AIG 2012 Annual Report Download - page 178

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The following table presents our aggregate United Kingdom and European credit exposures (excluding ILFC)
by product type:
Euro-Zone countries:
France $ 8,612
Germany 14,696
Netherlands 8,650
Spain 4,909
Italy 2,816
Belgium 1,062
Ireland 1,644
Luxembourg 613
Austria 557
Finland 378
Other Euro-Zone 253
Total Euro-Zone $ 44,190
Remainder of Europe
United Kingdom $ 29,052
Switzerland 7,670
Sweden 5,584
Other remainder of Europe 5,492
Total remainder of Europe $ 47,798
Total $ 91,988
(a) Fixed maturity securities primarily includes available-for-sale and trading securities reported at fair value of $41.4 billion ($41.4 billion amortized
cost), and $3.4 billion ($3.4 billion amortized cost), respectively.
(b) Cash and short-term investments include bank deposit placements ($3.8 billion), collateral posted to counterparties against structured products
($1.9 billion), securities purchased under agreements to resell ($187 million), and operating accounts ($115 million).
(c) Insurance Credit Exposures primarily consist of captive fronting management programs ($10.7 billion), trade credit insurance ($6.2 billion), and
surety bonds ($2.1 billion) and commercial letters of credit supporting insurance credit exposures ($794 million).
(d) Other primarily consists of derivative transactions reported at fair value.
At December 31, 2012, approximately 86 percent of fixed maturity securities in the United Kingdom and European
exposures were considered investment grade based on our internal ratings. European financial institution fixed
maturity securities exposure was $10.2 billion, of which $1.1 billion were covered bonds (debt securities secured by a
pool of financial assets sufficient to cover any bondholder claims and that have full recourse to the issuing bank).
$4.4 billion of fixed maturity securities were issued by banks domiciled in the Euro-Zone countries. Our subordinated
debt holdings and Tier 1 and preference share securities in these banks totaled $901 million and $312 million,
respectively, at December 31, 2012. These exposures were predominantly to the largest banks in those countries.
Other Credit Concentrations
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We have a risk concentration in the U.S. municipal sector, primarily through the investment portfolios of our
insurance companies. A majority of these securities were held in available-for-sale portfolios of our domestic property
and casualty insurance companies. See Investments – Available for Sale Investments herein for further details. We
had $464 million of additional exposure to the municipal sector outside of our insurance company portfolios at
December 31, 2012, compared to $892 million at December 31, 2011. These exposures consisted of derivatives and
trading securities (at fair value), and exposure related to other insurance and financial services operations.
We have a risk concentration in the residential mortgage sector in the form of non-agency RMBS, CDO of RMBS as
well as our mortgage guaranty insurance business. See Investments – Available for Sale Investments herein for
further details on RMBS and CDO investments. The net risk-in-force for UGC was $33.6 billion at December 31,
2012, of which exposure in the United States was $30.4 billion.
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AIG 2012 Form 10-K 161
December 31, 2012
Fixed Cash and Insurance December 31,
Maturity Short-Term Credit Reinsurance 2011
(in millions) Securities(a) Investments(b) Exposures(c) Recoverables Other(d) Total Total
$ 4,834 $ 422 $ 3,349 $ 590 $ 1,338 $ 10,533
4,655 633 1,976 1,755 229 9,248
5,817 56 1,745 619 96 8,333
1,872 135 2,041 18 1 4,067
1,616 2 1,151 59 20 2,848
796 1 369 4 4 1,174
784 61 172 – 1 1,018
307 3 356 1 – 667
316 7 197 2 1 523
313 13 104 2 – 432
140 10 151 1 3 305
$ 21,450 $ 1,343 $ 11,611 $ 3,051 $ 1,693 $ 39,148
$ 15,600 $ 1,822 $ 8,814 $ 2,189 $ 1,947 $ 30,372
3,011 448 1,060 2,767 4 7,290
1,550 1,804 286 3 – 3,643
3,228 613 1,310 90 371 5,612
$ 23,389 $ 4,687 $ 11,470 $ 5,049 $ 2,322 $ 46,917
$ 44,839 $ 6,030 $ 23,081 $ 8,100 $ 4,015 $ 86,065
ITEM 7 / ENTERPRISE RISK MANAGEMENT