AIG 2015 Annual Report Download - page 278

ITEM 8 / NOTE 5. INVESTMENTS

278
December 31, December 31,
(in millions) 2015 2014
Outstanding principal balance $16,871 $ 16,962
Amortized cost 12,303 12,216
Fair value 13,164 13,462
The following table presents activity for the accretable yield on PCI securities:
Years Ended December 31,
(in millions) 2015 2014
Balance, beginning of year $ 6,865 $ 6,940
Newly purchased PCI securities 696 1,289
Disposals (13) -
Accretion (879) (880)
Effect of changes in interest rate indices (251) (542)
Net reclassification from (to) non-accretable difference,
including effects of prepayments 428 58
Balance, end of year $ 6,846 $ 6,865
Pledged Investments
Secured Financing and Similar Arrangements
We enter into secured financing transactions whereby certain securities are sold under agreements to repurchase (repurchase
agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same or
substantially similar securities. At December 31, 2015, our secured financing transactions also include those that involve the
transfer of securities to financial institutions in exchange for cash (securities lending agreements). In all of these secured
financing transactions, the securities transferred by us (pledged collateral) may be sold or repledged by the counterparties.
These agreements are recorded at their contracted amounts plus accrued interest, other than those that are accounted for at
fair value.
Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of
the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral
under these secured financing transactions, we may be required to transfer cash or additional securities as pledged collateral
under these agreements. At the termination of the transactions, we and our counterparties are obligated to return the amounts
borrowed and the securities transferred, respectively.
The following table presents the fair value of securities pledged to counterparties under secured financing
transactions, including repurchase and securities lending agreements:
(in millions) December 31, 2015
December 31, 2014
Fixed maturity securities available for sale $1,145 $ -
Other bond securities, at fair value 1,740 2,122
At December 31, 2015, amounts borrowed under repurchase and securities lending agreements totaled $2.9 billion.
At December 31, 2015, repurchase agreements with remaining contractual maturities of 91 - 364 days were collateralized by
Non-U.S. government securities, at fair value, of $49million. Repurchase agreements with remaining contractual maturities of
up to 30 days, 31 - 90 days and 91 - 364 days were collateralized by Corporate debt securities, at fair value, of $33 million,
$332 million and $1,326 million, respectively. Repurchase agreements with remaining contractual maturities of up to 30 days
were collateralized by Non-U.S. government securities, available for sale, of $50 million.