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INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2016

The amortized cost or cost and fair value of AIG's available for sale securities and other invested assets carried at fair value

										Other-Than-
		Amortized		Gross		Gross				Temporary
		Cost or		Unrealized		Unrealized		Fair		Impairments
(in millions)		Cost		Gains		Losses		Value		in AOCI^(a)
March 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities	$	1,835	$	207	$	(1)	$	2,041	$	-
Obligations of states, municipalities and political subdivisions		26,014		1,798		(54)		27,758		2
Non-U.S. governments		17,676		1,119		(180)		18,615		-
Corporate debt		132,514		8,779		(2,345)		138,948		(104)
Mortgage-backed, asset-backed and collateralized:
RMBS		34,056		2,672		(506)		36,222		1,018
CMBS		13,813		722		(98)		14,437		93
CDO/ABS		15,822		344		(402)		15,764		31
Total mortgage-backed, asset-backed and collateralized		63,691		3,738		(1,006)		66,423		1,142
Total bonds available for sale^(b)		241,730		15,641		(3,586)		253,785		1,040
Equity securities available for sale:
Common stock		891		1,396		(13)		2,274		-
Preferred stock		19		4		-		23		-
Mutual funds		419		56		(2)		473		-
Total equity securities available for sale		1,329		1,456		(15)		2,770		-
Total	$	243,059	$	17,097	$	(3,601)	$	256,555	$	1,040
December 31, 2015
Bonds available for sale:
U.S. government and government sponsored entities	$	1,698	$	155	$	(9)	$	1,844	$	-
Obligations of states, municipalities and political subdivisions		26,003		1,424		(104)		27,323		19
Non-U.S. governments		17,752		805		(362)		18,195		-
Corporate debt		133,513		6,462		(3,987)		135,988		(87)
Mortgage-backed, asset-backed and collateralized:
RMBS		33,878		2,760		(411)		36,227		1,326
CMBS		13,139		561		(129)		13,571		185
CDO/ABS		14,985		360		(248)		15,097		39
Total mortgage-backed, asset-backed and collateralized		62,002		3,681		(788)		64,895		1,550
Total bonds available for sale^(b)		240,968		12,527		(5,250)		248,245		1,482
Equity securities available for sale:
Common stock		913		1,504		(16)		2,401		-
Preferred stock		19		3		-		22		-
Mutual funds		447		53		(8)		492		-
Total equity securities available for sale		1,379		1,560		(24)		2,915		-
Total	$	242,347	$	14,087	$	(5,274)	$	251,160	$	1,482

(a) Represents the amount of other-than-temporary impairments recognized in Accumulated other comprehensive income. Amount includes unrealized gains and losses on impaired securities relating to changes in the fair value of such securities subsequent to the impairment measurement date.

(b) At March 31, 2016 and December 31, 2015, bonds available for sale held by us that were below investment grade or not rated totaled $35.6 billion and $34.9 billion, respectively.

The fair value and gross unrealized losses on AIG's available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position

	Less than 12 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
March 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities	$	2	$	-	$	11	$	1	$	13	$	1
Obligations of states, municipalities and political
subdivisions		550		25		545		29		1,095		54
Non-U.S. governments		1,400		52		1,212		128		2,612		180
Corporate debt		17,937		1,053		9,297		1,292		27,234		2,345
RMBS		5,087		151		4,828		355		9,915		506
CMBS		1,340		46		863		52		2,203		98
CDO/ABS		8,208		258		2,221		144		10,429		402
Total bonds available for sale		34,524		1,585		18,977		2,001		53,501		3,586
Equity securities available for sale:
Common stock		69		13		-		-		69		13
Mutual funds		93		2		-		-		93		2
Total equity securities available for sale		162		15		-		-		162		15
Total	$	34,686	$	1,600	$	18,977	$	2,001	$	53,663	$	3,601
December 31, 2015
Bonds available for sale:
U.S. government and government sponsored entities	$	483	$	9	$	1	$	-	$	484	$	9
Obligations of states, municipalities and political
subdivisions		2,382		87		268		17		2,650		104
Non-U.S. governments		4,327		203		832		159		5,159		362
Corporate debt		41,317		2,514		5,428		1,473		46,745		3,987
RMBS		7,215		133		4,318		278		11,533		411
CMBS		4,138		108		573		21		4,711		129
CDO/ABS		7,064		104		2,175		144		9,239		248
Total bonds available for sale		66,926		3,158		13,595		2,092		80,521		5,250
Equity securities available for sale:
Common stock		91		16		-		-		91		16
Mutual funds		200		8		-		-		200		8
Total equity securities available for sale		291		24		-		-		291		24
Total	$	67,217	$	3,182	$	13,595	$	2,092	$	80,812	$	5,274

The amortized cost and fair value of fixed maturity securities available for sale by contractual maturity

	Total Fixed Maturity Securities				Fixed Maturity Securities in a Loss
March 31, 2016	Available for Sale				Position Available for Sale
(in millions)		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,930	$	9,092	$	732	$	723
Due after one year through five years		49,341		52,088		6,357		6,084
Due after five years through ten years		51,660		53,355		10,954		9,972
Due after ten years		68,108		72,827		15,491		14,175
Mortgage-backed, asset-backed and collateralized		63,691		66,423		23,553		22,547
Total	$	241,730	$	253,785	$	57,087	$	53,501
December 31, 2015
Due in one year or less	$	9,176	$	9,277	$	1,122	$	1,103
Due after one year through five years		47,230		49,196		9,847		9,494
Due after five years through ten years		54,120		54,459		22,296		20,686
Due after ten years		68,440		70,418		26,235		23,755
Mortgage-backed, asset-backed and collateralized		62,002		64,895		26,271		25,483
Total	$	240,968	$	248,245	$	85,771	$	80,521

The gross realized gains and gross realized losses from sales of AIG's available for sale securities

		2016				2015
		Gross		Gross		Gross		Gross
Three Months Ended March 31,	Realized		Realized		Realized		Realized
(in millions)		Gains		Losses		Gains		Losses
Fixed maturity securities	$	187	$	549	$	149	$	118
Equity securities		32		8		496		5
Total	$	219	$	557	$	645	$	123

The fair value of AIG's other securities

		March 31, 2016				December 31, 2015
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	3,403	21	%	$	3,369	19	%
Obligations of states, municipalities and political subdivisions		-	-			75	-
Non-U.S. governments		53	-			50	-
Corporate debt		1,879	12			2,035	12
Mortgage-backed, asset-backed and collateralized:
RMBS		1,953	12			2,230	13
CMBS		687	4			750	4
CDO/ABS and other collateralized^*		7,369	46			8,273	47
Total mortgage-backed, asset-backed and collateralized		10,009	62			11,253	64
Total fixed maturity securities		15,344	95			16,782	95
Equity securities		877	5			921	5
Total	$	16,221	100	%	$	17,703	100	%

* Includes $592 million and $712 million of U.S. Government agency-backed ABS at March 31, 2016 and December 31, 2015, respectively.

Components of net investment income

Three Months Ended March 31,
(in millions)		2016		2015
Fixed maturity securities, including short-term investments	$	2,936	$	2,883
Equity securities		(22)		15
Interest on mortgage and other loans		389		339
Alternative investments^*		(366)		586
Real estate		53		26
Other investments		137		141
Total investment income		3,127		3,990
Investment expenses		114		152
Net investment income	$	3,013	$	3,838

* Beginning in the first quarter of 2016, the presentation of income on alternative investments has been refined to include only income from hedge funds, private equity funds and affordable housing partnerships. Prior period disclosures have been reclassified to conform to this presentation. Hedge funds for which we elected the fair value option are recorded as of the balance sheet date. Other hedge funds are generally reported on a one-month lag, while private equity funds are generally reported on a one-quarter lag.

Components of net realized capital gains (losses)

Three Months Ended March 31,
(in millions)		2016		2015
Sales of fixed maturity securities	$	(362)	$	31
Sales of equity securities		24		491
Other-than-temporary impairments:
Severity		(2)		(2)
Change in intent		(29)		(24)
Foreign currency declines		(6)		(29)
Issuer-specific credit events		(131)		(68)
Adverse projected cash flows		(36)		(5)
Provision for loan losses		30		24
Foreign exchange transactions		(520)		254
Derivative instruments		(84)		208
Impairments on investments in life settlements		(157)		(70)
Other^*		167		531
Net realized capital gains (losses)	$	(1,106)	$	1,341

* Includes realized gains due to the sale of Class B shares of Prudential Financial, Inc.

Schedule of increase (decrease) in unrealized appreciation (depreciation) of available for sale securities and other investments

Three Months Ended March 31,
(in millions)		2016		2015
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	4,778	$	2,156
Equity securities		(95)		(382)
Other investments		(148)		(503)
Total increase (decrease) in unrealized appreciation (depreciation) of investments	$	4,535	$	1,271

Credit impairments recognized in earnings for available for sale fixed maturity securities

Three Months Ended March 31,
(in millions)		2016		2015
Balance, beginning of year	$	1,747	$	2,659
Increases due to:
Credit impairments on new securities subject to impairment losses		110		15
Additional credit impairments on previously impaired securities		55		22
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(150)		(42)
Accretion on securities previously impaired due to credit^*		(239)		(188)
Other		-		-
Balance, end of period	$	1,523	$	2,466

* Represents both accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities and the accretion due to the passage of time.

Schedule of Purchased Credit Impaired (PCI) Securities, at acquisition date

(in millions)	At Date of Acquisition
Contractually required payments (principal and interest)	$	33,999
Cash flows expected to be collected^*		27,609
Recorded investment in acquired securities		18,476

* Represents undiscounted expected cash flows, including both principal and interest.

Schedule of Purchased Credit Impaired (PCI) Securities, at reporting date

(in millions)	March 31, 2016		December 31, 2015
Outstanding principal balance	$	17,011	$	16,871
Amortized cost		12,442		12,303
Fair value		12,979		13,164

Activity for accretable yield on Purchased Credit Impaired (PCI) Securities

Three Months Ended March 31,
(in millions)		2016		2015
Balance, beginning of period	$	6,846	$	6,865
Newly purchased PCI securities		206		245
Disposals		-		-
Accretion		(214)		(220)
Effect of changes in interest rate indices		(299)		(138)
Net reclassification to/(from) non-accretable difference,
including effects of prepayments		83		13
Balance, end of period	$	6,622	$	6,765

Schedule of fair value of securities pledged to counterparties under secured financing transactions

(in millions)		March 31, 2016		December 31, 2015
Fixed maturity securities available for sale	$	1,455	$	1,145
Other bond securities, at fair value	$	1,897	$	1,740

Schedule of fair value of securities pledged to the entity under reverse repurchase agreements

(in millions)		March 31, 2016		December 31, 2015
Securities collateral pledged to us	$	1,282	$	1,742
Amount sold or repledged by us	$	140	$	-

Transfer of Certain Financial Assets Accounted for as Secured Borrowings

	Remaining Contractual Maturity of the Agreements
(in millions)		Overnight and Continuous		up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2016
Other bond securities:
Non-U.S. governments	$	-	$	-	$	-	$	52	$	-	$	52
Corporate debt		-		229		447		1,131		-		1,807
Total	$	-	$	229	$	447	$	1,183	$	-	$	1,859

December 31, 2015
Bonds available for sale:
Non-U.S. governments	$	-	$	50	$	-	$	-	$	-	$	50
Other bond securities:
Non-U.S. governments		-		-		-		49		-		49
Corporate debt		-		33		332		1,326		-		1,691
Total	$	-	$	83	$	332	$	1,375	$	-	$	1,790

	Remaining Contractual Maturity of the Agreements
(in millions)		Overnight and Continuous		up to 30 days		31 - 90 days		91 - 364 days		365 days or greater		Total
March 31, 2016
Bonds available for sale:
Non-U.S. governments	$	-	$	-	$	-	$	54	$	-	$	54
Corporate debt		-		101		674		167		8		950
RMBS		-		-		-		451		-		451
Other bond securities:
U.S. government and government sponsored entities		30		-		-		-		-		30
RMBS		-		-		-		8		-		8
Total	$	30	$	101	$	674	$	680	$	8	$	1,493

December 31, 2015
Bonds available for sale:
Non-U.S. governments	$	-	$	-	$	57	$	-	$	-	$	57
Corporate debt		-		-		914		-		-		914
RMBS		-		-		-		124		-		124
Total	$	-	$	-	$	971	$	124	$	-	$	1,095