AIG 2012 Annual Report Download - page 344

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The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with
investing in these securities. Based on our investment strategy, we have no significant concentrations of risks.
The U.S. pension plan holds a group annuity contract with US Life, one of our subsidiaries, which totaled $29 million
and $31 million at December 31, 2012 and 2011, respectively.
Changes in Level 3 fair value measurements
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The following table presents changes in our U.S. and Non-U.S. Level 3 plan assets measured at fair value:
U.S. Plan Assets:
Fixed maturity
U.S. investment grade
Mortgage and other asset-
backed securities
Private equity
Total
Non-U.S. Plan Assets:
Other fixed maturity securities
Insurance contracts
Total
U.S. Plan Assets:
Fixed maturity
U.S. investment grade $ 1 $ – $ – $ – $ – $ – $ – $ – $ 1 $ –
U.S. and international high
yield – – – – – (1) 1 – – 1
Mortgage and other asset-
backed securities 80 1 34 (79) – (1) 4 (3) 36 13
Equities – U.S. – – – – – – – – – –
Private equity 209 5 30 (20) – (1) – – 223 (23)
Total $ 290 $ 6 $ 64 $ (99) $ – $ (3) $ 5 $ (3) $ 260 $ (9)
Non-U.S. Plan Assets:
Other fixed maturity securities $ – $ – $ 1 $ – $ – $ – $ – $ – $ 1 $ –
Private equity – – – – – – – – – –
Insurance contracts 34 3 2 – – – – – 39 –
Total $ 34 $ 3 $ 3 $ – $ – $ – $ – $ – $ 40 $ –
Transfers of Level 1 and Level 2 Assets and Liabilities
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Our policy is to record transfers of assets and liabilities between Level 1 and Level 2 at their fair values as of the
end of each reporting period, consistent with the date of the determination of fair value. Assets are transferred out of
Level 1 when they are no longer transacted with sufficient frequency and volume in an active market. Conversely,
assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative of an active
market. We had no significant transfers between Level 1 and Level 2 during the year ended December 31, 2012.
Transfers of Level 3 Assets
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During the year ended December 31, 2012, transfers of Level 3 assets included certain U.S. investment grade and
mortgage backed securities and other fixed maturity securities. These transfers were due to a decrease in market
transparency, downward credit migration and an overall increase in price disparity for certain individual security types.
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AIG 2012 Form 10-K 327
Net Changes in
Realized and Unrealized Gains
Balance Unrealized Balance (Losses) on
Beginning Gains Transfers Transfers at End Instruments Held
At December 31, 2012
(in millions) of year (Losses) Purchases Sales Issuances Settlements In Out of year at End of year
$ 1 $ 5 $ 9 $ (29) $ – $ (10) $ 36 $ (1) $ 11 $ 1
36 – – – – – – (36) – –
223 9 23 (26) – – 4 (8) 225 (14)
$ 260 $ 14 $ 32 $ (55) $ – $ (10) $ 40 $ (45) $ 236 $ (13)
$ 1 $– $–$(1) $– $ – $27 $ – $27 $ –
39 2 2 – – – – – 43 –
$ 40 $ 2 $ 2 $ (1) $ – $ – $ 27 $ – $ 70 $ –
Changes in
Net Unrealized Gains
Balance Realized and Balance (Losses) on
Beginning Unrealized Transfers Transfers at End Instruments Held
At December 31, 2011
(in millions) of year Gains (Losses) Purchases Sales Issuances Settlements In Out of year at End of year
ITEM 8 / NOTE 22. EMPLOYEE BENEFITS