AIG 2014 Annual Report Download - page 270

ITEM 8 / NOTE 6. INVESTMENTS
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253
Other Invested Assets
The following table summarizes the carrying amounts of other invested assets:
December 31
,
(in millions) 2014 2013
Alternative investments
(
a
)
$
19
,
656
$
19
,
709
Mutual funds -85
Investment real estate
(b)
3,612 3,113
Aircraft asset investments
(
c
)
651 763
Investments in life settlements 3,753 3,601
Investment in AerCa
p
4,972 -
All other investments 1,874 1,388
Tota l $ 34
,
518
$
28
,
659
(a) Includes hedge funds, private equity funds, affordable housing partnerships, and other investment partnerships.
(b) Net of accumulated depreciation of $315 million and $513 million in 2014 and 2013, respectively.
(c) Consists primarily of investments in aircraft equipment held in consolidated trusts.
Other Invested Assets Carried at Fair Value
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 investments of AIG’s Corporate and Other category, 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. These investments are subject to other-than-temporary impairment evaluations
(see discussion below on evaluating equity investments for other-than-temporary impairment). The gross unrealized loss
recorded in Other comprehensive income on such investments was $56 million and $15 million at December 31, 2014 and
2013, respectively, the majority of which pertains to investments in private equity funds and hedge funds that have been in
continuous unrealized loss positions for less than 12 months.
Other Invested Assets – Equity Method Investments
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, or we have elected the fair value option. Under the equity method of accounting, our carrying amount
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 investments of AIG’s Corporate and Other category, 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.
Summarized Financial Information of Equity Method Investees
The following is the aggregated summarized financial information of our equity method investees, including those for
which the fair value option has been elected:
Years Ended December 31,
(in millions) 2014 2013 2012
Operating results:
Total revenues $29,579 $ 19,181 $ 9,438
Total expenses (7,828) (5,515) (5,183)
Net income $21,751 $ 13,666 $ 4,255