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Held-For-Sale Classification and Discontinued Operations Presentation | 6 Months Ended
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Jun. 30, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Held-For-Sale Classification and Discontinued Operations Presentation | 4. Held-For-Sale Classification & Discontinued Operations Presentation HELD-FOR-SALE CLASSIFICATION We report and classify a business or a component of an entity 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 Condensed Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale. At June 30, 2024, businesses and assets reported and classified as held-for-sale primarily consisted of our global individual personal travel insurance and assistance business and did not meet the criteria for discontinued operations. Nippon Sale On May 16, 2024, AIG entered into a stock purchase agreement with Corebridge Financial, Inc. (Corebridge), the holding company for AIG's Life and Retirement business, and Nippon Life Insurance Company, a mutual company (sougogaisha) organized under the laws of Japan (Nippon), pursuant to which AIG agreed to sell 121,956,256 shares of common stock of Corebridge, representing approximately 20 percent of the issued and outstanding common stock at signing, to Nippon for aggregate consideration of $3.8 billion in cash. The transaction is expected to close in the first quarter of 2025, subject to certain closing conditions, including the receipt of regulatory approvals. As a result, Corebridge met the criteria to be presented as held for sale and discontinued operations. However, on June 9, 2024, AIG met the requirements for the deconsolidation of Corebridge. For further details, see Discontinued Operations Presentation below. Global Personal Travel Business On June 26, 2024, AIG entered into a definitive agreement to sell its global individual personal travel insurance and assistance business to Zurich Insurance Group for $600 million in cash plus additional earn-out consideration. The agreement includes the Travel Guard business and its servicing capabilities, excluding our travel insurance businesses in Japan and our AIG joint venture arrangement in India. Travel coverages offered through AIG’s Accident & Health business are also excluded from this agreement. The sale is expected to close by the end of 2024, subject to customary closing conditions, including regulatory approvals. The results of our global individual personal travel insurance and assistance business are reported in General Insurance. DISCONTINUED OPERATIONS PRESENTATION We present a business, or a component of an entity, as discontinued operations if a) it meets the held-for-sale criteria, or is disposed of by sale, or is disposed of other than by sale, and b) the disposal of the business, or component of an entity, represents a strategic shift that has (or will have) a major effect on AIG’s financial results. On June 3, 2024, AIG closed on a secondary offering of 30 million shares of Corebridge common stock. The sale was recorded as an equity transaction as AIG controlled Corebridge as of the transaction date. The aggregate gross proceeds of the offering, before deducting underwriting discounts and commission and other expenses payable by AIG, were $876 million. As a result of the offering, AIG recorded an increase of $261 million in Total AIG shareholders' equity. On July 2, 2024, the underwriters exercised their option to purchase an additional 1.9 million shares which reduced AIG's remaining investment in Corebridge reported in Other invested assets. In September 2022, AIG closed on the initial public offering of Corebridge. Since September 2022 and through June 9, 2024, AIG sold portions of its interests in Corebridge through secondary public offerings. On June 9, 2024, AIG held 48.4 percent of Corebridge common stock, waived its right to majority representation on the Corebridge Board of Directors and one of AIG's designees resigned from the Corebridge Board of Directors as of June 9, 2024 (Deconsolidation Date). As a result, AIG met the requirements for the deconsolidation of Corebridge. The historical financial results of Corebridge, for all periods presented, are reflected in these Condensed Consolidated Financial Statements as discontinued operations. Due to share repurchases by Corebridge after the Deconsolidation Date, as of June 30, 2024, AIG held 49.0 percent of the outstanding common stock of Corebridge. The assets and liabilities of Corebridge are classified as Assets of discontinued operations and Liabilities of discontinued operations in AIG’s Condensed Consolidated Balance Sheets as of December 31, 2023. The results of operations of Corebridge are reported as discontinued operations for all periods presented in the Condensed Consolidated Statement of Income (Loss). AIG recognized a loss of $4.7 billion as a result of the deconsolidation (mainly due to the recognition of accumulated comprehensive loss of $7.2 billion). The loss is recorded as a component of discontinued operations. Corebridge was previously reported in Life and Retirement and Other Operations. Subsequent to the Deconsolidation Date, AIG has elected the fair value option and will reflect its retained interest in Corebridge as an equity method investment in Other invested assets in AIG's Condensed Consolidated Balance Sheets using Corebridge’s stock price as its fair value. Dividends received from Corebridge and changes in its stock price are recognized in Net investment income in AIG’s Condensed Consolidated Financial Statements. The following provides financial information related to Corebridge as an equity method investee as if Corebridge was an equity method investee for the periods presented. The “Equity method income (loss) related to Corebridge (based on fair value)” assumes a retained interest in Corebridge of 49.0 percent and is calculated based on the changes in Corebridge’s stock price for the periods presented.
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Corebridge pre-tax income |  | $ | 361 |  |  | $ | 980 |  |  | $ | 1,354 |  |  | $ | 347 |
Equity method income (loss) related to Corebridge (based on fair value) |  | $ | 115 |  |  | $ | 482 |  |  | $ | 2,195 |  |  | $ | (706) |
The following table summarizes the components of assets and liabilities held-for-sale and assets and liabilities of discontinued operations on the Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023:
|  |  |  |  |  | June 30, 2024 |  |  | December 31, 2023
(in millions) |  |  |  |  |  | Assets and Liabilities Held for Sale |  |  |  |  | Corebridge (Assets and Liabilities of Discontinued Operations) |  | Assets and Liabilities Held for Sale |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bonds available for sale, at fair value, net of allowance for credit losses |  |  |  |  |  | $ | 14 |  |  |  |  |  | $ | 166,657 |  |  | $ | 14 |  |  |
Other bond securities, at fair value |  |  |  |  |  | — |  |  |  |  |  | 4,579 |  |  | — |  |  |
Equity securities, at fair value |  |  |  |  |  | — |  |  |  |  |  | 63 |  |  | — |  |  |
Mortgage and other loans receivable, net of allowance for credit losses |  |  |  |  |  | — |  |  |  |  |  | 46,732 |  |  | — |  |  |
Other invested assets |  |  |  |  |  | — |  |  |  |  |  | 9,916 |  |  | — |  |  |
Short-term investments |  |  |  |  |  | 15 |  |  |  |  |  | 4,346 |  |  | 1 |  |  |
Total investments |  |  |  |  |  | 29 |  |  |  |  |  | 232,293 |  |  | 15 |  |  |
Cash |  |  |  |  |  | 90 |  |  |  |  |  | 618 |  |  | — |  |  |
Accrued investment income |  |  |  |  |  | — |  |  |  |  |  | 2,011 |  |  | — |  |  |
Premiums and other receivables, net of allowance for credit losses and disputes |  |  |  |  |  | 42 |  |  |  |  |  | 709 |  |  | 9 |  |  |
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes |  |  |  |  |  | — |  |  |  |  |  | 26,772 |  |  | — |  |  |
Reinsurance assets - other, net of allowance for credit losses and disputes |  |  |  |  |  | 6 |  |  |  |  |  | 2,519 |  |  | 3 |  |  |
Deferred income taxes |  |  |  |  |  | (10) |  |  |  |  |  | 8,307 |  |  | — |  |  |
Deferred policy acquisition costs |  |  |  |  |  | — |  |  |  |  |  | 10,782 |  |  | — |  |  |
Market risk benefit assets, at fair value |  |  |  |  |  | — |  |  |  |  |  | 912 |  |  | — |  |  |
Other assets, net of allowance for credit losses(a) |  |  |  |  |  | 28 |  |  |  |  |  | 2,820 |  |  | 3 |  |  |
Separate account assets, at fair value |  |  |  |  |  | — |  |  |  |  |  | 91,005 |  |  | — |  |  |
Total assets held for sale/assets of discontinued operations |  |  |  |  |  | $ | 185 |  |  |  |  |  | $ | 378,748 |  |  | $ | 30 |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses |  |  |  |  |  | $ | 24 |  |  |  |  |  | $ | — |  |  | $ | 19 |  |  |
Unearned premiums |  |  |  |  |  | 12 |  |  |  |  |  | 65 |  |  | 7 |  |  |
Future policy benefits for life and accident and health insurance contracts |  |  |  |  |  | — |  |  |  |  |  | 57,946 |  |  | — |  |  |
Policyholder contract deposits |  |  |  |  |  | — |  |  |  |  |  | 161,979 |  |  | — |  |  |
Market risk benefit liabilities, at fair value |  |  |  |  |  | — |  |  |  |  |  | 5,705 |  |  | — |  |  |
Other policyholder funds |  |  |  |  |  | — |  |  |  |  |  | 2,862 |  |  | — |  |  |
Fortitude Re funds withheld payable |  |  |  |  |  | — |  |  |  |  |  | 25,957 |  |  | — |  |  |
Other liabilities |  |  |  |  |  | 117 |  |  |  |  |  | 8,790 |  |  | 2 |  |  |
Short-term and long-term debt |  |  |  |  |  | — |  |  |  |  |  | 9,420 |  |  | — |  |  |
Debt of consolidated investment entities |  |  |  |  |  | — |  |  |  |  |  | 2,360 |  |  | — |  |  |
Separate account liabilities |  |  |  |  |  | — |  |  |  |  |  | 91,005 |  |  | — |  |  |
Total liabilities held for sale/liabilities of discontinued operations |  |  |  |  |  | $ | 153 |  |  |  |  |  | $ | 366,089 |  |  | $ | 28 |  |  |
(a)Other assets, net of allowance for credit losses includes goodwill and other intangibles of $116 million and $3 million, respectively, for Corebridge at December 31, 2023. The following table presents the amounts related to the operations of Corebridge that have been reflected in Net income from discontinued operations:
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Revenues: |  |  |  |  |  |  |  |
Premiums |  | $ | 428 |  |  | $ | 2,442 |  |  | $ | 2,723 |  |  | $ | 4,548 |
Policy fees |  | 555 |  |  | 693 |  |  | 1,269 |  |  | 1,392 |
Net investment income |  | 2,314 |  |  | 2,732 |  |  | 5,238 |  |  | 5,420 |
Net realized gains (losses) |  | (587) |  |  | (281) |  |  | (923) |  |  | (1,680) |
Other income |  | 155 |  |  | 193 |  |  | 372 |  |  | 375 |
Total revenues |  | 2,865 |  |  | 5,779 |  |  | 8,679 |  |  | 10,055 |
Benefits, losses and expenses: |  |  |  |  |  |  |  |
Policyholder benefits and losses incurred |  | 811 |  |  | 2,879 |  |  | 3,618 |  |  | 5,372 |
Change in the fair value of market risk benefits, net |  | 20 |  |  | (262) |  |  | (350) |  |  | (66) |
Interest credited to policyholder account balances |  | 980 |  |  | 1,063 |  |  | 2,184 |  |  | 2,102 |
|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2024 |  | 2023 |  | 2024 |  | 2023
Amortization of deferred policy acquisition costs |  | 199 |  |  | 257 |  |  | 465 |  |  | 511 |
General operating and other expenses |  | 574 |  |  | 772 |  |  | 1,350 |  |  | 1,512 |
Interest expense |  | 106 |  |  | 149 |  |  | 249 |  |  | 331 |
Net (gain) loss on divestitures and other |  | (186) |  |  | (59) |  |  | (191) |  |  | (54) |
Total benefits, losses and expenses |  | 2,504 |  |  | 4,799 |  |  | 7,325 |  |  | 9,708 |
Income (loss) from discontinued operations before income tax expense (benefit) and loss on disposal of discontinued operations |  | 361 |  |  | 980 |  |  | 1,354 |  |  | 347 |
Income tax expense (benefit) |  | 36 |  |  | 130 |  |  | 226 |  |  | (79) |
Income (loss) from discontinued operations, net of income taxes before loss on disposal of discontinued operations |  | 325 |  |  | 850 |  |  | 1,128 |  |  | 426 |
Loss on disposition of operations, net of tax |  | (4,684) |  |  | — |  |  | (4,684) |  |  | — |
Income (loss) from discontinued operations, net of income taxes |  | (4,359) |  |  | 850 |  |  | (3,556) |  |  | 426 |
Less: Net income (loss) from discontinued operations attributable to noncontrolling interests |  | 93 |  |  | 198 |  |  | 477 |  |  | 81 |
Net income (loss) from discontinued operations attributable to AIG |  | $ | (4,452) |  |  | $ | 652 |  |  | $ | (4,033) |  |  | $ | 345 |
DISCONTINUED OPERATIONS LOSS PRESENTATION The loss recognized for the deconsolidation of Corebridge includes (i) $8.5 billion of retained investment in Corebridge (Corebridge’s quoted stock price is used for fair value measurement, which is classified as level 1 in the fair value hierarchy), (ii) $817 million of certain other investments (considered level 3 in the fair value hierarchy) which are measured based on valuation techniques (i.e., third party appraisals) that use significant inputs (i.e., terminal capital rate and discount rate), and (iii) $378 million of an unsettled receivable. For details on fair value hierarchy, see Note 5. The loss on deconsolidation of Corebridge is calculated as follows:
(in millions) |  |
Corebridge retained investment (48.4% @28.90 per share at June 9, 2024) |  | $ | 8,502 |
Retained Interest in certain investment entities and other assets |  | 1,195 |
Net fair value of assets retained |  | 9,697 |
Corebridge book value at June 9, 2024 |  | 12,392 |
Less: Noncontrolling interests |  | 5,732 |
Corebridge book value excluding noncontrolling interest |  | 6,660 |
Gain on sale pre-tax |  | 3,037 |
Tax expense |  | 507 |
Subtotal: After tax gain |  | 2,530 |
Reclassification adjustment of Accumulated other comprehensive loss at June 9, 2024 |  | (7,214) |
Loss on sale of Corebridge - after-tax |  | $ | (4,684) |

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