AIG 2010 Annual Report Download - page 303

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
See Note 2(y) herein for the effect of consolidation under the amended accounting standard for the
consolidation of variable interest entities.
AIA and ALICO SPVs
AIG is the primary beneficiary of the AIA and ALICO SPVs as it has the power to direct the activities of the
SPVs that most significantly impact their economic performance and the obligation to absorb losses and the right
to receive benefits that could potentially be significant to the SPVs. See Notes 2 and 17 herein for further
discussion of the AIA and ALICO SPVs.
Real Estate and Investment Funds
AIG’s Direct Investment business, through AIG Global Real Estate, is an investor in various real estate
investments, some of which are VIEs. These investments are typically with unaffiliated third-party developers via a
partnership or limited liability company structure. The VIE’s activities consist of the development or
redevelopment of commercial and residential real estate. AIG’s involvement varies from being a passive equity
investor or finance provider to actively managing the activities of the VIE.
AIG’s insurance operations participate as passive investors in the equity issued primarily by third-party-managed
hedge and private equity funds. AIG’s insurance operations typically are not involved in the design or
establishment of VIEs, nor do they actively participate in the management of VIEs.
Affordable Housing Partnerships
SunAmerica Affordable Housing Partners, Inc. (SAAHP) organizes and invests in limited partnerships that
develop and operate affordable housing qualifying for federal tax credits, in addition to a few market rate
properties across the United States. The general partners in the operating partnerships are almost exclusively
unaffiliated third-party developers. AIG does not consolidate an operating partnership if the general partner is an
unaffiliated person. Through approximately 1,200 partnerships, SAAHP has invested in developments with
approximately 150,000 apartment units nationwide, and has syndicated over $7 billion in partnership equity since
1991 to other investors who will receive, among other benefits, tax credits under certain sections of the Internal
Revenue Code. The pre-tax income of SAAHP is reported, along with other SunAmerica partnership income, as a
component of the SunAmerica segment.
Maiden Lane Interests
In 2008, certain AIG wholly owned life insurance companies sold all of their undivided interests in a pool of
$39.3 billion face amount of RMBS to ML II, whose sole member is the FRBNY. AIG has a significant variable
economic interest in ML II, which is a VIE.
In 2008, AIG entered into the ML III Agreement with the FRBNY, ML III and The Bank of New York
Mellon, which established arrangements, through ML III, to fund the purchase of multi-sector CDOs underlying
or related to CDS written by AIG Financial Products Corp. Concurrently, AIG Financial Products Corp’s
counterparties to such CDS transactions agreed to terminate those CDS transactions relating to the multi-sector
CDOs purchased from them. AIG has a significant variable interest in ML III, which is a VIE.
Other Asset Accounts
Aircraft Trusts
AIG has created two VIEs for the purpose of acquiring, owning, leasing, maintaining, operating and selling
aircraft. AIG subsidiaries hold beneficial interests, including all the equity interests in these entities. These
beneficial interests include passive investments by AIG’s insurance operations in non-voting preferred equity
AIG 2010 Form 10-K 287