INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2018

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-
		Amortized		Gross		Gross				Temporary
		Cost or		Unrealized		Unrealized		Fair		Impairments
(in millions)		Cost		Gains		Losses		Value		in AOCI(b)
March 31, 2018
Bonds available for sale:
U.S. government and government sponsored entities	$	2,764	$	121	$	(52)	$	2,833	$	-
Obligations of states, municipalities and political subdivisions		16,943		941		(73)		17,811		-
Non-U.S. governments		15,350		570		(197)		15,723		-
Corporate debt		127,106		6,020		(1,787)		131,339		13
Mortgage-backed, asset-backed and collateralized:
RMBS		33,131		3,150		(392)		35,889		1,343
CMBS		13,558		273		(222)		13,609		29
CDO/ABS		16,500		284		(74)		16,710		26
Total mortgage-backed, asset-backed and collateralized		63,189		3,707		(688)		66,208		1,398
Total bonds available for sale(c)		225,352		11,359		(2,797)		233,914		1,411
December 31, 2017
Bonds available for sale:
U.S. government and government sponsored entities	$	2,532	$	160	$	(36)	$	2,656	$	-
Obligations of states, municipalities and political subdivisions		17,377		1,297		(30)		18,644		-
Non-U.S. governments		15,059		717		(117)		15,659		-
Corporate debt		126,310		8,666		(800)		134,176		17
Mortgage-backed, asset-backed and collateralized:
RMBS		34,181		3,273		(220)		37,234		1,568
CMBS		13,538		408		(105)		13,841		42
CDO/ABS		16,464		370		(52)		16,782		29
Total mortgage-backed, asset-backed and collateralized		64,183		4,051		(377)		67,857		1,639
Total bonds available for sale(c)		225,461		14,891		(1,360)		238,992		1,656
Equity securities available for sale:
Common stock		703		379		(21)		1,061		-
Preferred stock		504		29		-		533		-
Mutual funds		98		16		-		114		-
Total equity securities available for sale		1,305		424		(21)		1,708		-
Total	$	226,766	$	15,315	$	(1,381)	$	240,700	$	1,656

(a) As a result of the adoption of the Financial Instruments Recognition and Measurement Standard on January 1, 2018, equity securities are no longer classified and accounted for as available for sale securities.

(b)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.

(c)At March 31,2018 and December 31,2017, bonds available for sale held by us that were below investment grade or not rated totaled $30.4 billion and $31.5 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, 2018
Bonds available for sale:
U.S. government and government sponsored entities	$	1,097	$	25	$	529	$	27	$	1,626	$	52
Obligations of states, municipalities and political
subdivisions		2,010		36		599		37		2,609		73
Non-U.S. governments		5,825		127		893		70		6,718		197
Corporate debt		38,072		1,263		6,701		524		44,773		1,787
RMBS		7,716		206		3,349		186		11,065		392
CMBS		6,105		133		1,347		89		7,452		222
CDO/ABS		3,127		34		831		40		3,958		74
Total bonds available for sale	$	63,952	$	1,824	$	14,249	$	973	$	78,201	$	2,797
December 31, 2017
Bonds available for sale:
U.S. government and government sponsored entities	$	770	$	23	$	332	$	13	$	1,102	$	36
Obligations of states, municipalities and political
subdivisions		586		6		646		24		1,232		30
Non-U.S. governments		3,511		54		857		63		4,368		117
Corporate debt		15,578		453		7,291		347		22,869		800
RMBS		6,212		99		3,790		121		10,002		220
CMBS		3,408		46		1,389		59		4,797		105
CDO/ABS		1,455		24		822		28		2,277		52
Total bonds available for sale		31,520		705		15,127		655		46,647		1,360
Equity securities available for sale:
Common stock		136		21		-		-		136		21
Mutual funds		1		-		-		-		1		-
Total equity securities available for sale		137		21		-		-		137		21
Total	$	31,657	$	726	$	15,127	$	655	$	46,784	$	1,381

(a) As a result of the adoption of the Financial Instruments Recognition and Measurement Standard on January 1, 2018, equity securities are no longer classified and accounted for as available for sale securities.

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
March 31, 2018
Due in one year or less	$	8,393	$	8,524	$	1,881	$	1,872
Due after one year through five years		46,987		48,261		11,548		11,232
Due after five years through ten years		42,637		42,973		22,337		21,507
Due after ten years		64,146		67,948		22,069		21,115
Mortgage-backed, asset-backed and collateralized		63,189		66,208		23,163		22,475
Total	$	225,352	$	233,914	$	80,998	$	78,201
December 31, 2017
Due in one year or less	$	7,932	$	8,071	$	1,526	$	1,515
Due after one year through five years		47,179		49,093		7,764		7,571
Due after five years through ten years		42,617		43,944		11,559		11,143
Due after ten years		63,550		70,027		9,705		9,342
Mortgage-backed, asset-backed and collateralized		64,183		67,857		17,453		17,076
Total	$	225,461	$	238,992	$	48,007	$	46,647

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

		2018				2017
		Gross		Gross		Gross		Gross
Three Months Ended March 31,	Realized		Realized		Realized		Realized
(in millions)		Gains		Losses		Gains		Losses
Fixed maturity securities	$	70	$	60	$	333	$	178
Equity securities		16		-		17		16
Total	$	86	$	60	$	350	$	194

The fair value of AIG's other securities

		March 31, 2018				December 31, 2017
		Fair	Percent			Fair	Percent
(in millions)		Value	of Total			Value	of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	2,777	20	%	$	2,802	21	%
Non-U.S. governments		54	-			57	1
Corporate debt		1,803	13			1,909	14
Mortgage-backed, asset-backed and collateralized:
RMBS		1,818	13			1,885	14
CMBS		566	4			559	4
CDO/ABS and other collateralized*		5,379	38			5,560	42
Total mortgage-backed, asset-backed and collateralized		7,763	55			8,004	60
Total fixed maturity securities		12,397	88			12,772	96
Equity securities		1,725	12			589	4
Total	$	14,122	100	%	$	13,361	100	%

* Includes $220 million and $251 million of U.S. government agency-backed ABS at March 31,2018 and December 31,2017, respectively.

Components of other invested assets

		March 31,		December 31,
(in millions)		2018		2017
Alternative investments(a) (b)	$	11,125	$	11,308
Investment real estate(c)		8,636		8,258
Aircraft asset investments(d)		201		206
All other investments		1,221		1,050
Total	$	21,183	$	20,822

(a)At March 31,2018, included hedge funds of $5.5 billion, private equity funds of $5.2 billion, and affordable housing partnerships of $483 million. At December 31, 2017, included hedge funds of $5.8 billion, private equity funds of $5.0 billion, and affordable housing partnerships of $543 million.

(b) Approximately 69 percent of our hedge fund portfolio is available for redemption in 2018, an additional 31percent will be available between 2019 and 2027.

(c)Net of accumulated depreciation of $556 million and $515 million in March 31,2018 and December 31, 2017, 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)		2018		2017
Available for sale fixed maturity securities, including short-term investments	$	2,610	$	2,667
Other fixed maturity securities		(21)		134
Equity securities(a)		(32)		5
Interest on mortgage and other loans		450		393
Alternative investments(b)		337		448
Real estate		31		49
Other investments		10		116
Total investment income		3,385		3,812
Investment expenses		124		126
Net investment income	$	3,261	$	3,686

(a) Upon the adoption of the Financial Instruments Recognition and Measurement Standard on January 1, 2018, the change in fair value of all equity securities is included in Net Investment Income.

(b) 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 March 31,
(in millions)		2018		2017
Sales of fixed maturity securities	$	10	$	155
Sales of equity securities		16		1
Other-than-temporary impairments:
Severity		-		-
Change in intent		(49)		(1)
Foreign currency declines		(6)		(10)
Issuer-specific credit events		(32)		(57)
Adverse projected cash flows		-		-
Provision for loan losses		(24)		6
Foreign exchange transactions		53		159
Variable annuity embedded derivatives, net of related hedges		147		(389)
All other derivatives and hedge accounting		(225)		13
Impairments on investments in life settlements		-		(41)
Other		91		49
Net realized capital losses	$	(19)	$	(115)

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

The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale securities and other investments:

Three Months Ended March 31,
(in millions)		2018		2017
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	(4,969)	$	773
Equity securities(a)		-		114
Other investments		(25)		(54)
Total increase (decrease) in unrealized appreciation (depreciation) of investments(b)	$	(4,994)	$	833

(a)As a result of the adoption of the Financial Instruments Recognition and Measurement Standard on January 1, 2018, equity securities are no longer classified and accounted for as available for sale securities.

(b)Excludes net unrealized losses attributable to businesses held for sale.

The following table summarizes the unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date*:

Three Months Ended March 31, 2018				Other Invested
(in millions)		Equities		Assets		Total
Net gains and losses recognized during the period on equity securities	$	(31)	$	192	$	161
Less: Net gains and losses recognized during the period on equity securities sold
during the period		(8)		(1)		(9)
Unrealized gains and losses recognized during the reporting period on equity
securities still held at the reporting date	$	(23)	$	193	$	170

*The table includes a gain of $72 million in Other Invested Assets and a loss of $31 million in Equities recorded during the three-month period ended March 31, 2018, as a result of the new Financial Instruments Recognition and Measurement Standard.

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

Three Months Ended March 31,
(in millions)		2018		2017
Balance, beginning of year	$	526	$	1,098
Increases due to:
Credit impairments on new securities subject to impairment losses		14		17
Additional credit impairments on previously impaired securities		17		30
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(51)		(11)
Accretion on securities previously impaired due to credit*		(148)		(188)
Balance, end of period	$	358	$	946

* 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)	$	36,711
Cash flows expected to be collected*		30,121
Recorded investment in acquired securities		20,334

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

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

(in millions)	March 31, 2018		December 31, 2017
Outstanding principal balance	$	14,253	$	14,718
Amortized cost		10,141		10,492
Fair value		11,977		12,293

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

Three Months Ended March 31,
(in millions)		2018		2017
Balance, beginning of period	$	7,501	$	7,498
Newly purchased PCI securities		23		88
Disposals		-		(18)
Accretion		(187)		(210)
Effect of changes in interest rate indices		206		21
Net reclassification from (to) non-accretable difference, including effects of prepayments		58		214
Balance, end of period	$	7,601	$	7,593

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

(in millions)		March 31, 2018		December 31, 2017
Fixed maturity securities available for sale	$	1,767	$	2,911
Other bond securities, at fair value	$	1,381	$	1,585

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, 2018
Bonds available for sale:
Non-U.S. governments	$	-	$	94	$	18	$	-	$	-	$	112
Corporate debt		-		34		6		-		-		40
Other bond securities:
U.S. government and government sponsored entities		15		-		-		-		-		15
Non-U.S. governments		-		-		3		-		-		3
Corporate debt		-		93		18		-		-		111
Total	$	15	$	221	$	45	$	-	$	-	$	281
December 31, 2017
Bonds available for sale:
Non-U.S. governments	$	-	$	7	$	19	$	-	$	-	$	26
Corporate debt		-		13		35		-		-		48
Other bond securities:
U.S. government and government sponsored entities		44		-		-		-		-		44
Non-U.S. governments		-		-		11		-		-		11
Corporate debt		-		387		1,065		-		-		1,452
Total	$	44	$	407	$	1,130	$	-	$	-	$	1,581

	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, 2018
Bonds available for sale:
Non-U.S. governments	$	-	$	-	$	32	$	5	$	-	$	37
Corporate debt		-		235		1,224		119		-		1,578
Other bond securities:
Non-U.S. governments		-		-		7		-		-		7
Corporate debt		-		175		995		75		-		1,245
Total	$	-	$	410	$	2,258	$	199	$	-	$	2,867
December 31, 2017
Bonds available for sale:
Non-U.S. governments	$	-	$	-	$	18	$	-	$	-	$	18
Corporate debt		-		588		2,231		-		-		2,819
Other bond securities:
Non-U.S. governments		-		-		22		-		-		22
Corporate debt		-		-		56		-		-		56
Total	$	-	$	588	$	2,327	$	-	$	-	$	2,915

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

(in millions)		March 31, 2018		December 31, 2017
Securities collateral pledged to us	$	5,020	$	2,227
Amount sold or repledged by us	$	97	$	46