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INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2017

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)
June 30, 2017
Bonds available for sale:
U.S. government and government sponsored entities	$	2,225	$	153	$	(22)	$	2,356	$	-
Obligations of states, municipalities and political subdivisions		18,625		1,167		(70)		19,722		-
Non-U.S. governments		14,499		757		(117)		15,139		-
Corporate debt		124,719		8,319		(988)		132,050		(5)
Mortgage-backed, asset-backed and collateralized:
RMBS		33,336		2,992		(262)		36,066		1,504
CMBS		12,830		435		(102)		13,163		46
CDO/ABS		16,486		378		(71)		16,793		59
Total mortgage-backed, asset-backed and collateralized		62,652		3,805		(435)		66,022		1,609
Total bonds available for sale^(b)		222,720		14,201		(1,632)		235,289		1,604
Equity securities available for sale:
Common stock		616		372		(4)		984		-
Preferred stock		504		44		-		548		-
Mutual funds		61		12		-		73		-
Total equity securities available for sale		1,181		428		(4)		1,605		-
Total	$	223,901	$	14,629	$	(1,636)	$	236,894	$	1,604
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 subdivisions		24,025		1,001		(254)		24,772		-
Non-U.S. governments		14,018		773		(256)		14,535		-
Corporate debt		126,648		7,271		(1,739)		132,180		(31)
Mortgage-backed, asset-backed and collateralized:
RMBS		35,311		2,541		(478)		37,374		1,212
CMBS		14,054		409		(192)		14,271		45
CDO/ABS		16,315		278		(180)		16,413		39
Total mortgage-backed, asset-backed and collateralized		65,680		3,228		(850)		68,058		1,296
Total bonds available for sale^(b)		232,241		12,421		(3,125)		241,537		1,265
Equity securities available for sale:
Common stock		708		369		(12)		1,065		-
Preferred stock		748		4		-		752		-
Mutual funds		241		23		(3)		261		-
Total equity securities available for sale		1,697		396		(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 June 30, 2017 and December 31, 2016, bonds available for sale held by us that were below investment grade or not rated totaled $31.6 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 Months				12 Months or More				Total
				Gross				Gross				Gross
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in millions)		Value		Losses		Value		Losses		Value		Losses
June 30, 2017
Bonds available for sale:
U.S. government and government sponsored entities	$	949	$	21	$	1	$	1	$	950	$	22
Obligations of states, municipalities and political
subdivisions		1,867		48		257		22		2,124		70
Non-U.S. governments		3,132		52		475		65		3,607		117
Corporate debt		18,644		504		4,412		484		23,056		988
RMBS		6,364		156		2,716		106		9,080		262
CMBS		2,838		92		226		10		3,064		102
CDO/ABS		2,644		31		1,218		40		3,862		71
Total bonds available for sale		36,438		904		9,305		728		45,743		1,632
Equity securities available for sale:
Common stock		42		3		6		1		48		4
Mutual funds		8		-		-		-		8		-
Total equity securities available for sale		50		3		6		1		56		4
Total	$	36,488	$	907	$	9,311	$	729	$	45,799	$	1,636
December 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities	$	720	$	26	$	-	$	-	$	720	$	26
Obligations of states, municipalities and political
subdivisions		5,814		221		231		33		6,045		254
Non-U.S. governments		3,865		162		489		94		4,354		256
Corporate debt		28,184		1,013		6,080		726		34,264		1,739
RMBS		8,794		252		4,045		226		12,839		478
CMBS		4,469		152		479		40		4,948		192
CDO/ABS		5,362		102		1,961		78		7,323		180
Total bonds available for sale		57,208		1,928		13,285		1,197		70,493		3,125
Equity securities available for sale:
Common stock		125		12		-		-		125		12
Mutual funds		64		3		-		-		64		3
Total equity securities available for sale		189		15		-		-		189		15
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 Securities				Fixed Maturity Securities in a Loss
	Available for Sale				Position Available for Sale
(in millions)		Amortized Cost		Fair Value		Amortized Cost		Fair Value
June 30, 2017
Due in one year or less	$	8,730	$	8,960	$	1,236	$	1,230
Due after one year through five years		47,266		49,765		5,541		5,412
Due after five years through ten years		41,089		42,441		9,898		9,471
Due after ten years		62,983		68,101		14,259		13,624
Mortgage-backed, asset-backed and collateralized		62,652		66,022		16,441		16,006
Total	$	222,720	$	235,289	$	47,375	$	45,743
December 31, 2016
Due in one year or less	$	7,796	$	7,994	$	604	$	581
Due after one year through five years		49,200		51,958		6,002		5,841
Due after five years through ten years		43,308		44,226		16,045		15,332
Due after ten years		66,257		69,301		25,007		23,629
Mortgage-backed, asset-backed and collateralized		65,680		68,058		25,960		25,110
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

	Three Months Ended June 30,								Six Months Ended June 30,
		2017				2016			2017					2016
		Gross		Gross		Gross		Gross		Gross		Gross		Gross		Gross
	Realized		Realized		Realized		Realized		Realized		Realized		Realized			Realized
(in millions)		Gains		Losses		Gains		Losses		Gains		Losses		Gains		Losses
Fixed maturity securities	$	211	$	46	$	217	$	93	$	544	$	224		$	404	$	642
Equity securities		83		2		980		6		100		18			1,012		14
Total	$	294	$	48	$	1,197	$	99	$	644	$	242		$	1,416	$	656

The fair value of AIG's other securities

		June 30, 2017				December 31, 2016
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	3,180	23	%	$	2,939	20	%
Obligations of states, municipalities and political subdivisions		-	-			-	-
Non-U.S. governments		54	-			51	-
Corporate debt		1,848	13			1,772	12
Mortgage-backed, asset-backed and collateralized:
RMBS		1,967	14			2,025	14
CMBS		476	3			603	4
CDO/ABS and other collateralized^*		5,953	43			6,608	47
Total mortgage-backed, asset-backed and collateralized		8,396	60			9,236	65
Total fixed maturity securities		13,478	96			13,998	97
Equity securities		506	4			482	3
Total	$	13,984	100	%	$	14,480	100	%

* Includes $298 million and $421 million of U.S. government agency-backed ABS at June 30, 2017 and December 31, 2016, respectively.

Components of other invested assets

		June 30,		December 31,
(in millions)		2017		2016
Alternative investments^{(a) (b)}	$	12,496	$	13,379
Investment real estate^(c)		7,188		6,900
Aircraft asset investments^(d)		243		321
Investments in life settlements		2,105		2,516
All other investments		1,100		1,422
Total	$	23,132	$	24,538

(a) At June 30, 2017, includes hedge funds of $6.8 billion, private equity funds of $5.1 billion, and affordable housing partnerships of $567 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 55 percent and 27 percent of our hedge fund portfolio is available for redemption in 2017 and 2018, respectively, an additional 12 percent will be available between 2019 and 2024.

(c) Net of accumulated depreciation of $423 million and $451 million in June 30, 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				Six Months Ended
	June 30,				June 30,
(in millions)		2017		2016		2017		2016
Fixed maturity securities, including short-term investments	$	2,828	$	2,992	$	5,629	$	5,928
Equity securities		12		(22)		17		(44)
Interest on mortgage and other loans		399		376		792		765
Alternative investments^*		371		310		819		(56)
Real estate		31		35		80		88
Other investments		100		101		216		238
Total investment income		3,741		3,792		7,553		6,919
Investment expenses		128		109		254		223
Net investment income	$	3,613	$	3,683	$	7,299	$	6,696

* Includes income from hedge funds, private equity funds and affordable housing partnerships. 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				Six Months Ended
	June 30,				June 30,
(in millions)		2017		2016		2017		2016
Sales of fixed maturity securities	$	165	$	124	$	320	$	(238)
Sales of equity securities		81		974		82		998
Other-than-temporary impairments:
Severity		(2)		(3)		(2)		(5)
Change in intent		(7)		(4)		(8)		(33)
Foreign currency declines		-		(1)		(10)		(7)
Issuer-specific credit events		(55)		(95)		(112)		(226)
Adverse projected cash flows		(3)		(5)		(3)		(41)
Provision for loan losses		(24)		(30)		(18)		-
Foreign exchange transactions		74		(38)		233		(558)
Derivatives and hedge accounting		(298)		170		(674)		97
Impairments on investments in life settlements		(46)		(92)		(87)		(249)
Other^*		46		42		95		198
Net realized capital gains (losses)	$	(69)	$	1,042	$	(184)	$	(64)

* 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 six months ended June 30, 2016.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)		2017		2016		2017		2016
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	2,500	$	5,584	$	3,273	$	10,362
Equity securities		(71)		(1,045)		43		(1,140)
Other investments		(83)		(66)		(137)		(214)
Total Increase (decrease) in unrealized appreciation (depreciation) of investments^*	$	2,346	$	4,473	$	3,179	$	9,008

* 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				Six Months Ended
	June 30,				June 30,
(in millions)		2017		2016		2017		2016
Balance, beginning of period	$	946	$	1,523	$	1,098	$	1,747
Increases due to:
Credit impairments on new securities subject to impairment losses		41		13		58		123
Additional credit impairments on previously impaired securities		7		74		37		129
Reductions due to:
Credit impaired securities fully disposed of for which there was no
prior intent or requirement to sell		(44)		(93)		(55)		(243)
Accretion on securities previously impaired due to credit^*		(188)		(219)		(376)		(458)
Balance, end of period	$	762	$	1,298	$	762	$	1,298

* 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)	$	36,196
Cash flows expected to be collected^*		29,608
Recorded investment in acquired securities		19,907

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

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

(in millions)	June 30, 2017		December 31, 2016
Outstanding principal balance	$	15,568	$	16,728
Amortized cost		11,105		11,987
Fair value		12,488		12,922

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)		2017		2016		2017		2016
Balance, beginning of period	$	7,593	$	6,622	$	7,498	$	6,846
Newly purchased PCI securities		13		245		101		451
Disposals		-		-		(18)		-
Accretion		(206)		(209)		(416)		(423)
Effect of changes in interest rate indices		(135)		60		(114)		(239)
Net reclassification from (to) non-accretable difference,
including effects of prepayments		200		325		414		408
Balance, end of period	$	7,465	$	7,043	$	7,465	$	7,043

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

(in millions)		June 30, 2017		December 31, 2016
Fixed maturity securities available for sale	$	2,520	$	2,389
Other bond securities, at fair value	$	2,188	$	1,799

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
June 30, 2017
Bonds available for sale:
Non-U.S. governments	$	-	$	14	$	18	$	13	$	-	$	45
Corporate debt		-		17		23		16		-		56
Other bond securities:
U.S. government and government sponsored entities		359		-		-		-		-		359
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		555		743		531		-		1,829
Total	$	359	$	586	$	784	$	560	$	-	$	2,289

December 31, 2016
Other bond securities:
Non-U.S. governments	$	-	$	-	$	-	$	51	$	-	$	51
Corporate debt		-		163		860		725		-		1,748
Total	$	-	$	163	$	860	$	776	$	-	$	1,799

	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
June 30, 2017
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	-	$	-	$	-	$	-	$	-
Non-U.S. governments		-		4		16		-		-		20
Corporate debt		-		589		1,421		389		-		2,399
CMBS		-		-		-		-		-		-
Total	$	-	$	593	$	1,437	$	389	$	-	$	2,419

December 31, 2016
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions	$	-	$	21	$	-	$	-	$	-	$	21
Non-U.S. governments		-		-		50		-		-		50
Corporate debt		-		791		1,466		-		-		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)		June 30, 2017		December 31, 2016
Securities collateral pledged to us	$	3,463	$	1,434
Amount sold or repledged by us	$	384	$	11