SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2020

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. (Validus), Western World Insurance Group, Inc. and Glatfelter Insurance Group (Glatfelter).

International — consists of regional insurance businesses in Japan, the UK, Europe, Asia Pacific, Latin America and Caribbean, Middle East and Africa, and China. This also includes the results of Talbot Holdings, Ltd.

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 consists primarily of:

Income from assets held by AIG Parent and other corporate subsidiaries.

General operating expenses not attributable to AIG reporting segments.

Certain compensation expenses attributable to Other Operations and reporting segments.

Amortization of value of distribution network acquired related to the Validus and Glatfelter acquisitions.

Interest expense attributable to AIG long-term debt as well as debt associated with consolidated investment entities.

Results also include Blackboard and its subsidiaries which are focused on delivering commercial insurance solutions using digital technology, data analytics and automation. At the end of March 2020, Blackboard was placed into run-off.

Legacy Portfolio

Legacy Portfolio represents exited or discontinued product lines, policy forms or distribution channels. Effective February 2018, the Bermuda domiciled composite reinsurer, Fortitude Re, is included in our Legacy Portfolio. The sale of Fortitude Re was completed on June 2, 2020, and Fortitude Re is only included in the Legacy Portfolio through such date. As of closing of the Majority Interest Fortitude Sale, these reinsurance transactions between AIG and Fortitude Re are no longer considered affiliated transactions and Fortitude Re is the reinsurer of the majority of AIG’s 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.

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. These items generally fall into one or more of the following broad categories: legacy matters having no relevance to our current businesses or operating performance; adjustments to enhance transparency to the underlying economics of transactions; and measures that we believe to be common to the industry. 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,	2020				2019
				Adjusted				Adjusted
		Total		Pre-tax		Total		Pre-tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	3,077	$	5	$	4,025	$	718
International		3,178		170		3,502		262
Total General Insurance		6,255		175		7,527		980
Life and Retirement
Individual Retirement		1,333		550		1,466		588
Group Retirement		712		214		790		293
Life Insurance		1,113		(9)		1,154		86
Institutional Markets		1,391		126		418		82
Total Life and Retirement		4,549		881		3,828		1,049
Other Operations		15		(559)		144		(415)
Legacy Portfolio		719		257		740		119
AIG Consolidation and elimination		31		49		(79)		(56)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		11,569		803		12,160		1,677
Reconciling items from adjusted pre-tax income to pre-tax income (loss):
Changes in fair value of securities used to hedge guaranteed
living benefits		14		16		84		75
Changes in benefit reserves and DAC, VOBA and SIA related to net
realized capital gains (losses)		-		255		-		(73)
Changes in the fair value of equity securities		56		56		(22)		(22)
Other income (expense) - net		14		-		4		-
Loss on extinguishment of debt		-		-		-		(15)
Net investment income on Fortitude Re funds withheld assets(a)		116		116		-		-
Net realized capital gains (losses) on Fortitude Re funds withheld assets(a)		96		96		-		-
Net realized capital gains (losses) on Fortitude Re funds withheld embedded
derivative(a)		(837)		(837)		-		-
Net realized capital gains (losses)(b)		(1,632)		(1,619)		335		351
Loss from divested businesses		-		(8,412)		-		(1)
Non-operating litigation reserves and settlements		-		-		-		-
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		33		-		125
Net loss reserve discount charge		-		(16)		-		(212)
Integration and transaction costs associated with acquired businesses		-		(4)		-		(6)
Restructuring and other costs		-		(134)		-		(60)
Non-recurring costs related to regulatory or accounting changes		-		(14)		-		(2)
Revenues and Pre-tax income (loss)	$	9,396	$	(9,661)	$	12,561	$	1,837

Six Months Ended June 30,	2020				2019
				Adjusted				Adjusted
		Total		Pre-Tax		Total		Pre-Tax
(in millions)		Revenues		Income (Loss)		Revenues		Income (Loss)
General Insurance
North America	$	6,491	$	414	$	8,123	$	1,652
International		6,431		262		7,206		596
Total General Insurance		12,922		676		15,329		2,248
Life and Retirement
Individual Retirement		2,703		856		2,817		1,096
Group Retirement		1,406		357		1,499		525
Life Insurance		2,204		46		2,227		202
Institutional Markets		2,408		196		1,489		150
Total Life and Retirement		8,721		1,455		8,032		1,973
Other Operations		177		(1,010)		283		(802)
Legacy Portfolio		983		(111)		1,446		231
AIG Consolidation and elimination		(114)		(35)		(176)		(126)
Total AIG Consolidated adjusted revenues and adjusted pre-tax income		22,689		975		24,914		3,524
Reconciling items from adjusted pre-tax income to pre-tax income (loss):
Changes in fair value of securities used to hedge guaranteed
living benefits		28		9		189		171
Changes in benefit reserves and DAC, VOBA and SIA related to net
realized capital gains (losses)		-		(283)		-		26
Changes in the fair value of equity securities		(135)		(135)		57		57
Other income (expense) - net		23		-		11		-
Loss on extinguishment of debt		-		(17)		-		(13)
Net investment income on Fortitude Re funds withheld assets(a)		116		116		-		-
Net realized capital gains (losses) on Fortitude Re funds withheld assets(a)		96		96		-		-
Net realized capital gains (losses) on Fortitude Re funds withheld embedded
derivative(a)		(837)		(837)		-		-
Net realized capital gains (losses)(b)		1,853		1,883		(154)		(123)
Income (loss) from divested businesses		-		(8,628)		-		5
Non-operating litigation reserves and settlements		6		6		-		(1)
Favorable prior year development and related amortization
changes ceded under retroactive reinsurance agreements		-		41		-		152
Net loss reserve discount charge		-		(72)		-		(685)
Integration and transaction costs associated with acquired businesses		-		(6)		-		(13)
Restructuring and other costs		-		(224)		-		(107)
Non-recurring costs related to regulatory or accounting changes		-		(27)		-		(2)
Revenues and Pre-tax income (loss)	$	23,839	$	(7,103)	$	25,017	$	2,991

(a)Represents activity subsequent to the deconsolidation of Fortitude Re on June 2, 2020.

(b)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 and net realized gains and losses on Fortitude Re funds withheld assets held by AIG in support of Fortitude Re’s reinsurance obligations to AIG (Fortitude Re funds withheld assets).