Reinsurance (Tables)

6 Months Ended

Jun. 30, 2023

The following tables present the transition rollforward for Reinsurance assets:


(in millions)	Individual Retirement		Life Insurance		Institutional Markets		Total
Reinsurance assets - other, net of allowance for credit losses and disputes(a)
Pre-adoption, December 31, 2020	$	309	$	2,370	$	28	$	2,707
Reclassification of Cost of Reinsurance(b)	—		416		—		416
Reclassification to Market risk benefits	(35)		—		—		(35)
Change in cash flow assumptions and effect of net premiums exceeding gross premiums	—		9		—		9
Change due to the current upper-medium grade discount rate	—		74		5		79
Post-adoption January 1, 2021	$	274	$	2,869	$	33	$	3,176


(in millions)	Total
Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes(c)
Pre-adoption, December 31, 2020	$	29,135
Change in cash flow assumptions and effect of net premiums exceeding gross premiums	55
Change due to the current upper-medium grade discount rate	7,611
Post-adoption January 1, 2021	$	36,801

(a)Excludes $36.3 billion of Reinsurance assets - other, net of allowance for credit losses and disputes in General Insurance and Other Operations.

(b)Cost of reinsurance is reported in Other liabilities in the Condensed consolidated Balance sheets.

(c)Represents Life and Retirement legacy insurance lines ceded to Fortitude Re. Excludes $5.4 billion of Reinsurance assets - Fortitude Re, net of allowance for credit losses and disputes in General Insurance and Other Operations.

Summary of Assets Supporting Funds Withheld Arrangements

There is a diverse pool of assets supporting the funds withheld arrangements with Fortitude Re. The following summarizes the composition of the pool of assets:


	June 30, 2023				December 31, 2022
(in millions)	Carrying Value			Fair Value	Carrying Value			Fair Value	Corresponding Accounting Policy
Fixed maturity securities - available for sale(a)	$	17,595	$	17,595	$	18,821	$	18,821	Fair value through other comprehensive income (loss)
Fixed maturity securities - fair value option		4,558		4,558		4,182		4,182	Fair value through net investment income
Commercial mortgage loans		4,196		3,928		4,107		3,837	Amortized cost
Real estate investments		126		302		133		348	Amortized cost
Private equity funds / hedge funds		1,940		1,940		1,893		1,893	Fair value through net investment income
Policy loans		341		341		355		355	Amortized cost
Short-term investments		255		255		75		75	Fair value through net investment income
Funds withheld investment assets		29,011		28,919		29,566		29,511
Derivative assets, net(b)		58		58		90		90	Fair value through net realized gains (losses)
Other(c)		611		611		782		782	Amortized cost
Total	$	29,680	$	29,588	$	30,438	$	30,383

(a)The change in the net unrealized gains (losses) on available for sale securities related to the Fortitude Re funds withheld assets was $376 million ($297 million after-tax) and $(6.1) billion ($(4.8) billion after-tax), respectively for the six months ended June 30, 2023 and 2022.

(b)The derivative assets and liabilities have been presented net of cash collateral. The derivative assets and liabilities supporting the Fortitude Re funds withheld arrangements had a fair market value of $191 million and $25 million, respectively, as of June 30, 2023. The derivative assets and liabilities supporting the Fortitude Re funds withheld arrangements had a fair market value of $192 million and $28 million, respectively, as of December 31, 2022. These derivative assets and liabilities are fully collateralized either by cash or securities.

(c)Primarily comprised of Cash and Accrued investment income.

Summary of The Impact of Funds Withheld Arrangements

The impact of the funds withheld arrangements with Fortitude Re was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)		2023		2022		2023		2022

Net investment income - Fortitude Re funds withheld assets	$	291	$	188	$	737	$	479
Net realized gains (losses) on Fortitude Re funds withheld assets:
Net realized losses - Fortitude Re funds withheld assets		(138)		(86)		(169)		(226)
Net realized gains (losses) - Fortitude Re funds withheld embedded derivative		180		2,776		(985)		6,094
Net realized gains (losses) on Fortitude Re funds withheld assets		42		2,690		(1,154)		5,868
Income (loss) from continuing operations before income tax expense (benefit)		333		2,878		(417)		6,347
Income tax expense (benefit)(a)		70		605		(88)		1,333
Net income (loss)		263		2,273		(329)		5,014
Change in unrealized appreciation (depreciation) of all other investments(a)		(259)		(2,156)		297		(4,794)
Comprehensive income (loss)	$	4	$	117	$	(32)	$	220

(a)The income tax expense (benefit) and the tax impact in AOCI was computed using AIG’s U.S. statutory tax rate of 21 percent.

Reinsurance Recoverable, Allowance for Credit Loss

The following table presents a rollforward of the reinsurance recoverable allowance:


Three Months Ended June 30,		2023						2022
(in millions)	General Insurance		Life and Retirement			Total	General Insurance		Life and Retirement			Total
Balance, beginning of period	$	253	$	74	$	327	$	286	$	105	$	391
Addition to (release of) allowance for expected credit losses and disputes, net		(1)		(8)		(9)		(4)		2		(2)
Write-offs charged against the allowance for credit losses and disputes		—		—		—		—		—		—
Recoveries of amounts previously written off		—		—		—		2		—		2
Other changes		2		—		2		—		—		—
Balance, end of period	$	254	$	66	$	320	$	284	$	107	$	391


Six Months Ended June 30,		2023						2022
(in millions)	General Insurance		Life and Retirement			Total	General Insurance		Life and Retirement			Total
Balance, beginning of year	$	260	$	84	$	344	$	281	$	101	$	382

Addition to (release of) allowance for expected credit losses and disputes, net		(4)		(18)		(22)		1		6		7
Write-offs charged against the allowance for credit losses and disputes		(1)		—		(1)		(2)		—		(2)
Recoveries of amounts previously written off		—		—		—		2		—		2
Other changes		(1)		—		(1)		2		—		2
Balance, end of period	$	254	$	66	$	320	$	284	$	107	$	391