AIG 2012 Annual Report Download - page 292

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Securitization Vehicles
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During 2012, we created VIEs that hold investments, primarily in investment-grade debt securities, and issued
beneficial interests in these investments. The majority of these beneficial interests are owned by AIG entities and we
maintain the power to direct the activities of the VIEs that most significantly impacts their economic performance and
bear the obligation to absorb losses or receive benefits from the entities that could potentially be significant to the
entities. Accordingly, we consolidate these entities and those beneficial interests issued to third-parties are reported
as Long-term debt.
Structured Investment Vehicle
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Through the DIB, we sponsor Nightingale Finance Ltd, a structured investment vehicle (SIV), which meets the
definition of a VIE. Nightingale Finance Ltd. invests in variable rate, investment-grade debt securities, the majority of
which are ABS. We have no equity interest in the SIV, but we maintain the power to direct the activities of the SIV
that most significantly impact the entity’s economic performance and bear the obligation to absorb economic losses
that could potentially be significant to the SIV. We are the primary beneficiary and consolidate the assets of the SIV,
which totaled over $1.7 billion as of December 31, 2012. Related liabilities were not significant.
Affordable Housing Partnerships
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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. We do not consolidate an operating partnership if the general partner is an unaffiliated person. Through
approximately 1,000 partnerships, SAAHP has investments in developments with approximately 130,000 apartment
units nationwide, and as of December 31, 2012, has syndicated approximately $7.7 billion in partnership equity 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 AIG Life and Retirement partnership income, as a
component of the AIG Life and Retirement segment.
Maiden Lane Interests
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In 2008, certain of our 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 an 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 AIGFP. Concurrently, AIGFP’s counterparties to such CDS transactions agreed to terminate those CDS
transactions relating to the multi-sector CDOs purchased from them. AIG had a significant variable interest in ML III,
which was a VIE. In 2012, we received final distributions from ML II and ML III.
Other Asset Accounts
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Aircraft Trusts
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We have created two VIEs for the purpose of acquiring, owning, leasing, maintaining, operating and selling aircraft.
Our subsidiaries hold beneficial interests, including all the equity interests in these entities. These beneficial interests
include passive investments by our insurance operations in non-voting preferred equity interests and in the majority
of the debt issued by these entities. We maintain the power to direct the activities of the VIEs that most significantly
impact the entities’ economic performance, and bear the obligation to absorb economic losses or receive economic
benefits that could potentially be significant to the VIEs. As a result, we have determined that we are the primary
beneficiary and we fully consolidate the assets and liabilities of these entities, which totaled $1.2 billion and
$0.3 billion, respectively at December 31, 2012. The debt of these entities is not an obligation of, or guaranteed by,
us or any of our subsidiaries. Under a servicing agreement, ILFC acts as servicer for the aircraft owned by these
entities.
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AIG 2012 Form 10-K 275
ITEM 8 / NOTE 11. VARIABLE INTEREST ENTITIES