SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2018

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.
International — consists of insurance businesses in Japan, the United Kingdom, Europe, Asia Pacific, Latin America, Puerto Rico, Australia, the Middle East and Africa.

Results are presented before internal reinsurance transactions. North America and International operating segments consist of the following products:

– Commercial Lines — consists of Liability, Financial Lines, Property and Special Risks.

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

Life and Retirement

Life and Retirement business is presented as four operating segments:

Individual Retirement — consists of fixed annuities, fixed index annuities, variable annuities and retail mutual funds.
Group Retirement — consists of group mutual funds, group fixed annuities, group variable annuities, individual annuity and investment products, financial planning and advisory services.
Life Insurance — primary products in the U.S. include term life and universal life insurance. International operations include distribution of life and health products in the UK and Ireland.
Institutional Markets — consists of stable value wrap products, structured settlement and pension risk transfer annuities, corporate- and bank-owned life insurance and guaranteed investment contracts (GICs).

Other Operations

Other Operations category consists of:

Income from assets held by AIG Parent and other corporate subsidiaries.
General operating expenses not attributable to specific reporting segments.
Interest expense.
Blackboard — a data-enabled, digital subsidiary that provides the commercial insurance industry with alternative solutions using digital technology, data analytics and automation.
Fuji Life — consists of term insurance, life insurance, endowment policies and annuities. The sale of this business was completed on April 30, 2017.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda domiciled composite reinsurer, DSA Reinsurance Company, Ltd. (DSA Re) is included in our Legacy Portfolio.

Legacy Life and Retirement Run-Off Lines - Reserves consist of certain structured settlements, pension risk transfer annuities and single premium immediate annuities written prior to April 2012. Also includes exposures to whole life, long-term care and exited accident & health product lines.
Legacy General Insurance Run-Off Lines - Reserves consist of excess workers’ compensation, environmental exposures and exposures to other products within General Insurance that are no longer actively marketed. Also includes the remaining reserves in Eaglestone Reinsurance Company (Eaglestone).
Legacy Investments – Includes investment classes that we have placed into run-off including holdings in direct investments as well as investments in global capital markets and global real estate.

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 net income (loss) attributable to AIG, respectively. 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:

Three Months Ended June 30,	2018				2017
				Adjusted				Adjusted
		Adjusted		Pre-tax		Adjusted		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,426	$	407	$	3,671	$	721
International		3,801		161		3,750		325
Total General Insurance		7,227		568		7,421		1,046
Life and Retirement
Individual Retirement		1,366		462		1,383		558
Group Retirement		730		250		696		266
Life Insurance		1,092		175		1,030		106
Institutional Markets		277		75		256		63
Total Life and Retirement		3,465		962		3,365		993
Other Operations		169		(374)		626		(365)
Legacy Portfolio		781		134		1,138		431
AIG Consolidation and elimination		(110)		(12)		(54)		28
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		11,532		1,278		12,496		2,133
Reconciling Items to revenues and pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		(27)		(36)		80		80
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains		-		1		-		58
Other income (expense) - net		(14)		-		(11)		-
Gain (Loss) on extinguishment of debt		-		(5)		-		4
Net realized capital gains (losses)^*		139		155		(69)		(69)
Income (loss) from divested businesses		-		25		-		(60)
Non-operating litigation reserves and settlements		1		(12)		6		80
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		32		-		(251)
Net loss reserve discount benefit (charge)		-		14		-		(260)
Pension expense related to a one-time lump sum payment to former employees		-		-		-		(1)
Restructuring and other costs		-		(200)		-		(47)
Revenues and Pre-tax income	$	11,631	$	1,252	$	12,502	$	1,667

Six Months Ended June 30,	2018				2017
				Adjusted				Adjusted
		Adjusted		Pre-Tax		Adjusted		Pre-Tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	6,766	$	727	$	7,511	$	1,549
International		7,905		351		7,448		558
Total General Insurance		14,671		1,078		14,959		2,107
Life and Retirement
Individual Retirement		2,727		961		2,756		1,097
Group Retirement		1,491		532		1,414		509
Life Insurance		2,153		227		2,043		160
Institutional Markets		554		134		855		125
Total Life and Retirement		6,925		1,854		7,068		1,891
Other Operations		319		(716)		1,100		(673)
Legacy Portfolio		1,617		279		2,222		773
AIG Consolidation and elimination		(172)		(1)		(118)		76
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		23,360		2,494		25,231		4,174
Reconciling Items to revenues and pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		(104)		(113)		91		91
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains		-		(30)		-		111
Other income (expense) - net		(25)		-		(20)		-
Gain (Loss) on extinguishment of debt		-		(9)		-		5
Net realized capital gains (losses)^*		110		136		(184)		(184)
Income (loss) from divested businesses		-		33		-		(160)
Non-operating litigation reserves and settlements		2		(25)		16		86
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		(2)		-		(265)
Net loss reserve discount benefit (charge)		-		219		-		(235)
Pension expense related to a one-time lump sum payment to former employees		-		-		-		(1)
Restructuring and other costs		-		(224)		-		(228)
Revenues and Pre-tax income	$	23,343	$	2,479	$	25,134	$	3,394

* Includes all net realized capital 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.