A N N UA L R E PO RT 20 07

FAC TS AN D F I G U R E S

Company profile
AIG Private Equity Ltd. is a Swiss investment com-
pany with an objective to achieve long-term capital
growth for shareholders by investing in a diversified
portfolio of private equity funds and privately held
operating companies. The same team that manages
private equity investments for American International
Group, Inc. acts as investment advisor for AIG Private
Equity Ltd. With eight years of operating history
in a variety of market conditions, AIG Private Equity
Ltd. has a solid track record and a mature portfolio
of funds and direct investments. AIG Private Equity
Ltd. is listed on the SWX Swiss Exchange under the
ticker symbol “APEN”.

Valuation as of December 31, 2007

Closing price per share CHF 170.00
Net asset value per share CHF 182.13
(applying fair values)
Exchange rate USD/CHF 1.1329
Exchange rate EUR/CHF 1.6544
Number of shares outstanding 3 949 027
Market capitalization CHF 719 236 288

Swiss Security Number

915.331
ISIN: CH0009153310
Ticker: APEN

Trading Information
Reuters: APEZn.S
Bloomberg: APEN
Telekurs: APEN

www.aigprivateequity.com
Financial Highlights

Net A sset Value per Share and Share Price (C H F)

Net Asset Value per Share 190

Share Price 180

170

160

150

140

130

120

110

100

90

2004 2005 2006 2007

Investment Income (C H F in million)

135

120
+94%
105

90 +90%
75

60
–34%
45 +155%
30

15

2004 2005 2006 2007

CO NTE NTS

Chairman’s Statement 2

Management Report
– Review 2007 and Outlook 4
– Overview of 20 Largest Investments 8
– Overview of 20 Largest Funds 18

Financial Report
– AIG Private Equity Group 22
Consolidated Financial Statements 2007
– Corporate Governance 51
– AIG Private Equity Ltd. 60
Financial Statements 2007
C HAI R MAN’S STATE M E NT

E D UAR D O LE E MAN N, Chairman of the Board D R. C H R I STIAN WE N G E R, Vice Chairman

2007 consisted of two distinct periods, with the summer’s

Dear Shareholders volatility marking a dramatic transition between the two. After a
period of four years with strong growth, private equity activity
saw a sharp slowdown after credit markets suffered a severe
turmoil. In spite of the difficult environment in the latter part of
2007, AIG Private Equity Ltd. (the “Company”) recorded good
results. Investment income and net income both reached their
highest values since inception of the Company eight years ago.
Investment income was in excess of CHF 125 million and
significantly above prior year’s results. Net asset value per
share increased 13.4% despite the weak US dollar, which hurt
the performance of the Company’s US assets. The Company’s
share price increased by 6.1% in the course of the year, which
compares favorably with the LPX50 Index and equity market
indices. At year-end 2007 the shares traded at a discount of
6.6%. We believe that the Company has a strong and diversified
portfolio with attractive perspectives.
At this year’s annual general meeting, Erich Hort stepped
down from the board of directors, after serving in that capacity
for eight years since the Company’s founding in 1999. We thank
Mr. Hort for his very strong support from early days and value
his contributions greatly. Win Neuger also stepped down from
the board of directors and returned to the Company’s invest-
ment committee. Robert Thompson was elected to the board of
directors. Mr. Thompson is the Head of AIG Investment’s world-

2
 C HAI R MAN’S STATE M E NT

D R. E R N ST MÄD E R, Member D R. R O G E R S C H M I D, Member R O B E RT TH O M P S O N, Member

wide Alternative Investments business. Mr. Thompson has over the Company’s portfolio for 2008 correspond to long term
15 years experience in all segments of the private equity busi- volumes. Particularly large buyout opportunities will diminish
ness including mezzanine, direct investments, joint ventures, while operationally-focused managers may capture the oppor-
leveraged buyouts and fund investments and will be a valuable tunities available in periods of economic weakness. Despite the
addition to the board of directors. difficult market conditions, 2008 will yield significant opportu-
Debt markets are still in the process of recalibrating to the nities. As outlined, we do anticipate a number of significant
new risk perceptions. Currently, banks are restrictive in lending exits. To all of our shareholders we extend our appreciation for
and debt for new transactions is only available for buyouts with the confidence you have placed in us.
an enterprise value of up to USD/EUR two billion. This has led
to reduced portfolio activity compared to the previous years.
We anticipate that private equity activity, once the immediate
impact of the credit market turmoil has receded, will level off at
long term averages. Recent exits of top 20 investments in 2008
are proof that deals are getting done at attractive terms and
provide us confidence that 2008 will turn out to be at least a Eduardo Leemann
satisfactory year. Chairman of the Board
The year ended on a somber note, with credit markets in
turmoil, volatility abounding and a sense that further uncer-
tainty lies ahead. The start into 2008 has been challenging.
Financial and equity markets posted substantial losses and
volatility in January and March. Both share price and net asset
value have decreased. The decline of the net asset value is
entirely due to the weakening of the US dollar and the Euro
against the Swiss franc. Investment performance remained
positive. We expect to see exit and investment activity from

3
MANAG E M E NT R E PO RT

AIG Private Equity Ltd. (the “Company”) recorded a successful year in

2007. The Company’s net asset value (“NAV”) per share increased 13.5%
from CHF 160.63 to CHF 182.27 despite the further weakening of the
US dollar (–7.1%) against the Swiss franc which led to lower reported
values for US dollar assets. The Company’s share price increased 6.1%
and ended the year at CHF 170.00. The Company recorded the highest
investment income (CHF 126.3 million) and net income (CHF 80.6 million)
in its nine year history.

tial severity of a US (or global) recession, the state of credit

Review 2007 and Outlook markets and the health of the banking sector.
Investment income amounted to about CHF 36 million in
each of the first three quarters, an amount significantly greater
The private equity industry experienced record deal activity than for any quarter in the Company’s history prior to 2007.
in the first half of 2007, spurred by record fund raising and a Investment income slowed considerably in the fourth quarter,
seemingly limitless supply of debt financing on favorable but, at CHF 18.7 million, was still in line with results from
terms. With the disruption of debt markets beginning in July, previous years. The vast majority of the investment income
investment activity slowed down in the second half of the year, came from European 2001 to 2005 vintage year funds. CapVest
and came to a complete halt for mega buyouts as major banks I, Carlyle Europe II, Lexington IV, EQT III and IV, and Cognetas
were both unwilling and unable to finance transactions of that I each contributed more than CHF 10 million of investment
size. The latter half of the year was further marked by broken income as they sold portfolio companies such as FoodVest, AZ
deals and by unsyndicated buyout debt of more than USD 300 Electronic Materials, Symrise and QinetiQ. In 2006, the Com-
billion clogging the balance sheets of originating banks. pany did not receive more than CHF 10 million of investment
Despite the turmoil at the large end of the market, however, income from any single fund.
smaller buyout deals continued to transact and,
Quarterly Investment Income from 2003 to 2007
in certain areas (such as Scandinavia and
Eastern Europe), there was no noticeable im-
pact on the availability of credit for buyout
transactions. On another positive note, debt
financing (when available) was generally not
significantly more expensive than it was at the
beginning of the year, due to a smaller than
expected increase in spreads and to declines in
reference rates (especially in the US). None-
theless, the year ended with a great deal of
uncertainty regarding the possibility and poten-
Investment Income in TCHF
4

AN D R E W F LE TC H E R
The revaluation reserve for investments and foreign
exchange offset each other roughly. As the Company realized
significant investment income and invested more than CHF 400
million of new investments, the increase of unrealized gains of
CHF 25.5 million was lower than in 2006 (CHF 70.9 million).
With the continued weakening of the US dollar the unrealized
FX losses on investments increased by CHF 16.0 million.
The write-down on non-current assets amounted to
CHF 10.1 million (2006 CHF 28.8 million). In accordance with
IFRS requirements, the Company considers any investment
(whether fund or direct investment) with a fair value below cost
for more than twelve months as impaired. In addition, any
investment with a fair value more than 30% below cost will be
considered impaired regardless of the length the investment
was held below cost. Since impairments are taken automatically
under the policy, an impairment does not necessarily reflect
management’s opinion that the affected fund or direct invest-
ment will ultimately return a loss.
Investments in private equity funds make up the majority
of the portfolio (CHF 686 million; 2006: CHF 408.6 million).
Contractual Agreements (CHF 41.4 million; 2006: CHF 53.7 mil-
lion), direct investments (CHF 101.8 million; 2006: CHF 93.3
million) as well as loans (CHF 18.7 million; 2006: CHF 34.2 mil-
lion) make up the balance. We expect the loans and contractual
agreements to be repaid either in 2008 or 2009. In the longer
term we look to have more than 80% of the invested assets in
funds and the balance in direct investments.
MANAG E M E NT R E PO RT
CO N R AD I N S C H N E I D E R
The average maturity of the Company’s funds portfolio has
decreased somewhat as a result of the high volume of new fund
investments and commitments. As of year end, the fair value of
portfolio funds with a vintage of 2001 or earlier (seven years or
older) represented 20.8% of investment assets, down from
41.0% at the end of 2006.
Top 20 investments
The Company’s top 20 investments portfolio recorded another
year of high turnover, with a total of eight new investments
joining the top 20 in the course of the year. Four full sales, two
partial sales, two announced exits and two recapitalizations
during 2007 made their contribution to the overall positive
result of the Company’s top 20 investments. See page 8 for
detailed information on the portfolio of top 20 investments.
Top 20 Funds
For the first time, the Company is happy to provide share-
holders an overview of the top 20 funds within the portfolio.
The total fair market value of the Company’s twenty largest
funds increased significantly during the year. Of seven new
funds joining the top 20 in the course of the year, four were
2007 vintage funds. All funds are active in the buyout space
5
MANAG E M E NT R E PO RT

with the exception of a secondary fund that has little exposure
to venture capital. The geographic focus lies on Europe, fol-
lowed by North America and Rest of the World (Asia and
Emerging Markets). The 20 largest funds by NAV accounted for
54.1% of total NAV (2006: 46.1%).
Investment Program
The Company added nineteen funds and four direct invest-
ments to its portfolio in 2007. The commitments to the nine-
teen funds are divided up into eight follow-on funds and
eleven new funds.
The Company made commitments to a total of nine new
funds in 2007 with an investment focus on North America:
Sun Capital (USD 17 million), Silver Lake III (USD 30 million),
AIG Altaris Health Partners II (USD 20 million), Olympus V
(USD 23 million), Avista Capital Partners I (USD 25 million),
Carlyle V (USD 30 million), AIG Highstar III (USD 25 million),
New Mountain III (USD 20 million) and Platinum Equity Capi-
tal Partners II (USD 20 million).
Eight European funds were added to the portfolio with
commitments totaling EUR 162 million: Lion Capital Partners II
(EUR 20 million), Terra Firma Capital Partners III (EUR 25 mil-
lion), Odewald III (EUR 15 million), Carlyle Europe Partners III
(EUR 35 million), Astorg IV (EUR 20 million), PAI V (EUR 20
million), Mid Europa Partners Fund III (EUR 10 million) and
Ventizz Capital Fund IV (EUR 17 Mio.).
Two funds were added to the Rest-of-the-World/Asia
portion of the portfolio: Affinity Asia Pacific Fund III (USD 25
million), AIG Brazil Special Situations Fund II (USD 10 million).
Unfunded commitments as of year end amounted to
approximately CHF 966 million or 110.2% of total assets. Gen-
erally, we expect funds to invest over a period of approximately
five years. On a portfolio basis, drawdowns in 2007 were very
much in line with expectations based on the Company’s cash
flow models. To cover potential volatility in fund cash flows
and to allow appropriate vintage year diversification, the
Company maintains a USD 50 million credit line (increased
to USD 100 million in January 2008) with a consortium of
Swiss banks.
New Direct Investments
At year end, direct investments accounted for 14.2% of in-
vested assets (including the investments in loans). This re-
presents a decrease of nearly five percentage points over the
prior year.
The Company added four direct investments to its portfolio
with a total value of CHF 7.4 million. The Company made an
initial direct investment in Falcon Farms (USD 0.4 million) with
a commitment to invest a further USD 1.6 million into the
leading importer and distributor of fresh cut flowers in the
United States and Canada. Falcon Farms operates over 300
hectares of farmland in Colombia, Ecuador and Mexico and

1. Diversification by Investment Focus as of December 31, 2007 2. Investment Framework as of December 31, 2007
Expressed as % of invested assets applying fair values Expressed as % of total assets applying fair values

AIG 3rd-Party Direct Total

Venture 4.5% Funds Funds Investments
Development Capital 4.7% Portfolio Portfolio Portfolio
Mezzanine 4.5% Developed Markets
Europe 2.2% 40.5% 4.8% 47.5%
North America 4.6% 29.7% 9.2% 43.5%
Buyout 86.3%
Other Markets 4.3% 4.2% 0.1% 8.6%
Total 11.1% 74.4% 14.1% 99.6%

6

supplies its fresh cut flowers to leading mass merchant re-
tailers in North America. During the second quarter, the Com-
pany invested USD 3.7 million in Advanstar, a leading inte-
grated marketing solutions provider in the Fashion & Licensing,
Powersports and Life Science industries. Advanstar’s B2B
offering spans 91 trade shows and stand-alone conferences, 66
publications and directories, 150 electronic publications and
web sites, as well as educational seminars. USD 1.3 million was
invested in United Surgical Partners International (USPI). USPI
is the second largest operator of ambulatory surgery centers in
the US. USPI operates 138 facilities in the US and three in the
UK. Flash Global Logistics (USD 0.96 million) is a fast growing,
full-service non-asset based logistics solution provider that
specializes in handling high-velocity, time critical parts. It ser-
vices Fortune 500 companies and has a global network of 570
agents in 44 countries.
In addition to the four new direct investments, the Com-
pany made five follow-on investments. Three small add-on
investments in Xanodyne, Thomas Nelson Publishing and
Medispectra and two larger follow-on investments were made
in Knowledge Universe Education (USD 3.9 million) and Jet-
Direct Aviation (USD 1.7 million). These add-on investments
were all made in line with the original business plans.
The Company holds eleven direct investments with a fair
value of more than CHF 3 million. The average direct invest-
ment size amounts to CHF 5.2 million.
3. Diversification by Vintage Year as of December 31, 2007
Expressed as % of invested assets applying fair values
in %
30
i North America 43.6%
25
20
15
8.4 %
10
5.2 % 3.1 % 5.2 %
5
2.8 %
1.3 % 0.1 %
0
87–97 1998 1999 2000 2001 2002 2003
MANAG E M E NT R E PO RT
Outlook
The first quarter of 2008 continued to be volatile, with equity
markets extremely weak in January and March and a sharply
weaker US dollar. The Company’s NAV decreased over the first
two months. This decrease, however, was due to currency
effect – with both the US dollar and euro decreasing in value
against the Swiss franc – and the share price performance of
the Company’s listed portfolio companies. The Company’s core
private equity portfolio continues to develop well. Despite con-
tinued uncertainty in markets, there are grounds for optimism
as the US economy has proven relatively resilient despite the
severe housing recession and the fact that major banks have
taken considerable steps towards repairing their balance
sheets and divesting themselves of leveraged loan portfolios.
Although deal activity is likely to be significantly lower than the
first half of 2007, the Company has had relatively strong exit
activity year to date, with a number of additional exits expected
in the second quarter. We anticipate that overall transaction
activity will increase in the second half of 2008.
4. Diversification by Region as of December 31, 2007
Expressed as % of invested assets applying fair values
32.4 %
21.9 %
19.0 %
Other regions 8.7%
0.6 %
2004 2005 2006 2007 Europe 47.7%
7
MANAG E M E NT R E PO RT

The strong performance of the top 20 investments was a key element for
the solid performance of the Group in 2007. During the year, the Group,
recorded four full sales, two partial sales, two announced exits and two
recapitalizations among the top 20 investments. Furthermore, there were
several portfolio companies which saw valuations increase based on
strong operating results.

The technology sector (12.0% in 2006) is not represented in

Top 20 Investments
As of December 31, 2007, the total fair market value of the
Group’s twenty largest holdings was CHF 172.3 million.
Although this represents a 10.5% increase over the value of
the top 20 investments portfolio at the end of 2006, it also
represents a smaller share (20%) of the Group’s total assets
due to the large volume of new investment and the increase in
the overall value of the Group’s assets by 33% over the course
of the year. Portfolio turnover was high, with a total of eight
new investments joining the top 20. Most of the new top 20
companies entered the portfolio based on initial cost as the
Group made a number of large new investments during the
year. Reflecting the portfolio as a whole, the top 20 investments
portfolio continues to be well-diversified, with the following
industry weightings: 22.8% services, 20.0% consumer, 19.9%
communications, 12.8% energy, 8.4% financial services, 7.5%
medical & health, 4.4% semiconductors and 4.2% industrial.
8
the top 20 investments portfolio anymore, due to the partial
exit of AZ Electronic Materials and a reclassification of
Freescale into the semiconductor industry segment.
Top 20 Portfolio Performance
The exit of AZ Electronic Materials, which manufactures
and markets photoresist, anti-reflective coatings and ancillary
chemicals for use in electronics applications, was announced
last March by The Carlyle Group and the Group received
EUR 5.5 million from the sale. Since the Carlyle Group re-
invested some of its proceeds in AZ Electronic Materials, the
Group will keep an interest in the firm. Kwik-Fit, Europe’s
leading fast-fit car service business, dropped out of the Group’s
top 20 investments after a recapitalization in May 2007 and a
return of 0.97 times the Group’s initial investment. At year end,
the realized and unrealized value of Kwik-Fit was 1.57 times
invested capital. In June, the Group sold half of its direct and
indirect holdings in Theravance (Theravance’s Nasdaq Ticker:
THR X) and realized a full exit in December, yielding a return of
2 times cost. AMF Bowling, position sixteen in the prior year,
dropped out of the top 20 investments portfolio after a cash
distribution to the Group resulting from a debt refinancing. In
July 2007, the Group sold its interest in Vaasan & Vaasan, the
leading bakery company in Finland, and received distributions
of EUR 3.7 million. The Group continues to hold a stake of
 MANAG E M E NT R E PO RT

Vaasan & Vaasan through the buyer, Lion Capital Fund II. HSH
Nordbank fell out of the Group’s top 20 investments after a re- Distribution of value in Top 20 2007 vs. 2006

capitalization in March 2007. In April, EQT III sold its remaining 70%

shares in Symrise (Symrise’s FSE Ticker: SY1). Also during the 60%

year, The Carlyle Group sold its remaining shares in QinetiQ 50%

40%
(QinetiQ’s LSE Ticker: QQ/), the third full exit in a listed hold-
30%
ing of the Group’s last year top 20 investments. With total
20%
inflows of 7.6 times the Group’s invested capital, QinetiQ was a
10%
highly successful transaction for the Group. 0%
Top 3 Top 5 Top 10 Top 10–20 T
Capmark, a globally diversified company that provides a
broad range of financial services to investors in commercial real
estate-related assets, was the Group’s largest single investment
Comparison Top 20 by Maturity 2007 vs. 2006
at year end. Although origination business may be somewhat
slower in the current credit envoronment, Capmark secured 45%
40%
favorable financing in the first half of 2007 and is in a position
35%
to benefit from tightness in real estate financing markets. Geo- 30%
25%
services, a global oil field services company, replaced Hertz,
20%
the world’s largest general use car rental company, as the 15%
10%
Group’s second largest investment at year end. Geoservices in-
5%
creased substantially in value based on growing revenues and 0%
3 years 4 years 5 years 7 years 1
1 year 2 years 6 years
profits, while Hertz’s share price (NYSE ticker: HTZ) reflected
the volatility of public markets generally during the year and
ended up down 8.6% after being up over 50% through October.
Comparison Top 20 2007 vs. 2006 by Industry
The Group exited about 20% of its Hertz position in June
40%
and has been repaid 1.01 times its invested capital in Hertz.
35%
Together with the remaining listed position, the Group’s over- 30%

all investment multiple on the Hertz investment at year end was 25%

20%
2.24 times. Due to significant valuation increases, Thomas
15%
Nelson was the Group’s third largest investment at year end. 10%

Thomas Nelson/Faith Media, is the leading publisher of Christ- 5%

0%
ian-oriented books, Bible reference books, and translations of
Services

Services
Energy

Financial

Semiconductors

Industrial
Products
Consumer

Health

Technology
Medical &

Leisure
Communications

the Christian Bible, and also sells secular titles to mainstream

commercial markets. The fasting-growing segment of the busi-
ness is the Gospel Music Channel, which has seen exponential
growth in its subscription base. Suomen Asiakastieto, the 2007 2006 adjusted for currency differences

leading business and credit information company in Finland,

shifts up two positions compared to year end 2006 due to
strong revenue and EBITDA growth during 2007. Universal
Studios Escape, consisting of the two theme parks, Universal
Studios Florida and Islands of Adventure, CityWalk, a dining,
9
MANAG E M E NT R E PO RT
retail and entertainment complex, and Universal Studios
Florida, a movie- based theme park, finished the year 2007 as
number ten of the Group’s top 20 investments. In February
2008, the Group sold its holding in Universal Studios Escape
(Universal) – a long standing top 20 company. The investment
in Universal was made in 2000 and despite the adverse impact
of the September 11th events, Universal posted a good overall
performance, returning 2.58 times invested capital. Foodvest,
last year’s largest investment, was sold in the first quarter of
2007 to CapVest Equity Partners II, in which the Group is a
limited partner. The Group continues to have exposure to
Foodvest through CapVest II and through vendor loan notes
held by the selling fund, but the Group’s percentage interest
in Foodvest declined and it fell to the Group’s number eleven
investment by size. Freescale Semiconductor, a global de-
signer, manufacturer, and marketer of broad line semicon-
ductors, was reduced in value due to general weakness in the
semiconductor business during 2007 and a reduction in orders
from its primary customer, Motorola. The Nielsen Company
(formerly known as VNU) fell one position compared to
December 31, 2006. The world’s leading provider of marketing
information, audience measurement, and business media pro-
ducts and services is still held at cost. The slight decrease in
value is a result of foreign exchange influences. Nevertheless,
three more holdings within the Group’s top 20 investments
posted strong results in 2007. PBL Media, Australia’s largest
diversified media company, saw its valuation increase by 22%
compared to its value as of December 31, 2006. I-Med
Holdings (formally known as DC A Group) has dropped out of
the Group’s top 20 investments and then re-entered the top 20
investments portfolio during the fourth quarter as a result of
an increased valuation after the announced sale of their “Aged
Care” business. I-Med Holdings is Australia’s largest private
diagnostic imaging network and is held trough CVC European
Equity Partners IV, CVC European Equity Partners Tandem Fund
and CVC Capital Partners Asia Pacific II. Acosta, a leading
10
sales and marketing agency servicing consumer packaged
goods companies in the U.S. and Canada, found itself back in
the top 20 after dropping out in the second quarter of 2007.
The return into the Group’s top 20 investments was due to a
valuation increase stemming from strong operating results.
New Top 20 Companies
Eight of the Group's top twenty investments as of December
31, 2007, were new compared to the prior year. Of these eight,
six were new investments in 2007 and four of them are still
held at cost: EMI, Primesight, Ethypharm and Hema.
Kinder Morgan, one of the largest pipeline transporters and
terminal operators in North America, has already increased
in value due to a reduction of debt and good operating per-
formance. Kinder Morgan is held through AIG Highstar Capital
III and Carlyle Partners IV. Maxam, mainly a developer, manu-
facturer and seller of civil explosives and initiation systems for
the mining, quarry and infrastructure industries, has increased
in value within the first year after strong performance in Spain,
South America, Central Asia and Russia. The investment in
Maxam was made through Ibersuizas II, the first Spanish domi-
ciled fund of the Group. EMI, a portfolio company of Terra
Firma Investments III, is one of the world’s largest music com-
panies. Primesight, the second investment in the top 20
investments portfolio sponsored by GMT Communications
Partners III (after Suomen Asiakastieto), is a leading outdoor
media owner of various sheets, backlight billboards and exclu-
sive advertising contracts. In October 2007, the Group invested
EUR 4.2 million in Ethypharm, which was acquired by Astorg
IV. Ethypharm is one of the world’s leading drug delivery
systems companies and has launched over 50 products in over
70 countries. The initial investment of EUR 3.3 million in
Hema, which is held through Lion Capital Fund II, brought
the successful general merchandise retailer with stores in the
Netherlands, Belgium, and Germany into the Group’s top 20
investments. In October 2006, the Group made an invest-
ment in Knowledge Universe Education, a leading global
education company serving a wide range of students, from
 MANAG E M E NT R E PO RT

TO P 20 I NVE STM E NTS

Fair Value Percentage
Investment Date Portfolio Company (CHF million) of NAV Type Sector 1 Geography

1 March 2006 CapMark 14.5 2.0% Buyout Financial Services North America
2 July 2005 Geoservices 13.3 1.8% Buyout Energy Global
3 June 2006 Thomas Nelson Publishing 13.3 1.8% Buyout Communications North America
4 Aug. 2007 EMI 12.7 1.8% Buyout Consumer Global
5 Oct. 2006 Knowledge Universe Education 9.8 1.4% Buyout Services Global
6 July 2006 Suominen Asiakastieto 8.7 1.2% Buyout Services Europe
7 May 2007 Kinder Morgan 8.7 1.2% Buyout Energy North America
8 Dec. 2005 Hertz* 8.6 1.2% Buyout Services Global
9 Oct. 2007 Primesight 8.4 1.2% Buyout Communications Europe
10 June 2000 Universal Studios Escape 8.4 1.2% Buyout Consumer North America
11 March 2007 FoodVest 7.9 1.1% Buyout Consumer Europe
12 Nov. 2006 Freescale 7.6 1.1% Buyout Semiconductors Global
13 Jan. 2007 Maxam 7.3 1.0% Buyout Industrial Products Europe
14 June 2006 VNU 7.0 1.0% Buyout Services Global
15 Oct. 2007 Ethypharm 6.9 1.0% Buyout Medical/Health Europe
16 Nov. 2006 PBL Media 6.6 0.9% Buyout Communications Australia
17 May 2005 Numéricable (Ypso) 6.0 0.8% Buyout Communications Europe
18 Nov. 2006 I-Med Holdings (fka. as DCA Group) 6.0 0.8% Buyout Medical/Health Australia
19 July 2007 Hema 5.5 0.8% Buyout Consumer Europe
20 July 2006 Acosta 5.1 0.7% Buyout Services North America
Total Fair Value Top 20 Holdings 172.3 24.0%
* Denotes publicly traded company (Hertz’s NYSE Ticker: HTZ)
1 EVCA Definition

infants and toddlers to primary and secondary students, Outlook

which is one of five direct investments of the Group’s top 20.
Numéricâble, the number one cable operator in France,
serving more than 99% of the French cable subscribers, has
entered the Group’s top 20 investments through an add-on
acquisition and an uplift in value due to a partial sale to The
Carlyle Group.
At least one top 20 investment is currently in a sales process
(in addition to Suomen Asiakastieto), and the Group expects
two or more exits from the top 20 portfolio during the course
of 2008.

Subsequent Events

As indicated above, the Group sold its interest in Universal

Studios Escape as part of a secondary transaction in January
2008. The Group sold Universal at a valuation which was
higher than the carrying value and returned 2.58 times in-
vested capital. Furthermore, GMT Communications Partners III
announced the sale of Suomen Asiakastieto in April 2008.
The transaction is expected to close at the end of May and will
return more than EUR 6 million to the Group.
11
MANAG E M E NT R E PO RT
2 Geoservices
www.geoservices.com
Geoservices is an upstream oil field services
company with headquarters located near
Paris, France. Almost 100% of its business activity takes place
outside France on a worldwide basis in at least 50 different
locations spread over all continents. Geoservices employs
over 4 000 people of some 60 different nationalities. Its main
business lines are: Mud Logging; Well Intervention and Field
Surveillance.
3 Thomas Nelson/Faith Media
w w w.thomasnelson.com
Faith Media Holdings, LLC, is a company
formed by InterMedia Advisors to acquire
the controlling interests in Thomas Nelson
Media, Inc. (“TNM”) and The Gospel Music Channel (“GMC”).
TNM is the leading publisher of Christian-oriented fiction and
non-fiction books, Bible reference books, and translations of
the Christian Bible. TNM also sells secular titles to mainstream
commercial markets. GMC is the first advertiser supported
cable network dedicated to gospel music.
12
1 Capmark
w w w.capmark.com
Capmark TM is a global, diversified company
that provides a broad range of financial ser-
vices to investors in commercial real estate-
related assets. Capmark has three core businesses: lending
and mortgage banking, investments and funds management,
and servicing. The company operates in North America, Europe
and Asia.
4 EMI
www.emi.com
EMI is one of the world’s largest music com-
panies. It operates directly in 50 countries, with
licensees in a further 20 countries, and it em-
ploys around 5 500 people. The business comprises two divi-
sions: EMI Music Publishing and EMI Recorded Music. EMI
Music Publishing has one of the largest catalogs of songs in the
world and EMI Recorded Music represents musicians such as
Lily Allen, The Beach Boys, The Beatles, Coldplay, Norah Jones,
Kylie and Pink Floyd.
 MANAG E M E NT R E PO RT

roughly double the nearest competitor. KUE also offers before

5 Knowledge Universe Education

www.knowledgeu.com
Knowledge Universe Education (KUE) is a leading global
education company serving a wide range of students, from
infants and toddlers to primary and secondary students. The
Company operates approximately 1 900 centers in the U.S.,
and after-school tutoring services at approximately 700 school
sites and an on-line education business through its Knowledge
Learning Corporation subsidiary. KUE also owns a minority
stake in k12, a leading operator of web-delivered curriculum
for “virtual charter schools”.

6 Suomen Asiakastieto
www.asiakastieto.com

Suomen Asiakastieto is the leading business

and credit information company in Finland.
The company provides customers with information and benefits
at all stages of the business relationship. Its circle of services
comprises targeting, decision-making, and monitoring. Asia-
kastieto’s database is the most extensive and comprehensive in
Finland, with real-time connections with several public and pri-
vate data sources. It contains up-to-date and comprehensive
contact, credit, and financial information on Finnish companies
as well as credit history information on private individuals.

7 Kinder Morgan
www.kindermorgan.com

Kinder Morgan is one of the largest pipeline

transporters and terminal operators in North
America. The Kinder Morgan companies own an interest in or
operate more than 37 000 miles of pipelines that transport
primarily natural gas, crude oil, petroleum products and CO 2 ,
and approximately 165 terminals that store, transfer and handle
products like gasoline and coal.

13
MANAG E M E NT R E PO RT

rently rent cars at approximately 7 700 locations in over

8 Hertz
www.hert z.com
Hertz is the world’s largest general use car
rental company and the third largest equip-
ment rental business in North America. The
Company and its independent licensees and associates cur-
150 countries. Hertz has been in the car rental business since
1918 and in the equipment rental business for over 40 years.
Wholly owned subsidiaries of Hertz include: Hertz Equipment
Rental Corporation, Hertz Claim Management Corporation (a
Third Party Liability Claims Administrator), and Hertz Local
Edition, which specializes in insurance replacement and local
car rentals.

9 Primesight
www.primesight.co.uk

Primesight is one of the leading Outdoor

Media Owners, with interests in Roadside 6
Sheets, Convenience 6 Sheets, Premium Backlight Billboards,
Glasgow Subway and exclusive contracts to advertise in private
Health Clubs & multiplex Cinemas Foyers. The Company has
also developed a strong market position in several niche seg-
ments such as CTN (Confection, Tobacco, News), small retail
shops and petrol stations.

10 Universal Studios Escape

www.universalorlando.com

Universal Studios Escape consists of two

theme parks, Universal Studios Florida and
Islands of Adventure. It also includes CityWalk, a dining, retail
and entertainment complex. Universal Studios Florida is a
movie-based theme park designed to allow guests to become a
part of their favorite movies. Islands of Adventure, opened in
1999, has 16 rides, shows, and attractions along with a façade
of famous film locations. CityWalk is a diverse collection of
restaurants, retail outlets, and nightclubs, and also includes a
20-screen Cineplex. The latest attraction, The Incredible Hulk
Coaster, has a top speed of 67 mph, one of the fastest rides in
the world.
14

11 FoodVest
www.foodvest.co.uk
Foodvest is one of the largest food groups in
Europe. Foodvest is a UK registered business
and was created in 2006 with the merger of
Young’s Seafood in the UK and Findus in Sweden. Today the
business is run by a single management team. Young’s Seafood
is based in Grimsby, England. Young’s is the UK’s leading sea-
food producer, with a 40% share of both the frozen and chilled
seafood market. Findus is based in Malmo, Sweden. Findus is
the leading frozen food brand in Sweden, Norway, Finland and
France. Findus produces a wide range of products including
seafood, vegetables, ready meals and frozen bakery products.
13 Maxam
www.maxam-corp.com
Founded in 1872 by Alfred Nobel, Maxam is
an international company with productive
centers in more than 20 countries and commercial presence in
more than 90 countries. Maxam is the European leader and the
third largest player of the world in the development, manu-
facture and sale of civil explosives and initiation systems for the
mining, quarry and infrastructure industries in addition to a
leading producer of hunting cartridges and powders for sport-
ing use. Besides its mining expertise, Maxam is a key supplier
of raw materials to the Nitrochemical industry.
MANAG E M E NT R E PO RT
12 Freescale
www.freescale.com
Freescale Semiconductor, Inc., is a global
designer, manufacturer, and marketer of
broad line semiconductors. The Company develops products
for multiple markets, including the wireless and wire line com-
munication, consumer, and automotive semiconductor markets.
The company is based in Austin, Texas, and has design, re-
search and development, manufacturing, or sales operations
in more than 30 countries. Freescale is one of the world’s
largest semiconductor companies and has more than 24 000
employees.
14 The Nielsen Company (VNU)
w w w.nielsen.com
The Nielsen Company is the world’s leading
provider of marketing information, audience
measurement, and business media products
and services. By delivering an unmatched combination of in-
sights, market intelligence, advanced analytical tools, and in-
tegrated marketing solutions, Nielsen provides clients with
the most complete view of their consumers and their markets.
The company is active in more than 100 countries, with head-
quarters in Haarlem, the Netherlands, and New York, USA.
15
MANAG E M E NT R E PO RT
15 Ethypharm
w w w.ethypharm.com
Ethypharm is one of the world’s leading
drug delivery systems (DDS) companies
that provides a range of effective solutions to optimize the
delivery of pharmaceutical products. The use of Ethypharm’s
DDS technologies delivers important benefits including im-
proving the drug’s efficacy, enhancing patient compliance and
comfort, extending the life cycles of existing pharmaceutical
products, and reducing the total cost of treatment. Ethypharm
has launched 50 products in over 70 countries.
16 PBL Media
www.pblmedia.com.au
PBL Media is Australia’s largest diversified media
company. The group’s core businesses are tele-
vision production and broadcasting, magazine publishing and
distribution, and strategic investments in key digital media
16
and entertainment businesses. It owns a leading free-to-air
television network, the Nine Network Australia, and Australia’s
largest magazine publisher, ACP Magazines. Additionally
PBL Media is a joint venture partner in ninemsn, the leading
on-line business in Australia, and owns the majority in the
number one auto website carsales.com, and interests in
myhome.com.au and Australian News Channel Sky News.
17 Numéricâble
www.numericable.fr
Numéricâble was created in March 2005,
combining cable operators and their cable
networks from France Télécom, Canal+ (Vivendi) and TDF. Sub-
sequently, Altice One, which owned cable assets in eastern
France, Belgium and Luxembourg and then the number two
cable provider in France, Noos – UPC France were acquired. As
a result, Numéricâble is the number one cable operator in
France passing more than 9.5 million homes (i.e. serving more
than 99% of the French cable subscribers). Numéricâble is the
first telecom operator to massively deploy its own fiber network
in France. This unique fiber network already passes 2 million
households and will be extended to 8 million households
by 2010. In September 2007, Completel was acquired – it is
the third largest B2B infrastructure-based telecommunications
operator in France with both a national backbone and a DSL
network with 600 exchanges covering 110 cities in France.
 MANAG E M E NT R E PO RT

18 I-Med Holdings (DCA Group)

w w w.i-med.com.au

The I-MED Network (“I-Med”) is Australia’s

largest private diagnostic imaging network.
It was formerly part of DC A Group, which also included Aus-
tralia and New Zealand’s leading for-profit aged care facility
operator, prior to its sale to BUPA in December 2007. DC A has
been renamed I-Med and is now primarily a diagnostic imaging
business. Across Australia and the United Kingdom, the I-MED
Network operates over 240 diagnostic imaging clinics. Its model
is to provide the best quality of service to patients and their
referrers by offering comprehensive imaging services in all
modalities of this expanding branch of diagnostic medicine.
I-Med has more then 4 500 employees.

19 Hema
www.hema.nl

Hema is a unique and highly successful general

merchandise retailer which offers its customers an
extensive range of apparel, home, personal care
and food products, all under the Hema brand,
through a network of stores in the Netherlands (337 sites),
Belgium and Luxembourg (59 sites), and Germany (8 sites), as
well as a captive website. Hema is known by its customers for
its extensive and high quality product offering at attractive
prices. The company has approximately 10 000 employees.

20 Acosta
www.acosta.com

Acosta is the leading sales and marketing agency

servicing consumer packaged goods companies
in the U.S. and Canada. Its customer base comprises over 1 300
clients and includes top tier global food and beverage manu-
facturers. Acosta has roughly 11 000 non-unionized sales asso-
ciates deployed at more then 120 000 retail locations to serve
the grocery channel and strategic channels, which include
mass/club, natural/specialty, convenience stores, and drug
stores.

17
MANAG E M E NT R E PO RT

Although the Group has investments in 79 funds, the portfolio has become
more focused over the last three years, and the Group’s 20 largest fund
investments represent 46% of the Group’s assets as of year-end 2007
(compared to 45% of assets at the end of 2006). The average commitment
to a 2007 fund was CHF 29 million, up from CHF 26 million in 2006. Despite
the concentration strategy, however, no fund represents more than 5% of
Group assets. The Group had seven new funds move into the top 20 funds
portfolio. The strategic focus remains on the buyout sector, with an
overweight in Europe.

Partners IV (CHF 24.2 million), Carlyle IV (CHF 23.5 million),

Top 20 Funds
As of December 31, 2007, the total fair market value of the
Group’s twenty largest funds was CHF 389.4 million, a signifi-
cant increase of CHF 101.1 million (35.1%) over the prior year.
Of seven new funds joining the top 20 in the course of the
year, four were 2007 vintage funds. Their value represents
16.4% of Group’s top 20 funds. 2006 vintage funds make up
31.7% of the value of the Group’s top 20. Their share has
increased compared to the prior year (21.0%) as a result of
value increases. 2005 vintage funds make up 30.2% of the top
20 funds portfolio. The share of 2004 funds in the top 20 funds
portfolio remains unchanged at 4.8%. By geography, 55.8% of
the top 20 funds portfolio is invested primarily in Western
Europe, 35.95 in North America and 8.2% in the rest of the
world (Asia and emerging markets). The top 20 funds portfolio
has exposure to a range of deal sizes, with the following
distribution of overall fund size: one CHF 20+ billion fund,
two funds between CHF 10–20 billion, three funds between
CHF 5–10 billion, ten funds between CHF 500 million to CHF 5
billion, and four funds below CHF 500 million.
The five largest funds (by net asset value) were Blackstone
Capital Partners V (CHF 35.9 million), CVC European Equity
18
AIG Horizon Partners (CHF 23.2 million) and Carlyle European
Equity Partners II (CHF 22.0 million). These funds are fully
or nearly fully invested and have, with the exception of AIG
Horizon, launched follow-on funds. Of these funds, AIG
Horizon Partners is the most mature (vintage year 1999) and
is actively divesting its portfolio companies. The other funds
have made initial distributions but are generally in the value
creation phase of the underlying portfolio companies.
New Top 20 Funds
Advent International Global Private Equity V (GPE V)
has increased its net asset value due to the strong performance
of underlying portfolio companies. Furthermore, Advent made
eleven new investments during the year. In 2007 the Group
invested USD 9.4 million in Ares Corporate Fund II. Ares
makes majority and shared-control investments in distressed
and under-capitalized middle market companies in the US. In
2006, the Group committed USD 20 million in Madison Dear-
born Partners V, now the tenth largest fund of the Group’s top
20 funds. Madison Dearborn Partners V makes investments
in management buyouts and other private equity transactions
in the communications, basic industries, financial services,
consumer and healthcare industries. The Fund seeks to be a
lead investor and majority/control owner in most of its invest-
ments. Terra Firma Investments III is focused on buyouts
 MANAG E M E NT R E PO RT

TO P 20 F U N D S
Fair Value Percentage
Inception Fund (CHF million) of NAV Strategic Focus Geographic Focus

1 2006 Blackstone Capital Partners V, L.P. 35.9 5.0% Buyout North America/Europe
2 2005 CVC European Equity Partners IV, L.P. 24.2 3.4% Buyout Europe/Asia
3 2005 Carlyle Partners IV, L.P. 23.5 3.3% Buyout North America/Europe
4 1999 AIG Horizon Partners Fund, L.P. 23.2 3.2% Buyout Europe/US
5 2003 Carlyle Europe Partners II, L.P. 22.0 3.1% Buyout Europe/North America
6 2005 Advent International GPE V- C L.P. 21.1 2.9% Buyout Europe
7 2003 Astorg III 20.9 2.9% Buyout Europe
8 2006 GMT Communications Partners III, L.P. 20.6 2.9% Buyout Europe
9 2006 Ares Corporate Fund II, L.P. 19.4 2.7% Buyout North America
10 2006 Madison Dearborn Partners V, L.P. 18.6 2.6% Buyout North America
11 2004 EQT IV, L.P. 18.6 2.6% Buyout Europe
12 2007 Terra Firma Investments III, L.P. 17.8 2.5% Buyout Europe
13 2007 The Fourth Cinven Fund 17.4 2.4% Buyout Europe
14 2005 AIG Global Emerging Markets Fund II, L.P. 16.7 2.3% Buyout Global
15 2005 PAI Europe IV, L.P. 16.6 2.3% Buyout Europe
16 2005 CVC Capital Partners Asia Pacific II, L.P. 15.5 2.1% Buyout Asia
17 2006 Lexington Capital Partners VI, L.P. 15.2 2.1% Buyout/Venture Europe/North America
18 2007 Avista Capital Partners, L.P. 14.6 2.0% Buyout North America
19 2007 AIG Highstar Capital III, L.P. 14.2 2.0% Buyout North America
20 2006 Diamond Castle IV, L.P. 13.6 1.9% Buyout North America
Total Fair Value Top 20 Funds 389.4 54.1%

of large, asset-rich and complex businesses in need of oper-

ational and/or strategic change. EMI, a top 20 investment of Comparison Top 20 Funds by Geography 2007 vs. 2006

the Group, is a perfect example of one of their underlying port- 80%

folio companies. Number thirteen of the Group’s top 20 funds 70%

60%
is The Fourth Cinven Fund. The Group already had exposure
50%
to three prior Cinven funds, all of which showed good to out- 40%

standing performance. Cinven will continue to focus on buy- 30%

20%
outs in large high quality pan-European businesses. Avista
10%
Capital Partners is the first independent fund lead by two 0%
Europe North America Rest of the World E
seasoned private equity professionals that spun out of DL J
Merchant Banking Partners. The fund invests in the energy,
healthcare and media sectors in the United States, typically
Comparison Top 20 Funds by Vintage 2007 vs. 2006
pursuing control equity investments. AIG Highstar Capital
III is a fund targeting to make investments in infrastructure 35%

related assets and businesses primarily in North America. 30%

25%

20%

15%

10%

5%

0%
2007 2006 2005 2004 2003 2002 2001

19
2007 2006 adjusted for currency differences
F I NA NC IA L R E PO RT 2007
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

CO N S O LI DATE D BAL AN C E S H E E T A S O F D E C E M B E R 31, 2007 AN D D E C E M B E R 31, 2006

in TCHF

Note 2007 2006

Assets
Current assets
– Cash and cash equivalents 2 26 37 179
– Derivative instruments 4 1 645 945
– Receivables and prepayments 5 1 826 12 078
Total current assets 3 497 50 202

Non-current assets
– Loans 1 18 655 34 155
– Investments held as available-for-sale
Direct Investments 1, 17 101 788 93 286
Funds 1, 17 685 997 408 564
Contractual agreements 1, 16 41 425 53 748
Total non-current assets 847 865 589 753

Total Assets 20 851 362 639 955

Liabilities and Shareholders’ Equity

Current Liabilities
– Payables and accrued charges 6 24 008 14 109
– Loans 7 107 954 –
– Deferred tax liability 13 145 –
Total current liabilities 132 107 14 109

Shareholders’ Equity
– Share capital 8 412 500 412 500
– Share capital premium 149 116 148 770
– Treasury stock (at cost) (27 847) (36 207)
– Reserve for stock option plan 18 182 156
– Total Revaluation reserve 10 26 772 22 679
– Accumulated surplus 77 948 74 972
– Net profit for the period 80 584 2 976
Total Shareholders’ Equity 719 255 625 846

Total Liabilities and Shareholders’ Equity 851 362 639 955

Net asset value per share

Number of share outstanding at year-end 8 3 949 027 3 896 194
Net asset value per share (in CHF) 182.13 160.63

The accompanying notes on pages 26 to 48 form an integral part of these consolidated financial statements.

22
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

CO N S O LI DATE D I N CO M E STATE M E NT FO R TH E P E R I O D
JAN UARY 1 TO D E C E M B E R 31, 2007 AN D JAN UARY 1 TO D E C E M B E R 31, 2006
in TCHF
Note 2007 2006
Income
Interest income from non-current assets 12 11 130 6 884
Dividend income from non-current assets 12 3 165 1 485
Net realized gains on investments 12 112 053 56 717
Interest income from current assets 671 2 615
Net gain on derivative instruments 2 642 –
Total Income 20 129 661 67 701

Expenses
Management fees 14 (14 205) (11 256)
Performance fees 14 (13 049) (6 103)
Service fees 14 (409) (376)
Write-down of non-current assets 11 (10 144) (28 756)
Other operating expenses (2 764) (2 545)
Interest expense from loans (1 898) –
Net loss on foreign currency exchange (5 718) (13 152)
Net loss on derivative instruments – (1 381)
Total Expenses (48 187) (63 569)

Tax expenses 13 (890) (1 156)

Net profit for the period 80 584 2 976

Earnings per share

Weighted average number of shares outstanding during the period 9 3 927 921 3 546 533
Net profit/loss per share (in CHF) – basic 9 20.52 0.84
Net profit/loss per share (in CHF) – diluted 9 20.49 0.84

The accompanying notes on pages 26 to 48 form an integral part of these consolidated financial statements.

23
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

CO N S O LI DATE D STATE M E NT O F C A S H F LOWS FO R TH E P E R I O D

JAN UARY 1 TO D E C E M B E R 31, 2007 AN D JAN UARY 1 TO D E C E M B E R 31, 2006
in TCHF

Note 2007 2006

Cash Flows from Operating Activities
Purchase of non-current assets 1 (413 270) (273 757)
Proceeds from return of invested capital in non-current assets 1 146 121 80 341
Interest income received from current assets 673 2 613
Net interest income from non-current assets 12 13 193 6 248
Dividends received from non-current assets 12 3 165 1 486
Net realized gains on investments 12 110 863 57 106
Proceeds from derivative instruments 1 942 –
Operating costs (3 892) (3 335)
Management & Performance fees 14 (14 662) (12 345)
Changes in other current assets and liabilities – 1
Total Cash Flows from Operating Activities (155 867) (141 642)

Cash Flows from Financing Activities

Proceeds from loans 107 954 –
Interest paid on line of credit (1 586) –
Proceeds from capital increase – 145 519
Treasury share purchase – (36 465)
Treasury share sale 8 454 7 677
Total Cash Flows generated by/(used in) Financing Activities 114 822 116 731

Foreign Exchange Effect 3 892 (1 863)

Increase (decrease) in Cash and Cash Equivalents (37 153) (26 774)

Cash and Cash Equivalents as of January 1 2 37 179 63 953

Cash and Cash Equivalents as of December 31 2 26 37 179

The accompanying notes on pages 26 to 48 form an integral part of these consolidated financial statements.

24
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

STATE M E NT O F C HAN G E S I N CO N S O LI DATE D S HAR E H O LD E R S’ E Q U IT Y A S O F D E C E M B E R 31, 2007

in TCHF
Share Share Less Reserve Revaluation Accumulated Total
Capital Capital treasury for stock Reserve Surplus Equity
Premium stock option (Deficit)
(at cost) plan

Shareholders’ Equity
Balance January 1, 2006 317 500 94 557 (3 775) 78 (50 786) 74 972 432 546

Share capital increase 95 000 95 000

Movement due to share capital increase 55 575 55 575
Share issue cost (5 056) (5 056)
Value increase on investments 70 879 70 879
Value increase due to currency translation differences 2 586 2 586
Transaction in treasury shares 3 694 (32 432) (28 738)
Transaction in reserve for stock option plan 78 78
Net profit for the period 2 976 2 976
Total Shareholders’ Equity as of December 31, 2006 412 500 148 770 (36 207) 156 22 679 77 948 625 846

Balance January 1, 2007 412 500 148 770 (36 207) 156 22 679 77 948 625 846

Value increase on investments 20 078 20 078

Value decrease due to currency translation differences (15 985) (15 985)
Transaction in treasury shares 346 8 360 8 706
Transaction in reserve for stock option plan 26 26
Net profit for the period 80 584 80 584
Total Shareholders’ Equity as of December 31, 2007 412 500 149 116 (27 847) 182 26 772 158 532 719 255

The accompanying notes on pages 26 to 48 form an integral part of these consolidated financial statements.

25
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
N OTE S TO TH E CO N S O LI DATE D F I NAN C IAL STATE M E NTS
AIG Private Equity Ltd., Zug (“the Company”) is a Swiss stock
corporation established under the relevant provisions of the
Swiss Code of Obligations and domiciled in Zug. The Company
was established by AIG Private Bank Ltd. on September 17,
1999 for an indefinite period of time and was registered in the
commercial register of the Canton of Zug on September 20,
1999. The Company, together with AIG Private Equity (Ber-
muda) Ltd. and APEN Faith Media Holdings LLC (“the Sub-
sidiaries”), comprises the AIG PE Group (“the Group”). The
Company’s shares are listed on the SWX Swiss Exchange.
The Company’s investment objective is to achieve long-
term capital growth for shareholders by investing in private
equity funds. The Company may also make direct investments
in operating companies. Although the Company may invest
directly in fund investments or companies, it is anticipated that
investments will generally be made through the Subsidiaries.
The subsidiary in Bermuda was incorporated on October 6,
1999 as a company with limited liability under the laws of Ber-
muda for an unlimited duration and is domiciled in Pembroke.
All shares are held by the Company. The purpose of the sub-
sidiary is to act as an investment vehicle the Company’s in-
vestments and related transactions.
APEN Faith Media Holdings LLC was incorporated on June
11, 2006 as a company with limited liability under the laws of
Delaware, United States of America, for an unlimited duration
and is domiciled in Wilmington. All shares of APEN Faith Media
Holdings LLC are held by the Company. The purpose of APEN
Faith Media Holdings LLC is to act as an investment vehicle for
the Company’s direct investments in the United States and to
enter into related transactions.
The Company’s Board of Directors is responsible for the
policies and management of the Company as well as valuations
and the appointment of the investment committee. The sub-
sidiary’s investment committee is responsible for assessing the
investment opportunities presented by the manager and the
investment advisor and subsequently making investment
recommendations to the Bermuda Board of Directors for
approval. As of December 31, 2007 the Company did not em-
ploy any employees (2006: none). For information on the
Group’s management please refer to Note 14, Management
and Advisory Agreement.
26
ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of the
Group for the year ended December 31, 2007 have been pre-
pared in accordance with International Financial Reporting
Standards (IFRS) formulated by the International Accounting
Standards Board (IASB), and comply with Swiss Law and the
accounting provisions of the additional rules for the listing of
investment companies of the SWX Swiss Exchange.
The consolidated financial statements are prepared under
the historical cost convention, except that investments avail-
able-for-sale and derivative financial instruments are stated at
their fair value as disclosed in the accounting policies here-
after.
Use of Estimates
The preparation of financial statements requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the re-
porting period. Actual results could differ from those estimates.
Adoption of revised and new standards
Amendments to published standards effective in 2007
• IFRS 7, Financial instruments: Disclosures, and the com-
plementary amendment to IAS 1, Presentation of Financial
Statements – Capital disclosures introduces new and ex-
tended disclosures relating to financial instruments and
financial risk management and does not have any impact on
the classification and valuation of the group’s financial
instruments. The Group has applied IFRS 7 and the amend-
ment to IAS 1 from annual periods beginning January 1,
2007. Further disclosures have been included in order to
fulfill the requirements of IFRS 7 and IAS 1.
• IFRIC 10 – Interim Financial Reporting and Impairment –
(effective for annual periods beginning on or after 1 Nov-
ember 2006). IFRIC 10 prohibits the impairment losses
recognized in an interim period on goodwill, investments in
equity instruments and investments in financial assets held
available for sale to be reversed at a subsequent balance
sheet date. The Group has applied IFRIC 10 since January 1,
2007.
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
Standards, amendments and interpretations effective
in 2007 but not relevant
The following standards, adjustments and interpretations are
mandatory effective for the accounting periods starting at
January 1st, 2007 – but are not relevant for the Group:
• IFRIC 7 – Applying the Restatement Approach under IAS 29
Financial Reporting in Hyperinflationary Economies Effec-
tive for annual periods beginning on or after 1 March 2006.
• IFRIC 8 – Scope of IFRS 2 (Effective for annual periods
beginning on or after 1 May 2006). IFRIC 8 requires con-
sideration of transactions involving the issuance of equity
instruments – where the identifiable consideration received
is less than the fair value of the equity instruments issued.
• IFRIC 9 – Reassessment of Embedded Derivatives (effective
for annual periods beginning on or after 1 June 2006) –
This interpretation prescribes that the existence of an em-
bedded derivative is determined at the date an entity first
becomes a party to a contract and is reassessed only when
there has been a change to the contract that significantly
modifies the cash flows.
Interpretations to existing standards that are
not yet effective
The following standards and interpretations are not yet
effective:
• IFRS 2 (amended) – clarifies that vesting conditions can be
service conditions and performance conditions only. Other
features of share-based payment are not vesting conditions.
It also specifies that all cancellations, whether by the entity
or by the other parties, should, receive the same accounting
treatment. The Group has not yet evaluated the impact (if
any) of this amended statement.
• IFRS 3 (revised) – “business combinations” requires signifi-
cant changes in the application of the acquisition method to
business combinations. All payments to purchase a busi-
ness are to be recorded at fair value at the acquisition date,
with some contingent payments subsequently remeasured
at fair value through profit and loss. Goodwill may be cal-
culated based on the parent’s share of net assets or it may
also include goodwill related to the minority interest. All
transaction costs will be expensed. The standard is appli-
cable to business combinations occurring in accounting
periods beginning on or after 1 July 2009, with earlier
application permitted.
• IFRS 8 – Operating segments (effective for annual periods
beginning on or after 1 January 2009) – This standard
governs newly the use of the Segment Reporting.
• IAS 23 – Borrowing Costs (Revised) (effective for annual
periods beginning on or after 1 January 2009) – The revised
standard eliminates the option of expensing all borrowing
costs and requires borrowing costs to be capitalised if they
are directly attributable to the acquisition, construction or
production of a qualifying asset.
• IAS 27 (amended) – requires the effects of all transactions
with non-controlling interests to be recorded in equity if
there is no change in control. They will no longer result in
Goodwill or gains and losses. The standard also specifies
the accounting when control is lost. Any remaining interest
in the entity is remeasured to fair value and a gain or loss is
recognized in profit or loss. In addition, total comprehen-
sive income must be attributed to the owners of the parent
and to the non-controlling interests even if this results in
the non-controlling interests having a deficit balance. These
changes will impact the accounting for future transactions
with non-controlling interests.
• IFRIC 11, IFRS 2 – Group and Treasury Share Transactions
(effective for periods beginning on or after 1 March 2007) –
IFRIC 11 provides guidance on whether share-based trans-
actions involving treasury shares or involving group entities
(for example options over a parent’s shares) should be
accounted for as equity-settled or cash-settled share-based
payment transactions in the stand-alone accounts of the
parent and group companies.
• IFRIC 12 – Service Concession Arrangements (effective for
annual periods beginning on or after 1 January 2008) – The
interpretation provides guidance on the accounting by oper-
ators for public-to-private service concession arrangements.
• IFRIC 13 – Customer Loyalty Programmes (effetive for an-
nual periods beginning on or after 1 July 2008) – The Inter-
pretation requires that loyalty award credits granted to
customers as part of a sales transaction are accounted for
as a separate component of the sales transaction.
• IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction
(effective for annual periods beginning on or after 1 Jan-
uary 2008) – This interpretation addresses how to assess
the limit under IAS 19 Employee Benefits, on the amount of
the surplus that can be recognized as an asset, in particular,
when a minimum funding requirement exists.
Principles of Consolidation
The consolidated financial statements of the Group include
AIG Private Equity Ltd. and the companies that it controls. This
control is normally evidenced when the Group owns, either
directly or indirectly, more than 50% of the voting rights of a
company’s share capital or it is able to govern the financial and
27
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
operating policies of an enterprise so as to benefit from its
activities. Consolidated financial statements are prepared
using uniform accounting policies for like transactions and
other events in similar circumstances. Subsidiaries are consoli-
dated from the date on which effective control is transferred to
the Group and are no longer consolidated from the date that
control ceases. The consolidation is performed using the
purchase method. All intercompany transactions and balances
are eliminated. All Group companies have a December 31 year
end. The scope of consolidation currently includes AIG Private
Equity (Bermuda) Ltd. and APEN Faith Media Holdings LLC,
which both are owned 100% by the Company.
The investments of the Group are held as part of the
Group’s portfolio solely for the purpose of capital gains upon
sale in the near future.
As of December 31, 2007 the Group holds ownership in-
terests of 20% or more in AIG Horizon Partners Fund (36.57%;
20.50% including side-by-side vehicle; 2006: 36.57%; 20.50%
including side-by-side vehicle). According to the limited part-
nership agreement of this fund, the Group does not have the
power to participate in the financial and operating policy of
the fund. Therefore, this investment is excluded from equity
accounting.
Foreign currency transactions
Functional and presentation currency
The group’s investments are mainly held in foreign currencies
different from the presentation currency. Therefore, proceeds
from these investments are also received in foreign currencies.
Investments are generally held in the Subsidiaries which are
accounted for in USD. Further, performance management and
cash flow projections are based on investment currency (pri-
marily USD and EUR). Accordingly, the Board of Directors con-
siders the USD as the currency that most faithfully represents
the economic effects of the underlying transactions, events
and conditions of the Group, and the USD is considered to be
the functional currency of the Company and its subsidiaries.
The presentation currency of the financial statements is CHF.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities de-
nominated in foreign currencies are recognized in the income
28
statement. Translation difference on monetary items, such as
derivatives held at fair value through profit or loss, are re-
ported part of the fair value gain or loss. Translation differ-
ences on non-monetary items, such as equities classified as
available-for-sale financial assets, are recognized in equity
(reserve from foreign currency translation).
Translation to presentation currency
The results and financial positions of Group companies are
translated from the functional currency into the presentation
currency as follows:
• assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
• income and expenses for each income statement are trans-
lated at effective exchange rates; and
• all resulting exchange differences are recognized as a
separate component of equity.
Derivative Financial Instruments
The Company enters into foreign exchange forward or option
contracts to partially macro-hedge its net exposure in private
equity investments denominated in foreign currency. These de-
rivative financial instruments are held by the Company and the
Subsidiaries. The derivative financial instruments are held-for-
trading, are recorded at the date of the transaction and initially
recognized at fair value excluding transaction costs and sub-
sequently re-measured at fair value. Fair values are obtained
from quoted market prices, discounted cash flow models, or
option pricing models as appropriate. Changes in the fair value
of those derivative financial instruments are recorded into the
income statement.
Cash and Cash Equivalents
Cash includes cash on hand and cash with banks. Cash equiva-
lents are short-term, highly liquid investments that are readily
convertible to known amounts of cash with original maturities
of three months or less, and that are subject to an insignificant
risk of change of value.
Loans
While the loans may vary in their specific terms, in general the
interest calculated for the year is added to the notional
amount. Loans are recognized at the date of the transaction.
Loans are carried at amortized cost (with accrued and unpaid
interest included in cost) using the effective interest method,
less any impairment adjustments.
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
Direct Investments and Fund Investments
Under IAS 39, the Group has designated all its investments and
securities as available-for-sale. This category was chosen as the
most appropriate for an investment company as the Group
manages net asset value. Available-for-sale securities are initi-
ally recorded at fair value including transaction costs at trade
date. These securities are subsequently re-measured at fair
value. Gains or losses on measurement to fair value of available-
for-sale investments are recognized directly in the revaluation
reserve in the shareholder’s equity. When the investment is
sold or otherwise disposed of, or, when it is determined to be -
impaired, the cumulative gain or loss previously recognized in
equity is included in net profit or loss for the period. An im-
pairment is recorded when there is a significant (> 30%) or
prolonged (> 1 year) decrease in fair value below cost. Such
valuation adjustments are recorded under “write-down of long-
term assets”.
An investment, including contractual rights, is recognized
where the Group deems it probable that future economic
benefits associated with an investment will flow to the entity,
and it has a cost or value than can be measured reliably. The
future economic benefit of an investment is its potential to
contribute, directly or indirectly, to the flow of cash and cash
equivalents to the entity.
An investment is derecognized if, and only if, the Group
either transfers the contractual rights to receive the cash flows
of the financial asset, or it retains the contractual rights to re-
ceive the cash flows of the financial asset, but assumes a con-
tractual obligation to pay the cash flows to one or more reci-
pients, and in doing so transfers substantially all of the risks
and rewards of the assets.
The Group’s investments are mainly non-current financial
assets and market quotations are not readily available, there-
fore these investments are measured at their fair value using
the most appropriate valuation techniques as described in detail
below. The responsibility for determining the fair values lies
with the Board of Directors. Although general partners of funds
in which the Group invests and sponsors of the Group’s direct
investments provide valuations of these investments, no inde-
pendent external valuation of the investments were conducted.
All fair valuations may differ significantly from values that
would have been used had ready markets existed. Such dif-
ferences could be material.
Direct Investments
In determining the fair value of an unquoted direct investment,
the Group considers all appropriate and applicable factors re-
levant to their value, including but not limited to the following:
• Venture capital investments: A new financing round mate-
rial in size to the company with new, sophisticated insti-
tutional investors making up a significant piece of the
financing round. Inside round of finance does not qualify.
• Buy-out/later stage investments for which subsequent
rounds of finance are not anticipated:
Once an investment has been held for one year, an analy-
sis of the fair market value of the investments will be per-
formed. This analysis will typically be based on one of the
following methods (depending on what is appropriate for
that particular company/industry):
– Result of multiple analysis;
– Result of discounted cash flow analysis;
– Reference to transaction prices (including subsequent
financing rounds);
– Reference to the valuation of other investors;
– Reference to comparable companies.
Based on a composite assessment of all appropriate and
applicable indicators of fair value, the Group determines the
fair values as of the valuation date.
Fund Investments
In determining the fair value of fund investments, the Group
considers the funds as transparent holding vehicles. The fair
values of the underlying investments are determined using the
same valuation techniques as for direct investments.
All purchases and sales of investments are recognized
when the capital call/distribution notice is received. Cost of
purchase includes transaction cost.
Investments in securities and in other financial instruments
traded on recognized exchanges (including bonds, equities,
futures contracts, options, and funds), are valued at the last
reported bid price on the valuation date. Investments in securi-
ties and in other financial instruments traded in the over-
the-counter market and listed securities for which no trade is
reported on the valuation date are valued at the last reported
bid and ask price for long and short positions, respectively. In-
vestments are valued on a regular basis. No discount is applied
to the bid price of quoted investments, even in cases where
such investments are subject to a restriction on their sale or
where the number of share held is high in relation to the
trading volumes.
Dividends are recognized in the income statement upon
the receipt of such dividends.
29
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
Contractual Agreements
On December 22, 1999 the Group entered into three contrac-
tual agreements with American International Group Inc. that
entitle the Group to receive payments equal to a pro rata share
of all distributions from a specified list of funds, while obliga-
ting the Group to make payments equally to a pro rata share of
all draw-downs of committed capital to the same underlying
funds. The contractual agreements are valued using the latest
reported net asset value available from the General Partners
and adding or subtracting subsequent cash flows. Interest in-
come, dividends and capital gains are recognized in the in-
come statement on a monthly basis when cash is received from
the counterparty.
Net Asset Value per Share and Earnings per Share
The net asset value per share is calculated by dividing the net
assets included in the balance sheet by the number of partici-
pating shares outstanding at the reporting date. Basic earnings
per share are calculated by dividing the net profit attributable
to the ordinary shareholders by the weighted average number
of ordinary shares outstanding during the period. Diluted earn-
ings per share are calculated by adjusting the weighted aver-
age number of ordinary shares outstanding assuming conver-
sion of all dilutive potential ordinary shares.
Taxes
Tax provisions are based on reported income. Taxes are calcu-
lated in accordance with the tax regulations in force in each
country where the Group has investments.
Switzerland
The Company is taxed as a holding company in the Canton of
Zug. Income, including dividend income and capital gains from
its participations, is exempt from taxation at the cantonal and
communal level. For Swiss federal tax purposes, income tax at
an effective tax rate of approximately 7.8% is levied. However,
dividend income qualifies for the participation exemption if
the related investment represents at least 20% of the other
company’s share capital or has a value of not less than CHF 2
million. The participation exemption is extended to capital
gains on the sale of a substantial participation (i.e. at least
20%), which was acquired after January 1, 1997, and was held
for a minimum holding period of one year. The result of the
participation exemption pursuant to the aforementioned re-
quirements is that dividend income and capital gains are
almost fully exempt from taxation. In cases where the partici-
pation exemption is not applicable, a deferred tax liability will
be calculated for Swiss federal tax purposes.
30
Bermuda
The activities of the Bermuda subsidiary are currently not
subject to any income, withholding or capital gains taxes in
Bermuda.
US
APEN Faith Media Holdings LLC is subject to income and capi-
tal gains taxes in the US.
Provisions for taxes payable on profits earned in the Group
companies are calculated and recorded based on the appli-
cable tax rate in Switzerland.
Tax expenses shown in the profit and loss accounts repre-
sent withholding taxes paid in various jurisdictions that the
Group can not reclaim and may include direct taxes paid in
Switzerland or the US. Capital taxes charged to the Company
by the Canton of Zug are included in the operating expenses.
Shareholders Equity
Treasury shares are presented in the balance sheet as a de-
duction from equity. The acquisition of treasury shares is pre-
sented as a change in equity. No gain or loss is recognized in
the income statement on the sale, issuance, or cancellation of
treasury shares. Consideration received is presented in the
financial statements as a change in equity.
The transaction costs of an equity transaction, other than in
the context of a business combination, are accounted for as a
deduction from equity. Equity transaction costs are comprised of
only those incremental external costs directly attributable to the
equity transaction, which would otherwise have been avoided.
The revaluation reserve includes the cumulative net change
in fair value of available-for-sale investments until the invest-
ment is disposed of or is determined to be impaired. The trans-
lation reserve from currency revaluation includes differences
due to foreign currency translation between presentation and
functional currencies.
Impairment of Financial Instruments
Financial instruments are reviewed for impairment at each
balance sheet date. For available-for-sale investments, the
cumulative gain or loss previously recognized in equity is in-
cluded in net profit or loss for the period when there is objec-
tive evidence that the asset is impaired.
In the case of equity investments, a significant or pro-
longed decline in the fair value of the security below its cost is
considered in determining whether the assets are impaired.
Impairment losses recognized in the income statement on
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007
equity investments are not reversed through the income state-
ment but through equity.
The available-for-sale investments are categorized into
three distinct categories. The application of the impairment
policy to the individual category of investments is applied as
follows:
Contractual Agreements (see also note 16)
At each balance sheet date the reference funds are reviewed by
the Company and investment advisor. If a reference fund has
liquidated all of its portfolio companies and is beyond its in-
vestment period, the Company will eliminate the reference
fund from the contractual agreements and debit any residual
value through the profit and loss accounts. Additionally, the
Company will include the cumulative loss previously recog-
nized in equity in net profit or loss for the period if it comes to
the conclusion that the future cash flows of the contractual
agreements will not cover its costs.
Fund Investments
Funds where the Company is a direct limited partner will be re-
viewed at each balance sheet date. If the fair market value of
the Company’s investment in a fund is below the Company’s
cost basis in such fund, and has been below the cost basis for
at least one year, the Company will recognize the difference as
an impairment, which will be booked through profit or loss for
the period.
Direct Investments
Direct investments are reviewed on a quarterly basis by the
investment advisor. Financial and market performance is com-
pared with budget information, data obtained from competi-
tors, and subsequent rounds of financing. In case of significant
deviations, valuations are adjusted to reflect current market
values. If a direct investment has had a fair market value below
cost for at least a year, it will be deemed to be impaired and
the cumulative loss previously recognized in equity, will be
transferred to profit or loss for the period.
Segment reporting
The sole business segment of the Group is investing in private
equity, resulting in no primary segment disclosure. Therefore,
the results published in this report correspond to the primary
segment-reporting format. The geographical analysis of assets
and income is disclosed in Note 20.
Contingencies
Contingent liabilities are not recognized in the financial state-
ments. They are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. A con-
tingent asset is not recognized in the financial statements but
disclosed when an inflow of economic benefits is probable.
Share-based compensation plans
Stock option plan
The Group operates an equity-settled, share-based compen-
sation plan. Costs for stock options granted to the manage-
ment are recognized in the income statement in quarterly
amounts over the vesting period starting from the grant date
and ending at the beginning of the exercise period, so that the
personnel expenses show the fair amount of compensation
paid by the Company to its management for their services ren-
dered. The amounts recognized as cost in the income state-
ment are credited to “Reserves for stock option plan” in equity.
Cost is defined as the fair market value of the options at
grant date. The fair market value is determined by using a
recognized option pricing model.
Share appreciation rights (SARs)
In addition to the stock option plan the Group operates a cash-
settled, share-based compensation plan. The corresponding
liability is re-measured at each balance sheet date to fair value,
with changes recognized immediately in profit or loss.
Critical accounting estimates
The Group makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next
financial year are:
Fair value of non-quoted investments
The fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques. The
Group uses its judgment to select a variety of methods and
make assumptions that are not always supported by observ-
able market prices or rates. The use of valuation techniques
requires management to make estimates. Changes in assump-
tions could affect the reported fair value of these investments.
The carrying amounts of investments for which fair values were
determined using valuation techniques amounted to CHF 691.6
million (2006: CHF 385.5 million).
31
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

1. Long-term assets Investment Schedule as of December 31, 2007

Opening Opening Balance at Cumulative
Balance at Cost Fair Value Gain/Loss 31.12.06 Paid in Capital Returned Capital
in TCHF in TCHF in TCHF in TCHF in TCHF
AIG Fund Portfolio
AIG Altaris Health Partners II, L.P. – – – – –
AIG Blue Voyage Fund, L.P. 533 347 (186) 6 –
AIG Brazil Special Situations Fund, L.P. 5 298 5 015 (283) 199 (2 498)
AIG Brazil Special Situations Fund II, L.P. – – – 2 183 –
AIG Global Emerging Markets Fund II, L.P. 7 615 11 659 4 044 5 111 (251)
AIG Global Sports & Entertainment Fund, L.P. 3 904 3 275 (629) 201 (366)
AIG Highstar Capital, L.P. 578 428 (150) – –
AIG Highstar Capital III Prism Fund, L.P. – – – 20 922 (7 832)
AIG Horizon Partners Fund, L.P. 35 863 30 803 (5 060) 1 818 (7 989)
AIG New Europe Fund II, L.P. – – – 6 215 –
AIG Orion Fund, L.P. 1 897 1 287 (610) – (1 365)
CapVest Equity Partners, L.P. 18 813 28 538 9 725 220 (6 265)
CapVest Equity Partners II, L.P. – – – 10 570 (1 002)
AIG Private Equity Portfolio L.P. I AIG Funds 1 986 5 817 3 831 – (400)
Subtotal AIG Funds 76 488 87 169 10 682 47 445 (27 967)

Third Party Fund Portfolio

International Funds
Advent International GPE V- C L.P. 2 399 5 294 2 895 11 707 (330)
Affinity Asia Pacific Fund III, L.P. – – – 5 522 –
Astorg III 9 578 12 734 3 155 3 658 (1 791)
Astorg IV – – – 12 902 (2 013)
Carlyle Europe Partners II, L.P. 17 746 25 437 7 691 6 135 (459)
Carlyle Europe Partners III, L.P. – – – 4 834 –
Carlyle Japan Partners II, L.P. 992 872 (120) 115 –
CVC Capital Partners Asia Pacific II, L.P. 10 376 10 299 (77) 6 984 (2 888)
CVC European Equity Fund III, L.P. 5 401 7 107 1 706 1 122 (1 502)
CVC European Equity Fund IV, L.P. 10 057 11 185 1 128 14 129 (2 803)
CVC European Equity Partners Tandem Fund, L.P. – – – 5 198 (364)
Cognetas, L.P. 14 547 18 092 3 545 3 540 (5 743)
Cognetas II, L.P. 8 495 8 835 340 5 178 (1 352)
Emerging Europe Convergence Fund II, L.P. 6 401 6 549 148 5 325 (1 791)
EQT III, L.P. 9 908 13 393 3 485 188 (1 536)
EQT IV, L.P. 13 267 13 753 487 186 (587)
EQT V, L.P. 985 997 11 5 812 (245)
GMT Communications Partners III, L.P. 7 355 7 578 223 12 154 (2 609)
Ibersuizas II, L.P. 2 648 2 392 (256) 3 504 –
Lexington Captial Partners IV, L.P. 1 101 13 298 12 197 – (1 101)
Lexington Captial Partners VI, L.P. 7 882 7 728 (153) 9 575 (1 188)
Lion Capital Fund II, L.P. – – – 9 290 –
Mid Europa III, L.P. – – – 1 689 –
Odewald Private Equity Partners III, L.P. – – – 10 170 (1 473)
PAI Europe IV, L.P. 10 575 11 253 678 7 936 (5 908)
PAI Europe V, L.P. – – – 68 –
Sovereign Capital II, L.P. 997 1 049 52 1 914 (477)
Terra Firma Investments III – – – 17 691 –
The Third Cinven Fund 5 914 9 115 3 200 481 (1 230)
The Fourth Cinven Fund – – – 17 188 –
Unison Capital Partners II 1 181 2 034 853 759 (51)
Unison Standby Facility – – – 272 –
Ventizz Capital Fund IV, L.P. – – – – –
AIG Private Equity Portfolio L.P. I International Funds 3 349 3 192 (157) 314 (1 482)
Subtotal International Funds 151 156 192 185 41 029 185 538 (38 920)

Third Party Fund Portfolio

US Funds
Apollo VI, L.P. 5 316 5 233 (83) 9 893 (3 872)
Apollo VII, L.P. – – – – –
Ares Corporate Fund II, L.P. 4 087 4 056 (31) 14 049 (1 436)
Avista Capital Partners (Offshore), L.P. – – – 18 194 (2 625)
Berkshire Fund VII, L.P. 2 820 2 764 (56) 3 323 –
Blackstone Capital Partners V, L.P. 21 638 21 061 (577) 17 162 (2 789)
32 Carlyle Partners IV, L.P. 13 614 15 483 1 869 9 610 (325)
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Total Write-
downs of non- Book Value Fair Value Unrealized Gain Unrealized Loss Realized Gain Realized Losses Outstanding
current assets 31.12.07 31.12.07 31.12.07 31.12.07 1.1.07–31.12.07 1.1.07–31.12.07 Commitments Original Vintage
in TCHF in TCHF in TCHF in TCHF in TCHF in TCHF in TCHF in CHF Currency Year

– – – – – – – 22 658 USD 2008

– 539 352 – (187) – – – USD 2000
– 2 999 3 140 141 – – – 3 173 USD 2000
– 2 183 2 585 402 – – – 1 447 USD 2007
– 12 475 16 651 4 175 – 367 – 9 316 USD 2005
– 3 739 2 741 – (999) 120 (187) 2 566 USD 2000
(106) 472 275 – (197) – – 1 452 USD 2000
– 13 090 14 177 1 086 – – – 369 USD 2007
(1 837) 27 855 23 201 – (4 654) 1 634 – 15 696 USD 1999
– 6 215 6 224 9 – – – 2 660 EUR 2007
– 532 257 – (275) – – 26 863 USD 2000
– 12 768 6 714 – (6 054) 17 786 (637) 918 EUR 2000
– 9 567 9 634 66 – – – 22 485 EUR 2007
– 1 586 3 149 1 563 – 548 – – USD NA
(1 943) 94 023 89 101 7 442 (12 364) 20 455 (824) 109 604

– 13 776 21 061 7 285 – 6 749 – 7 197 EUR 2005

– 5 522 5 337 – (184) – – 22 987 USD 2007
– 11 446 20 942 9 496 – – – 2 978 EUR 2003
– 10 890 10 740 – (149) – – 22 347 EUR 2007
– 23 422 22 012 – (1 410) 15 013 – 4 585 EUR 2003
– 4 834 4 864 30 – – – 53 039 EUR 2007
– 1 107 889 – (218) – – 6 436 JPY 2006
– 14 472 15 461 988 – 331 – 2 175 EUR 2005
– 5 021 5 714 694 – 5 068 – 619 EUR 2001
– 21 383 24 181 2 798 – 2 386 – 6 395 EUR 2005
– 4 834 4 838 4 – – – 11 705 EUR 2007
(4 111) 8 234 7 377 – (857) 11 380 – 210 EUR 2001
– 12 320 9 421 – (2 899) 211 – 16 186 EUR 2005
(28) 9 907 11 862 1 956 – – – 4 446 EUR 2006
– 8 560 7 683 – (878) 3 500 – 2 554 EUR 2001
– 12 866 18 555 5 690 – 8 669 – 3 406 EUR 2004
– 6 552 6 143 – (409) – – 13 267 EUR 2006
– 16 899 20 559 3 659 – – – 15 995 EUR 2006
– 6 152 12 410 6 258 – – – 10 536 EUR 2006
– – 8 226 8 226 – 8 065 – 428 USD 2000
– 16 268 15 218 – (1 050) 3 086 – 17 800 USD 2006
– 9 290 9 351 60 – – – 23 725 EUR 2007
– 1 689 1 708 19 – – – 14 836 EUR 2007
– 8 697 8 660 – (37) – – 16 156 EUR 2007
– 12 603 16 567 3 964 – 264 – 7 786 EUR 2005
– 68 67 – (1) – – 32 744 EUR 2007
– 2 434 2 637 204 – – – 8 916 GBP 2005
– 17 691 17 763 72 – – – 23 633 EUR 2007
– 5 165 11 996 6 830 – 2 876 – 422 EUR 2001
– 17 188 17 431 243 – – – 32 201 EUR 2007
– 1 889 1 957 68 – – – 1 469 JPY 2005
– 272 262 – (10) 160 – 4 808 JPY 2007
– – – – – – – 28 125 EUR 2008
– 2 181 3 343 1 161 – 591 – – USD NA
(4 139) 293 635 345 234 59 702 (8 103) 68 349 – 420 110

–
– 11 338 12 065 728 – – – 17 957 USD 2006
– – – – – – – 28 323 USD 2008
– 16 700 19 438 2 738 – 40 – 12 120 USD 2006
– 15 569 14 586 – (983) 1 099 – 11 553 USD 2007
– 6 143 4 878 – (1 265) – – 28 488 USD 2006
– 36 012 35 942 – (70) – – 23 510 USD 2006
– 22 899 23 520 621 – 639 – 2 129 USD 2005 33
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Investment Schedule as of December 31, 2007

Opening Opening Balance at Cumulative
Balance at Cost Fair Value Gain/Loss 31.12.06 Paid in Capital Returned Capital
in TCHF in TCHF in TCHF in TCHF in TCHF
Third Party Fund Portfolio
US Funds
Carlyle Partners V, L.P. – – – 7 745 –
Charlesbank Equity Partners VI, L.P. 720 1 103 383 1 605 (305)
CHS Private Equity V, L.P. 3 753 4 657 904 2 785 –
Cortec Group Fund IV, L.P. 2 804 2 771 (34) 7 010 (1 591)
Diamond Castle IV, L.P. 10 800 10 927 128 5 325 (1 611)
HealthCare Ventures VIII, L.P. 355 678 323 1 284 –
J.C. Flowers Fund II, L.P. 5 349 5 166 (183) 5 081 (968)
KRG Capital Fund III, L.P. 5 010 4 947 (63) 4 398 –
KRG Capital Fund IV, L.P. – – – 191 –
Madison Dearborn V, L.P. 1 101 1 078 (23) 20 808 (2 532)
Mill Road Capital Partners, L.P. – – – 1 853 (332)
New Mountain Investments III, L.L.C – – – 1 824 –
Olympus Growth Fund V, L.P. – – – – –
Polaris Venture V, L.P. 370 366 (4) 2 080 –
SFW Capital Partners Fund, L.P. – – – 587 –
Silver Lake Partners III – – – 3 540 (124)
Sun Capital Advisors V, L.P. – – – 1 203 –
Technology Crossover Ventures IV, L.P. 4 899 3 841 (1 058) 288 (1 312)
Thompson Street Capital Partners II, L.P. 185 187 2 3 278 –
TowerBrook Capital Partners II, L.P. 6 694 6 541 (153) 6 779 (1 376)
VSS Communications Partners IV, L.P. 4 996 4 791 (204) 7 507 (749)
Wellspring Capital Partners VI, L.P. 1 726 1 728 2 493 –
WestView Capital Partners, L.P. 4 701 4 764 63 1 672 (3 630)
AIG Private Equity Portfolio L.P. I US Funds 34 651 27 068 (7 583) 670 (11 241)
Subtotal US Funds 135 588 129 211 (6 377) 160 238 (36 818)

Contractual Agreements-SWAP 88 369 53 748 (34 621) 876 (19 277)

Direct Investments Portfolio

Acosta 4 371 4 268 (103) – –
Advanstar Communications – – – 4 548 –
AMF Bowling Worldwide 1 260 1 858 598 – (1 260)
Bell-Riddell Holdings 1 621 1 750 129 – –
Body Central 2 364 2 306 (58) – –
CapMark 10 821 11 033 212 – –
Falcon Farms – – – 636 –
Flash Global Logistics – – – 1 160 –
Hertz 2 568 6 369 3 801 – (398)
Knowledge Universe Education – – – 9 656 –
Kwik-Fit 3 940 5 013 1 074 6 (3 815)
Medispectra 716 491 (224) 30 –
MVLF 15 836 16 094 258 – (1 399)
National Bedding Company 1 255 1 220 (35) – (488)
NXP Semiconductors 3 743 3 819 75 – –
Sentient Flight Group, LLC (fka. JetDirect Aviation) 1 721 1 707 (14) 2 044 –
SunGard Data Systems 1 236 1 494 257 – –
Theravance 3 420 5 387 1 967 – (3 420)
Thomas Nelson Publishing 8 694 8 555 (139) 340 –
United Surgical Partners International – – – 1 600 –
Universal Studios Escape 4 640 5 195 556 – –
Vanguard Health Systems 1 867 1 828 (39) – –
Xanodyne 1 374 1 343 (32) 140 –
AIG Private Equity Portfolio L.P., I Direct Investments 10 105 13 555 3 450 – –
Subtotal Direct Investments 81 552 93 286 11 733 20 160 (10 781)

Loans
Mediaspectra Loan 191 183 (8) – –
Flint Group (fka. Xsys/Aster) 1 544 1 785 241 – –
MVLF Loan 32 187 32 187 – – (16 331)
Subtotal Loans 33 922 34 155 233 – (16 331)

34 Total of all Investments 567 074 589 753 22 679 414 257 (150 094)
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Total Write-
downs of non- Book Value Fair Value Unrealized Gain Unrealized Loss Realized Gain Realized Losses Outstanding
current assets 31.12.07 31.12.07 31.12.07 31.12.07 1.1.07–31.12.07 1.1.07–31.12.07 Commitments Original Vintage
in TCHF in TCHF in TCHF in TCHF in TCHF in TCHF in TCHF in CHF Currency Year

– 7 745 7 669 – (76) – – 26 319 USD 2007

– 2 019 2 618 598 – 282 – 3 418 USD 2005
– 6 538 5 883 – (655) – – 4 117 USD 2005
– 8 224 6 693 – (1 531) – – 14 967 USD 2006
– 14 514 13 566 – (947) – – 14 862 USD 2006
– 1 639 1 776 137 – – – 6 752 USD 2005
– 9 462 8 466 – (995) – – 19 213 USD 2006
– 9 407 9 559 152 – – – 7 717 USD 2005
– 191 190 – (1) – – 28 323 USD 2008
– 19 378 18 611 – (767) – – 4 399 USD 2006
– 1 521 1 328 – (193) – – 15 599 USD 2007
– 1 824 1 768 – (56) – – 20 890 USD 2007
– – – – – – – 26 057 USD 2008
– 2 450 2 062 – (388) – – 9 233 USD 2006
– 587 575 – (12) – – 22 083 USD 2007
– 3 416 3 326 – (90) – – 30 664 USD 2007
– 1 203 1 141 – (62) – – 18 123 USD 2007
– 3 876 2 343 – (1 532) 704 – 276 USD 2000
– 3 462 2 856 – (606) – – 11 387 USD 2006
– 12 096 12 782 686 – 26 – 10 680 USD 2006
– 11 753 10 856 – (897) 452 – 4 947 USD 2006
– 2 220 1 842 – (377) – – 5 862 USD 2006
– 2 743 4 691 1 948 – – – 6 737 USD 2005
– 24 080 20 629 – (3 451) 7 297 – – USD NA
– 259 008 251 662 7 608 (14 955) 10 539 – 436 703

(2 329) 67 639 41 425 – (26 213) 7 732 (707) – Various

– 4 371 5 114 743 – – – – USD 2006

– 4 548 4 203 – (345) – – – USD 2007
– – 1 699 1 699 – 19 – – USD NA
– 1 621 1 617 – (3) – – – USD 2004
(796) 1 568 1 421 – (147) – – – USD 2006
– 10 821 14 455 3 634 – – – – USD 2006
– 636 596 – (40) – – – USD 2006
– 1 160 1 088 – (72) – – – USD 2007
– 2 170 4 183 2 013 – 1 406 – – USD 2007
– 9 656 9 809 153 – – – – USD 2005
– 131 2 382 2 251 – – – – USD 2007
(746) – – – – 10 – – USD 2005
– 14 437 16 314 1 877 – 35 – – USD 2001
– 766 756 – (11) – – – EUR 2006
– 3 743 3 925 182 – – – – USD 2005
– 3 765 3 503 – (262) – – – USD 2006
– 1 236 1 938 701 – – – – EUR 2006
– – – – – 2 210 – – USD 2005
– 9 034 13 301 4 267 – – – – USD 2000
– 1 600 1 547 – (52) – – – USD 2006
– 4 640 4 985 345 – – – – USD 2007
– 1 867 850 – (1 017) – – – USD 2000
– 1 514 1 447 – (67) – – – USD 2004
– 10 105 6 656 – (3 449) 2 829 – – USD 2005
(1 542) 89 389 101 788 17 865 (5 466) 6 509 – –

(191) – – – – – – – USD 2001

– 1 544 1 915 371 – – – – EUR 2006
– 15 856 16 739 883 – – – – EUR 2006
(191) 17 400 18 655 1 255 – – – –

(10 144) 821 093 847 865 93 872 (67 101) 113 584 (1 531) 966 417 35
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 2: Cash and Cash Equivalents

in TCHF
2007 2006
Cash at banks 26 37 179
Total 26 37 179

For the purpose of the cash flow statement cash and cash equivalents comprise all cash, short-term deposits and other money
market instruments, net of short-term overdrafts, with a original maturity of three months or less. Cash and cash equivalents are
recorded at nominal value.
The carrying amounts of cash and cash equivalents approximate fair value.

Note 3: Foreign Exchange Rates

The following exchange rates have been applied to translate the foreign currencies of significance for the group:

2007 2006
Year-end rates: Unit CHF CHF
US dollar 1 USD 1.1329 1.2195
Euro 1 EUR 1.6544 1.6094
Yen 100 Yen 1.0141 1.0345
Average annual rates:
US dollar 1 USD 1.1943 1.2456
Euro 1 EUR 1.6458 1.5758
Yen 100 Yen 1.0168 1.0743

Note 4: Derivative Instruments notional amount of USD 30 million, resulting in a profit of

Foreign Exchange Forward
As of December 31, 2007 the Company has an open foreign
exchange forward contract with a notional amount of USD 20
million, a positive market value of TCHF 622 and which matures
April 23, 2008.
On December 31, 2007 the Company closed a foreign ex-
change forward contract maturing January 22, 2008, with a
TCHF 1 023.
As of December 31, 2006 the Company had an open foreign
exchange forward contract with a notional amount of USD 30
million, a positive market value of TCHF 945 and which matured
January 12, 2007.

Note 5: Receivables and Prepayments

in TCHF
2007 2006
From third parties 326 6 154
From related parties:
AIG, Inc. 1 064 –
AIG Global Investment Group 103 5 924
MVLF 333 –
Subtotal 1 500 5 924
Total 1 826 12 078

The carrying amounts of the accounts receivable and prepayments approximate fair value.
36
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 6: Payables and Accrued Charges

in TCHF
2007 2006
Accrued service-, performance and management fees 20 679 8 237
Accrued carried interest contractual agreements and 2 264 1 464
accrual share-based compensation plan payable to related parties
Accounts payable and other accrued expenses 1 065 4 408
Total 24 008 14 109

The carrying amounts of the accounts payable and accrued charges approximate fair value.

Note 7: Loans/Overdrafts
in TCHF
2007 2006
ZKB Banking Syndicate 56 645 –
AIG Private Bank Ltd. 25 015 –
HSBC Bank of Bermuda 26 294 –
Total 107 954 –

In 2005, the Company entered into a long term committed syndicated USD 35 million back-up credit facility from Zurcher Kantonal-
bank and Migrosbank. In August 2007 the facility was increased to USD 50 million and the syndicate was expanded by Bank Linth.
The credit facility was fully drawn as per year end (2006. 0).

Note 8: Share Capital
The investment objective of the Group is to achieve long-term
capital growth for shareholders by investing in a diversified
portfolio of private equity funds and privately held companies.
The same team that manages private equity investments for
American International Group, Inc. acts as investment advisor
to the Group. Private equity is an asset class consisting of
equity investments in companies that are not traded on a
public stock exchange. Investments typically involve a trans-
formational, value-added, active management strategy. Private
equity investments can be divided into various categories:
venture capital, mezzanine finance, buyouts etc. The Group in-
vests in private equity funds and co-invests together with these
funds in operating companies. The Group’s investment advisor
disposes over long-term track record in private equity investing
and has access to premier private equity funds, both of which
are critical factors in achieving expected returns.
Currently, the Group does not intend to pay any dividends
to shareholders but rather to re-invest the proceeds.
Shareholders’ equity/net assets represent (2007: TCHF
719 255; 2006: TCHF 625 846) the capital available to the
Group to implement and achieve its investment goals. Share-
holders’ equity includes revaluation reserves, which represent
unrealized value increases/decreases on investments held as
available-for-sale and value increases/decreases due to cur-
rency translation differences.
The share capital of the Company as of December 31,
2007 amounts to CHF 412 500 000 (December 31, 2006: CHF
412 500 000) consisting of 4 125 000 registered shares (Decem-
ber 31, 2006: 4 125 000) with a par value of CHF 100 each. All
issued shares are fully paid. Each share entitles the holder to
participate in any distribution of income and capital.
As of December 31, 2007 the Company has CHF 206.25 mil-
lion (2006: CHF 63.75 million) authorized share capital out-
standing. This authorized share capital will expire at the end
of May 2009. As of December 31, 2007 the Company has
CHF 206.25 million (2006: CHF 63.75 million) conditional
share capital outstanding. This authorized share capital will
expire at the end of May 2009. Other than sales of treasury
shares, the company did not raise any new capital in 2007.

37
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Share capital is broken down as follows: Number of Shares

At 1 January 2006 3 130 587

– Shares issued 950 000
– Shares sold 46 080
– Treasury shares purchased (230 473)
At 31 December 2006 3 896 194

At 1 January 2007 3 896 194

– Shares sold 52 833
– Treasury shares purchased –
At 31 December 2007 3 949 027

The Company can trade in treasury shares in accordance with the relevant guidelines (Company’s articles of association, Swiss com-
pany law, listing rules of the SWX Swiss Exchange). Treasury shares are treated as a deduction from the consolidated shareholders’
equity (2007: TCHF 27 847: 2006: TCHF 36 207). During 2007 the Company sold 52 833 (2006: 46 080) shares.

The following major shareholders held shares and voting rights of 3% and more as of December 31, 2007:

Number of Shares Participation in % Number of Shares Participation in %

2007 2007 2006 2006
American International Underwriters Overseas Ltd. 413 500 10.02% 413 500 10.02%
AIG Life (Ireland) Ltd. 1 083 527 26.27% 1 160 127 28.12%
Ernst Göhner Stiftung 267 000 6.47% 267 000 6.47%
AIG Private Bank Ltd. 229 284 5.56% – *
AIG Private Equity Ltd. 175 973 4.27% 228 806 5.55%
SUVA, Schweiz. Unfallversicherungsanstalt 127 500 3.09% – **
AXA Winterthur 167 000 4.05% – ***

* On November 15, 2006 AIG Private Bank informed the Company that its shareholding had dropped below 5%.
** On March 21, 2006 SUVA informed the Company that its shareholding had dropped below 5%.
*** On June 27, 2006 AXA Winterthur informed the Company that its shareholding had dropped below 5%.

Note 9. Earning per Share

Earnings per Share 2007 2006

Net profit per share outstanding (in CHF) – basic 20.52 0.84
Net profit per share outstanding (in CHF) – fully diluted 20.49 0.84

Net profit for the period (in TCHF) 80 584 2 976

Weighted average of total number of shares outstanding (in 1 000) – basic 3 927 921 3 546 533
Adjustment for share options 3 978 4 245
Weighted average of total number of shares outstanding (in 1 000) – diluted 3 931 899 3 550 778

The stock options granted by the Group (note 18) are considered to be potential ordinary shares and have been included in the
determination of diluted earnings per share to the extent to which they are dilutive.

38
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 10: Revaluation Reserve

in TCHF
2007 2006
Reserve from foreign currency translation (51 902) (35 917)
Reserve from fair value movements of investments 78 674 58 596
Total revaluation reserve at December 31 26 772 22 679

Reserve from foreign currency translation

– at January 1 (35 917) (44 848)
– currency translation differences during the year (15 985) 8 931
– at December 31 (51 902) (35 917)

Reserve from fair value movements of investments

– at January 1 58 596 (5 938)
– Impairments transferred to income statement 10 144 28 756
– net realized (gains)/losses transferred to income statement (112 053) (57 931)
– net realized gains/(losses) from changes in Fair Value 121 987 93 709
– at December 31 78 674 58 596

Note 11: Write-downs of Non- Current Assets

For the year ended December 31, 2007 write-downs on non-current assets were recognized as follows:

in TCHF 2007 2006

Direct investments 1 733 463
Funds 6 082 19 563
Contractual agreements 2 329 8 730
Total 10 144 28 756

For details please see note 1 to the investment table.

39
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 12: Interest Income and Dividends from Non- Current Assets and Net Realized Gains on Investments
Interest income, net interest income and dividends from non-current assets, and net realized gains were generated by the three
portfolios as follows:

in TCHF 2007 2006

Interest income from long-term assets:
AIG Funds 1 590 2 566
Third Party Funds 7 255 2 722
Direct Investments 2 285 1 596
Total interest income from non-current assets 11 130 6 884

Dividend income from long-term assets:

AIG Funds 650 517
Third Party Funds 1 108 724
Direct Investments 1 407 244
Total dividend income from non-current assets 3 165 1 485

Net realized gains on investments:

AIG Funds 19 631 20 978
Third Party Funds 85 913 32 207
Direct Investments 6 509 3 532
Total net realized gains from non-current assets 112 053 56 717

Note 13: Taxes

in TCHF
2007 2006
Current income tax CHF 890 CHF 1 156

Reconciliation of income tax calculated with the applicable tax rate:

Profit before income tax CHF 80 584 CHF 4 132
Applicable tax rate 7.8% 7.8%
Income tax CHF 6 285 CHF 322
Effect from:
– income tax payable from current and prior periods CHF 152 CHF 504
– non-taxable profits CHF (6 285) CHF (315)
– deferred taxes CHF 145 CHF –
– non-refundable withholding tax paid CHF 593 CHF 645
Total income tax expenses 890 1 156

In 2007, the Group paid TCHF 593 (2006: TCHF 645) non-refundable withholding taxes.

Note 14: Related Party Transactions
Related Parties are individuals and companies where the in-
dividual or company has the ability, directly or indirectly, to
control the other party or to exercise significant influence over
the other party in making financial and operating decisions.
40
The Group has entered into several agreements with various
companies of the American International Group, Inc., New York
(“AIG”) which have a significant influence on the financial and
operating decisions of the Group.
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

RELATED PART Y AGREEMENTS For its services provided under the management agreement,
the advisor is entitled to receive an advisory fee from the
Service Agreement I Manager. The initial term of the advisory agreement matures
American International Company Ltd., Pembroke, Bermuda, an December 31, 2005 and was automatically extended until
indirect wholly owned subsidiary of AIG, provides several ad- December 31, 2010.
ministrative services for the subsidiary in Bermuda for an an- In 2007 the management agreement resulted in AIG re-
nual fee of TUSD 90 (TCHF 108; 2006: TCHF 75). This agree- ceiving management fees amounting to TCHF 14 205 (2006:
ment is entered into for an indefinite period of time and may TCHF 11 256) and performance fees amounting to TCHF 13 049
be terminated with advance notice of 30 days. (2006: TCHF 6 103) from the Group.
Refer to notes 1, 5, 6, and 11 for more information on re-
Service Agreement II lated parties.
AIG Private Bank Ltd., Zurich, a wholly owned subsidiary of
AIG, provides administrative and accounting services for the
Group. Compensation for these services in 2007 was TCHF 301 MATERIAL TRANSACTIONS
(2006: TCHF 301). This agreement is entered into for an in-
definite period of time. Either party is entitled to terminate the Cash and Cash Equivalents
agreement with advance notice of 6 months. As of December 31, 2007 the Group has cash and cash equiva-
lents totaling TCHF 26 (2006: TCHF 106) on a current account
Management and Advisory Agreement basis with AIG Private Bank Ltd., Zurich.
The Group has entered into a Management Agreement with
AIG Private Equity Management Ltd. Bermuda (“the Manager”), Capital Calls from AIG Fund Investments
a wholly owned subsidiary of AIG Private Bank Ltd., Zurich. For
2007 2006
services rendered, the Manager is entitled to receive a man- Investments (in million) CHF USD CHF USD
agement fee at an annual rate equal to 2% of the consolidated AIG Horizon Partners Fund L.P. 1.8 1.5 1.1 0.8
Net Asset Value of the Group on the last business day of each AIG Brazil Special Situations Fund L.P. 0.2 0.2 0.3 0.2
quarter before deductions or accrual of the management fee AIG Brazil Special Situations Fund II L.P. 2.2 1.8 0.0 0.0
and/or performance fees. The initial term of the Management AIG Orion Fund L.P. 0.0 0.0 0.0 0.0
Agreement ended December 31, 2005 and was automatically AIG Blue Voyage Fund L.P. 0.0 0.0 0.0 0.0
renewed for five years until December 31, 2010. AIG Global Sports & Entertainment L.P. 0.2 0.2 0.0 0.0
In addition to the management fee, the Manager will AIG Highstar Capital L.P. 0.0 0.0 0.0 0.0
receive quarterly performance fees from the Group. The per- AIG Highstar Capital III Prism L.P. 24.6 20.4 0.0 0.0
formance fee with respect to the Third Party Funds Portfolio is AIG Private Equity Portfolio L.P. 0.5 0.4 2.2 1.7
fifteen per cent (15%) of the increase in the net asset value of AIG Global Emerging Markets L.P., II 5.1 4.1 6.1 4.9
the Third Party Funds Portfolio for each quarter in excess of
any baseline return for such quarter of five per cent (5%) (on 2007 2006
an annual basis). The performance fee with respect to the Investments (in million) CHF EUR CHF EUR

Direct Investment Portfolio is twenty per cent (20%) of the in-
crease in the net asset value of the Direct Investment Portfolio
for each calendar quarter.
Furthermore both performance fees are subject to a “high-
water mark”, so that no performance fee will be paid with
respect to a particular portfolio unless the net asset value for
that portfolio is greater than the previous high net asset value
for the portfolio (increased, in the case of the Third Party
Funds Portfolio at the rate of 5% annually).
The Manager has entered into an advisory agreement with
AIG Global Investment Corp., New York, a wholly owned sub-
sidiary of AIG, to act as investment advisor with respect to the
Third Party Funds Portfolio and Direct Investments Portfolio.
AIG New Europe II L.P. 6.2 3.8 0.0 0.0
Personnel
Two members of the Board of Directors of the Company are
employees of other companies within the AIG Inc., Group. With
the exception of the Chairman of the Board, AIG executives
serving on the Board of Directors and the Investment Commit-
tee of the Group do not receive remuneration from the Group
for their services. Remuneration of directors for the year 2007:
TCHF 190 (2006: TCHF 176). Refer to note 18 for share com-
pensation schemes granted to the management board.
One of the members of management is a member of the
board of directors of MV Leveraged Finance Ltd. (see also Note 41
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

1 MVLF). The Subsidiary in Bermuda made an equity investment
(EUR 10 million) and a loan investment (EUR 20 million) in this
entity in the fourth quarter 2006. In the course of 2007, the Sub-
sidiary received dividends of TCHF 1 651 (2006: TCHF 0), princi-
pal repayments on the loan of TCHF 1399 (2006: TCHF: 0) and
loan interest amounting to TCHF 1 845 (2006: TCHF 0).
Note 15: Financial Instruments – Disclosures
The Group’s activities expose it to a variety of financial risks,
namely market risk (including interest rate risk, currency risk
and other price risks), liquidity risk and credit risk. Manage-
ment observes and manages these risks. These risks could re-
sult in a reduction of the Group’s net assets. The Group seeks
to minimize these risks and adverse effects by considering
potential impacts from the financial markets. The Group man-
ages these risks, where necessary, via collaboration with ser-
vice partners that are market leaders in their respective area of
expertise. Additionally, the Group has internal guidelines and
policies in place to ensure that transactions are effected in a
consistent and diligent manner.
Market Risk
• Interest rate risk
The risk to which the Group is exposed from changing
interest rates results primarily from loans (higher/lower
LIBOR rate at refinancing date; see schedule below). These
loans have a variable interest rate corresponding to the
LIBOR rate plus a margin. The majority of the Group’s
assets are non interest bearing. The Group has not applied
an interest rate hedge due to the short term maturity pro-
file of the loans and because the Group has no long term
visibility of its cash flows due to its business activity.
If interest rates had changed (+/–) by 0.3% (30 basis points)
the change in net income would have been (+/–) TCHF 268
(2006: TCHF 102).
The Group’s management monitors interest rates on a
regular basis and informs the Board of Directors accord-
ingly at its quarterly meetings.
• Currency risk
The net asset value per share is calculated in CHF, the pre-
sentation currency of the Company. However, as the Group’s
investments are largely denominated in USD and Euro, the
Company will be exposed to a certain degree of currency
risk, which can adversely affect performance. Fluctuations in
foreign currency exchange rates affect the net asset value of
the investments and therefore of the Group. The Group can
enter into currency contracts to mitigate these currency risks.
Such transactions are based upon decisions made by the FX
Committee that meets at least on quarterly basis. Over the
past several years, the FX Committee decided to take ap-

At 31.12.07 in TCHF < 1 month 1–3 months Non-interest bearing Total

Cash and cash equivalents 26 – – 26

Other current assets – – 3 471 3 471
Loans 18 655 – – 18 655
Investments (available for sale) – – 829 210 829 210
Total assets 18 681 – 832 681 851 362

Payables and accrued charges – – 24 008 24 008

Loans 107 954 – – 107 954
Deferred tax liability – – 145 145
Total Liabilities 107 954 – 24 153 132 107

At 31.12.06 in TCHF < 1 month 1–3 months Non-interest bearing Total

Cash and cash equivalents 37 179 – – 37 179

Other current assets – – 13 023 13 023
Loans 34 155 – – 34 155
Investments (available for sale) – – 555 598 555 598
Total assets 71 334 – 568 621 639 955

Payables and accrued charges – – 14 109 14 109

Loans – – – –
42 Total Liabilities – – 14 109 14 109
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

At 31.12.07 (in 1 000) USD EUR GBP JPY CHF Total

Assets
Cash and cash equivalents – – – – 26 26
Other current assets 1 387 439 – – 1 645 3 471
Loans receivable – 18 655 – – – 18 655
Investments (available for sale) 488 748 334 716 2 637 3 109 – 829 210
Total Assets 490 135 353 810 2 637 3 109 1 671 851 362

Payables and accrued charges 2 407 – – – 21 601 24 008

Loans payable 107 954 – – – – 107 954
Deferred tax liability – – – – 145 145
Total Liabilities 110 361 – – – 21 601 132 107
Total Equity – – – – 719 255 719 255
Total Liabilities and Equity 110 361 – – – 741 001 851 362

At 31.12.06 (in 1 000) USD EUR GBP JPY CHF Total

Assets
Cash and cash equivalents 1 426 30 563 1 004 1 4 183 37 178
Other current assets 8 281 3 669 – – 1 072 13 023
Loans receivable 183 33 973 – – – 34 155
Investments (available for sale) 344 461 202 163 6 063 2 912 – 555 599
Total Assets 354 352 270 368 7 067 2 913 5 255 639 955

Payables and accrued charges 4 149 – – – 9 960 14 109

Loans payable – – – – – –
Total Liabilities 4 149 – – – 9 960 14 109
Total Equity – – – – 625 846 625 846
Total Liabilities and Equity 4 149 – – – 635 806 639 955

propriate measures to mitigate the impact of currency fluc-
tuations on the net asset value (see note 4 for details on
current hedge transactions). Additionally, the Group regards
loans in the same currencies as its assets as a measure to
mitigate the impact of currencies on the net asset value.
The average monthly fluctuation of the USD against the CHF
(the presentation currency) in 2007 was –0.59% (2006: per
month –0.60%). If this rate of change were to continue in
2008, with all other variables held constant, it would result in
a monthly decrease in shareholders equity of CHF 2.9 million
(2006: CHF 2.1 million).
The average monthly fluctuation of the EUR against the CHF
(the presentation currency in 2007 was 0.2178% (2006: 0.28%).
If this rate of change were to continue in 2008, with all other
variables held constant, it would result in a monthly increase in
shareholders equity of CHF 0.8 million (2006: CHF 0.7 million).
The Group’s currency position is monitored on a regular basis.
The FX Committee meets at least on a quarterly basis to review
its strategy and make appropriate adjustments. The FX exposure
is reviewed by the board of directors at the quarterly meetings.
Other price risks
Other price risks (i.e. changes in market prices other than from
interest rate risks or currency risk) may affect the value of the
investments held as available-for-sale by the Group. Other
price risks arise mainly from the uncertainty about future
valuations of the investments held as available-for-sale by
the Group. Investments held available-for-sale amounted to
TCHF 829 210 (2006: TCHF 555 598). For these investments the
Group calculates the corresponding fair value on a monthly
basis. Please see the “Accounting Policies” for more inform-
ation on the fair value process as well as Note 1.
The Group’s investment advisor performs extensive due
diligence prior to recommending any fund or direct invest-
ment, including an analysis of the potential risks of the invest-
ment. The Group and the investment advisor monitor invest-
ments by analyzing regular reports and through direct contact
with general partners and company management.
43
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

If the value of the investments (based on year-end values) actual investments being made over a period of up to six years.
had increased or decreased by 1.47% with all other variables Based on the Group’s experience it is expected (on a portfolio
held constant, the impact on the shareholders’ equity would basis) that the maximum net amount invested in a fund will be
have been CHF 12.2 million (2006: 32%, CHF 179.5 million). approximately 60% of a commitment. In order to reach full
The Company is exposed to a variety of market risk factors investment, the Group applies an over-commitment strategy.
which may change significantly over time. As a result, measure- Outstanding commitments amounted to CHF 966 million in
ment of such exposure at any given point in time may be diffi- 2007 (2006 CHF 762 million). Even though these commitments
cult given the complexity and limited transparency of the could be drawn down at any point in time, the Group expects
underlying investments. Therefore, a sensitivity analysis is outstanding commitments to be drawn over a six year period
deemed of limited explanatory value or may be misleading. (standard investment period of a private equity fund).
It is the aim of the Group to maintain equilibrium between
drawdowns and distributions. Excess draw-downs are funded
Liquidity risk by using credit facilities. The Group applies a cash flow model
Due to the specific nature of private equity funds of the type in to estimate future cash flows and cash balances. As of 31 Dec-
which the Company invests, immediate and full investment of ember 2007, cash in banks totaled TCHF 26 (2006: 37 179) and
assets is not always possible. Commitments made by a private loans payable totaled TCHF 107 954 (2006: TCHF 0). In January
equity investor in a private equity fund typically results in 2008, the Group entered into a long term committed syndi-
cated USD 100 million credit facility
> 3 months/no led by Zürcher Kantonalbank (see
At 31.12.07 (in TCHF) < 1 month 1–3 months stated maturity
also note 7 and 21). Additionally, the
Payables and accrued charges 30 923 – –
Group had overdraft facilities in place
Loans payable 107 954 – –
with Bank of Bermuda and AIG Private
Deferred tax liability – – 145
Bank to fund capital drawdowns.
Total Current Liabilities 138 877 – 145
Management monitors cash flows on
> 3 months/no a weekly basis and reports at least on
At 31.12.06 (in TCHF) < 1 month 1–3 months stated maturity a quarterly basis to the board of
Payables and accrued charges 26 387 – – directors.
Loans payable – – –
Total Current Liabilities 26 387 – –

Credit risk
The Group has credit exposure only to established, credit- advance of investments, conservative underwriting, reviews of
worthy third parties, so that no collateralization is required. investment partners, and contractual provisions that limit the
Receivables are monitored continuously. The Group attempts Group’s downside risk. On a quarterly basis, the Group reviews
to minimize investment risk through effective due diligence in all investments for potential impairment losses.
The Group holds loans in two invest-
ments (see Note 1), namely Aster
At 31.12.07 (in TCHF) Fully Performing Total Rating
and MVLF. Management of the Group
Cash at AIG Private Bank 26 26 n/a
monitors these loans on a regular
Other current assets 3 471 3 471 n/a
basis by ensuring interest is paid and
Total exposure to credit risk 3 497 3 497 n/a
by reviewing monthly and quarterly
At 31.12.06 (in TCHF) Fully Performing Total Rating reporting. Both loans are current on
Cash at AIG Private Bank 37 179 37 179 n/a interest payments.
Other current assets 13 023 13 023 n/a Management monitors credit risk on a
Total exposure to credit risk 50 202 50 202 n/a regular basis.

44
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 16: Contractual Agreements Fair Value (in TCHF) 2007 2006
On December 22, 1999, the Group entered into three contrac- United States Swap Funds Portfolio
tual agreements with AIG that entitle the Group to receive dis- Bain Capital Fund VI, L.P. 70 113
tributions equal to pro rata share of all distributions from a Bain Capital VI Coinvestment Fund, L.P. 84 134
specified list of funds, while obligating the Group to make pay- Berkshire Fund III, L.P. 35 82
ments equal to pro rata share of all draw-downs of committed Berkshire Fund IV, L.P. 202 248
capital to the same list of funds. Blackstone Capital Partners II 133 129
Distributions from the underlying fund investments, which Blackstone Capital Partners III 1 579 2 706
are over the amount of its initial investment plus subsequent Carlyle Partners II, L.P. 16 84
payments are split 90% to the company and 10% to AIG. The Charterhouse Equity Partners II, L.P. 30 57
profit sharing is intended to compensate AIG for the manage- Clayton & Dubilier Private Equity Fund IV, L.P. 1 43
ment fees it paid with respect to the underlying fund invest- DL J Merchant Banking Partners II, L.P. 383 441
ments prior to the contractual agreements, which are not taken Dubilier CRM Fund I, L.P. 5 5
into consideration when calculating the fair value of the un- Evercore Capital Partners, L.P. 71 –
derlying fund investments. Fenway Capital Partners Fund II, L.P. 1 073 1 235
As of December 31, 2007, the contractual agreements were Fenway Capital Partners Fund, L.P. 33 49
valued at TCHF 41 425 (2006 TCHF 53 748). In Note 1 the funds GKH Investments, L.P. – 1
held through the contractual agreements are grouped into one Greenwich Street Capital Partners, L.P. 62 289
line as “contractual agreements”. The following table provides Kelso Investment Associates VI, L.P. 309 427
detail of the various funds contained in the contractual agree- KRG Capital Fund I, L.P. 20 132
ments. Morgan Stanley Capital Partners III, L.P. 252 266
Morgan Stanley Leveraged Equity Fund II, L.P. 74 –
Fair Value (in TCHF) 2007 2006 North Castle Capital Partners II, L.P. 339 843
AIG Swap Funds Portfolio Odyssey Investment Partners Fund, L.P. 84 291
AIG Asian Opportunity Fund 4 957 6 327 Questor Partners Fund II, L.P. 1 360 3 007
AIG Orion Fund 41 107 RCBA Strategic Partners, L.P. 891 961
Subtotal 4 998 6 434 Sandler Mezzanine Partners 11 44
Sankaty High Yield Asset Partners 462 435
Fair Value (in TCHF) 2007 2006 Silver Lake Partners, L.P. 957 1 376
International Swap Funds Portfolio Stonington Capital Appreciation 1994 Fund, L.P. 1 112 1 387
AEA Scandinavia I 1 305 1 660 Thayer Equity Investors Fund IV, L.P. 740 846
AEA Scandinavia II 238 909 Warburg Pincus Equity Partners, L.P. 1 952 1 812
Baring Communications Equity Limited 17 132 WPG Corporate Development Associates IV, L.P. 3 4
Carlyle Europe Partners L.P. 4 264 4 716 WPG Corporate Development Associates V, L.P. 227 382
Doughty Hanson & Co. III 3 555 2 774 Subtotal 15 152 22 595
Palamon European Equity Fund L.P. 6 604 4 489 Total 41 425 53 748
Permira VT 135 83
The Cinven Fund I 1 145 655 In total 18 private equity funds were either sold or have
The Cinven Fund II 4 012 9 301 liquidated all of their portfolio companies.
Subtotal 21 275 24 719 Unfunded commitments of the contractual agreement are
negligible as the underlying funds (vintage year 1999 and
Fair Value (in TCHF) 2007 2006 older) have past their investment periods and are in the
United States Swap Funds Portfolio process of liquidating their portfolios.
AEA Investors Inc. II – 1 354
American Industrial Partners Capital Fund II, L.P. 26 54
Apollo Investment Fund III, L.P. 86 295
Apollo Investment Fund IV, L.P. 2 470 3 063

45
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

Note 17: AIG Private Equity Portfolio Investment Details Fair Value (in TCHF) 2007 2006
Direct Investments Portfolio
Fair Value (in TCHF) 2007 2006 Theravance 505 1 720
AIG Fund Portfolio Universal Studios Escape 3 019 3 147
AIG Highstar Capital, L.P. 174 154 Medispectra, Inc. – 516
AIG Horizon Partners Fund, L.P. 1 216 1 632 Avalon Pharmaceuticals, Inc. 72 98
AIG PEP I Other Assets and Liabilities 1 759 4 031 High Response Holdings, Inc. 121 170
Subtotal 3 149 5 817 AZ Automotive Corp. 935 1 297
Iomai Corporation 16 84
Third Party Fund Portfolio 2007 2006 Springs Industries, Inc. 570 1 034
International Fund Fresh Direct 301 303
Carlyle Europe Venture Partners, L.P. 28 297 QinetiQ – 4 013
GMT Communications Partners II, L.P. 1 921 2 168 American Media 253 234
TH Lee.Putnam Internet Partners, L.P. 1 394 727 AMF Bowling 760 831
Subtotal 3 343 3 192 NovaRay 38 37
Altiris Inc. 66 71
Third Party Fund Portfolio 2007 2006 Subtotal 6 656 13 555
US Funds Total 33 777 49 632
Advanced Technology Ventures VI, L.P. 637 693
Arrow Path Venture Capital, L.P. 406 526
Baker Communications Fund II, L.P. 2 744 1 748 Note 18: Share-Based Compensation Plan
Berkshire Fund V, L.P. 2 422 620 Stock Option Plan
Blackstone Mezzanine Partners, L.P. 698 627 The Company issued the following incentive stock options in
Boston Millennia Partners II, L.P. 1 457 145 May 2005. Outstanding options arising from this agreement as
Carlyle Partners III, L.P. 869 1 964 at 31 December 2007 are as follows:
Focus Ventures II, L.P. 437 503
Heartland Industrial Partners L.P. 1 445 2 074 Number Year of Subscription Strike
of options grant Vesting date Expiry ratio price
JK&B Capital III, L.P. 1 257 1 413
KRG Capital Fund I, L.P. 10 114 4 000 2005 31.5.2006 13.6.2008 1:1 125
Meritage Private Equity Fund, L.P. 445 1 346 5 000 2005 31.5.2007 13.6.2008 1:1 125
North Castle Capital Partners II, L.P. 624 1 078 6 833 2005 31.5.2008 13.6.2008 1:1 125
Questor Partners Fund II, L.P. 1 379 3 914
RCBA Strategic Partners, L.P. 824 1 661 The options were granted free of charge. Each option en-
Silver Lake Partners, L.P. 733 3 690 titles the holder to buy one share of the Company at the exer-
Technology Crossover Ventures IV, L.P. 1 753 2 873 cise price. A third of the options are each exercisable after a
Thayer Equity Investors Fund IV, L.P. 1 077 624 vesting period of one, two and three years. In case of a termi-
Thomas Weisal Capital Partners, L.P. 1 189 1 254 nation of the working contract during the vesting period, the
T WP CEO Founders’ Circle (QP), L.P. 30 35 unvested options are cancelled. As at 31 December 2007 the
Mesirow Capital Fund 193 166 Company held no shares specifically in connection with the
Subtotal 20 629 27 068 stock option plan.
Movements in the number of share options outstanding
and their related exercise prices are as follows:

46
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

2007 2006 Of the 45 000 SARs (2006: 27 334), 7 000 SARs (2006: 6 334)
Average exercise Average exercise
were exercisable. SARs exercised in 2007 were transacted as
price per share Options price per share Options
follows: 2 000 SARs at a market price of CHF 163.00, 1 000 SARs
At January 1 125.00 18 666 125.00 21 000
at a market price of CHF 168.00, 1 000 SARs at a market price
Granted – –
of CHF 170.00 and 2 334 SARs at a market price of CHF 172.00.
Forfeited 125.00 – 125.00 (500)
The related average share price at exercise was CHF 168.21 per
Exercised 125.00 (2 833) 125.00 (1 834)
share.
At December 31 125.00 15 833 125.00 18 666
In the current year, CHF 433 341 (2006: 291 050) was charged
as an expense relating to SARs. The carrying amount at the end
Of the 15 833 options (2006: 18 666) 9 000 options (2006:
of the period amounted to CHF 561 118 (2006: 602 816) and the
5 000) were exercisable. Options exercised in 2007 were trans-
intrinsic value at the end of the period of liabilities for which
acted as follows: 1 666 options at a market price of CHF 170.00,
the counterpart’s right to cash or other assets had vested by
1 000 options at a market price of CHF 170.00 and 167 options
the end of the period (for example vested share appreciation
at a market price of CHF 168.00. The related weighted average
rights) equals CHF 70 000.
share price at exercise was CHF 169.88 per share.
In the current year, CHF 26 472 (2006: 77 804) was charged
as an expense relating to the options resulting in a correspond-
Note 19: Commitments, Contingencies and Other
ing increase to shareholders’ equity by the same amount.
Off-balance-sheet Transactions
In addition to those commitments disclosed in the Investment
Share Appreciation Rights (SARs)
Schedule and the Derivative Instruments mentioned in Note 4,
Outstanding SARs as at 31 December 2007 are as follows:
the Company has nil off-balance-sheet transactions open as of
December 31, 2007 (2006: nil off-balance-sheet transactions).
Number Year of Subscription Strike
of SARs grant Vesting date Expiry ratio price The operations of the Company may be affected by legislative,
7 000 2006 15.02.2007 28.02.2009 1:1 CHF 160 fiscal and regulatory developments for which provisions are
7 000 2006 15.02.2008 28.02.2009 1:1 CHF 160 made where deemed necessary. Please refer to Note 15 (liqui-
7 000 2006 15.02.2009 28.02.2009 1:1 CHF 160 dity risk) for additional information on commitments.

8 000 2007 01.03.2008 14.03.2010 1:1 CHF 160

8 000 2007 01.03.2009 14.03.2010 1:1 CHF 160 Note 20: Segment Reporting
8 000 2007 01.03.2010 14.03.2010 1:1 CHF 160 The Group operates in the sole business segment of private
equity investments. The geographical analysis of total assets is
The SARs were granted free of charge. Each SAR entitles the determined by specifying in which region the investment was
holder to receive in cash the difference between the strike made:
price and the market price of one share of the Company at the
exercise price. A third of the SARs are each exercisable after a in TCHF 2007 2006
vesting period of one, two and three years. In case of a termi- North America 373 389 281 771
nation of the working contract during the vesting period, the Europe 404 390 310 209
SARs are cancelled. Rest of the World 73 583 47 975
Movements in the number of stock appreciation rights and Total 851 362 639 955
their related exercise prices are as follows:

2007 2006
Average exercise Average exercise
price per share SARs price per share SARs

At January 1 145.40 27 334 97 12 367

Granted 160 24 000 160 21 000
Exercised 97 (6 334) 97 (6 033)
At December 31 160.00 45 000 146 27 334

47
AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

The geographical analysis of total income is determined Since the balance sheet date of December 31, 2007, there
by specifying from which region the investment profits are have been no material events that could impair the integrity of
generated: the information presented in the financial statements.

in TCHF 2007 2006 Approval of the Financial Statement

North America 24 322 23 362 The consolidated financial statements are authorized for issue
Europe 103 916 43 207 on April 29, 2008 by the Board of Directors. The annual gen-
Rest of the World 1 423 1 132 eral meeting called for May 28, 2008 will vote on the final
Total 129 661 67 701 acceptance of the consolidated financial statements.

Note 21: Subsequent Events

In January 2008 the Group converted the USD 50 million syn-
dicated standby credit facility into a syndicated credit facility
in the amount of USD 100 million. The syndicate is lead by
Zurcher Kantonalbank and comprises in total six banks.
The Group has made the following new capital commit-
ments from January 1 2008 through April 30, 2008:

Advent International GPEVI EUR 20 million

CVC European Equity Partners V EUR 20 million
Ares Corporate Fund III USD 20 million

This new commitment was made in the ordinary course of busi-

ness. We anticipate funding the majority of the commitment
over a six-year period. Following the expiry of the investment
period of a fund, only minor capital drawdowns (fees and
follow-on investments for existing portfolio companies) are
expected. These may be offset by distributions from these
funds. Based on the Group’s cash flow model and bank facili-
ties, sufficient liquidity is available to fund capital calls.
Between January 1, 2008 and March 31, 2008, the following
aggregate investment related cash flows have been recorded
(by the partnerships under the commitments existing as of
December 31, 2007 and direct investments):

Capital Calls (in 1 000) Amount

USD 43 402
EUR 19 482
JPY 22 882
GBP 239

Distributions (in 1 000) Amount

USD 22 442
EUR 7 422
SEK 640

48
 AI G P R IVATE E Q U IT Y G R O U P – CO N S O LI DATE D F I NAN C IAL STATE M E NTS 2007

R E PO RT O F TH E G R O U P AU D ITO R S

As group auditors, we have audited the consolidated financial In our opinion, the consolidated financial statements give
statements (balance sheet, income statement, statement of a true and fair view of the financial position, the results of
cash flows, statement of changes in shareholders’ equity and operations and the cash flows in accordance with the Inter-
notes to the consolidated financial statements) of AIG Private national Financial Reporting Standards (IFRS) and comply with
Equity Ltd., Zug on pages 22 to 48 for the year ended 31 Dec- the accounting provisions of the Additional Rules for the List-
ember 2007. ing of Investment Companies of SWX Swiss Exchange as well as
These consolidated financial statements are the responsibi- with Swiss law.
lity of the Board of Directors. Our responsibility is to express We recommend that the consolidated financial statements
an opinion on these consolidated financial statements based submitted to you be approved.
on our audit. We confirm that we meet the legal requirements
concerning professional qualification and independence. PricewaterhouseCoopers AG
Our audit was conducted in accordance with Swiss Auditing
Standards and with the International Standards on Auditing, Thomas Romer Nik Hood
which require that an audit be planned and performed to Auditor in charge
obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. Zurich, April 29, 2008
We have examined on a test basis evidence supporting the
amounts and disclosures in the consolidated financial state-
ments. We have also assessed the accounting principles used,
significant estimates made and the overall consolidated finan-
cial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In accordance with Article 20 of the Additional Rules for the
Listing of Investment Companies of SWX Swiss Exchange we
draw attention to Note 1 of the consolidated financial state-
ments. As indicated in Note 1, the financial statements include
unquoted investments stated at their fair value of CHF 847.9
million. Because of the inherent uncertainty associated with
the valuation of such investments and the absence of a liquid
market, these fair values may differ from their realizable
values, and the difference could be material. The fair values of
these investments have been determined by the Board of
Directors and have been disclosed in Note 1. We have reviewed
the procedures applied by the Board of Directors in valuing
such investments and have viewed the underlying documen-
tation. While in the circumstances the procedures appear to
be reasonable and the documentation appropriate, the deter-
mination of fair values involves subjective judgment which
cannot be independently verified.

49
 AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E

CO R PO R ATE G OVE R NAN C E AT AI G P R IVATE E Q U IT Y LTD.

1. GROUP STRUCTURE AND SHAREHOLDERS
AIG Private Equity Ltd. (the Company) is a holding company
according to Swiss law and domiciled in Zug. Its 100% subsi-
diary AIG Private Equity Ltd. (Bermuda) holds the vast majority
of investments on its behalf.
Both Fund Investments and Direct Investments are in-
vestments in private equity which forms the only investment
category of the Company. For presentation purposes, the
investments are divided in the following three portfolios:
– AIG Companies Funds
– Third Party Funds
– Direct Investments
For further information please also refer to the principles of con-
solidation section within the consolidated financial statements.
See also note 1 of statutory accounts (participations).
Significant Shareholders
There are several shareholders with a participation exceeding
the 3% threshold of the Company’s share capital. The number
of shares and voting rights of the major shareholders are dis-
closed in note 8 of the consolidated financial statements.

Organisational Structure

S HAR E H O LD E R S

S E R VI C E
AI G P R IVATE E Q U IT Y LTD. AG R E E M E NT I I AI G P R IVATE BAN K LTD. AI G G LO BAL
B OAR D O F D I R E C TO R S ZU G ZU R I C H I NVE STM E NT CO R P.
(CO M PANY) (BAN K) (I NVE STM E NT ADVI S O R)

100 %

ADVI S O RY
100 % MANAG E M E NT AI G P R IVATE E Q U IT Y AG R E E M E NT
AP E N FAITH M E D IA
TH I R D DIRECT AG R E E M E NT M G MT LTD. B E R M U DA
H O LD I N G S LLC
PART Y I NVE ST- (MANAG E R)
FUNDS M E NTS
100 %

S E R VI C E
AI G P R IVATE E Q U IT Y AG R E E M E NT I AM E R I C AN I NTE R NATI O NAL
I NVE STM E NT
(B E R M U DA) LTD. CO M PANY LTD.
CO M M IT TE E
(S U B S I D IARY) (S E R VI C E CO M PANY)

AI G F U N D S TH I R D PART Y F U N D S D I R E C T I NVE STM E NTS

PO RTFO LI O PO RTFO LI O PO RTFO LI O

I NVE STM E NTS I NVE STM E NTS I NVE STM E NTS

BOARD OF DIRECTORS INVESTMENT COMMIT TEE MANAGEMENT BOARD AUDITORS

Eduardo Leemann, Chairman Dr. Thomas Lips, Chairman Andrew Fletcher PricewaterhouseCoopers Ltd.
Dr. Ernst Mäder Steven Costabile (Fund Investments) Conradin Schneider Birchstrasse 160
Dr. Roger Schmid FT Chong (Direct Investments) CH-8050 Zürich
Robert Thompson Win Neuger
Dr. Christian Wenger
51
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
2. C AP ITAL STR U C TU R E
Capital
As of December 31, 2007 the issued share capital of the Com-
pany was CHF 412 500 000, divided into 4 125 000 fully paid
registered shares with a nominal amount of CHF 100 each.
As per the same date 3 949 027 shares were outstanding and
the Company held 175 973 shares as treasury shares. The mar-
ket capitalization of the Company per year-end amounts to
CHF 671 million.
The shares are listed on the SWX Swiss Exchange.
Changes of capital
On June 13, 2000 the Company increased its share capital from
CHF 184 000 000 to CHF 317 500 000 by issuing 1 335 000 fully
paid-in shares with a nominal value of CHF 100.00 at a price of
CHF 150.00 per share.
On June 28, 2006 the Company increased its share capital
from CHF 317 500 000 to CHF 412 500 000 by issuing 950 000
shares of which 736 013 were paid-in shares with a nominal
value of CHF 100.00 at a price of CHF 158.50. The balance of
213 987 shares were subscribed by the Company.
Shares and participation certificates
There are no preferential rights or similar rights. Each share is
entitled to one vote and has full dividend rights. Voting rights
may be exercised only after a shareholder has been registered
in the Company’s share register. No shares and/or share certi-
ficates will be issued to shareholders. Two Global Share Certi-
ficates (“Globalurkunde auf Dauer”) are deposited with SIS
SegaInterSettle AG under Swiss Security number 915.331, ISIN
CHF0009153310. Transfers of shares are effected through a
book-entry system maintained by SIS SegaInterSettle AG.
There are neither participation certificates nor profit shar-
ing certificates.
52
Authorized and conditional capital
The board of directors is entitled to an increase in authorized
capital up to a maximum amount of CHF 206 250 000 by issu-
ing no more than 2 062 500 shares with a nominal of CHF 100.–.
The duration of the authorization period expires May 30, 2009.
The board of directors is entitled to an increase in con-
ditional capital up to a maximum amount of CHF 206 250 000
by issuing no more than 2 062 500 shares with a nominal of
CHF 100.–. The duration of the authorization period expires
May 30, 2009.
Shares for which subscription rights were granted but not
executed are at the board of director’s disposal.
The pre-emptive rights of the shareholders can be excluded
in case of acquisitions of other companies or additional listings
to foreign stock exchanges. If doing so, the board of directors
is not allowed to fix the issuing price under the Net Asset Value
of the shares of the Company.
See also Article 4 lit. b of the articles of association (avail-
able at www.aigprivateequity.com),
Limitations of transferability and nominee
registrations
The Company’s shares are freely transferable, without any
limitations, provided that the buyers declare they are the bene-
ficial owners of the shares and comply with the disclosure
requirements of the Federal Act on Stock Exchanges and
Securities Trading of March 24, 1995.
Nominees who act as fiduciaries of shareholders are en-
tered without further inquiry in the Company’s share register
as shareholders with voting rights up to a maximum of 3% of
the outstanding capital available at the time.
See also Article 4 of the articles of association.
Convertible Bonds and Warrants
There are no convertible bonds and warrants issued by the
company or by its subsidiaries on shares of the Company out-
standing.

3. BOARD OF DIRECTORS
Responsibilities
The board of directors consists of one or more members. The
board of directors is ultimately responsible for the policies and
management of the corporation. The board establishes the
strategic, accounting, organizational and financing policies to
be followed by the corporation. The board further appoints the
executive officers and the authorized signatories of the cor-
poration, supervises the management of the corporation and
monitors the investment decisions. Moreover, the board is en-
trusted with preparing shareholders' meetings and carrying out
shareholders resolutions. The board may, pursuant to its regu-
lations, delegate the conduct of day-to-day business oper-
ations to management under its control. The board approves
all compensation upon proposal of the chairman.
Meeting schedule
The board usually meets four times per year in person (mini-
mum twice). The regular meetings are typically held in Fe-
bruary, May, August and November. Additional meetings are
called on short notice if and when required. In the year under
review, four board meetings and a workshop took place. Each
of the board meetings has a special focus which is basically
connected to the Company’s reporting rhythm. Such focuses
are the financial statements, interim results, the medium-term
plan, investments, foreign exchange exposure, the annual ge-
neral meeting and corporate governance. The members of the
management committee are invited to attend the board mee-
tings and have attended all four board meetings. The board re-
solves by majority vote with the presence of a majority of
members. The average duration of a board meeting is ninety
minutes.
Principles of the election procedure
The members of the Board will be elected by the annual gen-
eral meeting according to Article 11 of the articles of asso-
ciation. The term of office for all members is three years with
the possibility of repeated re-election.
Members of the Board of Directors
Eduardo Leemann, born 1956, Swiss citizen, Chairman, non-
executive member, term of office expires in 2009.
Mr. Leemann joined AIG Private Bank in Zurich in 1997 as
Chief Executive Officer. In May 2006 he has relinquished the
operational leadership of the bank to take over the manage-
ment of the AIG Global Wealth Management Organization and
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
became Chairman of the Board of Directors of AIG Private Bank
Ltd. He previously worked at Goldman, Sachs & Co Bank as
Member of the Management Committee and Head of Private
Banking. Prior to that, Mr. Leemann was Deputy to the Head of
Private Banking worldwide at Bank Julius Baer with direct
responsibilities for the Western Hemisphere, Switzerland as
well as the overall marketing effort in Private Banking. Prior to
that, he was responsible for building the private banking
business of Bank Julius Baer in their New York branch. Eduardo
Leemann is a graduate of the “Swiss School of Economics and
Business Administration” (SEBA) and from the Advanced Exe-
cutive Program of the J. L. Kellog Graduate School of Manage-
ment at the Northwestern University in Chicago, USA.
Mr. Leemann became Chairman of the Company’s board of
directors in September 1999.
Mr. Leemann also serves on the Board of Directors of AIG
International Real Estate GmbH & Co. KgaA, a listed real estate
company in Frankfurt, Germany. Mr. Leemann also serves as a
member of the board of directors of the SWX Group and SWX
Swiss Stock Exchange.
Dr. Ernst Mäder, born 1954, Swiss citizen, non-executive
member, term of office expires in 2009.
Currently the CFO of the Swiss National Accident Insurance
Fund, Dr. Mäder has had an extensive career with leading Swiss
banks. He served Credit Suisse Private Banking as Head of
Investment Research and Credit Suisse First Boston as Head of
the Fixed Income & Derivatives Research Department Switzer-
land/Europe. Previously, Dr. Mäder was the Head of the Bond
and Derivatives Research Division for Credit Suisse in Zurich.
Earlier in his career, he spent ten years at UBS Zurich working
with the Economic Department, Investment Research and the
Asset Management. Dr. Mäder holds an Economics degree from
the University of Zurich with post-graduate studies in “the use
of VAR-models in forecasting interest rates and analysing data.”
Mr. Mäder joined the Company’s board of directors in
December 2000.
Dr. Roger Schmid, born 1959, Swiss citizen, non-executive
member, term of office expires in 2009.
Mr. Schmid joined Ernst Goehner Foundation in 1996 as
Managing Director and became a member of the board of
trustees in 2005. Prior to joining Ernst Goehner Foundation,
Mr. Schmid worked for five years with Bank Leu Ltd. as coun-
selor-at-law and became a Member of the Senior Management
in 1995. Mr. Schmid received a degree in law from Zurich Uni-
versity. His professional education includes training programs
and work in South Africa, England and the United States.
53
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
Mr. Schmid joined the Company’s board of directors in
September 1999.
Mr. Schmid also serves as a non-executive member on the
board of directors of Panalpina Welttransport (Holding) Ltd.
Robert Thompson, born 1954, US citizen, non-executive
member, term of office expires in 2010.
Mr. Thompson is the Head of AIG Investments worldwide Al-
ternative Investments business, having joined AIG Investments
in 2005. Mr. Thompson was a co-founder and managing mem-
ber of Ferrer Freeman Thompson & Co., LLC, (“FFT”) a private
equity firm dedicated to investing in the Health Care industry.
Prior to FFT, he was Managing Director and Equity Group Lea-
der at GE Capital. Mr. Thompson founded, organized, and de-
veloped GE Capital’s Private Equity activities throughout the
U.S., Europe and Asia. Mr. Thompson has over 15 years experi-
ence in all segments of the private equity business including
mezzanine, direct investments, joint ventures, leveraged buy-
outs and fund investments. Mr. Thompson has also held va-
rious positions at Bain & Co. and Chemical Bank. He currently
serves on Investment Committees for AIG Investments
alternative investments activities. Mr. Thompson received an
A.B. in Economics from Harvard College and an M.B.A. from
Stanford University.
Mr. Thompson joined the Company’s board of directors in
May 2007.
Dr. Christian C. Wenger, born 1964, Swiss citizen, non-exe-
cutive member, term of office expires in 2009.
Mr. Wenger is a lawyer and a partner at the well-known law
firm of Wenger & Vieli in Zurich. He joined the firm in 1996 and
became partner in 1999. Mr. Wenger is specialized in commer-
cial and business law, with a focus on Private Equity, Venture
Capital and M&A. Mr. Wenger is member of the management
board of SEC A (Swiss Association for Private Equity and Cor-
porate Finance) as well as president of CTI Invest, an investors’
organization associated with KTI, the Swiss federal govern-
ment’s agency to promote innovation. In the scope of his pro-
fessional activities, Mr. Wenger is member of the board of
several Swiss as well as international companies. He received a
degree in law from Zurich University (Dr. iur.) and completed
his studies with an LL.M at Duke University Law School, North
Carolina.
Mr. Wenger joined the Company’s board of directors in
May 2006.
Mr. Wenger also serves as a non-executive member of
the board of directors of Looser Holding Ltd. and AIG Private
Bank Ltd.
54
Internal Organization and definition of areas of
responsibility
The principal responsibilities of the board of directors en-
compass:
– Establishment of strategic, organizational, reporting
and financial policies
– Appointment of executive officers
– Definition of investment policy and supervision of its
implementation
– Preparation and execution of annual shareholders
meeting
They are summarized in Article 13 of the articles of asso-
ciation (available at www.aigprivateequity.com).
In view of the relatively small board of directors and the
complexity of the tasks, the board did not constitute any more
committees.
The board of directors has delegated to the Management
Committee the coordination of the day-to-day business
operations of the company. See also Article 3 of the Internal
Regulations of the Board of Directors (available at www.aig-
privateequity.com). The board of directors has not concluded
any contracts with third parties to manage the business.
For the tasks and responsibilities of the board see internal
regulations of the board of directors (available at www.aig-
privateequity.com).
Information and control instruments vis-à-vis
the management board
In order to allow fulfilment of its supervising duties, the board
of directors is provided with the following information:
– Discussions with the management during the board of
directors meetings, telephone conferences, etc.
– Quarterly, Semi-annual and Annual reports
– Auditors report on the annual audit of the financial
statements
Members of the management committee participate at
every meeting of the board if directors. Additionally, the mem-
bers of the management committee engage on a frequent basis
with the chairman of the board and other members of the
board of directors.

4. INVESTMENT COMMIT TEE
Dr. Thomas Lips, Chairman of the Investment Committee
Dr. Lips is Chief Investment Officer for AIG Global Investment
Corp. (Switzerland) Ltd. and is responsible for directing Euro-
pean Equities activities. Prior to joining the AIG Companies in
1998, he was at Goldman, Sachs & Co. Bank as Chief Invest-
ment Officer responsible for building the private and in-
stitutional asset management business in Switzerland. Prior to
Goldman, Sachs & Co., Dr. Lips was head of Investment
Counseling and Research for Union Bank of Switzerland. Dr.
Lips studied at the Universities of Fribourg, Basel and Zurich,
where he received his Doctorate Degree in Economics. He is
the founding member of the board of the Swiss Training Cen-
ter for Investment Managers, and a member of the editing
body of the Swiss Association for Investment Research. He is
also the Chairman of the Swiss Association of Financial Ana-
lysts and Investment Managers. Dr. Lips is a member of the AIG
Global Investment Policy Committee.
Steven Costabile (fund investments)
Mr. Costabile joined AIG Investments in 2000 and is the Man-
aging Director of the Private Equity Funds Group. Mr. Costabile
has played a significant role in the successful growth of three
product lines, Pinestreet LLC, PineStar (secondaries) and the
PEP program. Mr. Costabile serves on the Developed Markets
Fund Investment Committee, APEN Investment Committee and
Japan Private Equity Investment Committee. His current re-
sponsibilities include overseeing all private equity funds in-
vestments in the developed markets, as well as sourcing, due
diligence, monitoring product development, and marketing.
From 1997 to 2000, Mr. Costabile was a Vice President at
Credit Suisse First Boston (CSFB) in the Private Funds Group,
with a focus on investments on behalf of CSFB and third party
investors. Prior to that, he was the Senior Investment Officer
of Alternative Investments for the Commonwealth of Massa-
chusetts and the Assistant Director of Venture Capital for
the Commonwealth of Pennsylvania. In both positions, Mr.
Costabile focused on private equity fund investments. He
received both a BSBA and an MBA from Duquesne University.
He is also a CFA charterholder and holds a Series 7 license.
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
FT Chong (direct investments)
Mr. Chong joined AIG Investments in 1998 and currently leads
the Direct Investments Team which focuses on private equity
and mezzanine investing in developed markets such as the
United States and Europe. Mr. Chong has worked in buyouts
and leveraged financing since 1981. Mr. Chong is currently a
director of a number of companies including Fresh Direct. Prior
to joining AIG Investments, Mr. Chong was Executive Vice
President for Business Development for the GT Group, an
Asian conglomerate, from 1994 to 1998. In the early 1990’s he
was a founder and CFO of DynadxTechnologies, Inc., a start-up
company that developed and marketed a new out-of-home
advertising technology. From 1981 to 1989 he was head of the
USD 3 billion US leveraged finance group at Swiss Bank Corp.
and participated in or led the financing for more than two
dozen high profile leveraged buyouts. He received an MBA
from Columbia University and also has a degree in Chemical
Engineering from the University of Malaya.
Win J. Neuger
Mr. Neuger is responsible for directing AIG Investments stra-
tegies on a worldwide basis. He is also an Executive Vice Presi-
dent and Chief Investment Officer of AIG. He also served as a
member of the board of directors of the Company from
2006–2007. Mr. Neuger joined AIG Investments in 1995, with
investment management experience since 1981. Before joining
AIG Investments, he was with Bankers Trust Company, where
he served both as Managing Director, Fixed Income and, sub-
sequently, Managing Director, Global Equities. Prior to joining
Bankers Trust, Mr. Neuger served as Chief Investment Officer
at Western Asset Management. He was also the Head of Fixed
Income at Northwestern National Bank in Minnesota. Mr.
Neuger received an AB from Dartmouth College and an MBA
from Dartmouth’s Amos Tuck Graduate School of Business. He
is a CFA charterholder and is a member of the New York
Society of Security Analysts (NYSSA) and the CFA Institute
(formerly AIMR).
55
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
Investment Process Diagram
Management &
Investment Advisor
Investment
Sourcing Evaluation
Memorandum
Recommendations
Investment
Committee
The Investment Committee is appointed by the board of
directors of the Subsidiary and is responsible for assessing the
investment opportunities presented by the Manager and the
Investment Advisor and subsequently making investment
recommendations to the board of directors of the Subsidiary
for approval by the latter. See also note 14 to the consolidated
financial statements.
5. MANAGEMENT BOARD
Members of the Management Board
Andrew Fletcher, born 1964, US citizen.
Mr. Fletcher joined the Company in 2001. Mr. Fletcher is also a
member of the management board of AIG Global Investment
Corp. (Switzerland) Ltd., responsible for alternative invest-
ments and structured products, and a managing director of AIG
International Real Estate GmbH & Co. KGaA, a listed real estate
company in Frankfurt, and its subsidiaries. Prior to 2001, Mr.
Fletcher worked for four years as Assistant General Counsel in
AIG’s corporate law department in New York and for six years
in private practice. He is a graduate of Harvard College and
Harvard Law School.
Mr. Fletcher is also a member of the management board of
AIG International Real Estate GmbH & Co. KGaA, a listed real
estate company in Frankfurt, Germany. He is also a member of
the management board of AIG Private Bank Ltd., Zurich.
56
Negotiation Investment
Monitoring Exit
of Terms Approval
Board of
Directors
Subsidiary
It also has to be noted that three members of the Invest-
ment Committee (W. Neuger, S. Costabile and FT Chong) of
the Subsidiary are senior executives and members of the
Investment Committee of AIG.
Conradin Schneider, born 1962, Swiss citizen.
Mr. Schneider joined the AIG Companies in 1999. He was in-
volved in establishing and listing the Company, a Swiss listed
private equity investment company, on the SWX Swiss Ex-
change. With the Company Mr. Schneider is responsible for
screening private equity funds and direct investment opportu-
nities and for operations. Prior to joining AIG, Mr. Schneider
was with Aventic Ltd., the private equity vehicle of UBS for
small and medium sized companies in Switzerland. Prior to his
assignment with UBS-Aventic, he worked 8 years as a corporate
banker with UBS with a focus on Swiss multinationals. Mr.
Schneider received his graduate degree from the University of
St. Gall, Switzerland, specializing in banking and economics.
Mr. Schneider is also a member of the board of directors of
MV Leverage Finance Limited and AIG MezzVest II, and a mem-
ber of the management board of AIG International Real Estate
GmbH & Co. KGaA, a listed real estate company in Frankfurt,
Germany. He is also a member of the management board of
AIG Private Bank Ltd., Zurich.
 AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E

6. COMPENSATION, SHAREHOLDINGS AND LOANS
Content and Method of Determining Compensations
The compensation of the Board of Directors lies in the
responsibility of the general meeting. The Board of Directors
approves compensation (including the share option plan) for
the management board upon proposal of the Chairman. The
share based compensation plan is designed to ensure that
the Company maintains a competitive bonus program in order
to recruit, retain and motivate management in the overall
interests of shareholders.

Base Variable Other Total Share-

All amounts in CHF Compensation Compensation* 1 Compensation** 1 2007 1 holdings 2 SARs 3

Board of Directors
Eduardo Leeman 60 000 2 500 6 967 69 467 200 –
Erich Hort 30 000 2 000 2 936 34 936 – –
Dr. Ernst Mäder 30 000 2 500 2 909 35 409 – –
Win Neuger (as from May 2007) – – – – – –
Dr. Roger Schmid 30 000 1 500 – 31 500 750 –
Robert Thompson (as from May 2007) – – – – – –
Dr. Christian Wenger 17 500 1 500 – 19 000 – –
Total Board of Directors 167 500 10 000 12 812 190 312 950 –

Management
Andrew Fletcher 242 319 – – 242 319 1 000 15 000
Conradin Schneider – – – – 3 334 7 500
Total Management 242 319 – – 242 319 4 334 22 500

* Attendance fee 1 in CHF

** Social security payments 2 number held at year end
3 number granted during year

Share-based compensation plans
The members of Management of the Company have the option
to exercise an aggregate of (i) 45 000 stock appreciation rights
of the Company over a period of three years and (ii) 15 833
stock options of the Company over a period of three years.
As of 31 December 2007, they held the following stock
appreciation rights and stock options:
6 333 stock appreciation rights and 2 833 options were exer-
cised in 2007. No other options to purchase shares of the Com-
pany have been issued by the Company.
Highest total compensation of Board of
Directors member
See above, total of compensations for both boards.

Subscription
Number of options Year of grant Vesting date Expiry Date ratio Strike Price

4 000 2005 31.5.2006 13.6.2008 1:1 CHF 125

5 000 2005 31.5.2007 13.6.2008 1:1 CHF 125
6 833 2005 31.5.2008 13.6.2008 1:1 CHF 125

Number of SARs

7 000 2006 15.2.2008 28.2.2009 1:1 CHF 160

7 000 2006 15.2.2009 28.2.2009 1:1 CHF 160
7 000 2006 15.2.2010 28.2.2009 1:1 CHF 160

8 000 2007 1.3.2008 14.3.2010 1:1 CHF 160

8 000 2007 1.3.2009 14.3.2010 1:1 CHF 160
8 000 2007 1.3.2010 14.3.2010 1:1 CHF 160 57
AI G P R IVATE E Q U IT Y G R O U P – CO R PO R ATE G OVE R NAN C E
7. SHAREHOLDER’S PARTICIPATION RIGHTS
Voting-rights restrictions and representations
Each registered share in the Company is entitled to one vote.
See also Article 7 section 1 in the articles of association. Voting
rights may be exercised only after a shareholder has been
registered as shareholder with voting rights in the Company’s
share register.
Rules on participating in the general meeting if
different from law
No restrictions. See Article 7 section 2 in the articles of asso-
ciation.
Statutory quora
The statutory quora comply with the applicable legal regu-
lations. See Article 8 in the articles of association.
Convocation of the general meeting of shareholders
and proposal for agenda items
The convocation of the Shareholders’ Meeting complies with
the applicable legal regulations. The convocation may also
be requested by one or several shareholders representing
together at least ten percent of the share capital. See also
Articles 5 and 6 in the articles of association.
Registration in the share register
There is no statutory rule on the deadline for registering share-
holders in connection with the attendance of the Annual Gen-
eral Meeting. In 2008, the qualifying date is May 5, while the
Annual General Meeting will be held on May 28.
8. CHANGES OF CONTROL AND DEFENSE MEASURES
Duty to make an offer
The company refrains from the duty to make an offer (opt-
ing-out; see also Article 23 in the articles of association)
pursuant to Article 32 of the Federal Stock Exchange Act
(SESTA).
58
9. AUDITORS
Date of Assumption of the Existing Auditing Mandate
PricewaterhouseCoopers (PwC) was re-elected for another 3
years at the general meeting in June 2005.
Responsible Partner: Thomas Romer (since 2004)
Responsible Senior Manager: Nik Hood (since 2007)
Total of auditing honorariums 2007
TCHF 150
Additional honorariums
Tax-consulting TCHF 89
Supervisory and control instruments vis-à-vis the
auditors, control instruments
Since there is no Audit Committee, the Auditors’ report will be
presented to the whole Board of Directors as a part of the
annual report.
In addition to that, the responsible Auditor participates in
the annual general meeting and is standing by for questions
and detailed audit information.
10. INFORMATION POLICY
The Company aims to offer the shareholders a high degree of
transparency. In this respect the Company publishes an annual
report, a semi-annual report and three quarterly reports. In ad-
dition, the Company publishes the net asset value of the Com-
pany on a monthly basis.
In between the quarterly report publications relevant in-
formation (including information subject to Ad-hoc publicity
according to section 72 of the listing rules) is published in the
form of press releases and available at www.aigprivateequity.
com.
AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

BALANCE SHEET AS OF DECEMBER 31, 2007 AND DECEMBER 31, 2006

in TCHF

Note 2007 2006

Assets
Current Assets
– Cash and cash equivalents 26 4 128
– Loans to subsidiary 25 150 –
– Derivative instruments 5 1 645 945
– Prepayments 219 127
– Own shares 3 27 847 36 207
54 887 41 407
Long-term Assets
– Participation 1 546 716 525 739
– Direct Investments 8 2 170 11 123
– Funds 8 3 041 2 052
551 927 538 914
Total Assets 606 814 580 321

Liabilities and Shareholders’ Equity

Current Liabilities
– Payables and accrued charges 1 401 1 838
– Bank loan 25 015 –
26 416 1 838
Shareholders’ Equity
– Share capital 2, 6 412 500 412 500

– Reserve (non-disposable) 82 500 82 500

– Other reserves (disposable) 61 607 61 607
Total share capital premium 144 107 144 107
– Less Reserve set aside for own shares (21 729) (30 088)
122 378 114 019

– Reserve for own shares 4 27 847 36 207

– Reserve for stock option plan 182 156
– Retained earnings 17 491 15 601
580 398 578 483
Total Liabilities and Shareholders’ Equity 606 814 580 321

60
 AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

INCOME STATEMENT FOR THE PERIOD JANUARY 1 TO DECEMBER 31, 2007 AND JANUARY 1 TO DECEMBER 31, 2006
in TCHF

Note 2007 2006

Income
Dividend income from non-current assets – 718
Net realized gains on investments 1 566 219
Interest income from current assets 210 175
Gain on foreign currency exchange 10 1 028
Gain on derivative instruments 5 2 642 –
Gain on sale of own shares 3 346 3 694
Total Income 4 774 5 834

Expenses
Service fees 301 301
Other operating expenses 2 319 1 912
Loss on foreign currency exchange 112 1 197
Loss on derivative instruments – 1 377
Tax expenses 152 675
Total Expenses 2 884 5 462

Net profit for the year 1 890 372

Accumulated surplus (deficit)

Balance, beginning of the year 21 720 21 348
Net profit for the year 1 890 372
Balance, end of the year 23 610 21 720

61
AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

N OTE S TO TH E F I NAN C IAL STATE M E NTS

in TCHF

1. Participation
Location Capital held Nominal Value Paid Book value Book value
in % in TUSD in TUSD in TCHF in TCHF

31.12.07 31.12.06
AIG Private Equity (Bermuda) Ltd. Pembroke, Bermuda 100 552 663 495 870 537 680 525 739
APEN Faith Media Holdings LLC. Delaware, USA 100 0 9 780 9 036 0
Total 552 663 505 650 546 716 525 739

AIG Private Equity Ltd., Zug (“the Company”) is a Swiss stock 3. Balances and transactions with own shares
corporation established under the relevant provisions of the
Swiss Code of Obligations and domiciled in Zug. The Company Number Amount CHF

was established by AIG Private Bank Ltd. on September 17, Balance as of January 1, 2007 228 806 36 207 033
1999 for an indefinite period of time and was registered in the Disposal (sold at CHF 164.50) (50 000) (8 225 000)
commercial register of the Canton of Zug on September 20, Disposal (purchased at CHF 168.00)* (167) (28 056)
1999. The Company, together with AIG Private Equity (Ber- Disposal (purchased at CHF 170.00)* (1 666) (283 220)
muda) Ltd. and APEN Faith Media Holdings LLC (“the Sub- Disposal (purchased at CHF 170.00)* (1 000) (170 000)
sidiaries”), comprises the AIG PE Group (“the Group”). The Total 175 973 27 500 757
Company’s shares are listed on the SWX Swiss Exchange since Realized gains on sale of own shares 2007 345 782
October 12, 1999. Book value as of December 31, 2007 27 846 539
The Company’s investment objective is to achieve long-
term capital growth for shareholders by investing in private * This relates to equity settlement of option exercised during the year.
equity funds. The Company may also make direct investments
in operating companies. Although the Company may invest 4. Reserve for Own Shares
directly in fund investments or companies, it is anticipated that At the end of 2007 the Reserve for Own Shares amounted to
investments will generally be made through the Subsidiaries. CHF 27 846 539. The decrease of CHF 8 360 494 has been
posted against Share Capital Premium – see also point 3 of
2. Authorized and Conditional Share Capital the notes.
As per December 31, 2007 the Company has CHF 206.25 mil-
lion (2006: CHF 63.75 million) authorized share capital out- 5. Derivative Instruments
standing. This authorized share capital will expire at the end of Forward Exchange Transactions
May 2009.
As per December 31, 2007 the Company has CHF 206.25 2007
million (2006: CHF 63.75 million) conditional share capital As of December 31, 2007 the Company has one open foreign
outstanding. This conditional share capital will expire at the exchange forward contracts:
end of May 2009.
Contractual Exchange Positive
Nominal Maturity exchange rate at replacement
amount date rate year end value

USD 20 000 000 23.04.2008 1.1640 1.1329 CHF 622 000

On December 31, 2007 the Company closed a foreign exchange

forward contract with a notional amount of USD 30 000 000
resulting in the Company receiving TCH 1023 in January 2008.
Certain prior year comparisons have been reclassified to
correspond with current year presentation.

62
 AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

2006
As of December 31, 2006 the company had open foreign
exchange forward contracts as follows:

Contractual Exchange Positive

Nominal Maturity exchange rate at replacement
amount date rate year end value

USD 30 000 000 12.01.2007 1.2502 1.2187 CHF 945 000

6. Shareholders’ Equity
The following major shareholders held shares and voting rights of 3% and more as of December 31, 2007:

Number of Shares Participation in % Number of Shares Participation in %

2007 2007 2006 2006
American International Underwriters Overseas Ltd. 413 500 10.02% 413 500 10.02%
AIG Life (Ireland) Ltd. 1 083 527 26.27% 1 160 127 28.12%
Ernst Göhner Stiftung 267 000 6.47% 267 000 6.47%
AIG Private Bank Ltd. 229 284 5.56% – *
AIG Private Equity Ltd. 175 973 4.27% 228 806 5.55%
SUVA, Schweiz. Unfallversicherungsanstalt 127 500 3.09% – **
AXA Winterthur 167 000 4.05% – ***

* On November 15, 2006 AIG Private Bank informed the Company that its shareholding had dropped below 5%.
** On March 21, 2006 SUVA informed the Company that its shareholding had dropped below 5%.
*** On June 27, 2006 AXA Winterthur informed the Company that its shareholding had dropped below 5%.

7. Compensation, shareholdings and loans

The compensation of the Board of Directors is within the com-
petence of the general meeting. The Board of Directors ap-
proves compensation (including the share option plan) for the
management board upon proposal of the Chairman.

Base Variable Other Total Share-

Compensation 1 Compensation* 1 Compensation** 1 2007 1 holdings 2 SARs 3

Board of Directors
Eduardo Leeman 60 000 2 500 6 967 69 467 200 –
Erich Hort 30 000 2 000 2 936 34 936 – –
Dr. Ernst Mäder 30 000 2 500 2 909 35 409 – –
Win Neuger (until May 2007) – – – – – –
Dr. Roger Schmid 30 000 1 500 – 31 500 750 –
Robert Thompson (as from May 2007) – – – – – –
Dr. Christian Wenger 17 500 1 500 – 19 000 – –
Total Board of Directors 167 500 10 000 12 812 190 312 950 –

Management
Andrew Fletcher 242 319 – – 242 319 1 000 15 000
Conradin Schneider – – – – 3 334 7 500
Total Management 242 319 – – 242 319 4 334 22 500

* Attendance fee 1 in CHF 63

** Social security payments 2 number held at year end
3 number granted during year
AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

Share-based compensation plans

The members of Management of the Company have the option
to exercise an aggregate of (i) 45 000 stock appreciation rights
of the Company over a period of three years and (ii) 15 833
stock options of the Company over a period of three years.

As of 31 December 2007, they held the following stock appre-

ciation rights and stock options:
Subscription
Number of options Year of grant Vesting date Expiry Date ratio Strike Price

4 000 2005 31.5.2006 13.6.2008 1:1 CHF 125

5 000 2005 31.5.2007 13.6.2008 1:1 CHF 125
6 833 2005 31.5.2008 13.6.2008 1:1 CHF 125

Number of SARs

7 000 2006 15.2.2008 28.2.2009 1:1 CHF 160

7 000 2006 15.2.2009 28.2.2009 1:1 CHF 160
7 000 2006 15.2.2010 28.2.2009 1:1 CHF 160

8 000 2007 1.3.2008 14.3.2010 1:1 CHF 160

8 000 2007 1.3.2009 14.3.2010 1:1 CHF 160
8 000 2007 1.3.2010 14.3.2010 1:1 CHF 160

8. Investments
The Company holds one direct investment (Hertz) and three
private equity partnerships (Carlyle Japan Partners II, L.P.;
Unison Capital Partners II and Unison Standby Facility). The
book values of these investments are as follows (in TCHF):

Hertz 2 170
Carlyle Japan Partners II 889
Unison Capital Partners II 1 890
Unison Standby Facility 262

9. Subsequent Events
Since the balance sheet date of December 31, 2007, there have
been no material events that could impair the integrity of the
information presented in the financial statements.

64
 AI G P R IVATE E Q U IT Y LTD. – F I NAN C IAL STATE M E NTS 2007

R E PO RT O F TH E STATUTO RY AU D ITO R S

As statutory auditors, we have audited the accounting records

and the financial statements (balance sheet, income statement
and notes) of AIG Private Equity AG, Zug on pages 60 to 64 for
the year ended 31 December 2007.
These financial statements are the responsibility of the
Board of Directors. Our responsibility is to express an opinion
on these financial statements based on our audit. We confirm
that we meet the legal requirements concerning professional
qualification and independence.
Our audit was conducted in accordance with Swiss Auditing
Standards, which require that an audit be planned and per-
formed to obtain reasonable assurance about whether the
financial statements are free from material misstatement. We
have examined on a test basis evidence supporting the
amounts and disclosures in the financial statements. We have
also assessed the accounting principles used, significant esti-
mates made and the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the accounting records and financial state-
ments comply with Swiss law and the company’s articles of
incorporation.
We recommend that the financial statements submitted to
you be approved.

PricewaterhouseCoopers AG

Thomas Romer Nik Hood

Auditor in charge

Zurich, April 29, 2008

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AD D R E S S E S AN D CO NTAC TS

Registered Office
AIG Private Equity Ltd.
Grafenauweg 8
CH-6300 Zug
Phone +41 (41) 710 70 60
Fax +41 (41) 710 70 64
E-mail info@aigprivateequity.com

Subsidiaries
AIG Private Equity (Bermuda) Ltd.
29, Richmond Road
Pembroke, HM 08
Bermuda

APEN Faith Media Holdings, LLC

2711 Centerville Road, Suite 400
Wilmington, New Castle County
Delaware 19808
USA

Investor Relations
Conradin Schneider
AIG Private Equity Ltd.
Grafenauweg 8
CH-6300 Zug
Phone +41 (41) 710 70 60
Fax +41 (41) 710 70 64
E-mail info@aigprivateequity.com

If you would like to submit an investment

proposal please contact:

For US direct investments:

E-mail FT.Chong@aig.com;
Phone +1 646 857 8651

For US based private equity funds:

E-mail Steven.Costabile@aig.com
Phone +1 646 857 8693

For European direct investments:

E-mail Rajveer.Ranawat@aig.com
Phone +44 207 954 8121

For European private equity funds:

E-mail Axel.Kuehn@aig.com
Phone +41 44 227 52 57

www.aigprivateequity.com
AIG Private Equity Ltd. Phone +41 (41) 710 70 60
Grafenauweg 8 Fax +41 (41) 710 70 64
CH-6300 Zug Email info@aigprivateequity.com
Switzerland www.aigprivateequity.com