Reinsurance (Tables)

9 Months Ended

Sep. 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:


	September 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)	$	15,955	$	15,955	$	18,821	$	18,821	Fair value through other comprehensive income (loss)
Fixed maturity securities - fair value option		4,418		4,418		4,182		4,182	Fair value through net investment income
Commercial mortgage loans		4,129		3,822		4,107		3,837	Amortized cost
Real estate investments		122		295		133		348	Amortized cost
Private equity funds / hedge funds		1,856		1,856		1,893		1,893	Fair value through net investment income
Policy loans		335		335		355		355	Amortized cost
Short-term investments		152		152		75		75	Fair value through net investment income
Funds withheld investment assets		26,967		26,833		29,566		29,511
Derivative assets, net(b)		2		2		90		90	Fair value through net realized gains (losses)
Other(c)		856		856		782		782	Amortized cost
Total	$	27,825	$	27,691	$	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 $(740) million ($(585) million after-tax) and $(7.7) billion ($(6.1) billion after-tax), respectively for the nine months ended September 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 $18 million and $27 million, respectively, as of September 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 September 30,				Nine Months Ended September 30,
(in millions)		2023		2022		2023		2022

Net investment income - Fortitude Re funds withheld assets	$	264	$	155	$	1,001	$	634
Net realized gains (losses) on Fortitude Re funds withheld assets:
Net realized losses - Fortitude Re funds withheld assets		(227)		(86)		(396)		(312)
Net realized gains - Fortitude Re funds withheld embedded derivative		1,137		1,757		152		7,851
Net realized gains (losses) on Fortitude Re funds withheld assets		910		1,671		(244)		7,539
Income from continuing operations before income tax expense		1,174		1,826		757		8,173
Income tax expense(a)		247		383		159		1,716
Net income		927		1,443		598		6,457
Change in unrealized depreciation of all other investments(a)		(882)		(1,317)		(585)		(6,111)
Comprehensive income	$	45	$	126	$	13	$	346

(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 September 30,		2023						2022
(in millions)	General Insurance		Life and Retirement			Total	General Insurance		Life and Retirement			Total
Balance, beginning of period	$	254	$	66	$	320	$	284	$	107	$	391
Addition to (release of) allowance for expected credit losses and disputes, net		1		4		5		4		1		5
Write-offs charged against the allowance for credit losses and disputes		—		—		—		(1)		—		(1)

Other changes		(1)		—		(1)		(1)		—		(1)
Balance, end of period	$	254	$	70	$	324	$	286	$	108	$	394


Nine Months Ended September 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		(3)		(14)		(17)		5		7		12
Write-offs charged against the allowance for credit losses and disputes		(1)		—		(1)		(3)		—		(3)
Recoveries of amounts previously written off		—		—		—		2		—		2
Other changes		(2)		—		(2)		1		—		1
Balance, end of period	$	254	$	70	$	324	$	286	$	108	$	394