$344 million to write down lower-rated securities (most of which were sold in the third quarter of 2001) in connection with the company’s decision to lower its risk profile by reducing the level of its high-yield portfolio, allocating holdings toward stronger credits, and reducing the concentration of exposure to individual companies and industry sectors; and $79 million to write down certain other investments to recognize losses incurred during the second quarter. Subsequently, during 2001 the company placed a majority of its rated CDO securities and related accrued interest, as well as a relatively minor amount of other liquid securities (collectively referred to as transferred assets), having an aggregate book value of $905 million, into a securitization trust. In return, the company received $120 million in cash (excluding transaction expenses) relating to sales to unaffiliated investors and retained interests with allocated book amounts aggregating $785 million. As of December 31, 2002, the retained interests had a carrying value of $754 million, of which $520 million is considered investment grade. The book amount is determined by allocating the previous carrying value of the transferred assets between assets sold and the retained interests based on their relative fair values. Fair values are based on the estimated present value of future cash flows. The retained interests are accounted for in accordance with EITF Issue 99-20. In connection with the spin-off of Lehman Brothers Holdings Inc. (Lehman) in 1994, the company acquired 928 shares and Nippon Life Insurance Company acquired 72 shares of Lehman’s redeemable voting preferred stock for a nominal dollar amount. This security entitled its holders to receive an aggregate annual dividend of 50 percent of Lehman’s net income in excess of $400 million for each of eight years ending in May 2002, with a maximum dividend of $50 million in any one year. In each of the three years ended December 31, 2002, the company received a pretax dividend of $46 million on these shares. In the third quarter of 2002, the company received the final dividend of $23 million under the terms of this security based on earnings from Lehman for the six months ended May 31, 2002. The change in net unrealized securities gains (losses) recognized in other comprehensive income includes two components: (i) unrealized gains (losses) that arose from changes in market value of securities that were held during the period (holding gains (losses)), and (ii) gains (losses) that were previously unrealized, but have been recognized in current period net income due to sales of Available-for-Sale securities (reclassification for realized gains). This reclassification has no effect on total comprehensive income (loss) or shareholders’ equity. The following table presents these components of other comprehensive income (loss) net of tax: Loans at December 31 consisted of: Note: American Express Financial Advisors’ (AEFA) investment loans of $4.0 billion in both 2002 and 2001 are included in Investment Loans and are presented in Note 2. I 65 AXP I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Millions) 2002 2001 Cardmember, consumer and private banking loans $  26,509 $ 24,551 Commercial loans: Commercial and industrial 308 732 Loans to banks and other institutions 1,428 1,196 Mortgage and real estate 61 140 Other, principally policyholders’ loans 742 814 29,048 27,433 Less: Reserves for credit losses 1,226 993 Total $ 27,822 $ 26,440 (Millions) 2002 2001 2000 Holding gains  $ 769 $ 16 $ 231 Reclassification for realized (gains) losses 1 463 (80) Increase in net unrealized securities gains recognized in other comprehensive income  $ 770 $ 479 $ 151 Note 3  LOANS