AIG 2014 Annual Report Download - page 124

ITEM 7 / INVESTMENTS
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grade rated fixed maturity securities. Based upon an assessment of its immediate and longer-term funding needs, AIG
Parent purchases publicly traded, intermediate term, investment-grade rated fixed maturity securities that can be readily
monetized through sales or repurchase agreements. These securities allow us to diversify sources of liquidity while
reducing the cost of maintaining sufficient liquidity.
Investments by Legal Entity
The following tables summarize the composition of AIG's investments by legal entity:
Non-Life Life Consolidations
Insurance Insurance Corporate and
(in millions) Companies Companies and Other
Eliminations Total
December 31, 2014
Fixed maturity securities:
Bonds available for sale, at fair value $92,942 $164,527 $5,933 $ (3,543) $259,859
Other bond securities, at fair value 1,733 2,785 15,634 (440) 19,712
Equity securities:
Common and preferred stock available for sale, at fair value 4,241 150 4 -4,395
Other Common and preferred stock, at fair value 495 -554 -1,049
Mortgage and other loans receivable, net of allowance 6,686 20,874 704 (3,274) 24,990
Other invested assets 10,372 11,916 12,109 121 34,518
Short-term investments 4,154 2,131 5,827 (869) 11,243
Total investments* 120,623 202,383 40,765 (8,005) 355,766
Cash 1,191 451 116 -1,758
Total invested assets $121,814 $202,834 $40,881 $ (8,005) $357,524
December 31, 2013
Fixed maturity securities:
Bonds available for sale, at fair value $97,202 $158,225 $7,282 $ (4,435) $258,274
Other bond securities, at fair value 1,995 2,406 18,558 (336) 22,623
Equity securities:
Common and preferred stock available for sale, at fair value 3,574 80 2 -3,656
Other Common and preferred stock, at fair value 198 538 98 -834
Mortgage and other loans receivable, net of allowance 4,088 19,209 850 (3,382) 20,765
Other invested assets 9,339 13,026 6,398 (104) 28,659
Short-term investments 5,420 6,462 10,882 (1,147) 21,617
Total investments* 121,816 199,946 44,070 (9,404) 356,428
Cash 1,496 584 161 -2,241
Total invested assets $123,312 $200,530 $44,231 $ (9,404) $358,669
* At December 31, 2014, approximately 90 percent and 10 percent of investments were held by domestic and foreign entities, respectively, compared to
approximately 89 percent and 11 percent, respectively, at December 31, 2013.
The following table presents the components of Net Investment Income:
Years Ended December 31,
(in millions) 2014 2013 2012
Interest and dividends $13,246 $ 13,199 $ 13,544
Alternative investments 2,624 2,803 1,769
Other investment income* 726 356 5,634
Investment expenses (517) (548) (604)
Total net investment income $16,079 $ 15,810 $ 20,343
* Includes changes in fair value of certain fixed maturity securities where the fair value option has been elected and which are used to economically hedge the
interest rate risk in GMWB embedded derivatives. For the years ended December 31, 2014, 2013 and 2012, the net investment income (loss) recorded on these
securities was $260 million, $(161) million and $37 million, respectively.
Net investment income for 2014 increased compared to 2013 primarily due to positive performance on bonds where we
elected the fair value option, driven by movements in interest rates, partially offset by lower income on alternative investments