AIG 2012 Annual Report Download - page 273

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Maiden Lane III
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The FRBNY completed the liquidation of ML III assets during the third quarter of 2012 and substantially all of the
sales proceeds have been distributed in accordance with the priority of payments of the transaction. In 2012, we
received total payments of approximately $8.5 billion, which included contractual and additional distributions and our
original $5.0 billion equity interest in ML III.
In 2012, we purchased $7.1 billion of securities through the FRBNY’s auction of ML III assets.
Other Invested Assets
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The following table summarizes the carrying values of other invested assets:
Alternative investments(a) $ 18,793
Mutual funds 258
Investment real estate(b) 2,778
Aircraft asset investments(c) 1,100
Life settlement contracts 4,006
Retained interest in AIA 12,367
All other investments 1,442
Total $ 40,744
(a) Includes hedge funds, private equity funds, affordable housing partnerships and other investment partnerships.
(b) Net of accumulated depreciation of $469 million and $428 million in 2012 and 2011, respectively.
(c) Consist primarily of AIG Life and Retirement investments in aircraft equipment held in trusts.
Other Invested Assets Carried at Fair Value
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Certain hedge funds, private equity funds, affordable housing partnerships and other investment partnerships for
which we have elected the fair value option are reported at fair value with changes in fair value recognized in Net
investment income with the exception of DIB investments, for which such changes are reported in Other income.
Other investments in hedge funds, private equity funds, affordable housing partnerships and other investment
partnerships in which our insurance operations do not hold aggregate interests sufficient to exercise more than minor
influence over the respective partnerships are reported at fair value with changes in fair value recognized as a
component of Accumulated other comprehensive income (loss). These investments are subject to
other-than-temporary impairment evaluation (see below for discussion on evaluating equity investments for
other-than-temporary impairment). The gross unrealized loss recorded in Accumulated other comprehensive income
on such investments was $68 million and $269 million at December 31, 2012 and 2011, respectively, the majority of
which pertains to investments in private equity funds and hedge funds that have been in continuous unrealized loss
position for less than 12 months.
Other Invested Assets – Equity Method Investments
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We account for hedge funds, private equity funds, affordable housing partnerships and other investment partnerships
using the equity method of accounting unless our interest is so minor that we may have virtually no influence over
partnership operating and financial policies. Under the equity method of accounting, our carrying value generally is
our share of the net asset value of the funds or the partnerships, and changes in our share of the net asset values
are recorded in Net investment income with the exception of DIB investments, for which such changes are reported
in Other income. In applying the equity method of accounting, we consistently use the most recently available
financial information provided by the general partner or manager of each of these investments, which is one to three
months prior to the end of our reporting period. The financial statements of these investees are generally audited
annually.
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AIG 2012 Form 10-K256
December 31,
(in millions) 2012 2011
$ 18,990
128
3,195
984
4,357
–
1,463
$ 29,117
ITEM 8 / NOTE 7. INVESTMENTS