American International Group (AIG) 10-K risk factor changes: FY2021 vs FY2020

*For [removed: a discussion] [added: information] regarding the [removed: effects of] [added: regulatory response to] the COVID-19 [removed: crisis on our business,] [added: pandemic,] see [added: Market Conditions –] “COVID-19 [removed: is] [added: has] adversely [removed: affecting,] [added: affected,] and is expected to continue to adversely affect, our global business, [removed: financial condition and] results of operations, [added: financial condition] and [added: liquidity, and] its ultimate impact will depend on future developments that are uncertain and cannot be [removed: predicted, including the scope, severity and duration of the crisis, and the governmental, legislative and regulatory actions taken and court decisions rendered in response thereto”] [added: predicted”] above.*

For example, we have engaged with Accenture plc for the delivery of services related to the administration or servicing of certain policies and contracts and investment assets, investment [removed: accounting] [added: accounting, information technology] and operational functions, finance and actuarial services, human resources and information technology services related to infrastructure, application development and maintenance.

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, [added: terminate] or [added: fail to renew our relationships, or] such third-party [removed: provider] [added: providers] in turn [removed: relies] [added: rely] on services from another third-party provider, who experiences such disruptions, licensure failures, nonperformance or noncompliance, [added: termination or non-renewal of its contractual relationships,] we may experience operational difficulties, an inability to meet obligations (including, but not limited to, [added: 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.

*For [removed: a discussion] [added: information] regarding cyber risk arising from third-party providers, see [added: 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 [removed: financial condition or] [added: business,] results of [removed: operations”] [added: operations, financial condition and liquidity”] above.*

*For [removed: a discussion] [added: information] regarding increased risks arising from our reliance on third parties as a result of the COVID-19 [removed: crisis,] [added: pandemic,] see [added: Market Conditions –] “COVID-19 [removed: is] [added: has] adversely [removed: affecting,] [added: affected,] and is expected to continue to adversely affect, our global business, [removed: financial condition and] results of operations, [added: financial condition] and [added: liquidity, and] its ultimate impact will depend on future developments that are uncertain and cannot be [removed: predicted, including the scope, severity and duration of the crisis, and the governmental, legislative and regulatory actions taken and court decisions rendered in response thereto”] [added: predicted”] above.*

[removed: No] [added: While we currently believe that, following the sale of 9.9 percent equity stake in SAFG to Blackstone, an initial public offering is the next step in the separation of the Life and Retirement business from AIG, no] assurance can be given regarding the form that [removed: a] [added: future] separation [removed: transaction] [added: transactions] may take or the specific terms or timing thereof, or that a separation will in fact occur.

[removed: 38] [added: 32] AIG | [removed: 2020] [added: 2021] Form 10-K

[removed: In addition, we] [added: We] have [added: also] provided and may provide financial guarantees and indemnities in connection with the businesses we have sold or may sell, as described in greater detail in Note [removed: 16] [added: 15] to the Consolidated Financial Statements.

*For additional information regarding the risks associated with AIG’s separation of its Life and Retirement business, see [added: Business and Operations –] “No assurances can be given that the separation of our Life and Retirement business will occur or as to the specific terms or timing thereof.

In addition, the separation could [added: cause the emergence or] exacerbate [added: the effects of] other risks to which AIG is [removed: exposed.”] [added: exposed”] above.*

*For additional information on these financial guarantees and [removed: indemnities] [added: indemnities,] see Note [removed: 16] [added: 15] to the Consolidated Financial Statements.*

Significant legal [added: or regulatory] proceedings may adversely affect our [added: 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.

AIG, our subsidiaries and their respective officers and directors are also subject [removed: to] [added: 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 [added: may also] involve potentially significant risk of loss due to the possibility of significant jury awards and settlements, punitive damages or other penalties.

*For [removed: a discussion of] [added: information regarding] certain legal proceedings, including certain tax controversies, see Notes [removed: 16] [added: 15] and [removed: 22] [added: 21] to the Consolidated Financial Statements.*

*For [removed: a discussion] [added: information] regarding potential litigation exposure as a result of the COVID-19 [removed: crisis,] [added: pandemic,] see [added: Market Conditions –] “COVID-19 [removed: is] [added: has] adversely [removed: affecting,] [added: affected,] and is expected to continue to adversely affect, our global business, [removed: financial condition and] results of operations, [added: financial condition] and [added: liquidity, and] its ultimate impact will depend on future developments that are uncertain and cannot be [removed: predicted, including the scope, severity and duration of the crisis, and the governmental, legislative and regulatory actions taken and court decisions rendered in response thereto”] [added: predicted”] above.*

Our risk management policies and procedures may prove to be ineffective and leave us exposed to unidentified or unanticipated risk, which could adversely affect our [removed: businesses or result in losses.] [added: businesses, results of operations, financial condition and liquidity.] We have developed and continue to [removed: develop] [added: enhance] enterprise-wide risk management policies and procedures to [added: identify, monitor and] mitigate risk and loss to which we are exposed, which include hedging programs designed to manage market risk and reinsurance to manage geographic accumulations.

For example, 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 instruments, which may not effectively or completely reduce our risk; and assumptions underlying models used to measure accumulations and support reinsurance purchases may [removed: be proven] [added: prove] inaccurate and could leave us exposed to larger than expected catastrophe losses in a given year.

As our businesses change and the markets in which we operate [removed: evolve,] [added: evolve and new risks emerge, including for example risks related to climate change or meeting stakeholder expectations relating to environmental, social or governance issues,] our risk management framework may not evolve at the same pace as those changes.

[removed: In times] [added: The effectiveness] of [added: our risk management strategies may be limited, resulting in losses, because of] market stress, unanticipated financial market movements or unanticipated claims experience [removed: resulting] from adverse mortality, morbidity or policyholder [removed: behavior, the effectiveness of our risk management strategies may be limited, resulting in losses to us.][added: behavior.]

In addition, there can be no assurance that we can effectively review and monitor all risks or that all of our employees will [added: understand and] follow [added: (or comply with)] our risk management policies and procedures.

AIG | [removed: 2020] [added: 2021] Form 10-K [removed: 39][added: 33]

The primary purpose of insurance regulation is the protection of our insurance and reinsurance contract [removed: holders, and not our investors.][added: holders.]

The extent of [removed: domestic] regulation on our insurance and reinsurance business [removed: varies,] [added: varies across the jurisdictions where we operate,] but generally is governed by [removed: state statutes] [added: laws] that delegate regulatory, supervisory and administrative authority to [removed: state] insurance [removed: departments.][added: departments and similar regulatory agencies.]

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 [removed: funds] [added: fund] operations.

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 [removed: standard of care applicable to our producers and agents who sell our products and the] manner in which [removed: certain conflicts of interest arising from or related to such sale are to be addressed,] [added: we underwrite our policies,] the delivery of our services, the nature or extent of disclosures [removed: required to be given to] [added: that we give] 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 [removed: the conduct of] [added: our] business for failure to comply with applicable [removed: securities] laws and regulations.

We strive to comply with laws and regulations applicable to our businesses, operations and legal [removed: entities.][added: entities, including maintenance of all required licenses and approvals.]

The relevant authorities may not agree with our interpretation of these laws and regulations, including, for example, our implementation of [added: new or revised] requirements related to [removed: new or changes in] capital, accounting treatment or reserving such as those governing [removed: principle-based reserving (PBR),] [added: PBR,] or with our policies and procedures adopted to address evolving industry practices or meet regulatory expectations.

Such authorities’ [removed: interpretation] [added: interpretations] and views may also change from time to time.

[removed: 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 [added: administrative penalties such as] fines or require corrective [removed: actions to be taken,] [added: actions,] which individually or in the aggregate could [added: interrupt our operations and materially and] adversely affect our [added: reputation,] business, [added: results of] operations and financial condition.

Additionally, [removed: if] [added: when] such authorities’ interpretation of [added: new or revised] requirements related to [removed: new or changes in] capital, accounting treatment and/or valuation manual or reserving (such as PBR) materially differs from ours, we [added: have incurred or] may incur higher operating [removed: costs] [added: costs,] or sales of products subject to such [removed: requirement] [added: requirements] or treatment may be affected.

In the [removed: U.S.,] [added: United States,] the RBC formula is designed to measure the adequacy of an insurer’s statutory surplus in relation to the risks inherent in its business.

Failure to comply with such RBC capital, liquidity and similar [removed: requirements] [added: 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.

We cannot predict the effect these initiatives may have on our business, [removed: consolidated] results of operations, liquidity and financial condition.

[removed: *See “Actions] [added: Additional actions] by foreign governments, regulators and international standard setters could result in substantial additional regulation to which we may be [removed: subject” below for additional information on increased capital and other requirements that may be imposed on us*.][added: subject.]

[removed: Accordingly,] [added: Consequently,] our insurance subsidiaries could be prevented from conducting future business in [removed: certain] [added: some] of the jurisdictions where they currently operate.

[removed: 40] [added: 34] AIG | [removed: 2020] [added: 2021] Form 10-K

[added: Adverse actions from any single] country could adversely affect our [removed: business, consolidated] results of operations, [removed: liquidity and financial condition,] depending on the magnitude of the event and our financial exposure at that time in that country.

*For [removed: further discussion of] [added: additional information on] our regulatory [removed: environment] [added: environment,] see Item 1.

*For [removed: a discussion] [added: information] regarding the regulatory response to the COVID-19 [removed: crisis,] [added: pandemic,] see [added: Market Conditions –] “COVID-19 [removed: is] [added: has] adversely [removed: affecting,] [added: affected,] and is expected to continue to adversely affect, our global business, [removed: financial condition and] results of operations, [added: financial condition] and [added: liquidity, and] its ultimate impact will depend on future developments that are uncertain and cannot be [removed: predicted, including the scope, severity and duration of the crisis, and the governmental, legislative and regulatory actions taken and court decisions rendered in response thereto”] [added: predicted”] above.*

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 occur or as to the specific terms or timing thereof.

In addition, the separation could cause the emergence or exacerbate the effects of other risks to which AIG is exposed” below.*

MD&A – Business Segment Operations – General Insurance – Business Strategy and – Outlook – Industry and Economic Factors, and Part II, Item 7.

MD&A – Business Segment Operations – Life and Retirement – Business Strategy and – Outlook – Industry and Economic Factors.*

Following the Majority Interest Fortitude Sale, our largest reinsurance counterparty, Fortitude Re, is no longer controlled by us, and a failure by Fortitude Re to perform its obligations could have a material effect on our business, results of operations or liquidity and the accounting treatment of our reinsurance agreements with Fortitude Re could also lead to volatility in our net income. As of June 2, 2020, we completed the Majority Interest Fortitude Sale (as defined in Item 7.

Executive Summary – Sale of Fortitude Holdings), upon which Fortitude Group Holdings, LLC (Fortitude Holdings), the parent of Fortitude Re, became controlled 71.5% by affiliates of The Carlyle Group Inc. and 25% by affiliates of T&D Holdings, Inc., and our ownership interest in Fortitude Holdings was reduced to 3.5%.

As of December 31, 2021, approximately $29.6 billion of reserves from AIG’s Life and Retirement Run-Off Lines and approximately $3.8 billion of reserves from AIG’s 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.

These reserve balances are fully collateralized pursuant to the terms of the reinsurance agreements.

While we retained a seat on the board of managers of Fortitude Holdings, our ability to influence its operations going forward will be very limited.

Our subsidiaries continue to remain primarily liable to policyholders under the business reinsured by Fortitude Re.

As a result, if Fortitude Re is unable to successfully operate independently, or other issues arise that affect its financial condition or ability to satisfy or perform its obligations to our subsidiaries under the various reinsurance arrangements in force between Fortitude Re and such subsidiaries, we could experience a material adverse effect on our results of operations 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 on the part of Fortitude Re under the applicable reinsurance agreements, 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 an increase in our solvency capital requirements.

These termination and recapture triggers are standard termination and recapture events and 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, 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 our consent.

Additionally, beginning in June 2023, Fortitude Re will have certain rights to replace AIG Asset Management (U.S.), LLC (AMG) as investment manager with respect to the assets supporting the reinsurance and to direct our subsidiaries to appoint a replacement investment manager with respect to those assets, if such appointment is reasonably acceptable to our subsidiaries and subject to the satisfaction of certain other conditions.

If Fortitude Re were to so direct our subsidiaries to appoint another investment manager to replace AMG as investment manager with respect to the assets supporting the reinsurance, it could disrupt our internal investment advisory capabilities and cause a reduction in management fees received by AMG, which could result in a material adverse effect on our business, results of operations and financial condition.

Furthermore, 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.

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 and its subsidiaries) 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 other comprehensive income).

As a result of the deconsolidation resulting from the Majority Interest Fortitude Sale, 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.

The manner in which we account for these various reinsurance agreements has and will continue to lead to volatility in our GAAP net income.

*For additional information on the sale of Fortitude Holdings see Part II, Item 7.

MD&A – Consolidated Results of Operations.*

*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.*

Our subsidiaries may be required to accelerate the amortization of deferred policy acquisition costs (DAC) and record additional liabilities for future policy benefits due to interest rate fluctuations, increased lapses and surrenders, declining investment returns and other events. We incur significant costs in connection with acquiring new and renewal insurance business.

DAC represents deferred costs that are incremental and directly related to the successful acquisition of new business or renewal of existing business.

The recovery of these costs is generally dependent upon the future profitability of the related business, but DAC amortization varies based on the type of contract.

For long-duration traditional business, DAC is generally amortized in proportion to premium revenue and varies with lapse experience.

Actual lapses in excess of expectations can result in an acceleration of DAC amortization, and therefore, adversely impact our pre-tax income.

DAC for investment-oriented products is generally amortized in proportion to actual and estimated gross profits.

Estimated gross profits are affected by a number of factors, including levels of current and expected interest rates, net investment income and credit spreads, net realized gains and losses, fees, surrender rates, mortality experience, policyholder behavior experience and equity market returns and volatility.

If actual and/or future estimated gross profits are less than originally expected, then the amortization of these costs would be accelerated in the period this is determined and would result in a charge to income.

For example, if interest rates rise rapidly and significantly, customers with policies that have interest crediting rates below the current market may seek competing products with higher returns and we may experience an increase in surrenders and withdrawals of life and annuity contracts, and thereby a strain on cash flow.

Additionally, this would also result in a decrease in expected future profitability and an acceleration of the amortization of DAC, and therefore lower than expected pre-tax income earned during the then current period.

We also periodically review products for potential loss recognition events, principally insurance-oriented products.

This review involves estimating the future profitability of in-force business and requires significant management judgment about assumptions including, but not limited to, mortality, morbidity, persistency, maintenance expenses and investment returns, including net realized gains (losses).

If actual experience or revised future expectations result in projected future losses, we may be required to amortize any remaining DAC and record additional liabilities through a charge to policyholder benefits and losses occurred in the then current period, which could negatively affect our business, results of operations, financial condition and liquidity.

No decisions have yet been made regarding the structure of the initial disposition of up to a 19.9% interest in the Life and Retirement business.

For example, following the closing of the sale of our controlling interest in Fortitude Holdings in June 2020, we contributed approximately $835 million of the proceeds of the sale of

Fortitude Holdings to certain of our insurance company subsidiaries.

We also strive to maintain all required licenses and approvals.

Regulatory authorities have relatively broad discretion to grant, renew or revoke licenses and approvals.

If we do not have the required licenses and approvals, these authorities could preclude or temporarily suspend us from carrying on some or all of our activities or impose substantial fines.

Further, insurance regulatory authorities have relatively broad discretion to issue orders of supervision, which permit them to apply enhanced supervision to the business and operations of an insurance or reinsurance company.

Adverse actions from any single

*For further details on these international regulations and their potential impact on AIG and its businesses, see Item 1.

Attempts to efficiently manage the impact of Regulation XXX, Actuarial Guideline AXXX and Principle-Based Reserving may not be successful in whole or in part resulting in an adverse effect on our financial condition and results of operations. Regulation XXX requires insurers to establish additional statutory reserves for term life insurance policies with long-term premium guarantees and universal life policies with secondary guarantees.

In addition, NAIC Actuarial Guideline 38 (Guideline AXXX) clarifies the application of Regulation XXX as to certain universal life insurance policies with secondary guarantees.

In December 2012, the NAIC approved a new Valuation Manual (VM) containing a principle-based approach to life insurance company reserves, which became effective on January 1, 2017, and replaced Regulation XXX and Guideline AXXX for new life insurance business issued after January 1, 2017.

As permitted by applicable regulations, we deferred implementing PBR until January 1, 2020, and have applied it as of such date for relevant life insurance business issued on or after January 1, 2020.

Our domestic Life and Retirement companies manage the capital impact of statutory reserve requirements under Regulation XXX and Guideline AXXX through reinsurance transactions.

We have also begun and may continue to pursue reinsurance transactions to manage the capital impact of statutory reserve requirements under PBR.

The application of Regulation XXX, Guideline AXXX and PBR involve 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, our statutory reserve requirements could increase, or our ability to take reserve credit for reinsurance transactions could be reduced or eliminated.

As a result, we could be required to raise capital to replace the reserve credit provided by the reinsurance transactions or incur higher costs to obtain reinsurance, each of which could adversely affect our sales of these products and our financial condition or results of operations.

*For additional information on statutory reserving requirements under Regulation XXX and Guideline AXXX and our use of reinsurance see Note 19 to the Consolidated Financial Statements.*

It is uncertain whether and how these and other such proposals would

On March 9, 2011, our Board adopted our Tax Asset Protection Plan (the Plan) to help protect these tax loss and credit carryforwards, and on December 14, 2016, our Board adopted an amendment to the Plan, extending its expiration date to December 14, 2019.

Our shareholders ratified the amendment of the Plan at our 2017 Annual Meeting of Shareholders.

Thereafter, on December 11, 2019, our Board adopted a further amendment to the Plan, extending its expiration date to December 11, 2022.

Our shareholders ratified the amendment of the Plan at our 2020 Annual Meeting of Shareholders.

At our 2017 Annual Meeting of Shareholders, our shareholders approved the amendment to our Amended and Restated Certificate of Incorporation to adopt a successor to the Protective Amendment that contains substantially the same terms as the Protective Amendment.

At our 2020 Annual Meeting of Shareholders, our shareholders adopted an amendment and restatement to our Amended and Restated Certificate of Incorporation to adopt a successor to the Protective Amendment that contains substantially the same terms as the Protective Amendment but would expire on May 13, 2023.

tender or exchange offer for AIG Common Stock.

Changes to tax laws, including U.S. legislation enacted in late 2017, could increase our corporate taxes or make some of our products less attractive to consumers. The 2017 Tax Act, known informally as the Tax Cuts and Jobs Act, reduced the statutory rate of U.S. federal corporate income tax to 21 percent and enacted numerous other changes impacting AIG and the insurance industry.

Other changes in the Tax Act that broaden the tax base by reducing or eliminating deductions for certain items (e.g., reductions to separate account dividends received deductions, disallowance of entertainment expenses, and limitations on the deduction of certain executive compensation costs) will offset a portion of the benefits from the lower statutory rate.

Other specific changes, including the calculation of insurance tax reserves and the amortization of deferred acquisition costs, will impact the timing of our tax expense items and could impact the pricing of certain insurance products.

These changes could reduce demand in the U.S. for life insurance and annuity contracts, which could reduce our income over time due to lower sales of these products or potential increased surrenders of in-force business.

While the U.S. tax authorities issued formal guidance and recently issued final regulations for BEAT and other provisions of the Tax Act, there are still certain aspects of the Tax Act that remain unclear.

AIG will continue to review the impact of BEAT, GILTI and related provisions as further guidance is issued.

Also, the Department of the Treasury’s Office of Foreign Assets Control administers regulations requiring U.S. persons to refrain from doing business, or allowing their clients to do business through them, with certain organizations or individuals on a prohibited list maintained by the U.S. government or with certain countries.

The laws and regulations of other jurisdictions may sometimes conflict with those of the U.S. Although we have instituted compliance programs to address these requirements, as well as potential conflicts of law, there are inherent risks in global transactions.

These estimates are based on

Changes to the manner in which we account for long-duration products could impact our consolidated results of operations, liquidity and financial condition.

The FASB issued ASU No. 2016-13 – Measurement of Credit Losses on Financial Instruments, which took effect on January 1, 2020.

This standard changes how we account for credit losses for most financial assets, premiums receivable and reinsurance receivables.

The standard replaces the incurred loss impairment model with a “current expected credit loss model” that generally results in earlier recognition of credit losses.

The fair value of our interest rate, currency, credit, commodity and equity swaps, options, swaptions, and forward commitments, futures, and forward contracts reported as a component of Other assets, was approximately $0.8 billion at both December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019.][added: 2020.]

| *(in millions)* | | [removed: 2020] [added: 2021] | | [removed: 2019] [added: 2020] |

| AAA | $ | [removed: 8] [added: 41] | $ | [removed: 45] [added: 8] |

| BBB | | [removed: 601] [added: 473] | | [removed: 553] [added: 601] |

| Below investment grade* | | [removed: 23] [added: 21] | | [removed: 31] [added: 23] |

| Total | $ | [removed: 774] [added: 843] | $ | [removed: 793] [added: 774] |

*For additional [removed: discussion] [added: information] related to derivative transactions see Note [removed: 11] [added: 10] to the Consolidated Financial Statements.*

AIG | [removed: 2020] [added: 2021] Form 10-K 173

Accident year combined ratio, as [removed: adjusted] [added: 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 [removed: adjusted] [added: 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.

Adjusted revenues exclude Net realized [removed: capital] gains (losses), income from non-operating litigation settlements (included in Other income for GAAP purposes) and changes in fair value of securities used to hedge guaranteed living benefits (included in Net investment income for GAAP purposes).

Base [removed: Spread] [added: spread] Net investment income excluding income from alternative investments and other enhancements, less interest credited excluding amortization of [added: deferred] sales [removed: inducement assets.][added: inducements.]

Book value per common share, excluding accumulated other comprehensive income [added: (loss)] (AOCI) adjusted for the cumulative unrealized gains and losses related to Fortitude [removed: Re’s Funds Withheld Assets] [added: 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 [removed: Re’s Funds Withheld Assets] [added: Re funds withheld assets] and DTA (Adjusted Common Shareholders’ Equity), by total common shares outstanding.

174 AIG | [removed: 2020] [added: 2021] Form 10-K

DAC Related to Unrealized Appreciation (Depreciation) of Investments An adjustment to DAC and Reserves for investment-oriented products, equal to the change in DAC and unearned revenue amortization that would have been recorded if fixed maturity securities available for sale [removed: and also, prior to 2018, equity securities] at fair value had been sold at their stated aggregate fair value and the proceeds reinvested at current yields.

An adjustment to benefit reserves for investment-oriented products is also recognized to reflect the application of the benefit ratio to the accumulated assessments that would have been recorded if fixed maturity securities available for sale [removed: and also, prior to 2018, equity securities] at fair value had been sold at their stated aggregate fair value and the proceeds reinvested at current [removed: yields (collectively referred to as shadow Investment-Oriented Adjustments).][added: yields.]

For long-duration traditional products, significant unrealized appreciation of investments in a sustained low interest rate environment may cause additional future policy benefit liabilities to be [removed: recorded (shadow loss reserves).][added: recorded.]

AIG | [removed: 2020] [added: 2021] Form 10-K 175

Return on common equity – Adjusted after-tax income excluding AOCI adjusted for the cumulative unrealized gains and losses related to Fortitude [removed: Re’s Funds Withheld Assets] [added: 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.

[removed: SIA *Sales Inducement Asset*] [added: 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.

| [removed: CMBS Commercial Mortgage-Backed Securities] [added: EGPs Estimated Gross Profits] | RMBS Residential Mortgage-Backed Securities |

| FRBNY Federal Reserve Bank of New York | [removed: URR Unearned revenue reserve] [added: SEC Securities and Exchange Commission] |

| [removed: GAAP Accounting principles generally accepted in the United] States of America | VIE Variable Interest Entity |

At December 31, 2021, 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 RCD, in conjunction with the credit executives within ERM, reviews these developments, monitors compliance with credit triggers that may require the 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.*

| AA | | 201 | | 12 |

| A | | 107 | | 130 |

AIG | 2021 Form 10-K 171

172 AIG | 2021 Form 10-K

| CDS Credit Default Swap | ORR Obligor Risk Ratings |

| CMA Capital Maintenance Agreement | OTC Over-the-Counter |

| CMBS Commercial Mortgage-Backed Securities | OTTI Other-Than-Temporary Impairment |

| FASB Financial Accounting Standards Board | S&P Standard & Poor’s Financial Services LLC |

| GAAP Accounting Principles Generally Accepted in the United | URR Unearned Revenue Reserve |

| AA | | 12 | | 19 |

| A | | 130 | | 145 |

176 AIG | 2020 Form 10-K

| CDS Credit Default Swap | OTC Over-the-Counter |

| CMA Capital Maintenance Agreement | OTTI Other-Than-Temporary Impairment |

| EGPs Estimated gross profits | S&P Standard & Poor’s Financial Services LLC |

| FASB Financial Accounting Standards Board | SEC Securities and Exchange Commission |

AIG | 2020 Form 10-K 177

178 AIG | [removed: 2020] [added: 2021] Form 10-K

| [Report of Independent Registered Public Accounting Firm](#Rpt_Indpt_Reg_Pub_Acct_Firm) [added: (PCAOB ID 238)] | | [removed: [180](#Rpt_Indpt_Reg_Pub_Acct_Firm)] [added: [178](#Rpt_Indpt_Reg_Pub_Acct_Firm)] |

| [Consolidated Balance Sheets at December 31, [removed: 2020] [added: 2021] and [removed: 2019](#CBS)] [added: 2020](#CBS)] | | [removed: [184](#CBS)] [added: [182](#CBS)] |

| [Consolidated Statements of Income (Loss) for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CIS)] [added: 2019](#CIS)] | | [removed: [185](#CIS)] [added: [183](#CIS)] |

| [Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CCIS)] [added: 2019](#CCIS)] | | [removed: [186](#CCIS)] [added: [184](#CCIS)] |

| [Consolidated Statements of Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CES)] [added: 2019](#CES)] | | [removed: [187](#CES)] [added: [185](#CES)] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CCFS)] [added: 2019](#CCFS)] | | [removed: [188](#CCFS)] [added: [186](#CCFS)] |

| [NOTE 1.](#Basis_Presentation) | [Basis of Presentation](#Basis_Presentation) | [removed: [190](#Basis_Presentation)] [added: [188](#Basis_Presentation)] |

| [NOTE 2](#Summary_Sig_Acctg_Pol). | [Summary of Significant Accounting Policies](#Summary_Sig_Acctg_Pol) | [removed: [193](#Summary_Sig_Acctg_Pol)] [added: [191](#Summary_Sig_Acctg_Pol)] |

| [NOTE 3.](#Segment_Info) | [Segment Information](#Segment_Info) | [removed: [199](#Segment_Info)] [added: [195](#Segment_Info)] |

| [NOTE [removed: 5.](#FV_Measurement)] [added: 4.](#FV_Measurement)] | [Fair Value Measurements](#FV_Measurement) | [removed: [203](#FV_Measurement)] [added: [198](#FV_Measurement)] |

| [NOTE [removed: 6.](#Investments)] [added: 5.](#Investments)] | [Investments](#Investments) | [removed: [222](#Investments)] [added: [217](#Investments)] |

| [NOTE [removed: 7.](#Lending_Activities)] [added: 6.](#Lending_Activities)] | [Lending Activities](#Lending_Activities) | [removed: [235](#Lending_Activities)] [added: [228](#Lending_Activities)] |

| [NOTE [removed: 8.](#Reinsurance)] [added: 7.](#Reinsurance)] | [Reinsurance](#Reinsurance) | [removed: [239](#Reinsurance)] [added: [233](#Reinsurance)] |

| [NOTE [removed: 9.](#Def_Pol_Acq_Cost)] [added: 8.](#Def_Pol_Acq_Cost)] | [Deferred Policy Acquisition Costs](#Def_Pol_Acq_Cost) | [removed: [244](#Def_Pol_Acq_Cost)] [added: [238](#Def_Pol_Acq_Cost)] |

| [NOTE [removed: 10.](#Variable_Int_Ent)] [added: 9.](#Variable_Int_Ent)] | [Variable Interest Entities](#Variable_Int_Ent) | [removed: [246](#Variable_Int_Ent)] [added: [241](#Variable_Int_Ent)] |

| [NOTE [removed: 11.](#Derivatives_n_Hedge_Acctg)] [added: 10.](#Derivatives_n_Hedge_Acctg)] | [Derivatives and Hedge Accounting](#Derivatives_n_Hedge_Acctg) | [removed: [249](#Derivatives_n_Hedge_Acctg)] [added: [244](#Derivatives_n_Hedge_Acctg)] |

| [NOTE [removed: 12.](#Goodwill)] [added: 11.](#Goodwill)] | [Goodwill and Other Intangible Assets](#Goodwill) | [removed: [253](#Goodwill)] [added: [247](#Goodwill)] |

| [NOTE [removed: 13](#Ins_Liab).] [added: 12](#Ins_Liab).] | [Insurance Liabilities](#Ins_Liab) | [removed: [256](#Ins_Liab)] [added: [250](#Ins_Liab)] |

| [NOTE [removed: 14.](#Variable_Life_n_Annuity_Contracts)] [added: 13.](#Variable_Life_n_Annuity_Contracts)] | [Variable Life and Annuity Contracts](#Variable_Life_n_Annuity_Contracts) | [removed: [292](#Variable_Life_n_Annuity_Contracts)] [added: [285](#Variable_Life_n_Annuity_Contracts)] |

| [NOTE [removed: 16.](#Cont_Comm_n_Guar)] [added: 15.](#Cont_Comm_n_Guar)] | [Contingencies, Commitments and Guarantees](#Cont_Comm_n_Guar) | [removed: [296](#Cont_Comm_n_Guar)] [added: [289](#Cont_Comm_n_Guar)] |

| [NOTE [removed: 17](#SHE).] [added: 16](#SHE).] | [Equity](#SHE) | [removed: [299](#SHE)] [added: [292](#SHE)] |

| [NOTE [removed: 18.](#EPS)] [added: 17.](#EPS)] | [Earnings Per Common Share](#EPS) | [removed: [305](#EPS)] [added: [298](#EPS)] |

| [NOTE [removed: 19.](#Stat_Fin_Data_n_Restrict)] [added: 18.](#Stat_Fin_Data_n_Restrict)] | [Statutory Financial Data and Restrictions](#Stat_Fin_Data_n_Restrict) | [removed: [306](#Stat_Fin_Data_n_Restrict)] [added: [299](#Stat_Fin_Data_n_Restrict)] |

| [NOTE [removed: 20.](#Share_Base_n_Comp_Plan)] [added: 19.](#Share_Base_n_Comp_Plan)] | [Share-Based Compensation Plans](#Share_Base_n_Comp_Plan) | [removed: [308](#Share_Base_n_Comp_Plan)] [added: [301](#Share_Base_n_Comp_Plan)] |

| [NOTE [removed: 21.](#Employee_Benefits)] [added: 20.](#Employee_Benefits)] | [Employee Benefits](#Employee_Benefits) | [removed: [311](#Employee_Benefits)] [added: [304](#Employee_Benefits)] |

| [NOTE [removed: 22](#Income_Taxes).] [added: 21](#Income_Taxes).] | [Income Taxes](#Income_Taxes) | [removed: [319](#Income_Taxes)] [added: [312](#Income_Taxes)] |

| [NOTE [removed: 23.](#Sub_Event)] [added: 22.](#Sub_Event)] | [Subsequent Events](#Sub_Event) | [removed: [325](#Sub_Event)] [added: [318](#Sub_Event)] |

| [SCHEDULE I](#Sch_I) | [Summary of Investments – Other than Investments in Related Parties at December 31, [removed: 2020](#Sch_I)] [added: 2021](#Sch_I)] | [removed: [336](#Sch_I)] [added: [328](#Sch_I)] |

| [SCHEDULE II](#Sch_II) | [Condensed Financial Information of Registrant at December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#Sch_II)] [added: 2019](#Sch_II)] | [removed: [337](#Sch_II)] [added: [329](#Sch_II)] |

| [SCHEDULE III](#Sch_III) | [Supplementary Insurance Information at December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#Sch_III)] [added: 2019](#Sch_III)] | [removed: [341](#Sch_III)] [added: [333](#Sch_III)] |

| [SCHEDULE IV](#Sch_IV) | [Reinsurance at December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] and for the years then ended](#Sch_IV) | [removed: [342](#Sch_IV)] [added: [334](#Sch_IV)] |

| [SCHEDULE V](#Sch_V) | [Valuation and Qualifying Accounts for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#Sch_V)] [added: 2019](#Sch_V)] | [removed: [343](#Sch_V)] [added: [335](#Sch_V)] |

AIG | [removed: 2020] [added: 2021] Form 10-K 179

We have audited the accompanying consolidated balance sheets of American International Group, Inc. and its subsidiaries (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] 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, [removed: 2020,] [added: 2021,] including the related notes and financial statement schedules listed in the accompanying index (collectively referred to as the [removed: consolidated] [added: “consolidated] financial [removed: statements).][added: statements”).]

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] 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, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] 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, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

180 AIG | [removed: 2020] [added: 2021] Form 10-K

As described in Note [removed: 5] [added: 4] to the consolidated financial statements, as of December 31, [removed: 2020,] [added: 2021,] the total fair value of the Company’s level 3 fixed maturity securities, including bonds available for sale and other bond securities, was $29.6 billion, comprised of residential mortgage backed securities, commercial mortgage backed securities, collateralized debt obligations, other asset-backed securities, and fixed maturity securities issued by corporations (including private placements), [added: states,] municipalities, and other governmental agencies.

176 AIG | 2021 Form 10-K

| [NOTE 14.](#Debt) | [Debt](#Debt) | [287](#Debt) |

AIG | 2021 Form 10-K 177

| [NOTE 4.](#BusinessCombo) | [Business Combination](#BusinessCombo) | [202](#BusinessCombo) |

| [NOTE 15.](#Debt) | [Debt](#Debt) | [294](#Debt) |

AIG | 2020 Form 10-K 181

182 AIG | 2020 Form 10-K

The Prudential Regulation [removed: Authority,] [added: Authority (PRA),] the [removed: United Kingdom’s (UK’s)] [added: UK’s] prudential regulator, is the lead prudential supervisor for our [removed: new] UK [removed: entity, American International Group UK Limited (AIG UK).][added: insurance operations.]

The UK’s Financial Conduct Authority has oversight of [removed: AIG UK] [added: AIG’s insurance operations] for consumer protection and competition matters.

Under the agreement, AIG will be supervised at the worldwide group level only by its relevant U.S. insurance supervisors, and will [added: in general] not have to satisfy EU Solvency II group capital, reporting and governance requirements for its worldwide group.

The [removed: agreement] [added: Covered Agreement] further provides that if the summary risk reports submitted to the supervisory authority of a host jurisdiction expose any serious threat to policyholder protection or financial stability in such host state, the host supervisor may request further information from the insurance group and/or impose preventive or corrective measures with respect to the (re)insurer in its jurisdiction.

While this provision does not preclude AIG from continuing to request collateral from an EU reinsurer that is party to a bilateral reinsurance transaction, it is [removed: unclear how much collateral AIG will be able] [added: generally difficult] to obtain [added: collateral] from [removed: EU] reinsurers [removed: going forward.][added: when it is not required for AIG to take credit for the reinsurance.]

[removed: 16] [added: 18] AIG | [removed: 2020] [added: 2021] Form 10-K

The [removed: Bermuda Monetary Authority (the BMA)] [added: BMA] regulates AIG’s operating (re)insurance subsidiaries in Bermuda.

[removed: The Insurance Act 1978 and its related regulations, as enforced by the BMA, impose a] [added: A] variety of requirements and restrictions [added: are imposed] on our Bermuda operating (re)insurance subsidiaries including: the filing of [removed: annual] [added: annual/quarterly] statutory financial [removed: returns;] [added: information including, but not limited to,] the [added: preparation of an annual Financial Condition Report for commercial (re)insurers providing details of measures governing the business operations, corporate governance framework, solvency and financial performance; the] filing of annual [removed: GAAP] [added: audited] financial statements [removed: for commercial (re)insurers;] [added: prepared in accordance with GAAP International Financial Reporting Standards or other generally accepted accounting principles as the BMA may recognize;] compliance with minimum enhanced capital requirements; compliance with the BMA’s [removed: Insurance Code] [added: applicable Codes] of Conduct; compliance with minimum solvency margins and liquidity ratios (the latter for general business (re)insurers); limitations on dividends and distributions; [removed: preparation of an annual Financial Condition Report for commercial (re)insurers providing details of measures governing the business operations, corporate governance framework, solvency] and [removed: financial performance; and restrictions] [added: notification obligations to the BMA] on certain changes in control of regulated (re)insurers.

The Registrar of Companies [removed: (the ROC)] [added: (ROC)] regulates the compliance by AIG’s entities in Bermuda which carry on a Relevant Activity, as defined in Bermuda’s Economic Substance Act 2018 and related Economic Substance Regulations 2018 (as amended, the ES Laws).

The Japan Financial Services Agency (JFSA) regulates AIG’s operating insurance [removed: and reinsurance] subsidiaries in Japan.

Our Japanese insurance [removed: and reinsurance] operations are required to maintain a minimum solvency margin ratio (SMR), which is a measure of capital adequacy.

The [removed: GDPR aims to introduce consistent data protection rules across the EU, and its] [added: GDPR’s] scope extends to entities established within the EEA (i.e., EU member states plus Iceland, Liechtenstein and Norway) and [removed: also extends] to certain entities not established in the EEA (in certain instances, if they solicit or target individuals in the EU [removed: to offer] [added: by offering] goods or services to EEA data subjects or [removed: monitor] [added: monitoring the] personal behavior of EEA data subjects (e.g., in an online context)).

We have sought to address these new requirements [removed: regarding] [added: on] the processing of personal data about individuals, including mandatory security breach reporting, new and strengthened individual rights, evidenced data controller accountability for compliance with the GDPR principles (including fairness and transparency), maintenance of data processing activity records and the implementation of “privacy by design”, including through the completion of mandatory Data Protection Impact Assessments in connection with higher risk data processing activities.

Sanctions for non-compliance with the GDPR are [removed: more onerous than the previous regulatory regime] [added: onerous,] with the potential for fines of up to 4 percent of global revenue for the most serious [removed: infringements.][added: infringements of the GDPR.]

In addition, we must comply with laws and regulations regarding data localization and the cross-border transfer of [removed: information, an example of which is described below.][added: information.]

AIG | [removed: 2020] [added: 2021] Form 10-K [removed: 17][added: 19]

The FSB [removed: itself] is not a regulator but is focused primarily on promoting international financial stability.

The [removed: IAIS] [added: 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 [removed: itself] is not a regulator, but one of its activities is to develop insurance regulatory standards for use by local authorities across the globe.

The IAIS has adopted ICS Version 2.0 for a [removed: five year] [added: five-year] monitoring phase, an initial phase commencing January 2020, during which ICS Version 2.0 [removed: will be] [added: is] used for confidential reporting to group-wide supervisors and discussion in supervisory colleges, but will not trigger supervisory action.

At the conclusion of the [removed: five year] [added: five-year] monitoring period, the IAIS has agreed to a second phase of implementation, whereby 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.

The IAIS [removed: has begun work on] [added: is] developing criteria to assess whether the AM provides comparable outcomes to the ICS, including a project plan focused on delivery by the end of the monitoring period.

The IAIS has adopted a Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector, [removed: for] [added: with] implementation beginning in 2020.

[removed: 18] [added: 20] AIG | [removed: 2020] [added: 2021] Form 10-K

At this time, as these standards have been adopted only recently and in some cases remain under development, [removed: it] [added: in some cases there] is [removed: not known] [added: uncertainty about] how the IAIS’ frameworks and/or standards might be implemented in the United States and other jurisdictions around the world, or how they might ultimately apply to us.

Regulation [removed: of] [added: of,] and restrictions [removed: on] [added: on,] derivatives markets and transactions [removed: have been proposed or] [added: were] adopted outside the United [removed: States.][added: States in conjunction with similar regulation promulgated by U.S. regulators.]

For instance, the EU [removed: has also] [added: and UK] established a set of [removed: new] regulatory requirements for EU [added: and UK] derivatives activities under [removed: EMIR.][added: EMIR and English law, respectively.]

These requirements include, among other things, various risk mitigation, risk management, margin posting, regulatory reporting and, for certain categories of derivatives, clearing [removed: requirements.][added: requirements, that are broadly similar to, but also deviate in certain respects from U.S. regulations of these activities.]

There remains the possibility of increased administrative costs with respect to our EU [added: and UK] derivatives activities [added: and/or our derivatives activities with EU or UK counterparties] and overlapping or inconsistent regulation depending on the ultimate application of cross-border regulatory requirements between and among U.S. and non-U.S. jurisdictions.

The Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation [added: (MiFIR)] took effect in Europe on January 3, 2018.

AIG Asset Management (Europe) Limited has [added: implemented] and continues to implement new policies, procedures and reporting protocols required to ensure compliance with this legislation and its related rules.

AIG | [removed: 2020] [added: 2021] Form 10-K [removed: 19][added: 21]

** *Charters for Board Committees:* Audit, Nominating and Corporate Governance, Compensation and Management [removed: Resources, Risk] [added: Resources] and [removed: Capital,] [added: Risk] and [removed: Technology] [added: Capital] Committees

[removed: 20] [added: 22] AIG | [removed: 2020] [added: 2021] Form 10-K

 COVID-19 [removed: is] [added: has] adversely [removed: affecting,] [added: affected,] and is expected to continue to adversely affect, our global business, [removed: financial condition and] results of operations, [added: financial condition] and [added: liquidity, and] its ultimate impact will depend on future developments that are uncertain and cannot be [removed: predicted, including the scope, severity and duration of the crisis, and the governmental, legislative and regulatory actions taken and court decisions rendered in response thereto.][added: predicted.]

 Deterioration of economic conditions, geopolitical [removed: tensions] [added: tensions, changes in market conditions] or weakening in global capital markets may materially affect our businesses, results of operations, financial condition and liquidity.

 Reinsurance may [removed: not] be [removed: available] [added: unavailable] or [removed: affordable] [added: too expensive relative to its benefit,] and may not be adequate to protect us against losses.

[removed:  Following] [added: *For information regarding] the [added: impact of the] Majority Interest Fortitude [added: sale on our reinsurance program, see Reserves and Exposures – “Following the Majority Interest Fortitude] Sale, our largest reinsurance counterparty, Fortitude Re, is no longer [removed: affiliated with] [added: controlled by] us, and a failure by Fortitude Re to perform its obligations could have a material effect on our business, results of operations or liquidity and the accounting treatment of our reinsurance agreements with Fortitude Re could also lead to volatility in our net [removed: income.][added: income” below.*]

 [removed: Interest rate fluctuations, increased lapses and surrenders, declining investment returns and other events may require our] [added: Our] subsidiaries [added: may be required] to accelerate the amortization of deferred policy acquisition costs (DAC) and record additional liabilities for future policy [removed: benefits.][added: benefits due to interest rate fluctuations, increased lapses and surrenders, declining investment returns and other events.]

 Losses due to nonperformance or defaults by counterparties [removed: can] [added: may] materially and adversely affect the value of our investments, our profitability and sources of liquidity.

Insurance and Financial Services Regulation

A substantial portion of our business is conducted in foreign countries.

Generally, our subsidiaries operating in foreign jurisdictions must satisfy local regulatory requirements; licenses issued by foreign authorities to our subsidiaries are subject to modification or revocation by such authorities, and therefore these subsidiaries could be prevented from conducting business in certain of the jurisdictions where they currently operate.

For our international operations, a decline in capital and surplus over capital requirements would limit the ability of our insurance subsidiaries to write business or make dividend payments or distributions.

Additionally, regulators in the countries in which such subsidiaries operate may deem it necessary to impose restrictions on dividend distributions in the event of a significant financial market or insurance event which creates uncertainty over our future capital and solvency position.

The UK Financial Conduct Authority (FCA) has also published Policy Statement PS21/3 titled “Building operational resilience: Feedback to CP19/32 and final rules” which will require, amongst other things, firms to strengthen their operational resilience by identifying important business services and setting tolerance levels for operational disruption.

These rules will come into force in March 2022.

As referenced elsewhere (*see “NAIC Activities and Model Laws” section*) the NAIC has developed a GCC which is designed to satisfy this requirement.

Certain states have already adopted the GCC requirements in their statutes.

Remaining states have until November 7, 2022 to implement the GCC provisions after which they will be subject to federal preemption.

Lastly, while the U.S. has not been deemed an “equivalent” jurisdiction under European law, U.S. groups are expected to receive treatment under Solvency II that reflects the soundness of U.S. supervision, Covered Agreement safeguards, and the enhanced bilateral relationship between U.S. and EU authorities.

Based on proposed changes to Article 262 in Solvency II, as part of EIOPA and the European Commission’s current review of the Solvency II framework, there is a desire to bring increased conformity to the supervision of groups from non-equivalent jurisdictions across all EU member states.

These potential changes could include limits on intragroup transactions, governance changes and requiring information on risk exposures from parent companies.

It is currently unclear how these potential changes would apply to US groups.

Bermuda’s Insurance Act 1978 and its related regulations impose solvency and liquidity standards and auditing and reporting requirements on Bermuda (re)insurance companies and grant the Bermuda Monetary Authority (BMA) powers to supervise, investigate and intervene in the affairs of (re)insurance companies.

EMIR, which governs derivatives, and MiFID II were adopted by the UK government as part of the Brexit legislative “onshoring” process.

The MiFID requirements were implemented in the UK before the UK’s exit from the EU and then amended to reflect the UK’s exit from the EU.

MiFIR was onshored in the UK by the Markets in Financial Instruments (Amendment) (EU Exit) Regulation 2018 (as amended).

Brexit has not, as yet, had a material impact on the UK regulation of derivatives and financial markets.

The UK government is conducting a wholesale markets review that proposes changes to MiFID rules governing trading venues and equity markets (such as the possible repeal of the obligation to trade equities on a regulated market or trading venue) and changes to MiFID rules on client reporting and disclosure, and minor changes to EMIR.

However, substantive obligations on AIG Asset Management (Europe) Limited arising from EMIR and MiFID II are unlikely to change in the UK context in the near future.

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.

For example, our regulated asset manager in the UK is subject to the SMCR regime described above.

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.

The GDPR was also onshored in the UK through the European Union (Withdrawal Agreement) Act 2018, with adjustments as provided in the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019.

For example, in 2021, the European Commission approved revised Standard Contractual Clauses (SCCs) for international data transfers from the EEA.

The SCCs are required to be used for new agreements involving the cross-border transfer of personal data from the EEA and must be 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 subprocessors that receive personal data in the process.

The EEA and the UK have also taken steps to regulate the use of personal data, including external data, and algorithms used for the purpose of AI and automated decision-making.

In April 2021, the European Commission published its Proposal for a Regulation on a European approach for Artificial Intelligence (the Artificial Intelligence Act, which recommends a risk-based approach to restricting, regulating and permitting different AI systems.

European countries, and supranational political organizations like the EU and the Council of Europe, are expected to take an active role in regulating AI in ways that may impact the insurance industry in the future.

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.

Climate Change

There have been a number of climate related policy developments throughout 2021, mostly focused on the UK (which we expect will impact AIG’s UK operations) and European markets, however there is increasing activity in certain jurisdictions across Asia (such as Singapore, Australia, Taiwan and New Zealand).

In the UK, the PRA’s 2021 Climate Change Adaptation Report sets out an expectation that they will be asking the largest firms in the UK for a report describing how the firm has embedded management of climate related financial risks into their existing management frameworks, and in particular, “how \[the firm\] has gained assurance that capital positions cover material climate related financial risks”.

In the EU, the upcoming Corporate Sustainability Reporting Directive and EU taxonomy initiatives will introduce additional disclosure requirements for large EU entities covering how sustainability is reflected in the balance sheet, business strategy and governance in the short, medium, and long-term horizons.

If proposed timeframes are met, the new requirements would apply to AIG’s EU subsidiaries commencing in 2024 for reports covering 2023.

For information on the UK’s withdrawal of its membership in the EU, see – Brexit.

After 42 months, FIO must begin evaluating a potential preemption determination with respect to any state law not in compliance with the aim of assuring full compliance within the five-year timeframe.

The NAIC is in the process of developing a group capital calculation that, if adopted by the states within the five-year time period, is expected to satisfy this condition.

The agreement is still subject to U.S. and UK internal requirements and procedures.

On July 16, 2020, the European Court of Justice (Court) ruled that the protection provided by the EU-U.S. privacy shield with respect to data export mechanisms used to transfer personal data from the EEA to the U.S. was inadequate.

On November 10, 2020, the European Data Protection Board (EDPB) adopted recommendations outlining European data protection authorities' expectations for how data exporters, supported by data importers, should approach international cross-border data transfers of personal data following the Court’s decision.

Such approach includes suggested supplemental technical, organizational and contractual measures companies can adopt to help comply with GDPR and protect against overreaching government surveillance outside of Europe.

We currently meet the criteria set forth to identify an IAIG.

Brexit

On June 23, 2016, the UK held a referendum in which a majority voted for the UK to withdraw its membership in the EU, commonly referred to as Brexit.

The UK left the EU on January 31, 2020.

Under the negotiated withdrawal agreement, there was an 11 month “transition period” during which EU rules continued to apply in the UK and the UK and EU negotiated their future relationship.

On December 24, 2020, a Trade and Cooperation Agreement (TCA) was reached between the UK and the EU which applies provisionally from January 1, 2021 until February 28, 2021, and is expected to be extended until April 30, 2021.

While the TCA covers areas like economic and security co-operation, tariff-free trade in goods, social security coordination, law enforcement and judicial cooperation in criminal matters, among others, it is largely silent on financial services which are expected to be addressed in subsequent negotiations.

AIG has significant operations and employees in the UK and other EU member states.

Prior to December 1, 2018, our General Insurance business operated through AIG Europe Limited (AEL), a UK-incorporated insurer with branches across the EEA.

These branches operated through the EU concept of Freedom of Establishment, which allows an insurer in any member state to establish branch operations in any other member state but with a single capital pool and a single prudential regulator (which in this case was the UK’s Prudential Regulation Authority as AEL was UK-authorized).

In addition, the various establishments of AEL were able to sell insurance products across borders into other member states under the EU principle of Freedom of Services.

The UK government did not pursue continued UK membership of the EU single market and so AEL’s structure would not have remained efficient or able to take advantage of these freedoms beyond the transitional period.

As a result, in order to prepare for Brexit, on December 1, 2018, we completed a reorganization of our operations and legal entity structure in the UK and the EU through the establishment of a new European subsidiary in Luxembourg, AIG Europe S.A. (AESA), which has branches across the EEA and Switzerland, and a new UK subsidiary, AIG UK.

Business written by AEL’s branches in the remaining EEA countries was transferred to AESA, along with business previously written on a Freedom of Services basis from AEL’s UK operations.

The remaining business written by AEL’s UK operations was transferred to AIG UK and AEL was merged into AESA, allowing AIG to operate in both the EEA and UK on a standalone basis.

This reorganization addressed the uncertainty for UK insurers generated by Brexit because it ensured that notwithstanding the loss of Freedom of Establishment and Freedom of Services in the EU for UK financial institutions, AIG will be able to continue to service and pay claims on existing policies, and write new and renewal business where the insured risk is located in the remaining EEA countries.

AIG has also put measures in place to adapt to other changes arising from Brexit such as the issuance of additional documentation to motorists it insures who travel cross border and continues to monitor other risks including, for example, the effect of the ending of the transition period and the TCA on the wider UK and EU economies and on its investments.

Aside from certain margin obligations, these requirements are now in force.

** *Related-Party Transactions Approval Policy*

ITEM 1A | Risk Factors

Investment Portfolio and Concentration of Investments

Liquidity, Capital and Credit

 AIG Parent’s ability to access funds from our subsidiaries is limited.

Business and Operations

 Actions by foreign governments, regulators and international standard setters could result in substantial additional regulation to which we may be subject.

 We face intense competition in each of our businesses.

There is also the potential for permanent or longer term acceleration in macro trends such as work from home and online shopping that may negatively impact elements of our investment portfolio such as commercial real estate.

Moreover, continued low interest rates and the slowdown in the U.S. or global economy, which may continue or increase in severity, have adversely affected and may continue to adversely affect the values of, and the performance of and cash flows derived from, some of the investment assets we hold.

These circumstances may also lead to increased defaults or distressed situations among the investments in our investment portfolio.

In addition, actions taken by governments as well as monetary authorities such as the FRB have been implemented to curtail the impact of economic disruption in the capital markets.

The discontinuation of such programs in advance of substantial economic recovery could adversely impact the performance of our investment portfolio.

Furthermore, market disruptions and uncertainty have negatively affected and may negatively affect our credit ratings or ratings outlook or our ability to generate or access liquidity we may need to operate our business and meet our obligations, including to pay interest on our debt, discharge or refinance our maturing debt obligations, meet capital needs of our subsidiaries, and to satisfy our regulatory capital and liquidity ratios.

If the economic downturn persists or worsens, or economic recovery is prolonged, an increased number of clients and policyholders may face difficulty paying insurance premiums and global regulators may seek to implement new or renew existing premium relief measures to alleviate such difficulties, especially as certain industries, such as travel, are dislocated, which could impair our cash flows.

*For a discussion of legal proceedings see Note [removed: 16] [added: 15] to the Consolidated Financial Statements, which is incorporated herein by reference.*

| For the fiscal year ended December 31, [removed: 2020] [added: 2021] | |

| ] [added: 1](https://www.sec.gov/Archives/edgar/data/5272/000110465922024701/image_000.jpg)] American International Group, Inc. (Exact name of registrant as specified in its charter) | |

| [removed: 175 Water Street,] [added: 1271 Avenue of the Americas,] New York, New York (Address of principal executive offices) | [removed: 10038] [added: 10020] (Zip Code) |

The aggregate market value of the voting and nonvoting common equity held by nonaffiliates of the registrant (based on the closing price of the registrant’s most recently completed second fiscal quarter) was approximately [removed: $,26,860000,000.][added: $,40,695000,000.]

As of February [removed: 9, 2021,] [added: 8, 2022,] there were outstanding [removed: 864,790,669] [added: 814,757,881] shares of Common Stock, $2.50 par value per share, of the registrant.

| Portions of the registrant’s definitive proxy statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders | Part II, Item 5 and Part III, Items 10, 11, 12, 13 and 14 |

ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, [removed: 2020][added: 2021]

| [ITEM 1.](#Item1_Business) | [Business](#Item1_Business) | [removed: [3](#Item1_Business)] [added: [2](#Item1_Business)] |

| | [removed: •] [Our Global Business Overview](#Item1_Business) | [removed: [3](#Item1_Business)] [added: [2](#Item1_Business)] |

| | [removed: • [AIG's Operating] [added: [Operating] Structure](#ManagementFramework) | [5](#ManagementFramework) |

| | [removed: •] [Diversified Mix of Businesses](#DivMix) | [6](#DivMix) |

| | [removed: •] [Human Capital Management](#Our_Employees) | [removed: [7](#Our_Employees)] [added: [8](#Our_Employees)] |

| | [removed: •] [Regulation](#Regulation) | [removed: [9](#Regulation)] [added: [10](#Regulation)] |

| | [removed: •] [Available Information about AIG](#Available_Info_About_AIG) | [removed: [20](#Available_Info_About_AIG)] [added: [23](#Available_Info_About_AIG)] |

| [ITEM 1A.](#Risk_Factors) | [Risk Factors](#Risk_Factors) | [removed: [21](#Risk_Factors)] [added: [24](#Risk_Factors)] |

| [ITEM 1B.](#Unresolved_Staff_Comments) | [Unresolved Staff Comments](#Unresolved_Staff_Comments) | [removed: [46](#Unresolved_Staff_Comments)] [added: [51](#Unresolved_Staff_Comments)] |

| [ITEM 2.](#Properties) | [Properties](#Properties) | [removed: [46](#Properties)] [added: [51](#Properties)] |

| [ITEM 3.](#Legal_Processings) | [Legal Proceedings](#Legal_Processings) | [removed: [47](#Legal_Processings)] [added: [51](#Legal_Processings)] |

| [ITEM 4.](#Mine_Safety_Discclosures) | [Mine Safety Disclosures](#Mine_Safety_Discclosures) | [removed: [47](#Mine_Safety_Discclosures)] [added: [51](#Mine_Safety_Discclosures)] |

| | [of Equity Securities](#Mkt_Regist_CE_related_SH_Matters) | [removed: [47](#Mkt_Regist_CE_related_SH_Matters)] [added: [52](#Mkt_Regist_CE_related_SH_Matters)] |

| [ITEM 6.](#Selected_Fin_Data) | [Selected Financial Data](#Selected_Fin_Data) | [removed: [48](#Selected_Fin_Data)] [added: [53](#Selected_Fin_Data)] |

| [ITEM 7.](#Cautionary_Stmt) | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Cautionary_Stmt) | [removed: [49](#Cautionary_Stmt)] [added: [54](#Cautionary_Stmt)] |

| | [removed: •] [Cautionary Statement Regarding Forward-Looking Information](#Cautionary_Stmt) | [removed: [49](#Cautionary_Stmt)] [added: [54](#Cautionary_Stmt)] |

| | [removed: •] [Use of Non-GAAP Measures](#NonGAAP) | [removed: [51](#NonGAAP)] [added: [57](#NonGAAP)] |

| | [removed: •] [Critical Accounting Estimates](#Critical_Acctg_Est) | [removed: [53](#Critical_Acctg_Est)] [added: [59](#Critical_Acctg_Est)] |

| | [removed: •] [Executive Summary](#Executive_Summary) | [removed: [69](#Executive_Summary)] [added: [75](#Executive_Summary)] |

| | [removed: •] [Consolidated Results of Operations](#Results_of_Operations) | [removed: [78](#Results_of_Operations)] [added: [83](#Results_of_Operations)] |

| | [removed: •] [Business Segment Operations](#Segment_Results) | [removed: [84](#Segment_Results)] [added: [88](#Segment_Results)] |

| | [removed: •] [Investments](#MDNA_Investments) | [116](#MDNA_Investments) |

| | [removed: •] [Insurance Reserves](#Insurance_Reserves) | [126](#Insurance_Reserves) |

| | [removed: •] [Liquidity and Capital Resources](#Liquid_Capital_Res) | [139](#Liquid_Capital_Res) |

| | [removed: •] [Enterprise Risk Management](#Enterprise_Risk_Mgmt_Overview) | [removed: [153](#Enterprise_Risk_Mgmt_Overview)] [added: [151](#Enterprise_Risk_Mgmt_Overview)] |

| [ITEM 7A.](#Q_QTY_Dis_Abt_Mkt_Risk) | [Quantitative and Qualitative Disclosures about Market Risk](#Q_QTY_Dis_Abt_Mkt_Risk) | [removed: [178](#Q_QTY_Dis_Abt_Mkt_Risk)] [added: [176](#Q_QTY_Dis_Abt_Mkt_Risk)] |

| [ITEM 8.](#Fin_Stmt_n_Supp_Data) | [Financial Statements and Supplementary Data](#Fin_Stmt_n_Supp_Data) | [removed: [179](#Fin_Stmt_n_Supp_Data)] [added: [177](#Fin_Stmt_n_Supp_Data)] |

| | [Reference to Financial Statements and Schedules](#Fin_Stmt_n_Supp_Data) | [removed: [179](#Fin_Stmt_n_Supp_Data)] [added: [177](#Fin_Stmt_n_Supp_Data)] |

| [ITEM 9.](#Chg_in_Disagr_w_Acct_n_Fin_Discl) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#Chg_in_Disagr_w_Acct_n_Fin_Discl) | [removed: [326](#Chg_in_Disagr_w_Acct_n_Fin_Discl)] [added: [319](#Chg_in_Disagr_w_Acct_n_Fin_Discl)] |

| [ITEM 9A.](#Controls_n_Procedures) | [Controls and Procedures](#Controls_n_Procedures) | [removed: [326](#Controls_n_Procedures)] [added: [319](#Controls_n_Procedures)] |

| [ITEM 10.](#Dir_Exe_Off_n_Corp_Gov) | [Directors, Executive Officers and Corporate Governance](#Dir_Exe_Off_n_Corp_Gov) | [removed: [328](#Dir_Exe_Off_n_Corp_Gov)] [added: [320](#Dir_Exe_Off_n_Corp_Gov)] |

| [ITEM 11.](#Exe_Comp) | [Executive Compensation](#Exe_Comp) | [removed: [328](#Exe_Comp)] [added: [320](#Exe_Comp)] |

| | [Matters](#Security_Ownership) | [removed: [328](#Security_Ownership)] [added: [320](#Security_Ownership)] |

| | [Glossary](#Glossary) | [172](#Glossary) |

| | [Acronyms](#Acronyms) | [175](#Acronyms) |

| [ITEM 9C.](#Controls_n_Procedures) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ForJuriPreIns) | [319](#ForJuriPreIns) |

| [Signatures](#Signatures) | | [326](#Signatures) |

| American International Group, Inc. (AIG) is a leading global insurance organization. We provide a wide range of property casualty insurance, life insurance, retirement solutions and other financial services to customers in approximately 70 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. AIG common stock is listed on the New York Stock Exchange. In 2021, AIG delivered strong financial results in General Insurance and Life and Retirement while executing on strategic imperatives such as our capital management plan; the separation of Life and Retirement from AIG; and AIG 200, our global, multi-year effort focused on positioning AIG for the future. Additionally, AIG’s pivot in General Insurance from remediation to profitable growth through disciplined underwriting, new business development and renewals continues, as demonstrated through strong double-digit net premium written growth, improved retention across the portfolio and meaningful improvement in the combined ratio. The pursuit of excellence by AIG colleagues allowed us to accomplish all of this despite the global challenges faced as a result of COVID-19 and elevated catastrophic activity. |

| Highly Engaged Global Workforce of more than 36,000 colleagues committed to excellence who are providing services in approximately 70 countries and jurisdictions. | Balance Sheet Strength and Financial Flexibility as demonstrated by over $65 billion in shareholders’ equity and AIG Parent liquidity sources of $15.2 billion as of December 31, 2021. |

2022 Priorities

|  Underwriting Excellence, Pricing Discipline and Clarity of Risk Appetite – Continue to enhance General Insurance portfolio optimization through strength of underwriting framework and guidelines as well as clear communication of risk appetite and rate adequacy. Continue long-standing disciplined approach in Life and Retirement with respect to product pricing and features. | |  Separation of Life and Retirement Business from AIG – Continue progress on the separation of the Life and Retirement business from AIG in a manner intended to maximize value for shareholders and other stakeholders and establish two strong, market-leading companies. |

|  Continued Focus on Profitable Growth – Build on the high-quality General Insurance portfolio achieved to date by focusing on targeted growth through continued underwriting discipline, improved retention and new business development. | |  Optimize Risk Management – Optimize risk profile through disciplined underwriting, reinsurance programs and asset-liability management in the investment portfolio. |

|  Leadership, Culture and Talent – Maintain focus on attracting, developing and retaining world-class employees. Further promote diversity, equity and inclusion at all levels through continued support of robust employee resource and development programs and recruitment strategies. | |  Transparent ESG Leadership – Continue strategic progress toward supporting a more sustainable, equitable and prosperous future for stakeholders by being an agent of positive change. |

2021 Highlights

| Strong General Insurance Performance Resulting from Significant Improvement in Global Commercial Lines Underwriting Results General Insurance achieved 2021 calendar year combined ratio of 95.8 compared to 104.3 in 2020, and sub-100 in every quarter of 2021 2021 accident year combined ratio, as adjusted(a) of 91.0 improved 3.1 points compared to 94.1 in 2020 Grew the top line while maintaining expense discipline with Net premiums written increasing 13 percent, Net premiums earned increasing 6 percent and the expense ratio improving 1.7 points | Continued Solid Contribution from Life and Retirement Along with Significant Separation Progress Life and Retirement increased 2021 Adjusted pre-tax income to $3.9 billion compared to $3.5 billion in 2020, despite unfavorable mortality from COVID-19, reflecting diversified product portfolio and balanced risk profile(b) Pension risk transfer issuance of $3.7 billion in 2021 exceeding $2.3 billion in 2020 Premiums and deposits(a) of $31.0 billion, excluding retail mutual funds, grew 18 percent reflecting growth in all three Individual Retirement product lines, strong pension risk transfer issuance and solid International Life sales 4 percent(c) growth in assets under administration to $409 billion driven by favorable equity markets and strong sales Announced and completed sale of 9.9 percent equity stake to Blackstone Inc. (Blackstone) |

| | |

| Capital Management Execution Complementing Operational Strength Returned $7.7 billion of capital to shareholders and creditors: Paid $1.1 billion of dividends Repurchased $2.6 billion of AIG common stock Reduced debt by $4.0 billion and lowered total debt and preferred stock to total capital ratio to 24.6 percent at December 31, 2021 | |

(c) Excludes Retail Mutual Funds (i) transferred as part of the sale to Touchstone Investments or (ii) liquidated.

| | | | |

| --- | --- | --- | --- |

| |  |  | |

| | | | |

| | | | |

We believe that our people are our greatest strength.

To this end, we place the highest importance on human capital management; namely attracting, developing and retaining high caliber talent committed to our journey to becoming a top performing company and fostering an inclusive environment in which we actively seek and embrace diverse thinking.

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.

Where permitted by local laws and regulations, our offices are open to fully vaccinated employees, even so we have continued our work from home availability.

Mask mandates, social distancing, and office capacity limits have been implemented to comply with local law.

Additionally, we have strict quarantine and contact tracing protocols in place in the event a positive COVID-19 case occurs.

The fund has helped more than 700 employees overcome serious financial hardships and disasters.

Talent Development. AIG is committed to offering a multitude of learning and development opportunities for our colleagues.

Our goal is to build our employees’ skills and fuel a culture of development, change agility, and transformational readiness across the Company through learning and development experiences.

To support this, AIG provides colleagues with a centralized destination where they can access a personalized learning platform that includes a variety of programs to support employee growth.

We have also developed a core, globally consistent curriculum that focuses on key skills that are important to our business and sets up colleagues for success in their career.

In 2021, we developed a globally consistent, streamlined process to encourage robust discussions around succession pipelines and the development of critical talent.

In 2021, the Executive Diversity Council conducted a comprehensive review of the Company’s global diversity representation aspirations and developed a plan to advance DEI objectives at AIG, including with respect to sourcing diverse talent at all levels of the organization.

AIG also provides training programs about conscious inclusion, unconscious bias and systemic racism and harassment awareness.

In 2021, General Insurance launched its Global Sponsorship Program, which builds upon the Accelerated Leadership Program by intentionally matching mid-level diverse employees with senior leaders across the General Insurance business unit to provide mentorship and leadership training.

In Life and Retirement, the Life and Retirement Executive Group, which includes the top 125 leaders in the segment, are mentoring emerging and diverse talent.

Employee Engagement. AIG is committed to an engaged workforce.

AIG conducted its first Organizational Health Index (OHI) survey in August of 2019 and its results were used to embed Health initiatives in the ten AIG 200 operational programs and provide leadership with a roadmap of the issues that were important to our colleagues.

The second OHI survey was conducted in January 2021 with 77 percent of colleagues participating.

| | • [Glossary](#Glossary) | [174](#Glossary) |

| | • [Acronyms](#Acronyms) | [177](#Acronyms) |

| [ITEM 9B.](#Controls_n_Procedures) | [Other Information](#OtherInformation) | [327](#OtherInformation) |

| [Signatures](#Signatures) | | [334](#Signatures) |

| American International Group, Inc. (AIG) is a leading global insurance organization. We provide a wide range of property casualty insurance, life insurance, retirement solutions, and other financial services to customers in approximately 80 countries and jurisdictions. These diverse offerings include products and services that help businesses and individuals protect their assets, manage risks and provide for retirement security. AIG common stock is listed on the New York Stock Exchange. In addition to natural catastrophes, in 2020, AIG effectively managed through COVID-19 and its collateral effects on the global economy thanks to the strong foundation created since late 2017 to instill a culture of underwriting excellence, adjust risk tolerances, implement a best-in-class reinsurance program, de-risk our balance sheet and maintain a balanced investment portfolio. We continue this momentum and embark on an important phase of our journey in becoming a top-performing company with our proactive leadership transition and corporate structure changes to come. |

| Highly Engaged Global Workforce Recognized for Inclusivity with more than 25 percent participating in Employee Resource Groups that foster a culture of inclusion, engage employees and help create a sense of belonging. | Balance Sheet Quality and Capital Strength as demonstrated by over $66 billion in shareholders’ equity and AIG Parent liquidity sources of $15.0 billion as of December 31, 2020. |

2021 Priorities

|  Separation of Life and Retirement Business from AIG – Pursue separation of Life and Retirement business from AIG in a manner intended to maximize value for shareholders and other stakeholders and establish two strong, market-leading companies | |  Business Mix & Targeted Growth – Build on strategic portfolio improvement and product diversity by focusing on growing segments of our business that perform well and are aligned with our underwriting strategy |

|  Leadership, Culture and Talent – Maintain focus on attracting, developing and retaining world-class employees; further promote diversity, equity and inclusion at all levels through continued support of robust employee resource and development programs and recruitment strategies | |  Underwriting Excellence and Pricing Discipline – Continue to enhance General Insurance portfolio rate adequacy through use of underwriting framework and guidelines and clear communication of risk appetite; continue long-standing disciplined approach in Life and Retirement with respect to product pricing and features |

|  Capital Management – Maintain strong capitalization and financial flexibility for our businesses, implement a stand-alone capital structure for our Life and Retirement business and recapitalize AIG Parent debt to create long-term shareholder value | | |

2020 Highlights

| Resilient General Insurance Portfolio from Underwriting Discipline Manageable impact of COVID-19 and natural catastrophes reflected in 2020 Calendar Year Combined Ratio of 104.3 compared to 99.6 in 2019. 2020 Accident Year Combined Ratio, As Adjusted(a) of 94.1 compared to 96.0 in 2019 showed continued improvement due to underwriting discipline, limit management and continued focus on expense reduction | Continued Solid Returns from Life and Retirement Full-Year 2020 Adjusted Pre-tax Income of $3.5 billion compared to $3.6 billion in 2019 Results reflect diversified product portfolio and balanced risk profile(b) |

| Effective Risk Management Established Syndicate 2019 with Lloyd’s to access strategic partners to participate in peak zones while facilitating growth in AIG’s high net worth business, and completed the sale of our majority interest in Fortitude Group Holdings, LLC (Fortitude Holdings) to mitigate a significant portion of our legacy risks(c) | |

In the fourth quarter of 2020, AIG’s chief operating decision makers modified their view of AIG’s businesses and how they allocate resources and assess performance.

The new operating structure no longer includes a Legacy segment.

Prior periods were revised to conform to the current period presentation.

Certain run-off life insurance portfolios previously reported in our Legacy segment have been realigned into the Life Insurance operating segment.

The run-off high net worth (private placement variable universal life and private placement variable annuity) and structured settlement portfolios previously reported in our Legacy segment have been realigned into the Institutional Markets operating segment.

On October 26, 2020, we announced our intention to separate our Life and Retirement business from AIG.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

MD&A – Insurance Reserves – Loss Reserves, and Note 13 to the Consolidated Financial Statements.*

We believe that a major strength of AIG is the dedication, commitment and loyalty of our colleagues.

AIG’s key human capital management objectives include attracting, developing and retaining the highest quality talent.

In August 2019, AIG conducted an Organizational Health Index survey, which was responded to by approximately 80 percent of our workforce and which covered topics across multiple dimensions, including leadership, business operations and effectiveness, diversity, equity and inclusion and customer focus.

In response to this feedback, our colleagues’ ideas and suggestions have been applied across AIG and informed the development of the AIG 200 operational programs.

In January 2021, we launched our second Organizational Health Index survey to give our colleagues another opportunity to share their insights, gather input on how AIG has progressed over the past year and continue to help make AIG a more rewarding place to work.

The COVID-19 Task Force is also responsible for our return-to-office planning, which is informed by a Return to Workplace survey recently completed by our employees.

Our goal is to build skills of our employees by providing ample opportunities to access learning and development that enhances their abilities to perform in their current or future roles.

As such, AIG makes available a library of on-demand learning options, combined with immersive learning experiences to build skills at all levels.

In 2020, more than 17,000 global colleagues participated in Courageous Conversations, a training program about unconscious bias and systemic racism.

Our insurance subsidiaries are subject to regulation and supervision by the states and jurisdictions in which they do business.

In particular, significant legislative and regulatory activity has occurred at both the U.S. federal and state levels, as well as globally, in response to COVID-19 and its impact on insurance consumers.

For example, many jurisdictions have issued regulations and guidance advising or requiring insurers to offer accommodations to policyholders adversely impacted by COVID-19, including requirements to defer payment of, or refund, premiums, postpone policy lapses, and have sought information and data from insurers on a number of topics, including operational preparedness, policyholder data, claims data, and other matters.

While some of these legislative and regulatory initiatives have expired, resurgence of the COVID-19 virus may lead to a renewal of those initiatives.

A number of U.S. states have also passed legislation or issued other guidance that creates a presumption of coverage under workers’ compensation insurance for certain people impacted by COVID-19.

In most cases, the presumption applies to first responders and medical professionals, but some states apply the scope of the presumption more broadly, and efforts are underway in other states to further expand the scope of the presumption.

Members of the U.S. Congress have held discussions and sought information with respect to business interruption, travel and other insurance lines impacted by the COVID-19 crisis and legislators both in the U.S. and overseas are discussing a number of potential loss-sharing programs, some of which contemplate participation by insurers, including a proposed pandemic risk insurance bill relating to business interruption and event cancellation insurance.

In the EU and UK, insurance regulators have issued recommendations or requirements for insurance groups subject to their jurisdiction to temporarily suspend discretionary dividend payments and share buybacks for the benefit of shareholders, and variable remuneration policies such as cash bonuses.

We cannot predict what form legal and regulatory responses to concerns about COVID-19 and related public health issues will take, or how such responses will impact our business.

We operate from approximately [removed: 146] [added: 140] offices in the United States and approximately [removed: 268] [added: 260] offices in approximately 50 foreign countries.

Our General Insurance companies own offices in [removed: 12] [added: 11] foreign countries [removed: and jurisdictions] including Bermuda, Ecuador, Japan, Mexico, the UK and Venezuela.

As of December 31, [removed: 2020,] [added: 2021,] approximately 8 percent of our consolidated assets were located outside the U.S. and Canada, including [removed: $797 million] [added: $2.2 billion] of cash and securities on deposit with regulatory authorities in those locations.

*For additional [removed: geographic] information [added: on geographic locations] see Note 3 to the Consolidated Financial Statements.*

*For [added: information regarding] total carrying values of cash and securities deposited by our insurance subsidiaries under requirements of regulatory authorities see Note [removed: 6] [added: 5] to the Consolidated Financial Statements.*

Risk Factors – Business and [removed: Operations.*][added: Operations and – Regulation.*]

We lease our corporate headquarters located at 1271 Avenue of the Americas, New York, New York.

During 2019, we executed a sale and concurrent leaseback of our corporate headquarters building, which includes a portion of the operations of our General Insurance companies, located at 175 Water Street, New York, New York.

46 AIG | 2020 Form 10-K

AIG | 2021 Form 10-K 51

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 [removed: 21,324] [added: 20,386] stockholders of record of AIG Common Stock as of February [removed: 9, 2021.][added: 8, 2022.]

Our table of equity compensation plans will be included in the definitive proxy statement for AIG’s [removed: 2021] [added: 2022] Annual Meeting of Shareholders.

During the three-month period ended December 31, [removed: 2020,] [added: 2021,] we [removed: did not repurchase any shares of AIG Common Stock or any warrants to purchase] [added: purchased approximately 17 million] shares of AIG Common Stock under this [removed: authorization.][added: authorization for an aggregate purchase price of approximately $992 million.]

As of December 31, [removed: 2020,] [added: 2021,] approximately [removed: $1.5] [added: $3.9] billion remained under the authorization.

[removed: In] [added: From] January [removed: 2021,] [added: 1, 2022 to February 15, 2022,] we repurchased approximately [removed: $92] [added: 9] million [removed: of additional] shares of AIG Common Stock [added: for an aggregate purchase price of approximately $522 million] pursuant to an Exchange Act Rule 10b5-1 repurchase plan.

Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or [removed: otherwise (including through the purchase of warrants).][added: otherwise.]

The repurchase of AIG Common Stock [removed: and warrants to purchase shares of AIG Common Stock] is also subject to the terms of AIG’s Series A 5.85% Non-Cumulative Preferred Stock (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.

*For additional information on our share purchases see Notes [removed: 17] [added: 16] and [removed: 23] [added: 22] to the Consolidated Financial Statements.*

[added: 52] AIG | [removed: 2020] [added: 2021] Form 10-K [removed: 47]

The following Performance Graph compares the cumulative total shareholder return on AIG Common Stock for a five-year period (December 31, [removed: 2015] [added: 2016] to December 31, [removed: 2020)] [added: 2021)] 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, [removed: 2015][added: 2016]

| ] [added: 1](https://www.sec.gov/Archives/edgar/data/5272/000110465922024701/image_009.jpg)] |

| | | [removed: 2015 | | |] 2016 | | | 2017 | | | 2018 | | | 2019 | | | [removed: 2020] [added: 2020] | [added: | | 2021 |]

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, 2021:

| | Total Number | | Average | Total Number of Shares | Approximate Dollar Value of Shares | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | of Shares | | Price Paid | Purchased as Part of Publicly | that May Yet Be Purchased Under the | | | |

| Period | Repurchased | | per Share | Announced Plans or Programs | Plans or Programs (in millions) | | | |

| October 1 – 31 | 5,345,684 | $ | 57.77 | 5,345,684 | | $ | 4,627 | |

| November 1 – 30 | 5,281,916 | | 58.47 | 5,281,916 | | | 4,318 | |

| December 1 – 31 | 6,801,563 | | 55.10 | 6,801,563 | | | 3,943 | |

| Total | 17,429,163 | $ | 56.94 | 17,429,163 | | $ | 3,943 | |

On August 3, 2021, our Board of Directors authorized a share repurchase authorization of AIG Common Stock of $6.0 billion (inclusive of the approximately $908 million remaining under the Board’s prior share repurchase authorization).

| AIG | $ | 100.00 | | $ | 93.14 | | $ | 63.25 | | $ | 84.49 | | $ | 64.84 | | $ | 99.81 |

| S&P 500 | | 100.00 | | | 121.83 | | | 116.49 | | | 153.17 | | | 181.35 | | | 233.41 |

| S&P 500 Property & Casualty Insurance Index | | 100.00 | | | 122.39 | | | 116.64 | | | 146.82 | | | 157.04 | | | 187.31 |

| S&P 500 Life & Health Insurance | | 100.00 | | | 116.43 | | | 92.24 | | | 113.63 | | | 102.86 | | | 140.59 |

On February 13, 2019, our Board of Directors authorized an additional increase to its previous repurchase authorization of AIG Common Stock of $1.5 billion.

| AIG | $ | 100.00 | | $ | 107.77 | | $ | 100.37 | | $ | 68.16 | | $ | 91.05 | | $ | 70.03 |

| S&P 500 | | 100.00 | | | 111.96 | | | 136.40 | | | 130.42 | | | 171.49 | | | 203.04 |

| S&P 500 Property & Casualty Insurance Index | | 100.00 | | | 115.71 | | | 141.61 | | | 134.97 | | | 169.88 | | | 181.70 |

| S&P 500 Life & Health Insurance | | 100.00 | | | 124.86 | | | 145.37 | | | 115.17 | | | 141.88 | | | 128.43 |

[removed: 48] AIG | [removed: 2020] [added: 2021] Form 10-K [added: 53]

This Annual Report on Form 10-K and other publicly available documents may include, and officers and representatives of AIG may from time to time make and discuss, [removed: projections, goals, assumptions and] statements [removed: that] [added: which, to the extent they are not statements of historical or present fact,] may constitute [removed: “forward-looking] [added: “forward looking] statements” within the meaning of the [added: U.S.] Private Securities Litigation Reform Act of 1995.

These [removed: projections, goals, assumptions and] statements [removed: include statements preceded by, followed by or including words such as “will,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “focused on achieving,” “view,” “target,” “goal” or “estimate.” These] [added: may include, among other things,] projections, [removed: goals, assumptions] [added: goals] and [removed: statements may] [added: assumptions that] relate to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, [removed: expenses,] [added: expense reduction efforts,] the outcome of contingencies such as legal proceedings, anticipated organizational, business or regulatory changes, [added: such as] the [added: separation of the Life and Retirement business, the] effect of catastrophes, such as the COVID-19 [removed: crisis,] [added: pandemic,] and macroeconomic events, anticipated dispositions, monetization and/or acquisitions of businesses or assets, or successful integration of acquired businesses, management succession and retention plans, exposure to risk, trends in operations and financial [removed: results.][added: results, and other statements that are not historical facts.]

[removed: It is possible] [added: Factors] that [added: could cause] AIG’s actual results [removed: and financial condition will] [added: to] differ, possibly materially, from [removed: the results and financial condition indicated] [added: those] in [removed: these] [added: the specific] projections, goals, assumptions and [removed: statements.][added: statements include, without limitation:]

|  [removed: the adverse impact of COVID-19, including with respect to] AIG’s [removed: business, financial condition and results of operations;  changes in market and industry conditions, including] [added: ability to successfully separate] the [removed: significant global economic downturn, volatility in financial and capital markets, prolonged economic recovery] [added: Life] and [removed: disruptions to AIG’s operations driven by COVID-19] [added: Retirement business] and [removed: responses thereto, including new or changed governmental policy] [added: the impact any separation may have on AIG, its businesses, employees, contracts] and [removed: regulatory actions;] [added: customers;]  the occurrence of catastrophic events, both natural and man-made, including COVID-19, other pandemics, civil unrest and the effects of climate change;  [removed: AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets or successfully integrate acquired businesses, including any separation] [added: the effect] of [added: economic conditions in] the [removed: Life and Retirement business from] [added: markets in which] AIG and [added: its businesses operate in] the [removed: impact] [added: U.S. and globally and] any [removed: separation may have on AIG, its businesses, employees, contracts] [added: changes therein, including financial market conditions, fluctuations in interest rates] and [removed: customers;] [added: foreign currency exchange rates and inflationary pressures;]  AIG’s ability to effectively execute on [added: the] AIG 200 [removed: transformational] [added: operational] programs designed to [removed: achieve underwriting excellence, modernization of] [added: modernize] AIG’s operating [removed: infrastructure, enhanced] [added: infrastructure and enhance] user and customer [removed: experiences] [added: experiences,] and [removed: unification of AIG;] [added: AIG’s ability to achieve anticipated cost savings from AIG 200;]  the impact of potential information technology, cybersecurity or data security breaches, including as a result of [added: supply chain disruptions,] cyber-attacks or security vulnerabilities, the likelihood of which may increase due to extended remote business operations as a result of COVID-19;  [added: the impact of COVID-19 and responses thereto, including new or changed governmental policy and regulatory actions, on AIG’s business, financial condition and results of operations;  availability of reinsurance or access to reinsurance on acceptable terms; ] disruptions in the availability of AIG’s electronic data systems or those of third parties; [removed: |]  [removed: availability] [added: changes to the valuation of AIG’s investments;  actions by rating agencies with respect to AIG’s credit] and [removed: affordability] [added: financial strength ratings as well as those] of [removed: reinsurance;] [added: its businesses and subsidiaries; |]  [added: concentrations in AIG’s investment portfolios, including as a result of our asset management relationship with Blackstone; ] the effectiveness of [removed: our] [added: strategies to recruit and retain key personnel and to implement effective succession plans;  the effectiveness of AIG’s enterprise] risk management policies and procedures, including with respect to [removed: our] business continuity and disaster recovery plans;  [added: changes in judgments concerning the recognition of deferred tax assets and the impairment of goodwill;  AIG’s ability to effectively execute on ESG targets and standards;  AIG’s ability to successfully dispose of, monetize and/or acquire businesses or assets or successfully integrate acquired businesses; ] nonperformance or defaults by counterparties, including Fortitude [removed: Re;] [added: Reinsurance Company Ltd. (Fortitude Re);]  changes in judgments concerning potential cost-saving opportunities;  [removed: concentrations in AIG’s investment portfolios; ] changes to [removed: the valuation of AIG’s investments;  changes to] our sources of or access to liquidity;  [removed: actions by rating agencies with respect to our credit and financial strength ratings; ] changes in judgments or assumptions concerning insurance underwriting and insurance liabilities;  the [removed: effectiveness of strategies to recruit and retain key personnel and to implement effective succession plans;  the] requirements, which may change from time to time, of the global regulatory framework to which AIG is subject;  significant legal, regulatory or governmental proceedings; [removed:  changes in judgments concerning the recognition of deferred tax assets] and [removed: the impairment of goodwill; 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. |

[added: 54] AIG | [removed: 2020] [added: 2021] Form 10-K [removed: 49]

| [Use of Non-GAAP Measures](#NonGAAP) | | [removed: [51](#NonGAAP)] [added: [57](#NonGAAP)] |

| [Critical Accounting Estimates](#Critical_Acctg_Est) | | [removed: [53](#Critical_Acctg_Est)] [added: [59](#Critical_Acctg_Est)] |

| [Executive Summary](#Executive_Summary) | | [removed: [69](#Executive_Summary)] [added: [75](#Executive_Summary)] |

| [Overview](#Executive_Summary) | | [removed: [69](#Executive_Summary)] [added: [75](#Executive_Summary)] |

| [Financial Performance Summary](#Fin_Performance_Sum) | | [removed: [70](#Fin_Performance_Sum)] [added: [77](#Fin_Performance_Sum)] |

| [AIG's Outlook – Industry and Economic Factors](#Strategic_Outlook) | | [removed: [74](#Strategic_Outlook)] [added: [79](#Strategic_Outlook)] |

| [Consolidated Results of Operations](#Results_of_Operations) | | [removed: [78](#Results_of_Operations)] [added: [83](#Results_of_Operations)] |

| [Business Segment Operations](#Segment_Results) | | [removed: [84](#Segment_Results)] [added: [88](#Segment_Results)] |

| [General Insurance](#MDNA_Commercial_Insurance) | | [removed: [85](#MDNA_Commercial_Insurance)] [added: [89](#MDNA_Commercial_Insurance)] |

| [Life and Retirement](#MDNA_Consumer_Insurance) | | [removed: [97](#MDNA_Consumer_Insurance)] [added: [98](#MDNA_Consumer_Insurance)] |

| [Investment Highlights in [removed: 2020](#MDNA_Investments)] [added: 2021](#MDNA_Investments)] | | [116](#MDNA_Investments) |

| [Analysis of Sources and Uses of Cash](#Analysis_of_Sources_and_Uses_of_Cash) | | [removed: [142](#Analysis_of_Sources_and_Uses_of_Cash)] [added: [141](#Analysis_of_Sources_and_Uses_of_Cash)] |

| [Liquidity and Capital Resources of AIG Parent and Subsidiaries](#Liq_Cap_Res_AIG_n_Sub) | | [removed: [143](#Liq_Cap_Res_AIG_n_Sub)] [added: [142](#Liq_Cap_Res_AIG_n_Sub)] |

| [Credit Facilities](#Credit_Facilities) | | [removed: [146](#Credit_Facilities)] [added: [144](#Credit_Facilities)] |

| [Contractual Obligations](#Contractual_Oblig) | | [removed: [146](#Contractual_Oblig)] [added: [144](#Contractual_Oblig)] |

| [Off-Balance Sheet Arrangements and Commercial Commitments](#Off_BS_Arrgmnt_n_Comm_Commit) | | [removed: [148](#Off_BS_Arrgmnt_n_Comm_Commit)] [added: [145](#Off_BS_Arrgmnt_n_Comm_Commit)] |

| [Debt](#MDNA_Debt) | | [removed: [149](#MDNA_Debt)] [added: [146](#MDNA_Debt)] |

| [Credit Ratings](#MDNA_Credit_Ratings) | | [removed: [150](#MDNA_Credit_Ratings)] [added: [148](#MDNA_Credit_Ratings)] |

| [Financial Strength Ratings](#MDNA_Financial_Strength_Ratings) | | [removed: [151](#MDNA_Financial_Strength_Ratings)] [added: [149](#MDNA_Financial_Strength_Ratings)] |

| [Regulation and Supervision](#Reg_n_Sup) | | [removed: [152](#Reg_n_Sup)] [added: [149](#Reg_n_Sup)] |

| [Dividends](#Div_n_Repur_AIG_CS) | | [removed: [152](#Div_n_Repur_AIG_CS)] [added: [150](#Div_n_Repur_AIG_CS)] |

| [Repurchases of AIG Common Stock](#Repurchases_CS) | | [removed: [152](#Repurchases_CS)] [added: [150](#Repurchases_CS)] |

| [Dividend Restrictions](#Dividend_Restrictions) | | [removed: [152](#Dividend_Restrictions)] [added: [150](#Dividend_Restrictions)] |

| [Enterprise Risk Management](#Enterprise_Risk_Mgmt_Overview) | | [removed: [153](#Enterprise_Risk_Mgmt_Overview)] [added: [151](#Enterprise_Risk_Mgmt_Overview)] |

| [Overview](#Enterprise_Risk_Mgmt_Overview) | | [removed: [153](#Enterprise_Risk_Mgmt_Overview)] [added: [151](#Enterprise_Risk_Mgmt_Overview)] |

| [Risk Governance Structure](#Risk_Governance_Structure) | | [removed: [153](#Risk_Governance_Structure)] [added: [151](#Risk_Governance_Structure)] |

| [Risk Appetite, Limits, Identification and Measurement](#Risk_Appetite) | | [removed: [154](#Risk_Appetite)] [added: [152](#Risk_Appetite)] |

| [Credit Risk Management](#ERM_Credit_Risk_Mgmt) | | [removed: [156](#ERM_Credit_Risk_Mgmt)] [added: [154](#ERM_Credit_Risk_Mgmt)] |

| [Market Risk Management](#ERM_Mkt_Risk_Mgmt) | | [removed: [157](#ERM_Mkt_Risk_Mgmt)] [added: [155](#ERM_Mkt_Risk_Mgmt)] |

| [Liquidity Risk Management](#ERM_Liq_Risk_Mgmt) | | [removed: [162](#ERM_Liq_Risk_Mgmt)] [added: [160](#ERM_Liq_Risk_Mgmt)] |

| [Operational Risk Management](#ERM_Op_Risk_Mgmt) | | [removed: [163](#ERM_Op_Risk_Mgmt)] [added: [161](#ERM_Op_Risk_Mgmt)] |

| [Insurance Risks](#ERM_Insurance_Risk_mgmt) | | [removed: [165](#ERM_Insurance_Risk_mgmt)] [added: [163](#ERM_Insurance_Risk_mgmt)] |

| [Other Business Risks](#ERM_OtherBus_Risks) | | [removed: [173](#ERM_OtherBus_Risks)] [added: [171](#ERM_OtherBus_Risks)] |

[removed: 50] AIG | [removed: 2020] [added: 2021] Form 10-K [added: 55]

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.

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,” “see,” “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.

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.

The 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.

Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC.

| [Rating Agency Actions Related to the Announced Separation of Life and Retirement](#RatingAgencyAction) | | [149](#RatingAgencyAction) |

| [Glossary](#Glossary) | | [172](#Glossary) |

| [Acronyms](#Acronyms) | | [175](#Acronyms) |

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 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.

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, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed.

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 development factors, where appropriate.

 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 generally reflects the projected 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 (for example, excess casualty, workers’ compensation and general liability), 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.

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.

 an assessment of economic conditions including inflation, employment rates or unemployment duration;

 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;

 changes in claims handling philosophy, operating model, processes and related ongoing enhancements;

 third-party claims reviews that are periodically performed for key product lines of business such as toxic tort, environmental and other complex casualty;

 third-party actuarial reviews that are periodically performed for key product lines of business;

 input from underwriters on pricing, terms, and conditions and market trends; and

 changes in our reinsurance program, pricing and commutations.

| 4.5 percent increase | $ | 960 | | | 2.5 percent tail factor increase | $ | 1,030 |

| 3.5 percent decrease | | (580) | | | 2.0 percent tail factor decrease | | (830) |

| 5.5 percent increase | | 1,140 | | | 3.0 percent tail factor increase | | 680 |

| 4.0 percent decrease | | (700) | | | 2.25 percent tail factor decrease | | (510) |

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.

For long-duration traditional business, a “lock-in” principle applies. 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).

Overview of Loss Recognition Process and Methods

These projections, goals, assumptions and statements are not historical facts but instead represent only a belief regarding future events, many of which, by their nature, are inherently uncertain and outside AIG’s control.

Factors that could cause AIG’s actual results to differ, possibly materially, from those in the specific projections, goals, assumptions and statements include:

| --- | --- |

| --- | --- | --- |

| [Recent Rating Agency Actions](#RatingAgencyAction) | | [151](#RatingAgencyAction) |

| [Glossary](#Glossary) | | [174](#Glossary) |

| [Acronyms](#Acronyms) | | [177](#Acronyms) |

The reconciliation to book value per common share, the most comparable GAAP measure, is presented in the Executive Summary section of this MD&A.

The reconciliation to return on common equity, the most comparable GAAP measure, is presented in the Executive Summary section of this MD&A.

and by excluding the net realized capital gains (losses) and other charges from noncontrolling interests.

For the period ended December 31, 2018, we have excluded changes in the fair value of equity securities from adjusted pre-tax income to be consistent with our elected prospective treatment beginning in the first quarter of 2019 due to a change in accounting principle.

ITEM 7 | Critical Accounting Estimates

| --- |

Insurance Liabilities

We use numerous assumptions in determining the best estimate of reserves for each line of business.

|  Loss cost trend factors are used to establish expected loss ratios for subsequent accident years based on the projected loss ratios for prior accident years.  Expected loss ratios are used for the latest accident year (i.e., accident year 2020 for the year-end 2020 loss reserve analysis) and, in some cases for accident years prior to the latest accident year. The expected loss ratio generally reflects the projected 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. For low-frequency, high-severity lines of business such as excess casualty, expected loss ratios generally are used for at least the three most recent accident years.  Loss development factors 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 are development factors used for certain longer tailed lines of business (for example, excess casualty, workers’ compensation and general liability), 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. |

|  an assessment of economic conditions including inflation, employment rates or unemployment duration;  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;  changes in claims handling philosophy, operating model, processes and related ongoing enhancements;  third-party claims reviews that are periodically performed for key product lines such as toxic tort, environmental and other complex casualty;  third-party actuarial reviews that are periodically performed for key product lines of business;  input from underwriters on pricing, terms, and conditions and market trends; and  changes in our reinsurance program, pricing and commutations. |

| Line of Business or Category | Key Assumptions |

| 5 percent increase | $ | 1,000 | | | 6-months slower | $ | 1,050 |

| 5 percent decrease | | (650) | | | 6-months faster | | (800) |

| 10 percent increase | | 1,100 | | | 6-months slower | | 650 |

| 10 percent decrease | | (650) | | | 6-months faster | | (450) |

If loss recognition exists, we recognize the loss by first reducing DAC through amortization expense, and, if DAC is depleted, record additional liabilities through a charge to policyholder benefit expense.

For the business ceded to Fortitude Re, 100 percent of the risk is transferred and no additional loss recognition will occur.

For products in which asset and liability durations are matched relatively well, this is less of a consideration since interest on excess cash flows are not a significant component of future cash flows.

For the reinvestment rate assumption, anticipated future changes to the yield curves could have a large effect.

Given the interest rate environment applicable at the date of our most recent loss recognition tests, we assumed a modest and gradual increase in long-term interest rates over time.

 For in-force long-term care insurance, rate increases are allowed but must be approved by state insurance regulators.

Consequently, the extent of rate increases that may be assumed requires judgment.

In establishing our assumption for rate increases for long-term care insurance, we consider historical experience as to the frequency and level of rate increases approved by state regulators.

Accordingly, there is limited additional judgment in this process.

| Key assumptions include:  Mortality rates, which are based upon actual experience modified to allow for variations in policy form  Lapse rates, which are based upon actual experience modified to allow for variations in policy form  Investment returns, using assumptions from a stochastic equity model In applying asset growth assumptions for the valuation of the GMDB liability, we use a reversion to the mean methodology, similar to that applied for DAC. *For a description of this methodology see Estimated Gross Profits for Investment-Oriented Products below.* | |

The use of a reversion to the mean assumption is common within the industry; however, the parameters used in the methodology are subject to judgment and vary within the industry.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Effect of an decrease by 10% | | 135 | | 94 | | 25 | | 118 | | (102) |

Reinsurance Recoverable

At December 31, 2020, the allowance for credit losses and disputes on reinsurance recoverable was $375 million, or less than one percent of the consolidated reinsurance recoverable.

Risk transfer

All insurance contracts, including reinsurance contracts, must meet risk transfer requirements in order to use insurance accounting, principally resulting in the recognition of cash flows under the contract as premiums and losses.

If risk transfer requirements are not met, a contract is to be accounted for as a deposit, typically resulting in the recognition of cash flows under the contract through a deposit asset or liability and not as revenue or expense.

As described in Note [removed: 22] [added: 21] to the consolidated financial statements, as of December 31, [removed: 2020,] [added: 2021,] the Company had a net U.S. federal deferred tax asset of [removed: $12.0] [added: $11.0] billion, [removed: $8.1] [added: $6.1] billion of which related to federal U.S. tax attributes with a limited carryforward period.

As of December 31, [removed: 2020,] [added: 2021,] management determined that it is no longer more-likely-than-not that [removed: $150] [added: $850] million of the Company’s deferred tax assets related to [removed: foreign] tax [removed: credit] [added: attribute] carryforwards will be utilized prior to expiration.

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 [removed: loss] [added: income/loss] measurement, reversal of temporary differences, adjustments to forecasted pre-tax income to calculate future taxable income, [added: 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, [added: 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.

[added: |] February [removed: 19,] [added: 16,] 2021 [added: | March 16, 2021 | March 30, 2021 | | | 0.32 |]

AIG | [removed: 2020] [added: 2021] Form 10-K 183

| *(in millions, except for share data)* | | [removed: 2020] [added: 2021] | | [removed: 2019] [added: 2020] |

| Bonds available for sale, at fair value, net of allowance for credit losses of [added: $98 in 2021 and] $186 in 2020 | | | | |

| (amortized cost: [removed: 2020] [added: 2021] - [removed: $244,337; 2019] [added: $259,210; 2020] - [removed: $233,230)*] [added: $244,337)*] | $ | [removed: 271,496] [added: 277,202] | $ | [removed: 251,086] [added: 271,496] |

| Other bond securities, at fair value *(See Note [removed: 6)] [added: 5)] | | [removed: 5,291] [added: 6,278] | | [removed: 6,682] [added: 5,291] |

| Equity securities, at fair value *(See Note [removed: 6)] [added: 5)] | | [removed: 1,056] [added: 739] | | [removed: 841] [added: 1,056] |

| Mortgage and other loans receivable, net of allowance for credit losses of [removed: $814] [added: $629] in [removed: 2020] [added: 2021] and [removed: $438] [added: $814] in [removed: 2019*] [added: 2020*] | | [removed: 45,562] [added: 46,048] | | [removed: 46,984] [added: 45,562] |

| Other invested assets (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $8,422; 2019] [added: $10,504; 2020] - [removed: $6,827)*] [added: $8,422)*] | | [removed: 19,060] [added: 15,668] | | [removed: 18,792] [added: 19,060] |

| Short-term investments, including restricted cash of [removed: $180] [added: $197] in [removed: 2020] [added: 2021] and [removed: $188] [added: $180] in [removed: 2019] [added: 2020] | | | | |

| (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $5,968; 2019] [added: $4,426; 2020] - [removed: $5,343)*] [added: $5,968)*] | | [removed: 18,203] [added: 13,357] | | [removed: 13,230] [added: 18,203] |

| Total investments | | [removed: 360,668] [added: 359,292] | | [removed: 337,615] [added: 360,668] |

| [removed: Cash*] [added: Cash] | [added: $] | [removed: 2,827] [added: 2,198] | [added: $] | [added: 2,827 | $ |] 2,856 |

| Accrued investment income* | | [removed: 2,271] [added: 2,239] | | [removed: 2,334] [added: 2,271] |

| Premiums and other receivables, net of allowance for credit losses and disputes of [removed: $205] [added: $185] in [removed: 2020] [added: 2021] and [removed: $178] [added: $205] in [removed: 2019] [added: 2020] | | [removed: 11,333] [added: 12,409] | | [removed: 10,274] [added: 11,333] |

| Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes of $0 in [added: 2021 and $0 in] 2020 | | [removed: 34,578] [added: 33,365] | | [removed: \-] [added: 34,578] |

| Reinsurance assets - other, net of allowance for credit losses and disputes of [removed: $326] [added: $333] in [removed: 2020] [added: 2021] and [removed: $151] [added: $326] in [removed: 2019] [added: 2020] | | [removed: 38,963] [added: 40,919] | | [removed: 37,977] [added: 38,963] |

| Deferred income taxes | | [removed: 12,624] [added: 11,714] | | [removed: 13,146] [added: 12,624] |

| Deferred policy acquisition costs | | [removed: 9,805] [added: 10,514] | | [removed: 11,207] [added: 9,805] |

| Other assets, net of allowance for credit losses of $49 in [added: 2021 and $49 in] 2020, including restricted cash of [removed: $223 in 2020 and $243] [added: $32] in [removed: 2019] [added: 2021] | | | | |

| [added: and $223 in 2020] (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $887; 2019] [added: $957; 2020] - [removed: $3,151)*] [added: $887)*] | | [removed: 13,122] [added: 14,351] | | [removed: 16,383] [added: 13,122] |

| Separate account assets, at fair value | | [removed: 100,290] [added: 109,111] | | [removed: 93,272] [added: 100,290] |

| Total assets | $ | [removed: 586,481] [added: 596,112] | $ | [removed: 525,064] [added: 586,481] |

| Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses of $14 in [added: 2021 and $14 in] 2020 | $ | [removed: 77,720] [added: 79,026] | $ | [removed: 78,328] [added: 77,720] |

| Unearned premiums | | [removed: 18,660] [added: 19,313] | | [removed: 18,269] [added: 18,660] |

| Future policy benefits for life and accident and health insurance contracts | | [removed: 51,097] [added: 59,950] | | [removed: 50,512] [added: 56,878] |

| Policyholder contract deposits (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $9,798; 2019] [added: $9,736; 2020] - [removed: $6,910)] [added: $9,798)] | | [removed: 160,251] [added: 156,686] | | [removed: 151,869] [added: 154,470] |

| Other policyholder funds | | [removed: 3,548] [added: 3,476] | | [removed: 3,428] [added: 3,548] |

| Fortitude Re funds withheld payable (portion measured at fair value: [added: 2021 - $5,922;] 2020 - $6,042) | | [removed: 43,060] [added: 40,771] | | [removed: \-] [added: 43,060] |

| Other liabilities (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $570; 2019] [added: $586; 2020] - [removed: $1,100)*] [added: $570)*] | | [removed: 27,122] [added: 28,704] | | [removed: 26,609] [added: 27,122] |

| Long-term debt (portion measured at fair value: [removed: 2020] [added: 2021] - [removed: $2,097; 2019] [added: $1,871; 2020] - [removed: $2,062)*] [added: $2,097)] | | [removed: 28,103] [added: 23,741] | | [removed: 25,479] [added: 28,103] |

| Debt of consolidated investment entities* | | [removed: 9,431] [added: 6,422] | | [removed: 9,871] [added: 9,431] |

| Separate account liabilities | | [removed: 100,290] [added: 109,111] | | [removed: 93,272] [added: 100,290] |

| Total liabilities | | [removed: 519,282] [added: 527,200] | | [removed: 457,637] [added: 519,282] |

| Contingencies, commitments and guarantees (See Note [removed: 16)] [added: 15)] | | \- | | \- |

| authorized; shares issued: [removed: 2020] [added: 2021] - 20,000 and [removed: 2019] [added: 2020] - 20,000; liquidation preference $ 500 | | 485 | | 485 |

February 17, 2022

AIG | 2021 Form 10-K 181

182 AIG | 2021 Form 10-K

| Other comprehensive loss | | \- | | \- | | \- | | \- | | \- | | (5,725) | | (5,725) | | (105) | | (5,830) |

| and acquisitions | | \- | | \- | | \- | | 470 | | \- | | (1,099) | | (629) | | 2,342 | | 1,713 |

| Other | | \- | | \- | | 101 | | 273 | | 5 | | \- | | 379 | | 7 | | 386 |

| Balance, December 31, 2021 | $ | 485 | $ | 4,766 | $ | (51,618) | $ | 81,851 | $ | 23,785 | $ | 6,687 | $ | 65,956 | $ | 2,956 | $ | 68,912 |

| Income from discontinued operations | | \- | | (4) | | (48) |

| Reinsurance assets, net | | (1,241) | | (693) | | 217 |

| Divestitures, net | | 4,683 | | 2,173 | | 2 |

Separation of Life and Retirement Business and Relationship with Blackstone Inc.

On November 2, 2021, AIG and Blackstone Inc. (Blackstone) completed the acquisition by Blackstone of a 9.9 percent equity stake in SAFG Retirement Services, Inc. (SAFG), which is the holding company for AIG’s Life and Retirement business, for $2.2 billion in an all cash transaction, subject to adjustment if the final pro forma adjusted book value is greater or lesser than the target pro forma adjusted book value.

This resulted in a $629 million decrease to AIG’s shareholders’ equity.

As part of the separation, most of AIG’s investment operations were transferred to SAFG or its subsidiaries as of December 31, 2021, and AIG entered into a long-term asset management relationship with Blackstone to manage an initial $50 billion of Life and Retirement’s existing investment portfolio beginning in the fourth quarter of 2021, with that amount increasing by increments of $8.5 billion per year for five years beginning in the fourth quarter of 2022, for an aggregate of $92.5 billion.

In addition, Blackstone designated one member of the Board of Directors of SAFG, which consists of 11 directors.

Pursuant to the definitive agreement, Blackstone will be required to hold its ownership interest in SAFG following the completion of the separation of the Life and Retirement business, subject to exceptions permitting Blackstone to sell 25%, 67% and 75% of its shares after the first, second and third anniversaries, respectively, of the initial public offering of SAFG (the IPO), with the transfer restrictions terminating in full on the fifth anniversary of the IPO.

In the event that the IPO of SAFG is not completed prior to November 2, 2023, Blackstone will have the right to require AIG to undertake the IPO, and in the event that the IPO has not been completed prior to November 2, 2024, Blackstone will have the right to exchange all or a portion of its ownership interest in SAFG for shares of AIG’s common stock on the terms set forth in the definitive agreement.

On November 1, 2021, SAFG declared a dividend payable to AIG Parent in the amount of $8.3 billion.

In connection with such dividend, SAFG issued a promissory note to AIG Parent in the amount of $8.3 billion, which will be required to be paid to AIG Parent prior to the IPO of SAFG.

As of February 16, 2022, no amounts have been paid under the promissory note.

While we currently believe the IPO is the next step in the separation of the Life and Retirement business from AIG, no assurance can be given regarding the form that future separation transactions may take or the specific terms or timing thereof, or that a separation will in fact occur.

Any separation transaction will be subject to the satisfaction of various conditions and approvals, including approval by the AIG Board of Directors, receipt of insurance and other required regulatory approvals, and satisfaction of any applicable requirements of the Securities and Exchange Commission (SEC).

*For additional information on the sale of SAFG to Blackstone see Note 16.*

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.

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 and was subject to certain conditions, including approval of the fund reorganizations by the retail mutual fund boards of directors/trustees and fund shareholders.

The transaction closed on July 16, 2021, at which time 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 may be earned over a three-year period based on asset levels in certain reorganized funds.

Six retail mutual funds managed by SAAMCo and not included in the transaction were liquidated.

We will retain our fund management platform and capabilities dedicated to our variable annuity insurance products.

Effective in the second quarter of 2021, AIG, Fortitude Holdings, Carlyle FRL, T&D and Carlyle amended the Purchase Agreement to finalize the post-closing purchase price adjustment for adverse reserve development.

As a result of this amendment, during 2021, AIG recorded a $21 million benefit through Policyholder benefits and losses incurred and eliminated further net exposure to adverse development on the reserves ceded to Fortitude Re.

 loss reserves;

 income taxes, in particular the recoverability of our deferred tax asset and establishment of provisions for uncertain tax positions.

Basis of Presentation

In the third quarter of 2021, we identified misclassifications related to the balance sheet presentation of certain of our universal life and variable annuity products which resulted in an overstatement of Policyholder contract deposits and an understatement of Future policyholder benefits for life and accident and health insurance contracts.

These balance sheet-only items had no impact to total liabilities reported, the Consolidated Statements of Income (Loss) or the Consolidated Statements of Cash Flows in any prior period.

Accordingly, the Policyholder contract deposits, and Future policy benefits for life and accident and health insurance contracts included within the Consolidated Balance Sheets were decreased and increased, respectively, by $5.8 billion on December 31, 2020 to $154.5 billion and $56.9 billion, respectively.

The Company will adopt the standard on January 1, 2023.

The Company will adopt the standard using the modified retrospective transition method relating to liabilities for traditional and limited payment contracts and deferred policy acquisition costs associated therewith.

* Represents activity subsequent to the deconsolidation of Fortitude Reinsurance Company Ltd. on June 2, 2020.

| Balance, January 1, 2018 | $ | \- | $ | 4,766 | $ | (47,595) | $ | 81,078 | $ | 21,457 | $ | 5,465 | $ | 65,171 | $ | 537 | $ | 65,708 |

| Cumulative effect of change in accounting | | | | | | | | | | | | | | | | | | |

| Other | | \- | | \- | | 1 | | 534 | | 3 | | \- | | 538 | | (5) | | 533 |

| and acquisitions | | \- | | \- | | \- | | \- | | \- | | \- | | \- | | (958) | | (958) |

| --- | --- | --- | --- | --- | --- | --- |

| Reinsurance assets and funds held under reinsurance treaties | | (693) | | 217 | | (3,289) |

| Divested businesses, net | | 2,173 | | 2 | | 10 |

| Purchase of common stock | | (500) | | \- | | (1,739) |

| Net increase (decrease) in cash and restricted cash | | (57) | | (8) | | 621 |