AIG 2015 Annual Report Download - page 289

ITEM 8 / NOTE 9. VARIABLE INTEREST ENTITIES
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residential real estate. Our involvement varies from being a passive equity investor or finance provider to actively managing
the activities of the VIEs.
Our insurance operations participate as passive investors in the equity issued by certain third-party-managed hedge and
private equity funds that are VIEs. Our insurance operations typically are not involved in the design or establishment of these
VIEs, nor do they actively participate in the management of the VIEs.
Securitization Vehicles
We created certain VIEs that hold investments, primarily in investment-grade debt securities and loans, and issued beneficial
interests in these investments. The majority of these beneficial interests are owned by our insurance operations and we
maintain the power to direct the activities of the VIEs that most significantly impact their economic performance and bear the
obligation to absorb losses or receive benefits from the entities that could potentially be significant to the entities. Accordingly,
we consolidate these entities and those beneficial interests issued to third-parties are reported as Long-term debt.
Structured Investment Vehicle
We sponsor Nightingale Finance Ltd., a structured investment vehicle (SIV), which is a VIE. Nightingale Finance Ltd. primarily
invests in variable rate, investment-grade debt securities, the majority of which are ABS. We have no equity interest in the SIV,
but we maintain the power to direct the activities of the SIV that most significantly impact the entity’s economic performance
and bear the obligation to absorb economic losses that could potentially be significant to the SIV. We are the primary
beneficiary and consolidate the SIV.
Affordable Housing Partnerships
SunAmerica Affordable Housing Partners, Inc. (SAAHP) organized and invested in limited partnerships that develop and
operate affordable housing qualifying for federal, state, and historic tax credits, in addition to a few market rate properties
across the United States. The operating partnerships are VIEs, whose debt is generally non-recourse in nature, and the
general partners of which are mostly unaffiliated third-party developers. We account for our investments in operating
partnerships using the equity method of accounting, unless they are required to be consolidated. We consolidate an operating
partnership if the general partner is an affiliated entity or we otherwise have the power to direct activities that most significantly
impact the entities’ economic performance. The pre-tax income of SAAHP is reported as a component of the Consumer
Insurance segment.
RMBS, CMBS, Other ABS and CDOs
Primarily through our insurance operations, we are a passive investor in RMBS, CMBS, other ABS and CDOs, the majority of
which are issued by domestic special purpose entities. We generally do not sponsor or transfer assets to, or act as the servicer
to these asset-backed structures, and were not involved in the design of these entities.
Our maximum exposure in these types of structures is limited to our investment in securities issued by these entities. Based on
the nature of our investments and our passive involvement in these types of structures, we have determined that we are not
the primary beneficiary of these entities. We have not included these entities in the above tables; however, the fair values of
our investments in these structures are reported in Notes 4 and 5 herein.