Held-For-Sale Classification

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

4. Held-For-Sale Classification

HELD-FOR-SALE CLASSIFICATION

We report and classify a business as held-for-sale (Held-For-Sale Business) when management has approved the sale or received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met. A Held-For-Sale Business is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized.

Assets and liabilities related to a Held-For-Sale Business are reported in Assets held for sale and Liabilities held for sale, respectively, in our Condensed Consolidated Balance Sheets beginning in the period in which the business is classified as held-for-sale. At September 30, 2023, the following business was reported and classified as held-for-sale:

Validus Re

To further simplify AIG's business model and reduce volatility in our portfolio, on May 22, 2023, AIG announced that it entered into a definitive agreement to sell Validus Re, including AlphaCat Managers Ltd. and the Talbot Treaty reinsurance business to RenaissanceRe for $2.7 billion in cash and approximately 1.3 million common shares of RenaissanceRe. Additionally, AIG agreed to retain 95 percent of the difference between (i) the reserves with respect to the business as of the closing date of the sale for losses occurring prior to the closing date and (ii) the associated reserve development following the closing date with respect to such losses. Any reserve development will be settled annually, commencing with the calendar year ending December 31, 2024. This arrangement stays in effect until the parties determine to terminate such arrangement (which they will re-evaluate on an annual basis beginning 5 years after the closing date) or until all such liabilities of the acquired reinsurance business have run off. This reserve cover is considered contingent consideration and will be recognized at fair value when the sale of Validus Re closes.

On September 4, 2023, AIG entered into an Adverse Development Cover Excess of Loss Agreement (the ADC Agreement) to hedge the risk of adverse development pertaining to Validus Re’s reserves with Clarendon National Insurance Company (Clarendon), a wholly owned subsidiary of Enstar Group Limited. Under the ADC Agreement, AIG will be reimbursed up to $400 million of adverse development for all policies in force as of December 31, 2022 when paid losses exceed the baseline reserve balance of $3.043 billion. The expected premium to be paid to Clarendon is $80 million.

On November 1, 2023, AIG completed the sale of Validus Re to RenaissanceRe and received $2.7 billion in cash from RenaissanceRe and 1.3 million shares of RenaissanceRe common stock valued at approximately $275 million as of the closing date. The results of Validus Re are reported in General Insurance.

AIG Life Limited

To further simplify Corebridge’s business model, on September 25, 2023, Corebridge announced that it entered into a definitive agreement to sell AIG Life to Aviva plc for £460 million in cash, subject to certain adjustments. The sale of AIG Life is expected to close in the first half of 2024, subject to regulatory approvals and other customary closing conditions. The results of AIG Life are reported in Life and Retirement.

Laya and Other

To further simplify Corebridge’s business model, on August 3, 2023, Corebridge announced that it entered into a definitive agreement to sell its subsidiary, Laya, to AXA for €650 million in cash, subject to certain adjustments. On October 31, 2023, Corebridge completed the sale of Laya to AXA. The results of Laya are reported in Life and Retirement.

Other primarily consists of owner occupied real estate.

The following table summarizes the components of assets and liabilities held-for-sale on the Condensed Consolidated Balance Sheets at September 30, 2023 after elimination of intercompany balances:



(in millions)		Validus Re		AIG Life		Laya and Other		Total
Assets:
Bonds available for sale	$	3,822	$	137	$	—	$	3,959

Other invested assets		5		—		—		5
Short-term investments, including restricted cash of $262		1,478		32		76		1,586
Cash		176		2		15		193
Accrued investment income		21		3		—		24
Premiums and other receivables, net of allowance for credit losses and disputes		3,195		127		15		3,337
Reinsurance assets - other, net of allowance for credit losses and disputes		1,759		794		—		2,553
Deferred income taxes		23		35		1		59
Deferred policy acquisition costs		623		755		—		1,378
Other assets, net of allowance for credit losses(a)		676		109		139		924



Total assets held for sale	$	11,778	$	1,994	$	246	$	14,018

Liabilities:
Liability for unpaid losses and loss adjustment expenses, including allowance for credit losses	$	5,046	$	—	$	—	$	5,046
Unearned premiums		2,504		71		—		2,575
Future policy benefits for life and accident and health insurance contracts		—		592		—		592
Other policyholder funds		—		—		40		40
Other liabilities		910		918		36		1,864


Total liabilities held for sale	$	8,460	$	1,581	$	76	$	10,117

(a)Other assets, net of allowance for credit losses includes goodwill and other intangibles of $318 million and $235 million, respectively, for Validus Re, $23 million and $3 million, respectively, for AIG Life and $30 million and $10 million, respectively, for Laya and other.