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INVESTMENTS (Tables)
 9 Months Ended
Sep. 30, 2017
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-
AmortizedGrossGrossTemporary
Cost orUnrealizedUnrealizedFairImpairments
(in millions)CostGainsLossesValuein AOCI(a)
September 30, 2017
Bonds available for sale:
U.S. government and government sponsored entities$2,252$152$(20)$2,384$-
Obligations of states, municipalities and political subdivisions17,6371,235(41)18,831-
Non-U.S. governments14,885808(100)15,593-
Corporate debt126,0148,519(848)133,68510
Mortgage-backed, asset-backed and collateralized:
RMBS34,2703,421(182)37,5091,737
CMBS13,154456(92)13,51852
CDO/ABS15,931374(54)16,25129
Total mortgage-backed, asset-backed and collateralized63,3554,251(328)67,2781,818
Total bonds available for sale(b)224,14314,965(1,337)237,7711,828
Equity securities available for sale:
Common stock708357(9)1,056-
Preferred stock50473-577-
Mutual funds6212-74-
Total equity securities available for sale1,274442(9)1,707-
Total$225,417$15,407$(1,346)$239,478$1,828
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 subdivisions24,0251,001(254)24,772-
Non-U.S. governments14,018773(256)14,535-
Corporate debt126,6487,271(1,739)132,180(31)
Mortgage-backed, asset-backed and collateralized:
RMBS35,3112,541(478)37,3741,212
CMBS14,054409(192)14,27145
CDO/ABS16,315278(180)16,41339
Total mortgage-backed, asset-backed and collateralized65,6803,228(850)68,0581,296
Total bonds available for sale(b)232,24112,421(3,125)241,5371,265
Equity securities available for sale:
Common stock708369(12)1,065-
Preferred stock7484-752-
Mutual funds24123(3)261-
Total equity securities available for sale1,697396(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 September 30, 2017 and December 31, 2016, bonds available for sale held by us that were below investment grade or not rated totaled $31.2 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 Months12 Months or MoreTotal
GrossGrossGross
FairUnrealizedFairUnrealizedFairUnrealized
(in millions)ValueLossesValueLossesValueLosses
September 30, 2017
Bonds available for sale:
U.S. government and government sponsored entities$766$10$237$10$1,003$20
Obligations of states, municipalities and political
subdivisions8719638321,50941
Non-U.S. governments2,35417793833,147100
Corporate debt13,1552727,98457621,139848
RMBS5,861992,287838,148182
CMBS2,663371,173553,83692
CDO/ABS1,86424755302,61954
Total bonds available for sale27,53446813,86786941,4011,337
Equity securities available for sale:
Common stock14991-1509
Mutual funds6---6-
Total equity securities available for sale15591-1569
Total$27,689$477$13,868$869$41,557$1,346
December 31, 2016
Bonds available for sale:
U.S. government and government sponsored entities$720$26$-$-$720$26
Obligations of states, municipalities and political
subdivisions5,814221231336,045254
Non-U.S. governments3,865162489944,354256
Corporate debt28,1841,0136,08072634,2641,739
RMBS8,7942524,04522612,839478
CMBS4,469152479404,948192
CDO/ABS5,3621021,961787,323180
Total bonds available for sale57,2081,92813,2851,19770,4933,125
Equity securities available for sale:
Common stock12512--12512
Mutual funds643--643
Total equity securities available for sale18915--18915
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 SecuritiesFixed Maturity Securities in a Loss
Available for Sale Position Available for Sale
(in millions)Amortized CostFair Value Amortized CostFair Value
September 30, 2017
Due in one year or less$8,929$9,129$1,400$1,386
Due after one year through five years47,23749,6515,2605,134
Due after five years through ten years41,57643,1018,8418,474
Due after ten years63,04668,61212,30611,804
Mortgage-backed, asset-backed and collateralized63,35567,27814,93114,603
Total$224,143$237,771$42,738$41,401
December 31, 2016
Due in one year or less$7,796$7,994$604$581
Due after one year through five years49,20051,9586,0025,841
Due after five years through ten years43,30844,22616,04515,332
Due after ten years66,25769,30125,00723,629
Mortgage-backed, asset-backed and collateralized65,68068,05825,96025,110
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 September 30,Nine Months Ended September 30,
2017201620172016
GrossGrossGrossGrossGrossGrossGrossGross
RealizedRealizedRealizedRealizedRealizedRealizedRealizedRealized
(in millions)GainsLossesGainsLossesGainsLossesGainsLosses
Fixed maturity securities$93$39$189$54$637$263$593$696
Equity securities62541106201,06615
Total$99$41$243$55$743$283$1,659$711
The fair value of AIG's other securities
September 30, 2017December 31, 2016
FairPercentFairPercent
(in millions) Value of TotalValue of Total
Fixed maturity securities:
U.S. government and government sponsored entities$2,82922%$2,93920%
Obligations of states, municipalities and political subdivisions----
Non-U.S. governments55-51-
Corporate debt1,862141,77212
Mortgage-backed, asset-backed and collateralized:
RMBS1,869142,02514
CMBS55646034
CDO/ABS and other collateralized*5,482426,60847
Total mortgage-backed, asset-backed and collateralized7,907609,23665
Total fixed maturity securities12,6539613,99897
Equity securities53844823
Total $13,191100%$14,480100%

* Includes $270 million and $421 million of U.S. government agency-backed ABS at September 30, 2017 and December 31, 2016, respectively.
Components of other invested assets
September 30,December 31,
(in millions)20172016
Alternative investments(a) (b)$12,042$13,379
Investment real estate(c)7,4656,900
Aircraft asset investments(d)218321
Investments in life settlements1,7592,516
All other investments1,1061,422
Total$22,590$24,538

(a) At September 30, 2017, includes hedge funds of $6.3 billion, private equity funds of $5.2 billion, and affordable housing partnerships of $558 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 45 percent and 32 percent of our hedge fund portfolio is available for redemption in 2017 and 2018, respectively, an additional 17 percent will be available between 2019 and 2024.

(c) Net of accumulated depreciation of $510 million and $451 million in September 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 EndedNine Months Ended
September 30,September 30,
(in millions)2017201620172016
Fixed maturity securities, including short-term investments$2,697$2,935$8,326$8,863
Equity securities52522(19)
Interest on mortgage and other loans4143791,2061,144
Alternative investments*3553651,174309
Real estate5137131125
Other investments30157246395
Total investment income3,5523,89811,10510,817
Investment expenses136115390338
Net investment income$3,416$3,783$10,715$10,479

* 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 EndedNine Months Ended
September 30,September 30,
(in millions)2017201620172016
Sales of fixed maturity securities$54$135$374$(103)
Sales of equity securities453861,051
Other-than-temporary impairments:
Severity-(10)(2)(15)
Change in intent(1)(2)(9)(35)
Foreign currency declines(1)(7)(11)(14)
Issuer-specific credit events(85)(77)(197)(303)
Adverse projected cash flows(1)(6)(4)(47)
Provision for loan losses(38)8(56)8
Foreign exchange transactions66(639)299(1,197)
Variable annuity embedded derivatives, net of related hedges(430)(309)(1,023)(482)
All other derivatives and hedge accounting(136)83(217)353
Impairments on investments in life settlements(273)(80)(360)(329)
Other*(81)8614284
Net realized capital losses$(922)$(765)$(1,106)$(829)

* 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 nine months ended September 30, 2016.

Schedule of increase (decrease) in unrealized appreciation (depreciation) of available for sale securities and other investments
Three Months EndedNine Months Ended
September 30,September 30,
(in millions)2017201620172016
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities$1,059$1,595$4,332$11,957
Equity securities9(19)52(1,159)
Other investments10(29)(127)(243)
Total Increase (decrease) in unrealized appreciation (depreciation) of investments*$1,078$1,547$4,257$10,555

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

Credit impairments recognized in earnings for available for sale fixed maturity securities
Three Months EndedNine Months Ended
September 30,September 30,
(in millions)2017201620172016
Balance, beginning of period$762$1,298$1,098$1,747
Increases due to:
Credit impairments on new securities subject to impairment losses5823116146
Additional credit impairments on previously impaired securities123749166
Reductions due to:
Credit impaired securities fully disposed of for which there was no
prior intent or requirement to sell(44)(39)(99)(282)
Accretion on securities previously impaired due to credit*(147)(187)(523)(645)
Impairments on securities reclassified to Assets held for sale-(2)-(2)
Balance, end of period$641$1,130$641$1,130

* 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)$36,228
Cash flows expected to be collected*29,649
Recorded investment in acquired securities19,944

* Represents undiscounted expected cash flows, including both principal and interest.
Schedule of Purchased Credit Impaired (PCI) Securities, at reporting date
(in millions)September 30, 2017December 31, 2016
Outstanding principal balance$14,977$16,728
Amortized cost10,63611,987
Fair value12,47012,922
Activity for accretable yield on Purchased Credit Impaired (PCI) Securities
Three Months EndedNine Months Ended
September 30,September 30,
(in millions)2017201620172016
Balance, beginning of period$7,465$7,043$7,498$6,846
Newly purchased PCI securities16177117628
Disposals--(18)-
Accretion(193)(214)(609)(637)
Effect of changes in interest rate indices(74)(196)(188)(435)
Net reclassification from (to) non-accretable difference,
including effects of prepayments172158586566
Balance, end of period$7,386$6,968$7,386$6,968
Schedule of fair value of securities pledged to counterparties under secured financing transactions
(in millions)September 30, 2017December 31, 2016
Fixed maturity securities available for sale$2,988$2,389
Other bond securities, at fair value$1,869$1,799
Transfer of Certain Financial Assets Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
(in millions)Overnight and Continuousup to 30 days31 - 90 days91 - 364 days365 days or greaterTotal
September 30, 2017
Bonds available for sale:
Non-U.S. governments$-$40$-$-$-$40
Corporate debt-174411-72
Other bond securities:
U.S. government and government sponsored entities33----33
Non-U.S. governments---55-55
Corporate debt-4221,089270-1,781
Total$33$479$1,133$336$-$1,981
December 31, 2016
Other bond securities:
Non-U.S. governments$-$-$-$51$-$51
Corporate debt-163860725-1,748
Total$-$163$860$776$-$1,799

Remaining Contractual Maturity of the Agreements
(in millions)Overnight and Continuousup to 30 days31 - 90 days91 - 364 days365 days or greaterTotal
September 30, 2017
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions$-$-$-$-$-$-
Non-U.S. governments-68---68
Corporate debt-7041,608496-2,808
CMBS------
Total$-$772$1,608$496$-$2,876
December 31, 2016
Bonds available for sale:
Obligations of states, municipalities and political
subdivisions$-$21$-$-$-$21
Non-U.S. governments--50--50
Corporate debt-7911,466--2,257
CMBS--61--61
Total$-$812$1,577$-$-$2,389
Schedule of fair value of securities pledged to the entity under reverse repurchase agreements
(in millions)September 30, 2017December 31, 2016
Securities collateral pledged to us$2,054$1,434
Amount sold or repledged by us$80$11