AIG 2014 Annual Report Download - page 273

ITEM 8 / NOTE 6. INVESTMENTS
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256
The following table presents the components of Net realized capital gains (losses):
Years Ended December 31,
(in millions) 2014 2013 2012
Sales of fixed maturity securities $ 585 $ 2,432 $ 2,607
Sales of equity securities 111 111 484
Other-than-temporary impairments:
Severity (3) (6) (44)
Change in intent (40) (48) (62)
Foreign currency declines (19) (1) (8)
Issuer-specific credit events (169) (170) (931)
Adverse projected cash flows (16) (7) (5)
Provision for loan losses (1) (26) 104
Foreign exchange transactions 598 151 (233)
Derivative instruments (177) 287 (529)
Impairments of investments in life settlements (201) (971) (309)
Other 71 187 13
Net realized capital gains $ 739 $ 1,939 $ 1,087
Change in Unrealized Appreciation (Depreciation) of Investments
The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale
securities and other investments:
Years Ended
December 31,
(in millions) 2014 2013
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturities $ 6,809 $ (14,066)
Equity securities 535 360
Other investments 376 101
Total increase (decrease) in unrealized appreciation (depreciation) of investments* $ 7,720 $ (13,605)
* Excludes net unrealized gains attributable to businesses held for sale.
Evaluating Investments for Other-Than-Temporary Impairments
Fixed Maturity Securities
If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security
before recovery of its amortized cost basis and the fair value of the security is below amortized cost, an other-than-temporary
impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to realized
capital losses. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that we will be
required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and
circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash
flow needs and sales of securities to take advantage of favorable pricing.
For fixed maturity securities for which a credit impairment has occurred, the amortized cost is written down to the estimated
recoverable value with a corresponding charge to realized capital losses. The estimated recoverable value is the present value
of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost
that is not related to a credit impairment is presented in unrealized appreciation (depreciation) of fixed maturity securities on
which other-than-temporary credit impairments were recognized (a separate component of accumulated other comprehensive
income).
When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CDO, ABS) management
considers historical performance of underlying assets and available market information as well as bond-specific structural