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FAIR VALUE MEASUREMENTS (Tables)
 3 Months Ended
Mar. 31, 2015
FAIR VALUE MEASUREMENTS  
Assets and liabilities measured at fair value on a recurring basis
March 31, 2015 CounterpartyCash
(in millions) Level 1Level 2Level 3Netting*CollateralTotal
Assets:
Bonds available for sale:
U.S. government and government sponsored entities$65$2,709$-$-$-$2,774
Obligations of states, municipalities and political subdivisions-25,5792,256--27,835
Non-U.S. governments71619,13934--19,889
Corporate debt-142,3151,827--144,142
RMBS-20,38717,345--37,732
CMBS-10,7492,694--13,443
CDO/ABS-8,5546,453--15,007
Total bonds available for sale781229,43230,609--260,822
Other bond securities:
U.S. government and government sponsored entities-5,483---5,483
Obligations of states, municipalities and political subdivisions-76---76
Non-U.S. governments-2---2
Corporate debt-55116--567
RMBS-8881,288--2,176
CMBS-676269--945
CDO/ABS-1,9147,850--9,764
Total other bond securities-9,5909,423--19,013
Equity securities available for sale:
Common stock3,05631--3,060
Preferred stock25----25
Mutual funds6801---681
Total equity securities available for sale3,76141--3,766
Other equity securities1,076222--1,100
Mortgage and other loans receivable--6--6
Other invested assets24,0965,098--9,196
Derivative assets:
Interest rate contracts14,80614--4,821
Foreign exchange contracts-971---971
Equity contracts109768--184
Commodity contracts------
Credit contracts--4--4
Other contracts--29--29
Counterparty netting and cash collateral---(2,476)(1,912)(4,388)
Total derivative assets1105,784115(2,476)(1,912)1,621
Short-term investments566642---1,208
Separate account assets76,6735,466---82,139
Total$82,969$255,016$45,274$(2,476)$(1,912)$378,871
Liabilities:
Policyholder contract deposits$-$47$1,835$-$-$1,882
Other policyholder funds-8---8

Derivative liabilities:
Interest rate contracts-4,07383--4,156
Foreign exchange contracts-1,4458--1,453
Equity contracts-872--89
Commodity contracts-6---6
Credit contracts--795--795
Other contracts--88--88
Counterparty netting and cash collateral---(2,476)(1,460)(3,936)
Total derivative liabilities-5,611976(2,476)(1,460)2,651
Long-term debt-4,658186--4,844
Other liabilities-178---178
Total$-$10,502$2,997$(2,476)$(1,460)$9,563

December 31, 2014 CounterpartyCash
(in millions) Level 1Level 2Level 3Netting*CollateralTotal
Assets:
Bonds available for sale:
U.S. government and government sponsored entities$322$2,670$-$-$-$2,992
Obligations of states, municipalities and political subdivisions-25,5002,159--27,659
Non-U.S. governments74220,32330--21,095
Corporate debt-142,5501,883--144,433
RMBS-20,71516,805--37,520
CMBS-10,1892,696--12,885
CDO/ABS-7,1656,110--13,275
Total bonds available for sale1,064229,11229,683--259,859
Other bond securities:
U.S. government and government sponsored entities1305,368---5,498
Obligations of states, municipalities and political subdivisions-122---122
Non-U.S. governments-2---2
Corporate debt-719---719
RMBS-9891,105--2,094
CMBS-708369--1,077
CDO/ABS-2,7517,449--10,200
Total other bond securities13010,6598,923--19,712
Equity securities available for sale:
Common stock3,62621--3,629
Preferred stock25----25
Mutual funds7383---741
Total equity securities available for sale4,38951--4,395
Other equity securities1,02425---1,049
Mortgage and other loans receivable--6--6
Other invested assets23,7425,650--9,394
Derivative assets:
Interest rate contracts23,72912--3,743
Foreign exchange contracts-8391--840
Equity contracts985851--207
Commodity contracts------
Credit contracts--4--4
Other contracts--31--31
Counterparty netting and cash collateral---(2,102)(1,119)(3,221)
Total derivative assets1004,62699(2,102)(1,119)1,604

Short-term investments5841,100---1,684
Separate account assets73,9396,097---80,036
Total$81,232$255,366$44,362$(2,102)$(1,119)$377,739
Liabilities:
Policyholder contract deposits$-$52$1,509$-$-$1,561
Other policyholder funds-8---8
Derivative liabilities:
Interest rate contracts-3,04786--3,133
Foreign exchange contracts-1,4829--1,491
Equity contracts-984--102
Commodity contracts-6---6
Credit contracts--982--982
Other contracts--90--90
Counterparty netting and cash collateral---(2,102)(1,429)(3,531)
Total derivative liabilities-4,6331,171(2,102)(1,429)2,273
Long-term debt-5,253213--5,466
Other liabilities34316---350
Total$34$10,262$2,893$(2,102)$(1,429)$9,658

* Represents netting of derivative exposures covered by a qualifying master netting agreement.
Changes in Level 3 recurring fair value measurements
Net Changes in
Realized and Unrealized Gains
UnrealizedPurchases, (Losses) Included
Fair ValueGains (Losses)OtherSales,GrossGrossFair Valuein Income on
BeginningIncludedComprehensiveIssues andTransfersTransfersEndInstruments Held
(in millions)of Periodin IncomeIncome (Loss)Settlements, Netinoutof Periodat End of Period
Three Months Ended March 31, 2015
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions$2,159$1$45$65$-$(14)$2,256$-
Non-U.S. governments30--4--34-
Corporate debt1,883-17(61)44(56)1,827-
RMBS16,805258(72)354--17,345-
CMBS2,696241030-(66)2,694-
CDO/ABS6,1103329402-(121)6,453-
Total bonds available for sale29,6833162979444(257)30,609-
Other bond securities:
Corporate debt----16-16-
RMBS1,105(19)-20429(31)1,288(31)
CMBS369--(100)--2692
CDO/ABS7,449132-(238)581(74)7,850(40)
Total other bond securities8,923113-(134)626(105)9,423(69)
Equity securities available for sale:
Common stock1-----1-
Total equity securities available for sale1-----1-
Other equity securities----22-22(3)
Mortgage and other loans receivable6-----6-
Other invested assets5,650446(511)(494)7-5,098-
Total$44,263$875$(482)$166$699$(362)$45,159$(72)
Liabilities:
Policyholder contract deposits$(1,509)$(275)$-$(51)$-$-$(1,835)$(50)
Derivative liabilities, net:
Interest rate contracts(74)(4)-9--(69)(4)
Foreign exchange contracts(8)1-(1)--(8)1
Equity contracts478-11--665
Commodity contracts--------
Credit contracts(978)147-40--(791)28
Other contracts(59)142(16)--(59)14
Total derivative liabilities, net(a)(1,072)166243--(861)44
Long-term debt(b)(213)15-12--(186)19
Total$(2,794)$(94)$2$4$-$-$(2,882)$13
Net Changes in
Realized and Unrealized Gains
UnrealizedPurchases, (Losses) Included
Fair ValueGains (Losses)OtherSales,GrossGrossFair Valuein Income on
BeginningIncludedComprehensiveIssues andTransfersTransfersEndInstruments Held
(in millions)of Periodin IncomeIncome (Loss)Settlements, Netinoutof Periodat End of Period
Three Months Ended March 31, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities
and political subdivisions(c)$1,080$-$117$846$-$(1)$2,042$-
Non-U.S. governments16-(1)2--17-
Corporate debt1,255(3)204648(109)1,815-
RMBS14,941244133557-(111)15,764-
CMBS5,7356111(50)-(61)5,741-
CDO/ABS6,974342866(474)6,610-
Total bonds available for sale30,0012813821,367714(756)31,989-

Other bond securities:
RMBS93728-104--1,06916
CMBS84417-(91)--77014
CDO/ABS8,834335-(451)-(220)8,498166
Total other bond securities10,615380-(438)-(220)10,337196
Equity securities available for sale:
Common stock1----(1)--
Total equity securities available for sale1----(1)--
Other invested assets5,93079544985(207)5,990-
Total$46,547$740$436$978$799$(1,184)$48,316$196
Liabilities:
Policyholder contract deposits$(312)$(474)$(8)$29$-$-$(765)$(82)
Derivative liabilities, net:
Interest rate contracts(100)(6)-8--(98)(1)
Equity contracts49(3)-(5)47-88(6)
Commodity contracts1-----1-
Credit contracts(1,280)80-15--(1,185)94
Other contracts(109)16(1)(15)--(109)12
Total derivative liabilities, net(a)(1,439)87(1)347-(1,303)99
Long-term debt(b)(370)(3)-19(70)21(403)7
Total$(2,121)$(390)$(9)$51$(23)$21$(2,471)$24

(a) Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

(b) Includes guaranteed investment agreements (GIAs), notes, bonds, loans and mortgages payable.

(c) Purchases, Sales, Issues and Settlements, Net primarily reflect the effect of consolidating previously unconsolidated securitization vehicles.
Schedule of net realized and unrealized gains and losses related to Level 3 items
NetNet Realized
InvestmentCapital Other
(in millions)IncomeGains (Losses)IncomeTotal
Three Months Ended March 31, 2015
Bonds available for sale$311$(9)$14$316
Other bond securities18689113
Other invested assets68389(11)446
Policyholder contract deposits-(275)-(275)
Derivative liabilities, net196141166
Long-term debt--1515
Three Months Ended March 31, 2014
Bonds available for sale$304$(36)$13$281
Other bond securities511328380
Other invested assets77(4)679
Policyholder contract deposits-(474)-(474)
Derivative liabilities, net15(3)7587
Long-term debt--(3)(3)
Gross components of purchases, sales, issuances and settlements, net
Purchases,
Sales, Issues and
(in millions)PurchasesSalesSettlementsSettlements, Net(a)
Three Months Ended March 31, 2015
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions$107$(22)$(20)$65
Non-U.S. governments6-(2)4
Corporate debt6(50)(17)(61)
RMBS961(22)(585)354
CMBS72(27)(15)30
CDO/ABS579(23)(154)402
Total bonds available for sale1,731(144)(793)794
Other bond securities:
RMBS245(6)(35)204
CMBS-(36)(64)(100)
CDO/ABS214(40)(412)(238)
Total other bond securities459(82)(511)(134)
Equity securities available for sale----
Other invested assets240(586)(148)(494)
Total assets$2,430$(812)$(1,452)$166
Liabilities:
Policyholder contract deposits$-$(73)$22$(51)
Derivative liabilities, net15-2843
Long-term debt(b)--1212
Total liabilities$15$(73)$62$4
Three Months Ended March 31, 2014
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions(c)$888$(5)$(37)$846
Non-U.S. governments2--2
Corporate debt56(7)(45)4
RMBS1,087(15)(515)557
CMBS65(57)(58)(50)
CDO/ABS330-(322)8
Total bonds available for sale2,428(84)(977)1,367
Other bond securities:
Corporate debt----
RMBS141(5)(32)104
CMBS-(6)(85)(91)
CDO/ABS21(7)(465)(451)
Total other bond securities162(18)(582)(438)
Equity securities available for sale----
Other invested assets296-(247)49
Total assets$2,886$(102)$(1,806)$978
Liabilities:
Policyholder contract deposits$-$(12)$41$29
Derivative liabilities, net1-23
Long-term debt(b)--1919
Total liabilities$1$(12)$62$51

(a) There were no issuances during the three-month periods ended March 31, 2015 and 2014, respectively.

(b) Includes GIAs, notes, bonds, loans and mortgages payable.

(c) Purchases primarily reflect the effect of consolidating previously unconsolidated securitization vehicles.
Significant unobservable inputs used for recurring fair value measurements
Fair Value  at
March 31,ValuationRange
(in millions)2015TechniqueUnobservable Input(Weighted Average)
Assets:
Obligations of states,$1,263Discounted cash flowYield(b)3.78% - 4.46% (4.12%)
municipalities and
political subdivisions
Corporate debt1,085Discounted cash flowYield(b)3.77% - 8.21% (5.99%)
RMBS18,003Discounted cash flowConstant prepayment rate(a)(c)0.76% - 9.06% (4.91%)
Loss severity(a)(c)46.57% - 80.00% (63.29%)
Constant default rate(a)(c)3.56% - 9.28% (6.42%)
Yield(c)2.79% - 6.29% (4.54%)
Certain CDO/ABS5,259Discounted cash flowConstant prepayment rate(a)(c)6.30% - 12.00% (8.70%)
Loss severity(a)(c)43.90% - 58.50% (51.40%)
Constant default rate(a)(c)2.50% - 14.30% (7.70%)
Yield(c)4.60% - 8.70% (6.90%)
CMBS2,583Discounted cash flowYield(b)0.00% - 17.56% (5.88%)
CDO/ABS - DIBBinomial ExpansionRecovery rate(b)5.00% - 33.00% (21.00%)
310Technique (BET) Diversity score(b)3 - 26 (12)
Weighted average life(b)0.27 - 10.40 years (4.97 years)
Liabilities:
Policyholder contract
deposits
GMWB1,121Discounted cash flowEquity implied volatility(b)6.00% - 39.00%(d)
Base lapse rate(b)1.00% - 40.00%(d)
Dynamic lapse rate(b)0.20% - 60.00%(d)
Mortality rate(b)0.10% - 35.00%(d)
Utilization rate(b)0.50% - 30.00%(d)
Index Annuities361Discounted cash flowLapse rates0.75% - 66.00%(d)
Mortality rates0.02% - 44.06%(d)

Index Life291Discounted cash flowEquity implied volatility10.00% to 25.00%(d)
Base lapse rate2.00% to 19.00%(d)
Mortality rates0.00% to 20.00%(d)
Total derivative
liabilities, net554BETRecovery rate(b)8.00% - 23.00% (11.00%)
Diversity score(b)9 - 22 (14)
Weighted average life(b)3.09 - 10.40 years (7.12 years)

Fair Value  at
December 31,ValuationRange
(in millions)2014TechniqueUnobservable Input(Weighted Average )
Assets:
Obligations of states,$1,178Discounted cash flowYield(b)3.9% - 4.62% (4.26%)
municipalities and
political subdivisions
Corporate debt1,145Discounted cash flowYield(b)3.46% - 8.75% (6.10%)
RMBS17,353Discounted cash flowConstant prepayment rate(a)(c)0.59% - 9.35% (4.97%)
Loss severity(a)(c)46.04% - 79.56% (62.80%)
Constant default rate(a)(c)3.67% - 9.96% (6.82%)
Yield(c)2.67% - 6.64% (4.65%)
Certain CDO/ABS5,282Discounted cash flowConstant prepayment rate(a)(c)6.40% - 12.80% (9.20%)
Loss severity(a)(c)42.90% - 60.30% (51.90%)
Constant default rate(a)(c)2.50% - 14.70% (7.80%)
Yield(c)4.70% - 9.70% (7.10%)
CMBS2,687Discounted cash flowYield(b)0.00% - 17.29% (6.06%)
CDO/ABS - DIBBinomial ExpansionRecovery rate(b)7.00% - 36.00% (21.00%)
279Technique (BET) Diversity score(b)5 - 27 (12)
Weighted average life(b)0.25 - 10.49 years (3.93 years)
Liabilities:
Policyholder contract
deposits
GMWB890Discounted cash flowEquity implied volatility(b)6.00% - 39.00%(d)
Base lapse rate(b)1.00% - 40.00%(d)
Dynamic lapse rate(b)0.20% - 60.00%(d)
Mortality rate(b)0.10% - 35.00%(d)
Utilization rate(b)0.50% - 30.00%(d)
Index Annuities294Discounted cash flowLapse rates0.75% - 66%(d)
Mortality rates0.02% - 44.06%(d)

Index Life259Discounted cash flowEquity implied volatility10.00% to 25.00%(d)
Base lapse rate2.00% to 19.00%(d)
Mortality rate0.00% to 20.00%(d)
Total derivative
liabilities, net791BETRecovery rate(b)5.00% - 23.00% (13.00%)
Diversity score(b)8 - 25 (13)
Weighted average life(b)2.67 - 10.49 years (4.65 years)

(a) The unobservable inputs and ranges for the constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CDO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points.

(b) Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c) Information received from independent third-party valuation service providers.

(d) Represents actual maximum and minimum, not weighted average rates.
Investments in Certain Entities Carried at Fair Value Using Net Asset Value per Share
March 31, 2015December 31, 2014
Fair Value Using Net Asset Value Per Share (or its equivalent)Fair Value Using Net Asset Value Per Share (or its equivalent)
UnfundedUnfunded
(in millions)Investment Category IncludesCommitmentsCommitments
Investment Category
Private equity funds:
Leveraged buyoutDebt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage$2,123$461$2,275$450
Real Estate / InfrastructureInvestments in real estate properties and infrastructure positions, including power plants and other energy generating facilities370205384227
Venture capitalEarly-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company1333012126
DistressedSecurities of companies that are in default, under bankruptcy protection, or troubled 1614316443
OtherIncludes multi-strategy, mezzanine and other strategies248209216234
Total private equity funds3,0359483,160980
Hedge funds:
Event-drivenSecurities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations1,182-1,109-
Long-shortSecurities that the manager believes are undervalued, with corresponding short positions to hedge market risk2,75012,4281
MacroInvestments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions531-498-
DistressedSecurities of companies that are in default, under bankruptcy protection or troubled 736237315
Emerging marketsInvestments in the financial markets of developing countries339-308-
OtherIncludes multi-strategy, relative value and other strategies173-125-
Total hedge funds5,711245,1996
Total$8,746$972$8,359$986
Gains or losses related to the eligible instruments for which AIG elected the fair value option
Three Months Ended March 31,Gain (Loss)
(in millions)20152014
Assets:
Mortgage and other loans receivable$-$-
Bond and equity securities141666
Alternative investments(a)145154
Other, including Short-term investments23
Liabilities:
Long-term debt(b)(76)(74)
Other liabilities(3)(4)
Total gain$209$745

(a) Includes hedge funds, private equity funds and other investment partnerships.

(b) Includes GIAs, notes, bonds, loans and mortgages payable.
Difference between fair values and aggregate contractual principal amounts, fair value option
March 31, 2015December 31, 2014
OutstandingOutstanding
(in millions)Fair ValuePrincipal AmountDifferenceFair ValuePrincipal AmountDifference
Assets:
Mortgage and other loans receivable$6$4$2$6$4$2
Liabilities:
Long-term debt*$4,844$3,541$1,303$5,466$4,101$1,365

* Includes GIAs, notes, bonds, loans and mortgages payable.
Fair value assets measured on nonrecurring basis and impairment charges
Assets at Fair ValueImpairment Charges
Non-Recurring BasisThree Months Ended March 31,
(in millions) Level 1 Level 2 Level 3 Total 20152014
March 31, 2015
Other investments$-$-$1,058$1,058$25$49
Investments in life settlements--3083087042
Other assets--9941
Total$-$-$1,375$1,375$99$92
December 31, 2014
Other investments$-$-$790$790
Investments in life settlements--537537
Other assets--11
Total$-$-$1,328$1,328
Carrying value and estimated fair value of AIG's financial instruments
Estimated Fair ValueCarrying
(in millions)Level 1Level 2Level 3TotalValue
March 31, 2015
Assets:
Mortgage and other loans receivable$-$424$26,730$27,154$25,307
Other invested assets-5492,9123,4614,324
Short-term investments-10,753-10,75310,753
Cash1,823--1,8231,823
Liabilities:
Policyholder contract deposits associated
with investment-type contracts-253120,740120,993106,646
Other liabilities-1,300-1,3001,300
Long-term debt-25,9283,80729,73527,155
December 31, 2014
Assets:
Mortgage and other loans receivable$-$449$26,157$26,606$24,984
Other invested assets-5932,8823,4754,352
Short-term investments-9,559-9,5599,559
Cash1,758--1,7581,758
Liabilities:
Policyholder contract deposits associated
with investment-type contracts-244119,268119,512106,395
Other liabilities-1,120-1,1201,120
Long-term debt-24,7492,93227,68125,751