Item 8. Report of Independent Registered Public Accounting Firm

discount rate assumption for the liability for future policy benefits, (b) the individual retirement variable annuity policyholder behavior assumptions related to lapses, withdrawals, benefit utilization, an explicit risk margin, and capital market assumptions related to long-term equity volatilities used in determining the attributed fee at policy inception date in the valuation of MRBs, (c) the individual retirement variable annuity and fixed index annuity policyholder behavior assumptions related to lapses, withdrawals, benefit utilization, along with an explicit risk margin, as well as capital market assumptions related to long-term equity volatilities and individual retirement fixed index annuity option budget assumptions used in the valuation of MRBs, and (d) the individual retirement fixed index annuity policyholder behavior assumptions related to lapses, withdrawals, benefit utilization, along with an explicit risk margin, as well as capital market assumptions related to the option budget assumptions used in the valuation of the EDs for certain guaranteed benefit features on fixed index contracts, and (iii) the audit effort involved the use of professionals with specialized skills and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls related to management’s adoption of the LDTI standard, including controls over determining the adoption adjustments. These procedures also included, among others, (i) evaluating management’s process for adopting the LDTI standard and for determining the adoption adjustments, (ii) testing the relevance and reliability of the external data used by management to develop the discount rate assumption for the liability for future policy benefit, (iii) testing, on a sample basis, the completeness and accuracy of the data used by management to develop and update the aforementioned policyholder behavior and capital market assumptions, and (iv) the use of professionals with specialized skill and knowledge to assist in (a) evaluating the reasonableness of the current discount rate assumption based on the consideration of the Company’s experience, industry trends, and market conditions, as applicable, and (b) evaluating the reasonableness of the aforementioned policyholder behavior and capital market assumptions used to determine the attributed fee at policy inception, the fair value of MRBs and EDs for certain guaranteed benefit features on fixed index contracts based on the consideration of the Company’s historical and actual experience, industry trends, and market conditions, as applicable, in connection with adopting the LDTI standard.

Recoverability of U.S. Federal Deferred Tax Asset

As described in Note 23 to the consolidated financial statements, as of December 31, 2023, the Company had a net U.S. federal deferred tax asset of $13.6 billion, $4.6 billion of which related to U.S. tax attributes of AIG's consolidated federal income tax group with a limited carryforward period. Management evaluates the recoverability of the deferred tax asset and the need for a valuation allowance based on the weight of all positive and negative evidence to reach a conclusion of whether it is more likely than not that all or some portion of the deferred tax asset will not be realized. As disclosed by management, in assessing the recoverability of the deferred tax asset, management considers a number of factors, which include forecasts of future income for each of the businesses and actual and planned business and operational changes, using assumptions about future macroeconomic and company specific conditions and events. Management subjects the forecasts to changes in key assumptions and evaluates the effect on tax attribute utilization, including tax attribute carryforward periods. Management also applies changes to assumptions about the effectiveness of relevant prudent and feasible tax planning strategies. As of December 31, 2023, management determined that it is no longer more-likely-than-not that $300 million of the Company’s deferred tax assets related to tax attribute carryforwards of AIG's consolidated federal income tax group will be utilized prior to expiration and reduced their beginning of the year valuation allowance by $405 million.

The principal considerations for our determination that performing procedures relating to the recoverability of the U.S. federal deferred tax asset is a critical audit matter are (i) the significant judgment by management when developing their estimate of the recoverability, which in turn led to a high degree of auditor subjectivity and judgment in performing the audit procedures relating to the forecasts of future income for the non-life business, assumptions about future macroeconomic and company specific conditions and events, tax attribute carryforward periods, and tax planning strategies, (ii) the significant audit effort and judgment in evaluating the audit evidence related to the recoverability of the U.S. federal deferred tax asset, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recoverability of the U.S. federal deferred tax asset, including controls over the accuracy of input data relevant to the analysis, such as cumulative income/loss measurement, reversal of temporary differences, adjustments to forecasted pre-tax income to calculate future taxable income, impacts of tax audits, and enacted and effective tax law considerations. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in (i) evaluating management’s assessment of the recoverability of the U.S. federal deferred tax asset and the need for a valuation allowance, including the reasonableness of the application of tax law, (ii) testing management’s process for forecasting future income for each of the businesses, which included evaluating the impact of actual and planned business and operational changes, the reasonableness of assumptions about future macroeconomic and company specific conditions and events, impacts of tax audits, as well as considering whether management demonstrated their ability and intent in executing planned strategies, (iii) testing the tax attribute carryforward periods, and (iv) evaluating the prudence and feasibility of the implementation of available tax planning strategies that impact the recoverability of the U.S. federal deferred tax asset.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 14, 2024

We have served as the Company’s auditor since 1980.

AIG | 2023 Form 10-K			129

American International Group, Inc.

Consolidated Balance Sheets

(in millions, except for share data)			December 31, 2023						December 31, 2022
Assets:
Investments:
Fixed maturity securities:
Bonds available for sale, at fair value, net of allowance for credit losses of $162 in 2023 and $186 in 2022 (amortized cost: 2023 - $253,035; 2022 - $255,993)*			$			231,733			$			226,156
Other bond securities, at fair value (See Note 6)*						5,241						4,485
Equity securities, at fair value (See Note 6)*						728						575
Mortgage and other loans receivable, net of allowance for credit losses of $38,473 in 2023 and $38,351 in 2022*						51,553						49,605
Other invested assets (portion measured at fair value: 2023 - $11,733; 2022 - $12,042)*						16,217						15,953
Short-term investments, including restricted cash of $4 in 2023 and $140 in 2022 (portion measured at fair value: 2023 - $10,772; 2022 - $5,708)*						17,200						12,376
Total investments						322,672						309,150
Cash*						2,155						2,043
Accrued investment income*						2,588						2,376
Premiums and other receivables, net of allowance for credit losses and disputes of $139 in 2023 and $169 in 2022						10,561						13,243
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes of $0 in 2023 and $0 in 2022						30,612						30,751
Reinsurance assets - other, net of allowance for credit losses and disputes of $236 in 2023 and $295 in 2022						36,914						38,971
Deferred income taxes						14,445						14,804
Deferred policy acquisition costs						12,085						12,857
Market risk benefit assets, at fair value						912						796
Other assets, net of allowance for credit losses of $49 in 2023 and $49 in 2022, including restricted cash of $45 in 2023 and $33 in 2022 (portion measured at fair value: 2023 - $754; 2022 - $621)*						13,089						12,384
Separate account assets, at fair value						91,005						84,853
Assets held for sale						2,268						—
Total assets			$			539,306			$			522,228
Liabilities:
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses of $14 in 2023 and $14 in 2022			$			70,393			$			75,167
Unearned premiums						17,387						18,338
Future policy benefits for life and accident and health insurance contracts						58,576						51,914
Policyholder contract deposits (portion measured at fair value: 2023 - $7,997; 2022 - $5,408)						161,979						155,984
Market risk benefit liabilities, at fair value						5,705						4,736
Other policyholder funds						3,356						3,463
Fortitude Re funds withheld payable (portion measured at fair value: 2023 - $(1,226); 2022 - $(2,235))						29,484						30,383
Other liabilities (portion measured at fair value: 2023 - $624; 2022 - $343)*						25,958						26,757
Short-term and long-term debt, of which $250 and $1,500 is short-term debt in 2023 and 2022 (portion measured at fair value: 2023 - $53; 2022 - $56)						19,796						21,299
Debt of consolidated investment entities*						2,591						5,880
Separate account liabilities						91,005						84,853
Liabilities held for sale						1,775						—
Total liabilities						488,005						478,774
Contingencies, commitments and guarantees (See Note 17)
AIG shareholders’ equity:
Series A non-cumulative preferred stock and additional paid in capital, $5.00 par value; 100,000,000 shares authorized; shares issued: 2023 - 20,000 and 2022 - 20,000; liquidation preference $500						485						485
Common stock, $2.50 par value; 5,000,000,000 shares authorized; shares issued: 2023 - 1,906,671,492 and 2022 - 1,906,671,492						4,766						4,766
Treasury stock, at cost; 2023 - 1,217,831,721 shares; 2022 - 1,172,543,436 shares of common stock						(59,189)						(56,473)
Additional paid-in capital						75,810						79,915
Retained earnings						37,516						34,893
Accumulated other comprehensive loss						(14,037)						(22,616)
Total AIG shareholders’ equity						45,351						40,970
Non-redeemable noncontrolling interests						5,950						2,484
Total equity						51,301						43,454
Total liabilities and equity			$			539,306			$			522,228

*See Note 10 for details of balances associated with variable interest entities.

See accompanying Notes to Consolidated Financial Statements.

130			AIG | 2023 Form 10-K

American International Group, Inc.

Consolidated Statements of Income (Loss)

									Years Ended December 31,
(dollars in millions, except per common share data)																					2023						2022						2021
Revenues:
Premiums																		$			33,254			$			31,856			$			31,285
Policy fees																					2,797						2,913						3,005
Net investment income:
Net investment income - excluding Fortitude Re funds withheld assets																					13,048						10,824						12,641
Net investment income - Fortitude Re funds withheld assets																					1,544						943						1,971
Total net investment income																					14,592						11,767						14,612
Net realized gains (losses):
Net realized gains (losses) - excluding Fortitude Re funds withheld assets and embedded derivative																					(2,306)						69						1,871
Net realized gains (losses) on Fortitude Re funds withheld assets																					(295)						(486)						1,003
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative																					(2,007)						7,481						(603)
Total net realized gains (losses)																					(4,608)						7,064						2,271
Other income																					767						850						984
Total revenues																					46,802						54,450						52,157
Benefits, losses and expenses:
Policyholder benefits and losses incurred (including remeasurement losses of $342, $304 and $247 for the years ended December 31, 2023, 2022 and 2021, respectively)																					24,755						22,176						23,785
Change in the fair value of market risk benefits, net																					2						(958)						(447)
Interest credited to policyholder account balances																					4,424						3,744						3,570
Amortization of deferred policy acquisition costs																					4,808						4,557						4,524
General operating and other expenses																					8,499						9,122						8,728
Interest expense																					1,136						1,125						1,305
(Gain) loss on extinguishment of debt																					(37)						303						389
Net (gain) loss on divestitures and other																					(643)						82						(3,044)
Total benefits, losses and expenses																					42,944						40,151						38,810
Income from continuing operations before income tax expense (benefit)																					3,858						14,299						13,347
Income tax expense (benefit):
Current																					491						517						(45)
Deferred																					(511)						2,508						2,486
Income tax expense (benefit)																					(20)						3,025						2,441
Income from continuing operations																					3,878						11,274						10,906
Loss from discontinued operations, net of income taxes																					—						(1)						—
Net income																					3,878						11,273						10,906
Less:
Net income from continuing operations attributable to noncontrolling interests																					235						1,046						539
Net income attributable to AIG																					3,643						10,227						10,367
Less: Dividends on preferred stock																					29						29						29
Net income attributable to AIG common shareholders																		$			3,614			$			10,198			$			10,338
Income per common share attributable to AIG common shareholders:
Basic:
Income (loss) from continuing operations																		$			5.02			$			13.10			$			12.10
Income from discontinued operations																		$			—			$			—			$			—
Net income (loss) attributable to AIG common shareholders																		$			5.02			$			13.10			$			12.10
Diluted:
Income (loss) from continuing operations																		$			4.98			$			12.94			$			11.95
Income from discontinued operations																		$			—			$			—			$			—
Net income (loss) attributable to AIG common shareholders																		$			4.98			$			12.94			$			11.95
Weighted average shares outstanding:
Basic																					719,506,291						778,621,118						854,320,449
Diluted																					725,233,068						787,941,750						864,884,879

See accompanying Notes to Consolidated Financial Statements.

AIG | 2023 Form 10-K			131

American International Group, Inc.

Consolidated Statements of Comprehensive Income (Loss)

									Years Ended December 31,
(in millions)																					2023						2022						2021
Net income																		$			3,878			$			11,273			$			10,906
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken																					14						(94)						44
Change in unrealized appreciation (depreciation) of all other investments																					7,134						(38,408)						(7,151)
Change in fair value of market risk benefits attributable to changes in our own credit risk																					(544)						1,294						179
Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts																					(871)						5,544						1,361
Change in foreign currency translation adjustments																					102						(613)						(180)
Change in retirement plan liabilities adjustment																					105						(20)						325
Change in fair value of liabilities under fair value option attributable to changes in our own credit risk																					—						(6)						(2)
Other comprehensive income (loss)																					5,940						(32,303)						(5,424)
Comprehensive income (loss)																					9,818						(21,030)						5,482
Comprehensive income (loss) attributable to noncontrolling interests																					1,534						(1,454)						440
Comprehensive income (loss) attributable to AIG																		$			8,284			$			(19,576)			$			5,042

See accompanying Notes to Consolidated Financial Statements.

132			AIG | 2023 Form 10-K

American International Group, Inc.

Consolidated Statements of Equity

(in millions, except per share data)			Preferred Stock and Additional Paid-in Capital									Common Stock						Treasury Stock						Additional Paid-in Capital						Retained Earnings			Accumulated Other Comprehensive Income (Loss)									Total AIG Share- holders' Equity			Non- redeemable Non- controlling Interests									Total Equity
Balance, January 1, 2021			$			485			$			4,766			$			(49,322)			$			81,418			$			15,504			$			13,511			$			66,362			$			837			$			67,199
Cumulative effect of change in accounting principle, net of tax						—						—						—						—						933						(2,197)						(1,264)						—						(1,264)
Common stock issued under stock plans						—						—						217						(281)						—						—						(64)						—						(64)
Purchase of common stock						—						—						(2,614)						(29)						—						—						(2,643)						—						(2,643)
Net income attributable to AIG or noncontrolling interests						—						—						—						—						10,367						—						10,367						539						10,906
Dividends on preferred stock ($1,462.50 per share)						—						—						—						—						(29)						—						(29)						—						(29)
Dividends on common stock ($1.28 per share)						—						—						—						—						(1,083)						—						(1,083)						—						(1,083)
Other comprehensive loss						—						—						—						—						—						(5,325)						(5,325)						(99)						(5,424)
Net increase (decrease) due to divestitures and acquisitions						—						—						—						288						—						(918)						(630)						2,342						1,712
Contributions from noncontrolling interests						—						—						—						—						—						—						—						22						22
Distributions to noncontrolling interests						—						—						—						—						—						—						—						(682)						(682)
Other						—						—						101						273						3						—						377						7						384
Balance, December 31, 2021			$			485			$			4,766			$			(51,618)			$			81,669			$			25,695			$			5,071			$			66,068			$			2,966			$			69,034
Common stock issued under stock plans						—						—						294						(368)						—						—						(74)						—						(74)
Purchase of common stock						—						—						(5,149)						—						—						—						(5,149)						—						(5,149)
Net income attributable to AIG or noncontrolling interests						—						—						—						—						10,227						—						10,227						1,046						11,273
Dividends on preferred stock ($1,462.50 per share)						—						—						—						—						(29)						—						(29)						—						(29)
Dividends on common stock ($1.28 per share)						—						—						—						—						(982)						—						(982)						—						(982)
Other comprehensive loss						—						—						—						—						—						(29,803)						(29,803)						(2,500)						(32,303)
Net increase (decrease) due to divestitures and acquisitions						—						—						—						(1,619)						—						2,116						497						1,117						1,614
Contributions from noncontrolling interests						—						—						—						—						—						—						—						133						133
Distributions to noncontrolling interests						—						—						—						—						—						—						—						(284)						(284)
Other						—						—						—						233						(18)						—						215						6						221
Balance, December 31, 2022			$			485			$			4,766			$			(56,473)			$			79,915			$			34,893			$			(22,616)			$			40,970			$			2,484			$			43,454
Common stock issued under stock plans						—						—						298						(423)						—						—						(125)						—						(125)
Purchase of common stock						—						—						(3,014)						—						—						—						(3,014)						—						(3,014)
Net income attributable to AIG or noncontrolling interests						—						—						—						—						3,643						—						3,643						235						3,878
Dividends on preferred stock ($1,462.50 per share)						—						—						—						—						(29)						—						(29)						—						(29)
Dividends on common stock ($1.40 per share)						—						—						—						—						(997)						—						(997)						—						(997)
Other comprehensive income						—						—						—						—						—						4,641						4,641						1,299						5,940
Net increase (decrease) due to divestitures and acquisitions						—						—						—						(3,793)						—						3,938						145						2,524						2,669
Contributions from noncontrolling interests						—						—						—						—						—						—						—						49						49
Distributions to noncontrolling interests						—						—						—						—						—						—						—						(710)						(710)
Other						—						—						—						111						6						—						117						69						186
Balance, December 31, 2023			$			485			$			4,766			$			(59,189)			$			75,810			$			37,516			$			(14,037)			$			45,351			$			5,950			$			51,301

See accompanying Notes to Consolidated Financial Statements.

AIG | 2023 Form 10-K			133

American International Group, Inc.

Consolidated Statements of Cash Flows

			Years Ended December 31,
(in millions)						2023						2022						2021
Cash flows from operating activities:
Net income			$			3,878			$			11,273			$			10,906
Loss from discontinued operations						—						1						—
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income (loss):
Net (gains) losses on sales of securities available for sale and other assets						970						959						(2,099)
Net (gain) loss on divestitures and other						(643)						82						(3,044)
(Gain) loss on extinguishment of debt						(37)						303						389
Unrealized (gains) losses in earnings - net						1,674						1,094						(873)
Change in the fair value of market risk benefits in earnings, net						(348)						(1,481)						(1,427)
Equity in (income) loss from equity method investments, net of dividends or distributions						(7)						(164)						3
Depreciation and other amortization						4,214						4,409						4,542
Impairments of assets						90						26						46
Changes in operating assets and liabilities:
Insurance reserves						1,593						(3,837)						4,472
Premiums and other receivables and payables - net						391						(10,222)						(724)
Reinsurance assets, net						472						3,978						(1,044)
Capitalization of deferred policy acquisition costs						(5,419)						(4,722)						(4,969)
Current and deferred income taxes - net						(1,003)						2,279						1,579
Other, net						418						156						(1,534)
Total adjustments						2,365						(7,140)						(4,683)
Net cash provided by operating activities						6,243						4,134						6,223
Cash flows from investing activities:
Proceeds from (payments for)
Sales or distributions of:
Available for sale securities						22,933						21,660						26,098
Other securities						1,347						3,060						975
Other invested assets						2,328						2,891						6,258
Divestitures, net						3,315						—						4,683
Maturities of fixed maturity securities available for sale						17,957						18,485						34,765
Principal payments received on and sales of mortgage and other loans receivable						7,429						9,435						8,267
Purchases of:
Available for sale securities						(40,466)						(38,885)						(74,204)
Other securities						(1,581)						(3,714)						(2,034)
Other invested assets						(2,189)						(2,346)						(3,168)
Mortgage and other loans receivable						(10,137)						(14,364)						(9,013)
Net change in short-term investments						(6,637)						595						5,088
Other, net						(1,320)						(443)						(995)
Net cash used in investing activities						(7,021)						(3,626)						(3,280)
Cash flows from financing activities:
Proceeds from (payments for)
Policyholder contract deposits						33,015						26,582						25,480
Policyholder contract withdrawals						(27,957)						(20,722)						(22,481)
Issuance of long-term debt						1,982						7,477						107
Issuance of debt of consolidated investment entities						225						933						4,338
Repayments of long-term debt						(2,304)						(9,455)						(4,147)
Repayments of debt of consolidated investment entities						(606)						(1,251)						(4,494)
Repayments of delayed draw term loan agreement						(1,250)						—						—
Borrowings under delayed draw term loan agreement						—						1,500						—
Purchase of common stock						(2,961)						(5,200)						(2,592)
Dividends paid on preferred stock						(29)						(29)						(29)
Dividends paid on common stock						(997)						(982)						(1,083)
Other, net						1,664						545						1,222
Net cash provided by (used in) financing activities						782						(602)						(3,679)
Effect of exchange rate changes on cash and restricted cash						(13)						(117)						(67)
Net decrease in cash and restricted cash						(9)						(211)						(803)
Cash and restricted cash at beginning of year						2,216						2,427						3,230
Cash and restricted cash of held for sale assets						(3)						—						—
Cash and restricted cash at end of year			$			2,204			$			2,216			$			2,427

134			AIG | 2023 Form 10-K

American International Group, Inc.

Consolidated Statements of Cash Flows (continued)

Supplementary Disclosure of Consolidated Cash Flow Information

						Years Ended December 31,
(in millions)						2023						2022						2021
Cash						$	2,155					$	2,043					$	2,198
Restricted cash included in Short-term investments*						4						140						197
Restricted cash included in Other assets*						45						33						32
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows						$	2,204					$	2,216					$	2,427
Cash paid during the period for:
Interest						$	1,059					$	1,127					$	1,348
Taxes						$	984					$	746					$	862
Non-cash investing activities:
Fixed maturity securities available for sale received in connection with pension risk transfer transactions						$	4,317					$	1,121					$	2,284
Fixed maturity securities and other invested assets received in connection with reinsurance transactions						$	110					$	110					$	161
Fixed maturity securities and other invested assets transferred in connection with reinsurance transactions						$	(838)					$	(224)					$	(837)
Non-cash consideration received from sale of Validus Re						$	290					$	—					$	—
Non-cash financing activities:
Interest credited to policyholder contract deposits included in financing activities						$	4,501					$	3,676					$	3,642
Fee income debited to policyholder contract deposits included in financing activities						$	(2,122)					$	(1,694)					$	(1,690)

*Includes funds held for tax sharing payments to AIG Parent, security deposits, and replacement reserve deposits related to real estate.

See accompanying Notes to Consolidated Financial Statements.

AIG | 2023 Form 10-K			135

ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation

1. Basis of Presentation

American International Group, Inc. (AIG) is a leading global insurance organization. AIG provides insurance solutions that help businesses and individuals in approximately 190 countries and jurisdictions protect their assets and manage risks through AIG operations and network partners. Unless the context indicates otherwise, the terms “AIG,” “we,” “us,” “our” or "the Company" mean American International Group, Inc. and its consolidated subsidiaries, and the term “AIG Parent” means American International Group, Inc. and not any of its consolidated subsidiaries.

The consolidated financial statements include the accounts of AIG Parent, our controlled subsidiaries (generally through a greater than 50 percent ownership of voting rights and voting interests), and variable interest entities (VIEs) of which we are the primary beneficiary. Equity investments in entities that we do not consolidate, including corporate entities in which we have significant influence and partnership and partnership-like entities in which we have more than minor influence over the operating and financial policies, are accounted for under the equity method unless we have elected the fair value option.

Prior to the fourth quarter ending December 31, 2022, certain of our foreign property and casualty subsidiaries reported on the basis of a fiscal year ending November 30. The effect on our consolidated financial condition and results of operations of all material events occurring at these subsidiaries from November 30 through December 31 of the periods previously presented in these Consolidated Financial Statements was considered for adjustment and/or disclosure.

Effective with the fourth quarter of the year ended December 31, 2022, the foreign property and casualty subsidiaries now report on a calendar year ending December 31. The elimination of a one-month reporting lag of a subsidiary is considered a change in accounting principle. We believe this change in accounting principle is preferable given that it aligns the reporting dates with other consolidated entities, which allows for a timelier and more consistent basis of reporting within our Consolidated Financial Statements. A change in accounting principle requires retrospective application. However, we determined that the effect of not retroactively applying this change was not material to our Consolidated Financial Statements for the current and prior periods. Therefore, we reported the cumulative effect of the change in accounting principle within the Consolidated Statements of Income (Loss) for the year ended December 31, 2022 and did not retrospectively apply the effects of this change to prior periods. The adoption impact was an increase to net income of $100 million for the year ended December 31, 2022.

We adopted the Financial Accounting Standards Board's (FASB) targeted improvements to the accounting for long-duration contracts (the standard or LDTI) on January 1, 2023 with a transition date of January 1, 2021 (Transition Date). In accordance with the transition guidance in the standard, we updated our prior period Consolidated Financial Statements presented herein to reflect LDTI. For additional detail, see Note 2.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). All material intercompany accounts and transactions have been eliminated.

SALES/DISPOSALS OF ASSETS AND BUSINESSES

AIG Life Limited

On September 25, 2023, Corebridge Financial, Inc. (Corebridge) announced that it entered into a definitive agreement to sell AIG Life Limited (AIG Life) to Aviva plc for £460 million in cash, subject to certain adjustments. The sale of AIG Life is expected to close in the first half of 2024, subject to regulatory approvals and other customary closing conditions. For further details on this transaction, see Note 4.

Laya Healthcare Limited

On October 31, 2023, Corebridge completed the sale of Laya Healthcare Limited (Laya) to AXA and received gross proceeds of €691 million ($731 million), resulting in a pre-tax gain of $652 million.

Validus Re

On November 1, 2023, AIG completed the sale of Validus Reinsurance, Ltd. (Validus Re), including AlphaCat Managers Ltd. and the Talbot Treaty reinsurance business, to RenaissanceRe Holdings Ltd. (RenaissanceRe) and received cash proceeds of $2.7 billion from RenaissanceRe and 1.3 million shares of RenaissanceRe common stock valued at $290 million as of the closing date, resulting in a pre-tax loss of $78 million. The results of Validus Re are reported in General Insurance.

Additionally, AIG agreed to retain 95 percent of the difference between (i) the reserves with respect to the business as of the closing date of the sale for losses occurring prior to the closing date and (ii) the associated reserve development following the closing date with respect to such losses. Any reserve development will be settled annually, commencing with the calendar year ending

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ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation

December 31, 2024. This arrangement stays in effect until the parties determine to terminate such arrangement (which they will re-evaluate on an annual basis beginning 5 years after the closing date) or until all such liabilities of the acquired reinsurance business have run off. The reserve cover is considered contingent consideration and was recognized at fair value of $130 million when the sale closed.

On September 4, 2023, AIG entered into an Adverse Development Cover Excess of Loss Agreement (the ADC Agreement) to hedge the risk of adverse development pertaining to Validus Re’s reserves with Clarendon National Insurance Company, a wholly owned subsidiary of Enstar Group Limited. Under the ADC Agreement, AIG will be reimbursed up to $400 million of adverse development for all policies in force as of December 31, 2022 when paid losses exceed the baseline reserve balance of $3.043 billion. The premium expensed in connection with the ADC Agreement was $80 million.

Crop Risk Services

On May 2, 2023, AIG announced that it reached an agreement to sell Crop Risk Services, Inc. (CRS) to American Financial Group, Inc. (AFG) and in substance, AIG exited the crop business. The gross proceeds, before deducting commissions, are $234 million. On July 3, 2023, the transaction closed, resulting in a pre-tax gain of $72 million for the year ended December 31, 2023.

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

AIG owns 52.2 percent of the outstanding common stock of Corebridge as of December 31, 2023. Corebridge is the holding company for AIG’s Life and Retirement business. AIG continues to consolidate Corebridge in AIG’s Consolidated Financial Statements. The portion of equity interest of Corebridge that AIG does not own is reflected as noncontrolling interest in AIG’s Consolidated Financial Statements.

In 2023, AIG closed on three secondary offerings and sold 159.75 million shares of Corebridge common stock. The aggregate gross proceeds of the offerings to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were approximately $2.9 billion. After consideration of underwriting discounts, commissions and other related expenses payable by AIG, AIG recorded an increase of $332 million in Total AIG shareholders' equity.

In 2023, Corebridge repurchased 26.5 million shares of Corebridge common stock for an aggregate purchase price of $498 million, of which 17.2 million shares were from AIG for an aggregate purchase price of $315 million. As a result, AIG recorded a decrease of $40 million in Total AIG shareholders' equity.

On September 19, 2022, AIG closed on the initial public offering (IPO) of 80 million shares of Corebridge common stock at a public offering price of $21.00 per share, representing 12.4 percent of Corebridge's common stock. The aggregate gross proceeds of the offering to AIG, before deducting underwriting discounts and commissions and other expenses payable by AIG, were approximately $1.7 billion. After consideration of underwriting discounts, commissions and other related expenses payable by AIG, AIG recorded an increase of $497 million in Total AIG shareholders' equity, recalculated on an LDTI basis.

Blackstone Inc. (Blackstone) completed the acquisition of a 9.9 percent equity stake in Corebridge in November 2021. Blackstone is required to hold its ownership interest in Corebridge, subject to exceptions permitting Blackstone to sell 25 percent, 67 percent and 75 percent of its ownership interest after the first, second and third anniversaries, respectively, of the closing of the Corebridge IPO (September 19, 2023, 2024 and 2025, respectively), with the transfer restrictions terminating in full on September 19, 2027.

On December 15, 2021, AIG and Blackstone Real Estate Income Trust (BREIT), a long-term, perpetual capital vehicle affiliated with Blackstone, completed the acquisition by BREIT of AIG’s interests in a U.S. affordable housing portfolio for $4.9 billion, in an all cash transaction, resulting in a pre-tax gain of $3.0 billion. The historical results of the U.S. affordable housing portfolio were reported in our Life and Retirement operating segments.

Sale of Certain AIG Life and Retirement Retail Mutual Funds Business

On July 16, 2021, AIG announced the closing of its sale of certain assets of Life and Retirement's Retail Mutual Funds business to Touchstone Investments (Touchstone), an indirect wholly-owned subsidiary of Western & Southern Financial Group. This sale consisted of the reorganization of twelve of the retail mutual funds managed by SunAmerica Asset Management, LLC (SAAMCo), a Life and Retirement entity, into certain Touchstone funds. We received initial proceeds, and the twelve retail mutual funds managed by SAAMCo, with $6.8 billion in assets, were reorganized into Touchstone funds. Additional consideration has been and may be earned over a three-year period based on asset levels in certain reorganized funds.

Other Events

On December 14, 2022, AIG announced that its wholly-owned subsidiary, AIG Financial Products Corp. (AIGFP), filed a voluntary petition to reorganize under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware and filed a proposed plan of reorganization. The reorganization will not have a material impact on the consolidated balance sheets of AIG or our respective businesses. AIGFP has no material operations or businesses and no employees. In conjunction with the bankruptcy filing, AIGFP and its consolidated subsidiaries were deconsolidated from the results of AIG, resulting in a pre-tax loss

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ITEM 8 | Notes to Consolidated Financial Statements | 1. Basis of Presentation

of $114 million for the twelve months ended December 31, 2022, reported in Net gain (loss) on divestitures and other. In addition, AIGFP and its subsidiaries were determined to be an unconsolidated variable interest entity.

USE OF ESTIMATES

The preparation of financial statements in accordance with U.S. GAAP requires the application of accounting policies that often involve a significant degree of judgment. Accounting policies that we believe are most dependent on the application of estimates and assumptions are considered our critical accounting estimates and are related to the determination of:

• loss reserves;

• valuation of future policy benefit liabilities and recognition of measurement gains and losses;

• valuation of market risk benefits (MRBs) related to guaranteed benefit features of variable annuity, fixed annuity and fixed index annuity products;

• valuation of embedded derivative liabilities for fixed index annuity and index universal life products;

• reinsurance assets, including the allowance for credit losses and disputes;

• goodwill impairment;

• allowance for credit losses on certain investments, primarily on loans and available for sale fixed maturity securities;

• fair value measurements of certain financial assets and financial liabilities; and

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

These accounting estimates require the use of assumptions about matters, some of which are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial condition, results of operations and cash flows could be materially affected.

2. Summary of Significant Accounting Policies

The following list identifies our significant accounting policies presented in other Notes to these Consolidated Financial Statements, with a reference to the Note where a detailed description can be found:

Note 6. Investments •Fixed maturity and equity securities •Other invested assets •Short-term investments •Net investment income •Net realized gains (losses) •Allowance for credit losses Note 7. Lending Activities •Mortgage and other loans receivable – net of allowance Note 8. Reinsurance •Reinsurance assets – net of allowance •Retroactive reinsurance Note 9. Deferred Policy Acquisition Costs •Deferred policy acquisition costs •Deferred sales inducements •Amortization of deferred policy acquisition costs Note 10. Variable Interest Entities			Note 11. Derivatives and Hedge Accounting •Derivative assets and liabilities, at fair value Note 12. Goodwill and Other Intangible Assets Note 13. Insurance Liabilities •Liability for unpaid losses and loss adjustment expenses •Discounting of reserves •Future policy benefits •Policyholder contract deposits •Other policyholder funds Note 14. Market Risk Benefits Note 16. Debt •Long-term debt •Debt of consolidated investment entities Note 17. Contingencies, Commitments and Guarantees •Legal contingencies Note 19. Earnings Per Common Share (EPS) Note 23. Income Taxes

138			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

OTHER SIGNIFICANT ACCOUNTING POLICIES

Insurance revenues include premiums and policy fees. All premiums and policy fees are presented net of reinsurance, as applicable. Premiums for short-duration contracts are recorded as written on the inception date of the policy. Premiums are earned primarily on a pro rata basis over the term of the related coverage. Sales of extended services contracts are reflected as premiums written and earned on a pro rata basis over the term of the related coverage. In addition, certain miscellaneous income is included as premiums written and earned. The reserve for unearned premiums includes the portion of premiums written relating to the unexpired terms of coverage. Reinsurance premiums are typically earned over the same period as the underlying policies or risks covered by the contract. As a result, the earnings pattern of a reinsurance contract may extend up to 24 months, reflecting the inception dates of the underlying policies throughout the year. Premiums from long-duration life products, other than universal and variable life contracts, are recognized as revenues when due. Premiums from individual and group annuity contracts that are life contingent are recognized as revenues when due.

For limited payment contracts, premiums are due over a significantly shorter period than the period over which benefits are provided. The difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in Policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This Deferred Profit Liability (DPL) is recorded in the Consolidated Balance Sheets in Future policy benefits for life and accident and health insurance contracts.

All reinsurance premiums ceded are recognized when due, following a ceded net premium ratio (NPR) methodology that also accrues a proportionate amount of estimated benefits.

Reinsurance premiums for assumed business are estimated based on information received from ceding companies and reinsurers. Any subsequent differences that arise regarding such estimates are recorded in the periods in which they are determined.

Amounts received as payment for investment-oriented contracts such as universal life, variable annuities, fixed annuities, and fixed index annuities, are reported as deposits to Policyholder contract deposits or Separate account liabilities, as applicable. Revenues from these contracts are recorded in policy fees and consist of policy charges for the cost of insurance, policy administration charges, surrender charges and amortization of unearned revenue reserves (URR). Policy fees are recognized as revenues in the period in which they are assessed against policyholders, unless the fees are designed to compensate AIG for services to be provided in the future. Fees deferred as unearned revenue are amortized on a constant level basis over the estimated lives of the contracts, consistent with the amortization of deferred acquisition costs. This URR is recorded in the Consolidated Balance Sheets in Other policyholder funds.

Other income includes advisory fee income from the Life and Retirement broker dealer business.

Cash represents cash on hand and demand deposits.

Short-term investments include interest bearing investments, time deposits and other investments with remaining contractual life of less than or equal to one year. Securities included within short-term investments are stated at estimated fair value, while other investments included within short-term investments are stated at amortized cost, which approximates estimated fair value.

Premiums and other receivables – net of allowance for credit losses and disputes include premium balances receivable, amounts due from agents and brokers and policyholders, receivables resulting from sales of securities that had not yet settled, cash collateral posted to derivative counterparties that is not eligible to be netted against derivative liabilities and other receivables.

Deposit assets and liabilities We have entered into certain insurance and reinsurance contracts, primarily in our General Insurance companies, that do not contain sufficient insurance risk to be accounted for as insurance or reinsurance. When we receive premiums on such contracts, the premiums received, after deduction for certain related expenses, are recorded as deposits within Other liabilities in the Consolidated Balance Sheets. Net proceeds of these deposits are invested and generate Net investment income. When we pay premiums on such contracts, the premiums paid are recorded as deposits within Other assets in the Consolidated Balance Sheets. The deposit asset or liability is adjusted as amounts are paid, consistent with the underlying contracts.

Other assets consist of deferred sales inducements (DSI), prepaid expenses, deposits, other deferred charges, real estate, other fixed assets, capitalized software costs, goodwill, intangible assets other than goodwill, restricted cash, derivative assets, and accrued interest income.

The cost of buildings and furniture and equipment is depreciated principally on the straight-line basis over their estimated useful lives (maximum of 40 years for buildings and 10 years for furniture and fixtures). Expenditures for maintenance and repairs are charged to income as incurred and expenditures for improvements are capitalized and depreciated. We periodically assess the carrying amount of our real estate for purposes of determining any asset impairment. Capitalized software costs, which represent costs directly related to obtaining, developing or upgrading internal use software, are capitalized and amortized using the straight-line method over a period generally not exceeding ten years.

AIG | 2023 Form 10-K			139

ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

Separate accounts represent funds for which investment income and investment gains and losses accrue directly to the policyholders who bear the investment risk. Each account has specific investment objectives and the assets are carried at fair value. The assets of each account are legally segregated and are not subject to claims that arise from any of our other businesses. The liabilities for these accounts are equal to the account assets. Separate accounts may also include deposits for funds held under stable value wrap funding agreements, although the majority of stable value wrap sales are measured based on the notional amount included in assets under management and do not include the receipt of funds. For additional information on separate accounts, see Note 15.

Other liabilities consist of other funds on deposit, other payables, securities sold under agreements to repurchase, securities sold but not yet purchased, liabilities resulting from purchases of securities that have not yet settled, derivative liabilities, cash collateral received from derivative counterparties that contractually cannot be netted against derivative assets, allowance for credit losses in relation to off-balance sheet commitments and deferred gains on retroactive reinsurance agreements.

Foreign currency Financial statement accounts expressed in foreign currencies are translated into U.S. dollars. Functional currency assets and liabilities are translated into U.S. dollars generally using rates of exchange prevailing at the balance sheet date of each respective subsidiary and the related translation adjustments are recorded as a separate component of Accumulated other comprehensive income, net of any related taxes, in Total AIG shareholders’ equity. Income statement accounts expressed in functional currencies are translated using average exchange rates during the period. Functional currencies are generally the currencies of the local operating environment. Financial statement accounts expressed in currencies other than the functional currency of a consolidated entity are remeasured into that entity’s functional currency resulting in exchange gains or losses recorded in income. The adjustments resulting from translation of financial statements of foreign entities operating in highly inflationary economies are recorded in income.

Non-redeemable noncontrolling interest is the portion of equity (net assets) and net income (loss) in a subsidiary not attributable, directly or indirectly, to AIG.

ACCOUNTING STANDARDS ADOPTED DURING 2023

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued an accounting standard update with the objective of making targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance entity.

The Company adopted the standard on January 1, 2023 using the modified retrospective transition method relating to liabilities for traditional and limited payment contracts and deferred policy acquisition costs. The Company also adopted the standard in relation to MRBs on a full retrospective basis. As of the Transition Date, the impact of the adoption of the standard was a net decrease to beginning Accumulated other comprehensive income (loss) (AOCI) of $2.2 billion and a net increase to beginning Retained earnings of $933 million primarily driven by (1) changes related to MRBs in our Individual Retirement and Group Retirement operating segments, including the impact of non-performance risk adjustments which reclassified the portion of the changes in fair value attributable to non-performance risk from Retained earnings to AOCI, (2) changes to the discount rate used to measure the liability for future policy benefits which most significantly impacted our Life Insurance and Institutional Markets operating segments, and (3) the removal of balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments.

The accounting for the Fortitude Reinsurance Company Ltd. (Fortitude Re) reinsurance assets, including the discount rates, continued to be calculated using the same methodology and assumptions as the direct policies, and therefore have been recalculated on an LDTI basis. The accounting for reinsurance transactions between AIG and Fortitude Re structured as modified coinsurance (modco) remained unchanged.

Market risk benefits: The standard requires the measurement of all MRBs (e.g., living benefit and death benefit guarantees associated with variable annuities) associated with deposit (or account balance) contracts at fair value at each reporting period. Changes in fair value compared to prior periods are recorded and presented separately within the income statement, with the exception of our own credit risk changes (non-performance adjustments), which are recognized in Other comprehensive income (loss) (OCI). MRBs impacted both Retained earnings and AOCI upon transition.

The accounting for MRBs primarily impacted our Individual Retirement and Group Retirement operating segments. For additional disclosures about MRBs, see Note 14.

Discount rate assumption: The standard requires the discount rate assumption for the liability for future policy benefits to be updated at the end of each reporting period using an upper-medium grade (low credit risk) fixed income instrument yield that maximizes the use of observable market inputs. Upon transition, the Company had an adjustment to AOCI due to the fact that the market upper-medium grade (low credit risk) interest rates as of the Transition Date differed from reserve interest accretion rates.

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ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

Following adoption of the standard, the impact of changes to discount rates are recognized through OCI. Changes resulting from updating the discount rate each reporting period primarily impact term life insurance and other traditional life insurance products, as well as pension risk transfer (PRT) and structured settlement products. For additional information on the discount rate assumption under accounting for Long-Duration Contracts Standard, see Note 13.

Removal of balances related to changes in unrealized appreciation (depreciation) on investments: Under the standard, the majority of balances recorded in AOCI related to changes in unrealized appreciation (depreciation) on investments were eliminated.

In addition to the above, the standard also:

• Requires the review and, if necessary, update of future policy benefit assumptions at least annually for traditional and limited pay long duration contracts, with the recognition and parenthetical presentation of any resulting re-measurement gain or loss in Policyholder benefits and losses incurred (except for discount rate changes as noted above) in the Consolidated Statements of Income (Loss). For additional information, see Note 13.

• Simplifies the amortization of DAC to a constant level basis over the expected term of the related contracts and no longer requires an impairment test. For additional information, see Note 9.

• Increases disclosures of disaggregated rollforwards of several balances, including but not limited to liabilities for future policy benefits, deferred acquisition costs, account balances, MRBs, separate account liabilities and information about significant inputs, judgments and methods used in measurement and changes thereto and impact of those changes.

The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 as well as cross references to the applicable notes herein for additional information:

						Pre-Adoption, December 31, 2020						Cumulative Effect Adjustment as of January 1, 2021						Updated Balances Post-Adoption of LDTI
(in millions)
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(a)						$	34,578					$	7,666					$	42,244
Reinsurance assets - other, net of allowance for credit losses and disputes(a)						38,963						469						39,432
Deferred income taxes						12,624						339						12,963
Deferred policy acquisition costs(b)						9,805						3,150						12,955
Market risk benefit assets(c)						—						338						338
Other assets, net of allowance for credit losses(d)						13,122						398						13,520
Total assets						586,481						12,360						598,841
Future policy benefits for life and accident and health insurance contracts(e)						56,878						10,486						67,364
Policyholder contract deposits(e)						154,470						(6,247)						148,223
Market risk benefit liabilities(c)						—						8,739						8,739
Other policyholder funds(f)						3,548						248						3,796
Other liabilities(g)						27,122						398						27,520
Total liabilities						519,282						13,624						532,906
Retained earnings						15,504						933						16,437
Accumulated other comprehensive income (loss)						13,511						(2,197)						11,314
Total AIG Shareholders' equity						66,362						(1,264)						65,098
Total equity						67,199						(1,264)						65,935
Total liabilities and equity						586,481						12,360						598,841

*(a)*For additional information on the transition impacts associated with LDTI, see Note 8.

(b)For additional information on the transition impacts associated with LDTI, see Note 9.

(c)For additional information on the transition impacts associated with LDTI, see Note 14.

(d)Other assets include deferred sales inducement assets. For additional information on the transition impacts associated with LDTI, see Note 9.

(e)For additional information on the transition impacts associated with LDTI, see Note 13.

(f)Other policyholder funds include URR. For additional information on the transition impacts associated with LDTI, see Note 13.

(g)Other liabilities include deferred cost of reinsurance liabilities. For additional information on the transition impacts associated with LDTI, see Note 8.

AIG | 2023 Form 10-K			141

ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 on our previously reported Consolidated Balance Sheets as of December 31, 2022:

						As Previously Reported						Effect of Change						Updated Balances Post-Adoption of LDTI
(in millions)
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes						$	32,159					$	(1,408)					$	30,751
Reinsurance assets - other, net of allowance for credit losses and disputes						39,434						(463)						38,971
Deferred income taxes						15,144						(340)						14,804
Deferred policy acquisition costs						15,518						(2,661)						12,857
Market risk benefit assets						—						796						796
Other assets, net of allowance for credit losses						12,714						(330)						12,384
Total assets						526,634						(4,406)						522,228
Future policy benefits for life and accident and health insurance contracts						59,223						(7,309)						51,914
Policyholder contract deposits						158,891						(2,907)						155,984
Market risk benefit liabilities						—						4,736						4,736
Other policyholder funds						3,909						(446)						3,463
Other liabilities						26,456						301						26,757
Total liabilities						484,399						(5,625)						478,774
Additional paid-in capital						80,284						(369)						79,915
Retained earnings						33,032						1,861						34,893
Accumulated other comprehensive income (loss)						(22,092)						(524)						(22,616)
Total AIG Shareholders' equity						40,002						968						40,970
Non-redeemable noncontrolling interests						2,233						251						2,484
Total equity						42,235						1,219						43,454
Total liabilities and equity						526,634						(4,406)						522,228

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated Statements of Income (Loss):

												Year Ended December 31, 2022												Year Ended December 31, 2021
																											As Previously Reported						Effect of Change						Updated Balances Post- Adoption of LDTI						As Previously Reported			Effect of Change			Updated Balances Post- Adoption of LDTI
(in millions, except per common share data)
Revenues:
Premiums																											$	31,857					$	(1)					$	31,856					$	31,259		$	26		$	31,285
Policy fees																											2,972						(59)						2,913						3,051			(46)			3,005
Total net realized gains (losses)																											8,991						(1,927)						7,064						2,151			120			2,271
Total revenues																											56,437						(1,987)						54,450						52,057			100			52,157
Benefits, losses and expenses:
Policyholder benefits and losses incurred																											22,771						(595)						22,176						24,388			(603)			23,785
Change in the fair value of market risk benefits, net																											—						(958)						(958)						—			(447)			(447)
Interest credited to policyholder account balances																											3,709						35						3,744						3,557			13			3,570
Amortization of deferred acquisition costs																											4,970						(413)						4,557						4,573			(49)			4,524
General operating and other expenses																											9,195						(73)						9,122						8,790			(62)			8,728
Total benefits, losses and expenses																											42,155						(2,004)						40,151						39,958			(1,148)			38,810
Income from continuing operations before income tax expense (benefit)																											14,282						17						14,299						12,099			1,248			13,347
Income tax expense																											3,006						19						3,025						2,176			265			2,441
Income (loss) from continuing operations																											11,276						(2)						11,274						9,923			983			10,906
Net income (loss)																											11,275						(2)						11,273						9,923			983			10,906
Net income from continuing operations attributable to noncontrolling interests																											999						47						1,046						535			4			539
Net income (loss) attributable to AIG																											10,276						(49)						10,227						9,388			979			10,367
Net income (loss) attributable to AIG common shareholders																											10,247						(49)						10,198						9,359			979			10,338
Income (loss) per common share attributable to AIG common shareholders:
Common stock - Basic																											13.16						(0.06)						13.10						10.95			1.15			12.10
Common stock - Diluted																											13.01						(0.07)						12.94						10.82			1.13			11.95

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ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated Statements of Comprehensive Income (Loss):

												Year Ended December 31, 2022												Year Ended December 31, 2021
																								As Previously Reported						Effect of Change						Updated Balances Post- Adoption of LDTI						As Previously Reported			Effect of Change			Updated Balances Post- Adoption of LDTI
(in millions)
Net income																											$	11,275					$	(2)					$	11,273					$	9,923		$	983		$	10,906
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken																											(87)						(7)						(94)						35			9			44
Change in unrealized appreciation (depreciation) of all other investments																											(32,775)						(5,633)						(38,408)						(6,001)			(1,150)			(7,151)
Change in fair value of market risk benefits attributable to changes in our own credit risk																											—						1,294						1,294						—			179			179
Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts																											—						5,544						5,544						—			1,361			1,361
Change in foreign currency translation adjustments																											(514)						(99)						(613)						(187)			7			(180)
Other comprehensive income (loss)																											(33,402)						1,099						(32,303)						(5,830)			406			(5,424)
Comprehensive income (loss)																											(22,127)						1,097						(21,030)						4,093			1,389			5,482
Comprehensive income (loss) attributable to noncontrolling interests																											(1,584)						130						(1,454)						430			10			440
Comprehensive income (loss) attributable to AIG																											(20,543)						967						(19,576)						3,663			1,379			5,042

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Consolidated Statements of Cash Flows:

						Year Ended December 31, 2022												Year Ended December 31, 2021
						As Previously Reported						Effect of Change						Updated Balances Post- Adoption of LDTI						As Previously Reported			Effect of Change			Updated Balances Post- Adoption of LDTI
(in millions)
Cash flows from operating activities:
Net income						$	11,275					$	(2)					$	11,273					$	9,923		$	983		$	10,906
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income (loss):
Unrealized gains in earnings - net						(1,392)						2,486						1,094						(1,889)			1,016			(873)
Change in the fair value of market risk benefits in earnings, net						—						(1,481)						(1,481)						—			(1,427)			(1,427)
Depreciation and other amortization						4,848						(439)						4,409						4,633			(91)			4,542
Changes in operating assets and liabilities:
Insurance reserves						(2,332)						(1,505)						(3,837)						5,127			(655)			4,472
Premiums and other receivables and payables - net						(10,193)						(29)						(10,222)						(655)			(69)			(724)
Reinsurance assets, net						2,843						1,135						3,978						(1,241)			197			(1,044)
Capitalization of deferred policy acquisition costs						(4,649)						(73)						(4,722)						(4,906)			(63)			(4,969)
Current and deferred income taxes - net						2,260						19						2,279						1,314			265			1,579
Other, net						340						(184)						156						(1,322)			(212)			(1,534)
Total adjustments						(7,069)						(71)						(7,140)						(3,644)			(1,039)			(4,683)
Net cash provided by operating activities						4,207						(73)						4,134						6,279			(56)			6,223
Cash flows from financing activities:
Policyholder contract deposits						26,508						74						26,582						25,424			56			25,480
Net cash used in financing activities						(676)						74						(602)						(3,735)			56			(3,679)

Troubled Debt Restructuring and Vintage Disclosures

In March 2022, the FASB issued an accounting standard update that eliminates the accounting guidance for troubled debt restructurings for creditors and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The standard also updates the requirements for accounting for credit losses by adding enhanced disclosures for creditors related to loan refinancings and restructurings for borrowers experiencing financial difficulty. The Company adopted the standard prospectively as of January 1, 2023 and the standard did not have a material impact on our reported consolidated financial condition, results of operations, or cash flows. For the updated required disclosures, see Note 7.

AIG | 2023 Form 10-K			143

ITEM 8 | Notes to Consolidated Financial Statements | 2. Summary of Significant Accounting Policies

FUTURE APPLICATION OF ACCOUNTING STANDARDS

Income Tax

In December 2023, the FASB issued an accounting standard update to address improvements to income tax disclosures. The standard requires disaggregated information about a company’s effective tax rate reconciliation as well as information on income taxes paid. The standard is effective for public companies for annual periods beginning after December 15, 2024, with early adoption permitted. The standard will be applied on a prospective basis with the option to apply the standard retrospectively. We are assessing the impact of this standard.

Segment Reporting

In November 2023, the FASB issued an accounting standard update to address improvements to reportable segment disclosures. The standard primarily requires the following disclosure on an annual and interim basis: (i) significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss; and (ii) other segment items and description of its composition. The standard also requires current annual disclosures about a reportable segment's profits or losses and assets to be disclosed in interim periods and the title and position of the CODM with an explanation of how the CODM uses the reported measure(s) of segment profits or losses in assessing segment performance. The guidance is effective for public companies for fiscal years beginning after December 15, 2023 and interim periods in fiscal years within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment is applied retrospectively to all prior periods presented. We are assessing the impact of this standard.

Fair Value Measurement

On June 30, 2022, the FASB issued an accounting standards update to address diversity in practice by clarifying that a contractual sale restriction should not be considered in the measurement of the fair value of an equity security. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities. The guidance is effective for public companies for fiscal years beginning after December 15, 2023 and interim periods within those years, with early adoption permitted. For entities other than investment companies, the accounting standards update applies prospectively, with any adjustments resulting from adoption recognized in earnings on the date of adoption. We are assessing the impact of this standard.

3. Segment Information

We report our results of operations consistent with the manner in which our chief operating decision makers review the business to assess performance and allocate resources, as follows:

GENERAL INSURANCE

General Insurance business is presented as two operating segments:

• North America –** consists of insurance businesses in the United States, Canada and Bermuda, and our global reinsurance business, AIG Re.

• International –** consists of regional insurance businesses in Japan, the United Kingdom, Europe, Middle East and Africa (EMEA region), Asia Pacific, Latin America and Caribbean, and China. International also includes the results of Talbot Holdings Ltd. as well as AIG’s Global Specialty business.

North America and International operating segments consist of the following products:

–Commercial Lines – consists of Property, Liability, Financial Lines and Specialty.

–Personal Insurance – consists of Accident & Health and Personal Lines.

For further discussion on recent activity in the General Insurance business, see Note 1.

LIFE AND RETIREMENT

Life and Retirement business is presented as four operating segments:

• Individual Retirement –** consists of fixed annuities, fixed index annuities and variable annuities.

• Group Retirement –** consists of record-keeping, plan administrative and compliance services, financial planning and advisory solutions offered to employer-defined contribution plan participants, along with proprietary and non-proprietary annuities and advisory and brokerage products offered outside of plans.

144			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information

• Life Insurance –** primary products in the U.S. include term life and universal life insurance. International operations primarily include distribution of life and health products in the UK and Ireland. Corebridge previously announced agreements to sell Laya and AIG Life. The sale of Laya closed on October 31, 2023 and the AIG Life sale is expected to close in the first half of 2024.

• Institutional Markets –** consists of stable value wrap products, structured settlement and pension risk transfer annuities, corporate- and bank-owned life insurance, high net worth products and guaranteed investment contracts (GICs).

For further discussion on the ongoing separation of the Life and Retirement business from AIG and other recent activity, see Note 1.

OTHER OPERATIONS

Other Operations primarily consists of income from assets held by AIG Parent and other corporate subsidiaries, deferred tax assets related to tax attributes, corporate expenses and intercompany eliminations, our institutional asset management business and results of our consolidated investment entities, General Insurance portfolios in run-off as well as the historical results of our legacy insurance lines ceded to Fortitude Re.

SEGMENT RESULTS

We evaluate segment performance based on adjusted revenues and adjusted pre-tax income (loss). Adjusted revenues and adjusted pre-tax income (loss) are derived by excluding certain items from total revenues and pre-tax income (loss), respectively. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. Legal entities are attributed to each segment based upon the predominance of activity in that legal entity. For the items excluded from adjusted revenues and adjusted pre-tax income (loss), see the table below.

The following table presents AIG’s continuing operations by operating segment:

(in millions)						Adjusted Revenues			Net Investment Income									Interest Expense			Amortization of DAC									Adjusted Pre-tax Income (Loss)
2023
General Insurance
North America			$			11,921									$			—			$			1,671			$			1,207			(a)
International						13,170												—						1,952						1,142			(a)
Net investment income						3,022			$			3,022						—						—						3,022
Total General Insurance						28,113						3,022						—						3,623						5,371
Life and Retirement
Individual Retirement						6,264						4,917						2						567						2,310
Group Retirement						2,734						1,999						1						82						758
Life Insurance						5,092						1,283						—						403						358
Institutional Markets						7,391						1,587						1						9						379
Total Life and Retirement						21,481						9,786						4						1,061						3,805
Other Operations
Other Operations before consolidation and eliminations						381						287						1,107						—						(1,765)
AIG consolidation and eliminations						(6)						(1)						(6)						—						(10)
Total Other Operations						375						286						1,101						—						(1,775)
Total						49,969						13,094						1,105						4,684						7,401
Reconciling items:
Changes in fair value of securities used to hedge guaranteed living benefits						55						55						—						—						(16)
Change in the fair value of market risk benefits, net(b)						—						—						—						—						(2)
Changes in benefit reserves related to net realized gains (losses)						—						—						—						—						6
Changes in the fair value of equity securities						94						94						—						—						94
Other income (expense) - net						(27)						31						31						—						—
Gain (loss) on extinguishment of debt						—						—						—						—						37
Net investment income on Fortitude Re funds withheld assets						1,544						1,544						—						—						1,544
Net realized gains (losses) on Fortitude Re funds withheld assets						(295)						—						—						—						(295)
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative						(2,007)						—						—						—						(2,007)
Net realized gains (losses)(c)						(2,536)						(227)						—						—						(2,496)
Net gain (loss) on divestitures and other						—						—						—						—						643
Non-operating litigation reserves and settlements						1						—						—						—						(1)
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements						—						—						—						—						62
Net loss reserve discount benefit (charge)						—						—						—						—						(195)

AIG | 2023 Form 10-K			145

ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information

(in millions)						Adjusted Revenues			Net Investment Income									Interest Expense			Amortization of DAC									Adjusted Pre-tax Income (Loss)
Pension expense related to a one-time lump sum payment to former employees						—						—						—						—						(84)
Integration and transaction costs associated with acquiring or divesting businesses						—						—						—						—						(252)
Restructuring and other costs						—						—						—						—						(553)
Non-recurring costs related to regulatory or accounting changes						—						—						—						—						(40)
Net impact from elimination of international reporting lag(d)						4						1						—						124						12
Revenues and pre-tax income			$			46,802			$			14,592			$			1,136			$			4,808			$			3,858

(in millions)						Adjusted Revenues			Net Investment Income									Interest Expense			Amortization of DAC									Adjusted Pre-tax Income (Loss)
2022
General Insurance
North America			$			12,071									$			—			$			1,585			$			648			(a)
International						13,269												—						1,948						1,400			(a)
Net investment income						2,382			$			2,382						—						—						2,382
Total General Insurance						27,722						2,382						—						3,533						4,430
Life and Retirement
Individual Retirement						5,325						3,898						11						519						1,676
Group Retirement						2,744						2,005						6						80						786
Life Insurance						5,364						1,393						4						415						521
Institutional Markets						4,160						1,051						2						7						334
Total Life and Retirement						17,593						8,347						23						1,021						3,317
Other Operations
Other Operations before consolidation and eliminations						827						714						1,131						5						(1,542)
AIG consolidation and eliminations						(435)						(446)						(56)						(2)						(405)
Total Other Operations						392						268						1,075						3						(1,947)
Total						45,707						10,997						1,098						4,557						5,800
Reconciling items:
Changes in fair value of securities used to hedge guaranteed living benefits						55						55						—						—						30
Change in the fair value of market risk benefits, net(b)						—						—						—						—						958
Changes in benefit reserves related to net realized gains (losses)						—						—						—						—						14
Changes in the fair value of equity securities						(53)						(53)						—						—						(53)
Other income (expense) - net						(29)						28						28						—						—
Gain (loss) on extinguishment of debt						—						—						—						—						(303)
Net investment income on Fortitude Re funds withheld assets						943						943						—						—						943
Net realized gains (losses) on Fortitude Re funds withheld assets						(486)						—						—						—						(486)
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative						7,481						—						—						—						7,481
Net realized gains (losses)(b)						(195)						(244)						(1)						—						(173)
Net gain (loss) on divestitures and other						—						—						—						—						(82)
Non-operating litigation reserves and settlements						49						—						—						—						41
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements						—						—						—						—						160
Net loss reserve discount benefit (charge)						—						—						—						—						703
Pension expense related to a one-time lump sum payment to former employees						—						—						—						—						(60)
Integration and transaction costs associated with acquiring or divesting businesses						—						—						—						—						(194)
Restructuring and other costs						—						—						—						—						(570)
Non-recurring costs related to regulatory or accounting changes						—						—						—						—						(37)
Net impact from elimination of international reporting lag(d)						978						41						—						—						127
Revenues and pre-tax income			$			54,450			$			11,767			$			1,125			$			4,557			$			14,299

146			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information

(in millions)						Adjusted Revenues			Net Investment Income									Interest Expense			Amortization of DAC									Adjusted Pre-tax Income (Loss)
2021
General Insurance
North America			$			10,989									$			—			$			1,333			$			(47)			(a)
International						14,068												—						2,197						1,102			(a)
Net investment income						3,304			$			3,304						—						—						3,304
Total General Insurance						28,361						3,304						—						3,530						4,359
Life and Retirement
Individual Retirement						5,922						4,338						61						447						2,297
Group Retirement						3,249						2,410						35						78						1,258
Life Insurance						5,286						1,619						25						427						453
Institutional Markets						5,117						1,154						9						6						546
Total Life and Retirement						19,574						9,521						130						958						4,554
Other Operations
Other Operations before consolidation and eliminations						1,338						1,112						1,220						37						(1,418)
AIG consolidation and eliminations						(991)						(996)						(65)						(1)						(932)
Total Other Operations						347						116						1,155						36						(2,350)
Total						48,282						12,941						1,285						4,524						6,563
Reconciling items:
Changes in fair value of securities used to hedge guaranteed living benefits						60						60						—						—						61
Change in the fair value of market risk benefits, net(b)						—						—						—						—						447
Changes in benefit reserves related to net realized gains (losses)						—						—						—						—						(15)
Changes in the fair value of equity securities						(237)						(237)						—						—						(237)
Other income (expense) - net						(24)						33						33						—						—
Gain (loss) on extinguishment of debt						—						—						—						—						(389)
Net investment income on Fortitude Re funds withheld assets						1,971						1,971						—						—						1,971
Net realized gains (losses) on Fortitude Re funds withheld assets						1,003						—						—						—						1,003
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative						(603)						—						—						—						(603)
Net realized gains (losses)(b)						1,705						(156)						(13)						—						1,744
Net gain (loss) on divestitures and other						—						—						—						—						3,044
Non-operating litigation reserves and settlements						—						—						—						—						(3)
Favorable prior year development and related amortization changes ceded under retroactive reinsurance agreements						—						—						—						—						186
Net loss reserve discount benefit (charge)						—						—						—						—						193
Pension expense related to a one-time lump sum payment to former employees						—						—						—						—						(34)
Integration and transaction costs associated with acquiring or divesting businesses						—						—						—						—						(83)
Restructuring and other costs						—						—						—						—						(433)
Non-recurring costs related to regulatory or accounting changes						—						—						—						—						(68)
Revenues and pre-tax income			$			52,157			$			14,612			$			1,305			$			4,524			$			13,347

(a)General Insurance North America’s and General Insurance International’s Adjusted pre-tax income does not include Net investment income as the investment portfolio results are managed at the General Insurance level. Net investment income is shown separately as a component of General Insurance’s total Adjusted pre-tax income results.

(b)Includes realized gains and losses on certain derivative instruments used for non-qualifying (economic) hedging.

(c)Includes all net realized gains and losses except earned income (periodic settlements and changes in settlement accruals) on derivative instruments used for non-qualifying (economic) hedging or for asset replication and net realized gains and losses on Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s reinsurance obligations to AIG (Fortitude Re funds withheld assets).

*(d)*See Note 1.

AIG | 2023 Form 10-K			147

ITEM 8 | Notes to Consolidated Financial Statements | 3. Segment Information

The following table presents AIG’s year-end identifiable assets and capital expenditures by segment:

			Year-End Identifiable Assets																		Capital Expenditures
(in millions)						2023									2022									2023									2022
General Insurance			$			139,371						$			147,083						$			158						$			68
Life and Retirement						375,197									352,694									43									102
Other Operations						24,738									22,451									39									40
Total Assets			$			539,306						$			522,228						$			240						$			210

The following table presents AIG’s consolidated total revenues and real estate and other fixed assets, net of accumulated depreciation, by major geographic area:

			Total Revenues*																					Real Estate and Other Fixed Assets, Net of Accumulated Depreciation
(in millions)						2023						2022						2021									2023						2022						2021
North America			$			33,565			$			39,618			$			37,324						$			1,006			$			1,206			$			1,230
International						13,237						14,832						14,833									372						387						610
Consolidated			$			46,802			$			54,450			$			52,157						$			1,378			$			1,593			$			1,840

*Revenues are generally reported according to the geographic location of the segment. International revenues consists of revenues from our General Insurance International operating segment.

4. Held-For-Sale Classification

HELD-FOR-SALE CLASSIFICATION

We report and classify a business as held-for-sale (Held-For-Sale Business) when management has approved the sale or received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met. A Held-For-Sale Business is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized.

Assets and liabilities related to a Held-For-Sale Business are reported in Assets held for sale and Liabilities held for sale, respectively, in our Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale. At December 31, 2023, the following businesses and assets were reported and classified as held-for-sale:

AIG Life Limited

To further simplify Corebridge’s business model, on September 25, 2023, Corebridge announced that it entered into a definitive agreement to sell AIG Life to Aviva plc for £460 million in cash, subject to certain adjustments. The sale of AIG Life is expected to close in the first half of 2024, subject to regulatory approvals and other customary closing conditions. The results of AIG Life are reported in Life and Retirement.

Other

Other primarily consists of real estate.

148			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 4. Held-For-Sale Classification

The following table summarizes the components of assets and liabilities held-for-sale on the Consolidated Balance Sheets at December 31, 2023 after elimination of intercompany balances:

(in millions)												AIG Life						Other						Total
Assets:
Bonds available for sale									$			167			$			14			$			181
Other invested assets												—						67						67
Short-term investments, including restricted cash of $0												11						1						12
Cash												3						—						3
Accrued investment income												3						—						3
Premiums and other receivables, net of allowance for credit losses and disputes												116						9						125
Reinsurance assets - other, net of allowance for credit losses and disputes												899						3						902
Deferred income taxes												47						—						47
Deferred policy acquisition costs												814						—						814
Other assets, net of allowance for credit losses(a)												83						31						114
Total assets held for sale									$			2,143			$			125			$			2,268
Liabilities:
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses									$			—			$			19			$			19
Unearned premiums												54						7						61
Future policy benefits for life and accident and health insurance contracts												838						—						838
Other liabilities												854						3						857
Total liabilities held for sale									$			1,746			$			29			$			1,775

(a)Other assets, net of allowance for credit losses includes goodwill and other intangibles of $23 million and $3 million, respectively, for AIG Life.

5. Fair Value Measurements

FAIR VALUE MEASUREMENTS ON A RECURRING BASIS

We carry certain of our financial instruments at fair value. We define the fair value of a financial instrument as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are responsible for the determination of the value of the investments carried at fair value and the supporting methodologies and assumptions.

The degree of judgment used in measuring the fair value of financial instruments generally inversely correlates with the level of observable valuation inputs. We maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Conversely, financial instruments for which no quoted prices are available have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction, liquidity and general market conditions.

Fair Value Hierarchy

Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are measured and classified in accordance with a fair value hierarchy consisting of three “levels” based on the observability of valuation inputs:

• Level 1:** Fair value measurements based on quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. We do not adjust the quoted price for such instruments.

• Level 2:** Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

• Level 3:** Fair value measurements based on valuation techniques that use significant inputs that are unobservable. Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. Therefore, we must make certain assumptions about the inputs a hypothetical market participant would use to value that asset or liability.

AIG | 2023 Form 10-K			149

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

The following is a description of the valuation methodologies used for instruments carried at fair value. These methodologies are applied to assets and liabilities across the levels discussed above, and the observability of the inputs used determines the appropriate level in the fair value hierarchy for the respective asset or liability.

VALUATION METHODOLOGIES OF FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

Incorporation of Credit Risk in Fair Value Measurements

• Our Own Credit Risk.** Fair value measurements for certain liabilities incorporate our own credit risk by determining the explicit cost for each counterparty to protect against its net credit exposure to us at the balance sheet date by reference to observable AIG credit default swaps (CDS) or cash bond spreads. We calculate the effect of credit spread changes using discounted cash flow techniques that incorporate current market interest rates. A derivative counterparty’s net credit exposure to us is determined based on master netting agreements, when applicable, which take into consideration all derivative positions with us, as well as collateral we post with the counterparty at the balance sheet date. For a description of how we incorporate our own credit risk in the valuation of embedded derivatives related to certain annuity and life insurance products, see – Market Risk Benefits and Embedded Derivatives within Policyholder Contract Deposits below.

• Counterparty Credit Risk.** Fair value measurements for freestanding derivatives incorporate counterparty credit by determining the explicit cost for us to protect against our net credit exposure to each counterparty at the balance sheet date by reference to observable counterparty CDS spreads, when available. When not available, other directly or indirectly observable credit spreads will be used to derive the best estimates of the counterparty spreads. Our net credit exposure to a counterparty is determined based on master netting agreements, which take into consideration all derivative positions with the counterparty, as well as collateral posted by the counterparty at the balance sheet date.

Fair values for fixed maturity securities based on observable market prices for identical or similar instruments implicitly incorporate counterparty credit risk. Fair values for fixed maturity securities based on internal models incorporate counterparty credit risk by using discount rates that take into consideration cash issuance spreads for similar instruments or other observable information.

For fair values measured based on internal models, the cost of credit protection is determined under a discounted present value approach considering the market levels for single name CDS spreads for each specific counterparty, the mid-market value of the net exposure (reflecting the amount of protection required) and the weighted average life of the net exposure. CDS spreads are provided to us by an independent third party. We utilize an interest rate based on the appropriate benchmark curve to derive our discount rates.

While this approach does not explicitly consider all potential future behavior of the derivative transactions or potential future changes in valuation inputs, we believe this approach provides a reasonable estimate of the fair value of the assets and liabilities, including consideration of the impact of non-performance risk.

Fixed Maturity Securities

Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure fixed maturity securities at fair value. Market price data is generally obtained from dealer markets.

We employ independent third-party valuation service providers to gather, analyze, and interpret market information to derive fair value estimates for individual investments, based upon market-accepted methodologies and assumptions. The methodologies used by these independent third-party valuation service providers are reviewed and understood by management, through periodic discussion with and information provided by the independent third-party valuation service providers. In addition, as discussed further below, control processes designed to ensure the accuracy of these values are applied to the fair values received from independent third-party valuation service providers.

Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of market-accepted valuation methodologies, which may utilize matrix pricing, financial models, accompanying model inputs and various assumptions, provide a single fair value measurement for individual securities. The inputs used by the valuation service providers include, but are not limited to, market prices from completed transactions for identical securities and transactions for comparable securities, benchmark yields, interest rate yield curves, credit spreads, prepayment rates, default rates, recovery assumptions, currency rates, quoted prices for similar securities and other market-observable information, as applicable. If fair value is determined using financial models, these models generally take into account, among other things, market observable information as of the measurement date as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector, and when applicable, collateral quality and other security or issuer-specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased.

150			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

We have control processes designed to ensure that the fair values received from independent third-party valuation service providers are accurately recorded, that their data inputs and valuation techniques are appropriate and consistently applied and that the assumptions used appear reasonable and consistent with the objective of determining fair value. We assess the reasonableness of individual security values received from independent third-party valuation service providers through various analytical techniques, and have procedures to escalate related questions internally and to the independent third-party valuation service providers for resolution. To assess the degree of pricing consensus among various valuation service providers for specific asset types, we conduct comparisons of prices received from available sources. We use these comparisons to establish a hierarchy for the fair values received from independent third-party valuation service providers to be used for particular security classes. We also validate prices for selected securities through reviews by members of management who have relevant expertise and who are independent of those charged with executing investing transactions.

When our independent third-party valuation service providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, fair value is determined either by requesting brokers who are knowledgeable about these securities to provide a price quote, which is generally non-binding, or by employing market accepted valuation models internally or via our third party asset managers. Broker prices may be based on an income approach, which converts expected future cash flows to a single present value amount, with specific consideration of inputs relevant to particular security types. For structured securities, such inputs may include ratings, collateral types, geographic concentrations, underlying loan vintages, loan delinquencies and defaults, loss severity assumptions, prepayments, and weighted average coupons and maturities. When the volume or level of market activity for a security is limited, certain inputs used to determine fair value may not be observable in the market. Broker prices may also be based on a market approach that considers recent transactions involving identical or similar securities. Fair values provided by brokers are subject to similar control processes to those noted above for fair values from independent third-party valuation service providers, including management reviews. For those corporate debt instruments (for example, private placements) that are not traded in active markets or that are subject to transfer restrictions, valuations reflect illiquidity and non-transferability, based on available market evidence. When observable price quotations are not available, fair value is determined based on discounted cash flow models using discount rates based on credit spreads, yields or price levels of comparable securities, adjusted for illiquidity and structure. Fair values determined internally or via our third party asset managers are also subject to management review to ensure that valuation models and related inputs are reasonable.

The methodology above is relevant for all fixed maturity securities including residential mortgage backed securities (RMBS), commercial mortgage backed securities (CMBS), collateralized loan obligations (CLO), other asset‑backed securities (ABS) and fixed maturity securities issued by government sponsored entities and corporate entities.

Equity Securities Traded in Active Markets

Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure equity securities at fair value. Market price data is generally obtained from exchange or dealer markets.

Mortgage and Other Loans Receivable

We estimate the fair value of mortgage and other loans receivable that are measured at fair value by using dealer quotations, discounted cash flow analyses and/or internal valuation models. The determination of fair value considers inputs such as interest rate, maturity, the borrower’s creditworthiness, collateral, subordination, guarantees, past-due status, yield curves, credit curves, prepayment rates, market pricing for comparable loans and other relevant factors.

Other Invested Assets

We initially estimate the fair value of investments in certain hedge funds, private equity funds and other investment partnerships by reference to the transaction price. Subsequently, we generally obtain the fair value of these investments from net asset value information provided by the general partner or manager of the investments, the financial statements of which are generally audited annually. We consider observable market data and perform certain control procedures to validate the appropriateness of using the net asset value as a fair value measurement. The fair values of other investments carried at fair value, such as direct private equity holdings, are initially determined based on transaction price and are subsequently estimated based on available evidence such as market transactions in similar instruments, other financing transactions of the issuer and other available financial information for the issuer, with adjustments made to reflect illiquidity as appropriate.

Short-term Investments

For short-term investments that are measured at amortized cost, the carrying amounts of these assets approximate fair values because of the relatively short period of time between origination and expected realization, and their limited exposure to credit risk. Securities purchased under agreements to resell (reverse repurchase agreements) are generally treated as collateralized receivables. We report certain receivables arising from securities purchased under agreements to resell as Short-term investments in the Consolidated Balance Sheets. When these receivables are measured at fair value, we use market-observable interest rates to determine fair value.

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ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

Separate Account Assets

Separate account assets are composed primarily of registered and unregistered open-end mutual funds that generally trade daily and are measured at fair value in the manner discussed above for equity securities traded in active markets.

Freestanding Derivatives

Derivative assets and liabilities can be exchange-traded or traded over-the-counter (OTC). We generally value exchange-traded derivatives such as futures and options using quoted prices in active markets for identical derivatives at the balance sheet date.

OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the selection of a particular model to value an OTC derivative depends on the contractual terms of, and specific risks inherent in the instrument, as well as the availability of pricing information in the market. We generally use similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be corroborated by observable market data by correlation or other means, and model selection does not involve significant management judgment.

For certain OTC derivatives that trade in less liquid markets, where we generally do not have corroborating market evidence to support significant model inputs and cannot verify the model to market transactions, the transaction price may provide the best estimate of fair value. Accordingly, when a pricing model is used to value such an instrument, the model is adjusted so the model value at inception equals the transaction price. We will update valuation inputs in these models only when corroborated by evidence such as similar market transactions, independent third-party valuation service providers and/or broker or dealer quotations, or other empirical market data. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit considerations. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used.

We value our super senior credit default swap portfolio using prices obtained from vendors and/or counterparties. The valuation of the super senior credit derivatives is complex because of the limited availability of market observable information due to the lack of trading and price transparency in certain structured finance markets. Our valuation methodologies for the super senior CDS portfolio have evolved over time in response to market conditions and the availability of market observable information. We have sought to calibrate the methodologies to available market information and to review the assumptions of the methodologies on a regular basis.

Market Risk Benefits and Embedded Derivatives within Policyholder Contract Deposits

Certain variable annuity, fixed annuity and fixed index annuity contracts contain MRBs related to guaranteed benefit features that we separate from the host contracts and account for at fair value, with certain changes recognized in earnings. MRBs are contracts or contract features that provide protection to policyholders from other-than-nominal capital market risks and expose the insurance entity to other-than-nominal capital market risks.

The fair value of MRBs contained in certain variable annuity, fixed annuity and fixed index annuity contracts is measured based on policyholder behavior and capital market assumptions related to projected cash flows over the expected lives of the contracts. These discounted cash flow projections primarily include benefits and related fees assessed, when applicable. In some instances, the projected cash flows from fees may exceed projected cash flows related to benefit payments and therefore, at a point in time, the carrying value of the MRBs may be in a net asset position. The projected cash flows incorporate best estimate assumptions for policyholder behavior (including mortality, lapses, withdrawals and benefit utilization), along with an explicit risk margin to reflect a market participant’s estimates of the fair value of projected cash flows and policyholder behavior. Estimates of future policyholder behavior assumptions are subjective and are based primarily on our historical experience.

Because of the dynamic and complex nature of the projected cash flows with respect to MRBs in our variable annuity, fixed annuity, and fixed index annuity contracts, risk neutral valuations are used, which are calibrated to observable interest rate and equity option prices. Estimating the underlying cash flows for these products involves judgments regarding the capital market assumptions related to expected market rates of return, market volatility, credit spreads, correlations of certain market variables, fund performance and discount rates. Additionally, estimating the underlying cash flows for these products also involves judgments regarding policyholder behavior. The portion of fees attributable to the fair value of expected benefit payments is included within the fair value measurement of these MRBs, and related fees are classified in change in the fair value of MRBs, net, as earned, consistent with other changes in the fair value of these MRBs. Any portion of the fees not attributed to the MRBs is excluded from the fair value measurement and classified in policy fees as earned.

Option pricing models are used to estimate the fair value of embedded derivatives in our fixed index annuity and life contracts, taking into account the capital market assumptions for future index growth rates, volatility of the index, future interest rates, and our ability to adjust the participation rate and the cap on fixed index credited rates in light of market conditions and policyholder behavior assumptions.

152			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

Projected cash flows are discounted using the interest rate swap curve (swap curve), which is viewed as being consistent with the credit spreads for highly-rated financial institutions (S&P AA-rated or above). A swap curve shows the fixed-rate leg of a non-complex swap against the floating rate (for example, Secured Overnight Financing Rate (SOFR)) leg of a related tenor. We also incorporate our own risk of non-performance in the valuation of MRBs and embedded derivatives associated with variable annuity, fixed annuity, fixed index annuity and life contracts. The non-performance risk adjustment (NPA) reflects a market participant’s view of our claims-paying ability by incorporating an additional spread to the swap curve used to discount projected benefit cash flows. The NPA is calculated by constructing forward rates based on a weighted average of observable corporate credit indices to approximate the claims-paying ability rating of our insurance companies. The corporate credit indices are observable for the first 30 years. For years 30 to 50, the yield is derived using market observable yields. Yields for years 50 to 100 are extrapolated using a flat forward approach, maintaining a constant forward spread through the period. MRBs are measured using a NPA that is a locked-in estimate of our claims-paying ability at policy issue (locked-in NPA) as well as a NPA that reflects an estimate of our current claims-paying ability (current NPA).

When MRBs are remeasured each period, both the interest rates and current NPA are updated. Changes in the swap curve and the time value accretion of the at-issue NPA are recorded to net income while the difference between the MRBs measured using the at-issue NPA and the current NPA is recorded to OCI. For embedded derivatives, changes in the interest rates and the period-over-period change in the NPA are recorded to net income.

Fortitude Re funds withheld payable

The reinsurance transactions between AIG and Fortitude Re were structured as modco and loss portfolio transfer arrangements with funds withheld (funds withheld). As a result of the deconsolidation of Fortitude Re, AIG has established a funds withheld payable to Fortitude Re while simultaneously establishing a reinsurance asset representing reserves for the insurance coverage that Fortitude Re has assumed. The funds withheld payable contains an embedded derivative and changes in fair value of the embedded derivative related to the funds withheld payable are recognized in earnings through realized gains (losses). This embedded derivative is considered a total return swap with contractual returns that are attributable to various assets and liabilities associated with these reinsurance agreements.

Long-Term Debt

The fair value of non-structured liabilities is generally determined by using market prices from exchange or dealer markets, when available, or discounting expected cash flows using the appropriate discount rate for the applicable maturity. We determine the fair value of structured liabilities and hybrid financial instruments (where performance is linked to structured interest rates, inflation or currency risks) using the appropriate derivative valuation methodology (described above) given the nature of the embedded risk profile. In addition, adjustments are made to the valuations of both non-structured and structured liabilities to reflect our own creditworthiness based on the methodology described in “Incorporation of Credit Risk in Fair Value Measurements – Our Own Credit Risk” above.

Borrowings under obligations of guaranteed investment agreements (GIAs), which are guaranteed by us, are recorded at fair value using discounted cash flow calculations based on interest rates currently being offered for similar contracts and our current market observable implicit credit spread rates with maturities consistent with those remaining for the contracts being valued. Obligations may be called at various times prior to maturity at the option of the counterparty.

Other Liabilities

Other liabilities measured at fair value include certain securities sold under agreements to repurchase and certain securities sold but not yet purchased. Liabilities arising from securities sold under agreements to repurchase are generally treated as collateralized borrowings. We estimate the fair value of liabilities arising under these agreements by using market-observable interest rates. This methodology considers such factors as the coupon rate, yield curves and other relevant factors. Fair values for securities sold but not yet purchased are based on current market prices.

AIG | 2023 Form 10-K			153

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents information about assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value measurement based on the observability of the inputs used:

December 31, 2023						Level 1						Level 2						Level 3			Counterparty Netting(a)						Cash Collateral									Total
(in millions)
Assets:
Bonds available for sale:
U.S. government and government sponsored entities			$			35			$			5,581			$			—			$			—			$			—			$			5,616
Obligations of states, municipalities and political subdivisions						—						9,816						847						—						—						10,663
Non-U.S. governments						233						12,213						7						—						—						12,453
Corporate debt						—						136,753						1,679						—						—						138,432
RMBS						—						12,804						7,640						—						—						20,444
CMBS						—						13,495						633						—						—						14,128
CLO/ABS						—						13,959						16,038						—						—						29,997
Total bonds available for sale						268						204,621						26,844						—						—						231,733
Other bond securities:
Obligations of states, municipalities and political subdivisions						—						90						1						—						—						91
Non-U.S. governments						—						37						—						—						—						37
Corporate debt						—						2,697						211						—						—						2,908
RMBS						—						105						158						—						—						263
CMBS						—						244						17						—						—						261
CLO/ABS						—						512						1,169						—						—						1,681
Total other bond securities						—						3,685						1,556						—						—						5,241
Equity securities						632						40						56						—						—						728
Other invested assets**(b)**						—						155						2,070						—						—						2,225
Derivative assets**(c)****:**
Interest rate contracts						—						2,826						460						—						—						3,286
Foreign exchange contracts						—						1,235						1						—						—						1,236
Equity contracts						7						1,187						825						—						—						2,019
Credit contracts						—						8						33						—						—						41
Other contracts						—						—						13						—						—						13
Counterparty netting and cash collateral						—						—						—						(3,864)						(2,220)						(6,084)
Total derivative assets						7						5,256						1,332						(3,864)						(2,220)						511
Short-term investments						2,635						8,137						—						—						—						10,772
Market risk benefit assets						—						—						912						—						—						912
Other assets**(c)**						—						—						243						—						—						243
Separate account assets						87,814						3,191						—						—						—						91,005
Total**(d)**			$			91,356			$			225,085			$			33,013			$			(3,864)			$			(2,220)			$			343,370
Liabilities:
Policyholder contract deposits			$			—			$			55			$			7,942			$			—			$			—			$			7,997
Market risk benefit liabilities						—						—						5,705						—						—						5,705
Derivative liabilities**(c)****:**
Interest rate contracts						—						3,631						—						—						—						3,631
Foreign exchange contracts						—						891						3						—						—						894
Equity contracts						2						680						63						—						—						745
Credit contracts						—						4						33						—						—						37
Other contracts						—						—						2						—						—						2
Counterparty netting and cash collateral						—						—						—						(3,864)						(1,050)						(4,914)
Total derivative liabilities						2						5,206						101						(3,864)						(1,050)						395
Fortitude Re funds withheld payable						—						—						(1,226)						—						—						(1,226)
Other liabilities						—						107						122						—						—						229
Long-term debt						—						53						—						—						—						53
Total			$			2			$			5,421			$			12,644			$			(3,864)			$			(1,050)			$			13,153

154			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

December 31, 2022						Level 1						Level 2						Level 3			Counterparty Netting(a)						Cash Collateral									Total
(in millions)
Assets:
Bonds available for sale:
U.S. government and government sponsored entities			$			25			$			6,594			$			—			$			—			$			—			$			6,619
Obligations of states, municipalities and political subdivisions						—						11,275						824						—						—						12,099
Non-U.S. governments						158						13,326						1						—						—						13,485
Corporate debt						—						134,992						2,847						—						—						137,839
RMBS						—						11,264						7,553						—						—						18,817
CMBS						—						13,267						926						—						—						14,193
CLO/ABS						—						10,356						12,748						—						—						23,104
Total bonds available for sale						183						201,074						24,899						—						—						226,156
Other bond securities:
Obligations of states, municipalities and political subdivisions						—						111						—						—						—						111
Non-U.S. governments						—						66						—						—						—						66
Corporate debt						—						1,976						416						—						—						2,392
RMBS						—						113						173						—						—						286
CMBS						—						303						28						—						—						331
CLO/ABS						—						389						910						—						—						1,299
Total other bond securities						—						2,958						1,527						—						—						4,485
Equity securities						518						18						39						—						—						575
Other invested assets (b)						—						145						2,075						—						—						2,220
Derivative assets**(c)****:**
Interest rate contracts						1						3,410						311						—						—						3,722
Foreign exchange contracts						—						1,844						—						—						—						1,844
Equity contracts						11						132						285						—						—						428
Commodity contracts						—						9						—						—						—						9
Credit contracts						—						—						32						—						—						32
Other contracts						—						—						14						—						—						14
Counterparty netting and cash collateral						—						—						—						(3,895)						(1,640)						(5,535)
Total derivative assets						12						5,395						642						(3,895)						(1,640)						514
Short-term investments						2,821						2,887						—						—						—						5,708
Market risk benefit assets						—						—						796						—						—						796
Other assets**(c)**						—						—						107						—						—						107
Separate account assets						81,655						3,198						—						—						—						84,853
Total			$			85,189			$			215,675			$			30,085			$			(3,895)			$			(1,640)			$			325,414
Liabilities:
Policyholder contract deposits			$			—			$			41			$			5,367			$			—			$			—			$			5,408
Market risk benefit liabilities						—						—						4,736						—						—						4,736
Derivative liabilities**(c)****:**
Interest rate contracts						—						4,838						—						—						—						4,838
Foreign exchange contracts						—						1,138						—						—						—						1,138
Equity contracts						2						10						14						—						—						26
Credit contracts						—						9						32						—						—						41
Counterparty netting and cash collateral						—						—						—						(3,895)						(1,917)						(5,812)
Total derivative liabilities						2						5,995						46						(3,895)						(1,917)						231
Fortitude Re funds withheld payable						—						—						(2,235)						—						—						(2,235)
Other liabilities						—						—						112						—						—						112
Long-term debt						—						56						—						—						—						56
Total			$			2			$			6,092			$			8,026			$			(3,895)			$			(1,917)			$			8,308

(a)Represents netting of derivative exposures covered by qualifying master netting agreements.

(b)Excludes investments that are measured at fair value using the net asset value (NAV) per share (or its equivalent), which totaled $9.5 billion and $9.8 billion as of December 31, 2023 and 2022, respectively.

(c)Presented as part of Other assets and Other liabilities on the Consolidated Balance Sheets.

(d)Excludes $182 million of assets reclassified to Assets held for sale on the Consolidated Balance Sheets.

AIG | 2023 Form 10-K			155

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

CHANGES IN LEVEL 3 RECURRING FAIR VALUE MEASUREMENTS

The following tables present changes during the years ended December 31, 2023 and 2022 in Level 3 assets and liabilities measured at fair value on a recurring basis, and the realized and unrealized gains (losses) related to the Level 3 assets and liabilities in the Consolidated Balance Sheets at December 31, 2023 and 2022:

(in millions)						Fair Value Beginning of Year						MRBs and Net Realized and Unrealized Gains (Losses) Included in Income						Other Comprehensive Income (Loss)						Purchases, Sales, Issuances and Settlements, Net						Gross Transfers In						Gross Transfers Out						Other						Fair Value End of Year						Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year						Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Year
December 31, 2023
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions			$			824			$			(2)			$			67			$			(31)			$			—			$			(11)			$			—			$			847			$			—			$			35
Non-U.S. governments						1						1						1						(5)						11						(2)						—						7						—						1
Corporate debt						2,847						(104)						24						(595)						818						(1,295)						(16)						1,679						—						(24)
RMBS						7,553						430						12						(249)						33						(139)						—						7,640						—						(63)
CMBS						926						(23)						(49)						(58)						223						(386)						—						633						—						(94)
CLO/ABS						12,748						228						408						2,070						675						(251)						160						16,038						—						243
Total bonds available for sale						24,899						530						463						1,132						1,760						(2,084)						144						26,844						—						98
Other bond securities:
Obligations of states, municipalities and political subdivisions						—						—						—						1						—						—						—						1						—						—
Corporate debt						416						(14)						—						—						—						(191)						—						211						(15)						—
RMBS						173						9						—						(24)						—						—						—						158						(5)						—
CMBS						28						(4)						—						(7)						—						—						—						17						—						—
CLO/ABS						910						68						—						153						5						(47)						80						1,169						(36)						—
Total other bond securities						1,527						59						—						123						5						(238)						80						1,556						(56)						—
Equity securities						39						1						—						27						10						(20)						(1)						56						1						—
Other invested assets						2,075						(150)						11						90						44						—						—						2,070						(151)						—
Other assets						107						—						—						136						—						—						—						243						—						—
Total**(a)**			$			28,647			$			440			$			474			$			1,508			$			1,819			$			(2,342)			$			223			$			30,769			$			(206)			$			98
(in millions)						Fair Value Beginning of Year						MRBs and Net Realized and Unrealized (Gains) Losses Included in Income						Other Comprehensive Income (Loss)						Purchases, Sales, Issuances and Settlements, Net						Gross Transfers In						Gross Transfers Out						Other						Fair Value End of Year						Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year						Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Year
Liabilities:
Policyholder contract deposits			$			5,367			$			1,464			$			—			$			1,111			$			—			$			—			$			—			$			7,942			$			(733)			$			—
Derivative liabilities, net:
Interest rate contracts						(311)						11						—						(160)						—						—						—						(460)						82						—
Foreign exchange contracts						—						2						—						—						—						—						—						2						(2)						—
Equity contracts						(271)						99						—						(590)						—						—						—						(762)						438						—
Other contracts						(14)						(64)						—						67						—						—						—						(11)						64						—
Total derivative liabilities, net**(b)**						(596)						48						—						(683)						—						—						—						(1,231)						582						—
Fortitude Re funds withheld payable						(2,235)						2,007						—						(998)						—						—						—						(1,226)						(872)						—
Other Liabilities						112						10						—						—						—						—						—						122						—						—
Total**(c)**			$			2,648			$			3,529			$			—			$			(570)			$			—			$			—			$			—			$			5,607			$			(1,023)			$			—

156			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

(in millions)						Fair Value Beginning of Year						MRBs and Net Realized and Unrealized Gains (Losses) Included in Income						Other Comprehensive Income (Loss)						Purchases, Sales, Issuances and Settlements, Net						Gross Transfers In						Gross Transfers Out						Other						Fair Value End of Year						Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year						Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Year
December 31, 2022
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions			$			1,431			$			1			$			(533)			$			(104)			$			40			$			(11)			$			—			$			824			$			—			$			(223)
Non-U.S. governments						7						1						3						(10)						3						(3)						—						1						—						(1)
Corporate debt						2,641						37						(238)						(87)						1,155						(661)						—						2,847						—						(217)
RMBS						10,378						452						(1,319)						(1,511)						8						(455)						—						7,553						—						(504)
CMBS						1,190						7						(162)						137						102						(348)						—						926						—						(133)
CLO/ABS						11,215						114						(1,658)						3,279						2,003						(2,205)						—						12,748						—						(1,605)
Total bonds available for sale						26,862						612						(3,907)						1,704						3,311						(3,683)						—						24,899						—						(2,683)
Other bond securities:
Corporate debt						134						(5)						—						158						334						(205)						—						416						(2)						—
RMBS						196						(39)						—						16						—						—						—						173						(38)						—
CMBS						35						(6)						—						(1)						—						—						—						28						(4)						—
CLO/ABS						2,332						(233)						—						(1,182)						77						(84)						—						910						(156)						—
Total other bond securities						2,697						(283)						—						(1,009)						411						(289)						—						1,527						(200)						—
Equity securities						6						(1)						—						27						16						(9)						—						39						(1)						—
Other invested assets						1,948						338						(22)						(26)						47						(210)						—						2,075						355						—
Other assets						114						—						—						(7)						—						—						—						107						—						—
Total**(a)**			$			31,627			$			666			$			(3,929)			$			689			$			3,785			$			(4,191)			$			—			$			28,647			$			154			$			(2,683)
(in millions)						Fair Value Beginning of Year						MRBs and Net Realized and Unrealized (Gains) Losses Included in Income						Other Comprehensive Income (Loss)						Purchases, Sales, Issuances and Settlements, Net						Gross Transfers In						Gross Transfers Out						Other						Fair Value End of Year						Changes in Unrealized Gains (Losses) Included in Income on Instruments Held at End of Year						Changes in Unrealized Gains (Losses) Included in Other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Year
Liabilities:
Policyholder contract deposits			$			5,572			$			(1,107)			$			—			$			902			$			—			$			—			$			—			$			5,367			$			1,363			$			—
Derivative liabilities, net:
Interest rate contracts						—						9						—						(245)						(81)						6						—						(311)						71						—
Foreign exchange contracts						(1)						—						—						1						—						—						—						—						(1)						—
Equity contracts						(444)						487						—						(313)						—						(1)						—						(271)						(246)						—
Credit contracts						30						3						—						(1)						—						—						(32)						—						(31)						—
Other contracts						(13)						(65)						—						64						—						—						—						(14)						65						—
Total derivative liabilities, net**(b)**						(428)						434						—						(494)						(81)						5						(32)						(596)						(142)						—
Fortitude Re funds withheld payable						5,922						(7,481)						—						(676)						—						—						—						(2,235)						7,729						—
Other liabilities						—						—						—						112						—						—						—						112						—						—
Total**(c)**			$			11,066			$			(8,154)			$			—			$			(156)			$			(81)			$			5			$			(32)			$			2,648			$			8,950			$			—

(a)Excludes MRB assets of $912 million at December 31, 2023 and $796 million at December 31, 2022. For additional information, see Note 14.

(b)Total Level 3 derivative exposures have been netted in these tables for presentation purposes only.

(c)Excludes MRB liabilities of $5.7 billion at December 31, 2023 and $4.7 billion at December 31, 2022. For additional information, see Note 14.

AIG | 2023 Form 10-K			157

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

Market risk benefits and net realized and unrealized gains and losses included in income related to Level 3 assets and liabilities shown above are reported in the Consolidated Statements of Income (Loss) as follows:

(in millions)						Net Investment Income						Net Realized Gains (Losses)						Change in the fair value of market risk benefits, net(c)						Other Income						Total
December 31, 2023
Assets:
Bonds available for sale			$			592			$			(62)			$			—			$			—			$			530
Other bond securities						59						—						—						—						59
Equity securities						1						—						—						—						1
Other invested assets						(146)						(4)						—						—						(150)
December 31, 2022
Assets:
Bonds available for sale			$			694			$			(82)			$			—			$			—			$			612
Other bond securities						(283)						—						—						—						(283)
Equity securities						(1)						—						—						—						(1)
Other invested assets						346						(8)						—						—						338
(in millions)						Net Investment Income						Net Realized (Gains) Losses						Change in the fair value of market risk benefits, net(c)						Other Income						Total
December 31, 2023
Liabilities:
Policyholder contract deposits(a)			$			—			$			1,464			$			—			$			—			$			1,464
Market risk benefit liabilities, net(b)						—						(3)						(1,125)						—						(1,128)
Derivative liabilities, net						—						70						40						(62)						48
Fortitude Re funds withheld payable						—						2,007						—						—						2,007
Other Liabilities						—						10						—						—						10
December 31, 2022
Liabilities:
Policyholder contract deposits(a)			$			—			$			(1,107)			$			—			$			—			$			(1,107)
Market risk benefit liabilities, net(b)						—						—						(2,344)						—						(2,344)
Derivative liabilities, net						—						520						(25)						(61)						434
Fortitude Re funds withheld payable						—						(7,481)						—						—						(7,481)

(a)Primarily embedded derivatives.

(b)Market risk benefit assets and liabilities have been netted in the above table for presentation purposes only.

(c)The portion of the fair value change attributable to own credit risk is recognized in OCI.

The following table presents the gross components of purchases, sales, issuances and settlements, net, shown above, for the years ended December 31, 2023 and 2022 related to Level 3 assets and liabilities in the Consolidated Balance Sheets:

(in millions)						Purchases						Sales						Issuances and Settlements(a)						Purchases, Sales, Issuances and Settlements, Net(a)
December 31, 2023
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions			$			1			$			(27)			$			(5)			$			(31)
Non-U.S. governments						—						—						(5)						(5)
Corporate debt						229						(34)						(790)						(595)
RMBS						935						(67)						(1,117)						(249)
CMBS						10						(50)						(18)						(58)
CLO/ABS						3,040						(450)						(520)						2,070
Total bonds available for sale						4,215						(628)						(2,455)						1,132
Other bond securities:
Obligations of states, municipalities and political subdivisions						3						(2)						—						1
Corporate debt						204						—						(204)						—
RMBS						6						—						(30)						(24)
CMBS						—						(7)						—						(7)
CLO/ABS						269						(20)						(96)						153
Total other bond securities						482						(29)						(330)						123

158			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

(in millions)						Purchases						Sales						Issuances and Settlements(a)						Purchases, Sales, Issuances and Settlements, Net(a)
Equity securities						32						(2)						(3)						27
Other invested assets						263						—						(173)						90
Other assets						130						—						6						136
Total			$			5,122			$			(659)			$			(2,955)			$			1,508
Liabilities:
Policyholder contract deposits			$			—			$			1,428			$			(317)			$			1,111
Derivative liabilities, net						(1,156)						28						445						(683)
Fortitude Re funds withheld payable						—						—						(998)						(998)
Total			$			(1,156)			$			1,456			$			(870)			$			(570)
December 31, 2022
Assets:
Bonds available for sale:
Obligations of states, municipalities and political subdivisions			$			6			$			(72)			$			(38)			$			(104)
Non-U.S. governments						—						—						(10)						(10)
Corporate Debt						143						(79)						(151)						(87)
RMBS						391						(76)						(1,826)						(1,511)
CMBS						195						(17)						(41)						137
CLO/ABS						3,655						(25)						(351)						3,279
Total bonds available for sale						4,390						(269)						(2,417)						1,704
Other bond securities:
Corporate debt						26						—						132						158
RMBS						62						(5)						(41)						16
CMBS						—						(1)						—						(1)
CLO/ABS						750						(1,530)						(402)						(1,182)
Total other bond securities						838						(1,536)						(311)						(1,009)
Equity securities						27						(1)						1						27
Other invested assets						682						—						(708)						(26)
Other assets						—						—						(7)						(7)
Total			$			5,937			$			(1,806)			$			(3,442)			$			689
Liabilities:
Policyholder contract deposits			$			—			$			923			$			(21)			$			902
Derivative liabilities, net						(687)						12						181						(494)
Fortitude Re funds withheld payable						—						—						(676)						(676)
Other liabilities						—						—						112						112
Total			$			(687)			$			935			$			(404)			$			(156)

(a)There were no issuances during the years ended December 31, 2023 and 2022.

Both observable and unobservable inputs may be used to determine the fair values of positions classified in Level 3 in the tables above. As a result, the unrealized gains (losses) on instruments held at December 31, 2023 and 2022 may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable inputs (e.g., changes in unobservable long-dated volatilities).

Transfers of Level 3 Assets and Liabilities

The Net realized and unrealized gains (losses) included in income (loss) or OCI as shown in the table above excludes $25 million and $(128) million of net gains (losses) related to assets and liabilities transferred into Level 3 during the years ended December 31, 2023 and 2022, respectively, and includes $(34) million and $(129) million of net gains (losses) related to assets and liabilities transferred out of Level 3 during the years ended December 31, 2023 and 2022, respectively.

Transfers of Level 3 Assets

During the years ended December 31, 2023 and 2022, transfers into Level 3 assets primarily included certain investments in private placement corporate debt, RMBS, CMBS and CLO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3 assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated market liquidity. The transfers of investments in RMBS, CMBS and CLO and certain ABS into Level 3 assets were due to diminished market transparency and liquidity for individual security types.

AIG | 2023 Form 10-K			159

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

During the years ended December 31, 2023 and 2022, transfers out of Level 3 assets primarily included certain investments in private placement corporate debt, RMBS, CMBS and CLO/ABS. Transfers of private placement corporate debt and certain ABS into Level 3 assets were primarily the result of limited market pricing information that required us to determine fair value for these securities based on inputs that are adjusted to better reflect our own assumptions regarding the characteristics of a specific security or associated market liquidity. The transfers of investments in RMBS, CMBS and CLO and certain ABS into Level 3 assets were due to diminished market transparency and liquidity for individual security types.

Transfers of Level 3 Liabilities

There were no significant transfers of derivative or other liabilities into or out of Level 3 for the year ended December 31, 2023. During the year ended December 31, 2022, transfers of derivatives into Level 3 were primarily due to increased long-dated European swaption activity with SOFR tenors.

QUANTITATIVE INFORMATION ABOUT LEVEL 3 FAIR VALUE MEASUREMENTS

The table below presents information about the significant unobservable inputs used for recurring fair value measurements for certain Level 3 instruments, and includes only those instruments for which information about the inputs is reasonably available to us, such as data from independent third-party valuation service providers. Because input information from third-parties with respect to certain Level 3 instruments (primarily CLO/ABS) may not be reasonably available to us, balances shown below may not equal total amounts reported for such Level 3 assets and liabilities:

(in millions)						Fair Value at December 31, 2023						Valuation Technique			Unobservable Input(b)			Range (Weighted Average)(c)
Assets:
Obligations of states, municipalities and political subdivisions						$			824			Discounted cash flow			Yield			4.97% - 5.31% (5.14%)
Corporate debt									1,803			Discounted cash flow			Yield			5.19% - 8.48% (6.83%)
RMBS(a)									4,656			Discounted cash flow			Constant prepayment rate			4.34% - 9.99% (7.17%)
															Loss severity			33.56% - 87.59% (60.57%)
															Constant default rate			0.76% - 2.56% (1.66%)
															Yield			6.13% - 7.41% (6.77%)
CLO/ABS(a)									14,242			Discounted cash flow			Yield			5.62% - 7.89% (6.76%)
CMBS									587			Discounted cash flow			Yield			5.62% - 17.85% (11.73%)
Market risk benefit assets									912			Discounted cash flow			Equity volatility			6.25% - 49.75%
															Base lapse rate			0.16% - 28.80%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			38.25% - 160.01%
															Utilization(h)			80.00% - 100.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.29%
Liabilities**(d)****:**
Market risk benefit liabilities:
Variable annuities guaranteed benefits									2,174			Discounted cash flow			Equity volatility			6.25% - 49.75%
															Base lapse rate			0.16% - 28.80%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			38.25% - 160.01%
															Utilization(h)			80.00% - 100.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.29%
Fixed annuities guaranteed benefits									1,111			Discounted cash flow			Base lapse rate			0.20% - 15.75%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			40.26% - 168.43%
															Utilization(h)			90.00% - 97.50%
															NPA(g)			0.00% - 2.29%
Fixed index annuities guaranteed benefits									2,420			Discounted cash flow			Equity volatility			6.25% - 49.75%
															Base lapse rate			0.20% - 50.00%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			24.00% - 146.00%

160			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

(in millions)						Fair Value at December 31, 2023						Valuation Technique			Unobservable Input(b)			Range (Weighted Average)(c)
															Utilization(h)			60.00% - 97.50%
															Option budget			0.00% - 6.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.29%
Embedded derivatives within Policyholder contract deposits:
Index credits on fixed index annuities(i)									6,953			Discounted cash flow			Equity volatility			6.25% - 49.75%
															Base lapse rate			0.20% - 50.00%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			24.00% - 146.00%
															Utilization(h)			60.00% - 97.50%
															Option budget			0.00% - 6.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.29%
Index life									989			Discounted cash flow			Base lapse rate			0.00% - 37.97%
															Mortality rate			0.00% - 100.00%
															Equity volatility			5.85% - 20.36%
															NPA(g)			0.00% - 2.29%

(in millions)						Fair Value at December 31, 2022						Valuation Technique			Unobservable Input(b)			Range (Weighted Average)(c)
Assets:
Obligations of states, municipalities and political subdivisions						$			799			Discounted cash flow			Yield			5.28% - 5.94% (5.61%)
Corporate debt									2,527			Discounted cash flow			Yield			4.98% - 9.36% (7.17%)
RMBS(a)									5,235			Discounted cash flow			Constant prepayment rate			4.89% - 10.49% (7.69%)
															Loss severity			45.06% - 76.87% (60.97%)
															Constant default rate			0.82% - 2.72% (1.77%)
															Yield			5.98% - 7.75% (6.87%)
CLO/ABS(a)									7,503			Discounted cash flow			Yield			6.00% - 7.97% (6.99%)
CMBS									587			Discounted cash flow			Yield			4.06% - 13.14% (8.60%)
Market risk benefit assets									796			Discounted cash flow			Equity volatility			6.45% - 50.75%
															Base lapse rate			0.16% - 28.80%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			38.25% - 160.01%
															Utilization(h)			80.00% - 100.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.03%
Liabilities**(d)****:**
Market risk benefit liabilities:
Variable annuities guaranteed benefits									2,358			Discounted cash flow			Equity volatility			6.45% - 50.75%
															Base lapse rate			0.16% - 28.80%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			38.25% - 160.01%
															Utilization(h)			80.00% - 100.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.03%
Fixed annuities guaranteed benefits									680			Discounted cash flow			Base lapse rate			0.20% - 15.75%
															Dynamic lapse multiplier(e)			20.00% - 186.16%
															Mortality multiplier(e)(f)			40.26% - 168.43%
															Utilization(h)			90.00% - 97.50%
															NPA(g)			0.00% - 2.03%
Fixed index annuities guaranteed benefits									1,698			Discounted cash flow			Equity volatility			6.45% - 50.75%
															Base lapse rate			0.20% - 50.00%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			24.00% - 180.00%
															Utilization(h)			60.00% - 97.50%

AIG | 2023 Form 10-K			161

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

(in millions)						Fair Value at December 31, 2022						Valuation Technique			Unobservable Input(b)			Range (Weighted Average)(c)
															Option budget			0.00% - 5.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.03%
Embedded derivatives within Policyholder contract deposits:
Index credits on fixed index annuities(i)									4,657			Discounted cash flow			Equity volatility			6.45% - 50.75%
															Base lapse rate			0.20% - 50.00%
															Dynamic lapse multiplier(e)			20.00% - 186.18%
															Mortality multiplier(e)(f)			24.00% - 180.00%
															Utilization(h)			60.00% - 97.50%
															Option budget			0.00% - 5.00%
															Equity / interest rate correlation			0.00% - 30.00%
															NPA(g)			0.00% - 2.03%
Index life									710			Discounted cash flow			Base lapse rate			0.00% - 37.97%
															Mortality rate			0.00% - 100.00%
															Equity volatility			5.75% - 23.63%
															NPA(g)			0.00% - 2.03%

(a)Information received from third-party valuation service providers. The ranges of the unobservable inputs for constant prepayment rate, loss severity and constant default rate relate to each of the individual underlying mortgage loans that comprise the entire portfolio of securities in the RMBS and CLO securitization vehicles and not necessarily to the securitization vehicle bonds (tranches) purchased by us. The ranges of these inputs do not directly correlate to changes in the fair values of the tranches purchased by us, because there are other factors relevant to the fair values of specific tranches owned by us including, but not limited to, purchase price, position in the waterfall, senior versus subordinated position and attachment points.

(b)Represents discount rates, estimates and assumptions that we believe would be used by market participants when valuing these assets and liabilities.

(c)The weighted averaging for fixed maturity securities is based on the estimated fair value of the securities. Because the valuation methodology for embedded derivatives with policyholder contract deposits and market risk benefits uses a range of inputs that vary at the contract level over the cash flow projection period, management believes that presenting a range, rather than weighted average, is a more meaningful representation of the unobservable inputs used in the valuation.

(d)The Fortitude Re funds withheld payable has been excluded from the above table. As discussed in Note 8, the Fortitude Re funds withheld payable is created through modco and funds withheld reinsurance arrangements where the investments supporting the reinsurance agreements are withheld by, and continue to reside on AIG’s balance sheet. This embedded derivative is valued as a total return swap with reference to the fair value of the invested assets held by AIG. Accordingly, the unobservable inputs utilized in the valuation of the embedded derivative are a component of the invested assets supporting the reinsurance agreements that are held on AIG’s balance sheet.

(e)The ranges for these inputs vary due to the different guaranteed minimum withdrawal benefits (GMWB) product specification and policyholder characteristics across in-force policies. Policyholder characteristics that affect these ranges include age, policy duration, and gender.

(f)Mortality inputs are shown as multipliers of the 2012 Individual Annuity Mortality Basic table.

(g)The NPA applied as a spread over risk-free curve for discounting.

(h)The partial withdrawal utilization unobservable input range shown applies only to policies with guaranteed minimum withdrawal benefit riders. The total embedded derivative liability at December 31, 2023 and 2022 was approximately $1.5 billion and $1.1 billion, respectively.

(i)The fixed index annuities embedded derivative associated with index credits related to the contracts with guaranteed product features included in policyholder contract deposits was $1.5 billion and $1.1 billion at December 31, 2023 and 2022, respectively.

The ranges of reported inputs for Obligations of states, municipalities and political subdivisions, Corporate debt, RMBS, CLO/ABS, and CMBS valued using a discounted cash flow technique consist of one standard deviation in either direction from the value‑weighted average. The preceding table does not give effect to our risk management practices that might offset risks inherent in these Level 3 assets and liabilities.

Interrelationships Between Unobservable Inputs

We consider unobservable inputs to be those for which market data is not available and that are developed using the best information available to us about the assumptions that market participants would use when pricing the asset or liability. Relevant inputs vary depending on the nature of the instrument being measured at fair value. The following paragraphs provide a general description of significant unobservable inputs along with interrelationships between and among the significant unobservable inputs and their impact on the fair value measurements. In practice, simultaneous changes in assumptions may not always have a linear effect on the inputs discussed below. Interrelationships may also exist between observable and unobservable inputs. Such relationships have not been included in the discussion below. For each of the individual relationships described below, the inverse relationship would also generally apply.

Fixed Maturity Securities

The significant unobservable input used in the fair value measurement of fixed maturity securities is yield. The yield is affected by the market movements in credit spreads and U.S. Treasury yields. The yield may be affected by other factors including constant prepayment rates, loss severity, and constant default rates. In general, increases in the yield would decrease the fair value of investments, and conversely, decreases in the yield would increase the fair value of investments.

162			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

MRBs and Embedded Derivatives within Policyholder Contract Deposits

For MRBs and embedded derivatives, the assumptions for unobservable inputs vary throughout the period over which cash flows are projected for valuation purposes. The following are applicable unobservable inputs:

• Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. Increases in assumed volatility will generally increase the fair value of both the projected cash flows from rider fees as well as the projected cash flows related to benefit payments. Therefore, the net change in the fair value of the liability may be either a decrease or an increase, depending on the relative changes in projected rider fees and projected benefit payments.

• Equity and interest rate correlation estimates the relationship between changes in equity returns and interest rates in the economic scenario generator used to value our MRBs. In general, a higher positive correlation assumes that equity markets and interest rates move in a more correlated fashion, which generally increases the fair value of the liability. Only our fixed index annuities with a GMWB rider are subject to the equity and interest correlation assumption. Other policies such as accumulation fixed index annuity and life products do not use a correlation assumption.

• Base lapse rate assumptions are determined by company experience and judgment and are adjusted at the contract level using a dynamic lapse function, which reduces the base lapse rate when the contract is in-the-money (when the contract holder’s guaranteed value, as estimated by the company, is worth more than their underlying account value). Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. Increases in assumed lapse rates will generally decrease the fair value of the liability as fewer policyholders would persist to collect guaranteed benefit amounts.

• Mortality rate assumptions, which vary by age and gender, are based on company experience and include a mortality improvement assumption. Increases in assumed mortality rates will decrease the fair value of the GMWB liability, while lower mortality rate assumptions will generally increase the fair value of the liability because guaranteed withdrawal payments will be made for a longer period of time and generally exceed any decrease in guaranteed death benefits.

• Utilization assumptions estimate the timing when policyholders with a GMWB will elect to utilize their benefit and begin taking withdrawals. The assumptions may vary by the type of guarantee, tax-qualified status, the contract’s withdrawal history and the age of the policyholder. Utilization assumptions are based on company experience, which includes partial withdrawal behavior. Increases in assumed utilization rates will generally increase the fair value of the liability.

• Non-performance or “own credit” risk adjustment used in the valuation of MRBs and embedded derivatives, which reflects a market participant’s view of our claims-paying ability by incorporating a different spread (the NPA spread) to the curve used to discount projected benefit cash flows. When corporate credit spreads widen, the change in the NPA spread generally reduces the fair value of the MRBs and embedded derivatives, resulting in a gain in AOCI or Net realized gains (losses), respectively, and when corporate credit spreads narrow or tighten, the change in the NPA spread generally increases the fair value of the MRBs and embedded derivatives, resulting in a loss in AOCI or Net realized gains (losses), respectively.

• The projected cash flows incorporate best estimate assumptions for policyholder behavior (including mortality, lapses, withdrawals and benefit utilization), along with an explicit risk margin to reflect a market participant’s estimates of the fair value of projected cash flows and policyholder behavior. Estimates of future policyholder behavior assumptions are subjective and based primarily on our historical experience.

• For embedded derivatives, option budgets estimate the expected long-term cost of options used to hedge exposures associated with index price changes. The level of option budgets determines future costs of the options, which impacts the growth in account value and the valuation of embedded derivatives.

Embedded Derivatives within Reinsurance Contracts

The fair value of embedded derivatives associated with funds withheld reinsurance contracts is determined based upon a total return swap technique with reference to the fair value of the investments held by AIG related to AIG’s funds withheld payable. The fair value of the underlying assets is generally based on market observable inputs using industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable, and accordingly, the valuation is considered Level 3 in the fair value hierarchy.

AIG | 2023 Form 10-K			163

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

INVESTMENTS IN CERTAIN ENTITIES CARRIED AT FAIR VALUE USING NET ASSET VALUE PER SHARE

The following table includes information related to our investments in certain other invested assets, including private equity funds, hedge funds and other alternative investments that calculate net asset value per share (or its equivalent). For these investments, which are measured at fair value on a recurring basis, we use the net asset value per share to measure fair value.

									December 31, 2023															December 31, 2022
(in millions)			Investment Category Includes						Fair Value Using NAV Per Share (or its equivalent)						Unfunded Commitments									Fair Value Using NAV Per Share (or its equivalent)						Unfunded Commitments
Investment Category
Private equity funds:
Leveraged buyout			Debt and/or equity investments made as part of a transaction in which assets of mature companies are acquired from the current shareholders, typically with the use of financial leverage			$			3,617			$			2,313						$			3,146			$			2,448
Real assets			Investments in real estate properties, agricultural and infrastructure assets, including power plants and other energy producing assets						1,814						782									1,851						840
Venture capital			Early-stage, high-potential, growth companies expected to generate a return through an eventual realization event, such as an initial public offering or sale of the company						270						141									272						183
Growth equity			Funds that make investments in established companies for the purpose of growing their businesses						680						117									732						60
Mezzanine			Funds that make investments in the junior debt and equity securities of leveraged companies						292						98									598						142
Other			Includes distressed funds that invest in securities of companies that are in default or under bankruptcy protection, as well as funds that have multi- strategy, and other strategies						2,125						297									1,829						391
Total private equity funds									8,798						3,748									8,428						4,064
Hedge funds:
Event-driven			Securities of companies undergoing material structural changes, including mergers, acquisitions and other reorganizations						18						—									92						—
Long-short			Securities that the manager believes are undervalued, with corresponding short positions to hedge market risk						549						—									696						—
Macro			Investments that take long and short positions in financial instruments based on a top-down view of certain economic and capital market conditions						69						—									414						—
Other			Includes investments held in funds that are less liquid, as well as other strategies which allow for broader allocation between public and private investments						74						—									192						—
Total hedge funds									710						—									1,394						—
Total						$			9,508			$			3,748						$			9,822			$			4,064

Private equity fund investments included above are not redeemable, because distributions from the funds will be received when underlying investments of the funds are liquidated. Private equity funds are generally expected to have 10-year lives at their inception, but these lives may be extended at the fund manager’s discretion, typically in one-year or two-year increments.

The majority of our hedge fund investments are redeemable upon a single month or quarter’s notice, though redemption terms vary from single, immediate withdrawals, to withdrawals staggered up to eight quarters. Some of the portfolio consists of illiquid run-off or “side-pocket” positions whose liquidation horizons are uncertain and likely beyond a year after submission of the redemption notice.

164			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

FAIR VALUE OPTION

Under the fair value option, we may elect to measure at fair value financial assets and financial liabilities that are not otherwise required to be carried at fair value. Subsequent changes in fair value for designated items are reported in earnings. We elect the fair value option for certain hybrid securities given the complexity of bifurcating the economic components associated with the embedded derivatives.

For additional information related to embedded derivatives, see Note 11.

Additionally, we elect the fair value option for certain alternative investments when such investments are eligible for this election. We believe this measurement basis is consistent with the applicable accounting guidance used by the respective investment company funds themselves.

For additional information on securities and other invested assets for which we have elected the fair value option, see Note 6.

The following table presents the gains or losses recorded related to the eligible instruments for which we elected the fair value option:

Years Ended December 31,									Gain (Loss)
(in millions)																					2023						2022						2021
Assets:
Other bond securities(a)																		$			382			$			(822)			$			(12)
Alternative investments(b)																					334						224						1,650
Liabilities:
Long-term debt(c)																					3						225						66
Total gain (loss)																		$			719			$			(373)			$			1,704

(a)Includes certain securities supporting the funds withheld arrangements with Fortitude Re. For additional information regarding the gains and losses for Other bond securities, see Note 6. For additional information regarding the funds withheld arrangements with Fortitude Re, see Note 8.

(b)Includes certain hedge funds, private equity funds and other investment partnerships.

(c)Includes GIAs, notes, bonds and mortgages payable.

Interest income and dividend income on assets measured under the fair value option are recognized and included in Net investment income in the Consolidated Statements of Income. Interest expense on liabilities measured under the fair value option is reported in Other Income in the Consolidated Statements of Income.

For additional information about our policies for recognition, measurement, and disclosure of interest and dividend income, see Note 6.

We calculate the effect of these credit spread changes using discounted cash flow techniques that incorporate current market interest rates, our observable credit spreads on these liabilities and other factors that mitigate the risk of nonperformance such as cash collateral posted.

The following table presents the difference between fair value and the aggregate contractual principal amount of long-term debt for which the fair value option was elected:

						December 31, 2023																					December 31, 2022
(in millions)						Fair Value						Outstanding Principal Amount						Difference									Fair Value						Outstanding Principal Amount						Difference
Liabilities:
Long-term debt*			$			53			$			44			$			9						$			56			$			45			$			11

*Includes GIAs, notes, bonds, loans and mortgages payable.

AIG | 2023 Form 10-K			165

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

FAIR VALUE MEASUREMENTS ON A NON-RECURRING BASIS

We measure the fair value of certain assets on a non-recurring basis, generally quarterly, annually or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. These assets include cost and equity-method investments, commercial mortgage loans and commercial loans, investments in real estate and other fixed assets, goodwill and other intangible assets.

For additional information about how we test various asset classes for impairment, see Notes 6 and 7.

Information regarding the estimation of fair value for financial instruments measured at fair value on a non-recurring basis is discussed below.

Impairments for Other investments primarily relate to real estate investments as well as commercial loans and commercial mortgage loans, the fair value determination for which is discussed above under the heading Valuation Methodologies of Financial Instruments Measured at Fair Value.

The following table presents assets measured at fair value on a non-recurring basis at the time of impairment and the related impairment charges recorded during the periods presented:

			Assets at Fair Value																																										Impairment Charges
			Non-Recurring Basis																																	December 31,
(in millions)						Level 1						Level 2						Level 3						Total																								2023						2022						2021
December 31, 2023
Other investments			$			—			$			—			$			80			$			80																					$			13			$			25			$			6
Other assets						—						—						—						—																								121						1						67
Total			$			—			$			—			$			80			$			80																					$			134			$			26			$			73
December 31, 2022
Other investments			$			—			$			—			$			12			$			12
Total			$			—			$			—			$			12			$			12

In addition to the assets presented in the table above, AIG had $163 million of loans held for sale which are carried at fair value at December 31, 2022. There are no loans that were carried at fair value as of December 31, 2023. There are no associated impairment charges.

FAIR VALUE INFORMATION ABOUT FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE

Information regarding the estimation of fair value for financial instruments not carried at fair value (excluding insurance contracts and lease contracts) is discussed below:

• Mortgage and other loans receivable:** Fair values of loans on commercial real estate and other loans receivable are estimated for disclosure purposes using discounted cash flow calculations based on discount rates that we believe market participants would use in determining the price that they would pay for such assets. For certain loans, our current incremental lending rates for similar types of loans are used as the discount rates, because we believe this rate approximates the rates market participants would use. Fair values of residential mortgage loans are generally determined based on market prices, using market based adjustments for credit and servicing as appropriate. The fair values of policy loans are generally estimated based on unpaid principal amount as of each reporting date. No consideration is given to credit risk because policy loans are effectively collateralized by the cash surrender value of the policies.

• Other invested assets:** The majority of the Other invested assets that are not measured at fair value represent time deposits with the original maturity at purchase greater than one year. The fair value of long-term time deposits is determined using the expected discounted future cash flow.

• Cash and short-term investments:** The carrying amounts of these assets approximate fair values because of the relatively short period of time between origination and expected realization, and their limited exposure to credit risk.

• Policyholder contract deposits associated with investment-type contracts:** Fair values for policyholder contract deposits associated with investment-type contracts not accounted for at fair value are estimated using discounted cash flow calculations based on interest rates currently being offered for similar contracts with maturities consistent with those of the contracts being valued. When no similar contracts are being offered, the discount rate is the appropriate swap rate (if available) or current risk-free interest rate consistent with the currency in which the cash flows are denominated. To determine fair value, other factors include current policyholder account values and related surrender charges and other assumptions include expectations about policyholder behavior and an appropriate risk margin.

166			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 5. Fair Value Measurements

• Other liabilities:** The majority of Other liabilities that are financial instruments not measured at fair value represent secured financing arrangements, including repurchase agreements. The carrying amounts of these liabilities approximate fair value, because the financing arrangements are short-term and are secured by cash or other liquid collateral.

• Fortitude Re funds withheld payable:** The funds withheld payable contains an embedded derivative and the changes in its fair value are recognized in earnings each period. The difference between the total Fortitude Re funds withheld payable and the embedded derivative represents the host contract.

• Short-term and Long-term debt and Debt of consolidated investment entities:** Fair values of these obligations were determined by reference to quoted market prices, when available and appropriate, or discounted cash flow calculations based upon our current market‑observable implicit‑credit‑spread rates for similar types of borrowings with maturities consistent with those remaining for the debt being valued.

• Separate Account Liabilities – Investment Contracts:** Only the portion of separate account liabilities related to products that are investment contracts are reflected in the table below. Separate account liabilities are recorded at the amount credited to the contract holder, which reflects the change in fair value of the corresponding separate account assets including contract holder deposits less withdrawals and fees; therefore, carrying value approximates fair value.

The following table presents the carrying amounts and estimated fair values of our financial instruments not measured at fair value and indicates the level in the fair value hierarchy of the estimated fair value measurement based on the observability of the inputs used:

						Estimated Fair Value																								Carrying Value
(in millions)						Level 1						Level 2						Level 3						Total
December 31, 2023
Assets:
Mortgage and other loans receivable			$			—			$			272			$			48,264			$			48,536			$			51,553
Other invested assets						—						913						6						919						919
Short-term investments(a)						—						6,428						—						6,428						6,428
Cash(b)						2,155						—						—						2,155						2,155
Other assets						45						—						—						45						45
Liabilities:
Policyholder contract deposits associated with investment-type contracts						—						90						130,094						130,184						140,652
Fortitude Re funds withheld payable						—						—						30,710						30,710						30,710
Other liabilities(c)						—						2,467						—						2,467						2,467
Short-term and long-term debt						—						18,595						267						18,862						19,743
Debt of consolidated investment entities						—						43						2,526						2,569						2,591
Separate account liabilities - investment contracts						—						87,215						—						87,215						87,215
December 31, 2022
Assets:
Mortgage and other loans receivable			$			—			$			89			$			45,755			$			45,844			$			49,442
Other invested assets						—						848						6						854						854
Short-term investments						—						6,668						—						6,668						6,668
Cash						2,043						—						—						2,043						2,043
Other assets						24						9						—						33						33
Liabilities:
Policyholder contract deposits associated with investment-type contracts						—						119						129,174						129,293						137,086
Fortitude Re funds withheld payable						—						—						32,618						32,618						32,618
Other liabilities						—						3,101						—						3,101						3,101
Short-term and long-term debt						—						19,328						275						19,603						21,243
Debt of consolidated investment entities						—						3,055						2,478						5,533						5,880
Separate account liabilities - investment contracts						—						80,649						—						80,649						80,649

(a)Excludes $11 million reclassified to Assets held for sale on the Consolidated Balance Sheets.

(b)Excludes $3 million reclassified to Assets held for sale on the Consolidated Balance Sheets.

(c)Excludes $45 million reclassified to Liabilities held for sale on the Consolidated Balance Sheets.

AIG | 2023 Form 10-K			167

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

6. Investments

FIXED MATURITY SECURITIES

Bonds held to maturity are carried at amortized cost when we have the ability and positive intent to hold these securities until maturity. When we do not have the ability or positive intent to hold bonds until maturity, these securities are classified as available for sale or the fair value option has been elected. None of our fixed maturity securities met the criteria for held to maturity classification at December 31, 2023 or 2022.

Unrealized gains and losses from available for sale investments in fixed maturity securities carried at fair value were reported as a separate component of AOCI, net of policy related amounts and deferred income taxes, in shareholders’ equity. Realized and unrealized gains and losses from fixed maturity securities for which the fair value option has been elected are reflected in Net investment income. Investments in fixed maturity securities are recorded on a trade-date basis.

Interest income is recognized using the effective yield method and reflects amortization of premium and accretion of discount. Premiums and discounts arising from the purchase of bonds classified as available for sale are treated as yield adjustments over their estimated holding periods, until maturity, or call date, if applicable. For investments in certain structured securities, recognized yields are updated based on current information regarding the timing and amount of expected undiscounted future cash flows. For high credit quality structured securities, effective yields are recalculated based on actual payments received and updated prepayment expectations, and the amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income. For structured securities that are not high credit quality, the structured securities yields are based on expected cash flows which take into account both expected credit losses and prepayments.

An allowance for credit losses is not established upon initial recognition of the asset (unless the security is determined to be a purchased credit deteriorated (PCD) asset which is discussed in more detail below). Subsequently, differences between actual and expected cash flows and changes in expected cash flows are recognized as adjustments to the allowance for credit losses. Changes that cannot be reflected as adjustments to the allowance for credit losses are accounted for as prospective adjustments to yield.

SECURITIES AVAILABLE FOR SALE

The following table presents the amortized cost and fair value of our available for sale securities:

(in millions)						Amortized Cost						Allowance for Credit Losses(a)						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
December 31, 2023
Bonds available for sale:
U.S. government and government sponsored entities			$			5,885			$			—			$			58			$			(327)			$			5,616
Obligations of states, municipalities and political subdivisions						11,387						—						118						(842)						10,663
Non-U.S. governments						13,668						(3)						137						(1,349)						12,453
Corporate debt						154,674						(90)						1,898						(18,050)						138,432
Mortgage-backed, asset-backed and collateralized:
RMBS						20,875						(35)						821						(1,217)						20,444
CMBS						15,379						(34)						46						(1,263)						14,128
CLO/ABS						31,167						—						183						(1,353)						29,997
Total mortgage-backed, asset-backed and collateralized						67,421						(69)						1,050						(3,833)						64,569
Total bonds available for sale**(b)**			$			253,035			$			(162)			$			3,261			$			(24,401)			$			231,733
December 31, 2022
Bonds available for sale:
U.S. government and government sponsored entities			$			7,094			$			—			$			21			$			(496)			$			6,619
Obligations of states, municipalities and political subdivisions						13,195						—						99						(1,195)						12,099
Non-U.S. governments						15,133						(6)						91						(1,733)						13,485
Corporate debt						160,242						(132)						1,152						(23,423)						137,839
Mortgage-backed, asset-backed and collateralized:
RMBS						19,584						(37)						807						(1,537)						18,817
CMBS						15,610						(11)						14						(1,420)						14,193
CLO/ABS						25,135						—						38						(2,069)						23,104

168			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

(in millions)						Amortized Cost						Allowance for Credit Losses(a)						Gross Unrealized Gains						Gross Unrealized Losses						Fair Value
Total mortgage-backed, asset-backed and collateralized						60,329						(48)						859						(5,026)						56,114
Total bonds available for sale**(b)**			$			255,993			$			(186)			$			2,222			$			(31,873)			$			226,156

(a)Represents the allowance for credit losses that has been recognized. Changes in the allowance for credit losses are recorded through Net realized gains (losses) and are not recognized in OCI.

(b)At December 31, 2023 and 2022, the fair value of bonds available for sale held by us that were below investment grade or not rated totaled $17.1 billion or 7 percent and $22.3 billion or 10 percent, respectively.

Securities Available for Sale in a Loss Position for Which No Allowance for Credit Loss Has Been Recorded

The following table summarizes the fair value and gross unrealized losses on our available for sale securities, aggregated by major investment category and length of time that individual securities have been in a continuous unrealized loss position for which no allowance for credit loss has been recorded:

						Less than 12 Months												12 Months or More												Total
(in millions)						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses						Fair Value						Gross Unrealized Losses
December 31, 2023
Bonds available for sale:
U.S. government and government sponsored entities			$			1,046			$			12			$			1,550			$			315			$			2,596			$			327
Obligations of states, municipalities and political subdivisions						1,994						133						5,218						709						7,212						842
Non-U.S. governments						1,901						168						7,483						1,175						9,384						1,343
Corporate debt						15,483						1,936						93,649						16,076						109,132						18,012
RMBS						4,154						288						7,246						880						11,400						1,168
CMBS						2,864						219						8,192						1,027						11,056						1,246
CLO/ABS						6,965						202						13,436						1,151						20,401						1,353
Total bonds available for sale			$			34,407			$			2,958			$			136,774			$			21,333			$			171,181			$			24,291

December 31, 2022
Bonds available for sale:
U.S. government and government sponsored entities			$			3,493			$			368			$			1,816			$			128			$			5,309			$			496
Obligations of states, municipalities and political subdivisions						8,697						1,180						73						15						8,770						1,195
Non-U.S. governments						10,702						1,526						779						191						11,481						1,717
Corporate debt						110,683						19,756						13,778						3,609						124,461						23,365
RMBS						10,953						1,293						1,005						182						11,958						1,475
CMBS						11,620						1,094						1,728						326						13,348						1,420
CLO/ABS						16,852						1,388						4,307						681						21,159						2,069
Total bonds available for sale			$			173,000			$			26,605			$			23,486			$			5,132			$			196,486			$			31,737

At December 31, 2023, we held 27,930 individual fixed maturity securities that were in an unrealized loss position and for which no allowance for credit losses has been recorded (including 22,663 individual fixed maturity securities that were in a continuous unrealized loss position for 12 months or more). At December 31, 2022, we held 36,549 individual fixed maturity securities that were in an unrealized loss position and for which no allowance for credit losses has been recorded (including 4,048 individual fixed maturity securities that were in a continuous unrealized loss position for 12 months or more). We did not recognize the unrealized losses in earnings on these fixed maturity securities at December 31, 2023 because it was determined that such losses were due to non-credit factors. Additionally, we neither intend to sell the securities nor do we believe that it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. For fixed maturity securities with significant declines, we performed fundamental credit analyses on a security-by-security basis, which included consideration of credit enhancements, liquidity position, expected defaults, industry and sector analysis, forecasts and available market data.

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ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

Contractual Maturities of Fixed Maturity Securities Available for Sale

The following table presents the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity:

December 31, 2023						Total Fixed Maturity Securities Available for Sale
(in millions)						Amortized Cost, Net of Allowance						Fair Value
Due in one year or less			$			7,963			$			7,860
Due after one year through five years						47,489						46,165
Due after five years through ten years						40,869						38,202
Due after ten years						89,200						74,937
Mortgage-backed, asset-backed and collateralized						67,352						64,569
Total			$			252,873			$			231,733

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations with or without call or prepayment penalties.

The following table presents the gross realized gains and gross realized losses from sales or maturities of our available for sale securities:

									Years Ended December 31,
															2023															2022															2021
(in millions)																																				Gross Realized Gains						Gross Realized Losses									Gross Realized Gains						Gross Realized Losses									Gross Realized Gains						Gross Realized Losses
Fixed maturity securities																																	$			267			$			1,329						$			446			$			1,628						$			1,369			$			441

For the years ended December 31, 2023, 2022 and 2021, the aggregate fair value of available for sale securities sold was $23.6 billion, $20.5 billion and $27.3 billion, respectively, which resulted in net realized gains (losses) of $(1.1) billion, $(1.2) billion and $928 million, respectively. Included within the net realized gains (losses) are $(133) million, $(311) million and $717 million of net realized gains (losses) for the years ended December 31, 2023, 2022 and 2021, respectively, which relate to Fortitude Re funds withheld assets. These net realized gains (losses) are included in Net realized gains (losses) on Fortitude Re funds withheld assets.

OTHER SECURITIES MEASURED AT FAIR VALUE

The following table presents the fair value of fixed maturity securities measured at fair value based on our election of the fair value option, which are reported in the other bond securities caption in the financial statements, and equity securities measured at fair value:

(in millions)									December 31, 2023																		December 31, 2022
			Fair Value						Percent of Total												Fair Value						Percent of Total
Fixed maturity securities:
Obligations of states, municipalities and political subdivisions						$			91						2			%						$			111						2			%
Non-U.S. governments									37						1												66						1
Corporate debt									2,908						49												2,392						47
Mortgage-backed, asset-backed and collateralized:
RMBS									263						4												286						6
CMBS									261						4												331						7
CLO/ABS and other collateralized									1,681						28												1,299						26
Total mortgage-backed, asset-backed and collateralized									2,205						36												1,916						39
Total fixed maturity securities									5,241						88												4,485						89
Equity securities									728						12												575						11
Total						$			5,969						100			%						$			5,060						100			%

170			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

OTHER INVESTED ASSETS

The following table summarizes the carrying amounts of other invested assets:

(in millions)						December 31, 2023						December 31, 2022
Alternative investments(a)(b)			$			11,320			$			11,809
Investment real estate(c)						2,237						2,153
All other investments(d)						2,660						1,991
Total			$			16,217			$			15,953

(a)At December 31, 2023, included hedge funds of $0.7 billion and private equity funds of $10.6 billion. At December 31, 2022, included hedge funds of $1.4 billion and private equity funds of $10.4 billion.

(b)The majority of our hedge fund investments are redeemable upon a single month or quarter’s notice, though redemption terms vary from single, immediate withdrawals, to withdrawals staggered up to six quarters. Some of the portfolio consists of illiquid run-off or “side-pocket” positions whose liquidation horizons are uncertain and likely beyond a year after submission of the redemption notice.

(c)Represents values net of accumulated depreciation. At December 31, 2023 and 2022, the accumulated depreciation was $853 million and $786 million, respectively.

(d)Includes AIG's ownership interest in Fortitude Group Holdings, LLC (FRL), and DaVinciRe Holdings Ltd, Class D (DVRH), which are recorded using the measurement alternative for equity securities. Our investment in FRL totaled $156 million and $156 million at December 31, 2023 and 2022, respectively. Our investment in DVRH totaled $300 million at December 31, 2023.

Other Invested Assets Carried at Fair Value

Certain hedge funds, private equity funds, and other investment partnerships for which we have elected the fair value option are reported at fair value with changes in fair value recognized in Net investment income.

Other Invested Assets – Equity Method Investments

We account for hedge funds, private equity funds and other investment partnerships using the equity method of accounting unless our interest is so minor that we may have virtually no influence over partnership operating and financial policies, or we have elected the fair value option. Under the equity method of accounting, our carrying amount generally is our share of the net asset value of the funds or the partnerships, and changes in our share of the net asset values are recorded in Net investment income. In applying the equity method of accounting, we consistently use the most recently available financial information provided by the general partner or manager of each of these investments. Hedge funds are reported as of the balance sheet date. Private equity funds are generally reported on a one-quarter lag. The financial statements of these investees are generally audited annually. The carrying amount of equity method investments totaled $5.5 billion and $6.0 billion as of December 31, 2023 and 2022, respectively, representing various ownership percentages each period.

Summarized Financial Information of Equity Method Investees

The following is the aggregated summarized financial information of our equity method investees, including those for which the fair value option has been elected:

Years Ended December 31,
(in millions)						2023						2022						2021
Operating results:
Total revenues			$			4,589			$			28,500			$			31,560
Total expenses						(2,212)						(2,789)						(2,241)
Net income			$			2,377			$			25,711			$			29,319
At December 31,
(in millions)												2023						2022
Balance sheet:
Total assets									$			59,359			$			134,435
Total liabilities									$			(5,893)			$			(14,701)

Other Investments

Also included in Other invested assets are real estate held for investment. These investments are reported at cost, less depreciation and are subject to impairment review, as discussed below.

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ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

NET INVESTMENT INCOME

Net investment income represents income primarily from the following sources:

• Interest income and related expenses, including amortization of premiums and accretion of discounts with changes in the timing and the amount of expected principal and interest cash flows reflected in yield, as applicable.

• Dividend income from common and preferred stocks.

• Realized and unrealized gains and losses from investments in other securities and investments for which we elected the fair value option.

• Earnings from alternative investments.

• Prepayment premiums.

The following table presents the components of Net investment income:

Years Ended December 31,			2023																					2022																					2021
(in millions)			Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets						Total									Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets						Total									Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets						Total
Available for sale fixed maturity securities, including short-term investments			$			10,780			$			917			$			11,697						$			8,664			$			1,067			$			9,731						$			8,583			$			1,468			$			10,051
Other fixed maturity securities(a)						43						339						382									(363)						(459)						(822)									(19)						7						(12)
Equity securities						94						—						94									(53)						—						(53)									(237)						—						(237)
Interest on mortgage and other loans						2,450						237						2,687									1,959						203						2,162									1,745						207						1,952
Alternative investments(b)						233						86						319									819						170						989									2,579						321						2,900
Real estate						42						—						42									57						—						57									225						—						225
Other investments(c)						162						(6)						156									359						(5)						354									250						5						255
Total investment income						13,804						1,573						15,377									11,442						976						12,418									13,126						2,008						15,134
Investment expenses						756						29						785									618						33						651									485						37						522
Net investment income			$			13,048			$			1,544			$			14,592						$			10,824			$			943			$			11,767						$			12,641			$			1,971			$			14,612

(a)Included in the years ended December 31, 2022 and 2021 were income (loss) of $(195) million and $(49) million, respectively, related to fixed maturity securities measured at fair value that economically hedge liabilities described in (c) below.

(b)Included income from hedge funds, private equity funds and affordable housing partnerships. Hedge funds are recorded as of the balance sheet date. Private equity funds are generally reported on a one-quarter lag.

(c)Included in the years ended December 31, 2023, 2022 and 2021 were income (loss) of $(9) million, $186 million and $65 million, respectively, related to liabilities measured at fair value that are economically hedged with fixed maturity securities as described in (a) above.

NET REALIZED GAINS AND LOSSES

Net realized gains and losses are determined by specific identification. The net realized gains and losses are generated primarily from the following sources:

• Sales of available for sale fixed maturity securities, real estate and other alternative investments.

• Reductions to the amortized cost basis of available for sale fixed maturity securities that have been written down due to our intent to sell them or it being more likely than not that we will be required to sell them.

• Changes in the allowance for credit losses on bonds available for sale, mortgage and other loans receivable, and loans commitments.

• Most changes in the fair value of free standing and embedded derivatives, including changes in the non-performance adjustment are included in Net realized gains (losses). However, changes in derivatives designated as hedging instruments when the fair value of the hedged item is not reported in Net realized gains (losses) are excluded from Net realized gains (losses). Changes in the fair value of free standing derivatives that hedge certain MRBs are excluded from Net realized gains (losses).

• Foreign exchange gains and losses resulting from foreign currency transactions.

• Changes in fair value of the embedded derivative related to the Fortitude Re funds withheld assets.

172			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

The following table presents the components of Net realized gains (losses):

Years Ended December 31,			2023																					2022																					2021
(in millions)			Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets									Total						Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets									Total						Excluding Fortitude Re Funds Withheld Assets						Fortitude Re Funds Withheld Assets									Total
Sales of fixed maturity securities			$			(929)			$			(133)			$			(1,062)						$			(871)			$			(311)			$			(1,182)						$			211			$			717			$			928
Intent to sell						—						—						—									(66)						—						(66)									—						—						—
Change in allowance for credit losses on fixed maturity securities						(211)						(9)						(220)									(184)						(32)						(216)									19						7						26
Change in allowance for credit losses on loans						(167)						(62)						(229)									(55)						(47)						(102)									163						9						172
Foreign exchange transactions						101						19						120									(20)						(5)						(25)									22						(5)						17
Index-linked interest credited embedded derivatives, net of related hedges						(784)						—						(784)									(119)						—						(119)									(5)						—						(5)
All other derivatives and hedge accounting*						(374)						(105)						(479)									1,230						(134)						1,096									260						28						288
Sales of alternative investments and real estate investments						98						(2)						96									193						43						236									988						237						1,225
Other						(40)						(3)						(43)									(39)						—						(39)									213						10						223
Net realized gains (losses) – excluding Fortitude Re funds withheld embedded derivative						(2,306)						(295)						(2,601)									69						(486)						(417)									1,871						1,003						2,874
Net realized gains (losses) on Fortitude Re funds withheld embedded derivative						—						(2,007)						(2,007)									—						7,481						7,481									—						(603)						(603)
Net realized gains (losses)			$			(2,306)			$			(2,302)			$			(4,608)						$			69			$			6,995			$			7,064						$			1,871			$			400			$			2,271

*Derivative activity related to hedging MRBs is recorded in Change in the fair value of MRBs, net. For additional disclosures about MRBs, see Note 14.

CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS

The following table presents the increase (decrease) in unrealized appreciation (depreciation) of our available for sale securities and other investments:

Years Ended December 31,
(in millions)																					2023						2022
Increase (decrease) in unrealized appreciation (depreciation) of investments:
Fixed maturity securities																		$			8,511			$			(47,741)
Other investments																					—						(25)
Total increase (decrease) in unrealized appreciation (depreciation) of investments*																		$			8,511			$			(47,766)

*Excludes net unrealized gains and losses attributable to businesses held for sale at December 31, 2023.

The following table summarizes the unrealized gains and losses recognized in Net investment income during the reporting period on equity securities and other investments still held at the reporting date:

Years Ended December 31,						2023																					2022
(in millions)						Equities						Other Invested Assets						Total									Equities						Other Invested Assets						Total
Net gains (losses) recognized during the period on equity securities and other investments			$			94			$			489			$			583						$			(53)			$			355			$			302
Less: Net gains (losses) recognized during the period on equity securities and other investments sold during the period						163						(20)						143									96						(23)						73
Unrealized gains (losses) recognized during the reporting period on equity securities and other investments still held at the reporting date			$			(69)			$			509			$			440						$			(149)			$			378			$			229

EVALUATING INVESTMENTS FOR AN ALLOWANCE FOR CREDIT LOSSES AND IMPAIRMENTS

Fixed Maturity Securities

If we intend to sell a fixed maturity security or it is more likely than not that we will be required to sell a fixed maturity security before recovery of its amortized cost basis and if the fair value of the security is below amortized cost, an impairment has occurred and the amortized cost is written down to current fair value, with a corresponding charge to Net realized gains (losses). No allowance is established in these situations and any previously recorded allowance is reversed. The new cost basis is not adjusted for subsequent increases in estimated fair value. When assessing our intent to sell a fixed maturity security, or whether it is more likely than not that

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ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

we will be required to sell a fixed maturity security before recovery of its amortized cost basis, management evaluates relevant facts and circumstances including, but not limited to, decisions to reposition our investment portfolio, sales of securities to meet cash flow needs and sales of securities to take advantage of favorable pricing.

For fixed maturity securities for which a decline in the fair value below the amortized cost is due to credit related factors, an allowance is established for the difference between the estimated recoverable value and amortized cost with a corresponding charge to Net realized gains (losses). The allowance for credit losses is limited to the difference between amortized cost and fair value. The estimated recoverable value is the present value of cash flows expected to be collected, as determined by management. The difference between fair value and amortized cost that is not associated with credit related factors is presented in unrealized appreciation (depreciation) of fixed maturity securities on which an allowance for credit losses was previously recognized (a separate component of AOCI). Accrued interest is excluded from the measurement of the allowance for credit losses.

When estimating future cash flows for structured fixed maturity securities (e.g., RMBS, CMBS, CLO, ABS) management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs, which vary by asset class:

• Current delinquency rates;

• Expected default rates and the timing of such defaults;

• Loss severity and the timing of any recovery; and

• Expected prepayment speeds.

When estimating future cash flows for corporate, municipal and sovereign fixed maturity securities determined to be credit impaired, management considers:

• Expected default rates and the timing of such defaults;

• Loss severity and the timing of any recovery; and

• Scenarios specific to the issuer and the security, which may also include estimates of outcomes of corporate restructurings, political and macroeconomic factors, stability and financial strength of the issuer, the value of any secondary sources of repayment and the disposition of assets.

We consider severe price declines in our assessment of potential credit impairments. We may also modify our model inputs when we determine that price movements in certain sectors are indicative of factors not captured by the cash flow models.

Under the current expected credit loss (CECL) model, credit losses are reassessed each period. The allowance for credit losses and the corresponding charge to Net realized gains (losses) can be reversed if conditions change, however, the allowance for credit losses will never be reduced below zero. When we determine that all or a portion of a fixed maturity security is uncollectable, the uncollectable amortized cost amount is written off with a corresponding reduction to the allowance for credit losses. If we collect cash flows that were previously written off, the recovery is recognized by recording a gain in Net realized gains (losses).

Credit Impairments

The following table presents a rollforward of the changes in allowance for credit losses on available for sale fixed maturity securities by major investment category:

Years Ended December 31,			2023																					2022																					2021
(in millions)			Structured						Non- Structured									Total						Structured						Non- Structured									Total						Structured						Non- Structured									Total
Balance, beginning of year			$			46			$			140			$			186						$			8			$			90			$			98						$			17			$			169			$			186
Additions:
Securities for which allowance for credit losses were not previously recorded						65						134						199									69						238						307									9						56						65
Reductions:
Securities sold during the period						(5)						(35)						(40)									(3)						(92)						(95)									(4)						(29)						(33)
Addition to (release of) the allowance for credit losses on securities that had an allowance recorded in a previous period, for which there was no intent to sell before recovery of amortized cost basis						(10)						31						21									(27)						(64)						(91)									(14)						(77)						(91)
Write-offs charged against the allowance						(30)						(168)						(198)									—						(30)						(30)									—						(29)						(29)
Other						3						(9)						(6)									(1)						(2)						(3)									—						—						—
Balance, end of year			$			69			$			93			$			162						$			46			$			140			$			186						$			8			$			90			$			98

174			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

Purchased Credit Deteriorated Securities

We purchase certain RMBS securities that have experienced more-than-insignificant deterioration in credit quality since origination. These are referred to as PCD assets. At the time of purchase an allowance is recognized for these PCD assets by adding it to the purchase price to arrive at the initial amortized cost. There is no credit loss expense recognized upon acquisition of a PCD asset. When determining the initial allowance for credit losses, management considers the historical performance of underlying assets and available market information as well as bond-specific structural considerations, such as credit enhancement and the priority of payment structure of the security. In addition, the process of estimating future cash flows includes, but is not limited to, the following critical inputs:

• Current delinquency rates;

• Expected default rates and the timing of such defaults;

• Loss severity and the timing of any recovery; and

• Expected prepayment speeds.

Subsequent to the acquisition date, the PCD assets follow the same accounting as other structured securities that are not high credit quality.

We did not purchase securities with more than insignificant credit deterioration since their origination during the twelve months ended December 31, 2023, 2022 and 2021.

Other Invested Assets

Our equity method investments in private equity funds, hedge funds and other entities are evaluated for impairment each reporting period. Such evaluation considers market conditions, events and volatility that may impact the recoverability of the underlying investments within these private equity funds and hedge funds and is based on the nature of the underlying investments and specific inherent risks. Such risks may evolve based on the nature of the underlying investments.

Our investments in real estate are periodically evaluated for recoverability whenever changes in circumstances indicate the carrying amount of an asset may be impaired. When impairment indicators are present, we compare expected investment cash flows to carrying amount. When the expected cash flows are less than the carrying amount, the investments are written down to fair value with a corresponding charge to earnings.

PLEDGED INVESTMENTS

Secured Financing and Similar Arrangements

We enter into secured financing transactions whereby certain securities are sold under agreements to repurchase (repurchase agreements), in which we transfer securities in exchange for cash, with an agreement by us to repurchase the same or substantially similar securities. Our secured financing transactions also include those that involve the transfer of securities to financial institutions in exchange for cash (securities lending agreements). In all of these secured financing transactions, the securities transferred by us (pledged collateral) may be sold or repledged by the counterparties. These agreements are recorded at their contracted amounts plus accrued interest, other than those that are accounted for at fair value.

Pledged collateral levels are monitored daily and are generally maintained at an agreed-upon percentage of the fair value of the amounts borrowed during the life of the transactions. In the event of a decline in the fair value of the pledged collateral under these secured financing transactions, we may be required to transfer cash or additional securities as pledged collateral under these agreements. At the termination of the transactions, we and our counterparties are obligated to return the amounts borrowed and the securities transferred, respectively.

The following table presents the fair value of securities pledged to counterparties under secured financing transactions, including repurchase and securities lending agreements:

(in millions)						December 31, 2023						December 31, 2022
Fixed maturity securities available for sale			$			2,723			$			2,968

At December 31, 2023 and 2022, amounts borrowed under repurchase and securities lending agreements totaled $2.6 billion and $3.1 billion, respectively.

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ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

The following table presents the fair value of securities pledged under our repurchase agreements by collateral type and by remaining contractual maturity:

						Remaining Contractual Maturity of the Agreements
(in millions)						Overnight and Continuous						up to 30 days						31 - 90 days						91 - 364 days						365 days or greater						Total
December 31, 2023
Bonds available for sale:
Non-U.S. governments						$	—					$	277					$	—					$	—					$	—					$	277
Corporate debt						38						2,408						—						—						—						2,446
Total						$	38					$	2,685					$	—					$	—					$	—					$	2,723

						Remaining Contractual Maturity of the Agreements
(in millions)						Overnight and Continuous						up to 30 days						31 - 90 days						91 - 364 days						365 days or greater						Total
December 31, 2022
Bonds available for sale:
Non-U.S. governments						$	—					$	20					$	—					$	—					$	—					$	20
Corporate debt						—						2,371						577						—						—						2,948
Total						$	—					$	2,391					$	577					$	—					$	—					$	2,968

We also enter into agreements in which securities are purchased by us under reverse repurchase agreements, which are accounted for as secured financing transactions and reported as short-term investments or other assets, depending on their terms. These agreements are recorded at their contracted resale amounts plus accrued interest, other than those that are accounted for at fair value. In all reverse repurchase transactions, we take possession of or obtain a security interest in the related securities, and we have the right to sell or repledge this collateral received.

The following table presents information on the fair value of securities pledged to us under reverse repurchase agreements:

(in millions)						December 31, 2023						December 31, 2022
Securities collateral pledged to us			$			1,200			$			—

At December 31, 2023, the carrying value of reverse repurchase agreements totaled $1.1 billion.

All secured financing transactions are collateralized and margined on a daily basis consistent with market standards and subject to enforceable master netting arrangements with rights of set off. We do not currently offset any such transactions.

Insurance – Statutory and Other Deposits

The total carrying value of cash and securities deposited by our insurance subsidiaries under requirements of regulatory authorities or other insurance-related arrangements, including certain annuity-related obligations and certain reinsurance contracts, was $16.5 billion and $13.6 billion at December 31, 2023 and 2022, respectively.

Other Pledges and Restrictions

Certain of our subsidiaries are members of Federal Home Loan Banks (FHLBs) and such membership requires the members to own stock in these FHLBs. We owned an aggregate of $283 million and $239 million of stock in FHLBs at December 31, 2023 and 2022, respectively. In addition, our subsidiaries have pledged securities available for sale and residential loans associated with borrowings and funding agreements from FHLBs, with a fair value of $6.5 billion and $3.0 billion, respectively, at December 31, 2023 and $5.8 billion and $1.8 billion, respectively, at December 31, 2022.

Certain GIAs have provisions that require collateral to be posted or payments to be made by us upon a downgrade of our long-term debt ratings. The actual amount of collateral required to be posted to the counterparties in the event of such downgrades, and the aggregate amount of payments that we could be required to make, depend on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade. The fair value of securities pledged as collateral with respect to these obligations was approximately $63 million and $63 million, at December 31, 2023 and 2022, respectively. This collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties.

176			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 6. Investments

Investments held in escrow accounts or otherwise subject to restriction as to their use were $164 million and $301 million, comprised of bonds available for sale and short-term investments at December 31, 2023 and 2022, respectively.

Reinsurance transactions between AIG and Fortitude Re were structured as modco and loss portfolio transfer arrangements with funds withheld.

7. Lending Activities

Mortgage and other loans receivable include commercial mortgages, residential mortgages, life insurance policy loans, commercial loans, and other loans and notes receivable. Commercial mortgages, residential mortgages, commercial loans, and other loans and notes receivable are carried at unpaid principal balances less allowance for credit losses and plus or minus adjustments for the accretion or amortization of discount or premium. Interest income on such loans is accrued as earned.

Direct costs of originating commercial mortgages, commercial loans, and other loans and notes receivable, net of nonrefundable points and fees, are deferred and included in the carrying amount of the related receivables. The amount deferred is amortized to income as an adjustment to earnings using the interest method. Premiums and discounts on purchased residential mortgages are also amortized to income as an adjustment to earnings using the interest method.

Life insurance policy loans are carried at unpaid principal balances. There is no allowance for policy loans because these loans serve to reduce the death benefit paid when the death claim is made and the balances are effectively collateralized by the cash surrender value of the policy.

The following table presents the composition of Mortgage and other loans receivable, net:

(in millions)			December 31, 2023						December 31, 2022
Commercial mortgages(a)			$	38,009					$	37,128
Residential mortgages			8,689						6,130
Life insurance policy loans			1,753						1,758
Commercial loans, other loans and notes receivable(b)			3,940						5,305
Total mortgage and other loans receivable**(c)**			52,391						50,321
Allowance for credit losses(c)(d)			(838)						(716)
Mortgage and other loans receivable, net**(c)**			$	51,553					$	49,605

(a)Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in New York and California representing the largest geographic concentrations (aggregating approximately 18 percent and 11 percent, respectively, at December 31, 2023 and 19 percent and 11 percent, respectively, at December 31, 2022).

(b)There were no loans that were held for sale carried at lower of cost or market as of December 31, 2023. The net carrying value of loans carried at lower of cost or market was $170 million as of 2022.

*(c)*Excludes $37.6 billion at both December 31, 2023 and 2022 of loan receivable from AIGFP, which has a full allowance for credit losses, recognized upon the deconsolidation of AIGFP. For additional information, see Note 1.

(d)Does not include allowance for credit losses of $67 million and $69 million, respectively, at December 31, 2023 and 2022, in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

Interest income is not accrued when payment of contractual principal and interest is not expected. Any cash received on impaired loans is generally recorded as a reduction of the current carrying amount of the loan. Accrual of interest income is generally resumed when delinquent contractual principal and interest is repaid or when a portion of the delinquent contractual payments are made and the ongoing required contractual payments have been made for an appropriate period. As of December 31, 2023, $27 million and $492 million of residential mortgage loans and commercial mortgage loans, respectively, are placed on nonaccrual status. As of December 31, 2022, $5 million and $703 million of residential mortgage loans and commercial mortgage loans, respectively, are placed on nonaccrual status.

Accrued interest is presented separately and is included in Accrued investment income on the Consolidated Balance Sheets. As of December 31, 2023, accrued interest receivable was $20 million and $183 million associated with residential mortgage loans and commercial mortgage loans, respectively. As of December 31, 2022, accrued interest receivable was $15 million and $147 million associated with residential mortgage loans and commercial mortgage loans, respectively.

A significant majority of commercial mortgages in the portfolio are non-recourse loans and, accordingly, the only guarantees are for specific items that are exceptions to the non-recourse provisions. It is therefore extremely rare for us to have cause to enforce the provisions of a guarantee on a commercial real estate or mortgage loan.

AIG | 2023 Form 10-K			177

ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities

Nonperforming loans are generally those loans where payment of contractual principal or interest is more than 90 days past due. Nonperforming loans were not significant for any of the periods presented.

CREDIT QUALITY OF COMMERCIAL MORTGAGES

The following table presents debt service coverage ratios**(a)** for commercial mortgages by year of vintage:

December 31, 2023						2023						2022						2021						2020						2019						Prior						Total
(in millions)
>1.2X			$			2,555			$			6,209			$			2,349			$			1,387			$			4,969			$			13,459			$			30,928
1.00 - 1.20X						295						1,149						1,574						369						177						2,632						6,196
<1.00X						—						50						—						—						—						835						885
Total commercial mortgages			$			2,850			$			7,408			$			3,923			$			1,756			$			5,146			$			16,926			$			38,009

December 31, 2022						2022						2021						2020						2019						2018						Prior						Total
(in millions)
>1.2X			$			5,518			$			2,457			$			1,710			$			4,985			$			4,120			$			11,663			$			30,453
1.00 - 1.20X						910						898						473						416						567						1,353						4,617
<1.00X						45						—						23						52						744						1,194						2,058
Total commercial mortgages			$			6,473			$			3,355			$			2,206			$			5,453			$			5,431			$			14,210			$			37,128

The following table presents loan-to-value ratios**(b)** for commercial mortgages by year of vintage:

December 31, 2023						2023						2022						2021						2020						2019						Prior						Total
(in millions)
Less than 65%			$			2,446			$			4,629			$			2,741			$			1,303			$			2,832			$			11,571			$			25,522
65% to 75%						290						1,763						794						288						1,937						3,220						8,292
76% to 80%						—						375						99						—						377						340						1,191
Greater than 80%						114						641						289						165						—						1,795						3,004
Total commercial mortgages			$			2,850			$			7,408			$			3,923			$			1,756			$			5,146			$			16,926			$			38,009
December 31, 2022						2022						2021						2020						2019						2018						Prior						Total
(in millions)
Less than 65%			$			5,425			$			2,548			$			1,775			$			3,958			$			3,016			$			10,739			$			27,461
65% to 75%						998						517						405						1,445						1,487						1,393						6,245
76% to 80%						50						52						—						—						168						229						499
Greater than 80%						—						238						26						50						760						1,849						2,923
Total commercial mortgages			$			6,473			$			3,355			$			2,206			$			5,453			$			5,431			$			14,210			$			37,128

(a)The debt service coverage ratio compares a property’s net operating income to its debt service payments, including principal and interest. Our weighted average debt service coverage ratio was 1.9x at both periods ended December 31, 2023 and December 31, 2022. The debt service coverage ratios are updated when additional relevant information becomes available.

(b)The loan-to-value ratio compares the current unpaid principal balance of the loan to the estimated fair value of the underlying property collateralizing the loan. Our weighted average loan-to-value ratio was 59 percent at both periods ended December 31, 2023 and December 31, 2022. The loan-to-value ratios have been updated within the last three months to reflect the current carrying values of the loans. We update the valuations of collateral properties by obtaining independent appraisals, generally at least once per year.

The following table presents supplementary credit quality information related to commercial mortgages:

			Number of Loans						Class																																							Percent of Total
(dollars in millions)						Apartments						Offices						Retail						Industrial						Hotel						Others						Total
December 31, 2023
Past Due Status:
In good standing			610			$			15,129			$			9,679			$			4,263			$			6,367			$			2,053			$			446			$			37,937			100			%
90 days or less delinquent			1						—						29						—						—						—						—						29			—
>90 days delinquent or in process of foreclosure(a)			1						—						—						43						—						—						—						43			—
Total**(b)**			612			$			15,129			$			9,708			$			4,306			$			6,367			$			2,053			$			446			$			38,009			100			%
Allowance for credit losses						$			94			$			415			$			109			$			90			$			38			$			6			$			752			2			%

178			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities

			Number of Loans						Class																																							Percent of Total
(dollars in millions)						Apartments						Offices						Retail						Industrial						Hotel						Others						Total
December 31, 2022
Past Due Status:
In good standing			625			$			14,597			$			10,102			$			3,774			$			6,006			$			2,027			$			407			$			36,913			99			%
90 days or less delinquent			—						—						—						—						—						—						—						—			—
>90 days delinquent or in process of foreclosure(a)			4						—						173						42						—						—						—						215			1
Total**(b)**			629			$			14,597			$			10,275			$			3,816			$			6,006			$			2,027			$			407			$			37,128			100			%
Allowance for credit losses						$			100			$			351			$			81			$			71			$			29			$			8			$			640			2			%

(a)Includes $156 million of Office loans supporting the Fortitude Re funds withheld arrangements, greater than 90 days delinquent or in process of foreclosure, at December 31, 2022. Office loans supporting the Fortitude Re funds have been foreclosed and are reported in Other invested assets in the Consolidated Balance Sheets at December 31, 2023.

(b)Does not reflect allowance for credit losses.

The following table presents credit quality performance indicators for residential mortgages by year of vintage:

December 31, 2023									2023						2022						2021						2020						2019						Prior						Total
(in millions)
FICO:*
780 and greater						$			514			$			589			$			2,283			$			622			$			240			$			608			$			4,856
720 - 779									1,121						625						560						169						99						243						2,817
660 - 719									313						257						113						40						37						128						888
600 - 659									2						20						11						8						9						53						103
Less than 600									—						1						2						2						4						16						25
Total residential mortgages						$			1,950			$			1,492			$			2,969			$			841			$			389			$			1,048			$			8,689
December 31, 2022									2022						2021						2020						2019						2018						Prior						Total
(in millions)
FICO:*
780 and greater						$			296			$			2,204			$			654			$			232			$			77			$			567			$			4,030
720 - 779									536						728						168						76						32						169						1,709
660 - 719									163						80						28						16						9						62						358
600 - 659									2						4						2						2						2						14						26
Less than 600									—						—						—						1						—						6						7
Total residential mortgages						$			997			$			3,016			$			852			$			327			$			120			$			818			$			6,130

*Fair Isaac Corporation (FICO) is the credit quality indicator used to evaluate consumer credit risk for residential mortgage loan borrowers and have been updated within the last twelve months.

METHODOLOGY USED TO ESTIMATE THE ALLOWANCE FOR CREDIT LOSSES

At the time of origination or purchase, an allowance for credit losses is established for mortgage and other loan receivables and is updated each reporting period. Changes in the allowance for credit losses are recorded in realized losses. This allowance reflects the risk of loss, even when that risk is remote, that is expected over the remaining contractual life of the loan. The allowance for credit losses considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts of future economic conditions. We revert to historical information when we determine that we can no longer reliably forecast future economic assumptions.

The allowances for the commercial mortgage loans and residential mortgage loans are estimated utilizing a probability of default and loss given default model. Loss rate factors are determined based on historical data and adjusted for current and forecasted information. The loss rates are applied based on individual loan attributes and considering such data points as loan-to-value ratios, FICO scores, and debt service coverage.

The estimate of credit losses also reflects management’s assumptions on certain macroeconomic factors that include, but are not limited to, gross domestic product growth, employment, inflation, housing price index, interest rates and credit spreads.

Accrued interest is excluded from the measurement of the allowance for credit losses and accrued interest is reversed through interest income once a loan is placed on nonaccrual.

When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance.

We also have off-balance sheet commitments related to our commercial mortgage loans. The liability for expected credit losses related to these commercial mortgage loan commitments is reported in Other liabilities in the Consolidated Balance Sheets. When a commitment is funded, we record a loan receivable and reclassify the liability for expected credit losses related to the commitment into

AIG | 2023 Form 10-K			179

ITEM 8 | Notes to Consolidated Financial Statements | 7. Lending Activities

loan allowance for expected credit losses. Other changes in the liability for expected credit losses on loan commitments are recorded in Net realized gains (losses) in the Consolidated Statements of Income (Loss).

The following table presents a rollforward of the changes in the allowance for credit losses on Mortgage and other loans receivable**(a)****:**

Years Ended December 31,						2023**(b)**															2022															2021
(in millions)						Commercial Mortgages						Other Loans						Total									Commercial Mortgages						Other Loans						Total									Commercial Mortgages						Other Loans						Total
Allowance, beginning of year						$	640					$	76					$	716								$	545					$	84					$	629								$	685					$	129					$	814
Loans charged off						(109)						—						(109)									(17)						—						(17)									(2)						—						(2)
Net charge-offs						(109)						—						(109)									(17)						—						(17)									(2)						—						(2)
Addition to (release of) allowance for loan losses						221						10						231									112						(8)						104									(138)						(26)						(164)
Divestitures						—						—						—									—						—						—									—						(19)						(19)
Allowance, end of year						$	752					$	86					$	838								$	640					$	76					$	716								$	545					$	84					$	629

(a)Does not include allowance for credit losses of $67 million, $69 million and $71 million, respectively, at December 31, 2023, 2022 and 2021 in relation to off-balance-sheet commitments to fund commercial mortgage loans, which is recorded in Other liabilities.

(b)Excludes $37.6 billion at both December 31, 2023 and 2022, of loan receivable from AIGFP, which has a full allowance for credit losses, recognized upon the deconsolidation of AIGFP. For additional information, see Note 1.

Our expectations and models used to estimate the allowance for losses on commercial and residential mortgage loans are regularly updated to reflect the current economic environment.

LOAN MODIFICATIONS

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. We use a probability of default/loss given default model to determine the allowance for credit losses for our commercial and residential mortgage loans. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses utilizing the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.

When modifications are executed, they often will be in the form of principal forgiveness, term extensions, interest rate reductions, or some combination of any of these concessions. When principal is forgiven, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

We assess whether a borrower is experiencing financial difficulty based on a variety of factors, including the borrower’s current default on any of its outstanding debt, the probability of a default on any of its debt in the foreseeable future without the modification, the insufficiency of the borrower’s forecasted cash flows to service any of its outstanding debt (including both principal and interest), and the borrower’s inability to access alternative third party financing at an interest rate that would be reflective of current market conditions for a non-troubled debtor.

During the year ended December 31, 2023, commercial mortgage loans with an amortized cost of $87 million (including $56 million supporting the funds withheld arrangements with Fortitude Re) and commercial loans, other loans and notes receivable with an amortized cost of $168 million (none of which were supporting the funds withheld arrangements with Fortitude Re) were granted term extensions. The modified loans represent less than 1 percent of each of these two portfolio segments. These modifications added less than one year to the weighted average life of loans in each of these two portfolio segments.

There were no loans that had defaulted during the year ended December 31, 2023, that had been previously modified with borrowers experiencing financial difficulties.

Prior to January 1, 2023, we were required to assess loan modifications to determine if they were a troubled debt restructuring. A troubled debt restructuring was a modification of a loan with a borrower that was experiencing financial difficulty and the modification involved us granting a concession to the troubled borrower. Concessions previously granted included extended maturity dates, interest rate changes, principal or interest forgiveness, payment deferrals and easing of loan covenants.

During the year ended December 31, 2022, loans with a carrying value of $219 million were modified as troubled debt restructurings. Effective January 1, 2023, we are no longer required to assess whether loan modifications are troubled debt restructurings.

180			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

8. Reinsurance

In the ordinary course of business, our insurance companies purchase both treaty and facultative reinsurance to limit potential losses, provide additional capacity for growth, minimize exposure to significant risks or to facilitate greater diversification of our businesses. In addition, certain of our General Insurance subsidiaries sell reinsurance to other insurance companies. We determine the portion of our ultimate net loss that will be recoverable under our reinsurance contracts by reference to the terms of the reinsurance protection purchased. This determination involves an estimate of incurred but not reported (IBNR) loss. Reinsurance recoverables for contracts which are accounted for as deposits are subject to similar judgments and uncertainties and reported in Other assets.

Reinsurance assets include the balances due for paid losses and expenses, reserves for losses and expenses reported and outstanding, reserves for IBNR, ceded unearned premiums and ceded future policy benefits for life and accident and health insurance contracts and benefits paid and unpaid. Amounts related to paid and reserved losses and expenses and benefits with respect to these reinsurance agreements are sometimes collateralized. We remain liable to our policyholders regardless of whether our reinsurers meet their obligations under the reinsurance contracts, and as such, we regularly evaluate the financial condition of our reinsurers and monitor concentration of our credit risk. The estimation of the allowance for unrecoverable reinsurance from reinsurers who are unwilling and/or unable to pay amounts due to us requires judgment for which key inputs typically include historical collection rates when amounts due are in dispute or where the reinsurer has suffered a credit event as well as specific reviews of balances in dispute or subject to credit impairment. The allowance for credit losses and disputes on reinsurance assets was $236 million and $295 million at December 31, 2023 and 2022, respectively. Changes in the allowance for credit losses and disputes on reinsurance assets are reflected in Policyholder benefits and losses incurred within the Consolidated Statements of Income (Loss).

Reinsurance recoverables are recognized in a manner consistent with the liabilities relating to the underlying reinsured contracts.

The reinsurance recoverables for coinsurance and modco contracts, along with amounts recoverable on YRT treaties are determined based on updated net premium ratios, reflecting updated actuarial assumptions using locked-in upper-medium investment instrument yield discount rates with changes recognized as remeasurement gains and losses reported in income. In addition, reinsurance recoverables are remeasured at the balance sheet date using current upper-medium grade discount rates with changes reported in OCI. For reinsurance agreements that reinsure existing, or non-contemporaneous (in-force) traditional and limited payment long-duration insurance contracts, the reinsurance recoverable is measured using the upper-medium grade fixed-income instrument yield discount rate assumption related to the effective date of the reinsurance contract. Therefore, for non-contemporaneous reinsurance agreements executed after January 1, 2021, the locked-in rate to accrete interest into the income statement related to the reinsurance recoverable would be different from the locked-in rate used for accreting interest on the direct reserve for future policy benefits. Certain reinsured guaranteed benefits previously reported as reinsurance recoverables are classified as Market risk benefit assets in the Consolidated Balance Sheets and are measured at fair value.

The following tables present the transition rollforward for Reinsurance assets:

(in millions)			Individual Retirement												Life Insurance						Institutional Markets						Total
Reinsurance assets - other, net of allowance for credit losses and disputes**(a)**
Pre-adoption, December 31, 2020			$	309											$	2,370					$	28					$	2,707
Reclassification of Cost of Reinsurance(b)			—												416						—						416
Reclassification to Market risk benefits			(35)												—						—						(35)
Change in cash flow assumptions and effect of net premiums exceeding gross premiums			—												9						—						9
Change due to the current upper-medium grade discount rate			—												74						5						79
Post-adoption January 1, 2021			$	274											$	2,869					$	33					$	3,176

(in millions)																											Total
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes**(c)**
Pre-adoption, December 31, 2020																											$	29,135
Change in cash flow assumptions and effect of net premiums exceeding gross premiums																											55
Change due to the current upper-medium grade discount rate																											7,611
Post-adoption January 1, 2021																											$	36,801

(a)Excludes $36.3 billion of Reinsurance assets - other, net of allowance for credit losses and disputes in General Insurance and Other Operations.

(b)Cost of reinsurance is reported in Other liabilities in the Consolidated Balance sheets.

(c)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Excludes $5.4 billion of Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes in General Insurance and Other Operations.

The remeasurement of the reinsurance assets using the current upper-medium grade discount rate is offset in AOCI.

AIG | 2023 Form 10-K			181

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

The following table provides supplemental information for loss and benefit reserves, gross and net of ceded reinsurance:

At December 31,			2023															2022
(in millions)						As Reported						Net of Reinsurance									As Reported						Net of Reinsurance
Liability for unpaid losses and loss adjustment expenses			$			(70,393)			$			(39,994)						$			(75,167)			$			(42,955)
Future policy benefits for life and accident and health insurance contracts						(58,576)						(35,005)									(51,914)						(27,836)
Policyholder contract deposits						(161,979)						(158,171)									(155,984)						(152,375)
Reserve for unearned premiums						(17,387)						(13,117)									(18,338)						(13,992)
Other policyholder funds						(3,356)						(2,817)									(3,463)						(2,898)
Reinsurance assets*						62,587															64,810

*Reinsurance assets excludes (i) allowance for credit losses and disputes of $236 million and $295 million (of which $110 million and $110 million pertains to CECL reserve for Liability for unpaid losses and loss adjustment expenses) for the years ended December 31, 2023 and 2022, respectively, (ii) paid loss recoveries of $4,879 million and $4,662 million for the years ended December 31, 2023 and 2022, respectively, and (iii) policy and contract claims recoverable of $296 million and $545 million for the years ended December 31, 2023 and 2022, respectively.

SHORT-DURATION REINSURANCE

Short-duration reinsurance is effected under reinsurance treaties and by negotiation on individual risks. Certain of these reinsurance arrangements consist of excess of loss contracts that protect us against losses above stipulated amounts. Ceded premiums are considered prepaid reinsurance premiums and are recognized as a reduction of premiums earned over the contract period in proportion to the protection received. Amounts recoverable from reinsurers on short-duration contracts are estimated in a manner consistent with the claims liabilities associated with the reinsurance and presented as a component of Reinsurance assets. Reinsurance premiums for assumed business are estimated based on information received from brokers, ceding companies and reinsurers. Any subsequent differences arising on such estimates are recorded in the periods in which they are determined. Assumed reinsurance premiums are earned primarily on a pro-rata basis over the terms of the reinsurance contracts and the portion of premiums relating to the unexpired terms of coverage is included in the reserve for unearned premiums. Reinsurance premiums for assumed business are estimated based on information received from brokers, ceding companies and reinsureds. Any subsequent differences arising on such estimates are recorded in the periods in which they are determined. For both ceded and assumed reinsurance, risk transfer requirements must be met for reinsurance accounting to apply. If risk transfer requirements are not met, the contract is accounted for as a deposit, resulting in the recognition of cash flows under the contract through a deposit asset or liability and not as revenue or expense. To meet risk transfer requirements, a reinsurance contract must include both insurance risk, consisting of both underwriting and timing risk, and a reasonable possibility of a significant loss for the assuming entity. Similar risk transfer criteria are used to determine whether directly written insurance contracts should be accounted for as insurance or as a deposit.

The following table presents short-duration insurance premiums written and earned:

			Years Ended December 31,
(in millions)						2023						2022						2021
Premiums written:
Direct			$			31,445			$			32,025			$			30,910
Assumed						7,951						7,385						7,209
Ceded						(12,190)						(12,650)						(11,702)
Net			$			27,206			$			26,760			$			26,417
Premiums earned:
Direct			$			30,781			$			32,053			$			30,279
Assumed						7,050						7,137						6,640
Ceded						(12,268)						(12,425)						(11,301)
Net			$			25,563			$			26,765			$			25,618

For the years ended December 31, 2023, 2022 and 2021, reinsurance recoveries, which reduced losses and loss adjustment expenses incurred, amounted to $8.1 billion, $7.1 billion and $7.2 billion, respectively.

182			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

Retroactive reinsurance agreements are reinsurance agreements under which our reinsurer agrees to reimburse us as a result of past insurable events. For these agreements, the excess of the amounts ultimately collectible under the agreement over the consideration paid is recognized as a deferred gain liability and amortized into income over the settlement period of the ceded reserves. The amount of the deferral is recalculated each period based on loss payments and updated estimates. If the consideration paid exceeds the ultimate losses collectible under the agreement, the net loss on the agreement is recognized in income immediately. Ceded loss reserves under retroactive agreements were $12.4 billion and $14.3 billion, and the deferred gain liability was $585 million and $661 million, as of December 31, 2023 and 2022, respectively. The effect on income from amortization of the deferred gain was $82 million, $252 million and $191 million for the years ended December 31, 2023, 2022 and 2021, respectively.

In the first quarter of 2017, we entered into an adverse development reinsurance agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior. Under this agreement, we ceded to NICO 80 percent of the losses on subject business paid on or after January 1, 2016 in excess of $25 billion of net paid losses, up to an aggregate limit of $25 billion. We account for this transaction as retroactive reinsurance. This transaction resulted in a gain, which under U.S. GAAP retroactive reinsurance accounting is deferred and amortized into income over the settlement period. NICO created a collateral trust account as security for their claim payment obligations to us, into which they deposited the consideration paid under the agreement, and Berkshire Hathaway Inc. has provided a parental guarantee to secure NICO’s obligations under the agreement.

LONG-DURATION REINSURANCE

Long-duration reinsurance is principally under YRT treaties, along with a large modco treaty reinsuring the majority of our legacy business to a former affiliate, Fortitude Re. Reinsurance premiums ceded are recognized when due, along with corresponding benefits. Amounts recoverable from reinsurers are presented as a component of Reinsurance assets.

The following table presents premiums earned and policy fees for our long-duration life insurance and annuity operations:

Years Ended December 31,
(in millions)						2023						2022						2021
Premiums earned:
Direct			$			4,706			$			4,739			$			4,604
Assumed						4,111						1,318						2,265
Ceded						(1,126)						(966)						(1,202)
Net			$			7,691			$			5,091			$			5,667
Policy Fees:
Direct			$			2,873			$			2,991			$			3,090
Assumed						—						—						—
Ceded						(76)						(78)						(85)
Net			$			2,797			$			2,913			$			3,005

Long-duration reinsurance recoveries, which reduced Policyholder benefits and losses incurred, was approximately $1.1 billion, $0.9 billion and $1.3 billion for the years ended December 31, 2023, 2022 and 2021 respectively.

The following table presents long-duration insurance in-force ceded to other insurance companies:

At December 31,
(in millions)			2023			2022			2021
Long-duration insurance in force ceded			$	363,471		$	346,879		$	363,008

Long-duration insurance in-force assumed as a percentage of gross long-duration insurance in-force was 0.01 percent, 0.01 percent, and 0.01 percent at December 31, 2023, 2022 and 2021, respectively; and premiums assumed represented 46.6 percent, 21.8 percent and 33.0 percent of gross premiums for the years ended December 31, 2023, 2022 and 2021, respectively.

The U.S. Life and Retirement companies manage the capital impact of their statutory reserve requirements for certain whole life and universal life policies through unaffiliated and affiliated reinsurance transactions. An evaluation is performed to determine whether these reinsurance transactions meet the requirements of risk transfer under U.S. GAAP. If risk transfer requirements are not met, deposit accounting is used for these reinsurance transactions with a reinsurance risk charge recorded in income. Under one affiliated reinsurance arrangement, one of the U.S. Life and Retirement subsidiaries had one bilateral letter of credit currently in the amount of $125 million, which was issued on May 9, 2022 and expires on February 7, 2027. As of May 12, 2022, this letter of credit is subject to reimbursement by Corebridge Parent in the event of a drawdown.

For additional information on the use of reinsurance, see Note 20.

AIG | 2023 Form 10-K			183

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

FORTITUDE RE

Fortitude Re is the reinsurer of the majority of AIG’s run-off operations. The reinsurance transactions are structured as modco and loss portfolio transfer arrangements with funds withheld (funds withheld). In modco and funds withheld arrangements, the investments supporting the reinsurance agreements, and which reflect the majority of the consideration that would be paid to the reinsurer for entering into the transaction, are withheld by, and therefore continue to reside on the balance sheet of, the ceding company (i.e., AIG) thereby creating an obligation for the ceding company to pay the reinsurer (i.e., Fortitude Re) at a later date. Additionally, as AIG maintains ownership of these investments, AIG will maintain its existing accounting for these assets (e.g., the changes in fair value of available for sale securities will be recognized within OCI). AIG has established a funds withheld payable to Fortitude Re while simultaneously establishing a reinsurance asset representing reserves for the insurance coverage that Fortitude Re has assumed. The funds withheld payable contains an embedded derivative and changes in fair value of the embedded derivative related to the funds withheld payable are recognized in earnings through Net realized gains (losses). This embedded derivative is considered a total return swap with contractual returns that are attributable to various assets and liabilities associated with these reinsurance agreements.

As of December 31, 2023, approximately $27.6 billion of reserves from our Life and Retirement Run-Off Lines and approximately $3.0 billion of reserves from our General Insurance Run-Off Lines related to business written by multiple wholly-owned AIG subsidiaries, had been ceded to Fortitude Re under these reinsurance transactions.

There is a diverse pool of assets supporting the funds withheld arrangements with Fortitude Re. The following summarizes the composition of the pool of assets:

			December 31, 2023															December 31, 2022
(in millions)			Carrying Value									Fair Value						Carrying Value									Fair Value			Corresponding Accounting Policy
Fixed maturity securities - available for sale(a)			$			17,384			$			17,384						$			18,821			$			18,821			Fair value through other comprehensive income (loss)
Fixed maturity securities - fair value option						4,867						4,867									4,182						4,182			Fair value through net investment income
Commercial mortgage loans						3,921						3,685									4,107						3,837			Amortized cost
Real estate investments						184						329									133						348			Amortized cost
Private equity funds / hedge funds						1,910						1,910									1,893						1,893			Fair value through net investment income
Policy loans						330						330									355						355			Amortized cost
Short-term investments						176						176									75						75			Fair value through net investment income
Funds withheld investment assets						28,772						28,681									29,566						29,511
Derivative assets, net(b)						45						45									90						90			Fair value through net realized gains (losses)
Other(c)						758						758									782						782			Amortized cost
Total			$			29,575			$			29,484						$			30,438			$			30,383

(a)The change in the net unrealized gains (losses) on available for sale securities related to the Fortitude Re funds withheld assets was $734 million ($580 million after-tax) and $(7.5) billion ($(5.9) billion after-tax), respectively for the years ended December 31, 2023 and 2022.

(b)The derivative assets and liabilities have been presented net of cash collateral. The derivative assets and liabilities supporting the Fortitude Re funds withheld arrangements had a fair market value of $63 million and $34 million, respectively, as of December 31, 2023. The derivative assets and liabilities supporting the Fortitude Re funds withheld arrangements had a fair market value of $192 million and $28 million, respectively, as of December 31, 2022. These derivative assets and liabilities are fully collateralized either by cash or securities.

(c)Primarily comprised of Cash and Accrued investment income.

The impact of the funds withheld arrangements with Fortitude Re was as follows:

Years Ended December 31,
(in millions)																					2023						2022						2021
Net investment income - Fortitude Re funds withheld assets																		$			1,544			$			943			$			1,971
Net realized gains (losses) on Fortitude Re funds withheld assets:
Net realized gains (losses) - Fortitude Re funds withheld assets																					(295)						(486)						1,003
Net realized gains (losses) - Fortitude Re funds withheld embedded derivative																					(2,007)						7,481						(603)
Net realized gains (losses) on Fortitude Re funds withheld assets																					(2,302)						6,995						400
Income (loss) from continuing operations before income tax expense (benefit)																					(758)						7,938						2,371
Income tax expense (benefit)(a)																					(159)						1,667						499
Net income (loss)																					(599)						6,271						1,872
Change in unrealized appreciation (depreciation) of all other investments(a)																					580						(5,900)						(1,760)
Comprehensive income (loss)																		$			(19)			$			371			$			112

(a)The income tax expense (benefit) and the tax impact in AOCI was computed using AIG’s U.S. statutory tax rate of 21 percent.

184			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

Various assets supporting the Fortitude Re funds withheld arrangements are reported at amortized cost, and as such, changes in the fair value of these assets are not reflected in the financial statements. However, changes in the fair value of these assets are included in the embedded derivative in the Fortitude Re funds withheld arrangement and the appreciation (depreciation) of the asset is the primary driver of the comprehensive income (loss) reflected above.

Reinsurance Security

Our third-party reinsurance arrangements do not relieve us from our direct obligations to our beneficiaries. Thus, a credit exposure exists with respect to both short-duration and long-duration reinsurance ceded to the extent that any reinsurer fails to meet the obligations assumed under any reinsurance agreement. We hold substantial collateral as security under related reinsurance agreements in the form of funds, securities, and/or letters of credit. A provision has been recorded for estimated unrecoverable reinsurance. In light of collateral held, we believe that no exposure to a single reinsurer represents an inappropriate concentration of credit risk to AIG. Gross reinsurance assets due from reinsurers exceeding 5 percent of our total reinsurance assets were approximately $46.3 billion and $48.4 billion at December 31, 2023 and 2022, respectively, of which approximately $3.2 billion and $3.6 billion at December 31, 2023 and 2022, respectively, was not secured by collateral.

REINSURANCE – CREDIT LOSSES

The estimation of reinsurance recoverables involves a significant amount of judgment, particularly for latent exposures, such as asbestos, due to their long-tail nature. We assess the collectability of reinsurance recoverable balances in each reporting period, through either historical trends of disputes and credit events or financial analysis of the credit quality of the reinsurer. We record adjustments to reflect the results of these assessments through an allowance for credit losses and disputes on uncollectible reinsurance that reduces the carrying amount of reinsurance and other assets on the consolidated balance sheets (collectively, reinsurance recoverables). This estimate requires significant judgment for which key considerations include:

• paid and unpaid amounts recoverable;

• whether the balance is in dispute or subject to legal collection;

• the relative financial health of the reinsurer as classified by the Obligor Risk Ratings (ORRs) we assign to each reinsurer based upon our financial reviews; reinsurers that are financially troubled (i.e., in run-off, have voluntarily or involuntarily been placed in receivership, are insolvent, are in the process of liquidation or otherwise subject to formal or informal regulatory restriction) are assigned ORRs that will generate a significant allowance; and

• whether collateral and collateral arrangements exist.

An estimate of the reinsurance recoverable's lifetime expected credit losses is established utilizing a probability of default and loss given default method, which reflects the reinsurer’s ORR. The allowance for credit losses excludes disputed amounts. An allowance for disputes is established for a reinsurance recoverable using the losses incurred model for contingencies.

The total reinsurance recoverables as of December 31, 2023 were $69.8 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 90 percent of the reinsurance recoverables were investment grade, of which 51 percent related to General Insurance and 39 percent related to Life and Retirement; (ii) approximately 9 percent of the reinsurance recoverables were non-investment grade, the majority of which related to General Insurance and (iii) approximately one percent of the reinsurance recoverables related to entities that were not rated by AIG.

The total reinsurance recoverables as of December 31, 2022 were $71.8 billion. As of that date, utilizing AIG’s ORRs, (i) approximately 92 percent of the reinsurance recoverables were investment grade, of which 53 percent related to General Insurance and 39 percent related to Life and Retirement; (ii) approximately 7 percent of the reinsurance recoverables were non-investment grade, the majority of which related to General Insurance; (iii) less than one percent of the non-investment grade reinsurance recoverables related to Life and Retirement and (iv) approximately one percent of the reinsurance recoverables related to entities that were not rated by AIG.

As of December 31, 2023 and December 31, 2022, approximately 83 percent and 77 percent, respectively, of our non-investment grade reinsurance exposure related to captive insurers. These arrangements are typically collateralized by letters of credit, funds withheld or trust agreements.

AIG | 2023 Form 10-K			185

ITEM 8 | Notes to Consolidated Financial Statements | 8. Reinsurance

Reinsurance Recoverable Allowance

The following table presents a rollforward of the reinsurance recoverable allowance:

Years Ended December 31,						2023																					2022																					2021
(in millions)			General Insurance						Life and Retirement									Total						General Insurance						Life and Retirement									Total						General Insurance						Life and Retirement									Total
Balance, beginning of year			$			260			$			84			$			344						$			281			$			101			$			382						$			292			$			83			$			375
Addition to (release of) allowance for expected credit losses and disputes, net						(5)						(5)						(10)									(22)						(17)						(39)									6						18						24
Write-offs charged against the allowance for credit losses and disputes						—						(49)						(49)									(5)						—						(5)									(17)						—						(17)
Recoveries of amounts previously written off						—						—						—									2						—						2									—						—						—
Other changes						—						—						—									4						—						4									—						—						—
Balance, end of year			$			255			$			30			$			285						$			260			$			84			$			344						$			281			$			101			$			382

Past-Due Status

We consider a reinsurance asset to be past due when it is 90 days past due. The allowance for credit losses is estimated excluding disputed amounts. An allowance for disputes is established using the losses incurred method for contingencies. Past due balances on claims that are not in dispute were not material for any of the periods presented.

9. Deferred Policy Acquisition Costs

DAC represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing insurance contracts. We defer incremental costs that result directly from, and are essential to, the acquisition or renewal of an insurance contract. Such DAC generally include agent or broker commissions and bonuses, premium taxes, and medical and inspection fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable. We partially defer costs, including certain commissions, when we do not believe that the entire cost is directly related to the acquisition or renewal of insurance contracts. Commissions that are not deferred to DAC are recorded in General operating and other expenses in the Consolidated Statements of Income (Loss).

We also defer a portion of employee total compensation and payroll-related fringe benefits directly related to time spent performing specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and processing, and sales force contract selling. The amounts deferred are derived based on successful efforts for each distribution channel and/or cost center from which the cost originates.

Short-duration insurance contracts: Policy acquisition costs are deferred and amortized over the period in which the related premiums written are earned, generally 12 months. DAC is grouped consistent with the manner in which the insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment income is anticipated in assessing the recoverability of DAC. We assess the recoverability of DAC on an annual basis or more frequently if circumstances indicate an impairment may have occurred. This assessment is performed by comparing recorded net unearned premiums and anticipated investment income on in-force business to the sum of expected losses and loss adjustment expenses incurred, unamortized DAC and maintenance costs. If the sum of these costs exceeds the amount of recorded net unearned premiums and anticipated investment income, the excess is recognized as an offset against the asset established for DAC. This offset is referred to as a premium deficiency charge. Increases in expected losses and loss adjustment expenses incurred can have a significant impact on the likelihood and amount of a premium deficiency charge.

Long-duration insurance contracts: DAC for all long-duration contracts, except for those with limited to no exposure to policyholder behavior risk, (i.e., certain investment contracts), is grouped and amortized on a constant level basis (i.e., approximating straight line amortization with adjustments for expected terminations) over the expected term of the related contracts using assumptions consistent with those used in estimating the related liability for future policy benefits, or any other related balances, for those corresponding contracts, as applicable. Capitalized expenses are only included in DAC amortization as expenses are incurred. For amortization purposes, contracts are grouped into annual cohorts by issue year and product and to segregate reinsured and non-reinsured contracts. For life insurance contracts, amortization is based on insurance in-force, while initial deposits are used for deferred annuity contracts, structured settlements and pension risk transfer products. Changes in future assumptions (e.g., expected duration of contracts or amount of coverage expected to be in force) are applied by adjusting the amortization rate prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period. DAC is capped at the amount of expenses capitalized as the DAC balance does not accrue interest. DAC is not subject to recoverability testing.

186			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 9. Deferred Policy Acquisition Costs

Value of Business Acquired (VOBA) is determined at the time of acquisition and is reported in the Consolidated Balance Sheets with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase. VOBA is amortized, consistent with DAC, i.e., over the life of the business on a constant level basis.

Internal Replacements of Long-duration and Investment-oriented Products: For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If the modification does not substantially change the contract, we do not change the accounting and amortization of existing DAC and related actuarial balances. If an internal replacement represents a substantial change, the original contract is considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new deferrable costs associated with the replacement contract are deferred.

The following table presents the transition rollforward for DAC:*

						Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Total
(in millions)
Pre-adoption December 31, 2020 DAC balance						$	2,359					$	560					$	4,371					$	26					$	7,316
Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)						2,062						534						547						7						3,150
Post-adoption January 1, 2021 DAC balance						$	4,421					$	1,094					$	4,918					$	33					$	10,466

*Excludes $2.5 billion of DAC in General Insurance.

Prior to the adoption of LDTI, DAC for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced DAC.

The following table presents a rollforward of DAC:

Years Ended December 31, 2023						General Insurance						Individual Retirement						Group Retirement						Life Insurance						Institutional Markets
(in millions)																					Total
Balance, beginning of year			$			2,310			$			4,597			$			1,060			$			4,839			$			51			$			12,857
Capitalization						4,135						705						78						473						28						5,419
Amortization expense						(3,747)						(567)						(82)						(403)						(9)						(4,808)
Other, including foreign exchange						(45)						—						—						54						—						9
Dispositions*						(578)						—						—						—						—						(578)
Reclassified to held for sale						—						—						—						(814)						—						(814)
Balance, end of year			$			2,075			$			4,735			$			1,056			$			4,149			$			70			$			12,085
Years Ended December 31, 2022
Balance, beginning of year			$			2,428			$			4,553			$			1,078			$			4,904			$			38			$			13,001
Capitalization						3,648						562						62						429						21						4,722
Amortization expense						(3,536)						(519)						(80)						(415)						(7)						(4,557)
Other, including foreign exchange						(230)						1						—						(79)						(1)						(309)
Balance, end of year			$			2,310			$			4,597			$			1,060			$			4,839			$			51			$			12,857
Years Ended December 31, 2021
Balance, beginning of year			$			2,489			$			4,421			$			1,094			$			4,918			$			33			$			12,955
Capitalization						3,658						579						62						420						10						4,729
Amortization expense						(3,566)						(447)						(78)						(427)						(6)						(4,524)
Other, including foreign exchange						(153)						—						—						(7)						1						(159)
Balance, end of year			$			2,428			$			4,553			$			1,078			$			4,904			$			38			$			13,001

*Includes amounts related to the sale of Validus Re through the date of disposition.

AIG | 2023 Form 10-K			187

ITEM 8 | Notes to Consolidated Financial Statements | 9. Deferred Policy Acquisition Costs

DEFERRED SALES INDUCEMENTS

We offer DSI which include enhanced crediting rates or bonus payments to contract holders (bonus interest) on certain annuity and investment contract products. To qualify for such accounting treatment as an asset, the bonus interest must be explicitly identified in the contract at inception. We must also demonstrate that such amounts are incremental to amounts we credit on similar contracts without bonus interest and are higher than the contracts’ expected ongoing crediting rates for periods after the bonus period. DSI is reported in Other assets, while amortization related to DSI is recorded in Interest credited to policyholder account balances.

DSI amounts are deferred and amortized on a constant level basis over the life of the contract consistent with DAC. Changes in future assumptions (e.g., expected duration of contracts) are applied by adjusting the amortization rate prospectively rather than through a retrospective catch up adjustment. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period, consistent with DAC.

The following table presents the transition rollforward for DSI:*

(in millions)						Individual Retirement						Group Retirement						Total
Pre-adoption December 31, 2020 DSI balance						$	190					$	91					$	281
Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)						284						114						398
Post-adoption January 1, 2021 DSI balance						$	474					$	205					$	679

*Other assets, excluding DSI, totaled $12.8 billion.

Prior to the adoption of LDTI, deferred sales inducements for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available-for-sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced DSI.

The following table presents a rollforward of DSI:

Years Ended December 31,			2023												2022												2021
(in millions)			Individual Retirement			Group Retirement			Total						Individual Retirement			Group Retirement			Total						Individual Retirement			Group Retirement			Total
Balance, beginning of year			$	381		$	177		$	558					$	428		$	191		$	619					$	474		$	205		$	679
Capitalization			7			1			8						9			—			9						10			—			10
Amortization expense			(55)			(14)			(69)						(56)			(14)			(70)						(56)			(14)			(70)
Balance, end of year*			$	333		$	164		$	497					$	381		$	177		$	558					$	428		$	191		$	619

*At December 31, 2023, 2022 and 2021, Other assets, excluding DSI, totaled $12.6 billion, $11.8 billion and $14.0 billion, respectively.

10. Variable Interest Entities

A variable interest entity (VIE) is a legal entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support or is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting rights or do not substantively participate in the gains and losses of the entity. Consolidation of a VIE by its primary beneficiary is not based on majority voting interest, but is based on other criteria discussed below.

We enter into various arrangements with VIEs in the normal course of business and consolidate the VIEs when we determine we are the primary beneficiary. This analysis includes a review of the VIE’s capital structure, related contractual relationships and terms, nature of the VIE’s operations and purpose, nature of the VIE’s interests issued and our involvement with the entity. When assessing the need to consolidate a VIE, we evaluate the design of the VIE as well as the related risks to which the entity was designed to expose the variable interest holders.

The primary beneficiary is the entity that has both (i) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. While also considering these factors, the consolidation conclusion depends on the breadth of our decision-making ability and our ability to influence activities that significantly affect the economic performance of the VIE.

188			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 10. Variable Interest Entities

BALANCE SHEET CLASSIFICATION AND EXPOSURE TO LOSS

Creditors or beneficial interest holders of VIEs for which AIG is the primary beneficiary generally have recourse only to the assets and cash flows of the VIEs and do not have recourse to AIG, except in limited circumstances when AIG has provided a guarantee to the VIE’s interest holders. The following table presents the total assets and total liabilities associated with our variable interests in consolidated VIEs, as classified in the Consolidated Balance Sheets:

(in millions)			Real Estate and Investment Entities(d)									Securitization Vehicles(e)																		Total
December 31, 2023
Assets:
Bonds available for sale			$			36			$			148															$			184
Other bond securities						45						—																		45
Equity securities						8						—																		8
Mortgage and other loans receivable						—						2,063																		2,063
Other invested assets
Alternative investments(a)						2,695						—																		2,695
Investment real estate						1,488						—																		1,488
Short-term investments						125						10																		135
Cash						61						—																		61
Accrued investment income						2						7																		9
Other assets						94						2																		96
Total**(b)**			$			4,554			$			2,230															$			6,784
Liabilities:
Debt of consolidated investment entities			$			1,094			$			1,106															$			2,200
Other(c)						82						1																		83
Total			$			1,176			$			1,107															$			2,283

(in millions)			Real Estate and Investment Entities(d)									Securitization Vehicles(e)																		Total
December 31, 2022
Assets:
Bonds available for sale			$			—			$			3,672															$			3,672
Equity securities						51						—																		51
Mortgage and other loans receivable						—						2,221																		2,221
Other invested assets
Alternative investments(a)						2,842						—																		2,842
Investment real estate						1,731						—																		1,731
Short-term investments						191						281																		472
Cash						71						—																		71
Accrued investment income						—						9																		9
Other assets						102						70																		172
Total**(b)**			$			4,988			$			6,253															$			11,241
Liabilities:
Debt of consolidated investment entities			$			1,358			$			4,336															$			5,694
Other(c)						85						47																		132
Total			$			1,443			$			4,383															$			5,826

(a)Comprised primarily of investments in real estate joint ventures at December 31, 2023 and 2022.

(b)The assets of each VIE can be used only to settle specific obligations of that VIE.

(c)Comprised primarily of Other liabilities at December 31, 2023 and 2022.

(d)At December 31, 2023 and 2022, off-balance sheet exposure primarily consisting of our insurance companies’ commitments to real estate and investment entities were $1.9 billion and $2.1 billion, respectively, of which commitments to external parties were $0.4 billion and $0.6 billion, respectively.

(e)During the year ended December 31, 2023, as part of the sale of AIG Credit Management, LLC, certain consolidated investment entities were deconsolidated. The impact of the deconsolidation was a decrease of $3.6 billion in assets and $3.1 billion in liabilities, resulting in a pre-tax loss of $14 million.

We calculate our maximum exposure to loss to be (i) the amount invested in the debt or equity of the VIE, (ii) the notional amount of VIE assets or liabilities where we have also provided credit protection to the VIE with the VIE as the referenced obligation, and (iii) other commitments and guarantees to the VIE.

AIG | 2023 Form 10-K			189

ITEM 8 | Notes to Consolidated Financial Statements | 10. Variable Interest Entities

The following table presents total assets of unconsolidated VIEs in which we hold a variable interest, as well as our maximum exposure to loss associated with these VIEs:

												Maximum Exposure to Loss
(in millions)						Total VIE Assets						On-Balance Sheet(c)									Off-Balance Sheet									Total
December 31, 2023
Real estate and investment entities(a)			$			528,053			$			9,125						$			3,720			(d)			$			12,845
Other(b)						1,027						58									748			(e)						806
Total			$			529,080			$			9,183						$			4,468						$			13,651
December 31, 2022
Real estate and investment entities(a)			$			504,219			$			9,145						$			3,938			(d)			$			13,083
Other(b)						1,302						247									747			(e)						994
Total			$			505,521			$			9,392						$			4,685						$			14,077

(a)Comprised primarily of hedge funds and private equity funds.

(b)At December 31, 2023 and 2022, excludes approximately $1,971 million and $2,057 million, respectively, of VIE assets related to AIGFP and its consolidated subsidiaries, with maximum off-balance sheet exposure to loss of $1,941 million and $2,033 million, respectively. For additional information, see Note 1.

(c)At December 31, 2023 and 2022, $9.1 billion and $9.3 billion, respectively, of our total unconsolidated VIE assets were recorded as Other invested assets.

(d)These amounts represent our unfunded commitments to invest in private equity funds and hedge funds.

(e)These amounts represent our estimate of the maximum exposure to loss under certain insurance policies issued to VIEs if a hypothetical loss occurred to the extent of the full amount of the insured value. Our insurance policies cover defined risks and our estimate of liability is included in our insurance reserves on the balance sheet.

REAL ESTATE AND INVESTMENT ENTITIES

Through our insurance operations and AIG Global Real Estate Investment Corp., we are an investor in various real estate investment entities, some of which are VIEs. These investments are typically with unaffiliated third-party developers via a partnership or limited liability company structure. The VIEs’ activities consist of the development or redevelopment of commercial, industrial and residential real estate. Our involvement varies from being a passive equity investor or finance provider to actively managing the activities of the VIEs.

Our insurance operations participate as passive investors in the equity issued by certain third-party-managed hedge and private equity funds that are VIEs. Our insurance operations typically are not involved in the design or establishment of these VIEs, nor do they actively participate in the management of the VIEs.

SECURITIZATION AND REPACKAGING VEHICLES

We created certain VIEs that hold investments, primarily in investment-grade debt securities and loans, and issued beneficial interests in these investments. Some of these VIEs were created to facilitate our purchase of asset-backed securities. In these situations, all of the beneficial interests are owned by our insurance operations and are consolidated by AIG. In other instances, we have created VIEs that are securitizations of residential mortgage loans or other forms of collateralized loan obligations or repackage loan and other assets into pass-through securities. Our insurance subsidiaries own some of the beneficial interests of these VIEs, and we maintain the power to direct the activities of the VIEs that most significantly impact their economic performance. Accordingly, we consolidate these entities and those beneficial interests issued to third parties are reported as debt of consolidated investment entities. This debt is non-recourse to AIG.

RMBS, CMBS, OTHER ABS AND CLOS

Primarily through our insurance operations, we are a passive investor in RMBS, CMBS, other ABS and CLOs, the majority of which are issued by domestic special purpose entities. We generally do not sponsor or transfer assets to, or act as the servicer to these asset-backed structures, and were not involved in the design of these entities.

Our maximum exposure in these types of structures is limited to our investment in securities issued by these entities and, where applicable, any unfunded commitments to these entities. Conditional unfunded commitments for these unconsolidated entities are $435 million at December 31, 2023. Based on the nature of our investments and our passive involvement in these types of structures, we have determined that we are not the primary beneficiary of these entities. We have not included these entities in the above tables; however, the fair values of our investments in these structures are reported in Notes 5 and 6.

Additionally from time to time, AIG participates in the design of certain VIEs which we do not consolidate. The notes issued by these VIEs are recognized at fair value and included in available for sale securities in our financial statements. As of December 31, 2023, the total VIE assets from these securitizations are $3 billion, of which AIG’s maximum exposure to loss is $2.4 billion.

190			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting

11. Derivatives and Hedge Accounting

We use derivatives and other financial instruments as part of our financial risk management programs and as part of our investment operations. Interest rate derivatives (such as interest rate swaps) are used to manage interest rate risk associated with embedded derivatives contained in insurance contract liabilities, fixed maturity securities, outstanding medium- and long-term notes as well as other interest rate sensitive assets and liabilities. Foreign exchange derivatives (principally foreign exchange forwards and swaps) are used to economically mitigate risk associated with non-U.S. dollar denominated debt, net capital exposures, foreign currency transactions, and foreign denominated investments. Equity derivatives are used to economically mitigate financial risk associated with embedded derivatives and MRBs in certain insurance liabilities. We use credit derivatives to manage our credit exposures. Commodity derivatives are used to hedge exposures within reinsurance contracts. The derivatives are effective economic hedges of the exposures that they are meant to offset. In addition to hedging activities, we also enter into derivative contracts with respect to investment operations, which may include, among other things, CDSs, total return swaps and purchases of investments with embedded derivatives, such as equity-linked notes and convertible bonds.

Interest rate, currency, equity and commodity swaps, credit contracts, swaptions, options and forward transactions are accounted for as derivatives, recorded on a trade-date basis and carried at fair value. Unrealized gains and losses are reflected in income, when appropriate. Aggregate asset or liability positions are netted on the Consolidated Balance Sheets only to the extent permitted by qualifying master netting arrangements in place with each respective counterparty. Cash collateral posted with counterparties in conjunction with transactions supported by qualifying master netting arrangements is reported as a reduction of the corresponding net derivative liability, while cash collateral received in conjunction with transactions supported by qualifying master netting arrangements is reported as a reduction of the corresponding net derivative asset.

Derivatives, with the exception of embedded derivatives, are reported at fair value in the Consolidated Balance Sheets in Other assets and Other liabilities. Embedded derivatives are generally presented with the host contract in the Consolidated Balance Sheets. A bifurcated embedded derivative is measured at fair value and accounted for in the same manner as a free standing derivative contract. The corresponding host contract is accounted for according to the accounting guidance applicable for that instrument.

For additional information on embedded derivatives, see Notes 5, 13 and 14.

The following table presents the notional amounts of our derivatives and the fair value of derivative assets and liabilities in the Consolidated Balance Sheets:

			December 31, 2023																														December 31, 2022
			Gross Derivative Assets															Gross Derivative Liabilities															Gross Derivative Assets															Gross Derivative Liabilities
(in millions)						Notional Amount						Fair Value									Notional Amount						Fair Value									Notional Amount						Fair Value									Notional Amount						Fair Value
Derivatives designated as hedging instruments:****(a)
Interest rate contracts			$			1,863			$			230						$			752			$			17						$			251			$			355						$			1,688			$			66
Foreign exchange contracts						3,847						416									6,402						336									4,543						642									4,899						317
Derivatives not designated as hedging instruments:****(a)
Interest rate contracts						42,549						3,056									42,466						3,614									39,833						3,367									34,128						4,772
Foreign exchange contracts						8,803						820									9,900						558									8,626						1,202									10,397						821
Equity contracts						81,110						2,019									9,595						745									31,264						428									4,740						26
Commodity contracts						—						—									—						—									212						9									20						—
Credit contracts(b)						2,109						41									509						37									1,808						32									933						41
Other contracts(c)						44,640						13									48						2									47,184						14									—						—
Total derivatives, gross			$			184,921			$			6,595						$			69,672			$			5,309						$			133,721			$			6,049						$			56,805			$			6,043
Counterparty netting**(d)**												(3,864)															(3,864)															(3,895)															(3,895)
Cash collateral**(e)**												(2,220)															(1,050)															(1,640)															(1,917)
Total derivatives on Consolidated Balance Sheets**(f)**									$			511												$			395												$			514												$			231

(a)Fair value amounts are shown before the effects of counterparty netting adjustments and offsetting cash collateral.

(b)As of December 31, 2023 and 2022, included CDSs on super senior multi-sector CLO with a net notional amount of $50 million and $79 million (fair value liability of $32 million and $32 million, respectively). The net notional amount represents the maximum exposure to loss on the portfolio.

(c)Consists primarily of stable value wraps and contracts with multiple underlying exposures.

(d)Represents netting of derivative exposures covered by a qualifying master netting agreement.

AIG | 2023 Form 10-K			191

ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting

(e)Represents cash collateral posted and received that is eligible for netting.

(f)Freestanding derivatives only, excludes embedded derivatives. Derivative instrument assets and liabilities are recorded in Other assets and Other liabilities, respectively. Fair value of assets related to bifurcated embedded derivatives was $1.2 billion at December 31, 2023 and $2.2 billion at December 31, 2022. Fair value of liabilities related to bifurcated embedded derivatives was $8.0 billion and $5.4 billion, respectively, at December 31, 2023 and 2022. A bifurcated embedded derivative is generally presented with the host contract in the Consolidated Balance Sheets. Embedded derivatives are primarily related to guarantee features in fixed index annuities and index universal life products, which include equity and interest rate components, and the funds withheld arrangement with Fortitude Re. For additional information, see Note 8.

COLLATERAL

We engage in derivative transactions that are not subject to a clearing requirement directly with unaffiliated third parties, in most cases, under International Swaps and Derivatives Association, Inc. (ISDA) Master Agreements. Many of the ISDA Master Agreements also include Credit Support Annex provisions, which provide for collateral postings that may vary at various ratings and threshold levels. We attempt to reduce our risk with certain counterparties by entering into agreements that enable collateral to be obtained from a counterparty on an upfront or contingent basis. We minimize the risk that counterparties might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value and generally requiring additional collateral to be posted upon the occurrence of certain events or circumstances. In addition, certain derivative transactions have provisions that require collateral to be posted by us upon a downgrade of our long-term debt ratings or give the counterparty the right to terminate the transaction. In the case of some of the derivative transactions, upon a downgrade of our long-term debt ratings, as an alternative to posting collateral and subject to certain conditions, we may assign the transaction to an obligor with higher debt ratings or arrange for a substitute guarantee of our obligations by an obligor with higher debt ratings or take other similar action. The actual amount of collateral required to be posted to counterparties in the event of such downgrades, or the aggregate amount of payments that we could be required to make, depends on market conditions, the fair value of outstanding affected transactions and other factors prevailing at and after the time of the downgrade.

Collateral posted by us to third parties for derivative transactions was $1.9 billion and $2.9 billion at December 31, 2023 and 2022, respectively. In the case of collateral posted under derivative transactions that are not subject to clearing, this collateral can generally be repledged or resold by the counterparties. Collateral provided to us from third parties for derivative transactions was $2.8 billion and $2.0 billion at December 31, 2023 and 2022, respectively. In the case of collateral provided to us under derivative transactions that are not subject to clearing, we generally can repledge or resell collateral.

OFFSETTING

We have elected to present all derivative receivables and derivative payables, and the related cash collateral received and paid, on a net basis on our Consolidated Balance Sheets when a legally enforceable ISDA Master Agreement exists between us and our derivative counterparty. An ISDA Master Agreement is an agreement governing multiple derivative transactions between two counterparties. The ISDA Master Agreement generally provides for the net settlement of all, or a specified group, of these derivative transactions, as well as transferred collateral, through a single payment, and in a single currency, as applicable. The net settlement provisions apply in the event of a default on, or affecting any, one derivative transaction or a termination event affecting all, or a specified group of, derivative transactions governed by the ISDA Master Agreement.

HEDGE ACCOUNTING

We designated certain derivatives entered into with third parties as fair value hedges of available for sale investment securities held by our insurance subsidiaries. The fair value hedges include foreign currency forwards and cross currency swaps designated as hedges of the change in fair value of foreign currency denominated available for sale securities attributable to changes in foreign exchange rates. We also designated certain interest rate swaps entered into with third parties as fair value hedges of fixed rate GICs attributable to changes in benchmark interest rates.

We use foreign currency denominated debt and cross-currency swaps as hedging instruments in net investment hedge relationships to mitigate the foreign exchange risk associated with our non-U.S. dollar functional currency foreign subsidiaries. For net investment hedge relationships where issued debt is used as a hedging instrument, we assess the hedge effectiveness and measure the amount of ineffectiveness based on changes in spot rates. For net investment hedge relationships that use derivatives as hedging instruments, we assess hedge effectiveness and measure hedge ineffectiveness using changes in forward rates. For the years ended December 31, 2023, 2022 and 2021, we recognized gains (losses) of $(44) million, $312 million and $201 million, respectively, included in Change in foreign currency translation adjustments in Other comprehensive income (loss) related to the net investment hedge relationships.

A qualitative methodology is utilized to assess hedge effectiveness for net investment hedges, while regression analysis is employed for all other hedges.

192			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting

The following table presents the gain (loss) recognized in income on our derivative instruments in fair value hedging relationships in the Consolidated Statements of Income (Loss):

			Gains/(Losses) Recognized in Income for:
(in millions)						Hedging Derivatives(a)						Excluded Components(b)						Hedged Items						Net Impact
Year Ended December 31, 2023
Interest rate contracts:
Interest credited to policyholder account balances			$			79			$			—			$			(99)			$			(20)
Foreign exchange contracts:
Net realized gains/(losses)						(422)						(11)						422						(11)
Year Ended December 31, 2022
Interest rate contracts:
Interest credited to policyholder account balances			$			(81)			$			—			$			83			$			2
Net investment income						11						—						(12)						(1)
Foreign exchange contracts:
Net realized gains/(losses)						382						244						(382)						244
Year Ended December 31, 2021
Interest rate contracts:
Interest credited to policyholder account balances			$			(19)			$			—			$			17			$			(2)
Net investment income						9						—						(11)						(2)
Foreign exchange contracts:
Net realized gains/(losses)						210						139						(210)						139

(a)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are included in the assessment of hedge effectiveness.

(b)Gains and losses on derivative instruments designated and qualifying in fair value hedges that are excluded from the assessment of hedge effectiveness and recognized in income on a mark-to-market basis.

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS

The following table presents the effect of derivative instruments not designated as hedging instruments in the Consolidated Statements of Income (Loss):

Years Ended December 31,																		Gains (Losses) Recognized in Income
(in millions)																					2023						2022						2021
By Derivative Type:
Interest rate contracts																		$			(404)			$			(2,190)			$			(573)
Foreign exchange contracts																					(384)						1,149						278
Equity contracts																					(142)						(497)						(736)
Commodity contracts																					9						(13)						(9)
Credit contracts																					(2)						(4)						(12)
Other contracts																					64						100						64
Embedded derivatives																					(3,485)						8,566						(1,079)
Total																		$			(4,344)			$			7,111			$			(2,067)
By Classification:
Policy fees																		$			64			$			63			$			61
Net investment income - excluding Fortitude Re funds withheld assets																					—						2						5
Net investment income - Fortitude Re funds withheld assets																					(11)						(10)						—
Net realized gains (losses) - excluding Fortitude Re funds withheld assets(a)																					(1,158)						1,111						263
Net realized gains (losses) on Fortitude Re funds withheld assets(b)																					(2,112)						7,347						(575)
Policyholder benefits and claims incurred																					—						(19)						(4)
Change in the fair value of market risk benefits, net(c)																					(1,127)						(1,383)						(1,817)
Total																		$			(4,344)			$			7,111			$			(2,067)

(a)Includes $13 million gain related to the sale of Laya and AIG Life. For further details on these transactions, see Notes 1 and 4.

(b)Includes over-the-counter derivatives supporting the funds withheld arrangements with Fortitude Re and the embedded derivative contained within the funds withheld payable with Fortitude Re.

(c)This represents activity related to derivatives that economically hedged changes in the fair value of certain market risk benefits.

AIG | 2023 Form 10-K			193

ITEM 8 | Notes to Consolidated Financial Statements | 11. Derivatives and Hedge Accounting

CREDIT RISK-RELATED CONTINGENT FEATURES

We estimate that at December 31, 2023, based on our outstanding financial derivative transactions, a downgrade of our long-term senior debt ratings to BBB or BBB– by Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., and/or a downgrade to Baa2 or Baa3 by Moody’s Investors’ Service, Inc. would permit counterparties to make additional collateral calls and permit certain counterparties to elect early termination of contracts, resulting in corresponding collateral postings and termination payments in the total amount of up to approximately $6 million. The aggregate fair value of our derivatives that were in a net liability position and that contain such credit risk-related contingencies which can be triggered below our long-term senior debt ratings of BBB+ or Baa1 was approximately $32 million and $32 million at December 31, 2023 and 2022, respectively. The aggregate fair value of assets posted as collateral under these contracts at December 31, 2023 and 2022, was approximately $34 million and $34 million, respectively.

HYBRID SECURITIES WITH EMBEDDED CREDIT DERIVATIVES

We invest in hybrid securities (such as credit-linked notes) with the intent of generating income and not specifically to acquire exposure to embedded derivative risk. As is the case with our other investments in RMBS, CMBS, CLO and ABS, our investments in these hybrid securities are exposed to losses only up to the amount of our initial investment in the hybrid security. Other than our initial investment in the hybrid securities, we have no further obligation to make payments on the embedded credit derivatives in the related hybrid securities.

We elect to account for our investments in these hybrid securities with embedded written credit derivatives at fair value, with changes in fair value recognized in Net investment income. Our investments in these hybrid securities are reported as Other bond securities in the Consolidated Balance Sheets. The fair value of these hybrid securities was under $1 million at both December 31, 2023 and 2022, respectively. These securities have par amounts of $42 million and $42 million at December 31, 2023 and 2022, respectively, and have remaining stated maturity dates that extend to 2052.

12. Goodwill and Other Intangible Assets

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is tested for impairment at the reporting unit level, which is defined as an operating segment or one level below, and the test is performed annually, or more frequently if circumstances indicate an impairment may have occurred. At December 31, 2023, goodwill is reported within our General Insurance business – North America and International operating segments, our Life and Retirement business – Life Insurance operating segment and our Other Operations segment. When a business is transferred from one reporting unit to another, goodwill from the original reporting unit is allocated among reporting units based on the fair value of business transferred, relative to business retained by a reporting unit.

The impairment assessment involves an option to first assess qualitative factors to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not performed, or after assessing the totality of the events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment for potential impairment is performed.

If the qualitative test is not performed or if the test indicates a potential impairment is present, we estimate the fair value of each reporting unit and compare the estimated fair value with the carrying amount of the reporting unit, including allocated goodwill. The estimate of a reporting unit’s fair value involves management judgment and is based on one or a combination of approaches including discounted expected future cash flows, market-based earnings multiples of the unit’s peer companies, external appraisals or, in the case of reporting units being considered for sale, third-party indications of fair value, if available. We consider one or more of these estimates when determining the fair value of a reporting unit to be used in the impairment test.

If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. If the carrying value of a reporting unit exceeds its estimated fair value, goodwill associated with that reporting unit potentially is impaired. The amount of impairment, if any, is measured as the excess of a reporting unit’s carrying amount over its fair value not to exceed the total amount of goodwill allocated to that reporting unit and recognized in income.

194			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 12. Goodwill and Other Intangible Assets

The following table presents the changes in goodwill by operating segment:

						General Insurance
(in millions)						North America						International						Life Insurance						Other Operations						Total
Balance at January 1, 2022:
Goodwill - gross						$	3,791					$	3,443					$	239					$	60					$	7,533
Accumulated impairments						(1,145)						(2,255)						(67)						(10)						(3,477)
Net goodwill						2,646						1,188						172						50						4,056
Increase (decrease) due to:
Other						—						(92)						(16)						(21)						(129)
Balance at December 31, 2022:
Goodwill - gross						3,791						3,351						223						39						7,404
Accumulated impairments						(1,145)						(2,255)						(67)						(10)						(3,477)
Net goodwill						2,646						1,096						156						29						3,927
Increase (decrease) due to:
Dispositions*						(369)						—						(30)						(9)						(408)
Reclassified to held for sale						—						—						(23)						—						(23)
Other						—						42						—						1						43
Balance at December 31, 2023:
Goodwill - gross						3,422						3,393						170						31						7,016
Accumulated impairments						(1,145)						(2,255)						(67)						(10)						(3,477)
Net goodwill						$	2,277					$	1,138					$	103					$	21					$	3,539

*Primarily represents amounts related to the sale of Validus Re through the date of disposition.

Indefinite lived intangible assets are not subject to amortization. Indefinite lived intangible assets primarily include Lloyd’s syndicate capacity and brand names. Finite lived intangible assets are amortized over their useful lives. Finite lived intangible assets primarily include distribution networks and are recorded net of accumulated amortization. The Company tests indefinite lived intangible assets for impairment on an annual basis or whenever events or circumstances suggest that the carrying value of an intangible asset may exceed the sum of the undiscounted cash flows expected to result from its use and eventual disposition. If this condition exists and the carrying value of an intangible asset exceeds its fair value, the excess is recognized as an impairment and is recorded as a charge against net income (loss).

The Other intangible assets and Value of distribution network acquired (VODA) were $394 million and $704 million at December 31, 2023 and 2022, respectively.

13. Insurance Liabilities

LIABILITY FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES (LOSS RESERVES)

Loss reserves represent the accumulation of estimates of unpaid claims, including estimates for claims incurred but not reported and loss adjustment expenses, less applicable discount. We regularly review and update the methods used to determine loss reserve estimates. Any adjustments resulting from this review are reflected currently in pre-tax income, except to the extent such adjustment impacts a deferred gain under a retroactive reinsurance agreement, in which case the ceded portion would be amortized into pre-tax income in subsequent periods. Because these estimates are subject to the outcome of future events, changes in estimates are common given that loss trends vary and time is often required for changes in trends to be recognized and confirmed. Reserve changes that increase previous estimates of ultimate cost are referred to as unfavorable or adverse development or reserve strengthening. Reserve changes that decrease previous estimates of ultimate cost are referred to as favorable development or reserve releases.

Our gross loss reserves before reinsurance and discount are net of contractual deductible recoverable amounts due from policyholders of approximately $12.1 billion at both December 31, 2023 and 2022, respectively. These recoverable amounts are related to certain policies with high deductibles (in excess of high dollar amounts retained by the insured through self-insured retentions, deductibles, retrospective programs, or captive arrangements, each referred to generically as “deductibles”), primarily for U.S. Commercial casualty business. With respect to the deductible portion of the claim, we manage and pay the entire claim on behalf of the insured and are reimbursed by the insured for the deductible portion of the claim. Thus, these recoverable amounts represent a credit exposure to us. At December 31, 2023 and 2022 we held collateral of approximately $8.7 billion and $8.6 billion, respectively, for these deductible recoverable amounts, consisting primarily of letters of credit and funded trust agreements. Allowance for credit losses for the unsecured portion of these recoverable amounts was $14 million at both December 31, 2023 and 2022.

AIG | 2023 Form 10-K			195

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table presents the rollforward of activity in loss reserves:

Years Ended December 31,
(in millions)																					2023						2022						2021
Liability for unpaid loss and loss adjustment expenses, beginning of year																		$			75,167			$			79,026			$			77,720
Reinsurance recoverable																					(32,102)						(35,213)						(34,431)
Net Liability for unpaid loss and loss adjustment expenses, beginning of year																					43,065						43,813						43,289
Losses and loss adjustment expenses incurred:
Current year																					15,100						16,434						16,434
Prior years, excluding discount and amortization of deferred gain																					(392)						(530)						(171)
Prior years, discount charge (benefit)																					307						(605)						(131)
Prior years, amortization of deferred gain on retroactive reinsurance(a)																					(81)						(252)						(190)
Total losses and loss adjustment expenses incurred																					14,934						15,047						15,942
Losses and loss adjustment expenses paid:
Current year																					(3,836)						(4,011)						(3,868)
Prior years																					(11,868)						(11,066)						(11,503)
Total losses and loss adjustment expenses paid																					(15,704)						(15,077)						(15,371)
Other changes:
Foreign exchange effect																					606						(1,463)						(593)
Losses and loss adjustment expenses recognized within gain on divestitures																					569						—						—
Retroactive reinsurance adjustment (net of discount)(b)																					158						745						546
Dispositions(c)																					(3,505)						—						—
Reclassified to held for sale, net of reinsurance recoverables																					(19)						—						—
Total other changes																					(2,191)						(718)						(47)
Liability for unpaid loss and loss adjustment expenses, end of year:
Net liability for unpaid losses and loss adjustment expenses																					40,104						43,065						43,813
Reinsurance recoverable																					30,289						32,102						35,213
Total																		$			70,393			$			75,167			$			79,026

(a)Includes $33 million, $63 million and $53 million for the retroactive reinsurance agreement with NICO covering U.S. asbestos exposures for the years ended December 31, 2023, 2022 and 2021, respectively.

(b)Includes benefit (charge) from change in discount on retroactive reinsurance in the amount of $150 million, $(301) million and $(42) million for the years ended December 31, 2023, 2022 and 2021, respectively.

(c)Includes amounts related to the sale of Validus Re through the date of disposition.

The following table presents the reconciliation of the net liability for unpaid losses and loss adjustment expenses in the following tables to Loss Reserves in the Consolidated Balance Sheets for the year ended December 31, 2023:

(in millions)			Net liability for unpaid losses and loss adjustment expenses as presented in the disaggregated tables below						Reinsurance recoverable on unpaid losses and loss adjustment expenses included in the disaggregated tables below						Gross liability for unpaid losses and loss adjustment expenses
U.S. Workers' Compensation (before discount)			$			3,888			$			5,203			$			9,091
U.S. Excess Casualty						3,321						3,272						6,593
U.S. Other Casualty						4,112						3,676						7,788
U.S. Financial Lines						5,672						1,622						7,294
U.S. Property and Special Risks						4,403						1,494						5,897
U.S. Personal Insurance						767						2,163						2,930
UK/Europe Casualty and Financial lines						7,447						1,951						9,398
UK/Europe Property and Special Risks						2,913						1,665						4,578
UK/Europe and Japan Personal Insurance						1,483						671						2,154
Total			$			34,006			$			21,717			$			55,723
Reconciling Items
Discount on workers' compensation lines																		(2,337)
Other product lines*																		14,739
Unallocated loss adjustment expenses																		2,268
Total Loss Reserves															$			70,393

*Reinsurance recoverable for other product lines of $8.7 billion resulted in a net liability for unpaid losses and loss adjustment expenses of $6.0 billion for the year ended December 31, 2023.

196			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Prior Year Development

In the sections below, we provide details by coverage group regarding incurred losses, reserve balances and prior year development. The first table below shows prior year development by coverage group, the first two columns of which will again be presented in the coverage group sections that follow. After this table we describe historical drivers of prior year development as well as actuarial methods and relevant terminology. The following coverage group sections present the undiscounted incurred losses and allocated loss adjustment expenses by accident year on a net basis after reinsurance, with separate presentation of the adverse development cover where applicable, excluding related amortization of the deferred gain. Each section also contains a description of the business included in that section. Finally, we show a table of claims payout patterns by coverage.

In 2017, we entered into adverse development reinsurance agreement (ADC) cessions with NICO under which we transferred to NICO 80 percent of the reserve risk on substantially all of our U.S. Commercial long-tail exposures for accident years 2015 and prior.

The following table presents the reconciliation of net prior year development before the ADC cessions from the tables below to the net prior year development after ADC cessions and amortization of deferred gain for the year ended December 31, 2023:

(in millions)						Prior Year Development Net of External Reinsurance Before ADC Cessions						Prior Year Development Net of External Reinsurance After ADC Cessions(a)						Re-Attribution of ADC Recovery(b)						Amortization of Deferred Gain at Inception						Prior Year Development After Amortization and Re-attribution
U.S. Workers' Compensation			$			(267)			$			(114)			$			(24)			$			(52)			$			(190)
U.S. Excess Casualty						(32)						18						(27)						(39)						(48)
U.S. Other Casualty						(133)						(133)						36						(37)						(134)
U.S. Financial Lines						94						50						13						(26)						37
U.S. Property and Special Risks						(10)						—						2						(9)						(7)
U.S. Personal Insurance						(64)						(65)						—						(1)						(66)
UK/Europe Casualty and Financial lines						165						165						—						—						165
UK/Europe Property and Special Risks						81						81						—						—						81
UK/Europe and Japan Personal Insurance						(57)						(57)						—						—						(57)
Other Operations Run-Off						(7)						(7)						—						—						(7)
Other product lines						(162)						(172)						—						—						(172)
Subtotal, adjusted pre-tax basis			$			(392)			$			(234)			$			—			$			(164)			$			(398)
Remove impact of Retroactive Reinsurance
Amortization of deferred gain at inception																														164
Prior year development ceded under the Asbestos LPT																														—
Prior year development ceded under the ADC																														(158)
Total, prior years, excluding discount and amortization of deferred gain																											$			(392)

(a)Change in net ultimate loss and loss adjustment expenses excludes the portion of prior year development we have ceded under the Asbestos Loss Portfolio Transfer (LPT) and the ADC, both of which are provided by NICO and are considered retroactive reinsurance under U.S. GAAP.

(b)Reattribution of the ADC recovery takes place annually as we model the future payments on the subject reserves covered by the ADC to determine when the aggregate payments will exceed the attachment. ADC recoverables are then reallocated by line based on payments expected to be made after attachment point is exceeded.

During 2023, we recognized favorable prior year loss reserve development of $392 million excluding discount and amortization of deferred gain. The development was primarily driven by:

• Favorable development on U.S. Workers’ Compensation of $267 million, net of external reinsurance but before ADC cessions due to a continuation of favorable loss cost trends in guaranteed cost and excess segments across most accident years;

• Favorable development on U.S. Excess Casualty of $32 million, net of external reinsurance but before ADC cessions, driven by favorable development on the Excess Construction Runoff Portfolio;

• Favorable development on U.S Other Casualty of $133 million, net of external reinsurance but before ADC cessions, largely driven by favorable experience in construction defect and construction wraps as well as guaranteed cost auto and general liability;

• Unfavorable development in U.S. Financial Lines of $94 million, net of external reinsurance but before ADC cessions, due to unfavorable development on High Attaching Excess D&O, M&A, Primary National D&O, Cyber data privacy claims, and Architects & Engineers, partially offset by favorable development on Primary Private Not for Profit D&O and Financial Institutions D&O;

• Favorable development on U.S Property and Special Risks of $10 million, net of external reinsurance but before ADC cessions, reflecting favorable development on prior year catastrophes in the 2017-2021 accident years, offset by adverse development on prior year catastrophes in the 2022 accident year;

• Favorable development in U.S. Personal Insurance of $64 million driven by favorable development on prior year catastrophes across several events primarily in the 2017-2020 accident years;

AIG | 2023 Form 10-K			197

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

• Unfavorable development in UK/Europe Casualty and Financial Lines of $165 million due to unfavorable development in auto liability in Europe and UK and in UK D&O and Commercial Professional Indemnity business, partially offset by favorable development in Financial Institutions Professional Indemnity and D&O in Europe and UK and Cyber and Commercial Professional Indemnity in Europe;

• Unfavorable development on UK/Europe Property and Special Risks of $81 million driven by unfavorable development on prior year catastrophes;

• Favorable development on UK/Europe and Japan Personal Insurance of $57 million driven by favorable development in Japan personal auto and A&H business; and

• Favorable development of $162 million in total on other product lines, net of external reinsurance but before ADC cessions, driven by favorable development in global specialty and financial lines in Canada and other International regions.

During 2022, we recognized favorable prior year loss reserve development of $530 million excluding discount and amortization of deferred gain. The development was primarily driven by:

• Favorable development on U.S. Workers’ Compensation of $644 million, net of external reinsurance but before ADC cessions due to continued favorable frequency and severity trends across most accident years particularly for excess and guaranteed cost US Workers Compensation segments;

• Favorable development on U.S. Excess Casualty of $116 million, net of external reinsurance but before ADC cessions, driven by lead and mid-excess Retail Excess Casualty;

• Favorable development on U.S Other Casualty of $149 million, net of external reinsurance but before ADC cessions, largely driven by favorable experience in Commercial Auto, General Liability and Construction Wraps;

• Unfavorable development in U.S. Financial Lines of $939 million, net of external reinsurance but before ADC cessions, due to higher severity trends particularly in Excess & Primary D&O and Excess & Financial Institutions E&O. This was partially offset by favorable development in EPLI;

• Favorable development in U.S. Property and Special Risks of $81 million driven by more favorable crop experience than anticipated;

• Unfavorable development in UK/Europe Casualty and Financial Lines of $82 million due to unfavorable experience in UK Financial Lines in M&A, Commercial PI and Commercial D&O as well as unfavorable Casualty experience due to large loss activity in the UK, European Excess Casualty, and French Auto experience;

• Favorable development on UK/Europe Property and Special Risks of $153 million driven by Global Specialty, primarily from accident years 2020 and 2021. This favorable experience was seen in each product line and in every region;

• Favorable development on UK/Europe and Japan Personal Insurance of $111 million driven by Japan Auto and A&H business with additional favorable experience in UK and Europe; and

• Favorable development of $264 million in total on other product lines, net of external reinsurance but before ADC cessions, driven by runoff construction business and favorable results from our Canadian business across most products.

During 2021, we recognized favorable prior year loss reserve development of $171 million excluding discount and amortization of deferred gain. The development was primarily driven by:

• Favorable development on U.S. Workers’ Compensation of $617 million, net of external reinsurance but before ADC cessions due to continued favorable frequency and severity trends seen across the diagonals for many subsets of U.S. Workers Compensation especially for recent accident years;

• Favorable development in U.S. Personal Lines of $412 million, net of external reinsurance but before ADC cessions, mainly due to favorable development and subrogation recoveries from the 2017 and 2018 catastrophe years;

• Favorable development on UK/Europe and Japan Personal Insurance of $173 million due to favorable loss trends in personal auto in Japan and Europe and accident and health in all three regions;

• Favorable development on UK/Europe Property and Special Risks of $118 million driven by favorable emergence across several Specialty classes;

• Unfavorable development in U.S. Financial Lines of $649 million, net of external reinsurance but before ADC cessions, due to adverse experience in D&O, Cyber and EPLI. This includes adverse experience in Fiduciary from emergence of Excessive Fee claims and Cyber ransomware losses;

• Unfavorable development on UK/Europe Casualty and Financial Lines of $210 million driven by recognition of large loss activity in Financial PI in the UK and Commercial D&O in Europe; and

• Unfavorable development in U.S. Property and Special Risks of $172 million driven largely by the impact of reductions in reinsurance recoveries driven by changes in catastrophe loss estimates.

Our analyses and conclusions about prior year reserves also help inform our judgments about the current accident year loss and loss adjustment expense ratios we selected.

198			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Loss Development Information

The following is information about incurred and paid loss developments as of December 31, 2023, net of reinsurance. The cumulative number of reported claims, the total of IBNR liabilities and expected development on reported loss included within the net incurred loss amounts are presented in the following section.

Reserving Methodology

We use a combination of methods to project ultimate losses for both long-tail and short-tail exposures, which include:

• Paid Development method:** The Paid Development method estimates ultimate losses by reviewing paid loss patterns and selecting paid ultimate loss development factors. These factors are then applied to paid losses by applying them to accident years, with further expected changes in paid loss. Since the method does not rely on case reserves, it is not directly influenced by changes in the adequacy of case reserves.

• Incurred Development method:** The Incurred Development method is similar to the Paid Development method, but it uses case incurred losses instead of paid losses. Since this method uses more data (case reserves in addition to paid losses) than the Paid Development method, the incurred development patterns may be less variable than paid development patterns.

• Expected Loss Ratio method:** The Expected Loss Ratio method multiplies premiums by an expected loss ratio to produce ultimate loss estimates for each accident year. This method may be useful if loss development patterns are inconsistent, losses emerge very slowly, or there is relatively little loss history from which to estimate future losses. Expected loss ratio methods for business written in excess of a deductible may be given significant weight in the most recent five accident years. The expected loss ratios used for recent accident years are based on the projected ultimate loss ratios for older years adjusted for rate changes, loss trend including inflation, and where appropriate, changing market conditions.

• Bornhuetter-Ferguson method:** The Bornhuetter-Ferguson method using premiums and paid losses is a combination of the Paid Development method and the Expected Loss Ratio method where the weight given to each method is the reciprocal of the loss development factor. This method normally determines expected loss ratios similar to the method used for the Expected Loss Ratio method. The Bornhuetter-Ferguson method using premiums and incurred losses is similar to the Bornhuetter-Ferguson method using premiums and paid losses except that it uses case-incurred losses.

• Cape Cod method:** The Cape Cod method is mechanically similar to the Bornhuetter-Ferguson method with the difference being that the Expected Loss Ratio estimates are determined based on a weighting of the loss estimates that come from the Paid/Incurred Development Methods. This method may be more responsive to recent loss trends than the Bornhuetter-Ferguson method.

• Average Loss method:** The Average Loss method multiplies a projected number of ultimate claims by an estimated ultimate severity average loss for each accident year to produce ultimate loss estimates. Since projections of the ultimate number of claims are often less variable than projections of ultimate loss, this method can provide more reliable results for reserve categories where loss development patterns are inconsistent or too variable to be relied on exclusively.

In updating our loss reserve estimates, we consider and evaluate inputs from many sources, including actual claims data, the performance of prior reserve estimates, observed industry trends, our internal peer review processes, including challenges and recommendations from our Enterprise Risk Management group, as well as the views of third-party actuarial firms. We use these inputs to improve our evaluation techniques, and to analyze and assess the change in estimated ultimate loss for each accident year by product line. Our analyses produce a range of indications from various methods, from which we select our best estimate.

In determining the actual carried loss reserves, we consider both the internal actuarial best estimate and numerous other internal and external factors, including:

• an assessment of economic conditions, including real GDP growth, inflation, employment rates or unemployment duration, stock market volatility and changes in corporate bond spreads;

• changes in the legal, regulatory, judicial and social environment, including changes in road safety, public health and cleanup standards;

• changes in medical cost trends (inflation, intensity and utilization of medical services) and wage inflation trends;

• underlying policy pricing, terms and conditions including attachment points and policy limits;

• change in claims handling philosophy, operating model, processes, and related ongoing enhancements;

• third-party claims reviews that are periodically performed for key classes of claims such as toxic tort, environmental and other complex casualty claims;

• third-party actuarial reviews that are periodically performed for key classes of business;

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

• changes in our reinsurance program, pricing and commutations.

Where appropriate and identifiable, adjustments have been made to standard projection techniques. Changes in Claims organization management, differing referral and review criteria and other factors may also be expected to alter loss emergence.

AIG | 2023 Form 10-K			199

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following factors are relevant to the loss development information included in the tables below:

• Table organization:** The tables are organized by accident year and include policies written on an occurrence and claims- made basis. We note that for certain categories of claims (e.g., construction defect claims and environmental claims) and for reinsurance recoverable, losses may sometimes be reclassified to an earlier or later accident year as more information about the date of occurrence becomes available to us. These reclassifications are shown as development in the respective years in the tables below. Financial Lines business is primarily written on a claims-made basis, while the majority of the workers’ compensation, excess casualty, other casualty, and run-off property and casualty lines of business are written on an occurrence basis. Primarily, all short-tail lines in Property and Special Risks and Personal Insurance are written on an occurrence basis.

• Groupings:** We believe our groupings have homogenous risk characteristics with similar development patterns and would generally be subject to similar trends and reflect our reportable segments. The incurred losses and loss adjustment expenses and paid losses in the following tables for the current reporting year are allocated to the line of business and accident years based on how the business is coded by profit center and line of business.

• Reinsurance:** Our reinsurance program varies by exposure type. Historically we have leveraged facultative and treaty reinsurance, both on a pro-rata and excess of loss basis. Our reinsurance program may change from year to year, which may affect the comparability of the data presented in our tables.

• Adverse development reinsurance agreement:** We have provided the impact of the ADC in an additional table below our Incurred Losses and Allocated Loss Adjustment Expenses tables. The impact of the ADC is shown beginning in 2016 given the retroactive date of the contract and coincides with the effective date of the contract. For the lines of business covered by the agreement (U.S. Workers' Compensation, U.S. Excess Casualty, U.S. Other Casualty, U.S. Financial Lines, U.S. Property and Special Risks and U.S. Personal Insurance or collectively, the Covered Lines), an attribution of the loss recoveries to the line of business by calendar year and accident year is performed based on the underlying distribution of the losses subject to the agreement. Specifically, the future claim payments for all subject incurred losses were projected into future years based on the same actuarial assumptions underlying the related reserves. The additional table presented after discussion of prior year development by line of business reconciles the changes in net ultimates to our overall prior year development and provides the reattribution of loss recoveries for the Covered Lines. The reinsurance terms of the ADC were then used to identify the future claims payments for which 80% will be reimbursed by NICO. At each reporting period, the attribution of the ADC recoveries is performed. The factors that could cause the attribution to lines of business and accident year to change include changes in underlying actuarial assumptions as to timing and amount of future claim payments.

• Incurred but not reported liabilities (IBNR):** We include development from past reported losses in IBNR.

• Data excluded from tables:** Information with respect to accident years older than ten years is excluded from the development tables. Unallocated loss adjustment expenses are also excluded.

• Foreign exchange:** The loss development for operations outside of the U.S. is presented for all accident years using the current exchange rate at December 31, 2023. Although this approach requires restating all prior accident year information, the changes in exchange rates do not impact incurred and paid loss development trends.

• Acquisitions:** We include acquisitions from all accident years presented in the tables. For purposes of this disclosure, we have applied the retrospective method for the acquired reserves, including incurred and paid claim development histories throughout the relevant tables. It should be noted that historical reserves for the acquired businesses were established by the acquired companies using methods, assumptions and procedures then in effect which may differ from our current reserving bases. Accordingly, it may not be appropriate to extrapolate future redundancies or deficiencies based on the aggregated historical results shown in the triangles.

• Dispositions:** We exclude dispositions from all accident years presented in the tables.

• Claim counts:** We consider a reported claim to be one claim for each claimant or feature for each loss occurrence. Claims relating to losses that are 100 percent reinsured are excluded from the reported claims in the tables below. Reported claims for losses from assumed reinsurance contracts are not available and hence not included in the reported claims.

There are limitations that should be considered on the reported claim count data in the tables below, including:

–Claim counts are presented only on a reported (not an ultimate) basis;

–The tables below include lines of business and geographies at a certain aggregated level which may indicate different frequency and severity trends and characteristics, and may not be as meaningful as the claim count information related to the individual products within those lines of business and geographies;

–Certain lines of business are more likely to be subject to occurrences involving multiple claimants and features, which can distort measures based on the reported claim counts in the table below; and

–Reported claim counts are not adjusted for ceded reinsurance, which may distort the measure of frequency or severity.

200			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Supplemental Information: The information about incurred and paid loss development for all periods preceding the year ended December 31, 2023 and the related historical claims payout percentage disclosure is unaudited and is presented as supplementary information.

The following tables present undiscounted, incurred and paid losses and allocated loss adjustment expenses by accident year, on a net basis after reinsurance, with a separate presentation of the ADC excluding the related amortization of the deferred gain:

U.S. Workers' Compensation

U.S. Workers’ Compensation is an extremely long-tail line of business, with loss emergence extending for decades. We generally use a combination of loss development, frequency/severity and expected loss ratio methods for workers’ compensation.

Many of our workers compensation policies contain risk-sharing features, including high deductibles, self-insured retentions or retrospective rating features, in addition to a traditional insurance component. These risk-sharing programs generally are large and complex, comprising multiple products, years and structures, and are subject to amendment over time. We group guaranteed cost and excess of deductible business separately and then further by state and industry subset to the extent that meaningful differences are determined to exist. We also separately analyze certain subsets of the portfolio that have unique characteristics (e.g., U.S. government sub-contractor accounts and construction wrap-up business). For excess of deductible business, we also segment by size of deductible and whether the claim is handled by AIG or an outside third-party administrator. The proportion of large deductible business has increased over time, which has slowed the reporting pattern of claims.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	1,729		$	1,764		$	1,866		$	1,862		$	1,794		$	1,709		$	1,679		$	1,637		$	1,614		$	1,589		$	(25)		$	172		41,529			$	(349)		$	(143)		$	1,240		$	29
2015						1,708			1,864			1,866			1,814			1,722			1,675			1,634			1,612			1,592			(20)			355			37,109			(438)			(228)			1,154			127
2016									1,299			1,346			1,318			1,140			1,090			1,075			1,036			1,025			(11)			224			31,868			—			—			1,025			224
2017												789			850			776			763			731			712			705			(7)			218			27,695			—			—			705			218
2018															998			1,021			961			911			896			875			(21)			385			22,222			—			—			875			385
2019																		887			873			812			801			788			(13)			285			17,000			—			—			788			285
2020																					597			573			521			477			(44)			106			13,839			—			—			477			106
2021																								597			570			545			(25)			274			10,982			—			—			545			274
2022																											523			493			(30)			296			9,339			—			—			493			296
2023																														500						397			7,359			—			—			500			397
Total																														$	8,589		$	(196)								$	(787)					$	7,802
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(4,727)			—									118						(4,609)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														4,327			(65)									(3,632)						695
Unallocated loss adjustment expense prior year development																																	(6)
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	8,189		$	(267)								$	(4,301)					$	3,888

AIG | 2023 Form 10-K			201

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	1,311		$	1,310		$	1,309		$	1,329		$	1,223		$	1,171		$	1,243		$	1,240		$	(3)
2015									1,279			1,279			1,318			1,134			1,105			1,041			1,092			1,154			62
2016									1,299			1,346			1,318			1,140			1,090			1,075			1,036			1,025			(11)
2017												789			850			776			763			731			712			705			(7)
2018															998			1,021			961			911			896			875			(21)
2019																		887			873			812			801			788			(13)
2020																					597			573			521			477			(44)
2021																								597			570			545			(25)
2022																											523			493			(30)
2023																														500
Total									$	3,889		$	4,724		$	5,793		$	6,287		$	6,612		$	6,911		$	7,394		$	7,802		$	(92)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(4,609)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								695			(48)
Unallocated loss adjustment expense prior year adjustment																											26
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	3,888		$	(114)

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(555)		$	(552)		$	(485)		$	(380)		$	(456)		$	(466)		$	(371)		$	(349)		$	22
2015									(585)			(587)			(496)			(588)			(570)			(593)			(520)			(438)			82
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(1,140)		$	(1,139)		$	(981)		$	(968)		$	(1,026)		$	(1,059)		$	(891)		$	(787)		$	104
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								118
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(3,632)			17
Unallocated loss adjustment expense prior year development																											32
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(4,301)		$	153

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	231		$	558		$	786		$	930		$	1,030		$	1,096		$	1,137		$	1,180		$	1,207		$	1,226					$	(64)
2015						234			524			725			854			925			979			1,013			1,038			1,058						(54)
2016									147			378			521			584			630			662			686			694						—
2017												93			224			294			333			367			389			395						—
2018															85			215			296			359			388			409						—
2019																		93			219			301			347			389						—
2020																					64			159			205			245						—
2021																								60			128			171						—
2022																											45			102						—
2023																														38						—
Total																														$	4,727					$	(118)

202			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

U.S. Excess Casualty

U.S. Excess Casualty policies tend to attach at a high layer above underlying policies, which causes the loss development pattern to lag significantly. Many of the claims notified to the excess layers are closed without payment because the claims never reach our layer as a result of high deductibles and other underlying coverages, while the claims that reach our layer can have large case reserves or settlements and be highly variable in terms of reported timing and amount. For a portion of this business, the underlying primary policies are issued by other insurance companies, which can limit our access to relevant information to help inform our judgments as the loss events evolve and mature. Furthermore, this coverage is often significantly impacted by the underwriting cycle and external judicial trends.

Recent accident years reflect a strategy towards having higher attachment points on the portfolio through changing participations in various layers within an insured’s program.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	938		$	1,069		$	1,275		$	1,260		$	1,339		$	1,283		$	1,248		$	1,269		$	1,259		$	1,245		$	(14)		$	277		2,985			$	(384)		$	(144)		$	861		$	133
2015						989			1,463			1,440			1,603			1,656			1,694			1,721			1,686			1,658			(28)			258			3,142			(462)			(116)			1,196			142
2016									898			1,146			1,162			1,171			1,274			1,250			1,263			1,276			13			314			2,813			—			—			1,276			314
2017												856			1,002			1,097			1,153			1,157			1,200			1,182			(18)			264			2,079			—			—			1,182			264
2018															648			646			721			769			769			779			10			155			1,461			—			—			779			155
2019																		577			583			597			612			600			(12)			301			1,347			—			—			600			301
2020																					406			413			410			420			10			238			1,284			—			—			420			238
2021																								278			277			274			(3)			100			855			—			—			274			100
2022																											305			305			—			189			490			—			—			305			189
2023																														345						326			303			—			—			345			326
Total																														$	8,084		$	(42)								$	(846)					$	7,238
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(4,724)			—									251						(4,473)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														2,044			(75)									(1,488)						556
Unallocated loss adjustment expense prior year development																																	85
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	5,404		$	(32)								$	(2,083)					$	3,321

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	902		$	905		$	915		$	844		$	912		$	949		$	869		$	861		$	(8)
2015									1,027			1,015			1,139			1,163			1,211			1,231			1,174			1,196			22
2016									898			1,146			1,162			1,171			1,274			1,250			1,263			1,276			13
2017												856			1,002			1,097			1,153			1,157			1,200			1,182			(18)
2018															648			646			721			769			769			779			10
2019																		577			583			597			612			600			(12)
2020																					406			413			410			420			10
2021																								278			277			274			(3)
2022																											305			305			—
2023																														345
Total									$	2,827		$	3,922		$	4,866		$	5,498		$	6,260		$	6,644		$	6,879		$	7,238		$	14
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(4,473)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								556			(111)
Unallocated loss adjustment expense prior year adjustment																											115
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	3,321		$	18

AIG | 2023 Form 10-K			203

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(373)		$	(355)		$	(424)		$	(439)		$	(336)		$	(320)		$	(390)		$	(384)		$	6
2015									(436)			(425)			(464)			(493)			(483)			(490)			(512)			(462)			50
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(809)		$	(780)		$	(888)		$	(932)		$	(819)		$	(810)		$	(902)		$	(846)		$	56
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								251
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(1,488)			(36)
Unallocated loss adjustment expense prior year development																											30
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(2,083)		$	50

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	3		$	77		$	240		$	444		$	590		$	703		$	815		$	839		$	878		$	902					$	(80)
2015						9			210			391			718			935			1,061			1,124			1,253			1,291						(171)
2016									28			80			204			388			502			566			670			798						—
2017												1			45			156			505			585			676			781						—
2018															1			125			227			315			414			494						—
2019																		7			43			79			157			216						—
2020																					4			15			33			128						—
2021																								4			43			62						—
2022																											14			51						—
2023																														1						—
Total																														$	4,724					$	(251)

204			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

U.S. Other Casualty

U.S. Other Casualty includes general liability, automobile liability, environmental, medical malpractice, and other casualty lines of business. These lines of business are all long-tail in nature and while somewhat diverse in terms of exposures, these lines are often subject to similar trends. These lines are often significantly impacted by the underwriting cycle and external judicial trends. Many of our policies contain risk-sharing features, including high deductibles, self-insured retentions or retrospective rating features, in addition to a traditional insurance component. These risk-sharing programs generally are large and complex, comprising multiple products, years and structures, and are subject to amendment over time.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	1,751		$	1,721		$	1,963		$	2,009		$	1,910		$	1,916		$	1,946		$	1,935		$	1,944		$	1,905		$	(39)		$	46		38,546			$	(214)		$	(29)		$	1,691		$	17
2015						1,329			1,762			1,829			1,736			1,794			1,834			1,824			1,815			1,796			(19)			23			35,754			(282)			(8)			1,514			15
2016									1,339			1,343			1,321			1,391			1,340			1,323			1,293			1,297			4			162			29,191			—			—			1,297			162
2017												602			629			738			674			668			643			654			11			21			21,266			—			—			654			21
2018															802			845			837			870			824			810			(14)			148			16,967			—			—			810			148
2019																		1,059			1,058			1,053			1,062			1,039			(23)			526			21,036			—			—			1,039			526
2020																					524			576			538			540			2			277			11,318			—			—			540			277
2021																								795			793			790			(3)			519			10,572			—			—			790			519
2022																											793			819			26			617			12,457			—			—			819			617
2023																														933						848			10,401			—			—			933			848
Total																														$	10,583		$	(55)								$	(496)					$	10,087
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(6,668)			—									298						(6,370)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														1,448			(67)									(1,053)						395
Unallocated loss adjustment expense prior year development																																	(11)
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	5,363		$	(133)								$	(1,251)					$	4,112

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
												Unaudited
2014									$	1,667		$	1,678		$	1,634		$	1,694		$	1,701		$	1,722		$	1,718		$	1,691		$	(27)
2015									1,361			1,373			1,423			1,493			1,553			1,562			1,563			1,514			(49)
2016									1,339			1,343			1,321			1,391			1,340			1,323			1,293			1,297			4
2017												602			629			738			674			668			643			654			11
2018															802			845			837			870			824			810			(14)
2019																		1,059			1,058			1,053			1,062			1,039			(23)
2020																					524			576			538			540			2
2021																								795			793			790			(3)
2022																											793			819			26
2023																														933
Total									$	4,367		$	4,996		$	5,809		$	7,220		$	7,687		$	8,569		$	9,227		$	10,087		$	(73)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(6,370)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								395			(73)
Unallocated loss adjustment expense prior year adjustment																											13
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	4,112		$	(133)

AIG | 2023 Form 10-K			205

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(296)		$	(331)		$	(276)		$	(222)		$	(245)		$	(213)		$	(226)		$	(214)		$	12
2015									(401)			(456)			(313)			(301)			(281)			(262)			(252)			(282)			(30)
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(697)		$	(787)		$	(589)		$	(523)		$	(526)		$	(475)		$	(478)		$	(496)		$	(18)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								298
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(1,053)			(6)
Unallocated loss adjustment expense prior year development																											24
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(1,251)		$	—

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	210		$	620		$	868		$	1,150		$	1,392		$	1,572		$	1,653		$	1,719		$	1,795		$	1,805					$	(122)
2015						105			309			769			1,087			1,351			1,485			1,603			1,680			1,707						(176)
2016									77			298			489			703			846			938			1,018			1,074						—
2017												51			111			216			314			455			527			592						—
2018															43			122			227			360			470			565						—
2019																		53			138			226			321			410						—
2020																					26			73			139			198						—
2021																								32			87			169						—
2022																											38			112						—
2023																														36						—
Total																														$	6,668					$	(298)

206			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

U.S. Financial Lines

U.S. Financial Lines business includes D&O, E&O, EPLI policies and various professional liability subsets of business, as well as the fidelity book of business. This includes cyber coverage and mergers and acquisitions coverage, which have been a growing and evolving portion of this portfolio. These product lines are predominantly claims-made in nature, losses are characterized by low frequency and high severity, and results are often significantly impacted by external economic conditions.

Our analysis is segmented by major coverages, such as D&O, E&O, etc. and then further segmented by major industry groups (e.g. corporate accounts, national accounts, financial institutions, private/not-for-profit, etc.). We also separately review primary business from excess business for certain product lines.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	1,812		$	1,777		$	1,892		$	1,927		$	1,960		$	1,981		$	2,000		$	2,057		$	2,014		$	2,017		$	3		$	91		17,650			$	(297)		$	(68)		$	1,720		$	23
2015						1,737			1,762			1,743			1,788			1,830			1,874			1,959			2,044			2,048			4			78			16,253			(495)			(63)			1,553			15
2016									1,605			1,855			1,993			2,064			2,139			2,281			2,325			2,308			(17)			133			16,127			—			—			2,308			133
2017												1,564			1,675			1,756			1,846			1,898			1,987			1,957			(30)			130			15,269			—			—			1,957			130
2018															1,640			1,766			1,882			2,063			2,225			2,322			97			498			14,833			—			—			2,322			498
2019																		1,503			1,536			1,627			1,926			1,912			(14)			513			13,319			—			—			1,912			513
2020																					1,213			1,252			1,408			1,457			49			331			10,390			—			—			1,457			331
2021																								1,430			1,408			1,388			(20)			894			7,117			—			—			1,388			894
2022																											1,130			1,108			(22)			948			5,809			—			—			1,108			948
2023																														1,043						950			6,467			—			—			1,043			950
Total																														$	17,560		$	50								$	(792)					$	16,768
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(11,645)			—									501						(11,144)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														271			27									(223)						48
Unallocated loss adjustment expense prior year development																																	17
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	6,186		$	94								$	(514)					$	5,672

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	1,733		$	1,729		$	1,753		$	1,741		$	1,759		$	1,761		$	1,738		$	1,720		$	(18)
2015									1,429			1,430			1,462			1,552			1,550			1,595			1,605			1,553			(52)
2016									1,605			1,855			1,993			2,064			2,139			2,281			2,325			2,308			(17)
2017												1,564			1,675			1,756			1,846			1,898			1,987			1,957			(30)
2018															1,640			1,766			1,882			2,063			2,225			2,322			97
2019																		1,503			1,536			1,627			1,926			1,912			(14)
2020																					1,213			1,252			1,408			1,457			49
2021																								1,430			1,408			1,388			(20)
2022																											1,130			1,108			(22)
2023																														1,043
Total									$	4,767		$	6,578		$	8,523		$	10,382		$	11,925		$	13,907		$	15,752		$	16,768		$	(27)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(11,144)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								48			56
Unallocated loss adjustment expense prior year adjustment																											21
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	5,672		$	50

AIG | 2023 Form 10-K			207

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(159)		$	(198)		$	(207)		$	(240)		$	(241)		$	(296)		$	(276)		$	(297)		$	(21)
2015									(333)			(313)			(326)			(278)			(324)			(364)			(439)			(495)			(56)
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(492)		$	(511)		$	(533)		$	(518)		$	(565)		$	(660)		$	(715)		$	(792)		$	(77)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								501
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(223)			29
Unallocated loss adjustment expense prior year development																											4
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(514)		$	(44)

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	66		$	366		$	849		$	1,158		$	1,387		$	1,573		$	1,658		$	1,758		$	1,820		$	1,849					$	(147)
2015						63			390			791			1,055			1,282			1,488			1,686			1,818			1,914						(354)
2016									73			499			1,002			1,358			1,659			1,826			1,903			2,039						—
2017												64			391			761			1,118			1,396			1,515			1,653						—
2018															86			486			835			1,126			1,415			1,601						—
2019																		94			367			642			953			1,204						—
2020																					84			356			648			915						—
2021																								43			151			315						—
2022																											30			109						—
2023																														46						—
Total																														$	11,645					$	(501)

208			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

U.S. Property and Special Risks

U.S. Property products include commercial, industrial and energy-related property insurance products and services that cover exposures to manmade and natural disasters, including business interruption. U.S. Special Risk products include aerospace, environmental, political risk, trade credit, surety and marine insurance, and program business for various small and medium sized enterprises insurance lines. The program segments include both property and casualty exposures. Recent years have seen an increasing proportion of non-admitted coverages which has altered the underlying customer profile to be less severe in the aggregate.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	2,600		$	2,396		$	2,490		$	2,480		$	2,494		$	2,477		$	2,460		$	2,446		$	2,440		$	2,437		$	(3)		$	4		60,766			$	(52)		$	(2)		$	2,385		$	2
2015						2,567			2,506			2,489			2,492			2,466			2,471			2,479			2,490			2,493			3			4			59,513			(100)			(1)			2,393			3
2016									2,674			2,748			2,690			2,697			2,707			2,694			2,700			2,713			13			8			54,821			—			—			2,713			8
2017												4,673			4,239			4,127			4,153			4,173			4,212			4,175			(37)			15			79,764			—			—			4,175			15
2018															2,978			2,993			2,992			3,229			3,201			3,210			9			112			69,922			—			—			3,210			112
2019																		2,177			2,146			2,211			2,222			2,177			(45)			25			78,848			—			—			2,177			25
2020																					3,391			3,320			3,280			3,238			(42)			761			68,644			—			—			3,238			761
2021																								2,339			2,213			2,160			(53)			101			81,795			—			—			2,160			101
2022																											3,171			3,281			110			690			85,477			—			—			3,281			690
2023																														2,528						777			88,129			—			—			2,528			777
Total																														$	28,412		$	(45)								$	(152)					$	28,260
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(24,207)			—									87						(24,120)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														409			39									(146)						263
Unallocated loss adjustment expense prior year development																																	(4)
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	4,614		$	(10)								$	(211)					$	4,403

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	2,423		$	2,419		$	2,430		$	2,401		$	2,382		$	2,376		$	2,364		$	2,385		$	21
2015									2,365			2,391			2,405			2,372			2,372			2,372			2,375			2,393			18
2016									2,674			2,748			2,690			2,697			2,707			2,694			2,700			2,713			13
2017												4,673			4,239			4,127			4,153			4,173			4,212			4,175			(37)
2018															2,978			2,993			2,992			3,229			3,201			3,210			9
2019																		2,177			2,146			2,211			2,222			2,177			(45)
2020																					3,391			3,320			3,280			3,238			(42)
2021																								2,339			2,213			2,160			(53)
2022																											3,171			3,281			110
2023																														2,528
Total									$	7,462		$	12,231		$	14,742		$	16,767		$	20,143		$	22,714		$	25,738		$	28,260		$	(6)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(24,120)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								263			9
Unallocated loss adjustment expense prior year adjustment																											(3)
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	4,403		$	—

AIG | 2023 Form 10-K			209

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(67)		$	(61)		$	(64)		$	(76)		$	(78)		$	(70)		$	(76)		$	(52)		$	24
2015									(141)			(98)			(87)			(94)			(99)			(107)			(115)			(100)			15
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(208)		$	(159)		$	(151)		$	(170)		$	(177)		$	(177)		$	(191)		$	(152)		$	39
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								87
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(146)			(30)
Unallocated loss adjustment expense prior year development																											1
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(211)		$	10

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	795		$	1,545		$	1,869		$	2,073		$	2,207		$	2,293		$	2,329		$	2,352		$	2,362		$	2,418					$	(20)
2015						844			1,572			1,878			2,121			2,240			2,308			2,344			2,391			2,457						(67)
2016									821			1,747			2,076			2,296			2,464			2,539			2,616			2,647						—
2017												1,137			2,625			3,281			3,638			3,897			3,999			4,055						—
2018															977			2,162			2,509			2,715			2,863			2,994						—
2019																		1,039			1,673			1,906			2,037			2,083						—
2020																					844			1,613			1,874			2,190						—
2021																								878			1,743			1,983						—
2022																											1,208			2,207						—
2023																														1,173						—
Total																														$	24,207					$	(87)

210			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

U.S. Personal Insurance

U.S. Personal Insurance consists of accident and health and personal lines. Accident and health products include voluntary and sponsor-paid personal accident and supplemental health products for individuals, employees, associations and other organizations as well as a broad range of travel insurance products and services for leisure and business travelers. Personal lines include automobile and homeowners’ insurance, extended warranty, and consumer specialty products, such as identity theft and credit card protection. Personal lines also provides insurance for high net worth individuals offered through AIG Private Client Group, including auto, homeowners, umbrella, yacht, fine art and collections insurance. Personal lines are generally short-tail in nature and can reflect significant salvage and subrogation recoveries.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development Excluding the Impact of ADC			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims			Incurred Impact of ADC			IBNR Impact of ADC			2023 (Net of Impact of ADC)			Total of IBNR Liabilities Net of Impact of ADC
			Unaudited
2014			$	1,552		$	1,562		$	1,572		$	1,572		$	1,583		$	1,584		$	1,588		$	1,587		$	1,592		$	1,592		$	—		$	5		275,132			$	(8)		$	—		$	1,584		$	5
2015						1,511			1,498			1,494			1,483			1,482			1,485			1,487			1,488			1,487			(1)			8			261,176			(8)			—			1,479			8
2016									1,536			1,533			1,533			1,540			1,542			1,544			1,544			1,541			(3)			12			247,479			—			—			1,541			12
2017												1,878			2,137			2,011			2,057			1,924			1,916			1,896			(20)			15			220,038			—			—			1,896			15
2018															2,188			2,193			2,154			1,937			1,936			1,920			(16)			33			102,256			—			—			1,920			33
2019																		1,593			1,664			1,646			1,596			1,578			(18)			43			93,428			—			—			1,578			43
2020																					954			906			913			894			(19)			51			55,101			—			—			894			51
2021																								748			765			762			(3)			70			56,234			—			—			762			70
2022																											517			529			12			93			51,983			—			—			529			93
2023																														677						248			32,022			—			—			677			248
Total																														$	12,876		$	(68)								$	(16)					$	12,860
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(12,060)			—									16						(12,044)
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														(48)			4									(1)						(49)
Unallocated loss adjustment expense prior year development																																	—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	768		$	(64)								$	(1)					$	767

Incurred Losses and Loss Adjustment Expenses, Undiscounted, Net of Reinsurance (including impact of ADC)

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	1,564		$	1,564		$	1,571		$	1,580		$	1,584		$	1,582		$	1,584		$	1,584		$	—
2015									1,476			1,475			1,472			1,476			1,480			1,482			1,481			1,479			(2)
2016									1,536			1,533			1,533			1,540			1,542			1,544			1,544			1,541			(3)
2017												1,878			2,137			2,011			2,057			1,924			1,916			1,896			(20)
2018															2,188			2,193			2,154			1,937			1,936			1,920			(16)
2019																		1,593			1,664			1,646			1,596			1,578			(18)
2020																					954			906			913			894			(19)
2021																								748			765			762			(3)
2022																											517			529			12
2023																														677
Total									$	4,576		$	6,450		$	8,901		$	10,393		$	11,435		$	11,769		$	12,252		$	12,860		$	(69)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								(12,044)
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(49)			4
Unallocated loss adjustment expense prior year adjustment																											—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	767		$	(65)

AIG | 2023 Form 10-K			211

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table provides our attribution of our reinsurance recoverable for the ADC only (included in the table above):

									Calendar Years Ended December 31, (in millions)
Accident Year									2016			2017			2018			2019			2020			2021			2022			2023			Prior Year Development
									Unaudited
2014									$	(8)		$	(8)		$	(12)		$	(4)		$	(4)		$	(5)		$	(8)		$	(8)		$	—
2015									(22)			(19)			(11)			(6)			(5)			(5)			(7)			(8)			(1)
2016									—			—			—			—			—			—			—			—			—
2017									—			—			—			—			—			—			—			—			—
2018									—			—			—			—			—			—			—			—			—
2019									—			—			—			—			—			—			—			—			—
2020									—			—			—			—			—			—			—			—			—
2021									—			—			—			—			—			—			—			—			—
2022									—			—			—			—			—			—			—			—			—
2023									—			—			—			—			—			—			—			—			—
Total									$	(30)		$	(27)		$	(23)		$	(10)		$	(9)		$	(10)		$	(15)		$	(16)		$	(1)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																								16
Liabilities for losses and allocated loss adjustment expenses and prior year development before 2014, net of reinsurance																								(1)			—
Unallocated loss adjustment expense prior year development																											—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																								$	(1)		$	(1)

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance

			Years Ended December 31, (in millions)																																	Paid Impact of ADC
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	959		$	1,380		$	1,463		$	1,507		$	1,536		$	1,555		$	1,568		$	1,572		$	1,579		$	1,584					$	(8)
2015						931			1,320			1,411			1,439			1,455			1,461			1,463			1,468			1,471						(8)
2016									857			1,344			1,422			1,460			1,501			1,512			1,518			1,521						—
2017												941			1,672			1,896			1,789			1,826			1,852			1,861						—
2018															1,227			1,939			1,973			1,789			1,832			1,849						—
2019																		884			1,295			1,379			1,416			1,491						—
2020																					667			679			725			824						—
2021																								488			650			658						—
2022																											372			401						—
2023																														400						—
Total																														$	12,060					$	(16)

212			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

UK/Europe Casualty and Financial Lines

UK/Europe is our largest non-U.S. region for Liability and Financial Lines. UK/Europe Casualty and Financial Lines is composed of third-party coverages including general liability, auto liability, D&O, professional liability and various other coverages throughout both the UK and Continental Europe. These areas are all long-tail in nature and while somewhat diverse in terms of exposures, these lines are often subject to similar trends. These lines are impacted by the underwriting cycle and external judicial trends. The largest share of business is in the UK, but significant business is also written in other European countries such as Germany, France, and Italy.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims
			Unaudited
2014			$	1,036		$	1,009		$	1,032		$	1,039		$	1,034		$	1,122		$	1,064		$	1,106		$	1,111		$	1,117		$	6		$	75		102,063
2015						1,092			1,233			1,262			1,170			1,244			1,234			1,238			1,258			1,266			8			74			113,865
2016									1,314			1,453			1,497			1,498			1,601			1,597			1,610			1,613			3			100			142,721
2017												1,343			1,323			1,252			1,321			1,381			1,366			1,408			42			177			149,665
2018															1,343			1,415			1,482			1,521			1,619			1,664			45			245			151,467
2019																		1,005			1,262			1,334			1,351			1,345			(6)			292			142,426
2020																					1,219			1,271			1,216			1,202			(14)			474			85,762
2021																								1,375			1,335			1,347			12			723			76,503
2022																											1,300			1,261			(39)			894			71,630
2023																														1,472						1,100			57,306
Total																														$	13,695		$	57
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(7,109)			—
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														861			108
Unallocated loss adjustment expense prior year development																																	—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	7,447		$	165

*The losses reported in the table are not covered by the ADC.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*

			Years Ended December 31, (in millions)
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	72		$	258		$	409		$	529		$	629		$	695		$	757		$	818		$	859		$	883
2015						71			240			433			568			683			859			949			994			1,041
2016									119			379			586			775			930			1,059			1,168			1,260
2017												96			280			447			602			753			896			964
2018															113			374			572			742			903			1,128
2019																		98			310			478			658			760
2020																					60			228			367			507
2021																								51			233			345
2022																											57			185
2023																														36
Total																														$	7,109

*The losses reported in the table are not covered by the ADC.

AIG | 2023 Form 10-K			213

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

UK/Europe Property and Special Risks

UK/Europe Property products include commercial, industrial and energy-related property insurance products and services that cover exposures to manmade and natural disasters, including business interruption. UK/Europe Special Risk products include aerospace, environmental, political risk, trade credit, surety and marine insurance, and various small and medium sized enterprises insurance lines.

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims
			Unaudited
2014			$	1,439		$	1,470		$	1,431		$	1,460		$	1,450		$	1,426		$	1,387		$	1,382		$	1,360		$	1,349		$	(11)		$	(2)		48,030
2015						1,552			1,469			1,531			1,463			1,444			1,434			1,421			1,455			1,442			(13)			7			54,639
2016									1,536			1,685			1,678			1,682			1,678			1,674			1,609			1,604			(5)			10			57,287
2017												1,649			1,614			1,609			1,616			1,600			1,566			1,565			(1)			12			53,411
2018															1,505			1,555			1,533			1,520			1,468			1,463			(5)			8			44,183
2019																		1,138			1,100			1,101			1,090			1,086			(4)			39			33,637
2020																					1,301			1,241			1,200			1,218			18			136			25,822
2021																								1,019			982			932			(50)			64			22,306
2022																											1,123			1,288			165			220			23,295
2023																														1,359						539			15,946
Total																														$	13,306		$	94
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(10,479)			—
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														86			(13)
Unallocated loss adjustment expense prior year development																																	—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	2,913		$	81

*The losses reported in the table are not covered by the ADC.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*

			Years Ended December 31, (in millions)
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	311		$	912		$	1,187		$	1,255		$	1,293		$	1,320		$	1,329		$	1,342		$	1,350		$	1,354
2015						346			920			1,193			1,295			1,331			1,354			1,362			1,363			1,362
2016									456			1,114			1,367			1,500			1,545			1,574			1,591			1,585
2017												353			940			1,222			1,364			1,420			1,459			1,472
2018															316			978			1,161			1,289			1,303			1,339
2019																		264			649			820			907			944
2020																					249			668			819			912
2021																								189			504			691
2022																											194			661
2023																														159
Total																														$	10,479

*The losses reported in the table are not covered by the ADC.

UK/Europe and Japan Personal Insurance

UK/Europe and Japan Personal Insurance lines consist of accident and health and personal lines. Accident and health products include voluntary and sponsor-paid personal accident and supplemental health products for individuals, employees, associations and other organizations as well as a broad range of travel insurance products and services for leisure and business travelers. Personal lines include automobile and homeowners’ insurance, extended warranty, and consumer specialty products, such as identity theft and credit card protection. Personal lines are generally short-tail in nature.

214			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Incurred Losses and Allocated Loss Adjustment Expenses, Undiscounted and Net of Reinsurance*

			Years Ended December 31, (in millions)																																	December 31, 2023
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023			2023 Prior Year Development			Total of IBNR Liabilities Plus Expected Development on Reported Losses			Cumulative Number of Reported Claims
			Unaudited
2014			$	2,210		$	2,220		$	2,207		$	2,204		$	2,197		$	2,197		$	2,199		$	2,197		$	2,220		$	2,224		$	4		$	2		1,799,271
2015						2,284			2,264			2,265			2,257			2,255			2,255			2,256			2,254			2,257			3			—			1,777,699
2016									2,241			2,240			2,226			2,221			2,219			2,216			2,209			2,212			3			1			1,794,987
2017												2,196			2,118			2,103			2,099			2,115			2,100			2,108			8			—			1,718,502
2018															2,555			2,461			2,458			2,431			2,450			2,448			(2)			4			1,915,683
2019																		2,085			2,050			2,015			2,000			2,002			2			3			1,673,976
2020																					1,909			1,771			1,713			1,701			(12)			19			1,389,704
2021																								1,776			1,719			1,689			(30)			32			1,387,230
2022																											1,889			1,854			(35)			89			2,050,657
2023																														1,698						256			1,275,686
Total																														$	20,193		$	(59)
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance from the table below																														(18,747)			—
Liabilities for losses and loss adjustment expenses and prior year development before accident year 2014, net of reinsurance																														37			2
Unallocated loss adjustment expense prior year development																																	—
Liabilities for losses and loss adjustment expenses and prior year loss development, net of reinsurance																														$	1,483		$	(57)

*The losses reported in the table are not covered by the ADC.

Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance*

			Years Ended December 31, (in millions)
Accident Year			2014			2015			2016			2017			2018			2019			2020			2021			2022			2023
			Unaudited
2014			$	1,198		$	1,817		$	1,999		$	2,090		$	2,137		$	2,158		$	2,170		$	2,179		$	2,184		$	2,189
2015						1,228			1,861			2,046			2,146			2,183			2,209			2,226			2,234			2,244
2016									1,225			1,830			2,013			2,102			2,147			2,173			2,187			2,195
2017												1,200			1,791			1,950			2,020			2,056			2,078			2,077
2018															1,520			2,063			2,225			2,309			2,352			2,404
2019																		1,219			1,726			1,854			1,916			1,950
2020																					1,020			1,470			1,576			1,619
2021																								1,003			1,423			1,533
2022																											1,100			1,572
2023																														964
Total																														$	18,747

*The losses reported in the table are not covered by the ADC.

Claims Payout Patterns

The following table presents the historical average annual percentage claims payout on an accident year basis at the same level of disaggregation as presented in the claims development table.

Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance (Unaudited)
Year			1			2			3			4			5			6			7			8			9			10
U.S. Workers' compensation			11.9		%	17.2		%	11.0		%	7.2		%	4.8		%	3.2		%	2.0		%	1.7		%	1.5		%	1.2		%
U.S. Excess casualty			1.2			8.5			9.2			18.1			10.5			7.9			7.4			6.6			2.7			1.9
U.S. Other casualty			5.8			11.3			14.2			14.4			13.7			9.4			6.7			4.0			2.8			0.5
U.S. Financial Lines			3.7			14.6			18.2			15.6			12.5			8.1			6.1			5.8			3.9			1.4
U.S. Property and Special Risks			35.2			32.2			11.8			8.1			4.9			3.1			1.8			1.3			1.5			2.3
U.S. Personal Insurance			61.6			23.8			5.2			0.8			2.4			0.9			0.5			0.3			0.3			0.3
UK/Europe Casualty and Financial Lines			5.6			14.3			12.2			11.3			9.3			10.3			6.1			4.9			3.7			2.1
UK/Europe Property and Special Risks			21.1			38.7			16.7			7.7			2.7			2.1			0.8			0.2			0.3			0.3
UK/Europe and Japan Personal Insurance			57.9			26.2			7.2			3.6			1.8			1.3			0.5			0.4			0.3			0.2

AIG | 2023 Form 10-K			215

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

DISCOUNTING OF LOSS RESERVES

At December 31, 2023 and 2022, the loss reserves reflect a net loss reserve discount of $1.2 billion and $1.3 billion, respectively, including tabular and non-tabular calculations based upon the following assumptions:

• The non-tabular workers’ compensation discount is calculated separately for companies domiciled in New York, Pennsylvania and Delaware, and follows the statutory regulations (prescribed or permitted) for each state.

–For New York companies, the discount is based on a 5 percent interest rate and the companies’ own payout patterns.

–The Pennsylvania and Delaware regulators approved use of a consistent benchmark discount rate and spread (U.S. Treasury rate plus a liquidity premium) to all of our workers’ compensation reserves in our Pennsylvania domiciled and Delaware domiciled companies, as well as our use of updated payout patterns specific to our primary and excess workers compensation portfolios. In 2020, the regulators also approved that the discount rate will be updated on an annual basis.

• The tabular workers’ compensation discount is calculated based on the mortality rate used in the 2007 U.S. Life table and interest rates prescribed or permitted by each state (i.e. New York is based on 5 percent interest rate and Pennsylvania and Delaware are based on U.S. Treasury rate plus a liquidity premium). In the case that applying this tabular discount factor to our nominal reserves produces a tabular discount that is greater than the indemnity portion of our case reserves, the tabular discount is capped at our estimate of the indemnity portion of our cases reserves (45 percent).

The discount for asbestos reserves has been fully accreted.

At December 31, 2023 and 2022, the discount consists of $294 million and $314 million of tabular discount, respectively, and $939 million and $964 million of non-tabular discount for workers’ compensation, respectively. During the years ended December 31, 2023, 2022 and 2021, the benefit / (charge) from changes in discount of $(195) million, $703 million and $193 million, respectively, were recorded as part of the policyholder benefits and losses incurred in the Consolidated Statements of Income (Loss).

The following table presents the components of the loss reserve discount discussed above:

(in millions)						December 31, 2023						December 31, 2022
U.S. workers' compensation			$			2,337			$			2,532
Retroactive reinsurance						(1,104)						(1,254)
Total reserve discount**(a)(b)**			$			1,233			$			1,278

(a)Excludes $196 million and $135 million of discount related to certain long-tail liabilities in the UK at December 31, 2023 and 2022, respectively.

(b)Includes gross discount of $687 million and $763 million, which was 100 percent ceded to Fortitude Re at December 31, 2023 and 2022, respectively.

The following table presents the net loss reserve discount benefit (charge):

Years Ended December 31,
(in millions)																					2023						2022						2021
Current accident year																		$			112			$			98			$			62
Accretion and other adjustments to prior year discount																					(264)						(239)						(88)
Effect of interest rate changes																					(43)						844						219
Net reserve discount benefit (charge)																					(195)						703						193
Change in discount on loss reserves ceded under retroactive reinsurance																					150						(301)						(42)
Net change in total reserve discount*																		$			(45)			$			402			$			151

*Excludes $61 million, $19 million and $(35) million of discount related to certain long-tail liabilities in the UK for the years ended December 31, 2023, 2022 and 2021, respectively.

During 2023, net change in total reserve discount was impacted by updates to payout patterns, along with decreases in discount rates due to an increase in U.S. Treasury rates offset by a decrease in the discount spread.

During 2022 and 2021, effective interest rates increased due to an increase in the forward yield curve component of the discount rates reflecting an increase in U.S. Treasury rates along with changes in payout pattern assumptions.

Amortization of Deferred Gain on Retroactive Reinsurance

Amortization of the deferred gain on retroactive reinsurance includes $48 million, $189 million and $137 million related to the adverse development reinsurance cover with NICO for the years ended December 31, 2023, 2022 and 2021, respectively.

Amounts recognized reflect the amortization of the initial deferred gain at inception, as amended for subsequent changes in the deferred gain due to changes in subject reserves.

216			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

FUTURE POLICY BENEFITS

Future policy benefits primarily include reserves for traditional life and annuity payout contracts, which represent an estimate of the present value of future benefits less the present value of future net premiums. Included in Future policy benefits are liabilities for annuities issued in structured settlement arrangements whereby a claimant receives life contingent payments over their lifetime. Also included are pension risk transfer arrangements whereby an upfront premium is received in exchange for guaranteed retirement benefits. All payments under these arrangements are fixed and determinable with respect to their amounts and dates. Structured settlement or other annuitization elections (e.g., certain single premium immediate annuities) that do not involve life contingent payments, but rather payments for a stated period are included in Policyholder contract deposits.

For traditional and limited pay long-duration products, benefit reserves are accrued and benefit expense is recognized using a NPR methodology for each annual cohort of business. This NPR method incorporates periodic retrospective revisions to the NPR to reflect updated actuarial assumptions and variances in actual versus expected experience. The Future policy benefit liability is accrued by multiplying the gross premium recognized in each period by the net premium ratio. The net premium is equal to the portion of the gross premium required to provide for all benefits and certain expenses and may not exceed 100 percent. Benefits in excess of premiums are expensed immediately through Policyholder benefits. In addition, periodic revisions to the NPR below 100 percent may result in reclassification between the benefit reserves and deferred profit liability for limited pay contracts.

Insurance contracts are aggregated into annual cohorts for the purposes of determining the liability for future policy benefits (LFPB), but are not aggregated across segments. These annual cohorts may be further segregated based on product characteristics, or to distinguish business reinsured from non-reinsured business or products issued in different functional currencies. The assumptions used to calculate the future policy benefits include discount rates, persistency and recognized morbidity and mortality tables modified to reflect the Company's experience.

The current discount rate assumption for the liability for future policy benefits is derived from market observable yields on upper-medium-grade fixed income instruments. The Company uses an external index as the source of the yields on these instruments for the first 30 years. For years 30 to 50, the yield is derived using market observable yields. Yields for years 50 to 100 are extrapolated using a flat forward approach, maintaining a constant forward spread through the period. The current discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change in the discount rate reflected in OCI.

The method for constructing and applying the locked-in discount rate assumptions on newly issued business is determined based on factors such as product characteristics and the expected timing of cash flows. This discount rate assumption is derived from market observable yields on upper-medium-grade fixed income instruments. Similar to the current discount rate assumption, the Company may employ conversion and interpolation methodologies when necessary. The applicable interest accretion is reflected in Policyholder benefits and losses incurred in the Consolidated Statements of Income (Loss).

The following table presents the transition rollforward of the liability for future policy benefits for nonparticipating contracts**(a)****:**

			Individual Retirement						Group Retirement						Life Insurance			Institutional Markets						Other(b)						Total
(in millions)
Pre-adoption December 31, 2020 liability for future policy benefits balance			$	1,309					$	282					$	11,129		$	11,029					$	22,206					$	45,955
Adjustments for the reclassification to the deferred profit liability			(65)						(8)						—			(766)						(859)						(1,698)
Change in cash flow assumptions and effect of net premiums exceeding gross premiums			(14)						2						15			4						55						62
Effect of the remeasurement of the liability at a current single A rate			156						63						2,977			1,655						7,611						12,462
Adjustment for the removal of loss recognition balances related to unrealized gain or loss on securities			(64)						(60)						4			(292)						—						(412)
Post-adoption January 1, 2021 liability for future policy benefits balance			$	1,322					$	279					$	14,125		$	11,630					$	29,013					$	56,369

(a)Excludes future policy benefits for participating contracts, DPL, additional liabilities, Accident and Health, Group Benefits and Other Operations representing $11.0 billion of liability for future policy benefits. See transition tables below for DPL and additional liabilities.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between the two liabilities, with no impact on Retained earnings.

Adjustments for change in cash flow assumptions represents revised net premium ratios in excess of 100 percent for certain cohorts at transition, with an offset to Retained earnings.

The effect of the remeasurement at the current single A rate is reported at the Transition Date and each subsequent balance sheet date, with an offset in AOCI.

AIG | 2023 Form 10-K			217

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Prior to adoption, loss recognition for traditional products was adjusted for the effect of unrealized gains on fixed maturity securities available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI.

The following tables present the balances and changes in the liability for future policy benefits and a reconciliation of the net liability for future policy benefits to the liability for future policy benefits in the Consolidated Balance Sheets:

Year Ended December 31, 2023			General Insurance						Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(f)						Total
(in millions, except for liability durations)
Present value of expected net premiums
Balance, beginning of year			$	1,929					$	—					$	—					$	11,654					$	—					$	991					$	14,574
Effect of changes in discount rate assumptions (AOCI)			262						—						—						1,872						—						66						2,200
Beginning balance at original discount rate			2,191						—						—						13,526						—						1,057						16,774
Effect of changes in cash flow assumptions			(2)						—						—						34						—						21						53
Effect of actual variances from expected experience			(16)						—						—						62						—						20						66
Adjusted beginning of year balance			2,173						—						—						13,622						—						1,098						16,893
Issuances			122						—						—						1,277						—						—						1,399
Interest accrual			43						—						—						437						—						46						526
Net premium collected			(283)						—						—						(1,464)						—						(118)						(1,865)
Foreign exchange impact			(14)						—						—						265						—						—						251
Other			—						—						—						11						—						(9)						2
Ending balance at original discount rate			2,041						—						—						14,148						—						1,017						17,206
Effect of changes in discount rate assumptions (AOCI)			(339)						—						—						(1,482)						—						(44)						(1,865)
Reclassified to Liabilities held for sale			—						—						—						(4,287)						—						—						(4,287)
Balance, end of year			$	1,702					$	—					$	—					$	8,379					$	—					$	973					$	11,054
Present value of expected future policy benefits
Balance, beginning of year			$	2,380					$	1,223					$	211					$	21,179					$	12,464					$	20,429					$	57,886
Effect of changes in discount rate assumptions (AOCI)			362						167						2						3,424						2,634						1,083						7,672
Beginning balance at original discount rate			2,742						1,390						213						24,603						15,098						21,512						65,558
Effect of changes in cash flow assumptions(a)			(13)						—						—						62						—						76						125
Effect of actual variances from expected experience(a)			(18)						(5)						(2)						122						15						—						112
Adjusted beginning of year balance			2,711						1,385						211						24,787						15,113						21,588						65,795
Issuances			130						173						18						1,266						5,339						4						6,930
Interest accrual			52						55						11						908						664						1,026						2,716
Benefit payments			(276)						(128)						(26)						(1,921)						(1,087)						(1,503)						(4,941)
Foreign exchange impact			(27)						—						—						345						359						—						677
Other			—						—						—						10						—						(24)						(14)
Ending balance at original discount rate			2,590						1,485						214						25,395						20,388						21,091						71,163
Effect of changes in discount rate assumptions (AOCI)			(441)						(132)						3						(2,745)						(1,906)						(437)						(5,658)
Reclassified to Liabilities held for sale			—						—						—						(5,119)						—						—						(5,119)
Balance, end of year			$	2,149					$	1,353					$	217					$	17,531					$	18,482					$	20,654					$	60,386
Net liability for future policy benefits, end of year			$	447					$	1,353					$	217					$	9,152					$	18,482					$	19,681					$	49,332
Liability for future policy benefits for certain participating contracts																																							1,313
Liability for universal life policies with secondary guarantees and similar features(b)																																							3,786
Deferred profit liability																																							2,512
Other reconciling items(c)																																							1,633
Future policy benefits for life and accident and health insurance contracts																																							58,576
Less: Reinsurance recoverable																																							(23,571)
Net liability for future policy benefits after reinsurance recoverable																																							$	35,005
Weighted average liability duration of the liability for future policy benefits**(d)(e)**			9.3						7.8						6.8						12.8						12.1						11.5

218			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Year Ended December 31, 2022			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(f)						Total
(in millions, except for liability durations)
Present value of expected net premiums
Balance, beginning of year			$	—					$	—					$	14,369					$	—					$	1,274					$	15,643
Effect of changes in discount rate assumptions (AOCI)			—						—						(706)						—						(150)						(856)
Beginning balance at original discount rate			—						—						13,663						—						1,124						14,787
Effect of changes in cash flow assumptions			—						—						123						—						—						123
Effect of actual variances from expected experience			—						—						(79)						—						7						(72)
Adjusted beginning of year balance			—						—						13,707						—						1,131						14,838
Issuances			—						—						1,358						—						—						1,358
Interest accrual			—						—						397						—						48						445
Net premium collected			—						—						(1,418)						—						(123)						(1,541)
Foreign exchange impact			—						—						(517)						—						—						(517)
Other			—						—						(1)						—						1						—
Ending balance at original discount rate			—						—						13,526						—						1,057						14,583
Effect of changes in discount rate assumptions (AOCI)			—						—						(1,872)						—						(66)						(1,938)
Balance, end of year			$	—					$	—					$	11,654					$	—					$	991					$	12,645
Present value of expected future policy benefits
Balance, beginning of year			$	1,373					$	264					$	27,442					$	13,890					$	27,674					$	70,643
Effect of changes in discount rate assumptions (AOCI)			(95)						(46)						(2,717)						(870)						(5,673)						(9,401)
Beginning balance at original discount rate			1,278						218						24,725						13,020						22,001						61,242
Effect of changes in cash flow assumptions(a)			—						—						140						(6)						—						134
Effect of actual variances from expected experience(a)			(30)						(2)						(94)						3						1						(122)
Adjusted beginning of year balance			1,248						216						24,771						13,017						22,002						61,254
Issuances			216						12						1,374						2,782						9						4,393
Interest accrual			42						10						876						459						1,233						2,620
Benefit payments			(116)						(26)						(1,757)						(821)						(1,483)						(4,203)
Foreign exchange impact			—						—						(657)						(339)						—						(996)
Other			—						1						(4)						—						(249)						(252)
Ending balance at original discount rate			1,390						213						24,603						15,098						21,512						62,816
Effect of changes in discount rate assumptions (AOCI)			(167)						(2)						(3,424)						(2,634)						(1,083)						(7,310)
Balance, end of year			$	1,223					$	211					$	21,179					$	12,464					$	20,429					$	55,506
Net liability for future policy benefits, end of year			$	1,223					$	211					$	9,525					$	12,464					$	19,438					$	42,861
Liability for future policy benefits for certain participating contracts																																	1,352
Liability for universal life policies with secondary guarantees and similar features(b)																																	3,355
Deferred profit liability																																	2,303
Other reconciling items(c)																																	2,043
Future policy benefits for life and accident and health insurance contracts																																	51,914
Less: Reinsurance recoverable																																	(24,078)
Net liability for future policy benefits after reinsurance recoverable																																	$	27,836
Weighted average liability duration of the liability for future policy benefits**(d)**			7.6						6.9						12.2						10.8						11.4

AIG | 2023 Form 10-K			219

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Year Ended December 31, 2021			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(f)						Total
(in millions, except for liability durations)
Present value of expected net premiums
Balance, beginning of year			$	—					$	—					$	13,793					$	—					$	1,506					$	15,299
Effect of changes in discount rate assumptions (AOCI)			—						—						(1,374)						—						(249)						(1,623)
Beginning balance at original discount rate			—						—						12,419						—						1,257						13,676
Effect of changes in cash flow assumptions			—						—						164						—						(72)						92
Effect of actual variances from expected experience			—						—						371						—						14						385
Adjusted beginning of year balance			—						—						12,954						—						1,199						14,153
Issuances			—						—						1,727						—						—						1,727
Interest accrual			—						—						392						—						54						446
Net premium collected			—						—						(1,364)						—						(129)						(1,493)
Foreign exchange impact			—						—						(46)						—						—						(46)
Other			—						—						—						—						—						—
Ending balance at original discount rate			—						—						13,663						—						1,124						14,787
Effect of changes in discount rate assumptions (AOCI)			—						—						706						—						150						856
Balance, end of year			$	—					$	—					$	14,369					$	—					$	1,274					$	15,643
Present value of expected future policy benefits
Balance, beginning of year			$	1,322					$	279					$	27,918					$	11,630					$	30,519					$	71,668
Effect of changes in discount rate assumptions (AOCI)			(156)						(63)						(4,351)						(1,654)						(7,862)						(14,086)
Beginning balance at original discount rate			1,166						216						23,567						9,976						22,657						57,582
Effect of changes in cash flow assumptions(a)			—						—						193						—						(83)						110
Effect of actual variances from expected experience(a)			1						(1)						413						(3)						(121)						289
Adjusted beginning of year balance			1,167						215						24,173						9,973						22,453						57,981
Issuances			172						21						1,713						3,366						15						5,287
Interest accrual			41						11						876						380						1,085						2,393
Benefit payments			(101)						(28)						(1,981)						(696)						(1,530)						(4,336)
Foreign exchange impact			—						—						(60)						(3)						—						(63)
Other			(1)						(1)						4						—						(22)						(20)
Ending balance at original discount rate			1,278						218						24,725						13,020						22,001						61,242
Effect of changes in discount rate assumptions (AOCI)			95						46						2,717						870						5,673						9,401
Balance, end of year			$	1,373					$	264					$	27,442					$	13,890					$	27,674					$	70,643
Net liability for future policy benefits, end of year			$	1,373					$	264					$	13,073					$	13,890					$	26,400					$	55,000
Liability for future policy benefits for certain participating contracts																																	1,397
Liability for universal life policies with secondary guarantees and similar features(b)																																	5,007
Deferred profit liability																																	2,236
Other reconciling items(c)																																	2,759
Future policy benefits for life and accident and health insurance contracts																																	66,399
Less: Reinsurance recoverable																																	(32,586)
Net liability for future policy benefits after reinsurance recoverable																																	$	33,813
Weighted average liability duration of the liability for future policy benefits**(d)**			8.6						7.8						14.4						13.0						13.7

(a)Effect of changes in cash flow assumptions and variances from actual experience are partially offset by changes in the deferred profit liability.

(b)Additional details can be found in the table that presents the balances and changes in the liability for universal life policies with secondary guarantees and similar features.

(c)Other reconciling items primarily include the Accident and Health as well as Group Benefits (short-duration) contracts.

(d)The weighted average liability durations are calculated as the modified duration using projected future net liability cash flows that are aggregated at the segment level, utilizing the segment level weighted average interest rates and current discount rate, which can be found in the table below.

(e)Includes balances that were reclassified to Liabilities held for sale in the Consolidated Balance sheets. For additional information, see Note 4.

(f)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

For the years ended December 31, 2023, 2022 and 2021 in the traditional and term life insurance block, capping of net premium ratios at 100 percent caused a (credit)/charge to net income of $(1) million, $26 million and $15 million, respectively. The discount rate was updated based on market observable information. Relative to the prior period, the increase in upper-medium-grade fixed income yields resulted in a decrease in the liability for future policy benefits.

220			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table presents the amount of undiscounted expected future benefit payments and undiscounted and discounted expected gross premiums for future policy benefits for nonparticipating contracts:

Years Ended December 31,
(in millions)									2023						2022						2021
General Insurance**(a)**			Undiscounted expected future benefits and expense						$	3,194					$	3,325					$	3,677
Undiscounted expected future gross premiums						4,403						4,558						4,899
Individual Retirement			Undiscounted expected future benefits and expense						$	2,131					$	1,959					$	1,747
Undiscounted expected future gross premiums						—						—						—
Group Retirement			Undiscounted expected future benefits and expense						$	313					$	321					$	328
Undiscounted expected future gross premiums						—						—						—
Life Insurance**(b)**			Undiscounted expected future benefits and expense						$	40,489					$	38,909					$	38,869
Undiscounted expected future gross premiums						30,458						29,035						29,272
Institutional Markets			Undiscounted expected future benefits and expense						$	38,253					$	25,066					$	20,839
Undiscounted expected future gross premiums						—						—						—
Other**(c)**			Undiscounted expected future benefits and expense						$	43,071					$	44,530					$	46,038
Undiscounted expected future gross premiums						2,146						2,262						2,437

(a)General Insurance discounted expected future gross premiums (at current discount rate) for 2023 were $3.0 billion.

(b)Includes balances reclassified to Liabilities held for sale at December 31, 2023. Life Insurance discounted expected future gross premiums (at current discount rate) for 2023 were $20.2 billion.

(c)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Other discounted expected future gross premiums (at current discount rate) for 2023 were $1.4 billion.

The following table presents the amount of revenue and interest recognized in the Consolidated Statements of Income (Loss) for future policy benefits for nonparticipating contracts:

Years Ended December 31,															Gross Premiums																		Interest Accretion
(in millions)																											2023						2022						2021						2023						2022						2021
General Insurance																											$	477					$	487					$	547					$	9					$	8					$	7
Individual Retirement																											202						224						186						55						42						41
Group Retirement																											19						19						21						11						10						11
Life Insurance																											2,393						2,342						2,319						471						479						484
Institutional Markets																											5,638						2,940						3,818						664						459						380
Other*																											215						224						236						980						1,185						1,031
Total																											$	8,944					$	6,236					$	7,127					$	2,190					$	2,183					$	1,954

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the weighted-average interest rate for future policy benefits for nonparticipating contracts:

Year Ended December 31, 2023			General Insurance						Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(b)
Weighted-average interest rate, original discount rate(a)			1.82		%				3.75		%				5.15		%				4.10		%				4.14		%				4.86		%
Weighted-average interest rate, current discount rate(a)			3.78		%				5.04		%				5.02		%				5.04		%				4.96		%				5.08		%
Year Ended December 31, 2022
Weighted-average interest rate, original discount rate			1.77		%				3.58		%				5.17		%				4.08		%				3.56		%				4.88		%
Weighted-average interest rate, current discount rate			3.21		%				5.32		%				5.30		%				5.33		%				5.30		%				5.36		%
Year Ended December 31, 2021
Weighted-average interest rate, original discount rate			1.61		%				3.23		%				4.96		%				4.11		%				3.22		%				4.83		%
Weighted-average interest rate, current discount rate			3.27		%				2.75		%				2.68		%				2.85		%				2.71		%				3.08		%

(a)Weighted-average interest rates for Life Insurance include balances that have been reclassified to Liabilities held-for-sale at December 31, 2023.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment level, and are represented as an annual rate.

AIG | 2023 Form 10-K			221

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Actuarial Assumption Updates for Liability for Future Policy Benefits

In 2023, the life insurance companies recognized an unfavorable impact to net income due to other refinements on life products offset in part by mortality assumption updates. In 2022, the life insurance companies recognized a favorable impact to net income (mostly offset by corresponding DPL adjustment) due to updates to mortality and retirement assumptions on certain pension risk transfer products. In 2021, the life insurance companies recognized an unfavorable impact to net income mainly due to updated mortality on traditional life products.

Deferred Profit Liability: The Company issues certain annuity and life insurance contracts where premiums are paid up-front or for a shorter period than benefits will be paid (i.e., limited pay contracts). A DPL is required to be established to avoid recognition of gains when these contracts are issued. DPLs are amortized over the life of the contracts to align the revenue recognized with the related benefit expenses. The DPL is amortized in a constant relationship to the amount of discounted insurance in force for life insurance or expected future benefit payments for annuity contracts over the term of the contract.

The difference between the gross premium received and recorded as revenue and the net premium is deferred and recognized in policyholder benefits in a constant relationship to insurance in-force, or for annuities, the amount of expected future policy benefits. This deferred profit liability accretes interest and is recorded in the Consolidated Balance Sheets in Future policy benefits. Cash flow assumptions included in the measurement of the DPL are the same as those utilized in the respective LFPBs and are reviewed at least annually. The cash flow estimates for DPLs are updated on a retrospective catch-up basis at the same time as the cash flow estimates for the related LFPBs. The updated LFPB cash flows are used to recalculate the DPL at the inception of the applicable related LFPB cohort. The difference between the recalculated DPL at the beginning of the current reporting period and the carrying amount of the DPL at the current reporting period is recognized as a gain or loss in Policyholder benefits and losses incurred in the Consolidated Statements of Income (Loss).

The following table presents the transition rollforward for deferred profit liability for long-duration contracts:*

			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other*						Total
(in millions)
Pre-adoption December 31, 2020 deferred profit liability balance			$	2					$	—					$	5					$	64					$	—					$	71
Adjustments for the reclassification from/(to) the liability for the future policy benefits			65						8						—						766						859						1,698
Post-adoption January 1, 2021 deferred profit liability balance			$	67					$	8					$	5					$	830					$	859					$	1,769

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

Adjustments for the reclassification between the liability for future policy benefits and deferred profit liability represent changes in the net premium ratios that are less than 100 percent at transition for certain limited pay cohorts, resulting in a reclassification between the two liabilities, with no impact on Retained earnings.

Additional Liabilities: For universal-life type products, insurance benefits in excess of the account balance are generally recognized as expenses in the period incurred unless the design of the product is such that future charges are insufficient to cover the benefits, in which case an “additional liability” is accrued over the life of the contract. These additional liabilities are included in Future policy benefits for life and accident and health insurance contracts in the Consolidated Balance Sheets. Prior to the adoption of the standard, our additional liabilities consisted primarily of guaranteed minimum death benefits (GMDBs) on annuities, as well as universal-life contracts with secondary guarantees. Subsequent to the adoption of this standard, the GMDBs have been reclassified and reported as MRBs, while the universal-life contracts with secondary guarantees continue to be reported as additional liabilities.

The following table presents the transition rollforward of the additional liabilities:

			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(c)						Total
(in millions)
Pre-adoption December 31, 2020 additional liabilities			$	1,423					$	221					$	5,117					$	—					$	55					$	6,816
Adjustment for the reclassification of additional liabilities from Future policy benefits to Market risk benefits(a)			(907)						(132)						—						—						—						(1,039)
Adjustment for removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)(b)			(516)						(89)						—						—						—						(605)
Post-adoption January 1, 2021 additional liabilities			$	—					$	—					$	5,117					$	—					$	55					$	5,172

(a)Adjustments for the reclassification of additional liabilities from Future policy benefits to MRBs represent contract guarantees (e.g., GMDBs) that were previously classified as insurance liabilities within Future policy benefits, but have been reclassified as MRBs as of January 1, 2021. For additional information on the transition impacts associated with LDTI, see Note 15.

(b)Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses) relate to the additional liabilities reclassified from Future policy benefits in the line above.

(c)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

222			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

Our additional liabilities primarily consist of universal life policies with secondary guarantees and these additional liabilities are recognized in addition to the Policyholder account balances. For universal life policies with secondary guarantees, as well as other universal life policies for which profits followed by losses are expected at contract inception, a liability is recognized based on a benefit ratio of (a) the present value of total expected payments, in excess of the account value, over the life of the contract, divided by (b) the present value of total expected assessments over the life of the contract. For universal life policies without secondary guarantees, for which profits followed by losses are first expected after contract inception, we establish a liability, in addition to policyholder account balances, so that expected future losses are recognized in proportion to the emergence of profits in the earlier (profitable) years. Universal life account balances are reported within Policyholder contract deposits, while these additional liabilities are reported within the liability for future policy benefits in the Consolidated Balance Sheets. These additional liabilities are also adjusted to reflect the effect of unrealized gains or losses on fixed maturity securities available for sale on accumulated assessments, with related changes recognized through OCI. The policyholder behavior assumptions for these liabilities include mortality, lapses and premium persistency. The capital market assumptions used for the liability for universal life secondary guarantees include discount rates and net earned rates.

The following table presents the balances and changes in the liability for universal life policies with secondary guarantees and similar features:

Years Ended December 31,			2023												2022												2021
(in millions, except duration of liability)			Life Insurance						Other(b)						Total						Life Insurance						Other(b)						Total						Life Insurance						Other(b)						Total
Balance, beginning of year			$	3,300					$	55					$	3,355					$	4,952					$	55					$	5,007					$	5,117					$	55					$	5,172
Effect of changes in assumptions			(41)						—						(41)						(24)						—						(24)						(116)						—						(116)
Effect of changes in experience			319						(4)						315						303						(4)						299						331						(4)						327
Adjusted beginning balance			3,578						51						3,629						5,231						51						5,282						5,332						51						5,383
Assessments			671						2						673						687						2						689						669						2						671
Excess benefits paid			(943)						—						(943)						(909)						—						(909)						(859)						—						(859)
Interest accrual			132						2						134						126						2						128						136						2						138
Other			(9)						—						(9)						(11)						—						(11)						24						—						24
Changes related to unrealized appreciation (depreciation) of investments			302						—						302						(1,824)						—						(1,824)						(350)						—						(350)
Balance, end of year			3,731						55						3,786						3,300						55						3,355						4,952						55						5,007
Less: Reinsurance recoverable			(164)						—						(164)						(191)						—						(191)						(200)						—						(200)
Balance, end of year, net of Reinsurance recoverable			$	3,567					$	55					$	3,622					$	3,109					$	55					$	3,164					$	4,752					$	55					$	4,807
Weighted average duration of liability**(a)**			25.4						9.2												26.3						9.5												27.1						9.8

(a)The weighted average duration of liabilities is calculated as the modified duration using projected future net liability cash flows that are aggregated at the segment level, utilizing the segment level weighted average interest rates, which can be found in the table below.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the amount of revenue and interest recognized in the Consolidated Statements of Income (Loss) for the liability for universal life policies with secondary guarantees and similar features:

Years Ended December 31,			Gross Assessments																		Interest Accretion
(in millions)			2023						2022						2021						2023						2022						2021
Life Insurance			$	1,109					$	1,193					$	1,187					$	132					$	126					$	136
Other*			37						39						39						2						2						2
Total			$	1,146					$	1,232					$	1,226					$	134					$	128					$	138

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The following table presents the calculation of weighted average interest rate for the liability for universal life policies with secondary guarantees and similar features:

Years Ended December 31,			2023												2022												2021
			Life Insurance						Other*						Life Insurance						Other*						Life Insurance						Other*
Weighted-average interest rate			3.92		%				4.20		%				3.76		%				4.24		%				3.74		%				4.21		%

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

The weighted average interest rates are calculated using projected future net liability cash flows that are aggregated to the segment level, and are represented as an annual rate.

AIG | 2023 Form 10-K			223

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table presents details concerning our universal life policies with secondary guarantees and similar features:

Years Ended December 31,
(dollars in millions)						2023						2022
Account value			$			3,721			$			3,514
Net amount at risk			$			72,422			$			69,335
Average attained age of contract holders						53						53

Actuarial Assumption Updates for Liability for Universal Life Policies With Secondary Guarantees And Similar Features

In 2023, the life insurance companies recognized a favorable impact to net income due to updates to the portfolio yield assumption and refinements to the modeling for universal life with secondary guarantees and similar features, partially offset by updated premium assumptions. In 2022, the life insurance companies recognized a favorable impact to net income due to modeling refinements to reflect actual versus expected asset data related to calls and capital gains. In 2021, the life insurance companies recognized a favorable impact to net income primarily due to the update in the reserving methodology, partially offset by assumption updates to mortality.

POLICYHOLDER CONTRACT DEPOSITS

The liability for Policyholder contract deposits is primarily recorded at accumulated value (deposits received and net transfers from separate accounts, plus accrued interest credited, less withdrawals and assessed fees). Deposits collected on investment-oriented products are not reflected as revenues. They are recorded directly to Policyholder contract deposits upon receipt. Amounts assessed against the contract holders for mortality, administrative, and other services are included as Policy fees in revenues.

In addition to liabilities for universal life, fixed annuities, fixed options within variable annuities, annuities without life contingencies, funding agreements and GICs, policyholder contract deposits also include our liability for (i) index features accounted for as embedded derivatives at fair value, (ii) annuities issued in a structured settlement arrangement with no life contingency and (iii) certain contracts we have elected to account for at fair value. Changes in the fair value of the embedded derivatives related to policy index features and the fair value of derivatives hedging these liabilities are recognized in realized gains and losses.

For additional information on index credits accounted for as embedded derivatives, see Note 5.

Under a funding agreement-backed notes issuance program, an unaffiliated, non-consolidated statutory trust issues medium-term notes to investors, which are secured by funding agreements issued to the trust by one of our Life and Retirement companies through our Institutional Markets business.

The following table presents the transition rollforward of Policyholder contract deposits account balances**(a)****:**

			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(b)						Total
(in millions)
Pre-adoption December 31, 2020 Policyholder contract deposits			$	84,874					$	43,805					$	10,286					$	11,559					$	4,145					$	154,669
Adjustment for the reclassification of the embedded derivative liability to market risk benefits, net of the host adjustment(s)			(5,671)						(576)						—						—						—						(6,247)
Post-adoption January 1, 2021 Policyholder contract deposits			$	79,203					$	43,229					$	10,286					$	11,559					$	4,145					$	148,422

(a)Excludes Other Operations of $(199) million.

(b)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

224			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table presents the balances and changes in Policyholder contract deposits account balances**(a)****:**

Year Ended December 31, 2023			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(d)						Total
(in millions, except for average crediting rate)
Policyholder contract deposits account balance, beginning of year			$	89,554					$	43,395					$	10,224					$	11,734					$	3,587					$	158,494
Deposits			18,188						5,352						1,632						3,813						44						29,029
Policy charges			(840)						(477)						(1,524)						(67)						(64)						(2,972)
Surrenders and withdrawals			(14,025)						(8,310)						(256)						(722)						(93)						(23,406)
Benefit payments			(3,770)						(2,518)						(281)						(2,405)						(300)						(9,274)
Net transfers from (to) separate account			3,617						2,705						3						792						—						7,117
Interest credited			2,188						1,141						413						507						168						4,417
Other			(16)						11						20						(3)						(9)						3
Policyholder contract deposits account balance, end of year			94,896						41,299						10,231						13,649						3,333						163,408
Other reconciling items(b)			(1,429)						(230)						208						93						(71)						(1,429)
Policyholder contract deposits			$	93,467					$	41,069					$	10,439					$	13,742					$	3,262					$	161,979
Weighted average crediting rate			2.68			%			2.91			%			4.41			%			4.08			%			4.99			%
Cash surrender value**(c)**			$	88,685					$	40,210					$	9,026					$	2,583					$	1,712					$	142,216

Year Ended December 31, 2022			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(d)						Total
(in millions, except for average crediting rate)
Policyholder contract deposits account balance, beginning of year			$	84,097					$	43,902					$	10,183					$	10,804					$	3,823					$	152,809
Deposits			15,186						4,946						1,674						1,494						48						23,348
Policy charges			(870)						(462)						(1,570)						(69)						(65)						(3,036)
Surrenders and withdrawals			(8,921)						(5,712)						(211)						(134)						(64)						(15,042)
Benefit payments			(3,798)						(2,528)						(216)						(775)						(349)						(7,666)
Net transfers from (to) separate account			2,248						2,149						(5)						144						—						4,536
Interest credited			1,608						1,100						377						301						178						3,564
Other			4						—						(8)						(31)						16						(19)
Policyholder contract deposits account balance, end of year			89,554						43,395						10,224						11,734						3,587						158,494
Other reconciling items(b)			(2,136)						(319)						34						(16)						(73)						(2,510)
Policyholder contract deposits			$	87,418					$	43,076					$	10,258					$	11,718					$	3,514					$	155,984
Weighted average crediting rate			2.43			%			2.77			%			4.29			%			2.71			%			4.91			%
Cash surrender value**(c)**			$	83,278					$	41,831					$	8,866					$	2,537					$	1,808					$	138,320

Year Ended December 31, 2021			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Other(d)						Total
(in millions, except for average crediting rate)
Policyholder contract deposits account balance, beginning of year			$	80,012					$	43,406					$	10,012					$	11,351					$	4,143					$	148,924
Deposits			13,774						5,146						1,702						1,272						53						21,947
Policy charges			(781)						(523)						(1,567)						(65)						(69)						(3,005)
Surrenders and withdrawals			(8,863)						(5,795)						(212)						(91)						(76)						(15,037)
Benefit payments			(4,031)						(2,329)						(245)						(1,948)						(374)						(8,927)
Net transfers from (to) separate account			1,531						2,750						(2)						61						—						4,340
Interest credited			2,444						1,249						447						263						191						4,594
Other			11						(2)						48						(39)						(45)						(27)
Policyholder contract deposits account balance, end of year			84,097						43,902						10,183						10,804						3,823						152,809
Other reconciling items(b)			(1,289)						(259)						117						165						(157)						(1,423)
Policyholder contract deposits			$	82,808					$	43,643					$	10,300					$	10,969					$	3,666					$	151,386
Weighted average crediting rate			2.42						2.79						4.28						2.41						4.92
Cash surrender value**(c)**			$	79,787					$	43,359					$	8,826					$	2,520					$	1,880					$	136,372

(a)Transactions between the general account and the separate account are presented in this table on a gross basis (e.g., a policyholder's funds are initially deposited into the general account and then simultaneously transferred to the separate account), thus, did not impact the ending balance of policyholder contract deposits.

(b)Includes MRBs that are bifurcated and reported separately, net of embedded derivatives recorded in Policyholder contract deposits. Other also includes amounts related to Other Operations of $(71) million, $(75) million and $(158) million at December 31, 2023, 2022 and 2021, respectively.

(c)Cash surrender value is related to the portion of policyholder contract deposits that have a defined cash surrender value (e.g. GICs, do not have a cash surrender value).

(d)Primarily represents Life and Retirement legacy insurance lines ceded to Fortitude Re.

For information related to net amount at risk, see Note 14.

AIG | 2023 Form 10-K			225

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

The following table presents Policyholder contract deposits account balance by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums:

December 31, 2023						At Guaranteed Minimum						1 Basis Point - 50 Basis Points Above						More than 50 Basis Points Above Minimum Guarantee						Total
(in millions, except percentage of total)
Individual Retirement			Range of Guaranteed Minimum Credited Rate
<=1%			$	6,498					$	2,078					$	26,873					$	35,449
> 1% - 2%			3,749						22						1,771						5,542
> 2% - 3%			8,046						11						972						9,029
> 3% - 4%			6,610						37						5						6,652
> 4% - 5%			426						—						4						430
> 5%			32						—						3						35
Total			$	25,361					$	2,148					$	29,628					$	57,137
Group Retirement			Range of Guaranteed Minimum Credited Rate
<=1%			$	2,185					$	2,344					$	6,830					$	11,359
> 1% - 2%			3,731						1,242						671						5,644
> 2% - 3%			12,073						211						110						12,394
> 3% - 4%			615						—						—						615
> 4% - 5%			6,635						—						—						6,635
> 5%			144						—						—						144
Total			$	25,383					$	3,797					$	7,611					$	36,791
Life Insurance			Range of Guaranteed Minimum Credited Rate
<=1%			$	—					$	—					$	—					$	—
> 1% - 2%			—						132						346						478
> 2% - 3%			9						855						1,082						1,946
> 3% - 4%			1,170						496						26						1,692
> 4% - 5%			2,851						—						—						2,851
> 5%			216						—						—						216
Total			$	4,246					$	1,483					$	1,454					$	7,183
Total*						$	54,990					$	7,428					$	38,693					$	101,111
Percentage of total						55			%			7			%			38			%			100			%

226			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

December 31, 2022						At Guaranteed Minimum						1 Basis Point - 50 Basis Points Above						More than 50 Basis Points Above Minimum Guarantee						Total
(in millions, except percentage of total)
Individual Retirement			Range of Guaranteed Minimum Credited Rate
<=1%			$	8,766					$	2,161					$	21,702					$	32,629
> 1% - 2%			4,208						24						2,195						6,427
> 2% - 3%			9,502						—						17						9,519
> 3% - 4%			7,630						40						6						7,676
> 4% - 5%			456						—						5						461
> 5%			33						—						4						37
Total			$	30,595					$	2,225					$	23,929					$	56,749
Group Retirement			Range of Guaranteed Minimum Credited Rate
<=1%			$	3,611					$	1,427					$	5,609					$	10,647
> 1% - 2%			5,628						727						150						6,505
> 2% - 3%			13,968						3						—						13,971
> 3% - 4%			666						—						—						666
> 4% - 5%			6,843						—						—						6,843
> 5%			154						—						—						154
Total			$	30,870					$	2,157					$	5,759					$	38,786
Life Insurance			Range of Guaranteed Minimum Credited Rate
<=1%			$	—					$	—					$	—					$	—
> 1% - 2%			1						129						352						482
> 2% - 3%			32						831						1,116						1,979
> 3% - 4%			1,369						180						195						1,744
> 4% - 5%			2,974						—						—						2,974
> 5%			223						—						—						223
Total			$	4,599					$	1,140					$	1,663					$	7,402
Total*						$	66,064					$	5,522					$	31,351					$	102,937
Percentage of total						65			%			5			%			30			%			100			%

*Excludes policyholder contract deposits account balances that are not subject to guaranteed minimum crediting rates.

Funding Agreements

Under a funding agreement-backed notes issuance program, an unaffiliated, non-consolidated statutory trust issues medium-term notes to investors, which are secured by funding agreements issued to the trust by one of our Life and Retirement companies.

The United States Life Insurance Company in the City of New York is a member of the FHLB of New York, while The Variable Annuity Life Insurance Company and American General Life Insurance Company are members of the FHLB of Dallas. Membership with both FHLBs provides us with collateralized borrowing opportunities, primarily as an additional source of liquidity or for other uses deemed appropriate by management, e.g., earning a spread on deposits. Our ownership in the FHLB stock is reported in Other invested assets within the Consolidated Balance Sheets. Pursuant to the membership terms, our Life and Retirement companies elected to pledge such stock to the FHLB as collateral for our obligations under agreements with the FHLB.

Our Life and Retirement companies' net borrowing capacity under such facilities with FHLB of Dallas and FHLB of New York as of December 31, 2023 is $3.7 billion. As of December 31, 2023, we pledged $8.7 billion as collateral to the FHLB, including assets backing funding agreements.

The life insurance companies issued the following funding agreements to the FHLB of Dallas and FHLB of New York; these obligations are reported in Policyholder contract deposits in the Consolidated Balance Sheets:

The following table presents details concerning our funding agreements as of December 31, 2023:

December 31, 2023									Payments due by period
(in millions)			Gross Amounts						2024						2025-2026						2027-2028						Thereafter						Stated Interest rates
FHLB Facility
FHLB of Dallas			$	3,357					$	52					$	254					$	3,051					$	—					DNA Auction* + 22 to 30 bps
FHLB of Dallas			2,027						—						—						1,506						521						3.53% to 4.77%
FHLB of New York			241						94						147						—						—						1.52% to 2.70%
			$	5,625					$	146					$	401					$	4,557					$	521

*Discount Note Advance (DNA) Auction is based on either a 4-Week or 3-Month tenor, depending on contractual terms of each borrowing.

AIG | 2023 Form 10-K			227

ITEM 8 | Notes to Consolidated Financial Statements | 13. Insurance Liabilities

OTHER POLICYHOLDER FUNDS

Other policyholder funds include URR, consisting of front-end loads on investment-oriented contracts, representing those policy loads that are non-level and typically higher in initial policy years than in later policy years. Amortization of URR is recorded in Policy fees.

URR for investment-oriented contracts are generally deferred and amortized into income using the same assumptions and factors used to amortize DAC (i.e., on a constant level basis). Changes in future assumptions are applied by adjusting the amortization rate prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization of URR (i.e., policy fees) each period.

Other policyholder funds also include provisions for future dividends to participating policyholders, accrued in accordance with all applicable regulatory or contractual provisions. Participating life business represented approximately 0.5 percent and 0.7 percent of gross insurance in force at December 31, 2023 and December 31, 2022, respectively and 0.9 percent, 1.3 percent and 1.7 percent of gross premiums and other considerations in 2023, 2022 and 2021 respectively. The amount of annual dividends to be paid is approved locally by the Corebridge Boards of Directors. Provisions for future dividend payments are computed by jurisdiction, reflecting local regulations. The portions of current and prior net income and of current unrealized appreciation of investments that can inure to our benefit are restricted in some cases by the insurance contracts and by the local insurance regulations of the jurisdictions in which the policies are in force.

Certain products are subject to experience adjustments. These include group life and group medical products, credit life contracts, accident and health insurance contracts/riders attached to life policies and, to a limited extent, reinsurance agreements with other direct insurers. Ultimate premiums from these contracts are estimated and recognized as revenue with the unearned portions of the premiums recorded as liabilities in Other policyholder funds. Experience adjustments vary according to the type of contract and the territory in which the policy is in force and are subject to local regulatory guidance.

The following table presents the transition rollforward of URR:

			Life Insurance						Institutional Markets						Other*						Total
(in millions)
Pre-adoption December 31, 2020 URR balance			$	1,413					$	2					$	132					$	1,547
Adjustment for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)			248						—						—						248
Post-adoption January 1, 2021 URR balance			$	1,661					$	2					$	132					$	1,795

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Other policyholder funds, excluding URR, totaled $2.0 billion.

Prior to the adoption of LDTI, URR for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced URR.

The following table presents a rollforward of URR:

			Life Insurance						Institutional Markets						Other*						Total
(in millions)
Year Ended December 31, 2023
Balance, beginning of year			$	1,727					$	2					$	105					$	1,834
Revenue deferred			153						—						—						153
Amortization			(110)						(1)						(11)						(122)
Balance, end of year			$	1,770					$	1					$	94					$	1,865
Year Ended December 31, 2022
Balance, beginning of year			$	1,693					$	2					$	116					$	1,811
Revenue deferred			143						—						—						143
Amortization			(109)						—						(11)						(120)
Balance, end of year			$	1,727					$	2					$	105					$	1,834
Year Ended December 31, 2021
Balance, beginning of year			$	1,661					$	2					$	132					$	1,795
Revenue deferred			140						—						—						140
Amortization			(108)						—						(15)						(123)
Other, including foreign exchange			—						—						(1)						(1)
Balance, end of year			$	1,693					$	2					$	116					$	1,811

*Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. At December 31, 2023, 2022 and 2021, Other policyholder funds, excluding URR, totaled $1.5 billion, $1.6 billion and $1.7 billion, respectively.

228			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits

14. Market Risk Benefits

MRBs are defined as contracts or contract features that both provide protection to the contract holder from other-than-nominal capital market risk and expose AIG to other-than nominal capital market risk. The MRB represents an amount that a policyholder receives in addition to the account balance upon the occurrence of a specific event or circumstance, such as death, annuitization, or periodic withdrawal that involves protection from other-than-nominal capital market risk. Certain contract features, such as GMWBs, GMDBs and guaranteed minimum income benefits (GMIBs) commonly found in variable, fixed index and fixed annuities, are MRBs. MRBs are assessed at contract inception using a non-option method involving attributed fees that results in an initial fair value of zero or an option method that results in a fair value greater than zero.

MRBs are recorded at fair value, and AIG applies a non-option attributed fee valuation method for variable annuity products, and an option-based valuation method (host offset) for both fixed index and fixed products. Under the non-option valuation method, the attributed fee is determined at contract inception; it cannot exceed the total contract fees and assessments collectible from the contract holder and cannot be less than zero. Investment margin is excluded from the attributed fee determination. Under the option-based valuation method, an offset to the host amount related to the MRB amount is established at inception. Changes in the fair value of MRBs are recorded in net income in Changes in the fair value of market risk benefits, net except for the portion of the fair value change attributable to our own credit risk, which is recognized in OCI. MRBs are derecognized when the underlying contract is surrendered, a GMDB is incurred, a GMIB is annuitized, or when the account value is exhausted on a policy with a GMWB. Generally when a policyholder elects to annuitize a GMIB rider or the account value on a policy with a GMWB rider is reduced to zero, the policy is converted to a payout annuity automatically. When a conversion occurs, the policyholder is issued a new payout annuity contract. At this point, the MRB is derecognized and a LFPB is established for the payout annuity.

Assumptions used to determine the MRB asset (including ceded MRBs) or liability generally include mortality rates that are based upon actual experience modified to allow for variations in policy form; lapse rates that are based upon actual experience modified to allow for variations in policy features; and investment returns, based on stochastically generated scenarios. We evaluate at least annually estimates used to determine the MRB asset or liability and adjust the balance, with a related charge or credit to Change in fair value of MRBs, net, if actual experience or other evidence suggests that earlier assumptions should be revised. In addition, MRBs are valued such that the current provision for nonperformance risk is reflected in the claims cash flows of the asset or liability valuation for direct MRBs. The nonperformance risk spread at contract issue is locked-in. The difference between the MRB valued using the at issue nonperformance risk spread and the current nonperformance risk spread is reported through OCI, while changes in the counterparty credit risk related to ceded MRBs are reported in income.

Changes in the fair value of MRBs, net represents changes in the fair value of market risk benefit liabilities and assets (with the exception of our own credit risk changes), and includes attributed rider fees and benefits, net of changes in the fair value of derivative instruments and fixed maturity securities that are used to economically hedge market risk from the variable annuity GMWB riders.

The following table presents the transition rollforward of MRBs:

						Individual Retirement						Group Retirement						Total
(in millions)
Pre-adoption December 31, 2020 carrying amount for features now classified as MRBs						$	—					$	—					$	—
Adjustment for the reclassification of the embedded derivative liability from policyholder contract deposits, net of the host adjustment(s)(a)						5,671						576						6,247
Adjustment for the reclassification of additional liabilities from Future policy benefits(b)						1,388						221						1,609
Adjustments for the cumulative effect of the changes to our own credit risk between the original contract issuance date and the Transition Date(c)						2,140						187						2,327
Adjustment for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)(d)						(516)						(89)						(605)
Adjustment for the remaining difference (exclusive of our own credit risk change and host contract adjustments) between previous carrying amount and fair value measurement for the MRB(e)						(1,084)						(93)						(1,177)
Post-adoption January 1, 2021 carrying amount for features now classified as MRBs						$	7,599					$	802					$	8,401

(a)Adjustments for the reclassification from Policyholder contract deposits represents certain contract guarantees (e.g., GMWBs) that were previously classified as embedded derivatives, but have been reclassified as MRBs as of January 1, 2021, and the related host impact. The impact on Retained earnings or AOCI resulting from the simultaneous remeasurement of the guarantee as a market risk benefit is reflected in the lines below.

(b)Adjustments for the reclassification from Future policy benefits represents contract guarantees (e.g., GMDBs) that were previously classified as insurance liabilities within Future policy benefits, but have been reclassified as MRBs as of January 1, 2021. The impact on Retained earnings or AOCI resulting from the simultaneous remeasurement of the guarantee as a market risk benefit is reflected in the lines below.

(c)Adjustments for the cumulative effect of the changes to our own credit risk between the original contract issuance date and the Transition Date are recognized in AOCI.

(d)Adjustment for the removal of related balances in AOCI originating from unrealized gains (losses) with an offset to AOCI relate to the additional liabilities reclassified from Future policy benefits in the line above.

(e)Adjustment for the remaining difference represents the measurement of MRBs at fair value, excluding the impact of our own credit risk with an offset to Retained earnings.

AIG | 2023 Form 10-K			229

ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits

The following is a reconciliation of MRBs by amounts in an asset position and in liability position to the MRB amounts in the Consolidated Balance Sheets at transition:

						Individual Retirement						Group Retirement						Total
(in millions)
Market risk benefit in an asset position						$	176					$	—					$	176
Reinsured market risk benefit						162						—						162
Market risk benefit assets, at fair value						338						—						338
Market risk benefit liabilities, at fair value						7,937						802						8,739
Market risk benefit, net, January 1, 2021						$	7,599					$	802					$	8,401

The following table presents the balances of and changes in MRBs:

Years Ended December 31,						2023												2022												2021
						Individual Retirement						Group Retirement						Total						Individual Retirement						Group Retirement						Total						Individual Retirement						Group Retirement						Total
(in millions, except for attained age of contract holders)
Balance, beginning of year						$	3,738					$	296					$	4,034					$	6,452					$	582					$	7,034					$	7,761					$	802					$	8,563
Effect of changes in our own credit risk						(441)						(24)						(465)						(1,934)						(167)						(2,101)						(2,140)						(187)						(2,327)
Balance, beginning of year, before effect of changes in our own credit risk						$	3,297					$	272					$	3,569					4,518						415						4,933						5,621						615						6,236
Issuances						681						37						718						263						25						288						247						28						275
Interest accrual						156						15						171						172						21						193						142						21						163
Attributed fees						803						63						866						864						70						934						805						74						879
Expected claims						(91)						(3)						(94)						(83)						(2)						(85)						(54)						(2)						(56)
Effect of changes in interest rates						(139)						(13)						(152)						(4,087)						(371)						(4,458)						(1,098)						(107)						(1,205)
Effect of changes in interest rate volatility						(69)						(3)						(72)						263						18						281						74						4						78
Effect of changes in equity markets						(1,236)						(109)						(1,345)						1,382						122						1,504						(1,414)						(203)						(1,617)
Effect of changes in equity index volatility						(14)						(5)						(19)						(75)						1						(74)						33						20						53
Actual outcome different from model expected outcome						188						7						195						164						(3)						161						106						8						114
Effect of changes in future expected policyholder behavior						(1)						1						—						(2)						(18)						(20)						53						(36)						17
Effect of changes in other future expected assumptions						(85)						(39)						(124)						(85)						—						(85)						—						—						—
Other, including foreign exchange						—						(3)						(3)						3						(6)						(3)						3						(7)						(4)
Balance, end of year, before effect of changes in our own credit risk						3,490						220						3,710						3,297						272						3,569						4,518						415						4,933
Effect of changes in our own credit risk						1,072						88						1,160						441						24						465						1,934						167						2,101
Balance, end of year						4,562						308						4,870						3,738						296						4,034						6,452						582						7,034
Less: Reinsured MRB, end of year						(77)						—						(77)						(94)						—						(94)						(145)						—						(145)
Net Liability Balance after reinsurance recoverable						$	4,485					$	308					$	4,793					$	3,644					$	296					$	3,940					$	6,307					$	582					$	6,889
Net amount at risk
GMDB only						$	758					$	160					$	918					$	1,615					$	371					$	1,986					$	684					$	159					$	843
GMWB only						$	152					$	13					$	165					$	27					$	1					$	28					$	831					$	118					$	949
Combined*						$	1,011					$	18					$	1,029					$	2,084					$	39					$	2,123					$	567					$	14					$	581
Weighted average attained age of contract holders						70						64												70						64												70						63

*Certain contracts contain both guaranteed GMDB and GMWB features and are modeled together for the purposes of calculating the MRB.

The following is a reconciliation of MRBs by amounts in an asset position and in a liability position to the MRBs amount in the Consolidated Balance Sheets:

						December 31, 2023																		December 31, 2022
(in millions)						Asset*						Liability*						Net						Asset*						Liability*						Net
Individual Retirement						$	740					$	5,225					$	4,485					$	661					$	4,305					$	3,644
Group Retirement						172						480						308						135						431						296
Total						$	912					$	5,705					$	4,793					$	796					$	4,736					$	3,940

*Cash flows and attributed fees for MRBs are determined on a policy level basis and are reported based on their asset or liability position at the balance sheet date.

For additional information related to fair value measurements of MRBs, see Note 5.

230			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 14. Market Risk Benefits

ACTUARIAL ASSUMPTION UPDATES FOR MARKET RISK BENEFITS

In 2023, the life insurance companies recognized a favorable impact to net income due to policyholder behavior assumptions. In 2022, the life insurance companies recognized a favorable impact to net income due to an update to the relationship between projected equity growth and interest rates for annuities. For 2021, the impacts were mainly due to updating the lapse rate expectations.

ANNUITY GUARANTEES

Annuity contracts may include certain contractually guaranteed benefits to the contract holder. These guaranteed features include GMDBs that are payable in the event of death and living benefits that are payable when partial withdrawals exhaust a policy’s account value, in the event of annuitization, or, in other instances, at specified dates during the accumulation period. Living benefits primarily include GMWBs. A variable annuity contract may include more than one type of guaranteed benefit feature; for example, it may have both GMDB and GMWB. However, a policyholder can only receive payout from one guaranteed feature on a contract containing a death benefit and a living benefit, i.e., the features are mutually exclusive (except a surviving spouse who has a rider to potentially collect both GMDB upon their spouse’s death and GMWB during their lifetime). A policyholder cannot purchase more than one living benefit on one contract. The net amount at risk for each feature is calculated irrespective of the existence of other features; as a result, the net amount at risk for each feature is not additive to that of other features.

Guaranteed Benefits on Variable Annuities

The GMDB feature may provide a death benefit of either (a) total deposits made to the contract, less any partial withdrawals plus a minimum return (and in rare instances, no minimum return), (b) return of premium whereby the benefit is the greater of the current account value or premiums paid less any partial withdrawals, (c) rollups whereby the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified rates up to specified ages, or (d) the highest contract value attained, typically on any anniversary date less any subsequent withdrawals following the contract anniversary.

Certain of our variable annuity contracts contain GMDB features and may also contain living benefit riders, which include optional GMWBs and, to a lesser extent, GMABs and GMIBs. These living benefits and GMDBs related to variable annuity contracts are accounted for as MRBs measured at fair value, with changes in the fair value (excluding changes in our own credit risk) recorded in Change in the fair value of MRBs, net. The net amount at risk for the GMWB represents benefits in excess of the account value assuming the utilization of all benefits by the contract holders at the balance sheet date. The net amount at risk for the GMDB feature represents the amount of guaranteed benefits in excess of account value if all policyholders died. GMDB is our most widely offered benefit.

Guaranteed Benefits on Fixed Index and Fixed Annuities

Certain of our fixed annuity and fixed index annuity contracts, which are not offered through separate accounts, contain optional GMWBs. With a GMWB, the contract holder can monetize the excess of the guaranteed amount over the account value of the contract through a series of withdrawals that do not exceed a specific percentage per year of the guaranteed amount. Once the account value is exhausted, the contract holder will receive a series of annuity payments equal to the remaining guaranteed amount; for lifetime GMWB products, the annuity payments continue as long as the covered person(s) is living. The liability for GMWBs in fixed annuity and fixed index annuity contracts, which are recorded in MRBs, represents the expected value of benefits in excess of the projected account value, with the excess (excluding changes in our own credit risk) recognized at fair value through Change in the fair value of MRBs, net.

The liability for all of our GMWBs in fixed annuity and fixed index annuity contracts are accounted for as MRBs.

For a discussion of the fair value measurement of guaranteed benefits that are accounted for as MRBs*,* see Note 5.

15. Separate Account Assets and Liabilities

We report variable contracts within the separate accounts when investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contract holder and the separate account meets additional accounting criteria to qualify for separate account treatment. The assets supporting the variable portion of variable annuity and variable universal life contracts that qualify for separate account treatment are carried at fair value and are reported as separate account assets, with an equivalent summary total reported as separate account liabilities. The assets of separate accounts are legally segregated and are not subject to claims that arise from any of our other businesses.

AIG | 2023 Form 10-K			231

ITEM 8 | Notes to Consolidated Financial Statements | 15. Separate Account Assets and Liabilities

Policy values for variable products and investment contracts are expressed in terms of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the value of the linked asset portfolio. The current liability at any time is the sum of the current unit value of all investment units in the separate accounts, plus any liabilities for MRBs.

Amounts assessed against the policyholders for mortality, administrative and other services are included in policy fees. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to policyholders of such separate accounts are offset within the same line in the Consolidated Statements of Income (Loss).

For discussion of the fair value measurement of guaranteed benefits that are accounted for as MRBs, see Note 5.

The following table presents fair value of separate account investment options:

			December 31, 2023																		December 31, 2022
(in millions)			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Total						Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Total
Equity Funds			$	25,451					$	28,675					$	819					$	593					$	55,538					$	22,990					$	24,608					$	687					$	581					$	48,866
Bond Funds			4,037						3,292						44						1,303						8,676						3,802						4,081						46						1,321						9,250
Balanced Funds			17,711						5,479						53						1,923						25,166						17,663						5,113						49						1,939						24,764
Money Market Funds			694						742						16						173						1,625						723						559						17						674						1,973
Total			$	47,893					$	38,188					$	932					$	3,992					$	91,005					$	45,178					$	34,361					$	799					$	4,515					$	84,853

The following table presents the balances and changes in Separate account liabilities:

Year Ended December 31, 2023			Individual Retirement						Group Retirement						Life Insurance						Institutional Markets						Total
(in millions)
Balance, beginning of year			$	45,178					$	34,361					$	799					$	4,515					$	84,853
Premiums and deposits			1,408						1,374						36						41						2,859
Policy charges			(1,241)						(441)						(49)						(93)						(1,824)
Surrenders and withdrawals			(3,744)						(3,047)						(25)						(721)						(7,537)
Benefit payments			(844)						(557)						(7)						(68)						(1,476)
Investment performance			6,933						6,666						181						287						14,067
Net transfers from (to) general account and other			203						(168)						(3)						31						63
Balance, end of year			$	47,893					$	38,188					$	932					$	3,992					$	91,005
Cash surrender value*			$	46,911					$	37,992					$	911					$	3,994					$	89,808

Year Ended December 31, 2022
Balance, beginning of year			$	57,927					$	45,138					$	1,044					$	5,002					$	109,111
Premiums and deposits			2,420						1,611						37						69						4,137
Policy charges			(1,325)						(461)						(51)						(100)						(1,937)
Surrenders and withdrawals			(3,320)						(2,452)						(22)						(131)						(5,925)
Benefit payments			(898)						(613)						(6)						(59)						(1,576)
Investment performance			(9,861)						(8,479)						(201)						(319)						(18,860)
Net transfers from (to) general account and other			235						(383)						(2)						53						(97)
Balance, end of year			$	45,178					$	34,361					$	799					$	4,515					$	84,853
Cash surrender value*			$	44,124					$	34,169					$	777					$	4,518					$	83,588

Year Ended December 31, 2021
Balance, beginning of year			$	53,456					$	41,310					$	912					$	4,612					$	100,290
Premiums and deposits			4,081						1,979						49						76						6,185
Policy charges			(1,368)						(523)						(52)						(98)						(2,041)
Surrenders and withdrawals			(4,261)						(3,013)						(32)						(82)						(7,388)
Benefit payments			(1,039)						(615)						(10)						(23)						(1,687)
Investment performance			6,743						6,711						180						486						14,120
Net transfers from (to) general account and other			315						(711)						(3)						31						(368)
Balance, end of year			$	57,927					$	45,138					$	1,044					$	5,002					$	109,111
Cash surrender value*			$	56,727					$	44,909					$	1,026					$	4,993					$	107,655

*The cash surrender value represents the amount of the contract holder’s account balance distributable at the balance sheet date less applicable surrender charges.

Separate account liabilities primarily represent the contract holder's account balance in separate account assets and will be equal and offsetting to total separate account assets.

232			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt

16. Debt

Our long-term debt is denominated in various currencies, with both fixed and variable interest rates. Long-term debt is carried at the principal amount borrowed, including unamortized discounts, hedge accounting valuation adjustments and fair value adjustments, when applicable.

The following table lists our total debt outstanding at December 31, 2023 and 2022. The interest rates presented in the following table are the range of contractual rates in effect at December 31, 2023, including fixed and variable-rates:

At December 31, 2023			Range of Interest Rate(s)			Maturity Date(s)			Balance at December 31, 2023						Balance at December 31, 2022
(in millions)
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable			0% - 6.82%			2024 - 2055			$			9,079			$			10,242
Junior subordinated debt			4.88% - 8.18%			2037 - 2058						992						991
AIG Japan Holdings Kabushiki Kaisha			0.27% - 0.35%			2025						267						273
Validus notes and bonds payable												—						269
Total AIG general borrowings												10,338						11,775
AIG borrowings supported by assets:
AIG notes and bonds payable			7.00% - 8.13%			2025 - 2026						19						81
Series AIGFP matched notes and bonds payable			0.00% - 5.48%			2024 - 2046						18						18
Total AIG borrowings supported by assets												37						99
Total debt issued or guaranteed by AIG												10,375						11,874
Corebridge debt:
CRBGLH notes and bonds payable(a)			6.63% - 7.50%			2025 - 2029						200						200
CRBGLH junior subordinated debt(a)			7.57% - 8.50%			2030 - 2046						227						227
Corebridge senior unsecured notes - not guaranteed by AIG			3.50% - 6.05%			2025 - 2052						7,702						6,452
Corebridge junior subordinated debt - not guaranteed by AIG			6.88%			2052						989						989
DDTL facility - not guaranteed by AIG			3.00% - 5.50%			2025						250						1,500
Total Corebridge debt												9,368						9,368
GIAs, at fair value - supported by Corebridge assets(b)			4.88% - 5.04%			2037 - 2038						53						56
Other subsidiaries' notes, bonds, loans and mortgages payable - not guaranteed by AIG												—						1
Total Short-term and long-term debt									$			19,796			$			21,299
Debt of consolidated investment entities - not guaranteed by AIG**(c)**			0% - 4.45%			2024 - 2051			$			2,591			$			5,880
Total debt									$			22,387			$			27,179

(a)We have entered into a guarantee reimbursement agreement with Corebridge and Corebridge Life Holdings, Inc. (CRBGLH) (formerly known as AIG Life Holdings, Inc.) which provides that Corebridge and CRBGLH will reimburse AIG for the full amount of any payment made by or on behalf of AIG pursuant to AIG’s guarantee of the CRBGLH notes and junior subordinated debt. We have also entered into a collateral agreement with Corebridge and CRBGLH which provides that in the event of: (i) a ratings downgrade of Corebridge or CRBGLH long-term unsecured indebtedness below specified levels or (ii) the failure by CRBGLH to pay principal and interest on the CRBGLH debt when due, Corebridge and CRBGLH must collateralize an amount equal to the sum of: (i) 100 percent of the principal amount outstanding, (ii) accrued and unpaid interest, and (iii) 100 percent of the net present value of scheduled interest payments. through the maturity dates of the CRBGLH debt.

(b)Collateral posted to third parties was $63 million and $63 million at December 31, 2023 and 2022, respectively. This collateral primarily consists of securities of the U.S. government and government sponsored entities and generally cannot be repledged or resold by the counterparties.

(c)At December 31, 2023, includes debt of consolidated investment entities primarily related to real estate investments of $1.5 billion and other securitization vehicles of $1.1 billion. At December 31, 2022, includes debt of consolidated investment entities related to real estate investments of $1.5 billion and other securitization vehicles of $4.4 billion.

AIG | 2023 Form 10-K			233

ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt

The following table presents maturities of short-term and long-term debt (including unamortized original issue discount, hedge accounting valuation adjustments and fair value adjustments, when applicable):

December 31, 2023																		Year Ending
(in millions)						Total												2024						2025						2026						2027						2028						Thereafter
Debt issued or guaranteed by AIG:
AIG general borrowings:
Notes and bonds payable			$			9,079									$			459			$			146			$			268			$			905			$			340			$			6,961
Junior subordinated debt						992												—						—						—						—						—						992
AIG Japan Holdings Kabushiki Kaisha(a)						267												—						267						—						—						—						—
Total AIG general borrowings						10,338												459						413						268						905						340						7,953
AIG borrowings supported by assets:
AIG notes and bonds payable						19												—						12						7						—						—						—
Series AIGFP matched notes and bonds payable						18												—						—						—						—						—						18
Total AIG borrowings supported by assets						37												—						12						7						—						—						18
Total debt issued or guaranteed by AIG						10,375												459						425						275						905						340						7,971
Corebridge debt:
CRBGLH notes and bonds payable						200												—						101						—						—						—						99
CRBGLH junior subordinated debt						227												—						—						—						—						—						227
Corebridge senior unsecured notes						7,702												—						997						—						1,243						—						5,462
Corebridge junior subordinated debt						989												—						—						—						—						—						989
DDTL facility(b)						250												250						—						—						—						—						—
Total Corebridge debt						9,368												250						1,098						—						1,243						—						6,777
GIAs, at fair value - supported by Corebridge assets						53												—						—						—						—						—						53
Total**(c)**			$			19,796									$			709			$			1,523			$			275			$			2,148			$			340			$			14,801

(a)In May 2023, the AIG Japan Holdings Kabushiki Kaisha syndicated loan facility in the amount of JPY24.65 billion and with a maturity date of May 25, 2023, was refinanced, and will now mature on March 25, 2025.

(b)Corebridge has the ability to further continue this borrowing through February 25, 2025.

(c)Does not reflect $2.6 billion of notes issued by consolidated investment entities, for which recourse is limited to the assets of the respective investment entities and for which there is no recourse to the general credit of AIG.

DEBT ISSUANCE

In March 2023, AIG issued $750 million aggregate principal amount of 5.125% Notes Due 2033.

On September 15, 2023, Corebridge issued $500 million aggregate principal amount of its 6.050% Senior Notes due 2033.

On December 8, 2023, Corebridge issued $750 million aggregate principal amount of its 5.750% Senior Notes due 2034.

DEBT CASH TENDER OFFERS AND REDEMPTIONS

In 2023, we repurchased, through cash tender offers, and redeemed $2.2 billion aggregate principal amount of certain notes and debentures issued or guaranteed by AIG, for an aggregate purchase price of $2.2 billion, resulting in a total gain on extinguishment of debt of $37 million. This includes the following:

• Repaid £311 million aggregate principal amount of our 5.00% Notes due 2023, which was equivalent to approximately $388 million at the time of repayment.

• Redeemed $199 million aggregate principal amount of Validus 8.875% Senior Notes due 2040 for a redemption price of 143.968 percent of the principal amount, plus accrued and unpaid interest, which totaled $289 million.

• Repurchased, through cash tender offers, approximately $1.6 billion aggregate principal amount of certain notes and debentures issued by AIG for an aggregate purchase price of approximately $1.5 billion.

CREDIT FACILITIES

On November 19, 2021, we entered into a credit agreement, which provides for a committed, revolving syndicated credit facility (the Facility) as a potential source of liquidity for general corporate purposes. The Facility provides for aggregate commitments by the bank syndicate to provide unsecured revolving loans and/or standby letters of credit of up to $4.5 billion without any limits on the type of borrowings and is scheduled to expire in November 2026. Under circumstances described in the credit agreement, the aggregate commitments may be increased by up to $500 million, for a total commitment of up to $5 billion. As of December 31, 2023, a total of $4.5 billion remained available under the Facility.

234			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 16. Debt

Corebridge maintains a committed, revolving syndicated credit facility (the Corebridge Facility) with aggregate commitments by the bank syndicate to provide Corebridge with unsecured revolving loans and/or standby letters of credit of up to $2.5 billion without any limits on the type of borrowings and with no recourse to AIG Parent. The Corebridge Facility is scheduled to expire in May 2027. As of December 31, 2023, a total of $2.5 billion remained available under the Corebridge Facility.

Corebridge also maintains a 3-Year Delayed Draw Term Loan Agreement (the DDTL Facility) scheduled to mature in February 2025. On September 15, 2022, Corebridge borrowed $1.5 billion under the DDTL Facility, $1.25 billion of which Corebridge repaid in 2023. At December 31, 2023, Corebridge has $250 million of borrowings outstanding in the DDTL Facility, with no recourse to AIG Parent.

We also maintain a revolving credit facility that can be utilized exclusively by certain consolidated investment entities to acquire assets related to securitizations. Draws under this credit facility cannot be utilized for general corporate purposes. Prior to the pricing of the related securitizations, this credit facility has a limit of up to $250 million. Subsequent to pricing of the related securitizations, the limit is expected to increase to up to approximately $450 million. As of December 31, 2023, we have drawn $43 million under the credit facility. This credit facility has a maturity date of seven years.

We also maintain revolving credit facilities that can exclusively be utilized by certain consolidated investment entities to acquire real estate assets. Draws under those credit facilities cannot be utilized for general corporate purposes. These credit facilities have consolidated limits of up to $396 million. As of December 31, 2023, we have drawn $231 million, under the credit facilities. Each of these credit facilities have maturity dates ranging from one year to two years.

17. Contingencies, Commitments and Guarantees

In the normal course of business, various contingent liabilities and commitments are entered into by AIG and our subsidiaries. In addition, AIG Parent guarantees various obligations of certain subsidiaries.

Although AIG cannot currently quantify its ultimate liability for unresolved litigation and investigation matters, including those referred to below, it is possible that such liability could have a material adverse effect on AIG’s consolidated financial condition or its consolidated results of operations or consolidated cash flows for an individual reporting period.

LEGAL CONTINGENCIES

Overview

In the normal course of business, AIG and our subsidiaries are subject to regulatory and government investigations and actions, and litigation and other forms of dispute resolution in a large number of proceedings pending in various domestic and foreign jurisdictions. Certain of these matters involve potentially significant risk of loss due to potential for significant jury awards and settlements, punitive damages or other penalties. Many of these matters are also highly complex and may seek recovery on behalf of a class or similarly large number of plaintiffs. It is therefore inherently difficult to predict the size or scope of potential future losses arising from these matters. In our insurance and reinsurance operations, litigation and arbitration concerning the scope of coverage under insurance and reinsurance contracts, and litigation and arbitration in which our subsidiaries defend or indemnify their insureds under insurance contracts, are generally considered in the establishment of our loss reserves. Separate and apart from the foregoing matters involving insurance and reinsurance coverage, AIG, our subsidiaries and their respective officers and directors are subject to a variety of additional types of legal proceedings brought by holders of AIG securities, customers, employees and others, alleging, among other things, breach of contractual or fiduciary duties, bad faith, indemnification and violations of federal and state statutes and regulations. With respect to these other categories of matters not arising out of claims for insurance or reinsurance coverage, we establish reserves for loss contingencies when it is probable that a loss will be incurred and the amount of the loss can be reasonably estimated. In many instances, we are unable to determine whether a loss is probable or to reasonably estimate the amount of such a loss and, therefore, the potential future losses arising from legal proceedings may exceed the amount of liabilities that we have recorded in our financial statements covering these matters. While such potential future charges could be material, based on information currently known to management, management does not believe, other than as may be discussed below, that any such charges are likely to have a material adverse effect on our financial position or results of operation.

Additionally, from time to time, various regulatory and governmental agencies review the transactions and practices of AIG and our subsidiaries in connection with industry-wide and other inquiries or examinations into, among other matters, the business practices of current and former operating insurance subsidiaries. Such investigations, inquiries or examinations could develop into administrative, civil or criminal proceedings or enforcement actions, in which remedies could include fines, penalties, restitution or alterations in our business practices, and could result in additional expenses, limitations on certain business activities and reputational damage.

AIG | 2023 Form 10-K			235

ITEM 8 | Notes to Consolidated Financial Statements | 17. Contingencies, Commitments and Guarantees

Moriarty Litigation

American General Life Insurance Company (AGL) continues to defend against Moriarty v. American General Life Insurance Co. (S.D. Cal.), a putative class action involving Sections 10113.71 and 10113.72 of the California Insurance Code. In general, those statutes require that for life-insurance policies issued and delivered in California: (1) the policy must contain a 60-day grace period following nonpayment of premium during which the policy remains in force; (2) the insurer must provide a 30-day pre-lapse notice; and (3) the insurer must notify policy owners of the right to designate a secondary recipient for lapse notices. The Moriarty plaintiff contends AGL did not comply with these requirements for a policy issued before these statutes went into effect. The plaintiff seeks damages and other relief. AGL asserts various defenses to the plaintiff’s claims and to class certification. In 2022, the District Court held a trial was necessary to determine whether AGL was liable, and it denied class certification. In May 2023, the case was reassigned to a new judge. On August 14, 2023, the District Court granted the plaintiff’s motion for summary judgment on the plaintiff’s breach-of-contract claim. On September 26, 2023, the District Court decided that good cause exists to allow the plaintiff to file a third motion for class certification. At the same time, however, the District Court certified its August 14, 2023 order for interlocutory appeal to the Ninth Circuit and stayed trial-court proceedings pending the outcome of AGL’s appeal. The Ninth Circuit granted AGL’s petition for interlocutory appeal on November 21, 2023, which remains pending.

AGL is defending other actions in California involving similar issues: Allen v. Protective Life Insurance Co. and AGL (E.D. Cal.), in which the individual plaintiff filed a motion on August 11, 2023 seeking leave to amend the complaint to add class-action allegations against AGL; and Chuck v. American General Life Insurance Co. (C.D. Cal.), which was filed on September 6, 2023 as a putative class action. These cases are in the early stages, and we expect their progress will be influenced by future developments in Moriarty and cases against other insurers involving the same statutes.

We have accrued our current estimate of probable loss with respect to these litigation matters.

LEASE COMMITMENTS

We lease office space and equipment in various locations across jurisdictions in which the Company operates. The majority of the resulting obligation arising from these contracts is generated by our real estate portfolio, which only includes contracts classified as operating leases. The lease liability and corresponding right of use asset reflected in Other liabilities and Other assets were $919 million and $767 million, respectively, at December 31, 2023, and $1.1 billion and $880 million, respectively, at December 31, 2022. We made cash payments of $197 million and $205 million in 2023 and 2022, respectively, in connection with these leases. The liability includes non-lease components, such as property taxes and insurance for our gross leases. Some of these leases contain options to renew after a specified period of time at the prevailing market rate; however, renewal options that have not been exercised as of December 31, 2023 are excluded until management attains a reasonable level of certainty. Some leases also include termination options at specified times and term; however, termination options are not reflected in the lease asset and liability balances until they have been exercised.

The weighted average discount rate and lease term assumptions used in determining the liability are 2.96 percent and 10.2 years, respectively. The primary assumption used to determine the discount rate is the cost of funding for the Company, which is based on the secured borrowing rate for terms similar to the lease term, and for the major financial markets in which AIG operates.

Rent expense was $177 million, $190 million and $237 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table presents the future undiscounted cash flows under operating leases at December 31, 2023:

(in millions)
2024			$			164
2025						134
2026						93
2027						85
2028						77
Remaining years after 2028						576
Total undiscounted lease payments						1,129
Less: Present value adjustment						210
Net lease liabilities			$			919

OTHER COMMITMENTS

In the normal course of business, we enter into commitments to invest in limited partnerships, private equity funds and hedge funds and to purchase and develop real estate in the U.S. and abroad. These commitments totaled $6.1 billion and $6.6 billion at December 31, 2023 and 2022, respectively.

236			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 17. Contingencies, Commitments and Guarantees

GUARANTEES

Subsidiaries

We have issued unconditional guarantees with respect to the prompt payment, when due, of all present and future payment obligations and liabilities of AIGFP and certain of its subsidiaries. We have also issued guarantees of all present and future payment obligations and liabilities of AIG Markets, Inc.

Due to the deconsolidation of AIGFP and its subsidiaries, as of December 31, 2023, a $102 million guarantee related to the obligations of AIGFP and certain of its subsidiaries was recognized, and is reported in Other liabilities.

Business and Asset Dispositions

We are subject to financial guarantees and indemnity arrangements in connection with the completed sales of businesses and assets. The various arrangements may be triggered by, among other things, declines in asset values, the occurrence of specified business contingencies, the realization of contingent liabilities, developments in litigation or breaches of representations, warranties or covenants provided by us. These arrangements are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or are not applicable.

We are unable to develop a reasonable estimate of the maximum potential payout under certain of these arrangements. Overall, we believe the likelihood that we will have to make any material payments related to completed sales under these arrangements is remote, and no material liabilities related to these arrangements have been recorded in the Consolidated Balance Sheets.

Other

*•*For additional information on commitments and guarantees associated with VIEs, see Note 10.

*•*For additional information on derivatives, see Note 11.

18. Equity

SHARES OUTSTANDING

Preferred Stock

On March 14, 2019, we issued 20,000 shares of Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred Stock) (equivalent to 20,000,000 Depositary Shares (the Depositary Shares), each representing a 1/1,000th interest in a share of Series A Preferred Stock), $5.00 par value and $25,000 liquidation preference per share (equivalent to $25 per Depositary Share). After underwriting discounts and expenses, we received net proceeds of approximately $485 million.

We may redeem the Series A Preferred Stock at our option, (a) in whole, but not in part, at any time prior to March 15, 2024, within 90 days after the occurrence of a “Rating Agency Event,” (as defined in our Amended and Restated Certificate of Incorporation), at a redemption price equal to $25,500 per share of the Series A Preferred Stock (equivalent to $25.50 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date), or (b) (i) in whole, but not in part, at any time prior to March 15, 2024, within 90 days after the occurrence of a “Regulatory Capital Event,” or (ii) in whole or in part, from time to time, on or after March 15, 2024, in each case, at a redemption price equal to $25,000 per share of the Series A Preferred Stock (equivalent to $25.00 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date).

Holders of the Series A Preferred Stock will be entitled to receive dividend payments only when, as and if declared by our Board of Directors (or a duly authorized committee of the board). Dividends will be payable from the original date of issue at a rate of 5.85% per annum, payable quarterly, in arrears, on the fifteenth day of March, June, September and December of each year, beginning on June 15, 2019. Dividends on the Series A Preferred Stock will be non-cumulative.

In the event of any liquidation, dissolution or winding-up of the affairs of AIG, whether voluntary or involuntary, before any distribution or payment out of our assets may be made to or set aside for the holders of any junior stock, holders of the Series A Preferred Stock will be entitled to receive out of our assets legally available for distribution to our shareholders, an amount equal to $25,000 per share of Series A Preferred Stock (equivalent to $25.00 per Depositary Share), together with an amount equal to all declared and unpaid dividends (if any), but no amount in respect of any undeclared dividends prior to such payment date. Distributions will be made only to the extent of our assets that are available for distribution to shareholders (i.e., after satisfaction of all our liabilities to creditors, if any).

AIG | 2023 Form 10-K			237

ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity

The Series A Preferred Stock does not have voting rights, except in limited circumstances, including in the case of certain dividend non-payments.

On January 31, 2024, we announced that we will redeem all of the 20,000 outstanding shares of the Series A Preferred Stock and all 20,000,000 of the corresponding Depositary Shares, each representing a 1/1,000th interest in a share of Series A Preferred Stock, on March 15, 2024. The redemption price per share of Series A Preferred Stock will be $25,000 (equivalent to $25.00 per Depositary Share).

Common Stock

The following table presents a rollforward of outstanding shares:

Years Ended December 31,			2023												2022												2021
(in millions)			Common Stock Issued			Treasury Stock			Common Stock Outstanding						Common Stock Issued			Treasury Stock			Common Stock Outstanding						Common Stock Issued			Treasury Stock			Common Stock Outstanding
Shares, beginning of year			1,906.7			(1,172.6)			734.1						1,906.7			(1,088.0)			818.7						1,906.7			(1,045.1)			861.6
Shares issued			—			5.5			5.5						—			5.5			5.5						—			6.8			6.8
Shares repurchased			—			(50.8)			(50.8)						—			(90.1)			(90.1)						—			(49.7)			(49.7)
Shares, end of year			1,906.7			(1,217.9)			688.8						1,906.7			(1,172.6)			734.1						1,906.7			(1,088.0)			818.7

Dividends

Dividends are payable on AIG common stock, par value $2.50 per share (AIG Common Stock) only when, as and if declared by our Board of Directors in its discretion, from funds legally available for this purpose. In considering whether to pay a dividend on or purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital resources available to support our insurance operations and business strategies, AIG’s funding capacity and capital resources in comparison to internal benchmarks, expectations for capital generation, rating agency expectations for capital, regulatory standards for capital and capital distributions, and such other factors as our Board of Directors may deem relevant. The payment of dividends is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which no dividends may be declared or paid on any AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

Repurchase of AIG Common Stock

Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. Certain of our share repurchases have been and may from time to time be effected through the Securities Exchange Act of 1934, as amended (the Exchange Act) Rule 10b5-1 repurchase plans. On August 1, 2023, the Board of Directors authorized the repurchase of $7.5 billion of AIG Common Stock (inclusive of the approximately $2.15 billion of expected remaining authorization under the Board's prior share repurchase authorization).

The timing of any future repurchases will depend on market conditions, our business and strategic plans, financial condition, results of operations, liquidity and other factors. The repurchase of AIG Common Stock is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which AIG may not (other than in limited circumstances) purchase, redeem or otherwise acquire AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

Pursuant to an Exchange Act Rule 10b5-1 repurchase plan, from January 1, 2024 to February 8, 2024, we repurchased approximately 10 million shares of AIG Common Stock for an aggregate purchase price of approximately $706 million.

DIVIDENDS DECLARED

On February 13, 2024, our Board of Directors declared a cash dividend on AIG Common Stock of $0.36 per share, payable on March 28, 2024 to shareholders of record on March 14, 2024. On February 13, 2024, our Board of Directors declared a cash dividend on AIG’s Series A Preferred Stock of $365.625 per share, payable on March 15, 2024 to holders of record on February 29, 2024.

238			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents a rollforward of Accumulated other comprehensive income (loss):

(in millions)			Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Allowance for Credit Losses Was Taken						Unrealized Appreciation (Depreciation) of All Other Investments						Change in Fair Value of Market Risk Benefits Attributable to Changes in Our Own Credit Risk						Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts						Foreign Currency Translation Adjustments						Retirement Plan Liabilities Adjustment						Fair Value of Liabilities Under Fair Value Option Attributable to Changes in Our Own Credit Risk									Total
Balance, January 1, 2021, net of tax			$			(95)			$			17,093			$			—			$			—			$			(2,267)			$			(1,228)			$			8			$			13,511
Cumulative effect of change in accounting principle, net of tax						—						3,407						(1,839)						(3,765)						—						—						—						(2,197)
Change in unrealized appreciation (depreciation) of investments						58						(9,313)						—						—						—						—						—						(9,255)
Change in other						(3)						(25)						—						—						—						—						—						(28)
Change in fair value of market risk benefits, net						—						—						227						—						—						—						—						227
Change in discount rates						—						—						—						1,717						—						—						—						1,717
Change in future policy benefits						—						380						—						—						—						—						—						380
Change in foreign currency translation adjustments						—						—						—						—						(108)						—						—						(108)
Change in net actuarial loss						—						—						—						—						—						417						—						417
Change in prior service cost						—						—						—						—						—						8						—						8
Change in deferred tax asset (liability)						(11)						1,807						(48)						(356)						(72)						(100)						—						1,220
Change in fair value of liabilities under fair value option attributable to changes in own credit risk						—						—						—						—						—						—						(2)						(2)
Total other comprehensive income (loss)						44						(7,151)						179						1,361						(180)						325						(2)						(5,424)
Corebridge noncontrolling interests						3						(1,333)						171						243						(2)						—						—						(918)
Noncontrolling interests						—						(109)						7						6						(3)						—						—						(99)
Balance, December 31, 2021, net of tax			$			(48)			$			12,125			$			(1,496)			$			(2,167)			$			(2,446)			$			(903)			$			6			$			5,071
Change in unrealized appreciation (depreciation) of investments						(119)						(47,647)						—						—						—						—						—						(47,766)
Change in other						—						(12)						—						—						—						—						—						(12)
Change in fair value of market risk benefits, net						—						—						1,635						—						—						—						—						1,635
Change in discount rates						—						—						—						6,993						—						—						—						6,993
Change in future policy benefits						—						1,805						—						—						—						—						—						1,805
Change in foreign currency translation adjustments						—						—						—						—						(593)						—						—						(593)
Change in net actuarial loss						—						—						—						—						—						(31)						—						(31)
Change in prior service cost						—						—						—						—						—						8						—						8
Change in deferred tax asset (liability)						25						7,446						(341)						(1,449)						(20)						3						—						5,664
Change in fair value of liabilities under fair value option attributable to changes in our own credit risk						—						—						—						—						—						—						(6)						(6)
Total other comprehensive loss						(94)						(38,408)						1,294						5,544						(613)						(20)						(6)						(32,303)
Corebridge noncontrolling interests						—						2,485						11						(393)						14						(1)						—						2,116
Noncontrolling interests						(6)						(3,123)						93						525						11						—						—						(2,500)
Balance, December 31, 2022, net of tax			$			(136)			$			(20,675)			$			(284)			$			2,459			$			(3,056)			$			(924)			$			—			$			(22,616)
Change in unrealized appreciation (depreciation) of investments*						30						8,410						—						—						—						—						—						8,440
Change in other						(10)						52						—						—						—						—						—						42
Change in fair value of market risk benefits, net						—						—						(695)						—						—						—						—						(695)
Change in discount rates						—						—						—						(1,045)						—						—						—						(1,045)
Change in future policy benefits						—						(254)						—						—						—						—						—						(254)
Change in foreign currency translation adjustments						—						—						—						—						137						—						—						137
Change in net actuarial loss						—						—						—						—						—						143						—						143
Change in prior service cost						—						—						—						—						—						4						—						4
Change in deferred tax asset (liability)						(6)						(1,074)						151						174						(35)						(42)						—						(832)
Total other comprehensive income						14						7,134						(544)						(871)						102						105						—						5,940
Corebridge noncontrolling interests						13						4,524						153						(732)						(18)						(2)						—						3,938
Noncontrolling interests						(3)						1,871						(199)						(377)						7						—						—						1,299
Balance, December 31, 2023, net of tax			$			(106)			$			(10,888)			$			(476)			$			1,233			$			(2,979)			$			(821)			$			—			$			(14,037)

*Includes net unrealized gains and losses attributable to businesses held for sale at December 31, 2023.

AIG | 2023 Form 10-K			239

ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity

The following table presents the other comprehensive income (loss) reclassification adjustments for the years ended December 31, 2023 and 2022**, respectively:**

(in millions)			Unrealized Appreciation (Depreciation) of Fixed Maturity Securities on Which Allowance for Credit Losses Was Taken						Unrealized Appreciation (Depreciation) of All Other Investments						Change in Fair Value of Market Risk Benefits Attributable to Changes in Our Own Credit Risk						Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts						Foreign Currency Translation Adjustments						Retirement Plan Liabilities Adjustment						Fair Value of Liabilities Under Fair Value Option Attributable to Changes in Our Own Credit Risk									Total
Year Ended December 31, 2023
Unrealized change arising during period			$			(6)			$			7,172			$			(695)			$			(1,045)			$			137			$			118			$			—			$			5,681
Less: Reclassification adjustments included in net income						(26)						(1,036)						—						—						—						(29)						—						(1,091)
Total other comprehensive income (loss), before of income tax expense (benefit)						20						8,208						(695)						(1,045)						137						147						—						6,772
Less: Income tax expense (benefit)						6						1,074						(151)						(174)						35						42						—						832
Total other comprehensive income (loss), net of income tax expense (benefit)			$			14			$			7,134			$			(544)			$			(871)			$			102			$			105			$			—			$			5,940
Year Ended December 31, 2022
Unrealized change arising during period			$			(112)			$			(47,043)			$			1,635			$			6,993			$			(593)			$			(53)			$			(6)			$			(39,179)
Less: Reclassification adjustments included in net income						7						(1,189)						—						—						—						(30)						—						(1,212)
Total other comprehensive income (loss), before income tax expense (benefit)						(119)						(45,854)						1,635						6,993						(593)						(23)						(6)						(37,967)
Less: Income tax expense (benefit)						(25)						(7,446)						341						1,449						20						(3)						—						(5,664)
Total other comprehensive income (loss), net of income tax expense (benefit)			$			(94)			$			(38,408)			$			1,294			$			5,544			$			(613)			$			(20)			$			(6)			$			(32,303)
Year Ended December 31, 2021
Unrealized change arising during period			$			55			$			(8,030)			$			227			$			1,717			$			(108)			$			379			$			(2)			$			(5,762)
Less: Reclassification adjustments included in net income						—						928						—						—						—						(46)						—						882
Total other comprehensive income (loss), before income tax expense (benefit)						55						(8,958)						227						1,717						(108)						425						(2)						(6,644)
Less: Income tax expense (benefit)						11						(1,807)						48						356						72						100						—						(1,220)
Total other comprehensive income (loss), net of income tax expense (benefit)			$			44			$			(7,151)			$			179			$			1,361			$			(180)			$			325			$			(2)			$			(5,424)

The following table presents the effect of the reclassification of significant items out of AOCI on the respective line items in the Consolidated Statements of Income (Loss)(a):

			Amount Reclassified from AOCI																					Affected Line Item in the
			Years Ended December 31,																					Consolidated
(in millions)						2023						2022						2021						Statements of Income (Loss)
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken
Investments			$			(26)			$			7			$			—						Net realized gains (losses)
Total						(26)						7						—
Unrealized appreciation (depreciation) of all other investments
Investments						(1,036)						(1,189)						928						Net realized gains (losses)
Total						(1,036)						(1,189)						928
Change in retirement plan liabilities adjustment
Prior-service credit						(2)						(2)						(3)						(b)
Actuarial losses						(27)						(28)						(43)						(b)
Total						(29)						(30)						(46)
Total reclassifications for the period			$			(1,091)			$			(1,212)			$			882

(a)The following items are not reclassified out of AOCI and included in the Consolidated Statements of Income (Loss) and thus have been excluded from the table: (a) Change in fair value of market risk benefits attributable to changes in our own credit risk (b) Change in the discount rates used to measure traditional and limited-payment long-duration insurance contracts, and (c) Fair value of liabilities under fair value option attributable to changes in own credit risk.

(b)These AOCI components are included in the computation of net periodic pension cost. For additional information, see Note 22.

240			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 18. Equity

NONCONTROLLING INTEREST

Since the IPO of Corebridge, AIG closed on three secondary offerings and sold 159.75 million shares of Corebridge common stock. Corebridge also repurchased approximately 17.2 million shares of Corebridge common stock from AIG during the year ended December 31, 2023. AIG owns 52.2 percent of the outstanding common stock of Corebridge as of December 31, 2023.

For additional information on the Corebridge common stock offerings and share repurchases, see Note 1.

The following table presents the effect of changes in our ownership interest in Corebridge on our equity:

Years Ended December 31,
(in millions)									2023						2022						2021
Net income attributable to AIG common shareholders									$	3,614					$	10,198					$	10,338
Changes in AIG equity for sale of interest in Corebridge and Corebridge share repurchases									145						497						(630)
Change from Net income attributable to AIG common shareholders and changes in AIG's ownership interests									$	3,759					$	10,695					$	9,708

19. Earnings Per Common Share (EPS)

The basic EPS computation is based on the weighted average number of common shares outstanding, adjusted to reflect all stock dividends and stock splits. The diluted EPS computation is based on those shares used in the basic EPS computation plus common shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares outstanding and adjusted to reflect all stock dividends and stock splits, using the treasury stock method or the if-converted method, as applicable.

The following table presents the computation of basic and diluted EPS:

Years Ended December 31,
(dollars in millions, except per common share data)																					2023						2022						2021
Numerator for EPS:
Income (loss) from continuing operations																					$	3,878					$	11,274					$	10,906
Less: Net income from continuing operations attributable to noncontrolling interests																					235						1,046						539
Less: Preferred stock dividends																					29						29						29
Income (loss) attributable to AIG common shareholders from continuing operations																					3,614						10,199						10,338
Income (loss) from discontinued operations, net of income tax expense																					—						(1)						—
Net income (loss) attributable to AIG common shareholders																					$	3,614					$	10,198					$	10,338
Denominator for EPS:
Weighted average common shares outstanding - basic																					719,506,291						778,621,118						854,320,449
Dilutive common shares																					5,726,777						9,320,632						10,564,430
Weighted average common shares outstanding - diluted(a)																					725,233,068						787,941,750						864,884,879
Income (loss) per common share attributable to AIG common shareholders:
Basic:
Income (loss) from continuing operations																					$	5.02					$	13.10					$	12.10
Income from discontinued operations																					$	—					$	—					$	—
Income (loss) attributable to AIG common shareholders																					$	5.02					$	13.10					$	12.10
Diluted:
Income (loss) from continuing operations																					$	4.98					$	12.94					$	11.95
Income from discontinued operations																					$	—					$	—					$	—
Income (loss) attributable to AIG common shareholders																					$	4.98					$	12.94					$	11.95

(a)Potential dilutive common shares include our share-based employee compensation plans and an option for Blackstone to exchange all or a portion of its ownership interest in Corebridge for AIG common shares in the event an IPO did not occur prior to 2024. As a result of the consummation of the IPO on September 19, 2022, this exchange right of Blackstone was terminated. The number of potential common shares excluded from diluted shares outstanding was 4.4 million, 24.1 million and 12.0 million for the years ended December 31, 2023, 2022 and 2021, respectively, because the effect of including those common shares in the calculation would have been anti-dilutive.

For information regarding our repurchases of AIG Common Stock, see Note 18.

AIG | 2023 Form 10-K			241

ITEM 8 | Notes to Consolidated Financial Statements | 20. Statutory Financial Data and Restrictions

20. Statutory Financial Data and Restrictions

The following table presents statutory net income (loss) and capital and surplus for our General Insurance companies and our Life and Retirement companies in accordance with statutory accounting practices:

(in millions)						2023						2022						2021
Years Ended December 31,
Statutory net income (loss)(a)(b):
General Insurance companies:
Domestic			$			1,912			$			2,272			$			2,649
Foreign						1,867						1,047						1,573
Total General Insurance companies			$			3,779			$			3,319			$			4,222
Life and Retirement companies:
Domestic			$			3,354			$			3,091			$			2,588
Foreign						(51)						5						5
Total Life and Retirement companies			$			3,303			$			3,096			$			2,593
At December 31,
Statutory capital and surplus**(a)(b)****:**
General Insurance companies:
Domestic			$			18,703			$			19,563
Foreign						11,527						13,913
Total General Insurance companies			$			30,230			$			33,476
Life and Retirement companies:
Domestic			$			14,752			$			12,229
Foreign						467						486
Total Life and Retirement companies			$			15,219			$			12,715
Aggregate minimum required statutory capital and surplus:
General Insurance companies:
Domestic			$			3,625			$			3,680
Foreign						6,041						7,314
Total General Insurance companies			$			9,666			$			10,994
Life and Retirement companies:
Domestic			$			4,025			$			4,057
Foreign						223						194
Total Life and Retirement companies			$			4,248			$			4,251

(a)Excludes discontinued operations and other divested businesses.

(b)The 2023 amounts reflect our best estimate of the statutory net income, capital and surplus as of the date of AIG’s Form 10-K filing.

Our insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by domestic and foreign insurance regulatory authorities. The principal differences between statutory financial statements and financial statements prepared in accordance with U.S. GAAP for domestic companies are that statutory financial statements do not reflect DAC, some bond portfolios may be carried at amortized cost, investment impairments are determined in accordance with statutory accounting practices, assets and liabilities are presented net of reinsurance, policyholder liabilities are generally valued using more conservative assumptions and certain assets are non-admitted.

For domestic insurance subsidiaries, aggregate minimum required statutory capital and surplus is based on the greater of the RBC level that would trigger regulatory action or minimum requirements per state insurance regulation. Capital and surplus requirements of our foreign subsidiaries differ from those prescribed in the U.S., and can vary significantly by jurisdiction. At both December 31, 2023 and 2022, all domestic and foreign insurance subsidiaries individually exceeded the minimum required statutory capital and surplus requirements and all domestic insurance subsidiaries individually exceeded RBC minimum required levels.

For foreign insurance companies, financial statements are prepared in accordance with local regulatory requirements. These accounting practices differ from U.S. GAAP primarily by different rules on deferral of policy acquisition costs, amortization of deferred acquisition costs, and establishing future policy benefit liabilities using different actuarial assumptions, as well as valuing for deferred taxes on a different basis.

242			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 20. Statutory Financial Data and Restrictions

STATUTORY PERMITTED ACCOUNTING PRACTICE

At December 31, 2023 and 2022, AGL used the following permitted practice that resulted in reported statutory surplus or risk-based capital that is significantly different from the statutory surplus or risk based capital that would have been reported had National Association of Insurance Commissioners (NAIC) statutory accounting practices or the prescribed regulatory accounting practices of their respective state regulator been followed in all respects:

• Effective December 31, 2020 and periods through September 30, 2023, AGL, a life insurance subsidiary domiciled in Texas, renewed a permitted statutory accounting practice to recognize an admitted asset related to the notional value of coverage defined in an excess of loss (XOL) reinsurance agreement with a 20-year term that provides coverage to AGL for aggregate claims incurred during the agreement term associated with guaranteed living benefits on certain fixed index annuities generally issued prior to April 2019 (Block 1) exceeding an attachment point as defined in the agreement. This permitted practice was previously expanded on October 1, 2020 to similarly recognize an additional admitted asset related to the net notional value of coverage as defined in a separate XOL reinsurance agreement with a 25-year term that provides coverage to the subsidiary for aggregate XOL claims associated with guaranteed living benefits on a block of fixed index annuities generally issued in April 2019 or later, including certain new business issued after the effective date (Block 2).

• Effective September 30, 2023, the permitted practice for Block 1 and Block 2 was extended through September 30, 2026 and the maximum notional value of Block 2 was increased for certain new business. Effective October 1, 2022 and periods through September 30, 2023, this permitted practice was expanded to similarly recognize an additional admitted asset related to the net notional value of coverage as defined in a separate XOL agreement with a 25-year term that provides coverage to the subsidiary for aggregate XOL claims associated with the base contract along with the guaranteed living benefits rider on a block of fixed annuities inforce on the treaty effective date, including certain new business issued after the effective date (Block 3). Effective September 30, 2023, the permitted practice for Block 3 was extended through September 30, 2026 and the maximum notional value was increased for certain new business.

These permitted practice resulted in an increase in the statutory surplus of AGL of approximately $1.7 billion and $1.0 billion at December 31, 2023 and 2022, respectively.

SUBSIDIARY DIVIDEND RESTRICTIONS

Payments of dividends to us by our insurance subsidiaries are subject to certain restrictions imposed by regulatory authorities. With respect to our domestic insurance subsidiaries, the payment of any dividend requires formal notice to the insurance department in which the particular insurance subsidiary is domiciled. For example, unless permitted by the Superintendent of Financial Services, property casualty companies domiciled in New York generally may not pay dividends to shareholders that, in any 12-month period, exceed the lesser of 10 percent of such company’s statutory policyholders’ surplus or 100 percent of its “adjusted net investment income,” for the previous year, as defined. Generally, less severe restrictions applicable to both property casualty and life insurance companies exist in most of the other states in which our insurance subsidiaries are domiciled. Under state insurance laws, an insurer may pay a dividend without prior approval of the insurance regulator when the amount of the dividend is below certain regulatory thresholds. Other foreign jurisdictions may restrict the ability of our foreign insurance subsidiaries to pay dividends. Various other regulatory restrictions also limit cash loans and advances to us by our subsidiaries.

Largely as a result of these restrictions, approximately $29.2 billion of the statutory capital and surplus of our consolidated insurance subsidiaries were restricted from transfer to AIG Parent without prior approval of state insurance regulators at December 31, 2023.

To our knowledge, no AIG insurance company is currently on any regulatory or similar “watch list” with regard to solvency.

PARENT COMPANY DIVIDEND RESTRICTIONS

At December 31, 2023, our ability to pay dividends is not subject to any significant contractual restrictions, but remains subject to regulatory restrictions.

For additional information about our ability to pay dividends to our shareholders, see Note 18.

AIG | 2023 Form 10-K			243

ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans

21. Share-Based Compensation Plans

The following table presents our total share-based compensation expense:

Years Ended December 31,
(in millions)						2023						2022						2021
Share-based compensation expense - pre-tax(a)			$			199			$			288			$			278
Share-based compensation expense - after tax(b)						157						228						220

(a)As a result of accelerated vesting events, such as retirement eligibility in the year of grant and involuntary terminations, we recognized $58 million, $67 million and $67 million in 2023, 2022 and 2021, respectively, prior to the end of the specified vesting periods. It is our policy to reverse compensation expense for forfeited awards when they occur. Excludes share-based compensation expense of $60 million, $75 million and $88 million in 2023, 2022 and 2021, respectively, for units issued to Corebridge employees that will be settled in Corebridge common stock.

(b)We also recognized $21 million of tax benefit due to share settlements occurring in 2023.

EMPLOYEE PLANS

The Company sponsors several stock compensation programs under the AIG Long Term Incentive Plan (LTIP) (as amended) from which performance share units (PSUs), restricted stock units (RSUs), stock options and deferred stock units (DSUs) (collectively units) are issued. In addition, off-cycle grants are made from time to time during the year generally as sign-on awards to new hires or as a result of a change in employee status. The LTIP was governed by the AIG 2013 Omnibus Incentive Plan (2013 Plan), until it was replaced by the AIG 2021 Omnibus Incentive Plan (2021 Omnibus Plan), which was adopted at the annual shareholders’ meeting in May 2021. The adoption occurred after the annual 2021 LTIP awards were granted.

Our share-settled awards are settled with previously acquired shares held in AIG’s treasury.

AIG Omnibus Incentive Plan

The 2021 Omnibus Plan provided for the grants of share-based awards to our employees and non-employee directors. The total number of shares granted under the 2021 Plan (the reserve) was the sum of 1) 8.1 million shares of AIG Common Stock, plus 2) the number of authorized shares that remained available for issuance under the 2013 Plan when the 2021 Omnibus Plan became effective, plus 3) the number of shares of AIG Common Stock relating to outstanding awards under the 2013 Plan at the time the 2021 Omnibus Plan became effective that subsequently were forfeited, expired, terminated or otherwise lapse or are settled in cash. Each share-based unit granted under the Omnibus Plan reduces the number of shares available for future grants by one share. However, shares with respect to awards that are forfeited, expired or settled for cash are returned to the reserve. As of December 31, 2023, 23,836,222 shares are available for future grants.

AIG Long Term Incentive Plan

Long-Term Incentive (LTI) Awards

The LTIP provides for an annual award to certain employees, including our senior executive officers and other highly compensated employees that may be comprised of a combination of one or more of the following units: PSUs, RSUs or stock options.

The number of PSUs issued on the grant date (the target) provides the opportunity for LTIP participants (usually senior management) to receive shares of AIG Common Stock based on AIG achieving specified performance goals at the end of a three-year performance period. These performance goals are pre-established by AIG’s Compensation and Management Resources Committee (CMRC) for each annual grant and may differ from year to year. The actual number of PSUs earned can vary from zero to 200 percent of the target for the 2023, 2022 and 2021 LTI awards, depending on AIG’s performance relative to a specified peer group and/or the outcome of pre-established financial goals, as applicable.

RSUs and stock options are earned based solely on continued service by the participant.

Vesting occurs on January 1 of the year immediately following the end of the three-year performance and service period. Beginning in 2022, vesting for RSUs and stock options awarded occurs in three equal installments on the first, second and third anniversary of the grant date. Recipients must be employed at each vesting date to be entitled to share delivery, except upon the occurrence of an accelerated vesting event, such as an involuntary termination without cause, disability, retirement eligibility or death during the vesting period. However, for involuntarily terminated employees hired after April 1, 2022 unvested RSUs and options are forfeited on the termination date, while PSUs are pro-rated based on the number of completed years in the performance period.

244			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans

Prior to 2021, LTI awards and other share-settled grants accrued dividend equivalent units (DEUs) in the form of additional PSUs and RSUs whenever a cash dividend was declared on shares of AIG Common Stock; the DEUs were subject to the same vesting terms and conditions as the underlying unit. Beginning in 2021, PSUs and RSUs granted accrue dividend equivalent rights (DERs) as AIG’s dividends are declared. These DERs are settled in cash only if the underlying units’ vesting conditions are met; previously accrued DEUs were not impacted by this change.

Unit Valuation

The fair value of time-vesting RSUs as well as PSUs that are earned based on certain company-specific metrics was based on the closing price of AIG Common Stock on the grant date; while the fair value of PSUs that are earned based on AIG’s relative total shareholder return (TSR) was determined on the grant date using a Monte Carlo simulation.

The following table presents the assumptions used to estimate the fair value of PSUs that vest based on AIG’s TSR**(a)****:**

			2023			2022			2021
Expected dividend yield(b)			—		%	—		%	—		%
Expected volatility(c)			37.98		%	47.60		%	47.63		%
Risk-free interest rate(d)			4.42		%	1.71		%	0.28		%

(a)PSUs will be adjusted by +/-25 percent if AIG's TSR is in the top or bottom quartile of the peer group at the culmination of the performance period for the 2021 LTI award.

(b)The award agreement provides that TSR for AIG and each member of the Peer Group will be calculated assuming dividends distributed are reinvested on the ex‑dividend date.

(c)We used the historical volatility over the most recent 2.86-year period for AIG and the members of the Peer Group, commensurate with the remaining Performance Period as of the valuation date.

(d)We converted the semi-annual zero-coupon U.S. Treasury rates as of the valuation date to continuously compounded rates. We then chose the continuously compounded risk-free rate that is commensurate with the length of the remaining performance period as of the valuation date and interpolated between the yields of the two-year and the three-year continuously compounded rates to determine the yield.

Modification

During 2022 in connection with the 2022 Corebridge IPO, approximately 4 million RSUs held by 735 Corebridge LTIP participants who were actively employed on the IPO date were converted to approximately 10 million Corebridge RSUs in accordance with the anti-dilution provision of the 2021 Omnibus Plan. The vesting terms of the Corebridge RSUs remain the same as the pre-converted RSUs but will be settled in Corebridge common stock. This conversion is considered a modification for accounting purposes and did not result in incremental compensation expense.

The following table summarizes outstanding share-settled LTI awards**(a)****:**

			Number of Units												Weighted Average Grant-Date Fair Value
As of or for the Year Ended December 31, 2023**(b)**			2023 LTI			2022 LTI			2021 LTI									2023 LTI						2022 LTI						2021 LTI
Unvested, beginning of year			—			2,280,431			2,696,264						$			—			$			61.86			$			45.40
Granted			2,752,390			—			—									59.98						—						—
Vested(c)			(876,285)			(969,438)			(689,706)									59.92						61.75						45.97
Forfeited			(141,136)			(202,840)			(278,707)									59.88						61.93						45.85
Unvested, end of year**(d)**			1,734,969			1,108,153			1,727,851						$			60.02			$			61.95			$			45.08

(a)Excludes stock options, other RSUs and DSUs, which are discussed under Stock Options, Other RSU Grants and Non-Employee Plan, respectively.

(b)PSUs represent target amount granted and does not reflect potential increases or decreases that could result from the final outcome of the performance goals for the respective awards, which is determined by the CMRC in the quarter after the applicable performance period ends.

(c)Also reflects units that vest as a result of an accelerated vesting event that occurred prior to the specified vesting date but for which share delivery has not yet occurred.

(d)At December 31, 2023, the total unrecognized compensation cost for outstanding RSUs and PSUs was $111 million and the weighted-average and expected period of years over which that cost is expected to be recognized are 1.01 years and 3 years.

Stock Options

Stock options were issued as part of the 2023, 2022 and 2021 LTI awards, and to certain newly hired senior executives in 2017 and 2018. Option awards are generally granted with an exercise price equal to the market price of the company’s stock on the grant date and are exercisable up to 10 years from the date of grant, or 3 years from the date of an involuntary termination or the option's expiration date, if earlier. The fair value of the options was estimated on the grant date using the Black-Scholes model for the time-vesting options, and a Monte Carlo simulation for the hurdle-vesting options using the assumptions noted in the following table.

AIG | 2023 Form 10-K			245

ITEM 8 | Notes to Consolidated Financial Statements | 21. Share-Based Compensation Plans

The following weighted-average assumptions were used for stock options granted:

			2023						2022						2021
Expected annual dividend yield(a)			2.14			%			2.08			%			2.89			%
Expected volatility(b)			25.17			%			32.13			%			36.68			%
Risk-free interest rate(c)			4.06			%			1.92			%			0.95			%
Expected term(d)			6.00			years			6.00			years			6.43			years

(a)The dividend yield is the last dividend from Bloomberg times 4 divided by stock price based on Bloomberg Professional service as of the valuation date.

(b)The expected volatility is based on the implied volatility of 24 months stock option estimated by the Bloomberg Professional service as of the valuation date.

(c)The risk-free interest rate is calculated as the interpolated zero rate as of the valuation date.

(d)The contractual term is 10 years from the date of grant.

The following table provides a rollforward of stock option activity:

As of or for the Year Ended December 31, 2023			Units						Weighted Average Exercise Price						Weighted Average Remaining Contractual Life						Aggregate Intrinsic Values (in millions)
Outstanding, beginning of year			12,893,412						$	48.94					6.95
Granted			1,352,039						59.72
Exercised			(1,039,998)						41.29
Forfeited or expired			(909,792)						50.13
Outstanding, end of year			12,295,661						$	50.69					6.81						$	210
Exercisable, end of year			9,810,882						$	47.95					6.24						$	194

The weighted average grant-date fair value of stock options granted during 2023, 2022 and 2021 was $11.43, $10.77 and $10.00, respectively. As of December 31, 2023, we recognized $18 million of expense, while $15 million was unrecognized and is expected to be amortized up to 2.25 years. We received $43 million in cash from the exercise of stock options during 2023.

Other RSU Grants

The Company may issue time-vesting RSUs for various reasons including, as a sign-on bonus, retention grant or replacement award in an acquisition. Vesting for these awards ranges from 1 to 5 years and is contingent on continuous service.

The following table summarizes outstanding share-settled Other RSU grants.

			Number of Units												Weighted Average Grant-Date Fair Value
As of or for the Year Ended December 31,			2023			2022			2021									2023						2022						2021
Unvested, beginning of year			1,488,248			819,640			1,151,380						$			54.77			$			43.95			$			46.18
Granted			208,641			1,070,458			493,140									62.42						60.16						49.36
Vested			(252,635)			(290,037)			(699,067)									49.42						44.59						50.03
Converted(a)			—			(91,300)			—									—						52.90						—
Forfeited			(82,540)			(20,513)			(125,813)									40.70						55.89						51.80
Unvested, end of year			1,361,714			1,488,248			819,640						$			57.79			$			54.77			$			43.95

(a)Represents RSUs converted to Corebridge RSUs as a result of the IPO.

We recognized $20 million of expense related to these RSU grants in 2023. Total unrecognized compensation cost related to these grants was $54 million and the weighted-average and expected period of years over which that cost is expected to be recognized are 1.79 years and 4 years at December 31, 2023.

NON-EMPLOYEE PLAN

Our non-employee directors, who serve on our Board of Directors, receive share-based compensation in the form of fully vested DSUs with delivery deferred until retirement from the Board. DSUs granted in 2023, 2022 and 2021 accrue dividend equivalents in the form of additional DSUs equal to the amount of any regular quarterly dividend that would have been paid by AIG if the shares of AIG Common Stock underlying the DSUs had been outstanding. In 2023, 2022 and 2021, we granted to non-employee directors 47,344, 46,273 and 55,133 DSUs, respectively, and recognized expense of $2.6 million, $2.7 million and $2.7 million, respectively.

246			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

22. Employee Benefits

PENSION PLANS

We offer various defined benefit plans to eligible employees. Effective January 1, 2016, the U.S. defined benefit pension plans were frozen. Consequently, these plans are closed to new participants and current participants no longer earn benefits.

The U.S. AIG Retirement Plan (the qualified plan) is a noncontributory defined benefit plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). In 2012, the qualified plan was converted to a cash balance formula comprised of pay credits based on 6% of a plan participant’s annual compensation (subject to IRS limitations) and annual interest credits. Although benefits are frozen, these interest credits continue to accrue on the cash balance accounts of active participants, who also accrue years of service for purposes of early retirement eligibility and subsidies. Employees can take their vested benefits as a lump sum or an annuity option when they leave AIG or are terminated from the plan.

Employees satisfying certain age and service requirements (i.e., grandfathered employees) remain covered under the average pay formula that was in effect prior to the conversion. The final average pay formula is based upon a percentage of final average compensation multiplied by years of credited service, up to 44 years. Grandfathered employees will receive the higher of the benefit under the cash balance formula or the final average pay formula at retirement.

In the U.S. we also sponsor non-qualified unfunded defined benefit plans, such as the AIG Non-Qualified Retirement Income Plan (AIG NQRIP) for certain employees, including key executives, designed to supplement pension benefits provided by the qualified plan. The AIG NQRIP provides a benefit equal to the reduction in benefits under the qualified plan as a result of federal tax limitations on compensation and benefits payable.

Non-U.S. defined benefit plans generally are either based on the employee’s years of credited service and compensation in the years preceding retirement or on points accumulated based on the employee’s job grade and other factors during each year of service.

POSTRETIREMENT PLANS

U.S. postretirement medical and life insurance benefits are based upon the employee attaining the age of 55 and having a minimum of ten years of service, which was reduced to 5 years in 2019 for medical coverage only. Eligible employees who have medical coverage can enroll in retiree medical upon termination of employment. Medical benefits are contributory, while the life insurance benefits, which are closed to new employees, are generally non-contributory. Retiree medical contributions vary from none for pre-1989 retirees to actual premium payments reduced by certain subsidies for post-1992 retirees. These retiree contributions are subject to annual adjustments. Other cost sharing features of the medical plan include deductibles, coinsurance, Medicare coordination, and an employer subsidy for grandfathered employees only.

Postretirement benefits are offered in certain non-U.S. countries and vary by geographic location.

AIG | 2023 Form 10-K			247

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

The following table presents the funded status of the plans reconciled to the amount reported in the Consolidated Balance Sheets.

As of or for the Years Ended			Pension																														Postretirement
December 31,			U.S. Plans(a)															Non-U.S. Plans(a)															U.S. Plans															Non-U.S. Plans
(in millions)						2023						2022									2023						2022									2023						2022									2023						2022
Change in projected benefit obligation:
Benefit obligation, beginning of year			$			3,475			$			4,795						$			826			$			1,157						$			131			$			174						$			32			$			47
Service cost						5						5									16						18									1						1									—						—
Interest cost						168						109									20						10									6						4									2						1
Actuarial (gain) loss(b)						75						(1,082)									(8)						(183)									3						(36)									(2)						(14)
Benefits paid:
AIG assets						(16)						(19)									(10)						(8)									(12)						(12)									(1)						(1)
Plan assets						(171)						(174)									(31)						(26)									—						—									—						—
Plan amendment						—						—									(1)						1									—						—									—						—
Settlements						(234)						(157)									(17)						(3)									—						—									—						—
Foreign exchange effect						—						—									9						(139)									—						—									—						(1)
Other						(1)						(2)									—						(1)									—						—									—						—
Projected benefit obligation, end of year			$			3,301			$			3,475						$			804			$			826						$			129			$			131						$			31			$			32
Change in plan assets:
Fair value of plan assets, beginning of year			$			3,345			$			4,746						$			731			$			996						$			—			$			—						$			—			$			—
Actual return on plan assets, net of expenses						288						(1,070)									15						(133)									—						—									—						—
AIG contributions						16						19									47						42									12						12									1						1
Benefits paid:
AIG assets						(16)						(19)									(10)						(8)									(12)						(12)									(1)						(1)
Plan assets						(171)						(174)									(31)						(26)									—						—									—						—
Settlements						(234)						(157)									(23)						(3)									—						—									—						—
Foreign exchange effect						—						—									5						(137)									—						—									—						—
Fair value of plan assets, end of year			$			3,228			$			3,345						$			734			$			731						$			—			$			—						$			—			$			—
Funded status, end of year			$			(73)			$			(130)						$			(70)			$			(95)						$			(129)			$			(131)						$			(31)			$			(32)
Amounts recognized in the balance sheet:
Assets			$			110			$			55						$			97			$			78						$			—			$			—						$			—			$			—
Liabilities						(183)						(185)									(167)						(173)									(129)						(131)									(31)						(32)
Total amounts recognized			$			(73)			$			(130)						$			(70)			$			(95)						$			(129)			$			(131)						$			(31)			$			(32)
Pre-tax amounts recognized in AOCI:
Net gain (loss)			$			(1,142)			$			(1,279)						$			(79)			$			(70)						$			31			$			39						$			23			$			24
Prior service (cost) credit						—						—									(21)						(25)									—						—									1						1
Total amounts recognized			$			(1,142)			$			(1,279)						$			(100)			$			(95)						$			31			$			39						$			24			$			25

(a)Includes non-qualified unfunded plans of which the aggregate projected benefit obligation was $184 million and $186 million for the U.S. at December 31, 2023 and 2022, respectively, and $140 million and $143 million for the non-U.S. at December 31, 2023 and 2022, respectively.

(b)The primary reason for the significant decrease in 2023 is due to a change in the discount rate for the U.S. AIG Retirement Plan.

The following table presents the accumulated benefit obligations for U.S. and non-U.S. pension benefit plans:

At December 31,
(in millions)						2023						2022
U.S. pension benefit plans			$			3,301			$			3,475
Non-U.S. pension benefit plans			$			792			$			815

248			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

Defined benefit plan obligations in which the projected benefit obligation (PBO) was in excess of the related plan assets and the accumulated benefit obligation (ABO) was in excess of the related plan assets were as follows:

At December 31,						PBO Exceeds Fair Value of Plan Assets																											ABO Exceeds Fair Value of Plan Assets
						U.S. Plans															Non-U.S. Plans															U.S. Plans															Non-U.S. Plans
(in millions)						2023						2022									2023						2022									2023						2022									2023						2022
Projected benefit obligation						$	184					$	185								$	287					$	280								$	—					$	—								$	—					$	—
Accumulated benefit obligation						—						—									—						—									184						186									245						238
Fair value of plan assets						—						—									88						76									—						—									88						76

The following table presents the components of net periodic benefit cost with respect to pensions and other postretirement benefits:

Years Ended December 31,			Pension																																										Postretirement
			U.S. Plans																					Non-U.S. Plans																					U.S. Plans																					Non-U.S. Plans
(in millions)						2023						2022						2021									2023						2022						2021									2023						2022						2021									2023						2022						2021
Components of net periodic benefit cost:
Service cost*			$			5			$			5			$			5						$			16			$			18			$			21						$			1			$			1			$			1						$			—			$			—			$			1
Interest cost						168						109						92									20						10						9									6						4						3									2						1						2
Expected return on assets						(193)						(213)						(243)									(21)						(17)						(21)									—						—						—									—						—						—
Amortization of prior service cost (credit)						—						—						—									3						3						3									—						—						—									(1)						—						—
Amortization of net (gain) loss						33						24						33									2						4						7									(5)						—						—									(3)						(1)						1
Net periodic benefit cost (credit)			$			13			$			(75)			$			(113)						$			20			$			18			$			19						$			2			$			5			$			4						$			(2)			$			—			$			4
Settlement loss						84						60						34									—						—						1									—						—						—									—						—						—
Net benefit cost (credit)			$			97			$			(15)			$			(79)						$			20			$			18			$			20						$			2			$			5			$			4						$			(2)			$			—			$			4
Total recognized in AOCI			$			136			$			(117)			$			332						$			5			$			57			$			65						$			(8)			$			36			$			10						$			(2)			$			13			$			27
Total recognized in net periodic benefit cost and other comprehensive income (loss)			$			40			$			(102)			$			411						$			(14)			$			39			$			45						$			(10)			$			31			$			6						$			—			$			13			$			23

*Reflects administrative fees for the U.S. pension plans.

Interest cost for pension and postretirement benefits for our U.S. plans and largest non-U.S. plans is measured using the spot rate approach, which applies specific spot rates along the yield curve to a plan’s corresponding discounted cash flows that comprise the obligation. This method provides a more precise measurement of interest cost by aligning the timing of the plans’ discounted cash flows to the corresponding spot rates on the yield curve. For certain non-U.S. plans, interest cost is measured utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligations.

A 100 basis point increase in the expected long-term rate of return would decrease the 2024 pension expense by approximately $38 million with all other items remaining the same. A 100 basis point increase in the discount rate would increase the 2024 pension expense by approximately $2 million. Conversely, a 100 basis point decrease in the discount rate would decrease the 2024 pension expense by approximately $3 million while a 100 basis point decrease in the expected long-term rate of return would increase the 2024 pension expense by approximately $38 million, with all other items remaining the same.

ASSUMPTIONS

The following table summarizes the weighted average assumptions used to determine the benefit obligations:

			Pension															Postretirement
			U.S. Plans						Non-U.S. Plans(a)									U.S. Plans			Non-U.S. Plans(a)
December 31, 2023
Discount rate			4.98		%				2.85		%							4.97		%	5.37		%
Interest crediting rate			4.94		%				1.40		%	(b)						N/A			N/A
Rate of compensation increase			N/A			(c)			2.42		%							N/A			N/A
December 31, 2022
Discount rate			5.22		%				2.51		%							5.19		%	5.23		%
Interest crediting rate			4.02		%				1.07		%	(b)						N/A			N/A
Rate of compensation increase			N/A			(c)			2.38		%							N/A			N/A

(a)The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiaries providing such benefits.

(b)Represents the weighted average interest crediting rate of non-U.S. cash balance plans primarily in Japan and Switzerland.

(c)Compensation increases are no longer applicable as the plan is frozen effective January 1, 2016.

AIG | 2023 Form 10-K			249

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

The following table summarizes assumed health care cost trend rates for the U.S. plans:

At December 31,			2023			2022
Following year:
Medical (before age 65)			5.78		%	6.01		%
Medical (age 65 and older)			4.93		%	4.95		%
Ultimate rate to which cost increase is assumed to decline			4.00		%	4.00		%
Year in which the ultimate trend rate is reached:
Medical (before age 65)			2046			2046
Medical (age 65 and older)			2046			2046

The following table presents the weighted average assumptions used to determine the net periodic benefit costs:

			Pension												Postretirement
			U.S. Plans			Non-U.S. Plans(a)									U.S. Plans			Non-U.S. Plans(a)
For the Year Ended December 31, 2023
Discount rate			5.22		%	2.51		%							5.19		%	5.23		%
Interest crediting rate			4.02		%	1.07		%	(b)						N/A			N/A
Rate of compensation increase			N/A			2.38		%							N/A			N/A
Expected return on assets			6.25		%	2.67		%							N/A			N/A
For the Year Ended December 31, 2022
Discount rate			2.75		%	1.09		%							2.87		%	2.89		%
Interest crediting rate			2.06		%	0.70		%	(b)						2.20		%	N/A
Rate of compensation increase			N/A			2.40		%							N/A			N/A
Expected return on assets			4.65		%	1.84		%							2.78		%	N/A
For the Year Ended December 31, 2021
Discount rate			2.28		%	1.00		%							2.45		%	2.33		%
Interest crediting rate			1.57		%	0.72		%	(b)						N/A			N/A
Rate of compensation increase			N/A			2.28		%							N/A			N/A
Expected return on assets			5.15		%	2.23		%							N/A			N/A

(a)The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiaries providing such benefits.

(b)Represents the weighted average interest crediting rate of non-U.S. cash balance plans primarily in Japan and Switzerland.

Discount Rate Methodology

The projected benefit cash flows under the U.S. AIG Retirement Plan were discounted using the spot rates derived from the Mercer U.S. Pension Discount Yield Curve (Mercer Yield Curve) at December 31, 2023 and 2022, which resulted in a single discount rate that would produce the same liability at the respective measurement dates. The discount rates were 4.98 percent at December 31, 2023 and 5.22 percent at December 31, 2022. The methodology was consistently applied for the respective years in determining the discount rates for the other U.S. pension plans.

In general, the discount rates for the non-U.S. plans were developed using a similar methodology to the U.S. AIG Retirement Plan, by using country-specific Mercer Yield Curves.

The projected benefit obligation for AIG’s Japan pension plans represents approximately 54 percent and 54 percent of the total projected benefit obligations for our non-U.S. pension plans at December 31, 2023 and 2022, respectively. The weighted average discount rate of 1.48 percent and 1.12 percent at December 31, 2023 and 2022, respectively, was selected by reference to the Mercer Yield Curve for Japan.

Plan Assets

The investment strategy with respect to assets relating to our U.S. and non-U.S. pension plans is designed to achieve investment returns that will provide for the benefit obligations of the plans over the long term, limit the risk of short-term funding shortfalls and maintain liquidity sufficient to address cash needs. Accordingly, the asset allocation strategy is designed to maximize the investment rate of return while managing various risk factors, including, but not limited to, volatility relative to the benefit obligations, liquidity, and concentration, and incorporates the risk/return profile applicable to each asset class.

There were no shares of AIG Common Stock included in the U.S. and non-U.S. pension plans assets at December 31, 2023 or 2022.

250			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

U.S. Pension Plan

The assets of the qualified plan are monitored by the AIG U.S. Investment Committee and actively managed by the investment managers, which involves allocating the plan’s assets among approved asset classes within ranges as permitted by the strategic allocation. The long-term strategic asset allocation historically has been reviewed and revised approximately every three years. The investment strategy is focused on de-risking the qualified plan via regular monitoring through liability driven investing and the glide path approach, where the glide path defines the target allocation for the “Return-Seeking” portion of the portfolio (i.e., growth assets) based on the funded ratio and level of interest rates. Under this approach, the allocation to growth assets is reduced and the allocation to liability-hedging assets is increased as the plan’s funded ratio increases in accordance with the defined glide path.

The following table presents the asset allocation percentage by major asset class for the U.S. qualified plan and the target allocation for 2024 based on the plan’s funded status at December 31, 2023:

At December 31,			Target 2024						Actual 2023						Actual 2022
Asset class:
Equity securities			9		%				8		%				6		%
Fixed maturity securities			80						77						77
Other investments			11						15						17
Total			100		%				100		%				100		%

The expected weighted average long-term rate of return for the plan was 6.25 percent and 4.65 percent for 2023 and 2022, respectively. The expected weighted average rate of return is an aggregation of expected returns within each asset class category, weighted for the investment mix of the assets. The combination of the expected asset return and any contributions made by us are expected to maintain the plan’s ability to meet all required benefit obligations. The expected asset return for each asset class was developed based on an approach that considers key fundamental drivers of the asset class returns in addition to historical returns, current market conditions, asset volatility and the expectations for future market returns.

Non-U.S. Pension Plans

The assets of the non-U.S. pension plans are held in various trusts in multiple countries and are invested primarily in equities and fixed maturity securities to maximize the long-term return on assets for a given level of risk.

The following table presents the asset allocation percentage by major asset class for non-U.S. pension plans and the target allocation:

At December 31,			Target 2024						Actual 2023						Actual 2022
Asset class:
Equity securities			21		%				19		%				24		%
Fixed maturity securities			58						45						44
Other investments			17						21						23
Cash and cash equivalents			4						15						9
Total			100		%				100		%				100		%

The assets of AIG’s Japan pension plans represent approximately 67 percent and 65 percent of total non-U.S. pension plan assets at December 31, 2023 and 2022, respectively. The expected long-term rate of return was 1.85 percent and 1.86 percent, for 2023 and 2022, respectively, and is evaluated by the Japanese Pension Investment Committee on a quarterly and annual basis along with various investment managers and is revised to achieve the optimal allocation to meet targeted funding levels if necessary. In addition, the funding policy is revised in accordance with local regulation every five years.

The expected weighted average long-term rate of return for all our non-U.S. pension plans was 2.67 percent and 1.84 percent for the years ended December 31, 2023 and 2022, respectively. It is an aggregation of expected returns within each asset class that was generally developed based on the building block approach that considers historical returns, current market conditions, asset volatility and the expectations for future market returns.

AIG | 2023 Form 10-K			251

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

ASSETS MEASURED AT FAIR VALUE

The following table presents information about our plan assets and indicates the level of the fair value measurement based on the observability of the inputs used. The inputs and methodology used in determining the fair value of these assets are consistent with those used to measure our assets as discussed in Note 5 to the Consolidated Financial Statements.

			U.S. Plans																											Non-U.S. Plans
(in millions)						Level 1						Level 2						Level 3						Total									Level 1						Level 2						Level 3						Total
December 31, 2023
Assets:
Cash and cash equivalents			$			54			$			—			$			—			$			54						$			108			$			—			$			—			$			108
Equity securities:
U.S.(a)						140						—						—						140									—						—						—						—
International(b)						4						—						—						4									104						35						—						139
Fixed maturity securities:
U.S. investment grade(c)						24						2,230						10						2,264									—						—						—						—
International investment grade(c)						—						125						—						125									—						138						—						138
U.S. and international high yield(d)						—						33						—						33									—						192						—						192
Mortgage and other asset-backed securities						—						59						1						60									—						—						—						—
Other fixed maturity securities						—						12						—						12									—						—						—						—
Other investment types**(e)****:**
Futures						10						—						—						10									—						—						—						—
Insurance contracts						—						9						—						9									—						—						138						138
Mutual funds(g)						—						—						—						—									—						19						—						19
Total			$			232			$			2,468			$			11			$			2,711						$			212			$			384			$			138			$			734
December 31, 2022
Assets:
Cash and cash equivalents			$			119			$			—			$			—			$			119						$			64			$			—			$			—			$			64
Equity securities:
U.S.(a)						90						—						—						90									—						—						—						—
International(b)						5						—						—						5									130						44						—						174
Fixed maturity securities:
U.S. investment grade(c)						45						2,213						10						2,268									—						—						—						—
International investment grade(c)						—						177						—						177									—						140						—						140
U.S. and international high yield(d)						—						58						—						58									—						184						—						184
Mortgage and other asset-backed securities						—						43						5						48									—						—						—						—
Other investment types**(e)****:**
Futures						(15)						—						—						(15)									—						—						—						—
Direct private equity(f)						—						—						5						5									—						—						—						—
Insurance contracts						—						10						—						10									—						—						134						134
Mutual funds(g)						—						—						—						—									—						35						—						35
Total			$			244			$			2,501			$			20			$			2,765						$			194			$			403			$			134			$			731

(a)Includes passive and active U.S. equity strategies.

(b)Includes passive and active international equity strategies.

(c)Includes investments in U.S. and non-U.S. government issued bonds, U.S. government agency or sponsored agency bonds, and investment grade corporate bonds.

(d)Consists primarily of investments in securities or debt obligations that have a rating below investment grade.

(e)Excludes investments that are measured at fair value using the NAV per share (or its equivalent), which totaled $517 million and $580 million at December 31, 2023 and 2022, respectively.

(f)Comprised of private capital financing including private debt and private equity securities.

(g)Comprised of mutual fund investing in variety of equity, derivatives, and bonds.

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Based on our investment strategy, we had no significant concentrations of risks at December 31, 2023.

252			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 22. Employee Benefits

Changes in Level 3 Fair Value Measurements

The following table presents changes in our U.S. and non-U.S. Level 3 plan assets measured at fair value:

December 31, 2023			Balance Beginning of year			Net Realized and Unrealized Gains (Losses)			Purchases			Sales			Issuances			Settlements			Transfers In			Transfers Out			Balance at End of Year			Changes in Unrealized Gains (Losses) on Instruments Held at End of Year			Changes in Unrealized Gains (Losses) included in other Comprehensive Income (Loss) for Recurring Level 3 Instruments Held at End of Year
(in millions)
U.S. Plan Assets:
Fixed maturity securities
U.S. investment grade			$	10		$	1		$	—		$	(1)		$	—		$	—		$	—		$	—		$	10		$	1					$	—
Mortgage and other asset backed securities			5			—			—			(4)			—			—			—			—			1			1						—
Direct private equity			5			(5)			—			—			—			—			—			—			—			(5)						—
Total			$	20		$	(4)		$	—		$	(5)		$	—		$	—		$	—		$	—		$	11		$	(3)					$	—
Non-U.S. Plan Assets:
Insurance contracts			$	134		$	6		$	1		$	—		$	—		$	(3)		$	—		$	—		$	138		$	—					$	—
Total			$	134		$	6		$	1		$	—		$	—		$	(3)		$	—		$	—		$	138		$	—					$	—
December 31, 2022
U.S. Plan Assets:
Fixed maturity securities
U.S. investment grade			$	16		$	(4)		$	4		$	—		$	—		$	—		$	—		$	(6)		$	10		$	(4)					$	—
Mortgage and other asset backed securities			1			(1)			3			—			—			—			2			—			5			(1)						—
Direct private equity			8			(1)			—			(2)			—			—			—			—			5			(2)						—
Total			$	25		$	(6)		$	7		$	(2)		$	—		$	—		$	2		$	(6)		$	20		$	(7)					$	—
Non-U.S. Plan Assets:
Insurance contracts			$	171		$	(43)		$	4		$	—		$	—		$	—		$	2		$	—		$	134		$	—					$	—
Total			$	171		$	(43)		$	4		$	—		$	—		$	—		$	2		$	—		$	134		$	—					$	—

EXPECTED CASH FLOWS

Funding for the qualified plan ranges from the minimum amount required by ERISA to the maximum amount that would be deductible for U.S. tax purposes. Contributed amounts in excess of the minimum amounts are deemed voluntary. Amounts in excess of the maximum amount would be subject to an excise tax and may not be deductible under the Internal Revenue Code. There are no minimum required cash contributions in 2023 for the U.S. AIG Retirement Plan. The non-qualified and postretirement plans’ benefit payments are deductible when paid to participants.

Our annual pension contribution in 2024 is expected to be approximately $59 million for our U.S. and non-U.S. pension plans. This estimate is subject to change, since contribution decisions are affected by various factors including our liquidity, market performance and management’s discretion.

The expected future benefit payments, net of participants’ contributions, with respect to the defined benefit pension plans and other postretirement benefit plans, are as follows:

			Pension									Postretirement
(in millions)			U.S. Plans			Non-U.S. Plans						U.S. Plans			Non-U.S. Plans
2024			$	270		$	43					$	11		$	1
2025			264			45						11			2
2026			267			47						10			2
2027			265			49						10			2
2028			265			53						9			2
2029-2033			1,216			255						43			10

DEFINED CONTRIBUTION PLANS

AIG Parent sponsors several defined contribution plans for U.S. employees that provide for pre-tax salary reduction contributions by employees. The most significant plan is the AIG Incentive Savings Plan (ISP), for which the matching contribution is 100 percent of the first 6% of a participant’s contributions, subject to the IRS-imposed limitations. Participants in the AIG ISP receive an additional fully vested, non-elective, non-discretionary contribution equal to 3% of the participant’s eligible compensation for the plan year, paid each pay period regardless of whether the participant currently contributes to the plan, and subject to the IRS-imposed limitations. Our pre-tax expenses associated with these plans were $163 million,$176 million and $183 million in 2023, 2022 and 2021, respectively.

On August 22, 2022, Corebridge participants’ accounts in the AIG ISP were transferred to the Corebridge Financial Inc. Retirement Savings 401(k) Plan. Corebridge contributions relating to these plans were $68 million, $76 million and $74 million for the years ended December 31, 2023, 2022 and 2021, respectively.

AIG | 2023 Form 10-K			253

ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes

23. Income Taxes

U.S. TAX LAW CHANGES

The Inflation Reduction Act of 2022 (H.R. 5376) includes a 15 percent corporate alternative minimum tax (CAMT) on adjusted financial statement income for corporations with average profits over $1 billion over a three-year period. Although the U.S. Treasury and Internal Revenue Service (IRS) issued interim CAMT guidance during 2023, many details and specifics of application of the CAMT remain subject to future guidance. We are subject to CAMT for 2023.

BASIS OF PRESENTATION

We file a consolidated U.S. federal income tax return with our eligible U.S. subsidiaries. Income earned by subsidiaries operating outside the U.S. is taxed, and income tax expense is recorded, based on applicable U.S. and foreign laws.

Following the IPO of Corebridge on September 19, 2022, AIG’s remaining ownership in Corebridge decreased below 80 percent, resulting in tax deconsolidation of Corebridge parent and its subsidiaries from the AIG consolidated U.S. federal income tax group as well as certain state and local jurisdictions where unitary returns are filed.

Subsequent to the tax deconsolidation from AIG, due to the application of relevant U.S. tax laws, American General Corporation and its directly owned life insurance subsidiaries will not be permitted to join in the filing of a consolidated U.S. federal income tax return with Corebridge parent and its non-life-insurance subsidiaries for a period of five years. Corebridge’s net operating losses and tax credit carryforwards that have not been utilized prior to tax deconsolidation from AIG will remain with the relevant Corebridge entities and will be available for utilization by the respective Corebridge U.S. federal income tax groups. The realizability of the deferred tax assets related to such carryforwards is based on the positive and negative evidence applicable to each U.S. federal income tax group.

TAX ACCOUNTING POLICIES

We use an item-by-item approach to release the stranded or disproportionate income tax effects in AOCI related to our available-for-sale securities. Under this approach, a portion of the disproportionate tax effects is assigned to each individual security lot at the date the amount becomes lodged. When the individual securities are sold, mature, or are otherwise impaired on an other-than-temporary basis, the assigned portion of the disproportionate tax effect is reclassified from AOCI to income (loss) from continuing operations.

We consider our foreign earnings with respect to certain operations in Canada, South Africa, Japan, Latin America, Bermuda as well as the European, Asia Pacific and Middle East regions to be indefinitely reinvested. These earnings relate to ongoing operations and have been reinvested in active business operations. A deferred tax liability has not been recorded for those foreign subsidiaries whose earnings are considered to be indefinitely reinvested. If recorded, such deferred tax liability would not be material to our consolidated financial condition. Deferred taxes, if necessary, have been provided on earnings of non-U.S. affiliates whose earnings are not indefinitely reinvested.

Global Intangible Low-Taxed Income (GILTI) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. Consistent with accounting guidance, we have made an accounting policy election to treat GILTI taxes as a period tax charge in the period the tax is incurred.

EFFECTIVE TAX RATE

The following table presents income (loss) from continuing operations before income tax expense (benefit) by U.S. and foreign location in which such pre-tax income (loss) was earned or incurred:

Years Ended December 31,
(in millions)						2023						2022						2021
U.S.			$			1,885			$			12,431			$			11,041
Foreign						1,973						1,868						2,306
Total			$			3,858			$			14,299			$			13,347

254			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes

The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from continuing operations:

Years Ended December 31,
(in millions)						2023						2022						2021
Foreign and U.S. components of actual income tax expense (benefit):
U.S.:
Current			$			68			$			246			$			(216)
Deferred						(564)						2,363						2,443
Foreign:
Current						423						271						171
Deferred						53						145						43
Total			$			(20)			$			3,025			$			2,441

Our actual income tax expense (benefit) differs from the statutory U.S. federal amount computed by applying the federal income tax rate due to the following:

Years Ended December 31,			2023												2022												2021
(dollars in millions)			Pre-Tax Income (Loss)			Tax Expense (Benefit)			Percent of Pre-Tax Income (Loss)						Pre-Tax Income (Loss)			Tax Expense (Benefit)			Percent of Pre-Tax Income (Loss)						Pre-Tax Income (Loss)			Tax Expense (Benefit)			Percent of Pre-Tax Income (Loss)
U.S. federal income tax at statutory rate			$	3,858		$	810		21.0		%				$	14,298		$	3,003		21.0		%				$	13,347		$	2,802		21.0		%
Adjustments:
Tax exempt interest						(14)			(0.4)									(18)			(0.1)									(18)			(0.1)
Uncertain tax positions(a)						162			4.2									(17)			(0.1)									(9)			(0.1)
Reclassifications from AOCI						(45)			(1.2)									(81)			(0.6)									(109)			(0.8)
Dispositions of subsidiaries(b)						(382)			(9.9)									—			—									11			0.1
Non-controlling interest						14			0.4									(31)			(0.2)									(97)			(0.7)
Non-deductible transfer pricing charges						16			0.4									12			0.1									16			0.1
Dividends received deduction						(60)			(1.6)									(36)			(0.3)									(37)			(0.3)
Effect of foreign operations(c)						176			4.6									150			1.0									136			1.0
Share-based compensation payments excess tax effect						(31)			(0.8)									(19)			(0.1)									16			0.1
State and local income taxes						10			0.3									47			0.3									38			0.3
Expiration of tax attribute carryforwards						—			—									—			—									16			0.1
Tax audit resolution(a)						(494)			(12.8)									—			—									(935)			(7.0)
Affiliated dividend income, net of dividends received deduction						59			1.5									—			—									—			—
Other(d)						116			3.1									40			0.4									(107)			(0.8)
Valuation allowance:
Continuing operations						(357)			(9.3)									(25)			(0.2)									718			5.4
Consolidated total amounts			3,858			(20)			(0.5)						14,298			3,025			21.2						$	13,347		2,441			18.3
Amounts attributable to discontinued operations			—			—			—						(1)			—			—						—			—			—
Amounts attributable to continuing operations			$	3,858		$	(20)		(0.5)		%				$	14,299		$	3,025		21.2		%				$	13,347		$	2,441		18.3		%

(a)Refer to the Accounting for Uncertainty in Income Taxes section below for further discussion on 2023 and 2021 tax audit resolution activity.

(b)Tax implications of the sales of certain AIG and Corebridge subsidiaries, including Validus Re and Laya, as well as tax implications of Corebridge secondary offerings and the announced sale of AIG Life.

(c)Effect of foreign operations is primarily related to income and losses in our foreign operations taxed at statutory tax rates different than 21 percent, and foreign income subject to U.S. taxation.

(d)Primarily includes tax charges associated with tax adjustments related to prior year returns.

AIG | 2023 Form 10-K			255

ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes

DEFERRED TAX ASSET

The following table presents the components of the net deferred tax assets (liabilities):

December 31,
(in millions)						2023						2022
Deferred tax assets:
Losses and tax credit carryforwards			$			6,107			$			6,868
Basis differences on investments						3,441						2,652
Life policy reserves						1,589						1,622
Accruals not currently deductible, and other						89						392
Investments in foreign subsidiaries						66						—
Loss reserve discount						424						352
Loan loss and other reserves						51						62
Unearned premium reserve reduction						87						294
Fixed assets and intangible assets						1,487						1,081
Unrealized losses related to available for sale debt securities						4,728						6,519
Employee benefits						344						382
Market risk benefit						1,010						827
Other						356						458
Total deferred tax assets						19,779						21,509
Deferred tax liabilities:
Investments in foreign subsidiaries						—						(41)
Deferred policy acquisition costs						(1,853)						(1,847)
Fortitude Re funds withheld embedded derivative						(711)						(862)
Total deferred tax liabilities						(2,564)						(2,750)
Net deferred tax assets before valuation allowance						17,215						18,759
Valuation allowance						(3,116)						(4,250)
Net deferred tax assets (liabilities)			$			14,099			$			14,509

The following table presents AIG's U.S. consolidated federal income tax group tax losses and credits carryforwards.

December 31, 2023						Tax			Carryforward Period Ending Tax Year(b)																		Unlimited Carryforward Period and Carryforward Periods(b)
(in millions)			Gross			Effected			2024			2025			2026			2027			2028			2029			2030 - After
Net operating loss carryforwards			$	21,968		$	4,613		$	—		$	—		$	—		$	—		$	2,660		$	178		$	1,775
Other carryforwards						67			—			—			—			—			—			—			67
Total AIG U.S. consolidated federal income tax group tax losses and credits carryforwards on a U.S. GAAP basis(a)						$	4,680		$	—		$	—		$	—		$	—		$	2,660		$	178		$	1,842

(a)Financial reporting basis reflects the impact of unrecognized tax benefits for tax years in which tax attributes can be realized through carryback upon settlement.

(b)Carryforward periods are based on U.S. tax laws governing utilization of tax attributes. Expiration periods are based on the year the carryforward was generated.

ASSESSMENT OF DEFERRED TAX ASSET VALUATION ALLOWANCE

The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed.

Although the 2022 tax deconsolidation of Corebridge from the AIG consolidated U.S. federal income tax group resulted in the formation of new federal tax filing groups requiring separate deferred tax asset realizability assessments, there was no material change to the total deferred tax asset valuation allowance.

During the fourth quarter, taxable income projections were updated to reflect 2023 results, updated projections of income for our insurance and non-insurance companies, and taxable income generated from prudent and feasible tax planning strategies. While there was improvement in projected tax attribute utilization, given there is a shorter carryforward period to utilize remaining net operating losses, we continue to consider multiple data points and stresses. Additionally, recent events, including changes in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, continue to impact actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. In order to demonstrate the predictability and sufficiency of future taxable income necessary to support the

256			AIG | 2023 Form 10-K

ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes

realizability of the net operating losses and foreign tax credit carryforwards, we have considered forecasts of future income for each of our businesses, including assumptions about future macroeconomic and AIG-specific conditions and events, and any impact these conditions and events may have on our prudent and feasible tax planning strategies. We also subjected the forecasts to a variety of stresses of key assumptions and evaluated the effect on tax attribute utilization.

After factoring in multiple data points and assessing the relative weight of all positive and negative evidence, we concluded that valuation allowance of $300 million should remain on a portion of AIG's U.S. federal consolidated income tax group tax attribute carryforwards that are not more likely than not to be realized, and reduced our beginning of the year valuation allowance by $405 million. Additionally, we recorded valuation allowance reduction of $8 million related to the write-off of net operating loss carryforwards from acquired entities that are not usable by AIG under the tax law. Accordingly, during the fourth quarter of 2023, we recorded total reduction in valuation allowance of $413 million.

As of December 31, 2023, we reported a valuation allowance of $162 million related to Corebridge. The valuation allowance at Corebridge relates to a portion of both tax attribute carryforwards and certain other deferred tax assets of the Corebridge non-life insurance group that are not more-likely-than-not to be realized. For the twelve months ended December 31, 2023, Corebridge recorded an $11 million increase in valuation allowance.

For the twelve months ended December 31, 2023, recent changes in market conditions, including changes in interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolios of both our U.S. life insurance and non-life insurance companies, resulting in a decrease to deferred tax assets related to net unrealized tax capital losses. The deferred tax assets relate to the unrealized tax capital losses for which the carryforward period has not yet begun, and as such, when assessing recoverability, we consider our ability and intent to hold the underlying securities to recovery. As of December 31, 2023, based on all available evidence, we concluded that a valuation allowance of $1.6 billion is necessary on a portion of the deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized. Of the total valuation allowance, $1.0 billion relates to the unrealized tax capital losses in the U.S. Life Insurance Companies' available for sale securities portfolio and $550 million relates to the unrealized tax capital losses in the non-life insurance companies' available for sale securities portfolio. For the twelve months ended December 31, 2023, we recorded a decrease in valuation allowance of $397 million associated with the unrealized tax capital losses in the U.S. Life Insurance Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in the non-life insurance companies’ available for sale securities portfolio. For the three months ended December 31, 2023, we recorded a decrease in valuation allowance of $511 million associated with the unrealized tax capital losses in the U.S. Life Insurance Companies’ available for sale securities portfolio and $355 million associated with the unrealized tax capital losses in the non-life insurance companies’ available for sale securities portfolio. The valuation allowance decrease was primarily allocated to other comprehensive income.

For the twelve months ended December 31, 2023, we recognized a net $44 million increase in deferred tax asset valuation allowance associated with certain foreign and state jurisdictions.

The following table presents the net deferred tax assets (liabilities) at December 31, 2023 and 2022 on a U.S. GAAP basis:

December 31,
(in millions)						2023						2022
Net U.S. deferred tax assets			$			11,317			$			10,831
Net deferred tax assets (liabilities) in AOCI						4,286						5,881
Valuation allowance						(2,006)						(3,128)
Subtotal						13,597						13,584
Net foreign, state and local deferred tax assets						1,958						2,342
Valuation allowance						(1,110)						(1,122)
Subtotal						848						1,220
Subtotal - Net U.S., foreign, state and local deferred tax assets						14,445						14,804
Net foreign, state and local deferred tax liabilities						(346)						(295)
Total AIG net deferred tax assets (liabilities)			$			14,099			$			14,509

AIG | 2023 Form 10-K			257

ITEM 8 | Notes to Consolidated Financial Statements | 23. Income Taxes

TAX EXAMINATIONS

We are currently under examination by the IRS for the tax years 2011 through 2019, and are engaging in the Appeals process for certain disagreed issues related to tax years 2007 through 2010.

Listed below are the tax years that remain subject to examination by major tax jurisdictions:

At December 31, 2023			Open Tax Years
Major Tax Jurisdiction
United States			2007-2022
Australia			2019-2022
Canada			2019-2022
France			2022-2022
Japan			2017-2022
Korea			2015-2022
Singapore			2019-2022
United Kingdom			2022-2022

ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

The following table presents a reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits, excluding interest and penalties:

Years Ended December 31,
(in millions)						2023						2022						2021
Gross unrecognized tax benefits, beginning of year			$			1,191			$			1,157			$			2,343
Increases in tax positions for prior years						200						29						22
Decreases in tax positions for prior years						(4)						(33)						(1,233)
Increases in tax positions for current year						—						59						37
Lapse in statute of limitations						—						(21)						—
Settlements						—						—						(12)
Gross unrecognized tax benefits, end of year			$			1,387			$			1,191			$			1,157

The activity in unrecognized tax benefits for the year ended December 31, 2023 is primarily attributable to the potential resolution of an IRS audit matter. There was no significant activity in unrecognized tax benefits for the year ended December 31, 2022. The activity in unrecognized tax benefits for the year ended December 31, 2021 is primarily attributable to effective settlement of reserves for uncertain tax positions due to the completion of audit activity by the IRS and New York State.

At December 31, 2023 and 2022 and 2021, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $1.4 billion, $1.2 billion and $1.1 billion, respectively. Unrecognized tax benefits that would not affect the effective tax rate generally relate to such factors as the timing, rather than the permissibility of the deduction.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31, 2023, 2022 and 2021, we had accrued liabilities of $52 million, $63 million and $69 million, respectively for the payment of interest (net of the federal benefit) and penalties. For the years ended December 31, 2023, 2022, and 2021, we accrued expense (benefit) of $(11) million, $(2) million, and $(207) million, respectively, for the payment of interest and penalties. There was no significant activity in interest and penalties related to unrecognized tax benefit for the years 2023 or 2022. The activity in 2021 was primarily related to the completion of audit activity by the IRS and New York State.

Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the next 12 months, based on the information currently available, we do not expect any change to be material to our consolidated financial condition.

258			AIG | 2023 Form 10-K

Part II