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Lending Activities | 6 Months Ended
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Jun. 30, 2024
Receivables [Abstract] |
Lending Activities | 7. Lending Activities The following table presents the composition of Mortgage and other loans receivable, net:
(in millions) | June 30, 2024 |  | December 31, 2023
Commercial mortgages(a) | $ | 3,728 |  |  | $ | 3,836 |
Life insurance policy loans | 6 |  |  | 7 |
Commercial loans, other loans and notes receivable(b) | 776 |  |  | 738 |
Total mortgage and other loans receivable(c) | 4,510 |  |  | 4,581 |
Allowance for credit losses(c)(d) | (163) |  |  | (140) |
Mortgage and other loans receivable, net(c) | $ | 4,347 |  |  | $ | 4,441 |
(a)Commercial mortgages primarily represent loans for apartments, offices and retail properties, with exposures in California and New York representing the largest geographic concentrations (aggregating approximately 12 percent and 10 percent, respectively, at June 30, 2024 and 13 percent and 10 percent, respectively, at December 31, 2023). (b)There were no loans that were held for sale carried at lower of cost or market as of June 30, 2024 and December 31, 2023. (c)Excludes $37.6 billion at both June 30, 2024 and December 31, 2023 of loans receivable from AIG Financial Products Corp. (AIGFP), which has a full allowance for credit losses, recognized upon the deconsolidation of AIGFP. For additional information, see Note 1 to the Consolidated Financial Statements in the 2023 Annual Report. (d)Does not include allowance for credit losses of $5 million and $9 million, respectively, at June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, $241 million and $73 million, respectively, of commercial mortgage loans were placed on nonaccrual status. Accrued interest is presented separately and is included in Accrued investment income on the Condensed Consolidated Balance Sheets. As of June 30, 2024 and December 31, 2023, accrued interest receivable was $20 million and $21 million, respectively, associated with commercial mortgage loans. 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. 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:
June 30, 2024 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Total
(in millions) |  |  |  |  |  |  |
>1.2X | $ | 33 |  | $ | 460 |  | $ | 183 |  | $ | 407 |  | $ | 102 |  | $ | 1,719 |  | $ | 2,904 |
1.00 - 1.20X |  | 19 |  |  | 33 |  |  | 48 |  |  | 285 |  |  | 56 |  |  | 247 |  |  | 688 |
<1.00X |  | — |  |  | — |  |  | 11 |  |  | — |  |  | — |  |  | 125 |  |  | 136 |
Total commercial mortgages | $ | 52 |  | $ | 493 |  | $ | 242 |  | $ | 692 |  | $ | 158 |  | $ | 2,091 |  | $ | 3,728 |
December 31, 2023 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Total
(in millions) |  |  |  |  |  |  |
>1.2X | $ | 398 |  | $ | 167 |  | $ | 394 |  | $ | 135 |  | $ | 156 |  | $ | 1,784 |  | $ | 3,034 |
1.00 - 1.20X |  | 5 |  |  | 71 |  |  | 254 |  |  | 56 |  |  | 21 |  |  | 298 |  |  | 705 |
<1.00X |  | — |  |  | 11 |  |  | — |  |  | — |  |  | — |  |  | 86 |  |  | 97 |
Total commercial mortgages | $ | 403 |  | $ | 249 |  | $ | 648 |  | $ | 191 |  | $ | 177 |  | $ | 2,168 |  | $ | 3,836 |
The following table presents loan-to-value ratios(b) for commercial mortgages by year of vintage:
June 30, 2024 |  | 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Total
(in millions) |  |  |  |  |  |  |
Less than 65% | $ | 33 |  | $ | 357 |  | $ | 154 |  | $ | 506 |  | $ | 150 |  | $ | 1,400 |  | $ | 2,600 |
65% to 75% |  | 19 |  |  | 81 |  |  | 46 |  |  | 134 |  |  | — |  |  | 302 |  |  | 582 |
76% to 80% |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 62 |  |  | 62 |
Greater than 80% |  | — |  |  | 55 |  |  | 42 |  |  | 52 |  |  | 8 |  |  | 327 |  |  | 484 |
Total commercial mortgages | $ | 52 |  | $ | 493 |  | $ | 242 |  | $ | 692 |  | $ | 158 |  | $ | 2,091 |  | $ | 3,728 |
December 31, 2023 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Total
(in millions) |  |  |  |  |  |  |
Less than 65% | $ | 359 |  | $ | 159 |  | $ | 492 |  | $ | 177 |  | $ | 156 |  | $ | 1,385 |  | $ | 2,728 |
65% to 75% |  | 10 |  |  | 15 |  |  | 137 |  |  | — |  |  | 21 |  |  | 367 |  |  | 550 |
76% to 80% |  | — |  |  | 32 |  |  | 10 |  |  | — |  |  | — |  |  | — |  |  | 42 |
Greater than 80% |  | 34 |  |  | 43 |  |  | 9 |  |  | 14 |  |  | — |  |  | 416 |  |  | 516 |
Total commercial mortgages | $ | 403 |  | $ | 249 |  | $ | 648 |  | $ | 191 |  | $ | 177 |  | $ | 2,168 |  | $ | 3,836 |
(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 1.8x at both periods ended June 30, 2024 and December 31, 2023. 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 64 percent and 62 percent at June 30, 2024 and December 31, 2023, respectively. 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 |
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Past Due Status: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
In good standing | 206 | $ | 1,241 |  | $ | 1,073 |  | $ | 422 |  | $ | 446 |  | $ | 243 |  | $ | 120 |  | $ | 3,545 |  | 95 |  | %
90 days or less delinquent | 1 |  | — |  |  | 112 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 112 |  | 3 |  |
>90 days delinquent or in process of foreclosure | 3 |  | — |  |  | 10 |  |  | 61 |  |  | — |  |  | — |  |  | — |  |  | 71 |  | 2 |  |
Total* | 210 | $ | 1,241 |  | $ | 1,195 |  | $ | 483 |  | $ | 446 |  | $ | 243 |  | $ | 120 |  | $ | 3,728 |  | 100 |  | %
Allowance for credit losses |  | $ | 6 |  | $ | 99 |  | $ | 34 |  | $ | 9 |  | $ | 12 |  | $ | 2 |  | $ | 162 |  | 4 |  | %
| 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 | 211 | $ | 1,267 |  | $ | 1,212 |  | $ | 476 |  | $ | 460 |  | $ | 247 |  | $ | 121 |  | $ | 3,783 |  | 99 |  | %
90 days or less delinquent | 1 |  | — |  |  | 11 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11 |  | — |  |
>90 days delinquent or in process of foreclosure | 1 |  | — |  |  | — |  |  | 42 |  |  | — |  |  | — |  |  | — |  |  | 42 |  | 1 |  |
Total* | 213 | $ | 1,267 |  | $ | 1,223 |  | $ | 518 |  | $ | 460 |  | $ | 247 |  | $ | 121 |  | $ | 3,836 |  | 100 |  | %
Allowance for credit losses |  | $ | 9 |  | $ | 75 |  | $ | 36 |  | $ | 7 |  | $ | 9 |  | $ | 2 |  | $ | 138 |  | 4 |  | %
*Does not reflect allowance for credit losses. METHODOLOGY USED TO ESTIMATE THE ALLOWANCE FOR CREDIT LOSSES For a discussion of our accounting policy for evaluating Mortgage and other loans receivable for impairment, see Note 7 to the Consolidated Financial Statements in the 2023 Annual Report. The following table presents a rollforward of the changes in the allowance for credit losses on Mortgage and other loans receivable(a):
Three Months Ended June 30, |  | 2024(b) |  |  | 2023
(in millions) |  | Commercial Mortgages |  | Other Loans |  | Total |  |  | Commercial Mortgages |  | Other Loans |  | Total
Allowance, beginning of period |  | $ | 150 |  |  | $ | 3 |  |  | $ | 153 |  |  |  | $ | 119 |  |  | $ | 8 |  |  | $ | 127 |
Loans charged off |  | — |  |  | — |  |  | — |  |  |  | (2) |  |  | — |  |  | (2) |
Net charge-offs |  | — |  |  | — |  |  | — |  |  |  | (2) |  |  | — |  |  | (2) |
Addition to (release of) allowance for loan losses |  | 12 |  |  | (2) |  |  | 10 |  |  |  | (1) |  |  | (5) |  |  | (6) |
Allowance, end of period |  | $ | 162 |  |  | $ | 1 |  |  | $ | 163 |  |  |  | $ | 116 |  |  | $ | 3 |  |  | $ | 119 |
Six Months Ended June 30, |  | 2024(b) |  |  | 2023 |  |  |
(in millions) |  | Commercial Mortgages |  | Other Loans |  | Total |  |  | Commercial Mortgages |  | Other Loans |  | Total |  |  |  |  |  |  |
Allowance, beginning of year |  | $ | 138 |  |  | $ | 2 |  |  | $ | 140 |  |  |  | $ | 109 |  |  | $ | 8 |  |  | $ | 117 |  |  |  |  |  |  |  |
Loans charged off |  | — |  |  | — |  |  | — |  |  |  | (2) |  |  | — |  |  | (2) |  |  |  |  |  |  |  |
Net charge-offs |  | — |  |  | — |  |  | — |  |  |  | (2) |  |  | — |  |  | (2) |  |  |  |  |  |  |  |
Addition to (release of) allowance for loan losses |  | 24 |  |  | (1) |  |  | 23 |  |  |  | 9 |  |  | (5) |  |  | 4 |  |  |  |  |  |  |  |
Allowance, end of period |  | $ | 162 |  |  | $ | 1 |  |  | $ | 163 |  |  |  | $ | 116 |  |  | $ | 3 |  |  | $ | 119 |  |  |  |  |  |  |  |
(a)Does not include allowance for credit losses of $5 million and $13 million, respectively, at June 30, 2024 and 2023 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 June 30, 2024 and December 31, 2023, 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 to the Consolidated Financial Statements in the 2023 Annual Report. 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 six months ended June 30, 2024, commercial mortgage loans with an amortized cost of $5 million supporting the funds withheld arrangements with Fortitude Re were granted term extensions. There were no loans that had defaulted during the six months ended June 30, 2024 and 2023, that had been previously modified with borrowers experiencing financial difficulties. AIG closely monitors the performance of the loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. All loans with borrowers experiencing financial difficulty that have been modified in the 12 months prior to June 30, 2024 are current and performing in conjunction with their modified terms.

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