Partially offsetting these strengths is the group’s exposure to higher risk investments including structured securities, collateralized debt obligations (CDO), direct commercial mortgage loans and various alternative strategies. As AIGL&R continues to restructure its asset portfolio to achieve greater investment yield, A.M. Best remains cautious on its investment risk appetite. For 2013, AIGL&R continued to meet the substantial dividend expectations of its ultimate parent and managed the effect of the low interest rate environment on its spread-based businesses. A.M. Best believes future investment losses should be manageable in the context of AIGL&R’s current capitalization level and earnings capacity. Based on results through September 30, 2013, asset impairments have continued to remain low, which is notable given the uncertain economic environment and the group’s sizable structured asset and alternative investment portfolios. A.M. Best further notes that AIGL&R’s investments in non-agency mortgage-backed securities, asset-backed securities, CDOs and commercial mortgage-backed securities totaled approximately $48.9 billion at September 30, 2013 (statutory, amortized cost basis). This exposure represents roughly 260% of statutory total-adjusted capital. In addition, AIGL&R’s $14.9 billion exposure to alternative assets (hedge funds, private equity and real estate) represents additional risk within its investment portfolio.As part of its current capital management strategy, AIGL&R continues to pay high dividends to AIG, (albeit at less than current earnings), thus allowing for a steady increase in its risk-adjusted and absolute capitalization levels. However, A.M. Best notes that AIG’s executive management has indicated its commitment to maintain healthy capitalization ratios to support the ratings of AIGL&R and potentially remove any capital maintenance agreements the group has with the parent in the future. Furthermore, AIG’s various implicit and explicit support initiatives are in line with this commitment. A.M. Best believes AIGL&R may experience positive rating movement if the positive trends in earnings and investment performance continues, exposure to structured assets and alternative investments remains constant and strong risk-adjusted capitalization is maintained. However, downward rating pressure may occur should the group experience unfavorable trends in earnings or net flows, a decline in risk-adjusted capitalization in excess of A.M. Best's expectations or significant deterioration in investment performance.