INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2013

INVESTMENTS

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

(in millions)	Amortized Cost or Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Other-Than- Temporary Impairments in AOCI(a)
December 31, 2013
Bonds available for sale:
U.S. government and government sponsored entities	$	3,084	$	150	$	(39	)	$	3,195	$	–
Obligations of states, municipalities and political subdivisions		28,704		1,122		(446	)		29,380		(15	)
Non-U.S. governments		22,045		822		(358	)		22,509		–
Corporate debt		139,461		7,989		(2,898	)		144,552		74
Mortgage-backed, asset-backed and collateralized:
RMBS		33,520		3,101		(473	)		36,148		1,670
CMBS		11,216		558		(292	)		11,482		125
CDO/ABS		10,501		649		(142	)		11,008		62
Total mortgage-backed, asset-backed and collateralized		55,237		4,308		(907	)		58,638		1,857
Total bonds available for sale(b)		248,531		14,391		(4,648	)		258,274		1,916
Equity securities available for sale:
Common stock		1,280		1,953		(14	)		3,219		–
Preferred stock		24		4		(1	)		27		–
Mutual funds		422		12		(24	)		410		–
Total equity securities available for sale		1,726		1,969		(39	)		3,656		–
Total	$	250,257	$	16,360	$	(4,687	)	$	261,930	$	1,916
December 31, 2012
Bonds available for sale:
U.S. government and government sponsored entities	$	3,161	$	323	$	(1	)	$	3,483	$	–
Obligations of states, municipalities and political subdivisions		33,042		2,685		(22	)		35,705		2
Non-U.S. governments		25,449		1,395		(44	)		26,800		–
Corporate debt		135,728		15,848		(464	)		151,112		115
Mortgage-backed, asset-backed and collateralized:
RMBS		31,330		3,379		(317	)		34,392		1,330
CMBS		9,449		770		(304	)		9,915		(79	)
CDO/ABS		7,990		806		(244	)		8,552		82
Total mortgage-backed, asset-backed and collateralized		48,769		4,955		(865	)		52,859		1,333
Total bonds available for sale(b)		246,149		25,206		(1,396	)		269,959		1,450
Equity securities available for sale:
Common stock		1,492		1,574		(37	)		3,029		–
Preferred stock		55		23		–			78		–
Mutual funds		93		12		–			105		–
Total equity securities available for sale		1,640		1,609		(37	)		3,212		–
Total	$	247,789	$	26,815	$	(1,433	)	$	273,171	$	1,450

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

(b)  At December 31, 2013 and 2012, bonds available for sale held by us that were below investment grade or not rated totaled $32.6 billion and $29.6 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
(in millions)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
December 31, 2013
Bonds available for sale:
U.S. government and government sponsored entities	$	1,101	$	34	$	42	$	5	$	1,143	$	39
Obligations of states, municipalities and political subdivisions		6,134		379		376		67		6,510		446
Non-U.S. governments		4,102		217		710		141		4,812		358
Corporate debt		38,495		2,251		4,926		647		43,421		2,898
RMBS		8,543		349		1,217		124		9,760		473
CMBS		3,191		176		1,215		116		4,406		292
CDO/ABS		2,845		62		915		80		3,760		142
Total bonds available for sale		64,411		3,468		9,401		1,180		73,812		4,648
Equity securities available for sale:
Common stock		96		14		–		–		96		14
Preferred stock		5		1		–		–		5		1
Mutual funds		369		24		–		–		369		24
Total equity securities available for sale		470		39		–		–		470		39
Total	$	64,881	$	3,507	$	9,401	$	1,180	$	74,282	$	4,687
December 31, 2012
Bonds available for sale:
U.S. government and government sponsored entities	$	153	$	1	$	–	$	–	$	153	$	1
Obligations of states, municipalities and political subdivisions		692		11		114		11		806		22
Non-U.S. governments		1,555		19		442		25		1,997		44
Corporate debt		8,483		201		3,229		263		11,712		464
RMBS		597		28		1,661		289		2,258		317
CMBS		404		8		1,481		296		1,885		304
CDO/ABS		393		3		1,624		241		2,017		244
Total bonds available for sale		12,277		271		8,551		1,125		20,828		1,396
Equity securities available for sale:
Common stock		247		36		18		1		265		37
Mutual funds		3		–		–		–		3		–
Total equity securities available for sale		250		36		18		1		268		37
Total	$	12,527	$	307	$	8,569	$	1,126	$	21,096	$	1,433

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

	Total Fixed Maturity Securities Available for Sale				Fixed Maturity Securities Available for Sale in a Loss Position
December 31, 2013 (in millions)
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	10,470	$	10,678	$	739	$	726
Due after one year through five years		50,698		53,410		7,620		7,471
Due after five years through ten years		70,096		72,386		22,534		21,445
Due after ten years		62,030		63,162		28,734		26,244
Mortgage-backed, asset-backed and collateralized		55,237		58,638		18,833		17,926
Total	$	248,531	$	258,274	$	78,460	$	73,812

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

	Years Ended December 31,
	2013				2012				2011
(in millions)	Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses		Gross Gains		Gross Realized Losses
Fixed maturity securities	$	2,634	$	202	$	2,778	$	171	$	2,042	$	129
Equity securities		130		19		515		31		199		35
Total	$	2,764	$	221	$	3,293	$	202	$	2,241	$	164

The fair value of AIG's other securities

	December 31, 2013					December 31, 2012
(in millions)	Fair Value		Percent of Total			Fair Value		Percent of Total
Fixed maturity securities:
U.S. government and government sponsored entities	$	5,723		24	%	$	6,794		27	%
Obligations of states, territories and political subdivisions		121		1			–		–
Non-U.S. governments		2		–			2		–
Corporate debt		1,169		5			1,320		5
Mortgage-backed, asset-backed and collateralized:
RMBS		2,263		10			1,727		7
CMBS		1,353		6			2,227		9
CDO/ABS and other collateralized*		11,985		51			12,506		50
Total mortgage-backed, asset-backed and collateralized		15,601		67			16,460		66
Other		7		–			8		–
Total fixed maturity securities		22,623		97			24,584		98
Equity securities		834		3			662		2
Total	$	23,457		100	%	$	25,246		100	%

*     Includes $1.0 billion and $0.9 billion of U.S. Government agency backed ABS at December 31, 2013 and 2012, respectively.

Components of other invested assets

December 31,(in millions)	2013		2012
Alternative investments(a)	$	19,709	$	18,990
Mutual funds		85		128
Investment real estate(b)		3,113		3,195
Aircraft asset investments(c)		763		984
Investments in life settlements		3,601		4,357
All other investments		1,388		1,463
Total	$	28,659	$	29,117

(a)  Includes hedge funds, private equity funds, affordable housing partnerships, investments in life settlements and other investment partnerships.

(b)  Net of accumulated depreciation of $513 million and $469 million in 2013 and 2012, respectively.

(c)  Consist primarily of AIG Life and Retirement investments in aircraft equipment held in consolidated trusts.

The carrying value and ownership percentage of AIA and equity method investments

	2013			2012
(in millions, except percentages)	Carrying Value		Ownership Percentage	Carrying Value		Ownership Percentage
All other equity method investments	$	12,921	Various	$	11,544		Various

Schedule of information regarding investments in life settlements

	December 31, 2013
(dollars in millions)	Number of Contracts		Carrying Value		Face Value (Death Benefits)
Remaining Life Expectancy of Insureds:
0 – 1 year		1	$	–	$	–
1 – 2 years		9		5		10
2 – 3 years		26		14		29
3 – 4 years		72		41		84
4 – 5 years		138		119		289
Thereafter		5,030		3,422		16,328
Total		5,276	$	3,601	$	16,740

Components of net investment income

Years Ended December 31, (in millions)	2013		2012		2011
Fixed maturity securities, including short-term investments	$	12,044	$	12,592	$	11,814
Change in fair value of ML II		–		246		42
Change in fair value of ML III		–		2,888		(646	)
Change in fair value of AIA securities including realized gain		–		2,069		1,289
Change in the fair value of MetLife securities prior to their sale		–		–		(157	)
Equity securities		178		162		92
Interest on mortgage and other loans		1,144		1,083		1,065
Alternative investments*		2,803		1,769		1,622
Real estate		128		127		107
Other investments		61		11		36
Total investment income		16,358		20,947		15,264
Investment expenses		548		604		509
Net investment income	$	15,810	$	20,343	$	14,755

*     Includes hedge funds, private equity funds, affordable housing partnerships, investments in life settlements and other investment partnerships.

Components of net realized capital gains (losses)

Years Ended December 31, (in millions)	2013			2012			2011
Sales of fixed maturity securities	$	2,432		$	2,607		$	1,913
Sales of equity securities		111			484			164
Other-than-temporary impairments:
Severity		(6	)		(44	)		(51	)
Change in intent		(48	)		(62	)		(12	)
Foreign currency declines		(1	)		(8	)		(32	)
Issuer-specific credit events		(265	)		(1,048	)		(1,165	)
Adverse projected cash flows		(7	)		(5	)		(20	)
Provision for loan losses		(26	)		104			48
Change in the fair value of MetLife securities prior to their sale		–			–			(191	)
Foreign exchange transactions		151			(233	)		(96	)
Derivative instruments		92			(685	)		447
Impairments of investments in life settlements		(971	)		(309	)		(312	)
Other		282			129			(2	)
Net realized capital gains	$	1,744		$	930		$	691

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

	Years Ended December 31,
(in millions)	2013			2012
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturities	$	(14,066	)	$	10,599
Equity securities		360			(232	)
Other investments		101			343
Total increase (decrease) in unrealized appreciation (depreciation) of investments*	$	(13,605	)	$	10,710

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

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

Years Ended December 31, (in millions)	2013			2012			2011
Balance, beginning of year	$	5,164		$	6,504		$	6,786
Increases due to:
Credit impairments on new securities subject to impairment losses		47			194			235
Additional credit impairments on previously impaired securities		78			483			735
Reductions due to:
Credit impaired securities fully disposed for which there was no prior intent or requirement to sell		(643	)		(1,105	)		(529	)
Credit impaired securities for which there is a current intent or anticipated requirement to sell		–			(5	)		–
Accretion on securities previously impaired due to credit*		(774	)		(915	)		(544	)
Hybrid securities with embedded credit derivatives reclassified to other bond securities		–			–			(179	)
Other		–			8			–
Balance, end of year	$	3,872		$	5,164		$	6,504

*     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)	$	25,374
Cash flows expected to be collected*		20,037
Recorded investment in acquired securities		13,077

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

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

(in millions)	December 31, 2013		December 31, 2012
Outstanding principal balance	$	14,741	$	11,791
Amortized cost		10,110		7,718
Fair value		11,338		8,823

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

Years Ended December 31, (in millions)	2013			2012
Balance, beginning of year	$	4,766		$	4,135
Newly purchased PCI securities		1,773			1,620
Disposals		(60	)		(298	)
Accretion		(719	)		(672	)
Effect of changes in interest rate indices		302			(213	)
Net reclassification from non-accretable difference, including effects of prepayments		878			194
Balance, end of year	$	6,940		$	4,766

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

(in millions)	December 31, 2013		December 31, 2012
Securities available for sale	$	3,907	$	8,180
Other securities		2,766		2,985

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

(in millions)	December 31, 2013		December 31, 2012
Securities collateral pledged to us	$	8,878	$	11,039
Amount repledged by us		71		33

AIA

Investments

Summarized financial information of AIG's equity method investees

Year Ended December 31, (in millions)	2011
Operating results:
Total revenues	$	13,802
Total expenses		(12,436	)
Net income	$	1,366

Other equity method investees

Investments

Summarized financial information of AIG's equity method investees

Years Ended December 31, (in millions)	2013			2012			2011
Operating results:
Total revenues	$	19,181		$	9,438		$	12,749
Total expenses		(5,515	)		(5,183	)		(3,530	)
Net income	$	13,666		$	4,255		$	9,219

At December 31, (in millions)	2013			2012
Balance sheet:
Total assets	$	150,586		$	139,681
Total liabilities	$	(25,134	)	$	(26,529	)