AIG 2014 Annual Report Download - page 277

ITEM 8 / NOTE 6. INVESTMENTS
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The following table presents the fair value of securities pledged to counterparties under secured financing
transactions:
(in millions) December 31, 2014
December 31, 2013
Securities available for sale $- $ 3,837
Other securities 2,122 2,766
We also enter into agreements in which securities are purchased by us under agreements to resell (reverse repurchase
agreements), which are accounted for as secured financing transactions and reported as Short-term investments or Other
assets, depending on their terms. These agreements are recorded at their contracted resale amounts plus accrued interest,
other than those that are accounted for at fair value. Such agreements entered into by the DIB are carried at fair value based
on market observable interest rates. In all reverse repurchase transactions, we take possession of or obtain a security interest
in the related securities, and we have the right to sell or repledge this collateral received.
The following table presents information on the fair value of securities pledged to us under reverse repurchase
agreements:
(in millions) December 31, 2014
December 31, 2013
Securities collateral pledged to us $2,506 $ 8,878
Amount repledged by us 131 71
Insurance – Statutory and Other Deposits
Total carrying amounts of cash and securities deposited by our insurance subsidiaries under requirements of regulatory
authorities or other insurance-related arrangements, including certain annuity-related obligations and certain reinsurance
agreements, were $5.9 billion and $6.7 billion at December 31, 2014 and 2013, respectively.
Other Pledges
Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the members
to own stock in these FHLBs. We owned an aggregate of $44 million and $57 million of stock in FHLBs at December 31, 2014
and 2013, respectively. To the extent an AIG subsidiary borrows from the FHLB, its ownership interest in the stock of FHLBs
will be pledged to the FHLB. In addition, our subsidiaries have pledged securities available for sale with a fair value of $535
million and $80 million at December 31, 2014 and 2013, respectively, associated with advances from the FHLBs.
Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade of our long-
term debt ratings. The actual amount of collateral required to be posted to the counterparties in the event of such downgrades,
and the aggregate amount of payments that we could be required to make, depend on market conditions, the fair value of
outstanding affected transactions and other factors prevailing at and after the time of the downgrade. The fair value of
securities pledged as collateral with respect to these obligations approximated $3.5 billion and $4.2 billion at December 31,
2014 and 2013, respectively. This collateral primarily consists of securities of the U.S. government and government sponsored
entities and generally cannot be repledged or resold by the counterparties.
7. LENDING ACTIVITIES
Mortgage and other loans receivable include commercial mortgages, life insurance policy loans, commercial loans, and other
loans and notes receivable. Commercial mortgages, commercial loans, and other loans and notes receivable are carried at
unpaid principal balances less credit allowances and plus or minus adjustments for the accretion or amortization of discount or
premium. Interest income on such loans is accrued as earned.