AIG 2015 Annual Report Download - page 73

ITEM 7 / EXECUTIVE OVERVIEW
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Our investment objective is to maintain a diversified, high quality portfolio of fixed maturity securities having weighted average
durations that are matched to the duration and cash flow profile of our liabilities, to the extent practicable. Our investment
strategy is to maximize net investment income and portfolio value, subject to liquidity requirements, capital constraints,
diversification requirements, asset-liability matching and available investment opportunities. While a portfolio of alternative
investments remains a fundamental component of the investment strategy of the Life Insurance Companies, we intend to
reduce the overall size of the hedge fund portfolio, in light of changing market conditions and perceived market opportunities,
and to continue reducing the size of the private equity portfolio. See Investments for additional discussion of investment
strategies. If these reductions were to include the sale of alternative investments that support certain payout annuities, we
could incur additional loss recognition expense on such products, due to updating assumptions to reflect reinvestment at lower
future yields. See Critical Accounting Estimates – Insurance Liabilities - Future Policy Benefits for Life and Accident and Health
Insurance Contracts (Life Insurance Companies) for discussion of assumptions related to loss recognition testing.
Profitability and Capital Management
We are focused on enhancing profitability and capital efficiency within our insurance entities through disciplined pricing, in-
force profitability management, effective management of risk and expense reductions. For product lines where we have
significant equity market risk and exposure to changes in interest rates, we use risk management tools, such as the risk
mitigation product features and hedging program in our Retirement Income Solutions and Group Retirement annuity
businesses. Additionally, our scale and the breadth of our product offerings provide diversification of risk. Within our Non-Life
Insurance Companies, we continue to increase capital efficiency.
In conjunction with our strategic active divestiture program, we announced on January 26, 2016 that we have agreed to sell
AIG Advisor Group, our network of independent broker-dealers, to investment funds affiliated with Lightyear Capital LLC and
PSP Investments. The transaction is expected to close in the second quarter of 2016, subject to regulatory approvals.
See Results of Operations — Consumer Insurance and Insurance Reserves for additional information about our Consumer
Insurance businesses.