American Express 2002 Annual Report Download - page 66

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I64 AXP INOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments classified as Available-for-Sale at December 31 are distributed by type and maturity as presented below:
2002 2001
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
(Millions) Cost Gains (Losses) Value Cost Gains (Losses) Value
Corporate debt securities $ 13,129 $ 782 $ (146) $ 13,765 $ 13,641 $ 388 $ (138) $ 13,891
Mortgage and other asset-
backed securities 19,463 653 (15) 20,101 15,374 188 (55) 15,507
State and municipal obligations 6,985 510 (2) 7,493 6,715 276 (21) 6,970
Structured investments(a) 3,475 10 (94) 3,391 3,106 11 (151) 2,966
Foreign government bonds
and obligations 1,153 67 (4) 1,216 1,078 41 (7) 1,112
U.S. Government and
agencies obligations 140 14 — 154 70 3 — 73
Other 2,976 25 (19) 2,982 1,666 51 (11) 1,706
Total $ 47,321 $ 2,061 $ (280) $ 49,102 $ 41,650 $ 958 $ (383) $ 42,225
(a) Includes CDOs, SLTs and retained interests from the company’s cardmember lending securitizations.
December 31, 2002 (Millions) Cost Fair Value
Due within 1 year $ 4,702 $ 4,736
Due after 1 year through 5 years 7,544 7,850
Due after 5 years through 10 years 8,428 8,909
Due after 10 years 7,060 7,400
27,734 28,895
Mortgage and other asset-backed securities 19,463 20,101
Other 124 106
Total $ 47,321 $ 49,102
Mortgage and other asset-backed securities primarily include GNMA, FNMA and FHLMC securities at December 31, 2002
and 2001.
The table below includes purchases, sales and maturities of investments classified as Available-for-Sale for the years ended
December 31:
(Millions) 2002 2001
Purchases $ 22,692 $ 19,427
Sales $ 12,321 $ 11,058
Maturities $ 6,229 $ 603
Gross realized gains on sales of securities classified as Available-for-Sale, using the specific identification method, were
$373 million, $322 million and $170 million for the years ended December 31, 2002, 2001 and 2000, respectively. Gross realized
losses on sales were ($171 million), ($574 million) and ($47 million) for the same periods. The company also recognized losses
of ($204 million), ($428 million) and ($55 million) in other-than-temporary impairments on structured securities and corpo-
rate debt securities for the years ended December 31, 2002, 2001 and 2000, respectively. The 2001 losses include the effect of
the write down and sale of high-yield securities discussed below.
The increase in net unrealized gains on Trading securities, which is included in income, was $12 million, $16 million and
$16 million for the years ended December 31, 2002, 2001 and 2000, respectively.
During the first half of 2001, the company recognized pretax losses of $1.01 billion ($182 million and $826 million in the first
and second quarters, respectively) from the write down and sale of certain high-yield securities. These losses are included in
interest and dividends on the Consolidated Statements of Income. The second quarter pretax charge of $826 million is
comprised of: $403 million to recognize the impact of higher default rate assumptions on certain structured investments;