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INVESTMENTS (Tables)
 3 Months Ended
Mar. 31, 2017
INVESTMENTS  
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-
AmortizedGrossGrossTemporary
Cost orUnrealizedUnrealizedFairImpairments
(in millions)CostGainsLossesValuein AOCI(a)
March 31, 2017
Bonds available for sale:
U.S. government and government sponsored entities$2,236$149$(23)$2,362$-
Obligations of states, municipalities and political subdivisions18,877967(141)19,703-
Non-U.S. governments13,688757(138)14,307-
Corporate debt123,4697,290(1,429)129,3302
Mortgage-backed, asset-backed and collateralized:
RMBS33,0422,648(403)35,2871,317
CMBS13,374392(157)13,60953
CDO/ABS15,943305(148)16,10035
Total mortgage-backed, asset-backed and collateralized62,3593,345(708)64,9961,405
Total bonds available for sale(b)220,62912,508(2,439)230,6981,407
Equity securities available for sale:
Common stock605386(5)986-
Preferred stock74976-825-
Mutual funds25039(1)288-
Total equity securities available for sale1,604501(6)2,099-
Total$222,233$13,009$(2,445)$232,797$1,407
December 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities$1,870$148$(26)$1,992$-
Obligations of states, municipalities and political subdivisions24,0251,001(254)24,772-
Non-U.S. governments14,018773(256)14,535-
Corporate debt126,6487,271(1,739)132,180(31)
Mortgage-backed, asset-backed and collateralized:
RMBS35,3112,541(478)37,3741,212
CMBS14,054409(192)14,27145
CDO/ABS16,315278(180)16,41339
Total mortgage-backed, asset-backed and collateralized65,6803,228(850)68,0581,296
Total bonds available for sale(b)232,24112,421(3,125)241,5371,265
Equity securities available for sale:
Common stock708369(12)1,065-
Preferred stock7484-752-
Mutual funds24123(3)261-
Total equity securities available for sale1,697396(15)2,078-
Total$233,938$12,817$(3,140)$243,615$1,265

(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, 2017 and December 31, 2016, bonds available for sale held by us that were below investment grade or not rated totaled $32.8 billion and $33.6 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 Months12 Months or MoreTotal
GrossGrossGross
FairUnrealizedFairUnrealizedFairUnrealized
(in millions)ValueLossesValueLossesValueLosses
March 31, 2017
Bonds available for sale:
U.S. government and government sponsored entities$892$23$-$-$892$23
Obligations of states, municipalities and political
subdivisions3,115111239303,354141
Non-U.S. governments2,98368463703,446138
Corporate debt24,7218654,83256429,5531,429
RMBS7,7522323,36317111,115403
CMBS4,248136333214,581157
CDO/ABS3,467671,593815,060148
Total bonds available for sale47,1781,50210,82393758,0012,439
Equity securities available for sale:
Common stock564171735
Mutual funds2-3151
Total equity securities available for sale584202786
Total$47,236$1,506$10,843$939$58,079$2,445
December 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities$720$26$-$-$720$26
Obligations of states, municipalities and political
subdivisions5,814221231336,045254
Non-U.S. governments3,865162489944,354256
Corporate debt28,1841,0136,08072634,2641,739
RMBS8,7942524,04522612,839478
CMBS4,469152479404,948192
CDO/ABS5,3621021,961787,323180
Total bonds available for sale57,2081,92813,2851,19770,4933,125
Equity securities available for sale:
Common stock12512--12512
Mutual funds643--643
Total equity securities available for sale18915--18915
Total$57,397$1,943$13,285$1,197$70,682$3,140
The amortized cost and fair value of fixed maturity securities available for sale by contractual maturity
Total Fixed Maturity SecuritiesFixed Maturity Securities in a Loss
Available for Sale Position Available for Sale
(in millions)Amortized CostFair Value Amortized CostFair Value
March 31, 2017
Due in one year or less$7,064$7,266$572$566
Due after one year through five years47,68250,3055,1325,016
Due after five years through ten years41,86142,97612,54612,036
Due after ten years61,66365,15520,72619,627
Mortgage-backed, asset-backed and collateralized62,35964,99621,46420,756
Total$220,629$230,698$60,440$58,001
December 31, 2016
Due in one year or less$7,796$7,994$604$581
Due after one year through five years49,20051,9586,0025,841
Due after five years through ten years43,30844,22616,04515,332
Due after ten years66,25769,30125,00723,629
Mortgage-backed, asset-backed and collateralized65,68068,05825,96025,110
Total$232,241$241,537$73,618$70,493
The gross realized gains and gross realized losses from sales of AIG's available for sale securities
20172016
GrossGrossGrossGross
Three Months Ended March 31,RealizedRealizedRealizedRealized
(in millions)GainsLossesGainsLosses
Fixed maturity securities$333$178$187$549
Equity securities1716328
Total$350$194$219$557
The fair value of AIG's other securities
March 31, 2017December 31, 2016
FairPercentFairPercent
(in millions) Value of TotalValue of Total
Fixed maturity securities:
U.S. government and government sponsored entities$2,93121%$2,93920%
Obligations of states, municipalities and political subdivisions----
Non-U.S. governments50-51-
Corporate debt1,773121,77212
Mortgage-backed, asset-backed and collateralized:
RMBS1,971142,02514
CMBS53646034
CDO/ABS and other collateralized*6,344456,60847
Total mortgage-backed, asset-backed and collateralized8,851639,23665
Total fixed maturity securities13,6059613,99897
Equity securities50044823
Total $14,105100%$14,480100%

* Includes $353 million and $421 million of U.S. government agency-backed ABS at March 31, 2017 and December 31, 2016, respectively.
Components of other invested assets
March 31,December 31,
(in millions)20172016
Alternative investments(a) (b)$12,712$13,379
Investment real estate(c)7,0576,900
Aircraft asset investments(d)281321
Investments in life settlements2,1052,516
All other investments1,4971,422
Total$23,652$24,538

(a) At March 31, 2017, includes hedge funds of $6.9 billion, private equity funds of $5.2 billion, and affordable housing partnerships of $578 million. At December 31, 2016, includes hedge funds of $7.2 billion, private equity funds of $5.5 billion, and affordable housing partnerships of $625 million.

(b) Approximately 64 percent and 21 percent of our hedge fund portfolio is available for redemption in 2017 and 2018, respectively, an additional 10 percent will be available between 2019 and 2024.

(c) Net of accumulated depreciation of $362 million and $451 million in March 31, 2017 and December 31, 2016, respectively.

(d) Consists of investments in aircraft equipment held in a consolidated trust.
Components of net investment income
Three Months Ended March 31,
(in millions)20172016
Fixed maturity securities, including short-term investments$2,801$2,936
Equity securities5(22)
Interest on mortgage and other loans393389
Alternative investments*448(366)
Real estate4953
Other investments116137
Total investment income3,8123,127
Investment expenses126114
Net investment income$3,686$3,013
Components of net realized capital gains (losses)
Three Months Ended March 31,
(in millions)20172016
Sales of fixed maturity securities$155$(362)
Sales of equity securities124
Other-than-temporary impairments:
Severity-(2)
Change in intent(1)(29)
Foreign currency declines(10)(6)
Issuer-specific credit events(57)(131)
Adverse projected cash flows-(36)
Provision for loan losses630
Foreign exchange transactions159(520)
Derivatives and hedge accounting(376)(72)
Impairments on investments in life settlements(41)(157)
Other *49155
Net realized capital losses$(115)$(1,106)

* Includes $107 million of realized gains due to a purchase price adjustment on the sale of Class B shares of Prudential Financial, Inc. for the three months ended March 31, 2016.

Schedule of increase (decrease) in unrealized appreciation (depreciation) of available for sale securities and other investments
Three Months Ended March 31,
(in millions)20172016
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities$773$4,778
Equity securities114(95)
Other investments(54)(148)
Total increase (decrease) in unrealized appreciation (depreciation) of investments*$833$4,535

* Excludes net unrealized losses attributable to businesses held for sale.

Credit impairments recognized in earnings for available for sale fixed maturity securities
Three Months Ended March 31,
(in millions)20172016
Balance, beginning of year$1,098$1,747
Increases due to:
Credit impairments on new securities subject to impairment losses17110
Additional credit impairments on previously impaired securities3055
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell(11)(150)
Accretion on securities previously impaired due to credit*(188)(239)
Other--
Balance, end of period$946$1,523

* 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)$36,159
Cash flows expected to be collected*29,575
Recorded investment in acquired securities19,884

* Represents undiscounted expected cash flows, including both principal and interest.
Schedule of Purchased Credit Impaired (PCI) Securities, at reporting date
(in millions)March 31, 2017December 31, 2016
Outstanding principal balance$16,270$16,728
Amortized cost11,64911,987
Fair value12,75412,922
Activity for accretable yield on Purchased Credit Impaired (PCI) Securities
Three Months Ended March 31,
(in millions)20172016
Balance, beginning of period$7,498$6,846
Newly purchased PCI securities88206
Disposals(18)-
Accretion(210)(214)
Effect of changes in interest rate indices21(299)
Net reclassification from (to) non-accretable difference,
including effects of prepayments21483
Balance, end of period$7,593$6,622
Schedule of fair value of securities pledged to counterparties under secured financing transactions
(in millions)March 31, 2017December 31, 2016
Fixed maturity securities available for sale$2,405$2,389
Other bond securities, at fair value$1,776$1,799
Transfer of Certain Financial Assets Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
(in millions)Overnight and Continuousup to 30 days31 - 90 days91 - 364 days365 days or greaterTotal
March 31, 2017
Other bond securities:
Non-U.S. governments$-$-$51$-$-$51
Corporate debt-377791557-1,725
Total$-$377$842$557$-$1,776

December 31, 2016
Other bond securities:
Non-U.S. governments$-$-$-$51$-$51
Corporate debt-163860725-1,748
Total$-$163$860$776$-$1,799

Remaining Contractual Maturity of the Agreements
(in millions)Overnight and Continuousup to 30 days31 - 90 days91 - 364 days365 days or greaterTotal
March 31, 2017
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions$-$-$-$-$-$-
Non-U.S. governments---52-52
Corporate debt-4391,598316-2,353
CMBS------
Total$-$439$1,598$368$-$2,405
December 31, 2016
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions$-$21$-$-$-$21
Non-U.S. governments--50--50
Corporate debt-7911,466--2,257
CMBS--61--61
Total$-$812$1,577$-$-$2,389
Schedule of fair value of securities pledged to the entity under reverse repurchase agreements
(in millions)March 31, 2017December 31, 2016
Securities collateral pledged to us$1,459$1,434
Amount sold or repledged by us$14$11