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DERIVATIVES AND HEDGE ACCOUNTING (Tables)
 9 Months Ended
Sep. 30, 2015
DERIVATIVES AND HEDGE ACCOUNTING  
Notional amounts and fair values of derivative instruments
September 30, 2015December 31, 2014
Gross Derivative AssetsGross Derivative LiabilitiesGross Derivative AssetsGross Derivative Liabilities
NotionalFairNotionalFairNotionalFairNotionalFair
(in millions)AmountValueAmountValueAmountValueAmountValue
Derivatives designated as
hedging instruments:(a)
Interest rate contracts$915$5$25$2$155$-$25$2
Foreign exchange contracts2,3801961,40168611251,794239
Equity contracts15211357110413
Derivatives not designated
as hedging instruments:(a)
Interest rate contracts60,5214,07851,8652,89365,0703,74345,2513,183
Foreign exchange contracts11,9046409,1111,14713,6678158,5161,251
Equity contracts(b)6,59817348,0332,3417,56520642,3871,615
Commodity contracts----15-116
Credit contracts(c)431,323531545,288982
Other contracts(d)35,974272507936,1553153890
Total derivatives, gross$118,311$5,124$112,121$7,066$123,250$4,825$103,914$7,381
Counterparty netting(e)(1,691)(1,691)(2,102)(2,102)
Cash collateral(f)(2,129)(910)(1,119)(1,429)
Total derivatives, net1,3044,4651,6043,850
Less: Bifurcated embedded derivatives-2,300-1,577
Total derivatives on condensed
consolidated balance sheets(g)$1,304$2,165$1,604$2,273

(a) Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b) Notional amount of derivative assets and fair value of derivative assets, related to bifurcated embedded derivatives, were zero at both September 30, 2015 and December 31, 2014. Notional amount of derivative liabilities and fair value of derivative liabilities, related to bifurcated embedded derivatives, was $42.7 billion and $2.3 billion, respectively, at September 30, 2015, and $39.3 billion and $1.5 billion, respectively, at December 31, 2014. A bifurcated embedded derivative is generally presented with the host contract in the Condensed Consolidated Balance Sheets.

(c) As of September 30, 2015 and December 31, 2014, includes super senior multi-sector CDOs with a net notional amount of $1.1 billion and $2.6 billion (fair value liability of $504 million and $947 million), respectively. The expected weighted average maturity as of September 30, 2015 is six years. Because of long-term maturities of the credit default swaps (CDSs) in the portfolio, we are unable to make reasonable estimates of the periods during which any payments would be made. However, the net notional amount represents the maximum exposure to loss on the portfolio. As of September 30, 2015, there were no super senior corporate debt/CLOs remaining. As of December 31, 2014, includes super senior corporate debt/CLOs with a net notional amount of $2.5 billion (fair value liability of $7 million).

(d) Consists primarily of contracts with multiple underlying exposures.

(e) Represents netting of derivative exposures covered by a qualifying master netting agreement.

(f) Represents cash collateral posted and received that is eligible for netting.

(g) Derivative assets and liabilities are recorded in Other Assets and Liabilities, respectively.
Gain (loss) recognized in earnings on AIG's derivative instruments in fair value hedging relationships in the Consolidated Statements of Income
Gains/(Losses) Recognized in Earnings for:Including Gains/(Losses) Attributable to:
HedgingHedgedHedgeExcluded
(in millions)Derivatives(a)ItemsIneffectivenessComponentsOther(b)
Three Months Ended September 30, 2015
Interest rate contracts:
Realized capital gains/(losses)$1$(1)$-$-$-
Interest credited to policyholder
account balances-----
Other income-2--2
Gain/(Loss) on extinguishment of debt-1--1
Foreign exchange contracts:
Realized capital gains/(losses)81(67)-14-
Interest credited to policyholder
account balances-----
Other income-4--4
Gain/(Loss) on extinguishment of debt-----
Equity contracts:
Realized capital gains/(losses)(4)3-(1)-
Three Months Ended September 30, 2014
Interest rate contracts:
Realized capital gains/(losses)$-$-$-$-$-
Interest credited to policyholder
account balances-----
Other income-10--10
Gain/(Loss) on extinguishment of debt-----

Foreign exchange contracts:
Realized capital gains/(losses)(76)91-96
Interest credited to policyholder
account balances-(1)--(1)
Other income-7--7
Gain/(Loss) on extinguishment of debt-----
Equity contracts
Realized capital gains/(losses)4(6)-(2)-
Nine Months Ended September 30, 2015
Interest rate contracts:
Realized capital gains/(losses)$1$(1)$-$-$-
Interest credited to policyholder
account balances-----
Other income-7--7
Gain/(Loss) on extinguishment of debt-14--14
Foreign exchange contracts:
Realized capital gains/(losses)152(123)-272
Interest credited to policyholder
account balances-(1)--(1)
Other income-14--14
Gain/(Loss) on extinguishment of debt-17--17
Equity contracts:
Realized capital gains/(losses)(23)21-(2)-
Nine Months Ended September 30, 2014
Interest rate contracts:
Realized capital gains/(losses)$1$(2)$-$-$(1)
Interest credited to policyholder
account balances1(1)---
Other income-38--38
Gain/(Loss) on extinguishment of debt-50--50
Foreign exchange contracts:
Realized capital gains/(losses)(20)32-(3)15
Interest credited to policyholder
account balances-(2)--(2)
Other income-7--7
Gain/(Loss) on extinguishment of debt-----
Equity contracts
Realized capital gains/(losses)(10)8-(2)-

(a) The amounts presented do not include the periodic net coupon settlements of the derivative contract or the coupon income (expense) related to the hedged item.

(b) Represents accretion/amortization of opening fair value of the hedged item at inception of hedge relationship, amortization of basis adjustment on hedged item following the discontinuation of hedge accounting, and the release of debt basis adjustment following the repurchase of issued debt that was part of previously-discontinued fair value hedge relationship.
Effect of AIG's derivative instruments not designated as hedging instruments in the Consolidated Statements of Income
Gains (Losses) Recognized in Earnings
Three Months EndedNine Months Ended
September 30,September 30,
(in millions)2015201420152014
By Derivative Type:
Interest rate contracts$469$222$402$409
Foreign exchange contracts51253321276
Equity contracts*(586)(159)(39)(584)
Commodity contracts-(2)(1)(1)
Credit contracts1175171229
Other contracts71446083
Total$16$433$914$412
By Classification:
Policy fees$20$19$59$49
Net investment income6242020
Net realized capital gains (losses)2079496(114)
Other income (losses)(36)309334447
Policyholder benefits and claims incurred62510
Total$16$433$914$412

* Includes embedded derivative losses of $(816) million and $(147) million for the three- and nine-month periods ended September 30, 2015, respectively, and embedded derivative losses of $(86) million and $(428) million for the three- and nine-month periods ended September 30, 2014, respectively.