AIG 2010 Annual Report Download - page 295

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AIG’s investments in life settlement contracts are monitored for impairment based on the underlying life
insurance policies, with cash flows reported periodically. An investment in a life settlement contract is considered
impaired if the undiscounted cash flows resulting from the expected proceeds from the insurance policy are less
than the carrying amount of the investment plus anticipated continuing costs. If an impairment loss is recognized,
the investment is written down to fair value.
AIG’s aircraft asset investments and investments in real estate are periodically evaluated for recoverability
whenever changes in circumstances indicate the carrying amount of an asset may be impaired. When impairment
indicators are present, AIG compares expected investment cash flows to carrying value. When the expected cash
flows are less than the carrying value, the investments are written down to fair value with a corresponding charge
to earnings.
Fixed Maturity Securities Impairment Policy — Prior to April 1, 2009
In all periods prior to April 1, 2009, AIG assessed its ability to hold any fixed maturity available for sale
security in an unrealized loss position to its recovery at each balance sheet date. The decision to sell any such
fixed maturity security classified as available for sale reflected the judgment of AIG’s management that the
security sold was unlikely to provide, on a relative value basis, as attractive a return in the future as alternative
securities entailing comparable risks. With respect to distressed securities, the sale decision reflected
management’s judgment that the risk-adjusted ultimate recovery was less than the value achievable on sale.
In those periods, AIG evaluated its fixed maturity securities for other-than-temporary impairments with respect
to valuation as well as credit.
After a fixed maturity security had been identified as other-than-temporarily impaired, the amount of such
impairment was determined as the difference between fair value and amortized cost and the entire amount,
whether attributable to credit or noncredit factors, was recorded as a charge to earnings.
(f) Insurance — Statutory Deposits
Total carrying values of cash and securities deposited by AIG’s insurance subsidiaries under requirements of
regulatory authorities were $12.0 billion and $14.6 billion at December 31, 2010 and 2009, respectively.
8. Lending Activities
The following table presents mortgages and other loans receivable:
December 31,
(in millions) 2010 2009
Mortgages – commercial $13,571 $16,005
Mortgages – residential(a) 9623
Life insurance policy loans 3,133 6,788
Collateral, guaranteed, and other commercial loans 3,521 4,883
Total mortgage and other loans receivable 20,234 28,299
Allowance for losses(b) (867) (838)
Mortgage and other loans receivable, net $19,367 $27,461
(a) Primarily consists of foreign mortgage loans.
(b) In 2010, comprised of $470 million related to commercial mortgage loans and $397 million related to other loans. In 2009, comprised of
$432 million related to commercial mortgage loans and $406 million related to other loans.
Mortgage loans and other receivables held for sale were $62 million at December 31, 2009. For the year ended
December 31, 2010, there were no mortgage loans and other receivables held for sale.
AIG 2010 Form 10-K 279