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DERIVATIVES AND HEDGE ACCOUNTING (Tables)
 12 Months Ended
Dec. 31, 2015
DERIVATIVES AND HEDGE ACCOUNTING  
Notional amounts and fair values of derivative instruments
December 31, 2015December 31, 2014
Gross Derivative AssetsGross Derivative LiabilitiesGross Derivative AssetsGross Derivative Liabilities
NotionalFairNotionalFairNotionalFairNotionalFair
(in millions)AmountValueAmountValueAmountValueAmountValue
Derivatives designated as
hedging instruments:(a)
Interest rate contracts$301$1$725$2$155$-$25$2
Foreign exchange contracts2,90320791456611251,794239
Equity contracts--121237110413
Derivatives not designated
as hedging instruments:(a)
Interest rate contracts45,8463,16165,7332,19765,0703,74345,1043,131
Foreign exchange contracts9,4725598,9001,14813,6678158,5161,251
Equity contracts6,6561775,028457,5652063,04990
Commodity contracts----15-116
Credit contracts(b) 431,289508545,288982
Other contracts(c)37,586232036936,1553153890
Total derivatives, gross$102,768$4,131$82,913$4,048$123,250$4,825$64,429$5,804
Counterparty netting(d) (1,268)(1,268)(2,102)(2,102)
Cash collateral(e)(1,554)(760)(1,119)(1,429)
Total derivatives on
consolidated balance sheets(f)$1,309$2,020$1,604$2,273

(a) Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b) As of December 31, 2015 and 2014, included super senior multi-sector CDOs with a net notional amount of $1.1 billion and $2.6 billion (fair value liability of $483 million and $947 million), respectively. The expected weighted average maturity as of December 31, 2015 is six years. Because of long-term maturities of the CDSs in the portfolio, we are unable to make reasonable estimates of the periods during which any payments would be made. However, the net notional amount represents the maximum exposure to loss on the portfolio. As of December 31, 2015, there were no super senior corporate debt/CLOs remaining. As of December 31, 2014, included super senior corporate debt/CLOs with a net notional amount of $2.5 billion (fair value liability of $7 million).

(c) Consists primarily of stable value wraps and contracts with multiple underlying exposures.

(d) Represents netting of derivative exposures covered by a qualifying master netting agreement.

(e) Represents cash collateral posted and received that is eligible for netting.

(f) Freestanding derivatives only, excludes Embedded derivatives. Derivative instrument assets and liabilities are recorded in Other Assets and Liabilities, respectively. Fair value of assets related to bifurcated Embedded derivatives was zero at both December 31, 2015 and December 31, 2014. Fair value of liabilities related to bifurcated Embedded derivatives was $2.3 billion and $1.6 billion, respectively, at December 31, 2015 and December 31, 2014. A bifurcated Embedded derivative is generally presented with the host contract in the Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in variable annuity products, which include equity and interest rate components.

Gain (loss) recognized in earnings on AIG's derivative instruments in fair value hedging relationships in the Consolidated Statements of Income
Gains/(Losses) Recognized in Earnings for:Including Gains/(Losses) Attributable to:
HedgingHedgedHedgeExcluded
(in millions)Derivatives(a)ItemsIneffectivenessComponentsOther(b)
Year ended December 31, 2015
Interest rate contracts:
Realized capital gains/(losses)$-$1$1$-$-
Interest credited to policyholder
account balances-----
Other income-9--9
Gain/(Loss) on extinguishment of debt-14--14
Foreign exchange contracts:
Realized capital gains/(losses)202(167)-323
Interest credited to policyholder
account balances-(1)--(1)
Other income-17--17
Gain/(Loss) on extinguishment of debt-17--17
Equity contracts:
Realized capital gains/(losses)(45)45---
Year ended December 31, 2014
Interest rate contracts:
Realized capital gains/(losses)$1$(2)$-$-$(1)
Interest credited to policyholder
account balances-(1)--(1)
Other income-43--43
Gain/(Loss) on extinguishment of debt-164--164
Foreign exchange contracts:
Realized capital gains/(losses)(129)147-810
Interest credited to policyholder
account balances-(3)--(3)
Other income-23--23
Gain/(Loss) on extinguishment of debt-2--2
Equity contracts:
Realized capital gains/(losses)(23)22-(1)-
Year ended December 31, 2013
Interest rate contracts:
Realized capital gains/(losses)$(5)$5$-$-$-
Interest credited to policyholder
account balances-(2)--(2)
Other income-99--99
Foreign exchange contracts:
Realized capital gains/(losses)(187)204-17-

(a) The amounts presented do not include the periodic net coupon settlements of the derivative contract or the coupon income (expense) related to the hedged item.

(b) Represents accretion/amortization of opening fair value of the hedged item at inception of hedge relationship, amortization of basis adjustment on hedged item following the discontinuation of hedge accounting, and the release of debt basis adjustment following the repurchase of issued debt that was part of previously-discontinued fair value hedge relationship.
Effect of AIG's derivative instruments not designated as hedging instruments in the Consolidated Statements of Income
Gains (Losses)
Years Ended December 31,Recognized in Earnings
(in millions)201520142013
By Derivative Type:
Interest rate contracts$339$851$(259)
Foreign exchange contracts41630941
Equity contracts(182)(274)(507)
Commodity contracts(1)(1)(4)
Credit contracts186263567
Other contracts6919285
Embedded derivatives49(841)1,099
Total$876$499$1,022
By Classification:
Policy fees$78$-$-
Net investment income2610228
Net realized capital gains (losses)365(219)257
Other income401599750
Policyholder benefits and claims incurred617(13)
Total$876$499$1,022