectives and to
economically hedge other securities. Trading securities are recorded on a trade-date basis and carried at fair value.
Realized and unrealized gains and losses are reflected in Other income.
For discussion of AIG’s other-than-temporary impairment policy, see Note 7 herein.
Mortgage and other loans receivable — net: Mortgage and other loans receivable includes mortgage loans on real
estate, policy loans and collateral, commercial loans and guaranteed loans. Mortgage loans on real estate and
collateral, commercial loans and guaranteed loans are carried at unpaid principal balances less credit allowances
and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on such
loans is accrued as earned.
Impairment of mortgage and other loans receivable is based on certain risk factors, including past due status.
For commercial mortgages in particular, risk factors evaluated in monitoring credit quality also include debt
AIG 2010 Form 10-K 215