AIG continues to receive indemnity claims asserting injuries from toxic waste, hazardous substances, and other environmental pollutants and alleged damages to cover the cleanup costs of hazardous waste dump sites (hereinafter collectively referred to as environmental claims) and indemnity claims asserting injuries from asbestos. The vast majority of these asbestos and environmental claims emanate from policies written in 1984 and prior years. Commencing in 1985, standard policies contained an absolute exclusion for pollution related damage. However, AIG currently underwrites pollution impairment liability insurance on a claims made basis and excluded such claims from the analyses included herein. AIG has established a specialized claims unit which investigates and adjusts all such asbestos and environmental claims.
AIG's operations are negatively impacted under guarantee fund assessment laws which exist in most states. As a result of operating in a state which has guarantee fund assessment laws, a solvent insurance company may be assessed for certain obligations arising from the insolvencies of other insurance companies which operated in that state. AIG generally records these assessments upon notice. Additionally, certain states permit at least a portion of the assessed amount to be used as a credit against a company's future premium tax liabilities. Therefore, the ultimate net assessment cannot reasonably be estimated. The guarantee fund assessments net of credits for 1995, 1994 and 1993 were $23.5 million, $28.2 million and $32.0 million, respectively.
AIG and Funding have entered into two syndicated revolving credit facilities (the Facilities) aggregating $1 billion. The Facilities consist of a $500 million 364 day revolving credit facility and a $500 million five year revolving credit facility. The Facilities can be used for general corporate purposes and also provide backup for AIG's commercial paper programs administered by Funding. There are currently no borrowings outstanding under either of the Facilities, nor were any borrowings outstanding as of December 31, 1995.
In October 1995, FASB issued Statement of Financial Accounting Standards No. 123 "Accounting for Awards of Stock-Based Compensation to Employees" (FASB 123). FASB 123 establishes accounting and reporting standards for stock-based employee compensation plans. These plans include stock option and stock purchase plans. FASB 123 provides employers a choice: Adopt FASB 123 accounting standards for all stock compensation arrangements which requires the recognition of compensation expense for the fair value of virtually all stock compensation awards; or continue to account for stock options and other forms of stock compensation under the current accounting standards (APB No. 25 "Accounting for Stock Issued to Employees") while also providing the disclosure required under FASB 123. AIG has adopted the disclosure requirements of FASB 123 effective for the year ended December 31, 1995 financial statements.
The deferred tax payable related to the net unrealized appreciation of investments was $656,572,000 at December 31, 1995 and $57,547,000 at December 31, 1994.
The amortized cost, related hedges and estimated market value of securities available for sale and carried at market value at December 31, 1995 and 1994 were as follows:
* Exchange traded futures are not deemed to have significant credit exposure as the exchanges guarantee that every contract will be properly settled on a daily basis.
Trading securities: Fair values for trading securities were based on current market value where available. For securities for which market values were not readily available, fair values were estimated using quoted market prices of comparable investments.