AIG 2015 Annual Report Download - page 264

ITEM 8 / NOTE 4. FAIR VALUE MEASUREMENTS
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The following table presents the gains or losses recorded related to the eligible instruments for which we elected the
fair value option:
Years Ended December 31, Gain (Loss)
(in millions) 2015
2014 2013
Assets:
Mortgage and other loans receivable $- $ - $ 3
Bond and equity securities 616 2,099 1,667
Alternative investments(a) 36 313 360
Other, including Short-term investments 2 10 11
Liabilities:
Long-term debt(b) (38) (269) 327
Other liabilities (3) (13) (15)
Total gain $613 $ 2,140 $ 2,353
(a) Includes certain hedge funds, private equity funds and other investment partnerships.
(b) Includes GIAs, notes, bonds and mortgages payable.
Interest income and dividend income on assets measured under the fair value option are recognized and included in Net
investment income in the Consolidated Statements of Income with the exception of activity within AIG’s Corporate and Other
category, which is included in Other income. Interest expense on liabilities measured under the fair value option is reported in
Other Income in the Consolidated Statements of Income. See Note 5 herein for additional information about our policies for
recognition, measurement, and disclosure of interest and dividend income.
During 2015, 2014 and 2013, we recognized losses of $4 million, $32 million and $54 million, respectively, attributable to the
observable effect of changes in credit spreads on our own liabilities for which the fair value option was elected. We calculate
the effect of these credit spread changes using discounted cash flow techniques that incorporate current market interest rates,
our observable credit spreads on these liabilities and other factors that mitigate the risk of nonperformance such as cash
collateral posted.
The following table presents the difference between fair values and the aggregate contractual principal amounts of
mortgage and other loans receivable and long-term borrowings for which the fair value option was elected:
December 31, 2015 December 31, 2014
Outstanding Outstanding
(in millions) Fair Value Principal Amount Difference Fair Value Principal Amount Difference
Assets:
Mortgage and other loans receivable $ 11 $ 9 $ 2 $6 $ 4$2
Liabilities:
Long-term debt* $ 3,670 $2,675 $995 $ 5,466 $ 4,101 $ 1,365
* Includes GIAs, notes, bonds, loans and mortgages payable.
There were no mortgage or other loans receivable for which the fair value option was elected that were 90 days or more past
due or in non-accrual status at December 31, 2015 or 2014.