EQUITY

6 Months Ended

Jun. 30, 2020

EQUITY

EQUITY

12. Equity

Shares Outstanding

Preferred Stock

On March 14, 2019, we issued 20,000 shares of Series A 5.85% Non-Cumulative Perpetual Preferred Stock (Series A Preferred Stock) (equivalent to 20,000,000 Depositary Shares, each representing a 1/1,000th interest in a share of Series A Preferred Stock), $5.00 par value and $25,000 liquidation preference per share (equivalent to $25 per Depositary Share). After underwriting discounts and expenses, we received net proceeds of approximately $485 million.

We may redeem the Series A Preferred Stock at our option, (a) in whole, but not in part, at any time prior to March 15, 2024, within 90 days after the occurrence of a “Rating Agency Event,” at a redemption price equal to $25,500 per share of the Series A Preferred Stock (equivalent to $25.50 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date), or (b) (i) in whole, but not in part, at any time prior to March 15, 2024, within 90 days after the occurrence of a “Regulatory Capital Event,” or (ii) in whole or in part, from time to time, on or after March 15, 2024, in each case, at a redemption price equal to $25,000 per share of the Series A Preferred Stock (equivalent to $25.00 per Depositary Share), plus an amount equal to any dividends per share that have been declared but not paid prior to the redemption date (but no amount due in respect of any dividends that have not been declared prior to such date).

A “Rating Agency Event” is generally defined to mean that any nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Securities Exchange Act of 1934, as amended (the Exchange Act) that then publishes a rating for us amends, clarifies or changes the criteria it uses to assign equity credit to securities such as the Series A Preferred Stock, which amendment, clarification or change results in the shortening of the length of time the Series A Preferred Stock is assigned a particular level of equity credit by that rating agency as compared to the length of time it would have been assigned that level of equity credit by that rating agency or its predecessor on the initial issuance of the Series A Preferred Stock, or the lowering of the equity credit (including up to a lesser amount) assigned to the Series A Preferred Stock by that rating agency as compared to the equity credit assigned by that rating agency or its predecessor on the initial issuance of the Series A Preferred Stock. A “Regulatory Capital Event” is generally defined to mean our good faith determination that as a result of a change in law, rule or regulation, or a proposed change or an official judicial or administrative pronouncement, there is more than an insubstantial risk that the full liquidation preference of the Series A Preferred Stock would not qualify as capital (or a substantially similar concept) for purposes of any group capital standard to which we are or will be subject.

Holders of the Series A Preferred Stock will be entitled to receive dividend payments only when, as and if declared by our board of directors (or a duly authorized committee of the board). Dividends will be payable from the original date of issue at a rate of 5.85% per annum, payable quarterly, in arrears, on the fifteenth day of March, June, September and December of each year, beginning on June 15, 2019. Dividends on the Series A Preferred Stock will be non-cumulative.

In the event of any liquidation, dissolution or winding-up of the affairs of AIG, whether voluntary or involuntary, before any distribution or payment out of our assets may be made to or set aside for the holders of any junior stock, holders of the Series A Preferred Stock will be entitled to receive out of our assets legally available for distribution to our stockholders, an amount equal to $25,000 per share of Series A Preferred Stock (equivalent to $25.00 per Depositary Share), together with an amount equal to all declared and unpaid dividends (if any), but no amount in respect of any undeclared dividends prior to such payment date. Distributions will be made only to the extent of our assets that are available for distribution to stockholders (i.e., after satisfaction of all our liabilities to creditors, if any).

The Series A Preferred Stock does not have voting rights, except in limited circumstances, including in the case of certain dividend non-payments.

The following table presents declaration date, record date, payment date and dividends paid per preferred share and per depository share on the Series A Preferred Stock in the six months ended June 30, 2020 and June 30, 2019:

			Dividends Paid
Declaration Date	Record Date	Payment Date		Per Preferred Share		Per Depositary Share
May 4, 2020	May 29, 2020	June 15, 2020	$	365.625	$	0.365625
February 12, 2020	February 28, 2020	March 16, 2020		365.625		0.365625
May 21, 2019	May 31, 2019	June 17, 2019	$	369.6875	$	0.3696875

Common Stock

The following table presents a rollforward of outstanding shares:

Six Months Ended June 30, 2020	Common	Treasury	Common Stock
	Stock Issued	Stock	Outstanding
Shares, beginning of year	1,906,671,492	(1,036,672,461)	869,999,031
Shares issued	-	3,595,763	3,595,763
Shares repurchased	-	(12,160,952)	(12,160,952)
Shares, end of period	1,906,671,492	(1,045,237,650)	861,433,842

Dividends

Dividends are payable on AIG Common Stock only when, as and if declared by our Board of Directors in its discretion, from funds legally available for this purpose. In considering whether to pay a dividend on or purchase shares of AIG Common Stock, our Board of Directors considers a number of factors, including, but not limited to: the capital resources available to support our insurance operations and business strategies, AIG’s funding capacity and capital resources in comparison to internal benchmarks, expectations for capital generation, rating agency expectations for capital, regulatory standards for capital and capital distributions, and such other factors as our Board of Directors may deem relevant. The payment of dividends is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which no dividends may be declared or paid on any AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

The following table presents declaration date, record date, payment date and dividends paid per common share on AIG Common Stock in the six months ended June 30, 2020 and June 30, 2019:

				Dividends Paid
Declaration Date	Record Date	Payment Date		Per Common Share
May 4, 2020	June 15, 2020	June 29, 2020	$	0.32
February 12, 2020	March 16, 2020	March 30, 2020		0.32
May 6, 2019	June 14, 2019	June 28, 2019	$	0.32
February 13, 2019	March 15, 2019	March 29, 2019		0.32

For a discussion of restrictions on payments of dividends to AIG Parent by its subsidiaries see Note 20 to the Consolidated Financial Statements in the 2019 Annual Report.

Repurchase of AIG Common Stock

The following table presents repurchases of AIG Common Stock and warrants to purchase shares of AIG Common Stock:

Six Months Ended June 30,
(in millions)		2020		2019
Aggregate repurchases of common stock	$	500	$	-
Total number of common shares repurchased		12		-
Aggregate repurchases of warrants	$	-	$	-
Total number of warrants repurchased		-		-

Our Board of Directors has authorized the repurchase of shares of AIG Common Stock and warrants to purchase shares of AIG Common Stock through a series of actions. On February 13, 2019, our Board of Directors authorized an additional increase of approximately $1.5 billion to its previous share repurchase authorization. As of June 30, 2020, $1.5 billion remained under our share repurchase authorization. Shares may be repurchased from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise (including through the purchase of warrants). Certain of our share repurchases have been and may from time to time be effected through Exchange Act Rule 10b5-1 repurchase plans.

In February 2020, we executed an accelerated stock repurchase (ASR) agreement with a third-party financial institution. The total number of shares of AIG Common Stock repurchased in the six months ended June 30, 2020, and the aggregate purchase price of those shares, reflect our payment of $500 million in the aggregate under the ASR agreement and the receipt of approximately 12 million shares of AIG Common Stock in the aggregate.

The timing of any future repurchases will depend on market conditions, our business and strategic plans, financial condition, results of operations, liquidity and other factors. The repurchase of AIG Common Stock is also subject to the terms of AIG’s outstanding Series A Preferred Stock, pursuant to which AIG may not (other than in limited circumstances) purchase, redeem or otherwise acquire AIG Common Stock unless the full dividends for the latest completed dividend period on all outstanding shares of Series A Preferred Stock have been declared and paid or provided for.

Accumulated Other Comprehensive INCOME (LOSS)

The following table presents a rollforward of Accumulated other comprehensive income (loss):

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Was Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, March 31, 2020, net of tax	$	(359)	$	3,190	$	(2,706)	$	(1,129)	$	10	$	(994)
Change in unrealized appreciation of investments		171		13,786		-		-		-		13,957
Change in deferred policy acquisition costs
adjustment and other		(11)		(1,736)		-		-		-		(1,747)
Change in future policy benefits		-		662		-		-		-		662
Change in foreign currency translation adjustments		-		-		(59)		-		-		(59)
Change in net actuarial loss		-		-		-		12		-		12
Change in prior service credit		-		-		-		-		-		-
Change in deferred tax liability		(34)		(2,630)		(2)		(3)		-		(2,669)
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		(2)		(2)
Total other comprehensive income (loss)		126		10,082		(61)		9		(2)		10,154
Noncontrolling interests		-		(9)		-		-		-		(9)
Balance, June 30, 2020, net of tax	$	(233)	$	13,281	$	(2,767)	$	(1,120)	$	8	$	9,169
Balance, December 31, 2019, net of tax	$	-	$	8,722	$	(2,625)	$	(1,122)	$	7	$	4,982
Change in unrealized appreciation (depreciation)
of investments		(313)		3,815		-		-		-		3,502
Change in deferred policy acquisition costs
adjustment and other		19		(359)		-		-		-		(340)
Change in future policy benefits		-		2,334		-		-		-		2,334
Change in foreign currency translation adjustments		-		-		(128)		-		-		(128)
Change in net actuarial loss		-		-		-		16		-		16
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax asset (liability)		61		(1,250)		(18)		(13)		-		(1,220)
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		1		1
Total other comprehensive income (loss)		(233)		4,540		(146)		2		1		4,164
Noncontrolling interests		-		(19)		(4)		-		-		(23)
Balance, June 30, 2020, net of tax	$	(233)	$	13,281	$	(2,767)	$	(1,120)	$	8	$	9,169

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Other-Than-		(Depreciation)		Currency		Plan		Attributable to
		Temporary Credit		of All Other		Translation		Liabilities		Changes in
(in millions)		Impairments Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Balance, March 31, 2019, net of tax	$	638	$	5,129	$	(2,562)	$	(1,087)	$	10	$	2,128
Change in unrealized appreciation of investments		95		5,812		-		-		-		5,907
Change in deferred policy acquisition costs
adjustment and other		(6)		(868)		-		-		-		(874)
Change in future policy benefits		-		(1,181)		-		-		-		(1,181)
Change in foreign currency translation adjustments		-		-		(133)		-		-		(133)
Change in net actuarial loss		-		-		-		15		-		15
Change in prior service cost		-		-		-		-		-		-
Change in deferred tax asset (liability)		(7)		(849)		4		(7)		-		(859)
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		(2)		(2)
Total other comprehensive income (loss)		82		2,914		(129)		8		(2)		2,873
Noncontrolling interests		-		9		1		-		-		10
Balance, June 30, 2019, net of tax	$	720	$	8,034	$	(2,692)	$	(1,079)	$	8	$	4,991
Balance, December 31, 2018, net of tax	$	(38)	$	2,426	$	(2,725)	$	(1,086)	$	10	$	(1,413)
Change in unrealized appreciation of investments		944		10,876		-		-		-		11,820
Change in deferred policy acquisition costs
adjustment and other		(14)		(1,724)		-		-		-		(1,738)
Change in future policy benefits		-		(2,249)		-		-		-		(2,249)
Change in foreign currency translation adjustments		-		-		55		-		-		55
Change in net actuarial loss		-		-		-		16		-		16
Change in prior service credit		-		-		-		(1)		-		(1)
Change in deferred tax liability		(172)		(1,281)		(20)		(8)		-		(1,481)
Change in fair value of liabilities under fair value
option attributable to changes in own credit risk		-		-		-		-		(2)		(2)
Total other comprehensive income (loss)		758		5,622		35		7		(2)		6,420
Noncontrolling interests		-		14		2		-		-		16
Balance, June 30, 2019, net of tax	$	720	$	8,034	$	(2,692)	$	(1,079)	$	8	$	4,991

The following table presents the other comprehensive income (loss) reclassification adjustments for the three- and six-month periods ended June 30, 2020 and 2019, respectively:

		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Allowance		(Depreciation)		Currency		Plan		Attributable to
		for Credit Losses		of All Other		Translation		Liabilities		Changes in
(in millions)		Was Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Three Months Ended June 30, 2020
Unrealized change arising during period	$	157	$	12,864	$	(59)	$	1	$	(2)	$	12,961
Less: Reclassification adjustments
included in net income		(3)		152		-		(11)		-		138
Total other comprehensive income (loss),
before income tax expense		160		12,712		(59)		12		(2)		12,823
Less: Income tax expense		34		2,630		2		3		-		2,669
Total other comprehensive income (loss),
net of income tax expense	$	126	$	10,082	$	(61)	$	9	$	(2)	$	10,154
Six Months Ended June 30, 2020
Unrealized change arising during period	$	(297)	$	6,156	$	(128)	$	(6)	$	1	$	5,726
Less: Reclassification adjustments
included in net income		(3)		366		-		(21)		-		342
Total other comprehensive income (loss),
before income tax expense (benefit)		(294)		5,790		(128)		15		1		5,384
Less: Income tax expense (benefit)		(61)		1,250		18		13		-		1,220
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	(233)	$	4,540	$	(146)	$	2	$	1	$	4,164
		Unrealized Appreciation								Fair Value of
		(Depreciation) of Fixed		Unrealized						Liabilities Under
		Maturity Securities on		Appreciation		Foreign		Retirement		Fair Value Option
		Which Other-Than-		(Depreciation)		Currency		Plan		Attributable to
		Temporary Credit		of All Other		Translation		Liabilities		Changes in
(in millions)		Impairments Were Taken		Investments		Adjustments		Adjustment		Own Credit Risk		Total
Three Months Ended June 30, 2019
Unrealized change arising during period	$	85	$	3,854	$	(133)	$	5	$	(2)	$	3,809
Less: Reclassification adjustments
included in net income		(4)		91		-		(10)		-		77
Total other comprehensive income (loss),
before income tax expense (benefit)		89		3,763		(133)		15		(2)		3,732
Less: Income tax expense (benefit)		7		849		(4)		7		-		859
Total other comprehensive income (loss),
net of income tax expense (benefit)	$	82	$	2,914	$	(129)	$	8	$	(2)	$	2,873
Six Months Ended June 30, 2019
Unrealized change arising during period	$	926	$	6,963	$	55	$	-	$	(2)	$	7,942
Less: Reclassification adjustments
included in net income		(4)		60		-		(15)		-		41
Total other comprehensive income (loss),
before income tax expense		930		6,903		55		15		(2)		7,901
Less: Income tax expense		172		1,281		20		8		-		1,481
Total other comprehensive income (loss),
net of income tax expense	$	758	$	5,622	$	35	$	7	$	(2)	$	6,420

The following table presents the effect of the reclassification of significant items out of Accumulated other comprehensive income on the respective line items in the Condensed Consolidated Statements of Income:

	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Condensed Consolidated Statements of Income
	Three Months Ended June 30,
(in millions)		2020		2019
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken
Investments		$	(3)	$	-		Other realized capital gains
Total			(3)		-
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments			-		(4)		Other realized capital gains
Total			-		(4)
Unrealized appreciation (depreciation) of all other investments
Investments			152		91		Other realized capital gains
Total			152		91
Change in retirement plan liabilities adjustment
Prior-service credit			(1)		-		*
Actuarial losses			(10)		(10)		*
Total			(11)		(10)
Total reclassifications for the period		$	138	$	77
	Amount Reclassified from Accumulated Other Comprehensive Income					Affected Line Item in the Condensed Consolidated Statements of Income
	Six Months Ended June 30,
(in millions)		2020		2019
Unrealized appreciation (depreciation) of fixed maturity securities on which allowance for credit losses was taken
Investments		$	(3)	$	-		Other realized capital gains
Total			(3)		-
Unrealized appreciation (depreciation) of fixed maturity securities on which other-than-temporary credit impairments were taken
Investments			-		(4)		Other realized capital gains
Total			-		(4)
Unrealized appreciation (depreciation) of all other investments
Investments			366		60		Other realized capital gains
Total			366		60
Change in retirement plan liabilities adjustment
Prior-service credit			(1)		-		*
Actuarial losses			(20)		(15)		*
Total			(21)		(15)
Total reclassifications for the period		$	342	$	41

*These Accumulated other comprehensive income components are included in the computation of net periodic pension cost. For additional information see Note 14 herein.