AIG 2014 Annual Report Download - page 77

ITEM 2 / EXECUTIVE OVERVIEW
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Investment Highlights
Net investment income increased 1.7 percent to $16.1 billion in 2014 compared to 2013.
Net investment income improved in 2014 compared to 2013 due to positive performance on bonds for which we elected the
fair value option, driven by interest rate movements. While corporate debt securities represented the core of new investment
allocations, we continued to make investments in structured securities and other fixed income securities with favorable risk
versus return characteristics to improve yields and increase net investment income.
Net unrealized gains in our available for sale portfolio increased to approximately $19.0 billion as of December 31, 2014 from
approximately $11.7 billion as of December 31, 2013 due to a decline in interest rates and widening of spreads.
The overall credit rating of our fixed maturity securities portfolio remains largely unchanged from December 31, 2013.
Liquidity and Capital Resources Highlights
We reduced our debt in 2014 as a result of maturities, repayments and repurchases of $16.1 billion, of which $7.5 billion is
related to DIB redemptions and repurchases.
We maintained financial flexibility at AIG Parent in 2014 through $2.6 billion in dividends in the form of cash and fixed
maturity securities from our Non-Life Insurance Companies and $6.8 billion in dividends and loan repayments in the form of
cash and fixed maturity securities from our Life Insurance Companies, which included approximately $829 million of legal
settlement proceeds.
Our Board of Directors increased our share repurchase authorization of AIG Common Stock, par value $2.50 per
share (AIG Common Stock), by an additional $2.5 billion on February 12, 2015. During 2014, we repurchased
approximately 88 million shares of AIG Common Stock for an aggregate purchase price of approximately $4.9 billion. The total
number of shares of AIG Common Stock repurchased in 2014, and the aggregate purchase price of these shares, reflect our
payment of approximately $3.1 billion in the aggregate under five accelerated stock repurchase (ASR) agreements and our
receipt of approximately 53 million shares of AIG Common Stock in the aggregate, including the initial receipt of 70 percent of
the total notional share equivalent, or approximately 9.2 million shares of AIG Common Stock, under an ASR Agreement
executed in December 2014.
We paid a cash dividend on AIG Common Stock of $0.125 per share on each of March 25, 2014, June 24, 2014,
September 25, 2014 and December 18, 2014.
Our Board of Directors declared a cash dividend on AIG Common Stock on February 12, 2015 of $0.125 per share,
payable on March 26, 2015 to shareholders of record on March 12, 2015.
We received net cash proceeds of approximately $2.4 billion from the sale of ILFC after taking into account the
settlement of intercompany loans. This cash amount is in addition to the 97.6 million newly issued AerCap common shares we
received as consideration from the sale.
Additional discussion and other liquidity and capital resources developments are included in Note 17 to the Consolidated
Financial Statements and Liquidity and Capital Resources herein.