SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2019

SEGMENT INFORMATION

SEGMENT INFORMATION

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. This also includes the results of Validus Reinsurance, Ltd., Western World Insurance Group, Inc. and Glatfelter Insurance Group as of their respective acquisition dates.

International — consists of insurance businesses in Japan, the United Kingdom, Europe, Asia Pacific, Latin America, Puerto Rico, Australia, the Middle East and Africa. This also includes the results of Talbot Holdings, Ltd. as of its acquisition date.

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 annuities, individual annuity and investment products, and 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 subsidiary focused on delivering commercial insurance solutions using digital technology, data analytics and automation.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, our Bermuda domiciled composite reinsurer, Fortitude Reinsurance Company Ltd. (Fortitude 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. Beginning in the first quarter of 2019, on a prospective basis, the changes in the fair value of equity securities are excluded from adjusted pre-tax income (loss). 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,	2019				2018
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	4,025	$	718	$	3,426	$	407
International		3,502		262		3,801		161
Total General Insurance		7,527		980		7,227		568
Life and Retirement
Individual Retirement		1,466		588		1,366		462
Group Retirement		790		293		730		250
Life Insurance		1,154		86		1,092		175
Institutional Markets		418		82		277		75
Total Life and Retirement		3,828		1,049		3,465		962
Other Operations		211		(415)		169		(374)
Legacy Portfolio		740		119		781		134
AIG Consolidation and elimination		(146)		(56)		(110)		(12)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		12,160		1,677		11,532		1,278
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		84		75		(27)		(36)
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses)		-		(73)		-		1
Changes in the fair value of equity securities		(22)		(22)		-		-
Professional fees related to regulatory or accounting changes		-		(2)		-		-
Other income (expense) - net		4		-		(14)		-
Loss on extinguishment of debt		-		(15)		-		(5)
Net realized capital gains*		335		351		139		155
Income (loss) from divested businesses		-		(1)		-		25
Non-operating litigation reserves and settlements		-		-		1		(12)
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		125		-		32
Net loss reserve discount benefit (charge)		-		(212)		-		14
Integration and transaction costs associated with acquired businesses		-		(6)		-		-
Restructuring and other costs		-		(60)		-		(200)
Revenues and Pre-tax income	$	12,561	$	1,837	$	11,631	$	1,252

Six Months Ended June 30,	2019				2018
				Adjusted				Adjusted
		Total		Pre-Tax		Total		Pre-Tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	8,123	$	1,652	$	6,766	$	727
International		7,206		596		7,905		351
Total General Insurance		15,329		2,248		14,671		1,078
Life and Retirement
Individual Retirement		2,817		1,096		2,727		961
Group Retirement		1,499		525		1,491		532
Life Insurance		2,227		202		2,153		227
Institutional Markets		1,489		150		554		134
Total Life and Retirement		8,032		1,973		6,925		1,854
Other Operations		414		(802)		319		(716)
Legacy Portfolio		1,446		231		1,617		279
AIG Consolidation and elimination		(307)		(126)		(172)		(1)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		24,914		3,524		23,360		2,494
Reconciling items from adjusted pre-tax income to pre-tax income:
Changes in fair value of securities used to hedge guaranteed
living benefits		189		171		(104)		(113)
Changes in benefit reserves and DAC, VOBA and SIA related to
net realized capital gains (losses)		-		26		-		(30)
Changes in the fair value of equity securities		57		57		-		-
Professional fees related to regulatory or accounting changes		-		(2)		-		-
Other income (expense) - net		11		-		(25)		-
Loss on extinguishment of debt		-		(13)		-		(9)
Net realized capital gains (losses)*		(154)		(123)		110		136
Income from divested businesses		-		5		-		33
Non-operating litigation reserves and settlements		-		(1)		2		(25)
(Unfavorable) favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		152		-		(2)
Net loss reserve discount benefit (charge)		-		(685)		-		219
Integration and transaction costs associated with acquired businesses		-		(13)		-		-
Restructuring and other costs		-		(107)		-		(224)
Revenues and Pre-tax income	$	25,017	$	2,991	$	23,343	$	2,479

*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.