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Weaving It All Together
American International Group, Inc.
2023 Annual Report
PURPOSE & VALUES
Our Purpose is
to discover new
potential by
reimagining
what AIG can
do for you.
Our Values and how
we bring them to life:
TAKE OWNERSHIP
• We set clear expectations
• We are proactive
• We are accountable
SET THE STANDARD
• We deliver quality—always
• We are client-centric
• We lead the industry
WIN TOGETHER
• We are stronger together
• We are aligned
• We are one team
BE AN ALLY
• We strive for inclusion
• We listen and learn
• We speak with our actions
DO WHAT’S RIGHT
• We act with integrity
• We lead by example
• We lift up our communities
2023 FINANCIAL & STRATEGIC HIGHLIGHTS
~28-point underwriting profitability improvement and ~$8B underwriting income
increase over seven years
Combined Ratio
118.9
96.0*
2016
~ 28 points
improvement
90.6
87.7*
2023
Approaching Corebridge deconsolidation
with 52% remaining stake at year-end
Corebridge Separation Actions
Balanced capital management
supported financial strength,
growth and shareholder
capital return
Common Shares Outstanding
(millions, at year end)
Blackstone Investment
2021
Initial Public Offering
September 2022
Three Secondary
Public Offerings and
Buybacks 2023
$2.9B
cash proceeds from
Secondary Public Offerings
900
800
700
600
500
6%
reduction from
$3B of repurchases
2021
2022
2023
$1.4B
capital to AIG
from Corebridge dividends and
share repurchases in 2023
12.5%
increase to quarterly
common stock dividend
* This is a non-GAAP financial measure. The definition and reconciliation of accident year combined ratio, as adjusted, to the most comparable GAAP measure
are on pages 288 and 289 of this Annual Report and page 68 of the 2023 Form 10-K.
AIG 2023 ANNUAL REPORT 1
LETTER TO SHAREHOLDERS
Dear AIG
Shareholder:
2023 was a year of
exceptional achievement
for AIG. In this letter to
our shareholders, I am
very pleased to share the
continued progress that
AIG has made on our
strategic repositioning as
well as our operational
capabilities, along with
our financial results, all of
which were outstanding.
2 AIG 2023 ANNUAL REPORT
Last year was a continuation of our multi-year
journey to become a top-performing global insurance
company wherein we accelerated our progress on a
number of important initiatives while simultaneously
driving improved underwriting profitability, strengthening
our balance sheet and returning capital to shareholders.
As a result of all that we accomplished in 2023, we
finished the year with very strong parent liquidity of
$7.6 billion. We have maintained significant financial
flexibility, continued to execute on our capital
management strategy, reduced debt by $1.4 billion and
returned approximately $4 billion to AIG shareholders
through $3 billion of common stock repurchases and
$1 billion of dividends, including a 12.5% increase in
the common stock dividend in the second quarter
of 2023. Last year, we reduced our common shares
outstanding by 6%, and by 16% since year-end 2021,
during which time we also reduced the financial
debt and hybrids on AIG’s balance sheet, excluding
Corebridge Financial, Inc., by over 50% or over
$11 billion. Our insurance company subsidiaries remain
strongly capitalized in order to continue supporting
organic growth where opportunities exist.
We entered 2024 with strong momentum, investing in
both our colleagues, who are our greatest asset, and
our businesses for sustainable profitable growth, while
also positioning AIG to further sell down our ownership
position of Corebridge, and we will continue to
execute on our balanced capital management
strategy. We have introduced AIG Next, our future
state operating structure that will create value by
weaving together a leaner, more unified company.
2023 Highlights
In many ways, 2023 was our best year yet. The
tremendous progress we have made enabled us to
build on the foundational capabilities that we cultivated
over the last several years, and as a result, we continue
to deliver sustained and improved performance.
PETER ZAFFINO
Chairman & Chief Executive Officer
American International Group, Inc. (AIG)
AIG is now recognized as a leading global insurer in
an environment of increasing global complexity,
socio-political disruption and escalating risk.
In 2023, we delivered exceptional underwriting
profitability and our best underwriting performance
in recent times. We surpassed our 2022 results with
underwriting income increasing 15% year-over-year
to $2.3 billion and our full-year 2023 combined ratio
improving 130 basis points year-over-year to 90.6%.
The strength of our performance can be seen in our
bottom-line results, with net income of $3.9 billion,
or $4.98 per diluted share, and adjusted after-tax
income* of $4.9 billion, or $6.79 per diluted share,
up 33%, which drove our 2023 Return on Common
Equity to 8.6% and Adjusted Return on Common
Equity (Adjusted ROCE)* to 9.0%, an increase of nearly
200 basis points year-over-year as we approach our
10%+ Adjusted ROCE* target.
Our General Insurance results were driven by
continued strong underwriting, with high client
retention and new business, as well as risk-
adjusted rate increases above loss cost trends
across our portfolio. In 2023, Global Commercial
Lines had substantial renewal retention of 88%
in its in-force portfolio, as well as very strong new
business performance. Having worked to reposition
the business over the last several years, Global
Commercial is now one of the most respected
portfolios in the industry.
The significant benefit of our disciplined deployment
of our risk framework could be seen across our
businesses. To highlight a few, Lexington and Global
Specialty delivered outstanding performance in
2023, as we remained very focused on investing to
accelerate their growth and continue to deliver strong
underwriting profitability. Lexington grew its net
premiums written** by 17% year-over-year.
15%
underwriting income increase
2022-2023
$1B
improvement in 2021 and 2022
compared to prior year
AIG 2023 ANNUAL REPORT 3
“In many ways, 2023 was our best year yet. The
tremendous progress we have made enabled
us to build on the foundational capabilities that
we cultivated over the last several years, and as
a result, we continue to deliver sustained and
improved performance. AIG is now recognized
as a leading global insurer...”
Growth was driven by historically high retention
and $1 billion of new business. Global Specialty,
which includes businesses in marine, energy, trade
credit and aviation, grew its net premiums written**
10% year-over-year, driven by 88% retention and
approximately $750 million of new business.
Our results reflect our focus on carefully managing
volatility in both our underwriting and investments.
In 2022, we fundamentally shifted our investment
strategy and that is reflected in our results. Our
improved strategic asset allocation guidelines and a
SUSTAINABLE, PROFITABLE GROWTH IN
GLOBAL COMMERCIAL LINES 2018-2023
$4.5B
underwriting income improvement
$1.4T
gross limits reduction
4 AIG 2023 ANNUAL REPORT
higher interest rate environment resulted in returns
increasing approximately 25% year-over-year.
Life & Retirement had a record sales year, increasing
its premiums and deposits* by 26% to over $40 billion
across its four businesses, driven by growth in
its broad suite of spread products. In addition, it
improved its adjusted pre-tax income* by 15% to
$3.8 billion. This improvement was driven by earnings
growth in Individual Retirement and Institutional
Markets that benefited from growth in general
account products and base spread expansion.
Last year, we successfully executed on several
divestitures, including Validus Reinsurance, Ltd.
(Validus Re) and Crop Risk Services, Inc. (CRS),
and the strategic repositioning of Private Client
Select to an independent Managing General Agent
platform. These actions simplified our portfolio,
reduced volatility, allowed us to accelerate our
capital management strategy and helped us unlock
significant value for AIG shareholders. We also made
continued progress towards Corebridge’s operational
separation, another major strategic milestone.
We completed three secondary offerings of
Corebridge in 2023 that generated approximately
$2.9 billion in proceeds, and we worked with
Corebridge on the divestiture of Laya Healthcare
AIG CHAIRMAN & CEO PETER ZAFFINO
discusses AIG’s strategic milestones and the
future of risk on Bloomberg’s “The David
Rubenstein Show: Peer-to-Peer Conversations.”
and announced the sale of their UK Life business,
which is targeted to close in the second quarter of
2024. Last year, AIG received $1.4 billion of capital
from Corebridge through $385 million of regular
dividends, $688 million of special dividends and
$315 million of share repurchases. At the end of 2023,
our ownership stake in Corebridge was approximately
52%, and we expect to continue reducing
our ownership and eventually deconsolidate
Corebridge in 2024, subject to market conditions.
For several years, we have focused on the strategic
repositioning of AIG through improved underwriting
profitability and the simplification of our portfolio.
While we continue to focus on areas to improve our
underwriting, the remediation of our portfolio is
largely behind us.
Our Path to Industry Leadership
The remediation actions we have taken over the
last several years were part of a complex series of
carefully orchestrated strategic initiatives executed
with tremendous discipline.
Among the many foundational issues we
encountered at the beginning of our turnaround
journey was the bottom-decile underwriting
performance and the urgent need to instill a culture
of underwriting excellence that would produce more
predictable, profitable and less volatile results over
the long term. Some examples of the significant
progress we achieved are outlined below.
•
We hired hundreds of experienced underwriters
and claims experts to supplement our existing
capabilities in order to reposition the global
portfolio, reducing gross limits by over $1.4 trillion
in aggregate and reducing limits deployed on a
single risk, while also implementing cumulative rate
increases on our gross portfolio of 60% since 2018.
•
•
•
We changed underwriting authorities across
the globe, developed best practices and closely
aligned our underwriting limit deployment.
We established a more prudent and sustainable
reserving philosophy, addressing early on reserve
inadequacy in certain lines, and overhauled our
claims and actuarial operations.
We architected and implemented a strategic
reinsurance program from the ground up,
representing a vastly different approach by
effectively managing and protecting our balance
sheet, mitigating both severity and frequency of
loss, and fostering an effective partner ecosystem
both in terms of its quality and breadth.
The results have been truly remarkable. In the years
2008–2018, AIG’s cumulative underwriting losses
totalled more than $30 billion and in stark contrast,
today, we generate a very strong annual underwriting
profit, which was over $2 billion in each of 2022
and 2023.
AIG 2023 ANNUAL REPORT 5
“The results have been truly remarkable. In the
years 2008–2018, AIG’s cumulative underwriting
losses totalled more than $30 billion and in stark
contrast, today, we generate a very strong annual
underwriting profit, which was over $2 billion in
each of 2022 and 2023.”
Since 2016, we have delivered an outstanding
improvement on our full-year combined ratio of
over 2,800 basis points. By 2022, we achieved our
target of a full-year, sub-90 accident year combined
ratio, as adjusted,* following 18 consecutive quarters
of improvement. I am particularly proud of the
sustainability of our improved results.
The extraordinary improvement in AIG’s gross
underwriting performance has enabled outstanding
reinsurance outcomes, and this remains the case
even in the current environment of heightened
risk and reinsurers’ increased discipline. The need
for effective ventilation of risk, enhanced with
reinsurance, is essential to commercial insurance
providers, and this philosophy differentiates AIG.
Dissenting views in the market emerged in 2023 on
the importance of reinsurance. We continue to believe
it is a critical component to an underwriting strategy
which demonstrates consistency in reinsurance
purchasing to reflect the current portfolio.
2023 TRANSACTIONS
Repositioning AIG’s portfolio of businesses and separating a U.S.-focused Corebridge
JUNE
JULY
AUGUST
SEPTEMBER
— Corebridge Secondary Public Offering
— AIG Sale of Crop Risk Services
— AIG Quarterly
— Corebridge Special Dividend
— Corebridge Share Repurchase from AIG
— AIG Formation of Private Client
Select MGA Partnership
Common Stock
Dividend Increase
— Corebridge Agreement
to Sell UK Life Business
6 AIG 2023 ANNUAL REPORT
2023 AIG
WOMEN’S
OPEN WINNER
LILIA VU
celebrates
her championship
victory.
We balance disciplined underwriting aligned to the
evolving market with the strategic use of reinsurance
to mitigate unpredictable outcomes. 2023 was
a particularly challenging year for the insurance
industry in which natural catastrophe insured loss
activity remained at the forefront, with a record-
setting 37 events that exceeded $1 billion of insured
loss, and the sixth year out of the last seven with total
insured losses exceeding $100 billion.***
Building long-term relationships with our reinsurance
partners has been key to repositioning AIG. Insurers
cannot reverse social and economic inflation.
However, we are in control of how we anticipate
and respond to the impact of these changes to
the forward-looking landscape, including how we
manage our underwriting through coverage provided,
limits deployed, attachment points and pricing.
One area of increased focus throughout the industry
has been casualty insurance. The heightened
attention is driven by the increased impacts of
rising economic and social inflation, litigation
funding, mass tort events and other external forces
that increase average severity trends through both
legal costs and higher jury awards throughout the
industry. Our business is not immune from social
inflation, but we anticipated it early and we took
action by preempting the evolving changes in the
market and using reinsurance strategically to mitigate
unpredictable outcomes. We are very pleased with
our existing portfolio and we are well positioned to
be able to prudently take advantage of opportunities
that exist in the current marketplace.
OCTOBER
— Corebridge Sale of
Laya Healthcare
NOVEMBER
DECEMBER
— Corebridge Special Dividend
— Corebridge Secondary Public Offering
— AIG Sale of Validus Re
— Corebridge Share Repurchase from AIG
— Corebridge Secondary Public Offering
AIG 2023 ANNUAL REPORT 7
AIG’s global Casualty portfolio represents 14% of
General Insurance net premiums written in 2023, with
significant reduction in limits across our Casualty
lines. In North America Casualty, our gross limit
for our Excess Casualty portfolio, including lead
umbrella, has decreased by over 50% since 2018
and our average limit size has also reduced by over
50%. Average lead attachment points, which protect
us from frequency and lower severity losses, have
more than doubled since 2018. We have been closely
assessing loss trends in these lines for several years,
before Casualty rates accelerated in 2023.
In addition to our underwriting improvement, our
journey has entailed a substantial transformation
of our operations, including investments in
“By weaving together
the best of AIG
across our businesses,
operations, functions
and technology, we are
reinforcing a strong
foundation that will
serve us on our journey
for years to come.”
8 AIG 2023 ANNUAL REPORT
foundational capabilities to modernize our
infrastructure, improve end-to-end processes
and capture and utilize data more effectively.
We performed a significant amount of diligence
in 2019 to design and launch an operational
program, AIG 200, which we accelerated during
the global pandemic. The complexity and scale
of this undertaking was significant, but the results
were meaningful — we substantially improved our
company and we achieved $1 billion of cost savings.
Our improved performance and strategic initiatives
have supported our substantial capital management
accomplishments. From 2018 through 2023, AIG has
completed over $40 billion of capital management
actions, consisting of dividend payments, share
repurchases and debt reduction.
In addition to returning capital to shareholders
and reducing shares outstanding, we have focused
methodically on both reducing debt load and debt
leverage. Since year-end 2021, we have reduced AIG’s
outstanding debt by over 50%, or more than $11 billion.
We have reduced AIG’s financial debt and hybrids
from $23.1 billion at year-end 2018 to $10.3 billion
at year-end 2023. Our total debt plus preferred to
total capital ratio excluding accumulated other
comprehensive income* improved by 4.5 points from
28.8% in 2018 to 24.3% in 2023. We expect further
improvement towards our low 20% target range upon
the deconsolidation of Corebridge.
AIG’s insurance subsidiaries continue to have
sufficient capacity to allow for growth where there is
the greatest opportunity for risk-adjusted returns. The
strength of capital in the subsidiaries has improved
substantially, with a U.S. Pool risk-based capital
ratio of under 400% at year-end 2018 moving up to
over 460% at 2023, and all of our Tier 1 international
insurance subsidiaries are at or above our target
capital ranges. The U.S. subsidiaries are now set up as
ordinary dividend payers, bringing financial flexibility
we did not have before.
AIG COLLEAGUES
participate in an early career
professional development event.
Looking to 2024 and Beyond
Given the volatility and uncertainty of the global
economic, political and social environment,
the insurance industry landscape will likely
evolve in the coming years, while playing a very
important role. As in past cycles, these conditions
may lead to a marketplace that is prepared for
disruption. In 2024, our highest priority remains
underwriting excellence. We expect 2024 to be
another landmark year, in which our ownership
of Corebridge will most likely fall below 50% and
we no longer consolidate our results, enabling us
to be a simpler company that will focus on our
commercial and personal insurance businesses.
We will continue to execute our capital management
strategic priorities — we allocate capital thoughtfully
to focus on growth where we see potential for
stronger risk-adjusted returns. We believe a
strategy of high-quality growth will deliver more
value to our stakeholders in the short, medium
and long term. With our continued focus on debt
management, we will continue returning capital
to shareholders through share repurchases and
dividends, along with pursuing any compelling
strategic acquisitions should the opportunity emerge.
Guiding our pursuit of excellence in 2024 will be
the execution of our primary objective, AIG Next,
a program that will create a slimmer, less complex
company with the appropriate infrastructure and
capabilities for the size of business we will be post
Corebridge deconsolidation.
As part of AIG Next, we are creating a leaner parent
company with a target cost structure of 1% to 1.5%
of net premiums earned, while further positioning
AIG for the future by operationalizing enterprise-
wide standards and driving global consistency and
local relevance across our end-to-end systems.
Overall, we expect the simplification and efficiencies
created through AIG Next to generate $500 million
of sustained annual run rate savings and to incur
approximately $500 million of one-time spend to
achieve these savings. These savings will allow us
to make meaningful progress toward achieving an
Adjusted ROCE* in excess of 10%.
AIG 2023 ANNUAL REPORT 9
AIG 2023 ANNUAL REPORT 9
92.1%
Three-year Total Shareholder
Return outperforming the S&P 500
We are making investments in the implementation
of large language models and artificial intelligence
to complement our underwriters in providing deeper
insights and improve decision-making, enabling us
to create a better and differentiated experience for
our clients and partners. We are using technology to
respond to a greater number of submissions, faster,
in markets of particular potential and launching new
products that reflect how we thoughtfully listen to
clients and distribution partners.
We believe that creating a better and differentiated
experience for our colleagues is essential to our
progress in raising our standards of client service. We
are fostering a committed and inclusive culture by
encouraging focused discussions on our Values and
behaviors that guide how we collaborate, how we
lead teams and how we treat each other.
We are instilling a “learn-it-all” culture that inspires
continuous learning, improvement and collaboration.
A key premise of a “learn-it-all” culture is openness to
new ideas and professional challenges. An impressive
depth of talent lies within AIG which fosters
agility and enables us to draw from all parts of our
company to identify and encourage movement to fill
key roles. This in turn provides accelerated learning,
development and career enhancement opportunities
as we retain and attract top talent and help our
colleagues discover their full potential.
By weaving together the best of AIG across our
businesses, operations, functions and technology,
we are reinforcing a strong foundation that will serve
us on our journey for years to come. Our ability to
execute has enabled us to deliver sustained strong
financial results. While we don’t talk enough about
our ability to execute, it remains one of our best
attributes. Our high-quality outcomes on multiple
complex initiatives has accelerated our progress and
created a more focused and simplified AIG that is well
positioned for the future.
Thanks to the tremendous commitment and
contributions of our AIG colleagues around the
world, and the support of our Board of Directors, our
industry leadership and distinct market advantages
are being recognized by our clients, distribution
partners and stakeholders. AIG is positioned for
growth and well-placed to help our customers,
partners and stakeholders navigate an increasingly
complex global risk environment.
As I enter my seventh year at AIG, I have never been
more optimistic about our opportunities in the future
and our momentum to becoming a top-performing
global company.
Sincerely,
Peter Zaffino
Chairman & Chief Executive Officer
American International Group, Inc. (AIG)
*Refers to financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of
non-GAAP measures can be found on pages 46-47 of the 2023 Form 10-K and page 288 of this Annual Report. The reconciliations to
their closest GAAP measures can be found on pages 63, 64, 68 of the 2023 Form 10-K and page 289 of this Annual Report.
**Net premiums written on a comparable basis reflects year-over-year comparison on a constant dollar basis adjusted for the
International lag elimination. Refer to page 289 for more detail.
***Aon. 2024 Climate and Catastrophe Insight, January 23, 2024.
10 AIG 2023 ANNUAL REPORT
TOP, FROM LEFT: James (Jimmy) Dunne III; Linda A. Mills; Vanessa A. Wittman;
Peter R. Porrino; John (Chris) Inglis; W. Don Cornwell BOTTOM, FROM LEFT:
James Cole, Jr.; Paola Bergamaschi; John G. Rice; Peter Zaffino; Diana M. Murphy
Board of Directors
Peter Zaffino
W. Don Cornwell*
Chairman & Chief Executive
Officer, AIG
Paola Bergamaschi
Former Global Banking and
Capital Markets Executive at
State Street Corporation,
Credit Suisse and
Goldman Sachs
James Cole, Jr.
Chairman & Chief Executive Officer
of The Jasco Group, LLC; Former
Delegated Deputy Secretary of
Education and General Counsel of
the U.S. Department of Education;
Former Deputy General Counsel
of the U.S. Department of
Transportation
Former Chairman of the Board
& Chief Executive Officer,
Granite Broadcasting Corporation
Diana M. Murphy
Managing Director,
Rocksolid Holdings, LLC
Peter R. Porrino
James (Jimmy) Dunne III
Vice Chairman and Senior Managing
Principal, Piper Sandler Co.
Former Executive Vice President
& Chief Financial Officer,
XL Group Ltd
John (Chris) Inglis
John G. Rice
Senior Strategic Advisor, Paladin
Capital Group; Former U.S. National
Cyber Director and White House
Cybersecurity Advisor
Linda A. Mills
President, Cadore Group, LLC;
Former Corporate Vice President
of Operations, Northrop Grumman
Corporation
Lead Independent Director, AIG;
Former Non-Executive Chairman,
GE Gas Power; Former Vice Chairman,
GE; Former President & Chief
Executive Officer, GE Global Growth
Organization
Vanessa A. Wittman
Former Chief Financial Officer,
Glossier, Inc.
*In accordance with AIG’s Corporate Governance Guidelines, Mr. Cornwell’s service on the Board will expire on the day of the 2024 Annual Meeting.
AIG 2023 ANNUAL REPORT 11
Executive Leadership Team
Peter Zaffino
Chairman & Chief
Executive Officer
Charlie Fry
Sabra Purtill
EVP, Reinsurance and
Risk Capital Optimization
EVP, Chief Financial Officer
Don Bailey
Rose Marie Glazer
EVP, Chief Executive Officer,
North America Insurance
EVP, General Counsel and
Interim Chief Human Resources
& Diversity Officer
Tom Bolt
EVP, Chief Risk Officer
Ed Dandridge
EVP, Chief Marketing &
Communications Officer
Ted Devine
EVP, Chief Administrative Officer
Jon Hancock
EVP, Chief Executive Officer,
International Insurance
David McElroy
EVP, Chairman,
General Insurance
Chris Schaper
EVP, Global Chief
Underwriting Officer
Jennifer Silane
EVP, Chief of Staff to
AIG Chairman & CEO
Peter Zaffino
Claude Wade
EVP, Chief Digital Officer
and Global Head of
Business Operations
Roshan Navagamuwa
Kevin Hogan (not pictured)
EVP, Chief Information Officer
Chief Executive Officer,
Corebridge Financial
STANDING, FROM LEFT: Don Bailey; Jennifer Silane; Peter Zaffino; Rose Marie Glazer; Ted Devine
SEATED, FROM LEFT: Sabra Purtill; Roshan Navagamuwa; Chris Schaper; Tom Bolt; Claude Wade;
Jon Hancock; David McElroy; Charlie Fry; Ed Dandridge
12 AIG 2023 ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
——————————
FORM 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-8787
American International Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
1271 Avenue of the Americas, New York, New York
(Address of principal executive offices)
13-2592361
(I.R.S. Employer Identification No.)
10020
(Zip Code)
Registrant’s telephone number, including area code: (212) 770-7000
——————————
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, Par Value $2.50 Per Share
4.875% Series A-3 Junior Subordinated Debentures
Depositary Shares Each Representing a 1/1,000th Interest in a Share of
Series A 5.85% Non-Cumulative Perpetual Preferred Stock
Trading Symbol
AIG
AIG 67EU
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
AIG PRA
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
——————————
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Non-accelerated filer ☐
Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of June 30, 2023, the aggregate market value of the registrant's voting and nonvoting common equity held by nonaffiliates was approximately
$36,903,000,000.
As of February 8, 2024, 680,953,652 shares of the registrant's Common Stock, $2.50 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document of the Registrant
Portions of the registrant’s definitive proxy statement for the 2024 Annual Meeting of Shareholders
Form 10-K Reference Locations
Part III, Items 10, 11, 12, 13 and 14
AMERICAN INTERNATIONAL GROUP, INC.
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023
TABLE OF CONTENTS
FORM 10-K
Item Number
Description
Part I
ITEM 1
ITEM 1A
ITEM 1B
ITEM 1C
ITEM 2
ITEM 3
ITEM 4
Part II
ITEM 5
ITEM 6
ITEM 7
ITEM 7A
ITEM 8
ITEM 9
ITEM 9A
ITEM 9B
ITEM 9C
Part III
ITEM 10
ITEM 11
ITEM 12
ITEM 13
ITEM 14
Part IV
ITEM 15
ITEM 16
Signatures
Business
• Our Global Business Overview
• Operating Structure
• How We Generate Revenues and Profitability
• Human Capital Management
• Regulation
• Available Information about AIG
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Investments
Insurance Reserves
Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
• Cautionary Statement Regarding Forward-Looking Information and Factors That May Affect Future Results
• Use of Non-GAAP Measures
• Critical Accounting Estimates
• Executive Summary
• Consolidated Results of Operations
• Business Segment Operations
•
•
• Liquidity and Capital Resources
• Enterprise Risk Management
• Glossary
• Acronyms
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Reference to Financial Statements and Schedules
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
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AIG | 2023 Form 10-K
1
Part I
ITEM 1 | Business
Sustaining Industry
Leadership Momentum
Creating Value through
Profitable Growth and a
Culture of Underwriting and
Operational Excellence
American International Group, Inc. (NYSE: AIG)
is a leading global insurance organization. AIG provides insurance solutions that help
businesses and individuals in approximately 190 countries and jurisdictions protect their assets
and manage risks through AIG operations and network partners.
AIG is building on its industry leadership and is positioned to become a top-performing
company recognized for the value it provides stakeholders in an environment of profound,
complex and dynamic risk. In 2023, AIG delivered an outstanding year, producing financial,
strategic and operational achievements that demonstrate continued strength in executing
multiple, complex initiatives simultaneously and with quality.
In this Annual Report, unless otherwise mentioned or unless the context indicates otherwise, we use the terms “AIG,” the “Company,”
“we,” “us” and “our” to refer to American International Group, Inc., a Delaware corporation, and its consolidated subsidiaries. We use
the term “AIG Parent” to refer solely to American International Group, Inc., and not to any of its consolidated subsidiaries.
About AIG
World-Class Insurance Franchises
that are among the leaders in their
geographies and segments, providing
differentiated service and expertise.
Breadth of Loyal Customers
including millions of clients and
policyholders ranging from multi-national
Fortune 500 companies to individuals
throughout the world.
Broad and Long-Standing
Distribution Relationships
with brokers, agents, advisors, banks and
other distributors strengthened through
AIG’s dedication to quality.
Highly Engaged Global Workforce of more than 25,000
colleagues committed to excellence who are providing
insurance solutions that help businesses and individuals in
approximately 190 countries and jurisdictions protect their
assets and manage risks through AIG operations and network
partners.
Balance Sheet Strength and Financial Flexibility
as demonstrated by approximately $45 billion in shareholders’
equity and AIG Parent liquidity sources of $12.1 billion as of
December 31, 2023.
2
AIG | 2023 Form 10-K
As a leading global property, casualty and specialty insurance organization, we are results oriented and believe that focusing on how
we achieve positive outcomes creates an aligned and inclusive culture that enables further progress. Unifying under one set of clear
and directive Purpose and Values empowers AIG colleagues to be conduits of positive change – delivering exceptional client service,
enhanced shareholder value and a better experience for everyone we serve.
ITEM 1 | Business
AIG’s five Values guide our actions:
• Take ownership: we set clear expectations, we are proactive, we are accountable
• Set the standard: we deliver quality—always, we are client-centric, we lead the industry
• Win together: we are stronger together, we are aligned, we are one team
• Be an ally: we strive for inclusion, we listen and learn, we speak with our actions
• Do what’s right: we act with integrity, we lead by example, we lift up our communities
2023 Highlights and 2024 Priorities
Execution of Multiple, Highly Complex Strategic
Initiatives
Repositioned AIG’s portfolio of businesses for sustainable,
profitable growth with the divestitures of Validus Reinsurance,
Ltd. (Validus Re) and Crop Risk Services, Inc. (CRS) and the
transfer of Private Client Select to an independent Managing
General Agent platform
Closed sale of Validus Re, including AlphaCat Managers Ltd.
and the Talbot Treaty reinsurance business, for $3.3 billion in
cash including pre-closing dividend
Closed sale of CRS for gross proceeds of $234 million
United General Insurance and AIG Parent leadership teams
and their organizations
Debuted AIG Next, creating a leaner future-state business
model and establishing enterprise-wide standards to drive
better outcomes for all stakeholders
Strong Performance Resulting from Significant
Improvement in Underwriting Income
General Insurance achieved $2.3 billion in underwriting
income, up 15 percent year over year
2023 combined ratio of 90.6 compared to 91.9 in 2022,
and sub-100 in every quarter of 2023
2023 accident year combined ratio, as adjusted(a) of 87.7
improved 1.0 point compared to 88.7 in 2022
Continued Balanced Capital Management
Supporting Financial Strength, Growth and
Shareholder Return
Repurchased $3.0 billion of AIG's common stock,
par value $2.50 per share (AIG Common Stock)
and paid $1.0 billion of dividends
Reduced weighted average diluted shares outstanding by
8 percent, reaching 725.2 million shares
Increased quarterly common stock dividend payments by
12.5 percent $0.36 per share during the second quarter of
2023
Reduced general borrowings by $1.4 billion
Continued Progress Towards Deconsolidation
and Separation of Corebridge Financial, Inc.
(Corebridge)
AIG sold 159.75 million shares of Corebridge common stock
in secondary public offerings with gross proceeds of
$2.9 billion
Corebridge repurchased 17.2 million shares of its common
stock from AIG for an aggregate purchase price of
$315 million
Corebridge distributed dividends on Corebridge common
stock totaling $1.1 billion to AIG
AIG’s ownership of Corebridge reduced to 52.2 percent as of
December 31, 2023
Corebridge closed the sale of Laya Healthcare Limited
(Laya) for €691 million ($731 million) and announced the
sale of AIG Life Limited (AIG Life) for consideration of
£460 million
(a) Non-GAAP measure – for reconciliation of non-GAAP to GAAP measure, see Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations (MD&A).
AIG | 2023 Form 10-K
3
ITEM 1 | Business
Operating Structure
AIG reports the results of its businesses through three segments – General Insurance, Life and Retirement and Other Operations.
General Insurance consists of two operating segments – North America and International. Life and Retirement consists of four
operating segments – Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. Other Operations is primarily
comprised of corporate, our institutional asset management business and consolidation and eliminations.
For additional information on our business segments, see Part II, Item 7. MD&A – Business Segment Operations and Note 3 to the
Consolidated Financial Statements, and for information regarding the separation of Life and Retirement, bankruptcy filing of AIG
Financial Products Corp. and the sale of Validus Re, CRS, AIG Life and Laya, see Note 1 to the Consolidated Financial Statements.
Business Segments
General Insurance
Life and Retirement
General Insurance is a leading provider of insurance
products and services for commercial and personal insurance
customers. It includes one of the world’s most far-reaching
property casualty networks. General Insurance offers a broad
range of products to customers through a diversified,
multichannel distribution network. Customers value General
Insurance’s strong capital position, extensive risk
management and claims experience and its ability to be a
market leader in critical lines of the insurance business.
Life and Retirement is a unique franchise that brings together a broad
portfolio of life insurance, retirement and institutional products offered through
an extensive, multichannel distribution network. It holds long-standing, leading
market positions in many of the markets it serves in the U.S. With its strong
capital position, customer-focused service, breadth of product expertise and
deep distribution relationships across multiple channels, Life and Retirement
is well positioned to serve growing market needs.
Life and Retirement includes the following major operating companies:
American General Life Insurance Company (AGL); The Variable Annuity Life
Insurance Company (VALIC); The United States Life Insurance Company in
the City of New York (U.S. Life) and AIG Life.
General Insurance includes the following major operating
companies: National Union Fire Insurance Company of
Pittsburgh, Pa. (National Union); American Home Assurance
Company (American Home); Lexington Insurance Company
(Lexington); AIG General Insurance Company, Ltd.; AIG Asia
Pacific Insurance, Pte, Ltd.; AIG Europe S.A.; American
International Group UK Ltd.; Talbot Holdings Ltd. (Talbot);
Western World Insurance Company and Glatfelter Insurance
Group (Glatfelter).
Other Operations
Other Operations primarily consists of income from assets held by AIG Parent and other corporate subsidiaries, deferred tax assets related to
tax attributes, corporate expenses and intercompany eliminations, our institutional asset management business and results of our consolidated
investment entities, General Insurance portfolios in run-off as well as the historical results of our legacy insurance lines ceded to Fortitude
Reinsurance Company Ltd. (Fortitude Re).
4
AIG | 2023 Form 10-K
ITEM 1 | Business
How We Generate Revenues and Profitability
We earn revenues primarily from insurance premiums, policy fees and income from investments.
Our expenses consist of policyholder benefits and losses incurred, interest credited to policyholders, commissions and other costs of
selling and servicing our products, interest expense and general operating expenses.
Our profitability is dependent on our ability to properly price and manage risk on insurance and annuity products, including
establishing loss reserves, to manage our portfolio of investments effectively and to control costs through expense discipline.
For additional information on loss reserves and prior year loss development, see Part II, Item 7. MD&A – Critical Accounting
Estimates – Loss Reserves, Part II, Item 7. MD&A – Insurance Reserves – Liability for Unpaid Losses and Loss Adjustment Expenses
(Loss Reserves), and Note 13 to the Consolidated Financial Statements.
For additional information on investment strategies, see Part II, Item 7. MD&A – Investments – Investment Strategies.
Human Capital Management
Our people are our greatest strength. To this end, we place significant focus on human capital management; namely retaining,
developing and attracting high caliber talent and fostering an inclusive environment in which we actively seek and embrace diverse
thinking.
Our Compensation and Management Resources Committee of the Board of Directors (CMRC) is responsible for overseeing human
capital management practices and programs, including retention, talent development, compensation and benefits, and diversity, equity
and inclusion. Management periodically reports to the CMRC on our various human capital management initiatives and metrics.
At December 31, 2023, we had approximately 25,200 employees based in approximately 50 countries, of which 32 percent are
located in North America, 44 percent are in the Asia Pacific region and the remaining 24 percent are in the European, Middle East and
Africa (EMEA region) and Latin America.
We believe that we foster a constructive and healthy work environment for our employees. The key programs and initiatives that are
designed to attract, develop and retain our diverse workforce include:
Competitive Compensation and Benefits. We seek to align compensation with individual and Company performance and provide
the appropriate market-competitive incentives to attract, retain and motivate employees to achieve outstanding results.
Management and the CMRC engage the services of third-party compensation consultants to help monitor the competitiveness of our
incentive programs. We provide a performance-driven compensation structure that consists of base salary and, for eligible
employees, short- and long-term incentives. We also offer comprehensive benefits to support the health, wellness, work-life balance
and retirement preparedness/savings needs of our employees, including subsidized health care plans, life and disability insurance,
wellness and mental health benefits, legal assistance plan, paid time off, paid volunteer time off, 2:1 matching grants for eligible
charitable donations, parental and bonding leave and both matching and Company 401(k) contributions for eligible employees.
Health and Safety. The health and safety of our employees is a priority. Occupational safety and health is a shared responsibility
between employees and corporate stakeholders, which we implement through our Global Safety and Environment policy. We take
appropriate measures to prevent workplace injuries and illnesses, to provide a safe and healthy work environment, and to meet
regulatory and duty of care responsibilities regarding the health, safety and welfare of employees engaging in AIG business activities.
We offer numerous benefits and wellness programs focused on the physical, social and financial wellness of our employees. Nearly
every country in which we operate has an Employee Assistance Program (EAP), which provides employees with confidential
counselling, mental health resources and information to help employees and their dependents through times of stress and anxiety. In
many countries where local market and regulations permit, our EAP and other programs also offer work-life balance assistance,
eldercare advice, bereavement support, and legal and financial guidance.
The AIG Compassionate Colleagues Fund (the Fund) enables the Company and its employees to provide direct relief to help eligible
colleagues overcome unforeseen financial hardships. The Fund has helped more than 1,600 employees overcome serious financial
hardships and disasters. In each of 2021, 2022 and 2023, AIG made a $2 million contribution to the Fund, and additional amounts
were contributed by our colleagues through voluntary donations and our 2:1 matching grants program. Employees in approximately
23 countries have contributed to the Fund and employees in 11 countries have received relief.
AIG | 2023 Form 10-K
5
ITEM 1 | Business
Talent Development. Equipping our people with the skills and capabilities to be successful and contribute to AIG is another priority.
We do this by giving our employees access to meaningful tools and resources to assist in their professional development no matter
where they are in their career paths.
AIG offers numerous learning opportunities to support the development of its employees. All online learning programs are accessible
through a global learning management system, Your Learning Journey. Through these programs, employees can increase their
insurance and business knowledge, build critical job skills and earn continuing education credits.
Alongside online courses, AIG offers a series of live, interactive learning opportunities designed to reinforce the Company's culture of
excellence. These programs focus on providing employees with a strong foundation of core skills including communication,
collaboration, coaching, change agility and problem solving.
Managers and leaders are critical in developing AIG’s talent for organizational success. To assess leadership skills and capabilities,
we use distinct leadership assessment tools, including 360 degree feedback, which develops self-awareness and builds personalized
leadership development goals. Our Leading Transformation program enhances our senior leaders’ ability to navigate and drive
change and transformation to successfully achieve business objectives and build culture.
In addition to live courses and online training, AIG also offers tuition and certification training reimbursement to encourage employees
to enhance their education and skills.
The Company also places significant importance on promoting internal talent and succession planning. Accordingly, we use a globally
consistent streamlined process to support succession planning and talent development for each of our functions and operating
segments. This approach helps identify a pipeline of diverse talent for positions at all levels of the organization and the actions
needed to support their development. In 2023, 33 percent of all our open positions were filled with internal talent.
Diversity, Equity and Inclusion (DEI). At AIG, we strive to create an inclusive workplace that provides equal opportunities for all
colleagues. We believe in building a culture where everyone is valued and celebrated for who they are and where all perspectives are
welcome. As of December 31, 2023, 54 percent of our global workforce were female and 34 percent of our U.S. workforce is ethnically
diverse.
AIG sponsors over 110 Employee Resource Groups (ERGs), which are groups of employees who come together based on a shared
interest in a specific identity in 45 countries to enhance allyship and inclusion across the organization. AIG’s global ERG network
spans 13 different dimensions of diversity and is open to all employees. The ERGs are key to fostering an inclusive workplace that
provides a safe space for colleagues to engage, learn, give back to our communities, and provide feedback from their perspective to
the business. The ERGs also support and advise company practices and programs to drive a committed culture of belonging and
deliver company value, as well as serve as an incubator for developing future leaders. AIG also provides DEI learning opportunities to
create awareness and educate on inclusive leadership, allyship, cross-cultural dynamics and fostering inclusion, including DEI
microlearning and sessions on authentic leadership.
6
AIG | 2023 Form 10-K
ITEM 1 | Business
Regulation
GENERAL
Our (re)insurance subsidiaries are subject to extensive regulation and supervision in the jurisdictions in which our (re)insurance
businesses are located or operate. Insurance regulatory authorities in those jurisdictions are the primary regulators for those
businesses; however, our operations are subject to regulation by many different types of regulatory authorities, including insurance,
securities, derivatives and investment advisory regulators in the United States and abroad.
Insurance regulators, other regulatory authorities, law enforcement agencies, and other governmental authorities from time to time
make inquiries and conduct examinations or investigations regarding our compliance, as well as compliance by other companies in
our industry, with applicable laws. In addition, regulation, legislation and administrative policies that are not limited in application solely
to the insurance market may significantly affect the insurance industry and certain of our operations, including regulation, legislation
and administrative policies related to privacy, cybersecurity, government sanctions, pensions, age and sex discrimination, financial
services, securities, taxation and climate change. See Item 1A. Risk Factors – Regulation – "Our businesses are heavily regulated
and changes in laws and regulations may affect our operations, increase our insurance subsidiary capital requirements or reduce our
profitability".
We expect that the U.S. and international regulations applicable to us and our regulated entities will continue to evolve for the
foreseeable future. See Item 1A. Risk Factors – Regulation – "New laws and regulations or new interpretations of current laws and
regulations, both domestically and internationally, may affect our businesses, results of operations, financial condition and ability to
compete effectively".
FINANCIAL, MARKET CONDUCT & CORPORATE GOVERNANCE OVERSIGHT
The method of insurance regulation of our (re)insurance subsidiaries varies, but generally has its source in statutes that delegate
regulatory and supervisory powers to a state insurance official (in the United States) or another governmental agency (outside the
United States). The regulation and supervision relate primarily to the financial condition of the (re)insurers, corporate conduct and
market conduct activities. In general, such regulation is for the protection of policyholders rather than the creditors or equity owners of
these companies. Financial, market conduct and corporate conduct oversight varies by jurisdiction, but can include activities such as:
(a) approval of policy language and rates;
(b) advertising practices;
(c) establishing minimum capital and liquidity requirements;
(d)
licensing of insurers and their agents;
(e)
requiring registration and periodic reporting by (re)insurance companies that are licensed in the jurisdiction;
(f) evaluating and, in some cases, requiring regulatory approval of, certain transactions between (re)insurance company subsidiaries
and their affiliates;
(g)
imposing restrictions and limitations on the amount of dividends or other distributions payable by a (re)insurance company;
(h) enforcing rules related to outsourcing of material functions;
(i)
(j)
requiring deposits of securities for the benefit of policyholders;
establishing requirements for acceptability of reinsurers and credit for reinsurance;
(k) establishing requirements for reserves; and
(l)
enterprise risk management (including technology risk management) and corporate governance requirements.
Our (re)insurance subsidiaries are generally subject to laws and regulations that prescribe the type, quality and concentration of
investments they can make and permissible investment practices, such as derivatives, securities lending and repurchase
transactions. In non-U.S. jurisdictions, our (re)insurance subsidiaries may also be subject to laws requiring certain amounts and types
of local investment. In addition, certain affiliates of our (re)insurance affiliates are themselves subject to laws and regulations
concerning the investment advisory and investment management services they provide to our (re)insurance subsidiaries and other
clients with respect to such investments.
Insurance laws in many jurisdictions also provide that no person, corporation or other entity may acquire control of an insurance
company, or a controlling interest in (or prescribed percentage of capital of) any direct or indirect parent company of an insurance
company, without the prior approval of, or notice to, such insurance company’s domiciliary insurance regulator.
AIG | 2023 Form 10-K
7
ITEM 1 | Business
As a holding company with no significant business operations of its own, AIG Parent depends on dividends from our subsidiaries to
meet our obligations. U.S. state insurance laws typically provide that dividends in excess of certain prescribed limits are considered to
be extraordinary dividends and require prior approval or non-disapproval from the applicable insurance regulator. Outside the U.S.,
(re)insurers, subject to certain exceptions, are permitted to pay dividends subject to maintaining prescribed capital and solvency
requirements and ensuring that dividends are made out of profits/retained earnings.
Further, as part of their regulatory oversight processes, insurance regulators conduct periodic examinations of our (re)insurance
subsidiaries. Such examinations can cover a broad scope of the (re)insurance subsidiary’s operations, including the financial strength
of the (re)insurance subsidiary; sales, marketing and claims handling practices; risk management; capital and liquidity management;
and information technology operations (including emerging technology risks).
Insurance and securities regulators and other law enforcement agencies and attorneys general also, from time to time, make
inquiries, issue data calls and conduct examinations or investigations regarding compliance with insurance and other laws or for
informational purposes that can be company-specific or part of a broader industry-wide effort.
There can be no assurance that any noncompliance with such applicable laws, regulations or guidance would not have a material
adverse effect on our business or results of operations.
REGULATORY REGIMES
United States
States
At the state-level, the National Association of Insurance Commissioners (NAIC) is a standard-setting and regulatory support
organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S.
territories. The NAIC is not a regulator, but, with assistance from the NAIC, state insurance regulators establish standards and best
practices, conduct peer reviews and coordinate regulatory oversight. Model laws and regulations promulgated by the NAIC only
become effective in a state once formally adopted by such state and are subject to revision by each state. Examples of NAIC models
adopted, in substantial part, by all states include:
• The Risk-Based Capital (RBC) for Insurers Model Act, which incorporates an RBC formula calculated in accordance with
instructions updated annually by the NAIC that is designed to measure the adequacy of an insurer’s total adjusted capital, as
calculated pursuant to the RBC formula, in relation to certain risks inherent in its business, and authorizes certain regulatory
actions regarding insurers whose RBC levels fall below specific thresholds. The NAIC has adopted, or is considering, several
changes impacting how RBC is calculated, including initiatives aimed at a comprehensive review of the RBC investment
framework as well as a proposed modeling methodology to determine RBC for collateralized loan obligations and other structured
securities to reduce reliance on the use of rating agency ratings. The RBC levels of each of our U.S. domiciled (re)insurance
companies exceeded each of these specific thresholds as of December 31, 2023. In addition to RBC requirements, the insurance
laws of our domiciliary states prescribe certain minimum capital and surplus requirements for insurance companies. If any of our
(re)insurance entities fell below prescribed levels of statutory capital and surplus, it would be our intention to provide appropriate
capital or other types of support to that entity. For additional information, see Part II, Item 7. MD&A – Liquidity and Capital
Resources – Liquidity and Capital Resources of AIG Parent and Subsidiaries – Insurance Companies.
• The Insurance Holding Company System Regulatory Act and the Insurance Holding Company System Model Regulation (together,
the Holding Company Models) include: provisions authorizing insurance commissioners to act as global group-wide supervisors for
internationally active insurance groups and participate in international supervisory colleges; standards for transactions between a
domestic (re)insurance company and its affiliates and regulatory approval requirements for certain of such transactions;
requirements for obtaining regulatory approval for acquiring control of a domestic (re)insurance company; and the requirement that
the ultimate controlling person of a U.S. insurer file an annual enterprise risk report with its lead state regulator identifying risks
likely to have a material adverse effect upon the financial condition or liquidity of its licensed insurers or the insurance holding
company system as a whole, among other requirements. The New York State Department of Financial Services (NYDFS) is AIG’s
lead U.S.-state regulator, and leads AIG’s Supervisory College meetings, which consist of AIG’s key global regulatory bodies.
• The Risk Management and Own Risk and Solvency Assessment Model Act, which requires that insurers maintain a risk
management framework, conduct an internal own risk and solvency assessment of the insurer’s material risks in normal and
stressed environments, and submit annual Own Risk and Solvency Assessment (ORSA) summary reports to the insurance group’s
lead U.S.-state regulator.
• The Corporate Governance Annual Disclosure Model Act (CGAD), which requires insurers to submit an annual filing regarding their
corporate governance structure, policies and practices.
• And, specific to our life insurance subsidiaries, the NAIC's new Valuation Manual, which contains a principle-based reserving
(PBR) approach to life insurance company reserves. PBR is designed to tailor the reserving process to more closely reflect the
risks of specific products rather than the factor-based approach employed historically.
8
AIG | 2023 Form 10-K
ITEM 1 | Business
The NAIC also provides standardized insurance industry accounting and reporting guidance through the NAIC Accounting Manual,
which establishes statutory accounting principles applicable to (re)insurance companies. Statutory accounting principles promulgated
by the NAIC may be modified by individual state laws, regulations and permitted practices granted by our domiciliary insurance
regulators.
The NAIC has undertaken a multi-pronged effort to determine whether additional standards, safeguards or disclosures are required in
connection with certain investments by U.S. insurance companies, including related party investments, structured securities and other
complex assets.
In December 2020, the NAIC amended the Holding Company Models to incorporate a Liquidity Stress Testing (LST) requirement for
large life insurers based on a set of scope criteria and a Group Capital Calculation (GCC) requirement. These amendments require
the ultimate controlling person of every U.S. insurer that is scoped into the LST framework to submit LST results to the insurance
group’s lead state insurance regulator on an annual basis. In addition, these amendments require the ultimate controlling person of
every U.S. insurer to submit GCC reports to the insurance group’s lead state insurance regulator on an annual basis unless an
exemption applies. The provisions of the December 2020 amendments to the Holding Company Models that authorize the GCC and
LST were signed into law by New York State in August 2023, making AIG formally subject to them beginning in 2024.
U.S. states have state insurance guaranty associations in which insurers admitted in the state are required by law to be members.
Member insurers may be assessed by the associations for certain obligations of insolvent insurance companies to policyholders and
claimants. The aggregate assessments levied against us have not been material to our financial condition in any of the past three
years.
Federal
At the U.S. federal level, AIG is impacted by the activities of policymakers and by the laws and regulations enforced by various federal
agencies.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), signed into law in 2010, brought about extensive
changes to financial regulation in the United States and established the Federal Insurance Office (FIO) to serve as the central
insurance authority in the federal government. While not serving a regulatory function, FIO performs certain duties related to the
business of insurance and has authority to collect information on the insurance industry and recommend prudential standards. In
addition, FIO monitors market access issues, represents the United States in international insurance forums and has authority to
determine if certain regulations are preempted by covered agreements. FIO’s approval is required to subject a financial company
whose largest U.S. subsidiary is an insurer to the special orderly liquidation process outside the federal bankruptcy code,
administered by the FDIC pursuant to Dodd-Frank. U.S. insurance subsidiaries of any such financial company, however, would remain
subject to rehabilitation and liquidation proceedings under state insurance laws.
FIO also assists the Secretary of the Treasury in administering the U.S. Terrorism Risk Insurance Act (TRIA), enacted in 2002 to
support insurance coverage for certain terrorist acts in the U.S. The program was continued under the Terrorism Risk Insurance
Program Reauthorization Act of 2019 (TRIPRA) through December 31, 2027 and is intended to provide reinsurance coverage from
the federal government in limited circumstances for certified acts of terrorism that exceed a certain threshold of industry losses.
Title I of Dodd-Frank established the Financial Stability Oversight Council (Council), which is authorized to determine that certain
nonbank financial companies be designated as nonbank systemically important financial institutions (SIFIs) subject to supervision by
the Board of Governors of the Federal Reserve System and enhanced prudential standards. Designation by the Council of any
nonbank SIFI is subject to certain statutory and regulatory standards and to the Council’s guidance. The Council may also
recommend that state insurance regulators or other regulators apply new or heightened standards and safeguards for activities or
practices that insurers or other nonbank financial services companies engage in.
Title V of Dodd-Frank authorizes the United States to enter into covered agreements with foreign governments or regulatory entities
regarding the business of insurance and reinsurance. On September 22, 2017, the U.S. and the European Union (EU) entered into
such an agreement, and on December 18, 2018, the U.S. signed a covered agreement with the United Kingdom (UK), which is similar
to the agreement with the EU. Under the agreements, AIG is supervised at the worldwide group level only by its relevant U.S.
insurance supervisors, and generally does not have to satisfy EU Solvency II group capital, reporting and governance requirements
for its worldwide group. The covered agreements also require various U.S. reinsurance collateral reforms, which have now been
adopted by all U.S. states.
Title VII of Dodd-Frank provides for significantly increased regulation of, and restrictions on, derivatives markets and transactions that
have affected various activities of insurance and other financial services companies, including (i) regulatory reporting for swaps,
including security-based swaps, (ii) mandated clearing through central counterparties and execution through regulated swap
execution facilities for certain swaps (other than security-based swaps) and (iii) margin and collateral requirements.
AIG | 2023 Form 10-K
9
ITEM 1 | Business
International
In the UK, the Prudential Regulation Authority (PRA) is the lead prudential supervisor for our UK insurance operations and the
Financial Conduct Authority has oversight of AIG’s insurance operations for consumer protection and competition matters.
In the EU, various Directives and Regulations affect our international (re)insurance operations. The Luxembourg insurance regulator,
the Commissariat aux Assurances, is the insurance regulator for AIG Europe SA, which serves our European Economic Area (EEA)
and Swiss policyholders. In addition, financial companies that operate in the EU are subject to a range of regulations enforced by the
national regulators in each member state in which that firm operates. Solvency II governs the insurance industry’s solvency framework
for the EU, including minimum capital and solvency requirements, governance requirements, risk management and public reporting
standards.
AIG’s operating (re)insurance subsidiaries in Bermuda are regulated by the Bermuda Monetary Authority (BMA). Bermuda’s Insurance
Act 1978, the applicable Codes of Conduct and related regulations impose solvency and liquidity standards and auditing and reporting
requirements on Bermuda (re)insurance companies and grant the BMA powers to supervise, investigate and intervene in the affairs of
(re)insurance companies. A variety of requirements and restrictions are imposed on our Bermuda operating (re)insurance subsidiaries
including: periodic financial reporting; corporate governance framework; solvency and financial performance; compliance with
minimum enhanced capital requirements; and minimum solvency margins and liquidity ratios (the latter for general business
(re)insurers); and limitations on dividends and distributions.
The Monetary Authority of Singapore (MAS) supervises AIG’s insurance subsidiary in Singapore. It has broad authority under the
Insurance Act 1966 to regulate insurance business in Singapore as well as insurers, insurance intermediaries and related institutions.
Our Singapore insurance operations are subject to minimum capital and solvency requirements as well as financial reporting,
corporate governance and conduct of business requirements. The MAS has authority to conduct inspections and investigations on
insurers and to administer sanctions for regulatory non-compliance. Our Singapore insurance subsidiary holds insurance entities in
the Asia Pacific region. The MAS holds the Chief Executive of the Singapore insurance subsidiary principally responsible for the
management and conduct of the business of the subsidiary, including the business of its subsidiaries and overseas branches.
The Japan Financial Services Agency (JFSA) regulates AIG’s operating insurance subsidiaries and insurance holding company in
Japan. The JFSA has extensive authority under the Insurance Business Act and related regulations to oversee licensing, sales
practices, business conduct, investments, reserves and solvency, amongst other matters. Our Japanese insurance operations are
required to maintain a minimum solvency margin ratio (SMR), which is a measure of capital adequacy. The failure to maintain an
appropriate SMR, or comply with other similar indicators of financial health, could result in the JFSA imposing corrective actions on
our operations.
FSB and IAIS
The Financial Stability Board (FSB) consists of representatives of national financial authorities of the G20 countries. The FSB is not a
regulator but is focused primarily on promoting international financial stability. The FSB has issued a series of frameworks and
recommendations to address such issues as systemic financial risk, financial group supervision, capital and solvency standards,
effective recovery and resolution regimes, corporate governance including compensation, and a number of related issues associated
with responses to the financial crisis.
The International Association of Insurance Supervisors (IAIS) represents insurance regulators and supervisors of more than 200
jurisdictions (including regions and states) in nearly 140 countries and seeks to promote globally consistent insurance industry
supervision. The IAIS is not a regulator, but one of its activities is to develop insurance regulatory standards for use by local
authorities across the globe. For example, the IAIS has adopted ComFrame, a Common Framework for the Supervision of
Internationally Active Insurance Groups (IAIGs). ComFrame assists regulators in addressing an IAIG’s risks by providing supervisory
standards for areas such as group supervision, governance and internal controls, enterprise risk management, and recovery and
resolution planning. We currently meet the criteria set forth to identify an IAIG, and the NYDFS, as our group-wide supervisor, has
publicly disclosed us as an IAIG on the IAIS’ register of IAIGs.
In addition, the FSB has charged the IAIS with developing a framework for measuring and mitigating systemic risks posed by the
insurance sector, and in response the IAIS developed an enhanced set of supervisory policy measures for the assessment and
mitigation of systemic risk in the insurance sector (Holistic Framework), with implementation beginning in 2020. The Holistic
Framework recognizes that systemic risk can emanate from specific activities and exposures arising from either sector-wide trends or
concentrations in individual insurers. In light of the IAIS adoption of the Holistic Framework, the FSB decided in December 2022 to
discontinue the annual identification of Global Systemically Important Insurers in favor of instead applying the Holistic Framework to
inform the FSB’s consideration of systemic risk in insurance.
As part of ComFrame, the IAIS is developing a risk-based global insurance capital standard (ICS) applicable to IAIGs, with the
purpose of creating a common language for supervisory discussions of group solvency of IAIGs. The IAIS has adopted ICS Version
2.0 for a five-year monitoring phase, with an initial phase that commenced January 2020. During the initial phase, ICS Version 2.0 is
used for confidential reporting to group-wide supervisors and discussion in supervisory colleges, but will not trigger supervisory action.
10
AIG | 2023 Form 10-K
Beginning after the conclusion of the five-year monitoring period in 2024, the IAIS has agreed to a second phase of implementation in
which the ICS will be applied as a group-wide prescribed capital requirement, defined as a solvency control level above which the
supervisor does not intervene on capital adequacy grounds. However, in recognition that the United States and potentially other
interested jurisdictions are developing an alternative approach to a group capital calculation that, as with the GCC, utilizes an
aggregation methodology of available capital and required capital of all insurance group members (Aggregation Method or AM), the
IAIS is assessing whether the AM provides comparable outcomes to ICS Version 2.0, including by collecting data from interested
jurisdictions. The IAIS aims to be in a position by the end of the monitoring phase to assess whether the AM provides substantially the
same outcome as the ICS, in which case it will be considered an outcome-equivalent approach to the ICS.
The standards issued by the FSB and/or the IAIS are not binding on the United States or other jurisdictions around the world unless
and until the appropriate local governmental bodies or regulators adopt laws or regulations implementing such standards.
ITEM 1 | Business
PRIVACY, DATA PROTECTION, CYBERSECURITY AND ARTIFICIAL INTELLIGENCE REQUIREMENTS
We are subject to various laws and regulations that require financial institutions and other businesses to protect and safeguard
personal and other sensitive information and provide notice of their practices relating to the collection, disclosure and other processing
of personal information. We also are subject to U.S. federal and state laws and regulations requiring notification to affected individuals
and regulators of a data breach(es). Below we highlight a few key privacy, data protection, cybersecurity and artificial intelligence (AI)
laws and regulations.
In October 2017, the NAIC adopted the Insurance Data Security Model Law (NAIC Data Security Model Law), which, among other
things, requires insurers, insurance producers and other entities required to be licensed under state insurance laws to develop and
maintain a written information security program, conduct risk assessments, and oversee the data security practices of third-party
service providers. As of December 31, 2023, more than 20 jurisdictions had adopted the NAIC Data Security Model Law. In addition,
on March 1, 2019, the NYDFS’s cybersecurity regulation became fully effective, requiring covered financial institutions, including
insurance entities licensed in New York, to, among other things, implement a cybersecurity program designed to protect information
systems. On November 1, 2023 the NYDFS published amendments to this cybersecurity regulation, which include additional
obligations for large insurers including enhanced and updated governance, risk assessment, and technology requirements, new
notification obligations, and clarifying changes regarding enforcement.
The State of California enacted the California Consumer Privacy Act of 2018 (CCPA), which went into effect as of January 1, 2020,
and imposes significant and often first-of-their-kind privacy obligations on businesses handling data related to California residents.
The law has a number of exceptions as a result of amendments however; it does not apply to personal information collected,
processed, sold, or disclosed pursuant to the federal Gramm-Leach-Bliley Act (GLBA) and implementing regulations or the California
Financial Information Privacy Act (FIPA). These amendments reduce the impact of the law on AIG in some, but not all, areas. The
California Privacy Rights Act (CPRA) passed in November 2020 became effective January 1, 2023 and amends the CCPA to create
additional privacy rights and obligations in California. Colorado, Connecticut, Utah and Virginia also enacted comprehensive
consumer data privacy laws and many other states have proposed similar laws, albeit with similar exemptions for entities and/or data
governed by the GLBA.
These privacy laws impose requirements on covered businesses that are similar to those imposed by the CCPA with respect to
privacy notices, data subject rights and data security standards.
The Securities and Exchange Commission (SEC) Rules of Cybersecurity Risk Management, Strategy, Governance and Incident
Disclosure by Public Companies require among other things, disclosure by registrants of any material cybersecurity incident on Form
8-K within four business days of determining that the incident the registrant has experienced is material. They also require periodic
disclosures of, among other things, (i) details on the company’s cybersecurity policies and procedures, and (ii) cybersecurity
governance and oversight policies, including the board of directors’ oversight of any material incidents (individually or in the
aggregate).
The EU General Data Protection Regulation (GDPR) took effect in May 2018. The GDPR’s scope extends to entities established
within the EEA (i.e., EU member states plus Iceland, Liechtenstein and Norway) and to certain entities not established in the EEA (in
certain instances, if they solicit or target individuals in the EU by offering goods or services to EEA data subjects or monitoring the
personal behavior of EEA data subjects (e.g., in an online context)). The GDPR was also onshored in the UK through the European
Union (Withdrawal) Act 2018, with adjustments as provided in the Data Protection, Privacy and Electronic Communications
(Amendments etc.) (EU Exit) Regulations 2019. Sanctions for non-compliance with the GDPR are onerous, with the potential for fines
of up to 4 percent of global revenue for the most serious infringements of the GDPR.
We have sought to address the GDPR’s requirements by demonstrating accountability for compliance with the GDPR’s principles
relating to processing of personal data, maintaining records of processing and completing mandatory Data Protection Impact
Assessments in connection with higher risk data processing activities.
AIG | 2023 Form 10-K
11
ITEM 1 | Business
The GDPR imposes requirements on the transfer of personal data outside of the EEA, including via standard contractual clauses
supplemented by an assessment and due diligence of the legal and regulatory landscape of the jurisdiction of the data importer, the
channels used to transmit personal data and the processors or subprocessors that may process personal data.
The NAIC and certain U.S. states have adopted or are considering regulations and guidance relating to the use of “big data,” AI,
machine learning and other technology innovations in the insurance marketplace. For example, Colorado and New York have adopted
regulations or guidance with respect to the use of external consumer data and information sources in underwriting for life insurance,
including the use of algorithms and predictive models. In December 2023, the NAIC adopted a model bulletin on the use of AI by
insurers that sets forth governance, risk management and other requirements that insurers using AI are expected to establish. In
addition, state insurance regulators in the United States have issued and will continue to consider regulations or proposed guidelines
in the use of external data, algorithms and AI in insurance practices, including underwriting, marketing, and claims practices.
The EEA and the UK have also taken steps to regulate the use of data and algorithms used for the purpose of AI and automated
decision-making. On December 9, 2023, the European Parliament and European Council reached a provisional agreement on the
European Union Artificial Intelligence Act, which, once formally adopted, will broadly regulate the use of AI within the European Union.
European countries, and supranational political organizations like the EU and the Council of Europe, are expected to continue taking
an active role in regulating AI in ways that may impact the insurance industry in the future.
We also are subject to other international laws and regulations that require financial institutions and other businesses to protect
personal and other sensitive information and provide notice of their practices relating to the collection, disclosure and other processing
of personal information and to obtain consent for specific processing activities. We are also subject to laws and regulations requiring
notification to affected individuals and regulators of security breaches and laws and regulations regarding data localization and the
cross-border transfer of information.
CLIMATE CHANGE
In recent years, federal- and state-level lawmakers and regulators in the United States and in other major countries in which we
operate have increased their scrutiny on financial institutions’ and other companies’ governance, risk oversight, disclosures, plans,
policies and practices in connection with climate change. Throughout 2023, there have been active and significant regulatory
developments on these issues in the form of newly proposed, issued or implemented laws, rules, regulations, guidance and
frameworks regarding climate change that impose, or will impose if and when effective, new requirements and expectations, including
in connection with climate-related governance, risk management, disclosures, stress testing and scenario analysis. Regulators in
several jurisdictions are considering the so-called protection gap as it relates to climate – which is the view that populations are under-
insured or that there is insufficient coverage to protect policyholders against the risks associated with climate change. In addition, the
SEC has proposed rule changes on climate-related disclosure. The proposed rule would require registrants, including public issuers
such as us, to include certain climate-related disclosures in registration statements and periodic reports. These proposed disclosures
include information about climate-related risks that are reasonably likely to have a material impact on the registrant’s business, results
of operations, or financial condition, and include a new note to their audited financial statements that provides certain climate-related
metrics and impacts on a line-item basis. The proposed climate-related disclosures would also include disclosure of a registrant’s
greenhouse gas emissions (including Scope 3 emissions) and attestation thereof, as well as information about climate-related targets,
goals, and transition plan, if any. If adopted as proposed, the rule changes are expected to result in additional compliance and
reporting costs. We continue to actively monitor the regulatory landscape surrounding these issues.
U.S. SECURITIES, INVESTMENT ADVISER, BROKER-DEALER AND INVESTMENT COMPANY
REGULATION
Our investment products and services are subject to applicable federal and state securities, investment advisory, fiduciary, including
the Employee Retirement Income Security Act of 1974, as amended (ERISA), and other laws and regulations. The principal U.S.
regulators of these operations include the SEC, Financial Industry Regulatory Authority (FINRA), Commodity Futures Trading
Commission (CFTC), Municipal Securities Rulemaking Board, state securities commissions, state insurance departments and the
Department of Labor (DOL).
Our variable life insurance, variable annuity and mutual fund products generally are subject to regulation as “securities” under
applicable federal securities laws, except where exempt. Such regulation includes registration of the offerings of these products with
the SEC, unless exempt from such registration, and requirements of distribution participants to be registered as broker-dealers, as
well as recordkeeping, reporting, and other requirements. This regulation also involves the registration of mutual funds and other
investment products offered by our businesses, and the separate accounts through which our variable life insurance and variable
annuity products are issued, as investment companies under the Investment Company Act of 1940, as amended (Investment
Company Act), except where exempt. The Investment Company Act imposes requirements relating to compliance, corporate
governance, disclosure, recordkeeping, registration and other matters. In addition, the offering of these products may involve filing
and other requirements under the securities laws of the states and other U.S. jurisdictions where offered. Our separate account
investment products are also subject to applicable state insurance regulation.
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AIG | 2023 Form 10-K
ITEM 1 | Business
We have several subsidiaries that are registered as broker-dealers under the Securities Exchange Act of 1934, as amended
(Exchange Act) and are members of FINRA, and/or are registered as investment advisers under the Investment Advisers Act of 1940,
as amended (Advisers Act). Certain of these broker-dealers and investment advisers are involved in our life and annuity product
sales, including participating in their distribution and/or serving as an investment adviser to mutual funds that underlie variable
products offered by us. Certain of these broker-dealers and investment advisers are also involved in the management of the
investment portfolios of our (re)insurance subsidiaries and other affiliates. In addition to registration requirements, the Exchange Act,
the Advisers Act, and the regulations thereunder, impose various compliance, disclosure, qualification, recordkeeping, reporting
requirements and subject these subsidiaries and their operations to examination. State securities laws also impose filing and other
requirements on broker-dealers, investment advisers and/or their licensed representatives, except where exempt.
Further, our licensed sales professionals appointed with certain of our broker-dealer and/or investment adviser subsidiaries and our
other employees, insofar as they sell products that are securities, including wholesale and retail activity, are subject to the Exchange
Act and to examination requirements and regulation by the SEC, FINRA and state securities commissioners. Regulation and
examination requirements also extend to our subsidiaries that employ or control those individuals.
INTERNATIONAL SECURITIES, INVESTMENT ADVISER, BROKER-DEALER AND INVESTMENT
COMPANY REGULATION
We operate investment-related businesses in, among other jurisdictions, the UK and Ireland. These businesses may advise on and
market investment management products and services, investment funds and separately managed accounts. The regulatory
authorities for these businesses include securities, investment advisory, financial conduct and other regulators that typically oversee
such issues as: (1) company licensing; (2) the approval of individuals with positions of responsibility; (3) conduct of business to
customers, including sales practices; (4) solvency and capital adequacy; (5) fund product approvals and related disclosures; and (6)
securities, commodities and related laws, among other items. We also participate in investment-related joint ventures in jurisdictions
outside the United States, primarily in Europe and Asia. In some cases, our international investment operations are also subject to
U.S. securities laws and regulations.
ERISA
We provide products and services to certain employee benefit plans that are subject to ERISA and/or the Internal Revenue Code of
1986, as amended (the Internal Revenue Code). Plans subject to ERISA include certain pension and profit-sharing plans and welfare
plans, including health, life and disability plans. As a result, our activities are subject to the restrictions imposed by ERISA and the
Internal Revenue Code, including the requirement under ERISA that fiduciaries must perform their duties solely in the interests of
ERISA plan participants and beneficiaries, and that fiduciaries may not cause a covered plan to engage in certain prohibited
transactions. The applicable provisions of ERISA and the Internal Revenue Code are subject to enforcement by the DOL, the Internal
Revenue Service (IRS) and the Pension Benefit Guaranty Corporation.
STANDARD OF CARE DEVELOPMENTS
We and our distributors are subject to laws and regulations regarding the standard of care applicable to sales of our products and the
provision of advice to our customers. In recent years, many of these laws and regulations have been revised or reexamined while
others have been newly adopted, such as:
• On October 31, 2023, the DOL announced proposed changes to the regulatory definition of an investment advice fiduciary for
purposes of transactions with ERISA qualified plans, related plan participants and IRAs. The proposed changes also included
significant changes to existing prohibited transactions exemptions (PTEs) relating to such advice, including PTE 84-24 and PTE
2020-02. The DOL’s proposed regulation changes would significantly increase the number of recommendations that would be
considered fiduciary, including (but not limited to) retirement plan rollover recommendations. The DOL proposal established a 60-
day comment period through January 2, 2024. Final DOL guidance is expected in 2024.
• SEC Best Interest Regulation – In 2020, Regulation Best Interest (Regulation BI), which establishes new rules regarding the
standard of care a broker must meet when making a recommendation to a retail customer in connection with the sale of a security
or other covered recommendation, and Form CRS, which requires enhanced disclosure by broker-dealers and investment advisers
regarding client relationships and certain conflicts of interest issues, became effective. Both had been adopted by the SEC in June
2019 as part of a package of final rulemakings and interpretations, at the same time as the SEC issued two interpretations under
the Advisers Act. The first interpretation addressed the standard of conduct applicable to SEC-registered investment advisers,
including details regarding the fiduciary duty owed to clients, required disclosures and the adviser’s continuous monitoring
obligations. The second interpretation clarified when investment advice would be considered “solely incidental” to brokerage
activity for purposes of the broker-dealer exclusion from SEC investment adviser registration. These two SEC interpretations
became effective in 2019.
AIG | 2023 Form 10-K
13
ITEM 1 | Business
• FINRA Standard of Care Development – In 2020, FINRA Rule 2111 was amended to provide that FINRA’s suitability requirements
do not apply to recommendations that are subject to Regulation BI. This amendment was intended to mitigate any potential
confusion regarding which standard of conduct applies to retail consumers. FINRA’s suitability rules still apply to recommendations
that are not covered by Regulation BI, such as recommendations to institutional customers.
• New York Standard of Care Developments – In July 2018, NYDFS adopted a best interest standard of care regulation applicable to
annuity and life insurance transactions through issuance of the First Amendment to Insurance Regulation 187 – Suitability and
Best Interests in Life Insurance and Annuity Transactions (Regulation 187). As amended, Regulation 187 requires life and annuity
producers to act in their client’s best interest when making point-of-sale and in-force recommendations, and to deliver to the client
the written basis for the recommendation, as well as the facts and analysis to support the recommendation. The amended
regulation also imposes additional duties on life insurance companies in relation to these transactions, such as requiring insurers
to establish and maintain procedures designed to prevent financial exploitation and abuse. The amended Regulation 187 was
previously challenged in court, but was upheld by the State of New York Court of Appeals, which is New York’s highest state court,
in October 2022.
• State Standard of Care Developments (Other than New York) – In February 2020, the NAIC adopted revisions to its Suitability in
Annuity Transactions Model Regulation (#275) (NAIC Suitability Model) implementing a best interest standard of care applicable to
sales and recommendations of annuities. The amended NAIC Suitability Model conforms in large part to Regulation BI, providing
that all recommendations by agents and insurers must be in the best interest of the consumer under known circumstances at the
time an annuity recommendation is made, without placing agents’ or insurers’ financial interests ahead of the consumer’s interest
in making a recommendation. A majority of states have adopted amendments to their suitability rules based on the NAIC Suitability
Model revisions, and we expect that a substantial majority of states will do so or consider adopting their own standards of conduct
which could be broader than the NAIC Suitability Model.
We continue to closely follow these legislative and regulatory activities as changes in standard of care requirements and have
evaluated the impact of these requirements on us and our customers, distribution partners and financial advisers. We have made
significant investments to implement and enhance tools, processes and procedures, where needed, to comply with the final rules and
interpretations. These efforts and enhancements have resulted in increased compliance costs and may impact sales results and
increase regulatory and litigation risk.
FEDERAL RETIREMENT LEGISLATION
In December 2022, comprehensive retirement legislation entitled "SECURE 2.0 Act of 2022" (SECURE 2.0) was signed into law.
SECURE 2.0 included many provisions affecting qualified contracts, many of which became effective in 2023, and additional ones that
become effective in 2024 or subsequent years. Some of the SECURE 2.0 provisions that became effective in 2023 include, among
others: an increase in the age at which required minimum distributions generally must commence to age 73 from the previous age of
72; elimination of the first day of the month requirement for governmental Section 457(b) plans; and optional treatment of employer
contributions as Roth sources. We are implementing new processes and procedures, where needed, designed to comply with the new
requirements.
Available Information about AIG
Our corporate website is www.aig.com. We make available free of charge, through the Investors section of our corporate website, the
reports that we file or furnish with the SEC (including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, Proxy Statements on Schedule 14A, any amendments to each of those reports and filings, and other
disclosure), corporate governance information (including our Code of Business Conduct and Ethics and any amendments of or
waivers from the Code of Business Conduct and Ethics), and select press releases. Additionally, all of our reports filed with the SEC
are available on the SEC's website at sec.gov.
Except for the documents specifically incorporated by reference into this Annual Report on Form 10-K, information contained on our
website or that can be accessed through our website is not incorporated by reference into this Annual Report on Form 10-K.
Reference to our website is made as an inactive textual reference.
14
AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
Risk Factor Summary
ITEM 1A | Risk Factors
The following is a summary of the material risks and uncertainties that could adversely affect our business, financial condition and
results of operations. You should read this summary together with the more detailed description of each risk factor contained below.
Market Conditions
• Deterioration of economic conditions, geopolitical tensions, changes in market conditions or weakening in global capital markets
may materially affect our businesses, results of operations, financial condition and liquidity.
• Changes in interest rates have materially and adversely affected and may continue to materially and adversely affect our
profitability.
Reserves and Exposures
• The amount and timing of insurance and reinsurance liability claims are difficult to predict and such claims may exceed the related
liability for unpaid losses and loss adjustment expenses or future policy benefits, or the liabilities associated with certain
guaranteed benefits and indexed features accounted for as embedded derivatives at fair value.
• Reinsurance may be unavailable or too expensive relative to its benefit, and may not be adequate to protect us against losses.
• Our consolidated results of operations, liquidity, financial condition and ratings are subject to the effects of natural and man-made
catastrophic events as well as mass torts.
• Climate change may adversely affect our business and financial condition.
• Concentration of our insurance, reinsurance and other risk exposures may have adverse effects.
• Fortitude Re may fail to perform its obligations and the accounting treatment of our reinsurance agreements with Fortitude Re
leads to volatility in our results of operations.
• Losses due to nonperformance or defaults by counterparties may materially and adversely affect the value of our investments, our
profitability and sources of liquidity.
Investment Portfolio and Concentration of Investments
• Our investment portfolio is concentrated in certain segments of the economy, and the performance and value of our investment
portfolio are subject to a number of risks and uncertainties.
• We rely on investment management and advisory arrangements with third-party investment managers for the majority of our
investment portfolio. The historical performance of Blackstone, BlackRock or any other investment manager we engage should not
be considered as indicative of the future results of our investment portfolio, our future results or any returns expected on AIG
Common Stock.
• Our valuation of investments and derivatives involves the application of methodologies and assumptions to derive estimates, which
may differ from actual experience and could result in changes to investment valuations that may materially adversely affect our
business, results of operations, financial condition and liquidity or lead to volatility in our net income.
Liquidity, Capital and Credit
• AIG Parent’s ability to access funds from our subsidiaries is limited, and our sources of liquidity may be insufficient to meet our
needs, including providing capital that may be required by our subsidiaries.
• We may not be able to generate cash to meet our needs due to the illiquidity of some of our investments.
• A downgrade by one or more of the rating agencies in the Insurer Financial Strength ratings of our insurance companies could limit
their ability to write or prevent them from writing new business and impair their retention of customers and in-force business, and a
downgrade in our credit ratings could adversely affect our business, results of operations, financial condition and liquidity.
Business and Operations
• No assurances can be given that the separation of our Life and Retirement business will be completed or as to the specific terms
or timing thereof. In addition, we may not achieve the expected benefits of the separation and will have continuing equity market
exposure to Corebridge until we fully divest our stake.
• Pricing for our products is subject to our ability to adequately assess risks and estimate related losses.
• Guarantees within certain of our Life and Retirement products may increase the volatility of our results.
AIG | 2023 Form 10-K
15
ITEM 1A | Risk Factors
• Our risk management policies, standards and procedures may prove to be ineffective and leave us exposed to unidentified or
unanticipated risk, which could adversely affect our businesses, results of operations, financial condition and liquidity.
• Our foreign operations expose us to risks that may affect our operations.
• We are exposed to certain risks if we are unable to maintain the availability of our critical technology systems and data and
safeguard the confidentiality and integrity of our data, which could compromise our ability to conduct business and adversely affect
our consolidated business, results of operations, financial condition and liquidity.
• Third parties we rely upon to provide certain business and administrative services on our behalf may not perform as anticipated,
which could have an adverse effect on our business and results of operations.
• We may experience difficulty in marketing and distributing products through our current and future distribution channels and the
use of third parties may result in additional liabilities.
• Our restructuring initiatives may not yield our expected reductions in expenses and improvements in operational and organizational
efficiency.
• Business or asset acquisitions and dispositions may expose us to certain risks.
• Significant legal or regulatory proceedings may adversely affect our business, results of operations or financial condition.
•
Increasing scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders
regarding environmental, social and governance matters, including governmental responses to such matters, may adversely affect
our reputation or otherwise adversely impact our business and results of operations.
• An epidemic, pandemic or other health crisis could materially and adversely affect our business results of operations, financial
condition and liquidity. COVID-19 (including variants) has adversely affected and may continue to adversely affect our global
business, results of operations, financial condition and liquidity.
• We may not be able to protect our intellectual property and may be subject to infringement claims.
Regulation
• Our businesses are heavily regulated and changes in laws and regulations may affect our operations, increase our insurance
subsidiary capital requirements or reduce our profitability.
• New laws and regulations or new interpretations of current laws and regulations, both domestically and internationally, may affect
our businesses, results of operations, financial condition and ability to compete effectively.
• An “ownership change” could limit our ability to utilize tax loss and credit carryforwards to offset future taxable income.
• New and proposed changes to tax laws could increase our corporate taxes or make some of our products less attractive to
consumers.
Estimates and Assumptions
• Estimates or assumptions used in the preparation of financial statements and modeled results used in various areas of our
business may differ materially from actual experience.
• Changes in accounting principles and financial reporting requirements may impact our consolidated results of operations and
financial condition.
•
If our businesses do not perform well and/or their estimated fair values decline, we may be required to recognize an impairment of
our goodwill or establish an additional valuation allowance against the deferred income tax assets, which could have a material
adverse effect on our results of operations and financial condition.
Employees and Competition
• Employee error and misconduct may be difficult to detect and prevent and may result in reputational damage and significant
losses.
• Competition for employees in our industry is intense, and managing key employee succession is critical to our success. We may
not be able to attract and retain the key employees and other highly skilled employees we need to support our businesses.
• We face intense competition in each of our business lines, and technological changes may present new and intensified challenges
to our businesses.
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AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
Risk Factors
Investing in AIG involves risk. In deciding whether to invest in AIG, you should carefully consider the following risk factors. Any of
these risk factors could have a significant or material adverse effect on our businesses, results of operations, financial condition or
liquidity. They could also cause significant fluctuations and volatility in the trading price of our securities. Readers should not consider
any descriptions of these factors to be a complete set of all potential risks that could affect AIG. These factors should be considered
carefully together with the other information contained in this report and the other reports and materials filed by us with the SEC.
Further, many of these risks are interrelated and could occur under similar business and economic conditions, and the occurrence of
certain of them may in turn cause the emergence or exacerbate the effect of others. Such a combination could materially increase the
severity of the impact of these risks on our businesses, results of operations, financial condition and liquidity above and beyond a
risk’s singular impact.
MARKET CONDITIONS
Deterioration of economic conditions, geopolitical tensions, changes in market conditions or weakening in global capital
markets may materially affect our businesses, results of operations, financial condition and liquidity.
Our businesses are highly dependent on global economic and market conditions. Weaknesses in economic conditions, including a
recessionary environment, poor capital markets performance and market volatility have in the past led to, and may in the future lead
to, among other consequences, a poor operating environment, erosion of consumer and investor confidence, reduced business
volumes, deteriorating liquidity, declines in asset valuations and impacts on policyholder behavior that could influence reserve
valuations.
Key ways in which we have in the past been, and could in the future be, negatively affected by economic conditions include:
•
•
•
•
•
•
increases in policy withdrawals, lapses, surrenders and cancellations and other impacts from changes in policyholder behavior
compared to that assumed in pricing;
increased loss payments and loss costs due to inflation;
increased challenges to insurance policy terms and conditions, such as standard exclusions;
increases in costs associated with third-party reinsurance, or decreased ability to obtain reinsurance on acceptable terms;
the increased likelihood of, or increased magnitude of, asset impairments caused by market fluctuations, deterioration in collateral
values or credit deterioration of borrowers; and
reduced premium and deposits.
Adverse economic conditions may result from a variety of factors including domestic and global economic and political developments,
including elevated interest rates, plateauing or decreasing economic growth and business activity, recessions, social inflation,
inflationary or deflationary pressures in developed economies, including the United States, civil unrest, pandemics, geopolitical
tensions, foreign investment restrictions, or military action, such as the armed conflict between Ukraine and Russia and corresponding
sanctions imposed by the United States and other countries or the conflict in Israel and the surrounding areas, and new or evolving
legal and regulatory requirements on business investment, hiring, migration, labor supply and global supply chains.
These and other market, economic, regulatory and political factors, including the prolonged effects of elevated inflation, turmoil in the
global banking sector and related macroeconomic uncertainty, and domestic and international political tension, including any potential
U.S. government shutdown, have had and could continue to have a material adverse effect on our businesses, results of operations,
financial condition, capital and liquidity in many ways, including:
•
•
•
•
lower levels of consumer demand for and ability to afford our products and commercial business activities that have decreased and
may continue to decrease revenues and profitability and thus impair goodwill, deferred tax assets or other long-term assets;
increased credit impairments, downgrades and losses across single or numerous asset classes due to lower collateral values or
deteriorating cash flow and profitability by borrowers that could lead to higher defaults on the Company’s investment portfolio,
especially in geographic, industry or investment sectors where the Company has higher concentrations of exposure, such as real
estate related borrowings, and widening of credit spreads that could reduce investment asset valuations, decrease fee income and
increase statutory capital requirements;
increased market volatility and uncertainty that could decrease liquidity, increase borrowing costs and limit access to capital
markets;
the reduction of investment income generated by our investment portfolio;
AIG | 2023 Form 10-K
17
ITEM 1A | Risk Factors
• disruption to our business operations in countries experiencing geopolitical tensions as well as increased costs associated with
meeting customer needs in such regions;
•
•
increased costs related to our direct and third-party support services, labor and financing, increased credit risk and decreased
sales as a result of inflationary pressures; and
limitations on business activities and increased compliance risks with respect to economic sanctions regulations relating to
jurisdictions in which our businesses operate or we have operations.
In addition, if our investment managers, including Blackstone Inc. (Blackstone) and BlackRock, Inc. (BlackRock), or any other
investment managers we engage, fail to react appropriately to difficult market or economic conditions, our investment portfolio could
incur material losses.
Changes in interest rates have materially and adversely affected and may continue to materially and adversely affect our
profitability.
Global interest rates increased steadily in 2022 and 2023, including in the United States, and in some cases, have risen rapidly after
an extended period at or near historic lows.
We are exposed primarily to the following risks arising from or exacerbated by fluctuations in interest rates:
• mismatch between the expected duration of our liabilities and our assets;
•
•
•
impairment to our ability to earn the returns or spreads assumed in the pricing and the reserving for our products;
changes in certain statutory reserve or capital requirements that are based on formulas or models that consider interest rates or
prescribed interest rates, such as cash flow testing reserves;
changes in the costs of derivatives we use for hedging or increases in the volume of hedging we do;
• an increase in policy loans, surrenders and withdrawals as interest rates rise;
•
•
•
loss from reduced fee income, and changes in the fair values of Market Risk Benefits (MRBs) and embedded derivatives;
the reinvestment risk associated with more prepayments on mortgage-backed securities and other fixed income securities in
decreasing interest rate environments and fewer prepayments in increasing interest rate environments;
volatility in our generally accepted accounting principles (GAAP) results of operations driven by interest rate-related components of
liabilities and equity market-related components of optional guaranteed benefits and the cost of associated hedges in low interest
rate environments; and
•
increased financing and refinancing costs, in particular with respect to our corporate debt instruments.
Changes in interest rates have had and could continue to have a material adverse effect on the value of our investment portfolio. For
example, increases in interest rates have impacted, and may continue to impact, our investment portfolio by decreasing the estimated
fair values of the fixed income securities that constitute a substantial portion of our investment portfolio as well as the alternative
investments in our investment portfolio. This in turn has increased and could continue to increase the unrealized loss positions in our
portfolio and adversely affect our ability to realize our deferred tax assets, thereby materially and adversely affecting our business,
results of operations, financial condition and liquidity. Furthermore, changes in interest rates and credit spreads have led to
decreasing the average account value of our separate accounts thereby negatively impacting the fee income we earn.
In periods of rapidly increasing interest rates or sustained periods of elevated interest rates, such as the current interest rate
environment, we may not be able to purchase, in a timely manner, the investments in our general account with yields sufficient to fund
the higher crediting rates necessary to keep interest rate sensitive products that we offer competitive. Therefore, we may need to
accept a lower investment spread and, thus, lower profitability, or face a decline in sales and greater loss of existing contracts and
related assets. Policy loans, surrenders and withdrawals also tend to increase as policyholders seek investments with higher
perceived returns in higher interest rate environments. These impacts may continue to result in significant cash outflows requiring that
we sell investments at a time when the prices of those investments are adversely affected by interest rate volatility, which could result
in realized investment losses when selling assets in an unrealized loss position.
Conversely, the sustained low interest rates we experienced through early 2022 negatively affected and, should a low interest rate
environment return, could in the future negatively affect the performance of our investments and reduce the level of investment
income earned on our investment portfolios, resulting in net investment spread compression. We experience lower investment income
as well as lower sales of new Life and Retirement insurance products, including interest rate sensitive products, and policies when a
low or declining U.S. interest rate environment persists, and/or interest rates turn negative, and these effects can persist so long as
the investments purchased and products issued remain outstanding, even after rates have risen. We may also experience lower
investment income if we are forced to reinvest cash flows from investments at rates below the average yield of our existing portfolios.
Due to practical and capital markets limitations, we have in the past not been and may in the future not be able to fully mitigate our
interest rate risk by matching exposure of our assets relative to our liabilities. Low levels of interest rates have in the past and could in
the future continue to impair our ability to earn the returns assumed in the pricing and the reserving for our products at the time they
were sold and issued.
18
AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
In addition, fluctuations in interest rates may expose us to the risk of increases in certain statutory reserve requirements that are
based on formulas or models that consider interest rates, which would reduce statutory capital, and increases in capital requirements
and the amount of assets we must maintain to support statutory reserves, which would reduce surplus.
The primary source of our exposure to credit spreads is in the value of our fixed income securities. If credit spreads widen
significantly, we could be exposed to higher levels of defaults and impairments. If credit spreads tighten significantly, it could result in
reduced net investment income and, in turn, reduced profitability associated with new purchases of fixed maturity securities.
Tightening credit spreads would reduce the discount rates used in the principles-based statutory reserve calculation, potentially
increasing statutory reserve requirements and, in turn, reducing statutory surplus. Although these effects on bond fund valuation and
reserve discount rates run in offsetting directions for either credit spread widening or narrowing, it is possible for one of them to
outweigh the other under certain market conditions. Any of these risks could cause an adverse effect on our business, results of
operations, financial condition and liquidity.
RESERVES AND EXPOSURES
The amount and timing of insurance and reinsurance liability claims are difficult to predict and such claims may exceed the
related liability for unpaid losses and loss adjustment expenses or future policy benefits, or the liabilities associated with
certain guaranteed benefits and indexed features accounted for as embedded derivatives at fair value.
We regularly review the adequacy of the established liability for unpaid losses and loss adjustment expenses and future policy
benefits, as well as liabilities associated with certain guaranteed benefits and indexed features accounted for as embedded
derivatives at fair value. We also conduct extensive analyses of our reserves and embedded derivatives during the year. Our liability
for unpaid losses and loss adjustment expenses, future policy benefits and embedded derivatives, however, has and may develop
adversely and materially impact our businesses, results of operations, financial condition and liquidity.
For General Insurance, estimation of ultimate net losses, loss expenses and the liability for unpaid losses and loss adjustment
expenses is a complex process, particularly for both long-tail and medium-tail liability lines of business. There is also greater
uncertainty in establishing reserves with respect to new business, particularly new business involving recently introduced product
lines. In these cases, there is less historical experience or knowledge and less data upon which the actuaries can rely. Estimating
reserves is further complicated by unexpected claims or unintended coverages that emerge due to unexpected events, such as
pandemics or geopolitical conflicts. These emerging issues may increase the size or number of claims beyond our underwriting intent
and may not become apparent for many years after a policy is issued.
While we use a number of analytical reserve development techniques to project future loss development, the liability for unpaid losses
and loss adjustment expenses has been and may continue to be significantly affected by changes in loss cost trends or loss
development factors that were relied upon in setting the liability for unpaid losses and loss adjustment expenses. These changes in
loss cost trends or loss development factors could be due to changes in actual versus expected claims and losses, difficulties in
predicting changes, such as changes in inflation, unemployment, or other social or economic factors affecting claims, including judicial
and legislative actions, and changes in the tort environment. Any deviation in loss cost trends or in loss development factors might not
be identified for an extended period of time after we record the initial loss reserve estimates for any accident year or number of years.
For Life and Retirement, establishment and ongoing calculations of reserves for future policy benefits and related reinsurance assets
as well as embedded derivatives and MRBs is a complex process with significant judgmental inputs, assumptions and modeling
techniques, in each case yielding corresponding results which may be inaccurate or incorrect. We make assumptions regarding
mortality, morbidity, discount rates, persistency and policyholder behavior at various points, including at the time of issuance and in
subsequent reporting periods. An increase in the valuation of the liability could result to the extent emerging and actual experience
deviates from these assumptions. The inputs and assumptions used in connection with calculations of reserves for future policy
benefits are inherently uncertain. Experience may develop adversely such that additional reserves must be established or the value of
MRBs or embedded derivatives may increase. Adverse experience could arise out of a number of factors, including, but not limited to,
a severe short-term event, such as a pandemic or changes to policyholder behavior during stressed economic periods, or due to mis-
estimation of long-term assumptions such as mortality, interest rates, credit spreads, equity market levels and volatility and
persistency assumptions. Certain variables, such as policyholder behavior, are difficult to estimate and can have a significant impact
on future policy benefits, MRBs and embedded derivatives. We review and update actuarial assumptions at least annually, typically in
the third quarter for reserves, MRBs and embedded derivatives. Additionally, we regularly carry out cash flow testing for statutory
reporting. If actual experience or revised future expectations result in projected future losses, we may be required to record additional
liabilities through a charge to policyholder benefit expense, net realized gains or losses, or changes in market risk benefits in the then-
current period, which could negatively affect our business, results of operations, financial condition and liquidity.
For additional information on reserve development, see Part II, Item 7. MD&A – Insurance Reserves.
For additional information on our loss reserves, see Part II, Item 7. MD&A – Critical Accounting Estimates – Loss Reserves and
Note 13 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
19
ITEM 1A | Risk Factors
For additional information regarding these products, see Item 1. Business – Regulation, Part II, Item 7. MD&A – Critical Accounting
Estimates – Market Risk Benefits, and Notes 13 and 14 to the Consolidated Financial Statements.
Reinsurance may be unavailable or too expensive relative to its benefit, and may not be adequate to protect us against
losses.
Our subsidiaries are major purchasers of third-party reinsurance and we use reinsurance as part of our overall risk management
strategy. While reinsurance does not discharge our subsidiaries from their obligation to pay claims for losses insured under our
policies, it does make the reinsurer liable to the subsidiaries for the reinsured portion of the risk. Market conditions beyond our control
have impacted and may in the future impact the availability and cost of reinsurance and could have a material adverse effect on our
business, results of operations and financial condition. For example, reinsurance is typically more difficult or costly to obtain after a
year or consecutive years with a large number of major catastrophes, the likelihood of which may be exacerbated by climate change.
We have been and may, at certain times be, (i) forced to incur additional costs for reinsurance, (ii) unable to obtain sufficient
reinsurance on acceptable terms, or (iii) unable to obtain reinsurance for certain parts of our business. In instances where reinsurance
is more costly, insufficient on acceptable terms or unavailable, we have had to, and will in the future have to accept an increase in
exposure to risk, reduce or stop writing certain lines of business written by our subsidiaries or seek alternatives in line with our risk
limits, or a combination thereof.
Additionally, we are exposed to credit risk with respect to our subsidiaries’ reinsurers to the extent the reinsurance receivable is not
secured, or is inadequately secured by collateral or does not benefit from other credit enhancements. We also bear the risk that a
reinsurer is, or may be, unwilling to pay amounts we have recorded as reinsurance recoverables for any reason, including that (i) the
terms of the reinsurance contract do not reflect the intent of the parties to the contract or there is a disagreement between the parties
as to their intent, or (ii) the terms of the contract cannot be legally enforced. In addition, we bear the risk that (i) the terms of the
contract are interpreted by a court or arbitration panel differently than expected, (ii) the reinsurance transaction performs differently
than we anticipated compared to the original structure, terms or conditions, or (iii) a change in laws and regulations, or in the
interpretation of the laws and regulations, materially impacts a reinsurance transaction. The insolvency of one or more of our
reinsurers, the inability or unwillingness of such reinsurers to make timely payments under the terms of our contracts or payments in
an amount equal to our reinsurance recoverable, or the risk that the reinsurance transaction does not operate as intended, including
due to a change in laws and regulations or on account of court or arbitration panel interpretations, could have a material adverse
effect on our results of operations and liquidity.
Moreover, the use of reinsurance placed in the capital markets may not provide the same levels of protection as traditional
reinsurance transactions. Any disruption, volatility and uncertainty in these markets, such as following a major catastrophic event, may
limit our ability to access such markets on terms favorable to us or at all. Also, to the extent that we intend to use structures based on
an industry loss index or other non-indemnity trigger rather than on actual losses incurred by us, we could be subject to residual risk.
Our Life and Retirement companies also utilize intercompany reinsurance arrangements to provide capital benefits to their affiliated
cedants. They have also pursued, and may continue to pursue, reinsurance transactions with external parties and permitted practices
to manage the capital impact of statutory reserve requirements under applicable reserving rules, including principle-based reserving
(PBR). The application of actuarial guidelines and PBR involves numerous interpretations. If state insurance departments do not
agree with our interpretations or if regulations change with respect to our ability to manage the capital impact of certain statutory
reserve requirements, the statutory reserve requirements of our Life and Retirement companies could increase, or the ability of our
Life and Retirement companies to take reserve credit for reinsurance transactions could be reduced or eliminated. Additionally, if the
ratings of our Life and Retirement companies decline, we could incur higher costs to obtain reinsurance, each of which could
adversely affect sales of our products and our financial condition or results of operations.
The availability of private sector reinsurance for terrorism is limited and we currently have limited reinsurance coverage for terrorist
attacks. While we benefit from the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), which provides U.S. government
risk assistance to the insurance industry to manage the exposure to terrorism incidents, TRIPRA has specific program limits and does
not cover losses in certain lines of business such as personal property and personal casualty. We also rely on the government
sponsored and government arranged terrorism reinsurance programs, including pools, in force in applicable non-U.S. jurisdictions.
The realization of these risks may materially and adversely affect our business, results of operations and financial condition.
For additional information on our reinsurance recoverable, see Part II, Item 7. MD&A – Enterprise Risk Management – Insurance
Risks – Reinsurance Activities – Reinsurance Recoverable.
Our consolidated results of operations, liquidity, financial condition and ratings are subject to the effects of natural and
man-made catastrophic events as well as mass torts.
Events such as hurricanes, windstorms, hailstorms, flooding, earthquakes, landslides, wildfires, solar storms, earth sinking, tsunamis,
war or other military action, acts of terrorism, explosions and fires, cyberattacks, product defects, pandemics and other highly
contagious diseases, mass torts, civil unrest and other catastrophes have adversely affected our business in the past and could do so
in the future.
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AIG | 2023 Form 10-K
Catastrophic events, and any relevant regulations, have in the past and could in the future result in losses in any business in which we
operate, and could expose us to:
• widespread claim costs associated with property, casualty, general liability, bodily injury, workers’ compensation, accident and
health, travel, business interruption, cyber and mortality and morbidity claims, among others;
ITEM 1A | Risk Factors
•
•
•
•
loss resulting from a decline in the value of our invested assets;
limitations on our ability to recover deferred tax assets;
loss resulting from actual policy experience that is adverse compared to the assumptions made in product pricing;
revenue loss due to decline in customer base;
• declines in value and/or losses with respect to companies and other entities whose securities we hold and counterparties we
transact business with and have credit exposure to, including reinsurers; and
•
significant disruptions to our physical infrastructure, systems and operations.
Natural and man-made catastrophic events are generally unpredictable. Our exposure to catastrophe-related loss depends on various
factors, including the frequency and severity of the catastrophes, the availability of reinsurance, the rate of inflation and the value and
geographic or other concentrations of insured companies and individuals. Vendor models and proprietary assumptions and processes
that we use to manage catastrophe exposure may prove to be ineffective due to incorrect assumptions or estimates. For example,
modeling for terrorism, cyber events and pandemics is more difficult and may be less reliable.
In addition, legislative and regulatory initiatives and court decisions following major catastrophes (both natural and man-made), as
well as mass torts, have required and could in the future require us to pay the insured beyond the provisions of the original insurance
policy and may prohibit the application of a deductible, resulting in inflated and unanticipated claims; or impose other restrictions,
which would reduce our ability to mitigate exposure. These initiatives could impair our cash flows and, without regulatory relief, could
reduce our subsidiaries’ capital ratios.
For additional information on potential catastrophic events, including a sensitivity analysis of our exposure to certain catastrophes, see
Part II, Item 7. MD&A – Enterprise Risk Management – Insurance Risks.
For information regarding the effects of climate change on our business, see Reserves and Exposures – “Climate change may
adversely affect our business and financial condition” below.
For information regarding the effects of the COVID-19 pandemic on our business, see Business and Operations – “An epidemic,
pandemic or other health crisis could materially and adversely affect our business results of operations, financial condition and
liquidity. COVID-19 (including variants) has adversely affected and may continue to adversely affect our global business, results of
operations, financial condition and liquidity.” below.
Climate change may adversely affect our business and financial condition.
Climate change, indicated by higher concentrations of greenhouse gases, a warming atmosphere and ocean, wildfires, diminished
snow and ice, and a rise in sea levels, appears to have contributed to an increase in the frequency and severity of natural disasters
and the creation of uncertainty as to future trends and exposures. As such, climate change presents significant financial implications
for AIG in areas such as underwriting, claims and investments, as well as risk capacity, financial reserving and operations.
Climate change presents challenges to our ability to effectively underwrite, model and price catastrophe risk particularly if the
frequency and severity of catastrophic events such as pandemics, hurricanes, tornadoes, heatwaves, floods, wildfires and windstorms
and other natural disasters continue to increase. For example, losses resulting from actual policy experience may be adverse as
compared to the assumptions made in product pricing as well as mortality assumptions and our ability to mitigate our exposure may
be reduced.
Climate change-related risks may also adversely impact the value of the securities that we hold or lead to credit risk of other
counterparties we transact business with, including reinsurers. Our reputation or corporate brand could also be negatively impacted
as a result of changing customer or societal perceptions of organizations that we either insure or invest in due to their actions (or lack
thereof) with respect to climate change, as well as political initiatives or other stakeholder expectations with respect thereto. Any
policies adopted by investors to address changing societal perceptions on climate change could result in increased compliance costs
to our businesses and changes to our corporate governance and risk management practices, and may affect the type of assets we
hold in our investment portfolio.
In addition, lawmakers and regulators have imposed and may continue to impose new requirements or issue new guidance aimed at
addressing or mitigating climate change-related risks and efforts undertaken in response thereto. Additional actions by foreign
governments, regulators and international standard setters have and could result in substantial expansions of the regulations,
guidance or expectations to which we may be subject. It is also possible that the laws, regulations and guidance adopted in U.S.
state, U.S. federal or foreign jurisdictions regarding climate change-related risks will differ from one another, and that they could be
inconsistent with the laws and regulations of other jurisdictions in which we operate.
AIG | 2023 Form 10-K
21
ITEM 1A | Risk Factors
Additionally, litigation related to climate change has increased in recent years. Many lawsuits center on enforcement or interpretation
of environmental laws and regulations, often seeking to use litigation as a tool to influence governmental and corporate climate
policies. Other cases seek damages for contribution to climate change or for insufficient disclosure around material financial risks.
Increased litigation of this nature could trigger losses under liability policies, such as casualty and directors’ and officers’ insurance
policies, increase our liabilities and affect the viability of certain of our business lines.
In addition, severe weather and other effects of climate change result in more frequent and more severe damages, leading to
lawsuits. Indirect climate change effects are also seen in litigation over flooding, mudslides and other severe weather that results in
injury or damage, as well as in construction defect litigation, chemical release lawsuits, and workers’ compensation claims. Litigation
related to climate change may, through increased claims from our customers and adverse impacts to the value of the securities that
we hold, adversely impact our business and results of operations.
We have also faced and may continue to face business continuity risk as a result of climate change-related incidents that may disrupt
business operations, including extreme weather events. We cannot predict the long-term impacts of climate change on our business
and results of operations.
For information regarding risks associated with other catastrophic events, see Reserves and Exposures – “Our consolidated results of
operations, liquidity, financial condition and ratings are subject to the effects of natural and man-made catastrophic events” above.
Concentration of our insurance, reinsurance and other risk exposures may have adverse effects.
We are exposed to risks as a result of concentrations in our insurance and reinsurance policies, investments, derivatives and other
obligations that we undertake for customers and counterparties. Further, any risk management arrangements we employ to manage
concentration risks, whether directly or through third parties, may not be available on acceptable terms or may prove to be ineffective.
Our risk exposures under insurance and reinsurance policies, derivatives and other obligations are, from time to time, compounded by
risk exposure assumed in our investment business. Also, our exposure for certain single risk coverages and other coverages may be
so large that adverse experience compared to our expectations may have a material adverse effect on our consolidated results of
operations or result in additional statutory capital requirements for our subsidiaries.
In addition, the separation of our Life and Retirement business, if completed, could increase the materiality of these potential
concentrations in the remaining portfolio. For additional information on risks associated with the separation of the Life and Retirement
business from AIG, see Business Operations – “No assurances can be given that the separation of our Life and Retirement business
will be completed or as to the specific terms or timing thereof. In addition, we may not achieve the expected benefits of the separation
and will have continuing equity market exposure to Corebridge until we fully divest our stake” below.
Also see Part II, Item 7. MD&A – Business Segment Operations – General Insurance – Business Strategy and – Business Segment
Operations – General Insurance – Industry and Economic Factors, and Part II, Item 7. MD&A – Business Segment Operations – Life
and Retirement – Business Strategy and – Business Segment Operations – Life and Retirement – Industry and Economic Factors.
Fortitude Re may fail to perform its obligations and the accounting treatment of our reinsurance agreements with Fortitude
Re leads to volatility in our results of operations.
As of December 31, 2023, approximately $27.6 billion of reserves from AIG’s Life and Retirement Run-Off Lines and approximately
$3.0 billion of reserves from AIG’s General Insurance Run-Off Lines, related to business written by multiple AIG subsidiaries, had
been ceded to Fortitude Re under reinsurance transactions. These reserve balances are fully collateralized pursuant to the terms of
the reinsurance transactions. Our subsidiaries continue to remain primarily liable to policyholders under the business reinsured with
Fortitude Re. As a result, if Fortitude Re is unable to successfully operate, or other issues arise that affect its financial condition or
ability to satisfy or perform its obligations to our subsidiaries, we could experience a material adverse effect on our results of
operations, financial condition and liquidity to the extent the amount of collateral posted in respect of our reinsurance receivable is
inadequate. Further, as is customary in similar reinsurance agreements, upon the occurrence of certain termination and recapture
triggers, our subsidiaries may elect or may be required to recapture the business ceded under such reinsurance agreements, which
would result in a substantial increase to our net insurance liabilities and statutory capital requirements and may require us to raise
capital to recapture such ceded business. These termination and recapture triggers include Fortitude Re becoming insolvent or being
placed into liquidation, rehabilitation, conservatorship, supervision, receivership, bankruptcy or similar proceedings, certain regulatory
ratios falling below certain thresholds, and, in the case of those reinsurance agreements made with Life and Retirement, Fortitude
Re’s failure to perform under the reinsurance agreements, or its entry into certain transactions without receiving the consent of
Corebridge.
As the reinsurance transactions between AIG and Fortitude Re are structured as modified coinsurance (modco) for the Life and
Retirement Run-Off Lines and loss portfolio transfer arrangements with funds withheld for the General Insurance Run-Off Lines, the
manner in which we account for these reinsurance arrangements has led, and will continue to lead, to volatility in our results of
operations. In modco and funds withheld arrangements, the investments supporting the reinsurance agreements, and which reflect
the majority of the consideration that is paid to the reinsurer for entering into the transaction, are withheld by, and therefore continue to
reside on the balance sheet of, the ceding company (i.e., AIG and its subsidiaries) thereby creating a potential obligation for the
22
AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
ceding company to pay the reinsurer (i.e., Fortitude Re) at a later date. Additionally, as our applicable insurance subsidiaries maintain
ownership of these investments, AIG will maintain its existing accounting for these assets (e.g., the changes in fair value of available
for sale securities will be recognized within other comprehensive income). AIG has established a funds withheld payable to Fortitude
Re while simultaneously establishing a reinsurance asset representing reserves for the insurance coverage that Fortitude Re has
assumed. The funds withheld payable contains an embedded derivative and changes in fair value of the embedded derivative related
to the funds withheld payable are recognized in earnings through realized gains (losses). This embedded derivative is considered a
total return swap with contractual returns that are attributable to various assets and liabilities associated with these reinsurance
agreements. As a result of changes in the fair value of the embedded derivative, we experience volatility in our GAAP net income.
For additional information on our exposure to credit risk of reinsurers, see Reserves and Exposures – “Reinsurance may be
unavailable or too expensive relative to its benefit, and may not be adequate to protect us against losses” above.
Losses due to nonperformance or defaults by counterparties may materially and adversely affect the value of our
investments, our profitability and sources of liquidity.
We are exposed to credit risk arising from exposures to various counterparties related to investments, derivatives, premiums
receivable, certain General Insurance businesses and reinsurance recoverables. These counterparties include, but are not limited to,
issuers of fixed income and equity securities we hold, borrowers of loans we hold, customers, plan sponsors, trading counterparties,
counterparties under swaps and other derivatives instruments, reinsurers, corporate and governmental entities whose payments or
performance we insure, joint venture partners, clearing agents, exchanges, clearing houses, custodians, brokers and dealers,
commercial banks, investment banks, intra-group counterparties with respect to derivatives and other third parties, financial
intermediaries and institutions and guarantors. These counterparties may default on their obligations to us due to bankruptcy,
insolvency, receivership, financial distress, lack of liquidity, adverse economic conditions, operational failure, fraud, government
intervention and other reasons. In addition, for exchange-traded derivatives, such as futures, options as well as "cleared" over-the-
counter derivatives, we are generally exposed to the credit risk of the relevant central counterparty clearing house and futures
commission merchants through which we clear derivatives. Defaults by these counterparties on their obligations to us could have a
material adverse effect on the value of our investments, business, financial condition, results of operations and liquidity.
An insolvency of, or the appointment of a receiver to rehabilitate or liquidate, a significant competitor could negatively impact our
business if such appointment were to impact consumer confidence in our products and services. Additionally, if the underlying assets
supporting the structured securities we invest in are expected to default or actually default on their payment obligations, our securities
may incur losses.
In addition, our exposure to credit risk may be exacerbated in periods of market or credit stress, as derivative counterparties take a
more conservative view of their acceptable credit exposure to us, resulting in reduced capacity to execute derivative-based hedges.
INVESTMENT PORTFOLIO AND CONCENTRATION OF INVESTMENTS
Our investment portfolio is concentrated in certain segments of the economy, and the performance and value of our
investment portfolio are subject to a number of risks and uncertainties.
Our results of operations and financial condition have in the past been, and may in the future be, adversely affected by the degree of
concentration in our consolidated investment portfolio. For example, we have significant holdings of real estate and real estate-related
investments, including residential mortgage- backed, commercial mortgage-backed and other asset-backed securities and residential
and commercial (including office) mortgage loans. We also have significant exposures to financial institutions and, in particular, to
money center banks and global banks, certain industries, such as energy and utilities, the U.S. federal, state and local government
issuers and authorities, and global financial institutions, governments and corporations. Events or developments that have a negative
effect on any particular industry, asset class, group of related industries or geographic region may adversely affect the valuation of our
investments to the extent they are concentrated in such segments. Our ability to sell assets in such segments may be limited.
Our investments are also subject to market risks and uncertainties, including, in addition to interest rate risk, changes in the level of
credit spreads, currency rates, and commodity and equity prices, each of which has affected and will continue to affect the value of
investments in our investment portfolio as well as the performance of, and returns generated by, such investments. For information
regarding risks associated with interest rate volatility, see Market Conditions above.
Furthermore, our alternative investment portfolio, which is subject to volatility in equity markets, includes investments for which
changes in fair value are reported through pre-tax income. An economic downturn or decline in the capital markets has had and could
continue to have a material adverse effect on our investment income, including as a result of decreases in the fair value of alternative
investments.
AIG | 2023 Form 10-K
23
ITEM 1A | Risk Factors
We rely on investment management and advisory arrangements with third-party investment managers for the majority of our
investment portfolio. The historical performance of Blackstone, BlackRock or any other investment manager we engage
should not be considered as indicative of the future results of our investment portfolio, our future results or any returns
expected on AIG Common Stock.
In 2021, AIG entered into a long-term investment management relationship with Blackstone, pursuant to which Blackstone is initially
managing $50 billion of Corebridge’s existing investment portfolio, with that amount increasing to an aggregate of $92.5 billion by the
third quarter of 2027. In addition, beginning in April 2022, certain AIG and Corebridge insurance company subsidiaries entered into
investment management agreements with BlackRock and as of December 31, 2023, BlackRock manages $135 billion of our
investment portfolio, consisting of liquid fixed income and certain private placement assets, including $76 billion of Corebridge assets.
In addition, liquid fixed income assets associated with the Fortitude Re funds withheld asset portfolio were separately transferred to
BlackRock for management.
As part of the arrangements with Blackstone, Blackstone is serving as exclusive external investment manager for certain of
Corebridge's current and future insurance company subsidiaries for certain asset classes, which has led to an increase in investment
management fees payable by us as compared to expenses we have historically incurred for similar services. Under the arrangements
with Blackstone, there are provisions that require minimum management fees to be paid to Blackstone to the extent actual amounts
charged to the Corebridge insurance company subsidiaries are below such minimums. Also, the exclusivity provisions and termination
provisions that are part of these arrangements with Blackstone may prevent certain of our Corebridge subsidiaries from retaining
other external investment managers with respect to the subject asset classes who may produce better returns on investments than
Blackstone. In addition, pursuant to the relevant agreements with Blackstone, if such agreements are terminated for reasons other
than certain specified reasons, Corebridge could be required to continue paying investment advisory fees to Blackstone regardless of
the termination. Corebridge may not have the funds available to pay any such fees and its insurance company subsidiaries may not
be able or permitted to pay dividends or make other distributions to Corebridge in an amount sufficient to pay any such fees or at all.
Any requirement to pay such fees could adversely affect our business, results of operations, financial condition and liquidity.
In addition, Blackstone and BlackRock are generally compensated based solely on our assets which they manage, rather than by
investment return targets, and as a result, Blackstone and BlackRock are not directly incentivized to maximize investment returns. Our
investment portfolio’s returns have benefited historically from investment opportunities and general market conditions that may not
currently exist and may not be repeated. There can be no guarantee that Blackstone, BlackRock or any other investment manager we
engage will be able to achieve any particular returns or generate investment opportunities with attractive, risk-adjusted returns for our
investment portfolio in the future. If Blackstone or BlackRock is unable to effectively manage our portfolio, due to the concentration of
assets in our portfolio that are managed by Blackstone and BlackRock, such inability could adversely affect our business, results of
operations, financial condition and liquidity.
Additionally, from time to time, we consider and engage in discussions with external asset managers about managing other assets in
our investment portfolio that are currently managed by us. If we increase the amount of assets in our investment portfolio managed by
external asset managers, it may lead to an increase in investment advisory fees payable by us. In addition, we may become more
reliant on our external asset managers, and such increased dependence may reduce our internal capabilities and expertise or expose
us to greater risk, including the risk that external asset managers may fail to meet our performance expectations or otherwise
experience disruptions or losses.
Our valuation of investments and derivatives involves the application of methodologies and assumptions to derive
estimates, which may differ from actual experience and could result in changes to investment valuations that may materially
adversely affect our business, results of operations, financial condition and liquidity or lead to volatility in our net income.
It has been and may continue to be difficult to value certain of our investments or derivatives that are not actively traded. There also
may be cases where certain assets in normally active markets with significant observable data become inactive with insufficient
observable data due to the financial environment or market conditions in effect at that time. As a result, valuations may include inputs
and assumptions that are less observable or require greater estimation and judgment as well as valuation methods that are more
complex. These values may not be realized in a market transaction, may not reflect the value of the asset and may change very
rapidly as market conditions change and valuation assumptions are modified. Decreases in value and/or an inability to realize that
value in a market transaction or other disposition may have a material adverse effect on our business, results of operations, financial
condition and liquidity.
For information regarding volatility in accounting as it relates to Fortitude Re, see Reserves and Exposures – “Fortitude Re may fail to
perform its obligations and the accounting treatment of our reinsurance agreements with Fortitude Re leads to volatility in our results
of operations” above.
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AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
LIQUIDITY, CAPITAL AND CREDIT
AIG Parent’s ability to access funds from our subsidiaries is limited, and our sources of liquidity may be insufficient to meet
our needs, including providing capital that may be required by our subsidiaries.
As a holding company, AIG Parent depends on dividends and other payments from its subsidiaries to fund operations, pay dividends,
repurchase shares, meet debt service obligations and meet the capital and liquidity needs of our subsidiaries. The majority of our
investments are held by our regulated subsidiaries. Any inability by our subsidiaries to make dividend or other payments in an amount
sufficient to enable AIG Parent to meet its cash requirements could have an adverse effect on our operations or our business, results
of operations, financial condition, capital and liquidity.
The ability of our subsidiaries to pay dividends to AIG Parent in the future will depend on their earnings, capital levels, tax
considerations, covenants contained in any financing or other agreements, applicable regulatory restrictions and rating agency
requirements. In addition, such payments could be limited as a result of claims against our subsidiaries by their creditors, including
suppliers, vendors, lessors and employees. Additionally, our insurance subsidiaries may be limited in their ability to make dividend
payments to AIG Parent in the future because of the need to meet their obligations or to support their own capital levels or because of
regulatory limits and restrictions or changes in, or interpretations of, regulatory or rating agency standards.
Our decision to pursue strategic changes or transactions in our business and operations may also subject our subsidiaries’ dividend
plans to heightened regulatory scrutiny and could make obtaining regulatory approvals for extraordinary distributions by our
subsidiaries, if required, more difficult. We are also subject to certain other restrictions on our capital from time to time.
If our liquidity is insufficient to meet our needs, we may need to have recourse to third-party financing, external capital markets or
other sources of liquidity, which may not be available or could be expensive. The availability and cost of any additional financing at
any given time depends on a variety of factors, including general market conditions, the volume of trading activities, the overall
availability of credit, regulatory actions and our credit ratings and credit capacity. It is also possible that, as a result of such recourse to
external financing, customers, lenders or investors could develop a negative perception of our long- or short-term financial prospects.
If AIG Parent is unable to satisfy a capital need of a subsidiary, the credit rating agencies could downgrade the subsidiary’s financial
strength ratings or the subsidiary could become insolvent or, in certain cases, could be seized by its regulator.
In the ordinary course of our business, we are required to post collateral for our insurance company subsidiaries from time to time. If
our reinsurance liabilities increase, we may be required to post additional collateral for insurance company clients that we reinsure. In
addition, we may be required to post additional collateral due to regulatory changes from time to time, which could adversely impact
our business, financial condition, results of operations and cash flows.
For additional information on our liquidity, see Part II, Item 7. MD&A – Liquidity and Capital Resources.
For additional information on rating agency requirements, see Liquidity, Capital and Credit – “A downgrade by one or more of the
rating agencies in the Insurer Financial Strength ratings of our insurance companies could limit their ability to write or prevent them
from writing new business and impair their retention of customers and in-force business, and a downgrade in our credit ratings could
adversely affect our business, results of operations, financial condition and liquidity” below.
We may not be able to generate cash to meet our needs due to the illiquidity of some of our investments.
We have a diversified investment portfolio. However, economic conditions as well as adverse capital market conditions, including a
lack of buyers, the inability of potential buyers to obtain financing on reasonable terms, volatility, credit spread changes, interest rate
changes, foreign currency exchange rates and/or declines in collateral values have in the past impacted, and may in the future
impact, the liquidity and value of our investments.
We have investments in certain securities, including certain fixed income structured and privately placed securities as well as
investments in private equity funds and hedge funds, mortgage loans, finance receivables and real estate, that are less liquid than
other types of securities. Collectively, investments in these assets had a carrying value of $68 billion at December 31, 2023. If it
became necessary to sell such assets in a stressed market environment, the prices achieved in any sale of such securities may be
lower than their carrying value, which could cause a material adverse effect on our business, financial condition, results of operations
and cash flows. Adverse changes in the valuation of real estate and real estate-linked assets, volatility or deterioration of capital
markets and widening credit spreads have in the past, and may in the future, materially adversely affect the liquidity and the value of
our investment portfolios, including our residential and commercial mortgage related securities portfolios.
In the event additional liquidity is required by one or more of our companies, it may be difficult for us to generate additional liquidity by
selling, pledging or otherwise monetizing these or other of our investments at reasonable prices and time frames.
AIG | 2023 Form 10-K
25
ITEM 1A | Risk Factors
A downgrade by one or more of the rating agencies in the Insurer Financial Strength ratings of our insurance companies
could limit their ability to write or prevent them from writing new business and impair their retention of customers and in-
force business, and a downgrade in our credit ratings could adversely affect our business, results of operations, financial
condition and liquidity.
Downgrades of the Insurer Financial Strength (IFS) ratings of our insurance companies could (i) prevent these companies from
selling, or make it more difficult for them to succeed in selling, products and services, (ii) make it more difficult for them to obtain new
reinsurance or obtain it on reasonable pricing terms, and/or (iii) result in increased policy cancellations, lapses and surrenders,
termination of, or increased collateral posting obligations under, assumed reinsurance contracts, or return of premiums.
A downgrade in AIG Parent’s credit ratings could result in a downgrade of the IFS ratings of our insurance or reinsurance subsidiaries.
Similarly, under credit rating agency policies, a downgrade of the IFS ratings of our insurance and reinsurance subsidiaries could also
result in a downgrade in AIG Parent’s credit ratings.
In addition, a downgrade of our long-term debt ratings could increase our financing costs and limit the availability of financing. A
downgrade would also require us to post additional collateral payments related to derivative transactions to which we are a party, and
could cause counterparties to limit or reduce their exposure to us and thus reduce our ability to manage our market risk exposures
effectively.
These events could adversely affect our business, results of operations, financial condition and liquidity.
For additional information on rating agency actions, see Part II, Item 7. MD&A – Liquidity and Capital Resources – Credit Ratings and
– Financial Strength Ratings.
BUSINESS AND OPERATIONS
No assurances can be given that the separation of our Life and Retirement business will be completed or as to the specific
terms or timing thereof. In addition, we may not achieve the expected benefits of the separation and will have continuing
equity market exposure to Corebridge until we fully divest our stake.
Since September of 2022 when AIG closed on the initial public offering Corebridge’s common stock, we have been selling down our
ownership interest. As of December 31, 2023, AIG holds 52.2 percent of Corebridge common stock. While we currently intend to sell
down our remaining ownership interest in Corebridge over time, there can be no guarantee as to the timing or pricing thereof.
The separation of our Life and Retirement business involves a number of risks, including (i) unanticipated developments that may
delay, prevent or otherwise adversely affect our ability to continue the separation, including an economic downturn or unfavorable
capital markets conditions; (ii) significant costs and disruption or distraction of management from AIG’s other business operations,
whether or not a separation is completed; (iii) rating agency actions; (iv) unforeseen losses, liabilities or asset impairments arising
from the disposition; (v) challenges associated with disentangling certain operations; and (vi) if we are successful in separating the
business, increased concentration of our business operations.
In addition, the separation of our Life and Retirement business, or a significant delay in our ability to continue to separate the
business, has caused and could continue to cause the emergence or exacerbate the effects of many of the other risks noted herein,
including: (i) the risk of indemnity claims or breach of contract claims that could be made against us in connection with divested
businesses; (ii) changes in our deferred tax assets and liabilities; (iii) our ability to utilize certain tax loss and credit carryforwards to
offset future taxable income; (iv) competition for employees and managing retention of key employees; (v) maintaining relationships
with certain key distributors; (vi) concentration of our insurance and other risk exposures; and (vii) increased exposure to certain risks
related to deriving revenue from non-U.S. sources.
We believe that the separation of our Life and Retirement business allows us and Corebridge to pursue distinct strategies appropriate
to our respective markets. However, there can be no assurance that we will realize any or all of the expected strategic, financial,
operational or other benefits of the separation. Our business, results of operations and financial condition may be materially and
adversely impacted if we are unable to realize the anticipated expense reductions and organizational improvements of the separation
and any related restructuring activities, or if implementing these initiatives harms our relationships with customers or employees or our
competitive position. Additionally, we continue to have a significant equity ownership position in Corebridge, and changes in the
market price of Corebridge common stock may have a material impact on us.
Pricing for our products is subject to our ability to adequately assess risks and estimate related losses.
Our business is dependent on our ability to price our products effectively and charge appropriate premiums, policy fees and other
charges. Pricing adequacy depends on a number of factors and assumptions, including proper evaluation of insurance risks, our
expense levels, expected net investment income to be realized, our response to rate actions taken by competitors, legal and
regulatory developments, the ability to obtain regulatory approval for rate changes and inflation. Management establishes target
returns for each product based upon the factors described above, certain underwriting assumptions and capital requirements,
including statutory, GAAP and economic capital models. We monitor and manage pricing and sales to achieve target returns on new
26
AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
business, but we may not be able to achieve those returns due to the factors discussed above. Additionally, the property and casualty
insurance markets are historically cyclical and experience periods of relatively strong premium rates followed by periods of increased
competition that push premium rates down. Inadequate pricing and the difference between estimated results of the above factors
compared to actual results could have a material adverse effect on the profitability of our operations and our financial condition.
Guarantees within certain of our Life and Retirement products may increase the volatility of our results.
Certain of our annuity and life insurance products include features that guarantee a certain level of benefits, including guaranteed
minimum death benefits, guaranteed living benefits, including guaranteed minimum income benefits, and products with guaranteed
interest crediting rates, including crediting rate guarantees tied to the performance of various market indices. Many of these features
are accounted for at fair value as either MRBs or embedded derivatives under GAAP, and they have significant exposure to capital
markets and insurance risks. An increase in valuation of liabilities associated with the guaranteed features results in a decrease in our
profitability and depending on the magnitude of any such increase, could materially and adversely affect our financial condition,
including our capitalization, as well as our financial strength ratings.
We employ a capital markets hedging strategy to partially offset the economic impacts of movements in equity, interest rate and credit
markets, however, our hedging strategy may not effectively offset movements in our GAAP equity or our statutory surplus and capital
requirements and may otherwise be insufficient in relation to our obligations. Furthermore, we are subject to the risk that changes in
policyholder behavior or actual levels of mortality/longevity as compared to assumptions in pricing and reserving, combined with
adverse market events, could produce losses not addressed by the risk management techniques employed. These factors,
individually or collectively, may have a material adverse effect on our business, financial condition, results of operations or liquidity
including our ability to receive dividends from our operating companies.
Changes in interest rates result in changes to the fair value liability. All else being equal, higher interest rates generally decrease the
fair value of our liabilities, which increases our earnings, while low interest rates generally increase the fair value of our liabilities,
which decreases our earnings. A prolonged low interest rate environment or a prolonged period of widening credit spreads may also
subject us to increased hedging costs or an increase in the amount of statutory reserves that our insurance subsidiaries are required
to hold for our liabilities, lowering their statutory surplus, which would adversely affect their ability to pay dividends. In addition, it may
also increase the perceived value of our benefits to our policyholders, which in turn may lead to a higher than expected benefit
utilization and lower than expected surrender rates of those products over time as compared to pricing assumptions.
Differences between the change in fair value of the GAAP MRBs and embedded derivatives, as well as associated statutory and tax
liabilities, and the value of the related hedging portfolio may occur and can be caused by movements in the level of equity, interest
rate and credit markets, market volatility, policyholder behavior and mortality/longevity rates that differ from our assumptions and our
inability to purchase hedging instruments at prices consistent with the desired risk and return trade-off. In addition, we may sometimes
choose not to hedge or fully mitigate these risks, based on economic considerations and other factors. The occurrence of one or more
of these events has in the past resulted in, and could in the future result in, an increase in the fair value of liabilities associated with
the guaranteed benefits without an offsetting increase in the value of our hedges, or a decline in the value of our hedges without an
offsetting decline in our liabilities, thus reducing our results of operations and shareholders’ equity.
For additional information on these products, see Item 1. Business – Regulation, Part II, Item 7. MD&A – Critical Accounting
Estimates – Market Risk Benefits and Notes 13 and 14 to the Consolidated Financial Statements.
Our risk management policies, standards and procedures may prove to be ineffective and leave us exposed to unidentified
or unanticipated risk, which could adversely affect our businesses, results of operations, financial condition and liquidity.
We have developed and continue to enhance enterprise-wide risk management policies, standards and procedures to identify,
monitor and mitigate risk to which we are exposed. Our risk management policies, standards and procedures may not be sufficiently
comprehensive and may not identify or adequately protect us from every risk to which we are exposed. Many of our methods of
identifying, measuring, underwriting and managing risks are based upon our study and use of historical market, applicant, customer,
employee and bad actor behavior or statistics based on historical models. As a result, these methods may not accurately predict
future exposures from events such as a major financial market disruption as the result of a natural or man-made disaster (for
example, a severe climate-related event or terrorist attack), that could be significantly different than the historical measures indicate,
and which could also result in a substantial change in policyholder behavior and claims levels not previously observed. We have and
will continue to enhance our underwriting processes, including, from time to time, considering and integrating newly available sources
of data to confirm and refine our traditional underwriting methods. Our efforts at implementing these improvements may not, however,
be fully successful, which may adversely affect our competitive position. We have also introduced new product features designed to
limit our risk and taken actions on in-force business, which may not be fully successful in limiting or eliminating risk. We may take
additional actions on our in-force business, including adjusting crediting rates and cost of insurance, which may not be fully successful
in maintaining profitability and which may result in litigation. Moreover, our hedging programs and reinsurance strategies that are
designed to manage market risk and mortality risk rely on assumptions regarding our assets, liabilities, general market factors and the
creditworthiness of our counterparties that could prove to be incorrect or inadequate. Our hedging programs utilize various derivative
instruments, including but not limited to equity options, futures contracts, interest rate swaps and swaptions, as well as other hedging
AIG | 2023 Form 10-K
27
ITEM 1A | Risk Factors
instruments, which may not effectively or completely reduce our risk; and assumptions underlying models used to measure
accumulations and support reinsurance purchases may prove inaccurate and could leave us exposed to larger than expected
catastrophe losses in a given year. In addition, our current business continuity and disaster recovery plans may not be sufficient to
reduce the impact of pandemics, a major cyber attack, including ransomware, and other natural or man-made catastrophic events that
are beyond our anticipated thresholds or impact tolerances. Other risk management methods depend upon the evaluation of
information regarding markets, clients, or other matters that is publicly available or otherwise accessible to us, which may not always
be accurate, complete, up-to-date or properly evaluated. Management of operational, legal and regulatory risks requires, among other
things, policies and procedures to record and verify large numbers of transactions and events in each jurisdiction in which we operate.
Jurisdictions have unique requirements with respect to artificial intelligence and environmental, social and governance matters, which
may impact the efficacy of our standardized risk management tools and techniques and therefore our policies and procedures may
not be fully effective. Accordingly, our risk management policies and procedures may not adequately mitigate the risks to our
business, results of operations, financial condition and liquidity.
If our risk management policies and procedures are ineffective, we may suffer unexpected losses and could be materially adversely
affected. As our businesses change and the markets in which we operate evolve and new risks emerge, including risks posed by the
rapidly developing technology associated with artificial intelligence and the implementation thereof within our operations, by our third-
party vendors and by competitors and unanticipated challenges with respect thereto. As a result, there is a risk that new products or
new business strategies may present risks that are not appropriately identified, monitored or managed. The effectiveness of our risk
management strategies may be limited, resulting in losses, because of market stress, unanticipated financial market movements or
unanticipated claims experience from adverse mortality, morbidity or policyholder behavior. In addition, there can be no assurance
that we can effectively review and monitor all risks or that all of our employees will understand and follow (or comply with) our risk
management policies and procedures.
Our foreign operations expose us to risks that may affect our operations.
AIG provides insurance solutions that help businesses and individuals in approximately 190 countries and jurisdictions protect their
assets and manage risks through AIG operations and network partners. A substantial portion of our business is conducted outside the
United States, and we intend to continue to grow our business in strategic markets. Operations outside the United States have in the
past been, and may in the future be, affected by elevated climate risks, regional economic downturns, changes in foreign currency
exchange rates, political events or upheaval, sanctions policies, nationalization and other restrictive government or regulatory actions,
which could also affect our other operations.
AIG subsidiaries operating in foreign jurisdictions must satisfy local regulatory requirements and it is possible that these local licenses
may require AIG Parent to meet certain conditions. Licenses issued by foreign authorities to our subsidiaries are subject to
modification and revocation. Consequently, our insurance subsidiaries could be prevented from conducting future business in some of
the jurisdictions where they currently operate. Adverse actions from any single country could adversely affect our results of
operations, depending on the magnitude of the event and our financial exposure at that time in that country.
AIG is subject to myriad regulations which govern items such as sanctions, bribery and anti-money laundering, for which failure to
comply could expose us to significant penalties. The USA Patriot Act of 2011 requires companies to know certain information about
their clients and to monitor their transactions for suspicious activities. The Foreign Corrupt Practices Act makes it unlawful for certain
classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. Also, the
Department of the Treasury’s Office of Foreign Assets Control administers regulations that restrict or prohibit dealings involving certain
organizations, individuals and countries. The UK, the EU, Japan and other jurisdictions maintain similar laws and regulations.
Although we have policies and controls in place that are designed to ensure compliance with these laws, if those controls are
ineffective and/or an employee or third party fails to comply with applicable laws and regulations, we could suffer civil and criminal
penalties, including disgorgement, and our business and our reputation could be adversely affected.
We are exposed to certain risks if we are unable to maintain the availability of our critical technology systems and data and
safeguard the confidentiality and integrity of our data, which could compromise our ability to conduct business and
adversely affect our consolidated business, results of operations, financial condition and liquidity.
We use information technology systems, infrastructure and networks and other operational systems to store, retrieve, evaluate and
use customer, employee and company data and information. Our business is highly dependent on our ability to access these systems
and networks to perform necessary business functions. In the event of a natural disaster, unauthorized access, a terrorist attack, a
major cyber attack or other disruption, our systems, networks, and data may be inaccessible to our employees, customers or business
partners for an extended period of time, and we may be unable to meet our business obligations and regulatory requirements for an
extended period of time if our data or systems are disabled, manipulated, destroyed or otherwise compromised. Additionally, some of
our technology systems are older, legacy-type systems that are less efficient and require an ongoing commitment of significant
resources to maintain or upgrade. Some of these systems cannot be fully protected because of the inability to implement the latest
security patches. Supply chain disruptions or delays could prevent us from maintaining and implementing changes, updates and
upgrades to our systems and networks in a timely manner or at all. System and network failures or outages could compromise our
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AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
ability to perform business functions in a timely manner, which could harm our ability to conduct business, hurt our relationships with
our business partners and customers and expose us to legal claims as well as regulatory investigations and sanctions, any of which
could have a material adverse effect on our business, results of operations, financial condition and liquidity.
Some of these technology systems also rely upon third-party systems and services, which themselves may rely on the systems and
services of other third parties. Problems caused by, or occurring in relation to, our third-party providers’ systems and services,
including those resulting from breakdowns or other disruptions in information technology services provided by our third-party providers
and the other third-parties on which they rely, our inability to acquire third-party services on commercially acceptable terms, failure of
a third-party provider to perform as anticipated or in compliance with applicable laws or regulations, inability of a third-party provider to
provide the required volumes of services or our third-party providers experiencing cyberattacks or data breaches, could materially and
adversely affect our business, results of operations, financial condition and liquidity.
Like other global companies, the systems and networks we maintain and third-party systems and networks we use have in the past
been, and may in the future be, subject to or targets of unauthorized or fraudulent access, including physical or electronic break-ins or
unauthorized tampering, as well as attempted cybersecurity threats such as “denial of service” attacks, phishing, automated attacks,
and other disruptive attacks, including ransomware. Cyber threats are constantly evolving and the techniques used in these attacks
change, develop and evolve rapidly, including the use of emerging technologies, such as broader forms of artificial intelligence and
quantum computing by nation state threat actors and criminal organizations. The new cyber risks introduced by these changes in
technology require us to devote significant attention to identification, assessment and analysis of the risks and implementation of
corresponding preventative measures. Additionally, the frequency and sophistication of such threats continue to increase and often
become further heightened in connection with geopolitical tensions. Also, like other global companies, we have an increasing
challenge of retaining and attracting highly qualified personnel to assist us in combatting these security threats.
There is no assurance that our cybersecurity measures, including information security and technology policies and standards,
administrative, technical and physical controls and other actions by us or contracted third-parties designed as preventative, will
provide fully effective protection from threats to our data, systems and networks, including malware and computer virus attacks,
ransomware, unauthorized access, business e-mail compromise, misuse, denial-of-service attacks, system failures and other
disruptions. AIG maintains insurance to cover operational risks, such as cyber risk and technology outages, but this insurance may
not cover all costs associated with the consequences of information systems or personal, confidential or proprietary information being
compromised. In the case of a successful ransomware attack in which our data and information systems are compromised and
applicable restore control processes to restore access are not effective, our information could be held hostage until a ransom, which
may be significant, is paid. In some cases, such a compromise may not be immediately detected which may make it difficult to restore
critical services, mitigate damage to assets and maintain the integrity and security of data including our policyholder, employee, agent,
and other confidential information processed through our systems and networks.
Additionally, since we rely heavily on information technology and systems (which increasingly will include the use of artificial
intelligence) and on the integrity and timeliness of data to run our businesses and service our customers, any such security event and
resulting compromise of systems or data may impede or interrupt our business operations and our ability to service our customers,
and otherwise may materially and adversely affect our business, results of operations, financial condition and liquidity.
There can be no assurance that any actions taken by us to evaluate and enhance our information security and technology systems
and processes, including third-party systems and services on which we rely, as well as changes designed to update and enhance our
protective measures to address new threats, will decrease the risk of a system or process failure or may create a gap in the
associated security measures during the change period. Any such system or process failure or security measures gap could materially
and adversely affect our business, results of operations, financial condition and liquidity.
We routinely transmit, receive and store personal, confidential and proprietary information by secured email and other electronic
means. Although we attempt to keep such information confidential and secure, we may be unable to do so in all events, especially
with clients, vendors, service providers, counterparties and other third parties who may not have or use appropriate controls to protect
personal, confidential or proprietary information. Failure to secure or appropriately handle personal, confidential or proprietary
information could cause a loss of data or compromised data integrity, give rise to remediation or other expenses, expose us to liability
under U.S. and international laws and regulations, and subject us to litigation, investigations, sanctions, and regulatory and law
enforcement action, and result in reputational harm and loss of business, which could have a material adverse effect on our business,
results of operations, financial condition and liquidity.
Furthermore, certain of our businesses are subject to compliance with laws and regulations enacted by U.S. federal and state
governments, the EU or other jurisdictions or enacted by various regulatory organizations or exchanges relating to the privacy and
security of the information of clients, employees or others. The variety of applicable privacy and information security laws and
regulations exposes us to heightened regulatory scrutiny, requires us to incur significant technical, legal and other expenses in an
effort to ensure and maintain compliance and will continue to impact our business in the future by increasing legal, operational and
compliance costs. While we have taken steps to comply with privacy and information security laws, we cannot guarantee that our
efforts will meet the evolving standards imposed by data protection authorities. If we are found not to be in compliance with these
AIG | 2023 Form 10-K
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ITEM 1A | Risk Factors
privacy and security laws and regulations, we may be subject to additional potential private consumer, business partner or securities
litigation, regulatory inquiries, and governmental investigations and proceedings, including class-actions. Any such developments may
damage our reputation and subject us to material fines and other monetary penalties and damages, divert management’s time and
attention, and lead to enhanced regulatory oversight, any of which could have a material adverse effect on our business, results of
operations, financial condition and liquidity. Additionally, we expect that developments in privacy and cybersecurity worldwide will
increase the financial and reputational implications following a significant breach of our or our third-party suppliers’ information
technology systems. For additional information on data protection and cybersecurity regulations, see Item 1. Business – Regulation –
Privacy, Data Protection, Cybersecurity and Artificial Intelligence Requirements, and Part II, Item 7. MD&A – Enterprise Risk
Management – Operational Risk Management – Cybersecurity Risk.
Third parties we rely upon to provide certain business and administrative services on our behalf may not perform as
anticipated, which could have an adverse effect on our business and results of operations.
We have used and will continue to use outsourcing strategies and third-party providers to transform operational and back office
processes and deliver contracted services in a broad range of areas. Such areas include, but are not limited to, administration or
servicing of certain policies and contracts, finance, actuarial, information technology services related to infrastructure, and investment
advisory and management services for certain funds, plans and retail advisory programs we offer, as well as our own investments. In
addition, we have engaged with BlackRock for use of its investment management and risk analytics technology platform, Aladdin. The
implementation of Aladdin is comprised of multiple workstreams that are complex and require significant time and resource
prioritization. While we have achieved key milestones in the implementation of the technology, there could be delays due to lack of
sufficient resources to execute on a timely basis, inefficiencies stemming from changes that may be required to the program or
sequencing, failure to meet operational and financial targets due to additional priorities or other factors. These risks may impair our
ability to achieve anticipated improvements in our businesses may disrupt or may otherwise harm our operations which could
materially and adversely affect our businesses, financial condition and operations.
Further, we have engaged Blackstone and BlackRock to serve as our investment managers for the majority of AIG’s investment
assets. For information regarding our reliance on Blackstone and BlackRock as a third-party investment managers, see Investment
Portfolio and Concentration of Investments – “We rely on investment management and advisory arrangements with third-party
investment managers for the majority of our investment portfolio. The historical performance of Blackstone, BlackRock or any other
asset manager we engage should not be considered as indicative of the future results of our investment portfolio, our future results or
any returns expected on AIG Common Stock” above.
Some of the third-party providers we use are located outside the U.S., which exposes us to business disruptions and political risks
inherent to conducting business outside of the U.S. We periodically negotiate provisions and renewals of these relationships, and
there can be no assurance that such terms will remain acceptable to us, such third parties or regulators. If such third-party providers
experience disruptions, fail to meet applicable licensure requirements, do not perform as anticipated or in compliance with applicable
laws and regulations, terminate or fail to renew our relationships, or such third-party providers in turn rely on services from another
third-party provider, who experiences such disruptions, licensure failures, nonperformance or noncompliance, termination or non-
renewal of its contractual relationships, we may experience operational difficulties, an inability to meet obligations (including, but not
limited to, contractual, legal, regulatory or policyholder obligations), a loss of business, increased costs or reputational harm,
compromises to our data integrity, or suffer other negative consequences, all of which may have a material adverse effect on our
business, consolidated results of operations, liquidity and financial condition. Third parties performing regulated activities on our
behalf, such as sales and servicing of insurance products, pose a heightened risk as we may be held accountable for third-party
conduct that is not in compliance with applicable law.
For information regarding cyber risk arising from third-party providers, see Business and Operations – “We are exposed to certain
risks if we are unable to maintain the availability of our critical technology systems and data and safeguard the confidentiality and
integrity of our data, which could compromise our ability to conduct business and adversely affect our consolidated business, results
of operations, financial condition and liquidity” above.
We may experience difficulty in marketing and distributing products through our current and future distribution channels
and the use of third parties may result in additional liabilities.
We maintain relationships with a number of key distributors, which results in certain distributor concentration. Distributors have in the
past, and may in the future, elect to renegotiate the terms of existing relationships, such that those terms may not remain attractive or
acceptable to us, limit the products they sell, including the types of products offered by us, or otherwise reduce or terminate their
distribution relationships with us, with or without cause. This could be due to various reasons, such as industry consolidation of
distributors or other industry changes that increase the competition for access to distributors, developments in laws or regulations that
affect our business or industry, including the marketing and sale of our products and services, adverse developments in our business,
the distribution of products with features that do not meet minimum thresholds set by the distributor, strategic decisions that impact
our business, adverse rating agency actions or concerns about market-related risks.
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ITEM 1A | Risk Factors
Alternatively, renegotiated terms may not be attractive or acceptable to distributors, or we may terminate one or more distribution
agreements due to, for example, a loss of confidence in, or a change in control of, one of the third-party distributors. An interruption or
reduction in certain key relationships could materially affect our ability to market our products and could materially and adversely
affect our business, results of operations, financial condition and liquidity.
Key distribution partners could merge, consolidate, change their business models in ways that affect how our products are sold, or
terminate their distribution contracts with us, or new distribution channels could emerge and adversely impact the effectiveness of our
distribution efforts. An increase in bank, wirehouse and broker-dealer consolidation activity could increase competition for access to
distributors, result in greater distribution expenses and impair our ability to market certain of our products through these channels.
Also, if we are unsuccessful in attracting, retaining and training key distribution partners, or are unable to maintain our distribution
relationships, our sales could decline, which could have a material adverse effect on our business, results of operations, financial
condition and liquidity. In addition, substantially all of our distributors are permitted to sell our competitors’ products. If our competitors
offer products that are more attractive than ours or pay higher commission rates to the distribution partners than we do or for other
reasons outside of our control, these distribution partners could concentrate their efforts in selling our competitors’ products instead of
ours.
In addition, we can, in certain circumstances, be held responsible for the actions of our third-party distributors, including broker-
dealers, registered representatives, insurance agents and agencies, marketing organizations, and their respective employees, agents
and representatives, in connection with the marketing and sale of our products by such parties, including the security of their
operations and their handling of confidential information and personal data, in a manner that is deemed not compliant with applicable
laws and regulations. This is particularly acute with respect to unaffiliated distributors where we may not be able to directly monitor or
control the manner in which our products are sold through third-party firms despite our risk assessment, training and compliance
programs. Further, misconduct by employees, agents and representatives of our broker-dealer subsidiaries in the sale of our products
could also result in violations of laws by us or our subsidiaries, regulatory sanctions and serious reputational or financial harm to us.
The precautions we take to prevent and detect the foregoing activities may not be effective. If our products are distributed to
customers for whom they are unsuitable or distributed in a manner alleged to be inappropriate, or third-party distributors experience a
security or data breach due to deficient operational controls, we could suffer reputational and/or other financial harm to our business.
For information regarding suitability standards, see Item 1. Business – Regulation – Regulatory Regimes – United States.
Our restructuring initiatives may not yield our expected reductions in expenses and improvements in operational and
organizational efficiency.
We may not be able to fully realize the anticipated expense reductions and operational and organizational efficiency improvements we
expect to result from our focus on our operating model and associated initiatives. Actual costs to implement these initiatives may
exceed our estimates or we may be unable to fully implement and execute these initiatives as planned. Our businesses and results of
operations may be negatively impacted if we are unable to realize these anticipated expense reductions and efficiency improvements
or if implementing these initiatives harms our relationships with customers or employees or our competitive position. The successful
implementation of these initiatives may continue to require us to effect business rationalizations, technology enhancements, business
process outsourcing, workforce reductions, modifications to our operating model and other actions, which depend on a number of
factors, some of which are beyond our control.
Business or asset acquisitions and dispositions may expose us to certain risks.
The completion of any business or asset acquisition or disposition is subject to certain risks, including those relating to the receipt of
required regulatory approvals, the terms and conditions of regulatory approvals including any financial accommodations required by
regulators, our ability to satisfy such terms, conditions and accommodations, the occurrence of any event, change or other
circumstances that could give rise to the termination of a transaction and the risk that parties may not be willing or able to satisfy the
conditions to a transaction. As a result, there can be no assurance that any business or asset acquisition or disposition will be
completed as contemplated, or at all, or regarding the expected timing of the completion of the acquisition or disposition. For example,
there can be no certainty as to the sale of our remaining stake in Corebridge nor the timing, pricing or terms thereof.
Once we complete acquisitions or dispositions, there can be no assurance that we will realize the anticipated economic, strategic or
other benefits of any transaction. For example, the integration of businesses we acquire may not be as successful as we anticipate or
there may be undisclosed risks present in such businesses. Acquisitions and dispositions involve a number of risks, including
operational, strategic, financial, accounting, legal, compliance and tax risks. Difficulties integrating an acquired business may result in
the acquired business performing differently than we expected (including through the loss of customers) or in our failure to realize
anticipated expense- related efficiencies. Our existing businesses could also be negatively impacted by acquisitions. Risks resulting
from future acquisitions may have a material adverse effect on our results of operations and financial condition. In connection with a
business or asset disposition, we may also hold a concentrated position in securities of the acquirer as part of the consideration,
which subjects us to risks related to the price of equity securities and our ability to monetize such securities. We have also provided
and may provide financial guarantees and indemnities in connection with the businesses we have sold or may sell, as described in
AIG | 2023 Form 10-K
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ITEM 1A | Risk Factors
greater detail in Note 17 to the Consolidated Financial Statements. Additionally, difficulties or delays in separating a divested business
from our existing infrastructure, systems and operations could reduce the anticipated economic, strategic or other benefits of such
transaction. While we do not currently believe that claims under these indemnities will be material, it is possible that significant
indemnity claims could be made against us. If such a claim or claims were successful, it could have a material adverse effect on our
results of operations, cash flows and liquidity.
For additional information regarding the risks associated with AIG’s separation of its Life and Retirement business, see Business and
Operations – “No assurances can be given that the separation of our Life and Retirement business will be completed or as to the
specific terms or timing thereof. In addition, we may not achieve the expected benefits of the separation and will have continuing
equity market exposure to Corebridge until we fully divest our stake” above.
Significant legal or regulatory proceedings may adversely affect our business, results of operations or financial condition.
In the normal course of business, we face significant risk from regulatory and governmental investigations and civil actions, litigation
and other forms of dispute resolution in various domestic and foreign jurisdictions. In our insurance and reinsurance operations, we
frequently engage in litigation and arbitration concerning the scope of coverage under insurance and reinsurance contracts, and face
litigation and arbitration in which our subsidiaries defend or indemnify their insureds under insurance and reinsurance contracts.
Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and our
subsidiaries in connection with company-specific matters, or industry-wide and other inquiries into, among other matters, the business
practices of current and former operating insurance subsidiaries. Such reviews, investigations, inquiries or examinations have and
could lead to extended delays to, or prohibitions of, such transactions or practices, or develop into administrative, civil or criminal
proceedings or enforcement actions, in which remedies could include fines, penalties, restitution or alterations to our business
practices, and could result in additional expenses, limitations on certain business activities and reputational damage.
AIG, our subsidiaries and their respective officers and directors are also subject to, or may become subject to, a variety of additional
types of legal disputes brought by holders of AIG securities, customers, employees and others, alleging, among other things, breach
of contractual or fiduciary duties, bad faith, indemnification and violations of federal and state statutes and regulations. Certain of
these matters may also involve potentially significant risk of loss due to the possibility of significant jury awards and settlements,
punitive damages or other penalties. Many of these matters are also highly complex and seek recovery on behalf of a class or
similarly large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from
them, and developments in these matters could have a material adverse effect on our consolidated financial condition or consolidated
results of operations.
For information regarding certain legal proceedings, see Notes 17 and 23 to the Consolidated Financial Statements.
Increasing scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders
regarding environmental, social and governance matters, including governmental responses to such matters, may adversely
affect our reputation or otherwise adversely impact our business and results of operations.
There is increasing scrutiny and evolving expectations from investors, customers, regulators, policymakers and other stakeholders on
companies’ governance, risk oversight, disclosures, plans, policies and practices regarding environmental, social and governance
matters, including those related to environmental stewardship, climate change, diversity, equity and inclusion, racial justice and
workplace conduct. These standards and expectations may also, as a whole, reflect diverging or conflicting values or policy
objectives.
Governmental actions to mitigate climate and other risks related to environmental, social and governance matters could have an
adverse effect on our business and results of operations. Internationally and at the U.S. federal and state levels, regulators have
imposed and likely will continue to impose requirements and guidance related to environmental, social and governance matters, which
may conflict with one another, impose additional costs on us and expose us to new or additional risks, including financial, regulatory,
litigation, reputational and operational risks. See Business – Regulation – Climate Change.
Certain organizations that provide information to investors have developed ratings for evaluating companies on their approach to
different environmental, social and governance matters, and unfavorable ratings of our company or our industries may lead to
negative investor sentiment and the diversion of investment to other companies or industries. We may not be able to meet
environmental, social, governance or sustainability targets, goals, plans, standards or expectations (including any previously
announced climate target, goal or plan), whether established or set by us or third parties, due to a variety of factors, including
regulatory or other developments, changes to the methodologies, assumptions and estimates that underlie our climate- and other
sustainability-related targets, goals and strategy, or the actions of or information provided by third parties outside of our control, who
may apply standards, methodologies, practices and policies that differ from ours. If we are unable to meet such targets, goals, plans,
standards or expectations, it could result in adverse publicity, reputational harm, or loss of customer and/ or investor confidence,
which could adversely affect our business and results of operations.
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ITEM 1A | Risk Factors
For information on the effects of climate change on our business, see Reserves and Exposures – “Climate change may adversely
affect our business and financial condition” above.
An epidemic, pandemic or other health crisis could materially and adversely affect our business results of operations,
financial condition and liquidity. COVID-19 (including variants) has adversely affected and may continue to adversely affect
our global business, results of operations, financial condition and liquidity.
Public health crises have previously resulted in significant societal disruption, economic uncertainty, volatility in business and
consumer confidence and global economic slowdowns. The COVID-19 pandemic, in particular, and related governmental response
measures introduced by various national and local governmental authorities (such as restrictions on social activity, travel, movement
and certain economic activity) caused significant societal disruption, volatility in the capital markets, disruptions in the labor market,
supply chain disruption, significant impacts on commercial real estate due to the increase in remote working arrangements, mortality
increases as compared to pricing expectations and most recently, an inflationary environment, which have had adverse economic
impacts on our business in various ways.
For example, we have experienced increased claim volumes; adverse effects resulting from our exposure to certain industries, such
as brick-and-mortar retail and commercial office space resulting from remote work, and difficulties in arriving at accurate valuations
thereof, which has caused or may cause impairment of the estimates and assumptions used to run our businesses or resulting in
greater variability and subjectivity in our investment decisions; and increased difficulty and cost in obtaining reinsurance coverage.
In addition, COVID-19 adversely affected our premiums and deposits in some of our insurance lines, including our Life and
Retirement products. Further, our policies with premium adjustment features tied to exposure levels, as is the case in certain specialty
and casualty lines, have in certain cases been be triggered, resulting in premium reductions. It is also possible that class actions and
other proceedings may in the future be filed against us, our insureds, or others, seeking coverage for COVID 19-related losses or
alleging bad-faith denials of coverage for such losses.
If these effects are prolonged, or if new COVID-19 variants emerge, a periodic spike in COVID-19 occurs or an unrelated epidemic
emerges which requires reimplementation of the response measures outlined above, the markets and economies in which we operate
may experience heightened stress and further volatility, which may exacerbate the impacts of COVID-19 set out above and may
materially adversely affect our business, results of operations and financial condition. In addition, remote or hybrid work may
negatively impact our culture and employees’ morale, which could result in greater turnover, lower productivity and greater operational
risks.
We may not be able to protect our intellectual property and may be subject to infringement claims.
Effective intellectual property rights protection, including in the form of contractual rights, copyright, trademark, patent and trade secret
laws, may be unavailable, limited, or subject to change in some countries where we do or plan to do business. Third parties may
infringe or misappropriate our intellectual property. We have, and may in the future, litigate to protect our intellectual property. Any
such litigation may be costly and may not be successful. Additionally, third parties may have patents or other protections that could be
infringed by our products, methods, processes or services or which could limit our ability to offer certain product features.
Consequently, we have in the past been and may in the future be subject to costly litigation in the event that another party alleges that
we infringe upon their intellectual property rights. Any such intellectual property litigation could prove to be both costly and
unsuccessful result in significant expense, damages, and in some circumstances we could be enjoined from providing certain
products or services to our customers. Alternatively, we could be required to enter into costly licensing arrangements with third parties
to resolve infringement or contractual disputes. The loss of intellectual property protection or the inability to secure or enforce the
protection of our intellectual property assets could harm our reputation and have a material adverse effect on our business and our
ability to compete.
REGULATION
Our businesses are heavily regulated and changes in laws and regulations may affect our operations, increase our
insurance subsidiary capital requirements or reduce our profitability.
Our operations generally, and our insurance and reinsurance subsidiaries in particular, are subject to extensive and potentially
conflicting laws and regulations in the jurisdictions in which we operate. Our business and financial condition are also subject to
supervision and regulation by authorities in the various jurisdictions in which we do business. Federal, state and foreign regulators
also periodically review and investigate our insurance and reinsurance businesses, including AIG-specific and industry-wide practices.
The primary purpose of insurance regulation is the protection of our insurance and reinsurance contract holders. The extent of
regulation on our insurance and reinsurance business varies across the jurisdictions in which we operate, but generally is governed
by laws that delegate regulatory, supervisory and administrative authority to insurance departments and similar regulatory agencies.
The laws and regulations that apply to our business and operations generally grant regulatory agencies and/or self-regulatory
organizations broad rulemaking and enforcement powers, including the power to regulate the issuance, sale and distribution of our
products, the manner in which we underwrite our policies, the delivery of our services, the nature or extent of disclosures that we give
AIG | 2023 Form 10-K
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ITEM 1A | Risk Factors
our customers, the compensation of our distribution partners, the manner in which we handle claims on our policies and the
administration of our policies and contracts, as well as the power to limit or restrict our business for failure to comply with applicable
laws and regulations. Our Life and Retirement companies and their distributors are also subject to laws and regulations governing the
standard of care applicable to sales of our products, the provision of advice to our customers and the manner in which certain conflicts
of interest arising from or related to such sales or giving of advice are to be addressed. In addition, federal and state securities laws
and regulations apply to certain of our insurance products that are considered ‘securities’ under such laws, including our variable
annuity contracts, variable life insurance policies and the separate accounts that issue them, as well as our broker-dealer, investment
advisor and mutual fund operations.
We strive to comply with laws and regulations applicable to our businesses, operations and legal entities, including maintenance of all
required licenses and approvals. The application of and compliance with such laws and regulations may be subject to interpretation,
evolving industry practices and regulatory expectations that could result in increased compliance costs. The relevant authorities may
not agree with our interpretation of these laws and regulations, including, for example, our implementation of new or revised
requirements related to the classification of debt securities that do not qualify as bonds, or with our policies and procedures adopted
to address evolving industry practices or meet regulatory expectations. Such authorities’ interpretations and views may also change
from time to time. It is also possible that the laws, regulations and interpretations across various jurisdictions in which we do business
may conflict with one another and affect how we do business in the United States and globally. If we are found not to have complied
with applicable legal or regulatory requirements, these authorities could preclude or temporarily suspend us from carrying on some or
all of our activities, impose substantial administrative penalties such as fines or require corrective actions, which individually or in the
aggregate could interrupt our operations and materially and adversely affect our reputation, business, results of operations and
financial condition. Additionally, when such authorities’ interpretation of new or revised requirements related to capital, accounting
treatment and/or valuation manual or reserving (such as PBR) materially differs from ours, we have incurred or may incur higher
operating costs, or sales of products subject to such requirements or treatment may be affected.
Regulators in jurisdictions in which we do business have adopted RBC, solvency and liquidity standards applicable to insurers and
reinsurers operating in their jurisdiction. Failure to comply with such capital (including, in the U.S., RBC), solvency, liquidity and similar
requirements, or as otherwise may be agreed by us or one of our insurance company subsidiaries with an insurance regulator, would
generally permit the insurance regulator to take certain regulatory actions that could materially impact the affected company’s
operations. Those actions range from requiring an insurer to submit a plan describing how it would regain a specified RBC or solvency
ratio to a mandatory regulatory takeover of the company. The NAIC adopted in 2020, and the IAIS is developing and testing for
implementation beginning in 2025, methodologies for assessing group-wide regulatory capital, which might evolve into more formal
group-wide prescribed capital requirements on certain insurance companies and/or their holding companies that may augment state-
law RBC standards, and similar international standards, that apply at the legal entity level, and such capital calculations may be
made, in whole or in part, on bases other than the statutory statements of our insurance and reinsurance subsidiaries. Furthermore,
efforts to address systemic risks within the financial services industry, including insurance services, may lead regulators to apply new
or heightened standards and safeguards for activities or practices that we and other insurers or other nonbank financial services
companies, including insurers, engage in. In addition to the regulation of specific activities, the Financial Stability Oversight Council
has authority under Dodd-Frank to determine that certain nonbank financial companies be designated as nonbank SIFIs subject to
supervision by the Board of Governors of the Federal Reserve System and enhanced prudential standards, and recently adopted
revised guidance and procedures intended to govern any such designations. We cannot predict the effect that any such initiatives or
heightened standards may have on our business, results of operations, liquidity and financial condition.
There has also been increased regulatory scrutiny of the use of “big data” techniques, machine learning, predictive models and
artificial intelligence, including in the insurance industry. Certain insurance regulators are developing, or have developed, regulations
or guidance applicable to insurance companies that use artificial intelligence, “big data” techniques, machine learning and predictive
models in their operations. We cannot predict what, if any, regulatory actions may be taken in the future with regard to “big data,”
artificial intelligence, machine learning or predictive models, but any limitations or restrictions could have a material impact on our
business, processes, results of operations and financial condition.
We also cannot predict the impact that laws and regulations adopted in foreign jurisdictions may have on the financial markets
generally or our businesses, results of operations or cash flows. It is possible such laws and regulations, including, without limitation,
Solvency II and European Data Protection Board Cross Border Data Transfer in the EU, and standard-setting initiatives by the FSB
and the IAIS, including, but not limited to, the IAIS’ Common Framework for the Supervision of IAIGs, its holistic framework for the
assessment and mitigation of systemic risk and the development and refinement of a risk-based global ICS, may significantly alter our
business practices. For example, regulators have imposed and may continue to impose new requirements or issue new guidance
aimed at addressing or mitigating climate change-related risks. They may also limit our ability to engage in capital or liability
management, require us to raise additional capital, and impose burdensome requirements and additional costs. It is also possible that
the laws and regulations adopted in foreign jurisdictions will differ from one another, and that they could be inconsistent with the laws
and regulations of other jurisdictions in which we operate, including the United States.
For additional information on our regulatory environment, see Item 1. Business – Regulation.
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ITEM 1A | Risk Factors
For information regarding the effects of regulations related to climate change on our business, see Reserves and Exposures –
“Climate change may adversely affect our business and financial condition” above.
For information regarding the regulatory response to the COVID-19 pandemic, see Business and Operations – “An epidemic,
pandemic or other health crisis could materially and adversely affect our business results of operations, financial condition and
liquidity. COVID-19 (including variants) has adversely affected and may continue to adversely affect our global business, results of
operations, financial condition and liquidity.” above.
New laws and regulations or new interpretations of current laws and regulations, both domestically and internationally, may
affect our businesses, results of operations, financial condition and ability to compete effectively.
Legislators, regulators and self-regulatory organizations have in the past, and may in the future, periodically consider various
proposals that may affect or restrict, among other things, our business practices and activities, product designs and distribution
relationships, how we market, sell or service certain products we offer, the investment assets we hold and our investment
management practices, our capital, reserving and accounting requirements, or the profitability of certain of our businesses.
Further, new laws and regulations may affect or significantly limit our ability to conduct certain businesses at all, including proposals
relating to restrictions on the type of activities in which financial institutions are permitted to engage into. These proposals or changes
in legislation or regulation could also impose additional taxes on a limited subset of financial institutions and insurance companies
(either based on size, activities, geography or other criteria), limit our ability to engage in capital or liability management, require us to
raise additional capital, and impose burdensome requirements and additional costs. It is uncertain whether and how these and other
such proposals or changes in legislation or regulation would apply to us, those who sell or service our products, or our competitors or
how they could impact our ability to compete effectively, as well as our business, consolidated results of operations, liquidity and
financial condition.
An “ownership change” could limit our ability to utilize tax loss and credit carryforwards to offset future taxable income.
As of December 31, 2023, on a U.S. GAAP basis, AIG Parent had U.S. federal net operating loss carryforwards of approximately
$22.0 billion. Our ability to use these tax attributes to offset future taxable income may be significantly limited if we experience an
“ownership change” as defined in Section 382 of the Internal Revenue Code. In general, an ownership change will occur when the
percentage of AIG Parent's ownership (measured by value) by one or more “5-percent shareholders” (as defined in the Internal
Revenue Code) has increased by more than 50 percentage points over the lowest percentage owned by such shareholders at any
time during the prior three years (calculated on a rolling basis). An entity that experiences an ownership change generally will be
subject to an annual limitation on its utilization of pre-ownership change tax loss and credit carryforwards equal to the equity value of
the corporation immediately before the ownership change, multiplied by the long- term, tax-exempt rate posted monthly by the IRS
(AFR) (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused
limitation in a prior year. The limitation on our ability to utilize tax loss and credit carryforwards arising from an ownership change
under Section 382 of the Internal Revenue Code would be dependent on the value of our equity and the AFR at the time of any
ownership change. If we were to experience an “ownership change,” it is possible that a significant portion of our tax loss and credit
carryforwards could expire before we would be able to use them to offset future taxable income.
New and proposed changes to tax laws could increase our corporate taxes or make some of our products less attractive to
consumers.
The Inflation Reduction Act of 2022, includes a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement
income for corporations with average profits over $1 billion over a three-year period. Although the U.S. Treasury and the Internal
Revenue Service issued interim CAMT guidance during 2023, many details and specifics of application of the CAMT remain subject to
future guidance. We are subject to CAMT for 2023. Our estimated CAMT liability will continue to be refined based on future guidance.
New tax laws outside the U.S., in particular those enacted in response to proposals by the Organisation for Economic Cooperation
and Development, could make substantive changes to the global international tax regime. Such changes could increase our global tax
costs. AIG continues to monitor and assess the impact of such proposals.
Finally, it is possible that tax laws will be further changed either in a technical corrections bill or entirely new legislation. It remains
difficult to predict whether or when there will be any tax law changes or further guidance by the authorities in the U.S. or elsewhere in
the world. New or proposed changes to tax laws may have a material adverse effect on our business, consolidated results of
operations, liquidity and financial condition, as the impact of proposals on our business can vary substantially depending upon the
specific changes or further guidance made and how the changes or guidance are implemented by the authorities.
For additional information, see Note 23 to the Consolidated Financial Statements.
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ITEM 1A | Risk Factors
ESTIMATES AND ASSUMPTIONS
Estimates or assumptions used in the preparation of financial statements and modeled results used in various areas of our
business may differ materially from actual experience.
Our financial statements are prepared in conformity with U.S. Generally Accepted Accounting Principles (U.S. GAAP), which requires
the application of accounting policies that often involve a significant degree of judgment. The accounting policies that we consider
most dependent on the application of estimates and assumptions, and therefore may be viewed as critical accounting estimates, are
described in Note 1 to the Consolidated Financial Statements and in Item 7. MD&A – Critical Accounting Estimates. These accounting
estimates require the use of assumptions, some of which are highly uncertain at the time of estimation. These estimates are based on
judgment, current facts and circumstances, and, when applicable, models developed internally or with inputs from third parties.
Therefore, actual results may differ from these estimates and models, possibly in the near term, and could have a material effect on
our financial statements.
In addition, we employ models to price products, calculate reserves and future policy benefits and value assets and execute hedging
strategies, as well as to assess risk and determine statutory capital requirements, among other uses. These models are complex and
rely on estimates and projections that are inherently uncertain, may use incomplete, outdated or incorrect data or assumptions and
may not operate as intended. To the extent that any of our operating practices and procedures do not accurately produce, or
reproduce, data that we use to conduct any or all aspects of our business, such differences may negatively impact our business,
reputation, results of operations, and financial condition. For our Life and Retirement companies, significant changes in policyholder
behavior assumptions such as lapses, surrenders and withdrawal rates as well as the amount of withdrawals, fund performance,
equity market returns and volatility, interest rate levels, the health habits of the insured population, technologies and treatments for
disease or disability, the economic environment, or other factors could negatively impact our assumptions and estimates. To the
extent that any of our modeling practices do not accurately produce, or reproduce, data that we use to conduct any or all aspects of
our business, such errors may negatively impact our business, reputation, results of operations and financial condition.
Changes in accounting principles and financial reporting requirements may impact our consolidated results of operations
and financial condition.
Our financial statements are prepared in accordance with U.S. GAAP, which are periodically revised. Accordingly, from time to time,
we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial
Accounting Standards Board (FASB). The adoption of new or revised accounting standards has in the past, and may in the future
impact, our reported consolidated results of operations, liquidity and reported financial condition and may cause investors to perceive
greater volatility in our financial results, negatively impacting our level of investor interest and investment.
For information regarding the impact of accounting pronouncements that have been issued but are not yet required to be
implemented, see Note 2 to the Consolidated Financial Statements.
If our businesses do not perform well and/or their estimated fair values decline, we may be required to recognize an
impairment of our goodwill or establish an additional valuation allowance against the deferred income tax assets, which
could have a material adverse effect on our results of operations and financial condition.
Goodwill represents the excess of the amounts we paid to acquire subsidiaries and other businesses over the fair value of their net
assets at the date of acquisition. We test goodwill at least annually for impairment and conduct interim qualitative assessments on a
periodic basis. Impairment testing is performed based upon estimates of the fair value of the “reporting unit” to which the goodwill
relates. In 2023, for substantially all of the reporting units we elected to bypass the qualitative assessment of whether goodwill
impairment may exist and, therefore, performed quantitative assessments that supported a conclusion that the fair value of all of the
reporting units tested exceeded their book value. Our goodwill balance was $3.5 billion at December 31, 2023. If it is determined that
goodwill has been impaired, we must write down goodwill by the amount of the impairment, with a corresponding charge to net
income (loss). These write-downs could have a material adverse effect on our consolidated results of operations, liquidity and
financial condition. For additional information on goodwill impairment, see Part II, Item 7. MD&A – Critical Accounting Estimates –
Goodwill Impairment and Note 12 to the Consolidated Financial Statements.
Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. As of
December 31, 2023, we had net deferred tax assets, after valuation allowance, of $14.1 billion, related to federal, foreign, and state
and local jurisdictions. If, based on available evidence, it is more likely than not that the deferred tax asset will not be realized, then a
valuation allowance must be established with a corresponding charge to net income, which such action we have taken from time to
time. Such charges could have a material adverse effect on our consolidated results of operations, liquidity and financial condition.
For additional information on deferred tax assets, see Part II, Item 7. MD&A – Critical Accounting Estimates – Income Taxes and
Note 23 to the Consolidated Financial Statements.
36
AIG | 2023 Form 10-K
ITEM 1A | Risk Factors
EMPLOYEES AND COMPETITION
Employee error and misconduct may be difficult to detect and prevent and may result in reputational damage and significant
losses.
There have been a number of cases involving fraud or other misconduct by employees in recent years and we are exposed to the risk
that employee fraud or misconduct could occur. Our informational technology, human resources and compliance departments work
collaboratively to monitor for fraud and conduct extensive training for employees. However, employee fraud or misconduct may still
occur. Instances of fraud, illegal acts, errors, failure to document transactions properly or to obtain proper internal authorization,
misuse of customer or proprietary/confidential information, or failure to comply with regulatory requirements or our internal policies
may result in losses and/or reputational damage.
Competition for employees in our industry is intense, and managing key employee succession is critical to our success. We
may not be able to attract and retain the key employees and other highly skilled employees we need to support our
businesses.
Our success depends, in large part, on our ability to retain and attract key and other highly skilled employees. Due to the intense
competition in our industry for key employees, we may be unable to retain or hire such employees. In addition, we may experience
higher than expected employee turnover and difficulty attracting new employees as a result of uncertainty from strategic actions and
organizational and operational changes. Losing any of our key employees also could have a material adverse effect on our operations
given their skills, knowledge of our business, years of industry experience and the potential difficulty of promptly finding qualified
replacements. Our business and consolidated results of operations could be materially adversely affected if we are unsuccessful in
retaining and attracting key employees.
In addition, we would be adversely affected if we fail to adequately plan for the succession of our Chief Executive Officer, other
members of senior management and other key employees. While we have succession plans and long-term compensation plans
designed to retain our employees, our succession plans may not operate effectively and our compensation plans cannot guarantee
that the services of these employees will continue to be available to us.
We face intense competition in each of our business lines, and technological changes may present new and intensified
challenges to our businesses.
Our businesses operate in highly competitive environments, both domestically and overseas. Our principal competitors are other large
multinational insurance organizations, as well as banks, investment banks and other nonbank financial institutions.
General Insurance and Life and Retirement compete through a combination of risk acceptance criteria, product pricing, and terms and
conditions. Reductions of our credit ratings or IFS ratings or negative publicity may make it more difficult to compete to retain existing
customers and to maintain our historical levels of business with existing customers, counterparties and distribution relationships. A
decline in our position as to any one or more of these factors could adversely affect our profitability.
Technological advancements and innovation in the insurance industry, including those related to evolving customer preferences, the
digitization of insurance products and services, data ingestion and exchange with trading partners, acceleration of automated
underwriting, and use of artificial intelligence and electronic processes present competitive risks. Technological advancements and
innovation are occurring in distribution, underwriting, recordkeeping, advisory, marketing, claims and operations at a rapid pace, and
that pace may increase, particularly as companies increasingly use data analytics and technology as part of their business strategy. If
we are unable to effectively implement these technological advancements in our business, including the use of artificial intelligence, in
a way that matches or exceeds our competitors, we may suffer competitive harm as a result, which could adversely impact our
reputation, results of operations and financial condition. For further discussion on regulatory developments with respect to emerging
technologies, see – Regulation below.
Further, additional costs may also be incurred in order to implement changes to automate procedures critical to our distribution
channels in order to increase flexibility of access to our services and products. While we seek opportunities to leverage technological
advancements and innovation for our customers’ benefit, our business and results of operations could be materially and adversely
affected if external technological advancements or innovation, or the regulation of technological advancements or innovation, limit our
ability to retain existing business, write new business at adequate rates or on appropriate terms, render our insurance products less
suitable or impact our ability to adapt or deploy current products as quickly and effectively as our competitors.
ITEM 1B | Unresolved Staff Comments
There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year
relating to periodic or current reports under the Exchange Act.
AIG | 2023 Form 10-K
37
ITEM 1C | Cybersecurity
ITEM 1C | Cybersecurity
CYBERSECURITY RISK MANAGEMENT
AIG maintains a documented Information Security Program (the Program) that includes risk assessments regularly conducted by us
and third-party experts to evaluate potential security threats that may have a negative impact on the organization, detect potential
vulnerabilities and mitigate any identified security risks. The Program is informed by industry standards and frameworks and is
designed to protect the confidentiality, integrity, and availability of AIG’s information assets and systems that store, process or transmit
information.
The AIG Chief Information Security Officer (CISO) provides oversight and direction for the Program, including adjustments in
response to changes in technology, internal or external threats, business processes, and regulatory or statutory requirements and
communicates the information security risk posture of AIG to senior management and the AIG Board of Directors.
The Program includes the following key elements:
• Network, Systems and Data Security – The Company deploys technical and organizational safeguards that are designed to protect
the Company’s networks, systems, and data from cybersecurity threats, including firewalls, intrusion prevention and detection
systems, anti-malware functionality, and access controls.
• Threat and Vulnerability Management – The Company maintains a threat and vulnerability management program that leverages
continuous threat intelligence to seek to proactively identify, assess, and mitigate evolving cybersecurity risks. This program
incorporates vulnerability scanning, remediation management, bug bounty, penetration testing, and threat response capabilities, all
designed to safeguard our information assets and ensure business continuity.
• Cybersecurity Incident Monitoring and Response – The Company has established and maintains incident response plans that
address the Company’s response to a cybersecurity incident, utilizing a cross-functional approach.
• Third Party Assessment and Oversight – The Company maintains a third-party risk management program designed to identify and
manage cybersecurity risks from third-party service providers, including initial due diligence and assessment of the service
provider’s control environment as well as periodic re-assessments.
• Security Training and Awareness – The Company provides ongoing education and training to employees regarding information
security threats, and their role and responsibility in detecting and responding to such threats.
In addition to the above, where appropriate, AIG employs third-party experts to evaluate our cybersecurity risk management program.
The Company conducts annual external penetration tests to simulate real-world attacks against the Company’s networks and
applications which supplement our continuous internal application security assessments. These independent evaluations help
uncover potential security vulnerabilities for remediation by our cybersecurity team. We also operate a bug bounty program through a
crowdsourced security platform to incentivize responsible disclosure of software defects by global security researchers.
The Program is evaluated on an ongoing basis both internally and through the use of third-party audit firms to address and protect
against the evolving cyber threat landscape and seeks to align to industry standards such as the National Institute of Standards and
Technology Cybersecurity Framework, as well as applicable legal and regulatory guidance and mandates related to all AIG
stakeholders, including investors, customers, and employees. Control adequacy and design are reviewed at least annually, and
independent audits and penetration tests assist in identifying areas for continued focus, improvement and/or inclusion, and are
designed to provide assurance that controls are appropriately designed and operating effectively. Additionally, the Company's Internal
Audit group performs independent testing of the Company’s control environment, including key components of the Program.
Board Oversight and Governance
AIG's Board of Directors (the Board) oversees the Program and management of risks from cybersecurity threats and reviews and
monitors AIG's business and technology strategy, including the policies, processes and practices that the Company’s management
implements to address risks from cybersecurity threats. The Board believes that all directors are responsible for oversight of these
matters given the increasing importance of cybersecurity to AIG’s risk profile, as well as the significant role the Company’s technology
strategy plays in its strategic priorities. The Chief Information Officer (CIO), CISO and Chief Risk Officer provide updates to the Board
as appropriate.
Global Committees
Group Risk Committee (GRC): The GRC is a committee comprised of senior management and is responsible for assessing
significant risk issues on a global basis to protect AIG’s financial strength, optimize AIG’s intrinsic value, and protect AIG’s reputation.
The risks considered by the GRC include those relating to cybersecurity.
38
AIG | 2023 Form 10-K
Technology Risk and Controls Committee (TRCC): The TRCC is used as a platform to assess risk and controls components
across the information technology (IT) landscape including cybersecurity. It manages the risk assessment process, escalation and
implementation of risk acceptance thresholds with the help of the GRC.
ITEM 1C | Cybersecurity
Regional, Country Risk and IT Risk Committees
• Asia Pacific (APAC) Technology Risk and Controls (TRC) Forum
• APAC - TRC Zone / Country Monthly Forums
•
Japan IT Risk Committee
• Europe, Middle East and Africa region/UK and Latin America and Caribbean TRC Forum
The above forums are set up for regional focus on IT, cybersecurity, regulations and overall issue management. The forums engage
with the Company's relevant IT leaders and functional leaders within Enterprise Risk Management, Legal, Compliance, and Internal
Audit.
Each of the Board and regional and country leadership boards may receive periodic presentations and reports on cybersecurity risks.
In the event of a material cybersecurity incident, the Board will receive prompt information and ongoing updates about the incident.
The Company has an established issue escalation protocol for technology incidents, including cyber related incidents. The Company’s
technology incidents and risks are tracked and rated. Items that are rated as "critical" are discussed in the TRCC, and escalated to
the GRC as appropriate. At least once each year, the Board discusses the Company’s approach to cybersecurity risk management
with the Company’s Global Chief Information Security Officer. The CISO and regional/country information security officers regularly
present to the Company’s regional and country leadership boards on material cyber risks and the Company’s information security
posture and strategy.
The CISO works collaboratively with business and functional colleagues to implement a program designed to protect the Company’s
information system from cybersecurity threats and promptly respond to potential cybersecurity incidents. Multidisciplinary teams are
deployed to respond to cybersecurity incidents in accordance with the Company’s incident response plans. Through ongoing
communication from these teams, the CISO monitors the prevention, detection, mitigation and remediation of cybersecurity incidents
in real time, and reports such incidents to the Board when appropriate.
The CISO reports to the CIO and is principally responsible for overseeing the Program, in partnership with other business leaders
across the Company including regional information security and technology officers. The Company’s cybersecurity personnel maintain
current knowledge through specific training programs, professional certifications, and participation in industry groups (e.g., Financial
Services Sector Coordinating Council, Financial Services Information Sharing and Analysis Center, Analysis and Resilience Center,
Securities Industry and Financial Markets Association, Cybersecurity and Infrastructure Security Agency, etc.). Company
cybersecurity personnel expand and test their knowledge of cyber threats and countermeasures through additional on-the-job training
and quarterly sponsored simulated exercises to practice their response to real-life threats. In addition, personnel are encouraged to
obtain industry approved certifications as appropriate for their roles and responsibilities. Below are some examples of certifications
held by the Company’s cybersecurity personnel: Certified in the Governance of Enterprise IT, Certified Information Systems Security
Professional, Certified Information Security Manager, Certified Risk Information Systems Control, Global Information Assurance
Certification (GIAC) Certified Incident Handler, GIAC Assessing and Auditing Wireless Networks, and GIAC Continuous Monitoring
Certification.
Our CISO has more than 30 years’ leadership experience in the field of information technology, cybersecurity, and adjacent roles
spanning both military, corporate, and advisory roles. He maintains multiple professional certifications and has completed various
academic and professional training courses, including the Federal Bureau of Investigation CISO Academy. In addition, he continues to
serve on cybersecurity advisory councils and on the faculty of educational institutions focused on network security and information
technology.
There have been no material cybersecurity incidents that have affected AIG for the period covered by this annual report. For a
discussion regarding risks associated with cybersecurity threats, see Part I, Item 1A. Risk Factors – Business and Operations – "Our
risk management policies, standards and procedures may prove to be ineffective and leave us exposed to unidentified or
unanticipated risk, which could adversely affect our businesses, results of operations, financial condition and liquidity" and “We are
exposed to certain risks if we are unable to maintain the availability of our critical technology systems and data and safeguard the
confidentiality and integrity of our data, which could compromise our ability to conduct business and adversely affect our consolidated
business, results of operations, financial condition and liquidity.”
AIG | 2023 Form 10-K
39
ITEM 2 | Properties
ITEM 2 | Properties
We lease our corporate headquarters located at 1271 Avenue of the Americas, New York, New York. We operate from approximately
130 offices in the United States and approximately 240 offices in approximately 40 foreign countries. We own 9 offices in the United
States and 40 offices in 7 foreign countries. The remainder of the office space we use is leased. We believe that our leases and
properties are sufficient for our current purposes.
LOCATIONS OF CERTAIN ASSETS
As of December 31, 2023, approximately 8 percent of our consolidated assets were located outside the U.S. and Canada.
For additional information on geographic locations, see Note 3 to the Consolidated Financial Statements.
ITEM 3 | Legal Proceedings
For a discussion of legal proceedings, see Note 17 to the Consolidated Financial Statements, which is incorporated herein by
reference.
ITEM 4 | Mine Safety Disclosures
Not applicable.
40
AIG | 2023 Form 10-K
ITEM 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Part II
ITEM 5 | Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
AIG’s common stock, par value $2.50 per share (AIG Common Stock), is listed on the New York Stock Exchange (NYSE: AIG). There
were approximately 18,502 shareholders of record of AIG Common Stock as of February 8, 2024.
Equity Compensation Plans
See Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Purchases of Equity Securities
The following table provides information about purchases made by or on behalf of AIG or any “affiliated purchaser” (as
defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934 (the Exchange Act)) of AIG Common Stock during
the three months ended December 31, 2023:
Period
October 1-31
November 1-30
December 1-31
Total
Total Number
of Shares
Repurchased
2,787,099
6,703,311
6,685,175
16,175,585
Average Price
Paid per
Share*
60.72
64.26
66.51
64.58
$
$
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
2,787,099
6,703,311
6,685,175
16,175,585
Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the Plans
or Programs (in millions)
7,038
6,608
6,163
6,163
$
$
*
Excludes excise tax of $27 million due to the Inflation Reduction Act of 2022 for the year ended December 31, 2023.
On August 1, 2023, the Board of Directors authorized the repurchase of $7.5 billion of AIG Common Stock (inclusive of the
approximately $2.15 billion of expected remaining authorization under the Board's prior share repurchase authorization upon
expiration of the current 10b5-1 Plan as of August 7, 2023). As of December 31, 2023, approximately $6.2 billion remained under the
authorization.
For additional information on our share purchases, see Note 18 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
41
ITEM 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Common Stock Performance Graph
The following Performance Graph compares the cumulative total shareholder return on AIG Common Stock for a five-year period
(December 31, 2018 to December 31, 2023) with the cumulative total return of the S&P’s 500 stock index (which includes AIG), the
S&P Property and Casualty Insurance Index and the S&P Life and Health Insurance Index.
Value of $100 Invested on December 31, 2018
(All $ as of December 31st)
Dividend reinvestment has been assumed and returns have been weighted to reflect relative stock market capitalization.
As of December 31,
AIG
S&P 500
S&P 500 Property & Casualty Insurance Index
S&P 500 Life & Health Insurance
2018
2019
2020
2021
2022
2023
$
100.00
$
133.58
$
102.52
$
157.80
$
179.49
$
196.94
100.00
100.00
100.00
131.49
125.87
123.18
155.68
134.63
111.51
200.37
160.58
152.41
164.08
190.89
168.18
207.21
211.53
176.00
ITEM 6 | [Reserved]
42
AIG | 2023 Form 10-K
AMERICAN INTERNATIONAL GROUPS&P 500 INDEXS&P 500 Property & Casualty Insurance IndexS&P 500 Life & Health Insurance Index201820192020202120222023$0$50$100$150$200$250
ITEM 7 | Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Cautionary Statement Regarding Forward-Looking Information and Factors That
May Affect Future Results
This Annual Report on Form 10-K and other publicly available documents may include, and members of AIG management may from
time to time make and discuss, statements which, to the extent they are not statements of historical or present fact, may constitute
“forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking
statements are intended to provide management’s current expectations or plans for AIG’s future operating and financial performance,
based on assumptions currently believed to be valid and accurate. Forward-looking statements are often preceded by, followed by or
include words such as “will,” “believe,” “anticipate,” “expect,” “expectations,” “intend,” “plan,” “strategy,” “prospects,” “project,”
“anticipate,” “should,” “guidance,” “outlook,” “confident,” “focused on achieving,” “view,” “target,” “goal,” “estimate” and other words of
similar meaning in connection with a discussion of future operating or financial performance. These statements may include, among
other things, projections, goals and assumptions that relate to future actions, prospective services or products, future performance or
results of current and anticipated services or products, sales efforts, expense reduction efforts, the outcome of contingencies such as
legal proceedings, anticipated organizational, business or regulatory changes, such as the separation of the Life and Retirement
business from AIG, the effect of catastrophic events, both natural and man-made, and macroeconomic and/or geopolitical events,
anticipated dispositions, monetization and/or acquisitions of businesses or assets, the successful integration of acquired businesses,
management succession and retention plans, exposure to risk, trends in operations and financial results, and other statements that
are not historical facts.
AIG | 2023 Form 10-K
43
All forward-looking statements involve risks, uncertainties and other factors that may cause AIG’s actual results and financial condition
to differ, possibly materially, from the results and financial condition expressed or implied in the forward-looking statements. Factors
that could cause AIG’s actual results to differ, possibly materially, from those in specific projections, targets, goals, plans, assumptions
and other forward-looking statements include, without limitation:
•
the impact of adverse developments affecting economic
conditions in the markets in which AIG and its businesses
operate in the U.S. and globally, including adverse
developments related to financial market conditions,
macroeconomic trends, fluctuations in interest rates and
foreign currency exchange rates, inflationary pressures,
including social inflation, pressures on the commercial real
estate market, an economic slowdown or recession, any
potential U.S. federal government shutdown and geopolitical
events or conflicts, including the conflict between Russia and
Ukraine and the conflict in Israel and the surrounding areas;
• occurrence of catastrophic events, both natural and man-
made, including the effects of climate change, geopolitical
events and conflicts and civil unrest;
• disruptions in the availability or accessibility of AIG's or a third
party’s information technology systems, including hardware
and software, infrastructure or networks, and the inability to
safeguard the confidentiality and integrity of customer,
employee or company data due to cyberattacks, data security
breaches, or infrastructure vulnerabilities;
• AIG’s ability to successfully dispose of, monetize and/or
acquire businesses or assets or successfully integrate
acquired businesses, and the anticipated benefits thereof;
• AIG's ability to realize expected strategic, financial, operational
or other benefits from the separation of Corebridge Financial,
Inc. (Corebridge) as well as AIG’s equity market exposure to
Corebridge;
• AIG's ability to effectively implement restructuring initiatives
and potential cost-savings opportunities;
• AIG's ability to effectively implement technological
advancements, including the use of artificial intelligence (AI),
and respond to competitors' AI and other technology initiatives;
•
•
the effectiveness of strategies to retain and recruit key
personnel and to implement effective succession plans;
concentrations in AIG’s investment portfolios;
• AIG’s reliance on third-party investment managers;
•
changes in the valuation of AIG’s investments;
• AIG’s reliance on third parties to provide certain business and
administrative services;
• availability of adequate reinsurance or access to reinsurance
on acceptable terms;
•
concentrations of AIG’s insurance, reinsurance and other risk
exposures;
• nonperformance or defaults by counterparties, including
Fortitude Reinsurance Company Ltd. (Fortitude Re);
• AIG's ability to adequately assess risk and estimate related
losses as well as the effectiveness of AIG’s enterprise risk
management policies and procedures, including with respect
to business continuity and disaster recovery plans;
• difficulty in marketing and distributing products through current
and future distribution channels;
• actions by rating agencies with respect to AIG’s credit and
financial strength ratings as well as those of its businesses and
subsidiaries;
•
•
•
•
•
•
•
•
changes to sources of or access to liquidity;
changes in judgments concerning the recognition of deferred
tax assets and the impairment of goodwill;
changes in judgments or assumptions concerning insurance
underwriting and insurance liabilities;
changes in accounting principles and financial reporting
requirements;
the effects of sanctions, including those related to the conflict
between Russia and Ukraine, and the failure to comply with
those sanctions;
the effects of changes in laws and regulations, including those
relating to the regulation of insurance, in the U.S. and other
countries in which AIG and its businesses operate;
changes to tax laws in the U.S. and other countries in which
AIG and its businesses operate;
the outcome of significant legal, regulatory or governmental
proceedings;
• AIG’s ability to effectively execute on sustainability targets and
standards;
• AIG’s ability to address evolving stakeholder expectations and
regulatory requirements with respect to environmental, social
and governance matters;
•
•
the impact of epidemics, pandemics and other public health
crises and responses thereto; and
such other factors discussed in:
– Part I, Item 1A. Risk Factors of this Annual Report; and.
– this Part II, Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations (MD&A) of
this Annual Report.
Forward-looking statements speak only as of the date of this report, or in the case of any document incorporated by reference, the
date of that document. We are not under any obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that
may cause actual results to differ materially from those expressed or implied in any forward-looking statements is disclosed from time
to time in other filings with the Securities and Exchange Commission (SEC).
44
AIG | 2023 Form 10-K
INDEX TO ITEM 7
Use of Non-GAAP Measures
Critical Accounting Estimates
Executive Summary
Overview
Regulatory, Industry and Economic Factors
Consolidated Results of Operations
Business Segment Operations
General Insurance
Life and Retirement
Other Operations
Investments
Overview
Investment Highlights in 2023
Investment Strategies
Credit Ratings
Insurance Reserves
Loss Reserves
Life and Annuity Future Policy Benefits, Policyholder Contract Deposits and Market Risk Benefits
Liquidity and Capital Resources
Overview
Liquidity and Capital Resources Highlights
Liquidity and Capital Resources Highlights of Corebridge
Analysis of Sources and Uses of Cash
Liquidity and Capital Resources of AIG Parent and Subsidiaries
Credit Facilities
Contractual Obligations
Off-Balance Sheet Arrangements and Commercial Commitments
Debt
Credit Ratings
Financial Strength Ratings
Regulation and Supervision
Dividends
Repurchases of AIG Common Stock
Dividend Restrictions
Enterprise Risk Management
Overview
Risk Governance Structure
Risk Appetite, Limits, Identification and Measurement
Credit Risk Management
Market Risk Management
Liquidity Risk Management
Operational Risk Management
Insurance Risks
Glossary
Acronyms
Page
46
48
57
57
58
60
65
66
73
84
86
86
86
86
88
96
96
100
104
104
104
106
106
107
108
109
110
111
112
112
113
113
113
113
114
114
114
114
115
115
117
117
118
122
124
Throughout the MD&A, we use certain terms and abbreviations, which are summarized in the Glossary and Acronyms.
We have incorporated into this discussion a number of cross-references to additional information included throughout this Annual
Report to assist readers seeking additional information related to a particular subject.
AIG | 2023 Form 10-K
45
ITEM 7 | Use of Non-GAAP Measures
Use of Non-GAAP Measures
Throughout this MD&A, we present our financial condition and results of operations in the way we believe will be most meaningful and
representative of our business results. Some of the measurements we use are “non-GAAP financial measures” under SEC rules and
regulations. GAAP is the acronym for “generally accepted accounting principles” in the United States. The non-GAAP financial
measures we present may not be comparable to similarly-named measures reported by other companies.
We use the following operating performance measures because we believe they enhance the understanding of the underlying
profitability of continuing operations and trends of our business segments. We believe they also allow for more meaningful
comparisons with our insurance competitors. When we use these measures, reconciliations to the most comparable GAAP measure
are provided on a consolidated basis in the Consolidated Results of Operations section of this MD&A.
Book value per common share, excluding accumulated other comprehensive income (loss) (AOCI) adjusted for the
cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and deferred tax assets (DTA)
(Adjusted book value per common share) is used to show the amount of our net worth on a per-common share basis after
eliminating items that can fluctuate significantly from period to period including changes in fair value (1) of AIG’s available for sale
securities portfolio, (2) of market risk benefits attributable to our own credit risk and (3) due to discount rates used to measure
traditional and limited payment long-duration insurance contracts, foreign currency translation adjustments and U.S. tax attribute
deferred tax assets. This measure also eliminates the asymmetrical impact resulting from changes in fair value of our available for
sale securities portfolio wherein there is largely no offsetting impact for certain related insurance liabilities. In addition, we adjust for
the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s
reinsurance obligations to AIG post deconsolidation of Fortitude Re (Fortitude Re funds withheld assets) since these fair value
movements are economically transferred to Fortitude Re. We exclude deferred tax assets representing U.S. tax attributes related to
net operating loss carryforwards and foreign tax credits as they have not yet been utilized. Amounts for interim periods are estimates
based on projections of full-year attribute utilization. As net operating loss carryforwards and foreign tax credits are utilized, the portion
of the DTA utilized is included in these book value per common share metrics. Adjusted book value per common share is derived by
dividing total AIG common shareholders’ equity, excluding AOCI adjusted for the cumulative unrealized gains and losses related to
Fortitude Re funds withheld assets, and DTA (Adjusted common shareholders’ equity), by total common shares outstanding.
Return on common equity – Adjusted after-tax income excluding AOCI adjusted for the cumulative unrealized gains and
losses related to Fortitude Re funds withheld assets and DTA (Adjusted return on common equity) is used to show the rate of
return on common shareholders’ equity. We believe this measure is useful to investors because it eliminates items that can fluctuate
significantly from period to period, including changes in fair value (1) of AIG’s available for sale securities portfolio, (2) of market risk
benefits attributable to our own credit risk and (3) due to discount rates used to measure traditional and limited payment long-duration
insurance contracts, foreign currency translation adjustments and U.S. tax attribute deferred tax assets. This measure also eliminates
the asymmetrical impact resulting from changes in fair value of our available for sale securities portfolio wherein there is largely no
offsetting impact for certain related insurance liabilities. In addition, we adjust for the cumulative unrealized gains and losses related to
Fortitude Re funds withheld assets since these fair value movements are economically transferred to Fortitude Re. We exclude
deferred tax assets representing U.S. tax attributes related to net operating loss carryforwards and foreign tax credits as they have not
yet been utilized. Amounts for interim periods are estimates based on projections of full-year attribute utilization. As net operating loss
carryforwards and foreign tax credits are utilized, the portion of the DTA utilized is included in Adjusted return on common equity.
Adjusted return on common equity is derived by dividing actual or annualized adjusted after-tax income attributable to AIG common
shareholders by average Adjusted common shareholders’ equity.
Adjusted after-tax income attributable to AIG common shareholders is derived by excluding the tax effected adjusted pre-tax
income (APTI) adjustments described below, dividends on preferred stock, noncontrolling interest on net realized gains (losses), other
non-operating expenses and the following tax items from net income attributable to AIG:
• deferred income tax valuation allowance releases and charges;
•
changes in uncertain tax positions and other tax items related to legacy matters having no relevance to our current businesses or
operating performance; and
• net tax charge related to the enactment of the Tax Cuts and Jobs Act.
Adjusted revenues exclude Net realized gains (losses), income from non-operating litigation settlements (included in Other income
for GAAP purposes), changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income
for GAAP purposes) and income from elimination of the international reporting lag. Adjusted revenues is a GAAP measure for our
segments.
46
AIG | 2023 Form 10-K
Adjusted pre-tax income is derived by excluding the items set forth below from income from continuing operations before income
tax. This definition is consistent across our segments. These items generally fall into one or more of the following broad categories:
legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the
underlying economics of transactions; and measures that we believe to be common to the industry. APTI is a GAAP measure for our
segments. Excluded items include the following:
•
changes in fair value of securities used to hedge guaranteed
living benefits;
• net loss reserve discount benefit (charge);
• pension expense related to lump sum payments to former
• net change in market risk benefits (MRBs);
employees;
ITEM 7 | Use of Non-GAAP Measures
changes in benefit reserves related to net realized gains and
losses;
• net gain or loss on divestitures and other;
• non-operating litigation reserves and settlements;
•
•
changes in the fair value of equity securities;
• net investment income on Fortitude Re funds withheld assets;
•
•
following deconsolidation of Fortitude Re, net realized gains
and losses on Fortitude Re funds withheld assets;
loss (gain) on extinguishment of debt;
• all net realized gains and losses except earned income
(periodic settlements and changes in settlement accruals) on
derivative instruments used for non-qualifying (economic)
hedging or for asset replication. Earned income on such
economic hedges is reclassified from net realized gains and
losses to specific APTI line items based on the economic risk
being hedged (e.g. net investment income and interest
credited to policyholder account balances);
•
income or loss from discontinued operations;
• General Insurance
•
•
•
•
restructuring and other costs related to initiatives designed to
reduce operating expenses, improve efficiency and simplify
our organization;
the portion of favorable or unfavorable prior year reserve
development for which we have ceded the risk under
retroactive reinsurance agreements and related changes in
amortization of the deferred gain;
integration and transaction costs associated with acquiring or
divesting businesses;
losses from the impairment of goodwill;
• non-recurring costs associated with the implementation of non-
ordinary course legal or regulatory changes or changes to
accounting principles; and
• income from elimination of the international reporting lag.
– Ratios: We, along with most property and casualty insurance companies, use the loss ratio, the expense ratio and the
combined ratio as measures of underwriting performance. These ratios are relative measurements that describe, for every $100
of net premiums earned, the amount of losses and loss adjustment expenses (which for General Insurance excludes net loss
reserve discount), and the amount of other underwriting expenses that would be incurred. A combined ratio of less than 100
indicates underwriting income and a combined ratio of over 100 indicates an underwriting loss. Our ratios are calculated using
the relevant segment information calculated under GAAP, and thus may not be comparable to similar ratios calculated for
regulatory reporting purposes. The underwriting environment varies across countries and products, as does the degree of
litigation activity, all of which affect such ratios. In addition, investment returns, local taxes, cost of capital, regulation, product
type and competition can have an effect on pricing and consequently on profitability as reflected in underwriting income and
associated ratios.
– Accident year loss and accident year combined ratios, as adjusted (Accident year loss ratio, ex-CAT and Accident year
combined ratio, ex-CAT): both the accident year loss and accident year combined ratios, as adjusted, exclude catastrophe
losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve
discounting. Natural catastrophe losses are generally weather or seismic events, in each case, having a net impact on AIG in
excess of $10 million and man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million
threshold. We believe that as adjusted ratios are meaningful measures of our underwriting results on an ongoing basis as they
exclude catastrophes and the impact of reserve discounting which are outside of management’s control. We also exclude prior
year development to provide transparency related to current accident year results.
• Life and Retirement
– Premiums and deposits: includes direct and assumed amounts received and earned on traditional life insurance policies,
group benefit policies and life-contingent payout annuities, as well as deposits received on universal life, investment-type
annuity contracts, Federal Home Loan Bank (FHLB) funding agreements and mutual funds. We believe the measure of
premiums and deposits is useful in understanding customer demand for our products, evolving product trends and our sales
performance period over period.
Results from discontinued operations are excluded from all of these measures.
AIG | 2023 Form 10-K
47
ITEM 7 | Critical Accounting Estimates
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires the application of accounting policies that often involve a
significant degree of judgment.
The accounting policies that we believe are most dependent on the application of estimates and assumptions,
which are critical accounting estimates, are related to the determination of:
•
•
•
•
•
•
•
•
•
loss reserves;
valuation of future policy benefit liabilities and recognition of measurement gains and losses;
valuation of MRBs related to guaranteed benefit features of variable annuity, fixed annuity and fixed index annuity products;
valuation of embedded derivative liabilities for fixed index annuity and index universal life products;
reinsurance assets, including the allowance for credit losses and disputes;
goodwill impairment;
allowance for credit losses on certain investments, primarily on loans and available for sale fixed maturity securities;
fair value measurements of certain financial assets and financial liabilities; and
income taxes, in particular the recoverability of our deferred tax asset and establishment of provisions for uncertain tax
positions.
These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of
estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of
operations and cash flows could be materially affected.
LOSS RESERVES
Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and
loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve
estimates. Because these estimates are subject to the outcome of future events and because loss trends vary and time is often
required for changes in trends to be recognized and confirmed, changes in estimates are common.
The estimate of loss reserves relies on several key judgments:
•
•
•
•
the determination of the actuarial methods used as the basis for these estimates;
the relative weights given to these models by product line;
the underlying assumptions used in these models; and
the determination of the appropriate groupings of similar product lines and, in some cases, the disaggregation of dissimilar losses
within a product line.
Numerous assumptions are made in determining the best estimate of reserves for each line of business, in consideration of expected
ultimate losses, loss cost trends and loss development factors, where appropriate. The importance of any one assumption can vary by
both line of business and accident year. Because such assumptions may differ from actual experience, there is potential for significant
variation in the development of loss reserves. This estimation uncertainty is particularly relevant for long-tail lines of business.
All of our methods to calculate net reserves include assumptions about estimated reinsurance recoveries and their collectability.
Reinsurance collectability is evaluated independently of the reserving process and appropriate allowances for uncollectible
reinsurance are established.
Overview of Loss Reserving Process and Methods
Our loss reserves can generally be categorized into two distinct groups: short-tail reserves and long-tail reserves. Short-tail reserves
consist principally of U.S. Property and Special Risks, Europe Property and Special Risks, U.S. Personal Insurance, and Europe and
Japan Personal Insurance. Long-tail reserves include U.S. Workers’ Compensation, U.S. Excess Casualty, U.S. Other Casualty, U.S.
Financial Lines, and UK/Europe Casualty and Financial Lines.
48
AIG | 2023 Form 10-K
ITEM 7 | Critical Accounting Estimates
Short-Tail Reserves
In short-tail lines of business, such as property or personal insurance, where the nature of these claims tends to be higher frequency
with short reporting periods, with volatility arising from occasional severe events, the actual losses reported make up a greater
proportion of the ultimate loss estimate. During the first few development quarters of an accident year, the expected ultimate losses
generally reflect the average loss costs from a period of preceding accident quarters that have been adjusted for changes in rate and
loss cost trends, mix of business, known exposure to unreported losses, or other factors affecting the particular line of business. For
more mature quarters, specific loss development methods and/or frequency/severity methods may be used to determine the incurred
but not reported (IBNR). IBNR for claims arising from catastrophic events or events of unusual severity would be determined taking
into account information known by the claims department, using alternative techniques or expected percentages of ultimate loss
emergence based on historical emergence of similar events or claim types.
Long-Tail Reserves
Estimation of loss reserves for our long-tail business is a complex process and depends on a number of factors, including the product
line and volume of business, as well as estimates of reinsurance recoveries. Experience in more recent accident years generally
provides limited statistical credibility of reported net losses on long-tail business. That is because in the more recent accident years, a
relatively low proportion of estimated ultimate net incurred losses are reported or paid. Therefore, IBNR reserves constitute a
relatively high proportion of loss reserves.
For our long-tail lines, we generally make actuarial and other assumptions with respect to the following:
• Loss cost trend factors, which are used to establish expected loss ratios for subsequent accident years based on the projected
loss ratios for prior accident years.
• Expected loss ratios, which are used for the latest accident year and, in some cases, for accident years prior to the latest accident
year. The expected loss ratio also generally reflects the average loss ratio from prior accident years, adjusted for the loss cost
trend and the effect of rate changes and other quantifiable factors on the loss ratio.
• Loss development factors, which are used to project the reported losses for each accident year to an ultimate basis. Generally, the
actual loss development factors observed from prior accident years would be used as a basis to determine the loss development
factors for the subsequent accident years.
• Tail factors, which are development factors used for certain long-tail lines of business to project future loss development for periods
that extend beyond the available development data. The development of losses to the ultimate loss for a given accident year for
these lines may take decades and the projection of ultimate losses for an accident year is very sensitive to the tail factors selected
beyond a certain age.
We record quarterly changes in loss reserves for each product line of business. The overall change in our loss reserves is based on
the sum of the changes for all product lines of business. The quarterly loss reserve changes are based on the estimated current loss
ratio for each subset of coverage less any amounts paid. Also, any change in estimated ultimate losses from prior accident years
deemed to be necessary based on the results of our latest detailed valuation reviews, large loss analyses, or other analytical
techniques, either positive or negative, is reflected in the loss reserve and incurred losses for the current quarter. Differences between
actual loss emergence in a given period and our expectations based on prior loss reserve estimates are used to monitor reserve
adequacy between detailed valuation reviews and may also influence our judgment with respect to adjusting reserve estimates.
Details of the Loss Reserving Process
The process of determining the current loss ratio for each product line of business is based on a variety of factors. These include
considerations such as: prior accident year and policy year loss ratios; rate changes; and changes in coverage, reinsurance, or mix of
business. Other considerations include actual and anticipated changes in external factors such as trends in loss costs, inflation,
employment rates or unemployment duration or in the legal and claims environment. The current loss ratio for each product line of
business is intended to represent our best estimate after reflecting all relevant factors. At the close of each quarter, the assumptions
and data underlying the loss ratios are reviewed to determine whether they remain appropriate. This process includes a review of the
actual loss experience in the quarter, actual rate changes achieved, actual changes in reinsurance, quantifiable changes in coverage
or mix of business, and changes in other factors that may affect the loss ratio. The loss ratio is changed to reflect the revised estimate
if this review suggests that the previously determined loss ratio is no longer appropriate and, generally, shorter tailed lines of business
are more likely to experience changes than longer tailed lines for immature accident years unless the information is directionally
unfavorable.
We conduct a comprehensive loss reserve detailed valuation review at least annually for each product line of business in accordance
with Actuarial Standards of Practice. These standards provide that the unpaid loss estimate may be presented in a variety of ways,
such as a point estimate, a range of estimates, a point estimate based on the expected value of several reasonable estimates, or a
probability distribution of the unpaid loss amount. Our actuarial best estimate for each product line of business represents an
expected value generally considering a range of reasonably possible outcomes.
AIG | 2023 Form 10-K
49
ITEM 7 | Critical Accounting Estimates
The reserve analysis, globally, for each product line of business is performed by a credentialed actuarial team in collaboration with
claims, underwriting, business unit management, risk management and senior management. Our actuaries consider the ongoing
applicability of prior data groupings and update numerous assumptions, including the analysis and selection of loss development and
loss trend factors. They also determine and select the appropriate actuarial or other methods used to develop our best estimate for
each business product line, and may employ multiple methods and assumptions for each product line. These data groupings, accident
year weights, method selections and assumptions necessarily change over time as business mix changes, development factors
mature and become more credible and loss characteristics evolve. We consult with third-party specialists to help inform our
judgments as needed. Through the execution of these detailed valuation reviews an actuarial best estimate of the loss reserve is
determined. The sum of these estimates for each product line of business yields an overall actuarial best estimate for that line of
business.
A critical component of our detailed valuation reviews is an internal peer review of our reserving analyses and conclusions, where
actuaries independent of the initial review evaluate the reasonableness of assumptions used, methods selected, and weightings given
to different methods. In addition, each detailed valuation review is subjected to a review and challenge process by specialists in our
Enterprise Risk Management (ERM) group.
For certain product lines, we measure sensitivities and determine explicit ranges around the actuarial best estimate using multiple
methodologies and varying assumptions. Where we have ranges, we use them to inform our selection of best estimates of loss
reserves by product line of business. Our range of reasonable estimates is not intended to cover all possibilities or extreme values
and is based on known data and facts at the time of estimation.
Actuarial and Other Methods for Our Lines of Business
Our actuaries determine the appropriate actuarial methods and segmentation. This determination is based on a variety of
factors including the nature of the losses associated with the product line of business, such as the frequency or severity of the claims.
In addition to determining the actuarial methods, the actuaries determine the appropriate loss reserve groupings of data. This
determination is a judgmental, dynamic process and refinements to the groupings are made every year. The groupings may change to
reflect observed or emerging patterns within and across product lines, or to differentiate risk characteristics (for example, size of
deductibles and extent of third-party claims specialists used by our insureds). As an example of reserve segmentation, we write many
unique subsets of professional liability insurance, which cover different products, industry segments, and coverage structures. While
for pricing or other purposes, it may be appropriate to evaluate the profitability of each subset individually, we believe it is appropriate
to combine the subsets into larger groups for reserving purposes to produce a greater degree of credibility in the loss experience. This
determination of data segmentation and related actuarial methods is assessed, reviewed and updated at least annually.
The actuarial methods we use most commonly include paid and incurred loss development methods, expected loss ratio
methods, including “Bornhuetter Ferguson” and “Cape Cod,” and frequency/severity models. Loss development methods
utilize the actual loss development patterns from prior accident years updated through the current year to project the reported losses
to an ultimate basis for all accident years. We also use this information to update our current accident year loss selections. Loss
development methods are generally most appropriate for lines of business that exhibit a stable pattern of loss development from one
accident year to the next, and for which the components of the product line have similar development characteristics. Expected loss
ratio methods rely on the application of an expected loss ratio to the earned premium for the product line of business to
determine the liability for loss reserves and loss adjustment expenses. We generally use expected loss ratio methods in cases
where the reported loss data lacked sufficient credibility to utilize loss development methods, such as for new product lines of
business or for long-tail product lines at early stages of loss development. Frequency/severity models may be used where sufficient
frequency counts are available to apply such approaches.
A key advantage of loss development methods is that they respond more quickly to any actual changes in loss costs for the product
line of business. Therefore, if loss experience is unexpectedly deteriorating or improving, the loss development method gives full
credibility to the changing experience. Expected loss ratio methods would be slower to respond to the change, as they would continue
to give more weight to a prior expected loss ratio, until enough evidence emerged to modify the expected loss ratio to reflect the
changing loss experience. On the other hand, loss development methods have the disadvantage of overreacting to changes in
reported losses if the loss experience is anomalous due to the various key factors described above and the inherent volatility in some
of the lines. For example, the presence or absence of large losses at the early stages of loss development could cause the loss
development method to overreact to the favorable or unfavorable experience by assuming it is a fundamental shift in the development
pattern. In these instances, expected loss ratio methods such as Bornhuetter Ferguson have the advantage of recognizing large
losses without extrapolating unusual large loss activity onto the unreported portion of the losses for the accident year.
50
AIG | 2023 Form 10-K
ITEM 7 | Critical Accounting Estimates
The Cape Cod method is a hybrid between the loss development and Bornhuetter Ferguson methods, where the historic loss data
and loss development factor assumptions are used to determine the expected loss ratio estimate in the Bornhuetter Ferguson
method.
Where appropriate, supplemental analysis for the given line of business may be performed in addition to the above described
techniques such as Shareholder Class Action suit analysis for Directors and Officers (D&O) coverages.
Frequency/severity methods generally rely on the determination of an ultimate number of claims and an average severity for
each claim for each accident year. Multiplying the estimated ultimate number of claims for each accident year by the expected
average severity of each claim produces the estimated ultimate loss for the accident year. Frequency/severity methods generally
require a sufficient volume of claims in order for the average severity to be predictable. Average severity for subsequent accident
years is generally determined by applying an estimated annual loss cost trend to the estimated average claim severity from prior
accident years. In certain cases, a structural approach may also be used to predict the ultimate loss cost. Frequency/severity methods
have the advantage that ultimate claim counts can generally be estimated more quickly and accurately than can ultimate losses.
Thus, if the average claim severity can be accurately estimated, these methods can more quickly respond to changes in loss
experience than other methods. However, for average severity to be predictable, the product line of business must consist of
homogenous types of claims for which loss severity trends from one year to the next are reasonably consistent and where there are
limited changes to deductible levels or limits. Generally these methods work best for high frequency, low severity product lines of
business such as personal auto. However, frequency and severity metrics are also used to test the reasonability of results for other
product lines of business and provide indications of underlying trends in the data. In addition, ultimate claim counts can be used as an
alternative exposure measure to earned premiums in the Cape Cod method.
The estimation of liability for loss reserves and loss adjustment expenses relating to asbestos and environmental pollution
losses on insurance policies written many years ago is typically subject to greater uncertainty than other types of losses.
This is due to inconsistent court decisions, as well as judicial interpretations and legislative actions that in some cases have tended to
broaden coverage beyond the original intent of such policies or have expanded theories of liability. In addition, reinsurance
recoverable balances relating to asbestos and environmental loss reserves are subject to greater uncertainty due to the underlying
age of the claim, underlying legal issues surrounding the nature of the coverage, and determination of proper policy period. For these
reasons, these balances tend to be subject to increased levels of disputes and legal collection activity when actually billed. The
insurance industry as a whole is engaged in extensive litigation over these coverage and liability issues and is thus confronted with a
continuing uncertainty in its efforts to quantify these exposures.
We continue to receive claims asserting injuries and damages from toxic waste, hazardous substances, and other environmental
pollutants and alleged claims to cover the cleanup costs of hazardous waste dump sites, referred to collectively as environmental
claims, and indemnity claims asserting injuries from asbestos. The vast majority of these asbestos and environmental losses emanate
from policies written in 1984 and prior years. Commencing in 1985, standard policies contained absolute exclusions for pollution-
related damage and asbestos. The current environmental policies that we specifically price and underwrite for environmental risks on
a claims-made basis have been excluded from the analysis. Nevertheless, most of these legacy exposures have been heavily
reinsured with very highly rated reinsurers.
The majority of our remaining exposures for asbestos and environmental losses are related to excess casualty coverages, not primary
coverages. The litigation costs are treated in the same manner as indemnity amounts, with litigation expenses included within the
limits of the liability we incur. Individual significant loss reserves, where future litigation costs are reasonably determinable, are
established on a case-by-case basis.
AIG | 2023 Form 10-K
51
Key Assumptions of our Actuarial Methods by Line of Business
Line of Business or Category Key Assumptions
U.S. Workers’
Compensation
We generally use a combination of loss development and expected loss ratio methods for U.S. Workers’
Compensation as this is a long-tail line of business.
ITEM 7 | Critical Accounting Estimates
The tail factor is typically the most critical assumption, and small changes in the selected tail factor can have a material
effect on our carried reserves. For example, the tail factors beyond twenty years for guaranteed cost business could
vary by 1 percentage point below to 2.5 percentage points above those indicated in the 2023 detailed valuation review.
For excess of deductible business, in our judgment, it is reasonably possible that tail factors beyond twenty years
could vary by 1.5 percentage points below to 3 percentage points above those indicated in the 2023 detailed valuation
review.
We utilize various loss cost trend assumptions for different segments of the portfolio. In our judgment, after evaluating
the historical loss cost trends from prior accident years since the early 1990s, it is reasonably possible that actual loss
cost trends applicable to the year-end 2023 detailed valuation review for U.S. Excess Casualty may range 5
percentage points lower or higher than this estimated loss trend. The loss cost trend assumption is critical for the U.S.
Excess Casualty line of business due to the long-tail nature of the losses, and it is applied across many accident
years. Thus, there is the potential for the loss reserves with respect to a number of accident years (the expected loss
ratio years) to be significantly affected by changes in loss cost trends that were initially relied upon in setting the loss
reserves. These changes in loss trends could be attributable to changes in inflation or in the judicial environment, or in
other social or economic conditions affecting losses.
U.S. Excess Casualty is a long-tail line of business and any deviation in loss development factors might not be
discernible for an extended period of time subsequent to the recording of the initial loss reserve estimates for any
accident year. Mass tort claims in particular may develop over a very extended period and impact multiple accident
years, so we usually select a separate pattern for them. Thus, there is the potential for the loss reserves with respect
to a number of accident years to be significantly affected by changes in loss development factors that were initially
relied upon in setting the reserves.
In our judgment, after evaluating the historical loss development factors from prior accident years since the early
1990s, it is reasonably possible that the actual loss development factors could vary by an amount equivalent to a six
month shift from those actually utilized in the year-end 2023 detailed valuation review. This would impact projections
both for accident years where the selections were directly based on loss development methods as well as the a priori
loss ratio assumptions for accident years with selections based on Bornhuetter Ferguson or Cape Cod methods.
Similar to loss cost trends, these changes in loss development factors could be attributable to changes in inflation or in
the judicial environment, or in other social or economic conditions affecting losses.
Given the very long-tail nature of this business, the tail factor selection can also have material impact on our carried
reserves. The sensitivity around tail selection may also be a proxy for the sensitivity of a calendar year impact of
monetary inflation on unpaid losses. It is reasonably possible for the tail factors for Excess Casualty could vary by 2
percentage points below to 3.5 percentage points above those indicated in the 2023 detailed valuation review.
The key assumptions for other casualty lines are similar to U.S. Excess Casualty, as the underlying business is long-
tailed and can be subject to variability in loss cost trends and changes in loss development factors. These may differ
significantly by line of business as coverages such as general liability, medical malpractice and environmental may be
subject to different risk drivers.
The loss cost trends for U.S. D&O liability business vary by year and subset. After evaluating the historical loss cost
levels from prior accident years since the early 1990s, including the potential effect of losses relating to the credit
crisis, in our judgment, it is reasonably possible that the actual variation in loss cost levels for these subsets could vary
by approximately 10 percentage points lower or higher on a year-over-year basis than the assumptions actually
utilized in the year-end 2023 reserve review. Because the U.S. D&O business has exhibited highly volatile loss trends
from one accident year to the next, there is the possibility of an exceptionally high deviation. In our analysis, the effects
of loss cost trend assumptions affect the results through the a priori loss ratio assumptions used for the Bornhuetter
Ferguson and Cape Cod methods, which impact the projections for the more recent accident years.
The selected loss development factors are also an important assumption, but are less critical than for U.S. Excess
Casualty. Because these lines are written on a claims made basis, the loss reporting and development tail is much
shorter than for U.S. Excess Casualty. However, the high severity nature of the losses does create the potential for
significant deviations in loss development patterns from one year to the next. Similar to U.S. Excess Casualty, after
evaluating the historical loss development factors from prior accident years since the early 1990s, in our judgment, it is
reasonably possible that actual loss development factors could change by an amount equivalent to a shift by six
months from those actually utilized in the year-end 2023 reserve review.
Similar to U.S. business, UK/Europe Casualty and Financial Lines can be significantly impacted by loss cost trends
and changes in loss development factors. The variation in such factors can differ significantly by product and region,
however the range of potential impacts is much lower than that of other lines of business noted above.
For shorter-tail lines such as Property and Special Risks, variance in outcomes for individual large claims or events
typically has a greater impact on results than does changes in actuarial assumptions or methodology. This is because
a greater proportion of the ultimate loss, at any stage of development, is composed of reported losses than IBNR
reserves. These outcomes generally relate to unique characteristics of events such as catastrophes or losses with
significant business interruption claims.
U.S. Excess Casualty
U.S. Other Casualty
U.S. Financial Lines
UK/Europe Casualty and
Financial Lines
U.S. and UK/Europe
Property and Special
Risks
U.S., UK/Europe and
Japan Personal Insurance
Personal Insurance is short-tailed in nature similar to Property and Special Risks but less volatile. Variance in
estimates can result from unique events such as catastrophes. In addition, some subsets of this business, such as
auto liability, can be impacted by changes in loss development factors and loss cost trends.
52
AIG | 2023 Form 10-K
The following sensitivity analysis table summarizes the effect on the loss reserve position of using certain alternative loss
cost trend (for accident years where we use expected loss ratio methods) or loss development factor assumptions rather
than the assumptions actually used in determining our estimates in the year-end loss reserve analyses in 2023:
December 31, 2023
(in millions)
Loss cost trends:
U.S. Excess Casualty:
Increase
(Decrease) to
Loss Reserves
Loss development factors:
U.S. Excess Casualty:
Increase
(Decrease) to
Loss Reserves
ITEM 7 | Critical Accounting Estimates
5.0 percentage points increase
5.0 percentage points decrease
$
850
(650)
3.5 percentage points tail factor increase
2.0 percentage points tail factor decrease
$
U.S. Financial Lines (D&O)
10.0 percentage points increase
10.0 percentage points decrease
U.S. Excess Casualty:
6-months slower
6-months faster
U.S. Financial Lines (D&O)
950
(700)
6-months slower
6-months faster
U.S. Workers' Compensation:
Tail factor increase(a)
Tail factor decrease(b)
1,200
(750)
600
(550)
600
(550)
800
(550)
(a) Tail factor increase of 2.5 percentage points for guaranteed cost business and 3 percentage points for deductible business.
(b) Tail factor decrease of 1 percentage point for guaranteed cost business and 1.5 percentage points for deductible business.
For additional information on our reserving process and methodology, see Note 13 to the Consolidated Financial Statements.
FUTURE POLICY BENEFITS FOR LIFE AND ACCIDENT AND HEALTH INSURANCE CONTRACTS
Long-duration traditional products primarily include whole life insurance, term life insurance, and certain payout annuities for which
the payment period is life-contingent, which include certain of our single premium immediate annuities including pension risk transfer
(PRT) and structured settlements. In addition, these products also include accident and health, and long-term care (LTC) insurance.
The LTC block is in run-off and has been fully reinsured with Fortitude Re.
Updating net premiums ratios (NPRs) – Remeasurement gains and losses: Generally, future policy benefits are payable over an
extended period of time and related liabilities are calculated as the present value of future benefits less the present value of future net
premiums (portion of the gross premium required to provide for all benefits and expenses). The assumptions used to calculate the
benefit liabilities are initially set when a policy is issued and an NPR is established. Benefit liabilities are subsequently remeasured
periodically to reflect changes in policy assumptions and actual versus expected experience and are recognized as remeasurement
gains and losses, a component of policyholder benefits. The assumptions include mortality, morbidity and persistency. These
assumptions are typically consistent with pricing inputs at policy issuance. Liabilities are accreted using an upper-medium grade (low
credit risk) fixed income instrument yield that is locked-in at policy issuance. The liabilities are remeasured at the balance sheet date
using a current upper-medium grade yield with changes in the liabilities reported in Other comprehensive income (loss) (OCI).
For universal life policies with secondary guarantees: We recognize certain liabilities in addition to policyholder account balances.
For universal life policies with secondary guarantees, as well as other universal life policies for which profits followed by losses are
expected at contract inception, a liability is recognized based on a benefit ratio of (a) the present value of total expected payments, in
excess of the account value, over the life of the contract, divided by (b) the present value of total expected assessments over the life
of the contract. Universal life account balances are reported in Policyholder contract deposits, while these additional liabilities related
to universal life products are reported within Future policy benefits in the Consolidated Balance Sheets. These additional liabilities are
also adjusted to reflect the effect of unrealized gains or losses on fixed maturity securities available for sale on accumulated
assessments, with related changes recognized through Other comprehensive income (loss). The policyholder behavior assumptions
for these liabilities include mortality, lapses and premium persistency. The capital market assumptions used for the liability for
universal life secondary guarantees include discount rates and net earned rates.
AIG | 2023 Form 10-K
53
ITEM 7 | Critical Accounting Estimates
MARKET RISK BENEFITS
Annuity products offered by our Individual Retirement and Group Retirement segments offer guaranteed benefit features (collectively
known as GMxBs). These guaranteed features include guaranteed minimum death benefits (GMDB) that are payable in the event of
death and guaranteed minimum withdrawal benefits (GMWB) that guarantee lifetime withdrawals regardless of fixed account and
separate account value performance. For additional information on these features, see Note 14 to the Consolidated Financial
Statements.
GMxBs are recognized as MRBs and can be assets or liabilities, and represent the expected value of benefits in excess of the
projected account value, with changes in fair value of MRBs recognized in the Consolidated Statements of Income (Loss) and the
portion of the fair value change attributable to our own credit risk recognized in OCI.
Our exposure to the guaranteed amounts is equal to the amount by which the contract holder’s account balance is below the amount
provided by the guaranteed feature. A deferred annuity contract may include more than one type of GMxB; for example, it may have
both a GMDB and a GMWB. However, a policyholder can generally only receive payout from one guaranteed feature on a contract
containing a death benefit and a living benefit, i.e., the features are generally mutually exclusive (except a surviving spouse who has a
rider to potentially collect both a GMDB upon their spouse’s death and a GMWB during his or her lifetime). A policyholder cannot
purchase more than one living benefit on one contract. Declines in the equity markets, increased volatility and a low interest rate
environment generally increase our exposure to potential benefits under the guaranteed features, leading to an increase in the
liabilities for those benefits.
For additional information on market risk management related to these product features, see Enterprise Risk Management –
Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Fixed Index Annuity and Index Universal Life Risk
Management and Hedging Programs.
The valuation methodology and assumptions used to measure our GMxBs is presented in the following table:
Guaranteed Benefit
Feature
Fair Value
Methodology
Reserving Methodology &
Key Assumptions
Guaranteed minimum benefits on annuity products are market risk benefits that are required to be measured at fair value with
changes in the fair value of the liabilities recorded in changes in the fair value of market risk benefits, except for changes
related to the Company's own credit risk which are recorded in AOCI. The fair value of these benefits is based on
assumptions that a market participant would use in valuing these MRBs.
The Company applies a non-option-based approach for variable products, and an option-based approach for fixed index and
fixed products. Under the non-option-based approach, a portion of actual fees (i.e., attributed fees) is determined such that
the present value of expected benefits less attributed fees is zero at issue. This calculated ratio is locked in and utilized in
each policy valuation going forward and results in an MRB value of zero at policy issue. Under the option-based approach,
the MRB value at issue represents the present value of expected benefits after account value exhaustion. There is no
calculated attributed fee ratio under this approach; as such, the calculated MRB liability at inception requires an equal and
offsetting adjustment to the underlying host contract. Consistent with the non-option-based approach, this results in no gains
or losses recognized upon policy issuance.
The fair value of the market risk benefits, which are Level 3 assets and liabilities, is based on a risk-neutral framework and
incorporates actuarial and capital market assumptions related to projected cash flows over the expected lives of the contracts.
For additional information on how we value for MRBs, see Note 14 to the Consolidated Financial Statements, and for
information on fair value measurement of these MRBs, including how we incorporate our own non-performance risk, see Note
5 to the Consolidated Financial Statements.
Key
Assumptions
Key assumptions include:
•
•
interest rates;
equity market returns;
• market volatility;
•
•
•
•
credit spreads;
equity / interest rate correlation;
policyholder behavior, including mortality, lapses, withdrawals and benefit utilization. Estimates of future policyholder
behavior are subject to judgment and based primarily on our historical experience; and
in applying asset growth assumptions for the valuation of MRBs, we use market-consistent assumptions calibrated to
observable interest rate and equity option prices.
For the fixed index annuity GMxB liability, policyholder funds are projected assuming growth equal to current option values for
the current crediting period followed by option budgets for all subsequent crediting periods. Policyholder fund growth
projected assuming credited rates are expected to be maintained at a target pricing spread, subject to guaranteed minimums.
54
AIG | 2023 Form 10-K
ITEM 7 | Critical Accounting Estimates
VALUATION OF EMBEDDED DERIVATIVES FOR FIXED INDEX ANNUITY AND INDEX UNIVERSAL LIFE
PRODUCTS
Fixed index annuity and life products provide growth potential based in part on the performance of market indices. Certain fixed index
annuity products offer optional guaranteed benefit features similar to those offered on variable annuity products. Policyholders may
elect to rebalance among the various accounts within the product at specified renewal dates. At the end of each index term, we
generally have the opportunity to re-price the index component by establishing different participation rates or caps on index credited
rates. The index crediting feature of these products results in the recognition of an embedded derivative that is required to be
bifurcated from the host contract and carried at fair value with changes in the fair value of the liabilities recorded in Net realized gains
(losses). Option pricing models are used to estimate fair value, taking into account assumptions for future index growth rates, volatility
of the index, future interest rates, and our ability to adjust the participation rate and the cap on index credited rates in light of market
conditions and policyholder behavior assumptions.
For additional information on market risk management related to these product features, see Enterprise Risk Management –
Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Fixed Index Annuity and Index Universal Life Risk
Management and Hedging Programs.
The following table summarizes the sensitivity of changes in certain assumptions for MRBs, liability for Future policyholder
benefits, net of reinsurance and embedded derivatives related to index-linked interest credited features, measured as the
related hypothetical impact for the December 31, 2023 balances and the resulting hypothetical impact on pre-tax income and
OCI, before hedging:
(in millions)
Assumptions:
Equity Return(a)
Effect of an increase by 20%
Effect of a decrease by 20%
Interest Rate(b)
Effect of an increase by 1%
Effect of a decrease by 1%
December 31, 2023
Increase (Decrease) Due to Changes in MRBs,
Liability for Future Policyholder Benefits, and
Embedded Derivatives Related to Index-Linked
Interest Credited Features
$
Pre-Tax
Income
$
157
(238)
2,323
(3,087)
Other
Comprehensive
Income (Loss)
Impact
153
(126)
2,920
(3,514)
(a) Represents the net impact of a 20 percent increase or decrease in the S&P 500 index.
(b) Represents the net impact of one percent parallel shift in the yield curve.
The sensitivities of 20 percent and one percent are included for illustrative purposes only and do not reflect the changes in net
investment spreads, equity return, volatility, interest rate, mortality or lapse used by AIG in its fair value analyses to value other
applicable liabilities. Changes different from those illustrated may occur in any period and by different products.
The change in pre-tax income due to variances in equity returns or interest rates reflects the impact to MRBs using the at-issue Non-
performance Risk Adjustment (NPA) and the change in embedded derivatives related to index-linked interest credit features. The
change in OCI due to equity returns solely reflects the impact on MRBs due to changes in the NPA, while the change in OCI due to
interest rates also reflects the impact to the Liability for future policyholder benefits, net of reinsurance.
The analysis of MRBs and embedded derivatives is a dynamic process that considers all relevant factors and assumptions described
above. We estimate each of the above factors individually, without the effect of any correlation among the key assumptions. An
assessment of sensitivity associated with changes in any single assumption would not necessarily be an indicator of future results.
The effects on pre-tax income in the sensitivity analysis table above do not reflect the related effects from our economic hedging
program, which utilizes derivative and other financial instruments and is designed so that changes in value of those instruments move
in the opposite direction of changes in the guaranteed benefit MRBs and embedded derivative liabilities.
For additional information on guaranteed benefit features of our variable annuities and the related hedging program, see Notes 5, 9,
13 and 14 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
55
ITEM 7 | Critical Accounting Estimates
REINSURANCE ASSETS
In the ordinary course of business, our insurance companies may use both treaty and facultative reinsurance to minimize their net
loss exposure to any single catastrophic loss event or to an accumulation of losses from a number of smaller events or to provide
greater diversification of our businesses. Reinsurance assets include the balances due from reinsurance and insurance companies
under the terms of our reinsurance agreements for paid and unpaid losses and loss adjustment expenses incurred, ceded unearned
premiums and ceded future policy benefits for life and accident and health insurance contracts and benefits paid and unpaid. The
estimation of reinsurance recoverables involves a significant amount of judgment. Reinsurance assets include reinsurance
recoverables on unpaid losses and loss adjustment expenses that are estimated as part of our loss reserving process and,
consequently, are subject to similar judgments and uncertainties as the estimation of gross loss reserves. For additional information
on reinsurance, see Note 8 to the Consolidated Financial Statements.
GOODWILL IMPAIRMENT
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually
identified and separately recognized. Goodwill is tested for impairment annually, or more frequently if circumstances indicate an
impairment may have occurred. A qualitative assessment may be performed, considering whether events or circumstances exist that
lead to a determination that it is not more likely than not that the fair value of an operating segment is less than its carrying value. If
management elects to perform a quantitative assessment to determine recoverability of carrying value or is compelled to do so based
on the results of a qualitative assessment, the estimate of fair value involves applying one or a combination of common valuation
approaches. These include discounted expected future cash flows, market-based earnings multiples and external appraisals, among
other methods, all of which require management judgment and are subject to uncertainty, primarily as it relates to assumptions around
business growth, earnings projections, and cost of capital.
For additional information on goodwill impairment, see Part I, Item 1A. Risk Factors – Estimates and Assumptions and Note 12 to the
Consolidated Financial Statements.
ALLOWANCE FOR CREDIT LOSSES ON CERTAIN INVESTMENTS
We maintain an allowance for the expected lifetime credit losses of commercial and residential mortgage loans and available for sale
securities. The sufficiency of this allowance is reviewed quarterly using both quantitative and qualitative considerations, which are
subject to risks and uncertainties. These considerations and the overall methodology used to estimate the allowance for credit losses
are discussed in more detail in Note 6 and Note 7 to the Consolidated Financial Statements for available for sale securities and
Commercial and residential loans, respectively.
FAIR VALUE MEASUREMENTS OF CERTAIN FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are measured and classified in a hierarchy for
disclosure purposes consisting of three levels based on the observability of inputs available in the marketplace used to measure the
fair value. We classify fair value measurements for certain assets and liabilities as Level 3 when they require significant unobservable
inputs in their valuation. We consider unobservable inputs to be those for which market data is not available. Our assessment of the
significance of a particular input to the fair value measurement of an asset or liability requires judgment.
For additional information about the valuation methodologies of financial instruments measured at fair value, see Note 5 to the
Consolidated Financial Statements.
INCOME TAXES
Deferred income taxes represent the tax effect of the differences between the amounts recorded in our Consolidated Financial
Statements and the tax basis of assets and liabilities. Our assessment of net deferred income taxes represents management’s best
estimate of the tax consequences of various events and transactions, which can themselves be based on other accounting estimates,
resulting in incremental uncertainty in the estimation process.
Deferred Tax Asset Recoverability
The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive
and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be
realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. As such, changes in
tax laws in countries where we transact business can impact our deferred tax asset valuation allowance. We consider multiple factors
to reliably estimate future taxable income so we can determine the extent of our ability to realize net operating losses, foreign tax
credits, realized capital loss and other carryforwards. These factors include forecasts of future income for each of our businesses,
which incorporate forecasts of future statutory income for our insurance companies, and actual and planned business and operational
changes, both of which include assumptions about future macroeconomic and AIG-specific conditions and events. We subject the
56
AIG | 2023 Form 10-K
ITEM 7 | Critical Accounting Estimates
forecasts to stresses of key assumptions and evaluate the effect on tax attribute utilization. We also apply stresses to our
assumptions about the effectiveness of relevant prudent and feasible tax planning strategies. In performing our assessment of
recoverability, we consider tax laws governing the utilization of net operating loss, capital loss and foreign tax credit carryforwards in
each applicable jurisdiction. These tax laws are subject to change, resulting in incremental uncertainty in our assessment of
recoverability.
Uncertain Tax Positions
Uncertain tax positions represent AIG’s liability for income taxes on tax years subject to review by the Internal Revenue Service (IRS)
or other tax authorities. We determine whether it is more likely than not that a tax position will be sustained, based on technical merits,
upon examination by the relevant taxing authorities before any part of the benefit can be recognized in the financial statements. A tax
position is measured at the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. The
completion of review, or the expiration of federal statute of limitations for a given audit period could result in an adjustment to the
liability for income taxes.
For a discussion of our framework for assessing the recoverability of our deferred tax asset and other tax topics, see Note 23 to the
Consolidated Financial Statements.
Executive Summary
OVERVIEW
This overview of the MD&A highlights selected information and may not contain all of the information that is important to current or
potential investors in our securities. You should read this Annual Report in its entirety for a more detailed description of events, trends,
uncertainties, risks and critical accounting estimates affecting us.
Adoption of Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the Financial Accounting Standards Board (FASB) issued an accounting standard update with the objective of making
targeted improvements to the existing recognition, measurement, presentation and disclosure requirements for long-duration
contracts issued by an insurance entity.
The Company adopted the targeted improvements to the accounting for long-duration contracts (the standard or LDTI) on January 1,
2023, with a transition date of January 1, 2021 (as described in additional detail below).
The Company adopted the standard using the modified retrospective transition method relating to liabilities for traditional and limited
payment contracts and deferred policy acquisition costs associated therewith, while the Company adopted the standard in relation to
MRBs on a retrospective basis. Based upon this transition method, as of the January 1, 2021 transition date (Transition Date), the
impact of the adoption of the standard was a net decrease to beginning AOCI of $2.2 billion and a net increase to beginning Retained
earnings of $933 million.
The net increase in Retained earnings resulted from:
• The reclassification of the cumulative effect of non-performance adjustments related to our products in Individual Retirement and
Group Retirement operating segments that are currently measured at fair value (e.g., living benefit guarantees associated with
variable annuities),
Partially offset by:
• A reduction from the difference between the fair value and carrying value of benefits not previously measured at fair value (e.g.,
death benefit guarantees associated with variable annuities).
The net decrease in AOCI resulted from:
• The reclassification of the cumulative effect of non-performance adjustments discussed above,
• Changes to the discount rate which will most significantly impact our Life Insurance and Institutional Markets segments,
Partially offset by:
• The removal of Deferred policy acquisition costs, Unearned revenue reserves, Sales inducement assets and certain future
policyholder benefit balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments.
AIG | 2023 Form 10-K
57
ITEM 7 | Executive Summary
REGULATORY, INDUSTRY AND ECONOMIC FACTORS
Russia/Ukraine Conflict
The Russia/Ukraine conflict began in February 2022. The conflict has and may continue to have a significant impact on the global
macroeconomic and geopolitical environments, including increased volatility in capital and commodity markets, rapid changes to
regulatory conditions around the globe including the use of sanctions, operational challenges for multinational corporations,
inflationary pressures and an increased risk of cybersecurity incidents.
The conflict is evolving and has the potential to adversely affect our business and results of operations from an investment,
underwriting and operational perspective. While we believe we have taken appropriate actions to minimize related risk, we continue to
monitor potential exposure and operational impacts, as well as any actual and potential claims activity. The ultimate impact will
depend on future developments that are uncertain and cannot be predicted, including scope, severity and duration, the governmental,
legislative and regulatory actions taken (including the application of sanctions), and court decisions, if any, rendered in response to
those actions.
Impact of Changes in the Interest Rate Environment and Equity Markets
Certain key U.S. benchmark rates continued to rise during 2023 as markets reacted to heightened inflation measures, geopolitical
risk, and the Board of Governors of the Federal Reserve System implementing multiple increases to short term interest rates. The
yield pick of new investments over sales, maturities and paydowns and redemptions, excluding Fortitude Re, averaged 195 basis
points during 2023. This combined with resetting of coupon rates on floating rate securities and loans has steadily improved the
overall portfolio yields. However, the key benchmark rates remain highly volatile. We actively manage our exposure to the interest rate
environment through portfolio construction and asset-liability management, including spread management strategies for our
investment-oriented products and economic hedging of interest rate risk from guarantee features in our variable and fixed index
annuities, but we may not be able to fully mitigate our interest rate risk by matching exposure of our assets relative to our liabilities.
Equity Markets
Our financial results are impacted by the performance of equity markets, which impacts the performance of our alternative investment
portfolio, fee income and net amount at risk. For instance, in our variable annuity separate accounts, mutual fund assets and
brokerage and advisory assets, we generally earn fee income based on the account value, which fluctuates with the equity markets
as a significant amount of these assets are invested in equity funds. The impact of equity market returns, both increases and
decreases, is reflected in our results due to the impact on the account value and the fair values of equity-exposed securities.
In Life and Retirement, hedging costs could also be significantly impacted by changes in the level of equity markets as rebalancing
and option costs are tied to the equity market volatility. These hedging costs are partially offset by our rider fees that are tied to the
level of the Chicago Board Options Exchange Volatility Index. As rebalancing and option costs increase or decrease, the rider fees will
increase or decrease partially offsetting the hedging costs incurred.
Market and other economic factors may result in increased credit impairments, downgrades and losses across single or numerous
asset classes due to lower collateral values or deteriorating cash flow and profitability by borrowers could lead to higher defaults on
our investment portfolio, especially in geographic, industry or investment sectors where we have higher concentrations of exposure,
such as real estate related borrowings. These factors can also cause widening of credit spreads which could reduce investment asset
valuations, decrease fee income and increase statutory capital requirements, as well as reduce the availability of investments that are
attractive from a risk-adjusted perspective.
Alternative investments include private equity funds which are generally reported on a one-quarter lag. Accordingly, changes in
valuations driven by equity market conditions during the fourth quarter of 2023 may impact the private equity investments in the
alternative investments portfolio in the first quarter of 2024.
Annuity Sales and Surrenders
The rising rate environment and our partnership with Blackstone Inc. and its investment advisory affiliates (Blackstone) have provided
a strong tailwind for fixed and fixed index annuity sales, however, higher interest rates have also resulted in an increase in surrenders.
Rising interest rates could continue to create the potential for increased sales, but could also drive higher surrenders relative to what
we have already experienced. Fixed annuities have surrender charge periods, generally in the three-to-seven year range. Fixed index
annuities have surrender charge periods, generally in the five-to-ten year range, and within our Group Retirement segment, certain of
our fixed investment options are subject to other withdrawal restrictions, which may help mitigate increased early surrenders in a
rising rate environment. In addition, older contracts that have higher minimum interest rates and continue to be attractive to contract
holders have driven better than expected persistency in fixed annuities, although the reserves for such contracts have continued to
decrease over time in amount and as a percentage of the total annuity portfolio. We closely monitor surrenders of fixed annuities as
contracts with lower minimum interest rates come out of the surrender charge period.
58
AIG | 2023 Form 10-K
ITEM 7 | Executive Summary
Reinvestment and Spread Management
We actively monitor fixed income markets, including the level of interest rates, credit spreads and the shape of the yield curve. We
also frequently review our interest rate assumptions and actively manage the crediting rates used for new and in-force business.
Business strategies continue to evolve and we attempt to maintain profitability of the overall business in light of the interest rate
environment. A rising interest rate environment results in improved yields on new investments and improves margins for our Life and
Retirement business while also making certain products, such as fixed annuities, more attractive to potential customers. However, the
rising rate environment has resulted in lower values on general and separate account assets, mutual fund assets and brokerage and
advisory assets that hold investments in fixed income assets.
For additional information on our investment and asset-liability management strategies, see Investments.
For investment-oriented products, including universal life insurance, and variable, fixed and fixed index annuities, in our Individual
Retirement, Group Retirement, Life Insurance and Institutional Markets businesses, our spread management strategies include
disciplined pricing and product design for new business, modifying or limiting the sale of products that do not achieve targeted
spreads, using asset-liability management to match assets to liabilities to the extent practicable, and actively managing crediting rates
to help mitigate some of the pressure on investment spreads. Renewal crediting rate management is guided by specific contract
provisions designed to allow crediting rates to be reset at pre-established intervals and subject to minimum crediting rate guarantees.
We expect to continue to adjust crediting rates on in-force business, as appropriate, to be responsive to changing rate environments.
As interest rates rise, we may need to raise crediting rates on in-force business for competitive and other reasons, potentially
offsetting a portion of the additional investment income resulting from investing in a higher interest rate environment.
Of the aggregate fixed account values of our Individual Retirement and Group Retirement annuity products, 54 percent were crediting
at the contractual minimum guaranteed interest rate as of December 31, 2023. The percentage of fixed account values of our annuity
products that are currently crediting at rates above one percent were 50 percent and 55 percent as of December 31, 2023 and 2022,
respectively. In the universal life products in our Life Insurance business, 59 percent and 62 percent of the account values were
crediting at the contractual minimum guaranteed interest rate as of December 31, 2023 and 2022, respectively. These businesses
continue to focus on pricing discipline and strategies to manage the minimum guaranteed interest crediting rates offered on new sales
in the context of regulatory requirements and competitive positioning.
General Insurance
Our net investment income is significantly impacted by market interest rates as well as the deployment of asset allocation strategies to
manage duration, enhance yield and manage interest rate risk. As interest rates increase, so too does our ability to reinvest future
cash inflows from premiums, as well as sales and maturities of existing investments, at more favorable rates. For additional
information on our investment and asset-liability management strategies, see Investments.
While the impact of rising interest rates on our General Insurance segment increases the benefit of investment income, the current
and medium-term inflationary environment may also translate into higher loss cost trends. We monitor these trends closely,
particularly loss cost trend uncertainty, to ensure that not only our pricing, but also our loss reserving assumptions are proactive to,
and considerate of, current and future economic conditions.
For our General Insurance segment loss reserves, rising interest rates may favorably impact the statutory net loss reserve discount
for workers’ compensation and its associated amortization.
Impact of Currency Volatility
Currency volatility remains acute. Strengthening of the U.S. dollar against the Euro, British pound and the Japanese yen (the Major
Currencies) impacts income for our businesses with substantial international operations. In particular, growth trends in net premiums
written reported in U.S. dollars can differ significantly from those measured in original currencies. The net effect on underwriting
results, however, is significantly mitigated, as both revenues and expenses are similarly affected.
These currencies may continue to fluctuate, especially as a result of central bank responses to inflation, concerns regarding future
economic growth and other macroeconomic factors, and such fluctuations will affect net premiums written growth trends reported in
U.S. dollars, as well as financial statement line item comparability.
AIG | 2023 Form 10-K
59
General Insurance businesses are transacted in most major foreign currencies. The following table presents the average of
the quarterly weighted average exchange rates of the Major Currencies, which have the most significant impact on our
businesses:
ITEM 7 | Executive Summary
Years Ended December 31,
Rate for 1 USD
Currency:
GBP
EUR
JPY
2023
2022
2021
2023 vs 2022
2022 vs 2021
Percentage Change
0.81
0.93
139.79
0.81
0.95
129.67
0.73
0.84
108.92
— %
(2) %
8 %
11 %
13 %
19 %
Unless otherwise noted, references to the effects of foreign exchange in the General Insurance discussion of results of operations are
with respect to movements in the Major Currencies included in the preceding table.
Consolidated Results of Operations
The following section provides a comparative discussion of our consolidated results of operations on a reported basis for the three-
year period ended December 31, 2023. Factors that relate primarily to a specific business are discussed in more detail within the
business segment operations section.
For information regarding the critical accounting estimates that affect our results of operations, see Critical Accounting Estimates.
The following table presents our consolidated results of operations and other key financial metrics:
Years Ended December 31,
(in millions)
Revenues:
Premiums
Policy fees
Net investment income:
2023
2022
2021
2023 vs 2022
2022 vs 2021
Percentage Change
$ 33,254
2,797
$ 31,856
2,913
$ 31,285
3,005
4 %
(4)
2 %
(3)
Net investment income - excluding Fortitude Re funds withheld assets 13,048
1,544
Net investment income - Fortitude Re funds withheld assets
14,592
Total net investment income
10,824
943
11,767
12,641
1,971
14,612
Net realized gains (losses):
Net realized gains (losses) - excluding Fortitude Re funds withheld
assets and embedded derivative
Net realized gains (losses) on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld
embedded derivative
Total net realized gains (losses)
Other income
Total revenues
Benefits, losses and expenses:
Policyholder benefits and losses incurred (including remeasurement
losses of $342, $304 and $247 for the years ended December 31,
2023, 2022 and 2021, respectively)
Change in the fair value of market risk benefits, net
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
General operating and other expenses
Interest expense
(Gain) loss on extinguishment of debt
Net (gain) loss on divestitures and other
Total benefits, losses and expenses
Income from continuing operations before income tax expense
(benefit)
Income tax expense (benefit):
Current
Deferred
Income tax expense (benefit)
60
AIG | 2023 Form 10-K
(2,306)
(295)
69
(486)
1,871
1,003
(2,007)
(4,608)
767
46,802
7,481
7,064
850
54,450
(603)
2,271
984
52,157
24,755
2
4,424
4,808
8,499
1,136
(37)
(643)
42,944
22,176
(958)
3,744
4,557
9,122
1,125
303
82
40,151
23,785
(447)
3,570
4,524
8,728
1,305
389
(3,044)
38,810
3,858
14,299
13,347
491
(511)
(20)
517
2,508
3,025
(45)
2,486
2,441
21
64
24
NM
39
NM
NM
(10)
(14)
12
NM
18
6
(7)
1
NM
NM
7
(73)
(5)
NM
NM
(14)
(52)
(19)
(96)
NM
NM
211
(14)
4
(7)
(114)
5
1
5
(14)
(22)
NM
3
7
NM
1
24
Years Ended December 31,
(in millions)
Income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to AIG
Less: Dividends on preferred stock
ITEM 7 | Consolidated Results of Operations
2023
2022
2021
2023 vs 2022
2022 vs 2021
Percentage Change
3,878
11,274
10,906
—
(1)
—
3,878
11,273
10,906
235
1,046
539
3,643
10,227
10,367
29
29
29
(66)
NM
(66)
(78)
(64)
—
3
NM
3
94
(1)
—
Net income attributable to AIG common shareholders
$ 3,614
$ 10,198
$ 10,338
(65) %
(1) %
Years Ended December 31,
Return on common equity
Adjusted return on common equity
(in millions, except per common share data)
Balance sheet data:
Total assets
Short-term and long-term debt
Debt of consolidated investment entities
Total AIG shareholders’ equity
Book value per common share
Adjusted book value per common share
2023
8.6 %
9.0 %
2022
20.7 %
7.1 %
2021
16.0 %
9.2 %
December 31, 2023
December 31, 2022
$
539,306 $
522,228
19,796
2,591
45,351
65.14
76.65
21,299
5,880
40,970
55.15
75.90
NET INCOME (LOSS) ATTRIBUTABLE TO AIG COMMON SHAREHOLDERS
Years Ended December 31, 2023 and 2022 Comparison
Net income (loss) attributable to AIG common shareholders decreased $6.6 billion due to the following, on a pre-tax basis:
• a decrease in Net realized gains on Fortitude Re funds withheld embedded derivative of $9.5 billion driven by interest rate
movement partially offset by lower Net realized losses on Fortitude Re funds withheld assets of $191 million; and
• a decrease in Net realized gains excluding Fortitude Re funds withheld assets and embedded derivative of $2.4 billion, driven by a
$2.3 billion decrease in derivative and hedge activity and gains on Index-linked interest credited embedded derivatives, net of
related hedges.
The decrease in Net income (loss) attributable to AIG common shareholders was partially offset by the following, on a pre-tax basis:
• an increase in Net investment income of $2.8 billion primarily driven by higher income on available for sale fixed maturity securities
of $2.0 billion and an increase in the fair value of fixed maturity securities where we elected the fair value option of $1.2 billion as a
result of the higher interest rate environment and an increase in interest income on mortgages and other loans of $525 million,
partially offset by lower returns on our alternative investments of $670 million;
• an increase in underwriting income in General Insurance of $301 million, reflecting lower catastrophe losses and premium growth
with improvement in the accident year loss ratio, as adjusted, primarily driven by changes in business mix along with continued
positive rate change, focused risk selection and improved terms and conditions partially offset by lower net favorable prior year
reserve development and higher expense ratio;
• a decrease in income attributable to noncontrolling interest of $811 million primarily driven by the decrease in the noncontrolling
interest on Corebridge as a result of a decline in net income at Corebridge compared to 2022 and lower ownership by AIG of
Corebridge common stock;
• an increase in Net (gain) loss on divestitures and other from a loss of $82 million in 2022 to a gain of $643 million in 2023, primarily
due to the sale of Laya Healthcare Limited (Laya); and
• a decrease in general operating expenses.
The $3.0 billion decrease in income tax expense was primarily attributable to lower income from continuing operations.
AIG | 2023 Form 10-K
61
ITEM 7 | Consolidated Results of Operations
Years Ended December 31, 2022 and 2021 Comparison
Net income (loss) attributable to AIG common shareholders decreased $140 million due to the following, on a pre-tax basis:
•
•
lower net gains on divestitures and other due to loss of $82 million in 2022 compared with net gains on divestitures and other in
2021 due to the recognition of $3.0 billion gain from the sale of the Affordable Housing portfolio and $102 million gain from the sale
of certain assets of the Retail Mutual Funds business in 2021;
lower net investment income of $2.8 billion primarily driven by lower returns on our alternative investments of $1.9 billion and
declines in fair value of fixed maturity securities where we elected the fair value option of $810 million as a result of the higher rate
environment and negative equity market performance;
• a decrease in Net realized gains excluding Fortitude Re funds withheld assets and embedded derivative of $1.8 billion, driven by
losses on sales of securities of $1.1 billion and sales of alternative investments and real estate of $795 million, unfavorable
movement in the allowance for credit losses on fixed maturity securities and loans of $421 million and absence of realized gains
related to Affordable Housing portfolio sale in 2021 of $219 million, partially offset by a $856 million increase in derivative and
hedge activity and gains on Index-linked interest credited embedded derivatives, net of related hedges;
• a decrease in Net realized gains on Fortitude Re funds withheld assets of $1.5 billion driven by losses on sales of available for sale
fixed maturity securities of $1.0 billion and sales of alternative investments of $194 million and $162 million decrease in derivative
and hedge activity; and
• higher income attributable to noncontrolling interest of $507 million driven by the sale of 9.9 percent interest of Corebridge to
Blackstone in December 2021 and the 12.4 percent initial public offering (IPO) of Corebridge in September 2022.
The decrease in Net income (loss) attributable to AIG common shareholders was partially offset by the following, on a pre-tax basis:
• an increase in Net realized gains on Fortitude Re funds withheld embedded derivative of $8.1 billion driven by interest rate
movements;
• higher underwriting income in General Insurance of $1.1 billion, including $86 million attributable to eliminating the international
reporting lag, reflecting the continued earn-in of positive rate change, strong renewal retentions and new business production, as
well as increased favorable prior year development and lower catastrophe losses. Underwriting income was negatively impacted
by unfavorable movements in foreign exchange. For additional information on the elimination of the international reporting lag, see
Note 1 to the to the Consolidated Financial Statements; and
•
lower interest expense of $180 million primarily driven by interest savings of $225 million from $9.4 billion debt repurchases,
through cash tender offers and debt redemptions in 2022 as well as $92 million from $3.6 billion of debt repurchases, through cash
tender offers and debt redemptions in 2021, as well as interest savings of $100 million on debt borrowing due to the sale of
Affordable Housing in 2021. These decreases are partially offset by interest expense of $240 million on $6.5 billion Corebridge
senior unsecured notes, $1.5 billion draw down on the Corebridge 3-Year Delayed Draw Term Loan Agreement (the DDTL Facility)
and $1.0 billion junior subordinated debt issued by Corebridge in 2022.
The $584 million increase in income tax expense was primarily attributable to higher income from continuing operations.
INCOME TAX EXPENSE ANALYSIS
For the years ended December 31, 2023, 2022 and 2021, the effective tax rate on income (loss) from continuing operations was
(0.5) percent, 21.2 percent and 18.3 percent, respectively.
For additional information, see Note 23 to the Consolidated Financial Statements.
62
AIG | 2023 Form 10-K
NON-GAAP RECONCILIATIONS
ITEM 7 | Consolidated Results of Operations
The following table presents a reconciliation of Book value per common share to Adjusted book value per common share,
which is a non-GAAP measure. For additional information, see Use of Non-GAAP Measures.
(in millions, except per common share data)
Total AIG shareholders' equity
Preferred equity
Total AIG common shareholders' equity
Less: Deferred tax assets
Less: Accumulated other comprehensive income (loss)
Add: Cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds
withheld assets
Adjusted common shareholders' equity
Total common shares outstanding
Book value per common share
Adjusted book value per common share
December 31,
2023
2022
2021
$
45,351 $
40,970 $
66,068
485
44,866
4,313
(14,037)
(1,791)
485
40,485
4,518
(22,616)
(2,862)
485
65,583
5,221
5,071
2,791
(12,246)
(19,754)
2,280
$
52,799 $
55,721 $
58,082
688.8
734.1
$
65.14 $
55.15 $
76.65
75.90
818.7
80.11
70.94
The following table presents a reconciliation of Return on common equity to Adjusted return on common equity, which is a
non-GAAP measure. For additional information, see Use of Non-GAAP Measures.
Years Ended December 31,
(dollars in millions)
Actual or annualized net income (loss) attributable to AIG common shareholders
Actual or annualized adjusted after-tax income attributable to AIG common shareholders
Average AIG common shareholders' equity
Less: Average DTA
Less: Average AOCI
Add: Average cumulative unrealized gains and losses related to Fortitude Re funds withheld assets
Subtotal: AOCI plus cumulative unrealized gains and losses related to Fortitude Re funds withheld
assets
Average adjusted AIG common shareholders' equity
Return on common equity
Adjusted return on common equity
$
$
2023
3,614
4,921
2022
$ 10,198
4,036
2021
$ 10,338
4,934
41,930
4,322
(19,499)
(2,475)
$ 49,338
4,796
(13,468)
(1,053)
$ 64,445
7,025
7,240
3,200
(17,024)
54,632
(12,415)
$ 56,957
4,040
$ 53,380
$
8.6 %
9.0 %
20.7 %
7.1 %
16.0 %
9.2 %
The following table presents a reconciliation of revenues to adjusted revenues:
Years Ended December 31,
(in millions)
Revenues
Changes in fair value of securities used to hedge guaranteed living benefits
Changes in the fair value of equity securities
Other (income) expense - net
Net investment income on Fortitude Re funds withheld assets
Net realized (gains) losses on Fortitude Re funds withheld assets
Net realized (gains) losses on Fortitude Re funds withheld embedded derivative
Net realized (gains) losses(a)
Non-operating litigation reserves and settlements
Net impact from elimination of international reporting lag(b)
Adjusted revenues
2023
2022
$
46,802 $
(55)
54,450 $
(55)
(94)
27
(1,544)
295
2,007
2,536
(1)
53
29
(943)
486
(7,481)
195
(49)
(4)
49,969 $
(978)
45,707 $
$
2021
52,157
(60)
237
24
(1,971)
(1,003)
603
(1,705)
—
—
48,282
(a) Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-
qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets.
(b) For additional information, see Note 1 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
63
The following table presents a reconciliation of pre-tax income (loss)/net income (loss) attributable to AIG to adjusted pre-
tax income (loss)/adjusted after-tax income (loss) attributable to AIG:
ITEM 7 | Consolidated Results of Operations
Years Ended December 31,
2023
2022
2021
(in millions, except per common share data)
Pre-tax
Total Tax
(Benefit)
Charge
Non-
controlling
Interests(f)
After
Tax
Pre-tax
Total Tax
(Benefit)
Charge
Non-
controlling
Interests(f)
After
Tax
Pre-tax
Total Tax
(Benefit)
Charge
Non-
controlling
Interests(f)
After
Tax
Pre-tax income/net income, including
noncontrolling interests
Noncontrolling interests
Pre-tax income/net income attributable to
$ 3,858 $
(20) $
— $ 3,878
$ 14,299 $ 3,025 $
— $ 11,273 $ 13,347 $ 2,441 $
— $ 10,906
(235)
(235)
(1,046)
(1,046)
(539)
(539)
AIG
$ 3,858 $
(20) $
(235) $ 3,643
$ 14,299 $ 3,025 $
(1,046) $ 10,227 $ 13,347 $ 2,441 $
(539) $ 10,367
Net loss (gain) on divestitures and other
(643)
247
(3,044)
(650)
—
(2,394)
Dividends on preferred stock
Net income attributable to AIG common
shareholders
Changes in uncertain tax positions and
other tax adjustments(a)
Deferred income tax valuation allowance
(releases) charges(b)
Changes in fair value of securities used to
hedge guaranteed living benefits
Change in the fair value of market risk
benefits, net(C)
Changes in benefit reserves related to net
realized gains (losses)
Changes in the fair value of equity securities
(Gain) loss on extinguishment of debt
Net investment income on Fortitude Re
funds withheld assets
Net realized losses on Fortitude Re funds
withheld assets
Net realized (gains) losses on Fortitude Re
funds withheld embedded derivative
Net realized (gains) losses(d)
Loss from discontinued operations
Non-operating litigation reserves and
settlements
Favorable prior year development and
related amortization changes ceded under
retroactive reinsurance agreements
Net loss reserve discount (benefit) charge
Pension expense related to a one-time lump
sum payment to former employees
Integration and transaction costs associated
with acquiring or divesting businesses
Restructuring and other costs
Non-recurring costs related to regulatory or
accounting changes
Net impact from elimination of international
reporting lag(e)
Noncontrolling interests(f)
Adjusted pre-tax income/Adjusted after-
tax income attributable to AIG common
shareholders
Weighted average diluted shares
outstanding
Income per common share attributable to
AIG common shareholders (diluted)
Adjusted after-tax income per common
share attributable to AIG common
shareholders (diluted)
29
$ 3,614
—
—
—
—
—
—
—
(230)
(357)
13
2
(5)
(74)
(29)
29
$ 10,198
—
—
—
(22)
(25)
(24)
29
$ 10,338
998
—
(998)
(718)
—
718
(61)
(13)
—
(48)
22
25
(30)
(6)
(958)
(202)
—
(756)
(447)
(94)
—
(353)
(14)
53
303
(3)
11
64
—
—
—
(11)
42
239
15
237
389
3
49
82
—
—
—
12
188
307
230
357
16
3
2
—
(6)
(94)
(37)
(1)
(20)
(8)
(1,544)
(324)
—
(1,220)
(943)
(198)
—
(745)
(1,971)
(414)
—
(1,557)
295
62
2,007
2,496
422
534
1
—
(62)
195
(13)
41
84
18
252
553
40
(12)
53
116
8
(3)
—
—
—
—
—
—
—
—
—
—
—
—
233
486
102
—
384
(1,003)
(211)
—
(792)
1,585
(7,481)
(1,571)
1,962
—
173
(890)
82
38
17
1
(41)
(9)
(49)
154
66
199
437
32
(160)
(703)
(34)
(148)
60
13
194
570
37
41
120
8
—
—
—
—
—
—
—
—
—
—
(5,910)
603
126
135
(1,744)
(368)
—
—
477
(1,376)
—
1
65
(32)
3
1
(126)
(555)
47
153
450
29
(186)
(193)
(39)
(40)
34
83
433
68
7
18
91
15
—
—
—
—
—
—
—
2
(147)
(153)
27
65
342
53
(9)
(127)
(27)
—
(100)
—
—
—
—
(514)
(514)
599
599
223
223
$ 7,401 $ 1,702 $
(749) $ 4,921
$ 5,800 $ 1,288 $
(447) $ 4,036
$ 6,563 $ 1,284 $
(316) $ 4,934
725.2
$ 4.98
$ 6.79
787.9
$ 12.94
$ 5.12
864.9
$ 11.95
$ 5.70
(a) The year ended December 31, 2021 includes the completion of audit activity by the IRS.
(b) The year ended December 31, 2023 includes a valuation allowance release and the year ended December 31, 2021 includes a valuation allowance establishment,
related to a portion of certain tax attribute carryforwards of AIG's U.S. federal consolidated income tax group, as well as valuation allowance changes in certain foreign
jurisdictions.
(c) Includes realized gains and losses on certain derivative instruments used for non-qualifying (economic) hedging.
(d) Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-
qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets.
(e) For additional information, see Note 1 to the Consolidated Financial Statements.
(f)
Includes the portion of equity interest of non-operating income of Corebridge and consolidated investment entities that AIG does not own.
64
AIG | 2023 Form 10-K
PRE-TAX INCOME (LOSS) COMPARISON
Pre-tax income (loss) was $3.9 billion, $14.3 billion and $13.3 billion in the years ended December 31, 2023, 2022 and 2021,
respectively.
For the main drivers impacting AIG’s results of operations, see Net Income (Loss) Attributable to AIG Common Shareholders above.
ITEM 7 | Consolidated Results of Operations
ADJUSTED PRE-TAX INCOME (LOSS) COMPARISON
Adjusted pre-tax income (loss) was $7.4 billion, $5.8 billion and $6.6 billion in the years ended December 31, 2023, 2022 and 2021,
respectively.
For the main drivers impacting AIG’s adjusted pre-tax income (loss), see Business Segment Operations.
Business Segment Operations
Our business operations consist of General Insurance, Life and Retirement and Other Operations.
General Insurance consists of two operating segments: North America and International. Life and Retirement consists of four
operating segments: Individual Retirement, Group Retirement, Life Insurance and Institutional Markets. Other Operations is primarily
comprised of corporate, our institutional asset management business and consolidation and eliminations.
The following table summarizes Adjusted pre-tax income (loss) from our business segment operations. See also Note 3 to
the Consolidated Financial Statements.
Years Ended December 31,
(in millions)
General Insurance
North America - Underwriting income (loss)
International - Underwriting income
Net investment income
General Insurance
Life and Retirement
Individual Retirement
Group Retirement
Life Insurance
Institutional Markets
Life and Retirement
Other Operations
Other Operations before consolidation and eliminations
Consolidation and eliminations
Other Operations
Adjusted pre-tax income
2023
2022
2021
$
1,207 $
1,142
3,022
5,371
2,310
758
358
379
3,805
648 $
1,400
2,382
4,430
1,676
786
521
334
3,317
(47)
1,102
3,304
4,359
2,297
1,258
453
546
4,554
(1,765)
(10)
(1,775)
7,401 $
(1,542)
(405)
(1,947)
5,800 $
(1,418)
(932)
(2,350)
6,563
$
AIG | 2023 Form 10-K
65
ITEM 7 | Business Segment Operations | General Insurance
General Insurance
General Insurance is managed by our geographic markets of North America and International. Our
global presence is underpinned by our multinational capabilities to provide Commercial Lines and
Personal Insurance products within these geographic markets.
PRODUCTS AND DISTRIBUTION
North America consists of insurance businesses in the United
States, Canada and Bermuda, and our global reinsurance
business, AIG Re.
International consists of regional insurance businesses in Japan,
the United Kingdom, Europe, Middle East and Africa (EMEA
region), Asia Pacific, Latin America and Caribbean, and China.
International also includes the results of Talbot Holdings Ltd.
(Talbot) as well as AIG’s Global Specialty business.
Property: Products include commercial and industrial property, including business interruption, as well as package insurance
products and services that cover exposures to man-made and natural disasters.
Liability: Products include general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty
and crisis management insurance products. Casualty also includes risk-sharing and other customized structured programs for large
corporate and multinational customers.
Financial Lines: Products include professional liability insurance for a range of businesses and risks, including directors and officers,
mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions
insurance.
Specialty: Products include marine, energy-related property insurance products, aviation, political risk, trade credit, trade finance and
portfolio solutions, as well as our global reinsurance business AIG Re and Crop Risk Services, Inc. (CRS) which includes multi-peril
and hail coverages.
On July 3, 2023, AIG completed the sale of CRS to American Financial Group, Inc. (AFG) and in substance, AIG exited the crop
business. AIG recognized a pre-tax gain of $72 million for the year ended December 31, 2023. For periods prior to the sale of CRS,
the underwriting results are included in adjusted pre-tax income of General Insurance – North America.
On November 1, 2023, AIG completed the sale of Validus Re, including AlphaCat Managers Ltd. and Talbot Treaty reinsurance
business to RenaissanceRe Holdings Ltd. (RenaissanceRe). For periods prior to the sale of Validus Re, the underwriting results are
included in adjusted pre-tax income of General Insurance – North America.
For additional information, see Note 1 to the Consolidated Financial Statements.
Accident & Health: Products include voluntary and sponsor-paid personal accident and supplemental health products for individuals,
employees, associations and other organizations, as well as a broad range of travel insurance products and services for leisure and
business travelers.
Personal Lines: Products include personal auto and personal property in selected markets, comprehensive extended warranty,
device protection insurance, home warranty and related services, and insurance for high net-worth individuals offered through Private
Client Select (PCS) in the U.S. that covers auto, homeowners, umbrella, yacht, fine art and collections.
General Insurance products in North America and International markets are distributed through various channels, including captive
and independent agents, brokers, affinity partners, airlines and travel agents, and retailers. Our global platform enables writing
multinational and cross-border risks in both Commercial Lines and Personal Insurance.
66
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | General Insurance
BUSINESS STRATEGY
Profitable Growth: Build on our high-quality portfolio by focusing on targeted growth through continued underwriting discipline,
improved retentions and new business development. Deploy capital efficiently to act opportunistically and achieve growth in profitable
lines, geographies and customer segments, while taking a disciplined underwriting approach to exposure management, terms and
conditions and rate change to achieve our risk/return hurdles. Continue to be open to inorganic growth opportunities in profitable
markets and segments to expand our capabilities and footprint.
Reinsurance Optimization: Strategically partner with reinsurers to effectively manage exposure to losses arising from frequency of
large catastrophic events and severity from individual risk losses. We strive to optimize our reinsurance program to manage volatility
and protect the balance sheet from tail events and unpredictable net losses in support of our profitable growth objectives.
Underwriting Excellence: Continue to enhance portfolio optimization through strength of underwriting framework and guidelines as
well as clear communication of risk appetite and rate adequacy. Empower and increase accountability of the underwriter and continue
to integrate underwriting, claims and actuarial to enable better decision making. Focus on enhancing risk selection, driving consistent
underwriting best practices and building robust monitoring standards to improve underwriting results.
COMPETITION AND CHALLENGES
General Insurance operates in a highly competitive industry against global, national and local insurers and reinsurers and
underwriting syndicates in specific market areas and product types. Insurance companies compete through a combination of risk
acceptance criteria, product pricing, service levels and terms and conditions. We serve our business and individual customers on a
global basis – from the largest multinational corporations to local businesses and individuals. General Insurance seeks to
differentiate itself in the markets where we participate by providing leading expertise and insight to clients, distribution partners and
other stakeholders, delivering underwriting excellence and value-driven insurance solutions and providing high quality, tailored
end-to-end support to stakeholders. In doing so, we leverage our world-class global franchise, multinational capabilities, balance
sheet strength and financial flexibility.
Our challenges include:
• ensuring adequate business pricing given passage of time to reporting and settlement for insurance business, particularly with
respect to long-tail Commercial Lines exposures;
impact of social and economic inflation on claim frequency and severity; and
volatility in claims arising from natural and man-made catastrophes and other aggregations of risk exposure.
•
•
INDUSTRY AND ECONOMIC FACTORS
The results of General Insurance for the year ended December 31, 2023 reflect continued strong performance from our Commercial
Lines portfolio and focused execution on our portfolio management strategies within Personal Insurance. Across our North America
and International Commercial Lines of business we have seen increased demand for our insurance products with continued positive
rate change and improvement in terms and conditions. We continue to monitor the impact of inflation, ongoing labor force and supply
chain disruptions and volatile commodity prices, among other factors, on rate adequacy and loss cost trends. Similarly, we are
monitoring the responsive monetary policy actions taken or anticipated to be taken by central banks, to curb inflation and the
corresponding impact on market interest rates.
General Insurance – North America
North America Commercial remains in a firm market amidst a backdrop of increasing claims severity due to elevated economic and
social inflation, as well as a higher frequency and severity of natural catastrophe losses over recent years. While market discipline
continues to support price increases across most lines, we are seeing capacity move back into the market in certain segments given
the improved pricing levels which is putting pressure on rates. We have focused on retaining our best accounts which has led to
improving retention across the portfolio. These retention rates are often coupled with an exposure limit management strategy to
reduce volatility within the portfolio. We continue to proactively identify segment growth areas as market conditions warrant through
effective portfolio management, while non-renewing unprofitable business.
Personal Insurance growth prospects are supported by the need for full life cycle products and coverage, increases in personal wealth
accumulation, and awareness of insurance protection and risk management. We compete in the high net worth market, accident and
health insurance, travel insurance, and warranty services.
AIG | 2023 Form 10-K
67
ITEM 7 | Business Segment Operations | General Insurance
General Insurance – International
We are continuing to pursue growth in our most profitable lines of business and diversify our portfolio across all regions by expanding
key business lines while remaining a market leader in key developed and developing markets. Overall, Commercial Lines continue to
show positive rate change, particularly in our Property, Casualty, Marine and Energy portfolios and across international markets where
market events or withdrawal of capability and capacity have favorably impacted pricing. We are maintaining our underwriting
discipline, reducing gross and net limits where appropriate, utilizing reinsurance to reduce volatility, as well as continuing our risk
selection strategy to improve profitability.
Personal Insurance focuses on individual customers, as well as group and corporate clients. Although market competition within
Personal Insurance has increased, we continue to benefit from the underwriting quality and portfolio diversity.
GENERAL INSURANCE RESULTS
Years Ended December 31,
(in millions)
Underwriting results:
Net premiums written
Increase in unearned premiums
Net premiums earned
Losses and loss adjustment expenses incurred(a)
Acquisition expenses:
Amortization of deferred policy acquisition costs
Other acquisition expenses
Total acquisition expenses
General operating expenses
Underwriting income
Net investment income
Adjusted pre-tax income
Loss ratio(a)
Acquisition ratio
General operating expense ratio
Expense ratio
Combined ratio(a)
Adjustments for accident year loss ratio, as adjusted and
accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums
Prior year development, net of reinsurance and prior year
premiums
Accident year loss ratio, as adjusted
Accident year combined ratio, as adjusted
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$ 26,719 $ 25,512 $ 25,890
5 %
(1) %
(1,628)
25,091
(172)
25,340
(833)
25,057
14,775
15,407
16,097
3,623
1,279
4,902
3,065
2,349
3,022
3,533
1,365
4,898
2,987
2,048
2,382
3,530
1,373
4,903
3,002
1,055
3,304
NM
(1)
(4)
3
(6)
—
3
15
27
79
1
(4)
—
(1)
—
—
94
(28)
$
5,371 $
4,430 $
4,359
21 %
2 %
58.9
19.5
12.2
31.7
90.6
60.8
19.3
11.8
31.1
91.9
64.2
19.6
12.0
31.6
95.8
(4.3)
(5.0)
(5.4)
1.4
56.0
87.7
1.8
57.6
88.7
0.6
59.4
91.0
(1.9)
0.2
0.4
0.6
(1.3)
0.7
(0.4)
(1.6)
(1.0)
(3.4)
(0.3)
(0.2)
(0.5)
(3.9)
0.4
1.2
(1.8)
(2.3)
(a) Consistent with our definition of APTI, excludes net loss reserve discount and the portion of favorable or unfavorable prior year reserve development for which we have
ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.
The following table presents General Insurance net premiums written by operating segment, showing change on both
reported and constant dollar basis:
2023
2022
2021
$ 13,464 $ 12,364 $ 11,733
14,157
13,148
$ 26,719 $ 25,512 $ 25,890
13,255
Percentage Change in
U.S. dollars
Percentage Change in
Original Currency
2023 vs 2022
2022 vs 2021
2023 vs 2022
2022 vs 2021
9 %
1
5 %
5 %
(7)
(1) %
9 %
3
6 %
6 %
2
4 %
Years Ended December 31,
(in millions)
North America
International
Total net premiums written
68
AIG | 2023 Form 10-K
The following tables present General Insurance accident year catastrophes(a) by geography and number of events:
ITEM 7 | Business Segment Operations | General Insurance
(dollars in millions)
Years Ended December 31, 2023
Flooding, rainstorms and other
Windstorms and hailstorms
Winter storms
Wildfires
Earthquakes
Reinstatement premiums
Total catastrophe-related charges
Years Ended December 31, 2022
Flooding, rainstorms and other
Windstorms and hailstorms
Winter storms
Earthquakes
Russia / Ukraine
Reinstatement premiums
Total catastrophe-related charges
Years Ended December 31, 2021
Flooding, rainstorms and other
Windstorms and hailstorms
Winter storms
Wildfires
Earthquakes
Civil unrest
Reinstatement premiums
# of
Events
North
America
International
Total
$
$
$
$
$
3
26
2
2
1
34
3
18
5
1
N/A (b)
27
7
10
3
4
1
1
18
450
32
144
20
32
696
53
531
154
—
10
53
801
136
541
283
67
—
20
7
1,054
$
$
$
$
$
$
84
258
13
19
29
(1)
402
105
206
53
19
97
31
511
136
72
64
—
19
19
13
323
$
$
$
$
$
$
102
708
45
163
49
31
1,098
158
737
207
19
107
84
1,312
272
613
347
67
19
39
20
1,377
Total catastrophe-related charges
26
$
(a) Natural catastrophe losses are generally weather or seismic events, in each case, having a net impact on AIG in excess of $10 million and man-made catastrophe
losses, such as terrorism and civil unrest that exceed the $10 million threshold.
(b) As the Russia/Ukraine conflict continues to evolve the number of events is yet to be determined.
AIG | 2023 Form 10-K
69
NORTH AMERICA RESULTS
Years Ended December 31,
(in millions)
Underwriting results:
Net premiums written
Increase in unearned premiums
Net premiums earned
Losses and loss adjustment expenses incurred(a)
Acquisition expenses:
Amortization of deferred policy acquisition costs
Other acquisition expenses
Total acquisition expenses
General operating expenses
Underwriting income (loss)
Loss ratio(a)
Acquisition ratio
General operating expense ratio
Expense ratio
Combined ratio(a)
Adjustments for accident year loss ratio, as adjusted and
accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums
Prior year development, net of reinsurance and prior year
premiums
Accident year loss ratio, as adjusted
Accident year combined ratio, as adjusted
ITEM 7 | Business Segment Operations | General Insurance
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$ 13,464 $ 12,364 $ 11,733
(744)
10,989
8,134
(1,543)
11,921
7,288
(293)
12,071
8,096
1,671
539
2,210
1,216
1,207 $
1,585
520
2,105
1,222
648 $
$
61.1
18.5
10.2
28.7
89.8
67.1
17.4
10.1
27.5
94.6
1,333
440
1,773
1,129
(47)
74.0
16.1
10.3
26.4
100.4
(5.7)
(6.5)
(9.5)
3.8
59.2
87.9
1.0
61.6
89.1
1.2
65.7
92.1
9 %
5 %
(427)
(1)
(10)
5
4
5
—
86 %
(6.0)
1.1
0.1
1.2
(4.8)
0.8
2.8
(2.4)
(1.2)
61
10
—
19
18
19
8
NM %
(6.9)
1.3
(0.2)
1.1
(5.8)
3.0
(0.2)
(4.1)
(3.0)
(a) Consistent with our definition of APTI, excludes net loss reserve discount and the portion of favorable or unfavorable prior year reserve development for which we have
ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.
Business and Financial Highlights
Net Premiums Written Comparison for the Years Ended December 31, 2023 and 2022
Net premiums written increased by $1.1 billion primarily due to:
• growth in Commercial Lines ($533 million), particularly in AIG Re and Property driven by continued positive rate change, higher
renewal retentions and strong new business production, partially offset by decreases in Crop as a consequence of the CRS sale
and Financial Lines; and
• growth in Personal Insurance ($567 million) driven by PCS resulting from changes in our reinsurance program, partially offset by
decreases in Travel and Warranty.
Net Premiums Written Comparison for the Years Ended December 31, 2022 and 2021
Net premiums written increased by $631 million primarily due to growth in Commercial Lines ($673 million), particularly in Property,
Casualty and AIG Re, driven by continued positive rate change, higher renewal retentions and strong new business production, as
well as growth in CRS driven by higher commodity prices, partially offset by a decrease in Financial Lines due to volatility in capital
markets and uncertain economic conditions.
This increase was partially offset by lower production in Personal Insurance ($42 million), particularly in Warranty as well as
underwriting actions taken in PCS to improve profitability, partially offset by an increase in Travel.
Underwriting Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Underwriting income increased by $559 million primarily due to:
•
improvement in the accident year loss ratio, as adjusted (2.4 points) primarily driven by changes in business mix along with
continued positive rate change, focused risk selection and improved terms and conditions;
• higher net favorable prior year reserve development (2.8 points or $340 million), primarily due to lower unfavorable development in
Financial Lines, partially offset by lower favorable development in Casualty; and
•
lower catastrophe losses (0.8 points or $105 million).
70
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | General Insurance
This increase was partially offset by
• a higher expense ratio of 1.2 points reflecting a higher acquisition ratio (1.1 points) primarily driven by changes in business mix as
well as an increase in general operating expense ratio (0.1 points).
Underwriting Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Underwriting income of $648 million in 2022 compared to an underwriting loss of $47 million in 2021 primarily reflected:
• premium growth with improvement in the accident year loss ratio, as adjusted (4.1 points) primarily driven by changes in business
mix along with continued positive rate change, focused risk selection and improved terms and conditions; and
•
lower catastrophe losses (3.0 points or $253 million).
This improvement was partially offset by:
• higher expense ratio of 1.1 points reflecting a higher acquisition ratio (1.3 points) primarily driven by changes in business mix and
reinsurance, partially offset by a lower general operating expense ratio (0.2 points) resulting from continued general expense
discipline as we grow the portfolio; and
•
lower net favorable prior year reserve development in 2022 compared to 2021 (0.2 points or $34 million), primarily due to lower
favorable development in PCS and higher unfavorable development within Financial Lines, partially offset by higher favorable
development in Property, Casualty and CRS.
INTERNATIONAL RESULTS
Years Ended December 31,
(in millions)
Underwriting results:
Net premiums written
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$ 13,255 $ 13,148 $ 14,157
1 %
(7) %
(Increase) decrease in unearned premiums
Net premiums earned
(85)
121
(89)
13,170
13,269
14,068
Losses and loss adjustment expenses incurred
7,487
7,311
7,963
Acquisition expenses:
Amortization of deferred policy acquisition costs
Other acquisition expenses
Total acquisition expenses
General operating expenses
Underwriting income
Loss ratio
Acquisition ratio
General operating expense ratio
Expense ratio
Combined ratio
Adjustments for accident year loss ratio, as adjusted and
accident year combined ratio, as adjusted:
Catastrophe losses and reinstatement premiums
Prior year development, net of reinsurance and prior year
premiums
Accident year loss ratio, as adjusted
Accident year combined ratio, as adjusted
1,952
740
2,692
1,849
1,948
845
2,793
1,765
$
1,142 $
1,400 $
56.8
20.4
14.0
34.4
91.2
55.1
21.0
13.3
34.3
89.4
2,197
933
3,130
1,873
1,102
56.6
22.2
13.3
35.5
92.1
(3.0)
(3.7)
(2.3)
(0.7)
53.1
87.5
2.5
53.9
88.2
0.1
54.4
89.9
NM
(1)
2
—
(12)
(4)
5
NM
(6)
(8)
(11)
(9)
(11)
(6)
(18) %
27 %
1.7
(0.6)
0.7
0.1
1.8
0.7
(3.2)
(0.8)
(0.7)
(1.5)
(1.2)
—
(1.2)
(2.7)
(1.4)
2.4
(0.5)
(1.7)
AIG | 2023 Form 10-K
71
ITEM 7 | Business Segment Operations | General Insurance
Business and Financial Highlights
Net Premiums Written Comparison for the Years Ended December 31, 2023 and 2022
Net premiums written, excluding the impact of foreign exchange ($317 million), increased by $424 million due to:
• growth in Commercial Lines ($370 million), notably in Property and Specialty driven by continued positive rate change and strong
new business production, partially offset by a decrease in Financial Lines; and
• growth in Personal Insurance ($54 million) driven by Personal Auto and Individual Travel, partially offset by lower production in
PCS.
Net Premiums Written Comparison for the Years Ended December 31, 2022 and 2021
Net premiums written, excluding the impact of foreign exchange ($1,287 million), increased by $278 million due to growth in
Commercial Lines ($417 million), notably Specialty, Property and Casualty driven by continued positive rate change and strong new
business production.
This increase was partially offset by lower production in Personal Insurance ($139 million), where declines in Warranty and Personal
Auto were partially offset by growth in Travel and Accident & Health.
Underwriting Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Underwriting income decreased by $258 million primarily due to:
• net unfavorable prior year reserve development of $95 million in 2023 compared to net favorable development in 2022 of
$349 million (3.2 points or $444 million), primarily as a result of lower favorable development in Specialty and Personal Auto,
unfavorable development in Property and higher unfavorable development in Casualty, partially offset by favorable development in
Financial Lines; and
• a higher expense ratio (0.1 points) reflecting an increase in the general operating expense ratio (0.7 points), partially offset by a
lower acquisition ratio (0.6 points) primarily driven by changes in business mix and improved commission terms.
This decrease was partially offset by:
•
•
improvement in the accident year loss ratio, as adjusted (0.8 points) primarily driven by changes in business mix along with
continued positive rate change, focused risk selection and improved terms and conditions; and
lower catastrophe losses (0.7 points or $109 million).
Underwriting Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Underwriting income increased by $298 million primarily due to:
• higher net favorable prior year reserve development in 2022 compared to 2021 (2.4 points or $346 million), primarily as a result of
lower unfavorable development in Financial Lines and higher favorable development in Specialty, partially offset by lower favorable
development in Accident & Health;
• a lower expense ratio (1.2 points) from a lower acquisition ratio (1.2 points) primarily driven by changes in business mix, improved
commission terms and reinsurance program changes; and
•
improvement in the accident year loss ratio, as adjusted (0.5 points) primarily driven by changes in business mix along with
continued positive rate change, focused risk selection and improved terms and conditions.
These increases were partially offset by higher catastrophe losses (1.4 points or $188 million).
72
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | Life and Retirement
Life and Retirement
Life and Retirement consists of four operating segments: Individual Retirement, Group Retirement,
Life Insurance and Institutional Markets. We offer a broad portfolio of products in the U.S. through
a multichannel distribution network and life and health products in the UK.
PRODUCTS AND DISTRIBUTION
Fixed Annuities: Products include single premium fixed annuities, immediate annuities and deferred
income annuities. Certain fixed deferred annuity products offer optional income protection features. The
fixed annuities product line maintains an industry-leading position in the U.S. bank distribution channel and
has broadened into the regional broker-dealer, wirehouse, and independent agent channels by leveraging
our scale and investment capabilities.
Fixed Index Annuities: Products include fixed index annuities that provide growth potential based in part
on the performance of a market index as well as optional living guaranteed features that provide lifetime
income protection. Fixed index annuities are distributed primarily through banks, broker-dealers,
independent marketing organizations and independent insurance agents.
Variable Annuities: Products include variable annuities that offer a combination of growth potential, death
benefit features and income protection features. Variable annuities are distributed primarily through banks,
wirehouses, and regional and independent broker-dealers.
Group Retirement: Known in the marketplace as Corebridge Retirement Services. Services and products
consist of recordkeeping, plan administration, financial planning and advisory solutions offered to employer
defined contribution plans and their participants, along with proprietary and limited non-proprietary annuities
and advisory and brokerage products offered outside of plans.
Retirement Services offers its products and services through The Variable Annuity Life Insurance Company
(VALIC) and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company.
Retirement Services employee financial professionals have the ability to serve clients throughout their
financial journey from the workplace through retirement via our integrated financial planning model. Our
financial professionals serve in-plan clients by providing enrollment support, education and financial
guidance and serve out-of-plan clients with financial planning, annuity products, brokerage and advisory
offerings.
Life Insurance: In the U.S., products primarily include term life and universal life insurance distributed
through independent marketing organizations, independent insurance agents, financial advisors and
direct marketing. International operations primarily include the distribution of life and health products in
the UK and Ireland. Corebridge previously announced agreements to sell Laya and AIG Life Limited
(AIG Life). The sale of Laya closed on October 31, 2023 and the AIG Life sale is expected to close in the
first half of 2024.
Institutional Markets: Products primarily include stable value wrap products, structured settlement and
pension risk transfer annuities (direct and assumed reinsurance), corporate- and bank-owned life
insurance, high net worth products and guaranteed investment contracts (GICs). Institutional Markets
products are primarily distributed through specialized marketing and consulting firms and structured
settlement brokers.
FHLB Funding Agreements: Funding agreements are issued by our U.S. Life and Retirement companies to FHLBs in their
respective districts at fixed or floating rates over specified periods, which can be prepaid at our discretion. Proceeds are generally
invested in fixed income securities and other suitable investments to generate spread income. These investment contracts do not
have mortality or morbidity risk and are similar to GICs.
AIG | 2023 Form 10-K
73
ITEM 7 | Business Segment Operations | Life and Retirement
BUSINESS STRATEGY
Deliver client-centric solutions through our unique franchise by bringing together a broad portfolio of life insurance, retirement
and institutional products offered through an extensive, multichannel distribution network. Life and Retirement focuses on ease of
doing business, offering valuable solutions, and expanding and deepening its distribution relationships across multiple channels.
Position market leading businesses to serve growing needs by continually enhancing product solutions, service delivery and
digital capabilities while using data and analytics in an innovative manner to improve customer experience.
Individual Retirement will continue to capitalize on the
opportunity to meet consumer demand for wealth
accumulation and guaranteed income products by maintaining
an innovative suite of fixed, variable and fixed index annuity
products, while also managing risk from guarantee features
through risk-mitigating product design and well-developed
economic hedging capabilities.
Group Retirement continues to enhance its technology
platform to improve the customer experience for plan
sponsors and individual participants. Retirement
Services’ self-service tools paired with its employee
financial advisors provide a compelling service platform.
Group Retirement’s strategy also involves providing
financial planning services for its clients and meeting
their need for income in retirement. In this role, Group
Retirement’s clients may invest in assets in which AIG or
a third party is custodian.
Life Insurance in the U.S. will continue to position itself for
growth and changing market dynamics while continuing to
execute strategies to enhance returns. Our focus is on
materializing success from a multi-year effort of building state-
of-the-art platforms and underwriting innovations, which are
expected to bring process improvements and cost efficiencies.
Institutional Markets continues to grow its assets under
management across multiple product lines, including stable
value wrap, GICs and pension risk transfer annuities. Our
growth strategy is transactional and allows us to pursue select
transactions that meet our risk-adjusted return requirements.
Enhance Operational Effectiveness by simplifying processes and operating environments to increase competitiveness, improve
service and product capabilities and facilitate delivery of our target customer experience. We continue to invest in technology to
improve operating efficiency and ease of doing business for our distribution partners and customers. We believe that simplifying our
operating models will enhance productivity and support further profitable growth.
Manage our Balance Sheet through a rigorous approach to our products and portfolio. We match our product design and high-quality
investments with our asset and liability exposures to support our cash and liquidity needs under various operating scenarios.
Deliver Value Creation and Manage Capital by striving to deliver solid earnings and returns on capital through disciplined pricing,
sustainable underwriting improvements, expense efficiency, and diversification of risk, while optimizing capital allocation and efficiency
within insurance entities to enhance return on common equity.
COMPETITION AND CHALLENGES
Life and Retirement operates in the highly competitive insurance and financial services industry in the U.S. and select international
markets, competing against various financial services companies, including banks and other life insurance and mutual fund
companies. Competition is primarily based on product pricing and design, distribution, financial strength, customer service and ease
of doing business.
Our business remains competitive due to its long-standing market leading positions, innovative products, distribution relationships
across multiple channels, customer-focused service and strong financial ratings.
Our primary challenges include:
• managing a rising rate environment. While a rising rate environment improves yields on new investment, improves margins on our
business, and increases sales in certain products such as fixed annuities, it may also result in increased competition for certain
products resulting in a need to increase crediting rates, and has resulted in lower separate account asset values for investments in
fixed income which has reduced fee income;
•
increased competition in our primary markets, including aggressive pricing of annuities by competitors, increased competition and
consolidation of employer groups in the group retirement planning market, and competitors with different profitability targets in the
pension risk transfer space as well as other product lines;
•
increasingly complex new and proposed regulatory requirements, which have affected industry growth and costs; and
• upgrading our technology and underwriting processes while managing general operating expenses.
74
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | Life and Retirement
INDUSTRY AND ECONOMIC FACTORS
Individual Retirement
Increasing life expectancy and reduced expectations for traditional retirement income from defined benefit programs are leading
Americans to seek additional financial security as they approach retirement. The strong demand for fixed index and fixed annuities
with guaranteed living benefit features has attracted increased competition in this product space. In response to the ever changing
interest rate environment we have developed guaranteed living benefits for variable, fixed index and fixed annuities with margins that
are less sensitive to the level of interest rates. Changes in the capital markets (interest rate environment, credit spreads, equity
markets, volatility) can have a significant impact on sales, surrender rates, investment returns, guaranteed income features, and net
investment spreads in the annuity industry.
Group Retirement
Group Retirement competes in the defined contribution market under the Retirement Services brand. Retirement Services is a leading
retirement plan provider in the U.S. for K-12 schools and school districts, higher education, healthcare, government and other not-for-
profit institutions. The defined contribution market is a highly efficient and competitive market that requires support for both plan
sponsors and individual participants. To meet this challenge, Retirement Services is investing in a client- focused technology platform
to support improved compliance and self-service functionality. Retirement Services’ model pairs self-service tools with its employee
financial advisors who provide individual plan participants with enrollment support and comprehensive financial planning services.
Changes in the interest rates, credit spreads and equity market environment can have a significant impact on investment returns, fee
income, advisory and other income, guaranteed income features, and net investment spreads, and a moderate impact on sales and
surrender rates.
Life Insurance
Consumers have a significant need for life insurance, whether it is used for income replacement for their surviving family, estate
planning or wealth transfer. Additionally, consumers use life insurance to provide living benefits in case of chronic, critical or terminal
illnesses, and to supplement retirement income.
In response to consumer needs and a changing interest rate environment, our Life Insurance product portfolio will continue to promote
products with less long-duration interest rate risk and mitigate exposure to products that have long-duration interest rate risk through
sales levels and hedging strategies.
As life insurance ownership remains at historical lows in the U.S., efforts to expand the reach and increase the affordability of life
insurance are critical. The industry is investing in consumer-centric efforts to reduce traditional barriers to securing life protection by
simplifying the sales and service experience. Digitally enabled processes and tools provide a fast, friendly and simple path to life
insurance protection.
Institutional Markets
Institutional Markets serves a variety of needs for corporate clients. Demand is driven by a number of factors including the
macroeconomic and regulatory environment. We expect to see continued growth in the pension risk transfer market (direct and
assumed reinsurance) as corporate plan sponsors look to transfer asset or liability, longevity, administrative and operational risks
associated with their defined benefit plans.
Changes in interest rates and credit spreads can have a significant impact on investment returns and net investment spreads,
impacting organic growth opportunities.
For additional information on the separation of Life and Retirement, see Part I, Item 1A. Risk Factors – Business and Operations –
“No assurances can be given that the separation of our Life and Retirement business will be completed or as to the specific terms or
timing thereof. In addition, we may not achieve the expected benefits of the separation and will have continuing equity market
exposure to Corebridge until we fully divest our stake” and Note 1 to the Consolidated Financial Statements.
For additional information on the impact of market interest rate movement on our Life and Retirement business, see Executive
Summary – Regulatory, Industry and Economic Factors – Impact of Changes in the Interest Rate Environment and Equity Markets.
AIG | 2023 Form 10-K
75
IMPACT OF LDTI ADOPTION
ITEM 7 | Business Segment Operations | Life and Retirement
The following table presents the impacts in connection with the adoption of LDTI on our previously reported APTI results for
our Life and Retirement segment:
(in millions)
Adjusted revenues:
Premiums
Policy fees
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
Total benefits and expenses
Adjusted pre-tax income
LIFE AND RETIREMENT RESULTS
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Policy fees
Net investment income
Advisory fee and other income
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
Advisory fee expenses
General operating expenses
Interest expense
Total benefits and expenses
Adjusted pre-tax income
Year Ended December 31, 2022
Year Ended December 31, 2021
As
Previously
Reported
Effect of
Change
Updated Balances
Post-Adoption
of LDTI
As
Previously
Reported
Effect of
Change
Updated Balances
Post-Adoption
of LDTI
$
5,508 $
2,972
17,654
(2) $
(59)
(61)
7,659
3,681
1,130
640
14,997
2,657
(583)
44
(109)
(73)
(721)
660
5,506
2,913
17,593
7,076
3,725
1,021
567
14,276
3,317
$
6,029 $
3,051
19,594
26 $
(46)
(20)
8,379
3,565
973
672
15,683
3,911
(596)
11
(15)
(63)
(663)
643
6,055
3,005
19,574
7,783
3,576
958
609
15,020
4,554
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$
8,101 $
2,797
9,786
797
21,481
5,506 $
2,913
8,347
827
17,593
9,811
4,391
1,061
589
261
1,559
4
17,676
7,076
3,725
1,021
567
266
1,598
23
14,276
$
3,805 $
3,317 $
6,055
3,005
9,521
993
19,574
7,783
3,576
958
609
322
1,642
130
15,020
4,554
47 %
(4)
17
(4)
22
39
18
4
4
(2)
(2)
(83)
24
15 %
(9) %
(3)
(12)
(17)
(10)
(9)
4
7
(7)
(17)
(3)
(82)
(5)
(27) %
Our insurance companies generate significant revenues from investment activities. As a result, the operating segments in Life and
Retirement are significantly impacted by variances in net investment income on the asset portfolios that support insurance liabilities
and surplus.
For additional information on our investment strategy, asset-liability management process and invested asset composition, see
Investments.
76
AIG | 2023 Form 10-K
7
INDIVIDUAL RETIREMENT RESULTS
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Policy fees
Net investment income
Advisory fee and other income
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
Advisory fee expenses
General operating expenses
Interest expense
Total benefits and expenses
Adjusted pre-tax income
Fixed annuities base net investment spread:
Base yield*
Cost of funds
Fixed annuities base net investment spread
Variable and fixed index annuities base net
investment spread:
Base yield*
Cost of funds
Variable and fixed index annuities base net
investment spread
ITEM 7 | Business Segment Operations | Life and Retirement
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$
213 $
235 $
708
4,917
426
6,264
204
2,269
567
355
141
416
2
741
3,898
451
5,325
285
1,916
519
351
141
426
11
3,954
3,649
$
2,310 $
1,676 $
195
797
4,338
592
5,922
305
1,789
447
396
189
438
61
3,625
2,297
(9) %
21 %
(4)
26
(6)
18
(28)
18
9
1
—
(2)
(82)
8
(7)
(10)
(24)
(10)
(7)
7
16
(11)
(25)
(3)
(82)
1
38 %
(27) %
5.05 %
4.03 %
3.94 %
102 bps
2.95
2.69
2.64
26
2.10 %
1.34 %
1.30 %
76 bps
4.66 %
3.89 %
3.83 %
77 bps
1.93
1.52
1.40
41
9 bps
5
4 bps
6 bps
12
2.73 %
2.37 %
2.43 %
36 bps
(6) bps
*
Includes returns from base portfolio including accretion and income (loss) from certain other invested assets.
Business and Financial Highlights
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Adjusted pre-tax income increased $634 million primarily due to higher net investment income, net of interest credited ($666 million)
driven by higher base portfolio income, net of interest credited ($774 million) due to improved base yields and growth in invested
assets driven by higher sales, plus higher yield enhancement income ($27 million), partially offset by lower alternative investment
income ($135 million).
This increase was partially offset by lower policy and advisory fee income, net of advisory fee expenses ($58 million), primarily due to
lower average variable annuity separate account asset values driven by negative net flows.
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Adjusted pre-tax income decreased $621 million primarily due to:
•
•
lower net investment income, net of interest credited ($567 million) primarily driven by lower alternative investment income
($401 million), lower yield enhancement income ($285 million), partially offset by higher base portfolio income, net of interest
credited ($119 million); and
lower policy and advisory fee income, net of advisory fee expenses ($149 million), primarily due to a decrease in variable annuity
separate account assets driven by negative equity market performance and sale of retail mutual funds to Touchstone.
Partially offset by:
•
•
lower interest expense on debt borrowings due to sale of Affordable Housing ($50 million); and
lower non-deferred commissions ($45 million) due to a decrease in variable annuity separate account assets.
AIG | 2023 Form 10-K
77
INDIVIDUAL RETIREMENT GAAP PREMIUMS, PREMIUMS AND DEPOSITS, SURRENDERS AND NET
FLOWS
Premiums and deposits is a non-GAAP financial measure that includes, in addition to direct and assumed premiums, deposits
received on investment-type annuity contracts.
Net flows for annuity products in Individual Retirement represent premiums and deposits less death, surrender and other withdrawal
benefits.
ITEM 7 | Business Segment Operations | Life and Retirement
The following table presents a reconciliation of Individual Retirement GAAP premiums to premiums and deposits:
Years Ended December 31,
(in millions)
Premiums
Deposits
Other
Premiums and deposits
2023
2022
$
213 $
235 $
17,971
(13)
14,900
(15)
2021
195
13,732
(11)
$
18,171 $
15,120 $
13,916
The following table presents Individual Retirement premiums and deposits and net flows by product line:
Years Ended December 31,
(in millions)
Fixed annuities
Fixed index annuities
Variable annuities
Retail mutual funds
Total
$
Premiums and Deposits
2023
2022
7,880 $
8,505
1,786
—
5,695 $
6,316
3,109
—
$ 18,171 $ 15,120 $
2021
3,011
5,621
5,025
259
13,916
Net Flows
2023
2022
$
(1,870) $
5,632
(3,429)
—
$
333 $
(441) $
4,522
(1,671)
—
2,410 $
2021
(2,396)
4,072
(864)
(1,402)
(590)
Premiums and Deposits and Net Flow Comparison for the Years Ended December 31, 2023 and 2022
Fixed Annuities Net outflows increased by $1.4 billion over the prior year, primarily due to higher surrenders and withdrawals of
($3.5 billion) and death benefits of ($85 million). Partially offset by higher premiums and deposits of ($2.2 billion) due to strong sales
execution as interest rates rose.
Fixed Index Annuities Net inflows increased ($1.1 billion) primarily due to higher premiums and deposits ($2.2 billion) due to strong
sales execution as interest rates rose, partially offset by higher surrenders and withdrawals ($1.0 billion) and higher death benefits
($69 million).
Variable Annuities Net outflows increased ($1.8 billion) primarily due to lower premiums and deposits of ($1.3 billion) due to market
volatility, and higher surrenders and withdrawals of ($496 million), partially offset by lower death benefits of ($61 million).
Premiums and Deposits and Net Flow Comparison for the Years Ended December 31, 2022 and 2021
Fixed Annuities Net outflows decreased ($2.0 billion) over the prior year, primarily due to higher premiums and deposits ($2.7 billion)
due to competitive pricing and higher interest rates and lower death benefits ($300 million), partially offset by higher surrenders and
withdrawals of ($1.0 billion).
Variable Annuities Net outflows increased ($807 million) primarily due to lower premiums and deposits ($1.9 billion), due to market
volatility; partially offset by lower surrenders and withdrawals ($993 million) and lower death benefits of ($116 million).
Fixed Index Annuities Net inflows increased by ($450 million) primarily due to higher premiums and deposits of ($695 million), due to
competitive pricing and higher interest rates; partially offset by higher surrenders and withdrawals ($193 million) and higher death
benefits ($52 million).
Retail Mutual Funds There were no flows in 2022 due to the Touchstone sale in the second quarter of 2021. For additional
information regarding the sale of certain assets of the AIG Life and Retirement Retail Mutual Funds business, see Note 1 to the
Consolidated Financial Statements.
The following table presents surrenders rates:
Years Ended December 31,
Fixed annuities
Fixed index annuities
Variable annuities
78
AIG | 2023 Form 10-K
2023
16.3 %
6.7
7.8
2022
2021
9.2 %
4.8
6.5
7.2 %
4.7
7.2
The following table presents account value for fixed annuities and variable and fixed index annuities by surrender charge
category:
ITEM 7 | Business Segment Operations | Life and Retirement
At December 31,
(in millions)
No surrender charge
Greater than 0% - 2%
Greater than 2% - 4%
Greater than 4%
Non-surrenderable(a)
Total account value(b)
2023
Fixed
Annuities
Fixed Index
Annuities
$
21,793 $
1,023
2,844
21,766
2,474
$
49,900 $
1,727 $
3,326
6,413
28,128
—
39,594 $
Variable
Annuities
29,819
6,717
5,799
11,014
1,156
54,505
2022
Fixed
Annuities
Fixed Index
Annuities
$
24,889 $
1,783
2,256
18,905
2,453
$
50,286 $
2,270 $
1,353
4,532
25,196
—
33,351 $
Variable
Annuities
27,037
6,962
5,081
12,082
1,155
52,317
(a) The non-surrenderable portion of variable annuities relates to funding agreements.
(b) Includes payout immediate annuities and funding agreements.
Individual Retirement annuities are typically subject to a three- to ten-year surrender charge period, depending on the product. For
fixed and fixed index annuities, the proportion of account value subject to surrender charge at December 31, 2023 increased
compared to December 31, 2022 primarily due to growth in business. The increase in the proportion of account value with no
surrender charge for variable annuities as of December 31, 2023 compared to December 31, 2022 was principally due to normal
aging of business.
GROUP RETIREMENT RESULTS
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Policy fees
Net investment income
Advisory fee and other income
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
Advisory fee expenses
General operating expenses
Interest expense
Total benefits and expenses
Adjusted pre-tax income
Base net investment spread:
Base yield*
Cost of funds
Base net investment spread
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$
20 $
19 $
406
1,999
309
2,734
31
1,182
82
124
118
438
1
415
2,005
305
2,744
35
1,147
80
123
124
443
6
22
480
2,410
337
3,249
31
1,159
78
112
133
443
35
1,976
1,958
1,991
5 %
(2)
—
1
—
(11)
3
3
1
(5)
(1)
(83)
1
(14) %
(14)
(17)
(9)
(16)
13
(1)
3
10
(7)
—
(83)
(2)
$
758 $
786 $
1,258
(4) %
(38) %
4.27 %
2.76
1.51 %
4.04 %
2.60
1.44 %
4.11 %
2.62
1.49 %
23 bps
16
7 bps
(7) bps
(2)
(5) bps
*
Includes returns from base portfolio including accretion and income (loss) from certain other invested assets.
AIG | 2023 Form 10-K
79
ITEM 7 | Business Segment Operations | Life and Retirement
Business and Financial Highlights
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Adjusted pre-tax income decreased $28 million primarily due to:
•
lower net investment income, net of interest credited ($41 million) primarily driven by lower alternative investment income
($73 million), partially offset by higher base portfolio income, net of interest credited ($29 million).
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Adjusted pre-tax income decreased $472 million primarily due to:
•
•
lower net investment income, net of interest credited ($393 million) primarily driven by lower alternative investment income
($224 million), lower yield enhancement income ($158 million) and higher base portfolio income, net of interest credited
($11 million); and
lower policy and advisory fee income, net of advisory fee expenses of ($88 million) due to lower fee based assets under
administration as a result of lower equity market performance.
These decreases were partially offset by lower interest expense on debt borrowings due to sale of Affordable Housing ($29 million).
GROUP RETIREMENT GAAP PREMIUMS, PREMIUMS AND DEPOSITS, SURRENDERS AND NET
FLOWS
Premiums and deposits are a non-GAAP financial measure that includes, in addition to direct and assumed premiums, deposits
received on investment-type annuity contracts, FHLB funding agreements and mutual funds under administration.
Net flows for annuity products included in Group Retirement represent premiums and deposits less death, surrender and other
withdrawal benefits. Net flows for mutual funds represent deposits less withdrawals. Client deposits into advisory and brokerage
accounts less total client withdrawals from advisory and brokerage accounts, are not included in net flows, but do contribute to growth
in assets under administration and advisory fee income.
The following table presents a reconciliation of Group Retirement GAAP premiums to premiums and deposits and net flows:
Years Ended December 31,
(in millions)
Premiums
Deposits
Premiums and deposits*
Net Flows
2023
2022
20 $
19 $
8,063
8,083 $
7,923
7,942 $
2021
22
7,744
7,766
(6,302) $
(3,111) $
(3,208)
$
$
$
*
Excludes client deposits into advisory and brokerage accounts of $2.4 billion, $2.1 billion and $2.5 billion for the years ended December 31, 2023, 2022 and 2021,
respectively.
Premiums and Deposits and Net Flow Comparison for the Years Ended December 31, 2023 and 2022
Net outflows were ($3.2 billion) higher compared to the prior year primarily due to higher surrenders and withdrawals ($3.4 billion),
partially offset by higher premiums and deposits ($141 million) and lower death and payout annuity benefits ($65 million). Large plan
acquisitions and surrenders resulted in lower net flows of ($1.4 billion) compared to the prior year. Excluding large plan acquisitions
and surrenders, net outflows were concentrated in products with higher contractual guaranteed minimum crediting rates.
Premiums and Deposits and Net Flow Comparison for the Years Ended December 31, 2022 and 2021
Net outflows decreased ($97 million) primarily due to higher premiums and deposits ($176 million), partially offset by higher death and
payout annuity benefits of ($30 million), and higher surrenders and withdrawals of ($49 million). In general, net outflows are
concentrated in fixed annuity products with higher contractual guaranteed minimum crediting rates. Large plan acquisitions and
surrenders resulted in higher net flows of ($121 million) compared to the prior year.
The following table presents Group Retirement surrenders rates:
Years Ended December 31,
Surrender rates
2023
12.9 %
2022
2021
9.5 %
8.8 %
80
AIG | 2023 Form 10-K
The following table presents account value for Group Retirement annuities by surrender charge category:
ITEM 7 | Business Segment Operations | Life and Retirement
(in millions)
No surrender charge(b)
Greater than 0% - 2%
Greater than 2% - 4%
Greater than 4%
Non-surrenderable
Total account value(c)
$
$
2023(a)
70,500
1,251
1,698
5,757
490
79,696
$
$
2022(b)
69,885
454
435
6,281
945
78,000
(a) Excludes mutual fund assets under administration of $27.8 billion and $24.0 billion at December 31, 2023 and 2022, respectively.
(b) Group Retirement amounts in this category include account values in the general account of approximately $4.1 billion and $4.5 billion at December 31, 2023 and 2022,
respectively, which are subject to 20 percent annual withdrawal limitations at the participant level and account value in the general account of $5.3 billion and $5.8 billion
at December 31, 2023 and 2022, respectively, which are subject to 20 percent annual withdrawal limitations at the plan level.
(c) Includes payout immediate annuities and funding agreements.
Group Retirement annuity deposits are typically subject to a four- to seven-year surrender charge period, depending on the product.
At December 31, 2023, Group Retirement annuity account value with no surrender charge increased compared to December 31,
2022 primarily due to increases in assets under management from higher equity markets partially offset by negative net flows. At
December 31, 2022, Group Retirement annuity account value with no surrender charge decreased compared to December 31, 2021
primarily due to decline in assets under management from lower equity markets.
LIFE INSURANCE RESULTS
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Policy fees
Net investment income
Other income
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
Advisory fee expenses
General operating expenses
Interest expense
Total benefits and expenses
Adjusted pre-tax income
Business and Financial Highlights
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$
2,261 $
2,339 $
1,488
1,283
60
5,092
1,563
1,393
69
5,364
2,064
1,541
1,619
62
5,286
3,278
3,352
3,264
340
403
91
2
620
—
342
415
73
1
656
4
4,734
4,843
$
358 $
521 $
354
427
79
—
684
25
4,833
453
(3) %
13 %
(5)
(8)
(13)
(5)
(2)
(1)
(3)
25
100
(5)
NM
(2)
1
(14)
11
1
3
(3)
(3)
(8)
NM
(4)
(84)
—
(31) %
15 %
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Adjusted pre-tax income decreased $163 million primarily due to:
•
•
lower net investment income ($110 million), driven by lower alternative investment and yield enhancement income ($103 million)
primarily due to lower equity partnership performance and reduced gains on calls, and lower base portfolio income ($7 million); and
lower premiums and fees, net of policyholder benefits, excluding actuarial assumptions update ($73 million), primarily due to
international life, partially offset by favorable domestic mortality.
AIG | 2023 Form 10-K
81
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Adjusted pre-tax income increased $68 million primarily due to:
• higher premiums and policy fees, net of policyholder benefits, excluding actuarial assumptions update ($232 million), primarily due
ITEM 7 | Business Segment Operations | Life and Retirement
to favorable mortality; and
•
lower general operating expenses ($28 million).
Partially offsetting this increase was:
•
lower net investment income ($226 million), primarily driven by lower alternative investment and yield enhancement income
($262 million) primarily due to lower equity partnership performance and reduced gains on calls, partially offset by higher base
portfolio income ($36 million); and
•
lower net favorable impact from the review and update of actuarial assumptions ($23 million).
LIFE INSURANCE GAAP PREMIUMS AND PREMIUMS AND DEPOSITS
Premiums for Life Insurance represent amounts received on traditional life insurance policies, primarily term life and international life
and health. Premiums and deposits for Life Insurance is a non-GAAP financial measure that includes direct and assumed premiums
as well as deposits received on universal life insurance.
Premiums and deposits, excluding the effect of foreign exchange, increased $59 million in the year ended December 31, 2023
compared to the same period in 2022 and increased $145 million in the year ended December 31, 2022 compared to the same period
in 2021 primarily due to growth in international life premiums.
The following table presents a reconciliation of Life Insurance GAAP premiums to premiums and deposits:
Years Ended December 31,
(in millions)
Premiums
Deposits
Other*
Premiums and deposits
2023
2,261 $
1,583
904
4,748 $
2022
2,339 $
1,600
732
4,671 $
2021
2,064
1,635
953
4,652
$
$
* Other principally consists of adding back ceded premiums to reflect the gross premiums and deposits.
INSTITUTIONAL MARKETS RESULTS
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
4,160
5,117
$
5,607 $
195
2,913 $
194
1,587
2
7,391
6,298
600
9
19
85
1
7,012
1,051
2
3,404
320
7
20
73
2
3,826
$
379 $
334 $
3,774
187
1,154
2
4,183
274
6
22
77
9
4,571
546
92 %
1
51
—
78
85
88
29
(5)
16
(50)
83
13 %
(23) %
4
(9)
—
(19)
(19)
17
17
(9)
(5)
(78)
(16)
(39) %
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Policy fees
Net investment income
Other income
Total adjusted revenues
Benefits and expenses:
Policyholder benefits
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
Non deferrable insurance commissions
General operating expenses
Interest expense
Total benefits and expenses
Adjusted pre-tax income
82
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | Life and Retirement
Business and Financial Highlights
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2023 and 2022
Adjusted pre-tax income increased $45 million primarily due to:
• higher premiums primarily on new pension risk transfer business ($2.7 billion); and
• higher net investment income ($536 million) primarily driven by higher base portfolio income.
Partially offset by:
• higher policyholder benefits (including interest accretion) primarily on new pension risk transfer business ($2.9 billion); and
• higher interest credited on policyholder account balances, primarily related to the GIC business ($280 million).
Adjusted Pre-Tax Income (Loss) Comparison for the Years Ended December 31, 2022 and 2021
Adjusted pre-tax income decreased $212 million primarily due to:
•
•
lower net investment income ($103 million) primarily driven by lower alternative investment income ($145 million) and lower yield
enhancement income ($89 million) partially offset by higher base portfolio income ($131 million);
lower premiums primarily on new pension risk transfer business ($861 million); and
• higher interest credited on policyholder account balances, primarily related to the GIC business ($46 million).
Partially offsetting these decreases was a reduction in policyholder benefits and losses incurred (including interest accretion) primarily
on new pension risk transfer business ($779 million).
INSTITUTIONAL MARKETS GAAP PREMIUMS AND PREMIUMS AND DEPOSITS
Premiums for Institutional Markets primarily represent amounts received on pension risk transfer or structured settlement annuities
with life contingencies. Premiums increased $2.7 billion in the year ended December 31, 2023 compared to the same period in 2022
and decreased $861 million in the year ended December 31, 2022 compared to the same period in 2021 primarily driven by the
transactional nature of the pension risk transfer business (direct and assumed reinsurance).
Premiums and deposits for Institutional Markets is a non-GAAP financial measure that includes direct and assumed premiums as well
as deposits received on investment-type annuity contracts. Deposits primarily include GICs, FHLB funding agreements and structured
settlement annuities with no life contingencies.
Premiums and deposits increased $5.0 billion in the year ended December 31, 2023, compared to the same period in 2022 primarily
due to higher premiums on pension risk transfer business and higher deposits on new GICs. Premiums and deposits decreased
$632 million in the year ended December 31, 2022 compared to the same period in 2021 primarily due to lower premiums on pension
risk transfer business, partially offset by deposits of structured settlement annuities.
The following table presents a reconciliation of Institutional Markets GAAP premiums to premiums and deposits:
Years Ended December 31,
(in millions)
Premiums
Deposits
Other*
Premiums and deposits
* Other principally consists of adding back ceded premiums to reflect the gross premiums and deposits.
2023
5,607 $
3,695
31
9,333 $
2022
2,913 $
1,382
30
4,325 $
$
$
2021
3,774
1,158
25
4,957
AIG | 2023 Form 10-K
83
ITEM 7 | Business Segment Operations | Other Operations
Other Operations
Other Operations primarily consists of income from assets held by AIG Parent and other corporate subsidiaries, deferred tax assets
related to tax attributes, corporate expenses and intercompany eliminations, our institutional asset management business and results
of our consolidated investment entities, General Insurance portfolios in run-off as well as the historical results of our legacy insurance
lines ceded to Fortitude Re.
OTHER OPERATIONS RESULTS
Years Ended December 31,
(in millions)
Adjusted revenues:
Premiums
Net investment income:
Interest and dividends
Alternative investments
Other investment income (loss)
Investment expenses
Total net investment income
Other income
Total adjusted revenues
Benefits, losses and expenses:
Policyholder benefits and losses incurred
Interest credited to policyholder account balances
Acquisition expenses:
Amortization of deferred policy acquisition costs
Other acquisition expenses
Total acquisition expenses
General operating expenses:
Corporate and Other
Asset Management
Amortization of intangible assets
Total General operating expenses
Interest expense:
Corporate and Other
Asset Management*
Total interest expense
Total benefits, losses and expenses
Adjusted pre-tax loss before consolidation and eliminations
Consolidation and eliminations
Adjusted pre-tax loss
Adjusted pre-tax income (loss) by activities:
Corporate and Other
Asset Management
Consolidation and eliminations
Adjusted pre-tax loss
2023
2022
2021
2023 vs 2022
2022 vs 2021
Change
$
68 $
85 $
186
(20) %
(54) %
385
(72)
11
(37)
287
26
381
15
—
—
(3)
(3)
965
35
27
353
516
(129)
(26)
169
919
65
(41)
714
1,112
28
40
827
1,338
30
—
5
(1)
4
250
1
37
(1)
36
1,119
1,137
45
40
72
40
1,027
1,204
1,249
958
149
1,107
2,146
(1,765)
(10)
908
223
1,032
188
1,131
1,220
2,369
2,756
(1,542)
(1,418)
(405)
(932)
9
NM
NM
(42)
(60)
(7)
(54)
(50)
NM
NM
(200)
NM
(14)
(22)
(33)
(15)
6
(33)
(2)
(9)
(14)
98
109
(44)
NM
37
(36)
(30)
(38)
(88)
NM
(86)
—
(89)
(2)
(38)
—
(4)
(12)
19
(7)
(14)
(9)
57
$
(1,775) $
(1,947) $
(2,350)
9 %
17 %
$
(1,651) $
(2,053) $
(2,329)
(114)
(10)
511
(405)
911
(932)
$
(1,775) $
(1,947) $
(2,350)
20 %
NM
98
9 %
12 %
(44)
57
17 %
*
Interest – Asset Management primarily represents interest expense on consolidated investment entities of $139 million, $217 million and $182 million in the years ended
December 31, 2023, 2022 and 2021, respectively.
84
AIG | 2023 Form 10-K
ITEM 7 | Business Segment Operations | Other Operations
YEARS ENDED DECEMBER 31, 2023 AND 2022 COMPARISON
Adjusted pre-tax loss before consolidation and eliminations of $1.8 billion in 2023 compared to $1.5 billion in 2022, an increase of
$223 million, was primarily due to:
•
•
•
lower net investment income associated with consolidated investment entities of $708 million and the absence of $56 million mark
to market gain on the 2.46 percent equity interest in Fortitude Group Holdings, LLC, partially offset by the absence of mark to
market losses of $272 million on our investment in collateralized loan obligations (CLO) and higher income on AIG Parent portfolio
of $139 million due to higher yields;
lower corporate general operating expenses of $154 million primarily driven by a reduction in employee related costs of $12 million
and other operating expenses of $142 million; and
lower interest expense of $24 million primarily driven by interest savings of $136 million from $11.0 billion debt repurchases,
through cash tender offers and debt redemption and maturity in 2022 and 2023, lower interest expense of $74 million associated
with consolidated investments entities as a result of deconsolidation and paydowns on debt, partially offset by interest expense of
$183 million on the $6.5 billion Corebridge senior unsecured notes, $1.5 billion draw down on the DDTL Facility and $1.0 billion
junior subordinated debt issued by Corebridge in 2022.
Adjusted pre-tax loss on consolidation and eliminations of $10 million in 2023 compared to $405 million in 2022, a decrease of
$395 million, was primarily due to the elimination of the insurance companies’ net investment income from their investment in the
consolidated investment entities of $419 million.
YEARS ENDED DECEMBER 31, 2022 AND 2021 COMPARISON
Adjusted pre-tax loss before consolidation and eliminations of $1.5 billion in 2022 compared to $1.4 billion in 2021, decrease of
$124 million was primarily due to:
•
•
•
•
lower net investment income associated with consolidated investment entities of $382 million partially offset by higher income on
AIG Parent portfolio of $94 million due to higher yields and $56 million mark to market gain on the 2.46 percent equity interest in
Fortitude Group Holdings, LLC;
lower underwriting loss attributable to lower catastrophe losses of $38 million and absence of unfavorable prior year development
($86 million in 2021) within Other Operations Run-Off, primarily Blackboard U.S. Holdings, Inc. (Blackboard);
lower corporate interest expense primarily driven by interest savings of $225 million from $9.4 billion debt repurchases, through
cash tender offers, and debt redemption in 2022 as well as $92 million from $3.6 billion of debt redemptions and debt repurchases,
through cash tender offers in 2021, partially offset by interest expense of $240 million on $6.5 billion Corebridge senior unsecured
notes, $1.5 billion draw down on the DDTL Facility and $1.0 billion junior subordinated debt issued by Corebridge in 2022; and
lower corporate and other general operating expenses of $45 million primarily driven by decreases in employment costs of
$254 million partially offset by higher professional fees of $209 million.
Adjusted pre-tax loss on consolidation and eliminations of $405 million in 2022 compared to $932 million in 2021, a decrease of
$527 million, was primarily due to the elimination of the insurance companies’ net investment income from their investment in the
consolidated investment entities of $520 million.
AIG | 2023 Form 10-K
85
ITEM 7 | Investments
Investments
OVERVIEW
Our investment strategies are tailored to the specific business needs of each segment by targeting an asset allocation mix that
supports estimated cash flows of our outstanding liabilities and provides diversification from an asset class, sector, issuer, and
geographic perspective. The primary objectives are generation of investment income, preservation of capital, liquidity management
and growth of surplus. The majority of assets backing our insurance liabilities consist of fixed maturity securities.
Inflation remains elevated relative to the Federal Reserve target however it has decreased over the past several quarters. Interest
rates also remain elevated although credit spreads have narrowed for most asset classes as recession concerns began to recede and
the likelihood for a soft landing increased.
Our Investment Management Agreements with Blackstone Inc.
In 2021, AIG entered into a long-term asset management relationship with Blackstone Inc. and its investment advisory affiliates
(Blackstone), pursuant to which Blackstone initially managed $50 billion of Corebridge’s existing investment portfolio, with that amount
increasing to an aggregate of $92.5 billion by the third quarter of 2027. As of December 31, 2023, Blackstone manages $55 billion in
book value of assets in Corebridge's investment portfolio. As these assets run-off, we expect Blackstone to reinvest primarily in
Blackstone-originated investments across a range of asset classes, including private and structured credit, and commercial and
residential real estate securitized and whole loans. We continue to manage asset allocation and portfolio-level risk management
decisions with respect to any assets managed by Blackstone, ensuring that we maintain a consistent level of oversight across our
entire investment portfolio considering our asset-liability matching needs, risk appetite and capital positions.
Our Investment Management Agreements with BlackRock, Inc.
Since April 2022, AIG and Corebridge insurance company subsidiaries have entered into separate investment management
agreements with BlackRock, Inc. and its investment advisory affiliates (BlackRock). Substantially all investment management
agreements contemplated for AIG insurance company subsidiaries have been executed. A small number of insurance companies
remain under discussion and expect to be resolved in 2024. As of December 31, 2023, BlackRock manages $135 billion of our
investment portfolio, consisting of liquid fixed income and certain private placement assets, including $76 billion of Corebridge assets.
In addition, liquid fixed income assets associated with the Fortitude Re funds withheld asset portfolio were separately transferred to
BlackRock for management in 2022.
For additional information, see Note 1 to the Consolidated Financial Statements.
INVESTMENT HIGHLIGHTS IN 2023
• Blended investment yields on new investments are higher than blended rates on investments that were sold, matured or called
during this period. We continued to make investments in structured securities and other fixed maturity securities with attractive
risk-adjusted return characteristics to improve yields and increase net investment income.
• The higher interest rate environment has contributed to higher income in the base portfolio for the twelve months ended
December 31, 2023 compared to the same period in the prior year. Total Net investment income increased for the twelve months
ended December 31, 2023 compared to the same period in the prior year, primarily due to higher returns in our fixed maturity
securities, mortgage and other loans, short-term investments and hedge fund portfolios, partially offset by lower income in our
private equity portfolio.
INVESTMENT STRATEGIES
Investment strategies are assessed at the segment level and involve considerations that include local and general market and
economic conditions, duration and cash flow management, risk appetite and volatility constraints, rating agency and regulatory capital
considerations, tax, regulatory and legal investment limitations, and, as applicable, environmental, social and governance
considerations.
Some of our key investment strategies are as follows:
• Our fundamental strategy across the portfolios is to seek investments with similar duration and cash flow characteristics to the
associated insurance liabilities to the extent practicable.
• We seek to purchase investments that offer enhanced yield through illiquidity premiums, such as private placements and
commercial mortgage loans, which also add portfolio diversification. These assets typically afford credit protections through
covenants, ability to customize structures that meet our insurance liability needs, and deeper due diligence given information
access.
86
AIG | 2023 Form 10-K
ITEM 7 | Investments
• Given our global presence, we seek investments that provide diversification from investments available in local markets. To the
extent we purchase these investments, we generally hedge any currency risk using derivatives, which could provide opportunities
to earn higher risk adjusted returns compared to investments in the functional currency.
• AIG Parent, included in Other Operations, actively manages its assets and liabilities, counterparties and duration. AIG Parent’s
liquidity sources are held primarily in the form of cash and short-term investments. This strategy allows us to both diversify our
sources of liquidity and reduce the cost of maintaining sufficient liquidity.
• Within the U.S., the Life and Retirement and General Insurance investments are generally split between reserve backing and
surplus portfolios.
– Insurance reserves are backed mainly by investment grade fixed maturity securities that meet our duration, risk-return, capital,
tax, liquidity, credit quality and diversification objectives. We assess asset classes based on their fundamental underlying risk
factors, including credit (public and private), commercial real estate and residential real estate, regardless of whether such
investments are bonds, loans, or structured products.
– Surplus investments seek to enhance portfolio returns and are generally comprised of a mix of fixed maturity investment grade
and below investment grade securities and various alternative asset classes, including private equity, real estate equity, and
hedge funds. Over the past few years, hedge fund investments have been reduced.
• Outside of the U.S., fixed maturity securities held by our insurance companies consist primarily of investment-grade securities
generally denominated in the currencies of the countries in which we operate.
• We also utilize derivatives to manage our asset and liability duration as well as currency exposures.
Asset-Liability Management
The investment strategy within the General Insurance companies focuses on growth of surplus, maintenance of sufficient liquidity for
unanticipated insurance claims, and preservation of capital. General Insurance invests primarily in fixed maturity securities issued by
corporations, municipalities and other governmental agencies; structured securities collateralized by, among other assets, residential
and commercial real estate; and commercial mortgage loans. Fixed maturity securities of the General Insurance companies have an
average duration of 3.9 years, with an average of 4.1 years for North America and 3.5 years for International.
While invested assets backing reserves of the General Insurance companies are primarily invested in conventional liquid fixed
maturity securities, we have continued to allocate to asset classes that offer higher yields through structural and illiquidity premiums,
particularly in our North America operations. In addition, we continue to invest in both fixed rate and floating rate asset-backed
investments to manage our exposure to potential changes in interest rates and inflation. We seek to diversify the portfolio across
asset classes, sectors and issuers to mitigate idiosyncratic portfolio risks.
In addition, a portion of the surplus of General Insurance companies is invested in a diversified portfolio of alternative investments that
seek to balance liquidity, volatility and growth of surplus. Although these alternative investments are subject to periodic earnings
fluctuations, they have historically achieved yields in excess of the fixed maturity portfolio yields and have provided added
diversification to the broader portfolio.
The investment strategy of the Life and Retirement companies is to provide net investment income to back liabilities that result in
stable distributable earnings and enhance portfolio value, subject to asset-liability management, capital, liquidity and regulatory
constraints.
The Life and Retirement companies use asset-liability management as a primary tool to monitor and manage risk in their businesses.
The Life and Retirement companies maintain a diversified, high-to-medium quality portfolio of fixed maturity securities issued by
corporations, municipalities and other governmental agencies; structured securities collateralized by, among other assets, residential
and commercial real estate; and commercial mortgage loans that, to the extent practicable, match the duration characteristics of the
liabilities. We seek to diversify the portfolio across asset classes, sectors, and issuers to mitigate idiosyncratic portfolio risks. The
investment portfolio of each product line is tailored to the specific characteristics of its insurance liabilities, and as a result, duration
varies between distinct portfolios. The interest rate environment has a direct impact on the asset-liability management profile of the
businesses, and changes in the interest rate environment may result in the need to lengthen or shorten the duration of the portfolio. In
a rising rate environment, we may shorten the duration of the investment portfolio.
Fixed maturity securities of the Life and Retirement companies’ domestic operations have an average duration of 6.9 years.
In addition, the Life and Retirement companies seek to enhance surplus portfolio returns through investments in a diversified portfolio
of alternative investments. Although these alternative investments are subject to periodic earnings fluctuations, they have historically
achieved returns in excess of the fixed maturity portfolio returns.
AIG | 2023 Form 10-K
87
ITEM 7 | Investments
National Association of Insurance Commissioners (NAIC) Designations of Fixed Maturity Securities
The Securities Valuation Office (SVO) of the NAIC evaluates the investments of U.S. insurers for statutory reporting purposes and
assigns fixed maturity securities to one of six categories called NAIC Designations. In general, NAIC Designations of ‘1’ highest
quality, or ‘2’ high quality, include fixed maturity securities considered investment grade, while NAIC Designations of ‘3’ through ‘6’
generally include fixed maturity securities referred to as below investment grade. NAIC Designations for non-agency Residential
Mortgage Backed Securities (RMBS) and Commercial Mortgage Backed Securities (CMBS) are calculated using third party modeling
results provided through the NAIC. These methodologies result in an improved NAIC Designation for such securities compared to the
rating typically assigned by the three major rating agencies. The following tables summarize the ratings distribution of AIG
subsidiaries’ fixed maturity security portfolio by NAIC Designation, and the distribution by composite AIG credit rating, which is
generally based on ratings of the three major rating agencies. For fixed maturity securities where no NAIC Designation is assigned or
able to be calculated using third-party data, the NAIC Designation category used in the first table below reflects an internal rating.
The NAIC Designations presented below do not reflect the added granularity to the designation categories adopted by the NAIC in
2020, which further subdivide each category of fixed maturity securities by appending letter modifiers to the numerical designations.
For a full description of the composite AIG credit ratings, see Credit Ratings below.
The following table presents the fixed maturity security portfolio categorized by NAIC Designation, at fair value:
December 31, 2023
(in millions)
NAIC Designation
1
2
Total
Investment
Grade
3
4
5
6
Total Below
Investment
Grade
Total
Other fixed maturity securities
$ 89,907 $ 68,456 $
158,363 $ 6,301 $ 4,827 $ 618 $
78 $
11,824 $ 170,187
Mortgage-backed, asset-backed and collateralized
58,639
7,221
65,860
367
399
54
21
841
66,701
Total*
$ 148,546 $ 75,677 $
224,223 $ 6,668 $ 5,226 $ 672 $
99 $
12,665 $ 236,888
*
Excludes $86 million of fixed maturity securities for which no NAIC Designation is available.
The following table presents the fixed maturity security portfolio categorized by composite AIG credit rating, at fair value:
December 31, 2023
(in millions)
Composite AIG Credit Rating
Other fixed maturity securities
AAA/AA/A
BBB
Total
Investment
Grade
BB
B
CCC and
Lower
Total Below
Investment
Grade
Total
$
91,753 $ 66,103 $
157,856 $ 6,458 $ 5,039 $
834 $
12,331 $ 170,187
Mortgage-backed, asset-backed and collateralized
53,344
7,990
61,334
555
591
4,221
5,367
66,701
Total*
$ 145,097 $ 74,093 $
219,190 $ 7,013 $ 5,630 $
5,055 $
17,698 $ 236,888
*
Excludes $86 million of fixed maturity securities for which no NAIC Designation is available.
CREDIT RATINGS
At December 31, 2023, approximately 89 percent of our fixed maturity securities were held by our domestic entities. Approximately 92
percent of these securities were rated investment grade by one or more of the principal rating agencies.
Moody’s Investors Service Inc. (Moody’s), Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc. (S&P), or
similar foreign rating services rate a significant portion of our foreign entities’ fixed maturity securities portfolio. Rating services are not
available for some foreign-issued securities. Our credit risk management group closely reviews the credit quality of the foreign
portfolio’s non-rated fixed maturity securities. At December 31, 2023, approximately 93 percent of such investments were either rated
investment grade or, on the basis of analysis of our investment managers, were equivalent from a credit standpoint to securities rated
investment grade. Approximately 27 percent of the foreign entities’ fixed maturity securities portfolio is comprised of sovereign fixed
maturity securities supporting policy liabilities in the country of issuance.
Composite AIG Credit Ratings
With respect to our fixed maturity securities, the credit ratings in the table below and in subsequent tables reflect: (i) a composite of
the ratings of the three major rating agencies, or when agency ratings are not available, the NAIC Designation assigned by the NAIC
SVO (99 percent of total fixed maturity securities), or (ii) our internal ratings when these investments have not been rated by any of
the major rating agencies or the NAIC. The “Non-rated” category in those tables consists of fixed maturity securities that have not
been rated by any of the major rating agencies, the NAIC or us.
For information regarding credit risks associated with Investments, see Enterprise Risk Management – Credit Risk Management.
88
AIG | 2023 Form 10-K
The following table presents the composite AIG credit ratings of our fixed maturity securities calculated on the basis of their
fair value*:
ITEM 7 | Investments
(in millions)
Rating:
Other fixed maturity securities
AAA
AA
A
BBB
Below investment grade
Non-rated
Total
Mortgage-backed, asset-backed
and collateralized
AAA
AA
A
BBB
Below investment grade
Non-rated
Total
Total
AAA
AA
A
BBB
Below investment grade
Non-rated
Available for Sale
Other
Total
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
$
7,668 $
13,477 $
38 $
36 $
7,706 $
38,349
44,511
64,765
11,693
178
31,061
45,618
63,173
16,538
175
955
231
1,339
467
6
810
244
1,043
432
4
39,304
44,742
66,104
12,160
184
13,513
31,871
45,862
64,216
16,970
179
$
167,164 $
170,042 $
3,036 $
2,569 $
170,200 $
172,611
$
16,477 $
20,729 $
212 $
253 $
16,689 $
$
$
27,411
8,145
7,262
5,248
15,706
7,186
6,857
5,509
745
359
729
109
659
289
578
125
28,156
8,504
7,991
5,357
26
64,569 $
127
56,114 $
51
2,205 $
12
1,916 $
77
66,774 $
24,145 $
65,760
52,656
72,027
16,941
204
34,206 $
46,767
52,804
70,030
22,047
302
250 $
289 $
1,700
590
2,068
576
57
1,469
533
1,621
557
16
24,395 $
67,460
53,246
74,095
17,517
261
20,982
16,365
7,475
7,435
5,634
139
58,030
34,495
48,236
53,337
71,651
22,604
318
Total
$
231,733 $
226,156 $
5,241 $
4,485 $
236,974 $
230,641
* On August 1, 2023, Fitch downgraded the U.S. government’s credit rating from AAA to AA+. This resulted in the composite AIG Credit Rating for both U.S. government
securities and agency mortgage-backed securities to transition from AAA to AA+.
Available-for-Sale Investments
The following table presents the fair value of our available-for-sale securities:
(in millions)
Bonds available for sale:
U.S. government and government sponsored entities
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
Mortgage-backed, asset-backed and collateralized:
RMBS
CMBS
CLO/ABS
Total mortgage-backed, asset-backed and collateralized
Total bonds available for sale*
December 31, 2023
December 31, 2022
$
$
5,616
10,663
12,453
138,432
20,444
14,128
29,997
64,569
231,733
$
$
6,619
12,099
13,485
137,839
18,817
14,193
23,104
56,114
226,156
*
At December 31, 2023 and 2022, the fair value of bonds available for sale held by us that were below investment grade or not rated totaled $17.1 billion and
$22.3 billion, respectively.
AIG | 2023 Form 10-K
89
The following table presents the fair value of our aggregate credit exposures to non-U.S. governments for our fixed maturity
securities:
ITEM 7 | Investments
(in millions)
Canada
Germany
Japan
France
United Kingdom
Indonesia
Chile
Mexico
Israel
Korea, Republic of
Other
Total
December 31, 2023
1,411
929
699
677
478
451
404
374
337
318
6,412
12,490
$
$
$
December 31, 2022
1,312
856
812
636
446
514
401
379
368
238
7,589
13,551
$
The following table presents the fair value of our aggregate European credit exposures by major sector for our fixed
maturity securities:
(in millions)
Euro-Zone countries:
Germany
France
Netherlands
Belgium
Ireland
Spain
Luxembourg
Italy
Denmark
Finland
Other Euro-Zone
Total Euro-Zone
Remainder of Europe:
United Kingdom
Switzerland
Guernsey
Norway
Sweden
Russian Federation
Other - Remainder of Europe
Total - Remainder of Europe
Total
Financial
Institution
December 31, 2023
Non-Financial
Corporates
Structured
Products
Sovereign
$
$
$
929 $
677
167
35
9
10
18
17
227
19
234
2,342 $
478 $
20
—
252
130
2
31
$
$
913 $
3,255 $
269 $
1,705
912
299
46
260
303
93
78
63
26
4,054 $
4,259 $
559
—
85
193
—
180
5,276 $
9,330 $
2,360 $
1,088
1,006
936
429
627
321
531
136
36
39
7,509 $
8,499 $
781
—
221
105
33
44
9,683 $
17,192 $
— $
12
43
41
679
217
—
—
—
—
—
992 $
782 $
—
624
—
—
—
48
1,454 $
2,446 $
Total
3,558 $
3,482
2,128
1,311
1,163
1,114
642
641
441
118
299
14,897 $
14,018 $
1,360
624
558
428
35
303
17,326 $
32,223 $
December 31,
2022
Total
3,422
2,919
2,060
1,256
1,167
684
1,025
491
374
97
276
13,771
12,492
1,449
—
607
433
34
470
15,485
29,256
90
AIG | 2023 Form 10-K
Investments in Municipal Bonds
At December 31, 2023, the U.S. municipal bond portfolio was composed primarily of essential service revenue bonds and high-quality
tax-exempt bonds with 98 percent of the portfolio rated A or higher.
ITEM 7 | Investments
The following table presents the fair values of our available for sale U.S. municipal bond portfolio by state and municipal
bond type:
(in millions)
California
New York
Texas
Illinois
Massachusetts
Ohio
Pennsylvania
Georgia
New Jersey
Washington
Florida
Virginia
Missouri
All other states
Total
December 31, 2023
State
General
Obligation
Local
General
Obligation
Revenue
$
$
526 $
42
16
81
206
16
58
83
9
85
4
8
—
301
1,435 $
415 $
163
340
57
20
—
2
48
2
17
—
—
—
157
1,221 $
1,420 $
1,779
567
587
269
355
300
188
252
154
236
213
184
1,503
8,007 $
Total
Fair
Value
2,361 $
1,984
923
725
495
371
360
319
263
256
240
221
184
1,961
December 31, 2022
Total Fair Value
2,599
2,207
1,168
832
597
334
391
354
308
279
337
277
193
2,223
12,099
10,663 $
Investments in Corporate Debt Securities
The following table presents the fair value of our available for sale corporate debt securities by industry categories:
Industry Category
(in millions)
Financial institutions:
Money center/Global bank groups
Regional banks – other
Life insurance
Securities firms and other finance companies
Insurance non-life
Regional banks – North America
Other financial institutions
Utilities
Communications
Consumer noncyclical
Capital goods
Energy
Consumer cyclical
Basic materials
Other
Total*
December 31, 2023
December 31, 2022
$
$
8,744
456
2,439
555
4,937
5,279
18,300
19,643
8,799
16,973
6,194
11,091
8,682
4,632
21,708
138,432
$
$
8,234
418
2,207
354
5,067
5,832
16,491
18,863
8,676
17,973
6,745
10,357
10,963
4,715
20,944
137,839
*
At December 31, 2023 and 2022, approximately 92 percent and 89 percent, respectively, of these investments were rated investment grade.
AIG | 2023 Form 10-K
91
Investments in RMBS
The following table presents the fair value of AIG’s RMBS available for sale securities:
ITEM 7 | Investments
(in millions)
Agency RMBS
Alt-A RMBS
Subprime RMBS
Prime non-agency
Other housing related
Total RMBS(a)(b)
December 31, 2023
7,045
4,844
1,649
3,132
3,774
20,444
$
$
December 31, 2022
8,126
4,400
1,819
2,064
2,408
18,817
$
$
(a) Includes approximately $4.1 billion and $4.4 billion at December 31, 2023 and 2022, respectively, of certain RMBS that had experienced deterioration in credit quality
since their origination. This excludes impact of U.S. debt downgrade of Fannie Mae and Freddie Mac. For additional information on purchased credit deteriorated
securities, see Note 6 to the Consolidated Financial Statements.
(b) The weighted average expected life was seven years at both December 31, 2023 and December 31, 2022.
Our investments guidelines for investing in RMBS, CLO and other asset-backed securities (ABS) take into consideration the quality of
the originator, the manager, the servicer, security credit ratings, underlying characteristics of the mortgages, borrower characteristics,
and the level of credit enhancement in the transaction.
Investments in CMBS
The following table presents the fair value of our CMBS available for sale securities:
(in millions)
CMBS (traditional)
Agency
Other
Total
December 31, 2023
12,205
1,434
489
14,128
$
$
December 31, 2022
12,401
1,219
573
14,193
$
$
The fair value of CMBS holdings remained stable during the year ended December 31, 2023. The majority of our investments in
CMBS are in tranches that contain substantial credit protection features through collateral subordination. The majority of CMBS
holdings are traditional conduit transactions, broadly diversified across property types and geographical areas.
Investments in CLO/ABS
The following table presents the fair value of our CLO/ABS available for sale securities by collateral type:
(in millions)
Collateral Type:
ABS
Bank loans
Other
Total
December 31, 2023
December 31, 2022
$
$
15,762
14,104
131
29,997
$
$
12,168
10,818
118
23,104
92
AIG | 2023 Form 10-K
4
344
2
56
6
400
Unrealized Losses of Fixed Maturity Securities
ITEM 7 | Investments
The following table shows the aging of the unrealized losses of fixed maturity securities, the extent to which the fair value is
less than amortized cost or cost, and the number of respective items in each category:
December 31, 2023
Aging(a)
Less Than or Equal
to 20% of Cost(b)
Unrealized
Greater Than 20%
to 50% of Cost(b)
Unrealized
Greater Than 50%
of Cost(b)
Unrealized
Total
Unrealized
(dollars in millions)
Cost(c)
Loss
Items(d)
Cost(c)
Loss
Items(d)
Cost(c)
Loss
Items(d)
Cost(c)
Loss
Items(d)
Investment grade bonds
0-6 months
7-11 months
12 months or more
112,619
9,943 16,579
37,388
10,511 3,214
$ 11,208 $
475 1,847 $ 2,993 $
866
192 $
6 $
17,683
766 2,750
2,307
656
166
3
2
188
— $ 14,207 $ 1,344 2,039
—
23
19,994
1,424 2,916
150,351
20,642 19,816
Total
$ 141,510 $ 11,184 21,176 $ 42,688 $ 12,033 3,572 $
354 $
193
23 $ 184,552 $ 23,410 24,771
Below investment grade
bonds
0-6 months
7-11 months
$ 2,417 $
756
96
29
12 months or more
7,637
481 2,443
179
56
949
51
17
9
266
177
Total
Total bonds
0-6 months
7-11 months
$ 10,810 $
606 3,338 $ 1,150 $
334
230 $
72 $
$ 13,625 $
571 2,563 $ 3,138 $
917
236 $
20 $
18,439
795 2,929
2,363
673
175
12 months or more
120,256
10,424 19,022
38,337
10,777 3,391
11
2
38
51
14
4
226
2
15
814
48
779
190
8,642
785 2,635
36 $ 12,032 $
991 3,604
19 $ 16,783 $ 1,502 2,818
2
38
20,808
1,472 3,106
158,993
21,427 22,451
716 $
145 $
44 $
14 $
19 $ 2,576 $
158
Total(d)
$ 152,320 $ 11,790 24,514 $ 43,838 $ 12,367 3,802 $
426 $
244
59 $ 196,584 $ 24,401 28,375
(a) Represents the number of consecutive months that fair value has been less than cost by any amount.
(b) Represents the percentage by which fair value is less than cost.
(c) For bonds, represents amortized cost net of allowance.
(d) Item count is by CUSIP by subsidiary.
The allowance for credit losses was $9 million for investment grade bonds and $153 million for below investment grade bonds as of
December 31, 2023.
Commercial Mortgage Loans
At December 31, 2023, we had direct commercial mortgage loan exposure of $38.0 billion.
The following table presents the commercial mortgage loan exposure by location and class of loan based on amortized
cost:
Number
of Loans
(dollars in millions)
December 31, 2023
State:
Apartments
Offices
Retail
Industrial
Hotel
Others
Total
Class
Percent
of Total
New York
California
New Jersey
Texas
Florida
Massachusetts
Illinois
Colorado
Pennsylvania
Ohio
Other states
Foreign
Total*
78 $
62
78
42
48
19
21
17
20
22
127
78
612 $
1,508 $ 4,172 $
829
2,316
894
729
662
609
308
151
141
2,787
4,195
1,123
80
884
107
750
467
93
133
10
457
1,432
488 $
157
358
145
507
542
3
179
249
161
675
842
15,129 $ 9,708 $ 4,306 $
440 $
101 $
621
—
18
535
—
—
168
23
—
173
414
1,309
753
280
106
22
44
70
218
431
943
1,751
6,367 $ 2,053 $
— $ 6,709
4,051
12
3,539
32
2,221
—
1,984
—
1,976
—
1,143
20
818
—
774
—
743
—
5,082
47
335
8,969
446 $ 38,009
18 %
11
9
6
5
5
3
2
2
2
13
24
100 %
AIG | 2023 Form 10-K
93
Number
of Loans
Apartments
Offices
Retail
Industrial
Hotel
Others
Total
Class
Percent
of Total
ITEM 7 | Investments
81 $
59
65
47
16
57
22
23
18
9
139
93
629 $
1,571 $ 4,502 $
847
2,154
857
576
491
584
145
75
483
2,239
4,575
1,068
163
998
443
119
623
10
133
116
494
1,606
490 $
170
439
153
521
362
3
168
255
—
842
413
14,597 $ 10,275 $ 3,816 $
404 $
104 $
656
11
143
—
391
—
—
23
17
278
404
1,316
497
184
23
199
46
544
223
—
961
1,609
6,006 $ 2,027 $
— $ 7,071
4,070
13
3,296
32
2,335
—
1,563
—
1,562
—
1,277
21
867
—
709
—
616
—
4,833
19
322
8,929
407 $ 37,128
19 %
11
9
6
4
4
4
2
2
2
13
24
100 %
(dollars in millions)
December 31, 2022
State:
New York
California
New Jersey
Texas
Massachusetts
Florida
Illinois
Ohio
Pennsylvania
Washington, D.C.
Other states
Foreign
Total*
* Does not reflect allowance for credit losses.
For additional information on commercial mortgage loans, see Note 7 to the Consolidated Financial Statements.
Net Realized Gains and Losses
The following table presents the components of Net realized gains (losses):
Years Ended December 31,
2023
(in millions)
Sales of fixed maturity securities
Excluding
Fortitude
Re Funds
Withheld
Assets
Fortitude
Re
Funds
Withheld
Assets
$
(929) $
Total
(133) $ (1,062)
Excluding
Fortitude
Re Funds
Withheld
Assets
2022
Fortitude
Re
Funds
Withheld
Assets
Excluding
Fortitude
Re Funds
Withheld
Assets
Total
2021
Fortitude
Re
Funds
Withheld
Assets
$
(871) $
(311) $ (1,182) $
211 $
Total
717 $ 928
Intent to sell
—
—
—
(66)
—
(66)
—
—
—
Change in allowance for credit losses on
fixed maturity securities
Change in allowance for credit losses on
loans
Foreign exchange transactions
Index-linked interest credited embedded
derivatives, net of related hedges
All other derivatives and hedge accounting*
Sales of alternative investments and real
estate investments
Other
Net realized gains (losses) – excluding
Fortitude Re funds withheld
embedded derivative
Net realized gains (losses) on Fortitude
Re funds withheld embedded derivative
Net realized gains (losses)
(211)
(9)
(220)
(184)
(32)
(216)
(167)
101
(62)
19
(229)
120
(55)
(20)
(47)
(5)
(102)
(25)
19
163
22
7
26
9
(5)
172
17
(784)
(374)
—
(105)
(784)
(479)
(119)
1,230
—
(134)
(119)
1,096
(5)
260
—
28
(5)
288
98
(40)
(2)
(3)
96
(43)
193
(39)
43
—
236
(39)
988
213
237
10
1,225
223
(2,306)
(295)
(2,601)
69
(486)
(417)
1,871
1,003
2,874
—
(2,007)
$ (2,306) $ (2,302) $ (4,608)
(2,007)
—
7,481
7,481
69 $ 6,995 $ 7,064
$
—
$ 1,871 $
(603)
(603)
400 $ 2,271
* Derivative activity related to hedging MRBs is recorded in Change in the fair value of MRBs, net. For additional disclosures about MRBs, see Note 14 to the
Consolidated Financial Statements.
Net realized losses excluding Fortitude Re funds withheld assets in the year ended December 31, 2023 compared to Net realized
gains excluding Fortitude Re funds withheld assets in 2022 were primarily due to lower derivative gains in the current period
compared to the prior year period. Lower Net realized gains excluding Fortitude Re funds withheld assets in the year ended
December 31, 2022 compared to 2021 were primarily due to losses on sales of securities compared to gains in 2021.
94
AIG | 2023 Form 10-K
ITEM 7 | Investments
Index-linked interest credited embedded derivatives, net of related hedges, reflected higher losses in the year ended December 31,
2023 compared to 2022 and higher losses in the year ended December 31, 2022 compared to 2021. Fair value gains or losses in the
hedging portfolio are typically not fully offset by increases or decreases in liabilities due to the non-performance or “own credit” risk
adjustment used in the valuation of index-linked interest credited embedded derivatives, which are not hedged as part of our
economic hedging program, and other risk margins used for valuation that cause the embedded derivatives to be less sensitive to
changes in market rates than the hedge portfolio.
Net realized gains (losses) on Fortitude Re funds withheld assets primarily reflect changes in the valuation of the modified
coinsurance and funds withheld assets. Increases in the valuation of these assets result in losses to AIG as the appreciation on the
assets under those reinsurance arrangements must be transferred to Fortitude Re. Decreases in valuation of the assets result in
gains to AIG as the depreciation on the assets under those reinsurance arrangements must be transferred to Fortitude Re. For
additional information on the impact of the funds withheld arrangements with Fortitude Re, see Note 8 to the Consolidated Financial
Statements.
For additional information on market risk management related to these product features, see Enterprise Risk Management –
Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Fixed Index Annuity and Index Universal Life Risk
Management and Hedging Programs. For additional information on the economic hedging target and the impact to pre-tax income of
this program, see Insurance Reserves – Life and Annuity Future Policy Benefits, Policyholder Contract Deposits and Market Risk
Benefits – Variable Annuity Guaranteed Benefits and Hedging Results.
For additional information on our investment portfolio, see Note 6 to the Consolidated Financial Statements.
Change in Unrealized Gains and Losses on Investments
The change in net unrealized gains and losses on investments in the year ended December 31, 2023 was primarily attributable to a
change in the fair value of fixed maturity securities. For the year ended December 31, 2023, net unrealized gains were $8.5 billion due
to narrowing of credit spreads.
The change in net unrealized gains and losses on investments in the year ended December 31, 2022 was primarily attributable to
decreases in the fair value of fixed maturity securities. For the year ended December 31, 2022, net unrealized losses were
$47.7 billion due to an increase in interest rates and spreads.
For additional information on our investment portfolio, see Note 6 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
95
ITEM 7 | Insurance Reserves
Insurance Reserves
LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (LOSS RESERVES)
The following table presents the components of our gross and net loss reserves by segment and major lines of business(a):
(in millions)
General Insurance:
December 31, 2023
December 31, 2022
Net liability for
unpaid losses
and loss
adjustment
expenses
Reinsurance
recoverable on
unpaid losses and
loss adjustment
expenses
Gross liability
for unpaid
losses and loss
adjustment
expenses
Net liability for
unpaid losses
and loss
adjustment
expenses
Reinsurance
recoverable on
unpaid losses and
loss adjustment
expenses
Gross liability
for unpaid
losses and loss
adjustment
expenses
U.S. Workers' Compensation (net of discount)
U.S. Excess Casualty
$
U.S. Other Casualty
U.S. Financial Lines
U.S. Property and Special Risks
U.S. Personal Insurance
UK/Europe Casualty and Financial Lines
UK/Europe Property and Special Risks
UK/Europe and Japan Personal Insurance
Other product lines(b)
Unallocated loss adjustment expenses(b)
Total General Insurance
Other Operations Run-Off:
U.S. run-off long tail insurance lines (net of
discount)
Other run-off product lines
Blackboard U.S. Holdings, Inc.
Unallocated loss adjustment expenses
Total Other Operations Run-Off
$
2,655
3,321
4,112
5,672
4,403
767
7,447
2,913
1,483
5,416
1,298
$
4,099
3,272
3,676
1,622
1,494
2,163
1,951
1,665
671
5,182
841
39,487
26,636
283
228
91
15
617
3,360
60
119
114
3,653
$
6,754
6,593
7,788
7,294
5,897
2,930
9,398
4,578
2,154
10,598
2,139
66,123
3,643
288
210
129
4,270
$
2,684
3,638
3,858
5,899
6,815
794
6,984
2,717
1,628
5,999
1,418
$
4,319
3,701
3,872
1,773
3,295
2,052
1,538
1,464
592
4,834
927
42,434
28,367
239
245
134
13
631
3,427
59
135
114
3,735
Total
$
40,104
$
30,289
$
70,393
$
43,065
$
32,102
$
7,003
7,339
7,730
7,672
10,110
2,846
8,522
4,181
2,220
10,833
2,345
70,801
3,666
304
269
127
4,366
75,167
(a) Includes net loss reserve discount of $1.2 billion and $1.3 billion at December 31, 2023 and 2022, respectively. For information regarding loss reserve discount, see
Note 13 to the Consolidated Financial Statements.
(b) Other product lines and Unallocated loss adjustment expenses includes Gross liability for unpaid losses and loss adjustment expense and Reinsurance recoverable on
unpaid losses and loss adjustment expense for the Fortitude Re reinsurance of $2.9 billion at both December 31, 2023 and 2022, respectively.
Prior Year Development
The following table summarizes incurred (favorable) unfavorable prior year development net of reinsurance by segment:
Years Ended December 31,
(in millions)
General Insurance:
North America
International
Total General Insurance*
Other Operations Run-Off
Total prior year favorable development
2023
2022
2021
$
$
$
(484) $
93
(391) $
(7)
(398) $
(196) $
(322)
(518) $
(5)
(523) $
(194)
(7)
(201)
86
(115)
*
Includes the amortization attributed to the deferred gain at inception from the National Indemnity Company (NICO) adverse development reinsurance agreement of
$164 million, $167 million and $193 million for the years ended December 31, 2023, 2022 and 2021, respectively. Consistent with our definition of APTI, the amount
excludes the portion of (favorable)/unfavorable prior year reserve development for which we have ceded the risk under the NICO reinsurance agreements of
$(158) million, $(174) million and $(249) million for the years ended December 31, 2023, 2022 and 2021, respectively. Also excludes the related changes in amortization
of the deferred gain, which were $(83) million, $85 million and $(3) million over those same periods.
96
AIG | 2023 Form 10-K
ITEM 7 | Insurance Reserves
Net Loss Development – 2023
In the twelve months ended December 31, 2023, we recognized favorable prior year loss reserve development of $398 million. The
key components of this development were:
North America
• Favorable development on U.S. Workers' Compensation business reflecting a continuation of favorable loss cost trends in
guaranteed cost and excess segments across most accident years.
• Favorable development in U.S. Excess Casualty driven by favorable development on the Excess Construction Runoff Portfolio.
• Favorable development in U.S. Other Casualty reflecting favorable experience in construction defect and construction wraps as
well as guaranteed cost auto and general liability.
• Favorable development in U.S. Property and Special risks reflecting favorable development on prior year catastrophes in the
2017-2021 accident years, offset by adverse development on prior year catastrophes in the 2022 accident year.
• Unfavorable development in U.S. Financial Lines due to unfavorable development on High Attaching Excess D&O, M&A, Primary
National D&O, Cyber data privacy claims, and Architects & Engineers, partially offset by favorable development on Primary Private
Not for Profit D&O and Financial Institutions D&O.
• Amortization benefit related to the deferred gain on the adverse development cover.
• Favorable development in U.S. Personal Insurance due to favorable development on prior year catastrophes across several
events primarily in the 2017-2020 accident years.
International
• Unfavorable development in UK/Europe Casualty and Financial Lines reflecting unfavorable development in auto liability in Europe
and UK and in UK D&O and Commercial Professional Indemnity business, partially offset by favorable development in Financial
Institutions Professional Indemnity and D&O in Europe and UK and Cyber and Commercial Personal Indemnity in Europe.
• Unfavorable development in UK/Europe Property and Special Risks driven by unfavorable development on prior year
catastrophes.
• Favorable development on Japan Professional Indemnity driven by personal auto and A&H business.
• Favorable development in Other product lines driven primarily by Global Specialty.
Our analyses and conclusions about prior year reserves also help inform our judgments about the current accident year loss and loss
adjustment expense ratios we selected.
For additional information on prior year development by line of business, see Note 13 to the Consolidated Financial Statements. For
information regarding actuarial methods employed for major classes of business, see Critical Accounting Estimates.
The following tables summarize incurred (favorable) unfavorable prior year development net of reinsurance, by segment and
major lines of business, and by accident year groupings:
Year Ended December 31, 2023
(in millions)
General Insurance North America:
U.S. Workers' Compensation
U.S. Excess Casualty
U.S. Other Casualty
U.S. Financial Lines
U.S. Property and Special Risks
U.S. Personal Insurance
Other Product Lines
Total General Insurance North America
General Insurance International:
UK/Europe Casualty and Financial Lines
UK/Europe Property and Special Risks
UK/Europe and Japan Personal Insurance
Other product lines
Total General Insurance International
Other Operations Run-Off
Total Prior Year (Favorable) Unfavorable Development
Total
2022
2021 & Prior
$
$
$
$
$
(190) $
(48)
(134)
37
(7)
(66)
(76)
(484) $
165 $
81
(57)
(96)
93 $
(7)
(398) $
(30) $
—
28
(20)
64
12
(54)
— $
(39) $
165
(35)
65
156 $
—
156 $
(160)
(48)
(162)
57
(71)
(78)
(22)
(484)
204
(84)
(22)
(161)
(63)
(7)
(554)
AIG | 2023 Form 10-K
97
ITEM 7 | Insurance Reserves
Net Loss Development – 2022
In the twelve months ended December 31, 2022, we recognized favorable prior year loss reserve development of $523 million. The
key components of this development were:
North America
• Favorable development in U.S Workers' Compensation reflecting continued favorable loss experience across most accident years
particularly for excess and guaranteed cost segments.
• Favorable development in U.S. Excess Casualty particularly in lead and mid-excess retail segments.
• Favorable development in U.S. Other Casualty in the Commercial Auto, General Liability and Construction Wraps business.
• Amortization benefit related to the deferred gain on the adverse development cover.
• Unfavorable development driven by U.S. Financial Lines driven by unfavorable severity trends in Excess and Primary D&O and
Excess and Financial Institutions Errors and Omissions (E&O), partially offset by favorable results in Employment Practices
Liability Insurance (EPLI).
International
• Favorable development on Global Specialty across all products in all regions.
• Favorable development in International Personal Lines particularly with Auto and A&H coverages in Japan as well as favorable
experience recognized in Europe and the UK.
• Unfavorable development in Casualty in Europe Excess Casualty and French Auto as well as large loss experience in the UK,
partially offset by favorable experience in Asia Pacific Casualty.
• Unfavorable development in Financial Lines primarily in the UK for M&A, Commercial PI and Commercial D&O.
Net Loss Development – 2021
In the twelve months ended December 31, 2021, we recognized favorable prior year loss reserve development of $115 million. The
key components of this development were:
North America
• Strong favorable development in Personal Insurance, primarily attributable to subrogation recovery related to the 2017 and 2018
California wildfires partially offset by the impact of dropping below the attachment point of our 2018 catastrophe aggregate treaty,
which also adversely impacted our U.S. Property and Special Risk Commercial Lines.
• Favorable development on U.S. Workers' Compensation and short-tailed commercial lines within Other Product Lines, reflecting
lower frequency and severity in recent calendar years.
• Amortization benefit related to the deferred gain on the adverse development cover.
• Reserve strengthening within U.S. Financial Lines, reflecting higher severity of claims in Directors & Officers, principally from
accident years 2018 and prior, and cyber risk from accident years 2019 and 2020.
International
• Favorable development on short-tailed International Commercial Lines and Personal Insurance, reflecting lower frequency and
severity of claims.
• Reserve strengthening on International Financial Lines, reflecting higher severity of claims, the majority of which is from accident
years 2018 and prior.
Other Operations
• Unfavorable development primarily attributed to the Blackboard insurance portfolio due to increased severity on reported claims.
We note that for certain categories of claims (e.g., construction defect claims and environmental claims) and for reinsurance
recoverable, losses may sometimes be reclassified to an earlier or later accident year as more information about the date of
occurrence becomes available to us.
Significant Reinsurance Agreements
In the first quarter of 2017, we entered into an adverse development reinsurance agreement with NICO, under which we transferred to
NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior.
Under this agreement, we ceded to NICO 80 percent of the losses on subject business paid on or after January 1, 2016 in excess of
$25 billion of net paid losses, up to an aggregate limit of $25 billion. We account for this transaction as retroactive reinsurance. This
transaction resulted in a gain, which under GAAP retroactive reinsurance accounting is deferred and amortized into income over the
settlement period. NICO created a collateral trust account as security for their claim payment obligations to us, into which they
deposited the consideration paid under the agreement, and Berkshire Hathaway Inc. has provided a parental guarantee to secure
NICO’s obligations under the agreement.
98
AIG | 2023 Form 10-K
For a description of AIG’s catastrophe reinsurance protection for 2023, see Enterprise Risk Management – Insurance Risks – General
Insurance Companies’ Key Risks – Natural Catastrophe Risk.
ITEM 7 | Insurance Reserves
The table below shows the calculation of the deferred gain on the adverse development reinsurance agreement, the effect of
discounting of loss reserves and amortization of the deferred gain.
(in millions)
Gross Covered Losses
Covered reserves before discount
Inception to date losses paid
Attachment point
Covered losses above attachment point
Deferred Gain Development
Covered losses above attachment ceded to NICO (80%)
Consideration paid including interest
Pre-tax deferred gain before discount and amortization
Discount on ceded losses(a)
Pre-tax deferred gain before amortization
Inception to date amortization of deferred gain at inception
Inception to date amortization attributed to changes in deferred gain(b)
Deferred gain liability reflected in AIG's balance sheet
December 31, 2023
December 31, 2022
December 31, 2021
$
$
$
10,849
$
12,537
$
30,157
(25,000)
28,667
(25,000)
16,006
$
16,204
$
12,805
$
12,963
$
(10,188)
2,617
(1,104)
1,513
(1,428)
64
(10,188)
2,775
(1,254)
1,521
(1,264)
(52)
$
149
$
205
$
14,398
27,023
(25,000)
16,421
13,137
(10,188)
2,949
(953)
1,996
(1,097)
(30)
869
(a) The accretion of discount and a reduction in effective interest rates is offset by changes in estimates of the amount and timing of future recoveries.
(b) Excluded from APTI.
The following table presents the rollforward of activity in the deferred gain from the adverse development reinsurance
agreement:
Years Ended December 31,
(in millions)
Balance at beginning of year, net of discount
(Favorable) unfavorable prior year reserve development ceded to NICO(a)
Amortization attributed to deferred gain at inception(b)
Amortization attributed to changes in deferred gain(c)
Changes in discount on ceded loss reserves
Balance at end of year, net of discount
2023
205 $
(158)
(164)
116
150
149 $
2022
869 $
(174)
(167)
(22)
(301)
205 $
2021
1,297
(249)
(193)
56
(42)
869
$
$
(a) Prior year reserve development ceded to NICO under the retroactive reinsurance agreement is deferred under GAAP.
(b) Represents amortization of the deferred gain recognized in APTI.
(c) Excluded from APTI.
The lines of business subject to this agreement include those with longer tails, which carry a higher degree of uncertainty. Since
inception, there have been periods of unfavorable prior year development, with more recent favorable development. This agreement
will continue to reduce the impact of volatility in the development on our ultimate loss estimates over time. The agreement has
resulted in lower capital charges for reserve risks at our U.S. insurance subsidiaries. In addition, net investment income declined as a
result of lower invested assets.
Fortitude Re was established during the first quarter of 2018 in a series of reinsurance transactions related to our run-off operations.
Those reinsurance transactions were designed to consolidate most of our insurance run-off lines into a single legal entity. As of
December 31, 2023, approximately $27.6 billion of reserves from our Life and Retirement Run-Off Lines and approximately
$3.0 billion of reserves from our General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG
subsidiaries, had been ceded to Fortitude Re under these reinsurance transactions.
AIG | 2023 Form 10-K
99
ITEM 7 | Insurance Reserves
LIFE AND ANNUITY FUTURE POLICY BENEFITS, POLICYHOLDER CONTRACT DEPOSITS AND
MARKET RISK BENEFITS
The following section provides discussion of life and annuity future policy benefits, policyholder contract deposits and market risk
benefits.
Update of Actuarial Assumptions and Models
The life insurance companies review and update actuarial assumptions at least annually, generally in the third quarter.
Investment-oriented products
The life insurance companies review and update assumptions used to value our universal life product with secondary guarantees at
least annually. These benefit reserves are also adjusted to reflect the changes in the fair value of available-for-sale securities with an
offset to OCI. DAC and related items (which may include VOBA, deferred sales inducements and unearned revenue reserves) are
amortized on a constant level basis.
The life insurance companies also review assumptions related to variable annuities, fixed annuities, and fixed index annuities
guaranteed benefits that are accounted for as MRBs or embedded derivatives and measured at fair value. The fair value of these
MRBs or embedded derivatives is based on actuarial assumptions, including policyholder behavior, as well as capital market
assumptions.
Traditional long-duration products
For traditional long-duration products discussed below, which includes whole life insurance, term life insurance, accident and health
insurance, PRT, and life-contingent single premium immediate annuities and structured settlements, cash flow assumptions are
reviewed at least annually to determine any changes in the liability for future policy benefits. DAC and related items (which may
include VOBA) are amortized on a constant level basis.
The net impacts to pre-tax income and adjusted pre-tax income because of the update of actuarial assumptions for the years ended
December 31, 2023, 2022 and 2021 are shown in the following tables.
The following table presents the increase in pre-tax income resulting from the annual update of actuarial assumptions in the
life insurance companies, by line item as reported in Results of Operations:
Years Ended December 31,
(in millions)
Premiums
Policyholder benefits and losses incurred
Increase in adjusted pre-tax income
Change in fair value of market risk benefits, net
Net realized gains (losses)
Increase in pre-tax income
2023
—
22
22
7
(7)
22
$
$
$
$
2022
$
— $
29
29
105
(2)
132
$
2021
(41)
89
48
(17)
—
31
The following table presents the increase in adjusted pre-tax income resulting from the annual update of actuarial
assumptions for the life insurance companies, by segment and product line:
Years Ended December 31,
(in millions)
Life and Retirement:
Individual Retirement
Fixed annuities
Total Individual Retirement
Life Insurance
Institutional Markets
Total increase in adjusted pre-tax income from update of assumptions*
2023
2022
2021
$
$
1
1
19
2
22
$
$
—
—
25
4
29
$
$
—
—
48
—
48
*
There was no impact to adjusted pre-tax income due to the annual update of actuarial assumptions on liabilities ceded to Fortitude Re as these liabilities are 100
percent ceded.
100
AIG | 2023 Form 10-K
ITEM 7 | Insurance Reserves
Update of Actuarial Assumptions Impact to Pre-tax Income (Loss)
The life insurance companies recognized favorable impacts to pre-tax income of $22 million, $132 million and $31 million for the years
ended December 31, 2023, 2022 and 2021, respectively, attributable to the annual actuarial assumption review. For the year ended
December 31, 2023, the assumption update impacts were primarily driven by updates to the portfolio yield assumption, refinements to
the modeling for universal life with secondary guarantees and similar features, and mortality assumption updates, partially offset by
updated premium assumptions, and other refinements on life insurance products. For the year ended December 31, 2022, the
assumption update impacts were driven by updates to the relationship between projected equity growth and interest rates, and
updates to premium and withdrawal assumption for annuities, partially offset by updated investments spreads on life insurance
products. For the year ended December 31, 2021, the assumption update impacts were mainly due to updated lapse and mortality
expectations for annuities, along with updates to mortality assumptions on traditional life products and updated universal life product
reserving methodology.
Update of Actuarial Assumptions Impact to Adjusted Pre-tax Income (Loss)
We recognized favorable impacts to adjusted pre-tax operating income of $22 million, $29 million and $48 million for the years ended
December 31, 2023, 2022 and 2021, respectively, attributable to the annual actuarial assumption review. For the year ended
December 31, 2023, the assumption update impacts were primarily driven by updates to the portfolio yield assumption, refinements to
the modeling for universal life with secondary guarantees and similar features, and mortality assumption updates, partially offset by
updated premium assumptions, and other refinements on life insurance products. For the year ended December 31, 2022, the
assumption update impacts were primarily driven by modeling refinements to reflect actual versus expected asset data related to calls
and capital gains for life insurance products. For the year ended December 31, 2021, the assumption update impacts were primarily
driven by updates to mortality assumptions on traditional life products and updated universal life product reserving methodology.
Variable Annuity Guaranteed Benefits and Hedging Results
Our Individual Retirement and Group Retirement businesses offer variable annuity products with riders that provide guaranteed
benefits. The liabilities are accounted for as MRBs and measured at fair value. The fair value of the MRBs may fluctuate significantly
based on market interest rates, equity prices, credit spreads, market volatility, policyholder behavior and other factors.
In addition to risk-mitigating features in our variable annuity product design, we have an economic hedging program designed to
manage market risk from GMWBs, including exposures to changes in interest rates, equity prices, credit spreads and volatility. The
hedging program includes all in-force GMWB policies and utilizes derivative instruments, including but not limited to equity options,
futures contracts and interest rate swap and option contracts, as well as fixed maturity securities.
For additional information on market risk management related to these product features, see Enterprise Risk Management –
Insurance Risks – Life and Retirement Companies’ Key Risks – Variable Annuity, Fixed Index Annuity and Index Universal Life Risk
Management and Hedging Programs.
Differences in Valuation of MRBs and Economic Hedge Target
The variable annuity hedging program utilizes an economic hedge target, which represents an estimate of the underlying economic
risks in our GMWB riders. The economic hedge target differs from the GAAP valuation of the MRBs, creating volatility in our net
income (loss) primarily due to the following:
• The MRBs include both the GMWB riders and the GMDB riders while the hedge program is targeting the economic risks of just the
GMWB rider;
• The hedge program is designed to offset moves in the GMWB economic liability and therefore has a lower sensitivity to equity
market changes than the MRBs;
• The economic hedge target includes 100 percent of the GMWB rider fees in present value calculations;
• The GAAP valuation reflects those fees attributed to the MRBs, such that the initial value at contract issue equals zero. Since the
MRB includes GMWBs and GMDBs, these attributed fees are typically larger than just the GMWB rider fees;
• The economic hedge target uses best estimate actuarial assumptions and excludes explicit risk margins used for GAAP valuation,
such as margins for policyholder behavior, mortality, and volatility; and
• The economic hedge target excludes our own credit risk changes (non-performance adjustments) used in the GAAP valuation,
which are recognized in OCI. The GAAP valuation has different sensitivities to movements in interest rates and other market
factors, and to changes from actuarial assumption updates, than the economic hedge target.
For additional information on our valuation methodology for MRBs, see Note 5 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
101
The market value of the hedge portfolio compared to the economic hedge target at any point in time may be different and is not
expected to be fully offsetting. In addition to the derivatives held in conjunction with the variable annuity hedging program, the Life and
Retirement companies generally have cash and invested assets available to cover future claims payable under these guarantees. The
primary sources of difference between the change in the fair value of the hedging portfolio and the economic hedge target include:
• basis risk due to the variance between expected and actual fund returns, which may be either positive or negative;
•
realized volatility versus implied volatility;
• actual versus expected changes in the hedge target driven by assumptions not subject to hedging, particularly policyholder
ITEM 7 | Insurance Reserves
behavior; and
•
risk exposures that we have elected not to explicitly or fully hedge.
The following table presents a reconciliation between the fair value of the GAAP MRBs and the value of our economic hedge
target:
(in millions)
Reconciliation of market risk benefits and economic hedge target:
Market risk benefits liability, net
Exclude non-performance risk adjustment
Market risk benefits liability, excluding NPA
Adjustments for risk margins and differences in valuation
Economic hedge target liability
Impact on Pre-tax Income (Loss)
December 31, 2023
December 31, 2022
$
$
1,340 $
(826)
514
522
1,036 $
1,657
(479)
1,178
(281)
897
The impact on our pre-tax income (loss) of variable annuity guaranteed benefits and related hedging results includes changes in the
fair value of MRBs, and changes in the fair value of related derivative hedging instruments, and along with attributed rider fees and
net of benefits associated with MRBs are together recognized in Change in the fair value of MRBs, net, with the exception of our own
credit risk changes, which are recognized in OCI. Changes in the fair value of MRBs, net are excluded from adjusted pre-tax income
of Individual Retirement and Group Retirement.
The change in the fair value of the MRBs and the change in the value of the hedging portfolio are not expected to be fully offsetting,
primarily due to the differences in valuation between the economic hedge target, the GAAP MRBs and the fair value of the hedging
portfolio, as discussed above. When corporate credit spreads widen, the change in the non-performance risk adjustment (NPA)
spread generally reduces the fair value of the MRBs liabilities, resulting in a gain in AOCI, and when corporate credit spreads tighten,
the change in the NPA spread generally increases the fair value of the MRBs liabilities, resulting in a loss in AOCI. In addition to
changes driven by credit market-related movements in the NPA spread, the NPA balance also reflects changes in business activity
and in the net amount at risk from the underlying guaranteed living benefits.
Change in Economic Hedge Target
The increase in the economic hedge target liability in the year ended December 31, 2023 was primarily driven by higher equity
markets partially offset by aging of the business and tightening credit spreads. The decrease in the economic hedge target liability in
2022 was primarily driven by higher interest rates and widening credit spreads, offset by lower equity markets.
102
AIG | 2023 Form 10-K
The following table presents the impact on pre-tax income (loss) and other comprehensive income (loss) of Variable Annuity
MRBs and Hedging:
ITEM 7 | Insurance Reserves
MRB
Liability*
2023
Hedge
Assets
Net
MRB
Liability*
2022
Hedge
Assets
Net
MRB
Liability*
2021
Hedge
Assets
Net
$
(1) $ —
$
(1)
$
(11) $ —
$
(11)
$
(21) $ —
$
(21)
Years Ended December 31,
(in millions)
Issuances
Interest accrual
Attributed fees
Expected claims
(43)
(243)
(866)
—
93
—
(286)
(866)
93
(79)
(934)
84
(283)
—
—
(362)
(934)
84
582
(70)
(880)
55
946
(80)
Effect of changes in interest rates
Effect of changes in interest rate volatility
121
76
Effect of changes in equity markets
1,329
Effect of changes in equity index volatility
19
5
(46)
(832)
25
126
3,328
(2,746)
30
(288)
140
(148)
497
(1,499)
1,030
(469)
1,617
44
76
(32)
44
(56)
Actual outcome different from model
expected outcome
Effect of changes in future expected
policyholder behavior
Effect of changes in other future expected
assumptions
Foreign exchange Impact
Total impact on balance before other and
changes in our own credit risk
Other
Effect of changes in our own credit risk
Total income (loss) impact on market risk
benefits
Less: Impact on OCI
Add: Fees net of claims and ceded
premiums and benefits
Net impact on pre-tax income (loss)
Net change in value of economic hedge
target and related hedges
Net impact on economic gains (losses)
* MRB Liability is partially offset by MRB Assets.
Year Ended December 31, 2023
(181)
—
(181)
(203)
—
—
115
—
1
—
—
115
1
87
16
7
—
—
—
—
(203)
(147)
87
16
7
(53)
36
6
663
(2)
(347)
(1,091)
(43)
49
(428)
(45)
(298)
584
—
1,206
(1,891)
66
(56)
(1,307)
66
1,150
1,353
1
275
(1,963)
8
73
314
(347)
(1,085)
59
(771)
(288)
1,790
1,206
(1,881)
(527)
(91)
679
1,629
275
(1,882)
(122)
761
$ 1,422
—
$ (1,144) $
761
278
847
$ 1,431
—
$ (1,354) $
847
77
851
$ 2,205
—
$ (1,760) $
851
445
$
(512)
$
714
$
109
(235)
—
—
(868)
29
(942)
53
—
—
—
—
(305)
(880)
55
78
(51)
675
(3)
(147)
(53)
36
6
(610)
9
348
(253)
153
Net impact on pre-tax income of $278 million was primarily driven by increases in equity markets and the impact of the London Inter-
Bank Offered Rate to Secured Overnight Financing Rate (SOFR) transition.
With the transition of risk free rates to the SOFR curve, our discounting of fees has been reduced, resulting in a one-time favorable
impact to the MRB liability.
On an economic basis, the changes in the fair value of the hedge portfolio were partially offset by the changes in the economic hedge
target. In the year ended December 31, 2023, we had a net mark-to-market loss of approximately $512 million from our hedging
activities related to our economic hedge target primarily driven by aging of the business and tightening credit spreads.
Year Ended December 31, 2022
Net impact on pre-tax loss of $77 million was primarily driven by fund basis changes that impacted our actual to expected model
outcomes, lower equity markets and term structure moves in the interest rate volatility market, partially offset by increases in interest
rates.
On an economic basis, the changes in the fair value of the hedge portfolio were partially offset by the changes in the economic hedge
target. In the year ended December 31, 2022, we had a net mark-to-market gain of approximately $714 million from our hedging
activities related to our economic hedge target primarily driven by widening credit spreads and update of actuarial assumptions.
Year Ended December 31, 2021
Net impact on pre-tax income of $445 million was mostly driven by higher equity markets.
On an economic basis, the changes in the fair value of the hedge portfolio were partially offset by the changes in the economic hedge
target. In 2021, we had a net mark-to market gain of approximately $109 million from our hedging activities related to our economic
hedge target primarily driven by higher equity markets, partially offset by losses from the review and update of actuarial assumptions.
AIG | 2023 Form 10-K
103
ITEM 7 | Liquidity and Capital Resources
Liquidity and Capital Resources
OVERVIEW
Liquidity refers to the ability to generate sufficient cash resources to meet the cash requirements of our business operations and
payment obligations.
Capital refers to the long-term financial resources available to support the operation of our businesses, fund business growth and
cover financial and operational needs that arise from adverse circumstances. Our primary source of ongoing capital generation is
derived from the profitability of our insurance subsidiaries. We must comply with numerous constraints on our capital positions. These
constraints drive the requirements for capital adequacy at AIG and the individual businesses and are based on internally defined risk
tolerances, regulatory requirements, rating agency and creditor expectations and business needs.
For information regarding our liquidity risk framework, see Enterprise Risk Management – Risk Appetite, Limits, Identification and
Measurement and Enterprise Risk Management – Liquidity Risk Management.
We believe that we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations to
policyholders, customers, creditors and debt-holders, including those arising from reasonably foreseeable contingencies or events.
Nevertheless, some circumstances may cause our cash or capital needs to exceed projected liquidity or readily deployable capital
resources.
For information regarding risks associated with our liquidity and capital resources, see Part I, Item 1A. – Risk Factors – Liquidity,
Capital and Credit.
Depending on market conditions, regulatory and rating agency considerations and other factors, we may take various liability and
capital management actions. Liability management actions may include, but are not limited to, repurchasing or redeeming outstanding
debt, issuing new debt or engaging in debt exchange offers. Capital management actions may include, but are not limited to, issuing
preferred stock, paying dividends to our shareholders on the AIG Common Stock, par value $2.50 per share (AIG Common Stock),
paying dividends to the holders of our Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred Stock), and
repurchases of AIG Common Stock.
On January 31, 2024, we announced that we will redeem all of the 20,000 outstanding shares of our Series A Preferred Stock and all
20,000,000 of the corresponding Depositary Shares (Depositary Shares), each representing a 1/1,000th interest in a share of Series A
Preferred Stock, on March 15, 2024. The redemption price per share of Series A Preferred Stock will be $25,000 (equivalent to $25.00
per Depositary Share).
LIQUIDITY AND CAPITAL RESOURCES HIGHLIGHTS
SOURCES
Liquidity to AIG Parent from Subsidiaries
During the year ended December 31, 2023, our General Insurance companies distributed dividends of $3.4 billion to AIG Parent or
applicable intermediate holding companies.
During the year ended December 31, 2023, Corebridge distributed $1.1 billion of dividends to AIG Parent in its capacity as a public
company shareholder of Corebridge. Of this amount, $385 million consisted of quarterly cash dividends of $0.23 per share on
Corebridge common stock, $264 million consisted of a special cash dividend of $0.62 per share on Corebridge common stock and
$424 million consisted of a special cash dividend of $1.16 per share on Corebridge common stock.
Senior Notes Offering of AIG
In March 2023, AIG issued $750 million aggregate principal amount of 5.125% Notes Due 2033.
Sale of Crop Risk Services Business
On July 3, 2023, AIG completed the sale of CRS to AFG, for which AIG received gross proceeds, before deducting commissions,
of $234 million.
Sale of Validus Re
On November 1, 2023, AIG completed the sale of Validus Re to RenaissanceRe and received $3.3 billion cash, including a pre-
closing dividend of approximately $570 million from Validus Re.
104
AIG | 2023 Form 10-K
ITEM 7 | Liquidity and Capital Resources
Secondary Offerings of Corebridge Shares by AIG
In June 2023, AIG sold 74.75 million shares of Corebridge common stock in a secondary offering at a public offering price of
$16.25 per share. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions
and other expenses payable by AIG, were approximately $1.2 billion.
In November 2023, AIG sold 50 million shares of Corebridge common stock in a secondary offering at a public offering price of
$20.50 per share. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions
and other expenses payable by AIG, were approximately $1.0 billion.
In December 2023, AIG sold 35 million shares of Corebridge common stock in a secondary offering at a public offering price of
$20.50 per share. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions
and other expenses payable by AIG, were approximately $718 million.
Corebridge Share Repurchases from AIG
In June 2023, Corebridge repurchased 11 million shares of its common stock from AIG at a purchase price of $16.41 per share.
The gross proceeds of the share repurchase to AIG were $180 million.
In December 2023, Corebridge repurchased 6.2 million shares of its common stock from AIG at a purchase price of $21.75 per
share. The gross proceeds of the share repurchase to AIG were $135 million.
USES
AIG General Borrowings
During the year ended December 31, 2023, $2.2 billion of debt categorized as general borrowings matured, was repaid or
redeemed as follows:
• Repaid £311 million aggregate principal amount of our 5.00% Notes due 2023, which was equivalent to approximately
$388 million at the time of repayment.
• Redeemed $199 million aggregate principal amount of Validus Holdings, Ltd. (Validus) 8.875% Senior Notes due 2040 for a
redemption price of 143.968 percent of the principal amount, plus accrued and unpaid interest, which totaled $289 million.
• Repurchased, through cash tender offers, approximately $1.6 billion aggregate principal amount of certain notes and
debentures issued by AIG for an aggregate purchase price of approximately $1.5 billion.
We made interest payments on our general borrowings totaling $466 million during the year ended December 31, 2023.
AIG Dividends
During the year ended December 31, 2023:
• We made quarterly cash dividend payments of $365.625 per share on AIG’s Series A Preferred Stock totaling $29 million.
• We made cash dividend payments in the amount of $0.36 per share on AIG Common Stock for each of the three months ended
December 31, 2023, September 30, 2023 and June 30, 2023 (an increase of 12.5 percent from prior dividend payments), and
$0.32 per share for the three months ended March 31, 2023, totaling $997 million.
Repurchases of AIG Common Stock(a)
During the year ended December 31, 2023, AIG Parent repurchased approximately 51 million shares of AIG Common Stock, for an
aggregate purchase price of approximately $3.0 billion.
(a) Pursuant to a Securities Exchange Act of 1934 (the Exchange Act) Rule 10b5-1 repurchase plan, from January 1, 2024 to February 8, 2024, AIG Parent repurchased
approximately 10 million shares of AIG Common Stock for an aggregate purchase price of approximately $706 million.
AIG | 2023 Form 10-K
105
ITEM 7 | Liquidity and Capital Resources
LIQUIDITY AND CAPITAL RESOURCES HIGHLIGHTS OF COREBRIDGE
SOURCES
Following the initial public offering, Corebridge liquidity, including its loan facilities, is not reflected in AIG Parent's liquidity.
Senior Notes Offerings of Corebridge
On September 15, 2023, Corebridge issued $500 million aggregate principal amount of its 6.050% Senior Notes due 2033 (the
Corebridge Notes).
On December 8, 2023, Corebridge issued $750 million aggregate principal amount of its 5.750% Senior Notes due 2034 (the
December Corebridge Notes).
Sale of Laya
On October 31, 2023, Corebridge completed the sale of Laya to AXA and received gross proceeds of €691 million ($731 million).
USES
Delayed Draw Term Loan Facility of Corebridge
Corebridge used the net proceeds of the issuance of the Corebridge Notes to repay $500 million of the $1.5 billion aggregate
principal amount drawn under the DDTL Facility.
Corebridge used the net proceeds of the issuance of the December Corebridge Notes to repay $750 million of the $1.0 billion
aggregate principal amount drawn under the DDTL Facility.
Corebridge Dividends
During the year ended December 31, 2023:
• Corebridge made quarterly cash dividend payments of $0.23 per share on Corebridge common stock, totaling $204 million to
its public company shareholders other than AIG.
• Corebridge made a special cash dividend of $0.62 per share on Corebridge common stock, totaling $138 million to its public
company shareholders other than AIG.
• Corebridge made a special cash dividend of $1.16 per share on Corebridge common stock, totaling $307 million to its public
company shareholders other than AIG.
Repurchases of Corebridge Common Stock(a)
In June 2023, Corebridge repurchased 11 million shares of Corebridge common stock from AIG, for an aggregate purchase price
of $180 million.
In December 2023, Corebridge repurchased 6.2 million shares of its common stock from AIG, for an aggregate purchase price of
$135 million.
During the year ended December 31, 2023, Corebridge repurchased from shareholders other than AIG, approximately 9.3 million
shares of Corebridge common stock for an aggregate purchase price of approximately $183 million.
(a) Pursuant to an Exchange Act Rule 10b5-1 repurchase plan, from January 1, 2024 to February 8, 2024, Corebridge repurchased from shareholders other than AIG,
approximately 1.2 million shares of Corebridge Common Stock for an aggregate purchase price of approximately $27 million.
ANALYSIS OF SOURCES AND USES OF CASH
Operating Cash Flow Activities
Insurance companies generally receive most premiums in advance of the payment of claims or policy benefits. The ability of
insurance companies to generate positive cash flow is affected by the frequency and severity of losses under their insurance policies,
policy retention rates, effective management of our investment portfolio and operating expense discipline.
Interest payments totaled $1.1 billion, $1.1 billion and $1.3 billion in the years ended December 31, 2023, 2022 and 2021,
respectively. Excluding interest payments, AIG had operating cash inflows (outflows) of $7.3 billion, $5.3 billion and $7.6 billion in the
years ended December 31, 2023, 2022 and 2021, respectively.
Investing Cash Flow Activities
Net cash used in investing activities in the year ended December 31, 2023 was $7.0 billion compared to net cash used in investing
activities of $3.6 billion in 2022 and $3.3 billion in 2021.
106
AIG | 2023 Form 10-K
Financing Cash Flow Activities
Net cash provided by financing activities in the year ended December 31, 2023 totaled $782 million, reflecting:
• $997 million to pay dividends of $0.36 per share in the three months ended December 31, 2023, September 30, 2023 and June 30,
ITEM 7 | Liquidity and Capital Resources
2023, and $0.32 per share for the three months ended March 31, 2023 on AIG Common Stock;
• $29 million to pay quarterly dividends of $365.625 per share on AIG’s Series A Preferred Stock;
• $3.0 billion to repurchase approximately 51 million shares of AIG Common Stock;
• $204 million paid by Corebridge in the form of quarterly cash dividends on Corebridge common stock to shareholders other than
AIG;
• $138 million paid by Corebridge in the form of a special cash dividend of $0.62 per share on Corebridge common stock to
shareholders other than AIG;
• $307 million paid by Corebridge in the form of a special cash dividend of $1.16 per share on Corebridge common stock to
shareholders other than AIG;
• $183 million paid by Corebridge to repurchase approximately 9 million shares of Corebridge common stock from shareholders
other than AIG;
• $1.25 billion outflow from the repayment on the DDTL Facility;
• $322 million in net outflows from the issuance and repayment and cash tender of long-term debt; and
• $381 million in net outflows from the issuance and repayment of debt of consolidated investment entities.
Net cash used in financing activities in the year ended December 31, 2022 totaled $602 million reflecting:
• $982 million to pay quarterly dividends of $0.32 per share on AIG Common Stock;
• $29 million to pay quarterly dividends of $365.625 per share on AIG’s Series A Preferred Stock;
• $124 million paid by Corebridge in the form of cash dividends to shareholders other than AIG, of which $66 million paid after its
IPO;
• $5.2 billion to repurchase approximately 90 million shares of AIG Common Stock;
• $1.5 billion inflow from drawdown on the DDTL Facility;
• $2.0 billion in net outflows from the issuance, repayment and cash tender of long-term debt; and
• $318 million in net outflows from the issuance and repayment of debt of consolidated investment entities.
Net cash used in financing activities in the year ended December 31, 2021 totaled $3.7 billion reflecting:
• $1.1 billion to pay a dividend of $0.32 per share per quarter on AIG Common Stock;
• $29 million to pay a dividend of $365.625 per share per quarter on AIG’s Series A Preferred Stock;
• $2.6 billion to repurchase approximately 50 million shares of AIG Common Stock;
• $4.0 billion in net outflows from the issuance, repayment and cash tender of long-term debt;
• $156 million in net outflows from the issuance and repayment of debt of consolidated investment entities; and
• $2.2 billion in net inflows from the sale of a 9.9 percent equity interest in Corebridge to an affiliate of Blackstone.
LIQUIDITY AND CAPITAL RESOURCES OF AIG PARENT AND SUBSIDIARIES
AIG Parent
As of December 31, 2023 and December 31, 2022, respectively, AIG Parent and applicable intermediate holding companies had
approximately $12.1 billion and $8.2 billion in liquidity sources held in the form of cash, short-term investments and AIG Parent's
committed, revolving syndicated credit facility of $4.5 billion. Following the initial public offering, Corebridge liquidity, including its loan
facilities, is not reflected in AIG Parent's liquidity. As a public company shareholder of Corebridge, AIG receives its pro rata share of
dividends paid by Corebridge on Corebridge common stock. AIG Parent’s primary sources of liquidity are dividends, distributions,
loans and other payments from subsidiaries and credit facilities. AIG Parent’s primary uses of liquidity are for debt service, capital and
liability management, operating expenses and dividends on AIG Common Stock and Series A Preferred Stock.
We expect to access the debt and preferred equity markets from time to time to meet funding requirements as needed.
We utilize our capital resources to support our businesses, with the majority of capital allocated to our insurance operations. Should
we have or generate more capital than is needed to support our business strategies (including organic or inorganic growth
opportunities) or mitigate risks inherent to our business, we may develop plans to distribute such capital to shareholders via dividends
or AIG Common Stock repurchase authorizations or deploy such capital towards liability management.
AIG | 2023 Form 10-K
107
ITEM 7 | Liquidity and Capital Resources
Insurance Companies
We expect that our insurance companies will be able to continue to satisfy reasonably foreseeable future liquidity requirements and
meet their obligations, including those arising from reasonably foreseeable contingencies or events, through cash from operations
and, to the extent necessary, monetization of invested assets. Our insurance companies’ liquidity resources are primarily held in the
form of cash, short-term investments and publicly traded, investment grade rated fixed maturity securities.
Each of our material insurance companies’ liquidity is monitored through various internal liquidity risk measures. The primary sources
of liquidity are premiums, fees, reinsurance recoverables and investment income and maturities. The primary uses of liquidity are paid
losses, reinsurance payments, benefit claims, surrenders, withdrawals, interest payments, dividends, expenses, investment
purchases and collateral requirements.
Our insurance companies may require additional funding to meet capital or liquidity needs under certain circumstances. For example,
large catastrophes may require us to provide additional support to the affected operations of our General Insurance companies, and a
shift in interest rates may require us to provide support to the affected operations of our Life and Retirement companies.
Certain of our U.S. Life and Retirement insurance companies are members of the FHLBs in their respective districts. Our borrowings
from FHLBs are non-puttable and are used to supplement liquidity or for other uses deemed appropriate by management. Our U.S.
Life and Retirement companies had $5.7 billion and $4.6 billion which were due to FHLBs in their respective districts at December 31,
2023 and December 31, 2022, respectively, under funding agreements issued through our Individual Retirement, Group Retirement
and Institutional Markets operating segments, which were reported in Policyholder contract deposits. Proceeds from funding
agreements are generally invested in fixed income securities and other investments intended to generate spread income.
Certain of our U.S. Life and Retirement companies have securities lending programs that lend securities from their investment
portfolio to supplement liquidity or for other uses as deemed appropriate by management. Under these programs, these companies
lend securities to financial institutions and receive cash as collateral equal to 102 percent of the fair value of the loaned securities. As
of December 31, 2023 and December 31, 2022 we had no loans outstanding under these programs.
AIG Parent and/or certain subsidiaries are parties to several letter of credit agreements with various financial institutions, which issue
letters of credit from time to time in support of our insurance companies. These letters of credit are subject to reimbursement by AIG
Parent and/or certain subsidiaries in the event of a drawdown of these letters of credit. Letters of credit issued in support of the
General Insurance companies totaled approximately $2.4 billion at December 31, 2023. Letters of credit issued in support of the Life
and Retirement companies totaled approximately $151 million at December 31, 2023, which are subject to reimbursement by
Corebridge with no recourse to AIG Parent.
Following the initial public offering of Corebridge, AIG owned less than 80 percent of Corebridge common stock, resulting in the tax
deconsolidation of Corebridge from AIG. As such, as of September 15, 2022, AIG no longer receives tax sharing payments from
Corebridge for tax liabilities of subsequent periods. With respect to historic tax periods and tax periods prior to the tax deconsolidation
of Corebridge from AIG, Corebridge and AIG will make tax payments to each other pursuant to the Tax Matters Agreement, dated
September 14, 2022.
CREDIT FACILITIES
AIG Parent maintains a committed, revolving syndicated credit facility (the Facility) with aggregate commitments by the bank
syndicate to provide AIG Parent with unsecured revolving loans and/or standby letters of credit of up to $4.5 billion without any limits
on the type of borrowings. The Facility is scheduled to expire in November 2026.
Our ability to utilize the Facility is conditioned on the satisfaction of certain legal, operating, administrative and financial covenants and
other requirements contained in the Facility. These include covenants relating to our maintenance of a specified total consolidated net
worth and total consolidated debt to total consolidated capitalization. Failure to satisfy these and other requirements contained in the
Facility would restrict our access to the Facility and could have a material adverse effect on our financial condition, results of
operations and liquidity.
As of December 31, 2023, a total of $4.5 billion remained available under the Facility.
Corebridge maintains a committed, revolving syndicated credit facility (the Corebridge Facility) with aggregate commitments by the
bank syndicate to provide Corebridge with unsecured revolving loans and/or standby letters of credit of up to $2.5 billion without any
limits on the type of borrowings and with no recourse to AIG Parent. The Corebridge Facility is scheduled to expire in May 2027.
As of December 31, 2023, a total of $2.5 billion remained available under the Corebridge Facility.
Corebridge also maintains the DDTL Facility, which is scheduled to mature in February 2025. As of December 31, 2023, a total of
$250 million of borrowings are outstanding under the DDTL Facility, with no recourse to AIG Parent.
108
AIG | 2023 Form 10-K
ITEM 7 | Liquidity and Capital Resources
CONTRACTUAL OBLIGATIONS
The following table summarizes material contractual obligations in total, and by remaining maturity:
December 31, 2023
(in millions)
Loss reserves(a)
Insurance and investment contract liabilities(b)
Short-term and Long-term debt(c)
Interest payments on Short-term and Long-term debt
Total
(a) Represents loss reserves, undiscounted and gross of reinsurance.
Total Payments
2024
2025 - 2026
Payments due by Period
$
72,730 $
319,395
19,796
13,487
$
425,408 $
20,068 $
26,774
709
891
48,442 $
20,721 $
48,996
1,798
1,661
73,176 $
Thereafter
31,941
243,625
17,289
10,935
303,790
(b) Excludes insurance and investment contract liabilities associated with AIG Life that have been reclassified to held for sale.
(c) Does not reflect $2.6 billion of debt of consolidated investment entities, for which recourse is limited to the assets of the respective investment entities and for which
there is no recourse to the general credit of AIG.
Loss Reserves
Loss reserves relate to our General Insurance companies and represent estimates of future loss and loss adjustment expense
payments based on historical loss development payment patterns. The amounts presented in the above table are undiscounted and
therefore exceed the liability for unpaid losses and loss adjustment expenses, including allowance for credit losses, as presented on
the Consolidated Balance Sheets. Due to the significance of the assumptions used, the payments by period presented above could
be materially different from actual required payments. We believe that our General Insurance companies maintain adequate financial
resources to meet the actual required payments under these obligations.
For additional information on loss reserves, see Critical Accounting Estimates – Loss Reserves and Note 13 to the Consolidated
Financial Statements.
Insurance and Investment Contract Liabilities
Insurance and investment contract liabilities, including GIC liabilities, relate to our Life and Retirement companies. These liabilities
include various investment-type products with contractually scheduled maturities, including periodic payments. These liabilities also
include benefit and claim liabilities, of which a significant portion represents policies and contracts that do not have stated contractual
maturity dates and may not result in any future payment obligations. For these policies and contracts (i) we are not currently making
payments until the occurrence of an insurable event, such as death or disability, (ii) payments are conditional on survivorship or (iii)
payment may occur due to a surrender or other non-scheduled event beyond our control.
We have made significant assumptions to determine the estimated undiscounted cash flows of these contractual policy benefits. The
amounts presented in the above table are undiscounted and therefore exceed the liabilities for future policy benefits for life and
accident and health insurance contracts, and policyholder contract deposits included in the Consolidated Balance Sheets. Due to the
significance of the assumptions used, the payments by period presented above could be materially different from actual required
payments.
We believe that our Life and Retirement companies have adequate financial resources to meet the payments actually required under
these obligations.
For additional information on loss reserves, see Critical Accounting Estimates – Loss Reserves and Notes 13 and 14 to the
Consolidated Financial Statements.
Short-Term and Long-Term Debt and Interest Payments on Short-Term and Long-Term Debt
The amounts presented in the above table represent AIG's total short-term and long-term debt outstanding and associated future
interest payments due on such debt.
For additional information on outstanding debt, see – Debt.
AIG | 2023 Form 10-K
109
OFF-BALANCE SHEET ARRANGEMENTS AND COMMERCIAL COMMITMENTS
In the normal course of business, AIG and our subsidiaries enter into commitments under which we may be required to make
payments in the future on a contingent basis.
ITEM 7 | Liquidity and Capital Resources
The following table summarizes Off-Balance Sheet Arrangements and Commercial Commitments in total, and by remaining
maturity:
December 31, 2023
(in millions)
Commitments:
Investment commitments
Commitments to extend credit
Letters of credit
Total(a)(b)
Total Amounts
Committed
Amount of Commitment Expiring
2024
2025 - 2026
Thereafter
$
$
6,091
4,640
447
11,178
$
$
3,104 $
1,540
219
4,863 $
2,367 $
2,681
—
5,048 $
620
419
228
1,267
(a) Excludes guarantees, CMAs or other support arrangements between AIG consolidated entities.
(b) Excludes commitments with respect to pension plans. The annual pension contribution for 2024 is expected to be approximately $59 million.
Investment commitments
We enter into investment commitments in the normal course of business that are aligned with and support our investment strategies.
These represent commitments to investment in private equity funds, hedge funds and other funds, as well as commitments to
purchase and develop real estate in the United States and abroad. The commitments to invest in private equity funds, hedge funds
and other funds are called at the discretion of each fund, as needed for funding new investments or expenses of the fund. The
expiration of these commitments is estimated based on the expected life cycle of the related funds, consistent with past trends of
requirements for funding. These commitments are primarily made by insurance and real estate subsidiaries of the Company.
We also enter into arrangements with variable interest entities (VIEs) and consolidate a VIE when we are the primary beneficiary of
the entity.
For additional information on investment commitments and VIEs, see Note 10 to the Consolidated Financial Statements.
Commitments to extend credit
As part of our normal course of business lending operations, we enter into commitments to fund mortgage loans at certain interest
rates and various other terms, within a stated period of time. Such commitments are legally binding and generally made by insurance
subsidiaries of the Company.
Letters of credit
AIG is party to several letter of credit agreements with various financial institutions, which issue letters of credit from time to time for
the benefit of third parties in support of our businesses. These letters of credit are subject to reimbursement by AIG in the event of a
drawdown.
Indemnification agreements
For information regarding our indemnification agreements, see Note 17 to the Consolidated Financial Statements.
110
AIG | 2023 Form 10-K
DEBT
AIG expects to service and repay general borrowings through maturing investments and dispositions of invested assets, future cash
flows from operations, cash flows generated from invested assets, future debt or preferred stock issuances and other financing
arrangements.
For additional information on GIAs and associated collateral posted, see Note 6 to the Consolidated Financial Statements.
ITEM 7 | Liquidity and Capital Resources
The following table provides the rollforward of AIG’s total debt outstanding:
Year Ended December 31, 2023
(in millions)
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable
Junior subordinated debt
AIG Japan Holdings Kabushiki Kaisha
Validus notes and bonds payable
Total AIG general borrowings
AIG borrowings supported by assets:
AIG notes and bonds payable
Series AIGFP matched notes and bonds payable
Total AIG borrowings supported by assets
Total debt issued or guaranteed by AIG
Corebridge debt:
CRBGLH notes and bonds payable(a)
CRBGLH junior subordinated debt(a)
Corebridge senior unsecured notes - not guaranteed by
AIG
Corebridge junior subordinated debt - not guaranteed by
AIG
DDTL facility - not guaranteed by AIG
Total Corebridge debt
GIAs, at fair value - supported by Corebridge assets(b)
Other subsidiaries' notes, bonds, loans and mortgages
payable - not guaranteed by AIG
Balance,
Beginning
of Year
Issuances
Maturities
and
Repayments
Effect of
Foreign
Exchange
Other
Changes
Balance,
End of
Year
$ 10,242 $
742 $
(1,975) $
40 $
991
273
269
11,775
81
18
99
11,874
200
227
—
—
—
742
—
—
—
742
—
—
6,452
1,240
—
—
1,240
—
989
1,500
9,368
56
1
—
—
(266)
(2,241)
(62)
—
(62)
(2,303)
—
—
—
—
(1,250)
(1,250)
—
1
(6)
—
35
—
—
—
35
—
—
—
—
—
—
—
30
—
—
(3)
27
—
—
—
27
—
—
10
—
—
10
(3)
—
34
$
9,079
992
267
—
10,338
19
18
37
10,375
200
227
7,702
989
250
9,368
53
—
$ 19,796
Total Short-term and long-term debt
$ 21,299 $
—
1,982 $
(1)
(3,554) $
—
35 $
Debt of consolidated investment entities - not
guaranteed by AIG(c)
$
5,880 $
225
(606)
34
(2,942) (d) $
2,591
(a) We have entered into a guarantee reimbursement agreement with Corebridge and Corebridge Life Holdings, Inc. (CRBGLH) (formerly known as AIG Life Holdings, Inc.)
which provides that Corebridge and CRBGLH will reimburse AIG for the full amount of any payment made by or on behalf of AIG pursuant to AIG’s guarantee of the
CRBGLH notes and junior subordinated debt. We have also entered into a collateral agreement with Corebridge and CRBGLH which provides that in the event of: (i) a
ratings downgrade of Corebridge or CRBGLH long-term unsecured indebtedness below specified levels or (ii) the failure by CRBGLH to pay principal and interest on the
CRBGLH debt when due, Corebridge and CRBGLH must collateralize an amount equal to the sum of: (i) 100 percent of the principal amount outstanding, (ii) accrued
and unpaid interest, and (iii) 100 percent of the net present value of scheduled interest payments through the maturity dates of the CRBGLH debt.
(b) Collateral posted to third parties was $63 million and $63 million at December 31, 2023 and 2022, respectively. This collateral primarily consists of securities of the U.S.
government and government sponsored entities and generally cannot be repledged or resold by the counterparties.
(c) At December 31, 2023, includes debt of consolidated investment entities primarily related to real estate investments of $1.5 billion and other securitization vehicles of
$1.1 billion. At December 31, 2022, includes debt of consolidated investment entities related to real estate investments of $1.5 billion and other securitization vehicles of
$4.4 billion.
(d) Primarily relates to the sale of AIG Credit Management, LLC where certain consolidated investment entities were deconsolidated.
AIG | 2023 Form 10-K
111
Debt Maturities
ITEM 7 | Liquidity and Capital Resources
The following table summarizes maturing short-term and long-term debt at December 31, 2023 of AIG for the next four
quarters:
(in millions)
AIG general borrowings
DDTL facility*
Total
First
Quarter
2024
459 $
250
709 $
$
$
Second
Quarter
2024
Third
Quarter
2024
Fourth
Quarter
2024
— $
—
— $
— $
—
— $
— $
—
— $
Total
459
250
709
* Corebridge has the ability to further continue this borrowing through February 25, 2025.
CREDIT RATINGS
Credit ratings estimate a company’s ability to meet its obligations and may directly affect the cost and availability of
financing to that company. The following table presents the credit ratings of AIG and certain of its subsidiaries as of the date of this
filing. Figures in parentheses indicate the relative ranking of the ratings within the agency’s rating categories; that ranking refers only
to the major rating category and not to the modifiers assigned by the rating agencies.
American International Group, Inc.
P-2 (2nd of 4)
A-2 (2nd of 5)
Short-Term Debt
Moody's
S&P
Corebridge Financial, Inc.
Moody's(a)
Baa 2 (4th of 9) /
Positive
Senior Long-Term Debt
S&P(b)
BBB+ (4th of 9) /
Stable
Fitch(c)
BBB+ (4th of 9) /
Stable
Baa 2 (4th of 9) /
Stable
BBB+ (4th of 9) /
Stable
BBB+ (4th of 9) /
Stable
(a) Moody’s appends numerical modifiers 1, 2 and 3 to the generic rating categories to show relative position within the rating categories.
(b) S&P ratings may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
(c) Fitch Ratings Inc. (Fitch) ratings may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
These credit ratings are current opinions of the rating agencies. They may be changed, suspended or withdrawn at any time by the
rating agencies as a result of changes in, or unavailability of, information or based on other circumstances. Ratings may also be
withdrawn at our request.
We are party to some agreements that contain “ratings triggers.” Depending on the ratings maintained by one or more rating
agencies, these triggers could result in (i) the termination or limitation of credit availability or a requirement for accelerated repayment,
(ii) the termination of business contracts or (iii) a requirement to post collateral for the benefit of counterparties.
In the event of a downgrade of AIG’s long-term senior debt ratings, certain AIG entities would be required to post additional collateral
under some derivative and other transactions, or certain of the counterparties of such AIG entities would be permitted to terminate
such transactions early.
The actual amount of collateral that we would be required to post to counterparties in the event of such downgrades, or the aggregate
amount of payments that we could be required to make, depends on market conditions, the fair value of outstanding affected
transactions and other factors prevailing at the time of the downgrade.
FINANCIAL STRENGTH RATINGS
Financial Strength ratings estimate an insurance company’s ability to pay its obligations under an insurance policy. The
following table presents the ratings of our significant insurance subsidiaries as of the date of this filing.
National Union Fire Insurance Company of Pittsburgh, Pa.
Lexington Insurance Company
American Home Assurance Company
American General Life Insurance Company
The Variable Annuity Life Insurance Company
United States Life Insurance Company in the City of New York
AIG Europe S.A.
American International Group UK Ltd.
AIG General Insurance Co. Ltd.
112
AIG | 2023 Form 10-K
A.M. Best
S&P
Fitch
Moody’s
A
A
A
A
A
A
NR
A
NR
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
A+
NR
NR
NR
A2
A2
A2
A2
A2
A2
A2
A2
NR
ITEM 7 | Liquidity and Capital Resources
On January 26, 2024, A.M. Best upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) of AIG General Insurance
subsidiaries to ‘a+’ from ‘a’, the Long-Term ICR of AIG to ‘bbb+’ from ‘bbb’, and revised the outlook of the Long-Term ICRs to stable
from positive. A.M. Best also affirmed the 'A' Financial Strength Rating of the AIG General Insurance subsidiaries with stable outlook.
On October 16, 2023, S&P revised the outlook for AIG and the core General Insurance subsidiaries to stable from negative and
affirmed the ‘BBB+/A-2’ issuer credit ratings on AIG and the ‘A+’ insurer financial strength ratings on AIG's core General Insurance
entities.
On July 11, 2023, Moody's changed the rating outlook for AIG and General Insurance subsidiaries to positive from stable and affirmed
the 'A2' insurance financial strength rating of the General Insurance subsidiaries and the 'Baa2' senior unsecured debt rating of AIG.
On February 27, 2023, Fitch Ratings upgraded the Insurer Financial Strength Ratings of AIG General Insurance subsidiaries to 'A+'
from 'A'.
These financial strength ratings are current opinions of the rating agencies. They may be changed, suspended or withdrawn at any
time by the rating agencies as a result of changes in, or unavailability of, information or based on other circumstances.
For information regarding the effects of downgrades in our credit ratings and financial strength ratings, see Part I, Item 1A. Risk
Factors – Liquidity, Capital and Credit – “A downgrade by one or more of the rating agencies in the Insurer Financial Strength ratings
of our insurance or reinsurance companies could limit their ability to write or prevent them from writing new business and impair their
retention of customers and in-force business, and a downgrade in our credit ratings could adversely affect our business, results of
operations, financial condition and liquidity” and Note 11 to the Consolidated Financial Statements.
REGULATION AND SUPERVISION
For a discussion of our regulation and supervision by different regulatory authorities in the United States and abroad, including with
respect to our liquidity and capital resources, see Part I, Item 1. Business – Regulation and Part I, Item 1A. Risk Factors – Regulation.
DIVIDENDS
On February 13, 2024, our Board of Directors declared a cash dividend on AIG Common Stock of $0.36 per share, payable on
March 28, 2024 to shareholders of record on March 14, 2024.
On February 13, 2024, our Board of Directors declared a cash dividend on AIG's Series A Preferred Stock of $365.625 per share,
payable on March 15, 2024 to holders of record on February 29, 2024.
The payment of any future dividends will be at the discretion of our Board of Directors and will depend on various factors. For further
detail on our dividends, see Note 18 to the Consolidated Financial Statements.
REPURCHASES OF AIG COMMON STOCK
Our Board of Directors has authorized the repurchase of shares of AIG Common Stock through a series of actions. On August 1,
2023, our Board of Directors authorized the repurchase of $7.5 billion of AIG Common Stock (inclusive of the approximately
$2.15 billion of expected remaining authorization under the Board's prior share repurchase authorization). During the year ended
December 31, 2023, AIG Parent repurchased approximately 51 million shares of AIG Common Stock for an aggregate purchase price
of $3.0 billion. Pursuant to an Exchange Act Rule 10b5-1 repurchase plan, from January 1, 2024 to February 8, 2024, we repurchased
approximately 10 million shares of AIG Common Stock for an aggregate purchase price of approximately $706 million. As of
February 8, 2024, $5.5 billion remained under the Board's authorization.
The timing of any future share repurchases will depend on market conditions, our business and strategic plans, financial condition,
results of operations, liquidity and other factors, as discussed further in Note 18 to the Consolidated Financial Statements.
DIVIDEND RESTRICTIONS
Payments of dividends to AIG by its insurance subsidiaries are subject to certain restrictions imposed by regulatory authorities.
For information regarding restrictions on payments of dividends by our subsidiaries, see Note 18 to the Consolidated Financial
Statements.
AIG | 2023 Form 10-K
113
ITEM 7 | Enterprise Risk Management
Enterprise Risk Management
OVERVIEW
Risk management is an integral part of our business strategy and a key element of our approach to corporate governance. We have
an integrated process for managing risks throughout our organization in accordance with our firm-wide risk appetite. Our Board of
Directors has oversight responsibility for the management of risk. Our Enterprise Risk Management (ERM) Department oversees and
integrates the risk management functions in each of our business units, providing senior management with a consolidated view of
AIG’s major risk positions. ERM embeds risk management in our key day-to-day business processes. Nevertheless, our risk
management efforts may not always be successful and material adverse effects on our business, results of operations, cash flows,
liquidity or financial condition may occur. For further information regarding the risks associated with our business and operations, see
Part I, Item 1A. Risk Factors.
AIG employs a Three Lines of Defense model. AIG’s business leaders assume full accountability for the risks and controls in their
segments, and ERM performs a review, challenge and oversight function. The third line consists of our Internal Audit Group that
provides independent assurance to AIG’s Board of Directors.
RISK GOVERNANCE STRUCTURE
Our risk governance structure is designed to foster the development and maintenance of a risk and control culture that encompasses
all significant risk categories impacting our lines of business and functions. Accountability for the implementation and oversight of risk
policies is aligned with individual business leaders, with the risk committees' oversight.
Our Board of Directors oversees the management of risk through its Risk Committee and Audit Committee. Our Chief Risk Officer
(CRO), a member of the Executive Leadership team, reports to both the Risk Committee and our Chairman and Chief Executive
Officer. The AIG CRO chairs the Group Risk Committee (GRC), the senior management group responsible for assessing all significant
risks on a global basis. The GRC is supported by management committees including the Business Unit Risk Committees and Legal
Entity Risk Committees.
RISK APPETITE, LIMITS, IDENTIFICATION AND MEASUREMENT
Risk Appetite Framework
Approved by our Board of Directors, AIG’s Risk Appetite Framework integrates stakeholder interests, strategic business goals and
available financial resources. We balance these by seeking to take measured risks that are expected to generate repeatable,
sustainable earnings and create long-term value for our shareholders. Our risk tolerances take into consideration regulatory
requirements, rating agency expectations, and business needs.
Risk Limits
A key component of our Risk Appetite Framework is the establishment and maintenance of tolerances and limits on material risks to
meet AIG’s objectives. To support the monitoring and management of material risks, ERM employs a three-tiered hierarchy consisting
of Board-level risk tolerances, AIG management level limits, and Business Unit and Legal Entity level limits. Board-level risk
tolerances define the minimum level of consolidated capital and liquidity we should maintain, which are approved by the Board of
Directors and monitored by the Risk Committee. AIG management level limits are risk type specific limits at the AIG consolidated
level, which are approved by the AIG CRO with consultation from the GRC. Business unit and legal entity level limits address key
risks identified for the business units and legal entities.
Risk Identification and Measurement
We conduct risk identification through multiple processes at the business unit and corporate level focused on capturing our material
risks. A key initiative is our integrated bottom-up risk identification and assessment process which is conducted down to the product-
line level. In addition, we perform an annual top-down risk assessment to identify top risks and assign owners to ensure these risks
are appropriately addressed and managed. These processes are used as critical input to enhance and develop our analytics for
measuring and assessing risks across the organization.
The internal capital framework quantifies our aggregate economic risk at a given confidence interval, after considering diversification
benefits between risk factors and business lines. The stress testing framework assesses our aggregate exposure to our most
significant financial and insurance risks. We use this information to support the assessment of resources needed at the AIG Parent
level to support our subsidiaries and capital resources required to maintain consolidated company target capitalization levels.
114
AIG | 2023 Form 10-K
We evaluate and manage risk in material topics as discussed below.
• Credit Risk Management
• Liquidity Risk Management
•
Insurance Risks
• Market Risk Management
• Operational Risk Management
• Business and Strategy Risks
ITEM 7 | Enterprise Risk Management
CREDIT RISK MANAGEMENT
Credit risk is defined as the risk that our customers or counterparties are unable or unwilling to repay their contractual obligations
when they become due. Credit risk may also result from a downgrade of a counterparty’s credit ratings or a widening of its credit
spreads.
Direct and indirect credit exposures may arise from, but are not limited to, fixed income investments, equity securities, deposits,
commercial paper investments, securities purchased under agreements to resell and repurchase agreements, corporate and
consumer loans, leases, reinsurance and retrocessional insurance recoverables, counterparty risk arising from derivatives activities,
collateral extended to counterparties, insurance risk cessions to third parties, financial guarantees, letters of credit, and certain
General Insurance businesses. Our credit risk framework incorporates risk identification and measurement, risk limits, risk delegations
to authorized credit professionals throughout the company, and credit reserving. Credit reserving includes but is not limited to the
development of a proper framework, policies and procedures for establishing accurate identification of (i) reserves for credit losses
and (ii) other than temporary impairments for securities portfolios.
We monitor and control our company-wide credit risk concentrations and attempt to avoid unwanted or excessive risk accumulations,
whether funded or unfunded. To minimize the level of credit risk in some circumstances, we may require mitigants, such as third-party
guarantees, reinsurance or collateral, including commercial bank-issued letters of credit and trust collateral accounts.
For additional information on our credit concentrations and credit exposures, see Investments – Credit Ratings – Available-for-Sale
Investments.
Derivative Transactions
We utilize derivatives principally to enable us to hedge exposure associated with changes in levels of interest rates, currencies, credit,
commodities, equity prices and other risks. Credit risk associated with derivative counterparties exists for a derivative contract when
that contract has a positive fair value to us. All derivative transactions must be transacted within counterparty limits that have been
approved by ERM. We evaluate counterparty credit quality via an internal analysis that is consistent with the AIG Credit Policy and,
where necessary, we require credit enhancements for certain transactions and enter into offsetting and netting arrangements.
For additional information related to derivative transactions, see Note 11 to the Consolidated Financial Statements.
MARKET RISK MANAGEMENT
Market risk is defined as the risk of adverse impact due to systemic movements in one or more of the following market risk drivers:
equity and commodity prices, residential and commercial real estate values, interest rates, credit spreads, foreign exchange, inflation,
and their respective levels of volatility. We are exposed to market risks primarily within our insurance and capital markets activities, on
both the asset and the liability sides of our balance sheet through on- and off-balance sheet exposures.
Market risk is overseen at the corporate level within ERM through the CRO. Market risk is managed by our finance, treasury and
investment management corporate functions, collectively, and in partnership with ERM. The scope and magnitude of our market risk
exposures is monitored through multiple lenses that include economic, GAAP and statutory reporting frameworks at various levels of
business consolidation, in a manner consistent with our risk appetite statement. This process aims to establish a comprehensive
coverage of potential implications from adverse market risk developments. We use a number of approaches to measure market risk
exposure including sensitivity analysis, scenario analysis and stress testing.
AIG | 2023 Form 10-K
115
Market Risk Sensitivities
ITEM 7 | Enterprise Risk Management
The following table provides estimates of sensitivity to changes in yield curves, equity prices and foreign exchange (FX)
rates on our financial instruments and excludes approximately $171.4 billion and $165.4 billion of insurance liabilities as of
December 31, 2023 and December 31, 2022, respectively. AIG believes that the interest rate sensitivities of these insurance
and other liabilities serve as an offset to the net interest rate risk of the financial assets presented in the table below. In
addition, the table excludes $26.2 billion of interest rate sensitive assets and $2.1 billion of equity and alternative
investments supporting the Fortitude Re funds withheld arrangements as the contractual returns related to the assets are
transferred to Fortitude Re, as well as $29.5 billion of related funds withheld payables.
(dollars in millions)
Sensitivity factor
Interest rate sensitive assets:
Fixed maturity securities
Mortgage and other loans receivable(a)
Derivatives:
Interest rate contracts
Equity contracts
Other contracts
Total interest rate sensitive assets(b)
Interest rate sensitive liabilities:
Policyholder contract deposits - Investment-type
contracts(a)
Market risk benefits and embedded derivatives
Short-term and long-term debt(a)(c)
Total interest rate sensitive liabilities
Sensitivity factor
Derivatives:
Equity contracts(d)
Equity and alternative investments:
Real estate investments
Private equity
Hedge funds
Common equity
Other investments
Total derivatives, equity and alternative investments
Market risk benefits and embedded derivatives
Total liabilities
Sensitivity factor
Foreign currency-denominated net asset position:
British pound
Japan Yen
Euro
$
$
$
$
All other foreign currencies
Total foreign currency-denominated net asset position(e) $
Balance Sheet Exposure
Economic Effect
December 31,
2023
December 31,
2022
December 31,
2023
December 31,
2022
100 bps parallel increase in all yield curves
$
213,191 $
205,860
$
(12,335) $
(11,728)
44,601
42,664
(1,790)
(1,718)
(345)
1,274
357
(1,116)
402
720
$
259,078 $
248,530
$
$
(138,619) $
(12,790)
(19,102)
(170,511) $
(134,874)
(9,348)
(20,329)
(164,551)
(621)
(241)
(27)
(631)
(62)
(49)
(15,014) $
(14,188)
5,933 $
2,600
1,375
9,908 $
6,552
1,970
1,316
9,838
$
$
$
20% decline in equity prices and alternative
investments
$
1,274 $
402
$
(446) $
552
2,053
8,778
632
671
2,033
15,441 $
(12,790) $
(12,790) $
1,617 $
1,120
964
2,330
6,031 $
2,020
8,626
1,290
542
1,382
14,262
(9,348)
(9,348)
419
978
47
2,367
3,811
(411)
(1,755)
(126)
(134)
(407)
(3,279) $
(350) $
(350) $
(404)
(1,725)
(258)
(108)
(276)
(2,219)
(1,008)
(1,008)
$
$
$
10% depreciation of all FX rates against the
U.S. dollar
$
$
(162) $
(112)
(96)
(233)
(603) $
(42)
(98)
(5)
(236)
(381)
(a) The economic effect is the difference between the estimated fair value and the effect of a 100 bps parallel increase in all yield curves on the estimated fair value. The
estimated fair values for Mortgage and other loans receivable, Policyholder contract deposits (Investment-type contracts) and Short-term and long-term debt were
$45.4 billion, $130.2 billion and $18.2 billion at December 31, 2023, respectively. The estimated fair values for Mortgage and other loans receivable, Policyholder
contract deposits (Investment-type contracts) and Long-term debt were $43.0 billion, $129.3 billion and $18.7 billion at December 31, 2022, respectively.
(b) At December 31, 2023, the analysis covered $259.1 billion of $290.5 billion interest-rate sensitive assets. As indicated above, excluded were $22.3 billion and
$3.9 billion of fixed maturity securities and loans, respectively, supporting the Fortitude Re funds withheld arrangements. In addition, $3.1 billion of loans and $2.3 billion
of assets across various asset categories were excluded due to modeling limitations. At December 31, 2022, the analysis covered $248.5 billion of $280.9 billion
interest-rate sensitive assets. As indicated above, excluded were $23.0 billion and $4.1 billion of fixed maturity securities and loans, respectively, supporting the
Fortitude Re funds withheld arrangements. In addition, $3.0 billion of loans and $2.6 billion of assets across various asset categories were excluded due to modeling
limitations.
(c) At December 31, 2023 the analysis excluded $0.4 billion of CRBGLH borrowings and $0.3 billion of AIG Japan Holdings Kabushiki Kaisha loans. At December 31, 2022,
the analysis excluded $0.4 billion of CRBGLH borrowings, $0.3 billion of Validus borrowings, $1 million of borrowings from Glatfelter and $0.3 billion of AIG Japan
Holdings Kabushiki Kaisha loans.
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ITEM 7 | Enterprise Risk Management
(d) The balance sheet exposures for equity contracts and variable annuity and other embedded derivatives are also reflected under “Interest rate sensitive liabilities” above,
and are not additive.
(e) The majority of the foreign currency exposure is reported on a one quarter lag. Foreign currency-denominated net asset position reflects our aggregated non-U.S. dollar
assets less our aggregated non-U.S. dollar liabilities on a GAAP basis, with certain adjustments.
Interest rate sensitivity is defined as the change in value with respect to a 100 basis point parallel shift up in the interest rate
environment, calculated as: scenario value minus base value, where base value is the value under the yield curves as of the period
end and scenario value is the value reflecting a 100 basis point parallel increase in all yield curves.
We evaluate our interest rate risk without considering effects of correlation of changes in levels of interest rate with other key market
risks or other assumptions used for calculating the values of our financial assets and liabilities.
We evaluate our equity price risk without considering effects of correlation of changes in equity prices with other key market risks or
other assumptions used for calculating the values of our financial assets and liabilities, as the stress scenario does not reflect the
impact of basis risk which we use in the development of our hedging strategy.
For additional information on our three-tiered hierarchy of limits, see – Risk Appetite, Limits, Identification and Measurement – Risk
Limits.
LIQUIDITY RISK MANAGEMENT
Liquidity risk is defined as the risk that our financial condition will be adversely affected by the inability or perceived inability to meet
our short-term cash, collateral or other financial obligations as they come due.
AIG and its legal entities seek to maintain sufficient liquidity both during the normal course of business and under defined liquidity
stress scenarios to ensure that sufficient cash will be available to meet the obligations as they come due.
AIG Parent liquidity risk tolerance levels are designed to allow us to meet our financial obligations for a minimum of six months under
a liquidity stress scenario. We maintain liquidity limits and minimum coverage ratios designed to ensure that funding needs are met
under stress conditions. Liquidity risk drivers include market/monetization risk, cash flow mismatch risk, event funding risk, and
financing risk.
Liquidity risk is monitored through comprehensive cash flow projections over varying time horizons that incorporate all relevant
liquidity sources and uses and include known and likely cash inflows and outflows. We use several approaches to measure liquidity
risk exposure including minimum liquidity limits, coverage ratios, coverage flow forecasts and stress testing.
OPERATIONAL RISK MANAGEMENT
Operational risk is defined as the risk of loss, or other adverse consequences, resulting from inadequate or failed internal processes,
people, systems, or from external events. Operational risk includes legal, regulatory, technology, compliance, third-party and business
continuity risks, but excludes business and strategy risks.
Operational risk is inherent in each of our business units and functions and can have many impacts, including but not limited to,
unexpected economic losses or gains, reputational harm due to negative publicity, regulatory action from supervisory agencies and
operational and business disruptions, and/or damage to customer relationships.
The Operational Risk Management (ORM) function within ERM oversees adherence to the operational risk policy and risk and control
framework.
ORM, working together with other control and assurance functions and first line Risk Control Owners through the risk and control
framework, provides an independent view of operational risks for each of the business areas.
Cybersecurity Risk
AIG, like other global companies, continues to witness the increased sophistication and activities of unauthorized parties attempting
cyber and other computer-related penetrations such as “denial of service” attacks, phishing, untargeted but sophisticated and
automated attacks, and other disruptive software in an effort to compromise systems, networks and obtain sensitive information.
ERM works closely with and supports the risk management practices of Information Technology, the Information Security Office and
the business units and functions that form the lines of defense against the cybersecurity risks that we face.
For additional information regarding the privacy data protection and cybersecurity regulations to which we are subject, see Part I,
Item 1. Business – Regulation – Privacy, Data Protection, Cybersecurity and Artificial Intelligence Requirements. For additional
discussion of cybersecurity risks, see Part I, Item 1A. Risk Factors – Business and Operations. For additional information regarding
our cybersecurity risk management as well as strategy and governance, please see Part 1, Item 1C. Cybersecurity.
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ITEM 7 | Enterprise Risk Management
INSURANCE RISKS
Insurance risk is defined as the risk of actual claims experience and/or policyholder behavior being materially different than initially
expected at the inception of an insurance contract. Uncertainties related to insurance risk can lead to deviations in magnitude and/or
timing of prospective cash flows associated with our liabilities compared to what we expected.
We manage our business risk oversight activities through our insurance operations. A primary goal in managing our insurance
operations is to achieve an acceptable risk-adjusted return on equity. To achieve this goal, we must be disciplined in risk selection,
premium adequacy, and appropriate terms and conditions to cover the risk accepted.
We operate our insurance businesses on a global basis, and we are exposed to a wide variety of risks with different time horizons. We
manage these risks throughout the organization, both centrally and locally, through a number of processes and procedures, including
but not limited to, pricing and risk selection models, pricing approval processes, pre-launch approval of product design, development,
and distribution, underwriting approval processes and authorities, modeling and reporting of aggregations and limit concentrations at
multiple levels, model risk management framework and validation processes, risk transfer tools, review and challenge of reserves,
actuarial profitability and reserve reviews, management of the relationship between assets and liabilities, and experience monitoring
and assumption updates.
We closely manage insurance risk by monitoring and controlling the nature and geographic location of the risks in each underwritten
line of business, concentrations in industries, the terms and conditions of the underwriting and the premiums we charge for taking on
the risk. We analyze concentrations of risks using various modeling techniques, including both probability distributions (stochastic)
and/or single-point estimates (deterministic) approaches.
Risk Measurement, Monitoring and Limits
We use several approaches to measure our insurance risk exposure including sensitivity and scenario analyses, stochastic methods,
and experience studies. Additionally, there are risk-specific assessment tools, both internal and third-party, in place to better manage
the variety of insurance risks to which we are exposed.
For additional information on our three-tiered hierarchy of limits, see – Risk Appetite, Limits, Identification and Measurement – Risk
Limits.
General Insurance Companies’ Key Risks
We manage our risks through risk review and selection processes, exposure limitations, exclusions, deductibles, self-insured
retentions, coverage limits, attachment points, and reinsurance. This management is supported by sound underwriting practices,
pricing procedures and the use of actuarial analysis to help determine overall adequacy of provisions for insurance.
For General Insurance companies, risks primarily include loss reserves, underwriting, catastrophe exposure, single risk loss
exposure, and reinsurance. The potential inadequacy of the liabilities we establish for unpaid losses and loss adjustment expenses is
a key risk faced by the General Insurance companies, which we manage through internal controls and oversight of the loss reserve
setting process, as well as reviews by external experts. For further information, see Critical Accounting Estimates – Loss Reserves.
The potential inadequacy of premiums charged for future risk periods on risks underwritten in our portfolios can impact the General
Insurance companies’ ability to achieve an underwriting profit. We develop pricing based on our estimates of losses and expenses,
but factors such as market pressures and the inherent uncertainty and complexity in estimating losses may result in premiums that
are inadequate to generate underwriting profit.
Our business is exposed to various catastrophic events, including natural disasters, man-made catastrophes, or pandemic disease, in
which multiple losses can occur and affect multiple lines of business in any calendar year, adversely affecting our business and
operating results. Concentration of exposure in certain industries or geographies may cause us to suffer disproportionate losses.
Our business is exposed to loss events, such as fires or explosions, that have the potential to generate losses from a single insured
client. The net risk to us is managed to acceptable limits established by the Chief Underwriting Officer through a combination of
internal underwriting standards and external reinsurance.
Since we use reinsurance to limit our losses, we are exposed to risks associated with reinsurance including the recoverability of
expected payments from reinsurers due to either an inability or unwillingness to pay, contracts that do not respond properly to the
event or actual reinsurance coverage that is different than anticipated, which is monitored through our credit risk management
framework.
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ITEM 7 | Enterprise Risk Management
Natural Catastrophe Risk
We manage catastrophe exposure with multiple approaches such as setting risk limits based on aggregate Probable Maximum Loss
(PML) modeling, monitoring overall exposures and risk accumulations, modifying our gross underwriting standards, and purchasing
catastrophe reinsurance through both the traditional reinsurance and capital markets in addition to other reinsurance protections.
We use third-party catastrophe risk models and other tools to evaluate and simulate frequency and severity of catastrophic events
and associated losses to our portfolios of exposures with adjustments applied to modeled losses to account for loss adjustment
expenses, model biases, data quality and non-modeled risks.
We recognize that climate change has implications for insurance industry exposure to natural catastrophe risk. With multiple levels of
risk management processes in place, we actively analyze the latest climate science and policies to anticipate potential changes to our
risk profile, pricing models and strategic planning and will continue to adapt to and evolve with the developing risk exposures
attributed to climate change. In addition, we provide insurance products and services to help our clients be proactive against the
threat of climate change.
The table below details our modeled estimates of PML, net of reinsurance, on an annual aggregate basis. The 1-in-100 and 1-in-250
PMLs are the annual aggregate probable maximum losses with probability of 1 percent and 0.4 percent in a year, respectively.
Estimates as of December 31, 2023 reflect our in-force portfolio for exposures as of October 1, 2023, and all inuring reinsurance
covers as of December 31, 2023, except for the catastrophe reinsurance programs, which are as of January 1, 2024 and reflected as
of such date.
The following table presents an overview of annual aggregate modeled losses for world-wide all perils and exposures
arising from our largest primarily modeled perils:
At December 31, 2023
(in millions)
Exposures:
Net of
Reinsurance
Net of Reinsurance,
After Tax(f)
Percent of Total
Shareholders' Equity
Percent of Total
Shareholders' Equity
Excluding AOCI
World-wide all peril (1-in-250)(a)
U.S. Hurricane (1-in-100)(b)
U.S. Earthquake (1-in-250)(c)
Japanese Typhoon (1-in-100)(d)
Japanese Earthquake (1-in-250)(e)
$
$
2,804
962
1,022
277
219
(a) The world-wide all peril loss estimate includes wildfire exposure.
2,215
760
807
219
173
4.9 %
1.7
1.8
0.5
0.4
3.7 %
1.3
1.4
0.4
0.3
(b) The U.S. hurricane loss estimate includes losses to Commercial and Personal Property from hurricane hazards of wind and storm surge.
(c) The U.S. earthquake loss estimates represent exposure to Commercial and Personal Property, U.S. Workers’ Compensation and A&H business lines.
(d) Japan Typhoon loss estimate represents exposure to Commercial and Personal Property.
(e) Japan Earthquake loss estimate represents exposure to Commercial and Personal Property and A&H business lines.
(f) Taxed at the statutory tax rate of 21 percent for both the U.S. and Japanese modeled losses. The majority of Japan exposures are ceded to our U.S. Pool.
AIG, along with other property casualty insurance and reinsurance companies, uses industry-recognized catastrophe models and
applies proprietary modeling processes and assumptions to arrive at loss estimates. The use of different methodologies and
assumptions could materially change the projected losses, and our modeled losses may not be comparable to estimates made by
other companies.
Also, the modeled results are based on the assumption that all reinsurers fulfill their obligations to us under the terms of the
reinsurance arrangements. These estimates are inherently uncertain and may not accurately reflect our net exposure, inclusive of
credit risk, to these events.
Our 2024 property catastrophe reinsurance program is a worldwide program providing both aggregate and per occurrence protection,
with differing per occurrence and aggregate retentions for North America, Japan, and rest of world. In 2024, we purchased our North
America property catastrophe reinsurance program with several coverage enhancements and unchanged attachment points of
$500 million for the commercial portfolio and $300 million for Lexington Insurance Company and Programs business. For
International, we reduced our Japan attachment point to $150 million and rest of world remained unchanged at $125 million.
We have also purchased property per risk covers that provide protection against large losses globally, which include those emanating
from non-critical catastrophe events (all events except for named windstorm and earthquake) globally as well as critical catastrophe
events (named windstorm and earthquake) outside North America.
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119
Actual results in any period are likely to vary, perhaps materially, from the modeled scenarios. The occurrence of one or more severe
events could have a material adverse effect on our financial condition, results of operations and liquidity.
ITEM 7 | Enterprise Risk Management
For additional information, see also Part 1, Item 1A. Risk Factors – Reserves and Exposures.
Terrorism Risk
We actively monitor terrorism risk and manage exposures to losses from terrorist attacks. Terrorism risks are modeled using a third-
party vendor model for various terrorism attack modes and scenarios. Adjustments are made to account for vendor model gaps and
the nature of the General Insurance companies’ exposures.
Our largest terrorism concentrations are in New York City, and estimated losses are largely driven by the Property and Workers’
Compensation lines of business. Our exposure to terrorism risk in the U.S. is mitigated by the Terrorism Risk Insurance Program
Reauthorization Act (TRIPRA) in addition to limited private reinsurance protections. TRIPRA covers certified terrorist attacks within the
U.S. or U.S. missions and against certain U.S. carriers or vessels and excludes certain lines of business as specified by applicable
law.
We offer terrorism coverage in many other countries through various insurance products and participate in country terrorism pools
when applicable. International terrorism exposure is estimated using scenario-based modeling and exposure concentration is
monitored routinely. Targeted reinsurance purchases are made for some lines of business to cover potential losses due to terrorist
attacks. We also rely on the government-sponsored and government-arranged terrorism reinsurance programs, including pools, in
force in applicable non-U.S. jurisdictions.
Life and Retirement Companies’ Key Risks
For Life and Retirement companies, risks include longevity risk, morbidity risk, mortality (including pandemic) risk, and policyholder
behavior risk (including full and partial surrender lapses). The emergence of significant adverse experience compared to the
experience we expected and priced for could require an adjustment to benefit reserves and/or DAC, which could have a material
adverse effect on our consolidated financial results of operations for a particular period.
We manage risk through product design, experience monitoring, pricing and underwriting discipline, risk limits and thresholds,
reinsurance and active monitoring and management of the alignment between risk and cash flow profiles of assets and liabilities, and
hedging instruments.
For additional information on the impact of actual and expected experience on DAC and benefit reserves, see Critical Accounting
Estimates – Future Policy Benefits for Life and Accident and Health Insurance Contracts and Critical Accounting Estimates – Market
Risk Benefits. For additional information on business risks, see Part I, Item 1A. Risk Factors – Business and Operations.
Variable Annuity, Fixed Index Annuity and Index Universal Life Risk Management and Hedging Programs
Our Individual and Group Retirement businesses offer variable and fixed index annuity products with guaranteed living benefit (GLB)
riders that guarantee a certain level of lifetime benefits. Under current GAAP rules, variable and certain index annuity GLBs are
accounted for as embedded derivatives measured at fair value, with changes in the fair value recorded in Other realized gains
(losses). GLB features subject the Life and Retirement companies to market risk, including exposure to changes in levels of interest
rates, equity prices, credit spreads and market volatility.
Risk mitigation features of our variable annuity product designs include GLB rider fees indexed to a broad equity market volatility
index, required minimum allocations to fixed accounts to reduce overall equity exposure, and for some of the variable annuity
products, the utilization of volatility control funds.
We utilize asset liability management and hedging programs to manage economic exposure to market risks that are not fully mitigated
through product designs. Our hedging program utilizes an economic hedge target established via a stochastic projection for
policyholder behavior in conjunction with market scenarios calibrated to observable equity and interest option prices, which represents
our estimate of the underlying economic risks in the embedded derivatives.
In designing the hedging portfolio for our variable annuity hedging program, we make assumptions that are used in projections of
future performance of the underlying mutual funds elected by the variable annuity policyholders. Basis risk exists due to the variance
between funds returns projected under these assumptions and actual fund returns, which may result in variances between changes in
the value of the hedging portfolio and changes in the economic value of the hedge liability target. Our hedging programs associated
with index annuity and index universal life products are designed to manage market risk associated with the index crediting strategies
offered on these product platforms.
To manage the capital market exposures embedded within the economic liability hedge targets, we identify and hedge market
sensitivities to changes in equity markets, interest rates, volatility and for variable annuities, credit spreads. Each hedge program
purchases derivative instruments or securities having sensitivities that offset corresponding sensitivities in the associated economic
hedge targets, within internally defined threshold limits.
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ITEM 7 | Enterprise Risk Management
Our hedging programs utilize various derivative instruments, including but not limited to equity options, futures contracts, interest rate
swaps and swaptions. In addition, within the variable annuities hedging program, we purchase certain fixed income securities
classified as available for sale.
The hedging programs are monitored on a daily basis to ensure that the economic liability hedge targets and the associated derivative
portfolios stay within the threshold limits, pursuant to the approved hedging strategies. In addition, monthly stress tests are performed
to determine the program’s effectiveness relative to the applicable limits, under an array of combined severe market stresses in equity
prices, interest rates, volatility and credit spreads. Finally, hedging strategies are reviewed regularly to gauge their effectiveness in
managing our market exposures in the context of our overall risk appetite.
For information on the impact on our consolidated pre-tax income from the change in fair value of the embedded derivatives and the
hedging portfolio, as well as additional discussion of differences between the economic hedge target and the valuation of the
embedded derivatives, see Insurance Reserves – Life and Annuity Future Policy Benefits, Policyholder Contract Deposits and Market
Risk Benefits – Variable Annuity Guaranteed Benefits and Hedging Results.
Reinsurance Activities
We purchase reinsurance for our insurance and reinsurance operations. Reinsurance facilitates insurance risk management
(retention, volatility, concentrations) and capital planning. We may purchase reinsurance on a pooled basis.
Reinsurance is used primarily to manage overall capital adequacy and mitigate the insurance loss (Life and Non-Life) exposure
related to certain events, such as natural and man-made catastrophes, death events, or single policy level events. Our subsidiaries
operate worldwide primarily by underwriting and accepting risks for their direct account on a gross basis and reinsuring a portion of
the exposure on either an individual risk or an aggregate basis to the extent those risks exceed the desired retention level. In addition,
as a condition of certain direct underwriting transactions, we may be required by clients, agents or regulation to cede all or a portion of
risks to specified reinsurance entities, such as captives, other insurers, local reinsurers and compulsory pools.
Reinsurance contracts do not relieve our subsidiaries from their direct obligations to insureds. However, an effective reinsurance
program substantially mitigates our exposure to potentially significant losses.
Reinsurance Recoverable
AIG’s reinsurance recoverable assets are comprised of paid losses recoverable, ceded loss reserves, ceded reserves for unearned
premiums, and Life and Annuity reinsurance recoverables (ceded policy and claim reserves and policyholder contract deposits).
At December 31, 2023, total reinsurance recoverable assets were $67.5 billion. These assets include general reinsurance paid losses
recoverable of $4.6 billion, ceded loss reserves of $30.4 billion including reserves for IBNR claims, and ceded reserves for unearned
premiums of $4.3 billion, as well as life reinsurance recoverable of $28.2 billion. The methods used to estimate IBNR and to establish
the resulting ultimate losses involve projecting the frequency and severity of losses over multiple years. These methods are
continually reviewed and updated by management. Any adjustments are reflected in income. We believe that the amount recorded for
ceded loss reserves at December 31, 2023 reflects a reasonable estimate of the ultimate losses recoverable. Actual losses may,
however, differ from the reserves currently ceded.
At December 31, 2023, we held $70.1 billion of collateral, in the form of funds withheld, securities in reinsurance trust accounts and/or
irrevocable letters of credit, in support of reinsurance recoverable assets from unaffiliated reinsurers.
At December 31, 2023, we had no significant reinsurance recoverable due from any individual reinsurer that was financially troubled.
Reduced profitability associated with lower interest rates, market volatility and catastrophe losses (including COVID-19), could
potentially result in reduced capacity or rating downgrades for some reinsurers. The Reinsurance Credit Department, in conjunction
with the credit executives within ERM, reviews these developments, monitors compliance with credit triggers that may require AIG's
reinsurer to post collateral, and seeks to use other appropriate means to mitigate any material risks arising from these developments.
For additional information on reinsurance recoverable, see Critical Accounting Estimates – Reinsurance Assets.
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121
Glossary
Glossary
Accident year The annual calendar accounting period in which loss events occurred, regardless of when the losses are actually
reported, booked or paid.
Accident year combined ratio, as adjusted (Accident year combined ratio, ex-CAT) The combined ratio excluding catastrophe
losses and related reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve
discounting.
Accident year loss ratio, as adjusted (Accident year loss ratio, ex-CAT) The loss ratio excluding catastrophe losses and related
reinstatement premiums, prior year development, net of premium adjustments, and the impact of reserve discounting.
Acquisition ratio Acquisition costs divided by net premiums earned. Acquisition costs are those costs incurred to acquire new and
renewal insurance contracts and also include the amortization of VOBA and DAC. Acquisition costs vary with sales and include, but
are not limited to, commissions, premium taxes, direct marketing costs and certain costs of personnel engaged in sales support
activities such as underwriting.
Adjusted revenues exclude Net realized gains (losses), income from non-operating litigation settlements (included in Other income
for GAAP purposes), changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income
for GAAP purposes) and income from elimination of the international reporting lag. Adjusted revenues is a GAAP measure for our
segments.
Assets under administration include assets under management and Group Retirement mutual fund assets that we sell or
administer.
Attritional losses are losses recorded in the current accident year, which are not catastrophe losses.
AUM Assets under management include assets in the general and separate accounts of our subsidiaries that support liabilities and
surplus related to our life and annuity insurance products and the notional value of stable value wrap contracts.
Base yield Net investment income excluding income from alternative investments and other enhancements, as a percentage of
average base invested asset portfolio, which excludes alternative investments, other bond securities and certain other investments for
which the fair value option has been elected.
Book value per common share, excluding accumulated other comprehensive income (loss) (AOCI) adjusted for the
cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and deferred tax assets (DTA)
(Adjusted book value per common share) is a non-GAAP measure and is used to show the amount of our net worth on a per-
common share basis. Adjusted book value per common share is derived by dividing total AIG common shareholders’ equity, excluding
AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude Re funds withheld assets and DTA (Adjusted
common shareholders’ equity), by total common shares outstanding.
Casualty insurance Insurance that is primarily associated with the losses caused by injuries to third persons, i.e., not the insured,
and the legal liability imposed on the insured as a result.
Combined ratio Sum of the loss ratio and the acquisition and general operating expense ratios.
Credit Support Annex A legal document generally associated with an ISDA Master Agreement that provides for collateral postings
which could vary depending on ratings and threshold levels.
Credit Valuation Adjustment (CVA)/Non-Performance Risk Adjustment (NPA) The CVA/NPA adjusts the valuation of derivatives
to account for nonperformance risk of our counterparty with respect to all net derivative assets positions. The CVA/NPA also accounts
for our own credit risk in the fair value measurement of all derivative net liability positions and liabilities where AIG has elected the fair
value option, when appropriate.
DAC Deferred Policy Acquisition Costs Deferred costs that are incremental and directly related to the successful acquisition of new
business or renewal of existing business.
Deferred gain on retroactive reinsurance Retroactive reinsurance is a reinsurance contract in which an assuming entity agrees to
reimburse a ceding entity for liabilities incurred as a result of past insurable events. If the amount of premium paid by the ceding
reinsurer is less than the related ceded loss reserves, the resulting gain is deferred and amortized over the settlement period of the
reserves. Any related development on the ceded loss reserves recoverable under the contract would increase the deferred gain if
unfavorable, or decrease the deferred gain if favorable.
DSI Deferred Sales Inducements Represents enhanced crediting rates or bonus payments to contract holders on certain annuity and
investment contract products that meet the criteria to be deferred and amortized over the life of the contract.
Expense ratio Sum of acquisition expenses and general operating expenses, divided by net premiums earned.
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AIG | 2023 Form 10-K
Glossary
General operating expense ratio General operating expenses divided by net premiums earned. General operating expenses are
those costs that are generally attributed to the support infrastructure of the organization and include but are not limited to personnel
costs, projects and bad debt expenses. General operating expenses exclude losses and loss adjustment expenses incurred,
acquisition expenses, and investment expenses.
GIC/GIA Guaranteed Investment Contract/Guaranteed Investment Agreement A contract whereby the seller provides a guaranteed
repayment of principal and a fixed or floating interest rate for a predetermined period of time.
IBNR Incurred But Not Reported Estimates of claims that have been incurred but not reported to us.
ISDA Master Agreement An agreement between two counterparties, which may have multiple derivative transactions with each
other governed by such agreement, that generally provides for the net settlement of all or a specified group of these derivative
transactions, as well as pledged collateral, through a single payment, in a single currency, in the event of a default on, or affecting any,
one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions.
Loan-to-value ratio Principal amount of loan amount divided by appraised value of collateral securing the loan.
Loss Adjustment Expenses The expenses directly attributed to settling and paying claims of insureds and include, but are not
limited to, legal fees, adjuster’s fees and the portion of general expenses allocated to claim settlement costs.
Loss ratio Losses and loss adjustment expenses incurred divided by net premiums earned.
Loss reserve development The increase or decrease in incurred losses and loss adjustment expenses related to prior years as a
result of the re-estimation of loss reserves at successive valuation dates for a given group of claims.
Loss reserves Liability for unpaid losses and loss adjustment expenses. The estimated ultimate cost of settling claims relating to
insured events that have occurred on or before the balance sheet date, whether or not reported to the insurer at that date.
Master netting agreement An agreement between two counterparties who have multiple derivative contracts with each other that
provides for the net settlement of all contracts covered by such agreement, as well as pledged collateral, through a single payment, in
a single currency, in the event of default on or upon termination of any one such contract.
MRB Market risk benefit is an amount that a policyholder would receive in addition to the account balance upon the occurrence of a
specific event or circumstance, such as death, annuitization, or periodic withdrawal that involves protection from capital market risk.
Natural catastrophe losses are generally weather or seismic events having a net impact on AIG in excess of $10 million each and
man-made catastrophe losses, such as terrorism and civil disorders that exceed the $10 million threshold.
Net premiums written represent the sales of an insurer, adjusted for reinsurance premiums assumed and ceded, during a given
period. Net premiums earned are the revenue of an insurer for covering risk during a given period. Net premiums written are a
measure of performance for a sales period, while net premiums earned are a measure of performance for a coverage period.
Noncontrolling interests The portion of equity ownership in a consolidated subsidiary not attributable to the controlling parent
company.
Policy fees An amount added to a policy premium, or deducted from a policy cash value or contract holder account, to reflect the
cost of issuing a policy, establishing the required records, sending premium notices and other related expenses.
Pool A reinsurance arrangement whereby all of the underwriting results of the pool members are combined and then shared by each
member in accordance with its pool participation percentage.
Premiums and deposits – Life and Retirement includes direct and assumed amounts received and earned on traditional life
insurance policies, group benefit policies and life-contingent payout annuities, as well as deposits received on universal life,
investment-type annuity contracts, FHLB funding agreements and mutual funds.
Prior year development See Loss reserve development.
RBC Risk-Based Capital A formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks
inherent in its business.
Reinstatement premiums Premiums on an insurance policy over and above the initial premium imposed at the beginning of the
policy payable to reinsurers or receivable from insurers to restore coverage limits that have been reduced or exhausted as a result of
reinsured losses under certain excess of loss reinsurance contracts.
Reinsurance The practice whereby one insurer, the reinsurer, in consideration of a premium paid to that insurer, agrees to indemnify
another insurer, the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of
insurance which it has issued.
Reinsurance recoverables are comprised of paid losses recoverable, ceded loss reserves, ceded reserves for unearned premiums,
and Life and Annuity reinsurance recoverables (ceded policy and claim reserves and policyholder contract deposits).
Retroactive reinsurance See Deferred gain on retroactive reinsurance.
AIG | 2023 Form 10-K
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Glossary
Return on common equity – Adjusted after-tax income excluding AOCI adjusted for the cumulative unrealized gains and
losses related to Fortitude Re funds withheld assets and DTA (Adjusted return on common equity) is a non-GAAP measure
and is used to show the rate of return on common shareholders’ equity. Adjusted return on common equity is derived by dividing
actual or annualized adjusted after-tax income attributable to AIG common shareholders by average Adjusted common shareholders’
equity.
Subrogation The amount of recovery for claims we have paid our policyholders, generally from a negligent third party or such party’s
insurer.
Surrender charge A charge levied against an investor for the early withdrawal of funds from a life insurance or annuity contract, or
for the cancellation of the agreement.
Surrender rate represents annualized surrenders and withdrawals as a percentage of average reserves and Group Retirement
mutual fund assets under administration.
Unearned premium reserve Liabilities established by insurers and reinsurers to reflect unearned premiums, which are usually
refundable to policyholders if an insurance or reinsurance contract is canceled prior to expiration of the contract term.
VOBA Value of Business Acquired Present value of future pre-tax profits from in-force policies of acquired businesses discounted at
yields applicable at the time of purchase. VOBA is reported in DAC in the Consolidated Balance Sheets.
Acronyms
A&H
ABS
APTI
AUM
CDS
CLO
Accident and Health Insurance
GMWB
Guaranteed Minimum Withdrawal Benefits
Asset-Backed Securities
Adjusted pre-tax income
ISDA
International Swaps and Derivatives Association, Inc.
Moody's Moody's Investors' Service Inc.
Assets Under Management
MRBs
Market Risk Benefits
Credit Default Swap
NAIC
National Association of Insurance Commissioners
Collateralized Loan Obligations
NM
Not Meaningful
CMBS
Commercial Mortgage-Backed Securities
ORR
Obligor Risk Ratings
ERM
Enterprise Risk Management
RMBS
Residential Mortgage-Backed Securities
FASB
Financial Accounting Standards Board
GAAP
GIA
GIC
Accounting Principles Generally Accepted in the
United States of America
Guaranteed Investment Agreements
Guaranteed Investment Contracts
GMDB
Guaranteed Minimum Death Benefits
S&P
SEC
URR
VIE
Standard & Poor's Financial Services LLC
Securities and Exchange Commission
Unearned Revenue Reserve
Variable Interest Entity
ITEM 7A | Quantitative and Qualitative Disclosures About Market
Risk
The information required by this item is set forth in the Enterprise Risk Management section of Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.
124
AIG | 2023 Form 10-K
Part II
ITEM 8 | Financial Statements and Supplementary Data
AMERICAN INTERNATIONAL GROUP, INC.
REFERENCE TO FINANCIAL STATEMENTS AND SCHEDULES
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Income (Loss) for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Equity for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Note 1.
Note 2.
Note 3.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Note 16.
Note 17.
Note 18.
Note 19.
Note 20.
Note 21.
Note 22.
Note 23.
Basis of Presentation
Summary of Significant Accounting Policies
Segment Information
Held-For-Sale Classification
Fair Value Measurements
Investments
Lending Activities
Reinsurance
Deferred Policy Acquisition Costs
Variable Interest Entities
Derivatives and Hedge Accounting
Goodwill and Other Intangible Assets
Insurance Liabilities
Market Risk Benefits
Separate Account Assets and Liabilities
Debt
Contingencies, Commitments and Guarantees
Equity
Earnings Per Common Share (EPS)
Statutory Financial Data and Restrictions
Share-Based Compensation Plans
Employee Benefits
Income Taxes
Schedules
SCHEDULE I
SCHEDULE II
Summary of Investments – Other than Investments in Related Parties at December 31, 2023
Condensed Financial Information of Registrant at December 31, 2023 and 2022 and for the years ended
December 31, 2023, 2022 and 2021
SCHEDULE III Supplementary Insurance Information at December 31, 2023 and 2022 and for the years ended
December 31, 2023, 2022 and 2021
SCHEDULE IV Reinsurance for the years ended December 31, 2023, 2022 and 2021
SCHEDULE V
Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021
Page
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AIG | 2023 Form 10-K
125
ITEM 8 | Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of American International Group, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of American International Group, Inc. and its subsidiaries (the "Company")
as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), of comprehensive income (loss), of equity and
of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement
schedules listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for long-
duration insurance contracts in 2023.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on
Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated
financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
126
AIG | 2023 Form 10-K
ITEM 8 | Report of Independent Registered Public Accounting Firm
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that
were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to
the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.
Valuation of Certain Level 3 Fixed Maturity Securities
As described in Note 5 to the consolidated financial statements, as of December 31, 2023, the total fair value of the Company’s level 3 fixed
maturity securities, including bonds available for sale and other bond securities, was $28.4 billion, comprised of residential mortgage backed
securities, commercial mortgage backed securities, collateralized loan obligations, other asset-backed securities, and fixed maturity securities
issued by corporations (including private placements), states, municipalities, and other governmental agencies. As the volume or level of
market activity for these securities is limited, management determines fair value either by requesting brokers who are knowledgeable about
the particular security to provide a price quote, which according to management is generally non-binding, or by employing market accepted
valuation models. In both cases, certain inputs used by management to determine fair value may not be observable in the market. For certain
private placement securities, fair value is determined by management based on discounted cash flow models using discount rates based on
credit spreads, yields or price levels of comparable securities, adjusted for illiquidity and structure. For other level 3 fixed maturity securities,
such assumptions may include loan delinquencies and defaults, loss severity, and prepayments. As disclosed by management, fair value
estimates are subject to management review to ensure valuation models and related inputs are reasonable.
The principal considerations for our determination that performing procedures relating to the valuation of certain level 3 fixed maturity
securities is a critical audit matter are (i) the significant judgment by management to determine the fair value of these securities, which in turn
led to a high degree of auditor subjectivity and judgment in performing the audit procedures relating to the aforementioned assumptions that
are used to determine the fair value, (ii) the significant audit effort and judgment in evaluating the audit evidence related to the valuation, and
(iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of level 3 fixed
maturity securities, including controls related to (i) management’s review over the pricing function and (ii) identifying and resolving pricing
exceptions. These procedures also included, among others, obtaining independent third-party vendor pricing, where available, and the
involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of
securities. Developing the independent range of prices involved testing the completeness and accuracy of data provided by management on
a sample basis and evaluating the reasonableness of management’s assumptions noted above. The independent third-party vendor pricing
and the independently developed ranges were compared to management’s recorded fair value estimates.
Valuation of Insurance Liabilities - Unpaid Losses and Loss Adjustment Expenses (Loss Reserves), Net of Reinsurance
As described in Note 13 to the consolidated financial statements, loss reserves represent the accumulation of estimates of unpaid claims,
including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. As of December 31, 2023,
the Company’s net liability for unpaid losses and loss adjustment expenses was $40.1 billion. As disclosed by management, the estimate of
the loss reserves relies on several key judgments, including (i) actuarial methods, (ii) relative weights given to these methods by product line,
(iii) underlying actuarial assumptions, and (iv) groupings of similar product lines. Actuarial assumptions include (i) expected loss ratios and
(ii) loss development factors. During management’s actuarial reviews, various factors are considered, including economic conditions; the
legal, regulatory, judicial and social environment; medical cost trends; policy pricing, terms and conditions; changes in the claims handling
process; and the impact of reinsurance. As described in Note 13 to the consolidated financial statements, management uses a combination of
actuarial methods to project ultimate losses for both long-tail and short-tail exposures.
The principal considerations for our determination that performing procedures relating to the valuation of insurance liabilities - loss reserves,
net of reinsurance is a critical audit matter are (i) the significant judgment by management when developing their estimate, which in turn led to
a high degree of auditor subjectivity and judgment in performing the audit procedures related to the estimate, (ii) the significant audit effort and
judgment in evaluating the audit evidence related to the actuarial methods, weights given to these methods by product line, groupings of
similar product lines, and the aforementioned actuarial assumptions, and (iii) the audit effort involved the use of professionals with specialized
skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of the net liability
for unpaid losses and loss adjustment expense, including controls over the selection of actuarial methods and development of significant
assumptions, as well as controls designed to identify and address management bias and contrary evidence. These procedures also included,
among others, the involvement of professionals with specialized skill and knowledge to assist in performing one or a combination of
procedures for a sample of product lines, including (i) independently estimating reserves using actual historical data and loss development
patterns, as well as industry data and other benchmarks, and comparing management’s actuarially determined reserves to these independent
estimates and (ii) evaluating management’s actuarial reserving methods and aforementioned factors, including actuarial assumptions and
judgments impacting loss reserves and the consistency of management’s approach period-over-period. Performing these procedures involved
testing the completeness and accuracy of data used by management on a sample basis.
AIG | 2023 Form 10-K
127
ITEM 8 | Report of Independent Registered Public Accounting Firm
Valuation of Market Risk Benefits (MRBs) on Individual Retirement Variable and Fixed Index Annuity contracts and the valuation of
Embedded Derivatives (EDs) for certain Guaranteed Benefit Features on Fixed Index Annuity contracts
As described in Notes 5, 13, and 14 to the consolidated financial statements, the total fair value of the Individual Retirement MRB assets and
liabilities were $740 million and $5,225 million, respectively, and the fair value of the EDs for certain guaranteed features on fixed index
annuity contracts was $1.5 billion on December 31, 2023. Certain variable annuity and fixed index annuity contracts contain MRBs related to
guaranteed benefit features that management separates from the host contracts and accounts for at fair value. As disclosed by management,
the fair value of MRBs contained in certain variable and fixed index annuity contracts and the associated EDs for certain guaranteed features
on fixed index annuities is measured based on policyholder behavior and capital market assumptions related to projected cash flows over the
expected lives of the contracts. The projected cash flows incorporate best estimate assumptions for policyholder behavior (including lapses,
withdrawals and benefit utilization), along with an explicit risk margin to reflect a market participant’s estimates of the fair value of projected
cash flows and policyholder behavior. Estimating the underlying cash flows for these features also involves judgments regarding the capital
market assumptions, including expected market rates of return, market volatility, credit spreads, correlations of certain market variables, fund
performance and discount rates. The guaranteed product features in the fixed index annuity contracts that are not MRBs and are accounted
for as EDs utilize option pricing models to estimate fair value, taking into account the capital market assumptions for future index growth rates,
volatility of the index, future interest rates, and the Company’s ability to adjust the participation rate and the cap on fixed index credited rates
in light of market conditions and policyholder behavior assumptions.
The principal considerations for our determination that performing procedures relating to the valuation of MRBs on Individual Retirement
variable and fixed index annuity contracts and EDs for certain guaranteed benefit features on fixed index contracts is a critical audit matter are
(i) the significant judgment by management in developing policyholder behavior assumptions relating to the individual retirement variable and
fixed index annuity lapses, withdrawals and benefit utilization, along with an explicit risk margin, as well as capital market assumptions related
to market volatility, used in the valuation of the MRBs and EDs for certain guaranteed benefit features on fixed index contracts (collectively the
“significant assumptions”), (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating
management’s significant assumptions, and (iii) the audit effort involved in the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the development of assumptions
used in the valuation of MRBs on Individual Retirement variable and fixed index annuity contracts and the EDs for certain guaranteed benefit
features on fixed index contracts. These procedures also included, among others, (i) testing management’s process for developing the
valuation of the MRBs and EDs for certain guaranteed benefit features on fixed index contracts, (ii) testing, on a sample basis, the
completeness and accuracy of data used by management to develop the significant assumptions, (iii) testing that the significant assumptions
are accurately reflected in the models, and (iv) the involvement of professionals with specialized skill and knowledge to assist in evaluating
the reasonableness of management’s judgments used in developing the significant assumptions based on industry knowledge and data.
Adoption of the New Accounting Standard for Long-Duration Contracts
As described above and in Notes 2, 5, 13, and 14 to the consolidated financial statements, the Company has adopted the new accounting
standard relating to targeted improvements to the accounting for long-duration contracts (the “LDTI standard”). The Company adopted the
LDTI standard on January 1, 2023 with a transition date of January 1, 2021, using the modified retrospective basis, except for market risk
benefits (MRBs) which used a full retrospective basis. The impact of the adoption of the LDTI standard resulted in a net decrease to beginning
total equity of $1,264 million as of January 1, 2021. The impact of adopting the LDTI standard also resulted in adjustments to the Company’s
previously reported consolidated financial statements as of December 31, 2022 and for each of the two years in the period ended December
31, 2022. These adjustments include a $2 million decrease and $983 million increase to net income for the years ended December 31, 2022
and 2021, respectively, and a $1,219 million increase to total equity as of December 31, 2022. The adoption adjustments include changes
related to MRBs and changes to the discount rate used to measure the liability for future policy benefits. The method for constructing and
applying the locked-in discount rate assumptions on newly issued business is determined based on factors such as product characteristics
and the expected timing of cash flows. Management employs conversion and interpolation methodologies when necessary. The current
discount rate assumption for the liability for future policy benefits, which is derived from market observable yields on upper medium-grade
fixed income instruments, is updated quarterly. The fair value of MRBs incorporate best estimate assumptions for policyholder behavior
(including lapses, withdrawals and benefit utilization), along with an explicit risk margin to reflect a market participant’s estimates of the fair
value of projected cash flows and policyholder behavior. Estimating the underlying cash flows involves judgments regarding capital market
assumptions related to expected market rates of return, market volatility, credit spreads, correlations of certain market variables, fund
performance and discount rates. The portion of fees attributable to the fair value of expected benefit payments is included within the fair value
measurement of these MRBs. The guaranteed product features in the fixed index annuity contracts that are not MRBs and are accounted for
as EDs utilize option pricing models to estimate fair value, taking into account the capital market assumptions for future index growth rates,
volatility of the index, future interest rates, and the Company’s ability to adjust the participation rate and the cap on fixed index credited rates
in light of market conditions and policyholder behavior assumptions. In connection with the adoption of the LDTI standard, as of December 31,
2022, the Company recorded the fair value of market risk benefit assets and market risk benefit liabilities of $661 million and $4,305 million,
respectively, which includes MRBs related to individual retirement variable and fixed index annuities, and the fair value of EDs related to the
fixed index annuity contracts with guaranteed product features included in policyholder contract deposits of $1.1 billion.
The principal considerations for our determination that performing procedures relating to the adoption of the LDTI standard is a critical audit
matter are (i) the significant judgment by management when adopting the LDTI standard and determining the adoption adjustments, (ii) a high
degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s assumptions related to (a) the
128
AIG | 2023 Form 10-K
ITEM 8 | Report of Independent Registered Public Accounting Firm
discount rate assumption for the liability for future policy benefits, (b) the individual retirement variable annuity policyholder behavior
assumptions related to lapses, withdrawals, benefit utilization, an explicit risk margin, and capital market assumptions related to long-term
equity volatilities used in determining the attributed fee at policy inception date in the valuation of MRBs, (c) the individual retirement variable
annuity and fixed index annuity policyholder behavior assumptions related to lapses, withdrawals, benefit utilization, along with an explicit risk
margin, as well as capital market assumptions related to long-term equity volatilities and individual retirement fixed index annuity option
budget assumptions used in the valuation of MRBs, and (d) the individual retirement fixed index annuity policyholder behavior assumptions
related to lapses, withdrawals, benefit utilization, along with an explicit risk margin, as well as capital market assumptions related to the option
budget assumptions used in the valuation of the EDs for certain guaranteed benefit features on fixed index contracts, and (iii) the audit effort
involved the use of professionals with specialized skills and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls related to management’s adoption of the
LDTI standard, including controls over determining the adoption adjustments. These procedures also included, among others, (i) evaluating
management’s process for adopting the LDTI standard and for determining the adoption adjustments, (ii) testing the relevance and reliability
of the external data used by management to develop the discount rate assumption for the liability for future policy benefit, (iii) testing, on a
sample basis, the completeness and accuracy of the data used by management to develop and update the aforementioned policyholder
behavior and capital market assumptions, and (iv) the use of professionals with specialized skill and knowledge to assist in (a) evaluating the
reasonableness of the current discount rate assumption based on the consideration of the Company’s experience, industry trends, and
market conditions, as applicable, and (b) evaluating the reasonableness of the aforementioned policyholder behavior and capital market
assumptions used to determine the attributed fee at policy inception, the fair value of MRBs and EDs for certain guaranteed benefit features
on fixed index contracts based on the consideration of the Company’s historical and actual experience, industry trends, and market
conditions, as applicable, in connection with adopting the LDTI standard.
Recoverability of U.S. Federal Deferred Tax Asset
As described in Note 23 to the consolidated financial statements, as of December 31, 2023, the Company had a net U.S. federal deferred tax
asset of $13.6 billion, $4.6 billion of which related to U.S. tax attributes of AIG's consolidated federal income tax group with a limited
carryforward period. Management evaluates the recoverability of the deferred tax asset and the need for a valuation allowance based on the
weight of all positive and negative evidence to reach a conclusion of whether it is more likely than not that all or some portion of the deferred
tax asset will not be realized. As disclosed by management, in assessing the recoverability of the deferred tax asset, management considers
a number of factors, which include forecasts of future income for each of the businesses and actual and planned business and operational
changes, using assumptions about future macroeconomic and company specific conditions and events. Management subjects the forecasts
to changes in key assumptions and evaluates the effect on tax attribute utilization, including tax attribute carryforward periods. Management
also applies changes to assumptions about the effectiveness of relevant prudent and feasible tax planning strategies. As of December 31,
2023, management determined that it is no longer more-likely-than-not that $300 million of the Company’s deferred tax assets related to tax
attribute carryforwards of AIG's consolidated federal income tax group will be utilized prior to expiration and reduced their beginning of the
year valuation allowance by $405 million.
The principal considerations for our determination that performing procedures relating to the recoverability of the U.S. federal deferred tax
asset is a critical audit matter are (i) the significant judgment by management when developing their estimate of the recoverability, which in
turn led to a high degree of auditor subjectivity and judgment in performing the audit procedures relating to the forecasts of future income for
the non-life business, assumptions about future macroeconomic and company specific conditions and events, tax attribute carryforward
periods, and tax planning strategies, (ii) the significant audit effort and judgment in evaluating the audit evidence related to the recoverability
of the U.S. federal deferred tax asset, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recoverability of the U.S.
federal deferred tax asset, including controls over the accuracy of input data relevant to the analysis, such as cumulative income/loss
measurement, reversal of temporary differences, adjustments to forecasted pre-tax income to calculate future taxable income, impacts of tax
audits, and enacted and effective tax law considerations. These procedures also included, among others, the involvement of professionals
with specialized skill and knowledge to assist in (i) evaluating management’s assessment of the recoverability of the U.S. federal deferred tax
asset and the need for a valuation allowance, including the reasonableness of the application of tax law, (ii) testing management’s process for
forecasting future income for each of the businesses, which included evaluating the impact of actual and planned business and operational
changes, the reasonableness of assumptions about future macroeconomic and company specific conditions and events, impacts of tax
audits, as well as considering whether management demonstrated their ability and intent in executing planned strategies, (iii) testing the tax
attribute carryforward periods, and (iv) evaluating the prudence and feasibility of the implementation of available tax planning strategies that
impact the recoverability of the U.S. federal deferred tax asset.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 14, 2024
We have served as the Company’s auditor since 1980.
AIG | 2023 Form 10-K
129
American International Group, Inc.
Consolidated Balance Sheets
(in millions, except for share data)
Assets:
Investments:
Fixed maturity securities:
Bonds available for sale, at fair value, net of allowance for credit losses of $162 in 2023 and $186 in 2022 (amortized
cost: 2023 - $253,035; 2022 - $255,993)*
Other bond securities, at fair value (See Note 6)*
Equity securities, at fair value (See Note 6)*
Mortgage and other loans receivable, net of allowance for credit losses of $38,473 in 2023 and $38,351 in 2022*
Other invested assets (portion measured at fair value: 2023 - $11,733; 2022 - $12,042)*
Short-term investments, including restricted cash of $4 in 2023 and $140 in 2022 (portion measured at fair value: 2023 -
$10,772; 2022 - $5,708)*
Total investments
Cash*
Accrued investment income*
Premiums and other receivables, net of allowance for credit losses and disputes of $139 in 2023 and $169 in 2022
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes of $0 in 2023 and $0 in 2022
Reinsurance assets - other, net of allowance for credit losses and disputes of $236 in 2023 and $295 in 2022
Deferred income taxes
Deferred policy acquisition costs
Market risk benefit assets, at fair value
Other assets, net of allowance for credit losses of $49 in 2023 and $49 in 2022, including restricted cash of $45 in 2023
and $33 in 2022 (portion measured at fair value: 2023 - $754; 2022 - $621)*
Separate account assets, at fair value
Assets held for sale
Total assets
Liabilities:
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses of $14 in 2023 and $14 in
2022
Unearned premiums
Future policy benefits for life and accident and health insurance contracts
Policyholder contract deposits (portion measured at fair value: 2023 - $7,997; 2022 - $5,408)
Market risk benefit liabilities, at fair value
Other policyholder funds
Fortitude Re funds withheld payable (portion measured at fair value: 2023 - $(1,226); 2022 - $(2,235))
Other liabilities (portion measured at fair value: 2023 - $624; 2022 - $343)*
Short-term and long-term debt, of which $250 and $1,500 is short-term debt in 2023 and 2022 (portion measured at fair
value: 2023 - $53; 2022 - $56)
Debt of consolidated investment entities*
Separate account liabilities
Liabilities held for sale
Total liabilities
Contingencies, commitments and guarantees (See Note 17)
AIG shareholders’ equity:
Series A non-cumulative preferred stock and additional paid in capital, $5.00 par value; 100,000,000 shares authorized;
shares issued: 2023 - 20,000 and 2022 - 20,000; liquidation preference $500
Common stock, $2.50 par value; 5,000,000,000 shares authorized; shares issued: 2023 - 1,906,671,492 and 2022 -
1,906,671,492
Treasury stock, at cost; 2023 - 1,217,831,721 shares; 2022 - 1,172,543,436 shares of common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total AIG shareholders’ equity
Non-redeemable noncontrolling interests
Total equity
Total liabilities and equity
*
See Note 10 for details of balances associated with variable interest entities.
See accompanying Notes to Consolidated Financial Statements.
December 31,
2023
December 31,
2022
$
231,733 $ 226,156
4,485
575
49,605
15,953
5,241
728
51,553
16,217
17,200
322,672
2,155
2,588
10,561
30,612
36,914
14,445
12,085
912
12,376
309,150
2,043
2,376
13,243
30,751
38,971
14,804
12,857
796
13,089
91,005
2,268
12,384
84,853
—
539,306 $ 522,228
70,393 $
17,387
58,576
161,979
5,705
3,356
29,484
25,958
75,167
18,338
51,914
155,984
4,736
3,463
30,383
26,757
19,796
2,591
91,005
1,775
488,005
21,299
5,880
84,853
—
478,774
$
$
485
485
4,766
(59,189)
75,810
37,516
(14,037)
45,351
5,950
51,301
4,766
(56,473)
79,915
34,893
(22,616)
40,970
2,484
43,454
539,306 $ 522,228
$
130
AIG | 2023 Form 10-K
American International Group, Inc.
Consolidated Statements of Income (Loss)
(dollars in millions, except per common share data)
Revenues:
Premiums
Policy fees
Net investment income:
Net investment income - excluding Fortitude Re funds withheld assets
Net investment income - Fortitude Re funds withheld assets
Total net investment income
Net realized gains (losses):
Net realized gains (losses) - excluding Fortitude Re funds withheld assets and embedded derivative
Net realized gains (losses) on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative
Total net realized gains (losses)
Other income
Total revenues
Benefits, losses and expenses:
Policyholder benefits and losses incurred (including remeasurement losses of $342, $304 and $247 for
the years ended December 31, 2023, 2022 and 2021, respectively)
Change in the fair value of market risk benefits, net
Interest credited to policyholder account balances
Amortization of deferred policy acquisition costs
General operating and other expenses
Interest expense
(Gain) loss on extinguishment of debt
Net (gain) loss on divestitures and other
Total benefits, losses and expenses
Income from continuing operations before income tax expense (benefit)
Income tax expense (benefit):
Current
Deferred
Income tax expense (benefit)
Income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Less:
Net income from continuing operations attributable to noncontrolling interests
Net income attributable to AIG
Less: Dividends on preferred stock
Years Ended December 31,
2023
2022
2021
$
33,254 $
31,856 $
2,797
2,913
31,285
3,005
12,641
1,971
14,612
1,871
1,003
(603)
2,271
984
10,824
943
11,767
69
(486)
7,481
7,064
850
54,450
52,157
22,176
(958)
3,744
4,557
9,122
1,125
303
82
40,151
14,299
517
2,508
3,025
11,274
(1)
11,273
1,046
10,227
29
23,785
(447)
3,570
4,524
8,728
1,305
389
(3,044)
38,810
13,347
(45)
2,486
2,441
10,906
—
10,906
539
10,367
29
13,048
1,544
14,592
(2,306)
(295)
(2,007)
(4,608)
767
46,802
24,755
2
4,424
4,808
8,499
1,136
(37)
(643)
42,944
3,858
491
(511)
(20)
3,878
—
3,878
235
3,643
29
Net income attributable to AIG common shareholders
$
3,614 $
10,198 $
10,338
Income per common share attributable to AIG common shareholders:
Basic:
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss) attributable to AIG common shareholders
Diluted:
Income (loss) from continuing operations
Income from discontinued operations
Net income (loss) attributable to AIG common shareholders
Weighted average shares outstanding:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
$
$
$
$
$
$
5.02 $
— $
5.02 $
13.10 $
— $
13.10 $
4.98 $
12.94 $
— $
— $
4.98 $
12.94 $
12.10
—
12.10
11.95
—
11.95
719,506,291
725,233,068
778,621,118
787,941,750
854,320,449
864,884,879
AIG | 2023 Form 10-K
131
American International Group, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(in millions)
Net income
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which allowance
for credit losses was taken
Change in unrealized appreciation (depreciation) of all other investments
Change in fair value of market risk benefits attributable to changes in our own credit risk
Change in the discount rates used to measure traditional and limited payment long-duration
insurance contracts
Change in foreign currency translation adjustments
Change in retirement plan liabilities adjustment
Change in fair value of liabilities under fair value option attributable to changes in our own credit
risk
Other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributable to noncontrolling interests
Years Ended December 31,
2023
2022
2021
$
3,878 $ 11,273 $ 10,906
14
(94)
44
7,134
(38,408)
(7,151)
(544)
1,294
179
(871)
5,544
102
105
—
5,940
9,818
1,534
(613)
(20)
(6)
(32,303)
(21,030)
(1,454)
1,361
(180)
325
(2)
(5,424)
5,482
440
Comprehensive income (loss) attributable to AIG
$
8,284 $ (19,576) $
5,042
See accompanying Notes to Consolidated Financial Statements.
132
AIG | 2023 Form 10-K
American International Group, Inc.
Consolidated Statements of Equity
(in millions, except per share data)
Balance, January 1, 2021
Cumulative effect of change in accounting principle,
net of tax
Common stock issued under stock plans
Purchase of common stock
Net income attributable to AIG or noncontrolling
interests
Dividends on preferred stock ($1,462.50 per share)
Dividends on common stock ($1.28 per share)
Other comprehensive loss
Net increase (decrease) due to divestitures and
acquisitions
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Other
Preferred
Stock and
Additional
Paid-in
Capital
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
AIG
Share-
holders'
Equity
Non-
redeemable
Non-
controlling
Interests
Total
Equity
$
485 $ 4,766 $ (49,322) $ 81,418 $ 15,504 $
13,511 $ 66,362 $
837 $ 67,199
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
217
(2,614)
—
—
—
—
—
—
—
101
—
(281)
(29)
—
—
—
—
288
—
—
273
933
—
—
10,367
(29)
(1,083)
—
—
—
—
3
—
—
—
—
—
(2,197)
(1,264)
(64)
(2,643)
—
—
—
(1,264)
(64)
(2,643)
10,367
539
10,906
(29)
(1,083)
—
—
(29)
(1,083)
(5,325)
(5,325)
(99)
(5,424)
(918)
(630)
2,342
1,712
—
—
—
—
—
377
22
(682)
7
22
(682)
384
Balance, December 31, 2021
$
485 $ 4,766 $ (51,618) $ 81,669 $ 25,695 $
5,071 $ 66,068 $
2,966 $ 69,034
Common stock issued under stock plans
Purchase of common stock
Net income attributable to AIG or noncontrolling
interests
Dividends on preferred stock ($1,462.50 per share)
Dividends on common stock ($1.28 per share)
Other comprehensive loss
Net increase (decrease) due to divestitures and
acquisitions
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
294
(5,149)
—
—
—
—
—
—
—
—
(368)
—
—
—
—
—
(1,619)
—
—
233
—
—
10,227
(29)
(982)
—
—
—
—
(18)
—
—
—
—
—
(74)
(5,149)
—
—
(74)
(5,149)
10,227
1,046
11,273
(29)
(982)
—
—
(29)
(982)
(29,803)
(29,803)
(2,500)
(32,303)
2,116
—
—
—
497
—
—
215
1,117
1,614
133
(284)
6
133
(284)
221
Balance, December 31, 2022
$
485 $ 4,766 $ (56,473) $ 79,915 $ 34,893 $
(22,616) $ 40,970 $
2,484 $ 43,454
Common stock issued under stock plans
Purchase of common stock
Net income attributable to AIG or noncontrolling
interests
Dividends on preferred stock ($1,462.50 per share)
Dividends on common stock ($1.40 per share)
Other comprehensive income
Net increase (decrease) due to divestitures and
acquisitions
Contributions from noncontrolling interests
Distributions to noncontrolling interests
Other
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
298
(3,014)
—
—
—
—
—
—
—
—
(423)
—
—
—
—
—
(3,793)
—
—
111
—
—
3,643
(29)
(997)
—
—
—
—
6
—
—
—
—
—
(125)
(3,014)
—
—
(125)
(3,014)
3,643
235
3,878
(29)
(997)
—
—
(29)
(997)
4,641
4,641
1,299
5,940
3,938
—
—
—
145
—
—
117
2,524
2,669
49
(710)
69
49
(710)
186
Balance, December 31, 2023
$
485 $ 4,766 $ (59,189) $ 75,810 $ 37,516 $
(14,037) $ 45,351 $
5,950 $ 51,301
See accompanying Notes to Consolidated Financial Statements.
AIG | 2023 Form 10-K
133
American International Group, Inc.
Consolidated Statements of Cash Flows
(in millions)
Cash flows from operating activities:
Net income
Loss from discontinued operations
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income (loss):
Net (gains) losses on sales of securities available for sale and other assets
Net (gain) loss on divestitures and other
(Gain) loss on extinguishment of debt
Unrealized (gains) losses in earnings - net
Change in the fair value of market risk benefits in earnings, net
Equity in (income) loss from equity method investments, net of dividends or distributions
Depreciation and other amortization
Impairments of assets
Changes in operating assets and liabilities:
Insurance reserves
Premiums and other receivables and payables - net
Reinsurance assets, net
Capitalization of deferred policy acquisition costs
Current and deferred income taxes - net
Other, net
Total adjustments
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from (payments for)
Sales or distributions of:
Available for sale securities
Other securities
Other invested assets
Divestitures, net
Maturities of fixed maturity securities available for sale
Principal payments received on and sales of mortgage and other loans receivable
Purchases of:
Available for sale securities
Other securities
Other invested assets
Mortgage and other loans receivable
Net change in short-term investments
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from (payments for)
Policyholder contract deposits
Policyholder contract withdrawals
Issuance of long-term debt
Issuance of debt of consolidated investment entities
Repayments of long-term debt
Repayments of debt of consolidated investment entities
Repayments of delayed draw term loan agreement
Borrowings under delayed draw term loan agreement
Purchase of common stock
Dividends paid on preferred stock
Dividends paid on common stock
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and restricted cash
Net decrease in cash and restricted cash
Cash and restricted cash at beginning of year
Cash and restricted cash of held for sale assets
Cash and restricted cash at end of year
134
AIG | 2023 Form 10-K
Years Ended December 31,
2023
2022
2021
$
3,878 $
—
11,273 $
1
10,906
—
970
(643)
(37)
1,674
(348)
(7)
4,214
90
1,593
391
472
(5,419)
(1,003)
418
2,365
6,243
22,933
1,347
2,328
3,315
17,957
7,429
(40,466)
(1,581)
(2,189)
(10,137)
(6,637)
(1,320)
(7,021)
959
82
303
1,094
(1,481)
(164)
4,409
26
(3,837)
(10,222)
3,978
(4,722)
2,279
156
(7,140)
4,134
21,660
3,060
2,891
—
18,485
9,435
(38,885)
(3,714)
(2,346)
(14,364)
595
(443)
(3,626)
33,015
(27,957)
1,982
225
(2,304)
(606)
(1,250)
—
(2,961)
(29)
(997)
1,664
782
(13)
(9)
2,216
(3)
2,204 $
26,582
(20,722)
7,477
933
(9,455)
(1,251)
—
1,500
(5,200)
(29)
(982)
545
(602)
(117)
(211)
2,427
—
2,216 $
$
(2,099)
(3,044)
389
(873)
(1,427)
3
4,542
46
4,472
(724)
(1,044)
(4,969)
1,579
(1,534)
(4,683)
6,223
26,098
975
6,258
4,683
34,765
8,267
(74,204)
(2,034)
(3,168)
(9,013)
5,088
(995)
(3,280)
25,480
(22,481)
107
4,338
(4,147)
(4,494)
—
—
(2,592)
(29)
(1,083)
1,222
(3,679)
(67)
(803)
3,230
—
2,427
American International Group, Inc.
Consolidated Statements of Cash Flows (continued)
Supplementary Disclosure of Consolidated Cash Flow Information
(in millions)
Cash
Restricted cash included in Short-term investments*
Restricted cash included in Other assets*
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows
Cash paid during the period for:
Interest
Taxes
Non-cash investing activities:
Fixed maturity securities available for sale received in connection with pension risk transfer
transactions
Fixed maturity securities and other invested assets received in connection with reinsurance
transactions
Fixed maturity securities and other invested assets transferred in connection with reinsurance
transactions
Non-cash consideration received from sale of Validus Re
Non-cash financing activities:
Interest credited to policyholder contract deposits included in financing activities
Fee income debited to policyholder contract deposits included in financing activities
Years Ended December 31,
2023
2022
$
2,155
$
2,043
$
4
45
140
33
2021
2,198
197
32
$
$
$
$
$
$
$
$
$
2,204
$
2,216
$
2,427
1,059
984
$
$
1,127
746
$
$
1,348
862
4,317
$
1,121
$
2,284
110
$
110
$
161
(838) $
$
290
(224) $
$
—
(837)
—
$
4,501
(2,122) $
$
3,676
(1,694) $
3,642
(1,690)
*
Includes funds held for tax sharing payments to AIG Parent, security deposits, and replacement reserve deposits related to real estate.
See accompanying Notes to Consolidated Financial Statements.
AIG | 2023 Form 10-K
135
ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation
1. Basis of Presentation
American International Group, Inc. (AIG) is a leading global insurance organization. AIG provides insurance solutions that help
businesses and individuals in approximately 190 countries and jurisdictions protect their assets and manage risks through AIG
operations and network partners. Unless the context indicates otherwise, the terms “AIG,” “we,” “us,” “our” or "the Company" mean
American International Group, Inc. and its consolidated subsidiaries, and the term “AIG Parent” means American International Group,
Inc. and not any of its consolidated subsidiaries.
The consolidated financial statements include the accounts of AIG Parent, our controlled subsidiaries (generally through a greater
than 50 percent ownership of voting rights and voting interests), and variable interest entities (VIEs) of which we are the primary
beneficiary. Equity investments in entities that we do not consolidate, including corporate entities in which we have significant
influence and partnership and partnership-like entities in which we have more than minor influence over the operating and financial
policies, are accounted for under the equity method unless we have elected the fair value option.
Prior to the fourth quarter ending December 31, 2022, certain of our foreign property and casualty subsidiaries reported on the basis
of a fiscal year ending November 30. The effect on our consolidated financial condition and results of operations of all material events
occurring at these subsidiaries from November 30 through December 31 of the periods previously presented in these Consolidated
Financial Statements was considered for adjustment and/or disclosure.
Effective with the fourth quarter of the year ended December 31, 2022, the foreign property and casualty subsidiaries now report on a
calendar year ending December 31. The elimination of a one-month reporting lag of a subsidiary is considered a change in accounting
principle. We believe this change in accounting principle is preferable given that it aligns the reporting dates with other consolidated
entities, which allows for a timelier and more consistent basis of reporting within our Consolidated Financial Statements. A change in
accounting principle requires retrospective application. However, we determined that the effect of not retroactively applying this
change was not material to our Consolidated Financial Statements for the current and prior periods. Therefore, we reported the
cumulative effect of the change in accounting principle within the Consolidated Statements of Income (Loss) for the year ended
December 31, 2022 and did not retrospectively apply the effects of this change to prior periods. The adoption impact was an increase
to net income of $100 million for the year ended December 31, 2022.
We adopted the Financial Accounting Standards Board's (FASB) targeted improvements to the accounting for long-duration contracts
(the standard or LDTI) on January 1, 2023 with a transition date of January 1, 2021 (Transition Date). In accordance with the
transition guidance in the standard, we updated our prior period Consolidated Financial Statements presented herein to reflect LDTI.
For additional detail, see Note 2.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (U.S. GAAP). All material intercompany accounts and transactions have been eliminated.
SALES/DISPOSALS OF ASSETS AND BUSINESSES
AIG Life Limited
On September 25, 2023, Corebridge Financial, Inc. (Corebridge) announced that it entered into a definitive agreement to sell AIG Life
Limited (AIG Life) to Aviva plc for £460 million in cash, subject to certain adjustments. The sale of AIG Life is expected to close in the
first half of 2024, subject to regulatory approvals and other customary closing conditions. For further details on this transaction, see
Note 4.
Laya Healthcare Limited
On October 31, 2023, Corebridge completed the sale of Laya Healthcare Limited (Laya) to AXA and received gross proceeds of
€691 million ($731 million), resulting in a pre-tax gain of $652 million.
Validus Re
On November 1, 2023, AIG completed the sale of Validus Reinsurance, Ltd. (Validus Re), including AlphaCat Managers Ltd. and the
Talbot Treaty reinsurance business, to RenaissanceRe Holdings Ltd. (RenaissanceRe) and received cash proceeds of $2.7 billion
from RenaissanceRe and 1.3 million shares of RenaissanceRe common stock valued at $290 million as of the closing date, resulting
in a pre-tax loss of $78 million. The results of Validus Re are reported in General Insurance.
Additionally, AIG agreed to retain 95 percent of the difference between (i) the reserves with respect to the business as of the closing
date of the sale for losses occurring prior to the closing date and (ii) the associated reserve development following the closing date
with respect to such losses. Any reserve development will be settled annually, commencing with the calendar year ending
136
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation
December 31, 2024. This arrangement stays in effect until the parties determine to terminate such arrangement (which they will re-
evaluate on an annual basis beginning 5 years after the closing date) or until all such liabilities of the acquired reinsurance business
have run off. The reserve cover is considered contingent consideration and was recognized at fair value of $130 million when the sale
closed.
On September 4, 2023, AIG entered into an Adverse Development Cover Excess of Loss Agreement (the ADC Agreement) to hedge
the risk of adverse development pertaining to Validus Re’s reserves with Clarendon National Insurance Company, a wholly owned
subsidiary of Enstar Group Limited. Under the ADC Agreement, AIG will be reimbursed up to $400 million of adverse development for
all policies in force as of December 31, 2022 when paid losses exceed the baseline reserve balance of $3.043 billion. The premium
expensed in connection with the ADC Agreement was $80 million.
Crop Risk Services
On May 2, 2023, AIG announced that it reached an agreement to sell Crop Risk Services, Inc. (CRS) to American Financial Group,
Inc. (AFG) and in substance, AIG exited the crop business. The gross proceeds, before deducting commissions, are $234 million. On
July 3, 2023, the transaction closed, resulting in a pre-tax gain of $72 million for the year ended December 31, 2023.
Separation of Life and Retirement Business and Relationship with Blackstone Inc.
AIG owns 52.2 percent of the outstanding common stock of Corebridge as of December 31, 2023. Corebridge is the holding company
for AIG’s Life and Retirement business. AIG continues to consolidate Corebridge in AIG’s Consolidated Financial Statements. The
portion of equity interest of Corebridge that AIG does not own is reflected as noncontrolling interest in AIG’s Consolidated Financial
Statements.
In 2023, AIG closed on three secondary offerings and sold 159.75 million shares of Corebridge common stock. The aggregate gross
proceeds of the offerings to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were
approximately $2.9 billion. After consideration of underwriting discounts, commissions and other related expenses payable by AIG,
AIG recorded an increase of $332 million in Total AIG shareholders' equity.
In 2023, Corebridge repurchased 26.5 million shares of Corebridge common stock for an aggregate purchase price of $498 million, of
which 17.2 million shares were from AIG for an aggregate purchase price of $315 million. As a result, AIG recorded a decrease of
$40 million in Total AIG shareholders' equity.
On September 19, 2022, AIG closed on the initial public offering (IPO) of 80 million shares of Corebridge common stock at a public
offering price of $21.00 per share, representing 12.4 percent of Corebridge's common stock. The aggregate gross proceeds of the
offering to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were approximately
$1.7 billion. After consideration of underwriting discounts, commissions and other related expenses payable by AIG, AIG recorded an
increase of $497 million in Total AIG shareholders' equity, recalculated on an LDTI basis.
Blackstone Inc. (Blackstone) completed the acquisition of a 9.9 percent equity stake in Corebridge in November 2021. Blackstone is
required to hold its ownership interest in Corebridge, subject to exceptions permitting Blackstone to sell 25 percent, 67 percent and 75
percent of its ownership interest after the first, second and third anniversaries, respectively, of the closing of the Corebridge IPO
(September 19, 2023, 2024 and 2025, respectively), with the transfer restrictions terminating in full on September 19, 2027.
On December 15, 2021, AIG and Blackstone Real Estate Income Trust (BREIT), a long-term, perpetual capital vehicle affiliated with
Blackstone, completed the acquisition by BREIT of AIG’s interests in a U.S. affordable housing portfolio for $4.9 billion, in an all cash
transaction, resulting in a pre-tax gain of $3.0 billion. The historical results of the U.S. affordable housing portfolio were reported in our
Life and Retirement operating segments.
Sale of Certain AIG Life and Retirement Retail Mutual Funds Business
On July 16, 2021, AIG announced the closing of its sale of certain assets of Life and Retirement's Retail Mutual Funds business to
Touchstone Investments (Touchstone), an indirect wholly-owned subsidiary of Western & Southern Financial Group. This sale
consisted of the reorganization of twelve of the retail mutual funds managed by SunAmerica Asset Management, LLC (SAAMCo), a
Life and Retirement entity, into certain Touchstone funds. We received initial proceeds, and the twelve retail mutual funds managed by
SAAMCo, with $6.8 billion in assets, were reorganized into Touchstone funds. Additional consideration has been and may be earned
over a three-year period based on asset levels in certain reorganized funds.
Other Events
On December 14, 2022, AIG announced that its wholly-owned subsidiary, AIG Financial Products Corp. (AIGFP), filed a voluntary
petition to reorganize under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of
Delaware and filed a proposed plan of reorganization. The reorganization will not have a material impact on the consolidated balance
sheets of AIG or our respective businesses. AIGFP has no material operations or businesses and no employees. In conjunction with
the bankruptcy filing, AIGFP and its consolidated subsidiaries were deconsolidated from the results of AIG, resulting in a pre-tax loss
AIG | 2023 Form 10-K
137
of $114 million for the twelve months ended December 31, 2022, reported in Net gain (loss) on divestitures and other. In addition,
AIGFP and its subsidiaries were determined to be an unconsolidated variable interest entity.
ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation
USE OF ESTIMATES
The preparation of financial statements in accordance with U.S. GAAP requires the application of accounting policies that often
involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of estimates and
assumptions are considered our critical accounting estimates and are related to the determination of:
•
•
•
•
•
loss reserves;
valuation of future policy benefit liabilities and recognition of measurement gains and losses;
valuation of market risk benefits (MRBs) related to guaranteed benefit features of variable annuity, fixed annuity and fixed index
annuity products;
valuation of embedded derivative liabilities for fixed index annuity and index universal life products;
reinsurance assets, including the allowance for credit losses and disputes;
• goodwill impairment;
• allowance for credit losses on certain investments, primarily on loans and available for sale fixed maturity securities;
•
•
fair value measurements of certain financial assets and financial liabilities; and
income taxes, in particular the recoverability of our deferred tax asset and establishment of provisions for uncertain tax positions.
These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of
estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of
operations and cash flows could be materially affected.
2. Summary of Significant Accounting Policies
The following list identifies our significant accounting policies presented in other Notes to these Consolidated Financial Statements,
with a reference to the Note where a detailed description can be found:
Note 6. Investments
Note 11. Derivatives and Hedge Accounting
• Fixed maturity and equity securities
• Derivative assets and liabilities, at fair value
• Other invested assets
• Short-term investments
• Net investment income
• Net realized gains (losses)
• Allowance for credit losses
Note 7. Lending Activities
Note 12. Goodwill and Other Intangible Assets
Note 13. Insurance Liabilities
• Liability for unpaid losses and loss adjustment expenses
• Discounting of reserves
• Future policy benefits
• Policyholder contract deposits
• Mortgage and other loans receivable – net of allowance
• Other policyholder funds
Note 8. Reinsurance
Note 14. Market Risk Benefits
• Reinsurance assets – net of allowance
• Retroactive reinsurance
Note 16. Debt
• Long-term debt
Note 9. Deferred Policy Acquisition Costs
• Debt of consolidated investment entities
• Deferred policy acquisition costs
• Deferred sales inducements
Note 17. Contingencies, Commitments and Guarantees
• Legal contingencies
• Amortization of deferred policy acquisition costs
Note 19. Earnings Per Common Share (EPS)
Note 10. Variable Interest Entities
Note 23. Income Taxes
138
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
OTHER SIGNIFICANT ACCOUNTING POLICIES
Insurance revenues include premiums and policy fees. All premiums and policy fees are presented net of reinsurance, as applicable.
Premiums for short-duration contracts are recorded as written on the inception date of the policy. Premiums are earned primarily on a
pro rata basis over the term of the related coverage. Sales of extended services contracts are reflected as premiums written and
earned on a pro rata basis over the term of the related coverage. In addition, certain miscellaneous income is included as premiums
written and earned. The reserve for unearned premiums includes the portion of premiums written relating to the unexpired terms of
coverage. Reinsurance premiums are typically earned over the same period as the underlying policies or risks covered by the
contract. As a result, the earnings pattern of a reinsurance contract may extend up to 24 months, reflecting the inception dates of the
underlying policies throughout the year. Premiums from long-duration life products, other than universal and variable life contracts, are
recognized as revenues when due. Premiums from individual and group annuity contracts that are life contingent are recognized as
revenues when due.
For limited payment contracts, premiums are due over a significantly shorter period than the period over which benefits are provided.
The difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in
Policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits.
This Deferred Profit Liability (DPL) is recorded in the Consolidated Balance Sheets in Future policy benefits for life and accident and
health insurance contracts.
All reinsurance premiums ceded are recognized when due, following a ceded net premium ratio (NPR) methodology that also accrues
a proportionate amount of estimated benefits.
Reinsurance premiums for assumed business are estimated based on information received from ceding companies and reinsurers.
Any subsequent differences that arise regarding such estimates are recorded in the periods in which they are determined.
Amounts received as payment for investment-oriented contracts such as universal life, variable annuities, fixed annuities, and fixed
index annuities, are reported as deposits to Policyholder contract deposits or Separate account liabilities, as applicable. Revenues
from these contracts are recorded in policy fees and consist of policy charges for the cost of insurance, policy administration charges,
surrender charges and amortization of unearned revenue reserves (URR). Policy fees are recognized as revenues in the period in
which they are assessed against policyholders, unless the fees are designed to compensate AIG for services to be provided in the
future. Fees deferred as unearned revenue are amortized on a constant level basis over the estimated lives of the contracts,
consistent with the amortization of deferred acquisition costs. This URR is recorded in the Consolidated Balance Sheets in Other
policyholder funds.
Other income includes advisory fee income from the Life and Retirement broker dealer business.
Cash represents cash on hand and demand deposits.
Short-term investments include interest bearing investments, time deposits and other investments with remaining contractual life of
less than or equal to one year. Securities included within short-term investments are stated at estimated fair value, while other
investments included within short-term investments are stated at amortized cost, which approximates estimated fair value.
Premiums and other receivables – net of allowance for credit losses and disputes include premium balances receivable,
amounts due from agents and brokers and policyholders, receivables resulting from sales of securities that had not yet settled, cash
collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities and other receivables.
Deposit assets and liabilities We have entered into certain insurance and reinsurance contracts, primarily in our General Insurance
companies, that do not contain sufficient insurance risk to be accounted for as insurance or reinsurance. When we receive premiums
on such contracts, the premiums received, after deduction for certain related expenses, are recorded as deposits within Other
liabilities in the Consolidated Balance Sheets. Net proceeds of these deposits are invested and generate Net investment income.
When we pay premiums on such contracts, the premiums paid are recorded as deposits within Other assets in the Consolidated
Balance Sheets. The deposit asset or liability is adjusted as amounts are paid, consistent with the underlying contracts.
Other assets consist of deferred sales inducements (DSI), prepaid expenses, deposits, other deferred charges, real estate, other
fixed assets, capitalized software costs, goodwill, intangible assets other than goodwill, restricted cash, derivative assets, and accrued
interest income.
The cost of buildings and furniture and equipment is depreciated principally on the straight-line basis over their estimated useful lives
(maximum of 40 years for buildings and 10 years for furniture and fixtures). Expenditures for maintenance and repairs are charged to
income as incurred and expenditures for improvements are capitalized and depreciated. We periodically assess the carrying amount
of our real estate for purposes of determining any asset impairment. Capitalized software costs, which represent costs directly related
to obtaining, developing or upgrading internal use software, are capitalized and amortized using the straight-line method over a period
generally not exceeding ten years.
AIG | 2023 Form 10-K
139
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
Separate accounts represent funds for which investment income and investment gains and losses accrue directly to the
policyholders who bear the investment risk. Each account has specific investment objectives and the assets are carried at fair value.
The assets of each account are legally segregated and are not subject to claims that arise from any of our other businesses. The
liabilities for these accounts are equal to the account assets. Separate accounts may also include deposits for funds held under stable
value wrap funding agreements, although the majority of stable value wrap sales are measured based on the notional amount
included in assets under management and do not include the receipt of funds. For additional information on separate accounts, see
Note 15.
Other liabilities consist of other funds on deposit, other payables, securities sold under agreements to repurchase, securities sold but
not yet purchased, liabilities resulting from purchases of securities that have not yet settled, derivative liabilities, cash collateral
received from derivative counterparties that contractually cannot be netted against derivative assets, allowance for credit losses in
relation to off-balance sheet commitments and deferred gains on retroactive reinsurance agreements.
Foreign currency Financial statement accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency
assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each
respective subsidiary and the related translation adjustments are recorded as a separate component of Accumulated other
comprehensive income, net of any related taxes, in Total AIG shareholders’ equity. Income statement accounts expressed in
functional currencies are translated using average exchange rates during the period. Functional currencies are generally the
currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional
currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded
in income. The adjustments resulting from translation of financial statements of foreign entities operating in highly inflationary
economies are recorded in income.
Non-redeemable noncontrolling interest is the portion of equity (net assets) and net income (loss) in a subsidiary not attributable,
directly or indirectly, to AIG.
ACCOUNTING STANDARDS ADOPTED DURING 2023
Targeted Improvements to the Accounting for Long-Duration Contracts
In August 2018, the FASB issued an accounting standard update with the objective of making targeted improvements to the existing
recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity.
The Company adopted the standard on January 1, 2023 using the modified retrospective transition method relating to liabilities for
traditional and limited payment contracts and deferred policy acquisition costs. The Company also adopted the standard in relation to
MRBs on a full retrospective basis. As of the Transition Date, the impact of the adoption of the standard was a net decrease to
beginning Accumulated other comprehensive income (loss) (AOCI) of $2.2 billion and a net increase to beginning Retained earnings
of $933 million primarily driven by (1) changes related to MRBs in our Individual Retirement and Group Retirement operating
segments, including the impact of non-performance risk adjustments which reclassified the portion of the changes in fair value
attributable to non-performance risk from Retained earnings to AOCI, (2) changes to the discount rate used to measure the liability for
future policy benefits which most significantly impacted our Life Insurance and Institutional Markets operating segments, and (3) the
removal of balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments.
The accounting for the Fortitude Reinsurance Company Ltd. (Fortitude Re) reinsurance assets, including the discount rates, continued
to be calculated using the same methodology and assumptions as the direct policies, and therefore have been recalculated on an
LDTI basis. The accounting for reinsurance transactions between AIG and Fortitude Re structured as modified coinsurance (modco)
remained unchanged.
Market risk benefits: The standard requires the measurement of all MRBs (e.g., living benefit and death benefit guarantees
associated with variable annuities) associated with deposit (or account balance) contracts at fair value at each reporting period.
Changes in fair value compared to prior periods are recorded and presented separately within the income statement, with the
exception of our own credit risk changes (non-performance adjustments), which are recognized in Other comprehensive income (loss)
(OCI). MRBs impacted both Retained earnings and AOCI upon transition.
The accounting for MRBs primarily impacted our Individual Retirement and Group Retirement operating segments. For additional
disclosures about MRBs, see Note 14.
Discount rate assumption: The standard requires the discount rate assumption for the liability for future policy benefits to be
updated at the end of each reporting period using an upper-medium grade (low credit risk) fixed income instrument yield that
maximizes the use of observable market inputs. Upon transition, the Company had an adjustment to AOCI due to the fact that the
market upper-medium grade (low credit risk) interest rates as of the Transition Date differed from reserve interest accretion rates.
140
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
Following adoption of the standard, the impact of changes to discount rates are recognized through OCI. Changes resulting from
updating the discount rate each reporting period primarily impact term life insurance and other traditional life insurance products, as
well as pension risk transfer (PRT) and structured settlement products. For additional information on the discount rate assumption
under accounting for Long-Duration Contracts Standard, see Note 13.
Removal of balances related to changes in unrealized appreciation (depreciation) on investments: Under the standard, the
majority of balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments were eliminated.
In addition to the above, the standard also:
• Requires the review and, if necessary, update of future policy benefit assumptions at least annually for traditional and limited pay
long duration contracts, with the recognition and parenthetical presentation of any resulting re-measurement gain or loss in
Policyholder benefits and losses incurred (except for discount rate changes as noted above) in the Consolidated Statements of
Income (Loss). For additional information, see Note 13.
• Simplifies the amortization of DAC to a constant level basis over the expected term of the related contracts and no longer requires
an impairment test. For additional information, see Note 9.
•
Increases disclosures of disaggregated rollforwards of several balances, including but not limited to liabilities for future policy
benefits, deferred acquisition costs, account balances, MRBs, separate account liabilities and information about significant inputs,
judgments and methods used in measurement and changes thereto and impact of those changes.
The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 as well as
cross references to the applicable notes herein for additional information:
(in millions)
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(a)
Reinsurance assets - other, net of allowance for credit losses and disputes(a)
Deferred income taxes
Deferred policy acquisition costs(b)
Market risk benefit assets(c)
Other assets, net of allowance for credit losses(d)
Total assets
Future policy benefits for life and accident and health insurance contracts(e)
Policyholder contract deposits(e)
Market risk benefit liabilities(c)
Other policyholder funds(f)
Other liabilities(g)
Total liabilities
Retained earnings
Accumulated other comprehensive income (loss)
Total AIG Shareholders' equity
Total equity
Total liabilities and equity
(a) For additional information on the transition impacts associated with LDTI, see Note 8.
(b) For additional information on the transition impacts associated with LDTI, see Note 9.
(c) For additional information on the transition impacts associated with LDTI, see Note 14.
Pre-Adoption,
December 31,
2020
34,578
$
Cumulative Effect
Adjustment as of
January 1, 2021
7,666
$
Updated Balances
Post-Adoption
of LDTI
42,244
$
38,963
12,624
9,805
—
13,122
586,481
56,878
154,470
—
3,548
27,122
519,282
15,504
13,511
66,362
67,199
586,481
469
339
3,150
338
398
12,360
10,486
(6,247)
8,739
248
398
13,624
933
(2,197)
(1,264)
(1,264)
12,360
39,432
12,963
12,955
338
13,520
598,841
67,364
148,223
8,739
3,796
27,520
532,906
16,437
11,314
65,098
65,935
598,841
(d) Other assets include deferred sales inducement assets. For additional information on the transition impacts associated with LDTI, see Note 9.
(e) For additional information on the transition impacts associated with LDTI, see Note 13.
(f) Other policyholder funds include URR. For additional information on the transition impacts associated with LDTI, see Note 13.
(g) Other liabilities include deferred cost of reinsurance liabilities. For additional information on the transition impacts associated with LDTI, see Note 8.
AIG | 2023 Form 10-K
141
The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 on our
previously reported Consolidated Balance Sheets as of December 31, 2022:
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
(in millions)
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes
Reinsurance assets - other, net of allowance for credit losses and disputes
Deferred income taxes
Deferred policy acquisition costs
Market risk benefit assets
Other assets, net of allowance for credit losses
Total assets
Future policy benefits for life and accident and health insurance contracts
Policyholder contract deposits
Market risk benefit liabilities
Other policyholder funds
Other liabilities
Total liabilities
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total AIG Shareholders' equity
Non-redeemable noncontrolling interests
Total equity
Total liabilities and equity
As Previously
Reported
Effect of
Change
Updated Balances
Post-Adoption of LDTI
$
32,159
39,434
15,144
15,518
—
12,714
526,634
59,223
158,891
—
3,909
26,456
484,399
80,284
33,032
(22,092)
40,002
2,233
42,235
526,634
$
(1,408)
$
(463)
(340)
(2,661)
796
(330)
(4,406)
(7,309)
(2,907)
4,736
(446)
301
(5,625)
(369)
1,861
(524)
968
251
1,219
(4,406)
30,751
38,971
14,804
12,857
796
12,384
522,228
51,914
155,984
4,736
3,463
26,757
478,774
79,915
34,893
(22,616)
40,970
2,484
43,454
522,228
The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated
Statements of Income (Loss):
Year Ended December 31, 2022
Year Ended December 31, 2021
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
$ 31,857 $
(1) $
2,972
8,991
56,437
(59)
(1,927)
(1,987)
22,771
—
3,709
4,970
9,195
42,155
14,282
3,006
11,276
11,275
999
10,276
(595)
(958)
35
(413)
(73)
(2,004)
17
19
(2)
(2)
47
(49)
31,856
2,913
7,064
54,450
22,176
(958)
3,744
4,557
9,122
40,151
14,299
3,025
11,274
11,273
1,046
10,227
$ 31,259 $
3,051
2,151
52,057
24,388
—
3,557
4,573
8,790
39,958
12,099
2,176
9,923
9,923
26 $
(46)
120
100
(603)
(447)
13
(49)
(62)
(1,148)
1,248
265
983
983
535
9,388
4
979
31,285
3,005
2,271
52,157
23,785
(447)
3,570
4,524
8,728
38,810
13,347
2,441
10,906
10,906
539
10,367
10,247
(49)
10,198
9,359
979
10,338
13.16
13.01
(0.06)
(0.07)
13.10
12.94
10.95
10.82
1.15
1.13
12.10
11.95
(in millions, except per common share data)
Revenues:
Premiums
Policy fees
Total net realized gains (losses)
Total revenues
Benefits, losses and expenses:
Policyholder benefits and losses incurred
Change in the fair value of market risk benefits, net
Interest credited to policyholder account balances
Amortization of deferred acquisition costs
General operating and other expenses
Total benefits, losses and expenses
Income from continuing operations before income tax
expense (benefit)
Income tax expense
Income (loss) from continuing operations
Net income (loss)
Net income from continuing operations attributable to
noncontrolling interests
Net income (loss) attributable to AIG
Net income (loss) attributable to AIG common
shareholders
Income (loss) per common share attributable to AIG
common shareholders:
Common stock - Basic
Common stock - Diluted
142
AIG | 2023 Form 10-K
The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated
Statements of Comprehensive Income (Loss):
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
(in millions)
Net income
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed
maturity securities on which allowance for credit losses
was taken
Change in unrealized appreciation (depreciation) of all other
investments
Change in fair value of market risk benefits attributable to
changes in our own credit risk
Change in the discount rates used to measure traditional
and limited payment long-duration insurance contracts
Change in foreign currency translation adjustments
Other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributable to
noncontrolling interests
Comprehensive income (loss) attributable to AIG
Year Ended December 31, 2022
Year Ended December 31, 2021
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
$ 11,275 $
(2) $
11,273
$
9,923 $
983 $
10,906
(87)
(7)
(94)
35
9
44
(32,775)
(5,633)
(38,408)
(6,001)
(1,150)
(7,151)
—
1,294
1,294
—
179
179
—
5,544
(514)
(99)
(33,402)
1,099
(22,127)
1,097
(1,584)
(20,543)
130
967
5,544
(613)
(32,303)
(21,030)
(1,454)
(19,576)
—
1,361
(187)
7
(5,830)
406
4,093
1,389
430
10
3,663
1,379
1,361
(180)
(5,424)
5,482
440
5,042
The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated
Statements of Cash Flows:
(in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Noncash revenues, expenses, gains and losses included in
income (loss):
Unrealized gains in earnings - net
Change in the fair value of market risk benefits in earnings, net
Depreciation and other amortization
Changes in operating assets and liabilities:
Insurance reserves
Premiums and other receivables and payables - net
Reinsurance assets, net
Capitalization of deferred policy acquisition costs
Current and deferred income taxes - net
Other, net
Total adjustments
Net cash provided by operating activities
Cash flows from financing activities:
Policyholder contract deposits
Net cash used in financing activities
Year Ended December 31, 2022
Year Ended December 31, 2021
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
As
Previously
Reported
Effect of
Change
Updated
Balances Post-
Adoption of LDTI
$ 11,275 $
(2) $
11,273
$
9,923 $
983 $
10,906
(1,392)
2,486
—
(1,481)
4,848
(439)
(2,332)
(1,505)
(10,193)
(29)
2,843
1,135
(4,649)
2,260
340
(7,069)
4,207
(73)
19
(184)
(71)
(73)
1,094
(1,481)
4,409
(3,837)
(10,222)
3,978
(4,722)
2,279
156
(7,140)
4,134
(1,889)
1,016
—
(1,427)
4,633
(91)
5,127
(655)
(655)
(1,241)
(4,906)
1,314
(1,322)
(3,644)
6,279
(69)
197
(63)
265
(212)
(1,039)
(56)
(873)
(1,427)
4,542
4,472
(724)
(1,044)
(4,969)
1,579
(1,534)
(4,683)
6,223
26,508
(676)
74
74
26,582
(602)
25,424
(3,735)
56
56
25,480
(3,679)
Troubled Debt Restructuring and Vintage Disclosures
In March 2022, the FASB issued an accounting standard update that eliminates the accounting guidance for troubled debt
restructurings for creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs
by year of origination. The standard also updates the requirements for accounting for credit losses by adding enhanced disclosures
for creditors related to loan refinancings and restructurings for borrowers experiencing financial difficulty. The Company adopted the
standard prospectively as of January 1, 2023 and the standard did not have a material impact on our reported consolidated financial
condition, results of operations, or cash flows. For the updated required disclosures, see Note 7.
AIG | 2023 Form 10-K
143
ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies
FUTURE APPLICATION OF ACCOUNTING STANDARDS
Income Tax
In December 2023, the FASB issued an accounting standard update to address improvements to income tax disclosures. The
standard requires disaggregated information about a company’s effective tax rate reconciliation as well as information on income
taxes paid. The standard is effective for public companies for annual periods beginning after December 15, 2024, with early adoption
permitted. The standard will be applied on a prospective basis with the option to apply the standard retrospectively. We are assessing
the impact of this standard.
Segment Reporting
In November 2023, the FASB issued an accounting standard update to address improvements to reportable segment disclosures. The
standard primarily requires the following disclosure on an annual and interim basis: (i) significant segment expenses that are regularly
provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss; and
(ii) other segment items and description of its composition. The standard also requires current annual disclosures about a reportable
segment's profits or losses and assets to be disclosed in interim periods and the title and position of the CODM with an explanation of
how the CODM uses the reported measure(s) of segment profits or losses in assessing segment performance. The guidance is
effective for public companies for fiscal years beginning after December 15, 2023 and interim periods in fiscal years within fiscal years
beginning after December 15, 2024, with early adoption permitted. The amendment is applied retrospectively to all prior periods
presented. We are assessing the impact of this standard.
Fair Value Measurement
On June 30, 2022, the FASB issued an accounting standards update to address diversity in practice by clarifying that a contractual
sale restriction should not be considered in the measurement of the fair value of an equity security. It also requires entities with
investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about
such securities. The guidance is effective for public companies for fiscal years beginning after December 15, 2023 and interim periods
within those years, with early adoption permitted. For entities other than investment companies, the accounting standards update
applies prospectively, with any adjustments resulting from adoption recognized in earnings on the date of adoption. We are assessing
the impact of this standard.
3. Segment Information
We report our results of operations consistent with the manner in which our chief operating decision makers review the business to
assess performance and allocate resources, as follows:
GENERAL INSURANCE
General Insurance business is presented as two operating segments:
• North America – consists of insurance businesses in the United States, Canada and Bermuda, and our global reinsurance
business, AIG Re.
•
International – consists of regional insurance businesses in Japan, the United Kingdom, Europe, Middle East and Africa (EMEA
region), Asia Pacific, Latin America and Caribbean, and China. International also includes the results of Talbot Holdings Ltd. as well
as AIG’s Global Specialty business.
North America and International operating segments consist of the following products:
– Commercial Lines – consists of Property, Liability, Financial Lines and Specialty.
– Personal Insurance – consists of Accident & Health and Personal Lines.
For further discussion on recent activity in the General Insurance business, see Note 1.
LIFE AND RETIREMENT
Life and Retirement business is presented as four operating segments:
•
Individual Retirement – consists of fixed annuities, fixed index annuities and variable annuities.
• Group Retirement – consists of record-keeping, plan administrative and compliance services, financial planning and advisory
solutions offered to employer-defined contribution plan participants, along with proprietary and non-proprietary annuities and
advisory and brokerage products offered outside of plans.
144
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information
• Life Insurance – primary products in the U.S. include term life and universal life insurance. International operations primarily
include distribution of life and health products in the UK and Ireland. Corebridge previously announced agreements to sell Laya
and AIG Life. The sale of Laya closed on October 31, 2023 and the AIG Life sale is expected to close in the first half of 2024.
•
Institutional Markets – consists of stable value wrap products, structured settlement and pension risk transfer annuities,
corporate- and bank-owned life insurance, high net worth products and guaranteed investment contracts (GICs).
For further discussion on the ongoing separation of the Life and Retirement business from AIG and other recent activity, see Note 1.
OTHER OPERATIONS
Other Operations primarily consists of income from assets held by AIG Parent and other corporate subsidiaries, deferred tax assets
related to tax attributes, corporate expenses and intercompany eliminations, our institutional asset management business and results
of our consolidated investment entities, General Insurance portfolios in run-off as well as the historical results of our legacy insurance
lines ceded to Fortitude Re.
SEGMENT RESULTS
We evaluate segment performance based on adjusted revenues and adjusted pre-tax income (loss). Adjusted revenues and adjusted
pre-tax income (loss) are derived by excluding certain items from total revenues and pre-tax income (loss), respectively. These items
generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or
operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we
believe to be common to the industry. Legal entities are attributed to each segment based upon the predominance of activity in that
legal entity. For the items excluded from adjusted revenues and adjusted pre-tax income (loss), see the table below.
The following table presents AIG’s continuing operations by operating segment:
(in millions)
2023
General Insurance
North America
International
Net investment income
Total General Insurance
Life and Retirement
Individual Retirement
Group Retirement
Life Insurance
Institutional Markets
Total Life and Retirement
Other Operations
Adjusted
Revenues
Net
Investment
Income
Interest
Expense
Amortization
of DAC
Adjusted
Pre-tax
Income
(Loss)
$
— $
—
—
—
1,671 $
1,952
—
3,623
1,207 (a)
1,142 (a)
3,022
5,371
$ 11,921
13,170
3,022 $
28,113
6,264
2,734
5,092
7,391
21,481
3,022
3,022
4,917
1,999
1,283
1,587
9,786
2
1
—
1
4
567
82
403
9
1,061
—
—
—
4,684
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,310
758
358
379
3,805
(1,765)
(10)
(1,775)
7,401
(16)
(2)
6
94
—
37
1,544
(295)
(2,007)
(2,496)
643
(1)
62
(195)
AIG | 2023 Form 10-K
145
Other Operations before consolidation and eliminations
AIG consolidation and eliminations
Total Other Operations
Total
Reconciling items:
381
(6)
375
49,969
287
(1)
286
13,094
1,107
(6)
1,101
1,105
Changes in fair value of securities used to hedge guaranteed living benefits
Change in the fair value of market risk benefits, net(b)
Changes in benefit reserves related to net realized gains (losses)
Changes in the fair value of equity securities
Other income (expense) - net
Gain (loss) on extinguishment of debt
Net investment income on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld embedded
derivative
Net realized gains (losses)(c)
Net gain (loss) on divestitures and other
Non-operating litigation reserves and settlements
Favorable prior year development and related amortization changes ceded
under retroactive reinsurance agreements
Net loss reserve discount benefit (charge)
55
—
—
94
(27)
—
1,544
(295)
(2,007)
(2,536)
—
1
—
—
55
—
—
94
31
—
1,544
—
—
(227)
—
—
—
—
—
—
—
—
31
—
—
—
—
—
—
—
—
—
(in millions)
Pension expense related to a one-time lump sum payment to former
employees
Integration and transaction costs associated with acquiring or divesting
businesses
Restructuring and other costs
Non-recurring costs related to regulatory or accounting changes
Net impact from elimination of international reporting lag(d)
ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information
Adjusted
Revenues
Net
Investment
Income
Interest
Expense
Amortization
of DAC
Adjusted
Pre-tax
Income
(Loss)
—
—
—
—
4
—
—
—
—
1
—
—
—
—
—
—
(84)
—
—
—
124
4,808 $
(252)
(553)
(40)
12
3,858
Revenues and pre-tax income
$ 46,802 $ 14,592 $ 1,136 $
(in millions)
2022
General Insurance
North America
International
Net investment income
Total General Insurance
Life and Retirement
Individual Retirement
Group Retirement
Life Insurance
Institutional Markets
Total Life and Retirement
Other Operations
Adjusted
Revenues
Net
Investment
Income
Interest
Expense
Amortization
of DAC
Adjusted
Pre-tax
Income
(Loss)
$ 12,071
13,269
$
— $
—
1,585 $
1,948
2,382 $
2,382
27,722
2,382
5,325
2,744
5,364
4,160
17,593
3,898
2,005
1,393
1,051
8,347
—
—
11
6
4
2
23
—
3,533
519
80
415
7
648 (a)
1,400 (a)
2,382
4,430
1,676
786
521
334
1,021
3,317
Other Operations before consolidation and eliminations
AIG consolidation and eliminations
Total Other Operations
Total
Reconciling items:
Changes in fair value of securities used to hedge guaranteed living benefits
Change in the fair value of market risk benefits, net(b)
Changes in benefit reserves related to net realized gains (losses)
Changes in the fair value of equity securities
Other income (expense) - net
Gain (loss) on extinguishment of debt
Net investment income on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld embedded
derivative
Net realized gains (losses)(b)
Net gain (loss) on divestitures and other
Non-operating litigation reserves and settlements
Favorable prior year development and related amortization changes ceded
under retroactive reinsurance agreements
Net loss reserve discount benefit (charge)
Pension expense related to a one-time lump sum payment to former
employees
Integration and transaction costs associated with acquiring or divesting
businesses
Restructuring and other costs
Non-recurring costs related to regulatory or accounting changes
Net impact from elimination of international reporting lag(d)
827
(435)
392
45,707
714
(446)
268
10,997
1,131
(56)
1,075
1,098
5
(2)
3
4,557
(1,542)
(405)
(1,947)
5,800
55
—
—
(53)
(29)
—
943
(486)
7,481
(195)
—
49
—
—
—
—
—
—
978
55
—
—
(53)
28
—
943
—
—
(244)
—
—
—
—
—
—
—
—
41
—
—
—
—
28
—
—
—
—
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
30
958
14
(53)
—
(303)
943
(486)
7,481
(173)
(82)
41
160
703
(60)
(194)
(570)
(37)
127
Revenues and pre-tax income
$ 54,450 $ 11,767 $ 1,125 $
4,557 $ 14,299
146
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information
(in millions)
2021
General Insurance
North America
International
Net investment income
Total General Insurance
Life and Retirement
Individual Retirement
Group Retirement
Life Insurance
Institutional Markets
Total Life and Retirement
Other Operations
Other Operations before consolidation and eliminations
AIG consolidation and eliminations
Total Other Operations
Total
Reconciling items:
Changes in fair value of securities used to hedge guaranteed living benefits
Change in the fair value of market risk benefits, net(b)
Changes in benefit reserves related to net realized gains (losses)
Changes in the fair value of equity securities
Other income (expense) - net
Gain (loss) on extinguishment of debt
Net investment income on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld embedded
derivative
Net realized gains (losses)(b)
Net gain (loss) on divestitures and other
Non-operating litigation reserves and settlements
Favorable prior year development and related amortization changes ceded
under retroactive reinsurance agreements
Net loss reserve discount benefit (charge)
Pension expense related to a one-time lump sum payment to former
employees
Integration and transaction costs associated with acquiring or divesting
businesses
Restructuring and other costs
Non-recurring costs related to regulatory or accounting changes
Adjusted
Revenues
Net
Investment
Income
Interest
Expense
Amortization
of DAC
$ 10,989
14,068
$
— $
—
1,333 $
2,197
3,304 $
3,304
28,361
3,304
5,922
3,249
5,286
5,117
19,574
4,338
2,410
1,619
1,154
9,521
—
—
61
35
25
9
130
1,338
1,112
1,220
(991)
347
(996)
(65)
116
1,155
—
3,530
447
78
427
6
958
37
(1)
36
48,282
12,941
1,285
4,524
60
—
—
(237)
(24)
—
1,971
1,003
(603)
1,705
—
—
—
—
—
—
—
—
60
—
—
(237)
33
—
1,971
—
—
(156)
—
—
—
—
—
—
—
—
—
—
—
—
33
—
—
—
—
(13)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Adjusted
Pre-tax
Income
(Loss)
(47) (a)
1,102 (a)
3,304
4,359
2,297
1,258
453
546
4,554
(1,418)
(932)
(2,350)
6,563
61
447
(15)
(237)
—
(389)
1,971
1,003
(603)
1,744
3,044
(3)
186
193
(34)
(83)
—
—
(433)
(68)
4,524 $ 13,347
Revenues and pre-tax income
$ 52,157 $ 14,612 $ 1,305 $
(a) General Insurance North America’s and General Insurance International’s Adjusted pre-tax income does not include Net investment income as the investment portfolio
results are managed at the General Insurance level. Net investment income is shown separately as a component of General Insurance’s total Adjusted pre-tax income
results.
(b) Includes realized gains and losses on certain derivative instruments used for non-qualifying (economic) hedging.
(c) Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-
qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s
reinsurance obligations to AIG (Fortitude Re funds withheld assets).
(d) See Note 1.
AIG | 2023 Form 10-K
147
The following table presents AIG’s year-end identifiable assets and capital expenditures by segment:
ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information
(in millions)
General Insurance
Life and Retirement
Other Operations
Total Assets
Year-End Identifiable Assets
Capital Expenditures
2023
139,371
375,197
24,738
539,306
$
$
2022
147,083
352,694
22,451
522,228
$
$
$
$
2023
158
43
39
240
$
$
2022
68
102
40
210
The following table presents AIG’s consolidated total revenues and real estate and other fixed assets, net of accumulated
depreciation, by major geographic area:
(in millions)
North America
International
Consolidated
Total Revenues*
2022
2023
2021
Real Estate and Other Fixed Assets,
Net of Accumulated Depreciation
2023
2022
$
$
33,565 $
39,618 $
37,324
$
1,006 $
1,206 $
13,237
14,832
14,833
372
387
46,802 $
54,450 $
52,157
$
1,378 $
1,593 $
2021
1,230
610
1,840
* Revenues are generally reported according to the geographic location of the segment. International revenues consists of revenues from our General Insurance
International operating segment.
4. Held-For-Sale Classification
HELD-FOR-SALE CLASSIFICATION
We report and classify a business as held-for-sale (Held-For-Sale Business) when management has approved the sale or received
approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being
actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met. A Held-For-
Sale Business is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the
business exceeds its estimated fair value, a loss is recognized.
Assets and liabilities related to a Held-For-Sale Business are reported in Assets held for sale and Liabilities held for sale, respectively,
in our Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale. At December 31,
2023, the following businesses and assets were reported and classified as held-for-sale:
AIG Life Limited
To further simplify Corebridge’s business model, on September 25, 2023, Corebridge announced that it entered into a definitive
agreement to sell AIG Life to Aviva plc for £460 million in cash, subject to certain adjustments. The sale of AIG Life is expected to
close in the first half of 2024, subject to regulatory approvals and other customary closing conditions. The results of AIG Life are
reported in Life and Retirement.
Other
Other primarily consists of real estate.
148
AIG | 2023 Form 10-K
The following table summarizes the components of assets and liabilities held-for-sale on the Consolidated Balance Sheets
at December 31, 2023 after elimination of intercompany balances:
ITEM 8 | Notes to Consolidated Financial Statements | 4. Held-For-Sale Classification
(in millions)
Assets:
Bonds available for sale
Other invested assets
Short-term investments, including restricted cash of $0
Cash
Accrued investment income
Premiums and other receivables, net of allowance for credit losses and disputes
Reinsurance assets - other, net of allowance for credit losses and disputes
Deferred income taxes
Deferred policy acquisition costs
Other assets, net of allowance for credit losses(a)
Total assets held for sale
Liabilities:
AIG Life
Other
Total
$
167 $
14 $
181
—
11
3
3
116
899
47
814
83
67
1
—
—
9
3
—
—
31
67
12
3
3
125
902
47
814
114
$
2,143 $
125 $
2,268
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses
$
— $
19 $
Unearned premiums
Future policy benefits for life and accident and health insurance contracts
Other liabilities
Total liabilities held for sale
54
838
854
7
—
3
$
1,746 $
29 $
19
61
838
857
1,775
(a) Other assets, net of allowance for credit losses includes goodwill and other intangibles of $23 million and $3 million, respectively, for AIG Life.
5. Fair Value Measurements
FAIR VALUE MEASUREMENTS ON A RECURRING BASIS
We carry certain of our financial instruments at fair value. We define the fair value of a financial instrument as the amount that would
be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. We are responsible for the determination of the value of the investments carried at fair value and the supporting
methodologies and assumptions.
The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of
observable valuation inputs. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is
used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and
are measured at fair value using valuation models or other pricing techniques that require more judgment. Pricing observability is
affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and
not yet established, the characteristics specific to the transaction, liquidity and general market conditions.
Fair Value Hierarchy
Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are measured and classified in accordance with a fair
value hierarchy consisting of three “levels” based on the observability of valuation inputs:
• Level 1: Fair value measurements based on quoted prices (unadjusted) in active markets that we have the ability to access for
identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted
price for such instruments.
• Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset
or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are
observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
• Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both
observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances
for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we
must make certain assumptions about the inputs a hypothetical market participant would use to value that asset or liability.
AIG | 2023 Form 10-K
149
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level
in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input
that is significant to the fair value measurement in its entirety.
The following is a description of the valuation methodologies used for instruments carried at fair value. These methodologies are
applied to assets and liabilities across the levels discussed above, and the observability of the inputs used determines the appropriate
level in the fair value hierarchy for the respective asset or liability.
VALUATION METHODOLOGIES OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Incorporation of Credit Risk in Fair Value Measurements
• Our Own Credit Risk. Fair value measurements for certain liabilities incorporate our own credit risk by determining the explicit
cost for each counterparty to protect against its net credit exposure to us at the balance sheet date by reference to observable AIG
credit default swaps (CDS) or cash bond spreads. We calculate the effect of credit spread changes using discounted cash flow
techniques that incorporate current market interest rates. A derivative counterparty’s net credit exposure to us is determined based
on master netting agreements, when applicable, which take into consideration all derivative positions with us, as well as collateral
we post with the counterparty at the balance sheet date. For a description of how we incorporate our own credit risk in the
valuation of embedded derivatives related to certain annuity and life insurance products, see – Market Risk Benefits and
Embedded Derivatives within Policyholder Contract Deposits below.
• Counterparty Credit Risk. Fair value measurements for freestanding derivatives incorporate counterparty credit by determining
the explicit cost for us to protect against our net credit exposure to each counterparty at the balance sheet date by reference to
observable counterparty CDS spreads, when available. When not available, other directly or indirectly observable credit spreads
will be used to derive the best estimates of the counterparty spreads. Our net credit exposure to a counterparty is determined
based on master netting agreements, which take into consideration all derivative positions with the counterparty, as well as
collateral posted by the counterparty at the balance sheet date.
Fair values for fixed maturity securities based on observable market prices for identical or similar instruments implicitly incorporate
counterparty credit risk. Fair values for fixed maturity securities based on internal models incorporate counterparty credit risk by using
discount rates that take into consideration cash issuance spreads for similar instruments or other observable information.
For fair values measured based on internal models, the cost of credit protection is determined under a discounted present value
approach considering the market levels for single name CDS spreads for each specific counterparty, the mid-market value of the net
exposure (reflecting the amount of protection required) and the weighted average life of the net exposure. CDS spreads are provided
to us by an independent third party. We utilize an interest rate based on the appropriate benchmark curve to derive our discount rates.
While this approach does not explicitly consider all potential future behavior of the derivative transactions or potential future changes
in valuation inputs, we believe this approach provides a reasonable estimate of the fair value of the assets and liabilities, including
consideration of the impact of non-performance risk.
Fixed Maturity Securities
Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure fixed maturity
securities at fair value. Market price data is generally obtained from dealer markets.
We employ independent third-party valuation service providers to gather, analyze, and interpret market information to derive fair value
estimates for individual investments, based upon market-accepted methodologies and assumptions. The methodologies used by
these independent third-party valuation service providers are reviewed and understood by management, through periodic discussion
with and information provided by the independent third-party valuation service providers. In addition, as discussed further below,
control processes designed to ensure the accuracy of these values are applied to the fair values received from independent third-
party valuation service providers.
Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources
and, through the use of market-accepted valuation methodologies, which may utilize matrix pricing, financial models, accompanying
model inputs and various assumptions, provide a single fair value measurement for individual securities. The inputs used by the
valuation service providers include, but are not limited to, market prices from completed transactions for identical securities and
transactions for comparable securities, benchmark yields, interest rate yield curves, credit spreads, prepayment rates, default rates,
recovery assumptions, currency rates, quoted prices for similar securities and other market-observable information, as applicable. If
fair value is determined using financial models, these models generally take into account, among other things, market observable
information as of the measurement date as well as the specific attributes of the security being valued, including its term, interest rate,
credit rating, industry sector, and when applicable, collateral quality and other security or issuer-specific information. When market
transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly
increased.
150
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
We have control processes designed to ensure that the fair values received from independent third-party valuation service providers
are accurately recorded, that their data inputs and valuation techniques are appropriate and consistently applied and that the
assumptions used appear reasonable and consistent with the objective of determining fair value. We assess the reasonableness of
individual security values received from independent third-party valuation service providers through various analytical techniques, and
have procedures to escalate related questions internally and to the independent third-party valuation service providers for resolution.
To assess the degree of pricing consensus among various valuation service providers for specific asset types, we conduct
comparisons of prices received from available sources. We use these comparisons to establish a hierarchy for the fair values received
from independent third-party valuation service providers to be used for particular security classes. We also validate prices for selected
securities through reviews by members of management who have relevant expertise and who are independent of those charged with
executing investing transactions.
When our independent third-party valuation service providers are unable to obtain sufficient market observable information upon
which to estimate the fair value for a particular security, fair value is determined either by requesting brokers who are knowledgeable
about these securities to provide a price quote, which is generally non-binding, or by employing market accepted valuation models
internally or via our third party asset managers. Broker prices may be based on an income approach, which converts expected future
cash flows to a single present value amount, with specific consideration of inputs relevant to particular security types. For structured
securities, such inputs may include ratings, collateral types, geographic concentrations, underlying loan vintages, loan delinquencies
and defaults, loss severity assumptions, prepayments, and weighted average coupons and maturities. When the volume or level of
market activity for a security is limited, certain inputs used to determine fair value may not be observable in the market. Broker prices
may also be based on a market approach that considers recent transactions involving identical or similar securities. Fair values
provided by brokers are subject to similar control processes to those noted above for fair values from independent third-party
valuation service providers, including management reviews. For those corporate debt instruments (for example, private placements)
that are not traded in active markets or that are subject to transfer restrictions, valuations reflect illiquidity and non-transferability,
based on available market evidence. When observable price quotations are not available, fair value is determined based on
discounted cash flow models using discount rates based on credit spreads, yields or price levels of comparable securities, adjusted
for illiquidity and structure. Fair values determined internally or via our third party asset managers are also subject to management
review to ensure that valuation models and related inputs are reasonable.
The methodology above is relevant for all fixed maturity securities including residential mortgage backed securities (RMBS),
commercial mortgage backed securities (CMBS), collateralized loan obligations (CLO), other asset-backed securities (ABS) and fixed
maturity securities issued by government sponsored entities and corporate entities.
Equity Securities Traded in Active Markets
Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure equity
securities at fair value. Market price data is generally obtained from exchange or dealer markets.
Mortgage and Other Loans Receivable
We estimate the fair value of mortgage and other loans receivable that are measured at fair value by using dealer quotations,
discounted cash flow analyses and/or internal valuation models. The determination of fair value considers inputs such as interest rate,
maturity, the borrower’s creditworthiness, collateral, subordination, guarantees, past-due status, yield curves, credit curves,
prepayment rates, market pricing for comparable loans and other relevant factors.
Other Invested Assets
We initially estimate the fair value of investments in certain hedge funds, private equity funds and other investment partnerships by
reference to the transaction price. Subsequently, we generally obtain the fair value of these investments from net asset value
information provided by the general partner or manager of the investments, the financial statements of which are generally audited
annually. We consider observable market data and perform certain control procedures to validate the appropriateness of using the net
asset value as a fair value measurement. The fair values of other investments carried at fair value, such as direct private equity
holdings, are initially determined based on transaction price and are subsequently estimated based on available evidence such as
market transactions in similar instruments, other financing transactions of the issuer and other available financial information for the
issuer, with adjustments made to reflect illiquidity as appropriate.
Short-term Investments
For short-term investments that are measured at amortized cost, the carrying amounts of these assets approximate fair values
because of the relatively short period of time between origination and expected realization, and their limited exposure to credit risk.
Securities purchased under agreements to resell (reverse repurchase agreements) are generally treated as collateralized receivables.
We report certain receivables arising from securities purchased under agreements to resell as Short-term investments in the
Consolidated Balance Sheets. When these receivables are measured at fair value, we use market-observable interest rates to
determine fair value.
AIG | 2023 Form 10-K
151
Separate Account Assets
Separate account assets are composed primarily of registered and unregistered open-end mutual funds that generally trade daily and
are measured at fair value in the manner discussed above for equity securities traded in active markets.
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
Freestanding Derivatives
Derivative assets and liabilities can be exchange-traded or traded over-the-counter (OTC). We generally value exchange-traded
derivatives such as futures and options using quoted prices in active markets for identical derivatives at the balance sheet date.
OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs
to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources with reasonable
levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the
contractual terms of, and specific risks inherent in the instrument, as well as the availability of pricing information in the market. We
generally use similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms,
market prices and rates, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC
derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be corroborated by
observable market data by correlation or other means, and model selection does not involve significant management judgment.
For certain OTC derivatives that trade in less liquid markets, where we generally do not have corroborating market evidence to
support significant model inputs and cannot verify the model to market transactions, the transaction price may provide the best
estimate of fair value. Accordingly, when a pricing model is used to value such an instrument, the model is adjusted so the model
value at inception equals the transaction price. We will update valuation inputs in these models only when corroborated by evidence
such as similar market transactions, independent third-party valuation service providers and/or broker or dealer quotations, or other
empirical market data. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit
considerations. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s
best estimate is used.
We value our super senior credit default swap portfolio using prices obtained from vendors and/or counterparties. The valuation of the
super senior credit derivatives is complex because of the limited availability of market observable information due to the lack of trading
and price transparency in certain structured finance markets. Our valuation methodologies for the super senior CDS portfolio have
evolved over time in response to market conditions and the availability of market observable information. We have sought to calibrate
the methodologies to available market information and to review the assumptions of the methodologies on a regular basis.
Market Risk Benefits and Embedded Derivatives within Policyholder Contract Deposits
Certain variable annuity, fixed annuity and fixed index annuity contracts contain MRBs related to guaranteed benefit features that we
separate from the host contracts and account for at fair value, with certain changes recognized in earnings. MRBs are contracts or
contract features that provide protection to policyholders from other-than-nominal capital market risks and expose the insurance entity
to other-than-nominal capital market risks.
The fair value of MRBs contained in certain variable annuity, fixed annuity and fixed index annuity contracts is measured based on
policyholder behavior and capital market assumptions related to projected cash flows over the expected lives of the contracts. These
discounted cash flow projections primarily include benefits and related fees assessed, when applicable. In some instances, the
projected cash flows from fees may exceed projected cash flows related to benefit payments and therefore, at a point in time, the
carrying value of the MRBs may be in a net asset position. The projected cash flows incorporate best estimate assumptions for
policyholder behavior (including mortality, lapses, withdrawals and benefit utilization), along with an explicit risk margin to reflect a
market participant’s estimates of the fair value of projected cash flows and policyholder behavior. Estimates of future policyholder
behavior assumptions are subjective and are based primarily on our historical experience.
Because of the dynamic and complex nature of the projected cash flows with respect to MRBs in our variable annuity, fixed annuity,
and fixed index annuity contracts, risk neutral valuations are used, which are calibrated to observable interest rate and equity option
prices. Estimating the underlying cash flows for these products involves judgments regarding the capital market assumptions related
to expected market rates of return, market volatility, credit spreads, correlations of certain market variables, fund performance and
discount rates. Additionally, estimating the underlying cash flows for these products also involves judgments regarding policyholder
behavior. The portion of fees attributable to the fair value of expected benefit payments is included within the fair value measurement
of these MRBs, and related fees are classified in change in the fair value of MRBs, net, as earned, consistent with other changes in
the fair value of these MRBs. Any portion of the fees not attributed to the MRBs is excluded from the fair value measurement and
classified in policy fees as earned.
Option pricing models are used to estimate the fair value of embedded derivatives in our fixed index annuity and life contracts, taking
into account the capital market assumptions for future index growth rates, volatility of the index, future interest rates, and our ability to
adjust the participation rate and the cap on fixed index credited rates in light of market conditions and policyholder behavior
assumptions.
152
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
Projected cash flows are discounted using the interest rate swap curve (swap curve), which is viewed as being consistent with the
credit spreads for highly-rated financial institutions (S&P AA-rated or above). A swap curve shows the fixed-rate leg of a non-complex
swap against the floating rate (for example, Secured Overnight Financing Rate (SOFR)) leg of a related tenor. We also incorporate
our own risk of non-performance in the valuation of MRBs and embedded derivatives associated with variable annuity, fixed annuity,
fixed index annuity and life contracts. The non-performance risk adjustment (NPA) reflects a market participant’s view of our claims-
paying ability by incorporating an additional spread to the swap curve used to discount projected benefit cash flows. The NPA is
calculated by constructing forward rates based on a weighted average of observable corporate credit indices to approximate the
claims-paying ability rating of our insurance companies. The corporate credit indices are observable for the first 30 years. For years
30 to 50, the yield is derived using market observable yields. Yields for years 50 to 100 are extrapolated using a flat forward approach,
maintaining a constant forward spread through the period. MRBs are measured using a NPA that is a locked-in estimate of our
claims-paying ability at policy issue (locked-in NPA) as well as a NPA that reflects an estimate of our current claims-paying ability
(current NPA).
When MRBs are remeasured each period, both the interest rates and current NPA are updated. Changes in the swap curve and the
time value accretion of the at-issue NPA are recorded to net income while the difference between the MRBs measured using the at-
issue NPA and the current NPA is recorded to OCI. For embedded derivatives, changes in the interest rates and the period-over-
period change in the NPA are recorded to net income.
Fortitude Re funds withheld payable
The reinsurance transactions between AIG and Fortitude Re were structured as modco and loss portfolio transfer arrangements with
funds withheld (funds withheld). As a result of the deconsolidation of Fortitude Re, AIG has established a funds withheld payable to
Fortitude Re while simultaneously establishing a reinsurance asset representing reserves for the insurance coverage that Fortitude
Re has assumed. The funds withheld payable contains an embedded derivative and changes in fair value of the embedded derivative
related to the funds withheld payable are recognized in earnings through realized gains (losses). This embedded derivative is
considered a total return swap with contractual returns that are attributable to various assets and liabilities associated with these
reinsurance agreements.
Long-Term Debt
The fair value of non-structured liabilities is generally determined by using market prices from exchange or dealer markets, when
available, or discounting expected cash flows using the appropriate discount rate for the applicable maturity. We determine the fair
value of structured liabilities and hybrid financial instruments (where performance is linked to structured interest rates, inflation or
currency risks) using the appropriate derivative valuation methodology (described above) given the nature of the embedded risk
profile. In addition, adjustments are made to the valuations of both non-structured and structured liabilities to reflect our own
creditworthiness based on the methodology described in “Incorporation of Credit Risk in Fair Value Measurements – Our Own Credit
Risk” above.
Borrowings under obligations of guaranteed investment agreements (GIAs), which are guaranteed by us, are recorded at fair value
using discounted cash flow calculations based on interest rates currently being offered for similar contracts and our current market
observable implicit credit spread rates with maturities consistent with those remaining for the contracts being valued. Obligations may
be called at various times prior to maturity at the option of the counterparty.
Other Liabilities
Other liabilities measured at fair value include certain securities sold under agreements to repurchase and certain securities sold but
not yet purchased. Liabilities arising from securities sold under agreements to repurchase are generally treated as collateralized
borrowings. We estimate the fair value of liabilities arising under these agreements by using market-observable interest rates. This
methodology considers such factors as the coupon rate, yield curves and other relevant factors. Fair values for securities sold but not
yet purchased are based on current market prices.
AIG | 2023 Form 10-K
153
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS
The following table presents information about assets and liabilities measured at fair value on a recurring basis and
indicates the level of the fair value measurement based on the observability of the inputs used:
December 31, 2023
(in millions)
Assets:
Bonds available for sale:
Level 1
Level 2
Level 3
Counterparty
Netting(a)
Cash
Collateral
Total
U.S. government and government sponsored entities
$
35 $
5,581 $
— $
— $
— $
5,616
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
Equity securities
Other invested assets(b)
Derivative assets(c):
Interest rate contracts
Foreign exchange contracts
Equity contracts
Credit contracts
Other contracts
Counterparty netting and cash collateral
Total derivative assets
Short-term investments
Market risk benefit assets
Other assets(c)
Separate account assets
Total(d)
Liabilities:
Policyholder contract deposits
Market risk benefit liabilities
Derivative liabilities(c):
Interest rate contracts
Foreign exchange contracts
Equity contracts
Credit contracts
Other contracts
Counterparty netting and cash collateral
Total derivative liabilities
Fortitude Re funds withheld payable
Other liabilities
Long-term debt
Total
154
AIG | 2023 Form 10-K
—
9,816
233
12,213
136,753
12,804
13,495
—
—
—
—
847
7
1,679
7,640
633
13,959
16,038
268
204,621
26,844
—
—
—
—
—
—
—
632
—
—
—
7
—
—
—
7
2,635
—
—
87,814
90
37
2,697
105
244
512
3,685
40
155
2,826
1,235
1,187
8
—
—
5,256
8,137
—
—
3,191
1
—
211
158
17
1,169
1,556
56
2,070
460
1
825
33
13
—
1,332
—
912
243
—
$ 91,356 $ 225,085 $ 33,013 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,663
12,453
138,432
20,444
14,128
29,997
231,733
91
37
2,908
263
261
1,681
5,241
728
2,225
3,286
1,236
2,019
—
—
(3,864)
(3,864)
—
—
—
—
—
(2,220)
(2,220)
—
—
—
41
13
(6,084)
511
10,772
912
243
—
91,005
(3,864) $ (2,220) $ 343,370
—
$
— $
—
55 $
—
7,942 $
5,705
— $
—
— $
—
7,997
5,705
—
—
2
—
—
—
2
—
—
—
3,631
891
680
4
—
—
5,206
—
107
53
—
3
63
33
2
—
101
(1,226)
122
—
—
—
—
—
—
—
—
—
(3,864)
—
—
(1,050)
(3,864)
(1,050)
—
—
—
—
—
—
3,631
894
745
37
2
(4,914)
395
(1,226)
229
53
$
2 $
5,421 $ 12,644 $
(3,864) $ (1,050) $ 13,153
December 31, 2022
(in millions)
Assets:
Bonds available for sale:
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
Level 1
Level 2
Level 3
Counterparty
Netting(a)
Cash
Collateral
Total
U.S. government and government sponsored entities
$
25 $
6,594 $
— $
— $
— $
6,619
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
Equity securities
Other invested assets (b)
Derivative assets(c):
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit contracts
Other contracts
Counterparty netting and cash collateral
Total derivative assets
Short-term investments
Market risk benefit assets
Other assets(c)
Separate account assets
Total
Liabilities:
Policyholder contract deposits
Market risk benefit liabilities
Derivative liabilities(c):
Interest rate contracts
Foreign exchange contracts
Equity contracts
Credit contracts
Counterparty netting and cash collateral
Total derivative liabilities
Fortitude Re funds withheld payable
Other liabilities
Long-term debt
Total
—
11,275
158
13,326
134,992
11,264
13,267
—
—
—
—
824
1
2,847
7,553
926
10,356
12,748
183
201,074
24,899
—
—
—
—
—
—
—
518
—
1
—
11
—
—
—
—
12
2,821
—
—
81,655
111
66
1,976
113
303
389
2,958
18
145
3,410
1,844
132
9
—
—
—
5,395
2,887
—
—
3,198
—
—
416
173
28
910
1,527
39
2,075
311
—
285
—
32
14
—
642
—
796
107
—
$ 85,189 $ 215,675 $ 30,085 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,895)
(3,895)
—
—
—
—
(1,640)
(1,640)
—
—
12,099
13,485
137,839
18,817
14,193
23,104
226,156
111
66
2,392
286
331
1,299
4,485
575
2,220
3,722
1,844
428
9
32
14
(5,535)
514
5,708
796
—
—
107
84,853
(3,895) $ (1,640) $ 325,414
—
—
$
— $
—
41 $
—
5,367 $
4,736
— $
—
— $
—
5,408
4,736
—
—
2
—
—
2
—
—
4,838
1,138
10
9
—
5,995
—
—
—
—
14
32
—
46
(2,235)
112
—
2 $
56
6,092 $
—
8,026 $
$
—
—
—
—
(3,895)
(3,895)
—
—
—
—
—
—
—
(1,917)
(1,917)
—
—
—
(3,895) $ (1,917) $
4,838
1,138
26
41
(5,812)
231
(2,235)
112
56
8,308
(a) Represents netting of derivative exposures covered by qualifying master netting agreements.
(b) Excludes investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent), which totaled $9.5 billion and $9.8 billion as of
December 31, 2023 and 2022, respectively.
(c) Presented as part of Other assets and Other liabilities on the Consolidated Balance Sheets.
(d) Excludes $182 million of assets reclassified to Assets held for sale on the Consolidated Balance Sheets.
AIG | 2023 Form 10-K
155
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
CHANGES IN LEVEL 3 RECURRING FAIR VALUE MEASUREMENTS
The following tables present changes during the years ended December 31, 2023 and 2022 in Level 3 assets and liabilities
measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and
liabilities in the Consolidated Balance Sheets at December 31, 2023 and 2022:
MRBs and
Net
Realized
and
Unrealized
Gains
(Losses)
Included
in Income
Fair Value
Beginning
of Year
Purchases,
Sales,
Issuances
and
Settlements,
Net
Other
Comprehensive
Income (Loss)
Gross
Transfers
In
Gross
Transfers
Out
Other
Fair
Value
End of
Year
Changes in
Unrealized
Gains
(Losses)
Included in
Income on
Instruments
Held at End
of Year
Changes in
Unrealized Gains
(Losses)
Included in Other
Comprehensive
Income (Loss) for
Recurring Level 3
Instruments Held
at End of Year
$
824 $
(2) $
67 $
(31) $
— $
(11) $ — $
847 $
— $
1
2,847
7,553
926
12,748
24,899
—
416
173
28
910
1,527
39
2,075
107
1
(104)
430
(23)
228
530
—
(14)
9
(4)
68
59
1
(150)
—
1
24
12
(49)
408
463
—
—
—
—
—
—
—
11
—
(5)
(595)
(249)
(58)
2,070
11
(2)
—
7
818
(1,295)
(16)
1,679
33
223
675
(139)
—
7,640
(386)
—
633
(251)
160
16,038
1,132
1,760
(2,084)
144
26,844
1
—
(24)
(7)
153
123
27
90
136
—
—
—
—
5
5
10
44
—
—
—
(191)
—
—
—
—
—
1
211
158
17
(47)
80
1,169
(238)
80
1,556
(20)
(1)
56
—
—
—
2,070
—
243
—
—
—
—
—
—
—
(15)
(5)
—
(36)
(56)
1
(151)
—
$ 28,647 $
440 $
474 $
1,508 $ 1,819 $ (2,342) $ 223 $ 30,769 $
(206) $
35
1
(24)
(63)
(94)
243
98
—
—
—
—
—
—
—
—
—
98
MRBs and
Net
Realized
and
Unrealized
(Gains)
Losses
Included
in Income
Fair Value
Beginning
of Year
Purchases,
Sales,
Issuances
and
Settlements,
Net
Other
Comprehensive
Income (Loss)
Gross
Transfers
In
Gross
Transfers
Out
Other
Fair
Value
End of
Year
Changes in
Unrealized
Gains
(Losses)
Included in
Income on
Instruments
Held at End
of Year
Changes in
Unrealized Gains
(Losses)
Included in Other
Comprehensive
Income (Loss) for
Recurring Level 3
Instruments Held
at End of Year
(in millions)
December 31, 2023
Assets:
Bonds available for sale:
Obligations of states, municipalities and
political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Obligations of states, municipalities and
political subdivisions
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
Equity securities
Other invested assets
Other assets
Total(a)
(in millions)
Liabilities:
Policyholder contract deposits
$ 5,367 $
1,464 $
— $
1,111 $
— $
— $ — $ 7,942 $
(733) $
Derivative liabilities, net:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Other contracts
Total derivative liabilities, net(b)
Fortitude Re funds withheld payable
Other Liabilities
Total(c)
(311)
—
(271)
(14)
(596)
11
2
99
(64)
48
(2,235)
2,007
112
10
—
—
—
—
—
—
—
(160)
—
(590)
67
(683)
(998)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(460)
2
(762)
(11)
—
(1,231)
—
(1,226)
—
122
82
(2)
438
64
582
(872)
—
$ 2,648 $
3,529 $
— $
(570) $
— $
— $ — $ 5,607 $
(1,023) $
—
—
—
—
—
—
—
—
—
156
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
MRBs and
Net
Realized
and
Unrealized
Gains
(Losses)
Included
in Income
Fair Value
Beginning
of Year
Purchases,
Sales,
Issuances
and
Settlements,
Net
Other
Comprehensive
Income (Loss)
Gross
Transfers
In
Gross
Transfers
Out
Other
Fair
Value
End of
Year
Changes in
Unrealized
Gains
(Losses)
Included in
Income on
Instruments
Held at End
of Year
Changes in
Unrealized Gains
(Losses)
Included in Other
Comprehensive
Income (Loss) for
Recurring Level 3
Instruments Held
at End of Year
$ 1,431 $
1 $
(533) $
(104) $
40 $
(11) $ — $
824 $
— $
7
2,641
10,378
1,190
11,215
26,862
134
196
35
2,332
2,697
6
1,948
114
1
37
452
7
114
612
(5)
(39)
(6)
(233)
(283)
(1)
338
—
(162)
(1,658)
(3,907)
—
—
—
—
—
—
(22)
—
3
(238)
(10)
3
(3)
—
1
(87)
1,155
(661)
—
2,847
(1,319)
(1,511)
137
8
102
(455)
—
7,553
(348)
—
926
3,279
2,003
(2,205)
—
12,748
1,704
3,311
(3,683)
—
24,899
158
334
(205)
—
—
—
77
—
—
—
—
(84)
—
416
173
28
910
411
(289)
—
1,527
16
47
—
(9)
—
39
(210)
—
2,075
—
—
107
16
(1)
(1,182)
(1,009)
27
(26)
(7)
—
—
—
—
—
—
(2)
(38)
(4)
(156)
(200)
(1)
355
—
$ 31,627 $
666 $
(3,929) $
689 $ 3,785 $ (4,191) $ — $ 28,647 $
154 $
(2,683)
MRBs and
Net
Realized
and
Unrealized
(Gains)
Losses
Included
in Income
Fair Value
Beginning
of Year
Purchases,
Sales,
Issuances
and
Settlements,
Net
Other
Comprehensive
Income (Loss)
Gross
Transfers
In
Gross
Transfers
Out
Other
Fair
Value
End of
Year
Changes in
Unrealized
Gains
(Losses)
Included in
Income on
Instruments
Held at End
of Year
Changes in
Unrealized Gains
(Losses)
Included in Other
Comprehensive
Income (Loss) for
Recurring Level 3
Instruments Held
at End of Year
(in millions)
December 31, 2022
Assets:
Bonds available for sale:
Obligations of states, municipalities and
political subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
Equity securities
Other invested assets
Other assets
Total(a)
(in millions)
Liabilities:
Policyholder contract deposits
$ 5,572 $
(1,107) $
— $
902 $
— $
— $ — $ 5,367 $
1,363 $
Derivative liabilities, net:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Credit contracts
Other contracts
Total derivative liabilities, net(b)
—
(1)
(444)
30
(13)
(428)
9
—
487
3
(65)
434
Fortitude Re funds withheld payable
5,922
(7,481)
—
—
Other liabilities
Total(c)
—
—
—
—
—
—
—
—
(245)
(81)
1
(313)
(1)
64
(494)
(676)
112
—
—
—
—
(81)
—
—
6
—
—
—
(311)
—
(1)
—
(271)
(32)
—
—
(14)
(32)
(596)
—
—
5
—
—
—
(2,235)
7,729
—
112
—
71
(1)
(246)
(31)
65
(142)
$ 11,066 $
(8,154) $
— $
(156) $
(81) $
5 $
(32) $ 2,648 $
8,950 $
(a) Excludes MRB assets of $912 million at December 31, 2023 and $796 million at December 31, 2022. For additional information, see Note 14.
(b) Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.
(c) Excludes MRB liabilities of $5.7 billion at December 31, 2023 and $4.7 billion at December 31, 2022. For additional information, see Note 14.
AIG | 2023 Form 10-K
157
(223)
(1)
(217)
(504)
(133)
(1,605)
(2,683)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Market risk benefits and net realized and unrealized gains and losses included in income related to Level 3 assets and
liabilities shown above are reported in the Consolidated Statements of Income (Loss) as follows:
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
(in millions)
December 31, 2023
Assets:
Bonds available for sale
Other bond securities
Equity securities
Other invested assets
December 31, 2022
Assets:
Bonds available for sale
Other bond securities
Equity securities
Other invested assets
(in millions)
December 31, 2023
Liabilities:
Policyholder contract deposits(a)
Market risk benefit liabilities, net(b)
Derivative liabilities, net
Fortitude Re funds withheld payable
Other Liabilities
December 31, 2022
Liabilities:
Policyholder contract deposits(a)
Market risk benefit liabilities, net(b)
Derivative liabilities, net
Fortitude Re funds withheld payable
(a) Primarily embedded derivatives.
Net
Investment
Income
Net Realized
Gains (Losses)
Change in the fair
value of market
risk benefits, net(c)
Other
Income
$
592 $
59
1
(146)
694 $
(283)
(1)
346
(62) $
—
—
(4)
(82) $
—
—
(8)
— $
—
—
—
— $
—
—
—
— $
—
—
—
— $
—
—
—
Net
Investment
Income
Net Realized
(Gains) Losses
Change in the fair
value of market
risk benefits, net(c)
Other
Income
— $
—
—
—
—
— $
—
—
—
1,464 $
(3)
70
2,007
10
(1,107) $
—
520
(7,481)
— $
(1,125)
40
—
—
— $
(2,344)
(25)
—
— $
—
(62)
—
—
— $
—
(61)
—
$
$
$
Total
530
59
1
(150)
612
(283)
(1)
338
Total
1,464
(1,128)
48
2,007
10
(1,107)
(2,344)
434
(7,481)
(b) Market risk benefit assets and liabilities have been netted in the above table for presentation purposes only.
(c) The portion of the fair value change attributable to own credit risk is recognized in OCI.
The following table presents the gross components of purchases, sales, issuances and settlements, net, shown above, for
the years ended December 31, 2023 and 2022 related to Level 3 assets and liabilities in the Consolidated Balance Sheets:
(in millions)
December 31, 2023
Assets:
Bonds available for sale:
Purchases
Sales
Issuances
and
Settlements(a)
Purchases, Sales,
Issuances and
Settlements, Net(a)
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
$
1 $
—
229
(27) $
—
(34)
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Obligations of states, municipalities and political subdivisions
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
158
AIG | 2023 Form 10-K
935
10
3,040
4,215
3
204
6
—
269
482
(67)
(50)
(450)
(628)
(2)
—
—
(7)
(20)
(29)
(5) $
(5)
(790)
(1,117)
(18)
(520)
(2,455)
—
(204)
(30)
—
(96)
(330)
(31)
(5)
(595)
(249)
(58)
2,070
1,132
1
—
(24)
(7)
153
123
90
136
1,508
1,111
(683)
(998)
(570)
(104)
(10)
(87)
(1,511)
137
3,279
1,704
158
16
(1)
(1,182)
(1,009)
27
(26)
(7)
689
902
(494)
(676)
112
(156)
(in millions)
Equity securities
Other invested assets
Other assets
Total
Liabilities:
Policyholder contract deposits
Derivative liabilities, net
Fortitude Re funds withheld payable
Total
December 31, 2022
Assets:
Bonds available for sale:
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
Issuances
and
Settlements(a)
(3)
Purchases, Sales,
Issuances and
Settlements, Net(a)
27
Purchases
32
263
130
Sales
(2)
—
—
$
$
— $
(1,156)
—
1,428 $
28
—
$
(1,156) $
1,456 $
(173)
6
(317) $
445
(998)
(870) $
5,122 $
(659) $
(2,955) $
Obligations of states, municipalities and political subdivisions
$
6 $
(72) $
(38) $
Non-U.S. governments
Corporate Debt
RMBS
CMBS
CLO/ABS
Total bonds available for sale
Other bond securities:
Corporate debt
RMBS
CMBS
CLO/ABS
Total other bond securities
Equity securities
Other invested assets
Other assets
Total
Liabilities:
Policyholder contract deposits
Derivative liabilities, net
Fortitude Re funds withheld payable
Other liabilities
Total
—
143
391
195
3,655
4,390
26
62
—
750
838
27
682
—
5,937 $
— $
(687)
—
—
(687) $
—
(79)
(76)
(17)
(25)
(269)
—
(5)
(1)
(1,530)
(1,536)
(1)
—
—
(1,806) $
923 $
12
—
—
935 $
(10)
(151)
(1,826)
(41)
(351)
(2,417)
132
(41)
—
(402)
(311)
1
(708)
(7)
(3,442) $
(21) $
181
(676)
112
(404) $
$
$
$
(a) There were no issuances during the years ended December 31, 2023 and 2022.
Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables
above. As a result, the unrealized gains (losses) on instruments held at December 31, 2023 and 2022 may include changes in fair
value that were attributable to both observable (e.g., changes in market interest rates) and unobservable inputs (e.g., changes in
unobservable long-dated volatilities).
Transfers of Level 3 Assets and Liabilities
The Net realized and unrealized gains (losses) included in income (loss) or OCI as shown in the table above excludes $25 million and
$(128) million of net gains (losses) related to assets and liabilities transferred into Level 3 during the years ended December 31, 2023
and 2022, respectively, and includes $(34) million and $(129) million of net gains (losses) related to assets and liabilities transferred
out of Level 3 during the years ended December 31, 2023 and 2022, respectively.
Transfers of Level 3 Assets
During the years ended December 31, 2023 and 2022, transfers into Level 3 assets primarily included certain investments in private
placement corporate debt, RMBS, CMBS and CLO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3
assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based
on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated
market liquidity. The transfers of investments in RMBS, CMBS and CLO and certain ABS into Level 3 assets were due to diminished
market transparency and liquidity for individual security types.
AIG | 2023 Form 10-K
159
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
During the years ended December 31, 2023 and 2022, transfers out of Level 3 assets primarily included certain investments in private
placement corporate debt, RMBS, CMBS and CLO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3
assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based
on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated
market liquidity. The transfers of investments in RMBS, CMBS and CLO and certain ABS into Level 3 assets were due to diminished
market transparency and liquidity for individual security types.
Transfers of Level 3 Liabilities
There were no significant transfers of derivative or other liabilities into or out of Level 3 for the year ended December 31, 2023. During
the year ended December 31, 2022, transfers of derivatives into Level 3 were primarily due to increased long-dated European
swaption activity with SOFR tenors.
QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS
The table below presents information about the significant unobservable inputs used for recurring fair value measurements
for certain Level 3 instruments, and includes only those instruments for which information about the inputs is reasonably
available to us, such as data from independent third-party valuation service providers. Because input information from third-
parties with respect to certain Level 3 instruments (primarily CLO/ABS) may not be reasonably available to us, balances
shown below may not equal total amounts reported for such Level 3 assets and liabilities:
Fair Value at
December 31, 2023
Valuation
Technique
Unobservable Input(b)
Range
(Weighted Average)(c)
(in millions)
Assets:
Obligations of states, municipalities
and political subdivisions
Corporate debt
RMBS(a)
$
824 Discounted cash flow
1,803 Discounted cash flow
4,656 Discounted cash flow
Yield
Yield
Constant prepayment rate
Loss severity
Constant default rate
Yield
Yield
Yield
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Equity / interest rate correlation
NPA(g)
4.97% - 5.31% (5.14%)
5.19% - 8.48% (6.83%)
4.34% - 9.99% (7.17%)
33.56% - 87.59% (60.57%)
0.76% - 2.56% (1.66%)
6.13% - 7.41% (6.77%)
5.62% - 7.89% (6.76%)
5.62% - 17.85% (11.73%)
6.25% - 49.75%
0.16% - 28.80%
20.00% - 186.18%
38.25% - 160.01%
80.00% - 100.00%
0.00% - 30.00%
0.00% - 2.29%
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Equity / interest rate correlation
NPA(g)
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
NPA(g)
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
6.25% - 49.75%
0.16% - 28.80%
20.00% - 186.18%
38.25% - 160.01%
80.00% - 100.00%
0.00% - 30.00%
0.00% - 2.29%
0.20% - 15.75%
20.00% - 186.18%
40.26% - 168.43%
90.00% - 97.50%
0.00% - 2.29%
6.25% - 49.75%
0.20% - 50.00%
20.00% - 186.18%
24.00% - 146.00%
CLO/ABS(a)
CMBS
Market risk benefit assets
14,242 Discounted cash flow
587 Discounted cash flow
912 Discounted cash flow
Liabilities(d):
Market risk benefit liabilities:
Variable annuities guaranteed
benefits
2,174 Discounted cash flow
Fixed annuities guaranteed benefits
1,111 Discounted cash flow
Fixed index annuities guaranteed benefits
2,420 Discounted cash flow
160
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
(in millions)
Fair Value at
December 31, 2023
Valuation
Technique
Unobservable Input(b)
Utilization(h)
Option budget
Equity / interest rate correlation
NPA(g)
Embedded derivatives within
Policyholder contract deposits:
Index credits on fixed index annuities(i)
6,953 Discounted cash flow
Equity volatility
Index life
989 Discounted cash flow
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Option budget
Equity / interest rate correlation
NPA(g)
Base lapse rate
Mortality rate
Equity volatility
NPA(g)
Range
(Weighted Average)(c)
60.00% - 97.50%
0.00% - 6.00%
0.00% - 30.00%
0.00% - 2.29%
6.25% - 49.75%
0.20% - 50.00%
20.00% - 186.18%
24.00% - 146.00%
60.00% - 97.50%
0.00% - 6.00%
0.00% - 30.00%
0.00% - 2.29%
0.00% - 37.97%
0.00% - 100.00%
5.85% - 20.36%
0.00% - 2.29%
Fair Value at
December 31, 2022
Valuation
Technique
Unobservable Input(b)
Range
(Weighted Average)(c)
(in millions)
Assets:
Obligations of states, municipalities
and political subdivisions
Corporate debt
RMBS(a)
$
799 Discounted cash flow
2,527 Discounted cash flow
5,235 Discounted cash flow
CLO/ABS(a)
CMBS
Market risk benefit assets
7,503 Discounted cash flow
587 Discounted cash flow
796 Discounted cash flow
Liabilities(d):
Market risk benefit liabilities:
Variable annuities guaranteed
benefits
2,358 Discounted cash flow
Fixed annuities guaranteed benefits
680 Discounted cash flow
Fixed index annuities guaranteed benefits
1,698 Discounted cash flow
Yield
Yield
Constant prepayment rate
Loss severity
Constant default rate
Yield
Yield
Yield
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Equity / interest rate correlation
NPA(g)
5.28% - 5.94% (5.61%)
4.98% - 9.36% (7.17%)
4.89% - 10.49% (7.69%)
45.06% - 76.87% (60.97%)
0.82% - 2.72% (1.77%)
5.98% - 7.75% (6.87%)
6.00% - 7.97% (6.99%)
4.06% - 13.14% (8.60%)
6.45% - 50.75%
0.16% - 28.80%
20.00% - 186.18%
38.25% - 160.01%
80.00% - 100.00%
0.00% - 30.00%
0.00% - 2.03%
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Equity / interest rate correlation
NPA(g)
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
NPA(g)
Equity volatility
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
6.45% - 50.75%
0.16% - 28.80%
20.00% - 186.18%
38.25% - 160.01%
80.00% - 100.00%
0.00% - 30.00%
0.00% - 2.03%
0.20% - 15.75%
20.00% - 186.16%
40.26% - 168.43%
90.00% - 97.50%
0.00% - 2.03%
6.45% - 50.75%
0.20% - 50.00%
20.00% - 186.18%
24.00% - 180.00%
60.00% - 97.50%
AIG | 2023 Form 10-K
161
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
(in millions)
Fair Value at
December 31, 2022
Valuation
Technique
Unobservable Input(b)
Option budget
Equity / interest rate correlation
NPA(g)
Range
(Weighted Average)(c)
0.00% - 5.00%
0.00% - 30.00%
0.00% - 2.03%
Embedded derivatives within
Policyholder contract deposits:
Index credits on fixed index annuities(i)
4,657 Discounted cash flow
Equity volatility
Index life
710 Discounted cash flow
Base lapse rate
Dynamic lapse multiplier(e)
Mortality multiplier(e)(f)
Utilization(h)
Option budget
Equity / interest rate correlation
NPA(g)
Base lapse rate
Mortality rate
Equity volatility
NPA(g)
6.45% - 50.75%
0.20% - 50.00%
20.00% - 186.18%
24.00% - 180.00%
60.00% - 97.50%
0.00% - 5.00%
0.00% - 30.00%
0.00% - 2.03%
0.00% - 37.97%
0.00% - 100.00%
5.75% - 23.63%
0.00% - 2.03%
(a) Information received from third-party valuation service providers. The ranges of the unobservable inputs for constant prepayment rate, loss severity and constant default
rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CLO securitization vehicles and not
necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the
tranches purchased by us, because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price,
position in the waterfall, senior versus subordinated position and attachment points.
(b) Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.
(c) The weighted averaging for fixed maturity securities is based on the estimated fair value of the securities. Because the valuation methodology for embedded derivatives
with policyholder contract deposits and market risk benefits uses a range of inputs that vary at the contract level over the cash flow projection period, management
believes that presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.
(d) The Fortitude Re funds withheld payable has been excluded from the above table. As discussed in Note 8, the Fortitude Re funds withheld payable is created through
modco and funds withheld reinsurance arrangements where the investments supporting the reinsurance agreements are withheld by, and continue to reside on AIG’s
balance sheet. This embedded derivative is valued as a total return swap with reference to the fair value of the invested assets held by AIG. Accordingly, the
unobservable inputs utilized in the valuation of the embedded derivative are a component of the invested assets supporting the reinsurance agreements that are held on
AIG’s balance sheet.
(e) The ranges for these inputs vary due to the different guaranteed minimum withdrawal benefits (GMWB) product specification and policyholder characteristics across in-
force policies. Policyholder characteristics that affect these ranges include age, policy duration, and gender.
(f) Mortality inputs are shown as multipliers of the 2012 Individual Annuity Mortality Basic table.
(g) The NPA applied as a spread over risk-free curve for discounting.
(h) The partial withdrawal utilization unobservable input range shown applies only to policies with guaranteed minimum withdrawal benefit riders. The total embedded
derivative liability at December 31, 2023 and 2022 was approximately $1.5 billion and $1.1 billion, respectively.
(i) The fixed index annuities embedded derivative associated with index credits related to the contracts with guaranteed product features included in policyholder contract
deposits was $1.5 billion and $1.1 billion at December 31, 2023 and 2022, respectively.
The ranges of reported inputs for Obligations of states, municipalities and political subdivisions, Corporate debt, RMBS, CLO/ABS,
and CMBS valued using a discounted cash flow technique consist of one standard deviation in either direction from the
value-weighted average. The preceding table does not give effect to our risk management practices that might offset risks inherent in
these Level 3 assets and liabilities.
Interrelationships Between Unobservable Inputs
We consider unobservable inputs to be those for which market data is not available and that are developed using the best information
available to us about the assumptions that market participants would use when pricing the asset or liability. Relevant inputs vary
depending on the nature of the instrument being measured at fair value. The following paragraphs provide a general description of
significant unobservable inputs along with interrelationships between and among the significant unobservable inputs and their impact
on the fair value measurements. In practice, simultaneous changes in assumptions may not always have a linear effect on the inputs
discussed below. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been
included in the discussion below. For each of the individual relationships described below, the inverse relationship would also
generally apply.
Fixed Maturity Securities
The significant unobservable input used in the fair value measurement of fixed maturity securities is yield. The yield is affected by the
market movements in credit spreads and U.S. Treasury yields. The yield may be affected by other factors including constant
prepayment rates, loss severity, and constant default rates. In general, increases in the yield would decrease the fair value of
investments, and conversely, decreases in the yield would increase the fair value of investments.
162
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
MRBs and Embedded Derivatives within Policyholder Contract Deposits
For MRBs and embedded derivatives, the assumptions for unobservable inputs vary throughout the period over which cash flows are
projected for valuation purposes. The following are applicable unobservable inputs:
• Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available.
Increases in assumed volatility will generally increase the fair value of both the projected cash flows from rider fees as well as the
projected cash flows related to benefit payments. Therefore, the net change in the fair value of the liability may be either a
decrease or an increase, depending on the relative changes in projected rider fees and projected benefit payments.
• Equity and interest rate correlation estimates the relationship between changes in equity returns and interest rates in the economic
scenario generator used to value our MRBs. In general, a higher positive correlation assumes that equity markets and interest
rates move in a more correlated fashion, which generally increases the fair value of the liability. Only our fixed index annuities with
a GMWB rider are subject to the equity and interest correlation assumption. Other policies such as accumulation fixed index
annuity and life products do not use a correlation assumption.
• Base lapse rate assumptions are determined by company experience and judgment and are adjusted at the contract level using a
dynamic lapse function, which reduces the base lapse rate when the contract is in-the-money (when the contract holder’s
guaranteed value, as estimated by the company, is worth more than their underlying account value). Lapse rates are also generally
assumed to be lower in periods when a surrender charge applies. Increases in assumed lapse rates will generally decrease the fair
value of the liability as fewer policyholders would persist to collect guaranteed benefit amounts.
• Mortality rate assumptions, which vary by age and gender, are based on company experience and include a mortality improvement
assumption. Increases in assumed mortality rates will decrease the fair value of the GMWB liability, while lower mortality rate
assumptions will generally increase the fair value of the liability because guaranteed withdrawal payments will be made for a
longer period of time and generally exceed any decrease in guaranteed death benefits.
• Utilization assumptions estimate the timing when policyholders with a GMWB will elect to utilize their benefit and begin taking
withdrawals. The assumptions may vary by the type of guarantee, tax-qualified status, the contract’s withdrawal history and the
age of the policyholder. Utilization assumptions are based on company experience, which includes partial withdrawal behavior.
Increases in assumed utilization rates will generally increase the fair value of the liability.
• Non-performance or “own credit” risk adjustment used in the valuation of MRBs and embedded derivatives, which reflects a market
participant’s view of our claims-paying ability by incorporating a different spread (the NPA spread) to the curve used to discount
projected benefit cash flows. When corporate credit spreads widen, the change in the NPA spread generally reduces the fair value
of the MRBs and embedded derivatives, resulting in a gain in AOCI or Net realized gains (losses), respectively, and when
corporate credit spreads narrow or tighten, the change in the NPA spread generally increases the fair value of the MRBs and
embedded derivatives, resulting in a loss in AOCI or Net realized gains (losses), respectively.
• The projected cash flows incorporate best estimate assumptions for policyholder behavior (including mortality, lapses, withdrawals
and benefit utilization), along with an explicit risk margin to reflect a market participant’s estimates of the fair value of projected
cash flows and policyholder behavior. Estimates of future policyholder behavior assumptions are subjective and based primarily on
our historical experience.
• For embedded derivatives, option budgets estimate the expected long-term cost of options used to hedge exposures associated
with index price changes. The level of option budgets determines future costs of the options, which impacts the growth in account
value and the valuation of embedded derivatives.
Embedded Derivatives within Reinsurance Contracts
The fair value of embedded derivatives associated with funds withheld reinsurance contracts is determined based upon a total return
swap technique with reference to the fair value of the investments held by AIG related to AIG’s funds withheld payable. The fair value
of the underlying assets is generally based on market observable inputs using industry standard valuation techniques. The valuation
also requires certain significant inputs, which are generally not observable, and accordingly, the valuation is considered Level 3 in the
fair value hierarchy.
AIG | 2023 Form 10-K
163
INVESTMENTS IN CERTAIN ENTITIES CARRIED AT FAIR VALUE USING NET ASSET VALUE PER
SHARE
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
The following table includes information related to our investments in certain other invested assets, including private equity
funds, hedge funds and other alternative investments that calculate net asset value per share (or its equivalent). For these
investments, which are measured at fair value on a recurring basis, we use the net asset value per share to measure fair
value.
(in millions)
Investment Category
Private equity funds:
Leveraged buyout
Real assets
Venture capital
Growth equity
Mezzanine
Other
Investment Category Includes
Debt and/or equity investments made as part of a
transaction in which assets of mature companies are
acquired from the current shareholders, typically with the
use of financial leverage
Investments in real estate properties, agricultural and
infrastructure assets, including power plants and other
energy producing assets
Early-stage, high-potential, growth companies expected
to generate a return through an eventual realization
event, such as an initial public offering or sale of the
company
Funds that make investments in established companies
for the purpose of growing their businesses
Funds that make investments in the junior debt and
equity securities of leveraged companies
Includes distressed funds that invest in securities of
companies that are in default or under bankruptcy
protection, as well as funds that have multi- strategy, and
other strategies
Total private equity funds
Hedge funds:
Event-driven
Long-short
Macro
Other
Total hedge funds
Total
Securities of companies undergoing material structural
changes, including mergers, acquisitions and other
reorganizations
Securities that the manager believes are undervalued,
with corresponding short positions to hedge market risk
Investments that take long and short positions in
financial instruments based on a top-down view of
certain economic and capital market conditions
Includes investments held in funds that are less liquid, as
well as other strategies which allow for broader allocation
between public and private investments
December 31, 2023
December 31, 2022
Fair Value
Using NAV
Per Share (or
its equivalent)
Unfunded
Commitments
Fair Value
Using NAV
Per Share (or
its equivalent)
Unfunded
Commitments
$
3,617 $
2,313
$
3,146 $
2,448
1,814
782
1,851
840
270
680
292
141
117
98
2,125
8,798
297
3,748
18
549
69
74
710
—
—
—
—
—
272
732
598
1,829
8,428
92
696
414
192
1,394
183
60
142
391
4,064
—
—
—
—
—
$
9,508 $
3,748
$
9,822 $
4,064
Private equity fund investments included above are not redeemable, because distributions from the funds will be received when
underlying investments of the funds are liquidated. Private equity funds are generally expected to have 10-year lives at their inception,
but these lives may be extended at the fund manager’s discretion, typically in one-year or two-year increments.
The majority of our hedge fund investments are redeemable upon a single month or quarter’s notice, though redemption terms vary
from single, immediate withdrawals, to withdrawals staggered up to eight quarters. Some of the portfolio consists of illiquid run-off or
“side-pocket” positions whose liquidation horizons are uncertain and likely beyond a year after submission of the redemption notice.
164
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
FAIR VALUE OPTION
Under the fair value option, we may elect to measure at fair value financial assets and financial liabilities that are not otherwise
required to be carried at fair value. Subsequent changes in fair value for designated items are reported in earnings. We elect the fair
value option for certain hybrid securities given the complexity of bifurcating the economic components associated with the embedded
derivatives.
For additional information related to embedded derivatives, see Note 11.
Additionally, we elect the fair value option for certain alternative investments when such investments are eligible for this election. We
believe this measurement basis is consistent with the applicable accounting guidance used by the respective investment company
funds themselves.
For additional information on securities and other invested assets for which we have elected the fair value option, see Note 6.
The following table presents the gains or losses recorded related to the eligible instruments for which we elected the fair
value option:
Years Ended December 31,
(in millions)
Assets:
Other bond securities(a)
Alternative investments(b)
Liabilities:
Long-term debt(c)
Total gain (loss)
Gain (Loss)
2023
2022
2021
$
382 $
334
(822) $
224
(12)
1,650
3
$
719 $
225
(373) $
66
1,704
(a) Includes certain securities supporting the funds withheld arrangements with Fortitude Re. For additional information regarding the gains and losses for Other bond
securities, see Note 6. For additional information regarding the funds withheld arrangements with Fortitude Re, see Note 8.
(b) Includes certain hedge funds, private equity funds and other investment partnerships.
(c) Includes GIAs, notes, bonds and mortgages payable.
Interest income and dividend income on assets measured under the fair value option are recognized and included in Net investment
income in the Consolidated Statements of Income. Interest expense on liabilities measured under the fair value option is reported in
Other Income in the Consolidated Statements of Income.
For additional information about our policies for recognition, measurement, and disclosure of interest and dividend income, see
Note 6.
We calculate the effect of these credit spread changes using discounted cash flow techniques that incorporate current market interest
rates, our observable credit spreads on these liabilities and other factors that mitigate the risk of nonperformance such as cash
collateral posted.
The following table presents the difference between fair value and the aggregate contractual principal amount of long-term
debt for which the fair value option was elected:
(in millions)
Liabilities:
December 31, 2023
Outstanding
Principal Amount
Fair Value
Difference
Fair Value
December 31, 2022
Outstanding
Principal Amount
Difference
Long-term debt*
$
53 $
44 $
9
$
56 $
45 $
11
*
Includes GIAs, notes, bonds, loans and mortgages payable.
AIG | 2023 Form 10-K
165
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
FAIR VALUE MEASUREMENTS ON A NON-RECURRING BASIS
We measure the fair value of certain assets on a non-recurring basis, generally quarterly, annually or when events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include cost and equity-method
investments, commercial mortgage loans and commercial loans, investments in real estate and other fixed assets, goodwill and other
intangible assets.
For additional information about how we test various asset classes for impairment, see Notes 6 and 7.
Information regarding the estimation of fair value for financial instruments measured at fair value on a non-recurring basis is discussed
below.
Impairments for Other investments primarily relate to real estate investments as well as commercial loans and commercial mortgage
loans, the fair value determination for which is discussed above under the heading Valuation Methodologies of Financial Instruments
Measured at Fair Value.
The following table presents assets measured at fair value on a non-recurring basis at the time of impairment and the
related impairment charges recorded during the periods presented:
(in millions)
December 31, 2023
Other investments
Other assets
Total
December 31, 2022
Other investments
Total
Assets at Fair Value
Non-Recurring Basis
Impairment Charges
December 31,
Level 1
Level 2
Level 3
Total
2023
2022
2021
$
$
$
$
— $
—
— $
— $
— $
— $
—
— $
80 $
—
80 $
— $
— $
12 $
12 $
80
—
80
12
12
$
$
13 $
121
134 $
25 $
1
26 $
6
67
73
In addition to the assets presented in the table above, AIG had $163 million of loans held for sale which are carried at fair value at
December 31, 2022. There are no loans that were carried at fair value as of December 31, 2023. There are no associated impairment
charges.
FAIR VALUE INFORMATION ABOUT FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE
Information regarding the estimation of fair value for financial instruments not carried at fair value (excluding insurance contracts and
lease contracts) is discussed below:
• Mortgage and other loans receivable: Fair values of loans on commercial real estate and other loans receivable are estimated
for disclosure purposes using discounted cash flow calculations based on discount rates that we believe market participants would
use in determining the price that they would pay for such assets. For certain loans, our current incremental lending rates for similar
types of loans are used as the discount rates, because we believe this rate approximates the rates market participants would use.
Fair values of residential mortgage loans are generally determined based on market prices, using market based adjustments for
credit and servicing as appropriate. The fair values of policy loans are generally estimated based on unpaid principal amount as of
each reporting date. No consideration is given to credit risk because policy loans are effectively collateralized by the cash
surrender value of the policies.
• Other invested assets: The majority of the Other invested assets that are not measured at fair value represent time deposits with
the original maturity at purchase greater than one year. The fair value of long-term time deposits is determined using the expected
discounted future cash flow.
• Cash and short-term investments: The carrying amounts of these assets approximate fair values because of the relatively short
period of time between origination and expected realization, and their limited exposure to credit risk.
• Policyholder contract deposits associated with investment-type contracts: Fair values for policyholder contract deposits
associated with investment-type contracts not accounted for at fair value are estimated using discounted cash flow calculations
based on interest rates currently being offered for similar contracts with maturities consistent with those of the contracts being
valued. When no similar contracts are being offered, the discount rate is the appropriate swap rate (if available) or current risk-free
interest rate consistent with the currency in which the cash flows are denominated. To determine fair value, other factors include
current policyholder account values and related surrender charges and other assumptions include expectations about policyholder
behavior and an appropriate risk margin.
166
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements
• Other liabilities: The majority of Other liabilities that are financial instruments not measured at fair value represent secured
financing arrangements, including repurchase agreements. The carrying amounts of these liabilities approximate fair value,
because the financing arrangements are short-term and are secured by cash or other liquid collateral.
• Fortitude Re funds withheld payable: The funds withheld payable contains an embedded derivative and the changes in its fair
value are recognized in earnings each period. The difference between the total Fortitude Re funds withheld payable and the
embedded derivative represents the host contract.
• Short-term and Long-term debt and Debt of consolidated investment entities: Fair values of these obligations were
determined by reference to quoted market prices, when available and appropriate, or discounted cash flow calculations based
upon our current market-observable implicit-credit-spread rates for similar types of borrowings with maturities consistent with those
remaining for the debt being valued.
• Separate Account Liabilities – Investment Contracts: Only the portion of separate account liabilities related to products that are
investment contracts are reflected in the table below. Separate account liabilities are recorded at the amount credited to the
contract holder, which reflects the change in fair value of the corresponding separate account assets including contract holder
deposits less withdrawals and fees; therefore, carrying value approximates fair value.
The following table presents the carrying amounts and estimated fair values of our financial instruments not measured at
fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the
observability of the inputs used:
(in millions)
December 31, 2023
Assets:
Mortgage and other loans receivable
Other invested assets
Short-term investments(a)
Cash(b)
Other assets
Liabilities:
Policyholder contract deposits associated with
investment-type contracts
Fortitude Re funds withheld payable
Other liabilities(c)
Short-term and long-term debt
Debt of consolidated investment entities
Separate account liabilities - investment contracts
December 31, 2022
Assets:
Mortgage and other loans receivable
Other invested assets
Short-term investments
Cash
Other assets
Liabilities:
Policyholder contract deposits associated with
investment-type contracts
Fortitude Re funds withheld payable
Other liabilities
Short-term and long-term debt
Debt of consolidated investment entities
Separate account liabilities - investment contracts
Estimated Fair Value
Level 1
Level 2
Level 3
Total
Carrying
Value
$
— $
—
—
2,155
45
272 $
913
6,428
—
—
48,264 $
6
—
—
—
48,536 $
919
6,428
2,155
45
51,553
919
6,428
2,155
45
—
—
—
—
—
—
90
—
2,467
18,595
43
87,215
130,094
30,710
—
267
2,526
—
130,184
30,710
2,467
18,862
2,569
87,215
140,652
30,710
2,467
19,743
2,591
87,215
$
— $
—
—
2,043
24
89 $
848
6,668
—
9
45,755 $
6
—
—
—
45,844 $
854
6,668
2,043
33
49,442
854
6,668
2,043
33
—
—
—
—
—
—
119
—
3,101
19,328
3,055
80,649
129,174
32,618
—
275
2,478
—
129,293
32,618
3,101
19,603
5,533
80,649
137,086
32,618
3,101
21,243
5,880
80,649
(a) Excludes $11 million reclassified to Assets held for sale on the Consolidated Balance Sheets.
(b) Excludes $3 million reclassified to Assets held for sale on the Consolidated Balance Sheets.
(c) Excludes $45 million reclassified to Liabilities held for sale on the Consolidated Balance Sheets.
AIG | 2023 Form 10-K
167
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
6. Investments
FIXED MATURITY SECURITIES
Bonds held to maturity are carried at amortized cost when we have the ability and positive intent to hold these securities until maturity.
When we do not have the ability or positive intent to hold bonds until maturity, these securities are classified as available for sale or
the fair value option has been elected. None of our fixed maturity securities met the criteria for held to maturity classification at
December 31, 2023 or 2022.
Unrealized gains and losses from available for sale investments in fixed maturity securities carried at fair value were reported as a
separate component of AOCI, net of policy related amounts and deferred income taxes, in shareholders’ equity. Realized and
unrealized gains and losses from fixed maturity securities for which the fair value option has been elected are reflected in Net
investment income. Investments in fixed maturity securities are recorded on a trade-date basis.
Interest income is recognized using the effective yield method and reflects amortization of premium and accretion of discount.
Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their
estimated holding periods, until maturity, or call date, if applicable. For investments in certain structured securities, recognized yields
are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high
credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment
expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since
acquisition with a corresponding charge or credit to net investment income. For structured securities that are not high credit quality,
the structured securities yields are based on expected cash flows which take into account both expected credit losses and
prepayments.
An allowance for credit losses is not established upon initial recognition of the asset (unless the security is determined to be a
purchased credit deteriorated (PCD) asset which is discussed in more detail below). Subsequently, differences between actual and
expected cash flows and changes in expected cash flows are recognized as adjustments to the allowance for credit losses. Changes
that cannot be reflected as adjustments to the allowance for credit losses are accounted for as prospective adjustments to yield.
SECURITIES AVAILABLE FOR SALE
The following table presents the amortized cost and fair value of our available for sale securities:
(in millions)
December 31, 2023
Bonds available for sale:
U.S. government and government sponsored entities
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
Mortgage-backed, asset-backed and collateralized:
RMBS
CMBS
CLO/ABS
Total mortgage-backed, asset-backed and collateralized
Total bonds available for sale(b)
December 31, 2022
Bonds available for sale:
Amortized
Cost
Allowance
for Credit
Losses(a)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
5,885 $
11,387
13,668
154,674
20,875
15,379
31,167
67,421
$
253,035 $
— $
—
(3)
(90)
(35)
(34)
—
58 $
118
137
1,898
821
46
183
(327) $
(842)
(1,349)
(18,050)
5,616
10,663
12,453
138,432
(1,217)
(1,263)
(1,353)
20,444
14,128
29,997
(69)
(162) $
1,050
3,261 $
(3,833)
(24,401) $
64,569
231,733
U.S. government and government sponsored entities
$
7,094 $
— $
21 $
(496) $
6,619
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Corporate debt
Mortgage-backed, asset-backed and collateralized:
RMBS
CMBS
CLO/ABS
168
AIG | 2023 Form 10-K
13,195
15,133
160,242
19,584
15,610
25,135
—
(6)
(132)
(37)
(11)
—
99
91
1,152
807
14
38
(1,195)
(1,733)
(23,423)
(1,537)
(1,420)
(2,069)
12,099
13,485
137,839
18,817
14,193
23,104
(in millions)
Total mortgage-backed, asset-backed and collateralized
Total bonds available for sale(b)
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
Amortized
Cost
60,329
Allowance
for Credit
Losses(a)
(48)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
859
(5,026)
Fair
Value
56,114
$
255,993 $
(186) $
2,222 $
(31,873) $
226,156
(a) Represents the allowance for credit losses that has been recognized. Changes in the allowance for credit losses are recorded through Net realized gains (losses) and
are not recognized in OCI.
(b) At December 31, 2023 and 2022, the fair value of bonds available for sale held by us that were below investment grade or not rated totaled $17.1 billion or 7 percent
and $22.3 billion or 10 percent, respectively.
Securities Available for Sale in a Loss Position for Which No Allowance for Credit Loss Has Been Recorded
The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated
by major investment category and length of time that individual securities have been in a continuous unrealized loss
position for which no allowance for credit loss has been recorded:
(in millions)
December 31, 2023
Bonds available for sale:
Less than 12 Months
12 Months or More
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. government and government sponsored entities
Obligations of states, municipalities and political
$ 1,046 $
12 $ 1,550 $
315 $ 2,596 $
327
subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
1,994
1,901
15,483
4,154
2,864
6,965
133
168
5,218
7,483
709
7,212
1,175
9,384
1,936
93,649
16,076
109,132
288
219
202
7,246
8,192
13,436
880
11,400
1,027
1,151
11,056
20,401
842
1,343
18,012
1,168
1,246
1,353
Total bonds available for sale
$ 34,407 $
2,958 $ 136,774 $
21,333 $ 171,181 $
24,291
December 31, 2022
Bonds available for sale:
U.S. government and government sponsored entities
Obligations of states, municipalities and political
subdivisions
Non-U.S. governments
Corporate debt
RMBS
CMBS
CLO/ABS
$ 3,493 $
368 $ 1,816 $
128 $ 5,309 $
496
8,697
10,702
110,683
10,953
11,620
16,852
1,180
1,526
73
779
15
8,770
191
11,481
19,756
13,778
3,609
124,461
1,293
1,094
1,388
1,005
1,728
4,307
182
326
681
11,958
13,348
21,159
1,195
1,717
23,365
1,475
1,420
2,069
Total bonds available for sale
$ 173,000 $
26,605 $ 23,486 $
5,132 $ 196,486 $
31,737
At December 31, 2023, we held 27,930 individual fixed maturity securities that were in an unrealized loss position and for which no
allowance for credit losses has been recorded (including 22,663 individual fixed maturity securities that were in a continuous
unrealized loss position for 12 months or more). At December 31, 2022, we held 36,549 individual fixed maturity securities that were
in an unrealized loss position and for which no allowance for credit losses has been recorded (including 4,048 individual fixed maturity
securities that were in a continuous unrealized loss position for 12 months or more). We did not recognize the unrealized losses in
earnings on these fixed maturity securities at December 31, 2023 because it was determined that such losses were due to non-credit
factors. Additionally, we neither intend to sell the securities nor do we believe that it is more likely than not that we will be required to
sell these securities before recovery of their amortized cost basis. For fixed maturity securities with significant declines, we performed
fundamental credit analyses on a security-by-security basis, which included consideration of credit enhancements, liquidity position,
expected defaults, industry and sector analysis, forecasts and available market data.
AIG | 2023 Form 10-K
169
Contractual Maturities of Fixed Maturity Securities Available for Sale
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
The following table presents the amortized cost and fair value of fixed maturity securities available for sale by contractual
maturity:
December 31, 2023
(in millions)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed, asset-backed and collateralized
Total
Total Fixed Maturity Securities
Available for Sale
Amortized Cost,
Net of Allowance
$
7,963 $
47,489
40,869
89,200
67,352
$
252,873 $
Fair Value
7,860
46,165
38,202
74,937
64,569
231,733
Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations
with or without call or prepayment penalties.
The following table presents the gross realized gains and gross realized losses from sales or maturities of our available for
sale securities:
(in millions)
Fixed maturity securities
Years Ended December 31,
2023
2022
2021
Gross
Realized
Gains
Gross
Realized
Losses
Gross
Realized
Gains
Gross
Realized
Losses
Gross
Realized
Gains
Gross
Realized
Losses
$
267 $ 1,329
$
446 $
1,628
$
1,369 $
441
For the years ended December 31, 2023, 2022 and 2021, the aggregate fair value of available for sale securities sold was
$23.6 billion, $20.5 billion and $27.3 billion, respectively, which resulted in net realized gains (losses) of $(1.1) billion, $(1.2) billion and
$928 million, respectively. Included within the net realized gains (losses) are $(133) million, $(311) million and $717 million of net
realized gains (losses) for the years ended December 31, 2023, 2022 and 2021, respectively, which relate to Fortitude Re funds
withheld assets. These net realized gains (losses) are included in Net realized gains (losses) on Fortitude Re funds withheld assets.
OTHER SECURITIES MEASURED AT FAIR VALUE
The following table presents the fair value of fixed maturity securities measured at fair value based on our election of the fair
value option, which are reported in the other bond securities caption in the financial statements, and equity securities
measured at fair value:
(in millions)
Fixed maturity securities:
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
$
Corporate debt
Mortgage-backed, asset-backed and collateralized:
RMBS
CMBS
CLO/ABS and other collateralized
Total mortgage-backed, asset-backed and collateralized
Total fixed maturity securities
Equity securities
Total
$
December 31, 2023
December 31, 2022
Fair
Value
91
37
2,908
263
261
1,681
2,205
5,241
728
5,969
Percent
of Total
$
2 %
1
49
4
4
28
36
88
12
100 %
$
Fair
Value
111
66
2,392
286
331
1,299
1,916
4,485
575
5,060
Percent
of Total
2 %
1
47
6
7
26
39
89
11
100 %
170
AIG | 2023 Form 10-K
OTHER INVESTED ASSETS
The following table summarizes the carrying amounts of other invested assets:
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
(in millions)
Alternative investments(a)(b)
Investment real estate(c)
All other investments(d)
Total
December 31, 2023
11,320
2,237
2,660
16,217
$
$
December 31, 2022
11,809
2,153
1,991
15,953
$
$
(a) At December 31, 2023, included hedge funds of $0.7 billion and private equity funds of $10.6 billion. At December 31, 2022, included hedge funds of $1.4 billion and
private equity funds of $10.4 billion.
(b) The majority of our hedge fund investments are redeemable upon a single month or quarter’s notice, though redemption terms vary from single, immediate withdrawals,
to withdrawals staggered up to six quarters. Some of the portfolio consists of illiquid run-off or “side-pocket” positions whose liquidation horizons are uncertain and likely
beyond a year after submission of the redemption notice.
(c) Represents values net of accumulated depreciation. At December 31, 2023 and 2022, the accumulated depreciation was $853 million and $786 million, respectively.
(d) Includes AIG's ownership interest in Fortitude Group Holdings, LLC (FRL), and DaVinciRe Holdings Ltd, Class D (DVRH), which are recorded using the measurement
alternative for equity securities. Our investment in FRL totaled $156 million and $156 million at December 31, 2023 and 2022, respectively. Our investment in DVRH
totaled $300 million at December 31, 2023.
Other Invested Assets Carried at Fair Value
Certain hedge funds, private equity funds, and other investment partnerships for which we have elected the fair value option are
reported at fair value with changes in fair value recognized in Net investment income.
Other Invested Assets – Equity Method Investments
We account for hedge funds, private equity funds and other investment partnerships using the equity method of accounting unless our
interest is so minor that we may have virtually no influence over partnership operating and financial policies, or we have elected the
fair value option. Under the equity method of accounting, our carrying amount generally is our share of the net asset value of the
funds or the partnerships, and changes in our share of the net asset values are recorded in Net investment income. In applying the
equity method of accounting, we consistently use the most recently available financial information provided by the general partner or
manager of each of these investments. Hedge funds are reported as of the balance sheet date. Private equity funds are generally
reported on a one-quarter lag. The financial statements of these investees are generally audited annually. The carrying amount of
equity method investments totaled $5.5 billion and $6.0 billion as of December 31, 2023 and 2022, respectively, representing various
ownership percentages each period.
Summarized Financial Information of Equity Method Investees
The following is the aggregated summarized financial information of our equity method investees, including those for which
the fair value option has been elected:
Years Ended December 31,
(in millions)
Operating results:
Total revenues
Total expenses
Net income
At December 31,
(in millions)
Balance sheet:
Total assets
Total liabilities
Other Investments
2023
2022
2021
$
$
4,589 $
(2,212)
2,377 $
28,500 $
(2,789)
25,711 $
31,560
(2,241)
29,319
2023
2022
$
$
59,359 $
(5,893) $
134,435
(14,701)
Also included in Other invested assets are real estate held for investment. These investments are reported at cost, less depreciation
and are subject to impairment review, as discussed below.
AIG | 2023 Form 10-K
171
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
NET INVESTMENT INCOME
Net investment income represents income primarily from the following sources:
•
Interest income and related expenses, including amortization of premiums and accretion of discounts with changes in the timing
and the amount of expected principal and interest cash flows reflected in yield, as applicable.
• Dividend income from common and preferred stocks.
• Realized and unrealized gains and losses from investments in other securities and investments for which we elected the fair value
option.
• Earnings from alternative investments.
• Prepayment premiums.
The following table presents the components of Net investment income:
Years Ended December 31,
(in millions)
Excluding
Fortitude
Re Funds
Withheld
Assets
2023
Fortitude
Re
Funds
Withheld
Assets
Excluding
Fortitude
Re Funds
Withheld
Assets
2022
Fortitude
Re
Funds
Withheld
Assets
Excluding
Fortitude
Re Funds
Withheld
Assets
2021
Fortitude
Re
Funds
Withheld
Assets
Total
Total
Total
Available for sale fixed maturity securities,
including short-term investments
$ 10,780 $
Other fixed maturity securities(a)
Equity securities
Interest on mortgage and other loans
Alternative investments(b)
Real estate
Other investments(c)
Total investment income
Investment expenses
Net investment income
43
94
2,450
233
42
917 $ 11,697
382
339
$ 8,664 $ 1,067 $ 9,731
(822)
(363)
(459)
$ 8,583 $ 1,468 $ 10,051
(12)
(19)
7
—
237
86
—
94
2,687
319
42
(53)
1,959
819
57
—
203
170
—
(53)
2,162
989
57
(237)
1,745
2,579
225
—
207
321
—
(237)
1,952
2,900
225
162
13,804
756
156
15,377
785
$ 13,048 $ 1,544 $ 14,592
(6)
1,573
29
359
11,442
618
$ 10,824 $
(5)
976
33
354
12,418
651
943 $ 11,767
250
13,126
485
255
15,134
522
$ 12,641 $ 1,971 $ 14,612
5
2,008
37
(a) Included in the years ended December 31, 2022 and 2021 were income (loss) of $(195) million and $(49) million, respectively, related to fixed maturity securities
measured at fair value that economically hedge liabilities described in (c) below.
(b) Included income from hedge funds, private equity funds and affordable housing partnerships. Hedge funds are recorded as of the balance sheet date. Private equity
funds are generally reported on a one-quarter lag.
(c) Included in the years ended December 31, 2023, 2022 and 2021 were income (loss) of $(9) million, $186 million and $65 million, respectively, related to liabilities
measured at fair value that are economically hedged with fixed maturity securities as described in (a) above.
NET REALIZED GAINS AND LOSSES
Net realized gains and losses are determined by specific identification. The net realized gains and losses are generated primarily from
the following sources:
• Sales of available for sale fixed maturity securities, real estate and other alternative investments.
• Reductions to the amortized cost basis of available for sale fixed maturity securities that have been written down due to our intent
to sell them or it being more likely than not that we will be required to sell them.
• Changes in the allowance for credit losses on bonds available for sale, mortgage and other loans receivable, and loans
commitments.
• Most changes in the fair value of free standing and embedded derivatives, including changes in the non-performance adjustment
are included in Net realized gains (losses). However, changes in derivatives designated as hedging instruments when the fair
value of the hedged item is not reported in Net realized gains (losses) are excluded from Net realized gains (losses). Changes in
the fair value of free standing derivatives that hedge certain MRBs are excluded from Net realized gains (losses).
• Foreign exchange gains and losses resulting from foreign currency transactions.
• Changes in fair value of the embedded derivative related to the Fortitude Re funds withheld assets.
172
AIG | 2023 Form 10-K
The following table presents the components of Net realized gains (losses):
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
Years Ended December 31,
(in millions)
Sales of fixed maturity securities
Excluding
Fortitude
Re Funds
Withheld
Assets
2023
Fortitude
Re
Funds
Withheld
Assets
Excluding
Fortitude
Re Funds
Withheld
Assets
2022
Fortitude
Re
Funds
Withheld
Assets
Excluding
Fortitude
Re Funds
Withheld
Assets
2021
Fortitude
Re
Funds
Withheld
Assets
Total
Total
Total
$
(929) $
(133) $ (1,062)
$
(871) $
(311) $ (1,182) $
211 $
717 $ 928
Intent to sell
—
—
—
(66)
—
(66)
—
—
—
Change in allowance for credit losses on
fixed maturity securities
Change in allowance for credit losses on
loans
Foreign exchange transactions
Index-linked interest credited embedded
derivatives, net of related hedges
All other derivatives and hedge accounting*
Sales of alternative investments and real
estate investments
Other
Net realized gains (losses) – excluding
Fortitude Re funds withheld
embedded derivative
Net realized gains (losses) on Fortitude
Re funds withheld embedded derivative
Net realized gains (losses)
(211)
(9)
(220)
(184)
(32)
(216)
(167)
101
(62)
19
(229)
120
(55)
(20)
(47)
(5)
(102)
(25)
19
163
22
7
9
26
172
(5)
17
(784)
(374)
—
(105)
98
(40)
(2)
(3)
(784)
(479)
96
(43)
(119)
—
(119)
(5)
—
(5)
1,230
(134)
1,096
193
43
236
(39)
—
(39)
260
988
213
28
288
237
1,225
10
223
(2,306)
(295)
(2,601)
69
(486)
(417)
1,871
1,003
2,874
—
(2,007)
$ (2,306) $ (2,302) $ (4,608)
(2,007)
—
7,481
7,481
69 $ 6,995 $ 7,064
$
—
$ 1,871 $
(603)
(603)
400 $ 2,271
* Derivative activity related to hedging MRBs is recorded in Change in the fair value of MRBs, net. For additional disclosures about MRBs, see Note 14.
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale
securities and other investments:
Years Ended December 31,
(in millions)
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities
Other investments
Total increase (decrease) in unrealized appreciation (depreciation) of investments*
*
Excludes net unrealized gains and losses attributable to businesses held for sale at December 31, 2023.
2023
2022
$
$
8,511 $ (47,741)
(25)
8,511 $ (47,766)
—
The following table summarizes the unrealized gains and losses recognized in Net investment income during the reporting
period on equity securities and other investments still held at the reporting date:
Years Ended December 31,
(in millions)
Net gains (losses) recognized during the period on equity securities and other
Equities
2023
Other
Invested
Assets
Total
Equities
2022
Other
Invested
Assets
Total
investments
$
94 $
489 $ 583
$
(53) $
355 $ 302
Less: Net gains (losses) recognized during the period on equity securities and
other investments sold during the period
Unrealized gains (losses) recognized during the reporting period on equity
securities and other investments still held at the reporting date
163
(20)
143
96
(23)
73
$
(69) $
509 $ 440
$
(149) $
378 $ 229
EVALUATING INVESTMENTS FOR AN ALLOWANCE FOR CREDIT LOSSES AND IMPAIRMENTS
Fixed Maturity Securities
If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before
recovery of its amortized cost basis and if the fair value of the security is below amortized cost, an impairment has occurred and the
amortized cost is written down to current fair value, with a corresponding charge to Net realized gains (losses). No allowance is
established in these situations and any previously recorded allowance is reversed. The new cost basis is not adjusted for subsequent
increases in estimated fair value. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that
AIG | 2023 Form 10-K
173
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts
and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow
needs and sales of securities to take advantage of favorable pricing.
For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance
is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to Net
realized gains (losses). The allowance for credit losses is limited to the difference between amortized cost and fair value. The
estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The
difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized
appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses was previously recognized (a separate
component of AOCI). Accrued interest is excluded from the measurement of the allowance for credit losses.
When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CLO, ABS) management considers the
historical performance of underlying assets and available market information as well as bond-specific structural considerations, such
as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows
includes, but is not limited to, the following critical inputs, which vary by asset class:
• Current delinquency rates;
• Expected default rates and the timing of such defaults;
• Loss severity and the timing of any recovery; and
• Expected prepayment speeds.
When estimating future cash flows for corporate, municipal and sovereign fixed maturity securities determined to be credit impaired,
management considers:
• Expected default rates and the timing of such defaults;
• Loss severity and the timing of any recovery; and
• Scenarios specific to the issuer and the security, which may also include estimates of outcomes of corporate restructurings,
political and macroeconomic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment
and the disposition of assets.
We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we
determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.
Under the current expected credit loss (CECL) model, credit losses are reassessed each period. The allowance for credit losses and
the corresponding charge to Net realized gains (losses) can be reversed if conditions change, however, the allowance for credit
losses will never be reduced below zero. When we determine that all or a portion of a fixed maturity security is uncollectable, the
uncollectable amortized cost amount is written off with a corresponding reduction to the allowance for credit losses. If we collect cash
flows that were previously written off, the recovery is recognized by recording a gain in Net realized gains (losses).
Credit Impairments
The following table presents a rollforward of the changes in allowance for credit losses on available for sale fixed maturity
securities by major investment category:
Years Ended December 31,
2023
2022
2021
(in millions)
Balance, beginning of year
Additions:
Securities for which allowance for credit
losses were not previously recorded
Reductions:
Securities sold during the period
Addition to (release of) the allowance for
credit losses on securities that had an
allowance recorded in a previous
period, for which there was no intent to
sell before recovery of amortized cost
basis
Write-offs charged against the allowance
Other
Structured
$
46 $
Total
140 $ 186
Structured
$
8 $
Total
90 $ 98
Structured
$
17 $
Total
169 $ 186
Non-
Structured
Non-
Structured
Non-
Structured
65
134
199
69
238
307
9
56
65
(5)
(35)
(40)
(3)
(92)
(95)
(4)
(29)
(33)
(10)
(30)
3
31
21
(168)
(198)
(9)
(6)
(27)
—
(1)
(64)
(30)
(2)
(91)
(30)
(3)
(14)
—
—
(77)
(29)
(91)
(29)
—
—
Balance, end of year
$
69 $
93 $ 162
$
46 $
140 $ 186
$
8 $
90 $ 98
174
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
Purchased Credit Deteriorated Securities
We purchase certain RMBS securities that have experienced more-than-insignificant deterioration in credit quality since origination.
These are referred to as PCD assets. At the time of purchase an allowance is recognized for these PCD assets by adding it to the
purchase price to arrive at the initial amortized cost. There is no credit loss expense recognized upon acquisition of a PCD asset.
When determining the initial allowance for credit losses, management considers the historical performance of underlying assets and
available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of
payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following
critical inputs:
• Current delinquency rates;
• Expected default rates and the timing of such defaults;
• Loss severity and the timing of any recovery; and
• Expected prepayment speeds.
Subsequent to the acquisition date, the PCD assets follow the same accounting as other structured securities that are not high credit
quality.
We did not purchase securities with more than insignificant credit deterioration since their origination during the twelve months ended
December 31, 2023, 2022 and 2021.
Other Invested Assets
Our equity method investments in private equity funds, hedge funds and other entities are evaluated for impairment each reporting
period. Such evaluation considers market conditions, events and volatility that may impact the recoverability of the underlying
investments within these private equity funds and hedge funds and is based on the nature of the underlying investments and specific
inherent risks. Such risks may evolve based on the nature of the underlying investments.
Our investments in real estate are periodically evaluated for recoverability whenever changes in circumstances indicate the carrying
amount of an asset may be impaired. When impairment indicators are present, we compare expected investment cash flows to
carrying amount. When the expected cash flows are less than the carrying amount, the investments are written down to fair value with
a corresponding charge to earnings.
PLEDGED INVESTMENTS
Secured Financing and Similar Arrangements
We enter into secured financing transactions whereby certain securities are sold under agreements to repurchase (repurchase
agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same or substantially
similar securities. Our secured financing transactions also include those that involve the transfer of securities to financial institutions in
exchange for cash (securities lending agreements). In all of these secured financing transactions, the securities transferred by us
(pledged collateral) may be sold or repledged by the counterparties. These agreements are recorded at their contracted amounts plus
accrued interest, other than those that are accounted for at fair value.
Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the
amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral under these
secured financing transactions, we may be required to transfer cash or additional securities as pledged collateral under these
agreements. At the termination of the transactions, we and our counterparties are obligated to return the amounts borrowed and the
securities transferred, respectively.
The following table presents the fair value of securities pledged to counterparties under secured financing transactions,
including repurchase and securities lending agreements:
(in millions)
Fixed maturity securities available for sale
December 31, 2023
$
2,723 $
December 31, 2022
2,968
At December 31, 2023 and 2022, amounts borrowed under repurchase and securities lending agreements totaled $2.6 billion and
$3.1 billion, respectively.
AIG | 2023 Form 10-K
175
The following table presents the fair value of securities pledged under our repurchase agreements by collateral type and by
remaining contractual maturity:
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
(in millions)
December 31, 2023
Bonds available for sale:
Non-U.S. governments
Corporate debt
Total
(in millions)
December 31, 2022
Bonds available for sale:
Non-U.S. governments
Corporate debt
Total
Remaining Contractual Maturity of the Agreements
Overnight
and
Continuous
up to
30 days
31 - 90
days
91 - 364
days
365 days
or greater
Total
$
$
—
38
38
$ 277 $ — $
2,408
$ 2,685 $ — $
—
—
—
—
$
$
—
—
—
$
$
277
2,446
2,723
Remaining Contractual Maturity of the Agreements
Overnight
and
Continuous
$
$
—
—
—
up to
30 days
31 - 90
days
91 - 364
days
365 days
or greater
Total
20 $ — $
$
2,371
$ 2,391 $ 577 $
577
—
—
—
$
$
—
—
—
$
$
20
2,948
2,968
We also enter into agreements in which securities are purchased by us under reverse repurchase agreements, which are accounted
for as secured financing transactions and reported as short-term investments or other assets, depending on their terms. These
agreements are recorded at their contracted resale amounts plus accrued interest, other than those that are accounted for at fair
value. In all reverse repurchase transactions, we take possession of or obtain a security interest in the related securities, and we have
the right to sell or repledge this collateral received.
The following table presents information on the fair value of securities pledged to us under reverse repurchase agreements:
(in millions)
Securities collateral pledged to us
$
December 31, 2023
1,200 $
December 31, 2022
—
At December 31, 2023, the carrying value of reverse repurchase agreements totaled $1.1 billion.
All secured financing transactions are collateralized and margined on a daily basis consistent with market standards and subject to
enforceable master netting arrangements with rights of set off. We do not currently offset any such transactions.
Insurance – Statutory and Other Deposits
The total carrying value of cash and securities deposited by our insurance subsidiaries under requirements of regulatory authorities or
other insurance-related arrangements, including certain annuity-related obligations and certain reinsurance contracts, was
$16.5 billion and $13.6 billion at December 31, 2023 and 2022, respectively.
Other Pledges and Restrictions
Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the members to own
stock in these FHLBs. We owned an aggregate of $283 million and $239 million of stock in FHLBs at December 31, 2023 and 2022,
respectively. In addition, our subsidiaries have pledged securities available for sale and residential loans associated with borrowings
and funding agreements from FHLBs, with a fair value of $6.5 billion and $3.0 billion, respectively, at December 31, 2023 and
$5.8 billion and $1.8 billion, respectively, at December 31, 2022.
Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade of our long-term
debt ratings. The actual amount of collateral required to be posted to the counterparties in the event of such downgrades, and the
aggregate amount of payments that we could be required to make, depend on market conditions, the fair value of outstanding affected
transactions and other factors prevailing at and after the time of the downgrade. The fair value of securities pledged as collateral with
respect to these obligations was approximately $63 million and $63 million, at December 31, 2023 and 2022, respectively. This
collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be
repledged or resold by the counterparties.
176
AIG | 2023 Form 10-K
Investments held in escrow accounts or otherwise subject to restriction as to their use were $164 million and $301 million, comprised
of bonds available for sale and short-term investments at December 31, 2023 and 2022, respectively.
ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments
Reinsurance transactions between AIG and Fortitude Re were structured as modco and loss portfolio transfer arrangements with
funds withheld.
7. Lending Activities
Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy loans, commercial
loans, and other loans and notes receivable. Commercial mortgages, residential mortgages, commercial loans, and other loans and
notes receivable are carried at unpaid principal balances less allowance for credit losses and plus or minus adjustments for the
accretion or amortization of discount or premium. Interest income on such loans is accrued as earned.
Direct costs of originating commercial mortgages, commercial loans, and other loans and notes receivable, net of nonrefundable
points and fees, are deferred and included in the carrying amount of the related receivables. The amount deferred is amortized to
income as an adjustment to earnings using the interest method. Premiums and discounts on purchased residential mortgages are
also amortized to income as an adjustment to earnings using the interest method.
Life insurance policy loans are carried at unpaid principal balances. There is no allowance for policy loans because these loans serve
to reduce the death benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender
value of the policy.
The following table presents the composition of Mortgage and other loans receivable, net:
(in millions)
Commercial mortgages(a)
Residential mortgages
Life insurance policy loans
Commercial loans, other loans and notes receivable(b)
Total mortgage and other loans receivable(c)
Allowance for credit losses(c)(d)
Mortgage and other loans receivable, net(c)
December 31, 2023
38,009
$
8,689
1,753
3,940
52,391
(838)
51,553
$
December 31, 2022
37,128
$
6,130
1,758
5,305
50,321
(716)
49,605
$
(a) Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest
geographic concentrations (aggregating approximately 18 percent and 11 percent, respectively, at December 31, 2023 and 19 percent and 11 percent, respectively, at
December 31, 2022).
(b) There were no loans that were held for sale carried at lower of cost or market as of December 31, 2023. The net carrying value of loans carried at lower of cost or
market was $170 million as of 2022.
(c) Excludes $37.6 billion at both December 31, 2023 and 2022 of loan receivable from AIGFP, which has a full allowance for credit losses, recognized upon the
deconsolidation of AIGFP. For additional information, see Note 1.
(d) Does not include allowance for credit losses of $67 million and $69 million, respectively, at December 31, 2023 and 2022, in relation to off-balance-sheet commitments
to fund commercial mortgage loans, which is recorded in Other liabilities.
Interest income is not accrued when payment of contractual principal and interest is not expected. Any cash received on impaired
loans is generally recorded as a reduction of the current carrying amount of the loan. Accrual of interest income is generally resumed
when delinquent contractual principal and interest is repaid or when a portion of the delinquent contractual payments are made and
the ongoing required contractual payments have been made for an appropriate period. As of December 31, 2023, $27 million and
$492 million of residential mortgage loans and commercial mortgage loans, respectively, are placed on nonaccrual status. As of
December 31, 2022, $5 million and $703 million of residential mortgage loans and commercial mortgage loans, respectively, are
placed on nonaccrual status.
Accrued interest is presented separately and is included in Accrued investment income on the Consolidated Balance Sheets. As of
December 31, 2023, accrued interest receivable was $20 million and $183 million associated with residential mortgage loans and
commercial mortgage loans, respectively. As of December 31, 2022, accrued interest receivable was $15 million and $147 million
associated with residential mortgage loans and commercial mortgage loans, respectively.
A significant majority of commercial mortgages in the portfolio are non-recourse loans and, accordingly, the only guarantees are for
specific items that are exceptions to the non-recourse provisions. It is therefore extremely rare for us to have cause to enforce the
provisions of a guarantee on a commercial real estate or mortgage loan.
AIG | 2023 Form 10-K
177
Nonperforming loans are generally those loans where payment of contractual principal or interest is more than 90 days past due.
Nonperforming loans were not significant for any of the periods presented.
ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities
CREDIT QUALITY OF COMMERCIAL MORTGAGES
The following table presents debt service coverage ratios(a) for commercial mortgages by year of vintage:
December 31, 2023
(in millions)
>1.2X
1.00 - 1.20X
<1.00X
Total commercial mortgages
December 31, 2022
(in millions)
>1.2X
1.00 - 1.20X
<1.00X
Total commercial mortgages
2023
2,555 $
295
—
2,850 $
2022
5,518 $
910
45
6,473 $
2022
6,209 $
1,149
50
7,408 $
2021
2,457 $
898
—
3,355 $
2021
2,349 $
1,574
—
3,923 $
2020
1,710 $
473
23
2,206 $
2020
1,387 $
369
—
1,756 $
2019
4,985 $
416
52
5,453 $
2019
4,969 $
177
—
5,146 $
2018
4,120 $
567
744
5,431 $
Prior
13,459 $
2,632
835
16,926 $
Prior
11,663 $
1,353
1,194
Total
30,928
6,196
885
38,009
Total
30,453
4,617
2,058
14,210 $
37,128
$
$
$
$
The following table presents loan-to-value ratios(b) for commercial mortgages by year of vintage:
December 31, 2023
(in millions)
Less than 65%
65% to 75%
76% to 80%
Greater than 80%
Total commercial mortgages
December 31, 2022
(in millions)
Less than 65%
65% to 75%
76% to 80%
Greater than 80%
Total commercial mortgages
2023
2,446 $
290
—
114
2,850 $
2022
5,425 $
998
50
—
6,473 $
2022
4,629 $
1,763
375
641
7,408 $
2021
2,548 $
517
52
238
3,355 $
2021
2,741 $
794
99
289
3,923 $
2020
1,775 $
405
—
26
2,206 $
2020
1,303 $
288
—
165
1,756 $
2019
3,958 $
1,445
—
50
5,453 $
2019
2,832 $
1,937
377
—
5,146 $
2018
3,016 $
1,487
168
760
5,431 $
Prior
11,571 $
3,220
340
1,795
16,926 $
Prior
10,739 $
1,393
229
1,849
14,210 $
Total
25,522
8,292
1,191
3,004
38,009
Total
27,461
6,245
499
2,923
37,128
$
$
$
$
(a) The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt
service coverage ratio was 1.9x at both periods ended December 31, 2023 and December 31, 2022. The debt service coverage ratios are updated when additional
relevant information becomes available.
(b) The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our
weighted average loan-to-value ratio was 59 percent at both periods ended December 31, 2023 and December 31, 2022. The loan-to-value ratios have been updated
within the last three months to reflect the current carrying values of the loans. We update the valuations of collateral properties by obtaining independent appraisals,
generally at least once per year.
The following table presents supplementary credit quality information related to commercial mortgages:
(dollars in millions)
December 31, 2023
Past Due Status:
In good standing
90 days or less delinquent
>90 days delinquent or in
process of foreclosure(a)
Total(b)
Number
of
Loans
Apartments
Offices
Retail
Industrial
Hotel
Others
Total
Class
Percent
of
Total
610 $
1
15,129 $
—
1
612 $
—
15,129 $
9,679 $ 4,263 $
6,367 $ 2,053 $
29
—
—
43
—
—
—
—
9,708 $ 4,306 $
6,367 $ 2,053 $
446 $ 37,937
29
—
—
43
446 $ 38,009
100 %
—
—
100 %
Allowance for credit losses
$
94 $
415 $
109 $
90 $
38 $
6 $
752
2 %
178
AIG | 2023 Form 10-K
(dollars in millions)
December 31, 2022
Past Due Status:
In good standing
90 days or less delinquent
>90 days delinquent or in
process of foreclosure(a)
Total(b)
Number
of
Loans
625 $
—
4
629 $
ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities
Apartments
Offices
Retail
Industrial
Hotel
Others
Total
Class
Percent
of
Total
14,597 $ 10,102 $ 3,774 $
—
—
—
—
173
14,597 $ 10,275 $ 3,816 $
42
6,006 $ 2,027 $
—
—
407 $ 36,913
—
—
—
—
6,006 $ 2,027 $
—
215
407 $ 37,128
99 %
—
1
100 %
Allowance for credit losses
$
100 $
351 $
81 $
71 $
29 $
8 $
640
2 %
(a) Includes $156 million of Office loans supporting the Fortitude Re funds withheld arrangements, greater than 90 days delinquent or in process of foreclosure, at
December 31, 2022. Office loans supporting the Fortitude Re funds have been foreclosed and are reported in Other invested assets in the Consolidated Balance Sheets
at December 31, 2023.
(b) Does not reflect allowance for credit losses.
The following table presents credit quality performance indicators for residential mortgages by year of vintage:
December 31, 2023
(in millions)
FICO*:
780 and greater
720 - 779
660 - 719
600 - 659
Less than 600
Total residential mortgages
December 31, 2022
(in millions)
FICO*:
780 and greater
720 - 779
660 - 719
600 - 659
Less than 600
Total residential mortgages
2023
2022
2021
2020
2019
Prior
Total
514 $
1,121
313
2
—
1,950 $
589 $
625
257
20
1
1,492 $
2,283 $
560
113
11
2
2,969 $
622 $
169
40
8
2
841 $
240 $
99
37
9
4
389 $
608 $
243
128
53
16
1,048 $
4,856
2,817
888
103
25
8,689
2022
2021
2020
2019
2018
Prior
Total
296 $
536
163
2
—
997 $
2,204 $
728
80
4
—
3,016 $
654 $
168
28
2
—
852 $
232 $
76
16
2
1
327 $
77 $
32
9
2
—
120 $
567 $
169
62
14
6
818 $
4,030
1,709
358
26
7
6,130
$
$
$
$
*
Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within
the last twelve months.
METHODOLOGY USED TO ESTIMATE THE ALLOWANCE FOR CREDIT LOSSES
At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is
updated each reporting period. Changes in the allowance for credit losses are recorded in realized losses. This allowance reflects the
risk of loss, even when that risk is remote, that is expected over the remaining contractual life of the loan. The allowance for credit
losses considers available relevant information about the collectability of cash flows, including information about past events, current
conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we
determine that we can no longer reliably forecast future economic assumptions.
The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a probability of default and
loss given default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted
information. The loss rates are applied based on individual loan attributes and considering such data points as loan-to-value ratios,
FICO scores, and debt service coverage.
The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not
limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.
Accrued interest is excluded from the measurement of the allowance for credit losses and accrued interest is reversed through
interest income once a loan is placed on nonaccrual.
When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off
against the allowance.
We also have off-balance sheet commitments related to our commercial mortgage loans. The liability for expected credit losses
related to these commercial mortgage loan commitments is reported in Other liabilities in the Consolidated Balance Sheets. When a
commitment is funded, we record a loan receivable and reclassify the liability for expected credit losses related to the commitment into
AIG | 2023 Form 10-K
179
loan allowance for expected credit losses. Other changes in the liability for expected credit losses on loan commitments are recorded
in Net realized gains (losses) in the Consolidated Statements of Income (Loss).
ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities
The following table presents a rollforward of the changes in the allowance for credit losses on Mortgage and other loans
receivable(a):
Years Ended December 31,
(in millions)
Allowance, beginning of year
Loans charged off
Net charge-offs
Addition to (release of) allowance for loan losses
Divestitures
Allowance, end of year
2023(b)
Commercial
Mortgages
Other
Loans
$
$
640 $
(109)
(109)
221
—
752 $
76 $
—
—
10
—
86 $
Total
716
(109)
(109)
231
—
838
2022
Commercial
Mortgages
Other
Loans
$
$
545 $
(17)
(17)
112
—
640 $
84 $
—
—
(8)
—
76 $
2021
Commercial
Mortgages
Other
Loans
$
$
685 $
(2)
(2)
(138)
—
545 $
129 $
—
—
(26)
(19)
84 $
Total
814
(2)
(2)
(164)
(19)
629
Total
629
(17)
(17)
104
—
716
(a) Does not include allowance for credit losses of $67 million, $69 million and $71 million, respectively, at December 31, 2023, 2022 and 2021 in relation to off-balance-
sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.
(b) Excludes $37.6 billion at both December 31, 2023 and 2022, of loan receivable from AIGFP, which has a full allowance for credit losses, recognized upon the
deconsolidation of AIGFP. For additional information, see Note 1.
Our expectations and models used to estimate the allowance for losses on commercial and residential mortgage loans are regularly
updated to reflect the current economic environment.
LOAN MODIFICATIONS
The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset
origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which
includes losses from modifications of receivables to borrowers experiencing financial difficulty. We use a probability of default/loss
given default model to determine the allowance for credit losses for our commercial and residential mortgage loans. An assessment
of whether a borrower is experiencing financial difficulty is made on the date of a modification.
Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for
credit losses utilizing the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is
generally not recorded upon modification.
When modifications are executed, they often will be in the form of principal forgiveness, term extensions, interest rate reductions, or
some combination of any of these concessions. When principal is forgiven, the amortized cost basis of the asset is written off against
the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the
loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit
losses.
We assess whether a borrower is experiencing financial difficulty based on a variety of factors, including the borrower’s current default
on any of its outstanding debt, the probability of a default on any of its debt in the foreseeable future without the modification, the
insufficiency of the borrower’s forecasted cash flows to service any of its outstanding debt (including both principal and interest), and
the borrower’s inability to access alternative third party financing at an interest rate that would be reflective of current market
conditions for a non-troubled debtor.
During the year ended December 31, 2023, commercial mortgage loans with an amortized cost of $87 million (including $56 million
supporting the funds withheld arrangements with Fortitude Re) and commercial loans, other loans and notes receivable with an
amortized cost of $168 million (none of which were supporting the funds withheld arrangements with Fortitude Re) were granted term
extensions. The modified loans represent less than 1 percent of each of these two portfolio segments. These modifications added less
than one year to the weighted average life of loans in each of these two portfolio segments.
There were no loans that had defaulted during the year ended December 31, 2023, that had been previously modified with borrowers
experiencing financial difficulties.
Prior to January 1, 2023, we were required to assess loan modifications to determine if they were a troubled debt restructuring. A
troubled debt restructuring was a modification of a loan with a borrower that was experiencing financial difficulty and the modification
involved us granting a concession to the troubled borrower. Concessions previously granted included extended maturity dates,
interest rate changes, principal or interest forgiveness, payment deferrals and easing of loan covenants.
During the year ended December 31, 2022, loans with a carrying value of $219 million were modified as troubled debt restructurings.
Effective January 1, 2023, we are no longer required to assess whether loan modifications are troubled debt restructurings.
180
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
8. Reinsurance
In the ordinary course of business, our insurance companies purchase both treaty and facultative reinsurance to limit potential losses,
provide additional capacity for growth, minimize exposure to significant risks or to facilitate greater diversification of our businesses. In
addition, certain of our General Insurance subsidiaries sell reinsurance to other insurance companies. We determine the portion of our
ultimate net loss that will be recoverable under our reinsurance contracts by reference to the terms of the reinsurance protection
purchased. This determination involves an estimate of incurred but not reported (IBNR) loss. Reinsurance recoverables for contracts
which are accounted for as deposits are subject to similar judgments and uncertainties and reported in Other assets.
Reinsurance assets include the balances due for paid losses and expenses, reserves for losses and expenses reported and
outstanding, reserves for IBNR, ceded unearned premiums and ceded future policy benefits for life and accident and health insurance
contracts and benefits paid and unpaid. Amounts related to paid and reserved losses and expenses and benefits with respect to these
reinsurance agreements are sometimes collateralized. We remain liable to our policyholders regardless of whether our reinsurers
meet their obligations under the reinsurance contracts, and as such, we regularly evaluate the financial condition of our reinsurers and
monitor concentration of our credit risk. The estimation of the allowance for unrecoverable reinsurance from reinsurers who are
unwilling and/or unable to pay amounts due to us requires judgment for which key inputs typically include historical collection rates
when amounts due are in dispute or where the reinsurer has suffered a credit event as well as specific reviews of balances in dispute
or subject to credit impairment. The allowance for credit losses and disputes on reinsurance assets was $236 million and $295 million
at December 31, 2023 and 2022, respectively. Changes in the allowance for credit losses and disputes on reinsurance assets are
reflected in Policyholder benefits and losses incurred within the Consolidated Statements of Income (Loss).
Reinsurance recoverables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts.
The reinsurance recoverables for coinsurance and modco contracts, along with amounts recoverable on YRT treaties are determined
based on updated net premium ratios, reflecting updated actuarial assumptions using locked-in upper-medium investment instrument
yield discount rates with changes recognized as remeasurement gains and losses reported in income. In addition, reinsurance
recoverables are remeasured at the balance sheet date using current upper-medium grade discount rates with changes reported in
OCI. For reinsurance agreements that reinsure existing, or non-contemporaneous (in-force) traditional and limited payment long-
duration insurance contracts, the reinsurance recoverable is measured using the upper-medium grade fixed-income instrument yield
discount rate assumption related to the effective date of the reinsurance contract. Therefore, for non-contemporaneous reinsurance
agreements executed after January 1, 2021, the locked-in rate to accrete interest into the income statement related to the reinsurance
recoverable would be different from the locked-in rate used for accreting interest on the direct reserve for future policy benefits.
Certain reinsured guaranteed benefits previously reported as reinsurance recoverables are classified as Market risk benefit assets in
the Consolidated Balance Sheets and are measured at fair value.
The following tables present the transition rollforward for Reinsurance assets:
Individual
Retirement
Life
Insurance
Institutional
Markets
(in millions)
Reinsurance assets - other, net of allowance for credit losses and disputes(a)
Pre-adoption, December 31, 2020
$
Reclassification of Cost of Reinsurance(b)
Reclassification to Market risk benefits
Change in cash flow assumptions and effect of net premiums exceeding gross
premiums
Change due to the current upper-medium grade discount rate
309 $
—
(35)
—
—
Post-adoption January 1, 2021
$
274 $
(in millions)
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(c)
Pre-adoption, December 31, 2020
Change in cash flow assumptions and effect of net premiums exceeding gross premiums
Change due to the current upper-medium grade discount rate
Post-adoption January 1, 2021
2,370 $
416
—
9
74
2,869 $
$
$
28
—
—
—
5
33
$
$
Total
2,707
416
(35)
9
79
3,176
Total
29,135
55
7,611
36,801
(a) Excludes $36.3 billion of Reinsurance assets - other, net of allowance for credit losses and disputes in General Insurance and Other Operations.
(b) Cost of reinsurance is reported in Other liabilities in the Consolidated Balance sheets.
(c) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Excludes $5.4 billion of Reinsurance assets - Fortitude Re, net of allowance for credit
losses and disputes in General Insurance and Other Operations.
The remeasurement of the reinsurance assets using the current upper-medium grade discount rate is offset in AOCI.
AIG | 2023 Form 10-K
181
The following table provides supplemental information for loss and benefit reserves, gross and net of ceded reinsurance:
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
At December 31,
(in millions)
Liability for unpaid losses and loss adjustment expenses
2023
As
Reported
Net of
Reinsurance
2022
As
Reported
Net of
Reinsurance
$
(70,393) $
(39,994)
$
(75,167) $
(42,955)
Future policy benefits for life and accident and health insurance contracts
(58,576)
(35,005)
(51,914)
(27,836)
Policyholder contract deposits
Reserve for unearned premiums
Other policyholder funds
Reinsurance assets*
(161,979)
(158,171)
(155,984)
(152,375)
(17,387)
(3,356)
62,587
(13,117)
(2,817)
(18,338)
(3,463)
64,810
(13,992)
(2,898)
* Reinsurance assets excludes (i) allowance for credit losses and disputes of $236 million and $295 million (of which $110 million and $110 million pertains to CECL
reserve for Liability for unpaid losses and loss adjustment expenses) for the years ended December 31, 2023 and 2022, respectively, (ii) paid loss recoveries of
$4,879 million and $4,662 million for the years ended December 31, 2023 and 2022, respectively, and (iii) policy and contract claims recoverable of $296 million and
$545 million for the years ended December 31, 2023 and 2022, respectively.
SHORT-DURATION REINSURANCE
Short-duration reinsurance is effected under reinsurance treaties and by negotiation on individual risks. Certain of these reinsurance
arrangements consist of excess of loss contracts that protect us against losses above stipulated amounts. Ceded premiums are
considered prepaid reinsurance premiums and are recognized as a reduction of premiums earned over the contract period in
proportion to the protection received. Amounts recoverable from reinsurers on short-duration contracts are estimated in a manner
consistent with the claims liabilities associated with the reinsurance and presented as a component of Reinsurance assets.
Reinsurance premiums for assumed business are estimated based on information received from brokers, ceding companies and
reinsurers. Any subsequent differences arising on such estimates are recorded in the periods in which they are determined. Assumed
reinsurance premiums are earned primarily on a pro-rata basis over the terms of the reinsurance contracts and the portion of
premiums relating to the unexpired terms of coverage is included in the reserve for unearned premiums. Reinsurance premiums for
assumed business are estimated based on information received from brokers, ceding companies and reinsureds. Any subsequent
differences arising on such estimates are recorded in the periods in which they are determined. For both ceded and assumed
reinsurance, risk transfer requirements must be met for reinsurance accounting to apply. If risk transfer requirements are not met, the
contract is accounted for as a deposit, resulting in the recognition of cash flows under the contract through a deposit asset or liability
and not as revenue or expense. To meet risk transfer requirements, a reinsurance contract must include both insurance risk,
consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. Similar risk
transfer criteria are used to determine whether directly written insurance contracts should be accounted for as insurance or as a
deposit.
The following table presents short-duration insurance premiums written and earned:
(in millions)
Premiums written:
Direct
Assumed
Ceded
Net
Premiums earned:
Direct
Assumed
Ceded
Net
Years Ended December 31,
2023
2022
2021
$
31,445 $
32,025 $
7,951
(12,190)
27,206 $
7,385
(12,650)
26,760 $
30,781 $
32,053 $
7,050
(12,268)
25,563 $
7,137
(12,425)
26,765 $
$
$
$
30,910
7,209
(11,702)
26,417
30,279
6,640
(11,301)
25,618
For the years ended December 31, 2023, 2022 and 2021, reinsurance recoveries, which reduced losses and loss adjustment
expenses incurred, amounted to $8.1 billion, $7.1 billion and $7.2 billion, respectively.
182
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
Retroactive reinsurance agreements are reinsurance agreements under which our reinsurer agrees to reimburse us as a result of past
insurable events. For these agreements, the excess of the amounts ultimately collectible under the agreement over the consideration
paid is recognized as a deferred gain liability and amortized into income over the settlement period of the ceded reserves. The
amount of the deferral is recalculated each period based on loss payments and updated estimates. If the consideration paid exceeds
the ultimate losses collectible under the agreement, the net loss on the agreement is recognized in income immediately. Ceded loss
reserves under retroactive agreements were $12.4 billion and $14.3 billion, and the deferred gain liability was $585 million and
$661 million, as of December 31, 2023 and 2022, respectively. The effect on income from amortization of the deferred gain was
$82 million, $252 million and $191 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In the first quarter of 2017, we entered into an adverse development reinsurance agreement with National Indemnity Company
(NICO), a subsidiary of Berkshire Hathaway Inc., under which we transferred to NICO 80 percent of the reserve risk on substantially
all of our U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent
of the losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit
of $25 billion. We account for this transaction as retroactive reinsurance. This transaction resulted in a gain, which under U.S. GAAP
retroactive reinsurance accounting is deferred and amortized into income over the settlement period. NICO created a collateral trust
account as security for their claim payment obligations to us, into which they deposited the consideration paid under the agreement,
and Berkshire Hathaway Inc. has provided a parental guarantee to secure NICO’s obligations under the agreement.
LONG-DURATION REINSURANCE
Long-duration reinsurance is principally under YRT treaties, along with a large modco treaty reinsuring the majority of our legacy
business to a former affiliate, Fortitude Re. Reinsurance premiums ceded are recognized when due, along with corresponding
benefits. Amounts recoverable from reinsurers are presented as a component of Reinsurance assets.
The following table presents premiums earned and policy fees for our long-duration life insurance and annuity operations:
Years Ended December 31,
(in millions)
Premiums earned:
Direct
Assumed
Ceded
Net
Policy Fees:
Direct
Assumed
Ceded
Net
2023
2022
2021
4,706 $
4,111
(1,126)
7,691 $
4,739 $
1,318
(966)
5,091 $
4,604
2,265
(1,202)
5,667
2,873 $
—
(76)
2,797 $
2,991 $
—
(78)
2,913 $
3,090
—
(85)
3,005
$
$
$
$
Long-duration reinsurance recoveries, which reduced Policyholder benefits and losses incurred, was approximately $1.1 billion,
$0.9 billion and $1.3 billion for the years ended December 31, 2023, 2022 and 2021 respectively.
The following table presents long-duration insurance in-force ceded to other insurance companies:
At December 31,
(in millions)
Long-duration insurance in force ceded
$
2023
363,471 $
2022
346,879 $
2021
363,008
Long-duration insurance in-force assumed as a percentage of gross long-duration insurance in-force was 0.01 percent, 0.01 percent,
and 0.01 percent at December 31, 2023, 2022 and 2021, respectively; and premiums assumed represented 46.6 percent, 21.8
percent and 33.0 percent of gross premiums for the years ended December 31, 2023, 2022 and 2021, respectively.
The U.S. Life and Retirement companies manage the capital impact of their statutory reserve requirements for certain whole life and
universal life policies through unaffiliated and affiliated reinsurance transactions. An evaluation is performed to determine whether
these reinsurance transactions meet the requirements of risk transfer under U.S. GAAP. If risk transfer requirements are not met,
deposit accounting is used for these reinsurance transactions with a reinsurance risk charge recorded in income. Under one affiliated
reinsurance arrangement, one of the U.S. Life and Retirement subsidiaries had one bilateral letter of credit currently in the amount of
$125 million, which was issued on May 9, 2022 and expires on February 7, 2027. As of May 12, 2022, this letter of credit is subject to
reimbursement by Corebridge Parent in the event of a drawdown.
For additional information on the use of reinsurance, see Note 20.
AIG | 2023 Form 10-K
183
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
FORTITUDE RE
Fortitude Re is the reinsurer of the majority of AIG’s run-off operations. The reinsurance transactions are structured as modco and
loss portfolio transfer arrangements with funds withheld (funds withheld). In modco and funds withheld arrangements, the investments
supporting the reinsurance agreements, and which reflect the majority of the consideration that would be paid to the reinsurer for
entering into the transaction, are withheld by, and therefore continue to reside on the balance sheet of, the ceding company (i.e., AIG)
thereby creating an obligation for the ceding company to pay the reinsurer (i.e., Fortitude Re) at a later date. Additionally, as AIG
maintains ownership of these investments, AIG will maintain its existing accounting for these assets (e.g., the changes in fair value of
available for sale securities will be recognized within OCI). AIG has established a funds withheld payable to Fortitude Re while
simultaneously establishing a reinsurance asset representing reserves for the insurance coverage that Fortitude Re has assumed.
The funds withheld payable contains an embedded derivative and changes in fair value of the embedded derivative related to the
funds withheld payable are recognized in earnings through Net realized gains (losses). This embedded derivative is considered a total
return swap with contractual returns that are attributable to various assets and liabilities associated with these reinsurance
agreements.
As of December 31, 2023, approximately $27.6 billion of reserves from our Life and Retirement Run-Off Lines and approximately
$3.0 billion of reserves from our General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG
subsidiaries, had been ceded to Fortitude Re under these reinsurance transactions.
There is a diverse pool of assets supporting the funds withheld arrangements with Fortitude Re. The following summarizes
the composition of the pool of assets:
(in millions)
Fixed maturity securities - available for sale(a)
Fixed maturity securities - fair value option
Commercial mortgage loans
Real estate investments
Private equity funds / hedge funds
Policy loans
Short-term investments
Funds withheld investment assets
Derivative assets, net(b)
Other(c)
Total
December 31, 2023
Fair
Carrying
Value
Value
December 31, 2022
Fair
Carrying
Value
Value
Corresponding Accounting Policy
$ 17,384 $ 17,384
$ 18,821 $ 18,821 Fair value through other comprehensive income (loss)
4,867
3,921
184
1,910
330
176
4,867
3,685
329
1,910
330
176
28,772
45
758
28,681
45
758
$ 29,575 $ 29,484
4,182
4,107
133
1,893
355
75
29,566
90
782
4,182 Fair value through net investment income
3,837 Amortized cost
348 Amortized cost
1,893 Fair value through net investment income
355 Amortized cost
75 Fair value through net investment income
29,511
90 Fair value through net realized gains (losses)
782 Amortized cost
$ 30,438 $ 30,383
(a) The change in the net unrealized gains (losses) on available for sale securities related to the Fortitude Re funds withheld assets was $734 million ($580 million after-tax)
and $(7.5) billion ($(5.9) billion after-tax), respectively for the years ended December 31, 2023 and 2022.
(b) The derivative assets and liabilities have been presented net of cash collateral. The derivative assets and liabilities supporting the Fortitude Re funds withheld
arrangements had a fair market value of $63 million and $34 million, respectively, as of December 31, 2023. The derivative assets and liabilities supporting the Fortitude
Re funds withheld arrangements had a fair market value of $192 million and $28 million, respectively, as of December 31, 2022. These derivative assets and liabilities
are fully collateralized either by cash or securities.
(c) Primarily comprised of Cash and Accrued investment income.
The impact of the funds withheld arrangements with Fortitude Re was as follows:
Years Ended December 31,
(in millions)
Net investment income - Fortitude Re funds withheld assets
Net realized gains (losses) on Fortitude Re funds withheld assets:
Net realized gains (losses) - Fortitude Re funds withheld assets
Net realized gains (losses) - Fortitude Re funds withheld embedded derivative
Net realized gains (losses) on Fortitude Re funds withheld assets
Income (loss) from continuing operations before income tax expense (benefit)
Income tax expense (benefit)(a)
Net income (loss)
Change in unrealized appreciation (depreciation) of all other investments(a)
Comprehensive income (loss)
2023
1,544 $
2022
943 $
2021
1,971
$
(295)
(2,007)
(2,302)
(758)
(159)
(599)
580
(486)
7,481
6,995
7,938
1,667
6,271
(5,900)
$
(19) $
371 $
1,003
(603)
400
2,371
499
1,872
(1,760)
112
(a) The income tax expense (benefit) and the tax impact in AOCI was computed using AIG’s U.S. statutory tax rate of 21 percent.
184
AIG | 2023 Form 10-K
Various assets supporting the Fortitude Re funds withheld arrangements are reported at amortized cost, and as such, changes in the
fair value of these assets are not reflected in the financial statements. However, changes in the fair value of these assets are included
in the embedded derivative in the Fortitude Re funds withheld arrangement and the appreciation (depreciation) of the asset is the
primary driver of the comprehensive income (loss) reflected above.
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
Reinsurance Security
Our third-party reinsurance arrangements do not relieve us from our direct obligations to our beneficiaries. Thus, a credit exposure
exists with respect to both short-duration and long-duration reinsurance ceded to the extent that any reinsurer fails to meet the
obligations assumed under any reinsurance agreement. We hold substantial collateral as security under related reinsurance
agreements in the form of funds, securities, and/or letters of credit. A provision has been recorded for estimated unrecoverable
reinsurance. In light of collateral held, we believe that no exposure to a single reinsurer represents an inappropriate concentration of
credit risk to AIG. Gross reinsurance assets due from reinsurers exceeding 5 percent of our total reinsurance assets were
approximately $46.3 billion and $48.4 billion at December 31, 2023 and 2022, respectively, of which approximately $3.2 billion and
$3.6 billion at December 31, 2023 and 2022, respectively, was not secured by collateral.
REINSURANCE – CREDIT LOSSES
The estimation of reinsurance recoverables involves a significant amount of judgment, particularly for latent exposures, such as
asbestos, due to their long-tail nature. We assess the collectability of reinsurance recoverable balances in each reporting period,
through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record
adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectible
reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively,
reinsurance recoverables). This estimate requires significant judgment for which key considerations include:
• paid and unpaid amounts recoverable;
• whether the balance is in dispute or subject to legal collection;
•
the relative financial health of the reinsurer as classified by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based
upon our financial reviews; reinsurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in
receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are
assigned ORRs that will generate a significant allowance; and
• whether collateral and collateral arrangements exist.
An estimate of the reinsurance recoverable's lifetime expected credit losses is established utilizing a probability of default and loss
given default method, which reflects the reinsurer’s ORR. The allowance for credit losses excludes disputed amounts. An allowance
for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.
The total reinsurance recoverables as of December 31, 2023 were $69.8 billion. As of that date, utilizing AIG’s ORRs,
(i) approximately 90 percent of the reinsurance recoverables were investment grade, of which 51 percent related to General Insurance
and 39 percent related to Life and Retirement; (ii) approximately 9 percent of the reinsurance recoverables were non-investment
grade, the majority of which related to General Insurance and (iii) approximately one percent of the reinsurance recoverables related
to entities that were not rated by AIG.
The total reinsurance recoverables as of December 31, 2022 were $71.8 billion. As of that date, utilizing AIG’s ORRs,
(i) approximately 92 percent of the reinsurance recoverables were investment grade, of which 53 percent related to General Insurance
and 39 percent related to Life and Retirement; (ii) approximately 7 percent of the reinsurance recoverables were non-investment
grade, the majority of which related to General Insurance; (iii) less than one percent of the non-investment grade reinsurance
recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables related to entities that
were not rated by AIG.
As of December 31, 2023 and December 31, 2022, approximately 83 percent and 77 percent, respectively, of our non-investment
grade reinsurance exposure related to captive insurers. These arrangements are typically collateralized by letters of credit, funds
withheld or trust agreements.
AIG | 2023 Form 10-K
185
Reinsurance Recoverable Allowance
The following table presents a rollforward of the reinsurance recoverable allowance:
ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance
Years Ended December 31,
(in millions)
Balance, beginning of year
2023
Life and
Retirement
General
Insurance
$
260 $
General
Insurance
2022
Life and
Retirement
Total
84 $ 344 $
281 $
Total
101 $ 382
2021
Life and
Retirement
General
Insurance
$
292 $
Total
83 $ 375
Addition to (release of) allowance for
expected credit losses and disputes, net
Write-offs charged against the allowance for
credit losses and disputes
Recoveries of amounts previously written off
Other changes
(5)
—
—
—
Balance, end of year
$
255 $
(5)
(10)
(22)
(17)
(39)
(49)
(49)
—
—
—
—
30 $ 285 $
(5)
2
4
260 $
(5)
—
2
—
—
4
84 $ 344
6
(17)
—
—
$
281 $
18
24
—
—
—
(17)
—
—
101 $ 382
Past-Due Status
We consider a reinsurance asset to be past due when it is 90 days past due. The allowance for credit losses is estimated excluding
disputed amounts. An allowance for disputes is established using the losses incurred method for contingencies. Past due balances on
claims that are not in dispute were not material for any of the periods presented.
9. Deferred Policy Acquisition Costs
DAC represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing
insurance contracts. We defer incremental costs that result directly from, and are essential to, the acquisition or renewal of an
insurance contract. Such DAC generally include agent or broker commissions and bonuses, premium taxes, and medical and
inspection fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed
to assess whether it is fully deferrable. We partially defer costs, including certain commissions, when we do not believe that the entire
cost is directly related to the acquisition or renewal of insurance contracts. Commissions that are not deferred to DAC are recorded in
General operating and other expenses in the Consolidated Statements of Income (Loss).
We also defer a portion of employee total compensation and payroll-related fringe benefits directly related to time spent performing
specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and
processing, and sales force contract selling. The amounts deferred are derived based on successful efforts for each distribution
channel and/or cost center from which the cost originates.
Short-duration insurance contracts: Policy acquisition costs are deferred and amortized over the period in which the related
premiums written are earned, generally 12 months. DAC is grouped consistent with the manner in which the insurance contracts are
acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying
insurance contracts. Investment income is anticipated in assessing the recoverability of DAC. We assess the recoverability of DAC on
an annual basis or more frequently if circumstances indicate an impairment may have occurred. This assessment is performed by
comparing recorded net unearned premiums and anticipated investment income on in-force business to the sum of expected losses
and loss adjustment expenses incurred, unamortized DAC and maintenance costs. If the sum of these costs exceeds the amount of
recorded net unearned premiums and anticipated investment income, the excess is recognized as an offset against the asset
established for DAC. This offset is referred to as a premium deficiency charge. Increases in expected losses and loss adjustment
expenses incurred can have a significant impact on the likelihood and amount of a premium deficiency charge.
Long-duration insurance contracts: DAC for all long-duration contracts, except for those with limited to no exposure to policyholder
behavior risk, (i.e., certain investment contracts), is grouped and amortized on a constant level basis (i.e., approximating straight line
amortization with adjustments for expected terminations) over the expected term of the related contracts using assumptions
consistent with those used in estimating the related liability for future policy benefits, or any other related balances, for those
corresponding contracts, as applicable. Capitalized expenses are only included in DAC amortization as expenses are incurred. For
amortization purposes, contracts are grouped into annual cohorts by issue year and product and to segregate reinsured and non-
reinsured contracts. For life insurance contracts, amortization is based on insurance in-force, while initial deposits are used for
deferred annuity contracts, structured settlements and pension risk transfer products. Changes in future assumptions (e.g., expected
duration of contracts or amount of coverage expected to be in force) are applied by adjusting the amortization rate prospectively. The
Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each
period. DAC is capped at the amount of expenses capitalized as the DAC balance does not accrue interest. DAC is not subject to
recoverability testing.
186
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 9. Deferred Policy Acquisition Costs
Value of Business Acquired (VOBA) is determined at the time of acquisition and is reported in the Consolidated Balance Sheets
with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase.
VOBA is amortized, consistent with DAC, i.e., over the life of the business on a constant level basis.
Internal Replacements of Long-duration and Investment-oriented Products: For some products, policyholders can elect to
modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or
rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal
replacements. If the modification does not substantially change the contract, we do not change the accounting and amortization of
existing DAC and related actuarial balances. If an internal replacement represents a substantial change, the original contract is
considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new
deferrable costs associated with the replacement contract are deferred.
The following table presents the transition rollforward for DAC*:
(in millions)
Pre-adoption December 31, 2020 DAC balance
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
$
2,359 $
560 $
4,371 $
26 $
Total
7,316
Adjustments for the removal of related balances in Accumulated other
comprehensive income (loss) originating from unrealized gains (losses)
2,062
534
547
7
3,150
Post-adoption January 1, 2021 DAC balance
$
4,421 $
1,094 $
4,918 $
33 $
10,466
*
Excludes $2.5 billion of DAC in General Insurance.
Prior to the adoption of LDTI, DAC for investment-oriented products included the effect of unrealized gains or losses on fixed maturity
securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in
AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of
related balances in AOCI originating from unrealized gains (losses) balances reduced DAC.
The following table presents a rollforward of DAC:
Years Ended December 31, 2023
(in millions)
Balance, beginning of year
Capitalization
Amortization expense
Other, including foreign exchange
Dispositions*
Reclassified to held for sale
Balance, end of year
Years Ended December 31, 2022
Balance, beginning of year
Capitalization
Amortization expense
Other, including foreign exchange
Balance, end of year
Years Ended December 31, 2021
Balance, beginning of year
Capitalization
Amortization expense
Other, including foreign exchange
Balance, end of year
General
Insurance
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
$
$
$
$
$
2,310 $
4,135
(3,747)
(45)
(578)
—
2,075 $
2,428 $
3,648
(3,536)
(230)
2,310 $
2,489 $
3,658
(3,566)
(153)
$
2,428 $
4,597 $
705
(567)
—
—
—
4,735 $
4,553 $
562
(519)
1
4,597 $
4,421 $
579
(447)
—
4,553 $
1,060 $
78
(82)
—
—
—
1,056 $
1,078 $
62
(80)
—
1,060 $
1,094 $
62
(78)
—
1,078 $
4,839 $
473
(403)
54
—
(814)
4,149 $
4,904 $
429
(415)
(79)
4,839 $
4,918 $
420
(427)
(7)
4,904 $
51 $
28
(9)
—
—
—
70 $
38 $
21
(7)
(1)
51 $
33 $
10
(6)
1
38 $
Total
12,857
5,419
(4,808)
9
(578)
(814)
12,085
13,001
4,722
(4,557)
(309)
12,857
12,955
4,729
(4,524)
(159)
13,001
* Includes amounts related to the sale of Validus Re through the date of disposition.
AIG | 2023 Form 10-K
187
ITEM 8 | Notes to Consolidated Financial Statements | 9. Deferred Policy Acquisition Costs
DEFERRED SALES INDUCEMENTS
We offer DSI which include enhanced crediting rates or bonus payments to contract holders (bonus interest) on certain annuity and
investment contract products. To qualify for such accounting treatment as an asset, the bonus interest must be explicitly identified in
the contract at inception. We must also demonstrate that such amounts are incremental to amounts we credit on similar contracts
without bonus interest and are higher than the contracts’ expected ongoing crediting rates for periods after the bonus period. DSI is
reported in Other assets, while amortization related to DSI is recorded in Interest credited to policyholder account balances.
DSI amounts are deferred and amortized on a constant level basis over the life of the contract consistent with DAC. Changes in future
assumptions (e.g., expected duration of contracts) are applied by adjusting the amortization rate prospectively rather than through a
retrospective catch up adjustment. The Company has elected to implicitly account for actual experience, whether favorable or
unfavorable, in its amortization expense each period, consistent with DAC.
The following table presents the transition rollforward for DSI*:
(in millions)
Pre-adoption December 31, 2020 DSI balance
Adjustments for the removal of related balances in Accumulated other comprehensive income
(loss) originating from unrealized gains (losses)
Post-adoption January 1, 2021 DSI balance
* Other assets, excluding DSI, totaled $12.8 billion.
Individual
Retirement
Group
Retirement
$
$
190
$
91
$
284
474
$
114
205
$
Total
281
398
679
Prior to the adoption of LDTI, deferred sales inducements for investment-oriented products included the effect of unrealized gains or
losses on fixed maturity securities classified as available-for-sale. At the Transition Date, these adjustments were removed with a
corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the
adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced DSI.
The following table presents a rollforward of DSI:
Years Ended December 31,
(in millions)
Balance, beginning of year
2023
Group
Retirement
Individual
Retirement
$
381 $
Capitalization
Amortization expense
Balance, end of year*
7
(55)
333 $
$
2022
Group
Retirement
2021
Group
Retirement
Total
558
8
(69)
497
Individual
Retirement
$
428 $
9
(56)
381 $
$
177 $
1
(14)
164 $
Total
619
9
(70)
558
Individual
Retirement
$
474 $
10
(56)
428 $
$
191 $
—
(14)
177 $
205 $
—
(14)
191 $
Total
679
10
(70)
619
*
At December 31, 2023, 2022 and 2021, Other assets, excluding DSI, totaled $12.6 billion, $11.8 billion and $14.0 billion, respectively.
10. Variable Interest Entities
A variable interest entity (VIE) is a legal entity that does not have sufficient equity at risk to finance its activities without additional
subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the
entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. Consolidation of a VIE
by its primary beneficiary is not based on majority voting interest, but is based on other criteria discussed below.
We enter into various arrangements with VIEs in the normal course of business and consolidate the VIEs when we determine we are
the primary beneficiary. This analysis includes a review of the VIE’s capital structure, related contractual relationships and terms,
nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity. When assessing
the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks to which the entity was designed to
expose the variable interest holders.
The primary beneficiary is the entity that has both (i) the power to direct the activities of the VIE that most significantly affect the
entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be potentially
significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of our decision-
making ability and our ability to influence activities that significantly affect the economic performance of the VIE.
188
AIG | 2023 Form 10-K
BALANCE SHEET CLASSIFICATION AND EXPOSURE TO LOSS
ITEM 8 | Notes to Consolidated Financial Statements | 10. Variable Interest Entities
Creditors or beneficial interest holders of VIEs for which AIG is the primary beneficiary generally have recourse only to the
assets and cash flows of the VIEs and do not have recourse to AIG, except in limited circumstances when AIG has provided
a guarantee to the VIE’s interest holders. The following table presents the total assets and total liabilities associated with
our variable interests in consolidated VIEs, as classified in the Consolidated Balance Sheets:
(in millions)
December 31, 2023
Assets:
Bonds available for sale
Other bond securities
Equity securities
Mortgage and other loans receivable
Other invested assets
Alternative investments(a)
Investment real estate
Short-term investments
Cash
Accrued investment income
Other assets
Total(b)
Liabilities:
Debt of consolidated investment entities
Other(c)
Total
(in millions)
December 31, 2022
Assets:
Bonds available for sale
Equity securities
Mortgage and other loans receivable
Other invested assets
Alternative investments(a)
Investment real estate
Short-term investments
Cash
Accrued investment income
Other assets
Total(b)
Liabilities:
Debt of consolidated investment entities
Other(c)
Total
Real Estate and
Investment Entities(d)
Securitization
Vehicles(e)
$
36 $
148 $
45
8
—
2,695
1,488
125
61
2
94
4,554 $
1,094 $
82
1,176 $
—
—
2,063
—
—
10
—
7
2
2,230 $
1,106 $
1
1,107 $
$
$
$
Real Estate and
Investment Entities(d)
Securitization
Vehicles(e)
$
— $
3,672 $
51
—
2,842
1,731
191
71
—
102
—
2,221
—
—
281
—
9
70
Total
184
45
8
2,063
2,695
1,488
135
61
9
96
6,784
2,200
83
2,283
Total
3,672
51
2,221
2,842
1,731
472
71
9
172
$
$
$
4,988 $
6,253 $
11,241
1,358 $
85
1,443 $
4,336 $
47
4,383 $
5,694
132
5,826
(a) Comprised primarily of investments in real estate joint ventures at December 31, 2023 and 2022.
(b) The assets of each VIE can be used only to settle specific obligations of that VIE.
(c) Comprised primarily of Other liabilities at December 31, 2023 and 2022.
(d) At December 31, 2023 and 2022, off-balance sheet exposure primarily consisting of our insurance companies’ commitments to real estate and investment entities were
$1.9 billion and $2.1 billion, respectively, of which commitments to external parties were $0.4 billion and $0.6 billion, respectively.
(e) During the year ended December 31, 2023, as part of the sale of AIG Credit Management, LLC, certain consolidated investment entities were deconsolidated. The
impact of the deconsolidation was a decrease of $3.6 billion in assets and $3.1 billion in liabilities, resulting in a pre-tax loss of $14 million.
We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of
VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii)
other commitments and guarantees to the VIE.
AIG | 2023 Form 10-K
189
The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our
maximum exposure to loss associated with these VIEs:
ITEM 8 | Notes to Consolidated Financial Statements | 10. Variable Interest Entities
(in millions)
December 31, 2023
Real estate and investment entities(a)
Other(b)
Total
December 31, 2022
Real estate and investment entities(a)
Other(b)
Total
Total VIE
Assets
On-Balance
Sheet(c)
Off-Balance
Sheet
Maximum Exposure to Loss
$
$
$
$
528,053 $
1,027
529,080 $
504,219 $
1,302
505,521 $
9,125
58
9,183
9,145
247
9,392
$
$
$
$
3,720 (d) $
748 (e)
4,468
$
3,938 (d) $
747 (e)
4,685
$
Total
12,845
806
13,651
13,083
994
14,077
(a) Comprised primarily of hedge funds and private equity funds.
(b) At December 31, 2023 and 2022, excludes approximately $1,971 million and $2,057 million, respectively, of VIE assets related to AIGFP and its consolidated
subsidiaries, with maximum off-balance sheet exposure to loss of $1,941 million and $2,033 million, respectively. For additional information, see Note 1.
(c) At December 31, 2023 and 2022, $9.1 billion and $9.3 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.
(d) These amounts represent our unfunded commitments to invest in private equity funds and hedge funds.
(e) These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of
the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.
REAL ESTATE AND INVESTMENT ENTITIES
Through our insurance operations and AIG Global Real Estate Investment Corp., we are an investor in various real estate investment
entities, some of which are VIEs. These investments are typically with unaffiliated third-party developers via a partnership or limited
liability company structure. The VIEs’ activities consist of the development or redevelopment of commercial, industrial and residential
real estate. Our involvement varies from being a passive equity investor or finance provider to actively managing the activities of the
VIEs.
Our insurance operations participate as passive investors in the equity issued by certain third-party-managed hedge and private
equity funds that are VIEs. Our insurance operations typically are not involved in the design or establishment of these VIEs, nor do
they actively participate in the management of the VIEs.
SECURITIZATION AND REPACKAGING VEHICLES
We created certain VIEs that hold investments, primarily in investment-grade debt securities and loans, and issued beneficial interests
in these investments. Some of these VIEs were created to facilitate our purchase of asset-backed securities. In these situations, all of
the beneficial interests are owned by our insurance operations and are consolidated by AIG. In other instances, we have created VIEs
that are securitizations of residential mortgage loans or other forms of collateralized loan obligations or repackage loan and other
assets into pass-through securities. Our insurance subsidiaries own some of the beneficial interests of these VIEs, and we maintain
the power to direct the activities of the VIEs that most significantly impact their economic performance. Accordingly, we consolidate
these entities and those beneficial interests issued to third parties are reported as debt of consolidated investment entities. This debt
is non-recourse to AIG.
RMBS, CMBS, OTHER ABS AND CLOS
Primarily through our insurance operations, we are a passive investor in RMBS, CMBS, other ABS and CLOs, the majority of which
are issued by domestic special purpose entities. We generally do not sponsor or transfer assets to, or act as the servicer to these
asset-backed structures, and were not involved in the design of these entities.
Our maximum exposure in these types of structures is limited to our investment in securities issued by these entities and, where
applicable, any unfunded commitments to these entities. Conditional unfunded commitments for these unconsolidated entities are
$435 million at December 31, 2023. Based on the nature of our investments and our passive involvement in these types of structures,
we have determined that we are not the primary beneficiary of these entities. We have not included these entities in the above tables;
however, the fair values of our investments in these structures are reported in Notes 5 and 6.
Additionally from time to time, AIG participates in the design of certain VIEs which we do not consolidate. The notes issued by these
VIEs are recognized at fair value and included in available for sale securities in our financial statements. As of December 31, 2023,
the total VIE assets from these securitizations are $3 billion, of which AIG’s maximum exposure to loss is $2.4 billion.
190
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting
11. Derivatives and Hedge Accounting
We use derivatives and other financial instruments as part of our financial risk management programs and as part of our investment
operations. Interest rate derivatives (such as interest rate swaps) are used to manage interest rate risk associated with embedded
derivatives contained in insurance contract liabilities, fixed maturity securities, outstanding medium- and long-term notes as well as
other interest rate sensitive assets and liabilities. Foreign exchange derivatives (principally foreign exchange forwards and swaps) are
used to economically mitigate risk associated with non-U.S. dollar denominated debt, net capital exposures, foreign currency
transactions, and foreign denominated investments. Equity derivatives are used to economically mitigate financial risk associated with
embedded derivatives and MRBs in certain insurance liabilities. We use credit derivatives to manage our credit exposures.
Commodity derivatives are used to hedge exposures within reinsurance contracts. The derivatives are effective economic hedges of
the exposures that they are meant to offset. In addition to hedging activities, we also enter into derivative contracts with respect to
investment operations, which may include, among other things, CDSs, total return swaps and purchases of investments with
embedded derivatives, such as equity-linked notes and convertible bonds.
Interest rate, currency, equity and commodity swaps, credit contracts, swaptions, options and forward transactions are accounted for
as derivatives, recorded on a trade-date basis and carried at fair value. Unrealized gains and losses are reflected in income, when
appropriate. Aggregate asset or liability positions are netted on the Consolidated Balance Sheets only to the extent permitted by
qualifying master netting arrangements in place with each respective counterparty. Cash collateral posted with counterparties in
conjunction with transactions supported by qualifying master netting arrangements is reported as a reduction of the corresponding net
derivative liability, while cash collateral received in conjunction with transactions supported by qualifying master netting arrangements
is reported as a reduction of the corresponding net derivative asset.
Derivatives, with the exception of embedded derivatives, are reported at fair value in the Consolidated Balance Sheets in Other assets
and Other liabilities. Embedded derivatives are generally presented with the host contract in the Consolidated Balance Sheets. A
bifurcated embedded derivative is measured at fair value and accounted for in the same manner as a free standing derivative
contract. The corresponding host contract is accounted for according to the accounting guidance applicable for that instrument.
For additional information on embedded derivatives, see Notes 5, 13 and 14.
The following table presents the notional amounts of our derivatives and the fair value of derivative assets and liabilities in
the Consolidated Balance Sheets:
(in millions)
Derivatives designated as
hedging instruments:(a)
Interest rate contracts
Foreign exchange contracts
Derivatives not designated as
hedging instruments:(a)
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit contracts(b)
Other contracts(c)
Total derivatives, gross
Counterparty netting(d)
Cash collateral(e)
Total derivatives on Consolidated
Balance Sheets(f)
December 31, 2023
December 31, 2022
Gross Derivative Assets Gross Derivative Liabilities Gross Derivative Assets Gross Derivative Liabilities
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
$
1,863 $
3,847
230
416
$
752 $
6,402
17
336
$
251 $
4,543
$
355
642
1,688 $
4,899
66
317
42,549
8,803
81,110
—
2,109
44,640
3,056
820
2,019
—
41
13
$ 184,921 $ 6,595
(3,864)
(2,220)
42,466
9,900
9,595
—
509
48
$
69,672 $
3,614
558
745
—
37
2
39,833
8,626
31,264
212
1,808
47,184
3,367
1,202
428
9
32
14
5,309
(3,864)
(1,050)
$ 133,721 $ 6,049
(3,895)
(1,640)
34,128
10,397
4,740
20
933
—
$
56,805 $
4,772
821
26
—
41
—
6,043
(3,895)
(1,917)
$
511
$
395
$
514
$
231
(a) Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.
(b) As of December 31, 2023 and 2022, included CDSs on super senior multi-sector CLO with a net notional amount of $50 million and $79 million (fair value liability of
$32 million and $32 million, respectively). The net notional amount represents the maximum exposure to loss on the portfolio.
(c) Consists primarily of stable value wraps and contracts with multiple underlying exposures.
(d) Represents netting of derivative exposures covered by a qualifying master netting agreement.
AIG | 2023 Form 10-K
191
ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting
(e) Represents cash collateral posted and received that is eligible for netting.
(f) Freestanding derivatives only, excludes embedded derivatives. Derivative instrument assets and liabilities are recorded in Other assets and Other liabilities, respectively.
Fair value of assets related to bifurcated embedded derivatives was $1.2 billion at December 31, 2023 and $2.2 billion at December 31, 2022. Fair value of liabilities
related to bifurcated embedded derivatives was $8.0 billion and $5.4 billion, respectively, at December 31, 2023 and 2022. A bifurcated embedded derivative is generally
presented with the host contract in the Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in fixed index annuities and
index universal life products, which include equity and interest rate components, and the funds withheld arrangement with Fortitude Re. For additional information, see
Note 8.
COLLATERAL
We engage in derivative transactions that are not subject to a clearing requirement directly with unaffiliated third parties, in most
cases, under International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements. Many of the ISDA Master Agreements
also include Credit Support Annex provisions, which provide for collateral postings that may vary at various ratings and threshold
levels. We attempt to reduce our risk with certain counterparties by entering into agreements that enable collateral to be obtained from
a counterparty on an upfront or contingent basis. We minimize the risk that counterparties might be unable to fulfill their contractual
obligations by monitoring counterparty credit exposure and collateral value and generally requiring additional collateral to be posted
upon the occurrence of certain events or circumstances. In addition, certain derivative transactions have provisions that require
collateral to be posted by us upon a downgrade of our long-term debt ratings or give the counterparty the right to terminate the
transaction. In the case of some of the derivative transactions, upon a downgrade of our long-term debt ratings, as an alternative to
posting collateral and subject to certain conditions, we may assign the transaction to an obligor with higher debt ratings or arrange for
a substitute guarantee of our obligations by an obligor with higher debt ratings or take other similar action. The actual amount of
collateral required to be posted to counterparties in the event of such downgrades, or the aggregate amount of payments that we
could be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors
prevailing at and after the time of the downgrade.
Collateral posted by us to third parties for derivative transactions was $1.9 billion and $2.9 billion at December 31, 2023 and 2022,
respectively. In the case of collateral posted under derivative transactions that are not subject to clearing, this collateral can generally
be repledged or resold by the counterparties. Collateral provided to us from third parties for derivative transactions was $2.8 billion
and $2.0 billion at December 31, 2023 and 2022, respectively. In the case of collateral provided to us under derivative transactions
that are not subject to clearing, we generally can repledge or resell collateral.
OFFSETTING
We have elected to present all derivative receivables and derivative payables, and the related cash collateral received and paid, on a
net basis on our Consolidated Balance Sheets when a legally enforceable ISDA Master Agreement exists between us and our
derivative counterparty. An ISDA Master Agreement is an agreement governing multiple derivative transactions between two
counterparties. The ISDA Master Agreement generally provides for the net settlement of all, or a specified group, of these derivative
transactions, as well as transferred collateral, through a single payment, and in a single currency, as applicable. The net settlement
provisions apply in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a
specified group of, derivative transactions governed by the ISDA Master Agreement.
HEDGE ACCOUNTING
We designated certain derivatives entered into with third parties as fair value hedges of available for sale investment securities held
by our insurance subsidiaries. The fair value hedges include foreign currency forwards and cross currency swaps designated as
hedges of the change in fair value of foreign currency denominated available for sale securities attributable to changes in foreign
exchange rates. We also designated certain interest rate swaps entered into with third parties as fair value hedges of fixed rate GICs
attributable to changes in benchmark interest rates.
We use foreign currency denominated debt and cross-currency swaps as hedging instruments in net investment hedge relationships
to mitigate the foreign exchange risk associated with our non-U.S. dollar functional currency foreign subsidiaries. For net investment
hedge relationships where issued debt is used as a hedging instrument, we assess the hedge effectiveness and measure the amount
of ineffectiveness based on changes in spot rates. For net investment hedge relationships that use derivatives as hedging
instruments, we assess hedge effectiveness and measure hedge ineffectiveness using changes in forward rates. For the years ended
December 31, 2023, 2022 and 2021, we recognized gains (losses) of $(44) million, $312 million and $201 million, respectively,
included in Change in foreign currency translation adjustments in Other comprehensive income (loss) related to the net investment
hedge relationships.
A qualitative methodology is utilized to assess hedge effectiveness for net investment hedges, while regression analysis is employed
for all other hedges.
192
AIG | 2023 Form 10-K
The following table presents the gain (loss) recognized in income on our derivative instruments in fair value hedging
relationships in the Consolidated Statements of Income (Loss):
ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting
(in millions)
Year Ended December 31, 2023
Interest rate contracts:
Gains/(Losses) Recognized in Income for:
Hedging
Derivatives(a)
Excluded
Components(b)
Hedged
Items
Net Impact
Interest credited to policyholder account balances
$
79 $
— $
(99) $
Foreign exchange contracts:
Net realized gains/(losses)
Year Ended December 31, 2022
Interest rate contracts:
Interest credited to policyholder account balances
Net investment income
Foreign exchange contracts:
Net realized gains/(losses)
Year Ended December 31, 2021
Interest rate contracts:
Interest credited to policyholder account balances
Net investment income
Foreign exchange contracts:
Net realized gains/(losses)
$
$
(20)
(11)
2
(1)
(422)
(11)
422
(81) $
11
— $
—
83 $
(12)
382
244
(382)
244
(19) $
9
— $
—
17 $
(11)
(2)
(2)
210
139
(210)
139
(a) Gains and losses on derivative instruments designated and qualifying in fair value hedges that are included in the assessment of hedge effectiveness.
(b) Gains and losses on derivative instruments designated and qualifying in fair value hedges that are excluded from the assessment of hedge effectiveness and
recognized in income on a mark-to-market basis.
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The following table presents the effect of derivative instruments not designated as hedging instruments in the Consolidated
Statements of Income (Loss):
Years Ended December 31,
(in millions)
By Derivative Type:
Interest rate contracts
Foreign exchange contracts
Equity contracts
Commodity contracts
Credit contracts
Other contracts
Embedded derivatives
Total
By Classification:
Policy fees
Net investment income - excluding Fortitude Re funds withheld assets
Net investment income - Fortitude Re funds withheld assets
Net realized gains (losses) - excluding Fortitude Re funds withheld assets(a)
Net realized gains (losses) on Fortitude Re funds withheld assets(b)
Policyholder benefits and claims incurred
Change in the fair value of market risk benefits, net(c)
Total
Gains (Losses) Recognized in Income
2023
2022
2021
$
$
$
$
(404) $
(384)
(142)
9
(2)
64
(3,485)
(4,344) $
64 $
—
(11)
(1,158)
(2,112)
—
(1,127)
(4,344) $
(2,190) $
1,149
(497)
(13)
(4)
100
8,566
7,111 $
63 $
2
(10)
1,111
7,347
(19)
(1,383)
7,111 $
(573)
278
(736)
(9)
(12)
64
(1,079)
(2,067)
61
5
—
263
(575)
(4)
(1,817)
(2,067)
(a) Includes $13 million gain related to the sale of Laya and AIG Life. For further details on these transactions, see Notes 1 and 4.
(b) Includes over-the-counter derivatives supporting the funds withheld arrangements with Fortitude Re and the embedded derivative contained within the funds withheld
payable with Fortitude Re.
(c) This represents activity related to derivatives that economically hedged changes in the fair value of certain market risk benefits.
AIG | 2023 Form 10-K
193
ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting
CREDIT RISK-RELATED CONTINGENT FEATURES
We estimate that at December 31, 2023, based on our outstanding financial derivative transactions, a downgrade of our long-term
senior debt ratings to BBB or BBB– by Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and/or a
downgrade to Baa2 or Baa3 by Moody’s Investors’ Service, Inc. would permit counterparties to make additional collateral calls and
permit certain counterparties to elect early termination of contracts, resulting in corresponding collateral postings and termination
payments in the total amount of up to approximately $6 million. The aggregate fair value of our derivatives that were in a net liability
position and that contain such credit risk-related contingencies which can be triggered below our long-term senior debt ratings of
BBB+ or Baa1 was approximately $32 million and $32 million at December 31, 2023 and 2022, respectively. The aggregate fair value
of assets posted as collateral under these contracts at December 31, 2023 and 2022, was approximately $34 million and $34 million,
respectively.
HYBRID SECURITIES WITH EMBEDDED CREDIT DERIVATIVES
We invest in hybrid securities (such as credit-linked notes) with the intent of generating income and not specifically to acquire
exposure to embedded derivative risk. As is the case with our other investments in RMBS, CMBS, CLO and ABS, our investments in
these hybrid securities are exposed to losses only up to the amount of our initial investment in the hybrid security. Other than our
initial investment in the hybrid securities, we have no further obligation to make payments on the embedded credit derivatives in the
related hybrid securities.
We elect to account for our investments in these hybrid securities with embedded written credit derivatives at fair value, with changes
in fair value recognized in Net investment income. Our investments in these hybrid securities are reported as Other bond securities in
the Consolidated Balance Sheets. The fair value of these hybrid securities was under $1 million at both December 31, 2023 and 2022,
respectively. These securities have par amounts of $42 million and $42 million at December 31, 2023 and 2022, respectively, and
have remaining stated maturity dates that extend to 2052.
12. Goodwill and Other Intangible Assets
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually
identified and separately recognized. Goodwill is tested for impairment at the reporting unit level, which is defined as an operating
segment or one level below, and the test is performed annually, or more frequently if circumstances indicate an impairment may have
occurred. At December 31, 2023, goodwill is reported within our General Insurance business – North America and International
operating segments, our Life and Retirement business – Life Insurance operating segment and our Other Operations segment. When
a business is transferred from one reporting unit to another, goodwill from the original reporting unit is allocated among reporting units
based on the fair value of business transferred, relative to business retained by a reporting unit.
The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist
that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the
qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely
than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is
performed.
If the qualitative test is not performed or if the test indicates a potential impairment is present, we estimate the fair value of each
reporting unit and compare the estimated fair value with the carrying amount of the reporting unit, including allocated goodwill. The
estimate of a reporting unit’s fair value involves management judgment and is based on one or a combination of approaches including
discounted expected future cash flows, market-based earnings multiples of the unit’s peer companies, external appraisals or, in the
case of reporting units being considered for sale, third-party indications of fair value, if available. We consider one or more of these
estimates when determining the fair value of a reporting unit to be used in the impairment test.
If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. If the carrying value of a reporting
unit exceeds its estimated fair value, goodwill associated with that reporting unit potentially is impaired. The amount of impairment, if
any, is measured as the excess of a reporting unit’s carrying amount over its fair value not to exceed the total amount of goodwill
allocated to that reporting unit and recognized in income.
194
AIG | 2023 Form 10-K
The following table presents the changes in goodwill by operating segment:
ITEM 8 | Notes to Consolidated Financial Statements | 12. Goodwill and Other Intangible Assets
(in millions)
Balance at January 1, 2022:
Goodwill - gross
Accumulated impairments
Net goodwill
Increase (decrease) due to:
Other
Balance at December 31, 2022:
Goodwill - gross
Accumulated impairments
Net goodwill
Increase (decrease) due to:
Dispositions*
Reclassified to held for sale
Other
Balance at December 31, 2023:
Goodwill - gross
Accumulated impairments
Net goodwill
General Insurance
North
America
International
Life
Insurance
Other
Operations
$
$
3,791
(1,145)
2,646
$
3,443
(2,255)
1,188
—
(92)
3,791
(1,145)
2,646
(369)
—
—
3,351
(2,255)
1,096
—
—
42
3,422
(1,145)
2,277
$
3,393
(2,255)
1,138
$
$
239
(67)
172
(16)
223
(67)
156
(30)
(23)
—
170
(67)
103
$
$
60
(10)
50
(21)
39
(10)
29
(9)
—
1
31
(10)
21
$
$
Total
7,533
(3,477)
4,056
(129)
7,404
(3,477)
3,927
(408)
(23)
43
7,016
(3,477)
3,539
*
Primarily represents amounts related to the sale of Validus Re through the date of disposition.
Indefinite lived intangible assets are not subject to amortization. Indefinite lived intangible assets primarily include Lloyd’s syndicate
capacity and brand names. Finite lived intangible assets are amortized over their useful lives. Finite lived intangible assets primarily
include distribution networks and are recorded net of accumulated amortization. The Company tests indefinite lived intangible assets
for impairment on an annual basis or whenever events or circumstances suggest that the carrying value of an intangible asset may
exceed the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If this condition exists and
the carrying value of an intangible asset exceeds its fair value, the excess is recognized as an impairment and is recorded as a
charge against net income (loss).
The Other intangible assets and Value of distribution network acquired (VODA) were $394 million and $704 million at December 31,
2023 and 2022, respectively.
13. Insurance Liabilities
LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (LOSS RESERVES)
Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and
loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve
estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment
impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax
income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are
common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Reserve
changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve
strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development or
reserve releases.
Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from
policyholders of approximately $12.1 billion at both December 31, 2023 and 2022, respectively. These recoverable amounts are
related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured
retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for
U.S. Commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf
of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a
credit exposure to us. At December 31, 2023 and 2022 we held collateral of approximately $8.7 billion and $8.6 billion, respectively,
for these deductible recoverable amounts, consisting primarily of letters of credit and funded trust agreements. Allowance for credit
losses for the unsecured portion of these recoverable amounts was $14 million at both December 31, 2023 and 2022.
AIG | 2023 Form 10-K
195
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
The following table presents the rollforward of activity in loss reserves:
Years Ended December 31,
(in millions)
Liability for unpaid loss and loss adjustment expenses, beginning of year
Reinsurance recoverable
Net Liability for unpaid loss and loss adjustment expenses, beginning of year
Losses and loss adjustment expenses incurred:
Current year
Prior years, excluding discount and amortization of deferred gain
Prior years, discount charge (benefit)
Prior years, amortization of deferred gain on retroactive reinsurance(a)
Total losses and loss adjustment expenses incurred
Losses and loss adjustment expenses paid:
Current year
Prior years
Total losses and loss adjustment expenses paid
Other changes:
Foreign exchange effect
Losses and loss adjustment expenses recognized within gain on divestitures
Retroactive reinsurance adjustment (net of discount)(b)
Dispositions(c)
Reclassified to held for sale, net of reinsurance recoverables
Total other changes
Liability for unpaid loss and loss adjustment expenses, end of year:
Net liability for unpaid losses and loss adjustment expenses
Reinsurance recoverable
Total
2023
2022
2021
$
75,167 $
79,026 $
77,720
(32,102)
(35,213)
(34,431)
43,065
43,813
43,289
15,100
16,434
16,434
(392)
307
(81)
(530)
(605)
(252)
(171)
(131)
(190)
14,934
15,047
15,942
(3,836)
(11,868)
(15,704)
(4,011)
(11,066)
(15,077)
(3,868)
(11,503)
(15,371)
606
569
158
(3,505)
(19)
(2,191)
(1,463)
(593)
—
745
—
—
(718)
—
546
—
—
(47)
40,104
30,289
43,065
32,102
43,813
35,213
$
70,393 $
75,167 $
79,026
(a) Includes $33 million, $63 million and $53 million for the retroactive reinsurance agreement with NICO covering U.S. asbestos exposures for the years ended December
31, 2023, 2022 and 2021, respectively.
(b) Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $150 million, $(301) million and $(42) million for the years ended
December 31, 2023, 2022 and 2021, respectively.
(c) Includes amounts related to the sale of Validus Re through the date of disposition.
The following table presents the reconciliation of the net liability for unpaid losses and loss adjustment expenses in the
following tables to Loss Reserves in the Consolidated Balance Sheets for the year ended December 31, 2023:
(in millions)
U.S. Workers' Compensation (before discount)
U.S. Excess Casualty
U.S. Other Casualty
U.S. Financial Lines
U.S. Property and Special Risks
U.S. Personal Insurance
UK/Europe Casualty and Financial lines
UK/Europe Property and Special Risks
UK/Europe and Japan Personal Insurance
Total
Reconciling Items
Discount on workers' compensation lines
Other product lines*
Unallocated loss adjustment expenses
Total Loss Reserves
Net liability for unpaid
losses and loss adjustment
expenses as presented in the
disaggregated tables below
3,888
3,321
$
Reinsurance recoverable on
unpaid losses and loss
adjustment expenses included in
the disaggregated tables below
5,203
3,272
$
Gross liability
for unpaid
losses and loss
adjustment expenses
9,091
$
6,593
4,112
5,672
4,403
767
7,447
2,913
1,483
34,006
$
3,676
1,622
1,494
2,163
1,951
1,665
671
21,717
$
7,788
7,294
5,897
2,930
9,398
4,578
2,154
55,723
(2,337)
14,739
2,268
70,393
$
$
* Reinsurance recoverable for other product lines of $8.7 billion resulted in a net liability for unpaid losses and loss adjustment expenses of $6.0 billion for the year ended
December 31, 2023.
196
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Prior Year Development
In the sections below, we provide details by coverage group regarding incurred losses, reserve balances and prior year development.
The first table below shows prior year development by coverage group, the first two columns of which will again be presented in the
coverage group sections that follow. After this table we describe historical drivers of prior year development as well as actuarial
methods and relevant terminology. The following coverage group sections present the undiscounted incurred losses and allocated
loss adjustment expenses by accident year on a net basis after reinsurance, with separate presentation of the adverse development
cover where applicable, excluding related amortization of the deferred gain. Each section also contains a description of the business
included in that section. Finally, we show a table of claims payout patterns by coverage.
In 2017, we entered into adverse development reinsurance agreement (ADC) cessions with NICO under which we transferred to
NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior.
The following table presents the reconciliation of net prior year development before the ADC cessions from the tables below
to the net prior year development after ADC cessions and amortization of deferred gain for the year ended December 31,
2023:
Prior Year
Development
Net of External
Reinsurance
Before ADC
Cessions
Prior Year
Development
Net of External
Reinsurance
After ADC
Cessions(a)
$
(267) $
(114) $
(32)
(133)
94
(10)
(64)
165
81
(57)
(7)
18
(133)
50
—
(65)
165
81
(57)
(7)
$
(162)
(392) $
(172)
(234) $
(in millions)
U.S. Workers' Compensation
U.S. Excess Casualty
U.S. Other Casualty
U.S. Financial Lines
U.S. Property and Special Risks
U.S. Personal Insurance
UK/Europe Casualty and Financial lines
UK/Europe Property and Special Risks
UK/Europe and Japan Personal Insurance
Other Operations Run-Off
Other product lines
Subtotal, adjusted pre-tax basis
Remove impact of Retroactive Reinsurance
Amortization of deferred gain at inception
Prior year development ceded under the Asbestos LPT
Prior year development ceded under the ADC
Re-Attribution
of ADC
Recovery(b)
Amortization
of Deferred
Gain at
Inception
Prior Year
Development
After
Amortization
and
Re-attribution
(24) $
(27)
36
13
2
—
—
—
—
—
—
(52) $
(39)
(37)
(26)
(9)
(1)
—
—
—
—
—
— $
(164) $
(190)
(48)
(134)
37
(7)
(66)
165
81
(57)
(7)
(172)
(398)
164
—
(158)
(392)
Total, prior years, excluding discount and amortization of deferred gain
$
(a) Change in net ultimate loss and loss adjustment expenses excludes the portion of prior year development we have ceded under the Asbestos Loss Portfolio Transfer
(LPT) and the ADC, both of which are provided by NICO and are considered retroactive reinsurance under U.S. GAAP.
(b) Reattribution of the ADC recovery takes place annually as we model the future payments on the subject reserves covered by the ADC to determine when the aggregate
payments will exceed the attachment. ADC recoverables are then reallocated by line based on payments expected to be made after attachment point is exceeded.
During 2023, we recognized favorable prior year loss reserve development of $392 million excluding discount and amortization of
deferred gain. The development was primarily driven by:
• Favorable development on U.S. Workers’ Compensation of $267 million, net of external reinsurance but before ADC cessions due
to a continuation of favorable loss cost trends in guaranteed cost and excess segments across most accident years;
• Favorable development on U.S. Excess Casualty of $32 million, net of external reinsurance but before ADC cessions, driven by
favorable development on the Excess Construction Runoff Portfolio;
• Favorable development on U.S Other Casualty of $133 million, net of external reinsurance but before ADC cessions, largely driven
by favorable experience in construction defect and construction wraps as well as guaranteed cost auto and general liability;
• Unfavorable development in U.S. Financial Lines of $94 million, net of external reinsurance but before ADC cessions, due to
unfavorable development on High Attaching Excess D&O, M&A, Primary National D&O, Cyber data privacy claims, and Architects
& Engineers, partially offset by favorable development on Primary Private Not for Profit D&O and Financial Institutions D&O;
• Favorable development on U.S Property and Special Risks of $10 million, net of external reinsurance but before ADC cessions,
reflecting favorable development on prior year catastrophes in the 2017-2021 accident years, offset by adverse development on
prior year catastrophes in the 2022 accident year;
• Favorable development in U.S. Personal Insurance of $64 million driven by favorable development on prior year catastrophes
across several events primarily in the 2017-2020 accident years;
AIG | 2023 Form 10-K
197
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
• Unfavorable development in UK/Europe Casualty and Financial Lines of $165 million due to unfavorable development in auto
liability in Europe and UK and in UK D&O and Commercial Professional Indemnity business, partially offset by favorable
development in Financial Institutions Professional Indemnity and D&O in Europe and UK and Cyber and Commercial Professional
Indemnity in Europe;
• Unfavorable development on UK/Europe Property and Special Risks of $81 million driven by unfavorable development on prior
year catastrophes;
• Favorable development on UK/Europe and Japan Personal Insurance of $57 million driven by favorable development in Japan
personal auto and A&H business; and
• Favorable development of $162 million in total on other product lines, net of external reinsurance but before ADC cessions, driven
by favorable development in global specialty and financial lines in Canada and other International regions.
During 2022, we recognized favorable prior year loss reserve development of $530 million excluding discount and amortization of
deferred gain. The development was primarily driven by:
• Favorable development on U.S. Workers’ Compensation of $644 million, net of external reinsurance but before ADC cessions due
to continued favorable frequency and severity trends across most accident years particularly for excess and guaranteed cost US
Workers Compensation segments;
• Favorable development on U.S. Excess Casualty of $116 million, net of external reinsurance but before ADC cessions, driven by
lead and mid-excess Retail Excess Casualty;
• Favorable development on U.S Other Casualty of $149 million, net of external reinsurance but before ADC cessions, largely driven
by favorable experience in Commercial Auto, General Liability and Construction Wraps;
• Unfavorable development in U.S. Financial Lines of $939 million, net of external reinsurance but before ADC cessions, due to
higher severity trends particularly in Excess & Primary D&O and Excess & Financial Institutions E&O. This was partially offset by
favorable development in EPLI;
• Favorable development in U.S. Property and Special Risks of $81 million driven by more favorable crop experience than
anticipated;
• Unfavorable development in UK/Europe Casualty and Financial Lines of $82 million due to unfavorable experience in UK Financial
Lines in M&A, Commercial PI and Commercial D&O as well as unfavorable Casualty experience due to large loss activity in the
UK, European Excess Casualty, and French Auto experience;
• Favorable development on UK/Europe Property and Special Risks of $153 million driven by Global Specialty, primarily from
accident years 2020 and 2021. This favorable experience was seen in each product line and in every region;
• Favorable development on UK/Europe and Japan Personal Insurance of $111 million driven by Japan Auto and A&H business with
additional favorable experience in UK and Europe; and
• Favorable development of $264 million in total on other product lines, net of external reinsurance but before ADC cessions, driven
by runoff construction business and favorable results from our Canadian business across most products.
During 2021, we recognized favorable prior year loss reserve development of $171 million excluding discount and amortization of
deferred gain. The development was primarily driven by:
• Favorable development on U.S. Workers’ Compensation of $617 million, net of external reinsurance but before ADC cessions due
to continued favorable frequency and severity trends seen across the diagonals for many subsets of U.S. Workers Compensation
especially for recent accident years;
• Favorable development in U.S. Personal Lines of $412 million, net of external reinsurance but before ADC cessions, mainly due to
favorable development and subrogation recoveries from the 2017 and 2018 catastrophe years;
• Favorable development on UK/Europe and Japan Personal Insurance of $173 million due to favorable loss trends in personal auto
in Japan and Europe and accident and health in all three regions;
• Favorable development on UK/Europe Property and Special Risks of $118 million driven by favorable emergence across several
Specialty classes;
• Unfavorable development in U.S. Financial Lines of $649 million, net of external reinsurance but before ADC cessions, due to
adverse experience in D&O, Cyber and EPLI. This includes adverse experience in Fiduciary from emergence of Excessive Fee
claims and Cyber ransomware losses;
• Unfavorable development on UK/Europe Casualty and Financial Lines of $210 million driven by recognition of large loss activity in
Financial PI in the UK and Commercial D&O in Europe; and
• Unfavorable development in U.S. Property and Special Risks of $172 million driven largely by the impact of reductions in
reinsurance recoveries driven by changes in catastrophe loss estimates.
Our analyses and conclusions about prior year reserves also help inform our judgments about the current accident year loss and loss
adjustment expense ratios we selected.
198
AIG | 2023 Form 10-K
Loss Development Information
The following is information about incurred and paid loss developments as of December 31, 2023, net of reinsurance. The cumulative
number of reported claims, the total of IBNR liabilities and expected development on reported loss included within the net incurred
loss amounts are presented in the following section.
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Reserving Methodology
We use a combination of methods to project ultimate losses for both long-tail and short-tail exposures, which include:
• Paid Development method: The Paid Development method estimates ultimate losses by reviewing paid loss patterns and
selecting paid ultimate loss development factors. These factors are then applied to paid losses by applying them to accident years,
with further expected changes in paid loss. Since the method does not rely on case reserves, it is not directly influenced by
changes in the adequacy of case reserves.
•
Incurred Development method: The Incurred Development method is similar to the Paid Development method, but it uses case
incurred losses instead of paid losses. Since this method uses more data (case reserves in addition to paid losses) than the Paid
Development method, the incurred development patterns may be less variable than paid development patterns.
• Expected Loss Ratio method: The Expected Loss Ratio method multiplies premiums by an expected loss ratio to produce
ultimate loss estimates for each accident year. This method may be useful if loss development patterns are inconsistent, losses
emerge very slowly, or there is relatively little loss history from which to estimate future losses. Expected loss ratio methods for
business written in excess of a deductible may be given significant weight in the most recent five accident years. The expected
loss ratios used for recent accident years are based on the projected ultimate loss ratios for older years adjusted for rate changes,
loss trend including inflation, and where appropriate, changing market conditions.
• Bornhuetter-Ferguson method: The Bornhuetter-Ferguson method using premiums and paid losses is a combination of the Paid
Development method and the Expected Loss Ratio method where the weight given to each method is the reciprocal of the loss
development factor. This method normally determines expected loss ratios similar to the method used for the Expected Loss Ratio
method. The Bornhuetter-Ferguson method using premiums and incurred losses is similar to the Bornhuetter-Ferguson method
using premiums and paid losses except that it uses case-incurred losses.
• Cape Cod method: The Cape Cod method is mechanically similar to the Bornhuetter-Ferguson method with the difference being
that the Expected Loss Ratio estimates are determined based on a weighting of the loss estimates that come from the Paid/
Incurred Development Methods. This method may be more responsive to recent loss trends than the Bornhuetter-Ferguson
method.
• Average Loss method: The Average Loss method multiplies a projected number of ultimate claims by an estimated ultimate
severity average loss for each accident year to produce ultimate loss estimates. Since projections of the ultimate number of claims
are often less variable than projections of ultimate loss, this method can provide more reliable results for reserve categories where
loss development patterns are inconsistent or too variable to be relied on exclusively.
In updating our loss reserve estimates, we consider and evaluate inputs from many sources, including actual claims data, the
performance of prior reserve estimates, observed industry trends, our internal peer review processes, including challenges and
recommendations from our Enterprise Risk Management group, as well as the views of third-party actuarial firms. We use these
inputs to improve our evaluation techniques, and to analyze and assess the change in estimated ultimate loss for each accident year
by product line. Our analyses produce a range of indications from various methods, from which we select our best estimate.
In determining the actual carried loss reserves, we consider both the internal actuarial best estimate and numerous other internal and
external factors, including:
• an assessment of economic conditions, including real GDP growth, inflation, employment rates or unemployment duration, stock
market volatility and changes in corporate bond spreads;
•
•
changes in the legal, regulatory, judicial and social environment, including changes in road safety, public health and cleanup
standards;
changes in medical cost trends (inflation, intensity and utilization of medical services) and wage inflation trends;
• underlying policy pricing, terms and conditions including attachment points and policy limits;
•
•
•
•
•
change in claims handling philosophy, operating model, processes, and related ongoing enhancements;
third-party claims reviews that are periodically performed for key classes of claims such as toxic tort, environmental and other
complex casualty claims;
third-party actuarial reviews that are periodically performed for key classes of business;
input from underwriters on pricing, terms, and conditions and market trends; and
changes in our reinsurance program, pricing and commutations.
Where appropriate and identifiable, adjustments have been made to standard projection techniques. Changes in Claims organization
management, differing referral and review criteria and other factors may also be expected to alter loss emergence.
AIG | 2023 Form 10-K
199
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
The following factors are relevant to the loss development information included in the tables below:
• Table organization: The tables are organized by accident year and include policies written on an occurrence and claims- made
basis. We note that for certain categories of claims (e.g., construction defect claims and environmental claims) and for reinsurance
recoverable, losses may sometimes be reclassified to an earlier or later accident year as more information about the date of
occurrence becomes available to us. These reclassifications are shown as development in the respective years in the tables
below. Financial Lines business is primarily written on a claims-made basis, while the majority of the workers’ compensation,
excess casualty, other casualty, and run-off property and casualty lines of business are written on an occurrence basis. Primarily,
all short-tail lines in Property and Special Risks and Personal Insurance are written on an occurrence basis.
• Groupings: We believe our groupings have homogenous risk characteristics with similar development patterns and would
generally be subject to similar trends and reflect our reportable segments. The incurred losses and loss adjustment expenses and
paid losses in the following tables for the current reporting year are allocated to the line of business and accident years based on
how the business is coded by profit center and line of business.
• Reinsurance: Our reinsurance program varies by exposure type. Historically we have leveraged facultative and treaty
reinsurance, both on a pro-rata and excess of loss basis. Our reinsurance program may change from year to year, which may
affect the comparability of the data presented in our tables.
• Adverse development reinsurance agreement: We have provided the impact of the ADC in an additional table below our
Incurred Losses and Allocated Loss Adjustment Expenses tables. The impact of the ADC is shown beginning in 2016 given the
retroactive date of the contract and coincides with the effective date of the contract. For the lines of business covered by the
agreement (U.S. Workers' Compensation, U.S. Excess Casualty, U.S. Other Casualty, U.S. Financial Lines, U.S. Property and
Special Risks and U.S. Personal Insurance or collectively, the Covered Lines), an attribution of the loss recoveries to the line of
business by calendar year and accident year is performed based on the underlying distribution of the losses subject to the
agreement. Specifically, the future claim payments for all subject incurred losses were projected into future years based on the
same actuarial assumptions underlying the related reserves. The additional table presented after discussion of prior year
development by line of business reconciles the changes in net ultimates to our overall prior year development and provides the
reattribution of loss recoveries for the Covered Lines. The reinsurance terms of the ADC were then used to identify the future
claims payments for which 80% will be reimbursed by NICO. At each reporting period, the attribution of the ADC recoveries is
performed. The factors that could cause the attribution to lines of business and accident year to change include changes in
underlying actuarial assumptions as to timing and amount of future claim payments.
•
Incurred but not reported liabilities (IBNR): We include development from past reported losses in IBNR.
• Data excluded from tables: Information with respect to accident years older than ten years is excluded from the development
tables. Unallocated loss adjustment expenses are also excluded.
• Foreign exchange: The loss development for operations outside of the U.S. is presented for all accident years using the current
exchange rate at December 31, 2023. Although this approach requires restating all prior accident year information, the changes in
exchange rates do not impact incurred and paid loss development trends.
• Acquisitions: We include acquisitions from all accident years presented in the tables. For purposes of this disclosure, we have
applied the retrospective method for the acquired reserves, including incurred and paid claim development histories throughout the
relevant tables. It should be noted that historical reserves for the acquired businesses were established by the acquired companies
using methods, assumptions and procedures then in effect which may differ from our current reserving bases. Accordingly, it may
not be appropriate to extrapolate future redundancies or deficiencies based on the aggregated historical results shown in the
triangles.
• Dispositions: We exclude dispositions from all accident years presented in the tables.
• Claim counts: We consider a reported claim to be one claim for each claimant or feature for each loss occurrence. Claims relating
to losses that are 100 percent reinsured are excluded from the reported claims in the tables below. Reported claims for losses from
assumed reinsurance contracts are not available and hence not included in the reported claims.
There are limitations that should be considered on the reported claim count data in the tables below, including:
– Claim counts are presented only on a reported (not an ultimate) basis;
– The tables below include lines of business and geographies at a certain aggregated level which may indicate different
frequency and severity trends and characteristics, and may not be as meaningful as the claim count information related to the
individual products within those lines of business and geographies;
– Certain lines of business are more likely to be subject to occurrences involving multiple claimants and features, which can
distort measures based on the reported claim counts in the table below; and
– Reported claim counts are not adjusted for ceded reinsurance, which may distort the measure of frequency or severity.
200
AIG | 2023 Form 10-K
Supplemental Information: The information about incurred and paid loss development for all periods preceding the year ended
December 31, 2023 and the related historical claims payout percentage disclosure is unaudited and is presented as supplementary
information.
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
The following tables present undiscounted, incurred and paid losses and allocated loss adjustment expenses by accident
year, on a net basis after reinsurance, with a separate presentation of the ADC excluding the related amortization of the
deferred gain:
U.S. Workers' Compensation
U.S. Workers’ Compensation is an extremely long-tail line of business, with loss emergence extending for decades. We generally use
a combination of loss development, frequency/severity and expected loss ratio methods for workers’ compensation.
Many of our workers compensation policies contain risk-sharing features, including high deductibles, self-insured retentions or
retrospective rating features, in addition to a traditional insurance component. These risk-sharing programs generally are large and
complex, comprising multiple products, years and structures, and are subject to amendment over time. We group guaranteed cost
and excess of deductible business separately and then further by state and industry subset to the extent that meaningful differences
are determined to exist. We also separately analyze certain subsets of the portfolio that have unique characteristics (e.g., U.S.
government sub-contractor accounts and construction wrap-up business). For excess of deductible business, we also segment by
size of deductible and whether the claim is handled by AIG or an outside third-party administrator. The proportion of large deductible
business has increased over time, which has slowed the reporting pattern of claims.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$ 1,729 $ 1,764 $ 1,866 $ 1,862 $ 1,794 $ 1,709 $ 1,679 $ 1,637 $ 1,614 $
1,589 $
(25) $
1,708
1,864
1,866
1,814
1,722
1,675
1,634
1,612
1,299
1,346
1,318
1,140
1,090
1,075
1,036
789
850
776
998
1,021
887
763
961
873
597
731
911
812
573
597
712
896
801
521
570
523
1,592
1,025
705
875
788
477
545
493
500
(20)
(11)
(7)
(21)
(13)
(44)
(25)
(30)
172
355
224
218
385
285
106
274
296
397
41,529 $
(349) $
(143) $
1,240 $
37,109
31,868
27,695
22,222
17,000
13,839
10,982
9,339
7,359
(438)
(228)
1,154
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,025
705
875
788
477
545
493
500
29
127
224
218
385
285
106
274
296
397
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
$
8,589 $
(196)
$
(787)
$
7,802
(4,727)
4,327
—
(65)
(6)
118
(3,632)
(4,609)
695
$
8,189 $
(267)
$
(4,301)
$
3,888
AIG | 2023 Form 10-K
201
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
1,311 $
1,310 $
1,309 $
1,329 $
1,223 $
1,171 $
1,243 $
1,240 $
Unaudited
1,279
1,299
1,279
1,346
789
1,318
1,318
850
998
1,134
1,140
776
1,021
887
1,105
1,090
763
961
873
597
1,041
1,075
731
911
812
573
597
1,092
1,036
1,154
1,025
712
896
801
521
570
523
705
875
788
477
545
493
500
(3)
62
(11)
(7)
(21)
(13)
(44)
(25)
(30)
$
3,889 $
4,724 $
5,793 $
6,287 $
6,612 $
6,911 $
7,394 $
7,802 $
(92)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(4,609)
695
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
3,888 $
(48)
26
(114)
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
(555) $
(552) $
(485) $
(380) $
(456) $
(466) $
(371) $
(349) $
(585)
(587)
(496)
(588)
(570)
(593)
(520)
(438)
Unaudited
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
22
82
—
—
—
—
—
—
—
—
$
(1,140) $
(1,139) $
(981) $
(968) $
(1,026) $
(1,059) $
(891) $
(787) $
104
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
118
(3,632)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(4,301) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
231 $
558 $
786 $
930 $
1,030 $
1,096 $
1,137 $
1,180 $
1,207 $
1,226
$
Unaudited
234
524
147
725
378
93
854
521
224
85
925
584
294
215
93
979
630
333
296
219
64
1,013
1,038
1,058
662
367
359
301
159
60
686
389
388
347
205
128
45
694
395
409
389
245
171
102
38
$
4,727
$
(118)
17
32
153
Paid Impact
of ADC
(64)
(54)
—
—
—
—
—
—
—
—
202
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
U.S. Excess Casualty
U.S. Excess Casualty policies tend to attach at a high layer above underlying policies, which causes the loss development pattern to
lag significantly. Many of the claims notified to the excess layers are closed without payment because the claims never reach our layer
as a result of high deductibles and other underlying coverages, while the claims that reach our layer can have large case reserves or
settlements and be highly variable in terms of reported timing and amount. For a portion of this business, the underlying primary
policies are issued by other insurance companies, which can limit our access to relevant information to help inform our judgments as
the loss events evolve and mature. Furthermore, this coverage is often significantly impacted by the underwriting cycle and external
judicial trends.
Recent accident years reflect a strategy towards having higher attachment points on the portfolio through changing participations in
various layers within an insured’s program.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$
938 $ 1,069 $ 1,275 $ 1,260 $ 1,339 $ 1,283 $ 1,248 $ 1,269 $ 1,259 $
1,245 $
989
1,463
1,440
1,603
1,656
1,694
1,721
1,686
898
1,146
1,162
1,171
1,274
1,250
1,263
856
1,002
1,097
1,153
1,157
1,200
648
646
577
721
583
406
769
597
413
278
769
612
410
277
305
1,658
1,276
1,182
779
600
420
274
305
345
(14) $
(28)
13
(18)
10
(12)
10
(3)
—
277
258
314
264
155
301
238
100
189
326
2,985 $
(384) $
(144) $
861 $
3,142
2,813
2,079
1,461
1,347
1,284
855
490
303
(462)
(116)
1,196
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,276
1,182
779
600
420
274
305
345
133
142
314
264
155
301
238
100
189
326
$
8,084 $
(42)
$
(846)
$
7,238
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
(4,724)
2,044
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
$
5,404 $
—
(75)
85
(32)
251
(1,488)
(4,473)
556
$
(2,083)
$
3,321
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
902 $
905 $
915 $
844 $
912 $
949 $
869 $
861 $
Unaudited
1,027
898
1,015
1,146
856
1,139
1,162
1,002
648
1,163
1,171
1,097
646
577
1,211
1,274
1,153
721
583
406
1,231
1,250
1,157
769
597
413
278
1,174
1,263
1,200
769
612
410
277
305
1,196
1,276
1,182
779
600
420
274
305
345
(8)
22
13
(18)
10
(12)
10
(3)
—
$
2,827 $
3,922 $
4,866 $
5,498 $
6,260 $
6,644 $
6,879 $
7,238 $
14
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(4,473)
556
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
3,321 $
(111)
115
18
AIG | 2023 Form 10-K
203
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
(373) $
(355) $
(424) $
(439) $
(336) $
(320) $
(390) $
(384) $
(436)
(425)
(464)
(493)
(483)
(490)
(512)
(462)
Unaudited
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
(809) $
(780) $
(888) $
(932) $
(819) $
(810) $
(902) $
(846) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
251
(1,488)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(2,083) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
$
3 $
77 $
240 $
444 $
590 $
703 $
815 $
839 $
878 $
902
$
Unaudited
9
210
28
391
80
1
718
204
45
1
935
388
156
125
7
1,061
1,124
1,253
1,291
502
505
227
43
4
566
585
315
79
15
4
670
676
414
157
33
43
14
798
781
494
216
128
62
51
1
$
4,724
$
(251)
6
50
—
—
—
—
—
—
—
—
56
(36)
30
50
Paid Impact
of ADC
(80)
(171)
—
—
—
—
—
—
—
—
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
204
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
U.S. Other Casualty
U.S. Other Casualty includes general liability, automobile liability, environmental, medical malpractice, and other casualty lines of
business. These lines of business are all long-tail in nature and while somewhat diverse in terms of exposures, these lines are often
subject to similar trends. These lines are often significantly impacted by the underwriting cycle and external judicial trends. Many of
our policies contain risk-sharing features, including high deductibles, self-insured retentions or retrospective rating features, in addition
to a traditional insurance component. These risk-sharing programs generally are large and complex, comprising multiple products,
years and structures, and are subject to amendment over time.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$ 1,751 $ 1,721 $ 1,963 $ 2,009 $ 1,910 $ 1,916 $ 1,946 $ 1,935 $ 1,944 $
1,905 $
1,329
1,762
1,829
1,736
1,794
1,834
1,824
1,815
1,339
1,343
1,321
1,391
1,340
1,323
1,293
602
629
802
738
845
674
837
668
870
643
824
1,796
1,297
654
810
1,059
1,058
1,053
1,062
1,039
524
576
795
538
793
793
540
790
819
933
(39) $
(19)
4
11
(14)
(23)
2
(3)
26
46
23
162
21
148
526
277
519
617
848
38,546 $
(214) $
(29) $
1,691 $
35,754
29,191
21,266
16,967
21,036
11,318
10,572
12,457
10,401
(282)
(8)
1,514
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,297
654
810
1,039
540
790
819
933
17
15
162
21
148
526
277
519
617
848
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
$ 10,583 $
(55)
$
(496)
$ 10,087
(6,668)
1,448
—
(67)
(11)
298
(1,053)
(6,370)
395
$
5,363 $
(133)
$
(1,251)
$
4,112
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
1,667 $
1,678 $
1,634 $
1,694 $
1,701 $
1,722 $
1,718 $
1,691 $
Unaudited
1,361
1,339
1,373
1,343
602
1,423
1,321
629
802
1,493
1,391
738
845
1,059
1,553
1,340
674
837
1,058
524
1,562
1,323
668
870
1,563
1,293
643
824
1,514
1,297
654
810
1,053
1,062
1,039
576
795
538
793
793
540
790
819
933
(27)
(49)
4
11
(14)
(23)
2
(3)
26
$
4,367 $
4,996 $
5,809 $
7,220 $
7,687 $
8,569 $
9,227 $
10,087 $
(73)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(6,370)
395
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
4,112 $
(73)
13
(133)
AIG | 2023 Form 10-K
205
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
(296) $
(331) $
(276) $
(222) $
(245) $
(213) $
(226) $
(214) $
(401)
(456)
(313)
(301)
(281)
(262)
(252)
(282)
Unaudited
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12
(30)
—
—
—
—
—
—
—
—
$
(697) $
(787) $
(589) $
(523) $
(526) $
(475) $
(478) $
(496) $
(18)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
298
(1,053)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(1,251) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
210 $
620 $
868 $
1,150 $
1,392 $
1,572 $
1,653 $
1,719 $
1,795 $
1,805
$
Unaudited
105
309
77
769
298
51
1,087
1,351
1,485
1,603
489
111
43
703
216
122
53
846
314
227
138
26
938
455
360
226
73
32
1,680
1,018
527
470
321
139
87
38
1,707
1,074
592
565
410
198
169
112
36
$
6,668
$
(298)
(6)
24
—
Paid Impact
of ADC
(122)
(176)
—
—
—
—
—
—
—
—
206
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
U.S. Financial Lines
U.S. Financial Lines business includes D&O, E&O, EPLI policies and various professional liability subsets of business, as well as the
fidelity book of business. This includes cyber coverage and mergers and acquisitions coverage, which have been a growing and
evolving portion of this portfolio. These product lines are predominantly claims-made in nature, losses are characterized by low
frequency and high severity, and results are often significantly impacted by external economic conditions.
Our analysis is segmented by major coverages, such as D&O, E&O, etc. and then further segmented by major industry groups (e.g.
corporate accounts, national accounts, financial institutions, private/not-for-profit, etc.). We also separately review primary business
from excess business for certain product lines.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$ 1,812 $ 1,777 $ 1,892 $ 1,927 $ 1,960 $ 1,981 $ 2,000 $ 2,057 $ 2,014 $
2,017 $
1,737
1,762
1,743
1,788
1,830
1,874
1,959
2,044
1,605
1,855
1,993
2,064
2,139
2,281
2,325
1,564
1,675
1,756
1,846
1,898
1,987
1,640
1,766
1,882
2,063
2,225
1,503
1,536
1,627
1,926
1,213
1,252
1,408
1,430
1,408
1,130
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
2,048
2,308
1,957
2,322
1,912
1,457
1,388
1,108
1,043
$ 17,560 $
(11,645)
271
$
6,186 $
3 $
4
(17)
(30)
97
(14)
49
(20)
(22)
50
—
27
17
94
91
78
133
130
498
513
331
894
948
950
17,650 $
(297) $
(68) $
1,720 $
16,253
16,127
15,269
14,833
13,319
10,390
7,117
5,809
6,467
(495)
(63)
1,553
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,308
1,957
2,322
1,912
1,457
1,388
1,108
1,043
23
15
133
130
498
513
331
894
948
950
$
(792)
$ 16,768
501
(223)
(11,144)
48
$
(514)
$
5,672
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
1,733 $
1,729 $
1,753 $
1,741 $
1,759 $
1,761 $
1,738 $
1,720 $
Unaudited
1,429
1,605
1,430
1,855
1,564
1,462
1,993
1,675
1,640
1,552
2,064
1,756
1,766
1,503
1,550
2,139
1,846
1,882
1,536
1,213
1,595
2,281
1,898
2,063
1,627
1,252
1,430
1,605
2,325
1,987
2,225
1,926
1,408
1,408
1,130
1,553
2,308
1,957
2,322
1,912
1,457
1,388
1,108
1,043
(18)
(52)
(17)
(30)
97
(14)
49
(20)
(22)
$
4,767 $
6,578 $
8,523 $
10,382 $
11,925 $
13,907 $
15,752 $
16,768 $
(27)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(11,144)
48
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
5,672 $
56
21
50
AIG | 2023 Form 10-K
207
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
(159) $
(198) $
(207) $
(240) $
(241) $
(296) $
(276) $
(297) $
(333)
(313)
(326)
(278)
(324)
(364)
(439)
(495)
Unaudited
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(21)
(56)
—
—
—
—
—
—
—
—
$
(492) $
(511) $
(533) $
(518) $
(565) $
(660) $
(715) $
(792) $
(77)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
501
(223)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(514) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
66 $
366 $
849 $
1,158 $
1,387 $
1,573 $
1,658 $
1,758 $
1,820 $
1,849
$
Unaudited
63
390
73
791
499
64
1,055
1,002
391
86
1,282
1,358
761
486
94
1,488
1,659
1,118
835
367
84
1,686
1,826
1,396
1,126
642
356
43
1,818
1,903
1,515
1,415
953
648
151
30
1,914
2,039
1,653
1,601
1,204
915
315
109
46
$
11,645
$
(501)
29
4
(44)
Paid Impact
of ADC
(147)
(354)
—
—
—
—
—
—
—
—
208
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
U.S. Property and Special Risks
U.S. Property products include commercial, industrial and energy-related property insurance products and services that cover
exposures to manmade and natural disasters, including business interruption. U.S. Special Risk products include aerospace,
environmental, political risk, trade credit, surety and marine insurance, and program business for various small and medium sized
enterprises insurance lines. The program segments include both property and casualty exposures. Recent years have seen an
increasing proportion of non-admitted coverages which has altered the underlying customer profile to be less severe in the aggregate.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$ 2,600 $ 2,396 $ 2,490 $ 2,480 $ 2,494 $ 2,477 $ 2,460 $ 2,446 $ 2,440 $
2,437 $
(3) $
2,567
2,506
2,489
2,492
2,466
2,471
2,479
2,490
2,674
2,748
2,690
2,697
2,707
2,694
2,700
4,673
4,239
4,127
4,153
4,173
4,212
2,978
2,993
2,992
3,229
3,201
2,177
2,146
2,211
2,222
3,391
3,320
3,280
2,339
2,213
3,171
2,493
2,713
4,175
3,210
2,177
3,238
2,160
3,281
2,528
3
13
(37)
9
(45)
(42)
(53)
110
4
4
8
15
112
25
761
101
690
777
60,766 $
(52) $
(2) $
2,385 $
59,513
54,821
79,764
69,922
78,848
68,644
81,795
85,477
88,129
(100)
(1)
2,393
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,713
4,175
3,210
2,177
3,238
2,160
3,281
2,528
2
3
8
15
112
25
761
101
690
777
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
$ 28,412 $
(45)
$
(152)
$ 28,260
(24,207)
409
—
39
(4)
87
(146)
(24,120)
263
$
4,614 $
(10)
$
(211)
$
4,403
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
2,423 $
2,419 $
2,430 $
2,401 $
2,382 $
2,376 $
2,364 $
2,385 $
Unaudited
2,365
2,674
2,391
2,748
4,673
2,405
2,690
4,239
2,978
2,372
2,697
4,127
2,993
2,177
2,372
2,707
4,153
2,992
2,146
3,391
2,372
2,694
4,173
3,229
2,211
3,320
2,339
2,375
2,700
4,212
3,201
2,222
3,280
2,213
3,171
2,393
2,713
4,175
3,210
2,177
3,238
2,160
3,281
2,528
$
7,462 $
12,231 $
14,742 $
16,767 $
20,143 $
22,714 $
25,738 $
28,260 $
21
18
13
(37)
9
(45)
(42)
(53)
110
(6)
9
(3)
—
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(24,120)
263
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
4,403 $
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
AIG | 2023 Form 10-K
209
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
(67) $
(141)
(61) $
(98)
(64) $
(87)
(76) $
(94)
(78) $
(99)
(70) $
(76) $
(52) $
(107)
(115)
(100)
Unaudited
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
(208) $
(159) $
(151) $
(170) $
(177) $
(177) $
(191) $
(152) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
87
(146)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(211) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
$
795 $
1,545 $
1,869 $
2,073 $
2,207 $
2,293 $
2,329 $
2,352 $
2,362 $
2,418
$
Unaudited
844
1,572
821
1,878
1,747
1,137
2,121
2,076
2,625
977
2,240
2,296
3,281
2,162
1,039
2,308
2,464
3,638
2,509
1,673
844
2,344
2,539
3,897
2,715
1,906
1,613
878
2,391
2,616
3,999
2,863
2,037
1,874
1,743
1,208
2,457
2,647
4,055
2,994
2,083
2,190
1,983
2,207
1,173
$
24,207
$
(87)
24
15
—
—
—
—
—
—
—
—
39
(30)
1
10
Paid Impact
of ADC
(20)
(67)
—
—
—
—
—
—
—
—
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
210
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
U.S. Personal Insurance
U.S. Personal Insurance consists of accident and health and personal lines. Accident and health products include voluntary and
sponsor-paid personal accident and supplemental health products for individuals, employees, associations and other organizations as
well as a broad range of travel insurance products and services for leisure and business travelers. Personal lines include automobile
and homeowners’ insurance, extended warranty, and consumer specialty products, such as identity theft and credit card protection.
Personal lines also provides insurance for high net worth individuals offered through AIG Private Client Group, including auto,
homeowners, umbrella, yacht, fine art and collections insurance. Personal lines are generally short-tail in nature and can reflect
significant salvage and subrogation recoveries.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance
Years Ended December 31, (in millions)
December 31, 2023
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
2023
Prior Year
Development
Excluding
the Impact
of ADC
Total of IBNR
Liabilities
Plus Expected
Development
on Reported
Losses
Cumulative
Number of
Reported
Claims
Incurred
Impact
of ADC
IBNR
Impact
of ADC
2023
(Net of
Impact
of ADC)
Total of
IBNR
Liabilities
Net of
Impact
of ADC
$ 1,552 $ 1,562 $ 1,572 $ 1,572 $ 1,583 $ 1,584 $ 1,588 $ 1,587 $ 1,592 $
1,592 $
— $
1,511
1,498
1,494
1,483
1,482
1,485
1,487
1,488
1,536
1,533
1,533
1,540
1,542
1,544
1,544
1,878
2,137
2,011
2,057
1,924
1,916
2,188
2,193
2,154
1,937
1,936
1,593
1,664
1,646
1,596
954
906
748
913
765
517
1,487
1,541
1,896
1,920
1,578
894
762
529
677
(1)
(3)
(20)
(16)
(18)
(19)
(3)
12
5
8
12
15
33
43
51
70
93
248
275,132 $
261,176
247,479
220,038
102,256
93,428
55,101
56,234
51,983
32,022
(8) $
(8)
—
—
—
—
—
—
—
—
— $
1,584 $
—
—
—
—
—
—
—
—
—
1,479
1,541
1,896
1,920
1,578
894
762
529
677
5
8
12
15
33
43
51
70
93
248
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of
Reinsurance from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development,
net of reinsurance
$ 12,876 $
(68)
$
(16)
$ 12,860
(12,060)
(48)
—
4
—
16
(1)
(12,044)
(49)
$
768 $
(64)
$
(1)
$
767
Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
$
1,564 $
1,564 $
1,571 $
1,580 $
1,584 $
1,582 $
1,584 $
1,584 $
Unaudited
1,476
1,536
1,475
1,533
1,878
1,472
1,533
2,137
2,188
1,476
1,540
2,011
2,193
1,593
1,480
1,542
2,057
2,154
1,664
954
1,482
1,544
1,924
1,937
1,646
906
748
1,481
1,544
1,916
1,936
1,596
913
765
517
1,479
1,541
1,896
1,920
1,578
894
762
529
677
—
(2)
(3)
(20)
(16)
(18)
(19)
(3)
12
$
4,576 $
6,450 $
8,901 $
10,393 $
11,435 $
11,769 $
12,252 $
12,860 $
(69)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
(12,044)
(49)
Unallocated loss adjustment expense prior year adjustment
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
767 $
4
—
(65)
AIG | 2023 Form 10-K
211
The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Calendar Years Ended December 31, (in millions)
2016
2017
2018
2019
2020
2021
2022
2023
Prior Year
Development
Unaudited
$
(8) $
(22)
(8) $
(19)
(12) $
(11)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4) $
(4) $
(5) $
(8) $
(8) $
(6)
—
—
—
—
—
—
—
—
(5)
—
—
—
—
—
—
—
—
(5)
—
—
—
—
—
—
—
—
(7)
—
—
—
—
—
—
—
—
(8)
—
—
—
—
—
—
—
—
$
(30) $
(27) $
(23) $
(10) $
(9) $
(10) $
(15) $
(16) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance
16
(1)
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance
$
(1) $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
$
959 $
1,380 $
1,463 $
1,507 $
1,536 $
1,555 $
1,568 $
1,572 $
1,579 $
1,584
$
Unaudited
931
1,320
857
1,411
1,344
941
1,439
1,422
1,672
1,227
1,455
1,460
1,896
1,939
884
1,461
1,501
1,789
1,973
1,295
667
1,463
1,512
1,826
1,789
1,379
679
488
1,468
1,518
1,852
1,832
1,416
725
650
372
1,471
1,521
1,861
1,849
1,491
824
658
401
400
$
12,060
$
(16)
—
(1)
—
—
—
—
—
—
—
—
(1)
—
—
(1)
Paid Impact
of ADC
(8)
(8)
—
—
—
—
—
—
—
—
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
212
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
UK/Europe Casualty and Financial Lines
UK/Europe is our largest non-U.S. region for Liability and Financial Lines. UK/Europe Casualty and Financial Lines is composed of
third-party coverages including general liability, auto liability, D&O, professional liability and various other coverages throughout both
the UK and Continental Europe. These areas are all long-tail in nature and while somewhat diverse in terms of exposures, these lines
are often subject to similar trends. These lines are impacted by the underwriting cycle and external judicial trends. The largest share
of business is in the UK, but significant business is also written in other European countries such as Germany, France, and Italy.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*
Years Ended December 31, (in millions)
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Unaudited
December 31, 2023
Total of IBNR
Liabilities
Plus Expected
Development on
Reported Losses
Cumulative
Number of
Reported
Claims
2023
Prior Year
Development
$ 1,036 $ 1,009 $ 1,032 $ 1,039 $ 1,034 $ 1,122 $ 1,064 $ 1,106 $ 1,111 $ 1,117 $
6 $
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
1,092 1,233 1,262 1,170 1,244 1,234 1,238 1,258
1,266
1,314 1,453 1,497 1,498 1,601 1,597 1,610
1,613
1,343 1,323 1,252 1,321 1,381 1,366
1,408
1,343 1,415 1,482 1,521 1,619
1,664
1,005 1,262 1,334 1,351
1,345
1,219 1,271 1,216
1,202
1,375 1,335
1,347
1,300
1,261
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net
of reinsurance
*
The losses reported in the table are not covered by the ADC.
75
74
102,063
113,865
100
142,721
177
149,665
245
151,467
292
142,426
474
723
894
1,100
85,762
76,503
71,630
57,306
8
3
42
45
(6)
(14)
12
(39)
57
—
108
—
165
1,472
$ 13,695 $
(7,109)
861
$ 7,447 $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*
Accident Year
2014
2015
2016
2017
2018
Unaudited
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
72 $
258 $
71
409 $
240
119
529 $
433
379
96
629 $
568
586
280
113
695 $
683
775
447
374
98
757 $
859
930
602
572
310
60
818 $
949
1,059
753
742
478
228
51
859 $
994
1,168
896
903
658
367
233
57
$
883
1,041
1,260
964
1,128
760
507
345
185
36
7,109
*
The losses reported in the table are not covered by the ADC.
AIG | 2023 Form 10-K
213
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
UK/Europe Property and Special Risks
UK/Europe Property products include commercial, industrial and energy-related property insurance products and services that cover
exposures to manmade and natural disasters, including business interruption. UK/Europe Special Risk products include aerospace,
environmental, political risk, trade credit, surety and marine insurance, and various small and medium sized enterprises insurance
lines.
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*
Years Ended December 31, (in millions)
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
December 31, 2023
Total of IBNR
Liabilities
Plus Expected
Development on
Reported Losses
Cumulative
Number of
Reported
Claims
2023
Prior Year
Development
Unaudited
$ 1,439 $ 1,470 $ 1,431 $ 1,460 $ 1,450 $ 1,426 $ 1,387 $ 1,382 $ 1,360 $ 1,349 $
1,552 1,469 1,531 1,463 1,444 1,434 1,421 1,455
1,442
1,536 1,685 1,678 1,682 1,678 1,674 1,609
1,604
1,649 1,614 1,609 1,616 1,600 1,566
1,565
1,505 1,555 1,533 1,520 1,468
1,463
1,138 1,100 1,101 1,090
1,086
1,301 1,241 1,200
1,218
1,019
982
932
1,123
1,288
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net
of reinsurance
*
The losses reported in the table are not covered by the ADC.
(2)
7
10
12
8
39
136
64
220
539
48,030
54,639
57,287
53,411
44,183
33,637
25,822
22,306
23,295
15,946
(11) $
(13)
(5)
(1)
(5)
(4)
18
(50)
165
94
—
(13)
—
81
1,359
$ 13,306 $
(10,479)
86
$ 2,913 $
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*
Accident Year
2014
2015
2016
2017
2018
Unaudited
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
311 $
912 $
346
1,187 $
920
456
1,255 $
1,193
1,114
353
1,293 $
1,295
1,367
940
316
1,320 $
1,331
1,500
1,222
978
264
1,329 $
1,354
1,545
1,364
1,161
649
249
1,342 $
1,362
1,574
1,420
1,289
820
668
189
1,350 $
1,363
1,591
1,459
1,303
907
819
504
194
1,354
1,362
1,585
1,472
1,339
944
912
691
661
159
$ 10,479
*
The losses reported in the table are not covered by the ADC.
UK/Europe and Japan Personal Insurance
UK/Europe and Japan Personal Insurance lines consist of accident and health and personal lines. Accident and health products
include voluntary and sponsor-paid personal accident and supplemental health products for individuals, employees, associations and
other organizations as well as a broad range of travel insurance products and services for leisure and business travelers. Personal
lines include automobile and homeowners’ insurance, extended warranty, and consumer specialty products, such as identity theft and
credit card protection. Personal lines are generally short-tail in nature.
214
AIG | 2023 Form 10-K
Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Years Ended December 31, (in millions)
Accident Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
December 31, 2023
Total of IBNR
Liabilities
Plus Expected
Development on
Reported Losses
Cumulative
Number of
Reported
Claims
2023
Prior Year
Development
Unaudited
$ 2,210 $ 2,220 $ 2,207 $ 2,204 $ 2,197 $ 2,197 $ 2,199 $ 2,197 $ 2,220 $ 2,224 $
2,284 2,264 2,265 2,257 2,255 2,255 2,256 2,254
2,257
2,241 2,240 2,226 2,221 2,219 2,216 2,209
2,212
2,196 2,118 2,103 2,099 2,115 2,100
2,108
2,555 2,461 2,458 2,431 2,450
2,448
2,085 2,050 2,015 2,000
1,909 1,771 1,713
1,776 1,719
1,889
2,002
1,701
1,689
1,854
1,698
4 $
3
3
8
(2)
2
(12)
(30)
(35)
2 1,799,271
— 1,777,699
1 1,794,987
— 1,718,502
4 1,915,683
3 1,673,976
19 1,389,704
32 1,387,230
89 2,050,657
256 1,275,686
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
from the table below
Liabilities for losses and loss adjustment expenses and prior year development before
accident year 2014, net of reinsurance
Unallocated loss adjustment expense prior year development
Liabilities for losses and loss adjustment expenses and prior year loss development, net
of reinsurance
*
The losses reported in the table are not covered by the ADC.
$ 20,193 $
(59)
(18,747)
37
—
2
—
$ 1,483 $
(57)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*
Accident Year
2014
2015
2016
2017
2018
Unaudited
2019
2020
2021
2022
2023
Years Ended December 31, (in millions)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
$
1,198 $
1,817 $
1,228
1,999 $
1,861
1,225
2,090 $
2,046
1,830
1,200
2,137 $
2,146
2,013
1,791
1,520
2,158 $
2,183
2,102
1,950
2,063
1,219
2,170 $
2,209
2,147
2,020
2,225
1,726
1,020
2,179 $
2,226
2,173
2,056
2,309
1,854
1,470
1,003
2,184 $
2,234
2,187
2,078
2,352
1,916
1,576
1,423
1,100
2,189
2,244
2,195
2,077
2,404
1,950
1,619
1,533
1,572
964
$ 18,747
*
The losses reported in the table are not covered by the ADC.
Claims Payout Patterns
The following table presents the historical average annual percentage claims payout on an accident year basis at the same
level of disaggregation as presented in the claims development table.
Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance (Unaudited)
Year
1
2
3
4
5
6
7
8
9
U.S. Workers' compensation
11.9%
17.2%
11.0%
7.2%
4.8%
3.2%
2.0%
1.7%
1.5%
U.S. Excess casualty
U.S. Other casualty
U.S. Financial Lines
U.S. Property and Special Risks
U.S. Personal Insurance
UK/Europe Casualty and Financial Lines
UK/Europe Property and Special Risks
UK/Europe and Japan Personal Insurance
1.2
5.8
3.7
35.2
61.6
5.6
21.1
57.9
8.5
11.3
14.6
32.2
23.8
14.3
38.7
26.2
9.2
14.2
18.2
11.8
5.2
12.2
16.7
7.2
18.1
14.4
15.6
8.1
0.8
11.3
7.7
3.6
10.5
13.7
12.5
4.9
2.4
9.3
2.7
1.8
7.9
9.4
8.1
3.1
0.9
10.3
2.1
1.3
7.4
6.7
6.1
1.8
0.5
6.1
0.8
0.5
6.6
4.0
5.8
1.3
0.3
4.9
0.2
0.4
2.7
2.8
3.9
1.5
0.3
3.7
0.3
0.3
10
1.2%
1.9
0.5
1.4
2.3
0.3
2.1
0.3
0.2
AIG | 2023 Form 10-K
215
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
DISCOUNTING OF LOSS RESERVES
At December 31, 2023 and 2022, the loss reserves reflect a net loss reserve discount of $1.2 billion and $1.3 billion, respectively,
including tabular and non-tabular calculations based upon the following assumptions:
• The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York, Pennsylvania and
Delaware, and follows the statutory regulations (prescribed or permitted) for each state.
– For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns.
– The Pennsylvania and Delaware regulators approved use of a consistent benchmark discount rate and spread (U.S. Treasury
rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania domiciled and Delaware
domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation
portfolios. In 2020, the regulators also approved that the discount rate will be updated on an annual basis.
• The tabular workers’ compensation discount is calculated based on the mortality rate used in the 2007 U.S. Life table and interest
rates prescribed or permitted by each state (i.e. New York is based on 5 percent interest rate and Pennsylvania and Delaware are
based on U.S. Treasury rate plus a liquidity premium). In the case that applying this tabular discount factor to our nominal reserves
produces a tabular discount that is greater than the indemnity portion of our case reserves, the tabular discount is capped at our
estimate of the indemnity portion of our cases reserves (45 percent).
The discount for asbestos reserves has been fully accreted.
At December 31, 2023 and 2022, the discount consists of $294 million and $314 million of tabular discount, respectively, and
$939 million and $964 million of non-tabular discount for workers’ compensation, respectively. During the years ended December 31,
2023, 2022 and 2021, the benefit / (charge) from changes in discount of $(195) million, $703 million and $193 million, respectively,
were recorded as part of the policyholder benefits and losses incurred in the Consolidated Statements of Income (Loss).
The following table presents the components of the loss reserve discount discussed above:
(in millions)
U.S. workers' compensation
Retroactive reinsurance
Total reserve discount(a)(b)
$
$
December 31, 2023
2,337 $
(1,104)
1,233 $
December 31, 2022
2,532
(1,254)
1,278
(a) Excludes $196 million and $135 million of discount related to certain long-tail liabilities in the UK at December 31, 2023 and 2022, respectively.
(b) Includes gross discount of $687 million and $763 million, which was 100 percent ceded to Fortitude Re at December 31, 2023 and 2022, respectively.
The following table presents the net loss reserve discount benefit (charge):
Years Ended December 31,
(in millions)
Current accident year
Accretion and other adjustments to prior year discount
Effect of interest rate changes
Net reserve discount benefit (charge)
Change in discount on loss reserves ceded under retroactive reinsurance
Net change in total reserve discount*
2023
112 $
(264)
(43)
(195)
150
(45) $
2022
98 $
(239)
844
703
(301)
402 $
2021
62
(88)
219
193
(42)
151
$
$
*
Excludes $61 million, $19 million and $(35) million of discount related to certain long-tail liabilities in the UK for the years ended December 31, 2023, 2022 and 2021,
respectively.
During 2023, net change in total reserve discount was impacted by updates to payout patterns, along with decreases in discount rates
due to an increase in U.S. Treasury rates offset by a decrease in the discount spread.
During 2022 and 2021, effective interest rates increased due to an increase in the forward yield curve component of the discount rates
reflecting an increase in U.S. Treasury rates along with changes in payout pattern assumptions.
Amortization of Deferred Gain on Retroactive Reinsurance
Amortization of the deferred gain on retroactive reinsurance includes $48 million, $189 million and $137 million related to the adverse
development reinsurance cover with NICO for the years ended December 31, 2023, 2022 and 2021, respectively.
Amounts recognized reflect the amortization of the initial deferred gain at inception, as amended for subsequent changes in the
deferred gain due to changes in subject reserves.
216
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
FUTURE POLICY BENEFITS
Future policy benefits primarily include reserves for traditional life and annuity payout contracts, which represent an estimate of the
present value of future benefits less the present value of future net premiums. Included in Future policy benefits are liabilities for
annuities issued in structured settlement arrangements whereby a claimant receives life contingent payments over their lifetime. Also
included are pension risk transfer arrangements whereby an upfront premium is received in exchange for guaranteed retirement
benefits. All payments under these arrangements are fixed and determinable with respect to their amounts and dates. Structured
settlement or other annuitization elections (e.g., certain single premium immediate annuities) that do not involve life contingent
payments, but rather payments for a stated period are included in Policyholder contract deposits.
For traditional and limited pay long-duration products, benefit reserves are accrued and benefit expense is recognized using a NPR
methodology for each annual cohort of business. This NPR method incorporates periodic retrospective revisions to the NPR to reflect
updated actuarial assumptions and variances in actual versus expected experience. The Future policy benefit liability is accrued by
multiplying the gross premium recognized in each period by the net premium ratio. The net premium is equal to the portion of the
gross premium required to provide for all benefits and certain expenses and may not exceed 100 percent. Benefits in excess of
premiums are expensed immediately through Policyholder benefits. In addition, periodic revisions to the NPR below 100 percent may
result in reclassification between the benefit reserves and deferred profit liability for limited pay contracts.
Insurance contracts are aggregated into annual cohorts for the purposes of determining the liability for future policy benefits (LFPB),
but are not aggregated across segments. These annual cohorts may be further segregated based on product characteristics, or to
distinguish business reinsured from non-reinsured business or products issued in different functional currencies. The assumptions
used to calculate the future policy benefits include discount rates, persistency and recognized morbidity and mortality tables modified
to reflect the Company's experience.
The current discount rate assumption for the liability for future policy benefits is derived from market observable yields on upper-
medium-grade fixed income instruments. The Company uses an external index as the source of the yields on these instruments for
the first 30 years. For years 30 to 50, the yield is derived using market observable yields. Yields for years 50 to 100 are extrapolated
using a flat forward approach, maintaining a constant forward spread through the period. The current discount rate assumption is
updated quarterly and used to remeasure the liability at the reporting date, with the resulting change in the discount rate reflected in
OCI.
The method for constructing and applying the locked-in discount rate assumptions on newly issued business is determined based on
factors such as product characteristics and the expected timing of cash flows. This discount rate assumption is derived from market
observable yields on upper-medium-grade fixed income instruments. Similar to the current discount rate assumption, the Company
may employ conversion and interpolation methodologies when necessary. The applicable interest accretion is reflected in Policyholder
benefits and losses incurred in the Consolidated Statements of Income (Loss).
The following table presents the transition rollforward of the liability for future policy benefits for nonparticipating
contracts(a):
(in millions)
Pre-adoption December 31, 2020 liability for future policy benefits
balance
Adjustments for the reclassification to the deferred profit liability
Change in cash flow assumptions and effect of net premiums
exceeding gross premiums
Effect of the remeasurement of the liability at a current single A rate
Adjustment for the removal of loss recognition balances related to
unrealized gain or loss on securities
Post-adoption January 1, 2021 liability for future policy benefits
balance
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(b)
Total
$
1,309 $
282 $ 11,129 $
11,029 $
22,206 $ 45,955
(65)
(14)
156
(8)
2
63
—
(766)
(859)
(1,698)
15
4
55
62
2,977
1,655
7,611
12,462
(64)
(60)
4
(292)
—
(412)
$
1,322 $
279 $ 14,125 $
11,630 $
29,013 $ 56,369
(a) Excludes future policy benefits for participating contracts, DPL, additional liabilities, Accident and Health, Group Benefits and Other Operations representing $11.0 billion
of liability for future policy benefits. See transition tables below for DPL and additional liabilities.
(b) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the
net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between
the two liabilities, with no impact on Retained earnings.
Adjustments for change in cash flow assumptions represents revised net premium ratios in excess of 100 percent for certain cohorts
at transition, with an offset to Retained earnings.
The effect of the remeasurement at the current single A rate is reported at the Transition Date and each subsequent balance sheet
date, with an offset in AOCI.
AIG | 2023 Form 10-K
217
Prior to adoption, loss recognition for traditional products was adjusted for the effect of unrealized gains on fixed maturity securities
available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI.
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
The following tables present the balances and changes in the liability for future policy benefits and a reconciliation of the
net liability for future policy benefits to the liability for future policy benefits in the Consolidated Balance Sheets:
Year Ended December 31, 2023
(in millions, except for liability durations)
Present value of expected net premiums
General
Insurance
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(f)
Total
Balance, beginning of year
$
1,929 $
— $
— $ 11,654 $
— $
991 $
14,574
Effect of changes in discount rate assumptions
(AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions
Effect of actual variances from expected
experience
Adjusted beginning of year balance
Issuances
Interest accrual
Net premium collected
Foreign exchange impact
Other
Ending balance at original discount rate
Effect of changes in discount rate assumptions
(AOCI)
Reclassified to Liabilities held for sale
Balance, end of year
Present value of expected future policy benefits
262
2,191
(2)
(16)
2,173
122
43
(283)
(14)
—
2,041
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,872
13,526
34
62
13,622
1,277
437
(1,464)
265
11
14,148
—
—
—
—
—
—
—
—
—
—
—
66
1,057
21
20
1,098
—
46
2,200
16,774
53
66
16,893
1,399
526
(118)
(1,865)
—
(9)
251
2
1,017
17,206
(339)
—
1,702 $
$
—
—
— $
(1,482)
(4,287)
—
—
— $ 8,379 $
—
—
— $
(44)
—
973 $
(1,865)
(4,287)
11,054
Balance, beginning of year
$
2,380 $
1,223 $
211 $ 21,179 $ 12,464 $
20,429 $
57,886
Effect of changes in discount rate assumptions
(AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions(a)
Effect of actual variances from expected
experience(a)
Adjusted beginning of year balance
Issuances
Interest accrual
Benefit payments
Foreign exchange impact
Other
$
$
Ending balance at original discount rate
Effect of changes in discount rate assumptions
(AOCI)
Reclassified to Liabilities held for sale
Balance, end of year
Net liability for future policy benefits, end of
year
Liability for future policy benefits for certain
participating contracts
Liability for universal life policies with secondary
guarantees and similar features(b)
Deferred profit liability
Other reconciling items(c)
Future policy benefits for life and accident and
health insurance contracts
Less: Reinsurance recoverable
Net liability for future policy benefits after
reinsurance recoverable
Weighted average liability duration of the
liability for future policy benefits(d)(e)
218
AIG | 2023 Form 10-K
362
2,742
(13)
(18)
2,711
130
52
(276)
(27)
—
2,590
167
1,390
—
(5)
1,385
173
55
(128)
—
—
1,485
(441)
—
2,149 $
(132)
—
1,353 $
2
213
—
3,424
24,603
62
(2)
211
18
11
(26)
—
—
214
3
—
122
24,787
1,266
908
(1,921)
345
10
25,395
(2,745)
(5,119)
2,634
15,098
—
15
15,113
5,339
664
(1,087)
359
—
20,388
(1,906)
—
217 $ 17,531 $ 18,482 $
1,083
21,512
76
—
21,588
4
1,026
(1,503)
—
(24)
21,091
7,672
65,558
125
112
65,795
6,930
2,716
(4,941)
677
(14)
71,163
(437)
—
20,654 $
(5,658)
(5,119)
60,386
447 $
1,353 $
217 $ 9,152 $ 18,482 $
19,681 $
49,332
1,313
3,786
2,512
1,633
58,576
(23,571)
$
35,005
9.3
7.8
6.8
12.8
12.1
11.5
Year Ended December 31, 2022
(in millions, except for liability durations)
Present value of expected net premiums
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(f)
Total
Balance, beginning of year
$
Effect of changes in discount rate assumptions (AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Adjusted beginning of year balance
Issuances
Interest accrual
Net premium collected
Foreign exchange impact
Other
$
$
$
$
Ending balance at original discount rate
Effect of changes in discount rate assumptions (AOCI)
Balance, end of year
Present value of expected future policy benefits
Balance, beginning of year
Effect of changes in discount rate assumptions (AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions(a)
Effect of actual variances from expected experience(a)
Adjusted beginning of year balance
Issuances
Interest accrual
Benefit payments
Foreign exchange impact
Other
Ending balance at original discount rate
Effect of changes in discount rate assumptions (AOCI)
Balance, end of year
Net liability for future policy benefits, end of year
Liability for future policy benefits for certain participating
contracts
Liability for universal life policies with secondary
guarantees and similar features(b)
Deferred profit liability
Other reconciling items(c)
Future policy benefits for life and accident and health
insurance contracts
Less: Reinsurance recoverable
Net liability for future policy benefits after reinsurance
recoverable
Weighted average liability duration of the liability for
future policy benefits(d)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,373
(95)
1,278
—
(30)
1,248
216
42
(116)
—
—
1,390
(167)
1,223
1,223
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
264
(46)
218
—
(2)
216
12
10
(26)
—
1
213
(2)
211
211
$ 14,369
$
(706)
13,663
123
(79)
13,707
1,358
397
(1,418)
(517)
(1)
13,526
(1,872)
$ 11,654
$
$ 27,442
(2,717)
$
24,725
140
(94)
24,771
1,374
876
(1,757)
(657)
(4)
24,603
(3,424)
$ 21,179
9,525
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
1,274
$ 15,643
(150)
1,124
—
7
1,131
—
48
(123)
—
1
1,057
(66)
991
(856)
14,787
123
(72)
14,838
1,358
445
(1,541)
(517)
—
14,583
(1,938)
$ 12,645
$
13,890
(870)
13,020
(6)
3
13,017
2,782
459
(821)
(339)
—
15,098
(2,634)
12,464
12,464
$ 27,674
(5,673)
$ 70,643
(9,401)
22,001
61,242
—
1
22,002
9
1,233
(1,483)
—
(249)
134
(122)
61,254
4,393
2,620
(4,203)
(996)
(252)
21,512
(1,083)
$ 20,429
$ 19,438
62,816
(7,310)
$ 55,506
$ 42,861
1,352
3,355
2,303
2,043
51,914
(24,078)
$ 27,836
7.6
6.9
12.2
10.8
11.4
AIG | 2023 Form 10-K
219
Year Ended December 31, 2021
(in millions, except for liability durations)
Present value of expected net premiums
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(f)
Total
Balance, beginning of year
$
Effect of changes in discount rate assumptions (AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Adjusted beginning of year balance
Issuances
Interest accrual
Net premium collected
Foreign exchange impact
Other
$
$
$
$
Ending balance at original discount rate
Effect of changes in discount rate assumptions (AOCI)
Balance, end of year
Present value of expected future policy benefits
Balance, beginning of year
Effect of changes in discount rate assumptions (AOCI)
Beginning balance at original discount rate
Effect of changes in cash flow assumptions(a)
Effect of actual variances from expected experience(a)
Adjusted beginning of year balance
Issuances
Interest accrual
Benefit payments
Foreign exchange impact
Other
Ending balance at original discount rate
Effect of changes in discount rate assumptions (AOCI)
Balance, end of year
Net liability for future policy benefits, end of year
Liability for future policy benefits for certain participating
contracts
Liability for universal life policies with secondary
guarantees and similar features(b)
Deferred profit liability
Other reconciling items(c)
Future policy benefits for life and accident and health
insurance contracts
Less: Reinsurance recoverable
Net liability for future policy benefits after reinsurance
recoverable
Weighted average liability duration of the liability for
future policy benefits(d)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,322
(156)
1,166
—
1
1,167
172
41
(101)
—
(1)
1,278
95
1,373
1,373
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
279
(63)
216
—
(1)
215
21
11
(28)
—
(1)
218
46
264
264
$ 13,793
$
(1,374)
12,419
164
371
12,954
1,727
392
(1,364)
(46)
—
13,663
706
$ 14,369
$
$ 27,918
(4,351)
$
23,567
193
413
24,173
1,713
876
(1,981)
(60)
4
24,725
2,717
$ 27,442
$ 13,073
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,630
(1,654)
9,976
—
(3)
9,973
3,366
380
(696)
(3)
—
13,020
870
13,890
13,890
$
1,506
$ 15,299
(249)
1,257
(72)
14
1,199
—
54
(129)
—
—
1,124
150
(1,623)
13,676
92
385
14,153
1,727
446
(1,493)
(46)
—
14,787
856
$
1,274
$ 15,643
$ 30,519
(7,862)
$ 71,668
(14,086)
22,657
57,582
(83)
(121)
22,453
15
1,085
(1,530)
—
(22)
110
289
57,981
5,287
2,393
(4,336)
(63)
(20)
22,001
5,673
$ 27,674
$ 26,400
61,242
9,401
$ 70,643
$ 55,000
1,397
5,007
2,236
2,759
66,399
(32,586)
$ 33,813
8.6
7.8
14.4
13.0
13.7
(a) Effect of changes in cash flow assumptions and variances from actual experience are partially offset by changes in the deferred profit liability.
(b) Additional details can be found in the table that presents the balances and changes in the liability for universal life policies with secondary guarantees and similar
features.
(c) Other reconciling items primarily include the Accident and Health as well as Group Benefits (short-duration) contracts.
(d) The weighted average liability durations are calculated as the modified duration using projected future net liability cash flows that are aggregated at the segment level,
utilizing the segment level weighted average interest rates and current discount rate, which can be found in the table below.
(e) Includes balances that were reclassified to Liabilities held for sale in the Consolidated Balance sheets. For additional information, see Note 4.
(f) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
For the years ended December 31, 2023, 2022 and 2021 in the traditional and term life insurance block, capping of net premium
ratios at 100 percent caused a (credit)/charge to net income of $(1) million, $26 million and $15 million, respectively. The discount rate
was updated based on market observable information. Relative to the prior period, the increase in upper-medium-grade fixed income
yields resulted in a decrease in the liability for future policy benefits.
220
AIG | 2023 Form 10-K
The following table presents the amount of undiscounted expected future benefit payments and undiscounted and
discounted expected gross premiums for future policy benefits for nonparticipating contracts:
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Years Ended December 31,
(in millions)
General Insurance(a)
Individual Retirement
Group Retirement
Life Insurance(b)
Institutional Markets
Undiscounted expected future benefits and expense
Undiscounted expected future gross premiums
Undiscounted expected future benefits and expense
Undiscounted expected future gross premiums
Undiscounted expected future benefits and expense
Undiscounted expected future gross premiums
$
$
$
2023
3,194
4,403
2,131
—
313
—
$
$
$
2022
3,325
4,558
1,959
—
321
—
$
$
$
2021
3,677
4,899
1,747
—
328
—
Undiscounted expected future benefits and expense
$ 40,489
$ 38,909
$ 38,869
Undiscounted expected future gross premiums
30,458
29,035
29,272
Undiscounted expected future benefits and expense
$ 38,253
$ 25,066
$ 20,839
Undiscounted expected future gross premiums
—
—
—
Other(c)
Undiscounted expected future benefits and expense
$ 43,071
$ 44,530
$ 46,038
Undiscounted expected future gross premiums
2,146
2,262
2,437
(a) General Insurance discounted expected future gross premiums (at current discount rate) for 2023 were $3.0 billion.
(b) Includes balances reclassified to Liabilities held for sale at December 31, 2023. Life Insurance discounted expected future gross premiums (at current discount rate) for
2023 were $20.2 billion.
(c) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Other discounted expected future gross premiums (at current discount rate) for 2023 were
$1.4 billion.
The following table presents the amount of revenue and interest recognized in the Consolidated Statements of Income
(Loss) for future policy benefits for nonparticipating contracts:
Years Ended December 31,
Gross Premiums
Interest Accretion
(in millions)
General Insurance
Individual Retirement
Group Retirement
Life Insurance
Institutional Markets
Other*
Total
2023
2022
2021
2023
2022
2021
$
$
477
202
19
2,393
5,638
215
8,944
$
$
487
224
19
2,342
2,940
224
6,236
$
$
547
186
21
2,319
3,818
236
7,127
$
$
9
55
11
471
664
$
8
42
10
479
459
7
41
11
484
380
980
2,190
$
1,185
2,183
$
1,031
1,954
$
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
The following table presents the weighted-average interest rate for future policy benefits for nonparticipating contracts:
Year Ended December 31, 2023
Weighted-average interest rate, original discount rate(a)
Weighted-average interest rate, current discount rate(a)
Year Ended December 31, 2022
Weighted-average interest rate, original discount rate
Weighted-average interest rate, current discount rate
Year Ended December 31, 2021
Weighted-average interest rate, original discount rate
Weighted-average interest rate, current discount rate
General
Insurance
1.82 %
3.78 %
Individual
Retirement
3.75 %
5.04 %
Group
Retirement
5.15 %
5.02 %
Life
Insurance
4.10 %
5.04 %
Institutional
Markets
4.14 %
4.96 %
Other(b)
4.86 %
5.08 %
1.77 %
3.21 %
1.61 %
3.27 %
3.58 %
5.32 %
3.23 %
2.75 %
5.17 %
5.30 %
4.08 %
5.33 %
3.56 %
5.30 %
4.88 %
5.36 %
4.96 %
2.68 %
4.11 %
2.85 %
3.22 %
2.71 %
4.83 %
3.08 %
(a) Weighted-average interest rates for Life Insurance include balances that have been reclassified to Liabilities held-for-sale at December 31, 2023.
(b) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment
level, and are represented as an annual rate.
AIG | 2023 Form 10-K
221
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Actuarial Assumption Updates for Liability for Future Policy Benefits
In 2023, the life insurance companies recognized an unfavorable impact to net income due to other refinements on life products offset
in part by mortality assumption updates. In 2022, the life insurance companies recognized a favorable impact to net income (mostly
offset by corresponding DPL adjustment) due to updates to mortality and retirement assumptions on certain pension risk transfer
products. In 2021, the life insurance companies recognized an unfavorable impact to net income mainly due to updated mortality on
traditional life products.
Deferred Profit Liability: The Company issues certain annuity and life insurance contracts where premiums are paid up-front or for a
shorter period than benefits will be paid (i.e., limited pay contracts). A DPL is required to be established to avoid recognition of gains
when these contracts are issued. DPLs are amortized over the life of the contracts to align the revenue recognized with the related
benefit expenses. The DPL is amortized in a constant relationship to the amount of discounted insurance in force for life insurance or
expected future benefit payments for annuity contracts over the term of the contract.
The difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in
policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits.
This deferred profit liability accretes interest and is recorded in the Consolidated Balance Sheets in Future policy benefits. Cash flow
assumptions included in the measurement of the DPL are the same as those utilized in the respective LFPBs and are reviewed at
least annually. The cash flow estimates for DPLs are updated on a retrospective catch-up basis at the same time as the cash flow
estimates for the related LFPBs. The updated LFPB cash flows are used to recalculate the DPL at the inception of the applicable
related LFPB cohort. The difference between the recalculated DPL at the beginning of the current reporting period and the carrying
amount of the DPL at the current reporting period is recognized as a gain or loss in Policyholder benefits and losses incurred in the
Consolidated Statements of Income (Loss).
The following table presents the transition rollforward for deferred profit liability for long-duration contracts*:
(in millions)
Pre-adoption December 31, 2020 deferred profit liability balance $
Individual
Retirement
2
Group
Retirement
—
$
Life
Insurance
5
$
Institutional
Markets
64
$
Other*
—
$
Total
71
$
Adjustments for the reclassification from/(to) the liability for the future
policy benefits
Post-adoption January 1, 2021 deferred profit liability balance
$
65
67
$
8
8
$
—
5
$
766
830
$
859
859
1,698
$ 1,769
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the
net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between
the two liabilities, with no impact on Retained earnings.
Additional Liabilities: For universal-life type products, insurance benefits in excess of the account balance are generally recognized
as expenses in the period incurred unless the design of the product is such that future charges are insufficient to cover the benefits, in
which case an “additional liability” is accrued over the life of the contract. These additional liabilities are included in Future policy
benefits for life and accident and health insurance contracts in the Consolidated Balance Sheets. Prior to the adoption of the
standard, our additional liabilities consisted primarily of guaranteed minimum death benefits (GMDBs) on annuities, as well as
universal-life contracts with secondary guarantees. Subsequent to the adoption of this standard, the GMDBs have been reclassified
and reported as MRBs, while the universal-life contracts with secondary guarantees continue to be reported as additional liabilities.
The following table presents the transition rollforward of the additional liabilities:
(in millions)
Pre-adoption December 31, 2020 additional liabilities
Adjustment for the reclassification of additional liabilities
from Future policy benefits to Market risk benefits(a)
Adjustment for removal of related balances in Accumulated
other comprehensive income (loss) originating from
unrealized gains (losses)(b)
Post-adoption January 1, 2021 additional liabilities
$
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
$
1,423
$
221
$
5,117
$
—
$
(907)
(132)
—
(516)
—
$
(89)
—
$
—
5,117
$
—
—
—
Other(c)
55
Total
$
6,816
—
(1,039)
—
55
$
(605)
5,172
$
(a) Adjustments for the reclassification of additional liabilities from Future policy benefits to MRBs represent contract guarantees (e.g., GMDBs) that were previously
classified as insurance liabilities within Future policy benefits, but have been reclassified as MRBs as of January 1, 2021. For additional information on the transition
impacts associated with LDTI, see Note 15.
(b) Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses) relate to the additional
liabilities reclassified from Future policy benefits in the line above.
(c) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
222
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Our additional liabilities primarily consist of universal life policies with secondary guarantees and these additional liabilities are
recognized in addition to the Policyholder account balances. For universal life policies with secondary guarantees, as well as other
universal life policies for which profits followed by losses are expected at contract inception, a liability is recognized based on a benefit
ratio of (a) the present value of total expected payments, in excess of the account value, over the life of the contract, divided by (b)
the present value of total expected assessments over the life of the contract. For universal life policies without secondary guarantees,
for which profits followed by losses are first expected after contract inception, we establish a liability, in addition to policyholder
account balances, so that expected future losses are recognized in proportion to the emergence of profits in the earlier (profitable)
years. Universal life account balances are reported within Policyholder contract deposits, while these additional liabilities are reported
within the liability for future policy benefits in the Consolidated Balance Sheets. These additional liabilities are also adjusted to reflect
the effect of unrealized gains or losses on fixed maturity securities available for sale on accumulated assessments, with related
changes recognized through OCI. The policyholder behavior assumptions for these liabilities include mortality, lapses and premium
persistency. The capital market assumptions used for the liability for universal life secondary guarantees include discount rates and
net earned rates.
The following table presents the balances and changes in the liability for universal life policies with secondary guarantees
and similar features:
Years Ended December 31,
2023
2022
2021
(in millions, except duration of liability)
Balance, beginning of year
Effect of changes in assumptions
Effect of changes in experience
Adjusted beginning balance
Assessments
Excess benefits paid
Interest accrual
Other
Changes related to unrealized appreciation
(depreciation) of investments
Balance, end of year
Less: Reinsurance recoverable
Balance, end of year, net of Reinsurance
recoverable
Life
Insurance Other(b)
$ 3,300 $
Total
55 $ 3,355
Life
Insurance Other(b)
$ 4,952 $
Total
55 $ 5,007
Life
Insurance Other(b)
$ 5,117 $
Total
55 $ 5,172
(41)
—
(41)
(24)
—
(24)
319
3,578
671
(943)
132
(9)
302
3,731
(164)
315
(4)
51 3,629
673
(943)
134
(9)
2
—
2
—
—
302
55 3,786
(164)
—
303
5,231
687
(909)
126
(11)
(1,824)
3,300
(191)
299
(4)
51 5,282
689
(909)
128
(11)
2
—
2
—
— (1,824)
55 3,355
(191)
—
(116)
331
5,332
669
(859)
136
24
(350)
4,952
(200)
—
(116)
327
(4)
51 5,383
671
(859)
138
24
2
—
2
—
—
(350)
55 5,007
(200)
—
$ 3,567 $
55 $ 3,622
$ 3,109 $
55 $ 3,164
$ 4,752 $
55 $ 4,807
Weighted average duration of liability(a)
25.4
9.2
26.3
9.5
27.1
9.8
(a) The weighted average duration of liabilities is calculated as the modified duration using projected future net liability cash flows that are aggregated at the segment level,
utilizing the segment level weighted average interest rates, which can be found in the table below.
(b) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
The following table presents the amount of revenue and interest recognized in the Consolidated Statements of Income
(Loss) for the liability for universal life policies with secondary guarantees and similar features:
Years Ended December 31,
Gross Assessments
Interest Accretion
(in millions)
Life Insurance
Other*
Total
2023
1,109
37
1,146
$
$
2022
1,193
39
1,232
2021
1,187
39
1,226
$
$
$
$
$
$
2023
132
2
134
$
$
2022
126
2
128
$
$
2021
136
2
138
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
The following table presents the calculation of weighted average interest rate for the liability for universal life policies with
secondary guarantees and similar features:
Years Ended December 31,
2023
2022
2021
Weighted-average interest rate
3.92 %
4.20 %
3.76 %
4.24 %
3.74 %
Life Insurance
Other*
Life Insurance
Other*
Life Insurance
Other*
4.21 %
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment
level, and are represented as an annual rate.
AIG | 2023 Form 10-K
223
The following table presents details concerning our universal life policies with secondary guarantees and similar features:
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Years Ended December 31,
(dollars in millions)
Account value
Net amount at risk
Average attained age of contract holders
$
$
2023
3,721 $
2022
3,514
72,422 $
69,335
53
53
Actuarial Assumption Updates for Liability for Universal Life Policies With Secondary Guarantees And Similar
Features
In 2023, the life insurance companies recognized a favorable impact to net income due to updates to the portfolio yield assumption
and refinements to the modeling for universal life with secondary guarantees and similar features, partially offset by updated premium
assumptions. In 2022, the life insurance companies recognized a favorable impact to net income due to modeling refinements to
reflect actual versus expected asset data related to calls and capital gains. In 2021, the life insurance companies recognized a
favorable impact to net income primarily due to the update in the reserving methodology, partially offset by assumption updates to
mortality.
POLICYHOLDER CONTRACT DEPOSITS
The liability for Policyholder contract deposits is primarily recorded at accumulated value (deposits received and net transfers from
separate accounts, plus accrued interest credited, less withdrawals and assessed fees). Deposits collected on investment-oriented
products are not reflected as revenues. They are recorded directly to Policyholder contract deposits upon receipt. Amounts assessed
against the contract holders for mortality, administrative, and other services are included as Policy fees in revenues.
In addition to liabilities for universal life, fixed annuities, fixed options within variable annuities, annuities without life contingencies,
funding agreements and GICs, policyholder contract deposits also include our liability for (i) index features accounted for as
embedded derivatives at fair value, (ii) annuities issued in a structured settlement arrangement with no life contingency and (iii) certain
contracts we have elected to account for at fair value. Changes in the fair value of the embedded derivatives related to policy index
features and the fair value of derivatives hedging these liabilities are recognized in realized gains and losses.
For additional information on index credits accounted for as embedded derivatives, see Note 5.
Under a funding agreement-backed notes issuance program, an unaffiliated, non-consolidated statutory trust issues medium-term
notes to investors, which are secured by funding agreements issued to the trust by one of our Life and Retirement companies through
our Institutional Markets business.
The following table presents the transition rollforward of Policyholder contract deposits account balances(a):
(in millions)
Pre-adoption December 31, 2020 Policyholder contract
deposits
Adjustment for the reclassification of the embedded derivative
liability to market risk benefits, net of the host adjustment(s)
Post-adoption January 1, 2021 Policyholder contract
deposits
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(b)
Total
$
84,874
$
43,805
$ 10,286
$ 11,559
$ 4,145
$ 154,669
(5,671)
(576)
—
—
—
(6,247)
$
79,203
$
43,229
$ 10,286
$ 11,559
$ 4,145
$ 148,422
(a) Excludes Other Operations of $(199) million.
(b) Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
224
AIG | 2023 Form 10-K
$
$
The following table presents the balances and changes in Policyholder contract deposits account balances(a):
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Year Ended December 31, 2023
(in millions, except for average crediting rate)
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(d)
Total
Policyholder contract deposits account
balance, beginning of year
$
Deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Net transfers from (to) separate account
Interest credited
Other
Policyholder contract deposits account
balance, end of year
Other reconciling items(b)
Policyholder contract deposits
Weighted average crediting rate
Cash surrender value(c)
89,554
18,188
(840)
(14,025)
(3,770)
3,617
2,188
(16)
94,896
(1,429)
93,467
$
$
43,395
5,352
(477)
(8,310)
(2,518)
2,705
1,141
11
41,299
(230)
41,069
$
$
10,224
1,632
(1,524)
(256)
(281)
3
413
20
10,231
208
10,439
$
$
11,734
3,813
(67)
(722)
(2,405)
792
507
(3)
13,649
93
13,742
$
$
3,587
44
(64)
(93)
(300)
—
168
(9)
3,333
(71)
3,262
$ 158,494
29,029
(2,972)
(23,406)
(9,274)
7,117
4,417
3
163,408
(1,429)
$ 161,979
2.68 %
2.91 %
4.41 %
4.08 %
4.99 %
$
88,685
$
40,210
$
9,026
$
2,583
$
1,712
$ 142,216
Year Ended December 31, 2022
(in millions, except for average crediting rate)
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(d)
Total
Policyholder contract deposits account
balance, beginning of year
$
Deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Net transfers from (to) separate account
Interest credited
Other
Policyholder contract deposits account
balance, end of year
Other reconciling items(b)
Policyholder contract deposits
Weighted average crediting rate
Cash surrender value(c)
84,097
15,186
(870)
(8,921)
(3,798)
2,248
1,608
4
89,554
(2,136)
87,418
$
$
43,902
4,946
(462)
(5,712)
(2,528)
2,149
1,100
—
43,395
(319)
43,076
$
$
10,183
1,674
(1,570)
(211)
(216)
(5)
377
(8)
10,224
34
10,258
$
$
10,804
1,494
(69)
(134)
(775)
144
301
(31)
11,734
(16)
11,718
$
$
3,823
48
(65)
(64)
(349)
—
178
16
3,587
(73)
3,514
$ 152,809
23,348
(3,036)
(15,042)
(7,666)
4,536
3,564
(19)
158,494
(2,510)
$ 155,984
2.43 %
2.77 %
4.29 %
2.71 %
4.91 %
$
83,278
$
41,831
$
8,866
$
2,537
$
1,808
$ 138,320
Year Ended December 31, 2021
(in millions, except for average crediting rate)
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Other(d)
Total
Policyholder contract deposits account
balance, beginning of year
$
Deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Net transfers from (to) separate account
Interest credited
Other
Policyholder contract deposits account
balance, end of year
Other reconciling items(b)
Policyholder contract deposits
Weighted average crediting rate
Cash surrender value(c)
$
$
80,012
13,774
(781)
(8,863)
(4,031)
1,531
2,444
11
84,097
(1,289)
82,808
2.42
79,787
$
$
$
43,406
5,146
(523)
(5,795)
(2,329)
2,750
1,249
(2)
43,902
(259)
43,643
2.79
43,359
$
$
$
10,012
1,702
(1,567)
(212)
(245)
(2)
447
48
10,183
117
10,300
4.28
8,826
$
$
$
11,351
1,272
(65)
(91)
(1,948)
61
263
(39)
10,804
165
10,969
2.41
2,520
$
$
$
4,143
53
(69)
(76)
(374)
—
191
(45)
3,823
(157)
3,666
4.92
1,880
$ 148,924
21,947
(3,005)
(15,037)
(8,927)
4,340
4,594
(27)
152,809
(1,423)
$ 151,386
$ 136,372
(a) Transactions between the general account and the separate account are presented in this table on a gross basis (e.g., a policyholder's funds are initially deposited into
the general account and then simultaneously transferred to the separate account), thus, did not impact the ending balance of policyholder contract deposits.
(b) Includes MRBs that are bifurcated and reported separately, net of embedded derivatives recorded in Policyholder contract deposits. Other also includes amounts related
to Other Operations of $(71) million, $(75) million and $(158) million at December 31, 2023, 2022 and 2021, respectively.
(c) Cash surrender value is related to the portion of policyholder contract deposits that have a defined cash surrender value (e.g. GICs, do not have a cash surrender
value).
(d) Primarily represents Life and Retirement legacy insurance lines ceded to Fortitude Re.
For information related to net amount at risk, see Note 14.
AIG | 2023 Form 10-K
225
The following table presents Policyholder contract deposits account balance by range of guaranteed minimum crediting
rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective
guaranteed minimums:
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
December 31, 2023
(in millions, except percentage of total)
At
Guaranteed
Minimum
1 Basis Point -
50 Basis Points
Above
More than 50
Basis Points Above
Minimum Guarantee
Total
Range of Guaranteed Minimum Credited Rate
Individual Retirement
Group Retirement
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
$
6,498
3,749
8,046
6,610
426
32
$
25,361
Range of Guaranteed Minimum Credited Rate
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
$
$
2,185
3,731
12,073
615
6,635
144
25,383
Range of Guaranteed Minimum Credited Rate
$
2,078
$
26,873
$
35,449
22
11
37
—
—
2,148
2,344
1,242
211
—
—
—
3,797
—
132
855
496
—
—
1,483
7,428
$
$
$
$
$
$
$
$
$
$
$
$
1,771
972
5
4
3
29,628
6,830
671
110
—
—
—
7,611
—
346
1,082
26
—
—
1,454
38,693
5,542
9,029
6,652
430
35
57,137
11,359
5,644
12,394
615
6,635
144
36,791
—
478
1,946
1,692
2,851
216
7,183
101,111
$
$
$
$
$
$
55 %
7 %
38 %
100 %
$
$
$
—
—
9
1,170
2,851
216
4,246
54,990
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
Life Insurance
Total*
Percentage of total
226
AIG | 2023 Form 10-K
December 31, 2022
(in millions, except percentage of total)
At
Guaranteed
Minimum
1 Basis Point -
50 Basis Points
Above
More than 50
Basis Points Above
Minimum Guarantee
Total
Range of Guaranteed Minimum Credited Rate
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
Individual Retirement
Group Retirement
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
$
8,766
4,208
9,502
7,630
456
33
$
30,595
Range of Guaranteed Minimum Credited Rate
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
$
3,611
5,628
13,968
666
6,843
154
$
30,870
Range of Guaranteed Minimum Credited Rate
<=1%
> 1% - 2%
> 2% - 3%
> 3% - 4%
> 4% - 5%
> 5%
Total
Life Insurance
Total*
Percentage of total
$
$
$
—
1
32
1,369
2,974
223
4,599
66,064
$
2,161
$
21,702
$
32,629
24
—
40
—
—
2,225
1,427
727
3
—
—
—
2,157
—
129
831
180
—
—
1,140
5,522
$
$
$
$
$
$
$
$
$
$
$
$
2,195
17
6
5
4
23,929
5,609
150
—
—
—
—
5,759
—
352
1,116
195
—
—
1,663
31,351
6,427
9,519
7,676
461
37
56,749
10,647
6,505
13,971
666
6,843
154
38,786
—
482
1,979
1,744
2,974
223
7,402
102,937
$
$
$
$
$
$
65 %
5 %
30 %
100 %
*
Excludes policyholder contract deposits account balances that are not subject to guaranteed minimum crediting rates.
Funding Agreements
Under a funding agreement-backed notes issuance program, an unaffiliated, non-consolidated statutory trust issues medium-term
notes to investors, which are secured by funding agreements issued to the trust by one of our Life and Retirement companies.
The United States Life Insurance Company in the City of New York is a member of the FHLB of New York, while The Variable Annuity
Life Insurance Company and American General Life Insurance Company are members of the FHLB of Dallas. Membership with both
FHLBs provides us with collateralized borrowing opportunities, primarily as an additional source of liquidity or for other uses deemed
appropriate by management, e.g., earning a spread on deposits. Our ownership in the FHLB stock is reported in Other invested
assets within the Consolidated Balance Sheets. Pursuant to the membership terms, our Life and Retirement companies elected to
pledge such stock to the FHLB as collateral for our obligations under agreements with the FHLB.
Our Life and Retirement companies' net borrowing capacity under such facilities with FHLB of Dallas and FHLB of New York as of
December 31, 2023 is $3.7 billion. As of December 31, 2023, we pledged $8.7 billion as collateral to the FHLB, including assets
backing funding agreements.
The life insurance companies issued the following funding agreements to the FHLB of Dallas and FHLB of New York; these
obligations are reported in Policyholder contract deposits in the Consolidated Balance Sheets:
The following table presents details concerning our funding agreements as of December 31, 2023:
December 31, 2023
(in millions)
FHLB Facility
FHLB of Dallas
FHLB of Dallas
FHLB of New York
Gross Amounts
2024
Payments due by period
2025-2026
2027-2028
Thereafter
Stated Interest rates
$
$
3,357 $
2,027
241
5,625 $
52 $
—
94
146 $
254 $
—
147
401 $
3,051 $
1,506
—
4,557 $
— DNA Auction* + 22 to 30 bps
3.53% to 4.77%
521
—
521
1.52% to 2.70%
* Discount Note Advance (DNA) Auction is based on either a 4-Week or 3-Month tenor, depending on contractual terms of each borrowing.
AIG | 2023 Form 10-K
227
ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities
OTHER POLICYHOLDER FUNDS
Other policyholder funds include URR, consisting of front-end loads on investment-oriented contracts, representing those policy loads
that are non-level and typically higher in initial policy years than in later policy years. Amortization of URR is recorded in Policy fees.
URR for investment-oriented contracts are generally deferred and amortized into income using the same assumptions and factors
used to amortize DAC (i.e., on a constant level basis). Changes in future assumptions are applied by adjusting the amortization rate
prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its
amortization of URR (i.e., policy fees) each period.
Other policyholder funds also include provisions for future dividends to participating policyholders, accrued in accordance with all
applicable regulatory or contractual provisions. Participating life business represented approximately 0.5 percent and 0.7 percent of
gross insurance in force at December 31, 2023 and December 31, 2022, respectively and 0.9 percent, 1.3 percent and 1.7 percent of
gross premiums and other considerations in 2023, 2022 and 2021 respectively. The amount of annual dividends to be paid is
approved locally by the Corebridge Boards of Directors. Provisions for future dividend payments are computed by jurisdiction,
reflecting local regulations. The portions of current and prior net income and of current unrealized appreciation of investments that can
inure to our benefit are restricted in some cases by the insurance contracts and by the local insurance regulations of the jurisdictions
in which the policies are in force.
Certain products are subject to experience adjustments. These include group life and group medical products, credit life contracts,
accident and health insurance contracts/riders attached to life policies and, to a limited extent, reinsurance agreements with other
direct insurers. Ultimate premiums from these contracts are estimated and recognized as revenue with the unearned portions of the
premiums recorded as liabilities in Other policyholder funds. Experience adjustments vary according to the type of contract and the
territory in which the policy is in force and are subject to local regulatory guidance.
The following table presents the transition rollforward of URR:
(in millions)
Pre-adoption December 31, 2020 URR balance
Adjustment for the removal of related balances in Accumulated other
comprehensive income (loss) originating from unrealized gains (losses)
Post-adoption January 1, 2021 URR balance
Life
Insurance
1,413
Institutional
Markets
2
$
248
1,661
$
—
2
$
$
Other*
132
—
132
$
$
$
$
Total
1,547
248
1,795
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Other policyholder funds, excluding URR, totaled $2.0 billion.
Prior to the adoption of LDTI, URR for investment-oriented products included the effect of unrealized gains or losses on fixed maturity
securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in
AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of
related balances in AOCI originating from unrealized gains (losses) balances reduced URR.
The following table presents a rollforward of URR:
(in millions)
Year Ended December 31, 2023
Balance, beginning of year
Revenue deferred
Amortization
Balance, end of year
Year Ended December 31, 2022
Balance, beginning of year
Revenue deferred
Amortization
Balance, end of year
Year Ended December 31, 2021
Balance, beginning of year
Revenue deferred
Amortization
Other, including foreign exchange
Balance, end of year
Life
Insurance
Institutional
Markets
Other*
Total
$
$
$
$
$
$
$
$
$
1,727
153
(110)
1,770
1,693
143
(109)
1,727
$
1,661
140
(108)
—
1,693
$
$
2
—
(1)
1
2
—
—
2
2
—
—
—
2
$
$
$
$
$
$
105
—
(11)
94
116
—
(11)
105
132
—
(15)
(1)
116
$
$
$
$
$
$
1,834
153
(122)
1,865
1,811
143
(120)
1,834
1,795
140
(123)
(1)
1,811
* Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. At December 31, 2023, 2022 and 2021, Other policyholder funds, excluding URR, totaled
$1.5 billion, $1.6 billion and $1.7 billion, respectively.
228
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits
14. Market Risk Benefits
MRBs are defined as contracts or contract features that both provide protection to the contract holder from other-than-nominal capital
market risk and expose AIG to other-than nominal capital market risk. The MRB represents an amount that a policyholder receives in
addition to the account balance upon the occurrence of a specific event or circumstance, such as death, annuitization, or periodic
withdrawal that involves protection from other-than-nominal capital market risk. Certain contract features, such as GMWBs, GMDBs
and guaranteed minimum income benefits (GMIBs) commonly found in variable, fixed index and fixed annuities, are MRBs. MRBs are
assessed at contract inception using a non-option method involving attributed fees that results in an initial fair value of zero or an
option method that results in a fair value greater than zero.
MRBs are recorded at fair value, and AIG applies a non-option attributed fee valuation method for variable annuity products, and an
option-based valuation method (host offset) for both fixed index and fixed products. Under the non-option valuation method, the
attributed fee is determined at contract inception; it cannot exceed the total contract fees and assessments collectible from the
contract holder and cannot be less than zero. Investment margin is excluded from the attributed fee determination. Under the option-
based valuation method, an offset to the host amount related to the MRB amount is established at inception. Changes in the fair value
of MRBs are recorded in net income in Changes in the fair value of market risk benefits, net except for the portion of the fair value
change attributable to our own credit risk, which is recognized in OCI. MRBs are derecognized when the underlying contract is
surrendered, a GMDB is incurred, a GMIB is annuitized, or when the account value is exhausted on a policy with a GMWB. Generally
when a policyholder elects to annuitize a GMIB rider or the account value on a policy with a GMWB rider is reduced to zero, the policy
is converted to a payout annuity automatically. When a conversion occurs, the policyholder is issued a new payout annuity contract. At
this point, the MRB is derecognized and a LFPB is established for the payout annuity.
Assumptions used to determine the MRB asset (including ceded MRBs) or liability generally include mortality rates that are based
upon actual experience modified to allow for variations in policy form; lapse rates that are based upon actual experience modified to
allow for variations in policy features; and investment returns, based on stochastically generated scenarios. We evaluate at least
annually estimates used to determine the MRB asset or liability and adjust the balance, with a related charge or credit to Change in
fair value of MRBs, net, if actual experience or other evidence suggests that earlier assumptions should be revised. In addition, MRBs
are valued such that the current provision for nonperformance risk is reflected in the claims cash flows of the asset or liability valuation
for direct MRBs. The nonperformance risk spread at contract issue is locked-in. The difference between the MRB valued using the at
issue nonperformance risk spread and the current nonperformance risk spread is reported through OCI, while changes in the
counterparty credit risk related to ceded MRBs are reported in income.
Changes in the fair value of MRBs, net represents changes in the fair value of market risk benefit liabilities and assets (with the
exception of our own credit risk changes), and includes attributed rider fees and benefits, net of changes in the fair value of derivative
instruments and fixed maturity securities that are used to economically hedge market risk from the variable annuity GMWB riders.
The following table presents the transition rollforward of MRBs:
(in millions)
Pre-adoption December 31, 2020 carrying amount for features now classified as MRBs
Adjustment for the reclassification of the embedded derivative liability from policyholder contract
deposits, net of the host adjustment(s)(a)
Adjustment for the reclassification of additional liabilities from Future policy benefits(b)
Adjustments for the cumulative effect of the changes to our own credit risk between the original
contract issuance date and the Transition Date(c)
Adjustment for the removal of related balances in Accumulated other comprehensive income
(loss) originating from unrealized gains (losses)(d)
Adjustment for the remaining difference (exclusive of our own credit risk change and host contract
adjustments) between previous carrying amount and fair value measurement for the MRB(e)
Post-adoption January 1, 2021 carrying amount for features now classified as MRBs
Individual
Retirement
—
$
Group
Retirement
—
$
$
5,671
1,388
2,140
(516)
(1,084)
7,599
$
$
576
221
187
(89)
(93)
802
$
Total
—
6,247
1,609
2,327
(605)
(1,177)
8,401
(a) Adjustments for the reclassification from Policyholder contract deposits represents certain contract guarantees (e.g., GMWBs) that were previously classified as
embedded derivatives, but have been reclassified as MRBs as of January 1, 2021, and the related host impact. The impact on Retained earnings or AOCI resulting from
the simultaneous remeasurement of the guarantee as a market risk benefit is reflected in the lines below.
(b) Adjustments for the reclassification from Future policy benefits represents contract guarantees (e.g., GMDBs) that were previously classified as insurance liabilities
within Future policy benefits, but have been reclassified as MRBs as of January 1, 2021. The impact on Retained earnings or AOCI resulting from the simultaneous
remeasurement of the guarantee as a market risk benefit is reflected in the lines below.
(c) Adjustments for the cumulative effect of the changes to our own credit risk between the original contract issuance date and the Transition Date are recognized in AOCI.
(d) Adjustment for the removal of related balances in AOCI originating from unrealized gains (losses) with an offset to AOCI relate to the additional liabilities reclassified
from Future policy benefits in the line above.
(e) Adjustment for the remaining difference represents the measurement of MRBs at fair value, excluding the impact of our own credit risk with an offset to Retained
earnings.
AIG | 2023 Form 10-K
229
The following is a reconciliation of MRBs by amounts in an asset position and in liability position to the MRB amounts in the
Consolidated Balance Sheets at transition:
ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits
(in millions)
Market risk benefit in an asset position
Reinsured market risk benefit
Market risk benefit assets, at fair value
Market risk benefit liabilities, at fair value
Market risk benefit, net, January 1, 2021
Individual
Retirement
Group
Retirement
$
$
176
162
338
7,937
$
7,599
$
—
—
—
802
802
$
$
Total
176
162
338
8,739
8,401
The following table presents the balances of and changes in MRBs:
Years Ended December 31,
2023
2022
2021
(in millions, except for attained age of contract holders)
Balance, beginning of year
Effect of changes in our own credit risk
Balance, beginning of year, before effect of
changes in our own credit risk
Issuances
Interest accrual
Attributed fees
Expected claims
Effect of changes in interest rates
Effect of changes in interest rate volatility
Individual
Retirement
Group
Retirement
Total
Individual
Retirement
Group
Retirement
Total
Individual
Retirement
Group
Retirement
Total
$
3,738 $
(441)
296 $ 4,034
(465)
(24)
$
6,452 $
(1,934)
582 $ 7,034
(167) (2,101)
$
7,761 $
(2,140)
802 $ 8,563
(187) (2,327)
$
3,297 $
272 $ 3,569
4,518
415 4,933
5,621
615 6,236
681
156
803
(91)
(139)
(69)
37
15
63
(3)
718
171
866
(94)
263
172
864
(83)
25
21
70
(2)
288
193
934
(85)
247
142
805
(54)
28
21
74
(2)
275
163
879
(56)
(13)
(152)
(4,087)
(371) (4,458)
(1,098)
(107) (1,205)
(3)
(72)
263
1,382
(75)
18
281
74
4
78
122 1,504
(1,414)
(203) (1,617)
1
(74)
33
20
53
Effect of changes in equity markets
(1,236)
(109) (1,345)
Effect of changes in equity index volatility
(14)
(5)
(19)
Actual outcome different from model expected
outcome
Effect of changes in future expected
policyholder behavior
Effect of changes in other future expected
assumptions
Other, including foreign exchange
Balance, end of year, before effect of changes
in our own credit risk
Effect of changes in our own credit risk
Balance, end of year
Less: Reinsured MRB, end of year
Net Liability Balance after reinsurance
recoverable
Net amount at risk
GMDB only
GMWB only
Combined*
188
7
195
164
(3)
161
106
8
114
(1)
1
—
(2)
(18)
(20)
53
(36)
17
(85)
—
(39)
(124)
(3)
(3)
3,490
1,072
4,562
(77)
220 3,710
88 1,160
308 4,870
—
(77)
(85)
3
3,297
441
3,738
(94)
—
(6)
(85)
(3)
272 3,569
24
465
296 4,034
—
(94)
—
3
—
(7)
—
(4)
4,518
1,934
6,452
(145)
415 4,933
167 2,101
582 7,034
—
(145)
$
4,485 $
308 $ 4,793
$
3,644 $
296 $ 3,940
$
6,307 $
582 $ 6,889
$
$
$
758 $
152 $
1,011 $
160 $ 918
13 $ 165
18 $ 1,029
$
$
$
1,615 $
371 $ 1,986
27 $
1 $
28
2,084 $
39 $ 2,123
$
$
$
684 $
831 $
567 $
159 $ 843
118 $ 949
14 $ 581
Weighted average attained age of contract
holders
70
64
70
64
70
63
* Certain contracts contain both guaranteed GMDB and GMWB features and are modeled together for the purposes of calculating the MRB.
The following is a reconciliation of MRBs by amounts in an asset position and in a liability position to the MRBs amount in
the Consolidated Balance Sheets:
(in millions)
Individual Retirement
Group Retirement
Total
December 31, 2023
Asset*
Liability*
$
$
740
172
912
$
$
5,225
480
5,705
$
$
Net
4,485
308
4,793
$
$
December 31, 2022
Asset*
Liability*
661
135
796
$
$
4,305
431
4,736
$
$
Net
3,644
296
3,940
* Cash flows and attributed fees for MRBs are determined on a policy level basis and are reported based on their asset or liability position at the balance sheet date.
For additional information related to fair value measurements of MRBs, see Note 5.
230
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits
ACTUARIAL ASSUMPTION UPDATES FOR MARKET RISK BENEFITS
In 2023, the life insurance companies recognized a favorable impact to net income due to policyholder behavior assumptions. In
2022, the life insurance companies recognized a favorable impact to net income due to an update to the relationship between
projected equity growth and interest rates for annuities. For 2021, the impacts were mainly due to updating the lapse rate
expectations.
ANNUITY GUARANTEES
Annuity contracts may include certain contractually guaranteed benefits to the contract holder. These guaranteed features include
GMDBs that are payable in the event of death and living benefits that are payable when partial withdrawals exhaust a policy’s account
value, in the event of annuitization, or, in other instances, at specified dates during the accumulation period. Living benefits primarily
include GMWBs. A variable annuity contract may include more than one type of guaranteed benefit feature; for example, it may have
both GMDB and GMWB. However, a policyholder can only receive payout from one guaranteed feature on a contract containing a
death benefit and a living benefit, i.e., the features are mutually exclusive (except a surviving spouse who has a rider to potentially
collect both GMDB upon their spouse’s death and GMWB during their lifetime). A policyholder cannot purchase more than one living
benefit on one contract. The net amount at risk for each feature is calculated irrespective of the existence of other features; as a
result, the net amount at risk for each feature is not additive to that of other features.
Guaranteed Benefits on Variable Annuities
The GMDB feature may provide a death benefit of either (a) total deposits made to the contract, less any partial withdrawals plus a
minimum return (and in rare instances, no minimum return), (b) return of premium whereby the benefit is the greater of the current
account value or premiums paid less any partial withdrawals, (c) rollups whereby the benefit is the greater of current account value or
premiums paid (adjusted for withdrawals) accumulated at contractually specified rates up to specified ages, or (d) the highest contract
value attained, typically on any anniversary date less any subsequent withdrawals following the contract anniversary.
Certain of our variable annuity contracts contain GMDB features and may also contain living benefit riders, which include optional
GMWBs and, to a lesser extent, GMABs and GMIBs. These living benefits and GMDBs related to variable annuity contracts are
accounted for as MRBs measured at fair value, with changes in the fair value (excluding changes in our own credit risk) recorded in
Change in the fair value of MRBs, net. The net amount at risk for the GMWB represents benefits in excess of the account value
assuming the utilization of all benefits by the contract holders at the balance sheet date. The net amount at risk for the GMDB feature
represents the amount of guaranteed benefits in excess of account value if all policyholders died. GMDB is our most widely offered
benefit.
Guaranteed Benefits on Fixed Index and Fixed Annuities
Certain of our fixed annuity and fixed index annuity contracts, which are not offered through separate accounts, contain optional
GMWBs. With a GMWB, the contract holder can monetize the excess of the guaranteed amount over the account value of the
contract through a series of withdrawals that do not exceed a specific percentage per year of the guaranteed amount. Once the
account value is exhausted, the contract holder will receive a series of annuity payments equal to the remaining guaranteed amount;
for lifetime GMWB products, the annuity payments continue as long as the covered person(s) is living. The liability for GMWBs in fixed
annuity and fixed index annuity contracts, which are recorded in MRBs, represents the expected value of benefits in excess of the
projected account value, with the excess (excluding changes in our own credit risk) recognized at fair value through Change in the fair
value of MRBs, net.
The liability for all of our GMWBs in fixed annuity and fixed index annuity contracts are accounted for as MRBs.
For a discussion of the fair value measurement of guaranteed benefits that are accounted for as MRBs, see Note 5.
15. Separate Account Assets and Liabilities
We report variable contracts within the separate accounts when investment income and investment gains and losses accrue directly
to, and investment risk is borne by, the contract holder and the separate account meets additional accounting criteria to qualify for
separate account treatment. The assets supporting the variable portion of variable annuity and variable universal life contracts that
qualify for separate account treatment are carried at fair value and are reported as separate account assets, with an equivalent
summary total reported as separate account liabilities. The assets of separate accounts are legally segregated and are not subject to
claims that arise from any of our other businesses.
AIG | 2023 Form 10-K
231
ITEM 8 | Notes to Consolidated Financial Statements | 15. Separate Account Assets and Liabilities
Policy values for variable products and investment contracts are expressed in terms of investment units. Each unit is linked to an
asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. The current liability at any
time is the sum of the current unit value of all investment units in the separate accounts, plus any liabilities for MRBs.
Amounts assessed against the policyholders for mortality, administrative and other services are included in policy fees. Investment
performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the
corresponding amounts credited to policyholders of such separate accounts are offset within the same line in the Consolidated
Statements of Income (Loss).
For discussion of the fair value measurement of guaranteed benefits that are accounted for as MRBs, see Note 5.
The following table presents fair value of separate account investment options:
(in millions)
Equity Funds
Bond Funds
December 31, 2023
December 31, 2022
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Total
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
Total
$
25,451 $
28,675 $
819 $
593 $ 55,538
$ 22,990 $ 24,608 $
687 $
581 $ 48,866
Balanced Funds
Money Market Funds
4,037
17,711
694
3,292
5,479
742
44
53
16
1,303
8,676
1,923 25,166
1,625
173
3,802
17,663
723
4,081
5,113
559
46
49
17
1,321
9,250
1,939 24,764
1,973
674
Total
$
47,893 $
38,188 $
932 $
3,992 $ 91,005
$ 45,178 $ 34,361 $
799 $
4,515 $ 84,853
The following table presents the balances and changes in Separate account liabilities:
Year Ended December 31, 2023
(in millions)
Balance, beginning of year
Premiums and deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Investment performance
Net transfers from (to) general account and other
Balance, end of year
Cash surrender value*
Year Ended December 31, 2022
Balance, beginning of year
Premiums and deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Investment performance
Net transfers from (to) general account and other
Balance, end of year
Cash surrender value*
Year Ended December 31, 2021
Balance, beginning of year
Premiums and deposits
Policy charges
Surrenders and withdrawals
Benefit payments
Investment performance
Net transfers from (to) general account and other
Balance, end of year
Cash surrender value*
Individual
Retirement
Group
Retirement
Life
Insurance
Institutional
Markets
$
$
$
$
$
$
$
$
$
45,178
1,408
(1,241)
(3,744)
(844)
6,933
203
47,893
46,911
57,927
2,420
(1,325)
(3,320)
(898)
(9,861)
235
45,178
44,124
53,456
4,081
(1,368)
(4,261)
(1,039)
6,743
315
57,927
56,727
$
$
$
$
$
$
$
$
$
34,361
1,374
(441)
(3,047)
(557)
6,666
(168)
38,188
37,992
45,138
1,611
(461)
(2,452)
(613)
(8,479)
(383)
34,361
34,169
41,310
1,979
(523)
(3,013)
(615)
6,711
(711)
45,138
44,909
$
$
$
$
$
$
$
$
$
$
$
$
$
$
799
36
(49)
(25)
(7)
181
(3)
932
911
1,044
37
(51)
(22)
(6)
(201)
(2)
799
777
912
49
(52)
(32)
(10)
180
(3)
Total
84,853
2,859
(1,824)
(7,537)
(1,476)
14,067
63
91,005
89,808
$
$
$
$ 109,111
4,137
(1,937)
(5,925)
(1,576)
(18,860)
(97)
84,853
83,588
$
$
4,515
41
(93)
(721)
(68)
287
31
3,992
3,994
5,002
69
(100)
(131)
(59)
(319)
53
4,515
4,518
4,612
76
$ 100,290
6,185
(98)
(82)
(23)
486
31
(2,041)
(7,388)
(1,687)
14,120
(368)
$
$
1,044
1,026
$
$
5,002
$ 109,111
4,993
$ 107,655
*
The cash surrender value represents the amount of the contract holder’s account balance distributable at the balance sheet date less applicable surrender charges.
Separate account liabilities primarily represent the contract holder's account balance in separate account assets and will be equal and
offsetting to total separate account assets.
232
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt
16. Debt
Our long-term debt is denominated in various currencies, with both fixed and variable interest rates. Long-term debt is carried at the
principal amount borrowed, including unamortized discounts, hedge accounting valuation adjustments and fair value adjustments,
when applicable.
The following table lists our total debt outstanding at December 31, 2023 and 2022. The interest rates presented in the
following table are the range of contractual rates in effect at December 31, 2023, including fixed and variable-rates:
At December 31, 2023
(in millions)
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable
Junior subordinated debt
AIG Japan Holdings Kabushiki Kaisha
Validus notes and bonds payable
Total AIG general borrowings
AIG borrowings supported by assets:
AIG notes and bonds payable
Series AIGFP matched notes and bonds payable
Total AIG borrowings supported by assets
Total debt issued or guaranteed by AIG
Corebridge debt:
CRBGLH notes and bonds payable(a)
CRBGLH junior subordinated debt(a)
Corebridge senior unsecured notes - not guaranteed by AIG
Corebridge junior subordinated debt - not guaranteed by AIG
DDTL facility - not guaranteed by AIG
Total Corebridge debt
GIAs, at fair value - supported by Corebridge assets(b)
Other subsidiaries' notes, bonds, loans and mortgages payable - not
guaranteed by AIG
Total Short-term and long-term debt
Debt of consolidated investment entities - not guaranteed by AIG(c)
Total debt
Range of
Interest Rate(s)
Maturity
Date(s)
Balance at
December 31, 2023
Balance at
December 31, 2022
0% - 6.82%
2024 - 2055
$
9,079
$
10,242
4.88% - 8.18%
2037 - 2058
0.27% - 0.35%
2025
7.00% - 8.13%
0.00% - 5.48%
2025 - 2026
2024 - 2046
6.63% - 7.50%
7.57% - 8.50%
3.50% - 6.05%
6.88%
3.00% - 5.50%
2025 - 2029
2030 - 2046
2025 - 2052
2052
2025
4.88% - 5.04%
2037 - 2038
0% - 4.45%
2024 - 2051
$
$
$
992
267
—
991
273
269
10,338
11,775
19
18
37
10,375
200
227
7,702
989
250
9,368
53
—
19,796
2,591
22,387
$
$
$
81
18
99
11,874
200
227
6,452
989
1,500
9,368
56
1
21,299
5,880
27,179
(a) We have entered into a guarantee reimbursement agreement with Corebridge and Corebridge Life Holdings, Inc. (CRBGLH) (formerly known as AIG Life Holdings, Inc.)
which provides that Corebridge and CRBGLH will reimburse AIG for the full amount of any payment made by or on behalf of AIG pursuant to AIG’s guarantee of the
CRBGLH notes and junior subordinated debt. We have also entered into a collateral agreement with Corebridge and CRBGLH which provides that in the event of: (i) a
ratings downgrade of Corebridge or CRBGLH long-term unsecured indebtedness below specified levels or (ii) the failure by CRBGLH to pay principal and interest on the
CRBGLH debt when due, Corebridge and CRBGLH must collateralize an amount equal to the sum of: (i) 100 percent of the principal amount outstanding, (ii) accrued
and unpaid interest, and (iii) 100 percent of the net present value of scheduled interest payments. through the maturity dates of the CRBGLH debt.
(b) Collateral posted to third parties was $63 million and $63 million at December 31, 2023 and 2022, respectively. This collateral primarily consists of securities of the U.S.
government and government sponsored entities and generally cannot be repledged or resold by the counterparties.
(c) At December 31, 2023, includes debt of consolidated investment entities primarily related to real estate investments of $1.5 billion and other securitization vehicles of
$1.1 billion. At December 31, 2022, includes debt of consolidated investment entities related to real estate investments of $1.5 billion and other securitization vehicles of
$4.4 billion.
AIG | 2023 Form 10-K
233
The following table presents maturities of short-term and long-term debt (including unamortized original issue discount,
hedge accounting valuation adjustments and fair value adjustments, when applicable):
ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt
December 31, 2023
(in millions)
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable
Junior subordinated debt
AIG Japan Holdings Kabushiki Kaisha(a)
Total AIG general borrowings
AIG borrowings supported by assets:
AIG notes and bonds payable
Series AIGFP matched notes and bonds payable
Total AIG borrowings supported by assets
Total debt issued or guaranteed by AIG
Corebridge debt:
CRBGLH notes and bonds payable
CRBGLH junior subordinated debt
Corebridge senior unsecured notes
Corebridge junior subordinated debt
DDTL facility(b)
Total Corebridge debt
GIAs, at fair value - supported by Corebridge assets
Total(c)
Total
2024
2025
2026
2027
2028
Thereafter
Year Ending
$ 9,079 $ 459 $
146 $ 268 $ 905 $ 340 $
6,961
992
267
—
10,338
459
—
—
—
—
—
267
413
—
—
—
268
905
340
19
18
37
—
12
7
—
—
—
—
—
—
—
—
12
7
—
—
992
—
7,953
—
18
18
10,375
459
425
275
905
340
7,971
200
—
101
—
—
—
227
7,702
—
—
—
997
—
—
—
1,243
—
—
989
250
—
—
—
—
—
250
—
—
—
—
9,368
250
1,098
—
1,243
—
53
—
—
—
—
—
99
227
5,462
989
—
6,777
53
$ 19,796 $ 709 $ 1,523 $ 275 $ 2,148 $ 340 $
14,801
(a) In May 2023, the AIG Japan Holdings Kabushiki Kaisha syndicated loan facility in the amount of JPY24.65 billion and with a maturity date of May 25, 2023, was
refinanced, and will now mature on March 25, 2025.
(b) Corebridge has the ability to further continue this borrowing through February 25, 2025.
(c) Does not reflect $2.6 billion of notes issued by consolidated investment entities, for which recourse is limited to the assets of the respective investment entities and for
which there is no recourse to the general credit of AIG.
DEBT ISSUANCE
In March 2023, AIG issued $750 million aggregate principal amount of 5.125% Notes Due 2033.
On September 15, 2023, Corebridge issued $500 million aggregate principal amount of its 6.050% Senior Notes due 2033.
On December 8, 2023, Corebridge issued $750 million aggregate principal amount of its 5.750% Senior Notes due 2034.
DEBT CASH TENDER OFFERS AND REDEMPTIONS
In 2023, we repurchased, through cash tender offers, and redeemed $2.2 billion aggregate principal amount of certain notes and
debentures issued or guaranteed by AIG, for an aggregate purchase price of $2.2 billion, resulting in a total gain on extinguishment of
debt of $37 million. This includes the following:
• Repaid £311 million aggregate principal amount of our 5.00% Notes due 2023, which was equivalent to approximately $388 million
at the time of repayment.
• Redeemed $199 million aggregate principal amount of Validus 8.875% Senior Notes due 2040 for a redemption price of 143.968
percent of the principal amount, plus accrued and unpaid interest, which totaled $289 million.
• Repurchased, through cash tender offers, approximately $1.6 billion aggregate principal amount of certain notes and debentures
issued by AIG for an aggregate purchase price of approximately $1.5 billion.
CREDIT FACILITIES
On November 19, 2021, we entered into a credit agreement, which provides for a committed, revolving syndicated credit facility (the
Facility) as a potential source of liquidity for general corporate purposes. The Facility provides for aggregate commitments by the bank
syndicate to provide unsecured revolving loans and/or standby letters of credit of up to $4.5 billion without any limits on the type of
borrowings and is scheduled to expire in November 2026. Under circumstances described in the credit agreement, the aggregate
commitments may be increased by up to $500 million, for a total commitment of up to $5 billion. As of December 31, 2023, a total of
$4.5 billion remained available under the Facility.
234
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt
Corebridge maintains a committed, revolving syndicated credit facility (the Corebridge Facility) with aggregate commitments by the
bank syndicate to provide Corebridge with unsecured revolving loans and/or standby letters of credit of up to $2.5 billion without any
limits on the type of borrowings and with no recourse to AIG Parent. The Corebridge Facility is scheduled to expire in May 2027. As of
December 31, 2023, a total of $2.5 billion remained available under the Corebridge Facility.
Corebridge also maintains a 3-Year Delayed Draw Term Loan Agreement (the DDTL Facility) scheduled to mature in February 2025.
On September 15, 2022, Corebridge borrowed $1.5 billion under the DDTL Facility, $1.25 billion of which Corebridge repaid in 2023.
At December 31, 2023, Corebridge has $250 million of borrowings outstanding in the DDTL Facility, with no recourse to AIG Parent.
We also maintain a revolving credit facility that can be utilized exclusively by certain consolidated investment entities to acquire assets
related to securitizations. Draws under this credit facility cannot be utilized for general corporate purposes. Prior to the pricing of the
related securitizations, this credit facility has a limit of up to $250 million. Subsequent to pricing of the related securitizations, the limit
is expected to increase to up to approximately $450 million. As of December 31, 2023, we have drawn $43 million under the credit
facility. This credit facility has a maturity date of seven years.
We also maintain revolving credit facilities that can exclusively be utilized by certain consolidated investment entities to acquire real
estate assets. Draws under those credit facilities cannot be utilized for general corporate purposes. These credit facilities have
consolidated limits of up to $396 million. As of December 31, 2023, we have drawn $231 million, under the credit facilities. Each of
these credit facilities have maturity dates ranging from one year to two years.
17. Contingencies, Commitments and Guarantees
In the normal course of business, various contingent liabilities and commitments are entered into by AIG and our subsidiaries. In
addition, AIG Parent guarantees various obligations of certain subsidiaries.
Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including those referred
to below, it is possible that such liability could have a material adverse effect on AIG’s consolidated financial condition or its
consolidated results of operations or consolidated cash flows for an individual reporting period.
LEGAL CONTINGENCIES
Overview
In the normal course of business, AIG and our subsidiaries are subject to regulatory and government investigations and actions, and
litigation and other forms of dispute resolution in a large number of proceedings pending in various domestic and foreign jurisdictions.
Certain of these matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive
damages or other penalties. Many of these matters are also highly complex and may seek recovery on behalf of a class or similarly
large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from these
matters. In our insurance and reinsurance operations, litigation and arbitration concerning the scope of coverage under insurance and
reinsurance contracts, and litigation and arbitration in which our subsidiaries defend or indemnify their insureds under insurance
contracts, are generally considered in the establishment of our loss reserves. Separate and apart from the foregoing matters involving
insurance and reinsurance coverage, AIG, our subsidiaries and their respective officers and directors are subject to a variety of
additional types of legal proceedings brought by holders of AIG securities, customers, employees and others, alleging, among other
things, breach of contractual or fiduciary duties, bad faith, indemnification and violations of federal and state statutes and regulations.
With respect to these other categories of matters not arising out of claims for insurance or reinsurance coverage, we establish
reserves for loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably
estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a
loss and, therefore, the potential future losses arising from legal proceedings may exceed the amount of liabilities that we have
recorded in our financial statements covering these matters. While such potential future charges could be material, based on
information currently known to management, management does not believe, other than as may be discussed below, that any such
charges are likely to have a material adverse effect on our financial position or results of operation.
Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and our
subsidiaries in connection with industry-wide and other inquiries or examinations into, among other matters, the business practices of
current and former operating insurance subsidiaries. Such investigations, inquiries or examinations could develop into administrative,
civil or criminal proceedings or enforcement actions, in which remedies could include fines, penalties, restitution or alterations in our
business practices, and could result in additional expenses, limitations on certain business activities and reputational damage.
AIG | 2023 Form 10-K
235
ITEM 8 | Notes to Consolidated Financial Statements | 17. Contingencies, Commitments and Guarantees
Moriarty Litigation
American General Life Insurance Company (AGL) continues to defend against Moriarty v. American General Life Insurance Co. (S.D.
Cal.), a putative class action involving Sections 10113.71 and 10113.72 of the California Insurance Code. In general, those statutes
require that for life-insurance policies issued and delivered in California: (1) the policy must contain a 60-day grace period following
nonpayment of premium during which the policy remains in force; (2) the insurer must provide a 30-day pre-lapse notice; and (3) the
insurer must notify policy owners of the right to designate a secondary recipient for lapse notices. The Moriarty plaintiff contends AGL
did not comply with these requirements for a policy issued before these statutes went into effect. The plaintiff seeks damages and
other relief. AGL asserts various defenses to the plaintiff’s claims and to class certification. In 2022, the District Court held a trial was
necessary to determine whether AGL was liable, and it denied class certification. In May 2023, the case was reassigned to a new
judge. On August 14, 2023, the District Court granted the plaintiff’s motion for summary judgment on the plaintiff’s breach-of-contract
claim. On September 26, 2023, the District Court decided that good cause exists to allow the plaintiff to file a third motion for class
certification. At the same time, however, the District Court certified its August 14, 2023 order for interlocutory appeal to the Ninth
Circuit and stayed trial-court proceedings pending the outcome of AGL’s appeal. The Ninth Circuit granted AGL’s petition for
interlocutory appeal on November 21, 2023, which remains pending.
AGL is defending other actions in California involving similar issues: Allen v. Protective Life Insurance Co. and AGL (E.D. Cal.), in
which the individual plaintiff filed a motion on August 11, 2023 seeking leave to amend the complaint to add class-action allegations
against AGL; and Chuck v. American General Life Insurance Co. (C.D. Cal.), which was filed on September 6, 2023 as a putative
class action. These cases are in the early stages, and we expect their progress will be influenced by future developments in Moriarty
and cases against other insurers involving the same statutes.
We have accrued our current estimate of probable loss with respect to these litigation matters.
LEASE COMMITMENTS
We lease office space and equipment in various locations across jurisdictions in which the Company operates. The majority of the
resulting obligation arising from these contracts is generated by our real estate portfolio, which only includes contracts classified as
operating leases. The lease liability and corresponding right of use asset reflected in Other liabilities and Other assets were
$919 million and $767 million, respectively, at December 31, 2023, and $1.1 billion and $880 million, respectively, at December 31,
2022. We made cash payments of $197 million and $205 million in 2023 and 2022, respectively, in connection with these leases. The
liability includes non-lease components, such as property taxes and insurance for our gross leases. Some of these leases contain
options to renew after a specified period of time at the prevailing market rate; however, renewal options that have not been exercised
as of December 31, 2023 are excluded until management attains a reasonable level of certainty. Some leases also include
termination options at specified times and term; however, termination options are not reflected in the lease asset and liability balances
until they have been exercised.
The weighted average discount rate and lease term assumptions used in determining the liability are 2.96 percent and 10.2 years,
respectively. The primary assumption used to determine the discount rate is the cost of funding for the Company, which is based on
the secured borrowing rate for terms similar to the lease term, and for the major financial markets in which AIG operates.
Rent expense was $177 million, $190 million and $237 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The following table presents the future undiscounted cash flows under operating leases at December 31, 2023:
(in millions)
2024
2025
2026
2027
2028
Remaining years after 2028
Total undiscounted lease payments
Less: Present value adjustment
Net lease liabilities
OTHER COMMITMENTS
$
$
164
134
93
85
77
576
1,129
210
919
In the normal course of business, we enter into commitments to invest in limited partnerships, private equity funds and hedge funds
and to purchase and develop real estate in the U.S. and abroad. These commitments totaled $6.1 billion and $6.6 billion at December
31, 2023 and 2022, respectively.
236
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 17. Contingencies, Commitments and Guarantees
GUARANTEES
Subsidiaries
We have issued unconditional guarantees with respect to the prompt payment, when due, of all present and future payment
obligations and liabilities of AIGFP and certain of its subsidiaries. We have also issued guarantees of all present and future payment
obligations and liabilities of AIG Markets, Inc.
Due to the deconsolidation of AIGFP and its subsidiaries, as of December 31, 2023, a $102 million guarantee related to the
obligations of AIGFP and certain of its subsidiaries was recognized, and is reported in Other liabilities.
Business and Asset Dispositions
We are subject to financial guarantees and indemnity arrangements in connection with the completed sales of businesses and assets.
The various arrangements may be triggered by, among other things, declines in asset values, the occurrence of specified business
contingencies, the realization of contingent liabilities, developments in litigation or breaches of representations, warranties or
covenants provided by us. These arrangements are typically subject to various time limitations, defined by the contract or by operation
of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in
other cases such limitations are not specified or are not applicable.
We are unable to develop a reasonable estimate of the maximum potential payout under certain of these arrangements. Overall, we
believe the likelihood that we will have to make any material payments related to completed sales under these arrangements is
remote, and no material liabilities related to these arrangements have been recorded in the Consolidated Balance Sheets.
Other
• For additional information on commitments and guarantees associated with VIEs, see Note 10.
• For additional information on derivatives, see Note 11.
18. Equity
SHARES OUTSTANDING
Preferred Stock
On March 14, 2019, we issued 20,000 shares of Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred
Stock) (equivalent to 20,000,000 Depositary Shares (the Depositary Shares), each representing a 1/1,000th interest in a share of
Series A Preferred Stock), $5.00 par value and $25,000 liquidation preference per share (equivalent to $25 per Depositary Share).
After underwriting discounts and expenses, we received net proceeds of approximately $485 million.
We may redeem the Series A Preferred Stock at our option, (a) in whole, but not in part, at any time prior to March 15, 2024, within 90
days after the occurrence of a “Rating Agency Event,” (as defined in our Amended and Restated Certificate of Incorporation), at a
redemption price equal to $25,500 per share of the Series A Preferred Stock (equivalent to $25.50 per Depositary Share), plus an
amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in
respect of any dividends that have not been declared prior to such date), or (b) (i) in whole, but not in part, at any time prior to March
15, 2024, within 90 days after the occurrence of a “Regulatory Capital Event,” or (ii) in whole or in part, from time to time, on or after
March 15, 2024, in each case, at a redemption price equal to $25,000 per share of the Series A Preferred Stock (equivalent to $25.00
per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption
date (but no amount due in respect of any dividends that have not been declared prior to such date).
Holders of the Series A Preferred Stock will be entitled to receive dividend payments only when, as and if declared by our Board of
Directors (or a duly authorized committee of the board). Dividends will be payable from the original date of issue at a rate of 5.85%
per annum, payable quarterly, in arrears, on the fifteenth day of March, June, September and December of each year, beginning on
June 15, 2019. Dividends on the Series A Preferred Stock will be non-cumulative.
In the event of any liquidation, dissolution or winding-up of the affairs of AIG, whether voluntary or involuntary, before any distribution
or payment out of our assets may be made to or set aside for the holders of any junior stock, holders of the Series A Preferred Stock
will be entitled to receive out of our assets legally available for distribution to our shareholders, an amount equal to $25,000 per share
of Series A Preferred Stock (equivalent to $25.00 per Depositary Share), together with an amount equal to all declared and unpaid
dividends (if any), but no amount in respect of any undeclared dividends prior to such payment date. Distributions will be made only to
the extent of our assets that are available for distribution to shareholders (i.e., after satisfaction of all our liabilities to creditors, if any).
AIG | 2023 Form 10-K
237
The Series A Preferred Stock does not have voting rights, except in limited circumstances, including in the case of certain dividend
non-payments.
On January 31, 2024, we announced that we will redeem all of the 20,000 outstanding shares of the Series A Preferred Stock and all
20,000,000 of the corresponding Depositary Shares, each representing a 1/1,000th interest in a share of Series A Preferred Stock, on
March 15, 2024. The redemption price per share of Series A Preferred Stock will be $25,000 (equivalent to $25.00 per Depositary
Share).
ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity
Common Stock
The following table presents a rollforward of outstanding shares:
Years Ended December 31,
2023
2022
2021
(in millions)
Common
Stock Issued
Treasury
Stock
Common Stock
Outstanding
Common
Stock Issued
Treasury
Stock
Common Stock
Outstanding
Common
Stock Issued
Treasury
Stock
Common Stock
Outstanding
Shares, beginning of year
1,906.7
(1,172.6)
Shares issued
Shares repurchased
Shares, end of year
Dividends
—
—
5.5
(50.8)
1,906.7
(1,217.9)
734.1
5.5
(50.8)
688.8
1,906.7
(1,088.0)
—
—
5.5
(90.1)
1,906.7
(1,172.6)
818.7
5.5
(90.1)
734.1
1,906.7
(1,045.1)
—
—
6.8
(49.7)
1,906.7
(1,088.0)
861.6
6.8
(49.7)
818.7
Dividends are payable on AIG common stock, par value $2.50 per share (AIG Common Stock) only when, as and if declared by our
Board of Directors in its discretion, from funds legally available for this purpose. In considering whether to pay a dividend on or
purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital
resources available to support our insurance operations and business strategies, AIG’s funding capacity and capital resources in
comparison to internal benchmarks, expectations for capital generation, rating agency expectations for capital, regulatory standards
for capital and capital distributions, and such other factors as our Board of Directors may deem relevant. The payment of dividends is
also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which no dividends may be declared or paid on
any AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A
Preferred Stock have been declared and paid or provided for.
Repurchase of AIG Common Stock
Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated
repurchase or automatic repurchase transactions or otherwise. Certain of our share repurchases have been and may from time to
time be effected through the Securities Exchange Act of 1934, as amended (the Exchange Act) Rule 10b5-1 repurchase plans. On
August 1, 2023, the Board of Directors authorized the repurchase of $7.5 billion of AIG Common Stock (inclusive of the approximately
$2.15 billion of expected remaining authorization under the Board's prior share repurchase authorization).
The timing of any future repurchases will depend on market conditions, our business and strategic plans, financial condition, results of
operations, liquidity and other factors. The repurchase of AIG Common Stock is also subject to the terms of AIG’s outstanding Series
A Preferred Stock, pursuant to which AIG may not (other than in limited circumstances) purchase, redeem or otherwise acquire AIG
Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock
have been declared and paid or provided for.
Pursuant to an Exchange Act Rule 10b5-1 repurchase plan, from January 1, 2024 to February 8, 2024, we repurchased
approximately 10 million shares of AIG Common Stock for an aggregate purchase price of approximately $706 million.
DIVIDENDS DECLARED
On February 13, 2024, our Board of Directors declared a cash dividend on AIG Common Stock of $0.36 per share, payable on
March 28, 2024 to shareholders of record on March 14, 2024. On February 13, 2024, our Board of Directors declared a cash dividend
on AIG’s Series A Preferred Stock of $365.625 per share, payable on March 15, 2024 to holders of record on February 29, 2024.
238
AIG | 2023 Form 10-K
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents a rollforward of Accumulated other comprehensive income (loss):
ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity
Unrealized
Appreciation
(Depreciation)
of Fixed Maturity
Securities on Which
Allowance for Credit
Losses Was Taken
Change in Fair
Value of Market
Risk Benefits
Attributable to
Changes in
Our Own
Credit Risk
Change in the
discount rates
used to measure
traditional and
limited payment
long-duration
insurance contracts
Unrealized
Appreciation
(Depreciation)
of All Other
Investments
Foreign
Currency
Translation
Adjustments
Retirement
Plan
Liabilities
Adjustment
Fair Value of
Liabilities
Under Fair
Value Option
Attributable to
Changes in Our
Own Credit Risk
Total
(in millions)
Balance, January 1, 2021, net of tax
$
(95) $
17,093 $
— $
— $
(2,267) $
(1,228) $
8 $ 13,511
Cumulative effect of change in
accounting principle, net of tax
Change in unrealized appreciation
(depreciation) of investments
Change in other
Change in fair value of market risk
benefits, net
Change in discount rates
Change in future policy benefits
Change in foreign currency translation
adjustments
Change in net actuarial loss
Change in prior service cost
—
58
(3)
—
—
—
—
—
—
3,407
(1,839)
(3,765)
(9,313)
(25)
—
—
380
—
—
—
—
—
227
—
—
—
—
—
—
—
—
1,717
—
—
—
—
Change in deferred tax asset (liability)
(11)
1,807
(48)
(356)
Change in fair value of liabilities under
fair value option attributable to
changes in own credit risk
Total other comprehensive income (loss)
Corebridge noncontrolling interests
Noncontrolling interests
—
44
3
—
—
(7,151)
(1,333)
(109)
—
179
171
7
—
1,361
243
6
—
—
—
—
—
—
(108)
—
—
(72)
—
(180)
(2)
(3)
—
—
—
—
—
—
—
417
8
(100)
—
325
—
—
—
—
—
—
—
—
—
—
—
—
(2)
(2)
—
—
(2,197)
(9,255)
(28)
227
1,717
380
(108)
417
8
1,220
(2)
(5,424)
(918)
(99)
Balance, December 31, 2021, net of tax
$
(48) $
12,125 $
(1,496) $
(2,167) $
(2,446) $
(903) $
6 $
5,071
Change in unrealized appreciation
(depreciation) of investments
Change in other
Change in fair value of market risk
benefits, net
Change in discount rates
Change in future policy benefits
Change in foreign currency translation
adjustments
Change in net actuarial loss
Change in prior service cost
Change in deferred tax asset (liability)
Change in fair value of liabilities under
fair value option attributable to
changes in our own credit risk
Total other comprehensive loss
Corebridge noncontrolling interests
Noncontrolling interests
(119)
(47,647)
—
—
—
—
—
—
—
25
—
(94)
—
(6)
(12)
—
—
1,805
—
—
—
—
—
1,635
—
—
—
—
—
—
—
—
6,993
—
—
—
—
7,446
(341)
(1,449)
—
(38,408)
2,485
(3,123)
—
1,294
11
93
—
5,544
(393)
525
—
—
—
—
—
(593)
—
—
(20)
—
(613)
14
11
—
—
—
—
—
—
(31)
8
3
—
(20)
(1)
—
—
—
—
—
—
—
—
—
—
(47,766)
(12)
1,635
6,993
1,805
(593)
(31)
8
5,664
(6)
(6)
—
—
(6)
(32,303)
2,116
(2,500)
Balance, December 31, 2022, net of tax
$
(136) $
(20,675) $
(284) $
2,459 $
(3,056) $
(924) $
— $ (22,616)
Change in unrealized appreciation
(depreciation) of investments*
Change in other
Change in fair value of market risk
benefits, net
Change in discount rates
Change in future policy benefits
Change in foreign currency translation
adjustments
Change in net actuarial loss
Change in prior service cost
Change in deferred tax asset (liability)
Total other comprehensive income
Corebridge noncontrolling interests
Noncontrolling interests
30
(10)
—
—
—
—
—
—
(6)
14
13
(3)
8,410
52
—
—
(254)
—
—
—
(1,074)
7,134
4,524
1,871
—
—
(695)
—
—
—
—
—
151
(544)
153
(199)
—
—
—
(1,045)
—
—
—
—
174
(871)
(732)
(377)
—
—
—
—
—
137
—
—
(35)
102
(18)
7
—
—
—
—
—
—
143
4
(42)
105
(2)
—
—
—
—
—
—
—
—
—
—
—
—
—
8,440
42
(695)
(1,045)
(254)
137
143
4
(832)
5,940
3,938
1,299
Balance, December 31, 2023, net of tax
$
(106) $
(10,888) $
(476) $
1,233 $
(2,979) $
(821) $
— $ (14,037)
*
Includes net unrealized gains and losses attributable to businesses held for sale at December 31, 2023.
AIG | 2023 Form 10-K
239
The following table presents the other comprehensive income (loss) reclassification adjustments for the years ended
December 31, 2023 and 2022, respectively:
ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity
Unrealized
Appreciation
(Depreciation)
of Fixed Maturity
Securities on Which
Allowance for Credit
Losses Was Taken
Unrealized
Appreciation
(Depreciation)
of All Other
Investments
Change in Fair
Value of Market
Risk Benefits
Attributable to
Changes in Our
Own Credit Risk
Change in the
discount rates
used to measure
traditional and
limited payment
long-duration
insurance contracts
Foreign
Currency
Translation
Adjustments
Retirement
Plan
Liabilities
Adjustment
Fair Value of
Liabilities
Under Fair
Value Option
Attributable to
Changes in Our
Own Credit Risk
Total
(in millions)
Year Ended December 31, 2023
Unrealized change arising during period
$
(6) $
7,172 $
(695) $
(1,045) $
137 $
118 $
— $
5,681
Less: Reclassification adjustments
included in net income
Total other comprehensive income
(loss), before of income tax expense
(benefit)
Less: Income tax expense (benefit)
Total other comprehensive income
(loss), net of income tax expense
(benefit)
Year Ended December 31, 2022
(26)
(1,036)
—
—
—
(29)
—
(1,091)
20
6
8,208
1,074
(695)
(151)
(1,045)
(174)
137
35
147
42
—
—
6,772
832
$
14 $
7,134 $
(544) $
(871) $
102 $
105 $
— $
5,940
Unrealized change arising during period
$
(112) $
(47,043) $
1,635 $
6,993 $
(593) $
(53) $
(6) $
(39,179)
Less: Reclassification adjustments
included in net income
Total other comprehensive income (loss),
before income tax expense (benefit)
Less: Income tax expense (benefit)
Total other comprehensive income (loss),
net of income tax expense (benefit)
$
Year Ended December 31, 2021
7
(1,189)
(119)
(25)
(45,854)
(7,446)
—
1,635
341
—
—
6,993
1,449
(593)
20
(30)
(23)
(3)
—
(6)
—
(1,212)
(37,967)
(5,664)
(94) $
(38,408) $
1,294 $
5,544 $
(613) $
(20) $
(6) $
(32,303)
Unrealized change arising during period
$
55 $
(8,030) $
227 $
1,717 $
(108) $
379 $
(2) $
(5,762)
Less: Reclassification adjustments
included in net income
Total other comprehensive income (loss),
before income tax expense (benefit)
Less: Income tax expense (benefit)
Total other comprehensive income (loss),
net of income tax expense (benefit)
$
—
55
11
928
(8,958)
(1,807)
—
227
48
—
—
(46)
1,717
356
(108)
72
425
100
—
(2)
—
882
(6,644)
(1,220)
44 $
(7,151) $
179 $
1,361 $
(180) $
325 $
(2) $
(5,424)
The following table presents the effect of the reclassification of significant items out of AOCI on the respective line items in
the Consolidated Statements of Income (Loss)(a):
(in millions)
Unrealized appreciation (depreciation) of fixed maturity
securities on which allowance for credit losses was taken
Amount Reclassified from AOCI
Affected Line Item in the
Years Ended December 31,
Consolidated
2023
2022
2021
Statements of Income (Loss)
Investments
$
(26) $
7 $
— Net realized gains (losses)
Total
Unrealized appreciation (depreciation) of all other investments
(26)
7
—
Investments
Total
Change in retirement plan liabilities adjustment
Prior-service credit
Actuarial losses
Total
Total reclassifications for the period
(1,036)
(1,036)
(1,189)
(1,189)
(2)
(27)
(29)
(1,091) $
(2)
(28)
(30)
(1,212) $
$
928 Net realized gains (losses)
928
(3)
(43)
(46)
882
(b)
(b)
(a) The following items are not reclassified out of AOCI and included in the Consolidated Statements of Income (Loss) and thus have been excluded from the table: (a)
Change in fair value of market risk benefits attributable to changes in our own credit risk (b) Change in the discount rates used to measure traditional and limited-
payment long-duration insurance contracts, and (c) Fair value of liabilities under fair value option attributable to changes in own credit risk.
(b) These AOCI components are included in the computation of net periodic pension cost. For additional information, see Note 22.
240
AIG | 2023 Form 10-K
NONCONTROLLING INTEREST
Since the IPO of Corebridge, AIG closed on three secondary offerings and sold 159.75 million shares of Corebridge common stock.
Corebridge also repurchased approximately 17.2 million shares of Corebridge common stock from AIG during the year ended
December 31, 2023. AIG owns 52.2 percent of the outstanding common stock of Corebridge as of December 31, 2023.
For additional information on the Corebridge common stock offerings and share repurchases, see Note 1.
ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity
The following table presents the effect of changes in our ownership interest in Corebridge on our equity:
Years Ended December 31,
(in millions)
Net income attributable to AIG common shareholders
2023
2022
2021
$
3,614
$
10,198
$
10,338
Changes in AIG equity for sale of interest in Corebridge and Corebridge share repurchases
145
497
(630)
Change from Net income attributable to AIG common shareholders and changes in AIG's
ownership interests
$
3,759
$
10,695
$
9,708
19. Earnings Per Common Share (EPS)
The basic EPS computation is based on the weighted average number of common shares outstanding, adjusted to reflect all stock
dividends and stock splits. The diluted EPS computation is based on those shares used in the basic EPS computation plus common
shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding
and adjusted to reflect all stock dividends and stock splits, using the treasury stock method or the if-converted method, as applicable.
The following table presents the computation of basic and diluted EPS:
Years Ended December 31,
(dollars in millions, except per common share data)
Numerator for EPS:
2023
2022
2021
Income (loss) from continuing operations
Less: Net income from continuing operations attributable to noncontrolling interests
Less: Preferred stock dividends
Income (loss) attributable to AIG common shareholders from continuing operations
Income (loss) from discontinued operations, net of income tax expense
Net income (loss) attributable to AIG common shareholders
$
$
3,878
235
29
3,614
—
3,614
$
$
11,274
1,046
29
10,199
(1)
10,198
$
$
10,906
539
29
10,338
—
10,338
Denominator for EPS:
Weighted average common shares outstanding - basic
Dilutive common shares
Weighted average common shares outstanding - diluted(a)
Income (loss) per common share attributable to AIG common shareholders:
Basic:
Income (loss) from continuing operations
Income from discontinued operations
Income (loss) attributable to AIG common shareholders
Diluted:
Income (loss) from continuing operations
Income from discontinued operations
Income (loss) attributable to AIG common shareholders
719,506,291
5,726,777
778,621,118
9,320,632
854,320,449
10,564,430
725,233,068
787,941,750
864,884,879
$
$
$
$
$
$
5.02
—
5.02
4.98
—
4.98
$
$
$
$
$
$
13.10
—
13.10
12.94
—
12.94
$
$
$
$
$
$
12.10
—
12.10
11.95
—
11.95
(a) Potential dilutive common shares include our share-based employee compensation plans and an option for Blackstone to exchange all or a portion of its ownership
interest in Corebridge for AIG common shares in the event an IPO did not occur prior to 2024. As a result of the consummation of the IPO on September 19, 2022, this
exchange right of Blackstone was terminated. The number of potential common shares excluded from diluted shares outstanding was 4.4 million, 24.1 million and
12.0 million for the years ended December 31, 2023, 2022 and 2021, respectively, because the effect of including those common shares in the calculation would have
been anti-dilutive.
For information regarding our repurchases of AIG Common Stock, see Note 18.
AIG | 2023 Form 10-K
241
ITEM 8 | Notes to Consolidated Financial Statements | 20. Statutory Financial Data and Restrictions
20. Statutory Financial Data and Restrictions
The following table presents statutory net income (loss) and capital and surplus for our General Insurance companies and
our Life and Retirement companies in accordance with statutory accounting practices:
(in millions)
Years Ended December 31,
Statutory net income (loss)(a)(b):
General Insurance companies:
Domestic
Foreign
Total General Insurance companies
Life and Retirement companies:
Domestic
Foreign
Total Life and Retirement companies
At December 31,
Statutory capital and surplus(a)(b):
General Insurance companies:
Domestic
Foreign
Total General Insurance companies
Life and Retirement companies:
Domestic
Foreign
2023
2022
2021
1,912 $
2,272 $
1,867
1,047
3,779 $
3,319 $
2,649
1,573
4,222
3,354 $
3,091 $
2,588
(51)
5
5
3,303 $
3,096 $
2,593
$
$
$
$
$
$
18,703 $
11,527
30,230 $
$
14,752 $
467
15,219 $
19,563
13,913
33,476
12,229
486
12,715
Total Life and Retirement companies
Aggregate minimum required statutory capital and surplus:
General Insurance companies:
Domestic
Foreign
Total General Insurance companies
Life and Retirement companies:
Domestic
Foreign
Total Life and Retirement companies
$
$
$
$
$
3,625 $
6,041
3,680
7,314
9,666 $
10,994
4,025 $
223
4,248 $
4,057
194
4,251
(a) Excludes discontinued operations and other divested businesses.
(b) The 2023 amounts reflect our best estimate of the statutory net income, capital and surplus as of the date of AIG’s Form 10-K filing.
Our insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or
permitted by domestic and foreign insurance regulatory authorities. The principal differences between statutory financial statements
and financial statements prepared in accordance with U.S. GAAP for domestic companies are that statutory financial statements do
not reflect DAC, some bond portfolios may be carried at amortized cost, investment impairments are determined in accordance with
statutory accounting practices, assets and liabilities are presented net of reinsurance, policyholder liabilities are generally valued
using more conservative assumptions and certain assets are non-admitted.
For domestic insurance subsidiaries, aggregate minimum required statutory capital and surplus is based on the greater of the RBC
level that would trigger regulatory action or minimum requirements per state insurance regulation. Capital and surplus requirements of
our foreign subsidiaries differ from those prescribed in the U.S., and can vary significantly by jurisdiction. At both December 31, 2023
and 2022, all domestic and foreign insurance subsidiaries individually exceeded the minimum required statutory capital and surplus
requirements and all domestic insurance subsidiaries individually exceeded RBC minimum required levels.
For foreign insurance companies, financial statements are prepared in accordance with local regulatory requirements. These
accounting practices differ from U.S. GAAP primarily by different rules on deferral of policy acquisition costs, amortization of deferred
acquisition costs, and establishing future policy benefit liabilities using different actuarial assumptions, as well as valuing for deferred
taxes on a different basis.
242
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 20. Statutory Financial Data and Restrictions
STATUTORY PERMITTED ACCOUNTING PRACTICE
At December 31, 2023 and 2022, AGL used the following permitted practice that resulted in reported statutory surplus or risk-based
capital that is significantly different from the statutory surplus or risk based capital that would have been reported had National
Association of Insurance Commissioners (NAIC) statutory accounting practices or the prescribed regulatory accounting practices of
their respective state regulator been followed in all respects:
• Effective December 31, 2020 and periods through September 30, 2023, AGL, a life insurance subsidiary domiciled in Texas,
renewed a permitted statutory accounting practice to recognize an admitted asset related to the notional value of coverage defined
in an excess of loss (XOL) reinsurance agreement with a 20-year term that provides coverage to AGL for aggregate claims
incurred during the agreement term associated with guaranteed living benefits on certain fixed index annuities generally issued
prior to April 2019 (Block 1) exceeding an attachment point as defined in the agreement. This permitted practice was previously
expanded on October 1, 2020 to similarly recognize an additional admitted asset related to the net notional value of coverage as
defined in a separate XOL reinsurance agreement with a 25-year term that provides coverage to the subsidiary for aggregate XOL
claims associated with guaranteed living benefits on a block of fixed index annuities generally issued in April 2019 or later,
including certain new business issued after the effective date (Block 2).
• Effective September 30, 2023, the permitted practice for Block 1 and Block 2 was extended through September 30, 2026 and the
maximum notional value of Block 2 was increased for certain new business. Effective October 1, 2022 and periods through
September 30, 2023, this permitted practice was expanded to similarly recognize an additional admitted asset related to the net
notional value of coverage as defined in a separate XOL agreement with a 25-year term that provides coverage to the subsidiary
for aggregate XOL claims associated with the base contract along with the guaranteed living benefits rider on a block of fixed
annuities inforce on the treaty effective date, including certain new business issued after the effective date (Block 3). Effective
September 30, 2023, the permitted practice for Block 3 was extended through September 30, 2026 and the maximum notional
value was increased for certain new business.
These permitted practice resulted in an increase in the statutory surplus of AGL of approximately $1.7 billion and $1.0 billion at
December 31, 2023 and 2022, respectively.
SUBSIDIARY DIVIDEND RESTRICTIONS
Payments of dividends to us by our insurance subsidiaries are subject to certain restrictions imposed by regulatory authorities. With
respect to our domestic insurance subsidiaries, the payment of any dividend requires formal notice to the insurance department in
which the particular insurance subsidiary is domiciled. For example, unless permitted by the Superintendent of Financial Services,
property casualty companies domiciled in New York generally may not pay dividends to shareholders that, in any 12-month period,
exceed the lesser of 10 percent of such company’s statutory policyholders’ surplus or 100 percent of its “adjusted net investment
income,” for the previous year, as defined. Generally, less severe restrictions applicable to both property casualty and life insurance
companies exist in most of the other states in which our insurance subsidiaries are domiciled. Under state insurance laws, an insurer
may pay a dividend without prior approval of the insurance regulator when the amount of the dividend is below certain regulatory
thresholds. Other foreign jurisdictions may restrict the ability of our foreign insurance subsidiaries to pay dividends. Various other
regulatory restrictions also limit cash loans and advances to us by our subsidiaries.
Largely as a result of these restrictions, approximately $29.2 billion of the statutory capital and surplus of our consolidated insurance
subsidiaries were restricted from transfer to AIG Parent without prior approval of state insurance regulators at December 31, 2023.
To our knowledge, no AIG insurance company is currently on any regulatory or similar “watch list” with regard to solvency.
PARENT COMPANY DIVIDEND RESTRICTIONS
At December 31, 2023, our ability to pay dividends is not subject to any significant contractual restrictions, but remains subject to
regulatory restrictions.
For additional information about our ability to pay dividends to our shareholders, see Note 18.
AIG | 2023 Form 10-K
243
ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans
21. Share-Based Compensation Plans
The following table presents our total share-based compensation expense:
Years Ended December 31,
(in millions)
Share-based compensation expense - pre-tax(a)
Share-based compensation expense - after tax(b)
$
2023
199 $
157
2022
288 $
228
2021
278
220
(a) As a result of accelerated vesting events, such as retirement eligibility in the year of grant and involuntary terminations, we recognized $58 million, $67 million and
$67 million in 2023, 2022 and 2021, respectively, prior to the end of the specified vesting periods. It is our policy to reverse compensation expense for forfeited awards
when they occur. Excludes share-based compensation expense of $60 million, $75 million and $88 million in 2023, 2022 and 2021, respectively, for units issued to
Corebridge employees that will be settled in Corebridge common stock.
(b) We also recognized $21 million of tax benefit due to share settlements occurring in 2023.
EMPLOYEE PLANS
The Company sponsors several stock compensation programs under the AIG Long Term Incentive Plan (LTIP) (as amended) from
which performance share units (PSUs), restricted stock units (RSUs), stock options and deferred stock units (DSUs) (collectively
units) are issued. In addition, off-cycle grants are made from time to time during the year generally as sign-on awards to new hires or
as a result of a change in employee status. The LTIP was governed by the AIG 2013 Omnibus Incentive Plan (2013 Plan), until it was
replaced by the AIG 2021 Omnibus Incentive Plan (2021 Omnibus Plan), which was adopted at the annual shareholders’ meeting in
May 2021. The adoption occurred after the annual 2021 LTIP awards were granted.
Our share-settled awards are settled with previously acquired shares held in AIG’s treasury.
AIG Omnibus Incentive Plan
The 2021 Omnibus Plan provided for the grants of share-based awards to our employees and non-employee directors. The total
number of shares granted under the 2021 Plan (the reserve) was the sum of 1) 8.1 million shares of AIG Common Stock, plus 2) the
number of authorized shares that remained available for issuance under the 2013 Plan when the 2021 Omnibus Plan became
effective, plus 3) the number of shares of AIG Common Stock relating to outstanding awards under the 2013 Plan at the time the 2021
Omnibus Plan became effective that subsequently were forfeited, expired, terminated or otherwise lapse or are settled in cash. Each
share-based unit granted under the Omnibus Plan reduces the number of shares available for future grants by one share. However,
shares with respect to awards that are forfeited, expired or settled for cash are returned to the reserve. As of December 31, 2023,
23,836,222 shares are available for future grants.
AIG Long Term Incentive Plan
Long-Term Incentive (LTI) Awards
The LTIP provides for an annual award to certain employees, including our senior executive officers and other highly compensated
employees that may be comprised of a combination of one or more of the following units: PSUs, RSUs or stock options.
The number of PSUs issued on the grant date (the target) provides the opportunity for LTIP participants (usually senior management)
to receive shares of AIG Common Stock based on AIG achieving specified performance goals at the end of a three-year performance
period. These performance goals are pre-established by AIG’s Compensation and Management Resources Committee (CMRC) for
each annual grant and may differ from year to year. The actual number of PSUs earned can vary from zero to 200 percent of the
target for the 2023, 2022 and 2021 LTI awards, depending on AIG’s performance relative to a specified peer group and/or the
outcome of pre-established financial goals, as applicable.
RSUs and stock options are earned based solely on continued service by the participant.
Vesting occurs on January 1 of the year immediately following the end of the three-year performance and service period. Beginning in
2022, vesting for RSUs and stock options awarded occurs in three equal installments on the first, second and third anniversary of the
grant date. Recipients must be employed at each vesting date to be entitled to share delivery, except upon the occurrence of an
accelerated vesting event, such as an involuntary termination without cause, disability, retirement eligibility or death during the vesting
period. However, for involuntarily terminated employees hired after April 1, 2022 unvested RSUs and options are forfeited on the
termination date, while PSUs are pro-rated based on the number of completed years in the performance period.
244
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans
Prior to 2021, LTI awards and other share-settled grants accrued dividend equivalent units (DEUs) in the form of additional PSUs and
RSUs whenever a cash dividend was declared on shares of AIG Common Stock; the DEUs were subject to the same vesting terms
and conditions as the underlying unit. Beginning in 2021, PSUs and RSUs granted accrue dividend equivalent rights (DERs) as AIG’s
dividends are declared. These DERs are settled in cash only if the underlying units’ vesting conditions are met; previously accrued
DEUs were not impacted by this change.
Unit Valuation
The fair value of time-vesting RSUs as well as PSUs that are earned based on certain company-specific metrics was based on the
closing price of AIG Common Stock on the grant date; while the fair value of PSUs that are earned based on AIG’s relative total
shareholder return (TSR) was determined on the grant date using a Monte Carlo simulation.
The following table presents the assumptions used to estimate the fair value of PSUs that vest based on AIG’s TSR(a):
Expected dividend yield(b)
Expected volatility(c)
Risk-free interest rate(d)
2023
— %
37.98 %
4.42 %
2022
— %
47.60 %
1.71 %
2021
— %
47.63 %
0.28 %
(a) PSUs will be adjusted by +/-25 percent if AIG's TSR is in the top or bottom quartile of the peer group at the culmination of the performance period for the 2021 LTI
award.
(b) The award agreement provides that TSR for AIG and each member of the Peer Group will be calculated assuming dividends distributed are reinvested on the
ex-dividend date.
(c) We used the historical volatility over the most recent 2.86-year period for AIG and the members of the Peer Group, commensurate with the remaining Performance
Period as of the valuation date.
(d) We converted the semi-annual zero-coupon U.S. Treasury rates as of the valuation date to continuously compounded rates. We then chose the continuously
compounded risk-free rate that is commensurate with the length of the remaining performance period as of the valuation date and interpolated between the yields of the
two-year and the three-year continuously compounded rates to determine the yield.
Modification
During 2022 in connection with the 2022 Corebridge IPO, approximately 4 million RSUs held by 735 Corebridge LTIP participants who
were actively employed on the IPO date were converted to approximately 10 million Corebridge RSUs in accordance with the anti-
dilution provision of the 2021 Omnibus Plan. The vesting terms of the Corebridge RSUs remain the same as the pre-converted RSUs
but will be settled in Corebridge common stock. This conversion is considered a modification for accounting purposes and did not
result in incremental compensation expense.
The following table summarizes outstanding share-settled LTI awards(a):
As of or for the Year Ended December 31, 2023(b)
Unvested, beginning of year
Granted
Vested(c)
Forfeited
Unvested, end of year(d)
2023 LTI
—
2,752,390
(876,285)
(141,136)
1,734,969
Number of Units
2022 LTI
2,280,431
—
(969,438)
(202,840)
1,108,153
2021 LTI
2,696,264
—
(689,706)
(278,707)
1,727,851
$
— $
2023 LTI
2022 LTI
Weighted Average Grant-Date Fair Value
2021 LTI
45.40
—
45.97
45.85
45.08
61.86 $
—
61.75
61.93
61.95 $
59.98
59.92
59.88
60.02 $
$
(a) Excludes stock options, other RSUs and DSUs, which are discussed under Stock Options, Other RSU Grants and Non-Employee Plan, respectively.
(b) PSUs represent target amount granted and does not reflect potential increases or decreases that could result from the final outcome of the performance goals for the
respective awards, which is determined by the CMRC in the quarter after the applicable performance period ends.
(c) Also reflects units that vest as a result of an accelerated vesting event that occurred prior to the specified vesting date but for which share delivery has not yet occurred.
(d) At December 31, 2023, the total unrecognized compensation cost for outstanding RSUs and PSUs was $111 million and the weighted-average and expected period of
years over which that cost is expected to be recognized are 1.01 years and 3 years.
Stock Options
Stock options were issued as part of the 2023, 2022 and 2021 LTI awards, and to certain newly hired senior executives in 2017 and
2018. Option awards are generally granted with an exercise price equal to the market price of the company’s stock on the grant date
and are exercisable up to 10 years from the date of grant, or 3 years from the date of an involuntary termination or the option's
expiration date, if earlier. The fair value of the options was estimated on the grant date using the Black-Scholes model for the time-
vesting options, and a Monte Carlo simulation for the hurdle-vesting options using the assumptions noted in the following table.
AIG | 2023 Form 10-K
245
The following weighted-average assumptions were used for stock options granted:
ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans
Expected annual dividend yield(a)
Expected volatility(b)
Risk-free interest rate(c)
Expected term(d)
2023
2.14 %
25.17 %
4.06 %
2022
2.08 %
32.13 %
1.92 %
2021
2.89 %
36.68 %
0.95 %
6.00 years
6.00 years
6.43 years
(a) The dividend yield is the last dividend from Bloomberg times 4 divided by stock price based on Bloomberg Professional service as of the valuation date.
(b) The expected volatility is based on the implied volatility of 24 months stock option estimated by the Bloomberg Professional service as of the valuation date.
(c) The risk-free interest rate is calculated as the interpolated zero rate as of the valuation date.
(d) The contractual term is 10 years from the date of grant.
The following table provides a rollforward of stock option activity:
As of or for the Year Ended December 31, 2023
Outstanding, beginning of year
Granted
Exercised
Forfeited or expired
Outstanding, end of year
Exercisable, end of year
Units
12,893,412
1,352,039
(1,039,998)
(909,792)
12,295,661
9,810,882
Weighted
Average
Exercise Price
48.94
$
59.72
41.29
50.13
50.69
47.95
$
$
Weighted Average
Remaining
Contractual Life
6.95
Aggregate
Intrinsic Values
(in millions)
6.81
6.24
$
$
210
194
The weighted average grant-date fair value of stock options granted during 2023, 2022 and 2021 was $11.43, $10.77 and $10.00,
respectively. As of December 31, 2023, we recognized $18 million of expense, while $15 million was unrecognized and is expected to
be amortized up to 2.25 years. We received $43 million in cash from the exercise of stock options during 2023.
Other RSU Grants
The Company may issue time-vesting RSUs for various reasons including, as a sign-on bonus, retention grant or replacement award
in an acquisition. Vesting for these awards ranges from 1 to 5 years and is contingent on continuous service.
The following table summarizes outstanding share-settled Other RSU grants.
As of or for the Year Ended December 31,
Unvested, beginning of year
Granted
Vested
Converted(a)
Forfeited
Unvested, end of year
Number of Units
Weighted Average Grant-Date Fair Value
2023
1,488,248
208,641
(252,635)
—
(82,540)
1,361,714
2022
819,640
2021
1,151,380
$
1,070,458
(290,037)
(91,300)
(20,513)
1,488,248
493,140
(699,067)
—
(125,813)
819,640
$
2023
54.77 $
62.42
49.42
—
40.70
57.79 $
2022
43.95 $
60.16
44.59
52.90
55.89
54.77 $
2021
46.18
49.36
50.03
—
51.80
43.95
(a) Represents RSUs converted to Corebridge RSUs as a result of the IPO.
We recognized $20 million of expense related to these RSU grants in 2023. Total unrecognized compensation cost related to these
grants was $54 million and the weighted-average and expected period of years over which that cost is expected to be recognized are
1.79 years and 4 years at December 31, 2023.
NON-EMPLOYEE PLAN
Our non-employee directors, who serve on our Board of Directors, receive share-based compensation in the form of fully vested
DSUs with delivery deferred until retirement from the Board. DSUs granted in 2023, 2022 and 2021 accrue dividend equivalents in the
form of additional DSUs equal to the amount of any regular quarterly dividend that would have been paid by AIG if the shares of AIG
Common Stock underlying the DSUs had been outstanding. In 2023, 2022 and 2021, we granted to non-employee directors 47,344,
46,273 and 55,133 DSUs, respectively, and recognized expense of $2.6 million, $2.7 million and $2.7 million, respectively.
246
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
22. Employee Benefits
PENSION PLANS
We offer various defined benefit plans to eligible employees. Effective January 1, 2016, the U.S. defined benefit pension plans were
frozen. Consequently, these plans are closed to new participants and current participants no longer earn benefits.
The U.S. AIG Retirement Plan (the qualified plan) is a noncontributory defined benefit plan subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA). In 2012, the qualified plan was converted to a cash balance formula
comprised of pay credits based on 6% of a plan participant’s annual compensation (subject to IRS limitations) and annual interest
credits. Although benefits are frozen, these interest credits continue to accrue on the cash balance accounts of active participants,
who also accrue years of service for purposes of early retirement eligibility and subsidies. Employees can take their vested benefits as
a lump sum or an annuity option when they leave AIG or are terminated from the plan.
Employees satisfying certain age and service requirements (i.e., grandfathered employees) remain covered under the average pay
formula that was in effect prior to the conversion. The final average pay formula is based upon a percentage of final average
compensation multiplied by years of credited service, up to 44 years. Grandfathered employees will receive the higher of the benefit
under the cash balance formula or the final average pay formula at retirement.
In the U.S. we also sponsor non-qualified unfunded defined benefit plans, such as the AIG Non-Qualified Retirement Income Plan
(AIG NQRIP) for certain employees, including key executives, designed to supplement pension benefits provided by the qualified
plan. The AIG NQRIP provides a benefit equal to the reduction in benefits under the qualified plan as a result of federal tax limitations
on compensation and benefits payable.
Non-U.S. defined benefit plans generally are either based on the employee’s years of credited service and compensation in the years
preceding retirement or on points accumulated based on the employee’s job grade and other factors during each year of service.
POSTRETIREMENT PLANS
U.S. postretirement medical and life insurance benefits are based upon the employee attaining the age of 55 and having a minimum
of ten years of service, which was reduced to 5 years in 2019 for medical coverage only. Eligible employees who have medical
coverage can enroll in retiree medical upon termination of employment. Medical benefits are contributory, while the life insurance
benefits, which are closed to new employees, are generally non-contributory. Retiree medical contributions vary from none for
pre-1989 retirees to actual premium payments reduced by certain subsidies for post-1992 retirees. These retiree contributions are
subject to annual adjustments. Other cost sharing features of the medical plan include deductibles, coinsurance, Medicare
coordination, and an employer subsidy for grandfathered employees only.
Postretirement benefits are offered in certain non-U.S. countries and vary by geographic location.
AIG | 2023 Form 10-K
247
The following table presents the funded status of the plans reconciled to the amount reported in the Consolidated Balance
Sheets.
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
As of or for the Years Ended
December 31,
(in millions)
Change in projected benefit obligation:
Pension
U.S. Plans(a)
2023
2022
Non-U.S. Plans(a)
U.S. Plans
Non-U.S. Plans
2023
2022
2023
2022
2023
2022
Postretirement
Benefit obligation, beginning of year
$ 3,475 $ 4,795
$
826 $ 1,157
$
131 $
174
$
32 $
47
—
1
(14)
(1)
—
—
—
(1)
—
—
—
1
(1)
—
—
—
—
(32)
—
(32)
(32)
24
1
25
Service cost
Interest cost
Actuarial (gain) loss(b)
Benefits paid:
AIG assets
Plan assets
Plan amendment
Settlements
Foreign exchange effect
Other
Projected benefit obligation, end of
year
Change in plan assets:
Fair value of plan assets, beginning of
year
Actual return on plan assets, net of
expenses
AIG contributions
Benefits paid:
AIG assets
Plan assets
Settlements
Foreign exchange effect
Fair value of plan assets, end of year
Funded status, end of year
Amounts recognized in the balance
sheet:
Assets
Liabilities
Total amounts recognized
Pre-tax amounts recognized in AOCI:
5
168
5
109
75
(1,082)
(16)
(171)
—
(234)
—
(1)
(19)
(174)
—
(157)
—
(2)
16
20
(8)
(10)
(31)
(1)
(17)
9
—
18
10
(183)
(8)
(26)
1
(3)
(139)
(1)
1
6
3
1
4
(36)
(12)
(12)
—
—
—
—
—
—
—
—
—
—
—
2
(2)
(1)
—
—
—
—
—
$ 3,301 $ 3,475
$
804 $
826
$
129 $
131
$
31 $
32
$ 3,345 $ 4,746
$
731 $
996
$
— $
—
$
— $
288
16
(1,070)
19
15
47
(16)
(171)
(234)
—
(19)
(174)
(157)
—
$ 3,228 $ 3,345
(130)
(73) $
$
$
$
(10)
(31)
(23)
5
734 $
(70) $
(133)
42
(8)
(26)
(3)
(137)
731
(95)
$
$
—
12
(12)
—
—
—
— $
(129) $
$
110 $
(183)
$
(73) $
55
(185)
(130)
$
97 $
(167)
$
(70) $
78
(173)
(95)
$
— $
(129)
(129) $
—
12
(12)
—
—
—
—
(131)
—
(131)
(131)
$
$
$
$
—
1
(1)
—
—
—
— $
(31) $
— $
(31)
(31) $
$
$
$
Net gain (loss)
Prior service (cost) credit
Total amounts recognized
$ (1,142) $ (1,279)
—
$ (1,142) $ (1,279)
—
$
$
(79) $
(21)
(100) $
(70)
(25)
(95)
31 $
—
31 $
39
—
39
$
23 $
1
$
24 $
(a) Includes non-qualified unfunded plans of which the aggregate projected benefit obligation was $184 million and $186 million for the U.S. at December 31, 2023 and
2022, respectively, and $140 million and $143 million for the non-U.S. at December 31, 2023 and 2022, respectively.
(b) The primary reason for the significant decrease in 2023 is due to a change in the discount rate for the U.S. AIG Retirement Plan.
The following table presents the accumulated benefit obligations for U.S. and non-U.S. pension benefit plans:
At December 31,
(in millions)
U.S. pension benefit plans
Non-U.S. pension benefit plans
$
$
2023
3,301 $
792 $
2022
3,475
815
248
AIG | 2023 Form 10-K
Defined benefit plan obligations in which the projected benefit obligation (PBO) was in excess of the related plan assets and
the accumulated benefit obligation (ABO) was in excess of the related plan assets were as follows:
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
At December 31,
PBO Exceeds Fair Value of Plan Assets
ABO Exceeds Fair Value of Plan Assets
(in millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
U.S. Plans
Non-U.S. Plans
U.S. Plans
Non-U.S. Plans
2023
2022
2023
2022
2023
2022
2023
$
184
$
185
$
287
$
280
$
—
$
—
$
—
$
—
—
—
—
—
88
—
76
184
—
186
—
245
88
2022
—
238
76
The following table presents the components of net periodic benefit cost with respect to pensions and other postretirement
benefits:
Years Ended December 31,
Pension
Postretirement
(in millions)
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
U.S. Plans
Non-U.S. Plans
U.S. Plans
Non-U.S. Plans
$
16 $
18 $
21
$
1 $
1 $
9
6
4
1
3
$ — $ — $
2
1
1
2
(21)
—
—
—
—
—
—
Components of net periodic
benefit cost:
Service cost*
Interest cost
$
5 $
5 $
168
109
5
92
Expected return on assets
(193)
(213)
(243)
Amortization of prior service cost
(credit)
—
—
—
Amortization of net (gain) loss
33
24
33
20
(21)
3
2
10
(17)
3
4
3
7
—
—
—
(5)
—
—
(1)
(3)
(1)
—
—
1
4
Net periodic benefit cost (credit)
$
13 $
(75) $ (113)
$
20 $
18 $
19
$
2 $
5 $
4
$
(2) $ — $
Settlement loss
84
60
34
—
—
Net benefit cost (credit)
$
97 $
(15) $
(79)
Total recognized in AOCI
$ 136 $ (117) $ 332
$
$
20 $
18 $
5 $
57 $
1
20
65
—
—
—
—
—
—
$
$
2 $
5 $
4
(8) $
36 $
10
$
$
(2) $ — $
4
(2) $
13 $
27
Total recognized in net periodic
benefit cost and other
comprehensive income (loss)
$
40 $ (102) $ 411
$
(14) $
39 $
45
$
(10) $
31 $
6
$ — $
13 $
23
* Reflects administrative fees for the U.S. pension plans.
Interest cost for pension and postretirement benefits for our U.S. plans and largest non-U.S. plans is measured using the spot rate
approach, which applies specific spot rates along the yield curve to a plan’s corresponding discounted cash flows that comprise the
obligation. This method provides a more precise measurement of interest cost by aligning the timing of the plans’ discounted cash
flows to the corresponding spot rates on the yield curve. For certain non-U.S. plans, interest cost is measured utilizing a single
weighted-average discount rate derived from the yield curve used to measure the benefit obligations.
A 100 basis point increase in the expected long-term rate of return would decrease the 2024 pension expense by approximately
$38 million with all other items remaining the same. A 100 basis point increase in the discount rate would increase the 2024 pension
expense by approximately $2 million. Conversely, a 100 basis point decrease in the discount rate would decrease the 2024 pension
expense by approximately $3 million while a 100 basis point decrease in the expected long-term rate of return would increase the
2024 pension expense by approximately $38 million, with all other items remaining the same.
ASSUMPTIONS
The following table summarizes the weighted average assumptions used to determine the benefit obligations:
December 31, 2023
Discount rate
Interest crediting rate
Rate of compensation increase
December 31, 2022
Discount rate
Interest crediting rate
Rate of compensation increase
Pension
Postretirement
U.S. Plans
Non-U.S. Plans(a)
U.S. Plans
Non-U.S. Plans(a)
4.98 %
4.94 %
N/A (c)
5.22 %
4.02 %
N/A (c)
2.85 %
1.40 % (b)
2.42 %
2.51 %
1.07 % (b)
2.38 %
4.97 %
N/A
N/A
5.19 %
N/A
N/A
5.37 %
N/A
N/A
5.23 %
N/A
N/A
(a) The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiaries providing such benefits.
(b) Represents the weighted average interest crediting rate of non-U.S. cash balance plans primarily in Japan and Switzerland.
(c) Compensation increases are no longer applicable as the plan is frozen effective January 1, 2016.
AIG | 2023 Form 10-K
249
The following table summarizes assumed health care cost trend rates for the U.S. plans:
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
At December 31,
Following year:
Medical (before age 65)
Medical (age 65 and older)
Ultimate rate to which cost increase is assumed to decline
Year in which the ultimate trend rate is reached:
Medical (before age 65)
Medical (age 65 and older)
2023
2022
5.78 %
4.93 %
4.00 %
2046
2046
6.01 %
4.95 %
4.00 %
2046
2046
The following table presents the weighted average assumptions used to determine the net periodic benefit costs:
For the Year Ended December 31, 2023
Discount rate
Interest crediting rate
Rate of compensation increase
Expected return on assets
For the Year Ended December 31, 2022
Discount rate
Interest crediting rate
Rate of compensation increase
Expected return on assets
For the Year Ended December 31, 2021
Discount rate
Interest crediting rate
Rate of compensation increase
Expected return on assets
Pension
Postretirement
U.S. Plans Non-U.S. Plans(a)
U.S. Plans Non-U.S. Plans(a)
5.22 %
4.02 %
N/A
6.25 %
2.75 %
2.06 %
N/A
4.65 %
2.28 %
1.57 %
N/A
5.15 %
2.51 %
1.07 % (b)
2.38 %
2.67 %
1.09 %
0.70 % (b)
2.40 %
1.84 %
1.00 %
0.72 % (b)
2.28 %
2.23 %
5.19 %
5.23 %
N/A
N/A
N/A
2.87 %
2.20 %
N/A
2.78 %
2.45 %
N/A
N/A
N/A
N/A
N/A
N/A
2.89 %
N/A
N/A
N/A
2.33 %
N/A
N/A
N/A
(a) The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiaries providing such benefits.
(b) Represents the weighted average interest crediting rate of non-U.S. cash balance plans primarily in Japan and Switzerland.
Discount Rate Methodology
The projected benefit cash flows under the U.S. AIG Retirement Plan were discounted using the spot rates derived from the Mercer
U.S. Pension Discount Yield Curve (Mercer Yield Curve) at December 31, 2023 and 2022, which resulted in a single discount rate that
would produce the same liability at the respective measurement dates. The discount rates were 4.98 percent at December 31, 2023
and 5.22 percent at December 31, 2022. The methodology was consistently applied for the respective years in determining the
discount rates for the other U.S. pension plans.
In general, the discount rates for the non-U.S. plans were developed using a similar methodology to the U.S. AIG Retirement Plan, by
using country-specific Mercer Yield Curves.
The projected benefit obligation for AIG’s Japan pension plans represents approximately 54 percent and 54 percent of the total
projected benefit obligations for our non-U.S. pension plans at December 31, 2023 and 2022, respectively. The weighted average
discount rate of 1.48 percent and 1.12 percent at December 31, 2023 and 2022, respectively, was selected by reference to the Mercer
Yield Curve for Japan.
Plan Assets
The investment strategy with respect to assets relating to our U.S. and non-U.S. pension plans is designed to achieve investment
returns that will provide for the benefit obligations of the plans over the long term, limit the risk of short-term funding shortfalls and
maintain liquidity sufficient to address cash needs. Accordingly, the asset allocation strategy is designed to maximize the investment
rate of return while managing various risk factors, including, but not limited to, volatility relative to the benefit obligations, liquidity, and
concentration, and incorporates the risk/return profile applicable to each asset class.
There were no shares of AIG Common Stock included in the U.S. and non-U.S. pension plans assets at December 31, 2023 or 2022.
250
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
U.S. Pension Plan
The assets of the qualified plan are monitored by the AIG U.S. Investment Committee and actively managed by the investment
managers, which involves allocating the plan’s assets among approved asset classes within ranges as permitted by the strategic
allocation. The long-term strategic asset allocation historically has been reviewed and revised approximately every three years. The
investment strategy is focused on de-risking the qualified plan via regular monitoring through liability driven investing and the glide
path approach, where the glide path defines the target allocation for the “Return-Seeking” portion of the portfolio (i.e., growth assets)
based on the funded ratio and level of interest rates. Under this approach, the allocation to growth assets is reduced and the
allocation to liability-hedging assets is increased as the plan’s funded ratio increases in accordance with the defined glide path.
The following table presents the asset allocation percentage by major asset class for the U.S. qualified plan and the target
allocation for 2024 based on the plan’s funded status at December 31, 2023:
At December 31,
Asset class:
Equity securities
Fixed maturity securities
Other investments
Total
Target 2024
Actual 2023
Actual 2022
9 %
80
11
100 %
8 %
77
15
100 %
6 %
77
17
100 %
The expected weighted average long-term rate of return for the plan was 6.25 percent and 4.65 percent for 2023 and 2022,
respectively. The expected weighted average rate of return is an aggregation of expected returns within each asset class category,
weighted for the investment mix of the assets. The combination of the expected asset return and any contributions made by us are
expected to maintain the plan’s ability to meet all required benefit obligations. The expected asset return for each asset class was
developed based on an approach that considers key fundamental drivers of the asset class returns in addition to historical returns,
current market conditions, asset volatility and the expectations for future market returns.
Non-U.S. Pension Plans
The assets of the non-U.S. pension plans are held in various trusts in multiple countries and are invested primarily in equities and
fixed maturity securities to maximize the long-term return on assets for a given level of risk.
The following table presents the asset allocation percentage by major asset class for non-U.S. pension plans and the target
allocation:
At December 31,
Asset class:
Equity securities
Fixed maturity securities
Other investments
Cash and cash equivalents
Total
Target 2024
Actual 2023
Actual 2022
21 %
58
17
4
100 %
19 %
45
21
15
100 %
24 %
44
23
9
100 %
The assets of AIG’s Japan pension plans represent approximately 67 percent and 65 percent of total non-U.S. pension plan assets at
December 31, 2023 and 2022, respectively. The expected long-term rate of return was 1.85 percent and 1.86 percent, for 2023 and
2022, respectively, and is evaluated by the Japanese Pension Investment Committee on a quarterly and annual basis along with
various investment managers and is revised to achieve the optimal allocation to meet targeted funding levels if necessary. In addition,
the funding policy is revised in accordance with local regulation every five years.
The expected weighted average long-term rate of return for all our non-U.S. pension plans was 2.67 percent and 1.84 percent for the
years ended December 31, 2023 and 2022, respectively. It is an aggregation of expected returns within each asset class that was
generally developed based on the building block approach that considers historical returns, current market conditions, asset volatility
and the expectations for future market returns.
AIG | 2023 Form 10-K
251
ASSETS MEASURED AT FAIR VALUE
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
The following table presents information about our plan assets and indicates the level of the fair value measurement based
on the observability of the inputs used. The inputs and methodology used in determining the fair value of these assets are
consistent with those used to measure our assets as discussed in Note 5 to the Consolidated Financial Statements.
U.S. Plans
Non-U.S. Plans
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$
54 $
— $
— $
54
$
108 $
— $
— $
108
Total
$
232 $
(in millions)
December 31, 2023
Assets:
Cash and cash equivalents
Equity securities:
U.S.(a)
International(b)
Fixed maturity securities:
U.S. investment grade(c)
International investment grade(c)
U.S. and international high yield(d)
Mortgage and other asset-backed
securities
Other fixed maturity securities
Other investment types(e):
Futures
Insurance contracts
Mutual funds(g)
December 31, 2022
Assets:
Cash and cash equivalents
Equity securities:
U.S.(a)
International(b)
Fixed maturity securities:
U.S. investment grade(c)
International investment grade(c)
U.S. and international high yield(d)
Mortgage and other asset-backed
securities
Other investment types(e):
Futures
Direct private equity(f)
Insurance contracts
Mutual funds(g)
140
4
24
—
—
—
—
10
—
—
90
5
45
—
—
—
(15)
—
—
—
—
—
2,230
125
33
59
12
—
—
10
—
—
1
—
140
4
2,264
125
33
60
12
—
9
—
2,468 $
—
—
—
11 $
10
9
—
2,711
—
104
—
—
—
—
—
—
—
—
—
35
—
138
192
—
—
—
—
19
—
—
—
—
—
—
—
—
138
—
$
212 $
384 $
138 $
—
139
—
138
192
—
—
—
138
19
734
$
119 $
— $
— $
119
$
64 $
— $
— $
64
—
—
2,213
177
58
43
—
—
10
—
—
5
—
—
10
—
2,501 $
—
5
—
—
20 $
90
5
2,268
177
58
48
(15)
5
10
—
2,765
—
130
—
—
—
—
—
—
—
—
—
44
—
140
184
—
—
—
—
35
—
—
—
—
—
—
—
—
134
—
$
194 $
403 $
134 $
—
174
—
140
184
—
—
—
134
35
731
Total
$
244 $
(a) Includes passive and active U.S. equity strategies.
(b) Includes passive and active international equity strategies.
(c) Includes investments in U.S. and non-U.S. government issued bonds, U.S. government agency or sponsored agency bonds, and investment grade corporate bonds.
(d) Consists primarily of investments in securities or debt obligations that have a rating below investment grade.
(e) Excludes investments that are measured at fair value using the NAV per share (or its equivalent), which totaled $517 million and $580 million at December 31, 2023 and
2022, respectively.
(f) Comprised of private capital financing including private debt and private equity securities.
(g) Comprised of mutual fund investing in variety of equity, derivatives, and bonds.
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these
securities. Based on our investment strategy, we had no significant concentrations of risks at December 31, 2023.
252
AIG | 2023 Form 10-K
Changes in Level 3 Fair Value Measurements
The following table presents changes in our U.S. and non-U.S. Level 3 plan assets measured at fair value:
ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits
December 31, 2023
(in millions)
U.S. Plan Assets:
Fixed maturity securities
Balance
Beginning
of year
Net
Realized
and
Unrealized
Gains
(Losses) Purchases
Sales
Issuances
Settlements
Transfers
In
Transfers
Out
Balance
at End
of Year
Changes in
Unrealized
Gains (Losses)
on Instruments
Held at
End of Year
Changes in Unrealized
Gains (Losses) included
in other Comprehensive
Income (Loss) for Recurring
Level 3 Instruments
Held at End of Year
U.S. investment grade
$
10 $
1 $
— $
(1) $
— $
— $
— $
— $
10 $
Mortgage and other asset
backed securities
Direct private equity
Total
Non-U.S. Plan Assets:
Insurance contracts
Total
$
$
$
5
5
20 $
134 $
134 $
—
(5)
(4) $
6 $
6 $
—
—
(4)
—
—
—
—
—
—
—
—
—
1
—
— $
(5) $
— $
— $
— $
— $
11 $
1 $
1 $
— $
— $
— $
— $
(3) $
(3) $
— $
— $
— $
— $
138 $
138 $
1
1
(5)
(3)
—
—
$
$
$
$
December 31, 2022
U.S. Plan Assets:
Fixed maturity securities
U.S. investment grade
$
16 $
(4) $
4 $
— $
— $
— $
— $
(6) $
10 $
(4)
$
Mortgage and other asset
backed securities
Direct private equity
Total
Non-U.S. Plan Assets:
Insurance contracts
Total
$
$
$
1
8
25 $
(1)
(1)
(6) $
171 $
171 $
(43) $
(43) $
3
—
7 $
4 $
4 $
—
(2)
(2) $
— $
— $
—
—
—
—
2
—
—
—
5
5
— $
— $
2 $
(6) $
20 $
— $
— $
— $
— $
2 $
2 $
— $
— $
134 $
134 $
(1)
(2)
(7)
—
—
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
EXPECTED CASH FLOWS
Funding for the qualified plan ranges from the minimum amount required by ERISA to the maximum amount that would be deductible
for U.S. tax purposes. Contributed amounts in excess of the minimum amounts are deemed voluntary. Amounts in excess of the
maximum amount would be subject to an excise tax and may not be deductible under the Internal Revenue Code. There are no
minimum required cash contributions in 2023 for the U.S. AIG Retirement Plan. The non-qualified and postretirement plans’ benefit
payments are deductible when paid to participants.
Our annual pension contribution in 2024 is expected to be approximately $59 million for our U.S. and non-U.S. pension plans. This
estimate is subject to change, since contribution decisions are affected by various factors including our liquidity, market performance
and management’s discretion.
The expected future benefit payments, net of participants’ contributions, with respect to the defined benefit pension plans
and other postretirement benefit plans, are as follows:
(in millions)
2024
2025
2026
2027
2028
2029-2033
$
Pension
U.S. Plans
270 $
264
267
265
265
1,216
$
Non-U.S. Plans
43
45
47
49
53
255
Postretirement
U.S. Plans
11 $
11
10
10
9
43
Non-U.S. Plans
1
2
2
2
2
10
DEFINED CONTRIBUTION PLANS
AIG Parent sponsors several defined contribution plans for U.S. employees that provide for pre-tax salary reduction contributions by
employees. The most significant plan is the AIG Incentive Savings Plan (ISP), for which the matching contribution is 100 percent of
the first 6% of a participant’s contributions, subject to the IRS-imposed limitations. Participants in the AIG ISP receive an additional
fully vested, non-elective, non-discretionary contribution equal to 3% of the participant’s eligible compensation for the plan year, paid
each pay period regardless of whether the participant currently contributes to the plan, and subject to the IRS-imposed limitations. Our
pre-tax expenses associated with these plans were $163 million,$176 million and $183 million in 2023, 2022 and 2021, respectively.
On August 22, 2022, Corebridge participants’ accounts in the AIG ISP were transferred to the Corebridge Financial Inc. Retirement
Savings 401(k) Plan. Corebridge contributions relating to these plans were $68 million, $76 million and $74 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
AIG | 2023 Form 10-K
253
ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes
23. Income Taxes
U.S. TAX LAW CHANGES
The Inflation Reduction Act of 2022 (H.R. 5376) includes a 15 percent corporate alternative minimum tax (CAMT) on adjusted
financial statement income for corporations with average profits over $1 billion over a three-year period. Although the U.S. Treasury
and Internal Revenue Service (IRS) issued interim CAMT guidance during 2023, many details and specifics of application of the
CAMT remain subject to future guidance. We are subject to CAMT for 2023.
BASIS OF PRESENTATION
We file a consolidated U.S. federal income tax return with our eligible U.S. subsidiaries. Income earned by subsidiaries operating
outside the U.S. is taxed, and income tax expense is recorded, based on applicable U.S. and foreign laws.
Following the IPO of Corebridge on September 19, 2022, AIG’s remaining ownership in Corebridge decreased below 80 percent,
resulting in tax deconsolidation of Corebridge parent and its subsidiaries from the AIG consolidated U.S. federal income tax group as
well as certain state and local jurisdictions where unitary returns are filed.
Subsequent to the tax deconsolidation from AIG, due to the application of relevant U.S. tax laws, American General Corporation and
its directly owned life insurance subsidiaries will not be permitted to join in the filing of a consolidated U.S. federal income tax return
with Corebridge parent and its non-life-insurance subsidiaries for a period of five years. Corebridge’s net operating losses and tax
credit carryforwards that have not been utilized prior to tax deconsolidation from AIG will remain with the relevant Corebridge entities
and will be available for utilization by the respective Corebridge U.S. federal income tax groups. The realizability of the deferred tax
assets related to such carryforwards is based on the positive and negative evidence applicable to each U.S. federal income tax group.
TAX ACCOUNTING POLICIES
We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for-
sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security lot at the date
the amount becomes lodged. When the individual securities are sold, mature, or are otherwise impaired on an other-than-temporary
basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income (loss) from continuing operations.
We consider our foreign earnings with respect to certain operations in Canada, South Africa, Japan, Latin America, Bermuda as well
as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and
have been reinvested in active business operations. A deferred tax liability has not been recorded for those foreign subsidiaries whose
earnings are considered to be indefinitely reinvested. If recorded, such deferred tax liability would not be material to our consolidated
financial condition. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not
indefinitely reinvested.
Global Intangible Low-Taxed Income (GILTI) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain
foreign subsidiaries. Consistent with accounting guidance, we have made an accounting policy election to treat GILTI taxes as a
period tax charge in the period the tax is incurred.
EFFECTIVE TAX RATE
The following table presents income (loss) from continuing operations before income tax expense (benefit) by U.S. and
foreign location in which such pre-tax income (loss) was earned or incurred:
Years Ended December 31,
(in millions)
U.S.
Foreign
Total
254
AIG | 2023 Form 10-K
$
$
2023
1,885 $
1,973
3,858 $
2022
12,431 $
1,868
14,299 $
2021
11,041
2,306
13,347
The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from continuing
operations:
ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes
Years Ended December 31,
(in millions)
Foreign and U.S. components of actual income tax expense (benefit):
U.S.:
Current
Deferred
Foreign:
Current
Deferred
Total
2023
2022
2021
$
68 $
246 $
(564)
2,363
423
53
(20) $
271
145
3,025 $
$
(216)
2,443
171
43
2,441
Our actual income tax expense (benefit) differs from the statutory U.S. federal amount computed by applying the federal
income tax rate due to the following:
Years Ended December 31,
2023
2022
2021
Pre-Tax
Income
(Loss)
3,858 $
Tax
Expense
(Benefit)
810
$
Percent of
Pre-Tax
Income
(Loss)
21.0 % $ 14,298 $
Pre-Tax
Income
(Loss)
Tax
Expense
(Benefit)
3,003
Percent of
Pre-Tax
Income
(Loss)
21.0 % $ 13,347 $
Pre-Tax
Income
(Loss)
Tax
Expense
(Benefit)
2,802
Percent of
Pre-Tax
Income
(Loss)
21.0 %
(dollars in millions)
U.S. federal income tax at statutory rate
Adjustments:
Tax exempt interest
Uncertain tax positions(a)
Reclassifications from AOCI
Dispositions of subsidiaries(b)
Non-controlling interest
Non-deductible transfer pricing charges
Dividends received deduction
Effect of foreign operations(c)
Share-based compensation payments excess tax
effect
State and local income taxes
Expiration of tax attribute carryforwards
Tax audit resolution(a)
Affiliated dividend income, net of dividends
received deduction
Other(d)
Valuation allowance:
Continuing operations
Consolidated total amounts
Amounts attributable to discontinued operations
Amounts attributable to continuing operations
3,858
—
3,858 $
$
(14)
162
(45)
(382)
14
16
(60)
176
(31)
10
—
(494)
59
116
(357)
(20)
—
(20)
(0.4)
4.2
(1.2)
(9.9)
0.4
0.4
(1.6)
4.6
(0.8)
0.3
—
(12.8)
1.5
3.1
(9.3)
(0.5)
—
14,298
(1)
(0.5) % $ 14,299 $
(18)
(17)
(81)
—
(31)
12
(36)
150
(19)
47
—
—
—
40
(25)
3,025
—
3,025
(0.1)
(0.1)
(0.6)
—
(0.2)
0.1
(0.3)
1.0
(0.1)
0.3
—
—
—
0.4
(0.2)
21.2
—
$ 13,347
—
21.2 % $ 13,347 $
(18)
(9)
(109)
11
(97)
16
(37)
136
16
38
16
(935)
—
(107)
(0.1)
(0.1)
(0.8)
0.1
(0.7)
0.1
(0.3)
1.0
0.1
0.3
0.1
(7.0)
—
(0.8)
718
2,441
—
2,441
5.4
18.3
—
18.3 %
(a) Refer to the Accounting for Uncertainty in Income Taxes section below for further discussion on 2023 and 2021 tax audit resolution activity.
(b) Tax implications of the sales of certain AIG and Corebridge subsidiaries, including Validus Re and Laya, as well as tax implications of Corebridge secondary offerings
and the announced sale of AIG Life.
(c) Effect of foreign operations is primarily related to income and losses in our foreign operations taxed at statutory tax rates different than 21 percent, and foreign income
subject to U.S. taxation.
(d) Primarily includes tax charges associated with tax adjustments related to prior year returns.
AIG | 2023 Form 10-K
255
DEFERRED TAX ASSET
The following table presents the components of the net deferred tax assets (liabilities):
ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes
December 31,
(in millions)
Deferred tax assets:
Losses and tax credit carryforwards
Basis differences on investments
Life policy reserves
Accruals not currently deductible, and other
Investments in foreign subsidiaries
Loss reserve discount
Loan loss and other reserves
Unearned premium reserve reduction
Fixed assets and intangible assets
Unrealized losses related to available for sale debt securities
Employee benefits
Market risk benefit
Other
Total deferred tax assets
Deferred tax liabilities:
Investments in foreign subsidiaries
Deferred policy acquisition costs
Fortitude Re funds withheld embedded derivative
Total deferred tax liabilities
Net deferred tax assets before valuation allowance
Valuation allowance
Net deferred tax assets (liabilities)
2023
$
6,107 $
3,441
1,589
89
66
424
51
87
1,487
4,728
344
1,010
356
19,779
—
(1,853)
(711)
(2,564)
17,215
(3,116)
14,099 $
$
2022
6,868
2,652
1,622
392
—
352
62
294
1,081
6,519
382
827
458
21,509
(41)
(1,847)
(862)
(2,750)
18,759
(4,250)
14,509
The following table presents AIG's U.S. consolidated federal income tax group tax losses and credits carryforwards.
December 31, 2023
(in millions)
Tax
Carryforward Period Ending Tax Year(b)
Unlimited Carryforward Period
and Carryforward Periods(b)
Gross Effected
2024
2025
2026
2027
2028
2029
2030 - After
Net operating loss carryforwards
$
21,968 $ 4,613 $
Other carryforwards
67
— $
—
— $
—
— $
—
— $ 2,660 $
178 $
—
—
—
Total AIG U.S. consolidated federal income
tax group tax losses and credits
carryforwards on a U.S. GAAP basis(a)
$ 4,680 $
— $
— $
— $
— $ 2,660 $
178 $
1,775
67
1,842
(a) Financial reporting basis reflects the impact of unrecognized tax benefits for tax years in which tax attributes can be realized through carryback upon settlement.
(b) Carryforward periods are based on U.S. tax laws governing utilization of tax attributes. Expiration periods are based on the year the carryforward was generated.
ASSESSMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE
The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive
and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be
realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative
evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation
allowance is not needed.
Although the 2022 tax deconsolidation of Corebridge from the AIG consolidated U.S. federal income tax group resulted in the
formation of new federal tax filing groups requiring separate deferred tax asset realizability assessments, there was no material
change to the total deferred tax asset valuation allowance.
During the fourth quarter, taxable income projections were updated to reflect 2023 results, updated projections of income for our
insurance and non-insurance companies, and taxable income generated from prudent and feasible tax planning strategies. While
there was improvement in projected tax attribute utilization, given there is a shorter carryforward period to utilize remaining net
operating losses, we continue to consider multiple data points and stresses. Additionally, recent events, including changes in target
interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, continue to impact actual
and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax
planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the
256
AIG | 2023 Form 10-K
ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes
realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of
our businesses, including assumptions about future macroeconomic and AIG-specific conditions and events, and any impact these
conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of
stresses of key assumptions and evaluated the effect on tax attribute utilization.
After factoring in multiple data points and assessing the relative weight of all positive and negative evidence, we concluded that
valuation allowance of $300 million should remain on a portion of AIG's U.S. federal consolidated income tax group tax attribute
carryforwards that are not more likely than not to be realized, and reduced our beginning of the year valuation allowance by
$405 million. Additionally, we recorded valuation allowance reduction of $8 million related to the write-off of net operating loss
carryforwards from acquired entities that are not usable by AIG under the tax law. Accordingly, during the fourth quarter of 2023, we
recorded total reduction in valuation allowance of $413 million.
As of December 31, 2023, we reported a valuation allowance of $162 million related to Corebridge. The valuation allowance at
Corebridge relates to a portion of both tax attribute carryforwards and certain other deferred tax assets of the Corebridge non-life
insurance group that are not more-likely-than-not to be realized. For the twelve months ended December 31, 2023, Corebridge
recorded an $11 million increase in valuation allowance.
For the twelve months ended December 31, 2023, recent changes in market conditions, including changes in interest rates, impacted
the unrealized tax gains and losses in the available for sale securities portfolios of both our U.S. life insurance and non-life insurance
companies, resulting in a decrease to deferred tax assets related to net unrealized tax capital losses. The deferred tax assets relate to
the unrealized tax capital losses for which the carryforward period has not yet begun, and as such, when assessing recoverability, we
consider our ability and intent to hold the underlying securities to recovery. As of December 31, 2023, based on all available evidence,
we concluded that a valuation allowance of $1.6 billion is necessary on a portion of the deferred tax assets related to unrealized tax
capital losses that are not more-likely-than-not to be realized. Of the total valuation allowance, $1.0 billion relates to the unrealized tax
capital losses in the U.S. Life Insurance Companies' available for sale securities portfolio and $550 million relates to the unrealized
tax capital losses in the non-life insurance companies' available for sale securities portfolio. For the twelve months ended December
31, 2023, we recorded a decrease in valuation allowance of $397 million associated with the unrealized tax capital losses in the U.S.
Life Insurance Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in
the non-life insurance companies’ available for sale securities portfolio. For the three months ended December 31, 2023, we recorded
a decrease in valuation allowance of $511 million associated with the unrealized tax capital losses in the U.S. Life Insurance
Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in the non-life
insurance companies’ available for sale securities portfolio. The valuation allowance decrease was primarily allocated to other
comprehensive income.
For the twelve months ended December 31, 2023, we recognized a net $44 million increase in deferred tax asset valuation allowance
associated with certain foreign and state jurisdictions.
The following table presents the net deferred tax assets (liabilities) at December 31, 2023 and 2022 on a U.S. GAAP basis:
December 31,
(in millions)
Net U.S. deferred tax assets
Net deferred tax assets (liabilities) in AOCI
Valuation allowance
Subtotal
Net foreign, state and local deferred tax assets
Valuation allowance
Subtotal
Subtotal - Net U.S., foreign, state and local deferred tax assets
Net foreign, state and local deferred tax liabilities
Total AIG net deferred tax assets (liabilities)
2023
$
11,317 $
4,286
(2,006)
13,597
1,958
(1,110)
848
14,445
(346)
14,099 $
$
2022
10,831
5,881
(3,128)
13,584
2,342
(1,122)
1,220
14,804
(295)
14,509
AIG | 2023 Form 10-K
257
TAX EXAMINATIONS
We are currently under examination by the IRS for the tax years 2011 through 2019, and are engaging in the Appeals process for
certain disagreed issues related to tax years 2007 through 2010.
ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes
Listed below are the tax years that remain subject to examination by major tax jurisdictions:
At December 31, 2023
Major Tax Jurisdiction
United States
Australia
Canada
France
Japan
Korea
Singapore
United Kingdom
Open Tax Years
2007-2022
2019-2022
2019-2022
2022-2022
2017-2022
2015-2022
2019-2022
2022-2022
ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
The following table presents a reconciliation of the beginning and ending balances of the total amounts of gross
unrecognized tax benefits, excluding interest and penalties:
Years Ended December 31,
(in millions)
Gross unrecognized tax benefits, beginning of year
Increases in tax positions for prior years
Decreases in tax positions for prior years
Increases in tax positions for current year
Lapse in statute of limitations
Settlements
2023
$
1,191 $
200
(4)
—
—
—
Gross unrecognized tax benefits, end of year
$
1,387 $
2022
1,157 $
29
(33)
59
(21)
—
1,191 $
2021
2,343
22
(1,233)
37
—
(12)
1,157
The activity in unrecognized tax benefits for the year ended December 31, 2023 is primarily attributable to the potential resolution of
an IRS audit matter. There was no significant activity in unrecognized tax benefits for the year ended December 31, 2022. The activity
in unrecognized tax benefits for the year ended December 31, 2021 is primarily attributable to effective settlement of reserves for
uncertain tax positions due to the completion of audit activity by the IRS and New York State.
At December 31, 2023 and 2022 and 2021, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the
effective tax rate were $1.4 billion, $1.2 billion and $1.1 billion, respectively. Unrecognized tax benefits that would not affect the
effective tax rate generally relate to such factors as the timing, rather than the permissibility of the deduction.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2023, 2022 and
2021, we had accrued liabilities of $52 million, $63 million and $69 million, respectively for the payment of interest (net of the federal
benefit) and penalties. For the years ended December 31, 2023, 2022, and 2021, we accrued expense (benefit) of $(11) million,
$(2) million, and $(207) million, respectively, for the payment of interest and penalties. There was no significant activity in interest and
penalties related to unrecognized tax benefit for the years 2023 or 2022. The activity in 2021 was primarily related to the completion of
audit activity by the IRS and New York State.
Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months,
based on the information currently available, we do not expect any change to be material to our consolidated financial condition.
258
AIG | 2023 Form 10-K
Part II
ITEM 9 | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
ITEM 9A | Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted
under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within
the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In
connection with the preparation of this Annual Report on Form 10-K, an evaluation was carried out by AIG management, with the
participation of AIG’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of December 31, 2023. Based on this
evaluation, AIG’s Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2023.
Management’s Report on Internal Control Over Financial Reporting
Management of AIG is responsible for establishing and maintaining adequate internal control over financial reporting. AIG’s internal
control over financial reporting is a process, under the supervision of AIG’s Chief Executive Officer and Chief Financial Officer,
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of AIG’s financial
statements for external purposes in accordance with U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
AIG management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31,
2023 based on the criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
AIG management has concluded that, as of December 31, 2023, our internal control over financial reporting was effective based on
the criteria articulated in the 2013 Internal Control – Integrated Framework issued by the COSO. The effectiveness of our internal
control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
During the first quarter of 2023, AIG adopted Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI), which
resulted in a change to our recognition and measurement of long-duration contracts. In connection with the adoption of this standard,
AIG changed processes, systems and controls related to certain of our long-duration contracts. Many of these controls are similar to
those previously maintained under the historical GAAP framework but have been updated to reflect changes necessitated by the
adoption of LDTI. There have been no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) that
have occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
AIG | 2023 Form 10-K
259
ITEM 9B | Other Information
Our officers and directors (as defined in Rule 16a-1 under the Exchange Act) may, with Board approval, enter into plans for the
purchase or sale of AIG Common Stock that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the
Exchange Act. Other than as described below, during the three months ended December 31, 2023, none of the Company’s directors
or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is
defined in Item 408 of Regulation S-K.
• Peter Zaffino, our Chairman & CEO, adopted a new trading plan effective December 15, 2023. The plan’s maximum duration is
until July 24, 2024, and first trades may not occur until March 15, 2024, at the earliest. The trading plan is intended to permit Mr.
Zaffino to exercise up to 333,000 stock options expiring on July 24, 2024 and immediately sell the acquired shares.
The Rule 10b5-1 trading arrangement described above was adopted and precleared in accordance with AIG’s Insider Trading Policy
and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly in future Section 16 filings with the
SEC.
ITEM 9C | Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not applicable.
260
AIG | 2023 Form 10-K
Part III
ITEM 10 | Directors, Executive Officers and Corporate Governance
Other information required by Items 10, 11, 12, 13 and 14 of this Form 10-K but not included herein is incorporated by reference from
the definitive proxy statement for AIG’s 2024 Annual Meeting of Shareholders, which will be filed with the SEC not later than 120 days
after the close of the fiscal year pursuant to Regulation 14A.
Our Executive Officers
Name
Current Title and Other Business Experience Since 2019
Peter Zaffino
Age: 57
SERVED AS OFFICER
SINCE 2017
• Chairman, President & Chief Executive Officer (since 2022)
• President (since 2020) and Chief Executive Officer (since 2021)
• Executive Vice President & Global Chief Operating Officer and Chief Executive Officer, General
Insurance (2017-2019)
• Executive Vice President & Global Chief Operating Officer (2017-2021)
Don Bailey
Age: 58
SERVED AS OFFICER
SINCE 2023
• Executive Vice President and Chief Executive Officer, North America Insurance (since 2024)
• Executive Vice President, Global Head of Distribution and Field Operations (2023)
• Partner, Bristlecone Partners (2017-2023)
Thomas Bolt
Age: 67
SERVED AS OFFICER
SINCE 2022
Ed Dandridge
Age: 59
SERVED AS OFFICER
SINCE 2023
• Executive Vice President, Chief Risk Officer (since 2022)
• Senior Vice President, Chief Underwriting Officer, General Insurance (2018-2022)
• Executive Vice President and Chief Marketing & Communications Officer (since 2023)
• President, ScaleWith (2023)
• Senior Vice President, Chief Communications Officer, Boeing (2020-2022)
• Chief Marketing and Communications Officer, General Insurance, AIG PC Global Services, Inc.
(2018-2020)
Ted Devine
Age: 60
SERVED AS OFFICER
SINCE 2023
• Executive Vice President, Chief Administrative Officer (since 2024)
• Global Head of AIG 200 (2021-2023)
• Chief Executive Officer, Insureon (2012-2020)
Charlie Fry
Age: 51
SERVED AS OFFICER
SINCE 2022
• Executive Vice President, Reinsurance and Risk Capital Optimization (since 2022)
• Chief Executive Officer of Acacia Holdings Ltd. (2020-2022)
• Senior Vice President, Global Head of Reinsurance Strategy and Head of Global Portfolio
Management for General Insurance (2017-2020)
Rose Marie Glazer
Age: 57
SERVED AS OFFICER
SINCE 2022
• Executive Vice President, General Counsel and Interim Chief Human Resources & Diversity Officer
(since 2023)
• Executive Vice President, Chief Human Resources & Diversity Officer (2023)
• Executive Vice President, Chief Human Resources Officer (2022)
• Executive Vice President, Chief Human Resources Officer & Corporate Secretary (2022)
• Senior Vice President, Deputy General Counsel & Corporate Secretary (2019-2021)
• Vice President, Deputy General Counsel & Corporate Secretary (2017-2019)
Jon Hancock
Age: 58
SERVED AS OFFICER
SINCE 2024
• Executive Vice President, Chief Executive Officer, International Insurance (since 2024)
• Chief Executive Officer, International General Insurance (2020-2023)
• Director of Performance Management, Lloyd's (2016-2020)
AIG | 2023 Form 10-K
261
Name
Current Title and Other Business Experience Since 2019
Kevin Hogan
Age: 61
SERVED AS OFFICER
SINCE 2013
• President & Chief Executive Officer, Corebridge Financial, Inc. (since 2022)
• Executive Vice President & Chief Executive Officer, AIG Life & Retirement (2013-2022)
David McElroy
Age: 65
SERVED AS OFFICER
SINCE 2020
• Executive Vice President, Chairman, General Insurance (since 2024)
• Executive Vice President and Chief Executive Officer, General Insurance (2020-2024)
• President & Chief Executive Officer, North America General Insurance (2019-2020)
Roshan Navagamuwa
Age: 46
SERVED AS OFFICER
SINCE 2024
Sabra Purtill
Age: 61
SERVED AS OFFICER
SINCE 2021
Chris Schaper
Age: 59
SERVED AS OFFICER
SINCE 2023
Claude Wade
Age: 56
SERVED AS OFFICER
SINCE 2021
• Executive Vice President, Chief Information Officer (since 2024)
• Executive Vice President and Chief Information Officer, CVS Health (2012-2023)
• Executive Vice President, Chief Financial Officer (since 2023)
• Chief Investment Officer, Corebridge Financial, Inc. (2022-2023)
• Executive Vice President, Chief Risk Officer (2021-2022)
• Senior Vice President, Deputy Chief Financial Officer, Treasurer, Investor and Rating Agency
Relations (2019-2021)
• Executive Vice President and Global Chief Underwriting Officer (since 2023)
• Senior Vice President, General Insurance and Chief Executive Officer, AIG Re (2019-2023)
• Executive Vice President, Chief Digital Officer and Global Head of Business Operations (since
2023)
• Executive Vice President, Global Head of Operations & Shared Services and Chief Digital Officer
(2021-2023)
• Head of Client Experience & Atlanta Innovation Hub Leader, BlackRock Inc. (2017-2021)
ITEM 11 | Executive Compensation
See Item 10 herein.
ITEM 12 | Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
See Item 10 herein.
ITEM 13 | Certain Relationships and Related Transactions, and
Director Independence
See Item 10 herein.
ITEM 14 | Principal Accountant Fees and Services
See Item 10 herein.
262
AIG | 2023 Form 10-K
Part IV
ITEM 15 | Exhibits and Financial Statement Schedules
(a) Financial Statements and Schedules. See accompanying Index to Financial Statements.
Exhibit Index
Exhibit
Number Description
3
3(i)
Articles of incorporation and by laws
Amended and Restated Certificate of Incorporation of AIG, amended and
restated May 14, 2020
3(ii)
AIG By-laws, amended and restated December 9, 2020
4
Instruments defining the rights of security holders, including indentures
(1) Description of Registrant’s Securities
(2) Deposit Agreement, dated March 14, 2019, among AIG, Equiniti Trust
Company, as depositary, and the holders from time to time of the
depositary receipts described therein
(3) Form of depositary receipt representing the Depository Shares
(included in Exhibit A to Exhibit 4.2)
(4) Indenture, dated April 5, 2022, between Corebridge Financial, Inc. and
The Bank of New York Mellon, as Trustee
(5) First Supplemental Indenture, dated April 5, 2022, between Corebridge
Financial, Inc. and The Bank of New York Mellon, as Trustee, relating to the
3.500% Senior Notes due 2025 (2025 Notes)
(6) Second Supplemental Indenture, dated April 5, 2022, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the 3.650% Senior Notes due 2027 (2027 Notes)
(7) Third Supplemental Indenture, dated April 5, 2022, between Corebridge
Financial, Inc. and The Bank of New York Mellon, as Trustee, relating to the
3.850% Senior Notes due 2029 (2029 Notes)
(8) Fourth Supplemental Indenture, dated April 5, 2022, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the 3.900% Senior Notes due 2032 (2032 Notes)
(9) Fifth Supplemental Indenture, dated April 5, 2022, between Corebridge
Financial, Inc. and The Bank of New York Mellon, as Trustee, relating to the
4.350% Senior Notes due 2042 (2042 Notes)
(10) Sixth Supplemental Indenture, dated April 5, 2022, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the 4.400% Senior Notes due 2052 (2052 Notes)
(11) Form of the 2025 Notes (included in Exhibit 4.5)
(12) Form of the 2027 Notes (included in Exhibit 4.6)
(13) Form of the 2029 Notes (included in Exhibit 4.7)
(14) Form of the 2032 Notes (included in Exhibit 4.8)
(15) Form of the 2042 Notes (included in Exhibit 4.9)
Location
Incorporated by reference to Exhibit 3.1 to AIG’s Current
Report on Form 8-K filed with the SEC on May 15, 2020 (File
No. 1-8787).
Incorporated by reference to Exhibit 3.1 to AIG’s Current
Report on Form 8-K filed with the SEC on December 9, 2020
(File No. 1-8787).
Certain instruments defining the rights of holders of long-term
debt securities of AIG and its subsidiaries are omitted
pursuant to Item 601(b)(4)(iii) of Regulation S-K. AIG hereby
undertakes to furnish to the Commission, upon request,
copies of any such instruments.
Filed herewith.
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K filed with the SEC on March 14, 2019
(File No. 1-8787).
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K filed with the SEC on March 14, 2019
(File No. 1-8787).
Incorporated by reference to Exhibit 4.1 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.3 to AIG's Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.4 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.5 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.6 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.7 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.3 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.4 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.5 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.6 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
AIG | 2023 Form 10-K
263
Exhibit
Number Description
(16) Form of the 2052 Notes (included in Exhibit 4.10)
(17) Forty-Second Supplemental Indenture, dated March 27, 2023,
between AIG and The Bank of New York Mellon, as Trustee, relating to the
5.125% Notes due 2033 (2033 Notes)
(18) Form of the 2033 Notes (included in Exhibit 4.17)
(19) Seventh Supplemental Indenture, dated September 15, 2023, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the 2033 Notes (2033 Corebridge Notes)
(20) Form of the 2033 Corebridge Notes (included in Exhibit 4.19)
(21) Eighth Supplemental Indenture, dated December 8, 2023, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the 2034 Notes (2034 Notes)
(22) Form of the 2034 Notes (included in Exhibit 4.21)
Location
Incorporated by reference to Exhibit 4.7 to AIG’s Current
Report on Form 8-K, filed with the SEC on April 7, 2022 (File
No. 1-8787).
Incorporated by reference to Exhibit 4.1 to AIG’s Current
Report on Form 8-K, filed with the SEC on March 27, 2023
(File No. 1-8787).
Incorporated by reference to Exhibit 4.1 to AIG's Current
Report on Form 8-K, filed with the SEC on March 27, 2023
(File No. 1-8787).
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
9
10
(23) Subordinated Indenture, dated August 23, 2022, between Corebridge
Financial, Inc. and The Bank of New York Mellon, as Trustee
Incorporated by reference to Exhibit 4.1 to AIG’s Current
Report on Form 8-K, filed with the SEC on August 23, 2022.
(24) First Supplemental Indenture, dated August 23, 2022, between
Corebridge Financial, Inc. and The Bank of New York Mellon, as Trustee,
relating to the Hybrid Notes (Hybrid Notes)
(25) Form of Hybrid Notes (included in Exhibit 4.24)
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K, filed with the SEC on August 23, 2022.
Incorporated by reference to Exhibit 4.2 to AIG’s Current
Report on Form 8-K, filed with the SEC on August 23, 2022.
Voting Trust Agreement
None.
Material contracts
(1) American International Group, Inc. 2010 Stock Incentive Plan*
(2) AIG 2010 Stock Incentive Plan Non-Employee Director Deferred Stock
Units (DSU) Award Agreement*
(3) Letter Agreement, dated August 14, 2013, between AIG and Kevin
Hogan*
(4) Non-Solicitation and Non-Disclosure Agreement, dated August 14,
2013, between AIG and Kevin Hogan*
(5) Executive Officer Form of Release and Restrictive Covenant
Agreement*
(6) Master Transaction Agreement, dated as of April 19, 2011, by and
among American Home Assurance Company, Chartis Casualty Company
(f/k/a American International South Insurance Company), Chartis Property
Casualty Company (f/k/a AIG Casualty Company), Commerce and Industry
Insurance Company, Granite State Insurance Company, Illinois National
Insurance Co., National Union Fire Insurance Company of Pittsburgh, Pa.,
New Hampshire Insurance Company, The Insurance Company of the State
of Pennsylvania, Chartis Select Insurance Company (f/k/a AIG Excess
Liability Insurance Company Ltd.), Chartis Specialty Insurance Company (f/
k/a American International Specialty Lines Insurance Company), Landmark
Insurance Company, Lexington Insurance Company, AIU Insurance
Company, American International Reinsurance Company, Ltd. and
American Home Assurance Company, National Union Fire Insurance
Company of Pittsburgh, Pa., New Hampshire Insurance Company and
Chartis Overseas Limited acting as members of the Chartis Overseas
Association as respects business written or assumed by or from affiliated
companies of Chartis Inc. (collectively, the Reinsureds), Eaglestone
Reinsurance Company and National Indemnity Company
(7) AIG Clawback Policy (as amended and restated effective December 1,
2023)*
(8) AIG 2013 Omnibus Incentive Plan*
(9) Form of AIG 2013 Omnibus Incentive Plan Non-Employee Director DSU
Award Agreement*
Incorporated by reference to Appendix B in AIG’s Definitive
Proxy Statement, dated April 12, 2010 (Filed No. 1-8787).
Incorporated by reference to Exhibit 10.14 to AIG’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2012
(File No. 1-8787).
Incorporated by reference to Exhibit 10.2 to AIG’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015
(File No. 1-8787).
Incorporated by reference to Exhibit 10.3 to AIG’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015
(File No. 1-8787).
Incorporated by reference to Exhibit 10.5 to AIG’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2016
(File No. 1-8787).
Incorporated by reference to Exhibit 10.6 to AIG’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2011
(File No. 1-8787).
Filed herewith.
Incorporated by reference to Appendix B in AIG’s Definitive
Proxy Statement on Schedule 14A, dated April 4, 2013 (File
No. 1-8787).
Incorporated by reference to Exhibit 10.52 to AIG’s Annual
Report on Form 10-K for the year ended December 31, 2016
(File No. 1-8787).
264
AIG | 2023 Form 10-K
Exhibit
Number Description
(10) Aggregate Excess of Loss Reinsurance Agreement, dated January 20,
2017, by and between AIG Assurance Company, AIG Property Casualty
Company, AIG Specialty Insurance Company, AIU Insurance Company,
American Home Assurance Company, Commerce and Industry Insurance
Company, Granite State Insurance Company, Illinois National Insurance
Co., Lexington Insurance Company, National Union Fire Insurance
Company of Pittsburgh, Pa., New Hampshire Insurance Company and The
Insurance Company Of The State Of Pennsylvania and National Indemnity
Company (portions of this exhibit have been redacted pursuant to a request
for confidential treatment)
(11) Trust Agreement, dated January 20, 2017, by and among National
Union Fire Insurance Company of Pittsburgh, Pa., National Indemnity
Company, and Wells Fargo Bank, National Association (portions of this
exhibit have been redacted pursuant to a request for confidential treatment)
(12) Parental Guarantee Agreement, dated January 20, 2017, by Berkshire
Hathaway Inc. in favor of National Union Fire Insurance Company of
Pittsburgh, Pa.
(13) Form of Stock Option Award Agreement, between American
International Group, Inc. and Brian Duperreault*
(14) Form of Stock Option Award Agreement, between American
International Group, Inc. and Peter Zaffino*
(15) Form of Long Term Incentive Stock Option Award Agreement (as of
December 2017)*
(16) Description of Non-Management Director Compensation*
(17) Letter Agreement, dated May 10, 2018, between AIG and Mark Lyons*
(18) Non-Solicitation and Non-Disclosure Agreement, dated May 13, 2018,
between AIG and Mark Lyons*
(19) Form of AIG Long Term Incentive Award Agreement (as of January
2020)*
(20) Amended and Restated Combination Coinsurance and Modified
Coinsurance Agreement by and between American General Life Insurance
Company and Fortitude Reinsurance Company, Ltd., effective as of June 1,
2020 (portions of this exhibit have been redacted pursuant to a request for
confidential treatment)
(21) AIG 2012 Executive Severance Plan (as amended and restated
February 2021)*
(22) AIG Non-Qualified Retirement Income Plan (as amended and restated
February 2021)*
(23) American International Group, Inc. 2021 Omnibus Incentive Plan
(24) AIG Long Term Incentive Plan Form of Award Agreement (April 2021)*
(25) AIG Long Term Incentive Plan Form of Award Agreement (September
2021)*
(26) Form of AIG 2021 Omnibus Incentive Plan Non-Employee Director
DSU Award Agreement*
(27) Credit Agreement, dated as of November 19, 2021, among AIG, the
subsidiary borrowers party thereto, the lenders party thereto, Bank of
America, N.A., as Administrative Agent, and each Several L/C Agent party
thereto
(28) Letter Agreement, dated December 7, 2021, between AIG and Shane
Fitzsimons*
(29) 3-Year Delayed Draw Term Agreement, dated as of February 25, 2022,
among SAFG Retirement Services, Inc., as borrower, the lenders party
thereto and the administrative agent party thereto
(30) Form of Long-Term Incentive Award Agreement (as of March 2022)*
Location
Incorporated by reference to Exhibit 10.1 to AIG's Current
Report on Form 8-K filed with the SEC on February 14, 2017
(File No. 1-8787).
Incorporated by reference to Exhibit 10.2 to AIG's Current
Report on Form 8-K filed with the SEC on February 14, 2017
(File No. 1-8787).
Incorporated by reference to Exhibit 10.3 to AIG's Current
Report on Form 8-K filed with the SEC on February 14, 2017
(File No. 1-8787).
Incorporated by reference to Exhibit 10.2 to AIG’s Current
Report on Form 8-K filed with the SEC on May 15, 2017 (File
No. 1-8787).
Incorporated by reference to Exhibit 10.2 to AIG’s Current
Report on Form 8-K filed with the SEC on July 6, 2017 (File
No. 1-8787).
Incorporated by reference to Exhibit 10.60 to AIG’s Annual
Report on Form 10-K for the year ended December 31, 2017
(File No. 1-8787).
Incorporated by reference to “Compensation of Directors” in
AIG’s Definitive Proxy Statement on Schedule 14A, dated
March 29, 2023 (File No. 1-8787).
Incorporated by reference to Exhibit 10.1 to AIG’s Current
Report on Form 8-K/A, Amendment No. 1, filed with the SEC
on December 14, 2018 (File No. 1-8787).
Incorporated by reference to Exhibit 10.2 to AIG’s Current
Report on Form 8-K/A, Amendment No. 1, filed with the SEC
on December 14, 2018 (File No. 1-8787).
Incorporated by reference to Exhibit 10.49 to AIG’s Annual
Report on Form 10-K, filed with the SEC on February 21,
2020 (File No. 1-8787).
Incorporated by reference to Exhibit 10.1 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on August 4, 2020
(File No. 1-8787).
Incorporated by reference to Exhibit 10.35 to AIG’s Annual
Report on Form 10-K, filed with the SEC on February 19,
2021 (File No. 1-8787).
Incorporated by reference to Exhibit 10.37 to AIG’s Annual
Report on Form 10-K, filed with the SEC on February 19,
2021 (File No. 1-8787).
Incorporated by reference to Appendix B to AIG’s Definitive
Proxy Statement filed with the Commission on March 30,
2021 (File No. 001-08787).
Incorporated by reference to Exhibit 10.7 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on May 7, 2021
(File No. 1-8787).
Incorporated by reference to Exhibit 10.4 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 5,
2021 (File No. 1-8787).
Incorporated by reference to Exhibit 10.41 to AIG's Annual
Report on Form 10-K, filed with the SEC on February 17,
2022 (File No. 1-8787).
Incorporated by reference to Exhibit 10.1 to AIG’s Current
Report on Form 8-K filed with the SEC on November 22,
2021 (File No. 1-8787).
Incorporated by reference to Exhibit 10.1 to AIG’s Current
Report on Form 8-K/A, Amendment No. 1, filed with the SEC
on December 9, 2021 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.2 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on May 5, 2022.
Incorporated by Reference to Exhibit 10.4 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on May 5, 2022.
AIG | 2023 Form 10-K
265
Exhibit
Number Description
(31) Revolving Credit Agreement, dated as of May 12, 2022 among
Corebridge Financial, Inc., the subsidiary borrowers thereto, the lenders
party thereto, and JPMorgan Chase Bank, N.A., as administrative agent,
and the several L/C agent party thereto
(32) Amendment Letter, dated as of May 12, 2022, to the Credit Agreement
among AIG, the subsidiary borrowers party thereto, the lenders party
thereto, and Bank of America, N.A., as administrative agent, and each
several L/C agent party thereto
(33) Amendment Letter, dated as of May 11, 2022, to the 3-Year Delayed
Draw Term Loan Agreement among Corebridge Financial, Inc., the lenders
party thereto, and JPMorgan Chase Bank, N.A., as administrative agent
(34) Amendment Letter, dated as of August 24, 2022, to the 3-Year Delayed
Draw Term Loan Agreement among Corebridge Financial, Inc., the lenders
party thereto, and JPMorgan Chase Bank, N.A., as administrative agent
(35) Separation Agreement, dated as of September 14, 2022, by and
between American International Group, Inc. and Corebridge Financial, Inc.
(36) Registration Rights Agreement, dated as of September 14, 2022, by
and between American International Group, Inc. and Corebridge Financial,
Inc.
(37) Transition Services Agreement, dated as of September 14, 2022, by
and between American International Group, Inc. and Corebridge Financial,
Inc.
(38) Trademark License Agreement, dated as of September 14, 2022, by
and between American International Group, Inc. and Corebridge Financial,
Inc.
(39) Intellectual Property Assignment Agreement, dated as of September
14, 2022, by and between American International Group, Inc. and
Corebridge Financial, Inc.
(40) Grantback License Agreement, dated as of September 14, 2022, by
and between American International Group, Inc. and Corebridge Financial,
Inc.
(41) Employee Matters Agreement, dated as of September 14, 2022, by
and between American International Group, Inc. and Corebridge Financial,
Inc.
(42) Tax Matters Agreement, dated as of September 14, 2022, by and
between American International Group, Inc. and Corebridge Financial, Inc.
(43) Employment Agreement, dated as of November 10, 2022, by and
between American International Group, Inc. and Peter Zaffino*
(44) RSU Award Agreement, between American International Group, Inc.
and Peter Zaffino*
(45) Settlement Agreement and Release, dated January 29, 2023, by and
between American International Group, Inc. and Mark Lyons*
(46) Letter Agreement, dated June 19, 2023, between AIG and Sabra
Purtill*
(47) Transition Agreement, dated September 1, 2023, between AIG and
Lucy Fato*
(48) Form of AIG 2021 Omnibus Incentive Plan Non-Employee Director
Deferred Stock Units Award Agreement*
(49) Financial Restatement Compensation Recoupment Policy (effective as
of September 11, 2023)
Location
Incorporated by reference Exhibit 10.1 to AIG’s Current
Report on Form 8-K, filed with the SEC on May 13, 2022
(File No. 1-8787).
Incorporated by Reference to Exhibit 10.2 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on August 9, 2022
(File No. 1-8787).
Incorporated by Reference to Exhibit 10.3 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on August 9, 2022
(File No. 1-8787).
Incorporated by Reference to Exhibit 10.1 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.3 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.4 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.5 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.6 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.7 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.8 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.9 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.10 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2022 (File No. 1-8787).
Incorporated by reference to Exhibit 10.55 on AIG’s Annual
Report on Form 10-K for the year ended December 31, 2022,
filed with the SEC on February 17, 2023 (File No. 1-8787).
Incorporated by reference to Exhibit 10.56 on AIG’s Annual
Report on Form 10-K for the year ended December 31, 2022,
filed with the SEC on February 17, 2023 (File No. 1-8787).
Incorporated by Reference to Exhibit 99.1 to AIG’s Current
Report on Form 8-K, filed with the SEC on January 30, 2023
(File No. 1-8787).
Incorporated by Reference to Exhibit 10.1 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on August 2, 2023
(File No. 1-8787).
Incorporated by Reference to Exhibit 10.1 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2023 (File No. 1-8787).
Incorporated by Reference to Exhibit 10.2 to AIG’s Quarterly
Report on Form 10-Q, filed with the SEC on November 2,
2023 (File No. 1-8787).
Filed herewith.
(50) AIG Long Term Incentive Plan (as amended and restated effective
February 1, 2024)*
Filed herewith.
(51) AIG Annual Short-Term Incentive Plan (as amended and restated
effective February 1, 2024)*
Subsidiaries of Registrant
Guaranteed Securities
Filed herewith.
Filed herewith.
None.
Consent of Independent Registered Public Accounting Firm
Powers of attorney
Filed herewith.
Included on signature page and filed herewith.
Rule 13a-14(a)/15d-14(a) Certifications
Section 1350 Certifications**
Filed herewith.
Filed herewith.
21
22
23
24
31
32
266
AIG | 2023 Form 10-K
Exhibit
Number Description
101
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the
Consolidated Balance Sheets as of December 31, 2023 and December 31,
2022, (ii) the Consolidated Statements of Income (Loss) for the three years
ended December 31, 2023, (iii) the Consolidated Statements of Equity for
the three years ended December 31, 2023, (iv) the Consolidated
Statements of Cash Flows for the three years ended December 31, 2023,
(v) the Consolidated Statements of Comprehensive Income (Loss) for the
three years ended December 31, 2023 and (vi) the Notes to the
Consolidated Financial Statements.
Location
Filed herewith.
104
Cover Page Interactive Data File (formatted as inline XBRL with applicable
taxonomy extension information contained in Exhibits 101)
Filed herewith.
*
This exhibit is a management contract or a compensatory plan or arrangement.
** This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.
ITEM 16 | Form 10-K Summary
None.
AIG | 2023 Form 10-K
267
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly
caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th of
February, 2024.
AMERICAN INTERNATIONAL GROUP, INC.
By
/S/ PETER ZAFFINO
(Peter Zaffino, Chairman and Chief Executive Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Peter
Zaffino and Sabra R. Purtill, and each of them severally, his or her true and lawful attorney-in-fact, with full power of substitution and
resubstitution, to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all
instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934, as amended, and any
rules, regulations and requirements of the U.S. Securities and Exchange Commission in connection with this Annual Report on Form
10-K and any and all amendments hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby
ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed
below by the following persons on behalf of the Registrant and in the capacities indicated on the 14th of February, 2024.
SIGNATURE
/S/ PETER ZAFFINO
(Peter Zaffino)
/S/ SABRA R. PURTILL
(Sabra R. Purtill)
/S/ KATHLEEN CARBONE
(Kathleen Carbone)
/S/ PAOLA BERGAMASCHI
(Paola Bergamaschi)
/S/ JAMES COLE JR.
(James Cole Jr.)
/S/ W. DON CORNWELL
(W. Don Cornwell)
/S/ JAMES DUNNE III
(James Dunne III)
/S/ LINDA A. MILLS
(Linda A. Mills)
/S/ DIANA M. MURPHY
(Diana M. Murphy)
/S/ PETER R. PORRINO
(Peter R. Porrino)
/S/ JOHN G. RICE
(John G. Rice)
/S/ VANESSA A. WITTMAN
(Vanessa A. Wittman)
268
AIG | 2023 Form 10-K
TITLE
Chairman and Chief Executive Officer and Director
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Summary of Investments – Other than Investments in Related Parties
At December 31, 2023
(in millions)
Fixed maturities:
U.S. government and government sponsored entities
Obligations of states, municipalities and political subdivisions
Non-U.S. governments
Public utilities
All other corporate debt securities
Mortgage-backed, asset-backed and collateralized
Total fixed maturity securities
Equity securities and mutual funds:
Common stock:
Public utilities
Banks, trust and insurance companies
Industrial, miscellaneous and all other
Total common stock
Preferred stock
Mutual funds
Total equity securities and mutual funds
Mortgage and other loans receivable, net of allowance
Other invested assets
Short-term investments, at cost (approximates fair value)
Derivative assets(b)
Total investments
Cost(a)
Fair value
Schedule I
Amount at
which shown in
the Balance sheet
$
5,885 $
5,616 $
11,479
13,705
23,336
134,244
69,624
258,273
10,754
12,490
20,088
121,252
66,774
236,974
1
441
77
519
57
152
728
51,553
17,070
17,200
511
1
441
77
519
57
152
728
48,536
16,217
17,200
511
$ 345,335 $ 320,166 $
5,616
10,754
12,490
20,088
121,252
66,774
236,974
1
441
77
519
57
152
728
51,553
16,217
17,200
511
323,183
(a) Original cost of fixed maturities is reduced by repayments and adjusted for amortization of premiums or accretion of discounts.
(b) The balance is reported in Other assets.
AIG | 2023 Form 10-K
269
Condensed Financial Information of Registrant
Balance Sheets – Parent Company Only
December 31,
(in millions)
Assets:
Short-term investments
Other investments
Total investments
Cash
Loans to subsidiaries(a)
Due from affiliates - net(a)
Intercompany tax receivable(a)
Deferred income taxes
Investment in consolidated subsidiaries(a)
Other assets
Total assets
Liabilities:
Due to affiliates(a)
Intercompany tax payable(a)
Notes and bonds payable
Junior subordinated debt
Series AIGFP matched notes and bonds payable
Loans from subsidiaries(a)
Other liabilities
Total liabilities
AIG Shareholders’ equity:
Preferred stock
Common stock
Treasury stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Total AIG shareholders’ equity
Total liabilities and equity
Eliminated in consolidation.
See accompanying Notes to Condensed Financial Information of Registrant.
Schedule II
2023
2022
7,782 $
758
8,540
10
—
1,371
751
4,566
42,655
909
58,802 $
703 $
767
9,098
992
18
443
1,430
13,451
485
4,766
(59,189)
75,810
37,516
(14,037)
45,351
58,802 $
3,389
1,930
5,319
5
84
1,224
329
4,992
44,823
250
57,026
1,195
1,633
10,323
991
18
521
1,375
16,056
485
4,766
(56,473)
79,915
34,893
(22,616)
40,970
57,026
$
$
$
$
270
AIG | 2023 Form 10-K
Condensed Financial Information of Registrant (Continued)
Statements of Income – Parent Company Only
Years Ended December 31,
(in millions)
Revenues:
Equity in undistributed net income (loss) of consolidated subsidiaries(a)
Dividend income from consolidated subsidiaries(a)
Interest income(b)
Net realized losses
Other income (loss)
Expenses:
Interest expense
Net loss on extinguishment of debt
Net (gain) loss on divestitures and other
Other expenses
Income (loss) from continuing operations before income tax benefit
Income tax benefit
Net income (loss)
Loss from discontinued operations
Schedule II
2023
2022
2021
$
(4,508) $
7,875 $
8,385
226
(74)
5
525
(58)
5
778
2,784
(859)
3,643
—
2,974
936
(433)
22
631
301
111
960
9,371
(838)
10,209
18
(2,391)
14,699
169
(1)
(3)
948
304
(10)
1,214
10,017
(350)
10,367
—
10,367
Net income (loss) attributable to AIG Parent Company
$
3,643 $
10,227 $
(a) Eliminated in consolidation.
(b) Includes interest income on intercompany borrowings of $1 million, $813 million and $131 million on December 31, 2023, 2022 and 2021, respectively, eliminated in
consolidation.
See accompanying Notes to Condensed Financial Information of Registrant.
Condensed Financial Information of Registrant (Continued)
Statements of Comprehensive Income – Parent Company Only
Years Ended December 31,
(in millions)
Net income (loss)
Other comprehensive income (loss)
Total comprehensive income attributable to AIG
See accompanying Notes to Condensed Financial Information of Registrant.
Schedule II
$
$
2023
3,643 $
4,641
8,284 $
2022
10,227 $
(29,803)
(19,576) $
2021
10,367
(5,325)
5,042
AIG | 2023 Form 10-K
271
Condensed Financial Information of Registrant (Continued)
Statements of Cash Flows – Parent Company Only
Years Ended December 31,
(in millions)
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Sales and maturities of investments
Purchase of investments
Net change in short-term investments
Contributions from (to) subsidiaries - net
Loans to subsidiaries - net
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Issuance of long-term debt
Repayments of long-term debt
Cash dividends paid on preferred stock
Cash dividends paid on common stock
Loans from subsidiaries - net
Purchase of common stock
Other, net
Net cash provided by (used in) financing activities
Change in cash and restricted cash
Cash and restricted cash at beginning of year
Cash and restricted cash at end of year
Supplementary disclosure of cash flow information:
(in millions)
Cash
Restricted cash included in Other assets
Total cash and restricted cash shown in Statements of Cash Flows – Parent
Company Only
Cash (paid) received during the period for:
Interest:
Third party
Intercompany
Taxes:
Income tax authorities
Intercompany
Intercompany non-cash financing and investing activities:
Capital contributions
Return of capital
Dividend received in the form of intercompany note
Dividends received in the form of securities
See accompanying Notes to Condensed Financial Information of Registrant.
2023
2022
$
5,382 $
191 $
3,367
(2,070)
(4,393)
(47)
84
(48)
(3,107)
742
(2,037)
(29)
(997)
(97)
(2,961)
3,108
(2,271)
4
6
$
10 $
5,205
(90)
945
(330)
8,427
45
14,202
—
(9,364)
(29)
(982)
(224)
(5,200)
1,408
(14,391)
2
4
6 $
Schedule II
2021
3,837
4,228
(5,761)
2,647
403
(104)
(41)
1,372
—
(3,703)
(29)
(1,083)
3
(2,598)
2,201
(5,209)
—
4
4
Years Ended December 31,
2023
2022
2021
$
$
10 $
—
10 $
5 $
1
6 $
$
(455) $
(716) $
(3)
(109)
(95)
861
—
—
314
63
(348)
1,120
660
—
—
494
3
1
4
(941)
1
(494)
1,950
2,284
1,365
8,300
1,289
272
AIG | 2023 Form 10-K
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
American International Group, Inc.’s (the Registrant) investments in consolidated subsidiaries are stated at cost plus equity in
undistributed income of consolidated subsidiaries. The accompanying condensed financial statements of the Registrant should be
read in conjunction with the consolidated financial statements and notes thereto of American International Group, Inc. and subsidiaries
included in the Registrant’s 2023 Annual Report on Form 10-K for the year ended December 31, 2023 (Annual Report on Form 10-K)
filed with the Securities and Exchange Commission on February 14, 2024.
The Registrant includes in its Statement of Income dividends from its subsidiaries and equity in undistributed income (loss) of
consolidated subsidiaries, which represents the net income (loss) of each of its wholly-owned subsidiaries.
The five-year debt maturity schedule is incorporated by reference from Note 16 to the Consolidated Financial Statements.
On December 14, 2022, AIG announced that its wholly-owned subsidiary, AIG Financial Products Corp. (AIGFP), filed a voluntary
petition to reorganize under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of
Delaware and filed a proposed plan of reorganization. The reorganization will not have a material impact on the consolidated balance
sheets of AIG or our respective businesses. AIGFP has no material operations or businesses and no employees. In conjunction with
the bankruptcy filing, AIGFP and its consolidated subsidiaries were deconsolidated from the results of AIG, resulting in a pre-tax loss
of $114 million reported in Net gain (loss) on divestitures and other. The AIGFP loan receivable of $37.6 billion was reclassified to a
third party asset, which has a full allowance for credit losses. In addition, AIGFP and its subsidiaries were determined to be an
unconsolidated variable interest entity.
The Registrant files a consolidated federal income tax return with certain subsidiaries and acts as an agent for the consolidated tax
group when making payments to the Internal Revenue Service. The Registrant and its subsidiaries have adopted, pursuant to a
written agreement, a method of allocating consolidated Federal income taxes. Amounts allocated to the subsidiaries under the written
agreement are included in Due from affiliates in the accompanying Condensed Balance Sheets.
Under the U.S. federal tax laws, AIGFP will continue to join in filing of AIG’s consolidated U.S. federal income tax return and AIGFP’s
net operating losses continue to be available to offset taxable income of AIG’s consolidated U.S. federal income tax group.
Accordingly, deferred tax assets related to AIGFP’s net operating losses remain part of AIG’s deferred tax assets as of December 31,
2023. No additional valuation allowance is required in connection with AIGFP’s reorganization.
Income taxes in the accompanying Condensed Balance Sheets are composed of the Registrant’s current and deferred tax assets, the
consolidated group’s current income tax receivable and deferred taxes related to tax attribute carryforwards of AIG’s U.S.
consolidated federal income tax group.
The consolidated U.S. deferred tax asset for net operating loss and tax credit carryforwards are recorded by the Parent Company,
which files the consolidated U.S. Federal income tax return, and are not allocated to its subsidiaries. Generally, as, and if, the
consolidated net operating losses and other tax attribute carryforwards are utilized, the intercompany tax balance will be settled with
the subsidiaries.
For additional information, see Note 23 to the Consolidated Financial Statements.
AIG | 2023 Form 10-K
273
Supplementary Insurance Information
At December 31, 2023, 2022
Schedule III
Segment (in millions)
2023
General Insurance
Life and Retirement
Other Operations(a)
2022
General Insurance
Life and Retirement
Other Operations(a)
Deferred Policy
Acquisition Costs
Liability for Unpaid
Losses and Loss
Adjustment Expenses,
Future Policy Benefits
Unearned
Premiums
Policy and
Contract Claims
$
$
$
$
2,075 $
66,805 $
17,374 $
10,010
—
57,108
5,056
11
2
12,085 $
128,969 $
17,387 $
2,310 $
71,495 $
18,253 $
10,547
—
50,519
5,067
59
26
12,857 $
127,081 $
18,338 $
—
1,194
(188)
1,006
—
1,309
147
1,456
For the years ended December 31, 2023, 2022, and 2021
Segment (in millions)
2023
General Insurance
Life and Retirement
Other Operations(a)
2022
General Insurance
Life and Retirement
Other Operations(a)
2021
General Insurance
Life and Retirement
Other Operations(a)
Premiums
and
Policy Fees
Net
Investment
Income
Losses and
Loss Expenses
Incurred, Benefits
Amortization of
Deferred Policy
Acquisition Costs
Other
Operating
Expenses
Net
Premiums
Written
$
$
$
$
$
$
25,091 $
10,898
62
36,051 $
25,340 $
8,419
1,010
3,022 $
9,786
1,784
14,592 $
2,382 $
8,347
1,038
34,769 $
11,767 $
25,057 $
9,060
173
34,290 $
3,304 $
9,521
1,787
14,612 $
14,775 $
14,202
202
29,179 $
15,407 $
10,801
(288)
25,920 $
16,097 $
11,359
(101)
27,355 $
3,623 $
1,061
124
4,808 $
3,533 $
1,021
3
4,557 $
3,530 $
958
36
4,524 $
4,344 $
2,409
1,746
8,499 $
4,352 $
2,431
2,339
9,122 $
4,375 $
2,573
1,780
8,728 $
26,719
—
487
27,206
25,512
—
1,248
26,760
25,890
—
527
26,417
(a) Includes consolidation and elimination entries and reconciling items from adjusted pre-tax income to pre-tax income. See Note 3 to the Consolidated Financial
Statements.
274
AIG | 2023 Form 10-K
Reinsurance
For the years ended December 31, 2023, 2022, and 2021
Schedule IV
(in millions)
2023
Gross
Amount
Ceded to Other
Companies
Assumed from
Other Companies
Net Amount
Percent of Amount
Assumed to Net
Long-duration insurance in-force
$
1,308,474 $
363,471 $
173 $
945,176
— %
Premiums earned:
General Insurance companies
Life and Retirement companies
Total
2022
$
$
30,781 $
12,268 $
4,706
1,126
7,050 $
4,111
35,487 $
13,394 $
11,161 $
25,563
7,691
33,254
27.6 %
53.5
33.6 %
Long-duration insurance in-force
$
1,280,831 $
346,879 $
188 $
934,140
— %
Premiums earned:
General Insurance companies
Life and Retirement companies
Total
2021
Long-duration insurance in-force
Premiums earned:
General Insurance companies
Life and Retirement companies
Total
$
$
32,053 $
12,425 $
4,739
966
36,792 $
13,391 $
7,137 $
1,318
8,455 $
26,765
5,091
31,856
26.7 %
25.9
26.5 %
$
1,280,090 $
363,008 $
192 $
917,274
— %
$
$
30,279 $
11,301 $
4,604
1,202
34,883 $
12,503 $
6,640 $
2,265
8,905 $
25,618
5,667
31,285
25.9 %
40.0
28.5 %
Valuation and Qualifying Accounts
For the years ended December 31, 2023, 2022, and 2021
(in millions)
2023
Allowance for premiums and insurances balances receivable
Federal and foreign valuation allowance for deferred tax assets
2022
Allowance for premiums and insurances balances receivable
Federal and foreign valuation allowance for deferred tax assets
2021
Schedule V
Balance,
Beginning
of year
Charged to
Costs and
Expenses
Write
Offs
Reclassified
to Assets
Held for Sale
Other
Changes(a)
Balance,
End of year
$
169
4,246
$
(7) $
(357)
(29) $
—
—
(82)
$
185
$
—
$
(15) $
1,987
(25)
—
Allowance for premiums and insurances balances receivable
Federal and foreign valuation allowance for deferred tax assets
$
205
1,330
$
(15) $
718
(2) $
—
(a) Includes recoveries of amounts previously charged off and reclassifications to/from other accounts.
—
—
—
—
$
$
$
$
6
(691)
139
3,116
(1) $
2,284
169
4,246
(3) $
(61)
185
1,987
AIG | 2023 Form 10-K
275
[This Page Intentionally Left Blank]
American International Group, Inc., and Subsidiaries
Subsidiaries of Registrant
As of December 31, 2023
American International Group, Inc.
AIG Employee Services, Inc.
AIG Financial Products Corp.
AIG Matched Funding Corp.
AIG-FP Pinestead Holdings Corp.
AIG Markets, Inc.
AIG Global Operations, Inc.
AIG Property Casualty Inc.
AIG Claims, Inc.
AIG PC Global Services, Inc.
AIG Global Operations (Ireland) Limited
AIG Property Casualty International, LLC
AIG Insurance Management Services, Inc.
Grand Isle SAC Limited
AIG International Holdings GmbH
AIG APAC HOLDINGS PTE. LTD.
AIG Asia Pacific Insurance Pte. Ltd.
AIG Australia Limited
AIG Insurance Hong Kong Limited
AIG Insurance New Zealand Limited
AIG Korea Inc.
AIG Malaysia Insurance Berhad
AIG Philippines Insurance, Inc.
AIG Vietnam Insurance Company Limited
PT AIG Insurance Indonesia
AIG Insurance (Thailand) Public Company Limited
AIG Canada Holdings Inc.
AIG Insurance Company of Canada
AIG Europe Holdings S.à.r.l
AIG Europe S.A.
AIG Global Reinsurance Operations
AIG Holdings Europe Limited
AIG Israel Insurance Company Ltd
American International Group UK Limited
AIG Investments UK Limited
Talbot Holdings Ltd.
Talbot Underwriting Holdings Ltd.
Talbot Underwriting Ltd.
AIG Japan Holdings Kabushiki Kaisha
AIG General Insurance Co., Ltd.
American Home Assurance Co., Ltd.
Exhibit 21
Percentage
of Voting
Securities
held by
Immediate
Parent (1)
(2)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Jurisdiction of
Incorporation or
Organization
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Ireland
Delaware
Vermont
Bermuda
Switzerland
Singapore
Singapore
Australia
Hong Kong
New Zealand
Korea, Republic of
Malaysia
Philippines
Vietnam
Indonesia
Thailand
Canada
Canada
Luxembourg
Luxembourg
Belgium
England and Wales
Israel
England and Wales
England and Wales
Bermuda
England and Wales
England and Wales
Japan
Japan
Japan
As of December 31, 2023
AIG Latin America Investments, S.L.
Inversiones Segucasai, C.A.
C.A. de Seguros American International
AIG Brazil Holding I, LLC
AIG Seguros Brasil S.A.
AIG Resseguros Brasil S.A.
AIG Insurance Company-Puerto Rico
AIG Latin America I.I.
AIG Seguros Mexico, S.A. de C.V.
AIG-Metropolitana Cia. de Seguros y Reaseguros S.A.
AIG MEA Holdings Limited
AIG MEA Limited
AIG Kenya Insurance Company Limited
Johannesburg Insurance Holdings (Proprietary) Limited
AIG Life South Africa Limited
AIG South Africa Limited
AIG Travel, Inc.
AIG Travel Assist, Inc.
AIG Travel Asia Pacific Pte. Ltd.
AIG Travel Assist Malaysia Sdn. Bhd.
Jurisdiction of
Incorporation or
Organization
Spain
Venezuela
Venezuela
Delaware
Brazil
Brazil
Puerto Rico
Puerto Rico
Mexico
Ecuador
United Arab Emirates
United Arab Emirates
Kenya
South Africa
South Africa
South Africa
Delaware
Delaware
Singapore
Malaysia
Travel Guard Group Canada, Inc./Groupe Garde Voyage du Canada, Inc.
Canada
Travel Guard Group, Inc.
American International Reinsurance Company, Ltd.
PCG 2019 Corporate Member Limited
AIG Property Casualty U.S., Inc.
AIG Aerospace Insurance Services, Inc.
AIG Assurance Company
AIG Property Casualty Company
AIG Specialty Insurance Company
AIG WarrantyGuard, Inc.
AIU Insurance Company
American Home Assurance Company
AIG Insurance Company China Limited
Commerce and Industry Insurance Company
Eaglestone Reinsurance Company
Arthur J. Glatfelter Agency, Inc.
Glatfelter Underwriting Services, Inc.
Volunteer Firemen's Insurance Services, Inc.
Granite State Insurance Company
Illinois National Insurance Co.
Lexington Insurance Company
National Union Fire Insurance Company of Pittsburgh, Pa.
American International Realty LLC
National Union Fire Insurance Company of Vermont
Wisconsin
Bermuda
England and Wales
Delaware
Georgia
Illinois
Illinois
Illinois
Delaware
New York
New York
China
New York
Pennsylvania
Pennsylvania
Pennsylvania
Pennsylvania
Illinois
Illinois
Delaware
Pennsylvania
Delaware
Vermont
Percentage
of Voting
Securities
held by
Immediate
Parent (1)
100
100
97.39
100
90.56 (3)
100
100
100
100
51.78
100
100
66.67
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
As of December 31, 2023
New Hampshire Insurance Company
Risk Specialists Companies Insurance Agency, Inc.
Service Net Warranty, LLC
The Insurance Company of the State of Pennsylvania
Western World Insurance Company
Stratford Insurance Company
Tudor Insurance Company
Lexington Specialty Insurance Agency, Inc.
Blackboard U.S. Holdings, Inc.
Blackboard Specialty Insurance Company
Blackboard Insurance Company
AM Holdings LLC
Corebridge Financial, Inc.
Corebridge Life Holdings, Inc.
AGC Life Insurance Company
Corebridge Insurance Company of Bermuda, Ltd.
American General Life Insurance Company
SunAmerica Asset Management, LLC
Corebridge Capital Services, Inc.
The United States Life Insurance Company in the City of New York
The Variable Annuity Life Insurance Company
VALIC Financial Advisors, Inc.
VALIC Retirement Services Company
VALIC Trust Company Inc.
SAFG Capital LLC
AIG Global Asset Management Holdings Corp.
AIG Asset Management (Europe) Limited
AIG Asset Management (U.S.), LLC
Corebridge Real Estate Investors Inc.
Corebridge Europe Real Estate Fund I GP S.à r.l.
Corebridge U.S. Real Estate Fund I GP, LLC
Corebridge U.S. Real Estate Fund II GP, LLC
Corebridge Europe Real Estate Fund II GP S.à r.l.
Corebridge U.S. Real Estate Fund III GP, LP
Corebridge U.S. Real Estate Fund IV GP, LLC
Corebridge Markets, LLC
AIG Life Limited
(1) Percentages include directors' qualifying shares.
Jurisdiction of
Incorporation or
Organization
Illinois
Massachusetts
Delaware
Illinois
New Hampshire
New Hampshire
New Hampshire
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Texas
Missouri
Bermuda
Texas
Delaware
Delaware
New York
Texas
Texas
Texas
New Hampshire
Delaware
Delaware
England and Wales
Delaware
Delaware
Luxembourg
Delaware
Delaware
Luxembourg
Delaware
Delaware
Delaware
United Kingdom
Percentage
of Voting
Securities
held by
Immediate
Parent (1)
100
100
100
100
100
100
100
100
100
100
100
100
52.15
100
100
100
100
100
100
100
100
100
100
100
100
100 (4)
100 (5)
100 (6)
100
100
100
100
100
100
100
100
100 (7)
(2) Substantially all subsidiaries listed are consolidated in the accompanying financial statements. Certain subsidiaries have been omitted from the
tabulation. The omitted subsidiaries, when considered in the aggregate, do not constitute a significant subsidiary.
(3) Also owned 9.44 percent by AIG Brazil Holding II, LLC.
(4) Entity name was changed to Corebridge Institutional Investments Holdings Corp. in January 2024.
(5) Entity name was changed to Corebridge Institutional Investments (Europe) Limited in January 2024.
(6 ) Entity name was changed to Corebridge Institutional Investments (U.S.), LLC in January 2024.
(7) Entity is held for sale.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No.333-253312) and Forms S-8
(No.333-101640, No.333-168679, No.333-219180 and No.333-256033) of American International Group, Inc. of our report dated
February 14, 2024 relating to the financial statements, financial statement schedules and the effectiveness of internal control over
financial reporting, which appears in this Form 10-K.
Exhibit 23
/s/ PricewaterhouseCoopers LLP
New York, New York
February 14, 2024
Exhibit 31
CERTIFICATIONS
I, Peter Zaffino, certify that:
1. I have reviewed this Annual Report on Form 10-K of American International Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 14, 2024
/S/ PETER ZAFFINO
Peter Zaffino
Chairman and Chief Executive Officer
CERTIFICATIONS
I, Sabra R. Purtill, certify that:
1. I have reviewed this Annual Report on Form 10-K of American International Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: February 14, 2024
/S/ SABRA R. PURTILL
Sabra R. Purtill
Executive Vice President and
Chief Financial Officer
Exhibit 32
CERTIFICATION
In connection with this Annual Report on Form 10-K of American International Group, Inc. (the “Company”) for the year ended
December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter Zaffino,
Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Date: February 14, 2024
/S/ PETER ZAFFINO
Peter Zaffino
Chairman and Chief Executive Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or
as a separate disclosure document.
CERTIFICATION
In connection with this Annual Report on Form 10-K of American International Group, Inc. (the “Company”) for the year ended
December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sabra R. Purtill,
Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Date: February 14, 2024
/S/ SABRA R. PURTILL
Sabra R. Purtill
Executive Vice President and
Chief Financial Officer
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or
as a separate disclosure document.
Page is intentionally left blank
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report and other publicly available documents
may include, and members of AIG management may from time
to time make and discuss, statements which, to the extent they
are not statements of historical or present fact, may constitute
“forward-looking statements” within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. These forward
looking statements are intended to provide management’s
current expectations or plans for AIG’s future operating and
financial performance, based on assumptions currently
believed to be valid and accurate. Forward-looking statements
are often preceded by, followed by or include words such as
“will,” “believe,” “anticipate,” “expect,” “expectations,” “intend,”
“plan,” “strategy,” “prospects,” “project,” “anticipate,” “should,”
“guidance,” “outlook,” “confident,” “focused on achieving,”
“view,” “target,” “goal,” “estimate” and other words of similar
meaning in connection with a discussion of future operating or
financial performance. These statements may include, among
other things, projections, goals and assumptions that relate
to future actions, prospective services or products, future
performance or results of current and anticipated services or
products, sales efforts, expense reduction efforts, the outcome
of contingencies such as legal proceedings, anticipated
organizational, business or regulatory changes, such as the
separation of the Life and Retirement business from AIG, the
effect of catastrophic events, both natural and man-made,
and macroeconomic and/or geopolitical events, anticipated
dispositions, monetization and/or acquisitions of businesses
or assets, the successful integration of acquired businesses,
management succession and retention plans, exposure to
risk, trends in operations and financial results, and other
statements that are not historical facts.
All forward-looking statements involve risks, uncertainties and
other factors that may cause AIG’s actual results and financial
condition to differ, possibly materially, from the results and
financial condition expressed or implied in the forward-looking
statements. Factors that could cause AIG’s actual results to
differ, possibly materially, from those in specific projections,
targets, goals, plans, assumptions and other forward-looking
statements include, without limitation:
•
•
•
•
•
•
•
•
•
•
•
the impact of adverse developments affecting economic
conditions in the markets in which AIG and its businesses
operate in the U.S. and globally, including adverse
developments related to financial market conditions,
macroeconomic trends, fluctuations in interest rates and
foreign currency exchange rates, inflationary pressures,
including social inflation, pressures on the commercial
real estate market, an economic slowdown or recession,
any potential U.S. federal government shutdown and
geopolitical events or conflicts, including the conflict
between Russia and Ukraine and the conflict in Israel and
the surrounding areas;
occurrence of catastrophic events, both natural and man-
made, including the effects of climate change, geopolitical
events and conflicts and civil unrest;
disruptions in the availability or accessibility of AIG’s or a
third party’s information technology systems, including
hardware and software, infrastructure or networks, and the
inability to safeguard the confidentiality and integrity of
customer, employee or company data due to cyberattacks,
data security breaches, or infrastructure vulnerabilities;
AIG’s ability to successfully dispose of, monetize and/
or acquire businesses or assets or successfully integrate
acquired businesses, and the anticipated benefits thereof;
AIG’s ability to realize expected strategic, financial,
operational or other benefits from the separation of
Corebridge Financial, Inc. (Corebridge) as well as AIG’s
equity market exposure to Corebridge;
AIG’s ability to effectively implement restructuring
initiatives and potential cost-savings opportunities;
AIG’s ability to effectively implement technological
advancements, including the use of artificial intelligence
(AI), and respond to competitors’ AI and other technology
initiatives;
the effectiveness of strategies to retain and recruit key
personnel and to implement effective succession plans;
concentrations in AIG’s investment portfolios;
AIG’s reliance on third-party investment managers;
changes in the valuation of AIG’s investments;
•
AIG’s reliance on third parties to provide certain business
and administrative services;
•
availability of adequate reinsurance or access to
reinsurance on acceptable terms;
•
concentrations of AIG’s insurance, reinsurance and other
risk exposures;
•
nonperformance or defaults by counterparties, including
Fortitude Reinsurance Company Ltd. (Fortitude Re);
•
AIG’s ability to adequately assess risk and estimate related
losses as well as the effectiveness of AIG’s enterprise risk
management policies and procedures, including with
respect to business continuity and disaster recovery plans;
•
difficulty in marketing and distributing products through
current and future distribution channels;
•
actions by rating agencies with respect to AIG’s credit and
financial strength ratings as well as those of its businesses
and subsidiaries;
•
•
changes to sources of or access to liquidity;
changes in judgments concerning the recognition of
deferred tax assets and the impairment of goodwill;
•
changes in judgments or assumptions concerning
insurance underwriting and insurance liabilities;
•
changes in accounting principles and financial reporting
requirements;
•
the effects of sanctions, including those related to the
conflict between Russia and Ukraine, and the failure to
comply with those sanctions;
•
the effects of changes in laws and regulations, including
those relating to the regulation of insurance, in the U.S. and
other countries in which AIG and its businesses operate;
•
changes to tax laws in the U.S. and other countries in which
AIG and its businesses operate;
•
the outcome of significant legal, regulatory or
governmental proceedings;
•
AIG’s ability to effectively execute on sustainability targets
and standards;
286 AIG 2023 ANNUAL REPORT
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
•
•
•
AIG’s ability to address evolving stakeholder expectations
and regulatory requirements with respect to
environmental, social and governance matters;
the impact of epidemics, pandemics and other public
health crises and responses thereto; and
such other factors discussed in Part II, Item 7.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations and Part I, Item 1A.
Risk Factors in AIG’s Annual Report on Form 10-K for the
year ended December 31, 2023.
Forward-looking statements speak only as of the date of
this report, or in the case of any document incorporated by
reference, the date of that document. We are not under any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.
Additional information as to factors that may cause actual
results to differ materially from those expressed or implied in
any forward-looking statements is disclosed from time to time
in our filings with the Securities and Exchange Commission.
•
the impact of adverse developments affecting economic
conditions in the markets in which AIG and its businesses
operate in the U.S. and globally, including adverse
developments related to financial market conditions,
macroeconomic trends, fluctuations in interest rates and
foreign currency exchange rates, inflationary pressures,
including social inflation, pressures on the commercial
real estate market, an economic slowdown or recession,
any potential U.S. federal government shutdown and
geopolitical events or conflicts, including the conflict
between Russia and Ukraine and the conflict in Israel and
the surrounding areas;
•
occurrence of catastrophic events, both natural and man-
made, including the effects of climate change, geopolitical
events and conflicts and civil unrest;
•
disruptions in the availability or accessibility of AIG’s or a
third party’s information technology systems, including
hardware and software, infrastructure or networks, and the
inability to safeguard the confidentiality and integrity of
customer, employee or company data due to cyberattacks,
data security breaches, or infrastructure vulnerabilities;
•
AIG’s ability to successfully dispose of, monetize and/
or acquire businesses or assets or successfully integrate
acquired businesses, and the anticipated benefits thereof;
•
AIG’s ability to realize expected strategic, financial,
operational or other benefits from the separation of
Corebridge Financial, Inc. (Corebridge) as well as AIG’s
equity market exposure to Corebridge;
•
AIG’s ability to effectively implement restructuring
initiatives and potential cost-savings opportunities;
•
AIG’s ability to effectively implement technological
advancements, including the use of artificial intelligence
(AI), and respond to competitors’ AI and other technology
initiatives;
•
the effectiveness of strategies to retain and recruit key
personnel and to implement effective succession plans;
•
•
•
concentrations in AIG’s investment portfolios;
AIG’s reliance on third-party investment managers;
changes in the valuation of AIG’s investments;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
AIG’s reliance on third parties to provide certain business
and administrative services;
availability of adequate reinsurance or access to
reinsurance on acceptable terms;
concentrations of AIG’s insurance, reinsurance and other
risk exposures;
nonperformance or defaults by counterparties, including
Fortitude Reinsurance Company Ltd. (Fortitude Re);
AIG’s ability to adequately assess risk and estimate related
losses as well as the effectiveness of AIG’s enterprise risk
management policies and procedures, including with
respect to business continuity and disaster recovery plans;
difficulty in marketing and distributing products through
current and future distribution channels;
actions by rating agencies with respect to AIG’s credit and
financial strength ratings as well as those of its businesses
and subsidiaries;
changes to sources of or access to liquidity;
changes in judgments concerning the recognition of
deferred tax assets and the impairment of goodwill;
changes in judgments or assumptions concerning
insurance underwriting and insurance liabilities;
changes in accounting principles and financial reporting
requirements;
the effects of sanctions, including those related to the
conflict between Russia and Ukraine, and the failure to
comply with those sanctions;
the effects of changes in laws and regulations, including
those relating to the regulation of insurance, in the U.S. and
other countries in which AIG and its businesses operate;
changes to tax laws in the U.S. and other countries in which
AIG and its businesses operate;
the outcome of significant legal, regulatory or
governmental proceedings;
AIG’s ability to effectively execute on sustainability targets
and standards;
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AIG 2023 ANNUAL REPORT 287
General Insurance
Loss ratio
Catastrophe losses and reinstatement premiums
Prior year development, net of reinsurance and prior year premiums
Accident year loss ratio, as adjusted
Acquisition ratio
General operating expense ratio
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
FY 2016
84.8
(4.4)
(18.5)
61.9
19.8
14.3
34.1
118.9
96.0
COMMENT ON REGULATION G AND NON-GAAP FINANCIAL MEASURES
NON-GAAP RECONCILIATIONS
Throughout this Annual Report, AIG presents its financial
condition and results of operations in the way it believes will
be most meaningful and representative of its business results.
Some of the measurements AIG uses are “non-GAAP financial
measures” under Securities and Exchange Commission rules
and regulations. GAAP is the acronym for generally accepted
accounting principles in the United States. The non-GAAP
financial measures AIG presents may not be comparable to
similarly-named measures reported by other companies. The
reconciliations of such measures to the most comparable
GAAP measures in accordance with Regulation G are included
within this Annual Report, AIG’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2023 or in the Fourth
Quarter 2023 Financial Supplement available in the Investors
section of AIG’s website, www.aig.com.
Accident Year Combined Ratio, as adjusted excludes
catastrophe losses and related reinstatement premiums,
prior year development, net of premium adjustments, and
the impact of reserve discounting. Natural catastrophe losses
are generally weather or seismic events, in each case, having
a net impact on AIG in excess of $10 million and man-made
catastrophe losses, such as terrorism and civil disorders that
exceed the $10 million threshold. We believe that as adjusted
ratios are meaningful measures of our underwriting results on
an ongoing basis as they exclude catastrophes and the impact
of reserve discounting which are outside of management’s
control. We also exclude prior year development to provide
transparency related to current accident year results.
Premiums and deposits includes direct and assumed
amounts received and earned on traditional life insurance
policies, group benefit policies and life-contingent payout
annuities, as well as deposits received on universal life,
investment-type annuity contracts, Federal Home Loan
Bank funding agreements and mutual funds. We believe the
measure of premiums and deposits is useful in understanding
customer demand for our products, evolving product trends
and our sales performance period over period.
288 AIG 2023 ANNUAL REPORT
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NON-GAAP RECONCILIATIONS
General Insurance
Loss ratio
Catastrophe losses and reinstatement premiums
Prior year development, net of reinsurance and prior year premiums
Accident year loss ratio, as adjusted
Acquisition ratio
General operating expense ratio
Expense ratio
Combined ratio
Accident year combined ratio, as adjusted
Change in Net Premiums Written
Increase as reported in U.S. dollars
Foreign exchange effect
Lag elimination impact
Increase on comparable basis
Life and Retirement
($ in millions)
Premiums
Deposits
Other
Premiums and deposits
FY 2016
84.8
(4.4)
(18.5)
61.9
19.8
14.3
34.1
118.9
96.0
Lexington
Global Specialty
FY 2023
17.1%
FY 2023
8.9%
(0.1)
0.3
-
0.3
17.0%
9.5%
FY 2023
$ 8,101
FY 2022
$ 5,506
31,312
25,805
922
747
$ 40,335
$ 32,058
Total Debt and Preferred Stock Leverage
Hybrid - debt securities / Total capital
FY 2023
2.8%
FY 2018
1.9%
Financial debt and debt held for sale / Total capital
25.0
27.4
Total debt / Total capital
Preferred stock / Total capital
27.8
29.3
0.7
-
Total debt and preferred stock / Total capital (incl. AOCI)
28.5
29.3
AOCI Impact
(4.2)
(0.5)
Total debt and preferred stock / Total capital (ex. AOCI)
24.3%
28.8%
AIG 2023 ANNUAL REPORT 289
290 AIG 2023 ANNUAL REPORT
SHAREHOLDER INFORMATION
Requests for copies of the 2023
Annual Report should be directed to
AIG Investor Relations. Shareholders
may eliminate duplicate mailings of
AIG’s proxy materials by contacting
AIG’s transfer agent. Contact details
can be found at www.aig.com/
investor-relations.
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American International Group, Inc.
www.aig.com