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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 21. 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. While the U.S. Treasury and Internal Revenue Service (IRS) issued proposed regulations for CAMT during the third quarter of 2024, there are still certain details and specifics of application of the CAMT that remain unclear and we continue to evaluate the impact of the proposed regulations along with prior guidance. 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. TAX ACCOUNTING POLICIES 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) |  | 2024 |  | 2023 |  | 2022
U.S. | $ | 1,818 |  | $ | 900 |  | $ | 1,950 |
Foreign |  | 2,052 |  |  | 1,967 |  |  | 1,822 |
Total | $ | 3,870 |  | $ | 2,867 |  | $ | 3,772 |
The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from continuing operations:
Years Ended December 31, |  |  |  |  |  |
(in millions) |  | 2024 |  | 2023 |  | 2022
Foreign and U.S. components of actual income tax expense (benefit): |  |  |  |  |  |
U.S.: |  |  |  |  |  |
Current | $ | 283 |  | $ | (246) |  | $ | (713) |
Deferred |  | 416 |  |  | (110) |  |  | 1,173 |
Foreign: |  |  |  |  |  |
Current |  | 374 |  |  | 422 |  |  | 261 |
Deferred |  | 97 |  |  | 60 |  |  | 161 |
Total | $ | 1,170 |  | $ | 126 |  | $ | 882 |
Our actual income tax expense (benefit) from continuing operations differs from the statutory U.S. federal amount computed by applying the federal income tax rate due to the following:
Years Ended December 31, | 2024 |  | 2023 |  | 2022
(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 | $ | 3,870 |  | $ | 813 |  | 21.0 | % |  | $ | 2,867 |  | $ | 602 |  | 21.0 | % |  | $ | 3,772 |  | $ | 792 |  | 21.0 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |
Tax exempt interest |  | (8) |  | (0.2) |  |  |  | (14) |  | (0.5) |  |  |  | (18) |  | (0.5) |
Uncertain tax positions(a) |  | 17 |  | 0.4 |  |  |  | 169 |  | 5.9 |  |  |  | (12) |  | (0.3) |
Dispositions of subsidiaries(b) |  | (1) |  | — |  |  |  | (143) |  | (5.0) |  |  |  | — |  | — |
Non-deductible transfer pricing charges |  | 13 |  | 0.3 |  |  |  | 16 |  | 0.6 |  |  |  | 15 |  | 0.4 |
Effect of foreign operations(c) |  | 110 |  | 2.8 |  |  |  | 176 |  | 6.1 |  |  |  | 150 |  | 4.0 |
Share-based compensation payments excess tax effect |  | (16) |  | (0.4) |  |  |  | (21) |  | (0.7) |  |  |  | (13) |  | (0.3) |
State and local income taxes |  | 26 |  | 0.7 |  |  |  | 23 |  | 0.8 |  |  |  | (42) |  | (1.1) |
Developments related to prior tax years under IRS review(a) |  | 240 |  | 6.2 |  |  |  | (467) |  | (16.3) |  |  |  | — |  | —
Other(d) |  | 9 |  | 0.3 |  |  |  | 150 |  | 5.2 |  |  |  | 184 |  | 4.8 |
Valuation allowance(e) |  | (33) |  | (0.9) |  |  |  | (365) |  | (12.7) |  |  |  | (174) |  | (4.6) |
Consolidated total amounts | $ | 3,870 |  | $ | 1,170 |  | 30.2 | % |  | $ | 2,867 |  | $ | 126 |  | 4.4 | % |  | $ | 3,772 |  | $ | 882 |  | 23.4 | %
(a)2024 includes an update related to the estimated impact of potential resolution for prior tax years under IRS Appeals review. Refer to the Tax Examinations section below for further discussion on developments related to prior tax years under IRS review. For 2023, refer to the Accounting for Uncertainty in Income Taxes section below for further discussion on tax audit resolution activity. (b)This primarily includes tax implications of the sales of Validus Re for year 2023. (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. (e)Primarily due to 2023 and 2022 reductions in valuation allowance related to AIG’s U.S. federal consolidated income tax group tax attribute carryforwards DEFERRED TAX ASSET The following table presents the components of the net deferred tax assets (liabilities):
December 31, |  |  |  |
(in millions) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Losses and tax credit carryforwards | $ | 4,636 |  | $ | 5,655 |
Basis differences on investments |  | 30 |  |  | 75 |
Accruals not currently deductible, and other |  | 150 |  |  | 273 |
Investments in foreign subsidiaries |  | 19 |  |  | 16 |
Loss reserve discount |  | 443 |  |  | 424 |
Loan loss and other reserves |  | 37 |  |  | 51 |
Unearned premium reserve reduction |  | 46 |  |  | 87 |
Fixed assets and intangible assets |  | 293 |  |  | 159 |
Unrealized losses related to available for sale debt securities |  | 618 |  |  | 783 |
Employee benefits |  | 192 |  |  | 271 |
Other |  | 39 |  |  | 156 |
Total deferred tax assets |  | 6,503 |  |  | 7,950 |
Deferred tax liabilities: |  |  |  |
Deferred policy acquisition costs |  | (278) |  |  | (316) |
Life policy reserves |  | (45) |  |  | (49) |
Total deferred tax liabilities |  | (323) |  |  | (365) |
Net deferred tax assets before valuation allowance |  | 6,180 |  |  | 7,585 |
Valuation allowance |  | (1,650) |  |  | (1,746)
Net deferred tax assets (liabilities) | $ | 4,530 |  | $ | 5,839 |
The following table presents AIG's U.S. consolidated federal income tax group tax losses and credits carryforwards.
December 31, 2024 |  | Tax |  |  |  | Carryforward Period Ending Tax Year(b) | Unlimited Carryforward Period and Carryforward Periods(b)
(in millions) | Gross | Effected |  |  |  | 2028 | 2029 | 2030 | 2031 | 2032 - After
Net operating loss carryforwards | $ | 18,046 |  | $ | 3,790 |  |  |  |  | $ | 1,836 |  | $ | 178 |  | $ | — |  | $ | 930 |  | $ | 846 |
Other carryforwards |  | — |  |  |  |  | — |  | — |  | — |  | — |  | — |
Total AIG U.S. consolidated federal income tax group tax losses and credits carryforwards on a U.S. GAAP basis(a) |  | $ | 3,790 |  |  |  |  | $ | 1,836 |  | $ | 178 |  | $ | — |  | $ | 930 |  | $ | 846 |
(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. During the fourth quarter, taxable income projections were updated to reflect the latest projections of income for our insurance and non-insurance companies, 2024 transactions, and projections of taxable income generated from prudent and feasible tax planning strategies. Given there is a shorter carryforward period to utilize remaining net operating losses, we continue to consider multiple data points and stresses. Additionally, significant market volatility continues 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 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 a 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. Accordingly, during the year ended December 31, 2024, we recorded no change in valuation allowance. For the year ended December 31, 2024, 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 our general insurance and non-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. As of December 31, 2024, based on all available evidence, we concluded that a valuation allowance of $509 million is necessary on deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized. For the year ended December 31, 2024, we recorded a decrease in valuation allowance of $41 million associated with the unrealized tax capital losses in AIG's available for sale securities portfolio. The valuation allowance decrease was allocated to other comprehensive income. For the year ended December 31, 2024, we recognized a net $31 million decrease 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, 2024 and 2023 on a U.S. GAAP basis:
December 31, |  |  |  |
(in millions) |  | 2024 |  | 2023
Net U.S. deferred tax assets | $ | 4,922 |  | $ | 5,992 |
Net deferred tax assets (liabilities) in AOCI |  | 421 |  |  | 509 |
Valuation allowance |  | (798) |  |  | (840) |
Subtotal |  | 4,545 |  |  | 5,661 |
Net foreign, state and local deferred tax assets |  | 1,263 |  |  | 1,431 |
Valuation allowance |  | (852) |  |  | (906) |
Subtotal |  | 411 |  |  | 525 |
Subtotal - Net U.S., foreign, state and local deferred tax assets |  | 4,956 |  |  | 6,186 |
Net foreign, state and local deferred tax liabilities |  | (426) |  |  | (347) |
Total AIG net deferred tax assets (liabilities) | $ | 4,530 |  | $ | 5,839 |
TAX EXAMINATIONS We are currently under examination by the IRS for the tax years 2011 through 2019. Listed below are the tax years that remain subject to examination by major tax jurisdictions:
At December 31, 2024 | Open Tax Years
Major Tax Jurisdiction |
United States | 2007-2023
Australia | 2020-2023
Canada | 2020-2023
France | 2022-2023
Japan | 2018-2023
Korea | 2019-2023
Singapore | 2020-2023
United Kingdom | 2022-2023
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) |  | 2024 |  | 2023 |  | 2022
Gross unrecognized tax benefits, beginning of year | $ | 1,387 |  | $ | 1,191 |  | $ | 1,157 |
Increases in tax positions for prior years |  | 3 |  |  | 200 |  |  | 29 |
Decreases in tax positions for prior years |  | (20) |  |  | (4) |  |  | (33) |
Increases in tax positions for current year |  | 15 |  |  | — |  |  | 59 |
Lapse in statute of limitations |  | (1) |  |  | — |  |  | (21) |
Gross unrecognized tax benefits, end of year | $ | 1,384 |  | $ | 1,387 |  | $ | 1,191 |
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 years ended December 31, 2024 and December 31, 2022. At December 31, 2024 and 2023 and 2022, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate were $1.4 billion, $1.4 billion and $1.2 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, 2024, 2023 and 2022, we had accrued liabilities of $53 million, $52 million and $63 million, respectively for the payment of interest (net of the federal benefit) and penalties. For the years ended December 31, 2024, 2023, and 2022, we accrued expense (benefit) of $1 million, $(11) million, and $(2) 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 2024, 2023 or 2022. 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.

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