Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Standards Update and Change in Accounting Principle

The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 as well as cross references to the applicable notes herein for additional information:


	Pre-Adoption, December 31, 2020		Cumulative Effect Adjustment as of January 1, 2021		Updated Balances Post-Adoption of LDTI
(in millions)


Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(a)	$	34,578	$	7,666	$	42,244
Reinsurance assets - other, net of allowance for credit losses and disputes(a)	38,963		469		39,432
Deferred income taxes	12,624		339		12,963
Deferred policy acquisition costs(b)	9,805		3,150		12,955
Market risk benefit assets(c)	—		338		338
Other assets, net of allowance for credit losses(d)	13,122		398		13,520
Total assets	586,481		12,360		598,841

Future policy benefits for life and accident and health insurance contracts(e)	56,878		10,486		67,364
Policyholder contract deposits(e)	154,470		(6,247)		148,223
Market risk benefit liabilities(c)	—		8,739		8,739
Other policyholder funds(f)	3,548		248		3,796
Other liabilities(g)	27,122		398		27,520
Total liabilities	519,282		13,624		532,906

Retained earnings	15,504		933		16,437
Accumulated other comprehensive income (loss)	13,511		(2,197)		11,314
Total AIG Shareholders' equity	66,362		(1,264)		65,098

Total equity	67,199		(1,264)		65,935
Total liabilities and equity	586,481		12,360		598,841

(a)For additional information on the transition impacts associated with LDTI, see Note 8.

(b)For additional information on the transition impacts associated with LDTI, see Note 9.

(c)For additional information on the transition impacts associated with LDTI, see Note 13.

(d)Other assets include deferred sales inducement assets. For additional information on the transition impacts associated with LDTI, see Note 9.

(e)For additional information on the transition impacts associated with LDTI, see Note 12.

(f)Other policyholder funds include URR. For additional information on the transition impacts associated with LDTI, see Note 12.

(g)Other liabilities include deferred cost of reinsurance liabilities. For additional information on the transition impacts associated with LDTI, see Note 8.

The following table presents the impacts in connection with the adoption of LDTI effective as of January 1, 2021 on our previously reported Condensed Consolidated Balance Sheets as of December 31, 2022:


	As Previously Reported		Effect of Change		Updated Balances Post-Adoption of LDTI
(in millions)


Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes	$	32,159	$	(1,408)	$	30,751
Reinsurance assets - other, net of allowance for credit losses and disputes	39,434		(463)		38,971
Deferred income taxes	15,144		(340)		14,804
Deferred policy acquisition costs	15,518		(2,661)		12,857
Market risk benefit assets	—		796		796
Other assets, net of allowance for credit losses	12,714		(330)		12,384
Total assets	526,634		(4,406)		522,228

Future policy benefits for life and accident and health insurance contracts	59,223		(7,309)		51,914
Policyholder contract deposits	158,891		(2,907)		155,984
Market risk benefit liabilities	—		4,736		4,736
Other policyholder funds	3,909		(446)		3,463
Other liabilities	26,456		301		26,757
Total liabilities	484,399		(5,625)		478,774
Additional paid-in capital	80,284		(369)		79,915
Retained earnings	33,032		1,861		34,893
Accumulated other comprehensive income (loss)	(22,092)		(524)		(22,616)
Total AIG Shareholders' equity	40,002		968		40,970
Non-redeemable noncontrolling interests	2,233		251		2,484
Total equity	42,235		1,219		43,454
Total liabilities and equity	526,634		(4,406)		522,228

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Condensed Consolidated Statements of Income (Loss):


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	As Previously Reported		Effect of Change		Updated Balances Post- Adoption of LDTI			As Previously Reported		Effect of Change		Updated Balances Post- Adoption of LDTI
(in millions, except per common share data)
Revenues:
Premiums	$	7,516	$	(4)	$	7,512		$	14,626	$	6	$	14,632
Policy fees	742		(14)		728			1,506		(48)		1,458
Total net realized gains (losses)	3,392		(760)		2,632			7,811		(1,600)		6,211
Total revenues	14,441		(778)		13,663			30,249		(1,642)		28,607
Benefits, losses and expenses:



Policyholder benefits and losses incurred	5,123		(139)		4,984			10,378		(334)		10,044
Change in the fair value of market risk benefits, net	—		(45)		(45)			—		(278)		(278)
Interest credited to policyholder account balances	910		1		911			1,787		3		1,790
Amortization of deferred acquisition costs	1,298		(182)		1,116			2,735		(482)		2,253
General operating and other expenses	2,223		(17)		2,206			4,404		(34)		4,370
Total benefits, losses and expenses	10,120		(382)		9,738			20,093		(1,125)		18,968
Income (loss) from continuing operations before income tax expense (benefit)	4,321		(396)		3,925			10,156		(517)		9,639
Income tax expense (benefit)	928		(83)		845			2,107		(108)		1,999
Income (loss) from continuing operations	3,393		(313)		3,080			8,049		(409)		7,640
Net income (loss)	3,392		(313)		3,079			8,048		(409)		7,639
Net income (loss) from continuing operations attributable to noncontrolling interests	356		(31)		325			752		(40)		712
Net income (loss) attributable to AIG	3,036		(282)		2,754			7,296		(369)		6,927
Net income (loss) attributable to AIG common shareholders	3,028		(282)		2,746			7,281		(369)		6,912
Income (loss) per common share attributable to AIG common shareholders:
Common stock - Basic	3.83		(0.36)		3.47			9.06		(0.46)		8.60
Common stock - Diluted	3.78		(0.35)		3.43			8.95		(0.45)		8.50

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Condensed Consolidated Statements of Comprehensive Income (Loss):


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	As Previously Reported		Effect of Change		Updated Balances Post- Adoption of LDTI			As Previously Reported		Effect of Change		Updated Balances Post- Adoption of LDTI
(in millions)

Net income	$	3,392	$	(313)	$	3,079		$	8,048	$	(409)	$	7,639
Other comprehensive income (loss), net of tax
Change in unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken	40		(4)		36			(5)		(4)		(9)
Change in unrealized appreciation (depreciation) of all other investments	(12,538)		(2,244)		(14,782)			(26,145)		(4,778)		(30,923)
Change in fair value of market risk benefits attributable to changes in our own credit risk	—		582		582			—		1,364		1,364
Change in the discount rates used to measure traditional and limited payment long-duration insurance contracts	—		1,870		1,870			—		4,160		4,160
Change in foreign currency translation adjustments	(281)		(54)		(335)			(286)		(55)		(341)
Other comprehensive income (loss)	(12,767)		150		(12,617)			(26,415)		687		(25,728)
Comprehensive income (loss)	(9,375)		(163)		(9,538)			(18,367)		278		(18,089)
Comprehensive income (loss) attributable to noncontrolling interests	(655)		(18)		(673)			(1,320)		22		(1,298)
Comprehensive income (loss) attributable to AIG	(8,720)		(145)		(8,865)			(17,047)		256		(16,791)

The following table presents the impacts in connection with the adoption of LDTI on our previously reported Condensed Consolidated Statements of Cash Flows:


Six Months Ended June 30, 2022		As Previously Reported		Effect of Change	Updated Balances Post-Adoption of LDTI
(in millions)
Cash flows from operating activities:
Net income	$	8,048	$	(409)	$	7,639
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in income (loss):
Unrealized gains in earnings - net		(3,238)		1,906		(1,332)
Change in the fair value of market risk benefits in earnings, net		—		(541)		(541)
Depreciation and other amortization		2,698		(508)		2,190
Changes in operating assets and liabilities:
Insurance reserves		1,402		(1,024)		378
Premiums and other receivables and payables - net		(7,646)		(20)		(7,666)
Reinsurance assets, net		20		811		831
Capitalization of deferred policy acquisition costs		(2,543)		(34)		(2,577)
Current and deferred income taxes - net		1,842		(109)		1,733
Other, net		(783)		(105)		(888)
Total adjustments		(7,418)		376		(7,042)
Net cash provided by operating activities		631		(33)		598
Cash flows from financing activities:
Policyholder contract deposits		12,457		34		12,491


Net cash used in financing activities		(2,793)		34		(2,759)