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In July 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-1, “Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts” (SOP
03-1). The Company is currently evaluating its impact, which, among other provisions, requires reserves related to guar-
anteed minimum death benefits included within the majority of variable annuity contracts offered by AEFA. SOP 03-1 is
required to be adopted on January 1, 2004, and any impact will be recognized as a cumulative effect of change in account-
ing principle in the Company’s first quarter 2004 Consolidated Statement of Income.
In November 2003, the FASB ratified a consensus on the disclosure provisions of Emerging Issues Task Force (EITF) Issue
03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” The disclosure
provisions of this rule, which are addressed in Note 2, require tabular presentation of certain information regarding invest-
ment securities with gross unrealized losses.
In December 2003, the FASB issued SFAS No. 132 (Revised 2003), “Employers’ Disclosures about Pensions and Other
Postretirement Benefits.” This Statement amends the disclosure requirements of SFAS No. 87, “Employers’ Accounting for
Pensions,” No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Ter-
mination Benefits,” and No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” The Statement
does not change the recognition and measurement requirements of those Statements. See Note 15 for disclosures regarding
the Company’s Retirement Plans.
(Note 2) INVESTMENTS
The following is a summary of investments at December 31:
(Millions) 2003 2002
Available-for-Sale, at fair value $52,278 $49,102
Investment loans (fair value: 2003, $4,116; 2002, $4,405) 3,794 3,981
Trading 995 555
Total $57,067 $53,638
Investment loans are primarily comprised of commercial mortgage loans at AEFA.
Investments classified as Available-for-Sale at December 31 are distributed by type as presented below:
2003 2002
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
(Millions) Cost Gains Losses Value Cost Gains Losses Value
Corporate debt securities $20,144 $ 883 $ (110) $ 20,917 $13,129 $ 782 $ (146) $ 13,765
Mortgage and other asset-
backed securities 16,674 279 (84) 16,869 19,463 653 (15) 20,101
State and municipal
obligations 7,138 479 (5) 7,612 6,985 510 (2) 7,493
Structured investments(a) 2,828 24 (60) 2,792 3,475 10 (94) 3,391
Foreign government bonds
and obligations 1,378 60 (3) 1,435 1,153 67 (4) 1,216
U.S. Government and
agencies obligations 1,150 17 — 1,167 140 14 — 154
Other 1,474 21 (9) 1,486 2,976 25 (19) 2,982
Total $50,786 $ 1,763 $ (271) $ 52,278 $ 47,321 $ 2,061 $ (280) $ 49,102
(a) Includes unconsolidated CDOs, SLTs and retained subordinated security interests from the Company’s cardmember lending securitizations.
(p.85_axp_ notes to consolidated financial statements)