Financial Data and Key Metrics Changes - Adjusted after-tax income was $1.2 billion or $1.63 per diluted common share, representing a 9% increase year-over-year [6][37] - Net investment income on a consolidated basis was $3.1 billion, with a focus on improving credit quality and reducing volatility [6][38] - Book value per common share was $58.87 at quarter end, up 7% from year-end [43] Business Line Data and Key Metrics Changes - Net premiums written in General Insurance grew 10% on a constant dollar basis, driven by the Commercial business [6][11] - Life and Retirement reported premiums and deposits of $10.4 billion in the first quarter, a 44% increase year-over-year [7][25] - The accident year combined ratio, excluding catastrophes, was 88.7%, an 80 basis point improvement from the prior year [22] Market Data and Key Metrics Changes - North America Commercial saw a strong growth of 15% in net premiums written, driven by Validus Re [12] - International Commercial net premiums written grew 6%, primarily due to Property, which was up over 40% [17] - Global Personal reported a first quarter accident year combined ratio, excluding catastrophes, of 98.6%, a 120 basis point increase from the prior year [23] Company Strategy and Development Direction - The company is focused on long-term value creation and has made significant progress in strategic and operational priorities [5] - AIG plans to reduce its ownership interest in Corebridge and explore options aligned with shareholder interests [9] - The company is transitioning to a simpler, leaner business model, aiming for a 10%-plus return on common equity (ROCE) [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's future earnings power and commitment to disciplined capital management [8][34] - The company anticipates strong top-line growth in General Insurance for the remainder of 2023 [24] - Management highlighted the importance of maintaining appropriate capital levels in subsidiaries to support profitable growth [68] Other Important Information - AIG returned approximately $840 million to shareholders in the first quarter through stock repurchases and dividends [8] - The company approved a 12.5% increase in its common stock quarterly dividend, starting in the second quarter [8][34] - Corebridge has made substantial progress since its IPO, paying $450 million in dividends to public shareholders [9] Q&A Session Summary Question: Growth and Net-to-Gross Ratio - Management explained that the net-to-gross ratio remained unchanged due to portfolio composition and strategic reinsurance partnerships [50][52] Question: Implications of North American Personal Lines Changes - Management clarified that changes in North American Personal Lines do not significantly impact the International Personal segment due to their distinct business models [54][56] Question: Expense Ratio Expectations with MGA - Management indicated that as the MGA gains speed, the expense ratio is expected to fall over time, leading to improved profitability [57][60] Question: Catastrophe Load Stabilization - Management confirmed that the catastrophe load has stabilized, and they are focused on maintaining a balanced portfolio with reduced risk [61][64] Question: Excess Capital and Liquidity Management - Management emphasized a disciplined approach to capital management, maintaining strong liquidity while evaluating opportunities for share repurchases [66][70]

```markdown [Filing Information](index=1&type=section&id=Filing%20Information) [FORM 10-Q Details](index=1&type=section&id=FORM%2010-Q) This Quarterly Report on Form 10-Q for AIG covers the period ended March 31, 2023, with **723,752,512 shares** outstanding - The filing is a Quarterly Report on Form 10-Q for the period ended March 31, 2023[2](index=2&type=chunk) Registrant Name | Registrant Name | American International Group, Inc. | |---|---| | State of Incorporation | Delaware | | IRS Employer Identification No. | 13-2592361 | | Principal Executive Offices | 1271 Avenue of the Americas, New York, New York 10020 | | Telephone Number | (212) 770-7000 | | Common Stock Trading Symbol | AIG | | Common Stock Exchange | New York Stock Exchange | | Shares Outstanding (as of April 28, 2023) | 723,752,512 | | Filer Status | Large accelerated filer | [Part I – Financial Information](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) AIG's unaudited condensed consolidated financial statements for Q1 2023 show total assets of **$536,627 million** and a **net loss of $87 million** Condensed Consolidated Balance Sheets (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Total Assets | $536,627 | $522,228 | | Total Liabilities | $490,321 | $478,774 | | Total Equity | $46,306 | $43,454 | Condensed Consolidated Statements of Income (Loss) (in millions) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |---|---|---| | Total Revenues | $10,984 | $14,944 | | Total Benefits, Losses and Expenses | $11,215 | $9,230 | | Income (loss) from continuing operations before income tax expense (benefit) | $(231) | $5,714 | | Income tax expense (benefit) | $(144) | $1,154 | | Net income (loss) | $(87) | $4,560 | | Net income (loss) attributable to AIG common shareholders | $23 | $4,166 | | Basic EPS | $0.03 | $5.10 | | Diluted EPS | $0.03 | $5.04 | Condensed Consolidated Statements of Cash Flows (in millions) | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |---|---|---| | Net cash provided by operating activities | $497 | $39 | | Net cash provided by (used in) investing activities | $(1,474) | $853 | | Net cash provided by (used in) financing activities | $817 | $(577) | | Net increase (decrease) in cash and restricted cash | $(158) | $302 | | Cash and restricted cash at end of period | $2,058 | $2,729 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Supplementary Disclosure of Condensed Consolidated Cash Flow Information](index=10&type=section&id=Supplementary%20Disclosure%20of%20Condensed%20Consolidated%20Cash%20Flow%20Information) [Note 1. Basis of Presentation](index=11&type=section&id=Note%201.%20Basis%20of%20Presentation) This note outlines the basis for AIG's unaudited financial statements, highlighting the adoption of LDTI and the Corebridge IPO - AIG adopted targeted improvements to the accounting for long-duration contracts (LDTI) on January 1, 2023, with a transition date of January 1, 2021, updating prior period financial statements[25](index=25&type=chunk) - AIG closed the IPO of Corebridge Financial, Inc. on September 19, 2022, selling **12.4%** of common stock for approximately **$1.7 billion** gross proceeds. AIG's ownership decreased to **77.3%** by March 31, 2023, but AIG continues to consolidate Corebridge's financial results[26](index=26&type=chunk) - AIG Financial Products Corp. (AIGFP) filed for Chapter 11 reorganization on December 14, 2022, leading to its deconsolidation from AIG's results and a **pre-tax loss of $114 million** for the twelve months ended December 31, 2022. This reorganization is not expected to have a material impact on AIG's consolidated balance sheets[28](index=28&type=chunk) - Critical accounting estimates include loss reserves, valuation of future policy benefit liabilities, market risk benefits (MRBs), embedded derivative liabilities, reinsurance assets, goodwill impairment, allowance for credit losses on investments, fair value measurements, and income taxes[29](index=29&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=13&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note details AIG's accounting policies, emphasizing the significant impact of LDTI adoption on MRBs, discount rates, and DAC amortization - The adoption of LDTI on January 1, 2023, with a transition date of January 1, 2021, led to a **net decrease of $2.2 billion** in beginning AOCI and a **net increase of $933 million** in beginning Retained Earnings[35](index=35&type=chunk) - LDTI requires MRBs to be measured at fair value, with changes in fair value (excluding own credit risk) recognized in the income statement. The discount rate for future policy benefits must be updated quarterly using upper-medium grade fixed income instrument yields, with changes recognized in OCI[35](index=35&type=chunk) - LDTI simplifies DAC amortization to a constant level basis over the expected contract term, with adjustments for unexpected terminations, and eliminates the impairment test[35](index=35&type=chunk) Impact of LDTI Adoption on Condensed Consolidated Balance Sheets (January 1, 2021, in millions) | Item | Pre-Adoption, Dec 31, 2020 | Cumulative Effect Adjustment | Updated Balances Post Adoption | |---|---|---|---| | Reinsurance assets - Fortitude Re | $34,578 | $7,666 | $42,244 | | Deferred policy acquisition costs | $9,805 | $3,150 | $12,955 | | Market risk benefit assets | — | $338 | $338 | | Future policy benefits | $56,878 | $10,486 | $67,364 | | Policyholder contract deposits | $154,470 | $(6,247) | $148,223 | | Market risk benefit liabilities | — | $8,739 | $8,739 | | Retained earnings | $15,504 | $933 | $16,437 | | Accumulated other comprehensive income (loss) | $13,511 | $(2,197) | $11,314 | Impact of LDTI Adoption on Condensed Consolidated Statements of Income (Loss) (Three Months Ended March 31, 2022, in millions) | Item | As Previously Reported | Effect of Change | Updated Balances Post Adoption | |---|---|---|---| | Premiums | $7,110 | $10 | $7,120 | | Policy fees | $764 | $(34) | $730 | | Total net realized gains (losses) | $4,419 | $(840) | $3,579 | | Policyholder benefits and losses incurred | $5,255 | $(195) | $5,060 | | Change in the fair value of market risk benefits, net | — | $(233) | $(233) | | Amortization of deferred acquisition costs | $1,437 | $(300) | $1,137 | | Net income (loss) attributable to AIG common shareholders | $4,253 | $(87) | $4,166 | [Note 3. Segment Information](index=18&type=section&id=Note%203.%20Segment%20Information) AIG reports operations across General Insurance, Life and Retirement, and Other Operations, with segment performance evaluated by adjusted revenues and pre-tax income - AIG's business is structured into three main segments: General Insurance (North America, International), Life and Retirement (Individual Retirement, Group Retirement, Life Insurance, Institutional Markets), and Other Operations[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Segment performance is assessed using adjusted revenues and adjusted pre-tax income (loss), which exclude items like legacy matters, certain fair value adjustments, and non-industry-common measures[52](index=52&type=chunk) Adjusted Pre-tax Income (Loss) by Segment (Three Months Ended March 31, in millions) | Segment | 2023 | 2022 | |---|---|---| | General Insurance | | | | North America | $299 | $256 | | International | $203 | $190 | | Net investment income | $746 | $765 | | **Total General Insurance** | **$1,248** | **$1,211** | | Life and Retirement | | | | Individual Retirement | $533 | $466 | | Group Retirement | $187 | $241 | | Life Insurance | $82 | $113 | | Institutional Markets | $84 | $114 | | **Total Life and Retirement** | **$886** | **$934** | | Other Operations | $(491) | $(421) | | **Total Adjusted Pre-tax Income (Loss)** | **$1,643** | **$1,724** | [Note 4. Fair Value Measurements](index=20&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note details AIG's fair value measurement practices, classifying assets and liabilities into a three-level hierarchy, with **$331,954 million** in assets measured at fair value - Fair value measurements are classified into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[56](index=56&type=chunk) - Valuation methodologies for Market Risk Benefits (MRBs) and embedded derivatives were impacted by the adoption of LDTI, requiring fair value measurement based on policyholder behavior and capital market assumptions, including a non-performance risk adjustment (NPA)[58](index=58&type=chunk)[60](index=60&type=chunk) Assets and Liabilities Measured at Fair Value on a Recurring Basis (March 31, 2023, in millions) | Item | Level 1 | Level 2 | Level 3 | Total | |---|---|---|---|---| | **Assets:** | | | | | | Bonds available for sale | $413 | $203,262 | $25,722 | $229,397 | | Other bond securities | — | $3,428 | $1,334 | $4,762 | | Equity securities | $501 | $16 | $74 | $591 | | Derivative assets | $26 | $3,845 | $920 | $616 | | Short-term investments | $2,484 | $4,382 | — | $6,866 | | Market risk benefit assets | — | — | $830 | $830 | | Separate account assets | $84,202 | $3,155 | — | $87,357 | | **Total Assets** | **$87,626** | **$218,257** | **$30,246** | **$331,954** | | **Liabilities:** | | | | | | Policyholder contract deposits | — | $45 | $6,064 | $6,109 | | Market risk benefit liabilities | — | — | $5,144 | $5,144 | | Derivative liabilities | $36 | $3,864 | $48 | $255 | | Fortitude Re funds withheld payable | — | — | $(1,863) | $(1,863) | | **Total Liabilities** | **$36** | **$3,981** | **$9,505** | **$9,829** | Gains (Losses) from Fair Value Option Election (Three Months Ended March 31, in millions) | Item | 2023 Gain (Loss) | 2022 Gain (Loss) | |---|---|---| | Other bond securities | $136 | $(319) | | Alternative investments | $77 | $398 | | Long-term debt | $(1) | $103 | | **Total gain (loss)** | **$212** | **$182** | [Note 5. Investments](index=36&type=section&id=Note%205.%20Investments) This note details AIG's investment portfolio, with **$229,397 million** in AFS bonds and a significant decrease in net realized gains due to embedded derivatives Bonds Available for Sale (March 31, 2023, in millions) | Item | Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |---|---|---|---|---|---| | U.S. government and government sponsored entities | $5,995 | — | $49 | $(289) | $5,755 | | Obligations of states, municipalities and political subdivisions | $12,344 | — | $161 | $(857) | $11,648 | | Non-U.S. governments | $14,928 | $(10) | $109 | $(1,595) | $13,432 | | Corporate debt | $157,227 | $(81) | $1,542 | $(20,117) | $138,571 | | Mortgage-backed, asset-backed and collateralized | $63,685 | $(45) | $865 | $(4,514) | $59,991 | | **Total bonds available for sale** | **$254,179** | **$(136)** | **$2,726** | **$(27,372)** | **$229,397** | - At March 31, 2023, AIG held **34,040** individual fixed maturity securities in an unrealized loss position, totaling **$27,225 million** in gross unrealized losses, for which no allowance for credit loss was recorded due to non-credit factors and no intent to sell[113](index=113&type=chunk) Net Investment Income (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Net investment income - excluding Fortitude Re funds withheld assets | $3,087 | $2,946 | | Net investment income - Fortitude Re funds withheld assets | $446 | $291 | | **Total net investment income** | **$3,533** | **$3,237** | Net Realized Gains (Losses) (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Net realized gains (losses) - excluding Fortitude Re funds withheld assets and embedded derivative | $(713) | $401 | | Net realized losses on Fortitude Re funds withheld assets | $(31) | $(140) | | Net realized gains (losses) on Fortitude Re funds withheld embedded derivative | $(1,165) | $3,318 | | **Total net realized gains (losses)** | **$(1,909)** | **$3,579** | - The change in net unrealized appreciation (depreciation) of investments for fixed maturity securities was a gain of **$5,005 million** for the three months ended March 31, 2023, compared to a loss of **$(20,160) million** in the prior year, primarily due to lower interest rates[131](index=131&type=chunk) Allowance for Credit Losses on Available for Sale Fixed Maturity Securities (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Balance, beginning of year | $186 | $98 | | Additions | $24 | $177 | | Reductions | $(69) | $(83) | | Other | $(5) | $1 | | **Balance, end of period** | **$136** | **$186** | [Note 6. Lending Activities](index=44&type=section&id=Note%206.%20Lending%20Activities) This note details AIG's lending activities, with **$50,830 million** in net mortgage and other loans receivable and an increased allowance for credit losses Mortgage and Other Loans Receivable, Net (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Commercial mortgages | $37,779 | $37,128 | | Residential mortgages | $6,899 | $6,130 | | Life insurance policy loans | $1,747 | $1,758 | | Commercial loans, other loans and notes receivable | $5,191 | $5,305 | | Total mortgage and other loans receivable | $51,616 | $50,321 | | Allowance for credit losses | $(786) | $(716) | | **Mortgage and other loans receivable, net** | **$50,830** | **$49,605** | - Commercial mortgages have the largest geographic concentrations in New York (**19%**) and California (**11%**) as of March 31, 2023[148](index=148&type=chunk) Rollforward of Allowance for Credit Losses on Mortgage and Other Loans Receivable (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Allowance, beginning of year | $716 | $629 | | Addition to (release of) allowance for loan losses | $70 | $(8) | | **Allowance, end of period** | **$786** | **$617** | - No loans were modified to borrowers experiencing financial difficulty in Q1 2023. In Q1 2022, loans with a carrying value of **$115 million** were modified as troubled debt restructurings[161](index=161&type=chunk) [Note 7. Reinsurance](index=47&type=section&id=Note%207.%20Reinsurance) This note details AIG's reinsurance activities, including the impact of LDTI on recoverables and **$75.2 billion** in total reinsurance recoverables - Subsequent to LDTI adoption, reinsurance recoverables are recognized consistent with underlying liabilities, using updated net premium ratios and current upper-medium grade discount rates, with changes reported in OCI[165](index=165&type=chunk) - Fortitude Re reinsures the majority of AIG's run-off operations. As of March 31, 2023, approximately **$28.0 billion** of Life and Retirement Run-Off Lines and **$3.2 billion** of General Insurance Run-Off Lines reserves were ceded to Fortitude Re[169](index=169&type=chunk) Impact of Fortitude Re Funds Withheld Arrangements (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Net investment income - Fortitude Re funds withheld assets | $446 | $291 | | Net realized losses - Fortitude Re funds withheld assets | $(31) | $(140) | | Net realized gains (losses) - Fortitude Re funds withheld embedded derivative | $(1,165) | $3,318 | | **Net realized gains (losses) on Fortitude Re funds withheld assets** | **$(1,196)** | **$3,178** | | Income (loss) from continuing operations before income tax expense (benefit) | $(750) | $3,469 | | Net income (loss) | $(592) | $2,741 | | Change in unrealized appreciation (depreciation) of all other investments | $556 | $(2,638) | | **Comprehensive income (loss)** | **$(36)** | **$103** | - As of March 31, 2023, **total reinsurance recoverables were $75.2 billion**, with approximately **93%** being investment grade. Non-investment grade exposure (**7%**) primarily related to captive insurers, typically collateralized[175](index=175&type=chunk)[176](index=176&type=chunk) Rollforward of Reinsurance Recoverable Allowance (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Balance, beginning of year | $344 | $382 | | Addition to (release of) allowance for expected credit losses and disputes, net | $(13) | $9 | | Write-offs charged against the allowance | $(1) | $(2) | | Other changes | $(3) | $2 | | **Balance, end of period** | **$327** | **$391** | [Note 8. Deferred Policy Acquisition Costs](index=51&type=section&id=Note%208.%20Deferred%20Policy%20Acquisition%20Costs) This note details AIG's DAC and DSI accounting, highlighting LDTI's impact on amortization, with total DAC at **$13,304 million** - Post-LDTI adoption, DAC for all long-duration contracts (except certain investment contracts) is amortized on a constant level basis over the expected term, with prospective adjustments for changes in future assumptions. DAC is no longer subject to recoverability testing[184](index=184&type=chunk) Rollforward of Deferred Policy Acquisition Costs (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Balance, beginning of year | $12,857 | $13,001 | | Capitalization | $1,689 | $1,402 | | Amortization expense | $(1,293) | $(1,137) | | Other, including foreign exchange | $51 | $(47) | | **Balance, end of period** | **$13,304** | **$13,219** | - Deferred Sales Inducements (DSI) are deferred and amortized on a constant level basis over the contract life, consistent with DAC, following LDTI adoption[191](index=191&type=chunk) Rollforward of Deferred Sales Inducements (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Balance, beginning of year | $558 | $619 | | Capitalization | $2 | $2 | | Amortization expense | $(17) | $(17) | | **Balance, end of period** | **$543** | **$604** | [Note 9. Variable Interest Entities](index=54&type=section&id=Note%209.%20Variable%20Interest%20Entities) This note details AIG's involvement with VIEs, consolidating those where it is the primary beneficiary, with **$9,037 million** in consolidated VIE assets - AIG consolidates VIEs where it is the primary beneficiary, defined by having both the power to direct significant activities and the obligation to absorb losses or right to receive benefits[196](index=196&type=chunk) Consolidated VIEs: Total Assets and Liabilities (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Total Assets | $9,037 | $11,241 | | Total Liabilities | $3,883 | $5,826 | - During Q1 2023, the sale of AIG Credit Management, LLC led to the deconsolidation of certain investment entities, decreasing assets by **$2.1 billion** and liabilities by **$1.9 billion**, resulting in a **$5 million** pre-tax loss[200](index=200&type=chunk) Unconsolidated VIEs: Total Assets and Maximum Exposure to Loss (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Total VIE Assets | $502,728 | $505,521 | | Maximum Exposure to Loss (Total) | $14,015 | $14,077 | | - On-Balance Sheet | $9,372 | $9,392 | | - Off-Balance Sheet | $4,643 | $4,685 | [Note 10. Derivatives and Hedge Accounting](index=56&type=section&id=Note%2010.%20Derivatives%20and%20Hedge%20Accounting) This note details AIG's derivative use for risk management, with **$117,066 million** in gross notional amount and a **$(1,610) million** loss from non-hedging derivatives - AIG uses various derivatives (interest rate, foreign exchange, equity, credit, commodity) for financial risk management and investment operations[205](index=205&type=chunk) Notional Amounts and Fair Value of Derivatives (March 31, 2023, in millions) | Derivative Type | Gross Notional Amount | Assets Fair Value | Liabilities Fair Value | |---|---|---|---| | **Derivatives designated as hedging instruments:** | | | | | Interest rate contracts | $671 | $388 | $44 | | Foreign exchange contracts | $4,500 | $573 | $230 | | **Derivatives not designated as hedging instruments:** | | | | | Interest rate contracts | $25,756 | $2,014 | $3,001 | | Foreign exchange contracts | $10,505 | $1,079 | $573 | | Equity contracts | $27,092 | $683 | $60 | | Commodity contracts | $80 | $7 | — | | Credit contracts | $1,810 | $33 | $40 | | Other contracts | $46,652 | $14 | — | | **Total derivatives, gross** | **$117,066** | **$4,791** | **$3,948** | | Counterparty netting | | $(2,382) | $(2,382) | | Cash collateral | | $(1,793) | $(1,311) | | **Total derivatives on Condensed Consolidated Balance Sheets** | | **$616** | **$255** | - Collateral posted by AIG for derivative transactions was **$2.5 billion** at March 31, 2023, and collateral received was **$2.2 billion**[209](index=209&type=chunk) Gains (Losses) from Derivatives Not Designated as Hedging Instruments (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Interest rate contracts | $95 | $(613) | | Foreign exchange contracts | $(101) | $236 | | Equity contracts | $(78) | $(204) | | Commodity contracts | $7 | $(4) | | Credit contracts | $(1) | $(1) | | Other contracts | $16 | $18 | | Embedded derivatives | $(1,548) | $3,979 | | **Total** | **$(1,610)** | **$3,411** | - A downgrade of AIG's long-term senior debt ratings to BBB or BBB– by S&P and/or Baa2 or Baa3 by Moody's could trigger additional collateral calls and early termination rights, totaling up to approximately **$6 million**[219](index=219&type=chunk) [Note 11. Insurance Liabilities](index=59&type=section&id=Note%2011.%20Insurance%20Liabilities) This note details AIG's insurance liabilities, including **$75,793 million** in loss reserves and **$157,896 million** in policyholder contract deposits, impacted by LDTI adoption Rollforward of Loss Reserves (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Liability for unpaid loss and loss adjustment expenses, beginning of year | $75,167 | $79,026 | | Reinsurance recoverable, beginning of year | $(32,102) | $(35,213) | | Net Liability for unpaid loss and loss adjustment expenses, beginning of year | $43,065 | $43,813 | | Total losses and loss adjustment expenses incurred | $3,791 | $3,793 | | Total losses and loss adjustment expenses paid | $(3,838) | $(3,765) | | Total other changes | $409 | $21 | | **Total Liability for unpaid loss and loss adjustment expenses, end of year** | **$75,793** | **$78,183** | - AIG recognized **$27 million** in favorable prior year loss reserve development (excluding discount and amortization of deferred gain) for the three months ended March 31, 2023, primarily from U.S. Workers Compensation and Other product lines[226](index=226&type=chunk) - Post-LDTI adoption, future policy benefits for traditional and limited pay long-duration products use a net premiums ratios (NPR) methodology, with periodic retrospective revisions. The discount rate is updated quarterly, with changes reflected in Other Comprehensive Income (OCI)[237](index=237&type=chunk) Policyholder Contract Deposits Account Balances (March 31, 2023, in millions) | Segment | Account Balance, End of Period | |---|---| | Individual Retirement | $91,070 | | Group Retirement | $42,903 | | Life Insurance | $10,220 | | Institutional Markets | $12,294 | | Other | $3,516 | | **Total Policyholder Contract Deposits Account Balance** | **$160,003** | - The weighted average crediting rate for policyholder contract deposits was **2.52%** at March 31, 2023[267](index=267&type=chunk) Policyholder Contract Deposits Account Balance by Guaranteed Minimum Crediting Rates (March 31, 2023, in millions) | Range of Guaranteed Minimum Credited Rate | At Guaranteed Minimum | 1-50 Basis Points Above Minimum | More than 50 Points Above Guarantee | Total | |---|---|---|---|---| | **Individual Retirement** | | | | | | <=1% | $7,776 | $2,562 | $23,263 | $33,601 | | >1% - 2% | $3,994 | $24 | $2,163 | $6,181 | | >2% - 3% | $9,155 | $1 | $390 | $9,546 | | >3% - 4% | $7,359 | $40 | $6 | $7,405 | | >4% - 5% | $452 | — | $4 | $456 | | >5% | $32 | — | $4 | $36 | | **Total Individual Retirement** | **$28,768** | **$2,627** | **$25,830** | **$57,225** | | **Group Retirement** | | | | | | <=1% | $2,063 | $2,713 | $6,049 | $10,825 | | >1% - 2% | $5,005 | $908 | $353 | $6,266 | | >2% - 3% | $13,561 | $40 | — | $13,601 | | >3% - 4% | $658 | — | — | $658 | | >4% - 5% | $6,821 | — | — | $6,821 | | >5% | $153 | — | — | $153 | | **Total Group Retirement** | **$28,261** | **$3,661** | **$6,402** | **$38,324** | | **Life Insurance** | | | | | | >1% - 2% | — | $131 | $349 | $480 | | >2% - 3% | $28 | $862 | $1,079 | $1,969 | | >3% - 4% | $1,417 | $118 | $198 | $1,733 | | >4% - 5% | $2,946 | — | — | $2,946 | | >5% | $222 | — | — | $222 | | **Total Life Insurance** | **$4,613** | **$1,111** | **$1,626** | **$7,350** | | **Total All Segments** | **$61,642** | **$7,399** | **$33,858** | **$102,899** | [Note 12. Market Risk Benefits](index=72&type=section&id=Note%2012.%20Market%20Risk%20Benefits) This note defines MRBs as contract features protecting policyholders from capital market risk, with net MRB liabilities of **$4,314 million** as of March 31, 2023 - MRBs are contract features that provide protection to policyholders from other-than-nominal capital market risk and expose AIG to such risk, measured at fair value[279](index=279&type=chunk) - LDTI adoption reclassified certain contract guarantees (e.g., GMWBs, GMDBs) as MRBs, impacting Retained Earnings and AOCI. The fair value changes attributable to AIG's own credit risk are recognized in OCI[282](index=282&type=chunk) Balances of and Changes in Market Risk Benefits (Three Months Ended March 31, 2023, in millions) | Item | Individual Retirement | Group Retirement | Total | |---|---|---|---| | Balance, beginning of year | $3,738 | $296 | $4,034 | | Issuances | $191 | $9 | $200 | | Attributed fees | $235 | $17 | $252 | | Effect of changes in interest rates | $478 | $46 | $524 | | Effect of changes in equity markets | $(391) | $(36) | $(427) | | Effect of changes in our own credit risk | $339 | $32 | $371 | | **Balance, end of period** | **$4,084** | **$319** | **$4,403** | | Less: Reinsured MRB, end of period | $(89) | — | $(89) | | **Net Liability Balance after reinsurance recoverable** | **$3,995** | **$319** | **$4,314** | Net Amount at Risk for Annuity Guarantees (Three Months Ended March 31, 2023, in millions) | Item | Individual Retirement | Group Retirement | Total | |---|---|---|---| | GMDB only | $1,307 | $266 | $1,573 | | GMWB only | $63 | $5 | $68 | | Combined | $1,726 | $31 | $1,757 | [Note 13. Separate Account Assets and Liabilities](index=76&type=section&id=Note%2013.%20Separate%20Account%20Assets%20and%20Liabilities) This note describes AIG's separate account assets and liabilities, totaling **$87,357 million**, where investment income and risk accrue to contract holders - Separate account assets and liabilities are legally segregated, with investment income and risk accruing directly to contract holders for variable contracts[294](index=294&type=chunk) Separate Account Assets and Liabilities (in millions) | Item | March 31, 2023 | December 31, 2022 | |---|---|---| | Total Separate Account Assets | $87,357 | $84,853 | | Total Separate Account Liabilities | $87,357 | $84,853 | Balances and Changes in Separate Account Liabilities (Three Months Ended March 31, in millions) | Item | 2023 | 2022 | |---|---|---| | Balance, beginning of year | $84,853 | $109,111 | | Premiums and deposits | $846 | $1,238 | | Policy charges | $(490) | $(486) | | Surrenders and withdrawals | $(1,923) | $(1,656) | | Benefit payments | $(400) | $(406) | | Investment performance | $4,469 | $(6,870) | | Net transfers from (to) general account | $1 | $(82) | | Other charges | $1 | $1 | | **Balance, end of period** | **$87,357** | **$100,850** | [Note 14. Contingencies, Commitments and Guarantees](index=77&type=section&id=Note%2014.%20Contingencies,%20Commitments%20and%20Guarantees) This note addresses AIG's contingent liabilities, legal proceedings, and **$4.8 billion** in commitments to various investment funds - AIG and its subsidiaries are subject to regulatory and government investigations, litigation, and other disputes, with potential for significant jury awards, settlements, or penalties[302](index=302&type=chunk) - Management accrues for probable losses where amounts can be reasonably estimated and does not believe current matters are likely to have a material adverse effect on financial position, beyond what is already accrued[302](index=302&type=chunk) - Other commitments include **$4.8 billion** to invest in limited partnerships, private equity funds, hedge funds, and real estate as of March 31, 2023[305](index=305&type=chunk) - AIG Parent guarantees payment obligations of AIGFP and AIG Markets, Inc. A **$112 million** guarantee related to AIGFP was recognized upon its deconsolidation[306](index=306&type=chunk) - AIG is subject to financial guarantees and indemnity arrangements from business dispositions, but the likelihood of material payouts is considered remote[307](index=307&type=chunk)[308](index=308&type=chunk) [Note 15. Equity](index=79&type=section&id=Note%2015.%20Equity) This note details AIG's equity structure, including **727.6 million** common shares outstanding, dividends, and **$0.6 billion** in share repurchases in Q1 2023 Common Stock Outstanding Rollforward (Three Months Ended March 31, 2023, in millions) | Item | Common Stock Issued | Treasury Stock | Common Stock Outstanding | |---|---|---|---| | Shares, beginning of year | 1,906.7 | (1,172.6) | 734.1 | | Shares issued | — | 4.6 | 4.6 | | Shares repurchased | — | (11.1) | (11.1) | | **Shares, end of period** | **1,906.7** | **(1,179.1)** | **727.6** | - On May 4, 2023, AIG's Board declared a cash dividend of **$0.36** per common share (a **12.5%** increase) and **$365.625** per Series A Preferred Stock share[316](index=316&type=chunk)[569](index=569&type=chunk) - AIG repurchased approximately **11 million** common shares for **$0.6 billion** in Q1 2023. As of March 31, 2023, approximately **$3.2 billion** remained under the share repurchase authorization[314](index=314&type=chunk)[570](index=570&type=chunk) Rollforward of Accumulated Other Comprehensive Income (Loss) (in millions, net of tax) | Item | Dec 31, 2022 | Change in Q1 2023 | March 31, 2023 | |---|---|---|---| | Unrealized Appreciation (Depreciation) of Fixed Maturity Securities | $(136) | $6 | $(134) | | Unrealized Appreciation (Depreciation) of All Other Investments | $(20,675) | $4,252 | $(17,129) | | Change in Fair Value of Market Risk Benefits Related to Our Own Credit Risk | $(284) | $75 | $(226) | | Change in discount used to measure traditional and limited payment long-duration insurance contracts | $2,459 | $(420) | $2,150 | | Foreign Currency Translation Adjustments | $(3,056) | $(28) | $(3,094) | | Retirement Plan Liabilities Adjustment | $(924) | $28 | $(896) | | **Total** | **$(22,616)** | **$3,913** | **$(19,329)** | [Note 16. Earnings Per Common Share (EPS)](index=82&type=section&id=Note%2016.%20Earnings%20Per%20Common%20Share%20(EPS)) This note presents AIG's basic and diluted EPS, both **$0.03** for Q1 2023, a significant decrease from the prior year due to lower net income Computation of Basic and Diluted EPS (Three Months Ended March 31, in millions, except per common share data) | Item | 2023 | 2022 | |---|---|---| | Net income (loss) attributable to AIG common shareholders | $23 | $4,166 | | Weighted average common shares outstanding - basic | 738,661,428 | 816,314,273 | | Dilutive common shares | 5,437,758 | 9,698,337 | | Weighted average common shares outstanding - diluted | 744,099,186 | 826,012,610 | | **Basic EPS** | **$0.03** | **$5.10** | | **Diluted EPS** | **$0.03** | **$5.04** | - Potential dilutive common shares excluded from diluted EPS were **4.5 million** in Q1 2023 and **39.9 million** in Q1 2022 due to their anti-dilutive effect[324](index=324&type=chunk) [Note 17. Income Taxes](index=83&type=section&id=Note%2017.%20Income%20Taxes) This note outlines AIG's income tax policies, including the **15%** CAMT under the IRA and a **$880 million** valuation allowance as of March 31, 2023 - AIG is subject to the **15%** Corporate Alternative Minimum Tax (CAMT) under the Inflation Reduction Act (IRA) of 2022 for 2023[327](index=327&type=chunk) - Following the Corebridge IPO, Corebridge and its subsidiaries are tax deconsolidated from the AIG consolidated U.S. federal income tax group[328](index=328&type=chunk) - The **effective tax rate on loss from continuing operations was 62.3%** for Q1 2023, compared to **20.2%** on income for Q1 2022, primarily due to tax-exempt income, share-based compensation benefits, and prior year adjustments, partially offset by foreign operations and valuation allowance changes[332](index=332&type=chunk) - A **valuation allowance of $880 million** was deemed necessary as of March 31, 2023, with **$713 million** for AIG's U.S. federal consolidated income tax group and **$167 million** for Corebridge[333](index=333&type=chunk) - AIG released **$131 million** and **$234 million** of valuation allowance associated with unrealized tax capital losses in U.S. Life Insurance and non-life insurance companies' available-for-sale securities portfolios, respectively, in Q1 2023[335](index=335&type=chunk) - Unrecognized tax benefits, excluding interest and penalties, were **$1.3 billion** at March 31, 2023, with **$1.2 billion** favorably affecting the effective tax rate if recognized[337](index=337&type=chunk) [Part II – Other Information](index=86&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=86&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of AIG's financial condition and results for Q1 2023, highlighting the impact of LDTI and market conditions [Cautionary Statement Regarding Forward-Looking Information and Factors That May Affect Future Results](index=86&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Information%20and%20Factors%20That%20May%20Affect%20Future%20Results) [Use of Non-GAAP Measures](index=89&type=section&id=Use%20of%20Non-GAAP%20Measures) [Critical Accounting Estimates](index=91&type=section&id=Critical%20Accounting%20Estimates) [Executive Summary](index=94&type=section&id=Executive%20Summary) [Consolidated Results of Operations](index=99&type=section&id=Consolidated%20Results%20of%20Operations) [Business Segment Operations](index=103&type=section&id=Business%20Segment%20Operations) [Investments](index=123&type=section&id=Investments) [Insurance Reserves](index=132&type=section&id=Insurance%20Reserves) [Liquidity and Capital Resources](index=138&type=section&id=Liquidity%20and%20Capital%20Resources) [Enterprise Risk Management](index=140&type=section&id=Enterprise%20Risk%20Management) [Glossary](index=141&type=section&id=Glossary) [Acronyms](index=143&type=section&id=Acronyms) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=150&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures are incorporated by reference from the Enterprise Risk Management section of the MD&A - Market risk disclosures are incorporated by reference from the Enterprise Risk Management section of the MD&A[582](index=582&type=chunk) [ITEM 4. Controls and Procedures](index=150&type=section&id=ITEM%204.%20Controls%20and%20Procedures) AIG's disclosure controls were effective as of March 31, 2023, with internal control changes due to LDTI adoption - AIG's disclosure controls and procedures were effective as of March 31, 2023[583](index=583&type=chunk) - Changes in internal control over financial reporting occurred in Q1 2023 due to the adoption of the LDTI standard, which required updates to processes, systems, and controls for long-duration contracts[584](index=584&type=chunk) [ITEM 1. Legal Proceedings](index=151&type=section&id=ITEM%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 14 to the Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 14 to the Condensed Consolidated Financial Statements[585](index=585&type=chunk) [ITEM 1A. Risk Factors](index=151&type=section&id=ITEM%201A.%20Risk%20Factors) Readers should refer to the 2022 Annual Report for a comprehensive discussion of risk factors - Readers should refer to Part I, Item 1A. Risk Factors in the 2022 Annual Report for a comprehensive discussion of risk factors[586](index=586&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=151&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details AIG's common stock repurchases, totaling **11.16 million shares** for **$603 million** in Q1 2023 Common Stock Repurchases (Three Months Ended March 31, 2023) | Period | Total Number of Shares Repurchased | Average Price Paid per Share | Dollar Value May Yet Be Purchased Under the Plans (in millions) | |---|---|---|---| | January 1-31 | — | — | $3,794 | | February 1-28 | 2,756,691 | $60.46 | $3,628 | | March 1-31 | 8,405,903 | $51.93 | $3,191 | | **Total** | **11,162,594** | **$54.04** | **$3,191** | - As of March 31, 2023, approximately **$3.2 billion** remained under the share repurchase authorization. An additional **4 million** shares were repurchased for **$200 million** between April 1 and April 28, 2023[588](index=588&type=chunk) [ITEM 6. Exhibits](index=152&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including indentures, settlement agreements, and certifications - Exhibits include a Forty-Second Supplemental Indenture (March 27, 2023), a Settlement Agreement and Release (January 29, 2023), Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certifications, and Interactive Data Files in iXBRL format[590](index=590&type=chunk) [Signatures](index=153&type=section&id=Signatures) The report was duly signed by Sabra Purtill (Interim CFO) and Kathleen Carbone (Chief Accounting Officer) on May 5, 2023 - The report was signed by Sabra Purtill (Interim CFO) and Kathleen Carbone (Chief Accounting Officer) on May 5, 2023[593](index=593&type=chunk) ```

Fourth Quarter and Full Year 2022 Financial Results Presentation February 16, 2023 Copyright ® 2023 by American International Group, Inc. All rights reserved. No part of this document may be reproduced, republished or reposted without the permission of AIG. Certain statements in this presentation and other publicly available documents may include, and members of AIG management mayfrom time to time make and discuss, Cautionary Statement statements which, to the extent they are not statements of historical or ...

Financial Data and Key Metrics Changes - Adjusted after-tax income for Q4 2022 was $1 billion, or $1.36 per diluted share, with full year adjusted after-tax income reaching $3.6 billion, or $4.55 per diluted share, down from $4.4 billion in 2021 [8][48] - The company repurchased approximately $780 million of common stock and redeemed $1.8 billion of debt in Q4 2022, returning $6.1 billion to shareholders for the full year [8][49] - Adjusted return on common equity (ROCE) was 6.5% for the full year 2022, down from 8.6% in 2021, primarily due to lower alternative investment income [48][50] Business Line Data and Key Metrics Changes - General Insurance achieved underwriting income of $2 billion in 2022, with a combined ratio of 88.7%, an improvement of 230 basis points year-over-year [14][20] - Global Commercial reported a combined ratio of 84.5%, improving by 460 basis points year-over-year, while Global Personal's combined ratio deteriorated to 99.2% [20][48] - Net premiums written in General Insurance grew 4% on an FX-adjusted basis, driven by 6% growth in Global Commercial [19] Market Data and Key Metrics Changes - The company experienced significant rate increases in the commercial insurance market, with U.S. Property CAT rates increasing between 30% and 100% [33] - International commercial rate increases were 4%, driven by Asia Pacific at 9% and EMEA at 7% [10] - The reinsurance market faced challenges due to over $130 billion in insured natural catastrophe losses in 2022, impacting supply and pricing dynamics [22][23] Company Strategy and Development Direction - The company aims to achieve a 10% or greater ROCE by focusing on underwriting results, expense savings, and capital management [50] - AIG plans to invest in growth areas such as Lexington and Global Specialty, with expectations of continued rate momentum [31][32] - The company is also focused on completing the operational separation of Corebridge and exploring secondary offerings to enhance capital management [37][49] Management's Comments on Operating Environment and Future Outlook - Management highlighted the challenging conditions in the equity markets and insurance industry throughout 2022, but expressed optimism about the company's positioning for 2023 [6][39] - The company anticipates continued pressure in the reinsurance market but believes it is well-positioned to capitalize on opportunities due to its improved portfolio quality [25][30] - Management emphasized the importance of maintaining expense discipline and achieving operational efficiencies to support future growth [37][51] Other Important Information - The company completed the IPO of Corebridge in September 2022, marking it as the largest financial services IPO since 2020 [12] - AIG's investment management strategy has been restructured through partnerships with Blackstone and BlackRock, which are expected to yield benefits [13] - The company plans to launch a new Managing General Agency in partnership with Stone Point Capital to enhance its Private Client Group offerings [36] Q&A Session Summary Question: What is the starting point for the double-digit ROE target excluding Life and Retirement contributions? - Management indicated that achieving the 10% ROE target involves improving underwriting results, expense savings, and capital management, estimating a 300 to 350 basis point target for these components [54] Question: What are the expectations for loss trend assumptions and pricing in the first quarter? - Management confirmed that the loss cost assumption remains at 6.5%, with expectations that pricing will improve above loss trends in the first quarter [55][56] Question: How is the company managing its facultative reinsurance and commercial lines? - Management stated that while facultative reinsurance is used in certain segments, the focus is primarily on core treaty structures, which have been effectively managed to respond to market conditions [64][66]

Part I [Business](index=4&type=section&id=ITEM%201%20%7C%20Business) AIG is a global insurance organization providing property casualty, life, and retirement solutions across 70 countries, operating through General Insurance, Life and Retirement, and Other Operations segments - AIG is a leading global insurance organization providing property casualty insurance, life insurance, retirement solutions, and other financial services to customers in approximately **70 countries and jurisdictions**[5](index=5&type=chunk) 2022 Performance Highlights | Category | Detail | | :--- | :--- | | **Strategic Initiatives** | Completed the IPO of Corebridge Financial, Inc., the largest U.S. IPO in 2022. Achieved the **$1 billion** exit run-rate savings goal from the AIG 200 program six months ahead of schedule | | **Capital Management** | Reduced general borrowings by **$9.4 billion**, repurchased **$5.1 billion** of AIG Common Stock, and paid **$1.0 billion** in dividends | | **General Insurance Performance** | Achieved **$2.0 billion** in underwriting income, a **94% year-over-year increase**. The 2022 combined ratio was **91.9**, an improvement from **95.8 in 2021** | - AIG reports its business through three segments: General Insurance, Life and Retirement, and Other Operations[10](index=10&type=chunk) - As of December 31, 2022, AIG had approximately **26,200 employees**, with **34% in North America**, **43% in the Asia Pacific region**, and **23% in EMEA and Latin America**[15](index=15&type=chunk) [Regulation](index=9&type=section&id=Regulation) AIG's insurance subsidiaries are extensively regulated across jurisdictions, primarily for policyholder protection, covering financial condition, market conduct, and corporate governance - AIG's (re)insurance subsidiaries are subject to extensive regulation and supervision, which primarily relates to financial condition, corporate conduct, and market conduct activities for the protection of policyholders[19](index=19&type=chunk)[20](index=20&type=chunk) - In the U.S., the New York State Department of Financial Services (NYDFS) is AIG's lead state regulator and leads the Supervisory College meetings of AIG's key global regulatory bodies[23](index=23&type=chunk) - AIG is subject to various data privacy and cybersecurity laws, including the NAIC Insurance Data Security Model Law, NYDFS cybersecurity regulations, California's CCPA/CPRA, and the EU's GDPR, which impose significant obligations for protecting personal information and reporting data breaches[31](index=31&type=chunk)[32](index=32&type=chunk) - Regulators are increasing scrutiny on climate change and other ESG issues, with proposed SEC rule changes requiring extensive climate-related disclosures in periodic reports[34](index=34&type=chunk) [Risk Factors](index=17&type=section&id=ITEM%201A%20%7C%20Risk%20Factors) AIG faces diverse material risks, including economic deterioration, geopolitical tensions, interest rate fluctuations, insurance reserve adequacy, catastrophic events, investment portfolio concentrations, liquidity constraints, operational challenges, and regulatory changes [Market Conditions](index=17&type=section&id=Market%20Conditions) AIG's business is highly sensitive to global economic and market conditions, where deterioration, geopolitical tensions, or interest rate fluctuations can significantly impact profitability and asset valuations - Deterioration of economic conditions, geopolitical tensions, and market volatility may materially affect AIG's business by causing a poor operating environment, reduced business volumes, and declines in asset valuations[47](index=47&type=chunk)[57](index=57&type=chunk) - Changes in interest rates have materially and adversely affected profitability, with rising rates decreasing fixed-income portfolio fair value and increasing policy surrenders, while sustained low rates negatively affect investment performance and compress spreads[47](index=47&type=chunk)[58](index=58&type=chunk) [Reserves and Exposures](index=17&type=section&id=Reserves%20and%20Exposures) AIG faces significant uncertainty in estimating insurance claims, potential reinsurance unavailability or credit risk, and substantial exposure to catastrophic events, including those exacerbated by climate change - Estimating insurance and reinsurance liability claims is difficult, and claims may exceed established reserves, especially for long-tail liability lines of business[48](index=48&type=chunk)[61](index=61&type=chunk) - Reinsurance may be unavailable or too expensive, and AIG is exposed to credit risk if reinsurers fail to make timely payments, with limited availability of terrorism reinsurance[48](index=48&type=chunk)[62](index=62&type=chunk) - Climate change may adversely affect AIG's business by increasing the frequency and severity of natural disasters, impacting underwriting models, and affecting the value of its investment portfolio[48](index=48&type=chunk)[65](index=65&type=chunk) - AIG has significant exposure to Fortitude Re, which reinsured approximately **$29.0 billion** of Life and Retirement reserves and **$3.2 billion** of General Insurance reserves, where failure to perform could materially impact AIG's results[48](index=48&type=chunk)[67](index=67&type=chunk) [Business and Operations](index=18&type=section&id=Business%20and%20Operations) AIG's operational risks include the successful separation of Corebridge, challenges in product pricing and guarantee management, foreign operation exposures, cybersecurity threats, and reliance on third-party providers - The separation of the Life and Retirement business (Corebridge) involves risks, with no assurance of completion or expected benefits, and AIG will have continuing equity market exposure until its stake is fully divested[52](index=52&type=chunk)[78](index=78&type=chunk) - AIG is exposed to significant risks from its reliance on critical technology systems and the need to safeguard data, where a system failure, cyberattack, or data breach could compromise business conduct and lead to regulatory sanctions and financial loss[52](index=52&type=chunk)[81](index=81&type=chunk) - The company relies on third-party providers for a broad range of services, including investment management, policy administration, and IT functions, where failure to perform could adversely affect business and operations[52](index=52&type=chunk)[85](index=85&type=chunk) - The COVID-19 pandemic has adversely affected AIG's business through capital market volatility, increased mortality claims, and an inflationary environment, with its ultimate impact remaining uncertain[52](index=52&type=chunk)[88](index=88&type=chunk) [Regulation](index=18&type=section&id=Regulation) AIG's heavily regulated businesses face risks from changing laws, increased capital requirements, and new tax laws, potentially limiting the utilization of significant tax loss carryforwards - AIG's operations are subject to extensive and potentially conflicting laws and regulations in the jurisdictions where it operates, which can affect operations, increase capital requirements, and reduce profitability[54](index=54&type=chunk)[92](index=92&type=chunk) - An "ownership change" as defined in Section 382 of the Internal Revenue Code could significantly limit AIG's ability to utilize its approximately **$24.8 billion** in U.S. federal net operating loss carryforwards and **$22 million** in foreign tax credits[54](index=54&type=chunk)[93](index=93&type=chunk) - The recently enacted Inflation Reduction Act (IRA) establishes a new **15%** corporate alternative minimum tax (CAMT) and a **1%** excise tax on stock repurchases, which may impact AIG's after-tax earnings and cash flow starting in 2023[54](index=54&type=chunk)[94](index=94&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=ITEM%205%20%7C%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) AIG's common stock is listed on the NYSE, with **$780 million** in repurchases during Q4 2022, and its five-year cumulative total shareholder return was **21.89%**, outperforming the S&P 500 Life & Health Insurance Index but underperforming broader indices Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Shares Repurchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | Oct 1-31 | 4,698,357 | 51.97 | | Nov 1-30 | 3,793,917 | 60.21 | | Dec 1-31 | 4,896,176 | 62.59 | | **Total** | **13,388,450** | **58.19** | - As of December 31, 2022, approximately **$3.8 billion** remained under the Board of Directors' authorization for the repurchase of AIG Common Stock[105](index=105&type=chunk) Five-Year Cumulative Total Shareholder Return (Value of $100 Invested on Dec 31, 2017) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **AIG** | $100.00 | $67.91 | $90.72 | $69.62 | $107.16 | $121.89 | | **S&P 500** | $100.00 | $95.62 | $125.72 | $148.85 | $191.58 | $156.88 | | **S&P 500 P&C Insurance** | $100.00 | $95.31 | $119.97 | $128.31 | $153.05 | $181.93 | | **S&P 500 Life & Health Insurance** | $100.00 | $79.23 | $97.60 | $88.35 | $120.76 | $133.25 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=ITEM%207%20%7C%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on AIG's financial condition and results of operations for 2022, highlighting strategic moves, economic impacts, consolidated and segment performance, investment portfolio, insurance reserves, liquidity, capital resources, and enterprise risk management [Executive Summary](index=64&type=section&id=Executive%20Summary) AIG's 2022 was marked by strategic actions, including the Corebridge IPO and deepened asset management partnerships with Blackstone and BlackRock, all within a challenging market environment of rising interest rates, inflation, and geopolitical tensions - On September 19, 2022, AIG closed the IPO of **12.4%** of Corebridge Financial, Inc., raising approximately **$1.7 billion** in gross proceeds and recording a **$608 million** increase to shareholder's equity[170](index=170&type=chunk) - AIG entered into long-term asset management relationships with Blackstone to manage up to **$92.5 billion** for Corebridge and with BlackRock to manage over **$150 billion** of investments for AIG and Corebridge[171](index=171&type=chunk)[172](index=172&type=chunk) - The Russia/Ukraine conflict, which began in February 2022, has the potential to adversely affect AIG's business from an investment, underwriting, and operational perspective, with the company actively monitoring the evolving situation[176](index=176&type=chunk) - As of December 31, 2022, **64%** of the aggregate fixed account values of Individual and Group Retirement annuity products were crediting at the contractual minimum guaranteed interest rate[181](index=181&type=chunk) [Consolidated Results of Operations](index=68&type=section&id=Consolidated%20Results%20of%20Operations) For 2022, AIG reported net income attributable to common shareholders of **$10.2 billion**, an increase driven by a gain on the Fortitude Re embedded derivative and higher General Insurance underwriting income, partially offset by lower net investment income and the absence of a prior year gain Consolidated Results of Operations (in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $56,437 | $52,057 | | Total Benefits, Losses and Expenses | $42,155 | $39,958 | | Income from Continuing Operations | $11,276 | $9,923 | | **Net Income Attributable to AIG Common Shareholders** | **$10,247** | **$9,359** | - The increase in net income was primarily driven by an **$8.1 billion** increase in Net realized gains on the Fortitude Re funds withheld embedded derivative and a **$1.1 billion** increase in underwriting income in General Insurance[193](index=193&type=chunk) - The effective tax rate on income from continuing operations was **21.0% in 2022**, compared to **18.0% in 2021**, with the increase primarily attributable to higher income from continuing operations[194](index=194&type=chunk) Book Value Per Common Share | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Book value per common share | $53.83 | $79.97 | | Adjusted book value per common share (Non-GAAP) | $73.87 | $68.83 | [Business Segment Operations](index=73&type=section&id=Business%20Segment%20Operations) In 2022, General Insurance adjusted pre-tax income slightly increased to **$4.4 billion** due to strong underwriting, while Life and Retirement adjusted pre-tax income decreased to **$2.7 billion** due to lower alternative investment returns, and Other Operations improved its pre-tax loss to **$1.9 billion** Adjusted Pre-tax Income (Loss) by Segment (in millions) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | General Insurance | $4,430 | $4,359 | | Life and Retirement | $2,657 | $3,911 | | Other Operations | $(1,947) | $(2,350) | | **Total Adjusted Pre-tax Income** | **$5,140** | **$5,920** | [Investments](index=93&type=section&id=Investments) AIG's investment strategy focuses on income generation and capital preservation, but 2022 saw significant net unrealized losses of **$47.7 billion** in fixed maturity securities due to rising interest rates and lower net investment income from alternative investments - A significant rise in interest rates and widening credit spreads resulted in net unrealized losses in the available for sale fixed security portfolio of **$47.7 billion** during 2022, decreasing from a net unrealized gain of **$18.1 billion** at year-end 2021 to a net unrealized loss of **$29.7 billion** at year-end 2022[284](index=284&type=chunk) Fixed Maturity Security Portfolio by NAIC Designation (Fair Value, in millions) | NAIC Designation | Fair Value (Dec 31, 2022) | | :--- | :--- | | 1 (Highest Quality) | $139,048 | | 2 (High Quality) | $74,377 | | **Total Investment Grade** | **$213,425** | | 3 - 6 (Below Investment Grade) | $17,195 | | **Total** | **$230,620** | - Net realized gains were **$9.0 billion in 2022**, a significant increase from **$2.2 billion in 2021**, driven by a **$7.5 billion** gain on the Fortitude Re funds withheld embedded derivative, partially offset by a **$1.2 billion** net loss on sales of fixed maturity securities[322](index=322&type=chunk) [Insurance Reserves](index=102&type=section&id=Insurance%20Reserves) As of December 31, 2022, AIG's net liability for unpaid losses and loss adjustment expenses was **$43.1 billion**, with favorable prior year loss reserve development of **$523 million** in 2022, while Life and Retirement experienced a net unfavorable impact from actuarial assumption updates due to higher interest rates Net Loss Reserves by Segment (in millions) | Segment | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | General Insurance | $42,434 | $43,146 | | Other Operations Run-Off | $631 | $667 | | **Total** | **$43,065** | **$43,813** | - In 2022, AIG recognized favorable prior year loss reserve development of **$523 million**, compared to favorable development of **$115 million in 2021**[329](index=329&type=chunk) - The annual update of actuarial assumptions for Life and Retirement products resulted in a net unfavorable impact to adjusted pre-tax income of **$57 million in 2022**, primarily in fixed annuities driven by the impact of higher interest rates on expected lapses[348](index=348&type=chunk) [Liquidity and Capital Resources](index=114&type=section&id=Liquidity%20and%20Capital%20Resources) AIG maintains liquidity through subsidiary dividends, cash from operations, and credit facilities, with **$8.2 billion** in liquidity sources as of December 31, 2022, and major capital uses in 2022 included **$9.4 billion** for debt repayment and **$5.1 billion** for common stock repurchases - As of December 31, 2022, AIG Parent had approximately **$8.2 billion** in liquidity sources, including cash, short-term investments, and a **$4.5 billion** committed revolving credit facility[389](index=389&type=chunk) Key Uses of Capital in 2022 | Use of Capital | Amount (billions) | | :--- | :--- | | Debt Repayment/Redemption | $9.4 | | Common Stock Repurchases | $5.1 | | Common Stock Dividends | $1.0 | - During 2022, AIG Parent received dividends of **$1.9 billion** from its General Insurance companies and **$753 million** from its Life and Retirement companies[379](index=379&type=chunk) Summary of Contractual Obligations (in millions) | Obligation | Total Payments Due | | :--- | :--- | | Loss reserves (gross, undiscounted) | $77,699 | | Insurance and investment contract liabilities | $294,416 | | Short-term and Long-term debt | $21,299 | | Interest payments on debt | $13,703 | | **Total** | **$407,117** | [Enterprise Risk Management](index=124&type=section&id=Enterprise%20Risk%20Management) AIG employs an integrated three-lines-of-defense model for risk management, overseen by the Board's Risk and Capital Committee, utilizing a risk appetite framework with tiered limits and proprietary capital models to assess aggregate risk, including a modeled 1-in-250 year worldwide all-peril probable maximum loss of **$3.2 billion** - AIG employs a Three Lines of Defense model for risk management, where business leaders have primary accountability, the Enterprise Risk Management (ERM) department provides oversight, and the Internal Audit Group offers independent assurance[421](index=421&type=chunk) - The company's Risk Appetite Framework uses risk tolerances and a three-tiered limits hierarchy (Board-level, AIG management level, and business unit level) to manage its risk profile and financial resources[423](index=423&type=chunk)[425](index=425&type=chunk) Modeled Annual Aggregate Catastrophe Losses (Net of Reinsurance, After Tax) | Exposure | Probability | Estimated Loss (billions) | | :--- | :--- | :--- | | World-wide all peril | 1-in-250 year (0.4%) | $3.2 | | U.S. Hurricane | 1-in-100 year (1.0%) | $1.1 | | U.S. Earthquake | 1-in-250 year (0.4%) | $1.3 | - AIG manages market risk from its variable annuity guaranteed living benefits through product design features and an economic hedging program that utilizes derivatives to offset changes in the economic value of these liabilities[454](index=454&type=chunk) [Financial Statements and Supplementary Data](index=141&type=section&id=ITEM%208%20%7C%20Financial%20Statements%20and%20Supplementary%20Data) This section presents AIG's audited consolidated financial statements for the three years ended December 31, 2022, with accompanying notes detailing accounting policies, segment information, fair value measurements, and other financial matters, along with an unqualified opinion from PricewaterhouseCoopers LLP [Report of Independent Registered Public Accounting Firm](index=142&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on AIG's consolidated financial statements for the three years ended December 31, 2022, and on the effectiveness of its internal control over financial reporting, while identifying critical audit matters including the valuation of Level 3 fixed maturity securities and insurance loss reserves - PricewaterhouseCoopers LLP issued an unqualified opinion, stating that AIG's consolidated financial statements present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[470](index=470&type=chunk) - The firm also issued an unqualified opinion that AIG maintained effective internal control over financial reporting as of December 31, 2022[470](index=470&type=chunk) - Critical Audit Matters: - Valuation of certain Level 3 fixed maturity securities[473](index=473&type=chunk) - Valuation of insurance liabilities - unpaid losses and loss adjustment expenses (loss reserves), net of reinsurance[475](index=475&type=chunk) - Valuation of embedded derivatives for variable annuity and fixed index annuity products and certain guaranteed benefit features for universal life products[476](index=476&type=chunk) - Valuation of Deferred Policy Acquisition Costs (DAC) for universal life and individual retirement variable annuity products[478](index=478&type=chunk) - Recoverability of the U.S. federal deferred tax asset[478](index=478&type=chunk) [Consolidated Financial Statements](index=147&type=section&id=Consolidated%20Financial%20Statements) AIG's consolidated balance sheet as of December 31, 2022, shows total assets of **$526.6 billion** and total AIG shareholders' equity of **$40.0 billion**, a decrease largely due to unrealized losses on fixed maturity securities, while net income attributable to AIG for 2022 was **$10.3 billion** with **$4.2 billion** in net cash from operating activities Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Investments | $309,150 | $359,292 | | Total Assets | $526,634 | $596,112 | | Total Liabilities | $484,399 | $527,200 | | Total AIG Shareholders' Equity | $40,002 | $65,956 | Consolidated Income Statement Highlights (in millions) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenues | $56,437 | $52,057 | | Net Income (Loss) | $11,275 | $9,923 | | Net Income (Loss) Attributable to AIG | $10,276 | $9,388 | Consolidated Cash Flow Highlights (in millions) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,207 | $6,279 | | Net Cash Used in Investing Activities | $(3,626) | $(3,280) | | Net Cash Provided by (Used in) Financing Activities | $(676) | $(3,735) | [Notes to Consolidated Financial Statements](index=154&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of AIG's accounting policies and financial results, including the Corebridge IPO, asset management agreements, segment data, fair value measurements, and the expected impact of new accounting standards for long-duration insurance contracts - AIG closed the IPO of **12.4%** of Corebridge Financial, Inc. on September 19, 2022, raising approximately **$1.7 billion** in gross proceeds, while retaining a **77.7%** ownership stake and continuing to consolidate Corebridge[496](index=496&type=chunk)[497](index=497&type=chunk) - On June 2, 2020, AIG completed the sale of a majority interest in Fortitude Group Holdings, LLC, receiving **$2.2 billion** in proceeds and recording a **$4.3 billion** after-tax reduction to shareholders' equity[500](index=500&type=chunk) - AIG will adopt new accounting standards for long-duration insurance contracts on January 1, 2023, with the adoption expected to decrease after-tax equity as of the transition date (Jan 1, 2021) by approximately **$1.0 billion to $1.5 billion**[513](index=513&type=chunk) - As of December 31, 2022, AIG had **$24.9 billion** in Level 3 bonds available for sale and **$7.1 billion** in Level 3 policyholder contract deposit liabilities, indicating significant use of unobservable inputs in fair value measurements[556](index=556&type=chunk)

American International Group, Inc. (NYSE:AIG) Q3 2022 Earnings Conference Call November 2, 2022 8:30 AM ET Company Participants Quentin McMillan - IR Peter Zaffino - Chairman and CEO Shane Fitzsimons - CFO Mark Lyons - Global Chief Actuary and Head, Portfolio Management David McElroy - EVP and Chief Executive Officer, AIG General Insurance Conference Call Participants J Paul Newsome - Piper Sandler Meyer Shields - KBW Elyse Greenspan - Wells Fargo Brian Meredith - UBS Alexander Scott - Goldman Sachs Operat ...

Summary of AIG's KBW Insurance Conference 2022 Call Company Overview - **Company**: American International Group, Inc. (NYSE:AIG) - **Event**: KBW Insurance Conference 2022 - **Date**: September 7, 2022 - **Key Participants**: Peter Zaffino (Chairman and CEO), Meyer Shields (KBW) Core Points and Arguments Company Transformation and Strategy - AIG has undergone significant transformation since 2018, focusing on repositioning and changing its operational strategy to address fundamental issues in its core Property & Casualty (P&C) business [2][3] - The company has implemented a turnaround program known as AIG 200, which aims to improve underwriting results, reduce volatility, and modernize operations [5][6] - AIG has exited or repositioned ineffective businesses and established a new reinsurance strategy focused on combined ratio improvement and risk-adjusted returns [4][6] Underwriting and Financial Performance - AIG has reduced gross limits by over $1 trillion since 2018 and achieved cumulative rate increases of over 50% across its gross portfolio [8][10] - The company reported a sub-90 calendar year combined ratio in General Insurance for the first time since the financial crisis, marking a significant milestone [11] - AIG has experienced seven consecutive quarters of net premium growth in Commercial Lines, with an 85% retention rate on its Global Commercial business [10][11] Cost Management and Capital Strategy - AIG achieved $1 billion in cost savings six months ahead of schedule as part of the AIG 200 initiative [11][12] - The company has executed a capital management strategy that includes reducing leverage, returning capital to shareholders, and buying back shares [12][13] - AIG aims for a return on capital employed (ROCE) of 10% or greater, focusing on underwriting excellence, expense reduction, and the separation of its life and retirement business [13] Market Dynamics and Competitive Position - The wholesale insurance market has changed dramatically, with wholesale brokers growing faster than retail brokers, capturing significant market share [30][31] - AIG has adapted to these changes by focusing on dual distribution and specialized underwriting strategies [32][33] - The company has seen consistent double-digit rate increases in property wholesale, indicating a strong market position [33] International Operations and Growth Opportunities - AIG's Japanese market is a significant growth area, with opportunities to improve combined ratios and expand into digital capabilities [24][26] - The company is optimistic about growth in cyber insurance, which is currently underdeveloped in Japan [27] Reinsurance Strategy - AIG has improved its reinsurance strategy, with significant enhancements in ceding commissions and a focus on quality underwriting [60][64] - The company has reduced its net retention in casualty from $100 million to a maximum of $15 million, reflecting a more conservative risk appetite [10] Future Outlook - AIG is committed to continuous improvement in operational capabilities and digitization as part of its long-term strategy [70][71] - The company plans to maintain expense discipline and improve efficiency as it transitions to a new operating model post-separation of its life and retirement business [72] Additional Important Insights - AIG's operational transformation has been as significant as its underwriting turnaround, with a focus on data management and process improvement [68][71] - The company is cautious about the impact of external factors such as inflation and supply chain issues on its insurance portfolio [40][41] - AIG is actively monitoring the recovery of its travel insurance segment, which was impacted by the COVID-19 pandemic [52][54] This summary encapsulates the key points discussed during the AIG conference call, highlighting the company's strategic initiatives, financial performance, market dynamics, and future outlook.

American International Group, Inc. (NYSE:AIG) Q2 2022 Results Conference Call August 9, 2022 8:30 AM ET Company Participants Quentin McMillan - Investor Relations Peter Zaffino - Chairman and Chief Executive Officer Mark Lyons - Global Chief Actuary and Head, Portfolio Management Shane Fitzsimons - Chief Financial Officer David McElroy - EVP and Chief Executive Officer, AIG General Insurance Kevin Hogan - EVP and Chief Executive Officer, AIG Life & Retirement Conference Call Participants Meyer Shields - KBW ...