ITEM 7 / CRITICAL ACCOUNTING ESTIMATES The following sensitivity analysis table summarizes the effect on the loss reserve position of using certain alternative loss cost trend (for accident years where we use expected loss ratio methods) or loss development factor assumptions rather than the assumptions actually used in determining our estimates in the year-end loss reserve analyses in 2012.
## Table 0 ##
(a) Loss cost trend assumption does not have a material impact for this line of business.
(b) Percentages not applicable due to extremely long-tailed nature of workers’ compensation.
Future Policy Benefits for Life and Accident and Health Insurance Contracts (AIG Life and Retirement) Periodically, we evaluate estimates used in establishing liabilities for future policy benefits for life and accident and health insurance contracts, which include liabilities for certain payout annuities.
We also evaluate estimates used in amortizing Deferred Policy Acquisition Costs (DAC), Value of Business Acquired (VOBA) and Sales Inducement Assets (SIA) for these products.
We evaluate these estimates against actual experience and adjust them based on management judgment regarding mortality, morbidity, persistency, maintenance expenses, and investment returns.
For long duration traditional business, a ‘‘lock-in’’ principle applies.
The assumptions used to calculate the benefit liabilities and DAC are set when a policy is issued and do not change with changes in actual experience, unless a loss recognition event occurs.
These assumptions include margins for adverse deviation in the event that actual experience might deviate from these assumptions.
As we experience changes over time, we update the assumptions to reflect theseobserved changes.
Because of the long term nature of many of our liabilities subjectto the “lock-in" principle, small changes in certain assumptions may cause largechanges in the degree of reserve adequacy.
In particular, changes in estimates offuture invested asset returns have a large effect on the degree of reserve deficiency.
lf observed changes in actual experience or estimates result in projected future losses under loss recognition testing, we adjust DAC through amortization expense,and may record additional liabilities through a charge to policyholder benefit expense.
Loss recognition testing is performed at an aggregate AlG Life and Retirement reporting segment level.
Once loss recognition has been recorded for a block ofbusiness, the old assumption set is replaced (i. e. , a DAC unlocking), and theassumption set used for the loss recognition would then be subject to the lock-inprinciple.
See Note 10 to the Consolidated Financial Statements for additionalinformation.
The key assumptions used inestimating future policy benefitreserves are: ?lnvestment returns: whichvary by year of issuance andproducts.
?Mortality,morbidity andsurrender rates: based uponactual experience modified toallow for variation in policyform,risk classification anddistribution channel.
?Premium rate increases(Long-term care)
11.
VARIABLE INTEREST ENTITIES A variable interest entity (VIE) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights and do not substantively participate in the gains and losses of the entity.
Consolidation of a VIE by its primary beneficiary is not based on majority voting interest, but is based on other criteria discussed below.
While we enter into various arrangements with VIEs in the normal course of business, our involvement with VIEs is primarily via our insurance companies as a passive investor in debt securities (rated and unrated) and equity interests issued by VIEs.
In all instances, we consolidate the VIE when we determine we are the primary beneficiary.
This analysis includes a review of the VIE’s capital structure, contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity.
When assessing the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks the entity was designed to expose the variable interest holders to.
For VIEs with attributes consistent with that of an investment company or a money market fund, the primary beneficiary is the party or group of related parties that absorbs a majority of the expected losses of the VIE, receives the majority of the expected residual returns of the VIE, or both.
For all other variable interest entities, the primary beneficiary is the entity that has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE.
While also considering these factors, the consolidation conclusion depends on the breadth of our decision-making ability and our ability to influence activities that significantly affect the economic performance of the VIE.
Exposure to Loss Our total off-balance sheet exposure associated with VIEs, primarily consisting of financial guarantees and commitments to real estate and investment funds, was $0.2 billion and $0.4 billion at December 31, 2012 and 2011, respectively.
The following table presents our total assets, total liabilities and off-balance sheet exposure associated with our variable interests in consolidated VIEs:
## Table 1 ##
(a) The assets of each VIE can be used only to settle specific obligations of that VIE.
(b) Decrease primarily due to the retirement of the AIA SPV Preferred Interests held by the Department of the Treasury.
As a result, the AIA SPV no longer qualified as a VIE.
Assets include $567 million of cash held in escrow pursuant to the terms of the ALICO stock purchase agreement between AIG and MetLife.
See Note 16 herein for further discussion of the escrow arrangement.
(c) At December 31, 2012 and December 31, 2011, off-balance sheet exposure with respect to real estate and investments funds was $48.7 million and $85.7 million, respectively.
We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE.
Interest holders in VIEs sponsored by us generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to us, except in limited circumstances when we have provided a guarantee to the VIE’s interest holders.
ITEM 1 / BUSINESS GENERATING REVENUES: INVESTMENT ACTIVITIES OF OUR INSURANCE OPERATIONS AIG Property Casualty and AIG Life and Retirement generally receive premiums and deposits well in advance of paying covered claims or benefits.
In the intervening periods, we invest these premiums and deposits to generate net investment income and fee income that is available to pay claims or benefits.
As a result, we generate significant revenues from insurance investment activities.
AIG’s worldwide insurance investment policy places primary emphasis on investments in fixed maturity securities of corporations, municipal bonds and government issuances in all of its portfolios, and, to a lesser extent, investments in high-yield bonds, common stock, real estate, hedge funds and other alternative investments.
We generate significant revenues in our AIG Property Casualty and AIG Life and Retirement operations from investment activities.
The majority of assets backing insurance liabilities at AIG consist of intermediate and long duration fixed maturity securities.
AIG Property Casualty – Fixed maturity securities held by the insurance companies included in AIG Property Casualty domestic operations historically have consisted primarily of laddered holdings of tax-exempt municipal bonds.
These tax-exempt municipal bonds provided attractive after-tax returns and limited credit risk.
To meet our domestic operations’ current risk-return and tax objectives, our domestic property and casualty companies have begun to shift investment allocations away from tax-exempt municipal bonds towards taxable instruments.
Any taxable instruments must meet our liquidity, duration and quality objectives as well as current risk-return and tax objectives.
Fixed maturity securities held by AIG Property Casualty international operations consist primarily of intermediate duration high-grade securities, primarily in the markets being served.
In addition, AIG Property Casualty has redeployed cash in excess of operating needs and short-term investments into longer-term, higher-yielding securities.
AIG Life and Retirement – Our investment strategy is to generally match the duration of our liabilities with assets of comparable duration.
AIG Life and Retirement also invests in a diversified portfolio of private equity funds, hedge funds and affordable housing partnerships.
Although these types of investments are subject to periodic earnings volatility, through December 31, 2012, they have achieved total returns in excess of AIG Life and Retirement’s base portfolio yield.
AIG Life and Retirement expects that these alternative investments will continue to outperform the base portfolio yield over the long term.
The following table summarizes the investment results of AIG’s insurance operations, excluding the results of discontinued operations
## Table 2 ##
(a) Includes real estate investments and excludes cash and short-term investments.
(b) Net investment income divided by the annual average investments.
REGULATION Our operations around the world are subject to regulation by many different types of regulatory authorities, including banking, insurance, securities and investment advisory regulators in the United States and abroad.
The insurance
PART II ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The following table presents reported quarterly high and low per share sale prices of our Common Stock on the New York Stock Exchange (“NYSE”) for the years 2010 and 2009.
## Table 3 ##
On February 11, 2011, the closing price of our Common Stock was $56.73 per share as reported on the NYSE.
As of February 11, 2011, we had 397,612,895 outstanding shares of Common Stock and 463 registered holders.
Dividends We have not historically paid a dividend on our Common Stock.
Payment of dividends in the future, when, as and if authorized by our board of directors, would depend upon many factors, including our earnings and financial condition, restrictions under applicable law and our current and future loan agreements, our debt service requirements, our capital expenditure requirements and other factors that our board of directors may deem relevant from time to time, including the potential determination to elect REIT status.
In addition, the loan agreement for our Revolving Credit Facility and Term Loan contain covenants that generally restrict our ability to pay dividends unless certain financial covenants are satisfied.
For more information about the restrictions under the loan agreement for the Revolving Credit Facility and Term Loan, our notes indentures and the loan agreement related to our Securitization, see Item 7 of this Annual Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Factors Affecting Sources of Liquidity” and note 6 to our consolidated financial statements included in this Annual Report.

<table><tr><td>  December 31, 2012 <i>(in millions)</i> </td><td>Effect on Loss Reserves</td><td> </td><td>Effect on Loss Reserves</td></tr><tr><td>Loss cost trends:</td><td></td><td rowspan="2">Loss development factors: <i>Excess casualty:</i></td><td></td></tr><tr><td><i>Excess casualty:</i></td><td></td><td></td></tr><tr><td>5 percent increase</td><td>$1,500</td><td>4.6 percent increase</td><td>$1,100</td></tr><tr><td>5 percent decrease</td><td>-1,100</td><td>3.3 percent decrease</td><td>-700</td></tr><tr><td><i>D&O:</i></td><td></td><td><i>D&O:</i></td><td></td></tr><tr><td>26.5 percent increase</td><td>1,000</td><td>11 percent increase</td><td>650</td></tr><tr><td>25.5 percent decrease</td><td>-700</td><td>6.8 percent decrease</td><td>-400</td></tr><tr><td><i>Excess workers' compensation:</i></td><td></td><td><i>Excess workers' compensation:</i></td><td></td></tr><tr><td>5 percent increase</td><td>400</td><td>Increase<sup>(b)</sup></td><td>1,300</td></tr><tr><td>5 percent decrease</td><td>-250</td><td>Decrease<sup>(b)</sup></td><td>-850</td></tr><tr><td><i>Primary workers' compensation</i><sup>(a)</sup>:</td><td></td><td><i>Primary workers' compensation:</i></td><td></td></tr><tr><td></td><td></td><td>6.9 percent increase</td><td>2,200</td></tr><tr><td></td><td></td><td>3.1 percent decrease</td><td>-1,000</td></tr></table>
<table><tr><td> </td><td colspan="3">VIE Assets<sup>(a)</sup></td><td colspan="2">VIE Liabilities</td></tr><tr><td><i></i><i>(in billions)</i> </td><td> December 31, 2012 </td><td></td><td>December 31, 2011 </td><td> December 31, 2012 </td><td>December 31, 2011 </td></tr><tr><td>AIA/ALICO SPVs</td><td>$0.6</td><td><sup>(b)</sup></td><td>$14.2</td><td>$0.1</td><td>$0.1</td></tr><tr><td>Real estate and investment funds<sup>(c)</sup></td><td>1.0</td><td></td><td>1.5</td><td>0.2</td><td>0.4</td></tr><tr><td>Securitization Vehicles</td><td>2.4</td><td></td><td>–</td><td>–</td><td>–</td></tr><tr><td>Structured investment vehicles</td><td>1.7</td><td></td><td>1.0</td><td>0.1</td><td>–</td></tr><tr><td>Affordable housing partnerships</td><td>2.3</td><td></td><td>2.5</td><td>0.2</td><td>0.1</td></tr><tr><td>Other</td><td>3.3</td><td></td><td>3.6</td><td>1.3</td><td>2.0</td></tr><tr><td>Total</td><td>$11.3</td><td></td><td>$22.8</td><td>$1.9</td><td>$2.6</td></tr></table>
<table><tr><td>  Years Ended December 31, <i>(in millions)</i> </td><td>Annual Average Investments<sup>(a)</sup> </td><td>Net Investment Income </td><td>Pre-tax Return on Average Investments<sup>(b)</sup> </td></tr><tr><td>AIG Property Casualty:</td><td></td><td></td><td></td></tr><tr><td>  2012</td><td> $ 120,166</td><td> $ 4,820</td><td> 4.0%</td></tr><tr><td>2011</td><td>113,405</td><td>4,348</td><td>3.8</td></tr><tr><td>2010</td><td>100,583</td><td>4,392</td><td>4.4</td></tr><tr><td>AIG Life and Retirement:</td><td></td><td></td><td></td></tr><tr><td>  2012</td><td> $ 190,983</td><td> $ 10,718</td><td> 5.6%</td></tr><tr><td>2011</td><td>172,846</td><td>9,882</td><td>5.7</td></tr><tr><td>2010</td><td>154,167</td><td>10,768</td><td>7.0</td></tr></table>
<table><tr><td>2010</td><td>High</td><td>Low</td></tr><tr><td>Quarter ended March 31</td><td>$44.61</td><td>$40.10</td></tr><tr><td>Quarter ended June 30</td><td>45.33</td><td>38.86</td></tr><tr><td>Quarter ended September 30</td><td>52.11</td><td>43.70</td></tr><tr><td>Quarter ended December 31</td><td>53.14</td><td>49.61</td></tr><tr><td>2009</td><td>High</td><td>Low</td></tr><tr><td>Quarter ended March 31</td><td>$32.53</td><td>$25.45</td></tr><tr><td>Quarter ended June 30</td><td>34.52</td><td>27.93</td></tr><tr><td>Quarter ended September 30</td><td>37.71</td><td>29.89</td></tr><tr><td>Quarter ended December 31</td><td>43.84</td><td>35.03</td></tr></table>

Question: What will Structured investment vehicles be like in 2013 if it develops with the same increasing rate as current? (in billion)