INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2011

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, 2011
Bonds available for sale:
	U.S. government and government sponsored entities		$	5,661	$	418	$	(1	)	$	6,078	$	-
	Obligations of states, municipalities and political subdivisions			35,017		2,554		(73	)		37,498		(28	)
	Non-U.S. governments			24,568		1,269		(102	)		25,735		-
	Corporate debt			134,974		11,569		(1,725	)		144,818		115
	Mortgage-backed, asset-backed and collateralized:
		RMBS		34,780		1,387		(1,563	)		34,604		(716	)
		CMBS		8,449		470		(973	)		7,946		(276	)
		CDO/ABS		7,321		454		(473	)		7,302		49
	Total mortgage-backed, asset-backed and collateralized			50,550		2,311		(3,009	)		49,852		(943	)
Total bonds available for sale(b)				250,770		18,121		(4,910	)		263,981		(856	)
Equity securities available for sale:
	Common stock			1,682		1,839		(100	)		3,421		-
	Preferred stock			83		60		-			143		-
	Mutual funds			55		6		(1	)		60		-
Total equity securities available for sale				1,820		1,905		(101	)		3,624		-
Other invested assets carried at fair value(c)				5,155		1,611		(269	)		6,497		-
Total			$	257,745	$	21,637	$	(5,280	)	$	274,102	$	(856	)
December 31, 2010
Bonds available for sale:
	U.S. government and government sponsored entities		$	7,239	$	184	$	(73	)	$	7,350	$	-
	Obligations of states, municipalities and political subdivisions			45,297		1,725		(402	)		46,620		2
	Non-U.S. governments			16,142		741		(75	)		16,808		(28	)
	Corporate debt			117,367		8,725		(1,198	)		124,894		99
	Mortgage-backed, asset-backed and collateralized:
		RMBS		20,661		700		(1,553	)		19,808		(648	)
		CMBS		7,320		240		(1,149	)		6,411		(218	)
		CDO/ABS		6,643		402		(634	)		6,411		32
	Total mortgage-backed, asset-backed and collateralized			34,624		1,342		(3,336	)		32,630		(834	)
Total bonds available for sale(b)				220,669		12,717		(5,084	)		228,302		(761	)
Equity securities available for sale:
	Common stock			1,820		1,931		(52	)		3,699		-
	Preferred stock			400		88		(1	)		487		-
	Mutual funds			351		46		(2	)		395		-
Total equity securities available for sale				2,571		2,065		(55	)		4,581		-
Other invested assets carried at fair value(c)				5,392		1,256		(60	)		6,588		-
Total(d)			$	228,632	$	16,038	$	(5,199	)	$	239,471	$	(761	)

(a)

Represents the amount of other-than-temporary impairment losses recognized in Accumulated other comprehensive income. This 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, 2011 and 2010, bonds available for sale held by AIG that were below investment grade or not rated totaled $24.2 billion and $18.6 billion, respectively.

(c)

Represents private equity and hedge fund investments carried at fair value for which unrealized gains and losses are required to be recognized in other comprehensive income.

(d)

Excludes $80.5 billion of available for sale securities at fair value from businesses held for sale at December 31, 2010. Net unrealized gain attributable to businesses held for sale totaled $604 million at December 31, 2010. See Note 4 herein.

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, 2011
Bonds available for sale:
	U.S. government and government sponsored entities	$	142	$	1	$	-	$	-	$	142	$	1
	Obligations of states, municipalities and political subdivisions		174		1		669		72		843		73
	Non-U.S. governments		3,992		67		424		35		4,416		102
	Corporate debt		18,099		937		5,907		788		24,006		1,725
	RMBS		10,624		714		4,148		849		14,772		1,563
	CMBS		1,697		185		1,724		788		3,421		973
	CDO/ABS		1,680		50		1,682		423		3,362		473
Total bonds available for sale			36,408		1,955		14,554		2,955		50,962		4,910
Equity securities available for sale:
	Common stock		608		100		-		-		608		100
	Preferred stock		6		-		-		-		6		-
	Mutual funds		2		1		-		-		2		1
Total equity securities available for sale			616		101		-		-		616		101
Total		$	37,024	$	2,056	$	14,554	$	2,955	$	51,578	$	5,011

		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, 2010*
Bonds available for sale:
	U.S. government and government sponsored entities	$	2,142	$	73	$	-	$	-	$	2,142	$	73
	Obligations of states, municipalities and political subdivisions		9,300		296		646		106		9,946		402
	Non-U.S. governments		1,427		34		335		41		1,762		75
	Corporate debt		18,246		579		7,343		619		25,589		1,198
	RMBS		4,461		105		6,178		1,448		10,639		1,553
	CMBS		462		19		3,014		1,130		3,476		1,149
	CDO/ABS		996		48		2,603		586		3,599		634
Total bonds available for sale			37,034		1,154		20,119		3,930		57,153		5,084
Equity securities available for sale:
	Common stock		576		52		-		-		576		52
	Preferred stock		11		1		-		-		11		1
	Mutual funds		65		2		-		-		65		2
Total equity securities available for sale			652		55		-		-		652		55
Total		$	37,686	$	1,209	$	20,119	$	3,930	$	57,805	$	5,139

*

Excludes fixed maturity and equity securities of businesses held for sale. See Note 4 herein.

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

December 31, 2011	Total Fixed Maturity Available for Sale Securities				Fixed Maturity Securities in a Loss Position
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	9,967	$	10,101	$	1,884	$	1,866
Due after one year through five years		58,207		60,179		12,911		12,302
Due after five years through ten years		70,031		74,362		10,928		10,253
Due after ten years		62,015		69,487		5,585		4,986
Mortgage-backed, asset-backed and collateralized		50,550		49,852		24,564		21,555
Total	$	250,770	$	263,981	$	55,872	$	50,962

The fair value of AIG's trading securities

			December 31, 2011				December 31, 2010
(in millions)			Fair Value		Percent of Total		Fair Value		Percent of Total
Fixed Maturities:
	U.S. government and government sponsored entities		$	7,504	31	%	$	6,902	21	%
	Non-U.S. governments			35	-			125	-
	Corporate debt			816	3			912	3
	State, territories and political subdivisions			257	1			316	1
	Mortgage-backed, asset-backed and collateralized*:
		RMBS		1,648	7			1,928	6
		CMBS		1,837	7			2,078	6
		CDO/ABS and other collateralized		5,282	22			6,331	19
Total mortgage-backed, asset-backed and collateralized				8,767	36			10,337	31
ML II				1,321	5			1,279	4
ML III				5,664	23			6,311	19
Total fixed maturities				24,364	99			26,182	79
Equity securities:
	MetLife			-	-			6,494	20
	All other			125	1			158	1
Total equity securities				125	1			6,652	21
Total			$	24,489	100	%	$	32,834	100	%

*

Primarily United Kingdom and European structured products.

Components of other invested assets

December 31, (in millions)		2011		2010
Category:
	Alternative investments(a)	$	18,793	$	19,463
	Mutual funds		258		1,718
	Investment real estate(b)		2,778		3,196
	Aircraft asset investments(c)		1,100		1,381
	Life settlement contracts		4,006		3,834
	Retained interest in AIA		12,367		11,134
	All other investments		1,442		1,484
Other invested assets		$	40,744	$	42,210

(a)

Includes hedge funds, private equity funds, affordable housing partnerships and other investment partnerships.

(b)

Net of accumulated depreciation of $428 million and $536 million in 2011 and 2010, respectively.

(c)

Consist primarily of SunAmerica investments in aircraft equipment held in trusts.

Schedule of information regarding life settlement contracts

		December 31, 2011
(dollars in millions)		Number of Contracts		Carrying Value		Face Value (Death Benefits)
Remaining Life Expectancy of Insureds:
	0 - 1 year		6	$	2	$	4
	1 - 2 years		43		20		32
	2 - 3 years		108		78		165
	3 - 4 years		208		232		528
	4 - 5 years		274		232		616
	Thereafter		5,262		3,442		16,755
	Total		5,901	$	4,006	$	18,100

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

	2011					2010
(in millions, except percentages)	Carrying Value		Ownership Percentage			Carrying Value		Ownership Percentage
AIA	$	12,367		33	%	$	11,134		33	%
All other equity method investments		9,026		Various			9,187		Various
Total	$	21,393				$	20,321

Investments

Components of net investment income

Years Ended December 31,
(in millions)	2011			2010			2009
Fixed maturity securities, including short-term investments	$	11,814		$	14,445		$	14,535
Change in fair value of ML II		42			513			(25	)
Change in fair value of ML III		(646	)		1,792			419
Change in fair value of AIA securities		1,289			(638	)		-
Change in fair value of MetLife securities prior to their sale		(157	)		665			-
Equity securities		92			234			186
Interest on mortgage and other loans		1,065			1,268			1,347
Alternative investments*		1,213			1,602			4
Mutual funds		47			(25	)		315
Real estate		107			126			139
Other investments		398			557			306
Total investment income before policyholder income and trading gains		15,264			20,539			17,226
Policyholder investment income and trading gains		-			886			2,305
Total investment income		15,264			21,425			19,531
Investment expenses		509			491			539
Net investment income	$	14,755		$	20,934		$	18,992

*

Includes hedge funds, private equity funds and affordable housing partnerships.

Components of net realized capital gains (losses) and the increase (decrease) in unrealized appreciation

Years Ended December 31, (in millions)		2011			2010			2009
Sales of fixed maturity securities		$	1,913		$	1,846		$	849
Sales of equity securities			164			725			303
Other-than-temporary impairments:
	Severity		(51	)		(73	)		(1,510	)
	Change in intent		(12	)		(441	)		(958	)
	Foreign currency declines		(32	)		(63	)		(112	)
	Issuer-specific credit events		(1,165	)		(2,457	)		(3,979	)
	Adverse projected cash flows		(20	)		(5	)		(137	)
Provision for loan losses			48			(304	)		(614	)
Change in fair value of MetLife securities prior to the sale			(191	)		315			-
Foreign exchange transactions			(116	)		178			(616	)
Derivative instruments			297			138			1,724
Other			(314	)		(34	)		(160	)
Net realized capital gains (losses)		$	521		$	(175	)	$	(5,210	)
Increase in unrealized appreciation of investments:
	Fixed maturities	$	5,578		$	8,677		$	29,803
	Equity securities		(206	)		473			2,352
	Other investments		146			156			141
Increase in unrealized appreciation*		$	5,518		$	9,306		$	32,296

*

Excludes net unrealized gains attributable to businesses held for sale of $604 million and $925 million at December 31, 2010 and December 31, 2009, respectively.

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

	Years Ended December 31,
	2011				2010				2009
(in millions)	Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses		Gross Realized Gains		Gross Realized Losses
Fixed maturities	$	2,042	$	129	$	2,138	$	292	$	1,497	$	648
Equity securities		199		35		811		86		516		213
Total	$	2,241	$	164	$	2,949	$	378	$	2,013	$	861

Credit impairments recognized in earnings for available for sale fixed maturity securities held by AIG

(in millions)			Year Ended December 31, 2011			Year Ended December 31, 2010			Nine Months Ended December 31, 2009
Balance, beginning of year			$	6,786		$	7,803		$	-
	Increases due to:
		Credit losses remaining in accumulated deficit related to the adoption of new other-than-temporary impairment standard		-			-			7,182
		Credit impairments on new securities subject to impairment losses		235			627			550
		Additional credit impairments on previously impaired securities		735			1,294			1,523
	Reductions due to:
		Credit impaired securities fully disposed for which there was no prior intent or requirement to sell		(529	)		(1,039	)		(967	)
		Credit impaired securities for which there is a current intent or anticipated requirement to sell		-			(503	)		-
		Accretion on securities previously impaired due to credit(b)		(544	)		(332	)		(221	)
		Hybrid securities with embedded credit derivatives reclassified to Bond trading securities		(179	)		(748	)		-
	Other(c)			-			(316	)		(264	)
Balance, end of year			$	6,504		$	6,786		$	7,803

(a)

Includes structured, corporate, municipal and sovereign fixed maturity securities.

(b)

Represents accretion recognized due to changes in cash flows expected to be collected over the remaining expected term of the credit impaired securities as well as the accretion due to the passage of time.

(c)

Reflects the deconsolidation of AIA and sale of ALICO and AGF in 2010.

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

(in millions)	At Date of Acquisition
Contractually required payments (principal and interest)	$	14,518
Cash flows expected to be collected*		11,520
Recorded investment in acquired securities		7,577

*

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

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

(in millions)	December 31, 2011
Outstanding principal balance	$	10,119
Amortized cost		7,006
Fair value		6,535

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

Year Ended December 31, 2011 (in millions)
Balance, beginning of year		$	-
	Newly purchased PCI securities		3,943
	Accretion		(324	)
	Effect of changes in interest rate indices		(62	)
	Net reclassification from non-accretable difference, including effects of prepayments		578
Balance, end of year		$	4,135

AIA

Investments

Summarized financial information of AIG's equity method investees

The following is summarized financial information of AIA:

Year Ended December 31,
(in millions)	2011
Operating results:
Total revenues	$	13,802
Total expenses		(12,254	)
Net income (loss)	$	1,548

At December 31,
(in millions)		2011
Balance sheet:
	Total assets	$	114,844
	Total liabilities	$	(91,654	)

Other equity method investees

Investments

Summarized financial information of AIG's equity method investees

Years Ended December 31, (in millions)		2011			2010			2009
Operating results:
	Total revenues	$	12,749		$	14,079		$	(15,160	)
	Total expenses		(3,530	)		(3,812	)		(6,312	)
Net income (loss)		$	9,219		$	10,267		$	(21,472	)

At December 31, (in millions)		2011			2010
Balance sheet:
	Total assets	$	95,749		$	100,156
	Total liabilities	$	(22,379	)	$	(23,343	)