AIG 2012 Annual Report Download - page 276

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The following table presents further information regarding life settlement contracts:
Remaining Life Expectancy of Insureds:
0 - 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
Thereafter
Total
At December 31, 2012, the anticipated life insurance premiums required to keep the life settlement contracts in force,
payable in the next 12 months ending December 31, 2013 and the four succeeding years ending December 31, 2017
are $546 million, $555 million, $562 million, $554 million and $555 million, respectively.
Net Investment Income
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Net investment income represents income primarily from the following sources in our insurance operations and AIG
Parent:
• Interest income and related expenses, including amortization of premiums and accretion of discounts on bonds
with changes in the timing and the amount of expected principal and interest cash flows reflected in the yield, as
applicable.
• Dividend income from common and preferred stock and distributions from other investments.
• Realized and unrealized gains and losses from investments in trading securities accounted for at fair value and
investments for which the fair value option has been elected.
• Earnings from private equity funds and hedge fund investments accounted for under the equity method.
• The difference between the carrying amount of a life settlement contract and the life insurance proceeds of the
underlying life insurance policy recorded in income upon the death of the insured.
• Changes in the fair values of our interests in ML II, AIA and MetLife securities prior to sale and change in the fair
value of our interests in ML III prior to the FRBNY liquidation of ML III assets.
The following table presents the components of Net investment income:
Fixed maturity securities, including short-term investments $ 11,814 $ 14,445
Change in fair value of ML II 42 513
Change in fair value of ML III (646) 1,792
Change in fair value of AIA securities including realized gain in 2012 1,289 (638)
Change in the fair value of MetLife securities prior to their sale (157) 665
Equity securities 92 234
Interest on mortgage and other loans 1,065 1,268
Alternative investments*1,622 1,957
Real estate 107 126
Other investments 36 177
Total investment income before policyholder income and trading gains 15,264 20,539
Policyholder investment income and trading gains – 886
Total investment income 15,264 21,425
Investment expenses 509 491
Net investment income $ 14,755 $ 20,934
* Includes hedge funds, private equity funds, affordable housing partnerships and other investment partnerships.
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AIG 2012 Form 10-K 259
December 31, 2012
Number of Carrying Face Value
(dollars in millions) Contracts Value (Death Benefits)
1$ 3 $ 8
29 19 35
90 138 269
234 250 554
296 283 723
5,023 3,509 16,067
5,673 $ 4,202 $ 17,656
$ 12,592
246
2,888
2,069
–
162
1,083
1,769
127
11
20,947
–
20,947
604
$ 20,343
Years Ended December 31,
(in millions) 2012 2011 2010
ITEM 8 / NOTE 7. INVESTMENTS