INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 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)
September 30, 2018
Bonds available for sale:
U.S. government and government sponsored entities	$	3,069	$	101	$	(77)	$	3,093	$	-
Obligations of states, municipalities and political subdivisions		16,030		632		(150)		16,512		4
Non-U.S. governments		15,021		478		(280)		15,219		-
Corporate debt		130,263		4,302		(2,681)		131,884		(11)
Mortgage-backed, asset-backed and collateralized:
RMBS		32,825		2,961		(560)		35,226		1,330
CMBS		12,821		182		(312)		12,691		28
CDO/ABS		18,018		189		(112)		18,095		17
Total mortgage-backed, asset-backed and collateralized		63,664		3,332		(984)		66,012		1,375
Total bonds available for sale(c)		228,047		8,845		(4,172)		232,720		1,368
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 (loss). 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 September 30,2018 and December 31,2017, bonds available for sale held by us that were below investment grade or not rated totaled $30.6 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
September 30, 2018
Bonds available for sale:
U.S. government and government sponsored entities	$	1,406	$	61	$	364	$	16	$	1,770	$	77
Obligations of states, municipalities and political
subdivisions		3,475		98		743		52		4,218		150
Non-U.S. governments		5,079		172		1,821		108		6,900		280
Corporate debt		52,590		1,947		9,929		734		62,519		2,681
RMBS		7,930		245		4,706		315		12,636		560
CMBS		5,062		146		2,626		166		7,688		312
CDO/ABS		7,483		79		1,061		33		8,544		112
Total bonds available for sale	$	83,025	$	2,748	$	21,250	$	1,424	$	104,275	$	4,172
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
September 30, 2018
Due in one year or less	$	8,421	$	8,559	$	2,043	$	2,032
Due after one year through five years		48,626		49,416		16,406		16,042
Due after five years through ten years		42,674		42,475		26,927		25,844
Due after ten years		64,662		66,258		33,219		31,489
Mortgage-backed, asset-backed and collateralized		63,664		66,012		29,852		28,868
Total	$	228,047	$	232,720	$	108,447	$	104,275
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

	Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017			2018					2017
		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	$	82	$	71	$	93	$	39	$	252	$	244	$	637	$	263
Equity securities		-		-		6		2		16		-		106		20
Total	$	82	$	71	$	99	$	41	$	268	$	244	$	743	$	283

The fair value of AIG's other securities

		September 30, 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	$	2,634	21	%	$	2,802	21	%
Non-U.S. governments		49	-			57	1
Corporate debt		1,707	13			1,909	14
Mortgage-backed, asset-backed and collateralized:
RMBS		1,660	13			1,885	14
CMBS		401	3			559	4
CDO/ABS and other collateralized*		4,969	39			5,560	42
Total mortgage-backed, asset-backed and collateralized		7,030	55			8,004	60
Total fixed maturity securities		11,420	89			12,772	96
Equity securities		1,443	11			589	4
Total	$	12,863	100	%	$	13,361	100	%

* Includes $186 million and $251 million of U.S. government agency-backed ABS at September 30,2018 and December 31,2017, respectively.

Components of other invested assets

		September 30,		December 31,
(in millions)		2018		2017
Alternative investments(a) (b)	$	9,655	$	11,308
Investment real estate(c)		8,819		8,258
All other investments		1,265		1,256
Total	$	19,739	$	20,822

(a)At September 30,2018, included hedge funds of $4.6 billion, private equity funds of $4.6 billion, and affordable housing partnerships of $434 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)At September 30,2018, approximately 52 percent and 21 percent of our hedge fund portfolio is available for redemption in 2018 and 2019, respectively, the remaining27percent will be available for redemptionbetween 2020 and 2027.

(c)Net of accumulated depreciation of $553 million and $515 million atSeptember 30,2018 and December 31, 2017, respectively.

Components of net investment income

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)		2018		2017		2018		2017
Available for sale fixed maturity securities, including short-term investments	$	2,629	$	2,552	$	7,775	$	7,826
Other fixed maturity securities		60		145		29		500
Equity securities(a)		(21)		5		(50)		22
Interest on mortgage and other loans		455		414		1,352		1,206
Alternative investments(b)		329		355		837		1,174
Real estate		72		51		133		131
Other investments		(13)		30		11		246
Total investment income		3,511		3,552		10,087		11,105
Investment expenses		115		136		365		390
Net investment income	$	3,396	$	3,416	$	9,722	$	10,715

(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				Nine Months Ended
	September 30,				September 30,
(in millions)		2018		2017		2018		2017
Sales of fixed maturity securities	$	11	$	54	$	8	$	374
Sales of equity securities		-		4		16		86
Other-than-temporary impairments:
Severity		-		-		-		(2)
Change in intent		(3)		(1)		(52)		(9)
Foreign currency declines		(1)		(1)		(13)		(11)
Issuer-specific credit events		(30)		(85)		(92)		(197)
Adverse projected cash flows		(1)		(1)		(1)		(4)
Provision for loan losses		(23)		(38)		(73)		(56)
Foreign exchange transactions		(21)		66		(155)		299
Variable annuity embedded derivatives, net of related hedges		(185)		(430)		(2)		(1,023)
All other derivatives and hedge accounting		(1)		(136)		149		(217)
Impairments on investments in life settlements		-		(273)		-		(360)
Loss on sale of private equity funds		(311)		-		(311)		-
Other		54		(81)		161		14
Net realized capital losses	$	(511)	$	(922)	$	(365)	$	(1,106)

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				Nine Months Ended
	September 30,				September 30,
(in millions)		2018		2017		2018		2017
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities	$	(920)	$	1,059	$	(8,858)	$	4,332
Equity securities(a)		-		9		-		52
Other investments		(31)		10		(59)		(127)
Total increase (decrease) in unrealized appreciation (depreciation) of investments(b)	$	(951)	$	1,078	$	(8,917)	$	4,257

(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						Nine Months Ended
	September 30, 2018						September 30, 2018
				Other						Other
			Invested						Invested
(in millions)		Equities		Assets		Total		Equities		Assets		Total
Net gains and losses recognized during the period on equity securities	$	(13)	$	183	$	170	$	(41)	$	497	$	456
Less: Net gains and losses recognized during the period on equity
securities sold during the period		28		18		46		34		45		79
Unrealized gains and losses recognized during the reporting
period on equity securities still held at the reporting date	$	(41)	$	165	$	124	$	(75)	$	452	$	377

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)		2018		2017		2018		2017
Balance, beginning of period	$	188	$	762	$	526	$	1,098
Increases due to:
Credit impairments on new securities subject to impairment losses		15		58		32		116
Additional credit impairments on previously impaired securities		16		12		61		49
Reductions due to:
Credit impaired securities fully disposed for which there was no
prior intent or requirement to sell		(12)		(44)		(143)		(99)
Accretion on securities previously impaired due to credit*		(164)		(147)		(433)		(523)
Balance, end of period	$	43	$	641	$	43	$	641

* 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)	$	36,640
Cash flows expected to be collected*		30,077
Recorded investment in acquired securities		20,294

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

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

(in millions)	September 30, 2018		December 31, 2017
Outstanding principal balance	$	13,060	$	14,718
Amortized cost		9,087		10,492
Fair value		10,941		12,293

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

The following table presents activity for the accretable yield on PCI securities:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)		2018		2017		2018		2017
Balance, beginning of period	$	7,461	$	7,465	$	7,501	$	7,498
Newly purchased PCI securities		5		16		32		117
Disposals		-		-		-		(18)
Accretion		(176)		(193)		(553)		(609)
Effect of changes in interest rate indices		15		(74)		189		(188)
Net reclassification from (to) non-accretable difference,
including effects of prepayments		93		172		229		586
Balance, end of period	$	7,398	$	7,386	$	7,398	$	7,386

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

(in millions)		September 30, 2018		December 31, 2017
Fixed maturity securities available for sale	$	1,247	$	2,911
Other bond securities, at fair value	$	136	$	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
September 30, 2018
Bonds available for sale:
Non-U.S. governments	$	-	$	79	$	-	$	-	$	-	$	79
Corporate debt		-		110		1		-		-		111
Other bond securities:
U.S. government and government sponsored entities		24		-		-		-		-		24
Non-U.S. governments		-		3		-		-		-		3
Corporate debt		-		55		54		-		-		109
Total	$	24	$	247	$	55	$	-	$	-	$	326
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
September 30, 2018
Bonds available for sale:
Non-U.S. governments	$	-	$	-	$	82	$	22	$	-	$	104
Corporate debt		-		378		467		108		-		953
Other bond securities:
Non-U.S. governments		-		-		-		-		-		-
Corporate debt		-		-		-		-		-		-
Total	$	-	$	378	$	549	$	130	$	-	$	1,057
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)		September 30, 2018		December 31, 2017
Securities collateral pledged to us	$	1,324	$	2,227
Amount sold or repledged by us	$	164	$	46