AIG 2015 Annual Report Download - page 126

ITEM 7 / INVESTMENTS
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126
December 31, 2014
State:
New York 90 $ 545 $ 2,111 $ 285 $ 148 $ 68 $ 215 $ 3,372 18 %
California 115 29 635 389 472 597 469 2,591 14
New Jersey 48 490 353 308 - 30 74 1,255 7
Florida 89 141 192 335 118 137 161 1,084 6
Texas 58 62 482 121 171 187 54 1,077 6
Illinois 24 175 327 26 73 36 - 637 3
Massachusetts 19 - 198 321 - - 34 553 3
Colorado 18 62 158 48 - 120 101 489 2
Connecticut 23 279 155 5 43 - - 482 2
Pennsylvania 49 45 89 170 107 16 5 432 2
Other states 349 920 1,140 1,738 494 310 281 4,883 26
Foreign 142 636 678 78 63 176 423 2,054 11
Tot al* 1,024 $ 3,384 $ 6,518 $ 3,824 $ 1,689 $ 1,677 $ 1,817 $ 18,909 100 %
* Does not reflect allowance for credit losses.
See Note 6 to the Consolidated Financial Statements for additional discussion on commercial mortgage loans.
Impairments
The following table presents impairments by investment type:
Years Ended December 31,
(in millions) 2015 2014 2013
Other-than-temporary Impairments:
Fixed maturity securities, available for sale $ 425 $ 180 $ 173
Equity securities, available for sale 166 37 14
Private equity funds and hedge funds 80 30 45
Subtotal 671 247 232
Other impairments:
Investments in life settlements 540 201 971
Other investments 166 126 112
Real estate 23 8 19
Tot al $ 1,400 $ 582 $ 1,334
Our investments in life settlements are monitored for impairment on a contract-by-contract basis quarterly. An investment in life
settlements is considered impaired if the undiscounted cash flows resulting from the expected proceeds would not be sufficient
to recover our estimated future carrying amount, which is the current carrying amount for the investment in life settlements plus
anticipated undiscounted future premiums and other capitalizable future costs, if any. Impaired investments in life settlements
are written down to their estimated fair value which is determined on a discounted cash flow basis, incorporating current
market mortality assumptions and market yields.
In late 2015, several insurance providers gave notice of increases in policy premiums related to our investments in life
settlements. The increase in premiums required to keep policies in force results in lower future expected net cash flows which
are insufficient to recover our net investment on certain policies.
Other-Than-Temporary Impairments
To determine other-than-temporary impairments, we use fundamental credit analyses of individual securities without regard to
rating agency ratings. Based on this analysis, we expect to receive cash flows sufficient to cover the amortized cost of all
below investment grade securities for which credit impairments were not recognized.